Monday, October 31, 2016

Government and The Economy

In the News   Presented by Prairie Title  
October 31, 2016
Election Season is Here: Thinking of Government’s Role

By Frank Pellegrini, Prairie Title CEO   

It’s Halloween, so naturally the goblins and ghouls will be out in full force in our neighborhoods. Trick or treating reminds me of an economic concept I’ve been thinking a lot about lately. With the election just days away it’s a good time to ask the questions: How involved in our economy do we want our government to be? How many “treats” do we expect, or need? The federal government, of course, is very involved in our everyday economy, directly through regulation, taxation policy, etc., but also in some ways more indirectly.

Think of Social Security. While the money we all pay into Social Security is more or less the same money we eventually take out (hopefully), the government is still involved as the collector and distributor. And that money, when distributed, for the most part goes directly into the economy in the form of payments for housing, food, entertainment, etc.

Taking things a step further, some economists advocate strategic use of so-called “helicopter money” where the government flies in and “drops” money into a situation to solve a problem and at the same time provide economic benefit. Infrastructure is a good example. Government money spent on roads and bridges not only improves our lives by providing safer roadways, but also provides stimulus in the local area. Workers who provide the labor, in turn, pay taxes back to the government.

In an interesting piece by A. Gary Shilling published in Bloomberg News, Shilling argues that a form of helicopter money is needed to further stimulate our economy.

“Both U.S. political parties seem to agree that funding for infrastructure projects is needed, given the poor state of American highways, ports, bridges and the like. And a boost in defense spending may also be in the works, especially if Republicans retain control of Congress and win the White House. Given the ‘mad as hell’ attitude of many voters in Europe and the U.S., on the left and the right, don't be surprised to see a new round of fiscal stimulus financed by helicopter money, whether Donald Trump or Hillary Clinton is the next president.”

What’s your point of view? I’d love to start a conversation about this. Call or email me, or write a comment.
Election Day is next week. If you haven’t voted already, I urge you to make your voice heard.

Other stories we’re following:
2017 U.S. mortgages to exceed $1 trillion: MBA.
Nine takeaways from the ULI convention.
Case-Shiller: Housing prices just below record highs.
 Why housing remains a bright spot.

Thursday, September 29, 2016

Lousy Job; Good Life?

In the News   Presented by Prairie Title  
September 29, 2016
Our Social Compact in the New Economic Reality

By Frank Pellegrini, Prairie Title CEO   

Not so long ago, Americans chose careers (or happened into them), worked for a single company or a few companies over the course of a lifetime and felt a sense of security based on loyalty and the employer-based benefits they received. As we all know, that world has substantially gone the way of all flesh. What now?

The New York Times recently published an article by Michael Lind of New America, a non-partisan public policy think tank, that examines the social compact in modern America by posing the intriguing question, Can You Have a Good Life if You Don’t Have a Good Job? Lind’s answer: Yes.

Incomes are rising, and that helps, but less visible government benefits are also growing.

“Americans have been moving away from a system in which a good job with a generous employer was the key to having a good life to a new system in which even people with low-wage jobs can have access to the basic goods and services that define a decent life in a modern society,” Lind writes.

“The unelected policy experts who envision a future of multiple job types and a greater, if hidden, role for government in maintaining minimum incomes and providing health and retirement benefits are essentially right. From the 1970s to the present, then, mostly with bipartisan support (the glaring exception was Obamacare), American policy makers have responded to the decline of high-wage jobs and generous employer-based benefits by gradually expanding the role of the government in ensuring that Americans have adequate income and adequate benefits.”
As you listen to politicians leading up to November’s critical election, keep in mind that what government officials and those who aspire to replace them say about taxes and benefits while campaigning often contradicts what they do in office. It is up to us to try to tell the difference.
What’s your point of view? Keep the conversation going by calling or emailing me, or write a comment below.

Other stories we’re following:

Five trends affecting: commercial real estate.
Ellie Mae: Time to close settles at 46 days. 
Households make long-awaited gains in housing recovery.
Housing market paradox.

Tuesday, September 20, 2016

What's All The Hype With Blockchain?

I had the good fortune to have been asked to moderate a panel at the upcoming American Land Title Association Annual Convention in Scottsdale, Arizona in a couple of weeks. The topic is Blockchain. Like many of you, I had no idea what that is, but I have been learning  a great deal about it. And, I am excited about discussing with my panelists the many implications this technology may have on various industries, particularly real estate and financial services.

The program is set for Friday, October 7th from 10:00 - 11:00am (MT). Here's a link to a brief description of the topic:

To learn more about this, please post a comment or question below.

Thursday, September 1, 2016

TRID Updates and Millenials

In the News   Presented by Prairie Title  
September 1, 2016
Now is the Time to Comment on TRID

By Frank Pellegrini, Prairie Title CEO   

The Consumer Financial Protection Bureau published its proposed updates to TRID Monday, August 15, thus initiating the 64-day period in which the public can make comments about what CFPB has proposed and what might be missing. (Hint: The confusing way in which title insurance fees are disclosed is unchanged). Here’s an explanation from the MReport of how to submit comments.

