Boehner’s Farewell: October Gain, December Pain For Government and Housing

by Real estate financingMission+
7 minutes read

housing market
New home sales hit a seven-year high, Janet Yellen still wants to raise interest rates this year and John Boehner said zip-a-dee-doo-dah. If that wasn’t enough news for you, this week brings Redfin’s Demand Index, more congressional budget drama, and data on home sales and jobs. Also, can bean bag chairs save China’s economy?

What does John Boehner have to do with my house?

Boehner, a Republican, is speaker of the House, the guy in charge. He’s had a tough time keeping his conservative troops together. Some of them are itching for a political showdown with President Obama over government spending, the debt and abortion.
Boehner wants none of that. So he quit on Friday and yesterday vowed to pass a short-term spending bill this week to keep the government running. Then he’ll be gone. By November, Congress will be back to the business of brinkmanship.
And that could mean a government shutdown in December, when the Treasury will be maxed out on its credit cards (so to speak). At about the same time, a bunch of tax breaks will expire along with Boehner’s short-term spending bill. Congress will have to do something or government will shut down and the U.S. could default on its debts. Bad for the economy, potentially bad for the housing market.

Haven’t we been here before? Yes, in 2013, year of the fiscal cliff. Things got so bad that the government’s credit score (so to speak) tanked. Weirdly, mortgages got cheaper and the stock market bounced back. The fiscal cliff turned out to be more of a political event than a financial one.

But if Congress can’t get its act together, the U.S. risks tarnishing its reputation as a safe haven for the world’s money. If people don’t trust us, the cost of borrowing–including mortgages–goes up. Boehner’s departure increases that risk.
“Washington is expected to become even more dysfunctional than it is now,” said Scott Brown, chief economist at Raymond James & Associates, writing in a note to clients.

Bad-guy roundup

This one’s a doozy. The Consumer Financial Protection Bureau and Justice reached a record settlement with Hudson City Bancorp Inc. over what the government called discriminatory mortgage lending, or redlining. Hudson City agreed to pay almost $33 million in fines, loan subsidies and community outreach.
The New Jersey bank discriminated against black and Hispanic residents in New Jersey, New York, Connecticut and Pennsylvania, the government said. As part of the settlement, Hudson City will spend $25 million to help minority borrowers get mortgages.
While Hudson City took issue with the accusations, CFPB Director Richard Cordray put lenders on notice that this redlining case won’t be the bureau’s last. That’s important, because credit discrimination hurts more than its direct victims. If big segments of the population can’t get loans, they can’t buy houses. It’s harder for them to build wealth and contribute to the economy.
“Discriminatory practices in the mortgage market undermine people’s ability to buy a home and build long-term wealth,” Cordray said. “Without access to affordable credit to buy or improve a home, without a mortgage broker nearby, without a bank branch to offer basic services, neighborhoods deteriorate in the long shadow cast by discriminatory practices.”
Here are maps of the affected areas. Think you’ve been discriminated against? Tell the CFPB.


Seeking happiness? Rent an apartment in Memphis, says
What?!? You still haven’t refinanced? Underwater homeowners who took advantage of a government refi program have saved about $3,500 a year, researchers found. HousingWire sums it up here; details are here. If you’re having trouble making your mortgage payment or owe more on your house than it’s worth, check out this page from the Federal Housing Finance Administration. You have until the end of next year. Do it.
“Unfriend your neighbor to get a loan?” In the future, your Facebook friends might affect your ability to get a mortgage, the National Housing Institute reports. Stay tuned on this subject.
Foreclosures and delinquencies are down. A lot. Late mortgage payments plummeted more than 18 percent in August from a year earlier. That’s the best annual improvement since 2011, Black Knight Financial Services says.
Button-downs and beanbags: Smart suit-wearing people at the World Economic Forum say Asia’s economy can be improved if companies rearrange their desks and maybe add bean bag chairs.  

bean bags
Bean Bags at Google Developer Day by kentbrew. Licensed under CC BY-SA 2.0 via Wikimedia Commons

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