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CFPB ponders how well HMDA captures discrimination

The Consumer Financial Protection Bureau (CFPB) is launching a voluntary review of its mortgage data collection — a key tool in bringing redlining cases — to assess its effectiveness in detecting discrimination. HW+ Premium Content
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The Consumer Financial Protection Bureau (CFPB) is launching a voluntary review of its mortgage data collection — a key tool in bringing redlining cases — to assess its effectiveness in detecting discrimination.

The evaluation of rules implementing the Home Mortgage Disclosure Act will support the CFPB in its efforts to maintain a “fair, competitive, and non-discriminatory mortgage market,” the watchdog agency said.

The CFPB wants to hear from stakeholders about “industry outcomes” as a result of the HMDA rule, including how financial institutions comply with the rule’s criteria, and the impact of changes to coverage thresholds and data points. The agency asks for comment on whether the HMDA rule has “brought greater transparency to the mortgage market,” and whether it helps identify possible discriminatory lending patterns and enforcement of anti-discrimination laws. The operational and compliance costs of the HMDA rule for financial institutions is also an area of interest.

The Bureau said it plans to start its assessment process soon, or may have already started it. The analysis will rely on data from HMDA, as well as third-party servicing data, Fannie Mae and Freddie Mac public loan level data, and the National Mortgage Database.

The HMDA rule, enacted in 1975, was intended to document and discourage redlining, although the discriminatory banking practice had been made illegal in 1968. HMDA was one of several rules — the expansion of the Equal Credit Opportunity Act in 1976, and the passage of the Community Reinvestment Act the following year — to increase public scrutiny of lending patterns and expand access to credit.

Since HMDA was introduced, regulators’ definition of redlining has evolved. In a virtual seminar Thursday on “modern-day redlining,” attorneys from Garris Horn, LLP, said the CFPB’s current definition of the practice is better termed “marketing discrimination.”

The HMDA data is a crucial tool for the CFPB in constructing redlining cases.

The CFPB typically prepares a redlining case by comparing lenders’ performance in minority areas to a group of their peers to identify a potential disparity. The agency might also analyze marketing materials, outreach efforts, branch locations, hiring practices and even internal communications to find evidence of redlining.

CFPB Director Rohit Chopra has said combating “modern-day redlining” is a top priority, and the agency has partnered with other federal agencies to increase enforcement. It has also pledged to significantly increase its stable of compliance attorneys.

The agency also uses HMDA data to identify and call attention to systemic issues in mortgage lending. A July analysis of lending patterns in Asian American Pacific Islander communities found that some subgroups have much higher mortgage denial rates. In August, the CFPB found that mortgage lenders often deny credit and charge higher interest rates to Black and Hispanic applicants.

The Dodd-Frank Act transferred HMDA rulemaking authority from the Federal Reserve Board to the CFPB, and the agency has made several tweaks to the act over the years. The CFPB expanded HMDA reporting requirements in 2015, doubling the number of data fields it required lenders to submit, and modifying some of the existing fields.

The agency further refined the HMDA rule in 2017. In 2018, it issued clarifications, after Congress amended parts of HMDA, to exempt banks and credit unions that originate fewer than 500 open- or closed-end mortgages from the recently expanded data reporting requirements. Along with the clarifications, the agency signaled in 2018 it would take up another comment period and rule-making in 2019 to get input on what HMDA data will be disclosed in the future.

In March 2020, amid the early days of the COVID pandemic, the CFPB announced flexibilities to “reduce administrative burden.” It would not penalize institutions for not submitting quarterly HMDA reports, although it cautioned that institutions should still continue to collect and record HMDA data in anticipation of a return to the normal data reporting requirements.

The next month, it also set a final rule to amend Regulation C, increasing the permanent threshold for collecting and reporting data about closed-end mortgage loans from 25 to 100 loans. It made 2020 HMDA reporting optional for lenders that did not meet the 100-loan threshold in 2018 or 2019. The mortgage industry cheered those changes.

But the relationship between the mortgage industry and the CFPB has since soured.

