Reverse mortgage software and calculator provider Ibis Software announced this week that it appointed Robert Sivori, a reverse mortgage industry veteran, to its board of directors.

Sivori’s role became effective March 1, according to an announcement distributed to RMD by company president Jerry Wagner.

“Bringing a wealth of experience from the reverse mortgage industry, Sivori joins Ibis Software as a director, poised to contribute significantly to the company’s strategic growth initiatives,” the announcement stated.

Sivori has nearly 30 years of experience in the forward and reverse mortgage spaces. He previously served as co-founder and chief operating officer of Reverse Mortgage Investment Trust and Reverse Mortgage Funding (RMF). Prior to his role with RMF, he was a senior executive in the reverse mortgage division at MetLife Bank, co-founder and co-president of EverBank Reverse Mortgage, and president of BNY Mortgage Co.

Sivori also serves on the board of directors for the National Reverse Mortgage Lenders Association (NRMLA), most recently being elected to serve as vice chair on the association’s board in late 2023.

“Joining Ibis Software represents an exciting opportunity to leverage my industry insights and contribute to the company’s ongoing success,” Sivori said in a statement.

Ibis is currently focused on providing software solutions to U.S. Department of Housing and Urban Development (HUD)-approved Home Equity Conversion Mortgage (HECM) loan counselors. It also supplies NRMLA with its online reverse mortgage calculator. Ibis and Wagner provide regular mortgage rate updates for reverse mortgage industry professionals.



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Clear Capital, a real estate valuation technology company, has broadened its collaboration with data management platform Cherre, the companies announced on Wednesday.

Under the expanded partnership, Cherre’s customers will gain access to ClearAVM, Clear Capital’s automated valuation model (AVM), through Cherre’s advanced programming interface (API).

ClearAVM offers precise property valuations, empowering property investors and asset managers to make well-informed decisions regarding investment, management and underwriting. Additionally, customers will be able to automate, standardize and validate data from multiple third-party sources.

Cherre customers will now have the advantage of utilizing ClearAVM’s nationwide coverage to pinpoint investment opportunities that align with their investment criteria. Single-family rental (SFR) investors also rely on AVMs to assess asset portfolios, guide leasing and sale decisions, and ensure thorough due diligence.

“We pride ourselves in the strength and reliability of our AVM, and we’re looking forward to the opportunity to expand its reach and impact beyond the traditional mortgage origination space,” Kenon Chen, executive vice president of strategy and growth at Clear Capital, said in a statement.

“Being able to provide fast certainty and confidence to more industries that need or can benefit from an automated valuation is a natural next step for us and for our partnership with Cherre.”

Clear Capital and Cherre started their collaboration in November 2022. The initial partnership allowed Cherre customers to harness Clear Capital’s extensive property analytics alongside internal systems and application data. This integration empowered customers to conduct more precise modeling, enhance risk assessments and efficiently identify investment opportunities at reduced costs, a the news release stated.

ClearAVM can predict values for nearly every residential property in the U.S. and is regularly updated  to offer comprehensive insights into the nation’s housing market. Its accuracy has been validated by rating agencies, third-party testing and independent customer feedback.

“We’ve seen nearly a year and a half of proven success with our current data partnership, so it makes sense to add offerings that specifically support our clients in the single-family residential, asset management, commercial and real estate spaces,” Kevin Shtofman, global head of innovation at Cherre, said in a statement. 

“Any AVM can be used by SFR managers and investors to make more informed decisions, but ClearAVM provides our customers with a unique measure of predicted accuracy, quickly allowing them to gauge each valuation’s reliability and set a valuation risk tolerance. We’re thrilled to bring these capabilities to our customers and to expand our relationship with Clear Capital.”



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Last year might best be described as a risk-prone atmosphere for the single-family rental sector and the related fix-and-flip market.

The risky operating environment has been marked by volatile, high interest rates (with 30-year fixed rates now hovering around 7%), high financing costs and moderating rental rates as an influx of multifamily rental properties continues to come online across the country. 

Still, despite the gloomy news of late for SFR and fix-and-flip investors, some industry experts see better fortunes ahead in 2024 for both sectors.

“We didn’t call it a bear market, but we did call it a lack of liquidity, which I think is more accurate,” said L.D. Salmanson, CEO of Cherre, a data integration and insights platform serving the real estate market, including institutional owners of single-family rental (SFR) properties.

“That started in Q4 of 2022, so it’s been about six quarters at this point, and we predicted it would last 24 to 26 months,” Salmanson added. “So, there’s at least two [quarters] left, and I don’t see anything that will turn things around in the next couple of quarters where we’re going to see a massive number of (institutional SFR) transactions. It’s going to be a few more quarters before that happens.”

In addition, any reprieve in the housing inventory shortage created by more multifamily units hitting the market is expected to be short-lived. In recent congressional testimony, Mortgage Bankers Association (MBA) chief economist Mike Fratantoni pointed out that the housing market is now extremely supply challenged.

“While estimates of the needed supply vary widely, it is clear that we are millions of units behind at this point,” Fratantoni said in his statement submitted this month to a subcommittee of the U.S. House Financial Services Committee. “And even though we expect to see a large delivery of multifamily units over the next few years, this will not resolve the broader lack of inventory that we see across the country.”

The inventory shortage — in addition to high financing costs tied to elevated interest rates and related inflation for construction expenses — led to a nearly 30% decline in home flips in 2023, according to real estate data firm Attom.

The performance of the fix-and-flip market — in which investors purchase, rehabilitate and resell homes — can serve as a barometer for housing supply in general, given that the sector adds for-sale inventory to the market.

Last year, there was a total of 308,922 single-family home and condominiums flips, compared with 436,807 in 2022, according to Attom. Gross profits for home flippers also declined last year, to an average of $66,000 nationwide, down from $70,100 in 2022.

Attom points out that investment returns on these projects in 2023 were at levels that “could easily be wiped out by the carrying costs during the renovation and repair process, which usually consume 20 to 33 percent of the resale price.” 

“In 2023, the landscape for home flipping across the U.S. became increasingly challenging,” Attom CEO Rob Barber said in a statement, adding that “the sharp decline in the number of home flips likely reflected a combination of a tight supply of homes for sale as well as dwindling returns. 

