6.18.26 New Fed Framework; NCRA's Eric Ellman on Consumer Wellbeing; Regional Housing

Today’s episode includes a look at the new Federal Reserve framework and initiatives under Chair Kevin Warsh. Plus, Robbie interviews National Consumer Reporting Association’s Eric Ellman on the nomination of Brian Johnson to lead the Consumer Financial Protection Bureau, based on his extensive experience in financial services regulation and his understanding of how to balance consumer protection with access to credit, mortgages, and housing. And we close with some data from across the United States that reveals just how metro-specific housing really is.

Thank you to Truework, a Checkr Company, the one verification solution to replace in-house waterfalls. Verify any borrower with a VOIE solution that automates the entire process to quickly deliver the most accurate and complete reports with broad GSE coverage.

The Chrisman Commentary is your go-to daily mortgage news podcast, where industry insights meet expert analysis. Hosted by Robbie Chrisman, this podcast delivers the latest updates on mortgage rates, capital markets, and the forces shaping the housing finance landscape. Whether you're a seasoned professional or just looking to stay informed, you'll get clear, concise breakdowns of market trends and economic shifts that impact the mortgage world.

Transcript

SPEAKER_01 0:02

Welcome to the Crispin Commentary, Daily Mortgage News podcast. I'm your host, Robbie Crisman. Topics on today's episode include how housing is truly regional. Takeaways from the first Fed meeting under new chair Warsh and my interview with National Consumer Reporting Association's Eric Elman on the nomination of Brian Johnson to lead the Consumer Financial Protection Bureau. Here, take a listen to a little preview. Obviously, there's a need to protect consumers, and there's also a demand out there for people to have access to mortgages and housing leases. And I don't think those are by any means mutually exclusive. I'm wondering your thoughts on the intersection between those two, protecting people, but also making the making of available uh lending products and opportunities out there.

SPEAKER_00 0:52

Yeah, any regulator, enforcer, examiner has to keep in mind a couple of things. First, their statutory mission and what Congress asked them or told them to do. Secondly, any regulator has to recognize that any rulemaking, any administrative action, there is a tension, a balance that has to be achieved between, for example, the CFPB protecting consumers on the one hand, and on the other hand, regulating businesses out of business. And finding that balance is not easy. And finding that balance sometimes takes a while. But I'm confident that Mr. Johnson, under his leadership, we will find that balance between protecting consumers. And believe me, as you know, Robbie, there are plenty of need for consumer protection out there. There will always be bad actors, unscrupulous people who will try to pull the wool over the eyes of consumers. Bait and switch, whatever you want to call it, their fraud will always be out there. And there will always be a need to protect consumers. But on the other hand, there also has to be a way to allow businesses to do business to serve consumers and to innovate and do better in terms of offering innovative services and solutions for consumers. I certainly don't envy a position like Mr. Johnson where you have to find that balance on a daily basis, but I'm confident that he will be able to do so.

SPEAKER_01 2:29

Thank you to TrueWork for sponsoring this week's podcast. TrueWork is the one verification solution to replace in-house waterfalls. Verify any borrower with a VOIE solution that automates the entire process to quickly deliver the most accurate and complete reports with broad GSE coverage. To learn more, visit Truework.com. Two big headlines from yesterday. One, the United States and Iran have released the text of a memorandum of understanding that would immediately reopen the Strait of Horror moves, establish a ceasefire, maintain the current status of Iran's nuclear program, and launch a 60-day negotiation period toward a broader agreement. Two, the Federal Reserve left rates unchanged, but new chair Kevin Walsh struck a hawkish tone focused on price stability, reinforcing that tighter policy remains a possibility despite a divided outlook among policymakers. Markets responded with higher treasury yields, while Walsh also signaled a longer-term push to reassess a potentially shrink the Fed's balance sheet. Investor focus is split between the resilience of the consumer and the policy outlook under the new Fed chair. The Fed raised its inflation forecasts and signaled a higher expected policy rate path as markets increasingly price out rate cuts and shift toward the possibility of additional tightening. Chair Warsh used his first meeting to challenge the Fed's reliance on forward guidance, arguing it is ill-suited to the current environment, and announced multiple task forces to review the Fed's communications, balance sheet, inflation framework, data usage, and economic research priorities. While there were no media policy changes, Walsh made clear that significant institutional and communication reforms are ahead, which will likely reshape how markets interpret and respond to Fed policy under his stewardship. For today's interview, I wanted to welcome to the show National Consumer Reporting Association's Eric Ellman to talk about the nomination of Brian Johnson to lead the Consumer Financial Protection Bureau based on his extensive experience in financial services regulation and his understanding of how to balance consumer protection with access to credit, mortgage, and housing. Mr. Ellman is the president of the National Consumer Reporting Association, a trade association of highly regulated mortgage reporting and tenant screening companies that provide consumer reports and credit reports to lenders and landlords. We are here to talk about the nomination of Brian Johnson to serve as director of the Consumer Financial Protection Bureau. However, I want to start by talking about the National Consumer Reporting Association or NCRA, because ultimately we're going to talk about these two, these two entities dovetail. Come on. Give people background on NCRA, your role there, and how it interacts with the CFPB.

