President Donald Trump’s new tariffs create a dilemma for the Federal Reserve because they’re likely to both increase inflation and slow economic growth — and possibly lead to stagflation.

Economists are split between those who expect policymakers to focus on prices and therefore keep interest rates on hold for an extended period, and those who see the central bank prioritizing full employment and starting to cut borrowing costs.

Citi (C-7.68%) falls into the latter camp. “Officials will view an increase in inflation due to tariffs as a one-time increase in the price level that can be looked through,” the bank’s economists wrote in a note to clients. “That would leave Fed officials free to respond to softer growth conditions.” It expects 125 basis points of cuts this year, starting as soon as May.

William Raveis Mortgage Regional VP Melissa Cohn also expects a cut if the economy takes a turn for the worse, but she expects policymakers to wait for the next two months of data and cut no earlier than June, according to an email sent to the media.

Jefferies (JEF-9.92%) takes the opposite viewpoint, saying Chair Jerome Powell and his board will be “leaning more towards hiking than anything else.”

“Our textbooks tell us that tariffs are inflationary if the currency market does not adjust to offset,” the bank’s W. Brad Bectel wrote in his Micro Minute note. “The USD dropping 2% amid the addition of tariffs around the world on U.S. imported goods, is very inflationary.”

Powell said after the March FOMC meeting — at which the central bank left rates on hold — that some faster inflation was “clearly” coming from tariffs, but it’s very difficult to determine how much. The net effect of the Trump administration’s changes to trade, immigration, fiscal policy and regulation is what “will matter for the economy,” and that remains unknown.

“We’re not in any hurry to ease,” he said at the time, adding that policy wasn’t on a pre-set course.

The Fed won’t be able to help the economy with a rate cut if inflation remains well above its 2% target, Yardeni Research said, projecting that PCED inflation will accelerate to 3% to 4% over the rest of this year. The firm expects up to a year of stagflation from the tariffs.

“The economy won’t get a boost this summer from fiscal policy if the Republicans manage only to extend the 2017 tax cuts already in place,” Yardeni wrote. “If they fail to do so, the result would be a tax increase, which could cause a recession.”

California Gov. Gavin Newsom signed an executive order suspending what he dubbed as “unnecessary permitting and review requirements” by the utilities working to rebuild the areas devastated by January’s wildfires in Los Angeles County. to accelerate the rebuild of Altadena, Malibu, and Pacific Palisades following the devastating January fires.

The executive order suspends compliance requirements related to the California Environmental Quality Act (CEQA) and the California Coastal Act by utilities rebuilding electric, gas, water, sewer and telecommunication infrastructure in the Palisades and Eaton fire burn zones. The order also speeds the process of “undergrounding” utility equipment that he described as a necessary for creating a “safer and more resilient electric infrastructure.”

“We are determined to rebuild Altadena, Malibu, and Pacific Palisades stronger and more resilient than before,” said Newsom. “Speeding up the pace that we rebuild our utility systems will help get survivors back home faster and prevent future fires.”

A federal judge has halted the Trump administration’s actions to downsize and realign the Consumer Financial Protection Bureau (CFPB).

In a 112-page ruling by US District Judge Amy Berman Jackson, an Obama administration appointed, the Trump administration was ordered to reinstate CFPB employees who were fired and to lift its order to stop the agency from going forward with its work. Jackson also ordered the preservation of CFPB records and demanded the recission of “wholesale” contract cancellations issued on or after Feb. 11.

“In sum, the Court cannot look away or the CFPB will be dissolved and dismantled completely in approximately thirty days, well before this lawsuit has come to its conclusion,” Jackson wrote in her opinion, noting Elon Musk’s X post “RIP CFPB” as evidence that the administration was seeking to dismantle the agency.

Jackson’s order was in response to a lawsuit brought by the National Treasury Employees Union and other organizations, claiming it was trying to destroy the CFPB. For its part, the administration pointed to the nomination of Jonathan McKernan to serve as CFPB director while arguing it was attempting to streamline the agency.

Jackson stated that it is the role of Congress and not the Executive Branch to shutter a federal agency.

“While the President is free to propose legislation to Congress to accomplish this aim, the defendants are not free to eliminate an agency created by statute on their own, and certainly not before the Court has had an opportunity to rule on the merits of the plaintiffs’ challenge,” Jackson said.

The administration did not immediately respond to the court’s ruling.

A new forecast by Fannie Mae’s (OTCQB: FNMA) Economic and Strategic Research Group is predicting mortgage rates to end 2025 and 2026 at 6.3% and 6.2%, respectively, downward revisions of three-tenths for each.

