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8/13/2019 The Housing Industrial Complex
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The fun and challenge of coveringhousing and mortgage reform
Lorraine WoellertBloomberg NewsDecember 2013
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Real people homeowners and renters
Folks who make a living off those people
agents, lenders, settlement companies,
retailers, lobbyists Local and state governments taxers and
regulators, lobbyists
Wall Street lenders, securitizers, insurers,
investors, servicers, economists, lobbyists
Washington regulators, politicians, GSEs,
think tanks, advocacy groups, lobbyists
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MBS, RMBS, CLO, CDO, REMIC, TBA, QM, QRM,HAMP, HARP, PLS, ARM, MID, PMI, OMG!
Debt-to-income, ability-to-pay, loan-to-value
Monetary, fiscal and economic policy
Fannie v. Freddie v. Ginnie v. private label
HUD, FHFA, GSEs, FHA, CFPB, NEC, FDIC, FED
Mass-refis, g-fees, reps & warranties
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(no end of sources, people & stories)
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Homeowners, would-be buyers, renters,
communities, retirees
Civil rights and social justice groups who view
housing as a basic right:
National Fair Housing Alliance, Council of La Raza,National Low Housing Coalition, National Housing
Conference, state housing finance agencies
Consumer protection groups:
State consumer affairs divisions, attorneys general,
trial lawyers, U.S. PIRG, Consumer Federation ofAmerica, CFPB, National Community Reinvestment
Coalition, AARP
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Agents & brokers: National Association of Realtors, Zillow,Century 21, Sothebys, Berkshire-Hathaway, your localbrokerages and army of real estate agents, many of whomare local politicians and donors. Do not underestimate theinfluence of this group
Lenders: Mortgage Bankers Assoc. American Bankers
Assoc., credit union associations, financial services firms.Heed that note on influence above
Builders, contractors & labor: National Association ofHomebuilders, unions. Again, influence
Title & settlement companies, mortgage insurers,reinsurers: American Land Title Association, AIG and a
league of politically active small-town lawyers. Big-dollarfinancial companies youve never heard of down to the guywho runs City Hall
Appraisers, architects, landscapers, retailers: People whoread your paper and care about this stuff
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County, city and town governments rely on
property taxes to fund schools, infrastructure
Local and state judges oversee foreclosures
Local law enforcement handles evictions
States subsidize affordable housing through
housing finance agencies, which sell tax-
exempt bonds and administer tax credits
States oversee consumer protection and
insurance regulation
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Commercial banks lend money, service loans, securitizemortgage debt (package loans into bonds and sell them),trade and invest in mortgage bonds Financial ServicesRoundtable, SIFMA, American Securitization Forum
Private-label issuers do all of the above without help ofFannie, Freddie or Ginnie Redwood
Local and regional banks and credit unions make loans toconsumers. Most sell those loans to Fannie or Freddie.Some stay on the banks books (portfolio loans)
Mortgage insurers do what GSEs and FHA do, only withoutgovernment support Genworth, Essent
Servicers send bills, collect payments and manageforeclosure process. Some also manage borrowersescrow accounts to pay property taxes and insurance Ocwen, IBM, commercial banks
Investors buy mortgages pensions, mutual funds,foreign governments, hedge funds, banks, you and me
Economists!
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Regulators and enforcement Fed, CFTC, FDIC,OCC, NCUA, CFPB, HUD, SEC, DOJ, IRS, Treasury,oversight committees
Politicians and policymakers banking, tax andjudiciary committees, White House
GSEs government-sponsored entities FannieMae and Freddie Mac, overseen by the FederalHousing Finance Agency (FHFA)
Ginnie Mae a cousin of Fannie and Freddie thatpools FHA, VA and USDA loans
Lobbyists, lobbyists, lobbyists. Lobbyists.
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(aka thefine print. Dont freak out)
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MBS, RMBS = TYPES OF BONDS: mortgage-backed security, residential mortgage-backed security.Mortgage bonds are pools of home loans sold to investors (securitized)
CDO, CLO, PLS= TYPES OF MBS = TYPES OF BONDS: collateralized debt obligation, collateralized loanobligation, privatize-label security. All make it easier to invest in mortgage debt. More investors means
more money floating around means more homebuyers getting loans means more homes sold. CLOs, CDOs
and their exotic offspring also are known as derivatives
REMIC, REIT= WAYS TO BUY AND SELL MBS: real-estate investment conduit and real-estate investmenttrust. Offer tax benefits to investors
TBA= SPECIAL WAY TO BUY AND SELL MBS: to-be-announced market, where Wall Street can tradeFannie, Freddie and Ginnie bonds that dont actually exist yet
QM, QRM= SAFE MORTGAGES: qualified mortgage and qualified residential mortgage. Dodd-Frank Actdefinitions of low-risk home loans. QRM rule meant to give lenders and securitizers incentive to keep skinin the game (share risk) or face lawsuits and regulators wrath
HAMP, HARP= AID TO HOMEOWNERS: Home Affordable Modification Program, Home AffordableRefinance Program. Government programs to help troubled borrowers into easier-to-pay loans and help
underwater homeowners get lower interest rates
ARM, option-ARM = TYPES OF MORTGAGE: adjustable-rate mortgage as opposed to a fixed-rate, 30- or
15-year mortgage. Not necessarily evil. The more exotic option-ARM is riskier because it gives borrowersthe option of paying less every month
Conventional v. Jumbo= TYPES OF MORTGAGE: Conventional mortgages are backed by Fannie, Freddieor Ginnie, which cap the size of loans they insure. Jumbos are high-dollar mortgages the agencies wont
touch. Jumbos are securitized through PLS or held on portfolio
OMG= OMG
Debt-to-income, ability-to-pay, loan-to-value: Ways to gauge a borrowers risk of default
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Here comes Mel Watt! Will mass-refi follow?
Which GSE reform bill will win out? Will any?What if nothing happens?
Whats happening as Washingtons role shrinks?
Whos making money on housing now? How?
Politics not as simple as left-right, GOP-Dem,urban-rural
Its not just about single-family ownership
Foreclosure mess is NOT over! Lobbying is just gearing up
This story is LOCAL