SPEAKER_00 5:14

Yeah, happy to do that. And first, of course, Robbie, thank you so much for having me on this program. NCRA, the National Consumer Reporting Association, is a trade association of really two kinds of consumer reporting agencies. Less relevant, perhaps, for this conversation are our tenant screening members that are consumer reporting agencies that provide credit, criminal, and eviction history information to landlords and property managers to help them make leasing decisions. Naturally, a landlord doesn't necessarily want to rent to an arsonist or a sexual predator or somebody with a history of eviction. The second group of members that we represent, more relevant perhaps for this conversation, are our mortgage reporting companies, which are resellers as the term is commonly defined. And these members obtain credit reports from Equifax, Experian, and TransUnion, merge them together, and send them out into the mortgage marketplace in connection with the mortgage application process. Our members, the the threads that tie all of our members together is that our members provide regulated data under the FCRA to help consumers get into homes, whether it's through the home buying process or through the home rental process. I have been at NCRA as the president for just over a year now, although I have been for about 30 years in the consumer reporting industry. First for several uh decades, working for a trade association that primarily represented the big three nationwide credit reporting agencies, and now for NCRA, which, as I mentioned a moment ago, represents mortgage reporting companies and tenant screening companies.

SPEAKER_01 7:05

The original brief I received it said we are excited to be working again with Mr. Johnson, and we hope the Senate will swiftly confirm him to the office of CFPB. Director, thoughts on what it was like working with him uh and what you expect for him as CFPB director?

SPEAKER_00 7:22

Yeah, working with Mr. Johnson was uh relatively easy last time around, and we expect that this time around. And by easy, I don't mean to suggest, as some have, like Senator Elizabeth Warren, for example, who called him a hatchet man or something like that. I don't expect him to do anything or everything that the business sector might suggest, as some on the Democratic side of the aisle might be thinking. But the thing that made it easy to work with Mr. Johnson then, and I expect going forward, is that he is a reasonable, stable force for financial regulation. He has significant background in financial services, working for financial services companies, working on the Hill in the lawmaking process, working at the CFPB in a regulatory enforcement process. He will bring, he has brought and will bring fair, level-headed, even-handed, thoughtful approaches to regulation, supervision, and enforcement.

SPEAKER_01 8:37

And in terms of what you hope to accomplish with him, thoughts on goals, objectives, priorities for NCRA?

SPEAKER_00 8:45

Yeah, of course. A number of things. Uh, first is the CFPB under prior administrations, including Rohe Chopra and Richard Quadre, have a long and checkered history of rulemaking by press release, rulemaking by litigation, essentially rulemaking by everything uh but rulemaking. And federal law is clear that when you write rules, there is a process you need to follow. And unfortunately, the Chopper administration and the Cordrey administration never really followed those rules. So we are looking forward under Mr. Johnson, a return to the statutory mission that Congress established for the CFPB. And we are looking forward to a return to constitutional principles, where it is the courts that get to decide what the law is and not the federal agencies. In fact, Marbury versus Madison was very clear in that regard. Federal agencies don't get to make the law, don't get to interpret the law. It is the courts that get to do that. One of the things that's very important to NCRA members, I guess there's a few things that are very important relative to the CFPB. First is a number of years ago, one of the first, actually, the first decision by the CFPB to regulate larger market participants in the consumer reporting space was to set a threshold of $7 million in gross receipts or gross revenue. And that number was set, gosh, eight, 10 some odd years ago. I may be losing track of time here, but the CFPB, when it set this $7 million threshold, said that if you are above $7 million in gross revenue, then therefore, congratulations, you are now entitled to be regulated, examined, supervised, and enforced. $7 million was much too low then. And even though the CFPB promised it would revisit that threshold, it never did. And we are asking that the CFPB raise that threshold to $41 million. And there is clear precedent for that because the Small Business Business Administration has made it clear that the definition between a small consumer reporting agency and a large consumer reporting agency, that line is set at 41 million. So we are asking the CFPB to raise the threshold from 7 million to 4 million, 41 million. I'm sorry. We have um other priorities on our list as well.

SPEAKER_01 11:23

But Robbie, let me pause to see if you get any reactions to what I just credit is obviously also a uh priority of yours. And there was some stuff recently where you all came out in support of FHA continuing to support the the tri merge thoughts on the credit space and then what we've seen with there have been some some tweet you know legislation by or rulemaking by tweet that haven't been fully baked out when they've they've come about, but they're they're progressing down the the pastry sheet anyway, if we're gonna keep the the analogy going here.

