Discussing home sales, construction employment, the CFPB updating the Know Before You Owe disclosure and more…
In Case You Missed It: Existing Home Sales
Check out this infographic about May 2017 US Existing Home Sales:
This is a national report on home sales and not the local information that buyers and sellers MUST rely upon to make intelligent decisions!
Construction Sector Adds 16,000 Jobs in June Following 3 Month Lull
You probably read yesterday’s post and remember that ADC said that all the jobs added in June were in the Service sector. So it is good news that the Associated General Contractors of America is reporting that construction employment increased by 16,000 jobs in June to the highest level since October 2008.
Ken Simonson, the association’s chief economist said:
Construction firms added employees over the past year at nearly double the rate of the overall economy, but the record-low unemployment rate for construction workers shows companies are having to reach outside the industry to fill positions. Finding any qualified workers will likely become even harder with low unemployment throughout the economy.
The increase in construction employment in June was nearly double the 9,000 jobs added in the previous three months combined. The June level constituted was a 3.1% increase from a year ago. The sector’s unemployment rate in June was the lowest June level for construction since the series began in 2000.
Needless to say, this is great news! While it differs from the ADC report, AGC is analyzing the latest government data.
CFPB Finalizes Updates to “Know Before You Owe” Mortgage Disclosure
The CFPB just announced long needed updates to the Know Before You Owe Mortgage Disclosure.
CFPB Director Richard Cordray said:
A mortgage is one of the largest financial decisions a consumer will ever make, and CFPB’s rules help ensure consumers have the easy-to-understand information they need before making a decision that will significantly impact their financial lives. Our updates will clarify parts of our mortgage disclosure rule to make for a smoother implementation process for lenders and consumers.
The Know Before You Owe mortgage disclosure rule took effect Oct. 3, 2015. The CFPB’s rule created new, streamlined forms that consumers receive when applying for and closing on a mortgage. In addition to clarifications and technical corrections, the amendments that the Bureau is finalizing today address a handful of other issues within the rule, including:
Tolerances for the total of payments: Before the Know Before You Owe mortgage disclosure rule, the total of payments disclosure was determined using the finance charge as part of the calculation. The Know Before You Owe mortgage disclosure rule changed the total of payments calculation so that it did not make specific use of the finance charge. The Bureau is now finalizing updates to include tolerance provisions for the total of payments that parallel the tolerances for the finance charge and disclosures affected by the finance charge.
Housing assistance lending: The Know Before You Owe mortgage disclosure rule gave a partial exemption from disclosure requirements to certain housing assistance loans, which are originated primarily by housing finance agencies. The Bureau’s update, as finalized, promotes housing assistance lending by clarifying that recording fees and transfer taxes may be charged in connection with those transactions without losing eligibility for the partial exemption. The update also excludes recording fees and transfer taxes from the exemption’s limits on costs. Through the update, more housing assistance loans will qualify for the partial exemption, which should encourage these loans.
Cooperatives: The Bureau is finalizing updates to extend the rule’s coverage to include all cooperative units. Currently, the rule only covers transactions secured by real property, as defined under state law. Cooperatives are sometimes treated as personal property under state law and sometimes as real property. By including all cooperatives in the rule, the Bureau is simplifying compliance and ensuring that more consumers benefit from the rule.
Privacy and sharing of information: The Know Before You Owe mortgage disclosure rule requires creditors to provide certain mortgage disclosures to the consumer. The Bureau has received many questions about sharing the disclosures provided to consumers with third parties to the transaction, including the seller and real estate brokers. The Bureau understands that it is usual, accepted, and appropriate for creditors and settlement agents to provide a Closing Disclosure to consumers, sellers, and their real estate brokers or other agents. The Bureau is finalizing additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.
Hopefully this will correct some of the problems with the original version of the Know Before You Owe disclosure.
What Drives Bank Bailouts?
A new paper finds that political and personal interests have a major impact on politicians’ decisions regarding bank bailouts. Historically, though, bank bailouts have always been unpopular. In recent decades, academic and public debates over bank bailouts have largely developed along similar lines: Critics argue that using taxpayers’ money to bail out failing financial institutions that behaved recklessly risks moral hazard, while proponents of bailouts—like Geithner—dismiss such “Old Testament judgments” and claim that bailouts are preferable to the alternative.
Surprise! While this study was looking at politicians in Germany, I am pretty sure we would find the same disgusting behavior from politicians in the US.
With that being said, they said that politicians are 30 percent less likely to bail out a bank in the year prior to an election than in a year after an election. Likewise, a bailout is 12 percent less likely to occur if an election is highly competitive.
It shouldn’t surprise us that some politicians put their personal interests ahead of what their constituents want.
Fannie Mae Making It Easier to Get a Mortgage
I wrote about this when the news was first released but in case you missed it, check out this snippet from Business Insider:
Fannie Mae, the largest US mortgage lender, is making it a little easier for people with all kinds of existing debt — including student loans — to qualify for mortgages. The change will kick in on July 29 when the debt-to-income ratio (DTI), a measure of a borrower’s capacity to make payments, rises to 50% from the current 45%.
As I said before, whether this is good or bad or will help with the low level of home ownership remains to be seen. But remember that buying a home is a very serious financial commitment and you should not bite off more than you can chew.
That is it for today! As always…