Bond giant Pacific Investment Management Co., or PIMCO, one of the biggest buyers of Fannie Mae and Freddie Mac mortgage-backed securities, warned on Monday that ending the federal conservatorship of the GSEs without Congressional input would constrict housing-finance credit and boost mortgage rates.

In a letter to Mark Calabria, director of the Federal Housing Finance Agency, PIMCO executives including Managing Director Dan Hyman, head of agency mortgage trading, said freeing the companies by executive fiat would be interpreted by investors as an end to the government’s guarantee of the MBS.

That would boost mortgage rates and force some investors to sell the bonds, the PIMCO executives said.

“While the focus to release the GSEs from conservatorship is understandable, we believe that any release particularly prior to Congressional action would have unfavorable – and likely dramatic – consequences,” the PIMCO letter said. “We strongly believe that market participants will not view the release of the GSEs as a return to the implied guarantee model that prevailed before the financial crisis, but rather, they would view them as wholly-owned private companies with no accompanying government guarantee.”

That means investors would require higher returns to compensate for greater risks, the PIMCO executives said.

“Mortgage rates will increase, homeownership will likely suffer and the national mortgage rate will no longer exist,” the executives wrote.

The “national mortgage rate” refers to the ability of lenders to offer the same rate to homebuyers with similar credit profiles and down payments in different parts of the country.

“It is almost impossible to overstate the importance of the national mortgage rate, not only for the primary and secondary mortgage markets, but most importantly, for borrowers and prospective homeowners,” the letter said. “The national mortgage rate is a central underpinning of America’s housing finance system.”

PIMCO’s warnings came in response to the FHFA’s request for comments on its proposed capital rule that Fannie Mae and Freddie Mac be required to hold about $240 billion in capital combined, based on their September 2019 assets.

Raising the capital buffer is aimed at ensuring taxpayers don’t have to cover losses for the two companies, which have been in government control since they were seized in 2008 in the midst of the financial crisis.

A year ago, the Trump administration released a blueprint for freeing the GSEs from conservatorship without requiring Congressional approval. Calabria has worked to get all the pieces in place, but if former Vice President Joe Biden usurps President Donald Trump in the Nov. 3 election those plans could be knocked off track.

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Blackstone Group, which blazed a trail for Wall Street in 2012 when it formed Invitation Homes and became the largest owner of single-family rental homes in America, has returned to a familiar watering hole.

The financial firm is leading a syndicate of investors in a $300 million minority investment in Tricon Residential, which owns and manages more than 30,000 single family and multifamily rental homes in the U.S. and Canada.

“We continue to see strong underlying fundamentals in the rental-housing sector, and believe the company’s high-quality, income-generating assets are poised to generate stable performance under the leadership of its best-in-class management team,” said Frank Cohen, chief executive officer of Blackstone’s investment vehicle, a nontraded real estate investment trust called “BREIT.”

Blackstone’s re-entry comes just months after it sold its stake in Invitation Homes, which it brought public in 2017. Blackstone bought over 30,000 homes out of foreclosure for $10 billion and then spent another $2 billion fixing them up. At its peak, Blackstone spent over $100 million a week scooping up properties, often in the Sunbelt.

“The hardest part wasn’t buying the homes, it was building the business,” Blackstone President Jonathan Gray, who headed the company’s real-estate business when it launched Invitation, told the Wall Street Journal. “We created a company from scratch. It was created on a yellow pad. It was an idea. Now it’s a real business.”

As was the case last go-around, much of the inventory on Tricon’s books is in the Sunbelt. Interestingly, Tricon competes directly with Invitation Homes, though the Canadian company targets the middle market.

Blackstone’s minority investment in Tricon comes as urban renters with the financial means look to spread out in the suburbs, where they can enjoy back yards and work out of home offices. But large swaths of the economy still have not recovered from effects of the coronavirus pandemic. Millions of Americans are out of work, and reduced government assistance is expected to send eviction rates skyrocketing.

In related news, Invitation Homes plans to spend upward of $300 million buying homes. CEO Dallas Tanner said earlier this month that “housing fundamentals are spectacular in the U.S. right now.”

Invitation Homes, which has about 80,000 properties, has been criticized for evictions, rent hikes, delayed repairs and excessive fees. Tricon’s business practices have also been scrutinized by housing officials and nonprofits in Charlotte, North Carolina.

Blackstone made about $7 billion when it sold its stake last year.

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Encouraging Excellence in Eighteenth-Century American Church Music.

The importance of the use of music of quality in the service of worship was a topic of discussion and writing in late eighteenth-century America. Two men, Andrew Adgate and Francis Hopkinson, both of Philadelphia, Pennsylvania worked tirelessly to encourage excellence in church music.

