U.S. Homebuilder Confidence Rises to Highest Level in 12 Years


 

The National Association of Home Builders has released their report for the month of march, and their gauge of builder sentiment has risen to 71. This is the highest rating we have seen since June of 2005, and several other key indicators suggest that it could be a promising year for home builders. These indicators suggest that not only are home builders optimistic, but that market experts forecast improvements in the home market. Here are a few things that you should know about the jump in U.S. Homebuilder Confidence, what is causing it to rise to highest levels in 12 years, and what you can expect in the coming year.

  1. This jump is probably mostly caused by a changing political climate. Some experts cite that 25% of the cost of a modern home is spent in ensuring that it conforms to regulations. Donald Trump has vowed to slash regulation, meaning that homes could be built using cheaper or less environmentally friendly materials. This would mean that homes could cost substantially less to build, while the demand would not be expected to drop. Home builders expect to use this saving to be able to better afford many new and potentially lucrative projects.
  2. This regulatory optimism can overcome the typically negative effect of rising interest rates. While moderately higher interest rates might normally lead to a slow down, they may not be high enough to quench the optimistic sentiments of home builders (yet).
  3. Trump’s early days in office have shown that he appears to fully intent to fulfill his promises to cut away many of the regulations currently on the market but who knows? After his election, many waited and watched to see if he would follow through with the promises that they feel will benefit their market. In late February, when he issued a directive to roll back an Obama era regulation on water pollution, many took this as a sign that more regulation, particularly regulation intended to be environmentally conscious, would soon follow.

It is impossible to predict how the market will be affected in the long term, but it looks like we might be approaching a good time for home builders. Experts caution, however, that while things look good, there will still be economic constraints and struggles for the industry to overcome.  I never have an opinion on when the perfect moment is to buy a home. Over the past 50 years, owning real estate has been a great investment. If you are looking to purchase a home, always pay attention to the market, do your homework, and make the best possible decision with the information available to you.

Credit Reports are EXCLUDING Negative Information and Raising FICO Scores


Updates to the types of information that the major credit reporting firms use in creating a credit score could soon improve the scores for millions of Americans. The three firms, Equifax, TransUnion, and Experian recently decided that they would no longer use certain negative reports in their credit scores. Specifically, Tax liens and Civil Judgments will be excluded from reports if certain information is unavailable to the firms. Here are 3 things you need to know about the new rules allowing credit reports to exclude negative information and boosting FICO scores, and how they might affect you.

 

  1. This will only apply if the information that the firm has about the tax lien or civil judgment is missing some information. If the report includes full name, address, date of birth, and SSN, then the information will stay. However, frequently reports are made without this information. It is projected that over 10 million people will see moderate improvements to their credit score, and over half a million could see substantial gains of 40 points or more.
  2. The boost could make a definite difference in loan approvals. A 40 point gain could easily mean the difference between approval and denial for a loan. And while this is great news for consumers with shaky credit, lenders might be wary. Those with tax liens and civil judgments against them have been estimated to be twice as likely as those without to default on loans.
  3. The new rule will go in effect July 1, so if you know that you have these on your record, check your credit after this time. If you see a substantial improvement, don’t sleep on it. Use your improved credit to increase your financial stability. That said, If you are a lender, you might need to remember the adjustments, and keep them in mind when assessing credit worthiness. You now have less information to work with.

The impact of this change will obviously not be seen until the rule is put into effect and credit scores begin to change, but there are some things that we should keep in mind. First, public information can still be used to determine if, for example, someone has a civil judgement against them. The change in rules will boost their credit score, but lenders could still look this information up. Second, this will hopefully decrease the number of people with incorrect information on their credit reports. Removing items this way shows that the CRAs are paying attention to a current problem:the number of complaints that they receive about incorrect credit report info.

Dodd-Frank Repeal Looming? 4 Things That Might Change in 2017.


In the wake of the 2008 global financial crisis, congress passed several laws targeting what it saw as flaws in the system that led to the crash. One of the most sweeping of these was the 2010 Dodd-Frank act, a broad bill which created and empowered several regulatory agencies. These agencies have the responsibilities of overseeing the financial system, monitoring it for stability, and even going after banks that appear to have too much influence over the system. However, during his campaign, Donald Trump vowed to dismantle Dodd-Frank, calling it a disaster. Is a Dodd-Frank repeal looming? Here are the top 4 things that might change in 2017.

  1. The Mortgage Regulations. One of the key factors in the housing crash was the failure of mortgages. Dodd-Frank made several changes to the way that mortgages are approved. The goal of much of the legislation was to protect homeowners by putting restrictions and additional regulations on mortgage providers and services. If this part of the act is repealed, there would be a decrease in the amount of regulations on mortgage providers.
  2. Dodd-Frank also targets derivatives, which are financial contracts which rely on the value of an underlying asset. Some experts believe that certain “risky” derivatives are partially responsible for the crash, and so these are now heavily regulated.
  3. The Volcker Rule. One of the most controversial parts of Dodd-Frank, the Volcker Rule targets speculative investments made by banks. It specifically targets investments made by banks that are considered not to benefit their customers. However, this is very unpopular among many banks and investors. Trump’s Secretary of the Treasury, Steven Mnuchin has specifically said that he will be looking to take down the Volcker Rule. Opponents argue that this doesn’t protect consumers, and only cuts corporate profits.
  4. Oversight Agencies. Some of the oversight agencies created include the Financial Stability Oversight Committee (FSOC), and the Consumer Finance Protection Bureau (CFPB). These agencies are the ones who are responsible for overseeing most of the regulations and rules in Dodd-Frank. Defunding them could make the regulations toothless.

Ultimately, we will have to see what ends up changing. We do not yet know which parts of the law will be changed, abolished, or will stay the same. And while it would be very nice if we could eliminate a lot of the complicated regulations, we also need to make sure that we are protecting the American people.

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