“Either way, it will take some significant reworking of the financials for home flipping fortunes to turn back around.” 

Looming rebound

Despite the hardscrabble market realities facing SFR and fix-and-flip investors last year, 2024 could prove to be the year a rebound occurs — even if its full effect is not realized until later in the year.

For one, the Federal Reserve, despite holding its benchmark rate steady at its March meeting, is still signaling plans for three rate cuts this year. That should help to unlock more inventory while also reducing financing costs for leveraged investors. 

In addition, new-home construction — including in the hot build-to-rent (BTR) sector — is helping to slowly boost housing supply.

“While existing home inventory is quite constrained, with about 1 million homes for sale nationwide … builders have certainly picked up their pace of construction, and new homes now account for roughly one-third of homes on the market,” Fratantoni told the House committee. “This compares to a more typical 10% share of total home inventory historically.”

There is also an expected surge of housing demand that is likely to translate into healthy sales and rental activity in the years ahead. 

“The U.S population currently has about 50 million individuals between the ages of 30 and 40,” Fratantoni said. “This large millennial cohort is in the ages where household formation is at its peak, and we are seeing roughly 1.5 million households formed each year.”

Keith Lind, CEO of Acra Lending, a leading nonqualified mortgage lender, said early indications are that the year ahead looks promising for non-QM and related investment property lending for his institution. Non-QM loans typically serve clients who have nontraditional income sources, including the self-employed.

Lind points out that some 45% of Acra’s non-QM loans are to borrowers purchasing investment properties.

“Our pipeline of non-QM loans is up 30% from January and February of last year, versus January and February of this year,” he said. “We did $2.4 billion last year of (non-QM) originations, and we think we’ll do about $3 billion this year.”

Secondary market

A review of securitization deals tracked by Kroll Bond Rating Agency (KBRA) that are backed by non-QM loan pools and comprised of at least 30% investment properties (primarily single-family properties) shows that in roughly the first 10 weeks of 2023, there were 17 private-label offerings with a total value of $6.5 billion that closed. This year, during the same period, 20 such securitization deals with a total value of $7.3 billion hit the market.

Peter Van Gelderen is co-head of Global Securitized at TCW, a leading global asset management firm. He points out that investors in the secondary market are attracted to investment properties, particularly in an environment where rates are expected to soon start declining.

“Investors, like asset managers and insurance companies, like investment property loans because they are comfortable with the underwriting — the debt-service-coverage ratio, or DSCR, underwriting,” he said. “But investment property loans also aren’t subject to the same protections as [traditional residential mortgages], meaning they can have prepayment penalties.

“And so, if you have a view that the rates are coming down … you’re going to think people are going to refi more quickly, right? Then you’re going to say [as an investor], “Oh, how can I make some extra alpha, or money, and the way you do that is with the prepayment penalties.”

Geographic growth

A November 2023 report published by The Hamilton Project and focused on the SFR market notes that large institutional investors (those controlling at least 1,000 SFRs or more and have a presence in at least three markets) represent about 3% of the total SFR sector. But the bulk of mega-investor holdings (354,000 of the 446,000 SFRs) are concentrated in 20 markets, which are located primarily in the Southeast and Southwest regions, the report notes.

“For example, Atlanta is the largest single market, with almost 72,000 single-family rental units in the [metro area] held by institutional investors,” the report states. “For this market, institutional single-family investors hold 27.2% of all single-family rental properties and 9.53% of all rental properties (single-family plus multifamily).”

It’s worth noting that data analysis and size groupings in the fast-moving and wide-ranging SFR space vary across studies. They also depend on the timeliness of the data and the specific focus of the research. Cherre’s Salmanson, for example, estimates that the institutional-investor share of the SFR market could be as high as 6% to 7% nationwide. 

Fratantoni’s congressional testimony reveals that regardless of the percentage, SFRs are in great demand across the board. His congressional statement notes that some 40.4 million residents, or 39% of the 102.8 million renters nationwide, now live in SFRs. 

In terms of expanding their holdings via open-market home purchases, however, Salmanson said the large institutional players have been essentially “sidelined” in the current market.

He expects market dynamics to continue keeping these big players on the sidelines for at least the next two quarters — or at least until the interest rate, inventory and home price environment improves in their favor. In the meantime, these institutional SFR players have turned to a strategy of buying existing portfolios from smaller investors and doubling down on build-to-rent purchases.

Not enough supply

As an indicator of the slowdown in home purchases in the institutional SFR space, data from KBRA shows that in 2023, institutional operators issued four securitization offerings valued at $1.5 billion in total. In 2022, there were 15 such deals with an aggregate value of $10.3 billion.

“So, if I can’t buy in the open market, I either build or buy a portfolio,” Salmanson said. “Those are the two strategies employed in the last 18 to 24 months — rolling up the portfolios [of smaller SFR operators] and more build-for-rent.

“I don’t see any way [rent] goes down,” he added. “It’s not growing at the same pace, but there’s nothing that tells you [a decline] will happen when home prices are still high. The demand is increasing for these types of assets and we don’t have enough supply.”

Brandon Lwowski, senior director of research at HouseCanary — a proptech firm that provides institutional investors, lenders and other clients with residential real estate analysis — said there are currently about 73,800 SFRs available for rent at the national level. 

“That’s up 25.7% from last year (as of March 11), so it’s a big increase in inventory,” he added. “Yet the rental price is still staying up.”

“On the single-family rental side is where we’re kind of in this land of the unknown, where we’ve never seen this much inventory, historically, in single-family rentals,” Lwowski said. “So, that’s telling me that … there’s still enough demand to keep (rent) prices elevated even though we’re seeing inventory grow.”

Lwowski added that national rental rates for SFRs are up 2.7% from last year even as inventory has expanded. He pointed out, however, that within the SFR space (which includes BTR), it is the larger homes that are in greater demand and that are propelling rent growth in the space, given “we’ve actually seen price decreases” for the smaller SFRs that consist of one- and two-bedroom homes.