In 1784, Andrew Adgate helped organize the “Institution for the Encouragement of Church Music.” In the following year, he also founded a “Free School for Spreading the Knowledge of Vocal Music.” Through his work, the organists, choral directors and singers of Philadelphia had the opportunity to enhance their skills and provide more excellent music for their worshipping congregations.

Francis Hopkinson also weighed in on the subject of excellence in church music and in particular the use of the organ in worship. Hopkinson was known in the Philadelphia music world as an organist and harpsichordist and as one of America’s first native-born composers. Outside the world of music, Hopkinson was a jurist, the first Secretary of the US Navy and a signer of the Declaration of Independence.

Om 1786, Hopkinson sent a letter to the Rev. Doctor White, Rector of Christ Church and St. Peter’s in Philadelphia on the conduct of a church organ. Hopkinson’s letter provides a contemporary viewpoint of church music from 1750 to 1800. The letter begins, “I am one of those who take great delight in sacred music, and think, with royal David, that heart, voice, and instrument should unite in adoration of the great Supreme.” He continues, “To give wings, as it were to this holy zeal, and heighten the harmony of the soul, organs have been introduced into the churches.” Hopkinson then suggests “a few rules for the conduct of an organ in a place of worship” according to his own “ideas of propriety.”

Summarizing Hopkinson’s thoughts:

1. The excellence of an organist consists in making the instrument subservient and conducive to the purposes of devotion. None but a master can do this.

2. The voluntary was probably designed to fill a solemn pause in the service. The organ hath its part alone, and the organist an opportunity of showing his power over the instrument.

3. The chants form a pleasing and animating part of the service. Melody may be frivolous; harmony never.

4. The prelude which the organ plays immediately after the psalm was intended to advertise the congregation of the psalm tune which is going to be sung. The tune should be distinctly given out by the organ, with only a few chaste and expressive decorations, such as none but a master can give.

5. The interludes between the verses of the psalm were designed to give the singers a little pause in which the organ ought to assist in their reflections.

6. The voluntary after the service was never intended to eradicate every serious idea which he sermon may have indicated. It should rather be expressive of that cheerful satisfaction which a good heart feels under the sense of a duty performed.

In general, the purpose of Adgate’s schools and Hopkinson’s writing is to ensure that church music should ever preserve its dignity led by the conscientious efforts of singers and organists.

Source by Dr. Jeannine Jordan

According to Census data, approximately 21% of renter households are behind on rent payment, and it’s estimated that up to 40 million renters could face eviction over the next few months after federal eviction moratoriums expired in late July.

Now, states and localities are deciding if and when to end or extend eviction moratoriums. Today, eviction moratoriums are expiring in Atlanta and Pennsylvania. On Tuesday, they will expire in Nevada, California and Florida.

In Pennsylvania, a Census survey said that one in five adults either missed July’s rent or mortgage payment or had slight or no confidence their household could make their rent payment in August in time, the Philadelphia Enquirer said.

Pennsylvania Gov. Tom Wolf hinted on Monday that he supports a second extension of the moratorium, pending approval from the General Assembly.

In Nevada, an estimated 300,000 to 500,000 renters could face eviction due to owed rent or back pay, KTNV in Las Vegas said, flooding courts with three times as many eviction cases as last September.

In Florida, Gov. Ron DeSantis signaled that he might extend the eviction moratorium – for the fifth time – on Tuesday, when the fourth extension is set to expire.

California’s eviction moratorium is set to end on Tuesday, but Gov. Gavin Newsom introduced a new bill on Friday that could likely save renters facing eviction, pending approval from lawmakers.

What about the rent payments due on Tuesday?

RealPage said that it expects rent collections for September to continue to slump since states are paying only up to $400 more a week for unemployment benefits after the original $600 unemployment payment from the CARES Act expired in July.

When August rent payments came due, only 79.3% of apartment households had made a full or partial rent payment by August 6. This is down 1.9 percentage points from last August.

However, that number had risen to 92.1% of renters paying by Aug. 27, according to the National Multifamily Housing Council’s Rent Payment Tracker. This is 1.9 percentage points less than the same time last year.

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An alienation clause in a mortgage contract gives the lender certain stated rights when there is a transfer of ownership in the property. It may also be referred to as a due on sale clause. This is designed to limit the debtor’s right to transfer property without they creditor’s permission. Depending on the actual wording of the clause, alienation may be triggered by a transfer of title, by transfer of a significant interest in the property, or even by abandonment of the property. Transfer of a significant interest can be construed as an obvious long-term lease, but often is also interpreted to cover a lease with option to buy or a land contract.

