Biden’s surprise pick to lead HUD, VA backs their borrowers
Well. We feel sheepish. Last week, Rise&Shred nailed down the shortlist of possible leaders of HUD, under the incoming Biden administration. And they were all WRONG.
The next leader of HUD is none of those people. The next leader of HUD is, surprisingly, Ohio Representative Marcia Fudge. She is the first black woman named to the Biden Cabinet.
“HUD will play a critical role in Biden’s plan to address the COVID-19 pandemic and its economic fallout as millions of Americans have fallen behind on rent or mortgage payments,” writes David Kitai in MPA. “According to Politico, the new HUD Secretary will likely restore the 2015 Affirmatively Furthering Fair Housing rule, which was revoked by outgoing HUD Secretary Ben Carson this summer. The rule had required local governments to track segregation patterns with a 92-question checklist in order to access federal funding.”
Another federal housing institution, the VA, filed a proposal in the Federal Register yesterday to further protect Veteran homeowners after the CARES Act expires.
“Under this proposed program, a servicer could consider a partial claim option after the servicer has evaluated all loss-mitigation options for feasibility,” the filing states.
“If the veteran qualifies and opts to move forward, VA would act as a mortgage investor of last resort by purchasing the amount of indebtedness necessary to bring the veteran’s guaranteed loan current,” the document proposes. “The veteran would have up to 60 months to defer repayment to VA and up 120 months to repay the loan in full, with the interest rate fixed at 1 percent per annum.”
The move is already being communicated to our military heroes.
“Under the proposal, any overdue mortgage payments that the holder of the VA-back mortgage has run-up over the last nine months will be paid to the lender by the VA,” states coverage in Military.com. “The veteran will then have to pay back that money to the VA while they continue to make their regular mortgage payments.”
The VA is seeking public comments on the plan through Jan. 7.
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Fannie/Freddie lawsuit headed to Supreme Court
Bloomberg is reporting that the investor lawsuit against Fannie Mae and Freddie Mac (metered paywall) is likely to be heard by the Supreme Court in June. Right now, the Supreme Court is already considering the legality of FHFA leadership — it is believed the high court may combine the cases (links to those, below).
—> If you do not think this is a big deal or it won’t impact you, here’s a lawyer arguing how this decision will be monumental one way or another <—
“Ironically, a ruling backing the administration’s approach could make it easier for President-elect Joe Biden to replace Mark Calabria, the FHFA’s Trump-appointed director. Calabria has championed efforts to end U.S. control of Fannie and Freddie,” write Bloomberg reporters Greg Stohr and Joe Light.
“Calabria has said he wants Fannie and Freddie to raise capital from the private market as soon as next year,” they add. “But that task could be difficult while the government owns $222 billion in senior preferred stock.”
When the government took over the two GSEs, they moved all profits to the Treasury — cutting off current investors from accessing their profits, the investors allege.
If successful, the Supreme Court could rule the authority of the FHFA to regulate Fannie and Freddie as unconstitutional — thus paving the way to privatization.
The investors separately argue that the FHFA suffers from a fatal constitutional flaw — a provision in the 2008 law that says the director can be fired only for cause. They say that protection gives the agency an unconstitutional level of independence from the president and that the court should respond by eliminating the [profit] sweep. If successful, the government may end up owing the investors a boat-load of $$$.
The cases are Collins v. Mnuchin, 19-422, and Mnuchin v. Collins, 19-563.
🔥 Creating Content 🔥
With Josh Pitts
Is this bleak employment picture here to stay?
Geez, we hope not. The United States declared a national emergency in March 2020 due to the onset of the COVID-19 pandemic. Unemployment rose by 1.4 million in March, with a large increase in the number of newly unemployed—that is, those unemployed for less than 5 weeks.
Prior to the pandemic, those unemployed less than 5 weeks accounted for roughly one-third of the total unemployed, but this share increased to nearly one-half in March.
This leaves 36.9 percent of unemployed Americans still jobless for 27 weeks or more as the pandemic continues.
It also means that unemployment is becoming a long-term problem for plenty of folks and there isn’t much of a solution on the horizon.
The number of job openings in October (not seasonally adjusted) decreased over the year to 7.1 million (-596,000) reflecting the continued impact of the COVID-19 pandemic on the labor market.
Job openings decreased in a number of industries with the largest decreases in retail trade, accommodation and food services, and finance and insurance. Only nondurable goods manufacturing and durable goods manufacturing had increases in job openings.
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