Kurt Carlton, co-founder and president of New Western, a large national private real estate investment marketplace that serves some 200,000-plus investors, said the institutional SFR players are now working closely with builders and “guaranteeing the purchase of a certain amount of their future pipeline” for the BTR market. In fact, Carlton suggests that many of these large SFR platforms now prefer to operate in the BTR space rather than purchase homes on the open market, where they compete with consumer buyers.

“What I think is going to happen when these institutions do come back is they’ll start to focus more on constructed, new-build inventory,” Carlton said. “It’s just easier for them to forecast and manage those properties.

“They’re evolving to a state where they can do that, and it won’t make as much sense to focus on infill [by purchasing homes on the open market and competing with individual homebuyers].”

The National Association of Home Builders (NAHB) estimates that about 8% of all single-family starts are now BTR construction. Salmanson estimates that the figure is closer to 16% because “a lot of the pipeline just isn’t captured yet by the data.”

Even if the BTR market slows down a bit as projected, it’s still expected to play an outsized role in the new-home market given the larger forces that affect the housing market at large.

“Demand by investors for single-family rental units, new and existing, has cooled in recent quarters as financial conditions have tightened,” NAHB reported. “Given affordability challenges in the for-sale market, the (single-family BFR) market will likely retain an elevated market share even as the sector cools in the quarters ahead.”

Optimism ahead

New Western’s Carlton points out that there also are some 15 million vacant existing homes in the U.S., with one-quarter of these built prior to 2008 and starting to “enter a phase where they need to be rehabbed for the first time.” He said this is a prime market for fix-and-flip investors given the shortage of for-sale inventory.

“For example, there were 50,000 new homes constructed by builders last year in Dallas-Fort Worth,” he said. “And there were 17,000 homes that were purchased and then resold as flips. 

“So, that’s about [one-third] of the new inventory that’s coming from homes that have been remodeled and returned to the market. … I see fix-and-flip investors as one way to help alleviate [the housing inventory issue] because they can at least bring what was off the housing market back to the market.”

John Burns Real Estate & Consulting conducted a recent survey of fix-and-flip investors and found that 49% of those polled expect to acquire more properties in 2024 than they did last year, despite the challenges they faced in 2023. 

Arvind Mohan is CEO of fix-and-flip lender Kiavi. Mohan said the John Burns survey is already hitting home for the lender, which he said posted “a notable uptick in fix-and-flip loans in our pipeline in the first six weeks of this year relative to the same period last year.”

“The biggest challenge for flippers in 2024 is acquiring new properties while housing stock/inventory is limited and there are few ‘good deals’ available that make sense from an investment perspective,” Mohan said. 

Still, despite the challenging market in 2023, last year was a banner year for Kiavi. The company funded a record $4 billion in fix-and-flip and bridge loans across some 13,000 loans to 5,800 individual investors, representing a 7% year-over-year increase in volume, according to a company announcement.

One sign of the proverbial sun starting to peek through the clouds that have hovered over the market since early 2022 — when the Federal Reserve began to raise benchmark rates — is the return of institutional capital to the private-label securitization market, which is facilitating greater liquidity in the primary market.

“The outlook for Kiavi’s RTL (residential transition loan, aka fix-and-flip] securitizations looks strong this year,” Mohan said. “Our recent deals (including a $350 million offering that closed in February) have been consistently oversubscribed, which is a good sign of investor demand.

“That gives lenders, myself and others more confidence that we can sustain our pipelines and service our customers well. What I would say is over the last, like, two to three months, we have reduced pricing to customers, just given the trends in the capital markets and so forth. We definitely see an uptick there.”

Although 2023 was a difficult year to navigate for large and small investors alike, as well as “solopreneurs” in the fix-and-flip space, there is reason to hold out hope for a brighter time ahead by reading the tea leaves.

“It’s just like there’s a lot more confidence in the directionality of where things are going, more than in how quickly they’ll get there,” Mohan said. “But the good thing is it’s moving in the right direction.”

Another change for the better in the SFR market that shouldn’t be underestimated, Carlton noted, is that recent advancements in technology are now being driven down to the smaller investors, making it easier to find, finance and manage properties — whether for sale or rent — in the SFR sector.

“A lot of the benefits that the institutions have, that they’ve built up over the years with technology, is starting to reach these independent real estate investors,” Carlton explained, “because when these institutions went on pause, a lot of these (tech) vendors had to find new customers, so they made that technology available to smaller investors.

“So, now it’s a lot easier for me, if I live in Seattle and I’ve got some money, I can invest in Ohio and buy some houses because now there’s better technology, there’s better ways of managing, there’s more of a network of property management across the U.S.”

“I think the real tailwind, however, is just that there is a fundamental, authentic demand for single-family homes simply because we just haven’t built enough homes,” he added.



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Owner financing offers buyers and sellers more opportunities with real estate transactions. 

Before entering this type of transaction, it’s important to know what owner financing is, how it works, who benefits, and who pays property taxes on owner financing.

Owner Financing Basics

Owner financing gives homebuyers more options when looking for financing. 

Also known as seller financing, it often has higher interest rates and different terms than traditional financing, but may be a viable option for some buyers. In addition to knowing who pays taxes on owner financing, it’s important to understand the basics.

What is owner financing?

Owner financing is a loan from the seller of the property (the current owner) rather than a bank or mortgage lender. Sellers often charge higher interest rates than traditional lenders, and they typically want a large down payment and require a balloon payment within a few years of borrowing the funds.

How does owner financing work?

Owner financing works a lot like traditional financing, meaning the buyer needs a down payment and then makes monthly payments as agreed upon. However, there is often more leeway in how your payments are structured if you need less frequent payments, such as quarterly.

Your payments help reduce the principal balance, but you will likely owe the remaining balance as a balloon payment, usually in five years or less. If you plan to keep the property long term, you can either pay the full amount in cash or refinance the loan.

Because there isn’t a traditional lender involved, it’s up to the owner if they want to check your credit history or do a background check. You also won’t have to worry about appraisals or title work, as traditional lenders would require. 

However, it may be in your best interest to take these precautions to ensure you don’t overpay for the property, or the owner will be unable to transfer the title to you.

Who holds the deed in owner financing?

When a buyer and seller use owner financing, the buyer signs a promissory note promising to make the payments as stated in the agreement. They will also sign a deed of trust giving the seller the right to foreclose on the property (take back possession). 

