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Consultants who help store owners wring concessions from landlords are seeing brisk business these days, another ripple of the shifting retail landscape across the U.S. economy, the Wall Street Journal reported today. The rise of online shopping and changing consumer preferences are forcing retailers to rethink virtually all aspects of their operations. First on the list for many is real estate, which is typically the second-biggest cost, after payroll. As store owners scrutinize their store footprints, they are turning increasingly to professionals who can help them get better deals from landlords. A growing roster of retailers, including Bebe Stores Inc. and Pacific Sunwear of California Inc., are tapping lease-consulting firms to get landlords to agree to take less money. Landlords say they will make their own assessment by studying the tenant sales at the store, its rent-to-sale ratio and how that compares to the retailer’s national average and the national average of the industry.

The vacancy rate for regional malls was 8.1 percent in Q2 2017, up from 7.9 percent in Q1, and up from 7.9 percent in Q2 2016, according to recent data from Reis, ABL Advisor reported on Friday. While vacancy rates appear to be climbing, they are down from a cycle peak of 9.4 percent in Q3 2011. For neighborhood and community malls (strip malls), the vacancy rate was 10.0 percent in Q2, up from 9.9 percent in Q1, and up from 9.8 percent in Q2 2016. For strip malls, the vacancy rate peaked at 11.1 percent in Q3 2011.

The U.S. housing finance system continues to put taxpayers at risk in a market dominated by government-backed agencies, Federal Reserve Governor Jerome Powell said yesterday, calling for further reform of an "unsustainable" situation, Reuters reported. A decade after doubts about the creditworthiness of mortgage-backed securities helped trigger the worst financial crisis since the Great Depression, systemic risk remains given the concentration of mortgages in Fannie Mae and Freddie Mac, he said. "We're almost at a now-or-never moment," Powell said, arguing that the window for political action on an overhaul of housing finance may not stay open for long. Key lawmakers in the House and Senate have started to examine proposals to overhaul housing finance, and U.S. Treasury Secretary Steven Mnuchin has also indicated the issue a top priority. Policymakers have struggled for years to craft legislation to significantly reform Fannie and Freddie. The federal government bailed out Fannie and Freddie in 2008 after they took massive losses on bad mortgages. They have been in government conservatorship ever since and most mortgages are still issued with the backing of government-sponsored enterprises.

Two U.S. senators working on a bipartisan overhaul of Fannie Mae and Freddie Mac are seriously considering a plan that would break up the mortgage-finance giants, Bloomberg News reported yesterday. The proposal by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.) would attempt to foster competition in the secondary mortgage market, where loans are packaged into bonds and sold off to investors. Corker and Warner’s push to develop a plan marks Congress’ latest attempt to figure out what to do with Fannie and Freddie, an issue that has vexed lawmakers ever since the government took control of the companies in 2008 as the housing market cratered. The lawmakers’ plan is still being developed, and a Senate aide cautioned that no decisions had been made on any issues.

Rep. Jeb Hensarling (R-Texas) told a conference of mortgage bankers yesterday that his 2013 bill that would have ended Fannie Mae and Freddie Mac still remains the best path forward for reform of the housing finance market, the Washington Examiner reported today. The bill cleared the committee with Republican votes in 2013, but failed to advance in the House thanks to finance industry skepticism. Notably, it would have dissolved the bailed-out mortgage giants Fannie Mae and Freddie Mac. In their stead, it would have created a privately-run utility to facilitate the creation of mortgage-backed securities and support a secondary market for home loans. The bill would have removed government backing for mortgage-backed utilities, though. At the time, many industry groups, including the Mortgage Bankers Association, argued that eliminating the government backstop for mortgage-backed securities would make 30-year fixed-rate loans unavailable. Hensarling yesterday called it a "fable" that his legislation would have ended the 30-year fixed-rate mortgage.

The nation’s top consumer regulatory agency is seeking to hold a South Carolina housing finance company in contempt for moving too slowly to respond to a judge’s order that it turn over documents and audio recordings, the New York Times reported today. A federal judge on Tuesday referred the matter to a United States magistrate judge for a hearing. The unusual legal maneuver by the agency, the Consumer Financial Protection Bureau, to hold National Asset Advisors and a related company in contempt shows that the agency is proceeding with an investigation into businesses associated with the sale of homes to lower-income borrowers with seller financing. The motion for contempt arises from a court battle with National Asset Advisors and Harbour Portfolio Advisors, one of the nation’s largest sellers of homes on contracts for deed — a type of seller financing usually aimed at low-income consumers who cannot qualify for conventional mortgages. The consumer bureau filed a lawsuit last year in federal court in Michigan to require Harbour Portfolio Advisors and National Asset Advisors to comply with a subpoena seeking information about Harbour’s sale of rundown homes to thousands of people in more than a dozen states.

A hedge fund proposal for freeing Fannie Mae and Freddie Mac from U.S. control is poised to face stiff opposition from investors who say it risks wrecking the mortgage-bond market, Bloomberg News reported yesterday. The Moelis & Co. blueprint, which firms including Paulson & Co. and Blackstone Group LP sponsored, calls for raising tens of billions of dollars in capital for the mortgage-finance companies. The plan, released earlier this month, would also limit the amount of federal money available to offset any Fannie and Freddie losses to $150 billion. Fannie and Freddie package mortgages into debt securities that most investors treat as being fully guaranteed by the U.S. government, in part because the companies are currently under federal control. Some investors argue that capping taxpayer rescue funds, while releasing Fannie and Freddie to private shareholders like Paulson could upend the $5 trillion market for the bonds they issue.