These are dark times. But even in dark times, we are preternaturally prepared to see the end of the tunnel. 

If we are diligent, we will be able to identify the return of hope and light coming back into the American economy. While no one could truly know when we’ll see the end of the coronavirus, we can at least know what signs to look for that the housing market is on the rebound.

With that, here is a guide to the five indicators that the period of AD (After Disease) is abating, and the era of AB (America is Back) is emerging.  

1. Flattened Curve

The first, and in fact, a prerequisite event that will indicate that the economy will come out of this tunnel is the turning of the number of new cases of infection from positive to flat or negative.  

In the Wuhan Province, with the strictest lockdown measures ever enforced, it took two months for the trajectory of new cases to level off. Furthermore, there was a span of three months from the first cases in December until March 19 when it was reported* that there were no new local infections. (*Questionable data noted) 

Logan Mohtashami
Logan Mohtashami,

 If we consider the China trajectory to be the best-case scenario (Noting questionable data) and apply those timelines to the U.S., then we should see the path in new cases flatten by mid to late April for states that first issued stay-at-home orders. These states should have fewer new cases by mid-May.

I think this seemingly ambitious timeline is possible because we are growing our testing capacity, and the two most populous states issue stay-at-home orders in March, and others have since followed.

It is from this data that I have based my virus turnaround thesis, which is that by May 18 or sooner, we will see a flattening of the new infection curve, and by September 1, we will be at a much higher capacity to fight this virus.

2. End of Stay-at-Home Orders

The second and also prerequisite indicator that the economy will be getting back on track is the lifting of stay-at-home orders.

Remember that the economic data from January to February was robust. Job growth in those two months was running at a combined average of 244,500 per month, well above my own 2020 forecast range. Retail sales were growing year over year, and even a few of the regional manufacturing data lines were trending positive.

As I have mentioned previously, housing data was on fire with cycle highs in purchase applications, new home sales and existing home sales. Even housing starts showed almost 40% growth year over year in the last report. In the days of BC (Before Coronavirus), the economy wasn’t going into recession in 2020.

However, the stay-at-home orders that most of the country is now following have basically shut off the economy. Turning that massive machine back on once the protocols are removed will take time, so be patient. We have sustained a lot of economic damage in a matter of weeks. Catastrophic loss can be nearly instantaneous, while rebuilding is a slow and steady process.

3.  10-Year Yield Goes Above 1%

Dramatic changes in the bond markets were the harbingers of our oncoming economic decline and will be the beacons for our recovery.

In many ways, we are experiencing an artificially induced recession, so we were unable to rely on the usual early indications to predict the economic crash. In 2006, we had many data lines that were warning us about the economy. The effect of this virus and lockdown protocols on our economy is nothing short of an act of war hitting the country quickly.

On January 20, the first positive test for the coronavirus was reported in the U.S.  A month later, the 10-year yield was 1.56%. In all my yearly prediction articles since the end of 2014, I always talked about how the 10-year yield should be in the range between 1.6% -3%.

The bond markets correctly and with great speed reflected the oncoming crash of the economy.

On March 9, we got as low as 0.32% on the 10-year yield, but on March 12, 22 days after 1.56% print on the 10-year yield, the jobless claims were still positive, near all-time lows.

But we all knew what was coming on that day, massive layoffs, as it was also the first day the U.S. government banned gatherings of more than 50 people.

Before the 10-year yield broke under 1%, published my forecast for where I believe recession yields would be: in the range of -0.21% to 0.62% on the 10-year yield. That following Monday, on March 9, bond yields dropped to as low as 0.32%.

We had a massive sell-off in bonds, not because the economy was getting better but because some traders took profits, and others had to liquidate assets, which forced yields back to 1.25%. 

The fact that the 10-year yield is at 0.73% while I am writing this tells me that the markets believe that Q3 and Q4 will be better than Q2, which is using the lowest bar in recent history to work from.

An early indicator of recovery would see the 10-year yield above 1% –– especially if it got above 1.33%. A range between 1.33% and 1.6% on the 10-year yield is something we should be rooting for, especially if this happens without liquidation selling of bonds.

Once you get to these levels, know that it’s a good thing. 

4. Decline in Credit Stress and Jobless Claims

When credit stress and jobless claims start to fall, you can believe we are on the road to recovery.

Before COVID-19, jobless claims and the Financial Stress Indices were basically at all-time lows. (As seen below.)

Jobless 2

In the last expansion, declines in credit stress as measured by the St. Louis Fed Financial Stress Index (seen below) and in weekly jobless claims were discounted as indicators of an improving economy.

St Louis Stress index

To track economic recovery, these weekly data lines are going to be even more important to follow than monthly data like leading economic indicators and housing starts.

This is the opposite of a so-called “normal recession,” when monthly indicators would be the ones to watch because they are more indicative of trends and less subject to statistical vagaries.

In this recession, however, the monthly data is too slow to capture the day to day shifts in the economy. A good example is that the recent jobs number showed a loss of 701,000 jobs where the next report could show a report of over 15,000,000 jobs being lost. 

5. Data from the hardest-hit sectors starts to trend upward

Some of the hardest-hit business sectors will show recovery first because the declines have been so horrific.

The restaurant industry, airlines, hotels, movie tickets, rideshares and gasoline purchases are some areas to watch. As more people walk the earth, go to work and get back to normal, these beaten-down industries will be some of the first to pick up.

For housing, purchase applications –– which showed double-digit year-over-year growth all the way to March 18 –– had back-to-back negative, year-over-year prints of 11% and 24% for the last two weeks. We are likely to see much deeper year-over-year declines in the coming weeks as more states follow stay-at-home protocols.