In exchange, the seller signs over the title and transfers it to the buyer. Buyers can refinance and/or sell the property, but they are always required to make their payments.

In less common situations, the seller can remain on title. This requires an executed contract for the deed. This allows the seller to keep the title and only transfer the property when the final payment is made or when the buyer refinances the owner-financing with traditional lender financing.

Benefits and Risks of Owner Financing

Like any real estate transaction, owner financing has benefits and risks for buyers and sellers. Understanding both sides can help you determine if it’s the right choice.

What are the benefits of owner financing for buyers?

Buyers realize many benefits from owner financing, including:

  • More flexible qualifying requirements, especially if the seller doesn’t check credit.
  • May have fewer closing costs because there aren’t bank processing fees, inspections, and potential appraisals.
  • Seller financing usually closes faster, sometimes within a matter of days, versus traditional financing.
  • Buyers and sellers can negotiate the terms, including the down payment, monthly payment requirements, and interest costs.
  • In a seller’s market, owner financing can help buyers win the property they want without a lender’s red tape.

What are the benefits of owner financing for sellers?

Sellers also realize many benefits of owner financing, including:

  • Sellers don’t have to worry about lender property requirements; they may sell the property as-is.
  • Sellers have recourse and, even if they transferred the title, can repossess the property if the buyer doesn’t satisfy the loan agreement.
  • Owner financing may provide sellers with higher returns than they might earn on any other investment opportunity in the market.
  • Allows sellers to sell the property faster with less red tape and no lender requirements.
  • In a buyer’s market, sellers can look advantageous to buyers by offering owner financing for faster and less restrictive closings.

What are the risks of owner financing for buyers?

Buyers benefit from owner financing in many ways, but there are risks or downsides, too. Most notably, buyers often need a larger down payment than with traditional financing options. 

They may also have a large balloon payment that requires them to pay off the mortgage within a few years. This can be troublesome if they don’t have the cash and/or can’t get approved for traditional financing.

In addition, some sellers have strict requirements, including credit or background checks. If the buyer’s qualifying factors don’t meet their criteria, they can refuse to offer financing.

What are the risks of owner financing for sellers?

Sellers have the obvious risk of nonpayment from borrowers. While the deed of trust gives sellers the right to repossess the property, that’s not why they entered the agreement, so it can be a downside for sellers.

Sellers in some states may also be limited to what they can offer for owner financing (if they can offer any). State regulations may determine the amount of balloon payments they can require and the terms they offer, or they may require them to use a loan originator as a mediator in the process.

Owner Financing Structure, Terms, and Negotiations

Understanding the financing structure, terms, and what you should and shouldn’t allow as a buyer or seller is important when considering owner financing.

How do you structure an owner-financing deal?

Owner-financing deals can have one of three structures. The most common denominator is that the agreement is in writing, and both parties ensure it’s legally binding.

The options for structuring an owner-financing deal include:

  • Promissory note and deed of trust: This is the most common way to structure an owner-financing deal, similar to what you’d see if you used traditional financing. First, both the buyer and seller sign the promissory note, which includes the payment schedule, interest rates, and other details. Next, a mortgage or deed of trust is executed that uses the property as collateral. The buyer receives title to the house in their name, and the county records the new mortgage on the property.
  • Contract for deed: This is a less common way to structure an owner-financing deal because the buyer doesn’t take the property title. Instead, it remains in the seller’s name while the buyer makes payments. Once the buyer makes the final payment, either by following the payment schedule or refinancing the debt, they receive title to the property.
  • Lease-purchase agreement: In the rent-to-own scenario, tenants enter an agreement to purchase the property after a certain amount of time. They remain living in the property as tenants and paying rent. They can execute their right to buy the house at the predetermined time. If so, a portion of the rent, as agreed upon in the lease-purchase agreement, goes toward the down payment.

What are the typical terms of owner financing?

Many details go into owner financing, including the following:

  • Purchase price: This is the amount agreed upon by both buyer and seller for the transaction. This is what the loan amount is based on and how the entire transaction is structured.
  • Interest rate: This is the fee the seller charges for providing the financing. It may be higher or lower than traditional mortgage financing rates.
  • Down payment: Most sellers require an upfront investment or cash toward the property’s purchase price. This decreases the loan amount.
  • Loan amount: Buyers borrow the difference between the purchase price and the down payment. This is the amount they pay interest on and must repay to release the lien on the property.
  • Term: Sellers and buyers can negotiate a term, or the time they have to repay the loan. It may be a few months or years, with a balloon payment to finalize the loan.
  • Monthly payments: The amount buyers must pay monthly to satisfy the loan agreement is the monthly payment. This is the minimum amount required at each payment interval to satisfy the loan agreement.
  • Balloon payment: You may have monthly payments based on a 30-year loan agreement, but the owner financing terms can require a balloon payment after a couple of years. This gives buyers time to secure traditional financing while taking possession of the house faster.

Is a down payment required in owner financing?

The down payment requirements vary because owner financing terms are up to each seller. 

Some states have requirements or restrictions on what they allow for down payments, so be sure you know the state’s laws before entering an agreement. In most cases, though, a down payment is necessary.

Can the interest rate in owner financing be negotiated?

Yes, like the interest rates on traditional mortgage financing, buyers and sellers can negotiate the rate until they reach a deal. Sellers have the upper hand in this situation because they are the ones offering the financing.

Is there a minimum interest rate for owner financing?

Each month, there is a minimum interest rate for federal income tax purposes that you must meet when creating a loan agreement. While the rates are often well below what owners charge for owner financing, it’s important to know the guidelines before creating an agreement to avoid unnecessary tax penalties.

Owner Financing Nuances and Scenarios

Knowing the details involved in owner financing is important as you consider entering an agreement as a buyer or seller.

Can the owner-financed property be sold before the loan is paid off?

If you enter a traditional transaction with a promissory note and deed of trust, the buyer can sell the property, but they must pay off any remaining loan balance with the sale proceeds. Other types of transactions, such as a land contract or rent-to-own situation, do not allow the buyer to sell the property until they hold the title.

Who pays property taxes on owner financing?

Buyers and sellers must work it into the owner financing agreement to decide how to handle property taxes. Typically, buyers pay the property taxes, but you can work out a different plan if the seller is on board.

