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22 WHAT CASTRO'S PRESIDENTIAL BID MEANS FOR HOUSING When former U.S. Department of Housing and Urban Development (HUD) Secretary Julián Castro announced his presidential bid, he chose to do so in San Antonio—a city he is the former mayor of and one that been the center of recent immigration debates. "When my grandmother got here almost a 100 years ago, I'm sure she never could have imagined that just two generations later, one of her grandsons would be serving as a member of the United States Congress and the other would be standing with you here today to say these words: I am a candidate for President of the United States of America," Castro said. While Secretary of HUD, Castro focused his efforts on stabilizing the post-Recession market; helping homeowners who lost their properties in Hurricane Sandy, floods, and other natural disasters; and giving public- housing residents access to high-speed internet through the ConnectHome program. During Castro's tenure, HUD also worked with the Department of Justice and 49 state attorneys general to protect homeowners from mortgage fraud during the financial crisis. e result was a $25 billion agreement in 2012 with the country's five largest lenders, providing relief to millions of homeowners across the country. During his time as HUD Secretary, Castro sat down with Five Star Institute President and CEO Ed Delgado to discuss the industry's pressing issues, including the blight left by abandoned properties. Delgado asked Castro to consider opening up a dialogue with the servicing industry to talk about vacant and abandoned properties. "I have a decent perspective on what you're talking about, because I used to be a city councilman and then the mayor (of San Antonio)," Castro told Delgado. "So we saw it not just from an individual perspective, but from the perspective that concerns neighborhood associations and community associations and folks that have to deal with the impact of vacant houses on their block, and what it does to everyone and not just the individual." DEBT-TO- INCOME AND DELINQUENCIES Despite debt-to-income ratios rising in recent years, delinquencies have remained low in the five years since the Ability to Repay (ATR) requirements were introduced under the Dodd-Frank Act, according to the findings of the Consumer Financial Protection Bureau's (CFPB's) long-awaited report on the Ability to Repay (ATR) and the Qualified Mortgage (QM) Rule (ATR-QM Rule). e report, which looks at data of how these rules have impacted the mortgage market in the five years since they came into effect, revealed that despite the rise in home prices to pre-crisis levels, five to eight percent of conventional loans for home purchase have DTI exceeding 45 percent; in contrast, approximately 24 to 25 percent of loans originated in 2005–2007 exceeded that ratio. Despite these factors, in the conventional mortgage market, DTI ratios are constrained from returning to crisis-era levels by a combination of the ATR requirement, GSE underwriting limits which define the loans which are eligible for purchase by the GSEs and the CFPB's General QM DTI threshold which limits this category of loans to those with DTIs at or below43 percent. e report revealed that while housing prices had returned to the pre-crisis levels, only 5-8 percent of conventional home loans reflected DTI exceeding 45 percent. In contrast, around 24 to 25 percent of loans originated in 2005-2007 exceeded that ratio. However, it noted that the Rule was more likely to have affected access to credit on some segments of the market. ey included borrowers with high DTI, self-employed borrowers, and those seeking smaller loan amounts. However, the report, citing HMDA data, noted that for the last group of borrowers the Rule likely had no effect on access to credit for smaller amount loans. Comparing the delinquency rates between QM and non-QM loans, the report revealed that while the delinquency rate of loans with DTIs exceeding 43 percent (non-QM loans) remained at a steady 0.6 percent, the delinquency rate of GSE loans with DTIs above 43 percent increased from 0.6 percent for loans originated in 2012-2013 to 1 percent among 2014-2015 originations. "us, although the performance of non-QM loans did not improve in absolute terms, it has improved relative to the performance of comparable QM loans," the CFPB report said.

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