The National Association of Realtors says the current state of the housing market is absolutely “dire,” the consequence of a housing shortage 30 years in the making.

According to the lobbying group, construction of long-term housing fell 5.5 million units short of historical levels over the past 30 years.

The NAR is calling for a “major national commitment” to build more housing of all types by expanding resources, addressing barriers to new development and making new housing construction an integral part of a national infrastructure strategy.

The report, authored for the NAR by the Rosen Consulting Group, highlighted a “chronic shortage of affordable and available homes [needed to support] the nation’s population,” noting the recent lack of new construction and a prolonged underinvestment in those affordable units as the main culprits.

From 1968 to 2000, the total stock of U.S. housing grew at an average annual rate of 1.7%. In the past 20 years, the U.S. housing stock grew by an annual average rate of 1% — and only 0.7% in the last decade.

In fact, coming off the Great Recession, new home construction in the U.S. between 2010 and 2020 fell 6.8 million units short of what was needed, the report said.

Residential fixed investment (RFI) — the sector of economic activity that accounts for housing construction and renovation — accounted for approximately 5% of the country’s total gross domestic product between 1968 and 2000. In the past 12 years, though, RFI accounted for only 3% of the country’s gross domestic product. This shortfall in RFI, the NAR reported, translated to a $4.4 trillion gap in housing market investment from 2000 to 2020.

Existing-home inventory at the end of April totaled just 1.16 million units, down 20.5% from the prior year.

In looking at underbuilt, major U.S. metros, the New York-Newark-Jersey City metro had an underbuilding gap of 148,650 units in the past nine years — the largest gap in the country, the study claimed. That’s followed only by the San Francisco-Oakland-Hayward metro, which reported a gap of 113,200 units; and the Riverside-San Bernardino-Ontario, California metro, which reported a gap of 107,700 units.

“There is a strong desire for homeownership across this country, but the lack of supply is preventing too many Americans from achieving that dream,” said Lawrence Yun, NAR chief economist. “It’s clear from the findings of this report and from the conditions we’ve observed in the market over the past few years that we’ll need to do something dramatic to close this gap.”

Specifically, NAR President Charlie Oppler said adequate increases in housing construction this decade would add an estimated 2.8 million American jobs and $50 billion in nationwide tax revenue.

“A number of factors from the past 20 years are responsible for the massive housing investment gap we see in America today, but what’s important now is that we find solutions that will get us out of this crisis and provide more stability in future markets,” Oppler said. “Additional public funding and policy incentives for construction will very clearly provide huge benefits to our nation’s economy, and our work to close this gap will be particularly impactful for lower-income households, households of color and millennials.”

In order to fill the underbuilding gap in the next 10 years, the NAR estimated that more than 2 million housing units would need to be built per year – an increase of more than 700,000 units per year relative to the pace of housing production in 2020.

Several potential policy changes were offered up by NAR in the report, including addressing the large shortages of capital for the development of affordable housing by expanding resources and maximizing the potential of existing programs, incentivizing shifts in local zoning and regulatory environments to increase the quantity of developable residential space, and increasing housing supply by promoting conversions of underutilized commercial space.

Oppler added that addressing the national underbuilding gap in the housing market will require a “coordinated approach” to the planning, funding and development of infrastructure.

As part of a $1 trillion national infrastructure plan, President Biden has earmarked $318 billion toward the construction and preservation of affordable housing.

The post US housing market is short 5.5 million homes, NAR says appeared first on HousingWire.



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Another month of steadily increasing home prices and insatiable demand led Fannie Mae‘s Economic and Strategic Research Group to alter many of its 2021 predictions – in particular, its outlook on the symbiotic relationship between the housing market and inflation measures.

While the housing research group believes current inflation acceleration could be considered transitory, price pressures in all sectors – not just housing – are likely to last into 2022. The reason? Lagged effects from rapid home price growth will put upwards pressure on inflation through at least the end of the year.

“We now view stronger and persistent inflation as the principle risk to our forecast, though uncertainties over consumer behaviors related to reopening and COVID-19 developments remain,” Fannie Mae’s ESR Group said.

“If a stronger underlying inflation trend develops, due to expectations rising or persistent labor market tightness, there is risk of a wage-price spiral,” the group continued. “If this occurs, we believe it will likely lead to a substantial jump in longer-term interest rates and an earlier and more aggressive pace of Fed tightening.”

