Earlier this year, congressional Democrats considered making major investments to promote housing affordability as part of their Build Back Better bill. But the way this legislation was considered — through the inherently partisan “reconciliation” process — ensured it would garner no Republican support. Ultimately, the housing provisions ended up on the legislative cutting-room floor. 

The problem

The nation’s housing affordability crisis continues to roll on. Housing remains unaffordable for far too many families, due in large part to a shortage of affordable rental units and entry-level homeownership options. In addition to affordability challenges, wages and incomes in recent years have not kept pace with the rising housing costs.

As a result, millions of households pay unsustainably high rents, often more than half of their monthly incomes. Millions of others can’t afford to buy their first home. Meanwhile, nearly 600,000 individuals are experiencing homelessness on any given day. 

At the Bipartisan Policy Center’s Terwilliger Center for Housing Policy, we believe that a comprehensive, effective and durable response to the crisis can only come through bipartisan cooperation. That’s why our government advocacy partner, BPC Action, has developed a legislative proposal — the American Housing Act of 2023 — that builds on the best ideas from congressional Democrats and Republicans. The plan seeks to improve housing affordability using a three-pronged approach:

  1. Increasing the supply of homes both for rent and sale,
  2. preserving the existing stock of affordable housing and
  3. helping families afford and access housing through a series of “demand-side” initiatives.

At the grassroots level, Democrats and Republicans overwhelmingly believe the federal government should address the crisis. A new poll that Morning Consult conducted for the Bipartisan Policy Center claimed some 88% of Democrats and 75% of Republicans said it was important that the federal government respond to high housing costs that are contributing to inflation. And, 89% of Democrats and 77% of Republicans said it was important that the federal government address homelessness.

The housing affordability crisis does not discriminate by geography or party affiliation. It’s affecting big cities, rural areas and suburbs alike, disrupting the lives of Republicans, Democrats, and Independents. Some 54% of those polled said they had experienced increases in their rent, mortgage or utility payments over the past 12 months, and 52% of renters said they’ve had trouble paying their rent in the past six months.

Not surprisingly, those making less than $50,000 per year were likelier than middle and higher-income respondents to report problems in paying rent and utilities over the past 12 months. One in six renters is not caught up on their rent payments. 17% of renters are not confident that they can make their next payment on time.

Those troubling figures help to explain why we feel so strongly about the need for federal action. We believe that the three-part American Housing Act gives lawmakers a comprehensive, and politically feasible, way forward.  

What’s in the plan?

The first part of the plan proposes to increase the much-needed housing supply. In recent years, the nation has underbuilt housing by millions of homes, failing to keep pace with new household formations and rising demand. We would substantially strengthen the federal Low-Income Housing Tax Credit, our nation’s most successful affordable rental housing production program, and create a new tax credit that would incentivize private investment to build and rehabilitate homes for sale in distressed communities. These homes, designed for lower- and moderate-income families, would serve as an entry point for homeownership while supporting neighborhood revitalization. 

The second part proposes a preservation of our existing affordable housing stock. Preserving an affordable home is generally more cost-effective than building a new one, and it prevents displacing a household. We would ensure that new homes that are financed through the Low-Income Housing Tax Credit stay affordable permanently, rather than carry rent restrictions that expire after 30 years. 

The third and final part proposes a series of “demand-side” initiatives that would help families afford and access housing and reduce homelessness. Federal rental assistance enables millions of low-income families to secure stable housing. However, because of limited funding, fewer than one in four eligible households receives assistance. One of our proposals, based on legislation from Senate Democrat Chris Van Hollen of Maryland and Senate Republican Todd Young of Indiana, would fund 500,000 new housing vouchers to help families with young children move to high-opportunity neighborhoods.  

Nearly every idea put forward in the American Housing Act has some measure of bipartisan support. If enacted in its entirety, the legislation would greatly improve the lives of millions of Americans. 

Regardless of the upcoming congressional election results, the new 118th Congress that convenes in January should take on the housing affordability crisis with the urgency it deserves.

Dennis C. Shea is executive director of the Bipartisan Policy Center’s J. Ronald Terwilliger Center for Housing Policy.

The post American Housing Act charts bipartisan path forward for housing affordability appeared first on HousingWire.



Source link


Local markets is a HousingWire magazine feature spotlighting housing trends across the country.

Phoenix, Arizona

Phoenix has arguably been one of the hottest housing markets in the country over the past two years, but as mortgage rates have climbed, demand has cooled and inventory has risen dramatically. At some points during the summer, the active listing count for the Phoenix-Mesa-Scottsdale metro area topped 10,000, according to data from St. Louis Fed.

“Inventory is rising, and days on market is also a bit longer, but we still have a significant turnover of existing product,” Bob Nathan, a local Engels & Völkers agent, said. “It is not a crazy hot market anymore, it is now just a very strong market, but there are less concessions being given up by the buyer. So it is a little bit more back toward normal.”

However, as mortgage rates continue to rise, home-buying demand cools further and concerns about a possible recession become more prevalent. Accordingly, Phoenix is feeling the pain. The city ranked No. 8 in a Redfin analysis of metro areas most likely to feel a big impact as these gloomy economic scenarios materialize.

Phoenix Arizona

Lafayette, California

Just 25 miles east of San Francisco, Lafayette, California, is known for its high quality of life, top-rated schools, low crime rate and some of the highest home prices in the country. In June, the median sales price for a home in Lafayette came in at $2.065 million, according to Redfin.

Despite the steep home prices, home-buying competition was intense in Lafayette until mortgage rates began to rise.

“We have gone from so many offers on homes and not a lot of inventory to a slightly sleepier environment as people pause and figure out lending and what they can now afford with the decline in the stock market and rising interest rates,” said local agent Dana Green, team leader of the Compass-based Dana Green Team.

