Wells Fargo agreed to pay a $2.1 billion fine in order to settle allegations of misrepresenting the types of mortgages the company sold to investors during the housing crisis, according to the Chicago Sun Times.
Although the amount seems quite significant, it’s a relatively smaller fine compared with those paid by Bank of America, Citigroup, Goldman Sachs and other big banks in the years following the 2008 financial crisis for identical allegations. That being said, Wells Fargo is one of the last remaining banks that has yet to settle the charges related to its role in the mortgage crisis.
The Department of Justice reported that Wells Fargo sold a minimum 73,500 loans with poor underwriting standards to investors while the bank understood the risk and quality of the mortgages sold at the height of the housing bubble.
“This settlement holds Wells Fargo accountable for actions that contributed to the financial crisis,” said Acting Associate Attorney General Jesse Panuccio, in a statement.
The Chicago Sun Times reports that Wells Fargo said it was “pleased to put behind us these legacy issues” in a statement.
In other real estate news:
- As home prices continue to rise month after month, May posted significant home price increases, while some West Coast markets even saw double-digit gains. The much expected spike means prices are increasing at two to three times the inflation rate across the U.S., according to a report from S&P Dow Jones Indices and CoreLogic. Home prices in May rose 6.4 percent, the same annual increase that was seen the month before. Of the top 20 cities, seven reported a higher increase in the year ending in May than the year ending in April, according to the report. The West Coast posted the highest annual gains of all 20 cities. Topping the list with the most substantial price increases was Seattle, Las Vegas and San Francisco with gains of 13.6 percent, 12.6 percent and 10.9 percent respectively.
- As survivors of Hurricanes Maria and Irma are still seeking refuge in the wake of disaster, the Federal Emergency Management Agency (FEMA) was ordered to extend a housing program once again, according to NPR. Evacuees whose homes in Puerto Rico were destroyed and are now living in the U.S. and Puerto Rico islands will still be protected for several more weeks under the Transitional Sheltering Assistance program. Under this program, FEMA provides direct payments to hotels and motels where hundreds of survivors live after the hurricanes destroyed their homes. The original expiration date for the program was pushed back from June 30 to Aug. 31.
- A Citylab report outlines a study by Hyojung Lee, a postdoctoral fellow at Harvard’s Joint Center for Housing Studies, that seeks to identify where millennials prefer to live: the city or suburbs. The results suggest that millennials are moving into both urban and suburban areas in large numbers, but nothing suggests that they are leaving the city for suburbs. In recent years, more than 10 percent of millennials live within three to 10 miles of a city center while just 2.6 percent live within two to three miles. His study is based upon inclusive definitions of city and suburb, because of the fact that previous conclusions by other researchers on this topic have been based on inconsistent definitions of urban areas. “It is such a cliché, but demography is not destiny, of course, and there will be many other factors that influence the residential location choice among people,” writes Lee.
- Zillow’s newest feature Zillow Rental Manager now offers renters and landlords the ability to fill out and approve apartment applications and make rental payments online, according to The Verge. Landlords can use the program for free while applicants pay a $29 fee to submit an application to as many apartments as they want within one month. The new feature will be available on Trulia and HotPads, but is not yet on StreetEasy.
- The month-over-month Redfin Housing Demand Index fell 0.1 percent to 120 in June. This drop is the aftermath of a 2.2 percent decrease in the seasonally adjusted number of home buyers requesting tours as well as a 12.2 percent drop in the number of offers on homes from May to June. Redfin also reported the largest Demand Index decline since April 2016 as the Demand Index was 9.6 percent lower in June 2018 than it was one year previous. Overall, total home sales fell nearly 4 percent while the number of newly listed homes fell almost 2 percent in one year.
- HousesForSale recently announced their partnership with Dotloop and Contactually as they will be combining their services to streamline services for agents, according to HousingWire. The partnership will allow agents to focus more on their online property sales. “Real Estate agents are not website developers or coders. They are social creatures and not tech guys, and there is a big disconnect between IT and the real world,” HousesForSale.com CEO John Brown said to HousingWire. “We just boiled it down to what’s really necessary to be successful in today’s tech-driven real estate market, worked with the best and the brightest in the industry, put it all in one place, and made it easy to use.”
- Mortgage applications were down 2.6 percent on a seasonally adjusted basis, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending July 27, 2018. This is likely due to the fact that mortgage rates have reached the fourth highest level of 2018, as reported by HousingWire. “The higher rate environment, coupled with the ongoing lack of affordable inventory, has led to a drag on existing-home sales in the last few months,” Freddie Mac Chief Economist Sam Khater said to HousingWire. “Yesterday, the Federal Reserve passed on raising short-term rates, but with the embers of a strong economy potentially stoking higher inflation, borrowing costs will likely modestly rise in coming months.” For the second consecutive week, the 30-year fixed mortgage rate averaged 4.6 percent for the week ending August 2, 2018, while home prices are rising at two to three times the rate of inflation. “Even with home price growth easing slightly in some markets, mortgage rates hovering near a seven-year high will certainly create affordability challenges for some prospective buyers looking to close,” Khater told HousingWire.