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» VISIT US ONLINE @ DSNEWS.COM 81 removal, and covering pools, among other items, in the event that "the lender fails in its responsibility to maintain the home." Santino's plan for maintaining zombie properties calls for the servicer to provide $25,000 for each foreclosure initiated and also includes provisions to replenish the secu- rity fund as money from the fund is used or depleted, in order to continuously maintain the properties. e proposal from Santino also calls for penalties of up to $1,500 per day for lenders to fail to provide the $25,000 secu- rity fund under the proposed law, a Santino spokesperson told DS News. "It's time for big banks and other financial institutions to ' do the right thing' when it comes to ensuring that properties which they have seized don't become a blight on local neighborhoods." Many Markets Shift Toward Homeownership vs. Renting Many analysts have pointed out that hous- ing is in the midst of a catch 22 where renters cannot afford a down payment for a home because they are putting such a large percentage of their income toward rent, but at the same time the reason they are spending so much on rent is because they cannot afford a down pay- ment for a home. In 2014 and 2015, more families turned to renting as the single-family rental market sub- stantially increased its viability as an asset class. Some studies lately have indicated that there has been a shift toward buying in the housing market, namely an annual study by the New York Fed released and survey by Redfin re- leased in late May. e Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, released by Florida Atlan- tic University (FAU) and Florida International University (FIA), suggests that the housing market as a whole is moving deeper into buying territory and that residential housing markets around the country are sound based on numbers at the end of the first quarter. "is appears to be driven by a steady but strengthening job market, rising rents relative to rising ownership costs and recent slower growth in traditional financial portfolios con- sisting of stocks and bonds," said Ken Johnson, Ph.D., a real estate economist, one of the index's authors, and a professor at FAU. e index measures the relationship be- tween purchasing property and building wealth through building up equity versus renting a comparable property and investing in a portfo- lio of stocks and bonds. e index considers the whole housing market nationwide while isolat- ing the markets in 23 large U.S. cities and found that 16 of them favored homeownership versus renting a comparable property and investing. Markets solidly in buy territory were Boston, Chicago, Cincinnati, Cleveland, Detroit, Milwaukee, Minneapolis, New York, Phila- delphia, and St. Louis. Cities hovering around what the index terms the "indifference point" between buying versus renting were Honolulu, Kansas City, Los Angeles, Miami, Pittsburgh, Portland, San Diego, San Francisco, and Seattle. All the markets around the "indifference point" saw their BH&J Index score for the first quarter move in the direction of ownership since the previous quarter. "is movement suggests that most consum- ers in these markets appear to have learned from the real estate crash and now understand that residential property prices can get too high," Eli Beracha, Ph.D., co-author of the index and a professor at FIU. "is is a good sign for future housing price stability in these markets." Dallas and Denver were deep in rent terri- tory, according to the index, and continued to move that way in Q1 but at a slower rate than previous quarters. e index score of Houston, which had previously been deep in rent terri- tory, moved deep into buy territory in Q1. In the past, that scenario has foreshadowed notice- able property declines in that market. "A perfect storm seems to be developing in Houston," Johnson said. "I expect a lot of folks in Houston to be on the safe side and opt for renting over ownership." WASHINGTON D.C. Fannie Mae Appoints New Chief Audit Executive Fannie Mae has appointed J. Douglas Watt as SVP and chief audit executive effective July 11, according to an announcement from Fannie Mae. Watt's 35 years of audit experience include most recently serving as a member of GE Capital's senior audit leadership team and a member of several key GE Capital Americas management committees, including Opera- tional Risk Management, Enterprise Risk Management, Credit Risk, and Compliance. At GE Capital, Watt was responsible for over- seeing the internal auditing of GE Capital's North American Commercial Lending and Leading businesses and helping with leading the audit function's critical regulatory initia- tives. "Doug has significant audit experience and he will be a great addition to our leadership team. Doug joins us at a time of important change for the company and his experience will be highly valuable as we continue to improve our company and create a strong, sustainable housing finance system," said Timothy J. Mayopoulos, president and CEO at Fannie Mae. Watt's positions prior to GE Capital in- clude serving as VP of corporate audit services at Capital One Financial (leading retail bank and commercial bank audit programs); partner in the banking and capital markets with Price- waterhouse Coopers LLP. "Doug's deep background in internal audit, audit risk assessment, and regulatory reform matters will contribute greatly to Fannie Mae's strong culture of corporate governance and rigorous internal controls," said Egbert L.J. Perry, chairman of the Board at Fannie Mae. According to Watt, "Fannie Mae is a critically important company that plays an essential role in ensuring that eligible borrow- ers have access to good mortgage financing so they can buy or rent a home. Fannie Mae is at the center of the housing finance system and I am thrilled to join this great company. I look forward to working with the Board of Directors and the management team to ensure a safe and sustainable housing finance system in this country."

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