[PULSE] Housing discrimination: It’s real and not just a tweet

[PULSE] Housing discrimination: It’s real and not just a tweet
On July 16, I published this article in Housing Wire calling on HUD to back away from proposed changes to the disparate impact rule. I was one voice of many from industry and housing who called on HUD to not erode protections for families facing housing discrimination and the requirements for efforts to affirmatively further fair housing.

Unfortunately, HUD did not listen to large lenders, trade groups or housing advocates. In this time of BlackLivesMatter, the stark reminder that ignorance remains strong about this nation’s history of discrimination in housing became obvious. Secretary Carson and the Trump Administration not only reversed the important policy established just years earlier under Secretary Donovan and President Obama, but in the midst of their action President Trump triumphantly declared that the suburbs would be “safe” now.

In a series of tweets, President Trump declared, “I am happy to inform all of the people living their Suburban Lifestyle Dream that you will no longer be bothered or financially hurt by having low income housing built in your neighborhood.” He added: “Your housing prices will go up based on the market, and crime will go down. I have rescinded the Obama-Biden AFFH Rule. Enjoy!”

This one tweet was met with shock by many. A release from the National Association of Realtors stated, “NAR is disappointed that HUD is retreating on its decades-long policy requiring that communities receiving taxpayer money address discrimination and segregation. We previously communicated that disapproval to the industry and to the public , and our stance remains unchanged. Our commitment to fair housing and the property rights of all is unwavering. Discrimination and bias have absolutely no place in housing.”

HUD has a long history of racial discrimination in housing, promoting or supporting “white only” neighborhoods in the not-too-distant past. HUD was at the center of establishing what is now known as “redlining” as official policy. In fact, FHA publications implied that different races should not share neighborhoods, and repeatedly listed neighborhood characteristics like “inharmonious racial or nationality groups.”

Richard Rothstein’s book, The Color Of Law, exposed the explicit role the government played in creating white-only suburbs for middle class Americans while forcing minorities into urban buildings. “The Federal Housing Administration, which was established in 1934, furthered the segregation efforts by refusing to insure mortgages in and near African-American neighborhoods — a policy known as ‘redlining.’ At the same time, the FHA was subsidizing builders who were mass-producing entire subdivisions for whites — with the requirement that none of the homes be sold to African-Americans.”

As to the new rule just finalized, NYU’s Furman Center points out how the new rule puts the entire burden of proof of discrimination on the consumer. “Under the new rule, plaintiffs claiming disparate impact will be required to satisfy an onerous, and at times impossible to meet, pleading standard at the outset of litigation.”

It adds this critical point: “The proposed rule exempts ‘single events’ from scrutiny because single events, it alleges, are materially different from broader policies and practices. It removes ‘perpetuation of segregation’ from the list of discriminatory effects prohibited under the FHA. The rule also creates loopholes for landlords and lenders to defend discriminatory housing policies and algorithms, either as belonging to a third party and therefore out of scope, or as necessary to achieve ‘legitimate objectives.’”

So… as long as you discriminate only once and not all the time I guess you’re off the hook.

The rule is an outrageous attack on fair lending and obligations to affirm support for people with lower incomes — those simply searching for ways to improve their family’s opportunities.

But the dagger in the back of our nation’s housing history was just turned an additional notch as President Trump doubled down, almost taking a page from the clear discriminatory language used years ago but never truly eliminated from communities.

Within recent years there have been communities in wealthy areas like Connecticut and some wards in New Orleans and elsewhere that have filed suit, or been sued, to fight for their ability to ban access to families simply wanting safe and affordable housing with access to quality schools and support systems to raise their children.

The outrage of these tweets from a sitting U.S. president, “you will no longer be bothered or financially hurt by having low income housing built in your neighborhood,” are themes that sound like echoes from the past. They were wrong then and wrong now, and certainly should not be part of today’s dialogue where class distinctions based on race are so pronounced despite decades of effort to tear down the barriers created by our government and protected so fiercely by laws that saw white versus black as an acceptable paradigm.