SPEAKER_00 12:01

Again, so obviously I mentioned we're concerned about the the threshold that it was unfairly and uh unfortunately set so low at $7 million. And that's an important number because many small businesses, too many small businesses, fall into that scope. And as you know, when the CFPB comes in, comes in to examine, supervise, and force, they bring an army of people, and our small business members are too small to handle the overwhelming force that the government brings to bear. So $41 million is the right threshold. So going back to your question about other issues that we care about, we also represent tenant screening companies, and the CFPB has gone well beyond its statutory mission to attempt to regulate, supervise, examine, and enforce against tenant screening companies. Now, we submit going back to credit, uh, to your question on credit, is that the CFPB really has no business regulating tenant screening companies because it has nothing to do with credit. And therefore, we believe that Mr. Johnson will bring a more level-headed, balanced approach. And we are asking him, as we have asked the CFPB, to essentially lay off the rulemaking, lay off the guidance, lay off the uh the other tweets and blog posts and all of that, and focus on the mission that Congress gave it, because again, there's too much regulation by guidance when it should be a rule, too much regulation by tweet when it should be not that at all. So we are hope that Mr. Johnson and we expect him to take a more reasonable approach, more thoughtful approach to really meet the mission to protect consumers.

SPEAKER_01 13:53

And before I let you go here, any other final thoughts or things that you think are important for the audience to be aware of when it comes to NCRA or the CFPB, that interaction or in general, what's been on your mind recently?

SPEAKER_00 14:05

Yeah, you mentioned a few moments ago, Robbie, the Tri-Merge credit report. And that's an important mission for us to preserve and protect the Tri-Merge. There have been forces in the last year or so that have attempted to undo the Tri-Merge to revert, not even revert, to uh to create what I like to call a one credit report fits all. And as we know, consumers are more than just their credit report, and consumers are more than just one credit report. The tri-merge is tried and true. The best way to manage risk in a $13 trillion mortgage marketplace where there is an unbelievable amount of money at stake is for lenders to consider all three credit reports from all three bureaus. Our members work to provide that 360-degree view. It's unfortunate that there are those that want to take away that 360-degree view and blind lenders to risk. And there are myriad of studies that show that the tri-merge is beneficial for consumers, for businesses, and for the American economy. And tri-merge, like I said, tried and true, and we should not mess with the good thing.

SPEAKER_01 15:29

Well put Eric, I really appreciate the time in. I think there's a lot of really good stuff here. And that's great. Hopefully, I'll have you back on the podcast again soon.

SPEAKER_00 15:37

I love that.

SPEAKER_01 15:40

Beneath the headline data, purchase mortgage volume reveals that loan production remains materially below both pre-pandemic and decade-again levels. This helps to explain why mortgage industry employment is contracted alongside origination activity. Housing conditions remain highly regional, with the Northeast and Midwest showing far stronger builder sentiment than the South and the West. While states such as North Dakota, Idaho, West Virginia, and Hawaii, where I currently am, are posting notable gains in purchase activity despite the broader slowdown. National housing statistics often mask significant local variation, where affordability, home price appreciation, loan sizes, and prepayment behavior are all very market-specific. After we learned yesterday that retail sales and pending home sales both exceeded expectations in May, while business inventories continue to build, pointing to steady economic momentum. Today's economic calendar kicked off with weekly jobless claims, which came in 229,000, about as expected. We've also received the Philadelphia Fed Manufacturing Index for June, which registered negative 0.4. Later today, bring some treasury activity that will be headlined by a five-year tips auction as well as Freddie Mac's primary mortgage market survey. We begin the day with agency MBS prices all over the map based on maturity and coupon. The two-year yielding 4.20. Yesterday morning it was yielding 4.05. And the 10-year yielding 4.46 after closing yesterday at 4.46%. Look Trev up with a joke and some housekeeping. A tourist in Hawaii is amazed at how healthy and invigorated he feels after just a few days into visiting the islands. He strikes up a conversation with one of the locals while they are wading out into the crystal clear, warm surf on yet another perfect island day. I just can't get over how beautiful this place is, the tourist says excitedly. I feel great. I haven't felt this young and healthy in years. Island life is fantastic. The local says, I know what you mean. Take me for instance. When I came here, I was totally bald, didn't have any teeth, and I couldn't even walk. Look at me now. The tourist looks at him and says, Wow, that's amazing. How long have you been here? To which the local says, Oh I was born here. Thanks again to this week's podcast sponsor, TrueWork. The one verification solution to replace in-house waterfalls. Verify any borrower with a VOIE solution that automates the entire process to quickly deliver the most accurate and complete reports with broad GSC coverage. To learn more, visit Truework.com