Are there closing costs with owner financing?

Owner financing does incur some closing costs, but not as many as you might incur with traditional financing. For example, if you bypass the appraisal or inspection, you avoid those costs. Since no bank is involved in the transaction, closing costs can be even lower.

Is a title search and title insurance necessary in owner financing?

Sellers typically don’t require a title search or title insurance, but both can protect buyers, so it’s something to consider. 

A title search ensures the property can legally be transferred to the buyer, and title insurance protects buyers financially against any claims against the property ownership after the title search.

What are the disclosure requirements in owner financing?

Each state has different requirements regarding the disclosures that must accompany owner financing. Work with a local real estate attorney or title company to determine your state’s requirements to ensure you don’t miss any important details.

What happens in an owner-financing deal if the property has an existing mortgage?

If the owner has a current mortgage on the property, they may be able to create a wraparound note.

This is a junior lien that consists of an agreement between the buyer and seller for owner financing. The buyer makes payments to the seller as agreed, and the seller uses the funds to pay the existing mortgage on the property.

The seller must have permission from the first lien holder to enter into a wraparound note, since it puts another lien on the property.

Is owner financing the same as rent to own?

Rent-to-own is one way to conduct an owner-financing deal. A traditional owner financing deal is more straightforward, with buyers making down payments and regular monthly payments on the loan. 

In a rent-to-own agreement, potential buyers rent the property, paying a premium on their rent that goes toward the down payment if they execute their right to buy the property within the allowed time frame.

How does owner financing work for land?

Owner financing for land is similar to owner financing for a house. The seller extends the financing, and both parties sign a promissory note and mortgage deed. The seller hands over title to the land, but retains the right to foreclose on it if the buyer doesn’t satisfy the loan agreement terms.

Can owner financing be used for commercial real estate transactions?

Like residential financing, owner financing can be used in commercial real estate transactions. Because commercial real estate usually costs much more than residential properties, the terms can be different, but can provide tax advantages for both parties.

Income and Credit

As with any mortgage financing or real estate investment, it’s important to understand how the IRS considers owner financing income and how it affects a buyer’s credit.

Does owner financing count as income?

Yes, like rental income, money from owner financing must be claimed on your tax returns as income. This can increase your tax liability, so keep that in mind as you determine how to structure the deal.

How do you report owner financing to credit bureaus?

To report owner financing to the credit bureaus, you must operate as a business and meet certain compliance measures. In most cases, owner financing isn’t reported to the credit bureaus, so it doesn’t help or hurt a buyer’s credit.

Final Thoughts

Owner financing can help both buyers and sellers in the right situation. 

The key is having the proper support and ensuring you meet all state regulations. It is essential to understand who pays property taxes on owner financing, how it affects your income taxes, and what protections sellers have should buyers default.

Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.



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Marcia Fudge is now the former secretary of the U.S. Department of Housing and Urban Development (HUD), having served her final day on Friday, March 22, after announcing her resignation just 11 days earlier. Adrianne Todman now serves as acting HUD secretary.

In a recently published interview with NPR, Fudge was asked why now is the time to step away from the job, particularly as President Joe Biden has made housing issues a centerpiece of the administration heading into what is likely to be a hotly contested presidential race in the fall.

“One [reason], of course, is I just want to go home,” Fudge told NPR. “I have been away from home for more than 20 years, and it’s just time to go. [I] have an aging mother [and] family that, really, I’d like to spend some more time with. So it just became time. I feel really, really good[…] about what we have been able to do.”

Marcia Fudge, 18th secretary of the U.S. Department of Housing and Urban Development (HUD), who served under President Joe Biden.
Marcia Fudge

But Fudge’s resignation announcement also noted that she felt “mixed emotions” about leaving her post, which she said is mostly tied to the immense amount of work left to do in U.S. housing.

“Because there’s always more work to do,” she said when asked why she feels mixed emotions. “And so if there is any regret that I would have at all, it would just be that I just couldn’t do enough. But then, on the other hand, I know the environment in which I work, and I also know that not much is going to be done through this election cycle. And I just gave it everything I had.”

When asked for her assessment on housing affordability, Fudge said that the core issue is that there has not been enough investment in low- to-moderate income housing sources.

“Everybody wants a McMansion [and] two-acre lots,” she said. “We cannot build houses the way our parents and grandparents built them. And so we neglected to build anything that most average Americans can afford. And so we finally are now at a point where it is a crisis. The only way we get out of this […] is to build more affordable housing. And it’s not going to happen overnight. It’s going to take years.”

The U.S. is roughly 3 million units of affordable housing short of where it needs to be, Fudge said. That imbalance between supply and demand will serve to keep prices elevated. When asked about the different jurisdictions that intersect with housing — since city, county, state and federal governments all play a role — she said she believes there is more the federal government can do.

“I think that we’re going to have to start to do more public-private partnerships, which are some of the things that we’ve started doing, and that’s why we’ve been able to put more housing in the market,” she said. “We also need to go into communities like the ones I come from. I come from Cleveland, Ohio.

“We need to start to find ways to preserve core communities and not allow the kind of gentrification we’ve been seeing, not allow private companies to come in and just buy up swaths of land. We need to make sure that those properties remain affordable.”

Fudge was also asked about homelessness issues in various communities, and she responded by saying there needs to be more investment in “very low-income housing.”

“We’ve got to get away from shelters,” she said. “We have to get away from tent cities. We issued about $3 billion to communities across the country to assist them in dealing with unhoused people in their communities. Instead of shelters, they’re building tiny houses. Instead of congregate places, they’re building places that have common areas but have private rooms.

“We’re doing all of that kind of thing just to get people initially off the streets into an environment where they can start to heal. That really is the answer to homelessness, is housing.”

Fudge also said she hopes to continue advising the White House on housing issues on an informal basis as she returns to life as a private citizen.



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Fueled by a surge in mortgage rates, owning a home has become increasingly expensive. According to a Freddie Mac housing and mortgage market report released Monday, while mortgage payments remain the primary pressure point for homeowners, insurance costs are emerging as a growing burden.