You will see a reversal of these negative year-over-year trends as one of the first indicators for housing. 

Fiscal and monetary government disaster relief will speed this along. Unlike the Great Depression of the 1920s, we have many more social safety nets, not to mention the government disaster relief of $6 trillion, to help speed the recovery.

Don’t be surprised if the government disaster aid goes above $10 trillion, with more money for people, states and small businesses when it’s all said and done.

I believe the months of April and May are going to tell an epic story of America’s start in defeating this virus.  If we do this right and document the cause and effect of our efforts, future generations will be able to look to this period in time for how to handle a global pandemic.

My faith in America winning has never let me down because I always believe in my people and country. I can tell you now, this virus isn’t changing my view on that. Before that reality is more common for a lot of Americans, bond yields will have headed higher while jobless claims and the St. Louis Financial Stress Index have already gone lower. Let’s all be here to see it.

Until then, stay separate and safe, my friends, and keep your eyes open for those small rays of hope.

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Home equity co-investing pioneer Unison cut almost 50% of its team Friday, and no, this doesn’t mean housing and fintech doom for two reasons. 

First, cost-cutting is crisis leadership 101. 

Julian Hebron,

React fast and smart. Job and budget cuts are extremely painful for all souls involved. And fear is the first reaction among team members, investors, boards, counterparties, and customers. But nerves calm down as people digest smart rationale. 

Second, survival is job No. 1 in a crisis. 

We started March 2020 evangelizing industry visions from bright conference rooms and ended it triaging careers and companies from crowded kitchen counters. Vision means nothing if you don’t survive, and the bigger your vision, the faster you must adjust in a crisis. 

Fast adjustments buy you time to weather today’s coronavirus storm. 

Two weeks ago, category-leading iBuyers made hard, fast decisions to win the long game.

Friday, co-investing (aka shared appreciation) category leader Unison cut 89 sales and marketing employees, contractors, and consultants for the same reason.

Is Shared Appreciation Your Coronavirus Home Equity Solution?

Unison created the shared appreciation category in 2004. 

Companies like Unison, Point and Noah (formerly Patch Homes) give a homebuyer about half their down payment in exchange for about a third of the appreciation. 

Homebuyers who give up some future appreciation conserve cash now and don’t take on the extra monthly cost. But the more interesting play right now is shared appreciation for homeowners. 

Let’s say a homeowner with some equity loses their job because of coronavirus. 

A lender can’t do a home equity or cash out deal for them, but they may qualify for a shared appreciation deal. 

Unison and the other players look at debt-to-income ratios, but they’re not making a loan, they’re making a co-investment. 

So they may do a deal like this if the equity profile works long-term (and they may require their cash to pay off other debt at funding).

Here’s Noah CEO Sahil Gupta on helping coronavirus impacted homeowners:

“Today, the coronavirus is shutting down entire industries; we are already seeing more homeowners turning to Noah for help,” Gupta said. “Noah is dedicated to being a long-term partner to homeowners by making our products more accessible during this time so we can put even more money in their pockets.”

Like everything in a crisis market, it’s case by case, but lenders should keep an eye on this for clients who need to tap home equity at zero monthly cost. 

It could be a great niche-y solution in a tough market phase. 

And shared appreciation companies that survive have huge potential later because about 65% of U.S. home equity is owned by folks 55 or older –– these people need a way to tap equity without breaking monthly budgets. 

Can Shared Appreciation Companies Win The Long Game? 

So will shared appreciation companies survive?

Many of you mortgage folks reading this are saying “Nope, the model won’t weather a down cycle.” 

That’s your transactional revenue brain talking.

Unison makes transactional revenue as each deal funds, plus they make recurring revenue by managing a shared equity portfolio for the investors who fund their deals.

But their investors aren’t warehouse lines like mortgage banks use to fund deals. 

Pension plans and other institutional money managers who want housing exposure give Unison money to manage. 

Unison invests that money in people’s homes using these shared appreciation deals and takes an investment management fee for doing so. 

This fee revenue continues even as home buying transaction revenue slows to a trickle. So they trim sales and marketing until transaction revenue comes back.

Survival tactics. 

Who Will Survive The Short Game?

It’s another story if the coronavirus causes massive home price declines over the years. 

And there’s certainly strain right now. Here’s Point CEO Eddlie Lim on stark realities

“The growing number of necessary shelter-in-place orders has had a widespread effect on many people and industries,” Lim said. “It affects our ability to order appraisals, notarize documents, and record crucial documents with the county, causing delays throughout our process. The changing economic climate is also dramatically impacting home valuations. We are seeing valuations drop significantly and continuously.”

But it’s still early to accurately predict home price impacts and when home transactions resume a normal pace. Which brings us back to where we started. 

It’s tempting for some to predict doom for fintech models like shared appreciation and iBuyer when they see stark adjustments to stark reality. 

But cost-cutting is crisis leadership 101, and survival is job No. 1 in a crisis.

Mortgage lenders learned how to fight this kind of fight in August 2007. Now it’s the fintechs’ turn.  And I predict we’ll see some true warriors emerge. 

Good luck out there.

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While open houses have gone down and 3D or virtual home tours have gone up, homes that were on the market prior to coronavirus striking the market have fallen off.

In the midst of record-high unemployment claims and economic uncertainty, supply is declining now more than ever, according to a report from Redfin, as homeowners are staying put and retracting listings.