The actions taken by HUD and subsequently celebrated in tweets set this nation back generations. It will be up to governors, mayors, housing policy advocates and more to reverse the tide while we await the chance to correct this huge mistake and the disregard of fairness by this rule change.
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Redfin posts improved Q2 numbers while Realogy’s revenue, income declines

Redfin posts improved Q2 numbers while Realogy’s revenue, income declines
Two real estate giants reported earnings on Thursday, with each telling a very different story around their second-quarter performance.

Redfin Corp. on Thursday reported increased revenue and a narrower loss for the second quarter as the company saw a surge in demand fueled largely by low interest rates.

Redfin’s shares were up 3.5% Thursday afternoon to $42.97 on the news.

Specifically, the Seattle-based company said its revenue was up 8% year over year to $213.7 million in the second quarter, compared to $197.8 for the same period last year.

It still reported a loss, but a smaller one of $6.6 million, or 8 cents per share, compared to $12.6 million, or 14 cents per share, in the second quarter of 2019.

Redfin CEO Glenn Kelman commented that Redfin “blew away” its second quarter financial targets.

“Within the span of a single quarter, year-over-year changes in demand went from -41% to +40%, a level of volatility that I have never seen in nearly 30 years of business,” he said.

Over the past two months, since the COVID-19 pandemic hit, Redfin’s online visits and customer inquiries have been growing at a faster clip than at any point in the last three years, Kelman added. 

“We’re inside a tornado, hiring agents, lenders and closing specialists at breakneck speed to keep up with demand, but also mindful that the bottom of the economy could fall out a second time,” he said.

Redfin has worked to adapt in the COVID-19 environment by creating new technologies and policies aimed at keeping customers and employees safe, he added. Those include:

Making it easier for customers to request an in person or virtual tour or listing appointment and giving agents the power to specify their preference for in-person or video appointments within Redfin’s scheduling softwareUpdating the web and mobile search experience to highlight homes with virtual walkthroughs and recorded video toursLaunching a new Agent Dashboard, allowing agents from any brokerage to upload a video tour or virtual walkthrough to RedfinLaunching a virtual comparative market analysis presentation for Redfin agents to present to a seller during consultation

Kelman said the company has also “welcomed back” most Redfin employees who were furloughed in early April and resumed hiring in a number of markets “to meet resurgence of customer demand.”

Looking ahead to the third quarter, Redfin issued guidance of revenue of between $214 million and $225 million, representing a year-over-year decrease between 10% and 6% compared to the third quarter of 2019. 

It also projected net income of between $18 million and $23 million, compared to net income of $6.8 million in the third quarter of 2019. 


Realogy Holdings Corp. on Thursday also announced its second-quarter earnings and they told a different story. The Madison, N.J.-based company reported revenue of $1.2 billion for the three months ended June 30, a year-over-year decrease of 27%, or $457 million, compared to $1.6 billion in Q2 2019.

Realogy also recorded net income of $28 million from continuing operations and a net loss of $14 million, or 12 cents per share, including discontinued operations for the second quarter. That compares to $69 million in net income, or 60 cents per share, in the same period last year.

Realogy CEO and president Ryan Schneider said the company “delivered substantial operating EBITDA” in the quarter as it moved quickly “to navigate through the turbulent environment.” 

EBITDA declined to $172 million in the second quarter, compared to $235 million in the same period last year. 

“We continued to enhance our digital technology offerings, invest in strategic priorities, and improve our balance sheet,” Schneider said. “We believe that progress, combined with recent positive market data, positions us well for the future.”
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Is student loan debt really the barrier to Millennial homeownership?

Is student loan debt really the barrier to Millennial homeownership?
On Wednesday, the Census Bureau reported a surprise increase in the homeownership rate, up from 65.3% to 67.9%.

