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

On Friday, Politico obtained a draft of the proposed Department of Housing and Urban Development budget. Like the reporting from March when the White House initially released its plan, the draft shows a considerable $6 billion in cuts to spending on affordable housing and community development programs for 2018’s fiscal year, a move affordable housing advocates called “immoral” and a hit to some of Trump’s own support base.

Politico reports that “the document puts increased responsibility on state and local governments and calls for the private sector to do more to meet community needs, a key goal of HUD Secretary Ben Carson.”

From the article:

The administration is seeking to cut spending on affordable housing and community development and wants mortgage lenders to fund technology fixes at the Department of Housing and Urban Development, according to a budget draft obtained by POLITICO. The proposal also eliminates the Housing Trust Fund, a program financed by Fannie Mae and Freddie Mac profits.

In all, the request cuts funding by some $6 billion for fiscal year 2018, to about $40 billion. The draft, dated May 4, might not reflect the administration’s final spending request, which is expected next week. A HUD spokesman did not respond to requests for comment.

The budget “recognizes a greater role for state and local governments and the private sector in addressing community development and affordable housing needs,” the document states.

Also on the chopping block for the agency is a giant cut to the $3 billion Community Development Block Grant program, a state and local program that benefits low- and moderate-income communities and supports economic development projects, including roads, sewers and housing.

The budget also eliminates Choice Neighborhoods revitalization grants and the HOME Investment Partnerships Program, which leverages private funds to expand the supply of affordable housing. Rental assistance to tenants would fall $974 million to $19.3 billion, with the elimination of a housing program for veterans and reduced spending on Section 8 and other voucher programs and capital funding for public housing would fall by two-thirds.

Diane Yentel, president of the National Low Income Housing Coalition, said the spending plan is "immoral."

"The budget reflects a cruel indifference to the millions of low-income seniors, people with disabilities, families with children, veterans, and other vulnerable people who are struggling to keep a roof over their heads," Yentel told Politico.

But the proposed budget is not all cut, cut, cut… Politico also reports that HUD's mortgage agencies would get small funding increases and the administration wants to levy $30 million in fees on lenders who sell mortgages through the Federal Housing Administration, money that would be used to upgrade technology and risk-management systems. Also included is a small increase in staffing for FHA loan-seller Ginnie Mae. The proposed budget, in its current form, also maintains funding to support and enforce the Fair Housing Act.

Is non-QM the next emerging market in mortgage lending? Sanjiv Das, the CEO of Caliber Home Loans seems to think so…

In an interview published last night on the newly invigorated Institutional Risk Analyst, Das dishes on MSRs, Ginnie Mae and so much more.

Here’s what he had to say about the non-QM Market:

"There are a large number of customers who were impacted in the 2008 crisis who are on the fringes but want to get back into the mainstream in terms of lending.  The mainstream lenders are not ready for that.  So those of us who are backed by private equity and can be more opportunistic in a responsible way can work with these customers.  If you look at the non-QM and even QM, people who cannot qualify for a Fannie/Freddie loan are a newly emerging market."

Last week was all about avocados after an Australian millionaire ruffled Millennials’ feathers by saying that the generation should stop buying avocado toast and coffees to be able to afford a home.

35-year-old real estate developer Timothy Gurner told Australia’s 60 Minutes: “When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” he said. “We’re at a point now where the expectations of younger people are very, very high. They want to eat out every day; they want travel to Europe every year.

“The people that own homes today worked very, very hard for it,” he said, adding that they “saved every dollar, did everything they could to get up the property investment ladder.”

As you can imagine, Twitterverse lit up in response to Gurner’s comments.

In response to Gurner’s comments, compiled a list of the top metro areas and determined just how long future homebuyers would need to forego avocado toast to be able to afford a home. The city where future homebuyers need to give up toast the longest? San Francisco, where Millennials would need to face a long 72 toastless years to afford a home at the median home sale price of $1,185,000 and estimated $237,000 in closing costs for the California city.

The city with the shortest length of time? Chicago, where homebuyers would need to give up the savory toast for a seemingly short 11 years to cover the $225,000 median home price and $45,000 in closing costs.

According to a new report by Zillow and Thumbtack, an online services board, homeowners can spend anywhere between $10,000 and $55,000 in hidden costs to sell a house. From closing costs to home prep projects like cleaning, painting and staging, homeowners nationwide spend $15,190 on average in extra or hidden costs associated with selling their home. As for the cities with the highest hidden costs for selling a home, West Coast wallets are hit the hardest. 

Here are the Top 10 metro areas with the highest hidden costs to sell a home:

  1. San Francisco: $55,105
  2. Los Angeles: $40,808
  3. Seattle: $37,629
  4. San Diego: $35,629
  5. Boston: $29,833
  6. Washington, D.C.: $29,667
  7. Sacramento, California: $25,197
  8. Denver: $24,082
  9. Portland, Oregon: $23,280
  10. Riverside, California: $21,223

It’s worth noting that avocado toast was not taken into consideration for these hidden home selling costs.

Have a great week!