There was a 148% year-over-year increase in homes being delisted during the week ending March 29, coming to a total of 28,140 homes pulled off the market, the report from Redfin said.

During that seven-day period, about 4% of homes were removed from the market, about two times the average amount of homes taken off the market, under normal circumstances.

The number of homes taken off the market varied by region, from 2% to up to 6% of active home listings taken off the market.

For measure, Detroit and Philadelphia saw the biggest drop in home listings, both falling 63% from the same week a year of 2019, according to Redfin. Alternatively, listings in Denver fell only 1%.

During the week ending March 29, there were 58,366 new home listings, marking a 33% drop from the year prior.

What about homes that remained on the market? They’re just being listed for less.

According to Redfin, the median asking price for newly-listed homes last week was $309,000, which is $21,000 lower than two weeks prior.

Pending home sales also fell 42% from the year prior during the week ending March 29.

Out of the large U.S. markets Redfin analyzes, Dallas saw the biggest decline in pending home sales, at 66%, followed by Atlanta at 57% and Detroit at 55%.

When looking at new-home listings, there were 58,366 new listings during the week ending March 29, but it was still a 33% decline from the year before.

Meanwhile, the demand for virtual home showings keeps rising.

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Credit unions occupy a relatively small share of the overall mortgage market. But when the COVID-19 pandemic took root, they quickly readied themselves to assist borrowers who suddenly could not pay their home loans.

According to a study by Callahan & Associates, credit unions accounted for 7.1% of the nation’s total mortgage origination during 2018, the latest available year for industry-wide data. Credit unions accounted for $142.2 billion of the total $2 trillion in mortgage production – far behind banks and mortgage finance companies that accounted for 47.2% and 45.6% of the nationwide loan origination balances, respectively.

Before the coronavirus became widespread in the U.S., credit unions that were active in the mortgage space were enjoying a vibrant activity.

“What I was hearing was no surprise: they were very, very busy,” said Tracy Ashfield, president of the American Credit Union Mortgage Association. “Their pipelines were very full, predominantly with refinance loans, and our members are still reporting new application activity on through their online channels.”

A typical example of this situation is Metro Credit Union in Chelsea, Massachusetts, whose chief executive, Robert Cashman, reported a mortgage pipeline that was “the strongest and the largest” it had ever been. Active participation in the secondary market coupled with a carefully maintained portfolio helped keep the credit union’s mortgage operations running well, Cashman added.

“People were coming to us because not only do we have price, but we have great competitive rates,” he said.

Brett Weir, vice president of mortgage lending at United Federal Credit Union in St. Joseph, Michigan, was also experiencing a lively mortgage business before the viral maelstrom.

“We’ve been busier in the first quarter of 2020 than we’ve been in the 11 years that I’ve been here at United,” he said. “Because of the rate environment, refinance activity has been quite high, and it continues to be for members who have fewer challenges and are able to take advantage of the rate environment. Purchase transactions have slowed, and they’re typically slow in the first quarter of every year. But we had a pretty mild winter, so we were seeing unique trend on the purchase market, too.”

Kendall Garrison, CEO at Amplify Credit Union in Austin, Texas, recalled that “when this crisis began to build and rates started to fall, we saw our mortgage pipeline double in about 11 days. So, it’s been shocking.”

Garrison added that that although his Austin metro area is a “very strong purchase market with a low level of inventory,” the purchase business is slowing due to a construction ban now in place and social distancing guidelines that prevent potential buyers from visiting what relatively few properties can be found.

“The purchase market is going to slow down over the next 30 days,” he lamented. “But refinance is very, very strong.”

On the other hand, the continued interest in mortgage applications is creating a unique problem for these lenders.

“I think most lenders are dealing with a drastic increase in terms of applications,” said Kevin Parker, vice president of Field Mortgage at Navy Federal Credit Union in Vienna, Virginia. “We’re being transparent with our members. A refinance today will take longer than they may have experienced in the past. However, we’re honoring locked in rates for an extended period of time. There are so many external factors that could slow the process, so we’re trying to help our members understand that everyone in the process is doing the best we can.”

ACUMA’s Ashfield pointed out purchase loan activity will be further delayed by new burdens placed on traditional appraisals.

“Appraisers are not going into people’s homes right now with social distancing, so we’re needing to look at alternative ways to evaluate the value of collateral,” she said. “There are unique challenges as a result of the pandemic.”

As for those already holding mortgages, the main challenge facing lenders is an unprecedented wave of borrowers who suddenly found themselves in financial distress after being laid off from work. However, Amplify Credit Union’s Garrison theorized that credit unions were ready for this challenge thanks to the lessons absorbed during the last great national catastrophe.

“I think the thing that we learned from the 2007-2008 housing crisis was to act early, to act decisively, and to do everything we can to keep our borrowers in their homes and give them a path to maintain the equity in their home,” he said. “In any event, that is that is what we’ve done decisively this time, as well.”

Amplify Credit Union is offering deferred payments to mortgage borrowers who claim newfound financial hardship, but Garrison stated his staff is not demanding excess paperwork to verify the need for such aid.

“We’re not asking our borrowers to detail the level of hardship,” he said. “If they call us and tell us they have a hardship, we accept that and move on.”

Ronald McLean, president and CEO of the Cooperative Credit Union Association, said that the credit unions in the four states represented by his organization – Delaware, Massachusetts, New Hampshire and Rhode Island – are “working with members on loan modifications and deferral of payments for upwards of 60 days or 90 days,” he said, adding that credit unions are also offering “emergency hardship loans of various dollar amounts, typically up to either $2,500 or $5,000, with no interest for 60 days.”