The revised forecast was mirrored by a mild upward revision for predicted existing home sales in 2025. Fannie Mae also estimated that real gross domestic product (GDP) to be 1.7% in 2025 and 2.1% in 2026, modest downward revisions attributed to weaker incoming data and evolving trade policy.

“We expect the recent pullback in mortgage rates will provide a small boost to home sales this year,” said Mark Palim, Fannie Mae senior vice president and chief economist. “While our latest forecast calls for a period of modestly slower economic growth, historically, interest rates have been the most important driver of home sales. We think mortgage rates will move even lower within the next quarter and ultimately close the year at approximately 6.3%, which could be low enough to generate some extra sales from any would-be buyers still waiting on the sidelines.”

The National Association of Realtors (NAR) announced the elimination of 61 positions in an overhaul by the association as being part of a “a months-long strategy to reduce costs, streamline operations, and reposition itself to offer robust solutions and support for its members and consumers.”

In a statement, the Chicago-based NAR said this overhaul “41 positions and eliminate 20 open roles that were redundant or that could be integrated elsewhere in the organization, for a total of 61 positions affected.” The impacted departments within NAR that will see the loss of employees include Creative and Content Strategy, Digital Strategy, Public Relations and Communications, Meetings and Events, Member Development, Human Resources, Member Engagement, Member Experience, Research, Finance and IT. NAR did not provide a timeline on when the positioned were being terminated.

NAR added it was also reducing expenses in some areas and reallocating budget dollars toward its Advocacy, Research, Data and Education functions, with the goal of providing “members access to more useful and critical resources.”

“The industry is changing, and it is our responsibility to lead and change with it,” said CEO Nykia Wright. “As we continue managing our finances to meet the challenges of today and tomorrow, we need to invest in the best people, adopt the right processes, and apply the most advanced, cost-effective technology while remaining prudent financial stewards of the enterprise.”

The Consumer Financial Protection Bureau (CFPB) said Wednesday it is seeking to give back a $105,000 settlement it received last fall from mortgage lender Townstone Financial to end a racial discrimination charge.

CFPB has asked the U.S. District Court of the Northern District of Illinois to vacate the settlement that the bureau had made with the Chicago-based mortgage lender and that the court had approved in November.

In an unorthodox move, Russell Vought, the acting director of the bureau who took over soon after President Donald Trump was elected, maintained that the CFPB was the one in the wrong. He said in a statement that the lender had agreed to the settlement after the CFPB had launched “a seven-year harassment saga” against Townstone.

“CFPB abused its power, using radical ‘equity’ arguments to tag Townstone as racist with zero evidence and spent years persecuting and extorting them.” Vought said, according to the statement.

Vought also said that the CFPB did this to “further the goal of mandating” diversity, equity and inclusion in lending.

The CFPB, which was launched to protect consumers from financial fraud, is in the process of being dismantled by Vought and the Trump administration, which has repeatedly said the bureau should be closed. CFPB employees have recently been told to stand down and do no work. The new leadership says the agency has been unfairly aggressive against various financial players, including mortgage companies and other members of the housing industry.

That has led the Trump administration to drop nearly a dozen enforcement cases since taking office, according to The New York Times.

The cases dismissed include a recent charge against Capital One, which just prior to Trump being inaugurated was accused by the CFPB of using deceptive methods to obtain $2 billion from its customers. The bureau dropped that case in late February.

The case against Townstone Financial was actually first brought by the CFPB in 2020 during Trump’s first term. The bureau had accused Townstone of breaking fair-lending laws by discouraging Black prospective applicants from applying for mortgage loans with the lender. In the initial complaint, the bureau maintained that Townstone did this by making several statements over time on their long-form commercial radio broadcast, The Townstone Financial Show.

According to the 2020 complaint, the hosts of the radio show would regularly make disparaging statements about predominantly Black areas of greater Chicago that would discourage Black prospective applicants. Townstone lawyers say the lender was targeted for its constitutionally protected speech and that there was no evidence of discrimination on the part of Townstone.

Housing and Urban Development (HUD) Secretary Scott Turner announced residency requirements for Federal Housing Administration (FHA)-insured mortgages were changed to eliminate the “non-permanent residents” category from the Title I and Title II programs.

In a statement, Turner said the policy update was designed to prevent illegal immigrants and non-permanent residents from accessing FHA-insured financing.

“There will be no more illegal aliens getting HUD-backed home loans,” said Turner in a statement. “The Biden administration exploited taxpayer resources and manipulated FHA policy to allow illegal aliens to ride the coattails of the American taxpayer when financing on a home. For those who play by the rules and work hard to purchase a home, it is unconscionable. HUD will continue to implement President Trump’s executive order ending taxpayer subsidization of open borders and protecting the American Dream of homeownership.”