In March, under then-acting director Dave Uejio, the agency back-tracked on its Covid flexibilities, and said it would increase its focus on enforcement. On April 1, it instructed all financial institutions to resume the quarterly HMDA reports. The first deadline arrived swiftly: May 31, just two months later, lenders’ first quarterly HMDA report was due.

The data reporting requirements also facilitate public scrutiny of mortgage lending. The Markup, an investigative news outlet, used HMDA data to show that conventional loan applicants of color were much more likely to be denied than their white counterparts. The findings got pushback from the mortgage industry, in large part because the analysis did not include credit scores, or loans backed by the Federal Housing Administration or Department of Veterans Affairs. A former Obama-era HUD official said the findings were more an indication of GSE pricing and underwriting that pushes borrowers of color to other government programs, rather than evidence of secret bias, as the article claims.

The post CFPB ponders how well HMDA captures discrimination appeared first on HousingWire.

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TSX- and TSXV-Listed Potash Companies

The global potash market is dominated by Canada, the world’s leading potash producer, with Canadian potash companies producing 14 million tonnes in 2020.The potash industry has faced difficulties in the past few years, with prices and stocks dropping,…

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The global potash market is dominated by Canada, the world's leading potash producer, with Canadian potash companies producing 14 million tonnes in 2020.

The potash industry has faced difficulties in the past few years, with prices and stocks dropping, but potash companies have remained resourceful and resilient. The latest test to the potash market comes in the form of the COVID-19 pandemic, and market participants are rising to this challenge as well.

Potash producers continue to push ahead despite headwinds, and exploration companies are working to develop projects to take advantage of rising demand for agricultural products.


For those interested in the market, here's a list of Canadian potash stocks listed on the TSX and TSXV; companies are listed from largest to smallest, and all had market caps of at least C$10 million as of November 30, 2021.

Nutrien


Market cap: C$48.36 billion

Formed on January 1, 2018, after Potash Corporation of Saskatchewan and Agrium completed a merger of equals, today Nutrien (TSX:NTR,NYSE:NTR) is Canada's largest potash company.

Nutrien bills itself as the world's largest provider of crop inputs and services, with an agricultural retail network that services more than 500,000 grower accounts. It says it is "committed to providing products and services that help growers optimize crop yields and their returns."

The potash-mining company produces a variety of different materials, but in terms of potash production it has over 20 million tonnes of capacity at its six potash mines in Saskatchewan.

​​Gensource Potash​​


Market cap: C$154.73 million

Gensource Potash's (TSXV:GSP) Vanguard area and Lazlo area projects are located in Saskatchewan. The company's main asset, the Tugaske project in the Vanguard area, is its central focus. Once in operation, it will create no salt tailings and will require no brine ponds. The environmentally friendly project is expected to produce 250,000 tonnes per year of final product at very competitive capital and operating costs.

"Gensource's business plan was created six years ago to specifically become a new and independent potash producer that approaches potash production in a different way," said Gensource Potash CEO Mike Ferguson in early 2020. "We're essentially turning every component of conventional potash production upside down. Our business plan has two pillars. The first is to be small and efficient. The second is to be vertically integrated."

Gensource announced in September 2021 that agricultural chemical company HELM, the offtaker for Tugaske, has committed C$50 million in project equity.

Verde AgriTech 


Market cap: C$97.5 million

Verde AgriTech (TSX:NPK,OTCQB:AMHPF) bills itself as an agri-tech company focused on developing innovative products that promote sustainable agriculture. Its main asset is its Cerrado Verde project, which holds a potassium-rich deposit and is located in the heart of Brazil's largest agricultural market.

Production began at Cerrado Verde in May 2017, and the company later exported its first shipment of Super Greensand, a fertilizer and soil conditioner, to US cannabis and organic markets. As a fertilizer it provides potassium, magnesium, silicon, iron and manganese, and as a soil conditioner it increases the capacity of soil to retain water and nutrients. The company also launched a new product in 2018 called Super Greensand Granular.