I urge you to familiarize yourself with the changes proposed by CFPB, and make your feelings known publicly if you’re so inclined. We’re all working to get better at implementing the new system, and as things continue to shake out I have no doubt that the real estate industry will adopt a new “normal” closing process that is smooth, consistent and time-sensitive.

On the bright side, it seems as though the long-awaited movement of millennials into the home purchase market might be underway. The New York Times last week ran a perspective based on the recent Census Bureau report showing that more new homes were sold in July than in nearly a decade.

“Thank millennials and thank homebuilders who are starting to produce more of the starter houses young people demand,” is the way the Times put it. Let’s hope that’s a trend. Millennials would provide just the shot in the arm our industry needs if they start moving toward home ownership in large numbers.

What’s your point of view? Keep the conversation going by calling or emailing me, or write a comment below.

Other stories we’re following:
Rate hike in the offing?
New multifamily rental share remains strong. 
Office REITs get mixed report card.
Positives pushing housing market near potential.

Thursday, July 28, 2016

In the News   Presented by Prairie Title  

July 28, 2016


Where’s the Housing?


By Frank Pellegrini, Prairie Title CEO   


We’re in the midst of political convention season, that every-four-year dream world where both parties write platforms that will never see the light of day past their conventions and silly hats, banners, balloons and confetti rule the day.

What’s missing from both the major candidates for president, unfortunately, is truly substantive policy regarding housing. Compounding the issue is the media’s almost complete lack of interest in talking about housing as an important economic issue. To paraphrase a political campaign from long ago, I ask: “Where’s the Housing?”

Take this recent piece from the Wall Street Journal as an example. Titled, “Where Hillary Clinton and Donald Trump Stand on Economic Issues,” the article goes on in detail about jobs, trade, taxes, entitlements, debt, immigration, infrastructure, the Fed, college, wages.

These are all important issues, without a doubt, but I ask again: Where’s the Housing? Whether owning or renting, everyone has to live somewhere, and the impact housing has on the American economy is enormous. There is some bi-partisan movement in Congress for GSE reform, and the major party platforms both have planks that urge a return to a real estate lending environment like Glass-Steagall. (Republicans would like to go back to Glass-Steagall; Democrats favor a modernized version of Glass-Steagall). Regardless, making our views known to the respective parties is the key to pushing our representatives toward developing housing policies that work. 

Real estate industry associations work every day to remind the media and politicians alike of the importance of housing. Our job, it seems to me, is to back them up by participating in industry political actions groups at the federal and state levels. We also must be dedicated to promoting the industry in our local communities through media relations and participation in community-based business groups. Let’s make our voices be heard.

What’s your point of view? Keep the conversation going by calling or emailing me, or write a comment here.

Other stories we’re following:

Lending tracking toward best year since ‘13.
Mega-Trends affecting commercial R.E. and housing.
Technology to replace the originator? We don’t think so.
Office REITs get mixed report card.

Monday, June 27, 2016

Revisions to TRID Rule?

In the News   Presented by Prairie Title  

June 27, 2016


TRID Changes Coming in July?


By Frank Pellegrini, Prairie Title CEO   


I know it seems like we’re beating a dead horse (apologies to our dearly departed equine friends), but TRID is the subject matter that just won’t go away. On April 28, CFPB Director Cordray wrote to industry trade groups that, “We believe that there are places in the regulation text and commentary where adjustments would be useful for greater certainty and clarity.”


Cordray expressed hope that action would be taken by late July without specifying the issues the agency would address. In the title business, we have been in conversations with CFPB about changing the rule to ensure consumers receive accurate, clear information about title insurance costs.

“ALTA appreciates Director Cordray and the CFPB stepping up to the plate and committing to provide more clarity on TRID,” said Michelle Korsmo, CEO of ALTA. “We value their openness in this process moving forward. We are committed to continuing our conversation with Director Cordray and the CFPB staff to correct the calculation of title insurance policy premiums.”

Since the Cordray letter, a bipartisan coalition has emerged in the U.S. House that is urging the CFPB to “ensure that your new forms serve as a credible source of accurate information about the true costs of buying a home for consumers.”

In other D.C. news, ALTA has joined a group of the nation’s largest real estate trade associations to push for cuts to Fannie Mae and Freddie Mac fees. In a June letter to the Federal Housing Finance Agency, the group said the fees that Fannie and Freddie charge lenders to guarantee mortgage loans serve as a tax on consumers, preventing some potential borrowers from becoming actual borrowers.

I agree that it’s time to eliminate the fees that were instituted in 2008 in the wake of the housing crisis and subsequent major financial troubles faced by Fannie and Freddie. The two agencies have been stabilized and the fees have become an obstacle to homeownership.

I urge you to to contact your representives in Washington to ask them to get behind these critical  initiatives to improve the home buying process.

Let’s keep the discussion going. Call or email me, or write a comment.

Other stories we’re following:

Storm brewing in commercial real estate?                        Dems join house push to recapitalize GSEs.


Homebuilders can get loans, but where to build?                                    New home sales reverse course.