The Mortgage Field Service Industry has taken some substantial hits throughout the COVID epidemic. Probably the biggest hit currently being experienced by both Labor and Management is the lack of volume available. Foreclosures, in and of themselves, have been halted as the Consumer Financial Protection Bureau (CFPB) mulls over their recent proposed rule change to the Dodd – Frank Act specific to Regulation X. Here is what the CFPB is proposing,
The Bureau of Consumer Financial Protection (Bureau) seeks comment on proposed amendments to Regulation X to assist borrowers affected by the COVID-19 emergency. The Bureau is taking this action to help ensure that borrowers affected by the COVID-19 pandemic have an opportunity to be evaluated for loss mitigation before the initiation of foreclosure. The proposed amendments would establish a temporary COVID-19 emergency pre-foreclosure review period until December 31, 2021, for principal residences. In addition, the proposed amendments would temporarily permit mortgage servicers to offer certain loan modifications made available to borrowers experiencing a COVID-19-related hardship based on the evaluation of an incomplete application. The Bureau also proposes certain amendments to the early intervention and reasonable diligence obligations that Regulation X imposes on mortgage servicers.
Interestingly, there have been only 217 comments submitted on the proposed rule change. Even more interesting was how CFPB phrased their logic in the Abstract,
The proposed rule aims to ensure that mortgage borrowers are evaluated for loss mitigation before servicers initiate the foreclosure process and to avert, to the extent possible, a foreclosure crisis when the COVID-19 forbearances end.
The US government is keenly aware that there is an impending crisis on the horizon with respect to foreclosures. In fact, CFPB were not the only ones out drafting legal provisions — as opposed to the CDC Moratoriums which have been generally struck down. The Federal Housing Finance Agency extended the eviction moratorium until September for Fannie Mae and Freddie Mac-backed multifamily properties that had sought forbearance during the pandemic. It was a one two punch which hit landlords whom are already reeling from paying mortgages while their tenants live for free. Adding salt to the wounds are the daily reports of landlords finally able to take possession of their assets only to discover that they have been completely destroyed by ungrateful tenants. And finally, the Federal Open Market Committee (FOMC) could start preliminary discussions about scaling back the unprecedented bond-buying programs that aided the economy during the pandemic.
The Wall Street Journal reported today that,
Retail sales dropped in May, marking a shift in consumer spending from big-ticket items to goods and services related to going out amid business reopenings and higher vaccination rates. Consumers cut spending by 1.3% last month, trimming expenditures on autos, furniture, electronics, building materials and other items, the Commerce Department reported Tuesday. People spent more on such items throughout the Covid-19 pandemic but are now pulling back. Supply-chain disruptions and higher prices are also crimping sales of long-lasting goods.
This, coupled with the fact that there is no labor shortage, but rather a wage shortage, is further exacerbating an already fragile economy. As opposed to pressuring businesses to move beyond the $7.25 minimum wage — which has been in place since 2009 — 25 state governments are simply refusing to allow their citizens access to federal unemployment subsidies. It is a Comedy of Errors. On the federal side, though, On Tuesday April 27th, President Biden signed an executive order to increase the minimum wage for federal contractors up from $10.95 to $15.00 starting next year. This 37% increase will apply to most prime and sub-contractors on Service Contract Act and Davis-Bacon Act contracts. It gives a new meaning to the term Company Man as it is appearing to be more viable than attempting to hoe the row in a $3 inspection world.
The only thing which many Contractors are keeping their fingers crossed about is the fact that we are off to an early hurricane season. With 20 named storms anticipated, there is a good chance that what little skilled Labor is available in the Industry may very well leave to chase the storms.
Of note is the recent Wall Street Journal article discussing lumber pricing beginning to stabilize and drop,
Futures for July delivery ended Monday at $996.20 per thousand board feet, down 42% from the record of $1,711.20 reached in early May. Futures have declined 14 of the past 15 trading days, the last two by the most allowed by exchange rules. Cash lumber prices are also crashing. Pricing service Random Lengths said Friday that its framing composite index, which tracks on-the-spot sales, dropped $122 to $1,324, its biggest ever weekly decline. The pullback came just six weeks after the index rose $124 during the first week of May, its most on record. Random Lengths described a chaotic rout in which sawmill managers struggled to provide customers with price quotes.
When looking at all the points from a micro – singular point of view, it may appear that there is nothing to see; however, at the macro level, I submit that the once rosy veneer of the real estate bubble is now beginning to fray. Take, for example, the simple fact that mortgage applications are down 4% for the last week of May. Request for purchase loans were down a whopping 24% YOY. 56% of consumers surveyed believe that it is a bad time to invest in a home. Couple all of this with rising inflation, Foreclosurepedia submits that the astronomical housing prices will begin to fall by the fourth quarter. And while many are submitting that we are still approximately 3.4 Million homes shy of a solid real estate market, much of the money that has been pouring into the speculation side will begin to taper as both the Fed pulls the plug on near zero percent interest loans.
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