Monday Morning Cup of Coffee takes a look at news coming across HousingWire’s weekend desk, with more coverage to come on bigger issues.
About the most accurate headline you could write: Love them or loathe them, reverse mortgages are here to stay.
So writes the New York Times, and it’s hard to disagree. There’s always seemed something a little short-sighted about reverse mortgages at first blush – like eating your seed corn. But as others point out, better to have that cash to invest elsewhere if you’re savvy, or to have it out if your locale is experiencing declining home values.
It’s been fascinating to watch the reverse mortgage industry grow up — or try to — in recent years. On one hand, it’s always been filled with no-name companies using second-tier celebrities to try to sell seniors on the product. Unethical salespeople engaged in all manner of bad behavior, persuaded customers to pull equity from their homes and invest it in inappropriate financial products or to leave spouses off the property’s deed in a way that caused them to lose the homes later. Name-brand companies like Bank of America, Wells Fargo and MetLife fled the sector in horror.
But this summer, BNY Mellon got back into the business as a servicer and securitizer of the loans. And several respectable researchers have endorsed certain uses of reverse mortgages; one has even gone so far as to invest money in a start-up reverse mortgage lender. A series of legal and regulatory changes intended to lower the number of defaults have also taken effect or are about to.
Speaking of “loathe or love,” Attorney General Eric Holder will go down as one of the longest serving and most politically divisive, partisan AGs in history. From sending guns to Mexican narco-traffickers with “Operation Fast and Furious” to his refusal to pursue charges against IRS executives caught red-handed playing politics, biographers will have a field day.
On his legacy regarding the clean up after the housing and financial crash, opinions are equally mixed. One side, the progressives, accuse him of not sending a single banker to jail for the mortgage crisis. From wearechange.org:
In 2009, Congress passed the Fraud Enforcement and Recovery Act, giving $165m to the Justice Department to staff the investigations necessary to bring those accountable for the financial crisis to justice.
Yet, despite the Justice Department’s claims to the contrary, not one major executive has been sent to jail for their role in the crisis.
The department has put real housewives in jail for mortgage fraud, but not real bankers, saving their firepower for people who manage to defraud banks, not for banks who manage to defraud people.
Most of the “investigations” of financial institutions over the past six years have swiftly moved to cash settlements, often without holding anyone responsible for admitting wrongdoing or providing a detailed description of what they did wrong.
The conservatives, meanwhile, think Holder has been too harsh on bankers, or rather too harsh on banks in a way that hurt their shareholders more than the toxic executives behind the misdeeds. From The Daily Caller:
Among Holder’s chief accomplishments, according to Schoenberg, is negotiating a record settlement in which Bank of America agreed to fork over $16.65 billion to settle charges it and companies it had purchased, including Countrywide and Merrill Lynch, had deceived investors to whom they sold mortgage-backed securities. But how much from this settlement goes to the investor victims? Nada!
Far from holding bank executives accountable for misdeeds, the settlement, which Holder announced on August 21 with much fanfare, doubly punishes Bank of America’s shareholders and investors in its mortgage-backed securities, whom Holder and other government officials maintain are the victims.
In fact, the settlement transfers billions from defrauded investors to random borrowers who may not have been defrauded or may even have committed fraud themselves, as well as to ACORN-like housing advocates calling for a return to policies that fomented the crisis. More than $9 billion goes to the federal and various state government coffers. And, as Holder proclaimed, “the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers, and communities affected by the bank’s conduct.”
But whatever Bank of America’s misdeeds — and there were many — there is no justification to take from the investors, whom the government itself says were the victims, to give to homeowners who were never alleged to have been defrauded, as well as to activist groups that try to intimidate banks and investors into making more bad loans that could further threaten the financial system.
Taken together, left and right seem to think Holder was basically a puppet for the crony capitalists driving the Too Big To Fails.
At least Holder can say he united conservatives and liberals on one issue.
So he’s got that going for him.
Want a list of the top 10 homebuilders in the United States? Ok, have a list of the top 10 homebuilders in the United States,
It’s another week of critical housing and mortgage finance metrics ahead.
On Monday, the National Association of Realtors posts its pending home sales index for August. The index in July printed at a very strong 3.3% rise to 105.9. Regional data showed convincing gains led by the Northeast at 6.2% in the month followed by the South, at 4.2%, and the West at 4%. The Midwest was the only region in the minus column at -0.4%.
Tuesday brings the Conference Board's consumer confidence index for September. In August it was led by strength in the current assessment component.
On Wednesday we’ll see if construction spending can continue the broad-based gain it posted in July. Construction spending rebounded 1.8% in July after a 0.9% dip in June.
However, the gains were led by public sector and non-residential spending, so it will be telling what August shows for homebuilding.
And come Friday, it will be the all-important employment situation. Nonfarm payroll employment for August was seriously disappointing. The economy only added 142,000, well below replacement levels. Based on part-time job growth, the unemployment rate eased back to 6.1%.
No banks were reported failed by the FDIC for the week ending Sept. 22.