For sellers, Green said this change means having to alter pricing strategies and being a bit more modest with list prices. However, she noted that this shift did not come as a surprise.

“We all saw it coming based off of the number that came out Q1 this year,” she said. “We were at such an unbelievable high, and it obviously can’t stay that way forever. It is hard to know what a normal market looks like anymore. We went from a normal but strong market to the COVID market and now this sudden shift, so we are still trying to figure out what our new normal is.”

Acalanes Ridge, Lafayette, California

Vancouver, British Columbia, Canada

With easy access to the Pacific Ocean, great skiing and a milder climate than other parts of the country, it is a wonder everyone doesn’t live in Vancouver, British Columbia. During the height of the pandemic, when many people looked to get out of cramped cities, the housing market in Vancouver got a boost from homebuyers from other parts of the country who decided to take advantage of remote work opportunities and relocate.

But over the past few months, local eXp Realty agent Sarah Kwan has noticed a shift in the market. “There are definitely a lot more price reductions,” she said. “I first noticed the drop in March because I had a townhome listing and the week prior there was another unit that was virtually the same and it had twice as much foot traffic as we had.”

According to Kwan, prices have dropped an average of 2% month over month, but in some markets, she has seen prices drop 10% month over month. Despite these drops, she said that if a property shows well and is priced strategically, it will still generate plenty of interest and possibly even a multiple-offer situation.

“In markets where we have seen large price drops in the past 30 days, it is very important that you are looking at sold inventory on a weekly basis and maintaining communication with your clients so you can make changes if you need to.”

Kwan said she doesn’t confirm the final list price until right before the home is listed. Looking ahead, Kwan expects the market to continue to slow down. “It was expected regardless of interest rates. It was kind of bound to happen. There is only so long it can keep going up,” she said.

Closeup of a Vancouver, British Columbia, Canada

Huntsville, Alabama

Huntsville, Alabama, is perhaps best known as the birthplace of the Saturn V rocket that would one day send Neil Armstrong and Buzz Aldrin to the moon. However, it wasn’t always a bustling metropolis for the military technologies and aerospace industries. The city’s initial growth is attributed to the cotton industry and trade associated with railroad industries.

“We have always been known for great white-collar jobs, but we just didn’t have anything to fill the gap,” said John Brooks, a local agent with Coldwell Banker of the Valley. The opening of an Amazon distribution center and the addition of a second Toyota plant, among other things, have changed the situation.

The abundance of job opportunities combined with Huntsville’s strong public school system and growing arts and culture scene have made the city a place many wish to call home.

“We are usually ranked as one of the best places to live, and with this latest huge migration, a lot of people decided to move here, which gave us a bustling real estate market,” Brooks said.

Like elsewhere in the country, high levels of housing demand resulted in rapidly rising home prices and low inventory, but as interest rates have risen and fewer people are looking to make cross-country moves, Brooks said things have slowed down.

“I think Huntsville will still see some relocations probably into next year, and I think that is going to help our local market stay balanced,” he said. “We have definitely started getting more inventory, which is a healthy thing because it is not sustainable for everyone to continue to go up $40,000 over list price on every single home.”

Huntsville, Alabama, USA park and downtown cityscape
Huntsville, Alabama, USA park and downtown cityscape at twilight.

Boston, Massachusetts

Founded in 1630, Boston is one of the oldest cities in the U.S. In its centuries of existence, the city and its housing market have seen a lot. As one might expect, despite its high home prices, the metro’s housing market is pretty hearty. In July, Redfin named the city as one of the metro areas with the lowest chance of a housing downturn if the U.S. entered a recession.

“We are seeing pockets of high activity, but prices are super stable,” said Ricardo Rodriguez, a Boston-based Coldwell Banker agent. Rodriguez attributes at least some of Boston’s resilience to the metro’s limited inventory and constant stream of demand, thanks to the various industries that call the city home.

But while other markets across the country are dealing with shifting conditions and changing trends, Rodriguez said he has noticed a new home-buying trend in Boston.

“Our buyers are younger than they used to be,” he said. “I think during the pandemic, a lot of people passed along financial resources to their children earlier than they would have because I am seeing more young people engage in the home-buying process than I have in my 20 years in the industry.”

Boston Skyline at Night
Large panoramic view of Boston skyline at night

The post Local markets: Phoenix, Huntsville and Boston appeared first on HousingWire.



Source link


Higher mortgage rates continued to impact home sales over the last month, with existing home sales declining in September for the eighth consecutive month, according to a report from the National Association of Realtors (NAR)

“The housing sector continues to undergo an adjustment due to the continuous rise in interest rates, which eclipsed 6% for 30-year fixed mortgages in September and are now approaching 7%,” NAR Chief Economist Lawrence Yun said in a statement. “Expensive regions of the country are especially feeling the pinch and seeing larger declines in sales.”

Per the report, existing single-family home, townhome, condominium and co-op sales fell by 1.5% from August to September, with three out of four major U.S. regions experiencing month over month contractions.

The seasonally adjusted sales rate for existing home sales also declined in all regions on a year over year basis. According to the NAR, home sales declined by 23.8% on a year over year basis, dropping to 4.71 million from 6.18 million in September 2021.

This is the 13th consecutive month in which year over year home sales have declined nationwide.

Sales of existing homes are now at the lowest level since 2014, excluding the decline that occurred during the pandemic, and home sales are expected to continue to decline over the next few months.

“Existing home sales are being impacted by higher mortgage rates,” housing analyst Bill McBride of Calculated Risk said in a post Thursday. “Rates have increased sharply in October, and that will impact closed sales in November and December – so I expect further declines in sales later this year.”

According to Freddie Mac, the average rate in September for a 30-year, conventional, fixed-rate mortgage was 6.11%, up from 5.22% the month prior. In contrast, the average rate in 2021 was 2.96%.