After announcing a 169 percent increase in revenue for the the third quarter of 2021, Verde AgriTech revised its annual revenue target up by 120 percent.

Western Resources


Market cap: C$38.37 million

Western Resources (TSX:WRX) and the company's wholly owned subsidiary Western Potash are working to build an environmentally friendly and capital-efficient potash solution mine at the Milestone project in Saskatchewan.

Milestone is close to Mosaic's (NYSE:MOS) Belle Plaine mine, which is one of the largest-producing potash solution mines in the world. Phase 1 development at Milestone is nearing completion, and in November 2020, the company announced an updated NI 43-101 report on the project that extends the mine life from 12 years to 40 years.

Karnalyte Resources


Market cap: C$10.12 million

Karnalyte Resources (TSX:KRN) is an advanced development-stage company focused on its construction-ready Wynyard potash project in Central Saskatchewan. The project also hosts mineable magnesium resources.

The company has completed feasibility studies and has obtained environmental approval for the project. Phase 1 production is targeted at 625,000 tonnes per year of high-grade granular potash and two subsequent phases of 750,000 tonnes per year each will eventually culminate in production of up to 2.125 million tonnes annually.

Karnalyte is also exploring the development of a small-scale nitrogen fertilizer plant, the Proteos nitrogen project, for which it recently completed a feasibility study. Its strategic partner and largest investor is Gujarat State Fertilizers and Chemicals, India's premier fertilizer and chemical manufacturing company.

If we missed a TSX- or TSXV-listed potash company you think should be included on this list, please send an email to editorial@investingnews.com

This is an updated version of an article originally published by the Investing News Network in 2015.

Don't forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

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When Will Uranium Prices Go Up?

Uranium is an important fuel source for the nuclear energy industry. But prices have bottomed out in the past decade, with many investors wondering when the market will rebound.Driven by rising demand and massive supply disruptions, uranium prices shot…

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Uranium is an important fuel source for the nuclear energy industry. But prices have bottomed out in the past decade, with many investors wondering when the market will rebound.

Driven by rising demand and massive supply disruptions, uranium prices shot up in 2007 from US$72 per pound at the start of the year to an all-time high of US$136.22 by early June.

However, in the years since then, the spot price for uranium has mainly tracked downward on a steady slope. Since 2012 and through much of 2021, uranium prices traded under the key US$50 level, falling as low as US$18. However, in September 2021, the spot price for uranium shot up to a nine year high of US$50.80.


The consequences of an enduring low-price environment in the uranium industry have been significant, leading to curtailments in uranium production as well as a dearth of new discoveries. For years, analysts and industry leaders have proclaimed that the uranium spot price needs to rise above US$50 to US$60 — and stay above that point — before such activity becomes economical again.

This most recent uranium price rally came after supply cuts from major producers, including Kazakhstan's Kazatomprom and Canada's Cameco (TSX:CCO,NYSE:CCJ), alongside the emergence of the Sprott Physical Uranium Trust (TSX:U.UN). However, uranium’s leap over the critical US$50 level was only a brief blip on the price chart.

The uranium market's years-long trough has investors asking, "When will uranium prices go up?" Before we try to answer that question, we'll have a look at what's moved uranium spot prices in the past, including the energy metal's supply and demand dynamics.

When will uranium prices go up? Historical price action


chart showing uranium's price history over the last 25 years

Uranium has experienced a wide price range this past century — while its highest level was nearly US$140, the lowest U3O8 spot price came in at just US$7.

In 2003, the price of uranium began an upward trend as demand for nuclear power rose alongside the world's need for energy, especially in growth economies such as China and India.

These increasing energy demands came at the same time as significant supply-side disruptions. In 2006, Cameco's massive Cigar Lake mine in Saskatchewan flooded, stalling production for several years at one of the largest undeveloped uranium deposits in the world.

The inability to move this uranium ore to market was a huge setback for the uranium industry, and translated into explosive price growth for the metal in 2007. However, those impressive gains were soon undone by the 2008 economic crisis, which sent the uranium price on a downward spiral, slipping below the key US$50 level in early 2009. In 2010, uranium prices slipped further into the US$40 range.