In March 2020, the fed began buying bonds – split between $80 billion in Treasuries and $40 billion in MBS – to keep the economy moving and make borrowing cheaper. The bond market has been closely watching for the Fed to begin talks of tapering asset purchases if inflation stays above 2% for an extended period of time and if unemployment reaches a low the Fed deems satisfactory.

The Federal Open Market Committee raised its headline inflation expectation to 3.4% — a full percentage point above March’s projection following its June meeting. However, the Fed remained unwavering in it’s post-meeting statement that the uptick is merely transitory.

U.S. inflation hiked itself from 1.68% in February all the way up above 5% by June. If the fed were to tighten policy, Fannie Mae’s ESR Group expects this to drag on upcoming housing market growth and even stifle home sales, house prices, construction and mortgage originations.

“Our expectation is these high inflation readings now will abate,” said Jerome Powell, chairman of the Federal Reserve.

Existing home sales pulled back in April by 2.7% to an annualized pace of 5.85 million – an expected result of a market scrambling to get new builds up. However, recent declines in pending home sales (which lead closings by 30 to 45 days on average) and purchase mortgage applications have been more pronounced than the economic group previously expected.

“This, combined with a continued lack of new listings, led us to downwardly revise our near-term forecast,” the ESR group said. “Existing home sales are now expected to approach a level in the third quarter only slightly higher than the 2019 average.”

On top of this, ongoing labor scarcity and a lack of buildable lots is limiting production capacity. Because homebuilders will struggle to build units for some time, the ESR group downwardly revised its near-term single-family housing forecasts as well.

However, this doesn’t mean the housing market won’t see massive volumes. The ESR Group revised its purchase origination volume down by $33 billion, but thats still $1.8 trillion expected to flood into the housing ecosystem. The group also predicted that purchase volumes will grow by 4% in 2022 to $1.9 trillion, essentially unchanged from last month’s forecast.

Because of strong weekly data flowing in from the Mortgage Bankers Association’s weekly forbearance report, the group expects refis to tick up, though not at the insane volume 2020 saw.

“We expect refinance origination volume to be $2.3 trillion in 2021, a modest upward revision of $54 billion from last month’s forecast, as incoming application activity continued to stay at a relatively high level and interest rates remain low,” the group said. “We forecast refinance volume in 2022 to total $1.2 trillion, up from last month’s forecast, but a decline of 49 percent from 2021. Thus, we expect refinance volume will pull back from the 2020 peak throughout our forecast horizon.”

The post Fannie Mae, and the housing market’s inflation problem appeared first on HousingWire.



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Non-QM lender Sprout Mortgage is setting up a distributed retail operation, and it’s picked a veteran of Wells Fargo to lead the new division.

Sprout hired former Wells Fargo executive Michael Johnson to expand Sprout’s consumer and retail sales channel, the company said Tuesday. Johnson, who most recently led the depository bank’s Southeast division, will report directly to Sprout’s president, Shea Pallante.

Johnson spent two decades at Wells Fargo, leading sales teams in the Miami and Philadelphia regions. Johnson, based in Miami, has also worked at PNC Bank during his career in mortgage banking.

“Michael will help drive our commitment to significantly build out Sprout’s retail sales channel through direct-to-consumer outreach, brick-and-mortar retail facilities, and strategic joint ventures – all designed to help Sprout better serve our end-user clients with high-quality financial solutions for home ownership and investment properties,” Pallante said in a statement.

Sprout said it intends to grow its retail channel through increased direct sales to consumers and residential investors, dedicated retail facilities, and joint ventures. Sprout does most of its business through mortgage brokers. It also has a low-margin correspondent business.

The addition of Johnson represents yet another change to the C-suite at Sprout, which halted non-QM lending last year when the coronavirus pandemic began and liquidity dried up. In the last six months, Sprout has unveiled a series of new products for it non-QM programresumed correspondent lending

In April, the company announced that it had hired Infosys chief information officer and global director of real estate finance Henry Santos to be CIO. It also appointed Laura LaRaia as chief legal officer. LaRaia was previously the chief legal officer and general counsel at First Guaranty Mortgage Corporation.

The post Sprout Mortgage taps Wells Fargo veteran to lead retail appeared first on HousingWire.



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“We are seeing substantial inflation,” announced Warren Buffett at his company’s recent annual shareholder’s meeting. “We are raising prices. People are raising prices to us, and it’s being accepted.”

Buffett didn’t seem overly concerned because his companies can pass higher prices onto consumers. The stock market took the news with a grain of salt as well.

