February 13, 2015
Friday’s Weekly REFin ReCap
Reiss On:
- S&P Settlement
- Realistic Strategies for Consumer Education
- Nation of Renters
- Risky Reverse Mortgages
- $191 Billion for Fannie and Freddie
Weekly Roundups:
- Monday’s Adjudications
- Tuesday’s Regulatory & Legislative
- Wednesday’s Academic
- Thursday’s Advocacy and Think-Tank Papers
- Friday’s Government Reports
February 13, 2015 | Permalink | No Comments
Friday’s Government Reports
- FHFA House Price Index up .08% in November 2014
- HUD’s Worst Case Housing Needs 2015 Report to Congress
- New York Comptroller’s Report Finds Empire State Development Corporation Lacking in Accountability and Transparency
- Consumer Financial Protection Bureau Releases Report On Reverse Mortgage Complaints
February 13, 2015 | Permalink | No Comments
February 12, 2015
Realistic Strategies for Consumer Education
The Consumer Financial Protection Bureau has issued its latest Strategic Plan, Budget, and Performance Plan and Report. I was critical of last year’s strategic plan as it related to financial education. I felt that the CFPB was too optimistic about the efficacy of financial education, given the current state of research on this topic.
I was impressed, however, by the CFPB’s approach in this year’s strategic plan:
The CFPB believes that financial education’s primary goal is to help consumers to take the steps necessary to make choices that will improve their financial well-being and help them reach their own life goals. However, prior to the start of the CFPB’s work, very little empirical research had been conducted in the financial education field regarding what variables measure financial health in terms of real-world outcomes for consumers. By defining these variables through data-driven research, the Bureau will be able to define what knowledge and skills are associated with financial health. This research will inform the Bureau’s ongoing efforts to identify, highlight, and spread effective approaches to financial education. (64)
I am pleased that the CFPB appears to be more skeptical about the efficacy of consumer education in this strategic plan and that is reflected in its performance measure:
FY 2013: Identify variables that are likely to be key drivers of financial health
FY 2014: Develop and test metrics (questions) that accurately measure these variables
FY2015: Develop and implement framework for integration into Consumer Education and Engagement Activities; Complete testing financial health metrics
FY2016: Use metrics to establish a baseline of U.S. consumer financial well-being and begin testing hypotheses of identified success factors in consumer financial decision-making (64-65)
This performance measure does not make assumptions about the efficacy of financial education. By treating the topic like a blank slate, it is more likely that the Bureau will be able to avoid dead ends and blind alleys as it attempts to help people to navigate the world of consumer finance.
This is not to say that the Bureau will necessarily be successful. But it does appear that the Bureau is not falling for some of the wishful thinking that some of those in the financial education field have succumbed to.
February 12, 2015 | Permalink | No Comments
Thursday’s Advocacy & Think Tank Round-Up
- Harvard’s Joint Center for Housing Studies Issues Optimistic Report on Emerging Trends in the Home Remodeling Market
- National Housing Preservation Data Base Incorporates all Available Data on Federally Subsidized Housing Properties
- NYU Furman Center, Research Brief Shows A (Very) Slight Improvement in Neighborhood Segregation in the 21st Century
- NYU Furman Center/Capital One Study “Renting in America’s Largest Cities” – Affordable Housing in Short Supply for Many
February 12, 2015 | Permalink | No Comments
February 11, 2015
Nation of Renters
NYU’s Furman Center and Capital One have produced an interesting graphic, Renting in America’s Largest Cities. The graphic highlights the growing trend of renting in urban communities, but also the increasing expense of doing so. The press release about this study provides some highlights:
- In 2006, the majority of the population in just five of the largest 11 U.S. cities lived in rental housing; in 2013, that number increased to nine.
- As demand for rental housing grew faster than available supply, rental vacancy rates declined in all but two of the 11 cities, making it harder to find units for rent.
- Rents outpaced inflation in almost all of the 11 cities. Rents Increased most in DC, with a 21 percent increase in inflation-adjusted median gross rent, and least in Houston, where rents were stable.
- In all 11 cities, an overwhelming majority of low-income renters were severely rent-burdened, facing rents and utility costs equal to at least half of their income.
- Even In the most affordable cities in the study, low-income renters could afford no more than 11 percent of recently available units.
- In five major cities, including New York, Los Angeles, San Francisco, Boston and Miami, moderate-Income renters could afford less than a third of recently available units in 2013.
Rental housing clearly has an important role to play in providing stable homes for American households, particularly in big cities. While rental housing has been the stepchild of federal housing policy for far too long, it is good that it is finally get some attention and resources.
I look forward to the Furman Center’s follow-up report, which will provide more detail than the graphic does. I am particularly curious about whether the researchers have addressed the difference between housing affordability and location affordability in the longer study. I would guess that the relative affordability of the cities in this study is greatly impacted by households’ transportation costs.
February 11, 2015 | Permalink | No Comments
Wednesday’s Academic Roundup
- Banking Integration and House Price Comovement, by Augustin Landier, David Alexandre Sraer & David Thesmar, CEPR Discussion Paper No. DP10295.
- Second-Liens and the Leverage Option, by Adam J. Levitin & Susan M. Wachter, U of Penn. Inst. for Law & Econ Research Paper.
- Regulating Against Bubbles: How Mortgage Regulation Can Keep Main Street and Wall Street Safe – From Themselves, by Ryan Bubb & Prasad Krishnamurthy, University of Pennsylvania Law Review, Vol. 163, Forthcoming NYU Law and Economics Research Paper No. 15-03.
- Who Wins Residential Property Tax Appeals?, by Randall K. Johnson, Columbia Journal of Tax Law, Forthcoming Mississippi College School of Law Research Paper No. 2015-01.
- The Theft of Affordable Housing: How Rent Stabilized Apartments are Disappearing from Fraudulent Individual Apartment Improvements and What Can Be Done to Save Them, by Justin R. La Mort, New York University Review of Law & Social Change, Forthcoming.
February 11, 2015 | Permalink | No Comments