In 2011, the price of uranium got a serious push to the upside along with other energy metals as the global economy began to recover. The tight supply situation, heightened by years of low prices, also played a part in pushing the spot price past the US$70 level.

After the 2011 Fukushima disaster, the uranium spot price began a slow slide to lows not seen since the start of the century, ultimately bottoming out at US$18 in November 2017. In the decade or so since then, uranium prices have struggled to breach the US$29 level.

In 2020, COVID-19-induced supply disruptions at the world's top uranium mines briefly supported spot price gains of more than 30 percent in the first half of the year, and the uranium price hit a four year high of US$33.93 in May. However, by mid-September, prices had pulled back to the US$29 level.

The launch of the Sprott Physical Uranium Trust and ongoing concerns over potential future uranium supply shortages pushed the uranium spot price across the US$50 threshold in September 2021. But soon, uranium prices were see-sawing between US$38 and US$48 in October and November.

When will uranium prices go up? Supply and demand


Uranium prices are mainly influenced by aboveground mine supply and demand for nuclear energy. To understand where those stand, investors in this sector typically look to:

  • output from uranium mines
  • the number of nuclear reactors online, under construction or planned
  • the signing of long-term contracts between uranium suppliers and utilities companies

Analysts with a bullish lean believe the uranium market cycle has reached its bottom and that a break to the upside for uranium prices is supported by positive supply and demand fundamentals.

On the demand side, nuclear energy generated from 445 reactors around the globe supplies about 10 percent of the world's energy requirements. China alone is constructing 16 new reactors, Russia is constructing three with another 11 planned and India has seven nuclear reactors under construction.

The World Nuclear Association (WNA)'s “Nuclear Fuel Report: Global Scenarios for Demand and Supply Availability 2021-2040” forecasts 2.6 percent annual growth in nuclear generation capacity over the next two decades to reach 615 gigawatts electrical in 2040. About 79,400 tonnes of uranium will be required to feed these reactors in 2030, up from 62,500 tonnes in 2021. This figure is expected to grow to 112,300 tonnes of uranium in 2040.

On the supply side, major uranium producers are still cutting back on their output levels, while new uranium exploration projects are few and far between. The WNA points out that world uranium production dropped from 63,207 tonnes of uranium in 2016 to 47,731 tonnes of uranium in 2020. The organization also notes that “only 74 (percent) of 2020's reactor requirements were covered by primary uranium supply.”

Huge cuts to global uranium production have come from Kazakhstan, the world's largest uranium-producing country. Responsible for 41 percent of global uranium production, the Central Asian nation began reducing its annual production levels in 2018 and plans to continue "flexing down" its uranium output through 2022.

Australia, Namibia, Canada and Uzbekistan are also among the world's biggest uranium producers. In Canada, Cameco shuttered the Saskatchewan-based McArthur River mine in 2018 and temporarily closed Cigar Lake — the world's top uranium mine — in response to the COVID-19 pandemic.

These supply deficits are likely to continue impacting the uranium market in the years ahead. "Uranium production volumes at existing mines are projected to remain fairly stable until the late 2020s, then decreasing by more than half from 2030 to 2040," the WNA report states. This is also due in part to the lack of uranium exploration in recent years. The organization’s research shows that uranium exploration spending fell by 77 percent, from US$2.12 billion in 2014 to as little as US$483 million in 2018.

When will uranium prices go up? Future forecasts


So when can investors expect to see uranium prices go up? And when will the spot price for the metal once again move above — and stay above — the key US$50 to US$60 level?

In January 2020, Rick Rule, who was then part of Sprott (TSX:SII,NYSE:SII) told the Investing News Network (INN) that investors interested in uranium should be prepared to take the long position — in his opinion, it could be awhile before we see a rebound in the uranium market.

Rule reiterated his stance in a July 2021 interview with INN, pointing to Japanese restarts as the last catalyst needed to launch a new era of strength in the uranium market. “Everything else is in place,” he said at the time.