While higher mortgage rates have had a clear impact on existing home sales, it’s likely that rising home prices over the last 127 months (10.5 years, roughly) have also played a role. 

As of September, the median home price was $384,800 for existing homes of all types, according to the NAR. That’s an 8.4% increase year over year compared to September 2021, when the median home price was $355,100. The year over year median price change peaked at 25.2% in May 2021. 

The trend of month over month median home price growth has reversed course over the last few months, however. Per the report, September marked the third month in a row in which the median sales price retracted. The NAR cites regular seasonal price trends as the cause of the decline in median home price.

Housing inventory also decreased last month, but just slightly, dropping from 1.25 million available units in September from 1.28 million the month prior. Per the NAR, this drop in inventory was likely due, at least in part, to the seasonal inventory decline that typically occurs during December and January. 

The months of supply remained unchanged from August to September at 3.2 months.

According to the NAR, the region that experienced the most significant decline in existing home sales was the South, with home sales declining by 1.9% from August to September, and by 23.8% from this time last year. 

Existing home sales also declined in the Midwest, dropping by 1.7% from the month prior, and by 19.7% from September 2021. Home sales dropped in the Northeast as well, declining by 1.6% from August to September, and by 18.7% compared to September 2021.

The West was the only region that did not experience a decline in existing home sales month over month. Home sales in the West were identical from August to September, but were down 31.3% from the year prior.

But while home sales and inventory have declined across much of the nation, the trend of homes selling above list price has continued, according to Yun.

“Despite weaker sales, multiple offers are still occurring with more than a quarter of homes selling above list price due to limited inventory,” Yun said. “The current lack of supply underscores the vast contrast with the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today.”

The post Expensive regions see the biggest dip in home sales appeared first on HousingWire.



Source link


Profit margins on median-priced single-family and condo sales across the U.S. decreased to 54.6% in the third quarter, according to a new report from real estate data company ATTOM.

This is the first decline in home prices in almost three years, down from 57.6% in the second quarter, with median national home values dropping 3% quarterly to approximately $340,000, the report said.

Despite this drop, investment returns for home sellers is still up from 48.8% in the third quarter of 2021, and still at near-record levels for the century (20 points higher than two years ago). The median home price is also still at a near all-time high, more than double where it was 10 years ago, according to the report.

On the other hand, investment-return decline during this year’s summertime home-selling season marked the largest quarterly downturn since 2011, with the third-quarter reversal also marking the first since 2010 that seller returns went down from the second to third quarter.

This coincides with a decrease in gross profits during that time, with the typical single-family home and condo sale dropping 6% to $120,100, representing the largest quarterly decrease since early 2017.

The report attributes these declines to “growing headwinds that threaten to end or significantly cool down the nation’s decade-long housing market boom”, including a doubling in average mortgage rates, a slumping stock market, a 40-year high in consumer price inflation and double in foreclosure activity by lenders.


The easy way to make property listings stand out

According to a report from the National Association of Realtors, homebuyers consider floor plans the top most desired feature on a home listing, after standard listing photos and property data.

Presented by: CubiCasa

ATTOM says these factors are raising homeownership costs for buyers, which it says “cuts into resources available for down payments on purchases” and impacts overall household budgets. This has resulted in a growing supply of homes for sale, and in turn pushed home prices down (though not in every market).

Metro results for home sellers

While typically profit margins, or the percent change between median purchase and resale prices, decreased from the second quarter to the third quarter of 2022 in 68% of metropolitan statistical areas (127 of 186), returns were still up annually in 148 of these markets (78%)

The report states that the biggest quarterly decreases in typical profit margins came in the metro areas of:

  • Claramont-Lebanon, NH (down from 72.8% in the Q2 to 52.4% in Q3)
  • San Francisco, CA (down from 85.1% in Q2 to 65.4% in Q3)
  • Prescott, AZ (down from 86.3% in Q2 to 70.8% in Q3)
  • Barnstable, MA (down from 74.5% to 59.6% in Q3)
  • Trenton, NJ (down from 74.5% to 61% in Q3)

ATTOM also found that just 59 of 186 (32%) of markets that did see increased profit margins in the third quarter, with the largest quarterly increases including:

  • Macon, GA (up from 44.7% in Q2 to 82.4% in Q3)
  • Rockford, IL (up from 29.9% in Q2 to 41.8% in Q3)
  • Davenport, IA (up from 29.2% in Q2 to 40% in Q3)
  • Akron, OH (up from 52.8% in Q2 to 60.3% in Q3)
  • Hilo, HI (up from 103.3% in Q2 to 110.9% in Q3)

The report also found that metro areas with a population of at least one million saw the largest quarterly profit-margin declines in San Francisco, Seattle, San Jose, Raleigh and Birmingham. Larger markets experiencing profit increases include Milwaukee, Miami, Cincinnati, Nashville and Grand Rapids.

Cash sales and institutional investors

All-cash purchases continue to represent a large slice of single-family home and condo sales, accounting for 35.7% of all sales in the third quarter of 2022. This is slightly down from 36% last quarter, but is still above the 33.9% of sales in Q3 of 2021.

Markets with the largest share of all-cash purchases include Columbus, GA (76.8%), Augusta, GA (76.6%), Gainsville, GA (68.3%), Myrtle Beach, SC (67.3%) and Atlanta, GA (61.9%). Cash-sales represented the smallest share of all transactions in Lincoln, NE (14.9%), Valleja, CA (17.6%), San Jose, CA (18.8%), Kennewick, WA (19.4%) and Spokane, WA (20.2%).

These high levels of all-cash offers also coincides with a rise in institutional investment purchases, accounting for 6.7% of all single-family home purchases in the third quarter. While this is up from 6.4% last quarter, it is also down from 8.4% at this time last year.