McLean also pointed out that unlike many financial services providers which have been flooded with calls from customers and are unable to respond with great speed, credit unions are cognizant of the need for immediate communications.

“Many credit unions have extended their call centers’ hours and some have contracted with additional third parties to provide additional assistance. There’s been a problem of being able to get to their credit union – many transactions are taking place via drive-thru and, in other cases, credit unions are having members come into their branch lobbies by appointment only.”

Jacqueline Ramsay, vice president of media relations and communications at the National Association of Federally-Insured Credit Unions, observed that unlike banks and other financial institutions, credit unions have a greater stake in needing to be ahead of the curve in ensuring borrowers are well-treated.

“Credit unions have always been prudent stewards of their funds,” she said. “They are very connected to their members – they have to be, because they are not-for-profit cooperatives. With everything that a credit union makes, they give back to their communities and their members because the members are not just customers like in a bank, but are owners of the credit union that they have joined. There are no board shareholders – its members are the shareholders.”

Ramsay added that prior to the current pandemic, many credit unions already had mortgage assistance programs in the event a borrower ran into a rough patch and needed help.

“Being a credit union means we are always going to be there to help uphold the members, because the members are the credit union,” she said.

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Policymakers are considering ways to ensure the mortgage servicing industry –– the central plumbing of the U.S. housing financial system –– remains functional during the COVID-19 crisis. 

Policies established by various federal housing agencies and augmented in the $2 trillion CARES Act that offer homeowners affected by the crisis forbearance on their monthly mortgage payments could cost the industry $75 billion – $100 billion, according to the Mortgage Bankers Association. This could cause lasting damage to the housing market that will make the coming economic recovery longer and harder. 

Any solution to this crisis needs to go beyond temporary forbearance on foreclosures. It must also prevent homeowners who cannot pay their mortgage payments from eventually defaulting and facing complex loan modifications with potentially higher monthly payments, or losing their homes.

The system needs a clean and simple way to protect homeowners, cover the payments they currently are unable to meet, and defer such unpaid amounts at 0% interest until they pay off their mortgages. Such a solution also needs to maintain the financial integrity of the servicing industry and the secondary mortgage market.

The CARES Act creates the opportunity for a fast, efficient, and cost-effective federal program that, in protecting servicers, protects America’s homeowners for the long term.

We envision a program that would create a Federal Reserve funding facility for single-family servicers of Ginnie Mae, Fannie Mae, Freddie Mac and state and local housing finance agency home mortgage portfolios. It would enable up to 6.75 million low- and moderate-income homeowners to avoid default on their mortgages despite layoffs and unemployment due to the pandemic.

Here’s how it would work:

  • A Fed commitment of $19.25 billion combined with $16.25 billion in Treasury equity investment of the $425 billion authorized in the stimulus, creates $35 billion of liquidity for regular principal and interest advances on mortgage-backed securities.
  • This money is provided through a Federal Reserve facility for mortgage servicers.
  • The Fed receives full repayment with interest at 2%; the Treasury investment enables the Fed to provide funding at 0% on behalf of homeowners throughout the country.
  • Funding runs through commercial bank intermediaries to servicers to cover the costs they incur each month on behalf of borrowers to make scheduled payments on mortgage-backed securities and bonds and escrow deposits for borrowers’ taxes, homeowners’ insurance, and mortgage insurance.
  • Treasury receives up to 75% of its investment back (roughly $12 billion) when borrowers pay off their mortgages. The Treasury’s net investment of approximately $4 billion prevents foreclosure losses on millions of federally insured and guaranteed mortgages, as happened during the financial crisis.

Under the program we envision, targeted federal investment enables borrowers to avoid loan default despite missing up to three monthly payments during their forbearance periods; they simply pay this money back at 0% interest, whenever they pay off their loan. 

And the program enables servicers to stay in business and helps keep the housing system intact under highly stressful conditions — and avoid untold amounts in foreclosure losses by the federal housing agencies and GSEs down the line.

If the Presidential emergency lasts longer, the program can be scaled up to cover additional missing monthly payments through larger investments by the Federal Reserve and Treasury.

More details on how the proposed Mortgage Servicer Funding Facility would work are here.

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underwriting processes cost lenders valuable time and money, which reduces
bottom lines, harms competitiveness and negatively affects the customer
experience – as well as slowing time to close.

HouseCanary saw that lenders needed faster, more efficient and higher-confidence valuation solutions that would align with major financial sources – that’s why they developed Agile Evaluation and Agile Evaluation Certified, their hybrid and insured valuation products. These valuation products lead the industry in speed and accuracy and reduce friction for all participants in real estate transactions.

makes HouseCanary different is our data,” CEO and cofounder Jeremy Sicklick
said. “HouseCanary is recognized as one of the most accurate automated
valuations at 2.2% accuracy for 106 million properties. In addition, as a 50-state
brokerage we have access to the best and most recent property information. Our
models use the latest in artificial intelligence and machine learning to drive
ever-improving accuracy and image recognition.”

Evaluation and Agile Evaluation Certified are designed to replace outdated
traditional valuations with a comprehensive report delivered in just days. The
products comply with Inter-Agency Guidelines (IAG) for an inspection-informed
evaluation, and Agile Evaluation is now accepted by major hard-money lenders.

Evaluation and Agile Evaluation Certified valuation reports deliver all the
necessary value conclusions, market context and risk data that lenders want, as
well as a third-party onsite inspection report and property photos.

solutions pair HouseCanary’s highest-confidence automated valuation model (AVM)
with a third-party onsite property inspection. Proprietary machine learning
technology delivers condition-informed values and deep contextual data.