This is the second action by Turner this week targeting illegal immigrants. On Monday, Turner and Department of Homeland Security (DHS) Secretary Kristi Noem signed the “American Housing Programs for American Citizens” Memorandum of Understanding, with HUD agreeing to provide a full-time staff member to assist in operations at the Incident Command Center, establishing an interagency partnership to facilitate data sharing, with the goal of ensuring taxpayer-funded housing programs do not benefit illegal immigrants. HUD noted there are about 9 million residents of public and subsidized housing without proper information sharing to determine their eligibility status.

FHFA Director Pulte Terminates Mortgage-Related Special Purpose Credit Programs for GSEs

In a significant policy shift under the Trump administration, the new Federal Housing Finance Agency (FHFA) Director Bill Pulte issued an order on March 25, 2025 terminating special purpose credit programs (SPCPs) supported by the government sponsored enterprises, Fannie Mae and Freddie Mac (together, the GSEs). This directive, effective immediately, will significantly impact banks with mortgage-based SPCPs.

SPCPs — programs through which financial institutions may consider prohibited-basis information when determining whether to extend credit to economically or socially disadvantaged groups — are specifically authorized under the Equal Credit Opportunity Act (ECOA) and Regulation B, but not the Fair Housing Act (FHA). Nonetheless, in December 2021, the U.S. Department of Housing and Urban Development’s (HUD) Office of Legal Counsel issued a legal opinion stating that SPCPs that address home mortgage credit needs for economically disadvantaged groups and are designed and implemented in compliance with the ECOA and Regulation B generally do not violate the FHA. In February 2022, multiple federal agencies, including HUD and the FHFA, issued interagency guidance (the Policy Statement) strongly encouraging the use of SPCPs by financial institutions under both the ECOA and the FHA.

However, according to the order, which was posted on Director Pulte’s social media account X, the FHFA now has determined that the current level of support for SPCPs is “inappropriate for regulated entities in conservatorship,” a reference to the FHFA’s conservatorship of the GSEs. The order mandates the immediate termination of SPCPs supported by Fannie Mae and Freddie Mac. Those GSEs are permitted to comply with any contractual provisions regarding prior written notice to lenders, however.

Since President Trump took office in January, HUD’s legal opinion authorizing SPCPs under the FHA has been removed from HUD’s website, but the agency has not yet formally withdrawn the opinion. This could mean that HUD is re-examining the opinion to determine whether to retain it, rescind it, or modify it. The federal agencies have not yet taken action to rescind or amend the Policy Statement, but that is also likely under review.

Our Take

During the preceding administration, the level of support for SPCPs by the federal regulators was very high — to the point that many lenders felt that they needed to implement SPCPs to shield themselves from the very aggressive application of redlining concepts, especially by the federal banking regulators. FHFA’s recent order represents an about-face in this previous high level of encouragement for SPCPs. In light of the FHFA Director’s directive to the GSEs, banks and financial institutions with mortgage-based SPCPs should revisit their written plans and business objectives to determine whether any adjustments are advisable (e.g., to eligibility criteria) or whether to even continue offering them. More generally, this directive suggests that instead of the federal agencies looking upon SPCPs favorably, their use may instead increase regulatory scrutiny. In addition to a potential increase in regulatory scrutiny, private litigation is also a risk, especially for mortgage-related SPCPs, because of the absence of any statutory provision permitting them in the Fair Housing Act. Furthermore, practical risk is presented if SPCPs need to be modified or unwound, which could disrupt business plans in midstream.

We will continue to monitor this issue and provide updates as developments unfold concerning SPCPs.

News

The $418 million settlement by the National Association of Realtors (NAR) of the Sitzer/Burnett case received its final approval in federal court.

The New York Times reported Judge Stephen R. Bough of the Western District of Missouri gave his final sign-off on the settlement, which NAR agreed to on March 15. Today’s final approval was a legal formality, as Judge Bough gave his preliminary approval to the agreement on April 23 and the trade group enacted the settlement’s call for rule changes regarding commissions on Aug. 17.

“This is an important moment for NAR members, home buyers and sellers, and the real estate industry,” said NAR President Kevin Sears, broker-associate of Sears Real Estate/Lamacchia Realty in Springfield, Massachusetts. “As consumer champions, NAR’s members have been working tirelessly to implement the practice changes required by the settlement and shepherd consumers through this period of transition. The principles of transparency, competition and choice are core to the settlement agreement and empower real estate professionals and consumers to negotiate the services and compensation that work for them.”

