DS News

42 ARCH MI ECONOMIST WEIGHS IN ON MARKET If current analyses are any indication, U.S. home prices aren't heading south anytime soon, according to the Winter 2018 edition of e Housing and Mortgage Market Review (HaMMR) released by Arch Mortgage Insurance Company (Arch MI). Among the assessments, U.S. housing prices will keep climbing by 2 to 6 percent annually, especially in the entry-level space. "With interest rates and home prices both on the rise, first-time homebuyers—largely millennials—may want to consider making the jump from renting to owning sooner rather than later," said Dr. Ralph G. DeFranco, Global Chief Economist, Mortgage Services, Arch Capital Services Inc. "Our research shows few signs of a housing bubble because the typical warning signs aren't present. Overall, the shortage of housing paired with a robust job market should keep the housing market strong and growing, short of an unexpected event and despite the contrary pressures that may be created by the tax bill." Arch MI also debuted a new tool in this edition. e Estimated Fundamental Home Value Index (Fundamental HVI) spots housing bubbles by evaluating home prices across 50 states and 401 metros. "e index suggests that the average probability of home price declines in America's 401 largest cities remains unusually low, at 5 percent," the report says. "is trend reflects broad-based favorable fundamentals, such as a tightening job market, relatively low interest rates, and a limited number of homes for sale." As for the new U.S. tax code, the report contends the changes might bruise higher-cost, high-tax markets but benefit lower-cost ones. Limitations on the ability to deduct state, local, and property taxes will translate into bigger tax bills for many upper-middle-class members, the report continues. e upshot: "a permanent dampening effect in high-cost areas relative to the previous tax rules," it notes. California, Connecticut, Maryland, New Jersey, and New York are the hardest-hit states, the report says. Some areas could see price drops, with Connecticut and New Jersey most vulnerable due to anemic home-price and population growth. Generally speaking, prices in higher-cost places are still likely to increase due to economic growth, just at a reduced pace. MULVANEY REQUESTS ZERO FUNDING FOR CFPB IN Q2 In his first funding request to the Federal Reserve, Mick Mulvaney, acting Director of the Consumer Financial Protection Bureau (CFPB) requested zero dollars for Q2. e Federal Reserve directly funds the consumer agency, with directors sending their requests for funding for the quarter. According to the New York Times, Mulvaney, in a letter to then-Federal Reserve Chair Janet Yellen, said the bureau didn't need any new funds to operate during the second quarter. e bureau has on deposit $177.1 million to cover emergencies and contingencies, which Mulvaney said were too large. He intended to spend approximately $145 million from that contingency fund. Mulvaney argued those additional funds the Fed would have otherwise earmarked for CFPB could be turned over to the Treasury Department to pay down government debt. Richard Cordray, Former Director of the CFPB, had requested $217.1 million in the last quarter to fund the agency, according to political news website Politico. Mulvaney said Cordray had maintained a reserve fund in case of overruns or emergencies, but he didn't see any reason for that since the Fed has always given the bureau the money it needed, the website said. is letter from Mulvaney follows an announcement by the agency that it was issuing a call for evidence to ensure the Bureau was fulfilling its proper and appropriate functions to best protect consumers. e CFPB will be publishing in the Federal Register a series of Requests for Information (RFIs) seeking comment on enforcement, supervision, rulemaking, market monitoring, and education activities. ese RFIs will provide an opportunity for the public to submit feedback and suggest ways to improve outcomes for both consumers and covered entities.

• Cover