Evaluation Certified goes a step further by providing a warranty that transfers
risk to a large third party insurer. Lenders can use Agile Evaluation Certified
to quickly pre-approve properties, significantly transferring the risk of
overvaluation to a third party, which improves customer experience while
increasing pull-through.

Agile Evaluation and Agile Evaluation Certified have rapid turnaround times
that allow lenders to accelerate their underwriting process, arriving at an
efficient, accepted property valuation more quickly and with higher confidence.
This, in turn, improves the borrowing experience for loan customers, building
loyalty and raising net promoter scores in a competitive lending market.

AVM behind HouseCanary’s valuation products achieved top results among AVM
providers tested by Fitch Ratings Inc. in 2019. HouseCanary is trusted by seven
of the top 10 buyers of residential real estate loans, seven of the top 10
bulge bracket investment banks and four of the top five single-family rental
investor owner operators.

mortgages don’t require a full appraisal, and our lenders now have the ability
to leverage HouseCanary’s various valuation tools inside our platform,” said
one enterprise client.

“HouseCanary provides something of value from the loan originator to the borrower, helping to educate borrowers and making the relationship stickier. It significantly reduces risk for originators, and it dramatically improves the customer experience.”

Jeremy Sicklick, CEO and Cofounder

chairman, chief executive officer and cofounder, Jeremy Sicklick drives
HouseCanary’s vision, strategy and growth. Sicklick was previously a partner
and managing director at The Boston Consulting Group, where he helped leading
real estate investors deploy billions of dollars in capital.

Jeff Somers, President & COO

president and chief operating officer, Jeff Somers is responsible for
day-to-day operations, along with planning and executing key priorities with
the executive team. Somers has built and managed teams at tech powerhouses
including Amazon, Zillow, Microsoft and eBay. Before joining HouseCanary, Somers
was president at Insureon, the nation’s leading online provider of small
business insurance.

Chris Stroud, Chief of Research &

cofounder and head of research at HouseCanary, Chris Stroud leads the research
team in creating the most accurate predictive analytics through machine
learning, dynamic modeling and cloud computing. Stroud draws on his previous
experience as an economist and his dissertation research on Dynamic Models of
Financial Risk.

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To help lenders navigate the uncertainties in the mortgage industry amid the COVID-19 pandemic, HousingWire filmed an interview with Finance of America Mortgage President Bill Dallas to get the latest feedback on what’s happening. He also gives valuable insight on how the industry is working together to find ways to move forward. 

Here are two of the five questions HousingWire asked Dallas to answer, with the full video below.

This interview has been lightly edited for length and clarity.

HW: What messaging are you and other lending executives hearing directly from the GSEs during this period of uncertainty? 

Bill Dallas: The message is twofold. One is trying to create temporary lending program shifts that enable us to close loans in the current environment. 

The second thing is really sustainable homeownership. The concern about putting people into homes and then they’ve already lost their job or they’re not going to be able to sustain it. That’s their biggest position. Our issues are the standard, “What do we do with income? What do we do with appraisals?” We’re asking all these questions about lending, and they’re trying to make sure there’s sustainable housing. We have to be concerned about post COVID-19 and post this disruption on how a particular employee performs potentially. I think the jury’s out really on how.

What happened in the jumbo and non-QM markets? Will they make a comeback and if so, when?

Bill Dallas: These real estate investment trusts own a lot of the non-QM players. A lot of them have either filed bankruptcy or are already in trouble, so you saw an immediate suspension of non-QM programs. In the private loan securitization, non-agency market, on one side, you have HBX, or what we’re going to call high balance conforming, and you would then have traditional, what you would say is jumbo, non-agency, loans over the agency limit, and then you have this non-QM market, which could be a couple things.

The immediate piece was no liquidity for the non-QM market, which left you with a few REITs like Two Harbors, Redwood, PennyMac, and some of these companies that actually provided jumbo financing and had to have a securitization market in order to execute. That group pretty much has cut off, so that leaves you with Chase and Wells Fargo, or 3 or 4 people on the planet that actually do jumbo loans. 

This market will actually come back fairly rapidly. To use a Jaws example, in my view, when it’s safe to go back in the water, they will come back fairly fast.

Be sure to also check out the video interview HousingWire conducted with Mountain Lake Consulting’s CEO David Stevens about the economy’s recent turbulence and what the Fed’s decision means for the mortgage industry.

Watch the full video interview with Bill Dallas below.

The rest of this content is for HW+ members. Join today with a HW+ Membership! Already a member? log in

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It’s sinking in that I take working from home for granted.

Scott Petronis,
Guest Author

Having worked remotely for the better part of 15 years, it’s become just part of who I am.

Now I’m putting myself in the shoes of so many others for whom it is a very new territory. I went through this transition a long while ago, so I’d like to share what I hope is some tangible advice. I hope most find it helpful and others find it reminiscent of their work-from-home experience. 

With that in mind, I’m going to provide three perspectives on the following three topics: Working from home, leading from home and collaborating from home

Working from home

I have five crucial pieces of advice, especially for those that are brand new to this. These are things that will ensure that you can actually not just succeed, but excel, at this. 


Do not get out of your normal routine, with the exception of driving into the office! Set your alarm. Get up. Shower. Get ready. Get Dressed. And get it into your head that you are going to work.

