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45 » VISIT US ONLINE @ DSNEWS.COM PARENTAL WEALTH & HOMEOWNERSHIP Parents pass a lot of traits on to their children: perhaps their eye color, an affinity for a particular sport or hobby, and maybe even their work ethic. However, now there is evidence that parents also pass another trait on to their grown children: their odds of homeownership. "We now know that a family habit of homeownership is passed down among generations," stated researchers from the Urban Institute in a recent blog post. "Whether your parents are homeowners influences whether you'll be a homeowner," the researchers said. Furthermore, "your parents' wealth influences your future homeownership status." And the difference isn't subtle. e likelihood of being a homeowner increases 8.4 percentage points for millennials whose parents own homes when controlling for race, education level, and incomes. Without controlling for such factors, the gap widens to 17 percentage points. For the millennial generation, the homeownership rate for those whose parents are homeowners is 31.7 percent. Among those whose parents are renters, the rate is just 14.4 percent, according to the research. When it comes to wealth, a 1 percentage- point increase in parental wealth correlates to a 0.009 percentage-point increase in the likelihood of a young American owning a home. For millennials whose parents have less than $10,000 in net worth, the rate is 14.14 percent. For those whose parents have $300,000 in net worth, the homeownership rate is 36.39 percent. While the researchers said they "don't know exactly how homeownership or wealth affects adolescents," they suggested this influence is important. When it comes to owning a home, there exists a growing gap between different races in the United States "even as our nation becomes increasingly diverse." is new evidence of a generational link suggests this gap will widen over time. Among young Americans, white households have a 37 percent homeownership rate. e rate is 27 percent for Asian, 25 percent for Hispanic, and 13 percent among black millennials. White parents have a homeownership rate of 84 percent, while homeownership among Hispanic parents is 64 percent. Black parents have a 48 percent homeownership rate. Wealth is also lower among minority families than for white families. e research found the median net wealth for white parents of millennials was $171,000. For Hispanic parents, the median net wealth was $20,700, and for black families, the median net wealth was $17,600. "Our results provide strong evidence that the intergenerational transfer of homeownership and wealth reinforce and exacerbate existing gaps," the researchers stated. As a policy center, the institute suggested, "We need to better understand how this inheritance factor works so we can craft policies that will slow if not reverse widening gaps in prosperity." DO REGULATORY CHANGES MEAN MORE COMPLIANCE EXPENSES? e recently passed Regulatory Relief Bill (S. 2155) has had a significant impact on the compliance expenses of financial institutions, according to Continuity's quarterly Banking Compliance Index (BCI). In the second quarter, the BCI nearly doubled from Q1 with a score of 1.11, indicating that financial institutions needed more than one full-time employee to keep pace with regulatory changes. It also suggested that this uptick is more substantial than in past years. e BCI quantifies the incremental burden on financial institutions in keeping up with regulatory changes. is score doesn't include the resources institutions already dedicated to regulatory and compliance efforts. According to the report, the Regulatory Relief Bill added many pages of material that organizations had to "read, interpret, and decide on action forward." e bill contained over 50 separate regulatory changes impacting banks, and credit unions and lenders, and according to the report, the BCI increase reinforces that any difference, whether adding or reducing regulations, translates to extra work for financial institutions. Regarding issuances and expenses, the report found that 61 issuances were delivered in Q2, up from 50 in Q1. Compliance costs increased from $10,776 in Q1 2018 to $19,114 in Q2 2018, and hours required to comply per institution went from 219 hours in Q1 to 369 hours in Q2, a 68-percent increase. "We're just starting to see the impact of the Regulatory Relief Bill on banks, credit unions, and lenders," said Donna Cameron, Director of Regulatory I/O at Continuity. "e bill added a significant number of pages and material that organizations had to read, interpret, and decide on appropriate action forward. is increase in activity is only expected to continue as the agencies issue implementing regulations and guidance documents." e report indicated that the reinstatement of the Protecting Tenants at Foreclosure Act by the Regulatory Relief Bill effective June 23, 2018, was a significant change during Q2 2018. Other notable provisions of the law were changes to the ways reciprocal deposits and high-volatility commercial real estate are calculated and reported. ese amendments were effective on the day the Regulatory Relief Act was enacted—May 24, 2018. With government agencies having filled their vacant leadership positions, the report said, the regulatory uncertainty experienced by the industry in the first quarter was reduced. is movement also added to the increased score of Q2. Looking at the rest of the year, Cameron said the industry could "expect to see a more active second half of the year in regards to regulatory activity and issuances." "Agencies have made it clear that they plan to accelerate regulatory relief activity and provide guidance as soon as possible," Cameron said. "Financial service organizations must proactively work with their regtech partners to help them automate compliance processes, interpret regulations, and centralize efforts to prepare for the upcoming changes."

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