Why isn’t inflation—or the fear of inflation—having its normal effects on the markets? Typically, news of inflation spooks the market, triggering sell-offs as investors anticipate a slowdown in business, eventually denting the bottom lines of their portfolio companies and their associated stock prices.

However, that hasn’t happened so far. Why? Because of the stimulus.

Stimulus-fueled demand is bolstering both the economy and the stock market right now, but many economists don’t expect that to last. Many don’t expect another stimulus check, and all the new money that’s been pumped into the economy the past year will finally come to roost in the form of inflation, resulting in slowing consumer demand and a stock market correction.

In any other year or period, the Fed would typically step in and raise interest rates to cool the economy and corral runaway high prices. However, with its announcement last year of its new about-face policy to keep interest rates low—even in the face of inflation—it is too early to know if the Fed will do anything about rising inflation in the current environment. The concern is that if and when the Fed decides to step in to slow inflation, it will be too late.

Inflation or not, sophisticated investors never wait around for the shoe to drop. They’re prepared for inflation in 2021 because they’re always prepared for inflation.


More about inflation from BiggerPockets


Invest for demand

Some goods and services are demand-inelastic (meaning a rise in prices won’t impact demand) because they’re essential. People will always need shelter, food, transportation, fuel, medical care, etc. Rising prices don’t necessarily result in a drop in demand for these goods and services.

Warren Buffett is not concerned about inflation right now because consumer demand is sky-high across the board. Still, when stimulus money runs out and reality hits, consumers will cut back on spending on non-essential goods.

The Great Recession and the COVID-19 downturn of 2020 proved that specific segments, like affordable multifamily and mobile home parks (MHPs), are recession-resistant within real estate. Already in short supply, demand for multifamily and MHPs will only rise in an inflationary environment where consumers look to downsize.

Investing in properties with rents that rise in step with inflation without a decline in demand is the ideal counter to rising prices.

Long-term income over short-term rehabs

Investing for income long-term instead of thinking short-term with fix-and-flips will ensure consistent, reliable income independent of the underlying value of the property. While the housing market is currently experiencing unprecedented demand, this may cool with inflation as well—along with a slowing economy and stock market.

Since single-family housing is the real estate sector most correlated to the broader market, wise investors turn to less correlated commercial properties like multifamily, MHPs, or senior housing to insulate against potential downturns.


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Existing assets over new builds

Investing now in existing assets will shield you against rising prices that will impact new builds. Already facing rising lumber and material costs, new construction will only get costlier with accelerating inflation. So why not lock prices in now with existing assets instead of rolling the dice on increasing prices with new builds?

Key submarkets over top MSAs

As the Great Recession and the COVID-19 pandemic demonstrated, not all markets are equally impacted by a downturn. Primary gateway markets typically bear the biggest brunt of economic downturns as residents flee expensive, high-tax urban metropolitan statistical areas (MSAs) for secondary and tertiary MSAs with lower taxes and costs of living.

Just look at the exodus of workers from California and New York last year for proof. Follow the migration, and you can’t go wrong.

Inflation is already here. While the rest of the investing public shrugs its shoulders, wise investors shouldn’t wait to assess and readjust their portfolios to plan for inflation in 2021 and beyond.



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It’s no secret that lack of housing inventory is a major factor in the crazy price appreciation in the current housing market. There are many ways to measure housing inventory, and pretty much all of them say the same thing.

Between lags in new construction from last year, people not wanting to sell their houses due to a pandemic, foreclosure moratoriums, and people not wanting to enter the crazy buyer’s market once they sell their home, there are very few houses on the market.

While several factors are creating the recent buying frenzy (demand and low interest rates being the biggest factors), we’re unlikely to return to a more stable housing market with a healthier growth rate without inventory recovering.


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Assessing the current situation

When might inventory recover? I’ve pulled data from Redfin, a national real estate brokerage, and will be using Active Listings as the primary metric for forecasting inventory. Active Listings basically means the total number of property listings that were active in a given month.

We’ll look at the remainder of 2021 to help investors develop their own strategy for managing and growing their portfolios. As you can see from the graph below, listings are way down, even compared to 2020.

active listings redfin

When preparing to forecast a time series (a data set over time), you generally look for a few patterns off the bat.

  • Trend: Is the data generally moving up or down?
  • Seasonality: Does the data follow a repeatable pattern over a certain period of time?
  • Cyclicality: Does the data go through less-predictable cycles of highs and lows?

Just using our eyes, we can see that this data presents both a negative trend and annual seasonality.