FHA-financed purchases

Another interesting trend occurring in the third quarter is the increase in Federal Housing Administration (FHA) loans, which now comprise 7.9% of all home purchases in the third quarter (one in every 13). This is up from 6.7% in the second quarter of 2022, representing the first quarterly gain in the past year.

The post Where home seller profit margins are shrinking appeared first on HousingWire.



Source link


Online bank Ally Financial recorded a $136 million impairment related to its investment in struggling digital mortgage lender Better.com, bank executives said Wednesday during the company’s third-quarter earnings call.

The bank disclosed to shareholders and analysts that the $136 million impairment was a “nonmarketable equity investment” related to its mortgage business.

“Following the impairment, our investment has a remaining carrying value of $19 million, so this has been effectively derisked,” CEO Jeff Brown said on the call.

Better.com, founded by Vishal Garg in 2014, grew tremendously during the pandemic, capitalizing on a historic refinancing wave and homeowners’ growing comfort in an all-digital mortgage experience. Better grew from roughly 2,000 employees and $4.9 billion in volume in 2019 to 10,000 employees and $58 billion in origination volume in 2021.

But the company – which has raised $905 million across several funding rounds and got a $750 million loan from SoftBank in 2021 – has run into major trouble. It took a major public relations hit when Forbes reported on Garg’s aggressive management style and past controversies, as well as the infamous mass layoff on Zoom.

Better is also facing a lawsuit from Sarah Pierce, its former CFO, that claims she was pushed out after complaining that the company’s “black box” financial were misleading investors. The Securities and Exchange Commission took notice.

But above all else, Better’s biggest problem appears to be about fundamentals. The company continues to lose tons of money – it lost $221 million in the first quarter – and it’s struggled to gain traction in a purchase market that is also slowing.

The company’s plan to go public via a special purpose acquisition with Aurora Acquisition Corp., initially slated for the fourth quarter of 2021, is unlikely to happen given market conditions.

In recent weeks, Garg has sought out the press to tout its new direction, which includes a “Zillow-like website for mortgage applicants to find homes they can afford,” according to Insider. Better is also building a home-action tool that the company believes will allow preapproved mortgage holders to bid on homes and purchase them without broker fees.

Ally, one of the country’s largest vehicle lenders, invested in Better in 2019, though it wasn’t clear at the time how large its investment was.

In the first half of 2022, Better originated $8.7 billion, slipping to the 34th largest mortgage lender in America. Its origination volume dropped 67% from last year, according to Inside Mortgage Finance. Among the top 50 lenders, only Freedom Mortgage had a bigger decline in origination volume, at 75%.

The post Ally Financial takes a big hit on Better.com investment appeared first on HousingWire.



Source link


Mortgage rates have more than doubled from the beginning of the year and homebuyers facing affordability challenges are increasingly turning to adjustable-rate mortgages (ARMs) to reduce their monthly payments.

The latest weekly survey data from Freddie Mac shows the 30-year fixed-rate mortgage rose two basis points from last week to 6.94%, slowing its upward trajectory this week. A year ago at this time, rates averaged 3.09%.

“The 30-year fixed-rate mortgage continues to remain just shy of 7% and is adversely impacting the housing market in the form of declining demand,” Sam Khater, Freddie Mac’s chief economist, said in a statement. 

The Freddie Mac’s index compiles purchase mortgage rates reported by lenders during the past three days. It’s focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit. 

Other indexes show higher rates. 

On HousingWire’s Mortgage Rates Center, Black Knight’s Optimal Blue OBMMI pricing engine, which also includes some refinancing products, measured the 30-year conforming rate at 7.026% on Wednesday, up from 6.939% the previous week. Meanwhile, the 30-year fixed-rate jumbo (greater than $647,200) went from 6.549% to 6.746% in the same period.

Mortgage rates were 7.22% for conforming and 6.15% for jumbos at Mortgage News Daily on Wednesday, a spread of 107 bps.  

ARMs pick up steam

Though price growth has cooled and prices have begun to come down, high and still climbing mortgage rates mean many of today’s buyers face larger home payments than they would have when home prices were at their peak 

Hannah Jones, economic data analyst at Realtor.com.

Borrower demand slumped with mortgage demand hitting a 25-year low last week amid the ongoing economic uncertainty and affordability challenges. In return, homebuyers looking for rate relief turned to various ARM products to reduce their monthly mortgage payment. 

“Mortgage rates keep trending higher because inflation stubbornly refuses to abate,” said Holden Lewis, home and mortgage expert at NerdWallet. “That’s why one in eight loan applications are for adjustable-rate mortgages.”

The overall ARM loan share rose to 12.8% of all applications last week, marking a 14-year high, according to the Mortgage Bankers Association (MBA). Rates for 5/1 ARMs ticked up to 5.65% last week from the prior week’s 5.56%.

“ARM loans continue to remain a viable option for borrowers who are still trying to find ways to reduce their monthly payments,” said Joel Kan, MBA’s vice president and deputy chief economist.

Historically, it’s still roughly “a third of the peak seen in the early 2000s,” said Bob Broeksmit, President and CEO of the MBA.

Buyers, builders and sellers take a step back as inflation persists 

Surging mortgage rates reflect the Federal Reserve’s tightening monetary policy to tame inflation. The annual U.S. inflation rate was little changed last month, rising 8.2% year over year and up 0.4% compared to August’s 0.1%, according to the Bureau of Labor Statistics last week. 

The Fed increased its benchmark rate five times this year, which included three consecutive 0.75% hikes.

Treasury yields show higher rates in the short term, signaling a recession on the horizon. The 2-year note, closely tied to the Fed’s interest rate moves, increased 27 bps to 4.55% on Wednesday from the prior week. The 10-year note went to 4.14% from 3.91% in the same period. 