Homeowners insurance costs, though still much smaller than mortgage principal and interest payments, are on the rise. Even a slight uptick in insurance expenses can disproportionately impact very low-income borrowers, defined as those earning no more than 50% of the area median income.

In 2023, homeowners insurance premiums consumed 3.1% of the monthly income of these very low-income borrowers, significantly higher than the percentages for low-income (2.1%), middle-income (1.5%) and high-income borrowers (1.1%).

Freddie Mac’s estimates reveal a stark increase in the average annual homeowners insurance premium. In 2018, the average borrower paid $1,081 per year for a single-family, owner-occupied home with a conventional 30-year fixed-rate mortgage. But by 2023, this figure surged to $1,522 — an increase of 10.8% from 2022 and up 40.8% from 2018.

Effective homeowners insurance rates have remained relatively stable, with borrowers paying $4.90 per $1,000 of their home’s value in 2023, compared to $4.70 per $1,000 in 2018. 

But significant disparities exist across states. In 2023, borrowers in Louisiana, Oklahoma, Kansas, Nebraska and Mississippi paid more than $8 for every $1,000 of home value, while those in California, Washington, Nevada, Oregon, Utah and Washington, D.C., paid less than $2.50 per $1,000. Freddie Mac’s findings align with aggregated statistics from the National Association of Insurance Commissioners

Factors such as exposure to natural hazards and regulatory environments contribute to these disparities. For example, California’s strict regulations on companies that offer homeowners insurance help to explain the lower rates compared to similarly disaster-prone states like Louisiana and Mississippi.

Between 2018 and 2023, homeowners insurance premiums increased from 1.49% to 1.64% of a borrower’s monthly income, on average. In certain states — including Louisiana, Oklahoma, Kansas, Nebraska and Mississippi — homeowners are now allocating more than 2.5% of their monthly income to insurance premiums. This upward trend coincided with a higher share of income being allocated toward mortgage principal and interest payments.



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It may be counterintuitive, but loan officer Scott Betley, a 32-year-old TikTok sensation, says he isn’t worried about a potential U.S. ban of the short-form video app.

Betley, who has more than a decade of experience helping first-time and move-up buyers, joined NFM Lending as a loan officer in 2021. The following year, the Maryland-based lender created an Influencer Division, appointing Betley as vice president and co-creator. 

Using trending videos, educational content and humor to reveal all the secrets about buying a house, Betley, known as @thatmortgageguy, has reached 870,000 followers and garnered 15.5 million ‘likes’ on TikTok. To put this into perspective, he claims 300,000 followers on other platforms. Such a substantial audience results from spending four to five hours per day on social media.

“It does not cost me anything [to be on TikTok]. We get paid for it and we’ve monetized our brands tremendously,” Betley said in an interview. “I’ve probably closed a little over $100 million in loan volumes from people who have contacted me through TikTok over the last three years. TikTok is probably 40% to 45% of my business.”

Greg Sher, managing director at NFM, stated in a social media post that the lender’s Influencer Division, comprised of a team of 14 LOs, has generated nearly 70,000 leads over the past 35 months from five major social platforms. Specifically, 75% of these leads (or about 52,500 in total) were driven by TikTok, Sher said.

The figures demonstrate the potential impact on lenders like NFM — and LOs like Betley — if U.S. lawmakers were to prohibit the social media platform from operating in the country.

This possibility has grown since March 13, when the U.S. House of Representatives passed a bill, through a bipartisan vote of 352-65, that gave ByteDance, TikTok’s Chinese owner, a deadline of six months to sell the app’s U.S. assets or face a ban.

The bill is now in the Senate, where the outcome is unknown. Meanwhile, investors are taking steps to acquire the business. For instance, former Treasury Secretary Steven Mnuchin — who recently injected capital into Flagstar Bank’s struggling owner, New York Community Bancorp — announced his intention to form an investor group to purchase the video app. 

“In terms of the ban itself, I’m not too worried about it just because I know the user base in the United States for TikTok makes up a large percentage of the total. … I feel they’re going to pivot and sell and figure something out, just because there’s billions of dollars left on the table,” Betley said. TikTok reported in March 2023 that 150 million Americans use the short-form video app. 

As for his business, Betley added that, “at the end of the day, we built the skill set in terms of content creation and short-form video, and then the attention is going to be somewhere.” To mortgage pros, “it’s just a matter of staying on top of where that organic attention is and continuing to put the content there.”  

Like Betley, several loan officers who have invested time and resources into publishing content on TikTok over the past few years told HousingWire it’s unfortunate that the short-video app could face a potential ban in the country. 

TikTok has primarily served as a tool for mortgage pros to connect with first-time homebuyers through educational and entertaining content, maintain long-term relationships with the audience, and establish a reputation in the market. Moreover, the app has been a source of leads, representing a substantial portion of some LOs’ businesses.

But mortgage pros also believe there will be opportunities as the audience shifts to other social media platforms and content creators inevitably follow suit.  

Rebecca Richardson, a loan officer at California-based Kind Lending, joined TikTok about four years ago “not to dance,” but to “experiment” and “build a library” aimed at explaining complex concepts related to the homebuying process in a simple manner, she said.  

The endeavor led to Richardson, known as @the.mortgage.mentor, attracting 147,200 followers on TikTok and receiving 1.2 million likes. In total, Richardson dedicates approximately 10 to 15 hours per week to social media platforms. In 2019, 4% of her business originated from social media, but from 2020 through 2022, it increased to an average of 30%. TikTok alone accounted for about 12% to 15%, she said.

“The bill is going to the Senate and I think it would be unfortunate [if TikTok is banned], just because that opens up rabbit holes for other concerns about other platforms,” Richardson said. “But at this point, if TIkTok goes away, I’m not so worried about it from my personal business, just simply because I have other platforms that I can lean into. And now I have a content creation process.”

Richardson anticipates the audience transitioning to YouTube Shorts or Instagram Reels if TikTok is banned from the U.S. Her expectation was echoed by other loan officers. 

Exploring alternatives

Matt Gougé, a loan originator at Philadelphia-based UMortgage, said that “like many things, you learn to adapt,” implying that if TikTok is banned, loan officers will find clients and real estate partners on other social media platforms where “people’s eyeballs are going to be.”

