Green shoots in the mortgage business

‪The National Association of Realtors report that mortgage applications were up 12% week-over-week driven by purchase volume since refinances declined 3%. California, Washington, New York all up. While still 20% down from a year ago, positive sign of pent-up buyer demand.

Consumer spending plummets

Consumer spending trends amidst the #covid19 pandemic. Great analysis from Joint Venture Silicon Valley leveraging Earnest Research data. While location-focused, the analysis clearly shows that the region has been a leading indicator for the rest of the nation. Key nugget: if shifts in consumer spending trends persist, upwards of 16% of the region’s total employment, across retail, hospitality and food services, could be at risk.

WSJ: Kevin Scott of Microsoft hopes artificial intelligence will help his hometown

“I don’t think that we should be thinking about people in rural or middle America as folks who need to be defended from the changes that technology is going to force on them.” Microsoft CTO Kevin Scott provides a thoughtful redirection of artificial intelligence from a monolithic combine to consign humans to irrelevance towards distributed augmented intelligence solutions to improve the human condition.

Standing on the Precipice?

"The administration, Federal Housing Finance Agency, and regulators have put policy in place that could wreak long-term havoc on the entire #mortgage market if they don’t finish what they started." (David Stevens on Housingwire)

The unintended consequences of a "trust, but don't verify" mortgage forbearance policy include: (1) a liquidity crisis as mortgage servicers must continue to make good on the principal + interest payments to investors, not to mention property taxes, insurance and sundry other payments; (2) the disappearance of mortgage options for consumers as the originators, wary of moral hazard attendant to the forbearance policy, vacate large swaths of the market; and (3) the post-forbearance period crisis when home owners, stretched during the best of times, must somehow make good on the forborne portions.

It's as if the policy makers are now determined to achieve victory in the last war, one that emanated outward from the housing balance sheet, causing a lasting crisis of solvency.  This coronavirus pandemic is driving a crisis of liquidity as incomes evaporate, but if policy makers don't finish what they started, we may be revisiting the long-tenured morass from the last period.