At its most recent Federal Open Markets Committee meeting, officials largely agreed that it was better to aggressively raise interest rates now to avoid economic pain down the road. Markets widely expect a similar-size rise to be approved at the next meeting in early November.

On the heels of heightened mortgage rates and persistent inflation, buyers, builders and sellers have taken a step back to consider their best course of action. Home purchase sentiment hit its lowest level since 2011 and home builder sentiment fell for the 10th consecutive month in September as construction activity slowed. Sellers are responding to the shift in the market and pulling back on listing activity, resulting in a 9.8% decrease in new listings compared to last year and even further below 2019 levels, according to Realtor.com.

“Though price growth has cooled and prices have begun to come down, high and still climbing mortgage rates mean many of today’s buyers face larger home payments than they would have when home prices were at their peak,” said Hannah Jones, economic data analyst at Realtor.com.

The post Homebuyers increasingly seek ARMs as mortgage rates soar  appeared first on HousingWire.



Source link


15% ROI”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/05\/large_Extra_large_logo-1.jpg”,”imageAlt”:””,”title”:”SFR, MF & New Builds!”,”body”:”Invest in the best markets to maximize Cash Flow, Appreciation & Equity with a team of professional investors!”,”linkURL”:”https:\/\/renttoretirement.com\/”,”linkTitle”:”Contact us to learn more!”,”id”:”60b8f8de7b0c5″,”impressionCount”:”277963″,”dailyImpressionCount”:”633″,”impressionLimit”:”350000″,”dailyImpressionLimit”:”1040″},{“sponsor”:”The Entrust Group”,”description”:”Self-Directed IRAs”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/11\/TEG-Logo-512×512-1.png”,”imageAlt”:””,”title”:”Spring Into investing”,”body”:”Using your retirement funds. Get your step-by-step guide and learn how to use an old 401(k) or existing IRA to invest in real estate.\r\n”,”linkURL”:”https:\/\/www.theentrustgroup.com\/real-estate-ira-report-bp-awareness-lp?utm_campaign=5%20Steps%20to%20Investing%20in%20Real%20Estate%20with%20a%20SDIRA%20Report&utm_source=Bigger_Pockets&utm_medium=April_2022_Blog_Ads”,”linkTitle”:”Get Your Free Download”,”id”:”61952968628d5″,”impressionCount”:”456790″,”dailyImpressionCount”:”368″,”impressionLimit”:”600000″,”dailyImpressionLimit”:0},{“sponsor”:”Walker & Dunlop”,”description”:” Apartment lending. Simplified.”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/03\/WDStacked512.jpg”,”imageAlt”:””,”title”:”Multifamily Property Financing”,”body”:”Are you leaving money on the table? Get the Insider\u0027s Guide.”,”linkURL”:”https:\/\/explore.walkerdunlop.com\/sbl-financing-guide-bp-blog-ad”,”linkTitle”:”Download Now.”,”id”:”6232000fc6ed3″,”impressionCount”:”167138″,”dailyImpressionCount”:”333″,”impressionLimit”:”200000″,”dailyImpressionLimit”:”6500″},{“sponsor”:”SimpliSafe Home Security”,”description”:”Trusted by 4M+ Americans”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/09\/yard_sign_100x100.png”,”imageAlt”:””,”title”:”Security that saves you $”,”body”:”24\/7 protection against break-ins, floods, and fires. SimpliSafe users may even save up to 15%\r\non home insurance.”,”linkURL”:”https:\/\/simplisafe.com\/pockets?utm_medium=podcast&utm_source=biggerpockets&utm_campa ign=2022_blogpost”,”linkTitle”:”Protect your asset today!”,”id”:”624347af8d01a”,”impressionCount”:”140359″,”dailyImpressionCount”:”393″,”impressionLimit”:”200000″,”dailyImpressionLimit”:”2222″},{“sponsor”:”Delta Build Services, Inc.”,”description”:”New Construction in SWFL!”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Image-4-14-22-at-11.59-AM.jpg”,”imageAlt”:””,”title”:”Build To Rent”,”body”:”Tired of the Money Pits and aging \u201cturnkey\u201d properties? Invest with confidence, Build To\r\nRent is the way to go!”,”linkURL”:”https:\/\/deltabuildservicesinc.com\/floor-plans-elevations”,”linkTitle”:”Look at our floor plans!”,”id”:”6258570a45e3e”,”impressionCount”:”127598″,”dailyImpressionCount”:”276″,”impressionLimit”:”160000″,”dailyImpressionLimit”:”2163″},{“sponsor”:”RentRedi”,”description”:”Choose The Right Tenant”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/05\/rentredi-logo-512×512-1.png”,”imageAlt”:””,”title”:”Best App for Rentals”,”body”:”Protect your rental property investment. Find & screen tenants: get full credit, criminal, and eviction reports.”,”linkURL”:”http:\/\/www.rentredi.com\/?utm_source=biggerpockets&utm_medium=paid&utm_campaign=BP_Blog.05.02.22&utm_content=button&utm_term=findtenants”,”linkTitle”:”Get Started Today!”,”id”:”62740e9d48a85″,”impressionCount”:”108680″,”dailyImpressionCount”:”306″,”impressionLimit”:”150000″,”dailyImpressionLimit”:”5556″},{“sponsor”:”Guaranteed Rate”,”description”:”One-Stop Mortgage Lender”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/06\/GR-512×512-1.png”,”imageAlt”:””,”title”:”$1,440 Mortgage Savings”,”body”:”Whether you\u2019re buying new or cash-out refinancing to upscale the old \u2013 get started today and we\u2019ll help you save!”,”linkURL”:”https:\/\/www.rate.com\/biggerpockets?adtrk=|display|corporatebenefits|biggerpockets|july2022_blog||||||||||&utm_source=corporatebenefits&utm_medium=display&utm_campaign=biggerpockets&utm_content=july2022-blog%20%20%20″,”linkTitle”:”Buy or Cash-Out Refi”,”id”:”62ba1bfaae3fd”,”impressionCount”:”64347″,”dailyImpressionCount”:”309″,”impressionLimit”:”70000″,”dailyImpressionLimit”:”761″},{“sponsor”:”Avail”,”description”:”#1 Tool for Landlords”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/06\/512×512-Logo.png”,”imageAlt”:””,”title”:”Hassle-Free Landlording”,”body”:”One tool for all your rental management needs — find & screen tenants, sign leases, collect rent, and more.”,”linkURL”:”https:\/\/www.avail.co\/?ref=biggerpockets&source=biggerpockets&utm_medium=blog+forum+ad&utm_campaign=homepage&utm_channel=sponsorship&utm_content=biggerpockets+forum+ad+fy23+1h”,”linkTitle”:”Start for FREE