Events that shaped the mortgage business
BY RANIA OTEIFY, ASSOCIATE EDITOR
As the year draws to a close, looking back at the events that influenced the direction of the mortgage market paints a picture of a housing recovery that
often stumbled upon a sluggish economy.
The federal-government spending cuts that came into effect this past January and the budget disputes that led to the government shutdown this past October
have dashed hopes for the economic recovery to gain traction. In addition, unemployment rates have remained elevated despite their downward trend.
This year, the housing market has had some of its best days since the financial crisis, however. A combination of relatively low rates and a pickup in the
purchase market has driven record increases in home sales and prices. Foreclosures also plunged to their lowest level since the housing crash.
Mortgage originators and brokers still have had to keep a close watch on new and changing regulations and requirements coming out of the Consumer
Financial Protection Bureau (CFPB) and major industry players like the Federal Housing Administration (FHA). They also have followed closely statements
from the Federal Reserve and the Federal Open Market Committee (FOMC) regarding the direction of the Fed’s bond-buying program that has helped
keep mortgage rates low.
Here is a look at some of the events and milestones that have shaped the mortgage market this year.
• The FOMC confirmed a continuation of purchasing agency mortgage-backed securities and Treasury securities at a pace of $85 billion per month.
• The CFPB issued new servicing rules as well as the amended
Regulation Z related to implementing the Truth in Lending Act’s ability-
to-repay and qualified mortgage standards. Both become
effective in January 2014.
• Federal-budget spending cuts, aka sequestration, took effect after
a two-month delay agreed upon by the White House and the Senate.
• The FOMC made no change to its bond-buying program.
• Real gross domestic product (GDP) increased at 1.1 percent in the
first quarter (revised from an initial 2. 8 percent), reflecting the impact
of government spending cuts.
• Bernanke said the Fed might be scaling back its bond-buying policy in 2013 and may stop entirely by the middle of
2014. The 30-year fixed-rate average shot up to 4. 46 percent,
crossing the 4 percent mark for the first time since October
2011. June’s 30-year fixed average rate was 4.07 percent.
• The median existing-home-sale price was $214,000, the
highest level since June 2008.
• Real GDP increased at 2. 5 percent in the second quarter.
• The CFPB issued a bulletin saying it would scrutinize
consumer protection in mortgage-servicing transfers.
• Housing starts for single-family homes peaked at a
rate of 652,000 starts, the highest since 2008.
• FHA increased its mortgage-insurance
premiums between five basis points
and 10 basis points, in a move seen as
likely to restrict its market share.
• Pending home sales were at their highest level since late
2006, according to the National Association of Realtors’
(NAR) Pending Home Sales Index.
• In testimony to Congress, Fed
chairman Ben Bernanke pointed
to a possible change in the FOMC
based on the outlook in the
labor market or inflation
changes, sending shockwaves
across the financial markets.