Gougé, whose handle is @matthemortgageguy, currently has 2,545 followers and 14,200 likes on TikTok. He anticipates the audience transitioning to YouTube, where he enjoys far greater popularity, with 21,300 subscribers to his channel.

This shift would primarily impact the 25- to 45-year-old demographics that are on TikTok. It aligns, for the most part, with first-time homebuyers, he said. Gougé views TikTok as a shorter form of content intended to capture attention and educate borrowers, a strategy that has become more relevant in a shrinking mortgage market.

“In 2021, people got preapproved, submitted an offer, got a contract in a weekend; we’re seeing more and more, six months, nine months, 12 months to nurture, educate, preapprove, and so on, and you can do that on some of these platforms,” Gougé said. “Anybody who’s been on long enough realizes that putting out educational content is the best form of nurturing through the beginning of that lifecycle of a client.” 

Gougé’s colleague Kyle Koller, a UMortgage branch manager who has invested effort into increasing his followers on TikTok, said that LOs should be on multiple platforms to mitigate risk. In his case, if TikTok were to be banned, he would lean on Instagram due to his familiarity with the app. 

Koller spends at least $8,000 a month on social media platforms. He employs two full-time professionals who work to boost his social media presence since he is also originating loans. Thus far, he estimates that he receives probably “two deals a month” correlated to TikTok and Instagram. Koller, known as @kylemylender, has 4,608 followers and more than 1,760 likes on TikTok. 

“I’m using it as an educational tool,” Koller said. “Sometimes borrowers don’t want to have a phone call. The newer generations want to see stuff. So, instead of just texting back and forth, I’ll say, ‘I did a video on social media,’ and direct them to that. I can use it as a storage tool for educational value propositions to clients. I’ll try to sprinkle in some funny stuff because that’s what people want.” 

Marketing experts believe that LOs are mainly reaching Gen Z on TikTok, although other demographics also use the app. Researchers use the mid-to-late 1990s as the starting birth years and the early 2010s as the ending birth years for this generation. 

And, “what we’re seeing with Gen Z is that they have a longer research-to-buy lifecycle,” said Corie Meredith, vice president of marketing at UMortgage. 

“They read a lot of comments; they watch a lot of influencers. So, there’s a huge opportunity for loan officers or anyone within the mortgage space to be true educators on the platform,” Meredith said. “Gen Zs look at loyalty as not just purchasing but following and engaging with that brand or that influencer online. The marketing funnel has shifted due to this generation and the impact of things like TikTok.” 

Meredith said banning TikTok would be unfortunate from a customer experience perspective since it’s designed to educate borrowers. 

“TikTok does offer something special when it comes to those key elements that Gen Z finds so much value in. It’s an easy way for us to educate and be transparent about financial literacy and prepare them for homeownership. At the end of the day, the customer would be the one missing out versus the business.”  





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A recent CNBC survey based on cost per square foot revealed that the United States’ most expensive real estate market is San Francisco’s South of Market, which contains historic Victorian buildings surrounded by Beaux-Arts and neoclassical government buildings. On the other coast, in New York, Brooklyn’s most expensive real estate market is Brooklyn Heights, a leafy neighborhood of century-plus-old brownstones. 

Both have designated historical status, meaning their period architecture cannot be changed. However, not all older neighborhoods are historic. For investors looking to maximize equity appreciation, the key is buying an older home on the cusp of receiving the historic designation. 

Historic Districts Can Gain 20% Appreciation Per Year

There are more than 2,300 local historic districts in the United States, and new ones are being considered constantly. Every state has them, and they aren’t out of most investors’ price range. The government often offers grants, low-interest loans, and tax breaks to renovate homes in these areas. 

real estate analysis of Washington, D.C. by economist Donovan D. Rypkema showed historic districts can increase property values. Indeed, a 2011 study of Connecticut historic districts and property values found this designation could raise it almost 20% per year in some areas

The first step in becoming a historic district is to be designated a “landmark” status. Neighborhoods with historic churches and older buildings are particularly good candidates, as they are most likely listed in or eligible for listing in the National Register of Historic Places

Becoming landmarked is not fast or easy, but it’s a resource that investors often overlook. Once a neighborhood is afforded a historic designation, the older buildings attain prestige because they are immediately protected from developers. Preserving architectural gems can profoundly affect property values in cities with new, gleaming condo towers like New York. 

Crown Heights North, a gentrifying neighborhood in Brooklyn with a reputation for crime that is also filled with brownstones and old churches, was given historic status in 2011. All metrics point to a massive shift in not only property values, which occurred throughout Brooklyn but crucially, household income (the largest demographic earned below $20,000 annually in 2000, compared to $100,000 to $250,000 in 2021). Poverty had dropped to 14.8% compared to 18% citywide, while rents increased by 48.8% between 2006-2021.

Things to Be Aware Of When Buying an Older Home

If you’re buying a home in a landmarked designated or historic district, it’s likely older and needs renovation. There are a host of potential issues you could incur. Here are some considerations.

You might be entering into a restoration rather than a renovation

Buying in a historically designated neighborhood or a landmarked one means adhering to a strict code

Common stipulations for rehabbers include using wooden window casements that match the original ones that came with the home instead of model metal and vinyl ones. Exterior railings, gates, and doors will likely be replaced with like ones or restored to their previous condition. Ditto goes for moldings, motels, and fireplaces. However, mechanical walls, such as plumbing and electrical upgrades, will likely be unaffected and can be upgraded with modern materials. 

Homeowners insurance could cost more

Home insurance rates can be higher for a historic home due to the cost of building to historic specifications in the event of a total loss. Also, if the home is larger, with various outbuildings as part of the parcel, this will also increase the insurance cost.

Getting Financial Assistance for Your Renovations

The good news is that grants and loans can help investors with renovations. Your state Historic Preservation Office (SHPO) should be your first stop to learn about funding advantages. 

The National Trust for Historic Preservation’s Historic Tax Credit program (HTC) is also an invaluable resource. Historic preservation easements are also worth looking into, and if they apply, they can also bring additional tax benefits

A Historic Home Can Be a Good Investment for a Vacation Rental

If you own a historic home in a scenic part of the country or in a bustling downtown city neighborhood, consider a vacation rental business.