Today”,”id”:”62bc8a7c568d3″,”impressionCount”:”67832″,”dailyImpressionCount”:”377″,”impressionLimit”:0,”dailyImpressionLimit”:”1087″},{“sponsor”:”Steadily”,”description”:”Easy landlord insurance”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/06\/facebook-business-page-picture.png”,”imageAlt”:””,”title”:”Rated 4.8 Out of 5 Stars”,”body”:”Quotes online in minutes. Single-family, fix n\u2019 flips, short-term rentals, and more. Great prices and discounts.”,”linkURL”:”http:\/\/www.steadily.com\/?utm_source=blog&utm_medium=ad&utm_campaign=biggerpockets “,”linkTitle”:”Get a Quote”,”id”:”62bdc3f8a48b4″,”impressionCount”:”64968″,”dailyImpressionCount”:”238″,”impressionLimit”:”200000″,”dailyImpressionLimit”:”1627″},{“sponsor”:”MoFin Lending”,”description”:”Direct Hard Money Lender”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/06\/mf-logo@05x.png”,”imageAlt”:””,”title”:”Flip, Rehab & Rental Loans”,”body”:”Fast funding for your next flip, BRRRR, or rental with MoFin! Close quickly, low rates\/fees,\r\nsimple process!”,”linkURL”:”https:\/\/mofinloans.com\/scenario-builder?utm_source=biggerpockets&utm_medium=cpc&utm_campaign=bp_blog_july2022″,”linkTitle”:”Get a Quote-EASILY!”,”id”:”62be4cadcfe65″,”impressionCount”:”70370″,”dailyImpressionCount”:”213″,”impressionLimit”:”100000″,”dailyImpressionLimit”:”3334″},{“sponsor”:”REI Nation”,”description”:”Premier Turnkey Investing”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/07\/REI-Nation-Updated-Logo.png”,”imageAlt”:””,”title”:”Fearful of Today\u2019s Market?”,”body”:”Don\u2019t be! REI Nation is your experienced partner to weather today\u2019s economic conditions and come out on top.”,”linkURL”:”https:\/\/hubs.ly\/Q01gKqxt0 “,”linkTitle”:”Get to know us”,”id”:”62d04e6b05177″,”impressionCount”:”59750″,”dailyImpressionCount”:”251″,”impressionLimit”:”195000″,”dailyImpressionLimit”:”6360″},{“sponsor”:”Zen Business”,”description”:”Start your own real estate business”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/07\/512×512-1-300×300-1.png”,”imageAlt”:””,”title”:”Form Your Real Estate LLC or Fast Business Formation”,”body”:”Form an LLC with us, then run your real estate business on our platform. BiggerPockets members get a discount. “,”linkURL”:”https:\/\/www.zenbusiness.com\/p\/biggerpockets\/?utm_campaign=partner-paid&utm_source=biggerpockets&utm_medium=partner&utm_content=podcast”,”linkTitle”:”Form your LLC now”,”id”:”62e2b26eee2e2″,”impressionCount”:”46585″,”dailyImpressionCount”:”244″,”impressionLimit”:”80000″,”dailyImpressionLimit”:”2581″},{“sponsor”:”Marko Rubel “,”description”:”New Investor Program”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/07\/DisplayAds_Kit_BiggerPockets_MR.png”,”imageAlt”:””,”title”:”Funding Problem\u2014Solved!”,”body”:”Get houses as low as 1% down, below-market interest rates, no bank hassles. Available on county-by-county basis.\r\n”,”linkURL”:”https:\/\/kit.realestatemoney.com\/start-bp\/?utm_medium=blog&utm_source=bigger-pockets&utm_campaign=kit”,”linkTitle”:”Check House Availability”,”id”:”62e32b6ebdfc7″,”impressionCount”:”47651″,”dailyImpressionCount”:”281″,”impressionLimit”:”200000″,”dailyImpressionLimit”:0},{“sponsor”:”Xome”,”description”:”Search & buy real estate”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/BiggerPocket_Logo_512x512.png”,”imageAlt”:””,”title”:”Real estate made simple.”,”body”:”Now, you can search, bid, and buy property all in one place\u2014whether you\u2019re a seasoned\r\npro or just starting out.”,”linkURL”:”https:\/\/www.xome.com?utm_medium=referral&utm_source=BiggerPockets&utm_campaign=B P&utm_term=Blog&utm_content=Sept22″,”linkTitle”:”Discover Xome\u00ae”,”id”:”62fe80a3f1190″,”impressionCount”:”30389″,”dailyImpressionCount”:”270″,”impressionLimit”:”50000″,”dailyImpressionLimit”:”1667″},{“sponsor”:”Follow Up Boss”,”description”:”Real estate CRM”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/FUB-Logo-512×512-transparent-bg.png”,”imageAlt”:””,”title”:”#1 CRM for top producers”,”body”:”Organize your leads & contacts, find opportunities, and automate follow up. Track everything and coach smarter!”,”linkURL”:”https:\/\/pages.followupboss.com\/bigger-pockets\/%20″,”linkTitle”:”30-Day Free Trial”,”id”:”630953c691886″,”impressionCount”:”33685″,”dailyImpressionCount”:”295″,”impressionLimit”:”150000″,”dailyImpressionLimit”:”1230″},{“sponsor”:”BatchLeads”,”description”:”Off-market home insights”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/09\/image_6483441.jpg”,”imageAlt”:””,”title”:”Score off-market deals”,”body”:”Tired of working dead-end leads? Generate personalized leads, find cash buyers, and close more deals.”,”linkURL”:”https:\/\/batchleads.io\/?utm_source=biggerpockets&utm_medium=blog_ad&utm_campaign=bleads_3&utm_content=v1″,”linkTitle”:”Try for Free”,”id”:”6318ec1ac004d”,”impressionCount”:”21812″,”dailyImpressionCount”:”329″,”impressionLimit”:”50000″,”dailyImpressionLimit”:0},{“sponsor”:”BatchLeads”,”description”:”Property insights + tools”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/09\/image_6483441.jpg”,”imageAlt”:””,”title”:”Beat the shifting market”,”body”:”Don\u0027t let market uncertainty define your business. Find off-market deals and cash buyers with a single tool.”,”linkURL”:”https:\/\/batchleads.io\/?utm_source=biggerpockets&utm_medium=blog_ad&utm_campaign=bleads_3&utm_content=v2″,”linkTitle”:”Try for Free”,”id”:”6318ec1ad8b7f”,”impressionCount”:”33499″,”dailyImpressionCount”:”457″,”impressionLimit”:”50000″,”dailyImpressionLimit”:0},{“sponsor”:”Walker & Dunlop”,”description”:”Loan Quotes in Minutes”,”imageURL”:”https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/09\/WD-Square-Logo5.png”,”imageAlt”:””,”title”:”Skip the Bank”,”body”:”Financing $1M – $15M multifamily loans? Competitive terms, more certain execution, no strings to personal assets”,”linkURL”:”https:\/\/explore.walkerdunlop.com\/better-than-banks\/bigger-pockets\/blog\/quote”,”linkTitle”:”Learn More”,”id”:”6318ec1aeffc3″,”impressionCount”:”36555″,”dailyImpressionCount”:”474″,”impressionLimit”:”200000″,”dailyImpressionLimit”:”2334″}])” class=”sm:grid sm:grid-cols-2 sm:gap-8 lg:block”>