If you would normally have coffee, eat breakfast, read the news and so on, continue to do that. Just don’t let it consume all of your time. Your new routine might include others (kids, spouses, significant others, pets, etc.) that require focus and attention as well. Make sure to factor that into your new routine.


Create a schedule of your time each day. You’ll probably have standing meetings or other obligations. But besides those, block time on your calendar to get things done. Hold yourself accountable to your schedule.

One thing I’m terrible at is actually scheduling lunch and exercise. Make that part of your schedule like anything else. Especially if you’re used to walking each day or grabbing lunch with colleagues.


If you don’t already have an office, you live in cramped quarters, or your house is simply packed with everyone else who has to be home, you need to set up a dedicated space. Make sure wherever you set up is comfortable, but not too comfortable. Take heed of all of the recommendations you’ve heard about ergonomics and screen height and posture as well.

You need to set up a space you can “go to.” Treat as if you’re away. It’s your office. I tell my family when they’re home that “I’m at work.” You need to treat wherever you set up your workspace as if it’s your office.  


Avoid distractions! (He says as he pleads with you to read this). It’s easy to get sucked into the news, the thousands of articles about COVID-19, and the billions of Facebook posts about toilet paper. Keep yourself focused and don’t fall victim to the insane volume of distractions that will be all around you. 

That’s not to say that there won’t be legitimate ones. Your kids may need your help. Your spouse may need to discuss real-world challenges you’re both facing. But ask yourself if you’d be getting distracted by this if you were in the workplace. Urgent matters, especially under the current circumstances, are always urgent. 


Devote time to learning. Over the years, I’ve organized my time so that first thing in the morning and the last hour of every day, I try to set aside for learning. That can be reading a book, article, research report or series of articles. It can be watching videos that will expand your knowledge. It can be taking online courses. 

Think of it as an investment in yourself during the times that you’d normally be commuting. Don’t squander an opportunity to improve yourself.

Leading from home

When you’re working from home and are leading a team of people who are also working from home, you have a new set of challenges and opportunities to contend with. Not the least of which is, you certainly can’t “manage by walking around.” Regardless of what your functional role is or how your team is structured, there are a few things you need to excel at.


It’s one thing to “manage people” and it’s another thing entirely to be a leader. Over the years I’ve fielded many questions related to having people work remotely such as: “How would I know people are actually working?” “What if people don’t do what they’re told?” “How can I trust that they’re doing what they say they’re doing?”

I have some responses to all of these questions and usually, they’re not G or even PG-rated. So let me just pose my own question…

Do you trust that you’ve hired qualified and competent people?

If the answer is “yes,” then the questions above should be the farthest thing from your mind. If it’s no, I’d do some introspective soul searching to find out why. For now, let’s assume you have been smart and surrounded yourself with great people.

Now, as a leader, especially under current circumstances, your job is this:

  1. Set the tone – Let everyone know that you’re there for them, that you’re all going through this transition together, that you know everyone (including you) has been disrupted, and that you’re all going to continue to work to accomplish what needs to get done as best you can. Your team needs to know that you’re human, compassionate and understanding. And that there’s still a job to be done. 
  2. Inspire your team –  A major part of keeping people inspired and motivated is keeping in touch. I don’t mean lurking, sidling and peering over people’s shoulders or even the digital equivalent. What I mean is maintaining a tempo of checking in with your team as a whole and with individuals. And it’s not just about what they’re doing, it’s about what you can do for them. 
  3. Inform often – Your openness and willingness to keep people informed is not just a great way to give people comfort, it’s also a great way to build trust. Trust is a magical ingredient for high performing teams.


Your schedule may be more full than usual. Set regular check-ins with your entire team as well as individual team members. Find a time that works for everyone or make a time. Having worked in technology for so long, another thing I take for granted is stand-ups. But these work wonderfully no matter what line of work you’re in.

Get in the habit of quick, 15-minute stand-ups where you can all catch up on three important things.

  1. What did you work on yesterday?
  2. What are you working on today?
  3. What’s blocking you that you need help on?

Stand-ups are even more effective when everyone posts their items in advance so you don’t have to re-hash everything you could have just read. These should be about “what do I need to know about and what impediments are there to success?”


Yes, sometimes over-communication can be overbearing and downright annoying. But at times like this, communication is imperative. Keep in mind, I don’t recommend this style all of the time, but with what everyone’s dealing with right now, these things are top of mind:

  1. Don’t assume everyone knows what you know when you know it.
  2. People need frequent and consistent reassurance.
  3. Timeliness is more important than completeness: As a manager, there’s a tendency to want to have all the facts before communicating. But right now, it’s more important to get out what you know, when you know it. It’s okay to say ‘I don’t know’. Don’t go dark.
  4. Everyone could use a little levity: No, you don’t need to practice your stand-up routine. But it’s okay to throw a little fun into communication.
  5. Use a consistent communication channel.

There’s a fascinating post on the Doist blog all about the communication pyramid, synchronous and asynchronous communication, what tools to use when and loads more. I can’t do this topic justice in the confines of this article.

Collaborating from home

A lot of articles have focused almost fully on the technology you can use to work from home.

Of course, many have focused on things like Skype, Zoom, GoToMeeting and other video conferencing apps. Unsurprisingly, that’s led to a run on many of these applications and also a dramatic slowdown in everyone’s services.

Leverage what you have

Starting with what systems you may already be using. I find that this generally falls into two camps: Microsoft or Google. Now, that’s not to say that there aren’t other choices, but these are the two “platforms” that many businesses run on today. 