A true renaissance for uranium might be a few years off, but market participants are likely to see a series of incremental price increases along the way. John Ciampaglia, CEO of Sprott Asset Management, told INN: “The uranium market is not a very big market compared to, say, the oil and gas market and other commodity markets. It doesn't take a lot of capital to come from the generalist pool of capital to make a ripple in the uranium market."

A good gauge for where the winds are blowing is utilities contracts, as these entities are traditionally the greatest sources of uranium demand. Only about 10 to 15 percent of uranium trades happen on the spot market. The vast majority of uranium is sold through large long-term contracts between producers and utilities.

"Everyone is looking for this new contract cycle — when is it going to pick up, where are these deals going to get done in terms of term and price?" Ciampaglia said. "Everyone's looking for these signals in terms of where the longer-term price of uranium is going to drift to."

UxC estimates that by 2030 about two-thirds of utility nuclear fuel requirements will not be covered by contracts, and this will reach 81 percent in 2035. The lack of new uranium projects coming online is a considerable part of this equation. As utility inventories decline, they will come to market willing to accept higher contract prices to replenish their energy fuel stock, and secure future supply lines may happen sooner than later. Much higher long-term contract prices will in turn bring uranium spot prices along for the ride.

There are a wide range of views on uranium's future. Gerado Del Real, co-owner of Digest Publishing, told INN in a November 2021 interview that he believes uranium could hit new record highs in the next 12 to 18 months. His bullish outlook includes the potential for uranium prices to reach the US$200 level within that time period.

In September, Bank of America analyst Lawson Winder set his uranium spot price target for 2022 at US$53.50, and his 2023 target at US$48.50. As of December 1, analysts at Trading Economics were forecasting that uranium would trade at US$42.82 in 12 months time.

Still other uranium market watchers have cautioned that a near-term rebound in the uranium market is a tough call to make. Mercenary Geologist Mickey Fulp has advised, "Not even insiders have an idea of when this is going to turn because the market is so opaque."

This is an updated version of an article first published by the Investing News Network in 2020.

Don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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DB: Is The World Learning To Live With The Virus?

DB: Is The World Learning To Live With The Virus?

After a day of zigzags on the virus front, we end with some encouraging observations from Deutsche Bank’s Jim Reid who shows in his "chart of the day" that according to global mobility data,..

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DB: Is The World Learning To Live With The Virus?

After a day of zigzags on the virus front, we end with some encouraging observations from Deutsche Bank's Jim Reid who shows in his "chart of the day" that according to global mobility data, most of the world is back close to pre-pandemic levels of mobility (at least on a population-weighted basis) even if the GDP-weighted figure still lags, partly due to some of the larger DM economies still being down vs. February 2019.

Regardless, as Reid observes, the graph shows that "on both measures mobility is notably above last year’s levels. This helps show why reasonably strong YoY growth shouldn’t be too difficult to attain in H1 2022. In H1 2021, the world wasn’t that mobile."

This is good news because it means that - at least so far- as the winter covid wave and Omicron hit us, aggregate mobility hasn’t yet dipped. This, according to Reid, shows that either people are learning to live with the virus more or that it’s too early to tell as travel and domestic restrictions, only very recently imposed, have yet to fully take their toll, with more possibly to come.

To be sure, Austrian mobility has declined significantly with Germany also drifting lower. So where restrictions have been imposed there has been a consequence.

A more detailed heatmap of global mobility is shown below.

To be sure, the swing factor to winter mobility will be Omicron. For those readers looking for good news, the second chart from Reid shows that in South Africa covid fatalities from the Omicron wave have not responded to the rise in cases in the same manner as prior ones (with a 12-day lag).

While it is still very early days with the data subject to revisions, Reid notes that "we are getting more and more (albeit patchy) evidence that the new variant is less severe. So much now depends on how more transmissible it is, especially in heavily-vaccinated populations." Reid says that he leans on the optimistic side here "but it seems the number of Omicron cases are building fast enough that we should get some decent data very soon on how its impacting well-vaccinated countries."

Tyler Durden Tue, 12/07/2021 - 18:25

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