This increase challenges the long-standing thesis that college-educated Americans are too broke to own homes due to the financial burden of student loan debt. 

Logan MohtashamiLead Analyst

From the Census Bureau: “The homeownership rate of 67.9% was 3.8 percentage points higher than the rate in the second quarter 2019 (64.1%) and 2.6 percentage points higher than the rate in the first quarter 2020 (65.3%).”

I should start by saying I don’t think this number will stick. Any massive deviation from a historical trend needs to be questioned and the question I am asking (tongue in cheek) is: Has COVID-19 somehow impacted the accounting data?

Having said that, even when the data is corrected, in time the report will show that once Millennials get to the proper age to buy a home, a portion of them will do so.   

Also, we are officially in the window of 2020-2024!  

In the previous expansion, I talked about how homeownership rates should bottom out around 62.2%-62.7%. We got as low as 62.9% before the rate started to move higher. Last year I gave a rationale for homeownership rates to reach 66.21%. Oh, the trolling I got for that forecast! 

My thesis for 2008-2019 was that we would have the weakest housing recovery ever. My thesis was that we would not have the demand to drive the Purchase Application Index to 300 or over until the years 2020-2024. This year, as if on cue, the purchase application index reached 300.

Speaking of the Mortgage Banking Association’s purchase application data, it is up 21% year over year this week. That is 10 straight weeks of positive year-over-year growth and nine straight weeks of double-digit year-over-year growth. The last four weeks with this data line has shown growth of  21%, 19%, 16% and 33%.

I also predicted that total housing starts would not reach 1,500,000 until the years 2020-2024. We have not had the demand to warrant that amount of building. We have yet to start a year with 1,500,000 units built in the previous year, but we are getting there.

Those who have followed my work know that I have railed against the notion that the student loan debt crisis was holding back housing and that college-educated Americans are now the debilitated class of our society.

Since 2014, we have had steady year-over-year growth in purchase application data. When you look at the actual data on student loan debt, you see that those who matriculate from college have the highest employment rates and the highest incomes. Although they may accumulate student loan debt, they also have the financial capacity to own the debt.

Those who have delinquent student loans owe, on average, $10,000 and did not finish college – and so are not positioned to earn salaries that allow for homeownership. Of course there are many exceptions to this.  

Student loan debt is a legitimate financial problem for many — mostly for those who were unable to finish college and reap the career benefits of a degree. But it was never the over-hyped problem for the housing market. I outlined a plan to relieve student loan debt in an article I wrote for Housingwire this year.

I anticipate that the recently published homeownership rate of 67.9% will be revised lower in time. My 66.21% homeownership rate call might not have been bullish enough, and I will gladly accept my error.

However, my main point stands that housing economics are driven by demographics and mortgage rates.

The years 2020-2024 have the largest demographic patch of home-buying aged Americans in history. These demographics will support replacement buyers and any move-up or downsizing buyers just adds more demand into the total numbers.   

Since the loan quality from 2010-2020 was better than in the housing bubble years, we will not have any mass scale foreclosures like we saw after the housing bubble burst. For 2021, the forbearance issue will impact housing, but not to the degree some people think. More on this to come.

For now, believe that demographics and low interest rates will be the winning combination for the rest of the year. 
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NAR comes out strong against AFFH fair housing rule termination

NAR comes out strong against AFFH fair housing rule termination
On Wednesday, President Donald Trump tweeted about his administration’s actions in abolishing the Obama-era AFFH fair housing rule – a move which we covered on July 23.

In his tweet, President Trump wrote (among other things): “I am happy to inform all of the people living their Suburban Lifestyle Dream that you will no longer be bothered or financially hurt by having low income housing built in your neighborhood… Your housing prices will go up based on the market, and crime will go down. I have rescinded the Obama-Biden AFFH Rule. Enjoy!”

For context, the Trump administration formally announced last week it would terminate the Obama-era rule regarding the implementation of the Affirmatively Furthering Fair Housing, or AFFH, provision of the 1968 Fair Housing Act, according to Housing and Urban Development Secretary Ben Carson.

