DS News

41 » VISIT US ONLINE @ DSNEWS.COM windows through some sort of substance other than plywood, it's a huge advantage, not just for police but for fire that gets sent on those runs, so you can at least look inside before you approach or try and gain entrance to the property." Ultimately, houses boarded up by plywood can adversely affect the entire community, according to Taylor. "It brings a whole different character to the neighborhood, and with that brings other types of crimes that may or may not actually be occurring inside the vacant property," Taylor said. "Because of the blight it brings on the neighborhood, it lowers the standards of the neighborhood, at least within a block or so, can bring its own set of problems beyond what may or may not be going on inside the vacant property." In January 2017, a white paper written by former U.S. Treasury Department Deputy Assistant Secretary for Economic Policy Aaron Klein titled "Understanding the True Costs of Abandoned Properties: How Maintenance Can Make a Difference," estimated that one year of vacancy for one property causes around $150,000 in damages. at same month, Ohio became the first state to ban the use of plywood on vacant properties. "Plywood is an outdated solution to a growing modern-day problem," said Robert Klein, Chairman and Founder of Ohio- based Community Blight Solutions (no relation to Aaron Klein). "We need to apply 21st century solutions to reverse the trends that are decimating our neighborhoods. It is my hope that other states will follow Ohio's leadership and enact similar legislation." In recent years, polycarbonate clearboarding has become a popular alternative to plywood for securing windows in vacant homes. Fannie Mae began using clearboarding to secure vacant homes in REO properties in 2013 and went nationwide with it starting in early 2014. But using it in the pre foreclosure process began recently with the announcement of the new allowable in early November. "e use of clearboarding gives off the appearance of a normal window, so the curb appeal is much higher on a clearboarded property versus plywood boarded," said Jake Williamson, VP, Real Estate Fulfillment & Operational Analysis at Fannie Mae. "e first thing is the curb appeal. (Polycarbonate) does give off the perspective that it's just a normal home in a market where you're trying to compete with non-distressed sales, that it's just a normal home. e second thing is, it's an incredibly secure product. You can literally throw a cinder block at it and it's not going to shatter or crack." FED EXPECTED TO HALT MBS REINVESTMENTS IN 2018 Analysts with Morgan Stanley said they expect the U.S. Federal Reserve to stop reinvestments of its mortgage-backed securities (MBS) holdings in an effort to shrink its $4.2 trillion balance sheet caused by bond purchases made to battle the Great Recession. e analysts based their predictions on the Fed's projected 3 percent longer-run equilibrium interest rate, together with their own prediction of two rate hikes in 2017 and three in 2018. Morgan Stanley issued a report detailing their forecasts on January 27. "Applying this informal guidance to our expectation for the rates path leads us to believe the Fed will halt its reinvestments of MBS in April 2018," they said. e analysts said they expect a "ramp-up" in messaging and an announcement in the March 2018 Federal Open Market Committee report. e Fed's Treasuries and MBS holdings are about $2.46 trillion and $1.76 trillion, respectively. e Fed's balance sheet size is equivalent to about 22 percent of gross domestic product, according to the report. "Ending Treasury reinvestments is not necessary for a gradual normalization of the balance sheet; the economy should grow into the Fed's Treasury portfolio within about a decade," they said. ey said in their FOMC preview that they expect the Fed's "engine to idle" until September. "Inflation expectations have tracked sideways, as has the trade-weighted U.S. dollar," the analysts said. "Incoming data continue to confirm an underlying pace of domestic economic growth around 2 percent. "ese factors combined suggest there isn't much for the Fed to do at this meeting and it should deliver a positive sounding, but overall benign statement," they said. e analysts said minutes from the December FOMC meeting revealed discussions around possible upside risks to the outlook from fiscal policy, and several FOMC participants struck a more "upbeat tone" in recent statements. "To the extent an even more upbeat tone emerges in the statement, we could see current market-derived probabilities for a March hike rise from approximately 30 percent today," they said. "If done intentionally, then policymakers would like markets to give them more wiggle room on a possible March hike."

• Cover