With cultural tourism (defined by the United Nations World Tourism Organization as “movements of persons for essentially cultural motivations such as study tours, performing arts and cultural tours, travel to festivals and other cultural events, visits to sites and monuments, travel to study nature, folklore or art, and pilgrimages”) accounting for 40% of tourism in some countries, rental sites AirbnbVRBO, and Joybird have sections dedicated to historic homes that appeal to travelers looking to avoid sterile corporate hotels in favor of a character-filled, welcoming stay. Marketing your home’s historical status and choosing tasteful interior designs will appeal tremendously to visitors. If you own a historic home, you could also get the advantage of state websites (here’s one example from Pennsylvania) promoting your rental to attract visitors.

Final Thoughts

Historic homes are character-filled and often located in the scenic or older parts of towns and cities where most people want to live. This results in rapid appreciation and high rental demand. Check with your city’s rental laws to ensure your home can accommodate guests.

Entering a historic home renovation requires time, patience, and experience when following the city’s guidelines. As an investor, you can be certain that if you maintain your property, it will likely increase in value far faster than other non-historic homes in the area.

Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.



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Home equity levels among homeowners aged 62 and older are at record levels following the end of the pandemic. As a result, reverse mortgages may no longer be considered a “loan of last resort” as financial planners aim to highlight their uses as part of a comprehensive financial plan in retirement.

This is according to a column published this week by Investment News, soliciting input from planner professionals well known to the reverse mortgage business, including Wade Pfau. But other data suggests convincing borrowers of the benefits remains very challenging.

Reverse mortgage use as part of a broader financial plan “is really the intention in the financial planning space,” Pfau told the outlet. While reverse mortgage customers benefit greatly from low rates, the current high-rate environment doesn’t fully cancel out their potential use as a planning tool, he explained.

“It’s all about the sequence-of-returns risk in retirement planning […] Spending from the home equity helps you preserve more investments, so there is going to be a bigger legacy at the end,” Pfau told the outlet. “The beneficiaries can get more. They can pay off the loan and still have a net windfall.”

This perspective is consistent with prior statements Pfau has provided to other outlets, including to RMD.

Other financial planners adjacent to the reverse mortgage space offered their own thoughts, including Steve Resch, vice president of retirement strategies at Finance of America Reverse (FAR).

“The goal is for the client or the family to always retain an equity position in that property. […] Years ago, that wasn’t the case,” Resch said in the story, describing the housing crisis of 2008 as a “reckoning” for the reverse mortgage industry as well as the larger housing ecosystem.

Resch explained that the ballooning length of retirement in America contributes to the potential utility of a reverse mortgage for qualifying borrowers.

“It’s simply a matter of demographics,” he told Investment News. “We have an enormous population that is moving into retirement. We’ve got a massive amount of equity available. We’re looking at 20- to 30-year retirements. Bringing home equity into that plan really makes sense.”

Another financial planner, Gateway Wealth Management founder David Foster, cited Pfau’s work in particular as helping to bring him around on the product category as a planning tool for clients, but convincing them to take a closer look at a reverse mortgage remains a major challenge.

“I think reverse mortgages might be the single most underutilized retirement planning tool,” he told the outlet. “I have found it extremely difficult to have a rational conversation with my clients about reverse mortgages. Most people who’ve paid off their house just cannot fathom the idea of going back into debt.

“No amount of logic will be able to convince them that it is wise to borrow against their house in retirement after having worked so hard to pay off their home prior to retirement,” Foster added. “I’ve even had people get borderline angry with me for even suggesting the idea.”

Last year, Mutual of Omaha Mortgage released survey data suggesting that education hurdles remain very steep for the reverse mortgage industry when aiming to connect with a variety of different borrowers on multiple potential use cases.

Shelley Giordano, a longtime reverse mortgage advocate and Mutual of Omaha’s director of enterprise integration, discussed those findings with RMD after presenting them to the National Reverse Mortgage Lenders Association (NRMLA) last summer.

“A lot of people anecdotally tell me that they get quite a bit of their business from financial advisors, so that would make you think that things are easier,” Giordano, director of said in a 2023 interview with RMD. “And yet, there just doesn’t seem to be much of a trickle-down effect from [those conversations].”



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The landscape for home flipping across the country was challenging in 2023 as fewer single-family homes and condominiums were flipped and investment returns on these projects declined.

A total of 308,922 single-family homes and condos were flipped in 2023, down 29.3% from the 436,807 flips in 2022. This marked the largest annualized decline for the sector since 2008, according to recently released report from real estate data analytics company Attom.

Of the 65,656 homes flipped in fourth-quarter 2023, there were a total of 52,701 investors involved, translating to a ratio of 1.25 flips per investor. 

At the national level, homes flipped in 2023 were sold for a median price of $306,000 and generated a gross flipping profit of $66,000, a 5.8% decline from the typical profit of $70,100 in 2022. 

Return on investment (ROI) was 27.5% in 2023, the lowest level posted since 2007. For comparison, ROI was 28.1% in 2022 and 35.7% in 2021, which was the highest level this century.

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“Whether the overall market has soared or seen just modest gains in recent years, investors have missed out on the action,” Barber said.

“The sharp decline in the number of home flips likely reflected a combination of a tight supply of homes for sale as well as dwindling returns. Either way, it will take some significant reworking of the financials for home flipping fortunes to turn back around.”

The share of flips that were initially purchased with cash rose to 63.9% in the fourth quarter, up from 62.8% in the third quarter but down from 65.6% from Q4 2022. 

For the entire year, about 63.5% of homes flipped were bought with cash, down from 64% in 2022 and from 63.8% in 2021.

Home flips as a portion of all sales transactions dropped in 112 of the 212 metropolitan statistical areas analyzed in Attom’s report.

The largest decreases came in the South and West regions. Gainesville, Georgia, witnessed the largest decline as flips represented 15.1% of all sales in 2022 but only 9.9% in 2023.

Phoenix followed closely behind as home flipping rate dropped from 16.3% to 11.9% of all sales during the year. It was followed by Prescott, Arizona (down 3.8 percentage points); Charlotte, North Carolina (down 3.6 percentage points); and Provo, Utah (down 3.4 percentage points).



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