Source link


A coalition of 77 banking trade groups led by the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) has asked the Federal Housing Finance Agency (FHFA) to modify an existing rule which allows banks to access lower-cost funding from the Federal Home Loan Bank (FHLB) system even if they report that they currently have negative tangible capital.

“Although bank capital regulations were updated a decade ago, [current regulations direct] the Federal Home Loan Banks (FHLBs) to use tangible capital in assessing a commercial bank’s creditworthiness for purposes of issuing advances,” the letter reads in part. “In the event that a bank does not meet the required tangible capital levels, it could be denied access to the FHLB advance system unless its Primary Federal Regulator (PFR) requests in writing that an advance be made or rolled over.”

In other words, the current rule says that banks that report negative tangible capital cannot access FHLB banks unless they receive what is essentially a waiver from their PFR. The rule as it stands, the groups believe, would perpetuate a “misalignment” in existing regulations and could create “significant administrative bottlenecks between the FHLB and the banking regulators,” they said.

Current financial issues including the impact of the COVID-19 pandemic on many banks’ balance sheets combined with general “monetary tightening” could exacerbate existing problems, the letter reads. Smaller, community banks may be put at particular risk in the current climate of heightened inflation and economic volatility, the letter says.

“Making the change from tangible capital to regulatory capital in the near term, prior to any future stress, would help to ensure that banks, particularly smaller banks, have seamless access to an important liquidity tool without compromising the FHLBs’ ability to screen for troubled institutions or work with a bank’s PFR,” the letter reads. “Failure to fix this inconsistency in the regulations may exacerbate a stress as banks continue to navigate rising rates and the ongoing macroeconomic volatility.”

The ability for banks to provide credit to U.S. businesses and households could be negatively impacted unless the requested change is made, the letter says, particularly in more vulnerable areas of the nation’s economy.

“We encourage the FHFA to work closely with the banking agencies to better align Section 1266.4, and recommend the FHFA consider adjusting for unrealized gains and losses across its body of regulations,” the groups say.

In September, HousingWire reported that the Independent Community Bankers of America argued that the FHFA should not permit nonbank lenders and real estate investment trusts to become members of the $1 trillion FHLB system.

The FHFA is conducting a comprehensive review of the 90-year-old FHLB system – currently composed of 11 regional FHL banks and about 6,800 member institutions – beginning in the fall.

The post 77 bank trade groups urge FHFA to modify its tangible capital rule appeared first on HousingWire.



Source link


New York, NY, U.S.A. - Fitch Ratings: Fitch Ratings Inc. is an A
Fitch Ratings in October 2022 set negative outlooks for four nonbank mortgage lenders.

Credit rating agency Fitch this week revised the long-term issuer default ratings (IDRs) for five nonbank residential mortgage lenders based on their financial performances in the first half of 2022. The results: downgraded two companies and set a negative outlook for four.

Amid surging rates, lower origination volumes and fiercer competition, the capacity to efficiently reduce costs, control leverage and maintain liquidity will determine how successful these companies are during the most challenging mortgage market in decades. Some industry observers are bracing for mortgage rates in the 8% range in the coming months. 

Notably, Fitch downgraded Finance of America’s (FoA) rating from B+ to B-, maintaining the negative outlook, based on the expectation the company’s leverage will remain elevated over the medium term amid weak earnings. The lender’s gross debt to tangible assets – a measure of leverage – was 10.2x as of June 30, up from 8x the prior quarter.