On sale or transfer of a significant interest in the property, the lender will often have the right to accelerate the debt, change the interest rate, or charge a hefty assumption fee. Adjustable rate mortgage loans seldom have an alienation clause that calls for an interest rate change since the rate can already be adjusted under the original contract. An ARM loan may have other alienation provisions, however, such as an assumption fee. The lender may choose which, if any, options stated in the contract it chooses to enforce. This is true for most conventional loans. Although FHA and VA loans cannot, technically, have alienation clauses, they still attempt to restrict transfers in other ways, such as by reserving the right to approve a new debtor who will take over an FHA or VA loan.

For conventional loans, states tried to restrict enforcement of due on sale clauses. But in the 1982 landmark U.S. Supreme Court case of Fidelity Savings and Loan v. De La Cuesta, ET. Al., the Court ruled that federally chartered S & Ls could follow federal Office of Thrift Supervision rules allowing due on sale clauses, instead of following state laws that attempted to limit this right. Later that same year, the U.S. Congress passed the Deposit Insurance Flexibility Act extending this right of pre-emption of state laws limiting due on sale clauses so all lenders can now enforce due on sale clauses.

This law has led to a new problem that has yet to be addressed adequately. Lenders often have alienation clauses and prepayment clauses in contract. Essentially, the lender could collect additional fees or penalties twice, once under the provisions of each clause. Several rules or regulations have been proposed that would eliminate this problem by forcing lenders to choose to enforce one or the other of these clauses, but no new rules have yet been enacted. Of course, with increased competition in the home mortgage market, lenders do not have free reign to charge exorbitant fees. It is important, nevertheless, for buyers and sellers (and others) to be aware that this situation may exist.

Source by Joe Jesuele

Rochester, New York is jumping on the bandwagon. Sandusky, Ohio refuses to be left out. Rantoul, Illinois is making its own big statement. What do these communities have in common? They have all joined the growing trend across the U.S. of creating multimillion-dollar youth sports complexes that will serve expansive communities, attract major travel tournaments and teams, and bring in loads of cash for area businesses. It’s official. Sandlot ball has gone Big Business.

That won’t be a revelation to any parent whose children have participated in youth sports at any level, especially the travel team level. Costs of equipment, trainers, team “tuitions” and travel expenses can easily reach well into the thousands each year for each child. These mega youth sports complexes are just the latest craze in this crazy, commercialized world of youth sports.

We’ve come a long way since Joe Tomlin found an empty lot in Philadelphia to begin his Pop Warner youth football program in 1929, in order to keep young boys from vandalizing local businesses. And what would Carl Stotz think of today’s youth sports industry? It’s a far cry from the humble origins of his first Little League games created in 1938 on sandlot baseball fields around Williamsport, PA.

The City of Rochester spent $2.1 million (through a mix of public and private funding) on their indoor sports complex that will house multi-purpose courts and turf fields, a weight room, locker rooms. Their mayor welcomed the 2020 development project by saying that Rochester youth sports teams would now have “access to the same year-round training opportunities, scrimmages, practice sessions,” and sports medicine professionals as their suburban counterparts. (Oh goody. More “year-round training” for kids; precisely what the experts warn against.)

The folks in Rantoul, Illinois have a bigger vision than that. They are about to break ground on a $20 million sports complex aimed to attract people from all over the Midwest. Their plan calls for a 60-plus acre facility that will include eight multi-sport turf fields and eight turf baseball and softball diamonds. Rantoul officials believe the complex can attract massive youth sports tournaments and thereby drive economic development in the area, including restaurants, hotels and retail. Their mayor said he believed this complex “is the economic engine that can take Rantoul into the future.” Wow. Who knew how much was riding on our little pee wee athletes’ shoulders?

Sandusky, Ohio is going even further. In January they will open their new $32 million indoor Cedar Point Sports Center with enough room for 10 full-sized basketball courts, or 20 volleyball courts. It will complement their outdoor Sports Force Parks located next door, which opened in 2017 and houses 10 multi-sport turf fields. And to local officials, it fits nicely with their famous Cedar Point Amusement Park, especially as they aim to attract more visitors – and business – to the area during the colder off-season months. They seem poised to be correct. In February the new indoor facility will host its first volleyball tournament, with 130 teams participating. That should give local restaurants, hotels and gas stations a nice head start for the year.

According to Street & Smith’s Sports Business Journal, youth sports complexes are being developed at a rapid pace, with over $550 million invested in such projects just in the last three years. Apparently our kids’ sports are not only driving us crazy, they are also driving the economies of local communities all over the U.S. So get ready to hit the road, with even more tournament destinations at your disposal. And don’t complain. After all, you did sign your kid up for a travel team.

Source by Doug Rogers

Homebuyers who are juggling work and school from their home want more space, triggering an increase in the number of sales of large homes.