It’s not huge, but you can see that Active Listings were already trending down slightly over the last few years. So when we talk about inventory “recovering,” I’m talking about getting back to around (or even slightly below) 2019 levels.

active listings redfin line

The second thing to note in these graphs is the consistent seasonality in the data.

Seasonality doesn’t really have anything to do with the seasons. It just means that you see the same pattern in the data over a certain time period. For our analysis, we see annual seasonality: The pattern of peaks and valleys is very similar each year. Active Listings are lower in the first and fourth quarters and higher in the second and third quarters.

Because of this seasonality, the first step in forecasting inventory is projecting what will happen to inventory this year if the seasonal pattern holds and nothing else happens. In other words, based on what we know about January-April of 2021, what would history tell us will happen in May-December?

I created a seasonal index and projected just that. You can see the projected numbers in green below.

seasonal forecast

It doesn’t look great. Just as we’d expect, we see that inventory would rise over the summer months and then fall again towards the end of the year—but not really get us anywhere close to where we were pre-pandemic.

In normal times, this type of forecast could be sufficient. I would use our trend and seasonality and a couple of fancy statistical models to project inventory going forward.

But we’re not in normal times, and unfortunately, all the fancy tricks I’ve learned won’t work here. Mathematical models require data that the model can learn from, and I’m not aware of any data that could teach us about the present moment. Instead, we need to use some intuition about the housing market to forecast what might happen next.

To do that, I will incorporate three additional factors into the forecast: new construction, improved sales conditions, and foreclosure inventory.

New construction

Last year was a weird year for new construction. Early in 2020, construction was at its highest levels since the financial crisis. It then rapidly declined to 2014 levels as the COVID-19 pandemic took hold, according to data from MacroTrends.net.

housing starts

On average, it takes about eight months for a housing start to hit the market. As of April 2021, we should be getting beyond the lapse in housing starts at the beginning of the pandemic.

On the other hand, we haven’t yet seen the inventory from housing starts in the latter half of 2020 hit the market. This gives me a reason to believe that new construction could boost inventory on top of our seasonality forecast.

There were about 1.37 million housing starts in August 2020, all of which should have hit the market around April 2021, the last month we have data for. However, in March of 2021, there were 1.73 million housing starts–360,000 more than last August. Meaning that we’ll have a lot more new construction hitting the market eight months from now, relatively speaking.

Foreclosure inventory

Over the course of the pandemic, governments have put protections in place to limit foreclosures. This has led to all-time lows in foreclosure activity.

But that doesn’t tell the whole story. Millions of Americans are still in forbearance programs, meaning they are working with their lenders to delay or reduce mortgage payments temporarily. What happens when the foreclosure moratoriums end is still unclear, but personally, I am not overly worried about a foreclosure crisis.

If you look at the data, the number of borrowers in forbearance has been steadily declining. Back in March 2020, it was estimated that about 8% of all borrowers were in forbearance. That number shrank to 5.5% at the end of 2020 and is now down to about 4.2%. The means an estimated 2.1 million borrowers are still in forbearance.

Does that mean 2.1 million people are about to be foreclosed on? I don’t think so. According to the Mortgage Bankers Association, about 87% of people in forbearance have exited their forbearance agreements with a repayment plan in place, and their loans have been reinstated.

This is excellent news, as it means the number of homeowners facing imminent foreclosure is not that high. It looks like these forbearance programs have worked.

But there still could be an increase in foreclosures when the moratorium is lifted. If we assume that 13% of those 2.1 million borrowers in forbearance will exit forbearance without an agreement with their lender in place, that will give us about 273,000 loans facing potential foreclosure.

Surely not all of those loans will actually face foreclosure, but I’ll use a high estimate of 90% for the purposes of this exercise. That gives us 246,000 potential foreclosures. Because I have no idea of the timing of those potential foreclosures, I will spread them evenly from July-December in my forecast. Hopefully, the actual number of foreclosures will be much lower.

Sales conditions

The last factor I will pull into my forecast is improved sales conditions, which is by far the hardest to quantify and ventures into guesswork territory.

What I want to do is quantify an improvement in a homeowner’s willingness to sell. Intuitively it makes sense that people didn’t want to sell their homes during a pandemic. We also know that many have been fearful of selling because they don’t want to become buyers in this crazy market.

But I have to think that will change, and some recent data backs me up. In one recent survey, the number of people who said it’s a good time to sell moved up from 61% to 67%.

Without any other data to help quantify this effect, I modeled a 6% increase above our seasonal expectations from May-July and 8% from August-December 2021.