I’ll start with Google and specifically GSuite. There are also nonprofit, public sector and school versions of these. GSuite comes with a powerful set of capabilities for document sharing and collaboration. Email, calendar, documents, spreadsheets, presentations, file organization and sharing. You’re hard-pressed to find something missing here. But in addition to all of this, you get some things that I find people don’t take great advantage of:

  • Chat – GSuite provides an integrated chat feature based on A Hangouts that you may or may not be familiar with from your personal account.
  • Meet – Also based on Hangouts but way more robust is the Meet product. Essentially, it’s integrated video, voice and chat for handling internal and external meetings.
  • Groups – Another handy product is Groups which lets you create discussion in groups so you can get people communicating with each other in a shared environment.
  • Sites – Google has essentially given you a content management system, integrated with your files and docs, to create websites and pages for collaboration. It’s pretty feature-rich, ridiculously easy to use and may offer you one of the best ways to keep people informed on a shoestring. 
  • Forms – This product gives you the ability to create forms to capture information and then actually do stuff with the data. Now think about how you can use this to send out surveys to your employees, customers, vendors, etc., to quickly get a read on anything. 

Similarly, Microsoft has an impressive suite that’s all part of Office 365. I won’t go into all of the details here but this handy matrix will tell you everything you get in their various versions. If you’re on any one of these, you already have an arsenal at your fingertips and, again, chances are you’re not fully leveraging it. 

I can’t tell you how many companies I’ve worked with that don’t even know that they’re paying sometimes two or three times for redundant services. Great collaboration tools are essential for keeping teams motivated, productive and informed, but you don’t have to go out and spend an additional fortune to get them when many of you have these offerings already.

Ways to augment

While I’m a huge proponent of leveraging what you’re already paying for, there are some great point solutions out there that absolutely make collaboration that much better. I’m just going to highlight a few that I personally use and like, and give a few reasons why.

First, collaboration is not one-way or even two-way, collaboration is about getting everyone within a team department or company working together toward common goals. So the tools you choose have to facilitate that or they’re working against you.


One awesome thing about Slack is that you can create channels to control the flow of information. I’ve seen some companies create way too many channels so you have to be careful. But used properly, Slack channels can create amazing collaboration, boost community and provide incredible efficiency. There’s also the ability to call, direct message, connect to loads of other apps, search through conversations. If you’re looking for a fast, affordable way to help your team collaborate, this is a good place to start.


Zoho is a bit of a curveball in here because they’re way more than collaboration. They’ve not only built out an impressive suite of solutions, but they’ve also managed to help loads of companies cost-effectively scale with capabilities that were once reserved for the largest enterprises. Today they have an offering called Remotely which combines what they feel are all of the capabilities you need to effectively work remotely. Productivity, communication, collaboration and a host of other goodies that facilitate integration and automation. 


Specifically targeted at collaboration is a newer application called Workplace by Facebook. I’ll be the first to admit that I was extremely skeptical when I was first introduced to this. But over the past two and a half years, it’s grown on me and it’s also matured immensely. Based on the core Facebook platform, but tailored to the needs of businesses (security, administrative controls, branding, integration, etc.), they’ve created an environment that allows people, teams, departments, divisions and entire organizations to work together in ways that most couldn’t have imagined. 

Ready to get things done?

If you remember, I said avoid distractions in the first section of this and I just distracted you for at least 15 minutes. But I hope I also gave you some things to think about and learn from.

These are the things that have helped me effectively work, lead and, most of all, collaborate with team members all over the world. No, this is by no means an exhaustive list of how to be successful at it, but if you follow even a little bit of this advice, I think you’ll find it will help you.

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The U.S. GDP grew at an annual rate of 2.1% in the fourth quarter of 2019, according to the third estimate from the Bureau of Economic Analysis, showing the strength of the economy before the COVID-19 pandemic hit the U.S.

The estimate in Thursday’s report is based on more complete source data than what was available in the prior report. According to the BEA, the results match the prior quarter’s pace.

In Q4, a downturn in imports and an acceleration in government spending were offset by a larger decrease in private inventory investment, according to the BEA.

Homebuilding made a
positive contribution to GDP, as well as personal consumption expenditures.

The GDP increase also reflected positive contributions from
exports, federal government spending, and state and local government spending,
which were partly offset by negative contributions from private inventory
investment and nonresidential fixed investment.

Imports, which are a subtraction in the calculation of GDP,
decreased by 8.4%.

Current-dollar GDP increased by 3.5%, or $186.6 billion, in
Q4 to a level of $21.73 trillion. This is down from the third quarter’s 3.8%,
or $202.2 billion.

The gross domestic price purchase index increased by 1.4% in Q4, holding its ground
from Q3’s increase of 1.4%. Personal consumption expenditures increased by 1.4%,
down from 1.5% in the previous quarter.

Here are updates to the previous estimate:

Real GDP: Remained unchanged at 2.1%

Current-dollar GDP:  Remained unchanged at

Gross domestic purchases price index:  Remained
unchanged at 1.4%

Personal consumption expenditures: Increased
to 1.4%, up from the last estimate’s 1.3%

The chart below shows that GDP sits at the same level as
Q3, but is more than one percentage point above Q4 of 2019:

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“Because that’s the way it’s always been done.”

Anyone who has ever worked with me has heard me lose it when I hear this phrase. It is uttered everywhere I go and is usually spoken in response to my question, “Why does this process happen this way?” I’m used to it by now, and frankly, it is this kind of thinking that keeps me busy as a consultant or executive.

