What We're Reading: May 7

Throughout the week, the BPC Housing Commission highlights news items that address critical developments in housing policy. Any views expressed in the content posted on this forum do not necessarily represent the views of the Commission, its co-chairs or the Bipartisan Policy Center.

Renting Prosperity

By Daniel Gross

The Wall Street Journal

“In the American mind, renting has long symbolized striving—striving, that is, well short of achieving. But as we climb our way out of the Great Recession, it seems something has changed. Americans are getting over the idea of owning the American dream; increasingly, they’re OK with renting it. Homeownership is on the decline, and home rentership is on the rise. But the trend isn’t limited to the housing market. Across the board—for goods ranging from cars to books to clothes—Americans are increasingly acclimating to the idea of giving up the stability of being an owner for the flexibility of being a renter.” 

Read more here.

Fed’s Tarullo warns that banking reforms are losing steam

By Zachary A. Goldfarb

The Washington Post

“A report released this week by the law firm Davis Polk said that regulators have missed 67 percent of deadlines for new rules imposed by 2010’s Dodd-Frank legislation, a rewrite of the rules governing the financial sector. Among the major new regulations that has been delayed is the Volcker Rule, which would seek to prevent banks from taking excessive risks by curtailing their ability to speculate with their own money — rather than on behalf of clients.”

Read more here.

We Face Major Vulnerabilities in Our Financial System

By Robert Lenzner Forbes

“Too big to fail institutions that are of global systemic importance could still fail and have negative consequences for the entire financial system. And it may take 15 more years for banks to implement all the new capital requirements global regulators insist are required as protection against another crisis such as occurred in 2008.”

Read more here.

Future of ‘safe’ mortgages in CFPB’s hands

By Ronald D. Orol MarketWatch

“The recently formed Consumer Financial Protection Bureau is expected in the next few months to adopt a rule that would identify the criteria and characteristics for ‘qualified mortgages,’ those deemed by the sweeping Dodd-Frank bank reform law that assures a borrower has a reasonable ability to repay the loan. The goal of this measure is to eliminate the kinds of complex, deceptive loans, including so-called ‘liar loans,’ that were key contributors to the financial crisis of 2008.”

Read more here.

The Housing Market: Another False Bottom?

By Richard Barrington

Fox Business

“An optimist would point to the following: Government figures released last week indicate the number of new homes sold in March was up 7.5% over the number sold in the same month a year earlier, and the median price was up 6.3% for the same period. Also, during the past year, the number of months’ worth of new housing supply on the market shortened by 24.3%, while the median length of time it took to sell a new home shortened by 10.3%. “But a pessimist would respond that while the above suggests improvement over the past year, each of the above statistics actually worsened in the past month. So the question remains: Has the market really stabilized, or is it just starting on a new leg downward?”

Read more here.

Jumbo limbo: The massive mortgage market finds nowhere to go

By Justin T. Hilley

HousingWire

“The tremendous amount of uncertainty surrounding the finalization of Dodd-Frank is making financial institutions hesitant to inject capital into the jumbo mortgage lending space. Of course, it doesn’t help the market shrunk from more than 50% of the market in 2006 to barely 5% this year. And worst of all there is no financing available, a factor likely to remain unchanged if the zero interest rate policy remains in force.”

Read more here.

Fannie Mae Tried Loan-Forgiveness Programs

By Alan Zibel and Nick Timiraos

The Wall Street Journal

“Fannie Mae conducted small tests to reduce loan balances of homeowners who owned more on their mortgages than the properties were worth in 2010. But the mortgage-finance company didn’t expand the pilot programs after concluding they were difficult to operate and the benefits weren’t clear, according to a letter from the firm’s federal regulator.”

Read more here.

Should Banks Maintain Abandoned Properties?

By Odette Yousef

NPR

“Like hundreds of cities across the country, Chicago is trying to tackle the issue of too many foreclosed and vacant homes. The city is now requiring lenders to ensure that those abandoned properties are secured and maintained. Other cities have similar laws. But the federal government is suing Chicago over its new rules in what’s seen as a test case that could affect whether any city would be allowed to keep lenders on the hook for abandoned properties.”

Read more here.

As Berlin “Rental Advisors” Disappear, Housing Costs Left Unregulated

By Christine McLaren

Next American City

“To understand the present, you have to understand the past, and a few evenings ago I met with someone who told me an enlightening story about one piece of the history of Berlin’s housing market. It helped shed some fascinating light on the current debate over gentrification. Dr. Hans-Günter Kleff worked for 12 years as a Mieterberater in Berlin’s Kreuzberg neighborhood. Roughly translated, the job title means “rental advisor.” It was a specific position related to a very specific part of Berlin’s development history that takes a bit of context to understand.”

Read more here.

Commercial Real Estate Hindered by Tight Credit, Realtors Say

By Prashant Gopal

Bloomberg

“While the commercial real estate market showed signs of recovery in 2011, credit tightened in the past year for small businesses, the group said today in a report. Two out of three agents helping clients buy properties for less than $2 million said the purchases were scuttled because of a lack of capital, according to the survey.”

Read more here.