I moved it up to 8% just based on a hunch. It’s not really scientific. I actually think it could accelerate faster, but I don’t have any other data to back that up, so I’m going to stick to the numbers I have.

Final forecast

When I combine all these factors, I get a forecast for 2021 that looks like this.

daves inventory forecast

I broke out each factor in the graph so you can see where some of the increases come from. My gut says that improved sales conditions will rise faster than this, but I’m going to stick to the data I have right now. You can also see from this graph that even if I’m wrong and more homeowners face foreclosure, it won’t impact total inventory that much.

Put in historical context, my model shows us getting close to 2020 inventory levels over the summer and even surpassing 2020 numbers towards the end of the year. This forecast does not project inventory getting very close to pre-pandemic levels at all in 2021.

Ultimately, what really drives inventory is the number of existing homes (not new construction) placed on the market. Hopefully, my forecast for improved sales conditions is overly conservative, and it accelerates faster, helping inventory recover more quickly than shown here.

What will happen beyond 2021 is even less clear. New construction starts remain a big question mark. With prices for lumber and other materials running high, we may see a slowdown in housing starts. This could definitely reduce inventory, even if improved sales conditions continuously improve as I suspect they will.



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Lenders’ profit margin outlook declined in the second quarter of 2021, the third consecutive quarter of pessimism on the profit front, according to Fannie Mae‘s quarterly Mortgage Lender Sentiment Survey.

According to the second-quarter survey, 69% of lenders believe profit margins will decrease in the three months ahead compared to 52% in the prior quarter. Just 19% believe profits will remain the same and 11% believe profits will increase. The decline represented the largest quarterly decline recorded since the survey began in 2014, Fannie Mae said this week.

Lenders said they expect demand for purchase mortgages but a major dip in demand on refis. The net share of lenders reporting negative demand growth for the next three months hit a net negative for the first time since the first quarter of 2019. In fact, it reached the lowest level since the fourth quarter of 2018 for GSE-eligible and government loans.

“Despite elevated optimism toward the U.S. economy, lenders show a cautious outlook for their mortgage business,” said Doug Duncan, Fannie Mae’s chief economist. “Those who expected a lower profit margin continued to cite competition from other lenders and market trend changes as the primary reasons…With the shift from refinance to purchase business, some lenders commented that purchase transactions are harder to complete and have lower margins.”

Duncan noted that recent economic indicators are cause for some encouragement.

“Though the primary-secondary mortgage spread has continued to narrow, it remains wider than the level seen pre-pandemic, suggesting that lenders are still making profits, though not as much as they did in 2020,” he said.

“Purchase mortgage applications have trended slightly lower in recent weeks; however, they remain fairly strong, and higher than the pre-pandemic level, likely because of continued low mortgage rates, ” he said. “Our June National Housing Survey released early this week showed that consumer demand remains strong since ‘home purchase on next move’ is at a survey high, despite the challenges of accelerated home price appreciation and insufficient supply.”

At the Mortgage Bankers Association‘s spring virtual conference, speakers warned that narrowing profit margins could make for some difficult conversations between executives and loan officers.

“Trees don’t grow to the moon, and at some point volume comes off from refinances and margin will get tighter,” Michael McCauley, principal at mortgage consultancy Garrett, McAuley & Co., said.

Lenders need to prepare for margin compression “because it’s likely to be significantly worse” than 2018, McAuley said. Except this time, the lenders in 2018 who priced loans aggressively “have a lot more retained earnings and a lot more staying power,” he said.

The post Profit margins are just going to get worse, lenders say appeared first on HousingWire.



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What’s the difference between a home inspection and an appraisal? Have you budgeted for closing costs?

The home-buying journey can seem daunting when questions like these are around each turn. Before you get overwhelmed, take comfort that critical milestones of home inspection, appraisal and closing processes are all great ways to get more acquainted with your prospective new home. Plus, if you start your research early, you will be much more prepared when the time comes to have a home inspected and appraised.

Here’s a look at what to expect across three crucial parts of home buying.

Home Inspection

So you’ve found a house and you have submitted an offer… now what? The home inspection is the last opportunity to check for any defects with the house prior to locking in a commitment to purchase. This typically takes place within seven to 10 days of the initial offer. A home inspector, hired and paid by the buyer typically, will look at the plumbing, electricity and the overall foundation of the home and then provide a report with their findings. While home inspections aren’t required, they provide the buyer with several important opportunities in the home-buying process. Depending on what the inspector discovers, the inspection report may create an opportunity for negotiation on features that need to be repaired or replaced. You can potentially ask the seller to pay for the improvements, or you can ask for a lower sales price to offset the cost of the repairs.

