Government

Industry indicators such as rising prices, increases in construction, and declines in the number of underwater homeowners tell a story of a broad housing recovery, but Harvard's Joint Center for Housing Studies (JCHS) sheds light on a less popular story in a report released Wednesday. Homeownership is down, and consumer spending on housing as a portion of income is up. Market conditions are pushing more households into rentals, even those in categories that used to maintain high homeownership rates.

The nation’s economy grew at a 1.8 percent annual rate in the first quarter, far slower than previous report for the three months ended March 31, the Bureau of Economic Analysis said Wednesday. Previous reports on the nation's Gross Domestic Product (GDP), based on incomplete data, had estimated growth at 2.4 percent, and economists surveyed by Bloomberg had expected the most recent report would confirm that growth rate.

A bipartisan group of senators introduced on Tuesday legislation to replace Fannie Mae and Freddie Mac with a newly created agency. Citing the overwhelming presence of the GSEs in today's mortgage marketplace, Sens. Bob Corker and Mark Warner unveiled a new piece of legislation designed to wind down the enterprises and rebuild the private mortgage sector. The legislation would dissolve Fannie Mae and Freddie Mac within five years of passage and transfer appropriate utility duties and functions to a ""different, modernized and streamlined agency.""

The Consumer Financial Protection Bureau (CFPB) announced proposed revisions to its ability-to-repay rule, mortgage servicing rules, and rules regarding consumer protections. One of the clarifications specified in the announcement is the definition of a loan originator. The CFPB also clarified rules relating to loss mitigation.

The price of a new single-family home dropped 3.2 percent in May, but sales increased 2.1 percent to 476,000, the highest level in almost five years, the Census Bureau and HUD reported Tuesday. Economists surveyed by Bloomberg expected April sales to increase to 460,000 from April's originally reported 454,000. April sales were revised to 466,000.

Illinois Governor Pat Quinn signed a bill Thursday extending a state law that provides a grace period of up to 90 days for homeowners facing foreclosure. More specifically, the act provides homeowners with a grace period of up to 90 days when homeowners who are facing foreclosure seek housing counseling.

The recent jump in home prices has led to speculation that the rapid surge in home prices could be the sign of a new housing bubble similar to the one that led to the Great Recession. Is it? The not-so-short answer is, not yet. An increase in prices itself does not signal a bubble. An unsustainable increase, not supported by other data, however, would. In the run-up to the 2006 collapse, the higher prices--which had been trending up for four years--led to a sharp uptick in construction wholly unsupported by demographics.

Nearly 70,000 homeowners received permanent loan modifications in April, while foreclosure sales stood at 59,000 for the month, according to data from HOPE NOW, an alliance of mortgage servicers, investors, mortgage insurers, and nonprofit counselors. Since 2007, 6.39 million struggling homeowners have received permanent modifications, HOPE NOW reported. Completed short sales reached 27,000 in April--a slight adjustment from 28,000 in March.

A new concept paper from the Mortgage Bankers Association (MBA) calls for the alignment of underwriting standards and clear representations of warranties as a major step in secondary market reform. In the paper, MBA suggests that FHFA set the parameters for acceptable underwriting criteria by both Fannie Mae and Freddie Mac and then allow them to offer credit terms within that boundary. In addition, MBA calls for greater clarity in both of the GSEs' representations and warranties framework.

Mortgage rates eased off a bit this week as the markets awaited word from the Federal Reserve on potential changes to its monetary policy. The 30-year fixed-rate mortgage (FRM) averaged 3.93 percent (0.8 point) for the week ending June 20, according to Freddie Mac's Primary Mortgage Market Survey--down from 3.98 percent the week before. Last year at this time, the 30-year FRM averaged 3.66 percent. The 15-year FRM averaged 3.04 percent (0.7 point), down from 3.10 percent the prior week.