On Sunday, the U.S. Department of Justice issued a Statement of Interest on the settlement, declaring that it “does not address whether the proposed settlement prevents and restrains current antitrust violations, remedies past violations, or contains revised policies and practices that comply with the antitrust laws.” However, the DOJ stated that the settlement’s provision requiring written agreements between buyers and brokers prior to home tours “may harm buyers and limit how brokers compete for clients.”

President-elect Donald Trump announced his appointment of Scott Turner to become Secretary of Housing and Urban Development (HUD) in his upcoming administration.

The 52-year-old Turner is chief visionary officer at JPI, an Irving, Texas-based developer, builder, and investment manager of Class A multifamily assets. He also serves as CEO and founder of the Community Engagement & Opportunity Council and is the chairman of the Center for Education Opportunity at America First Policy Institute. During the first Trump administration, he was the executive director of the White House Opportunity and Revitalization Council.

Turner first gained national prominence as a cornerback in the NFL, playing nine seasons from 1995 through 2003 for the Washington Redskins, San Diego Chargers and Denver Broncos. In 2012, he was elected to the Texas House of Representatives, where he served a single term.

“Scott will work alongside me to Make America Great Again for EVERY American,” said Trump in a press statement.

Turner is the highest-ranking Black member of the incoming administration.

A new survey from Redfin (NASDAQ: RDFN) has determined that just over one in five (22%) renters are funneling all of their regular income directly into paying their rent.

As a result of this hefty paycheck absorption, 20% of renters are working a second job to cover their housing costs, while 19% complained they are working at a job they hated to afford rent. The survey’s respondents cited other strategies for covering their rent, including cash gifts from family (14%), pulling money out of retirement funds early (13%) and contributing less to their retirement savings (12%).

The new Redfin-commissioned survey was conducted by Ipsos in September and polled 1,802 adults. The survey’s respondents might be happy to learn of another study from Realtor.com that found the median asking rent was down by $14 or -0.8% to $1,720 in October, marking their fifteenth consecutive month of year-over-year declines.

“New multifamily construction projects started in the last two years have hit the market in 2024, with a greater supply of units helping to soften rents and bring renters some relief,” said Danielle Hale, chief economist at Realtor.com. “While we expect fewer multifamily homes to be finished in 2025, we still anticipate enough to increase supply, which will keep downward pressure on rents.”

Glenn Kelman, the CEO of Redfin (NASDAQ: RDFN), has a message for President-elect Donald Trump: Start powering the push for new home construction.

Neither Kelman nor Redfin publicly endorsed Trump’s campaign. But in a blog posting on the Redfin website titled “Way-Too-Early Take: What Trump’s Re-Election Could Mean for Housing,” he observed that Trump’s victory has already sparked greater interest among prospective homebuyers.

“Donald Trump’s re-election seems to have had immediate consequences for housing in America,” he wrote. “Demand from homebuyers requesting service through Redfin’s site, which was already stronger since the Federal Reserve’s September 18 rate cut, was about 25% higher this weekend than the same weekend last year, the largest year-on-year gain since the downturn began in 2022. Some buyers are undoubtedly enthusiastic about a Trump economy; others may have been waiting to make major decisions until after the election.”

Kelman credited Trump’s return to the White House to younger Americans who were unhappy with the current housing market – and he added Trump need to repay this electorate support.

“The young voters who, after years living in their parents’ basement, swung right in this election, will expect President Trump to act as America’s real estate developer in chief, and build the housing that they need,” Kelman wrote. “He can do this by setting aside well-meaning regulations on home-building that limit construction and make housing less affordable: local comment periods, traffic studies, parking requirements, environmental reviews in already well-settled areas, and limits on apartment buildings in neighborhoods of single-family homes. These rules are set by state and local governments, but the federal government could create a strong incentive for states to adopt simplified and consistent housing regulations, just as it does with the drinking age.”

Kelman pointed to data that placed the nation’s housing shortage at being between 2 million and 5 million homes. But he insisted the incoming president can address this shortfall.

“Many of America’s problems are hard to solve, but this one isn’t, especially for a president who loves construction,” he continued.

FICO (NYSE: FICO) has released the FICO Score Mortgage Simulator as a new analytic tool for mortgage professionals.

According to the Bozeman, Montana-headquartered company, the new tool simulates the potential impacts to a consumer’s FICO Score with various simulated changes to their credit report data, such as reducing credit card balances or deleting a collection account. With this data, mortgage brokers and lenders can help potential borrowers gauge how the changes could affect their FICO Scores and show them how different credit decisions could open up more loan options and favorable interest rates.

The company added that the tool can run credit event scenarios from an applicant’s credit report data, such as paying off a car loan, and determine the potential impact to that individual’s actual FICO Score.