Keep in mind, most inspection reports will include findings of multiple defects. That doesn’t mean you should pass on the home. After all, no property is perfect. What matters is whether or not the defects are deal-breakers to you, the buyer. For example, a small plumbing issue can be fixed rather easily and quickly. However, a structural issue could cause safety concerns and lead to expensive repairs that you might not be willing to take on. 

“The biggest issues almost always include water,” said Nick Gromicko, a certified home inspector. “Roof leaks, plumbing leaks, and foundation leaks.  And, of course, water leads to damage of personal property.  And then water leads to mold.”

Home inspections provide valuable information that can make or break your decision to purchase a home, as well as help you plan for future improvements.

Appraisal

An appraisal is a valuation of a property by a third party. The buyer typically covers the cost of the appraisal. The lender orders it, prior to the closing of the home, to ensure the home is worth at least as much as what the buyer is committing to paying. A qualified appraiser will compare recent sales of similar local properties, market trends and conduct a visual inspection of the home’s interior and exterior to determine the property’s fair market value. For example, an appraiser will check the condition of the walls, roof, floors and the structure’s overall integrity. They will also take into account any upgrades or amenities, as well as how maintained the home is.

If the appraised value ends up matching or is higher than the contract price, the transaction can continue as planned. Should the appraisal come in lower than the contract price, the closing process may be impacted.

If the seller is eager to sell the property, they might lower the listing price to match the appraisal. On the other hand, the seller might disagree with the appraisal and refuse to negotiate. If this happens, buyers can either make up the difference or request another appraisal in hopes the price matches. While buyers can request a second appraisal, the lender decides whether to push it through. If it’s denied, buyers can also choose to walk away from the deal.

Due to today’s booming housing market, the appraisal process may take anywhere from days to weeks to complete. The process can take even longer if the buyer or seller requests a second appraisal. 

“Something buyers aren’t aware of is that the appraisal process can take a while, depending on location, geography and the number of appraisers available at a company,” said Anthony Masseria, Vice President and Area Lending Manager at Citi. “However, once the appraiser is at the home, it’s generally about five business days,” Masseria estimates.

While the appraisal process can be stressful for buyers, it can be an important part of the closing process. An appraisal will allow both the lender and the potential buyers feel comfortable and confident in their investment.

Closing

Before being handed keys to their new home, buyers have to go through the closing process, which finalizes the home purchase. During closing, buyers sign several legal documents and pay additional fees, some of which are recurring costs like property tax. Others are one-time closing costs expenses, which may include: loan origination fees, application fee, mortgage broker fee, title insurance, appraisal fees, title search fee and other miscellaneous payments. Closing costs vary from state to state, but not all home buyers are aware of the expenses prior to closing. According to a study from ClosingCorp, a provider of residential real estate closing cost data and technology, 50% of buyers were “surprised” by how much they were charged at closing. 

Understanding the home-buying process isn’t easy. There are many different steps, which is why it’s imperative to ask questions and ensure you’re working with professionals who can offer guidance throughout the entire process.

“Because there are so many different parties involved in the closing transaction, communication is key. Which is why it’s important to set proper expectations with clients and guide them through the various stages,” said Citi’s Masseria. 

The home inspection, appraisal and closing are all crucial steps in the home-buying process. By knowing what to expect, you ensure you’re prepared financially and emotionally to close on your home.

The Citi team wants you to feel confident during your home-buying journey. Working with you in the mortgage process, Citi home lending officers are prepared to help you navigate inspections, appraisals, closings and more. Click here to learn more about how you can move into the home-buying process with everything you need to make the most informed choices.

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The post Unwrapping what to expect in your home inspection, appraisal and closing appeared first on HousingWire.



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There are a number of challenges affecting the non-QM market, but there are also opportunities. By partnering with a mortgage company that understands how to streamline non-Qm loans, brokers can close loans quickly and effectively. HousingWire recently sat down with John Jeanmonod, Regional Vice President of Sales at Angel Oak, about the company’s non-QM solutions which make the mortgage process easier for brokers.

HousingWire: Why is non-QM so important for originators to utilize in 2021?

