The BuildFax Housing Health Report for November found that the year-over-year rate of single-family housing authorizations, maintenance and remodeling have all decreased. This is the first time since 2011 that all three categories have decreased in the same month, pointing to a potential market slowdown on the horizon.

The report, which leverages U.S. property condition and history data to deliver macroeconomic as well as more granular trends, also reveals that eight of the last 10 instances of blanket declines occurred during the recession and its recovery in 2008 and 2009.

Other key points on housing supply are as follows:

• Single-family housing authorizations decreased by 0.86 percent year over year.
• Maintenance volume decreased by 5.85 percent year over year.
• Remodel volume decreased by 12 percent year over year.

“More so now than in years prior, the compounding effects of natural disasters, scarcity in the construction labor market and recent tariffs have impacted housing growth, not to mention systemic factors, like rising mortgage rates, that influence consumer behavior,” said BuildFax COO Jonathan Kanarek. “While it’s natural to see some leveling off after steep growth, the next few months will be telling, whether a downturn is on the horizon or the market is simply softening is yet to be seen.”

The report also looked at commercial construction, which shows decreases this month are in line with similar residential declines. However, commercial construction over the last five years has seen steady increases, primarily in construction spending. In fact, BuildFax data suggests there are disproportional increases between construction cost and volume, which point to a labor shortage in the market.

[caption id="attachment_8529" align="alignleft" width="225"] Jonathan Plutzik, new board chair at Fannie Mae[/caption]

Fannie Mae named Jonathan Plutzik to succeed Egbert Perry as chair of the board, effective Dec. 12, 2018. Perry will step down on Dec. 19, 2018, following 10 years of service to the board.

"I am pleased to announce Jonathan Plutzik as the new chair of Fannie Mae's board of directors," said Perry, outgoing chair of the board. "Jonathan's long-standing service and experience on the board will provide the company with deep institutional knowledge and valuable guidance as the company moves forward with its mission to provide access to safe, affordable mortgage financing in the U.S."

Plutzik joined the Fannie Mae board in November 2009. During his tenure, he has served as vice chair of the board and chair of the risk policy and capital committee. Also, he served as vice chair of the strategic initiatives and technology committee, and as a member of the compensation committee.

Perry has been a Fannie Mae director since December 2008 and was appointed chair of Fannie Mae's board in March 2014. Absent a waiver, the Federal Housing Finance Agency's corporate governance regulations limit service on Fannie Mae's board to 10 years or age 72, whichever comes first.

"We greatly appreciate the strong leadership, passion, and integrity Egbert has brought to Fannie Mae over the last 10 years. Egbert played an essential role in leading the transformation of Fannie Mae into the company it is today," said Hugh Frater, interim chief executive officer of Fannie Mae. "Jonathan's appointment as chair brings stability and continuity to the company, and we look forward to continuing our progress in his new role. The board and the company will benefit from Jonathan's insights and commitment to continuing the great strides we have made over the past decade."

Plutzik has served as chairman of Betsy Ross Investors LLC since 2005. Also, he served in positions with Credit Suisse Group for 24 years before retiring as vice chairman in 2002.

"I look forward to continuing working with the board and our talented management team as they advance our mission to provide liquidity, stability, and affordability to the U.S. housing market and develop innovative solutions to solve America's housing challenges," said Plutzik.

The Federal Housing Administration released its new schedule of loan limits for 2019, with most areas in the country to experience an increase in loan limits in the coming year.

FHA is required by the National Housing Act, as amended by the Housing and Economic Recovery Act of 2008, to set single family forward loan limits at 115 percent of median house prices, subject to a floor and a ceiling on the limits. FHA calculates forward mortgage limits by metropolitan statistical area and county.

In high-cost areas of the country, FHA’s loan limit ceiling will increase to $726,525 from $679,650. FHA will also increase its floor to $314,827 from $294,515. Additionally, the national mortgage limit for FHA-insured Home Equity Conversion Mortgages, or reverse mortgages, will increase to $726,525 from $679,650. FHA’s current regulations implementing the National Housing Act’s HECM limits do not allow loan limits for reverse mortgages to vary by metropolitan statistical area or county; instead, the single limit applies to all mortgages regardless of where the property is located.

Due to robust increases in median housing prices and required changes to FHA’s floor and ceiling limits, which are tied to the Federal Housing Finance Agency’s increase in the conventional mortgage loan limit for 2019, the maximum loan limits for FHA forward mortgages will rise in 3,053 counties. In 181 counties, FHA’s loan limits will remain unchanged. By statute, the median home price for a metropolitan statistical area is based on the county within the MSA having the highest median price. It has been Housing and Urban Developments’s long-standing practice to use the highest median price point for any year since the enactment of the Housing and Economic Recovery Act.

The National Housing Act, as amended by HERA, requires FHA to establish its floor and ceiling loan limits based on the loan limit set by FHFA for conventional mortgages owned or guaranteed by Fannie Mae and Freddie Mac. FHA’s 2019 minimum national loan limit, or floor of $314,827 is set at 65 percent of the national conforming loan limit of $484,350. This floor applies to those areas where 115 percent of the median home price is less than the floor limit.

Any areas where the loan limit exceeds this ‘floor’ is considered a high-cost area, and HERA requires FHA to set its maximum loan limit ‘ceiling’ for high-cost areas at 150 percent, $726,525, of the national conforming limit.

Based upon the volume of FHA endorsements in FY 2018, the following chart represents the number and share of counties where FHA loan limits are at the ceiling, floor and somewhere in between.

 Finance of America Mortgage LLC has agreed to pay the United States government $14.5 million to settle a False Claims Act lawsuit involving mortgage fraud. The lawsuit relates to Federal Housing Administration loans originated by Gateway Funding Diversified Mortgage Services, which Finance of America acquired in 2015.

[caption id="attachment_8407" align="alignleft" width="288"] Gateway focused on its own financial interests and ignored its quality-control findings.[/caption]

The settlement resulted from a lawsuit filed under the whistleblower provisions of the False Claims Act by Debra McGeehan, a former quality control underwriter at Gateway. She worked for the lender periodically between 2009 to 2015. 

"It is extremely frustrating when a mortgage company identifies issues with loans as part of its quality-control process, but then deliberately ignores those findings," said McGeehan. "Gateway was only interested in its own financial interests and was willing to ignore its own quality control findings in order to defraud the FHA program."

Under the guidelines of the program, HUD insures FHA loans that meet its requirements, which can therefore be lucrative for lenders who can seek compensation from HUD for any loss sustained when a borrower defaults on a loan. However, HUD's requirements require that lenders self-report loans that lenders determine have underwriting errors.

According to the settlement agreement, Gateway did not maintain a proper quality control program as required by HUD for participation in the FHA program. Gateway's loans had a high default rate, which members of the management team pointed out, but the company didn’t take steps to ensure compliance with self-reporting requirements.

For example, in a February 2014 email, Gateway's senior vice president of compliance and credit risk sent an email to Gateway's executive team, noting that there were specific underwriters and branch offices "who show a pattern of poor performance."

While Gateway identified loans during the quality-control process that had material underwriting errors, Gateway did not routinely report those errors to HUD, as required. As a result, HUD incurred substantial losses when those loans suffered defaults and insurance payments were subsequently paid to Gateway.

As part of the settlement, the U.S. government awarded McGeehan more than $2.3 million for the role she played in helping to resolve the case. Under the False Claims Act, individuals who identify fraud might be entitled to an award for alerting the government to it.