“FICO is continuously working on innovative product offerings that can responsibly expand credit access to more people,” said Geoff Smith, vice president and general manager of consumer scores at FICO. “Even a few additional points in a potential borrower’s FICO Score can have a material impact on the mortgage loan terms offered. Ultimately, the FICO Score Mortgage Simulator will prove to be a powerful tool that can enable more people to achieve the dream of homeownership.”

The Federal Trade Commission (FTC) has announced Invitation Homes, the country’s largest landlord of single-family homes, has agreed to a settlement where the company will turn over $48 million to refund consumers harmed by its deceptive actions.

The company was accused of deceiving renters about lease costs, charging undisclosed junk fees that could total more than $1,700 yearly, failing to inspect homes before residents moved in, and unfairly withholding tenants’ security deposits when they moved out. Consumers looking for rental houses owned by the company paid mandatory nonrefundable fees – including application fees up to $55 and reservation fees up to $500. Since 2019, Invitation Homes has collected more than $18 million in application fees alone for deceptively priced houses.

According to the FTC complaint, Invitation Homes’ marketing materials promoted that every home the company rents passed a “quality assurance inspection” before renters moved in and that the company provided “24/7 emergency maintenance.” However, there were numerous instances in which renters arrived at a home to find it in significant disrepair, and the FTC noted that residents in 33,328 properties submitted at least one work order within the first week after they moved in between 2018 and 2023.

Furthermore, Invitation Homes was accused of unfair eviction practices, including during the Covid-19 pandemic when both national and many state restrictions on evictions were in place. When the Centers for Disease Control and Prevention (CDC)’s eviction moratorium was in place, Invitation Homes intentionally steered its renters away from filing the CDC declaration required to prevent renters from being evicted, instead encouraging renters to complete the company’s own “Hardship Affidavit.” Despite its name, this document provided no eviction protection to renters.

“Invitation Homes, the nation’s largest single-family home landlord, preyed on tenants through a variety of unfair and deceptive tactics, from saddling people with hidden fees and unjustly withholding security deposits to misleading people about eviction policies during the pandemic and even pursuing eviction proceedings after people had moved out,” said FTC Chairwoman Lina M. Khan. “No American should pay more for rent or be kicked out of their home because of illegal tactics by corporate landlords. The FTC will continue to use all our tools to protect renters from unlawful business practices.”

FOR IMMEDIATE RELEASE

April 1, 2024

Recent National Association of Realtor Settlement Will Set Back Black Homeownership

Once again, we, the Consolidated Board of Realtists believe The National Association of Realtors (NAR) is on the wrong side of history. Just as they stood against the 1968 Fair Housing Act, Friday’s settlement stands as an affront to Black and other underserved homebuyers and the predominantly minority real estate agents who represent the homebuyers.

“The biggest impediment to Black homeownership is down payment and closing cost funds. This settlement serves to shift the buyer’s agent commission payment directly to the homebuyer when industry tradition and practice is that the listing agent shares the selling commission with the agent who is helping the homeowner sell the home. This change is devastating to Black homebuyers,” said Mark Alston, Legislative Committee Chair, Consolidated Board of Realtist.

 

For Black homebuyers, this is bad news. In this country, the average net wealth of Black households is $27,000 which represents over nine times less than the $250,000 average net wealth of White households. Black families have 68% less in liquid assets than their White counterparts along with  fewer opportunities to receive financial assistance from family members. Down payment and closing costs are hard enough of to save. Adding the buyer’s agent commission to the ledger puts homeownership out of reach.

According to The National Association of Realtors the average Black Realtor earns $16,700 per year which is three times less than the $49,400 a White Realtor averages. Historically, Black people are buyers’ agents. U.S. White homeownership is almost 74%, Black homeownership is 45%. The opportunity to be the seller’s agent is less for Black agents just based upon the overall ownership percentages.

“We believe this settlement will most assuredly have a racially disparate impact upon Black homeownership,” said Lyric Armstrong, 44^th President, Consolidated Board of Realtists, Los Angeles, CA.

The American dream of homeownership is not dead in the Black community, it just keeps getting pushed farther away. We are disappointed the NAR did not fight for us. It would have been better to lose with the dignity of being right and representing all of your membership, than to settle in shame.

 

Contact:  Mark Alston, Legislative Committee Chair                        Lyric Armstrong, President
                 (310) 908-0070                                                              (213) 444-6336
                Malston55@yahoo.com                                                     Lyric@LJAestates.com 

MESSAGE FROM THE PRESIDENT

SETTLEMENT LTR.LYRIC PDF Update.pdf