Monday Morning Cup of Coffee takes a look at news coming across HousingWire's weekend desk, with more coverage to come on bigger issues.

How the real estate and the housing finance industries are doing seems to be a matter of perspective — as defined by where you’re literally standing. Both coasts as well as Texas and many of the Sand States look pretty good right now, while the Midwest and Rust Belt are, to be generous, still hurting.

From the desk of Chris Flanagan at Bank of America/Merrill Lynch, comes this client note that puts a compelling turn on things.

“It is interesting to note that John Williams at the San Francisco Fed seems to want to raise rates sooner rather than later (to get San Francisco real estate under control?) while Charles Evans at Chicago and Narayana Kocherlakota at Minneapolis preach caution, as excess home price growth is not a problem in their backyard, the Midwest,” Flanagan writes.

To date, given that there has been no rate hike yet, weakness at the low end seems to be the winner as the driver of monetary policy, he says. Going forward, the onus is on the hawks to prove they can meaningfully hike rates in the face of relative weakness at the low end of the economy.

“We're skeptical. A similar story seems to be playing out in Europe, where weakness in the peripheral economies such as Greece is keeping interest rates in stronger economies such as Germany near record lows,” Flanagan says. “Let's call this a theme. 

“We remain in the somewhat uncomfortable position of being neutral on securitized products, even after underperformance in the past couple of weeks. On one hand, we are inclined to believe that the Fed will be forced by persistent weakness at the low end of the economy to repeatedly delay hiking,” he says, recalling the old joke about one-armed economists. “On the other hand, we hear the rhetoric about tightening; at a minimum, even if the Fed delays, the post-crisis days of the Fed put on risk assets are probably numbered, and the market will trade accordingly. Our neutral positioning is an attempt to balance the two sides. At a minimum, though, near term spread retracement seems likely.” 

The Urban Institute’s Housing Finance Policy Center has just released a new blogThree GSE risk-sharing innovations that could change housing finance reform.

The blog discusses the success Fannie Mae and Freddie Mac have had in sharing risk with private investors: To date, private investors have accepted the bulk of the credit risk on 22% of Freddie’s book of business and 13% of Fannie’s.

The authors say three innovations are what make the deals successful:

  1. The deals are no longer limited to the least risky mortgages. Mortgages with a loan-to-value ratio of over 80 are now included as well.
     
  2. Private investors are now willing to share the first-loss risk with the GSEs.
     
  3. Private investors are now willing to accept actual, rather than a predetermined, loss.

It’s now almost a month since Arizona Realtor Sidney Cranston went missing, and while the search continues and frustrations mount, other real estate agents see the case as a grim reminder of the dangers of being a Realtor, even if they are still holding out hope for Cranston.

There have been a couple of times when Realtor Dawn Brannies felt uneasy meeting a client in the middle of the desert, miles from the nearest neighbor, to show an empty home for sale.

That's why the designated broker at Kingman Premier Properties provides real estate agents with flashlights, Tasers and a smart phone application called "Be Safe" that activates an alarm and alerts the office or police if the agent is placed in a threatening situation.

Some agents have permits to carry firearms.

"Yes, when we are in rural areas with no one around for miles, we feel vulnerable," Brannies said Thursday. "Vacant houses pose a threat as we never know if squatters or transients have broken into the homes."

Brannies was the first to alert the Daily Miner about real estate agent Sidney Cranston, who once worked in her office and has been missing since June 16. He was reportedly going to meet a client regarding the sale of land he owns in Kingman and Golden Valley, but never showed up for the meeting.

It doesn't matter if you're a 6-foot, 250-pound man or a 5-foot, 100-pound woman, real estate agents have to be aware of their surroundings and take precautions, said Lauri Barker, 10-year real estate agent with ReMax Prestige Properties in Kingman.

On Tuesday the House Oversight and Investigations Subcommittee will hold a hearing entitled “Fed Oversight: Lack of Transparency and Accountability." Witnesses include Mark Calabria, director of financial regulation studies, Cato Institute; Paul Kupiec, resident scholar, American Enterprise Institute; Alice M. Rivlin, senior fellow, economic studies, Brookings Institution, and John Taylor, professor of economics, Stanford University.

Incidentally, this comes a day before Federal Reserve Chair Janet Yellen speaks to the House Financial Services Committee on Wednesday, and the Senate Banking Committee on Thursday. It’s also the day before the Beige Book is released.

This book is produced roughly two weeks before the monetary policy meetings of the Federal Open Market Committee. On each occasion, a different Fed district bank compiles anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts.

Also on Thursday, we’ll get the homebuilder confidence report for July from the National Association of Home Builders. Homebuilder confidence is expected to hold onto its entire 5-point surge in June, holding at 59 for July, analysts forecast. The new home market has been building steam and looks to become a leading sector for the second half of the year.

And finally, on Friday we’ll get the Census Bureau’s report on housing starts and permits. Starts and permits have been volatile and strong in recent months and are expected to remain so in June, with an expected 8.6% monthly gain in starts to 1.125 million, but a 7.6% decline for permits to 1.178 million.

Premier Bank of Denver, Colorado, closed the week ending July 10. The institution was acquired by United Fidelity Bank, according to the FDIC.