John Jeanmonod

John Jeanmonod: There are a number of factors making non-QM essential in today’s market. For one, refinance volume that has filled the pipeline for many originators over the past year is declining. It was projected in Q4 of 2020 that refinance volume would be cut in half in 2021 and we are definitely seeing the slowdown. In fact, the Mortgage Bankers Association (MBA) reports a decline in refinance applications almost weekly. Agency business alone will not bridge the gap to sustain volume growth. This is simply because more borrowers will not qualify for Agency loans. 

Fannie Mae and Freddie Mac have imposed tighter restrictions making the government box smaller and smaller. They have limited the percentage of loans they will do based on criteria they have set for what they consider to be high-risk loans. If borrowers meet two out of the three risks on the list, they won’t qualify. The three high-risk scenarios are: LTVs over 90%, DTI at 45% or above, or credit scores lower than 680. This two-out-of-three elimination rule creates a bigger demand for non-QM and results in a growing number of borrowers who do not fit in the GSE box. 

Originators without non-QM offerings risk losing deals and jeopardizing volume growth.

HW: Why is choosing the right non-QM lender so important?

JJ: It’s the difference between getting non-QM loans closed quickly and seamlessly versus working with a lender that doesn’t. Some non-QM lenders must get approval from outside investors that could result in delays. One of our biggest differentiators from other lenders is the fact that we are the end investor. We do not have to get approval or position anything with an outside party who could request changes and delay closings. The entire process from prequalification, underwriting to securitization occurs here at Angel Oak. We work very closely with our affiliate company Angel Oak Capital Advisors and when we say a loan is cleared to close – that’s it. We close the loan. 

In addition, we don’t sell our non-QM loans to Fannie Mae or Freddie Mac. This means that we are not held to the GSE’s 7% volume cap for investment properties or second home loans. Originators don’t have to worry about whether or not we can issue these loans – we are not held to a loan cap restriction.

Working with Angel Oak Mortgage Solutions means working with the leader in non-QM. It means originators are getting the top account executives in the country and an underwriting team incomparable to others. These unique individuals know every aspect of non-QM because our main focus is on non-QM lending. These are important factors to consider when choosing a non-QM lender. Your reputation and protecting your referral base depends on the right alignment.

HW: How does Angel Oak support the broker community at the local level?

JJ: We take great pride in our efforts focused on supporting brokers in local communities. We have 70 plus account executives across the country covering local markets. We belong to and sponsor every major trade organization coast to coast and many of our account executives serve on the board. For instance, I serve on the board of directors for the North Texas Association of Mortgage Professionals (NXTAMP) and Eric Morgenson, business development, sits on the board for the Orange County chapter of the California Association of Mortgage Professionals (CAMP). We are often the preferred non-QM partner for trade shows and events across the country. Our goal is to support originators the best we can and to continue to educate on non-QM with valuable information that moves the needle for our clients. The only way to do that is to be ingrained in local communities, knowing our clients and understanding their challenges. Each market is different.

Housing Wire: What is Angel Oak doing to make the process easier for brokers?

JJ: As much as we can. We try to do the heavy lifting so our clients can focus on prospecting and closing deals. One example is our marketing flyers available for approved brokers to use. Add your company logo, contact information and download to send out. We have presentations ready to go and we are happy to present with you as the expert on non-QM at any Realtor or referral partner meeting. An integral part of the business is to grow and solidify a referral base and we can help with that through in-person presentations or webinars. 

A significant time-saver for clients is our bank statement review team who will review, analyze and calculate income upfront for bank statement deals. As I mentioned before, our underwriting team is the most proficient in the business and our clients have access to them during the underwriting stage of the process. 

We continue to invest in technology ensuring quick responses, information and file updates. Examples include our non-QM pricing engine QuickQuote that provides an instant answer, Live Chat, a new broker helpline and we just launched loan status text notifications.

The bottom line is this – non-QM is going to become more and more in demand. Angel Oak Mortgage Solutions is the premier non-QM lender in the space. There is no one out there like us and we have the best account executives in the industry. Don’t trust your business or your livelihood to anyone but the experts who have built a successful company exclusively around non-QM.

To prepare for this surge in non-QM, brokers need a partner that’ll support their business. Using automation and fast technology to give brokers real-time data, Angel Oak Mortgage Solutions makes the process easier.

The post How non-QM lenders can make the origination process easier for brokers appeared first on HousingWire.



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Whether moving to be near family or relocating for a job, moving is common. Take the pandemic, for instance. The housing market saw a huge spike in the number of moves as people relocated from big cities to avoid COVID-19. According to data obtained by USPS, almost 16 million people moved during the pandemic.