Mary Frances Coleman
Mary Frances Coleman,

Over the years, I have found that people in leadership positions who answer my question with, “Because that’s the way it’s always been done,” have no business being in a leadership position. Leaders are supposed to lead, be the example, set the expectations and organizational structure and be the foundation during times of change and crisis.

This is that time.

The real estate industry as a whole has often relied on the thinking that the process has always been this way and will never change. Sure, there are companies that “innovate,” but typically it is in the form of creating a new model for a brokerage. This industry and its leaders need to start leading and accept that the business as we know it is changing.

iBuying meets changing market

As we navigate this temporary new normal brought on by the coronavirus, it’s important to examine the realities of how the real estate business gets done. Technology today has allowed buyers and sellers to access an unprecedented amount of information before ever really speaking with an agent. Companies like Redfin and Zillow have given consumers the information that we as agents used to provide.

Opendoor and other iBuyer programs have given sellers the option of eliminating the inconvenience of listing a property and entertaining buyers. As we’ve seen, sellers are willing to possibly place price a little further down the list in order to have the peace of mind that the house will, in fact, close escrow. Some of these companies, like Offerpad, will even move them locally.

(For more on this, my fellow columnist Julian Hebron wrote a wonderful article this week regarding iBuyers and the marketplace right now.)

The question of whether these models will survive and thrive, or lose momentum and struggle to maintain is one that will be answered with time for sure.

But the bigger issue now is whether the industry as a whole will remain in its current state and survive this interruption in the way things have always been done, or whether this will be the impetus for change. Perhaps it’s a combination of both.

I’m a big numbers girl, and my consulting company has afforded me the insight into a number of companies around the U.S. and how they operate. Spin doctors are always hard at work making things look rosier than they may actually be, but what I’ve found this week has been interesting. 

My home base is Arizona, which continues to be one of the hottest markets in the U.S. In the past week or so, some of the companies I consult for have actually seen a rise in the number of new open escrows rather than the cancelation of transactions currently scheduled to close. Many of the agents have been remarking that their buyers are ringing the phones off the hook now since the iBuyer market has almost halted. Traditional buyers, at least in Arizona, have discovered that they are not in competition with the all-cash “close when you want” iBuyer.

I know it’s only really been about a week and that’s not a long enough time to evaluate a trend, but in some respects, this may be the opportunity for the traditional buyer to actually put an offer in on a listing and get it accepted. 

Speaking of change… Hello, digitization

The governors of a number of states have met with and released statements regarding the real estate industry, and how much of a financial impact it has on the state.

The need for digital recordings to continue and property to be transferred is very important to the bottom line of many states. The business of real estate contributes funds necessary to provide programs for the continued health and safety of the citizens.

Mobile notaries are being dispensed by title companies and lenders alike, which is not the best solution since it also requires contact, but keeps social interaction to a minimum. The digitization of real estate may be in full force, and as a whole, it could change how things have always been done.

The difficult part in all of this is the basic fact that the purchase and sale of real estate is largely an interactive industry. Inspectors need to physically inspect, appraisers need to see it for themselves (although the drive-by appraisals that happened just a decade or so ago could certainly come back), buyers need to walk the property no matter how good of a video is created to market it, and most of all, both buyers and sellers need to actually move in and out of a home.

So where does that leave the agent? 

As I mentioned in last week’s article, there are currently class action filings naming the National Association of Realtors and brokerages as defendants, that claim to seek relief from the way the industry operates. In a nutshell, the suits claim that the fact that the listing agent controls how much is paid to the buyer’s agent is detrimental to the seller.

I received a number of passionate emails about this, many of which were convinced that this suit will easily be dismissed. But it’s not being dismissed. Actually, on October 10, 2019, the Department of Justice filed a statement of interest in the lawsuit.

The reality is that this business/commission model hasn’t changed in decades. As many agents are taught in real estate school, commissions are not set by any regulatory board or agency. Listing agents and brokerages set the commission rates by what they charge to sellers.

The lawsuit alleges that because the listing agent determines what is offered to the buyer’s agent, capitalism and fair market competition have been stymied. The industry has seen listing agent’s fees reduced based on open competition from companies like the iBuyers, or flat fee commission brokerages instead of the more costly split commission brokerages.

Why the buyer’s agent fee hasn’t gone down is the question at heart, according to the allegations in the lawsuit.

Agents are not supposed to put their own needs above their client (part of the fiduciary duties owed to the client), but there are absolutely differences between what is supposed to happen and what really happens. The lawsuit has questioned whether a listing offering lower than the “typical” 3% co-broke has fewer showings than ones that do offer that co-broke. Although they are not supposed to, agents in many MLSs can search by co-broke and sort out those that do not offer a higher fee. Consumers don’t always know that.

As noted above, consumers have a lot of information available to them now that they never had before. They used to have to come to a Realtor for information, neighborhood highlights and crime statistics and simply to see what is on the market. The technology tools they can utilize today have created situations where the buyers can already know what neighborhood, school district, utility bill costs, where the nearest Starbucks is, and in some cases, the exact home they want to buy.

If that’s the case, shouldn’t the buyer’s agent fee be based on something other than what the listing agent decides?

Of course not, because this is the way it’s always been done. It would wreak havoc on society. Chaos would reign in the streets if we changed that. Pandemonium would set in. Who would survive if this tomfoolery ensues?


Let’s take a good look at those leading us through the current situation. Giving us guidance on how to wash our hands while continuing to do business as usual is not as helpful as actually figuring out how to change our business to accommodate and recognize the needs of our clients. 

Leadership matters. Let’s stop accepting the answer, “Because that’s the way it’s always been done.”

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