FoA is trying to navigate the current landscape by cutting jobs, trying to sell its retail business – a deal with Guaranteed Rate collapsed, as HousingWire first reported – and shutting down its wholesale channel. 

“There is execution risk and cash burn associated with FOA’s plan to reduce expenses sufficiently to begin rebuilding capital to take leverage below 7.5x within the outlook horizon,” Fitch wrote. 

In addition, “Recent covenant breaches, resulting from reduced profitability and higher leverage, are also viewed negatively and create some concern for the company’s ability to extend debt maturities and secure future funding.”

On the bright side, FOA has, among other strengths, a leading reserve mortgage market position, an experienced senior management team and appropriate risk controls, Fitch analysts wrote. 

Leverage levels are also a concern for privately-held Freedom Mortgage, which had multiple layoff rounds this year and continues to “offshore” its workforce. Fitch maintained the lender’s BB- rating, but the outlook was revised from stable to negative.

Earnings to be pressured in the near term as volume and margin outlooks are lower for the remainder of 2022 and into 2023, and there is more limited MSR valuation upside from additional rate rises.

Fitch Ratings’ latest Review on United WholesalE Mortgage

Freedom’s corporate leverage was 1.7x as of June 30, above the long-term average of 1.3x and the management’s target of 1.5x. The agency believes that with weak earnings performance and an increase in debt to fund the acquisition of mortgage servicing rights (MSRs), leverage may remain elevated over the medium term.

Freedom has a multichannel approach and retains servicing rights, which serves as a “natural hedge” to the cyclicality of origination business – rising rates and lower prepayment increase the value of MSRs, which can be sold to support liquidity. 

However, although the write-up in MSRs benefited Freedom in 2022, there is more limited valuation upside in the near term from further rate rises, according to Fitch. In addition, Freedom’s ratings are also constrained by its high level of exposure to Ginnie Mae loans with higher advancing needs and potential regulatory scrutiny.

Wholesale lenders

Fitch also downgraded New Jersey-based Provident Funding Associates from B+ to B, maintaining the negative outlook. The actions reflect weakened profitability expectations in the near term for wholesale channel-focused originators amid stronger competition.  

According to the agency, the reduction in Provident’s origination and servicing footprint could weaken its long-term franchise value and earnings potential over time, despite its focus on higher quality and agency-eligible loans. 

“Provident will experience lower origination volumes and compressed gain-on-sale margins through the outlook horizon given the rising interest rate environment and intense competition among mortgage lenders,” the agency wrote.  

Regarding pure wholesale lenders, Fitch did not change Home Point Capital‘s B rating and maintained its negative outlook. The agency believes there is an “execution risk” with recently announced initiatives to right-size the business and its plan to specialize in the wholesale lending channel while maintaining adequate profitability.

The Michigan-based lender leadership “reset the organization,” Willie Newman, the CEO and president, told HousingWire late last month. The company went from about 4,000 workers in the summer of 2021 to about 1,000 in the fall of 2022. 

Competition for the company, according to Fitch, will not ease in the near term, thus maintaining downward pressure on profitability.

“Home Point has executed some cost reductions and announced additional plans in response to the reduced volume and more competitive environment, which should support earnings in 2023. However, it is unlikely to accrete to tangible equity materially without a change in the margin or volume environment.”

United Wholesale Mortgage (UWM), the leader in the wholesale channel, represents the biggest threat to its wholesale competitors due to an aggressive and ongoing pricing strategy. The credit rating agency affirmed UWM’s BB- rating and its stable outlook this week. 

Fitch wrote that the lender’s earnings had been impacted by the strategy to prioritize market share gains over profits. Declining origination volumes and gain-on-sale margins were partially offset by lower amortization and valuation gains on the MRS portfolio due to lower prepayment speeds.

But “earnings to be pressured in the near term as volume and margin outlooks are lower for the remainder of 2022 and into 2023, and there is more limited MSR valuation upside from additional rate rises.”

The post Fitch downgrades two nonbank lenders, sets negative outlook for four appeared first on HousingWire.



Source link


Optimal Blue, a division of Black Knight, launched its first hedging and trading platform CompassEdge, unifying its existing risk management and loan sale platform CompassPoint within a single system.

CompassEdge is designed to support every originator – regardless of range, size or type – and provide pipeline risk management tools and analytics with dynamic loan sale and mortgage servicing rights (MSR) valuation functionality, Black Knight said in announcing the launch on Wednesday. 

“With a simple login, any credentialed member of an organization can access the comprehensive hedging and trading tools, data and analytics they need – from a single, user-friendly source,” said Scott Happ, president of Optimal Blue.

Making “premier analytics” accessible to any capital markets participant, ranging from the lock desk to the C-suite, without requiring in-depth system training is what stands from other platforms, Optimal Blue claimed. The platform’s “intuitive interface and mobile functionality” also make it easy for any user to access data and tools from any location, the division said. 

Optimal Blue delivers the industry’s product, pricing and eligibility (PPE) engine that prices over 40% of locks in the U.S. mortgage industry and is fully integrated with the CompassPoint platform. The division, which has more than 213,000 users, supports more than $1.9 trillion in rate locks and loan trades annually, according to the company. 

Black Knight reported net earnings of $40.3 million, a 90% drop from the previous quarter’s $364.6 million due to a gain on the investment in credit report services company Dun & Bradstreet Holdings.

Intercontinental Exchange Inc. in May struck an agreement to buy Black Knight at $85 a share – at the time $13.1 billion, but federal officials are scrutinizing whether a merger would constitute a monopoly. Combined, the two companies would control roughly two-thirds of the software that is currently used to originate and service the country’s mortgages.

The post Black Knight rolls out CompassEdge hedging and trading platform appeared first on HousingWire.



Source link