And even though life is getting back to normal, people are still moving. The pandemic showed companies the possibilities of remote work. With some employees no longer having to live close to their office, their residential options are endless. That said, before you pack up your family and move to somewhere new, do your research.

To help families decide where to live, WalletHub compared over 180 cities to find the best and worst cities to raise a family. Here’s what they found: 

Best Cities for Families
  1. Overland Park, Kansas
  2. Fremont, California
  3. Irvine, California
  4. Plano, Texas
  5. Columbia, Maryland
  6. South Burlington, Vermont
  7. Seattle
  8. Scottsdale, Arizona
  9. Gilbert, Arizona
  10. Madison, Wisconsin
Worst Cities for Families
  1. Montgomery, Alabama
  2. Miami
  3. San Bernardino, California
  4. Wilmington, Deleware
  5. Birmingham, Alabama
  6. Newark, New Jersey
  7. Hialeah, Florida
  8. Memphis, Tennessee
  9. Cleveland
  10. Detroit

To rank these cities, WalletHub focused on five dimensions: family fun, health and safety, education and child care and affordability. They even took it a step further and highlighted the cities that feature must-have family attractions and other important family-friendly considerations.

Most Playgrounds Per Capita
  1. New York City
  2. Chicago
  3. Madison, Wisconsin
  4. Philadelphia
  5. Jacksonville, Florida
Highest Median Family Salary
  1. Overland Park, Kansas
  2. Plano, Texas
  3. Scottsdale, Arizona
  4. Gibert, Arizona
  5. Columbia, Maryland
Most Affordable Housing
  1. Cedar Rapids, Iowa
  2. Akron, Ohio
  3. Pittsburgh
  4. Overland Park, Kansas
  5. Des Monies, Iowa
Lowest Violent-Crime Rate per Capita
  1. Irvine, California
  2. Warwick, Rhode Island
  3. Gilbert, Arizona
  4. South Burlington, Vermont
  5. Glendale, California

The post Here are the cities that ranked among the best and worst places to raise a family appeared first on HousingWire.



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Regions Bank is looking to make a big dent in the home improvement lending space, striking a deal to acquire EnerBank USA for $960 million in cash.

EnerBank, a Utah-based subsidiary of publicly traded CMS Energy, has loan balances totaling $2.8 billion as of March 31, 2021 and is one of America’s largest specialized home improvement lenders.

The Salt Lake City-based lender says it’s worked with over 1 million homeowners since its founding in 2002 and funded $11.6 billion in home improvement projects. EnerBank says it works with 10,000 contractors and develops personalized loan programs for their clients. EnerBank funds most of its loans on its balance sheet through FDIC-insured brokered CDs; it also charges fees to the contractors.

Regions, a retail lender with a footprint of over 1,300 physical offices, has dipped into specialty finance sectors before. In 2020 it acquired equipment finance lender Ascentium Capital and a year prior picked up institutional investment firm Highland Associates.

“We have thoughtfully evaluated the home improvement point-of-sale lending space for a number of years, and we believe this is the right partner at the right time to deliver on our vision,” said Scott Peters, Regions’ head of consumer banking. “EnerBank’s platform and skilled financial professionals, combined with the reach and experience of Regions’ consumer banking teams, will help us deepen relationships with clients while reaching new customers with convenient home improvement lending options.”

The EnerBank team, led by Charlie Knadler, will join Regions as part of its consumer banking group reporting to Peters. It will maintain its headquarters in Salt Lake City. Regions’ acquisition of EnerBank from CMS is expected to close in the fourth quarter of 2021.

According to data from Polygon Research, Regions originated about $15 billion in loans in 2020, doing the majority of its business in the Southeast and Texas. It mostly originated cash-out refis and purchase mortgages in 2020, according to HMDA statistics in Polygon’s database.

Per a study from Harvard University’s Joint Center for Housing Studies, renovation financing is expected to increase 3.3% in 2021 to $433 billion.

The space remains dominated by depository banks. The top lender for home improvement loans in 2020 was PNC Bank, which issued 17,464 loans, worth $1.74 billion in volume in 2020. Bank of America followed closely with 17,056 home improvement loans worth $2.39 billion.

Given the growing interest to convert rooms into home offices and a lack of new inventory, non-depository banks are taking notice. Finance of America in May also announced the launch of Finance of America Home Improvement, a new business division that includes its acquisition of benji.

The post Regions Bank places $1B bet on home renovation market appeared first on HousingWire.



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