At that time, Carson alleged the provision has proven “to be complicated, costly, and ineffective.”

President Trump’s tweet on Wednesday ignited heated reactions from both sides of the fence. We reached out to industry organizations to get their perspectives on the administration’s actions.

The National Association of Realtors came out strong on Wednesday, expressing its disappointment that HUD was “retreating” on its decades-long policy requiring that communities receiving taxpayer money address discrimination and segregation.

The organization pointed out that, following the administration’s initial proposal in January, NAR had publicly commented that the changes threatened to strip away the rule’s original civil rights purpose, as mandated by the 1968 law.

In a statement on Wednesday, NAR President Vince Malta, a broker at Malta & Co. Inc., in San Francisco, said NAR’s commitment to fair housing and the property rights of all remains “unwavering.”

“Discrimination and bias have absolutely no place in housing,” he added. “We will continue to push all policymakers in Washington to ensure that the federal government promotes equality and eliminates discrimination in the housing market, for the benefit of all.”

The Mortgage Bankers Association (MBA)’s response today was simple, but to the point: “The Fair Housing Act remains a vital law and is something MBA strongly endorses.”

AIME, the Association of Independent Mortgage Experts, declined to comment.
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JetClosing raises $9M for digital title and escrow platform

JetClosing raises M for digital title and escrow platform
This article was written for FinLedger, HW Media’s new fintech-focused news brand designed specifically for financial services professionals in banking, insurance and real estate. Stay tuned for updates.

JetClosing, a cloud-based digital title and escrow startup, announced this morning that it has raised $9 million in a Series B funding round. 

T. Rowe Price Associates Inc. led the financing, which also included participation from Pioneer Square Labs (PSL) and Trilogy Equity. The investment brings the Seattle-based company’s total raised since its 2016 inception to $35 million.

JetClosing’s cloud-based platform aims to make home closings and mortgage refinances “more transparent, efficient, safe, and stress-free for everyone involved in the transaction” by streamlining the “historically manual” title and escrow process.

Homebuyers, sellers, agents and borrowers have the ability to collaborate remotely using JetClosing’s online dashboard or mobile app, both of which the company says enable secure document transfers, wire transactions, remote online notarizations (RON), and e-signatures.

The platform also provides real-time notifications on the status of a transaction.

JetClosing is currently available in Arizona, Colorado, Nevada, Florida, Pennsylvania, Texas and Washington.

The company plans to use its new capital to boost its offerings and expand into new markets.

Since the onset of the COVID-19 pandemic, JetClosing has seen a big bump in business. In particular, in June, it saw a 124% increase in orders compared to April. Part of that can be attributed to new legislation that allows for RON in nearly every state compared to only 23 prior to March, the company said. In general, it’s seeing an influx of refinance applications that are being processed remotely.

“In light of the current economy, this funding demonstrates unequivocally that there is a real market need for a digital workflow to facilitate home closings for resale and refinancing transactions,” Greenshields said in a statement. “Pandemic or not, consumers expect a technology-first closing process that’s catered to their fast-paced, on-demand, and mobile lifestyles.”

In an effort to prevent fraud commonly associated with home-buying scams, JetClosing said it has implemented a number of security measures, including a recent partnership with CertifID, an identity and account verification platform for protecting money transfers. 

Geoff Entress, managing director of PSL, said that his firm’s investment in JetClosing recognizes “the company’s growth as well as the value of the underlying technologies that power the platform and protect user data.”

“Cybersecurity is so critical in a remote operating environment and JetClosing’s standards are unmatched in the industry,” he added.

Are you a financial services professional hungry for better fintech news and info? HW Media is proud to introduce FinLedger, a fintech media brand that will cover the critical news impacting financial services professionals — from SaaS to big data, and cybersecurity to regtech. Want to be notified when we launch? Enter your email here and follow us on Twitter.
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