According to Redfin, sales for large homes were up 21.2% year over year nationwide in July, compared to a 10% increase for medium-sized homes and a 2.3% increase for small homes. Redfin categorized large homes as those between 3,000 and 5,000 square feet, medium homes between 1,500 and 3,000 square feet, and small homes between 300 and 1,500 square feet.

And the trend looks likely to continue: The average minimum square footage of Redfin users’ saved searches was 1,864 so far in August, up from 1,794 a year ago.

The average home that sold in the four weeks ending August 16 was 1,772 square fee, 3.7% larger than the typical home sold a year earlier.

Home prices went up 11.3% year over year in July in more rural areas, further proving the desire homebuyers have for more space. In the suburbs, home prices rose 9.2% year over year while in urban areas home prices increased 6.7%.

“Most people would prefer a large home over a small home given the choice,” said Redfin chief economist Daryl Fairweather. “That’s true regardless of what’s happening in the world, although spending more time at home due to the pandemic is encouraging some homebuyers to seek out bigger houses with bigger yards.

“But affordability still reigns, which is why the market for large homes isn’t much hotter than for smaller homes,” Fairweather said. “The lines are drawn economically. The people with steady work-from-home jobs are able to move away from city centers, or even to entirely different parts of the country, and find more space for a similar price. But a lot of people searching for homes are in less advantageous financial situations and can’t afford more space even if they want it.”

While homes of all sizes that sold faster year over year, Redfin said that small and medium-sized homes sold faster than large ones – small homes went under contract in 28 days, medium-sized homes went under contract in 24 days and larger homes went under contract in 47 days.

Because of increased work-from-home opportunities, 21% of homebuyers said the pandemic has caused them to want designated space to work at home.

Meanwhile, 21% also said the pandemic made them want more outdoor or recreational space, 10% said they want a bigger home and 7% said they want a designated space for their children to learn from home.

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Just the other day, I was talking to an acquaintance about high-tech bicycle gear. Specifically we got into a conversation about portable tire pumps, the little ratchet type pumps which are lightweight and you can take with you in case you get a flat tire on the road, or on a trail the middle of nowhere. They only weigh a few ounces, not even one whole pound. But they sure come in handy if you get a flat tire, patch that tire, and they need to pump your tire back up to continue your journey.

After I finished that conversation, I realized how much I love to go out and mountain bike ride in the trails near where I live. Unfortunately out here in California we’ve had a few fires, and one of my favorite trails has literally been burned to the ground, it smells like you are riding through a burned out barbecue, it’s ugly, and it looks like hell. Even though one doesn’t know what hell looks like, I think you might say the same thing if you saw it this way.

One of the most interesting things I like to do when I travel is to rent a mountain bike, or borrow one from a friend and find out what sort of trails they have near them, trails I might explore on a mountain bike. In fact, there’s a very good book about the mountain bike trails in the Philadelphia area. This is a Falcon Map Guidebook, it is a book I own, and one I’d like to recommend you. The name of the book is;

“Mountain Biking the Greater Philadelphia Area – A Guide to the Delaware Valley’s Greatest Off-Road Bicycle Rides,” by Bob D’ Antonio, Falcon Press, Guilford, CT, 2004, 223 pages, ISBN: 0-7627-2806-X.

This book comes with all the information you need. It tells you where each trailhead is found, how to get there, where to park, the number of hills, number of miles, and suggestions of gear you might need and the time it might take to complete based on your abilities and physical strength. Each trail also shows an elevation chart just like they do in the Tour de France stages, where you can look and see on a graph how many feet in elevation you go up and down as you travel.

If you’re going to do any type of mountain biking in the greater Philadelphia area, then you need to get this book as well. It’s not very expensive, but it is a must have. Please consider all this and think on it.

Source by Lance Winslow

In January, our team at Knox Financial felt like we had the wind at our backs.

Knox was approaching its first full year in business, and every month more homeowners and landlords were putting their properties onto our platform that makes investment property ownership a hands-off experience. We were also just named Boston’s most promising new startup, closed a $3M seed round of venture capital funding, and were planning to expand beyond Boston in the early spring.

Then, the COVID-19 pandemic changed everything.

The way our team saw it in March, COVID-19 would push startups into one of three categories: For “tailwind startups,” like video conferencing providers, COVID-19 would be a rocket booster. The second group, “persevering startups” could likely keep operating virtually and have the opportunity to make it through the pandemic. For “impossible startups,” such as brick-and-mortar retailers, COVID-19 would likely prevent them from running entirely.

We agreed that Knox was somewhere in between the first and second categories. While COVID-19 would force us to change how we did business, we felt that our company had the opportunity to continue attracting new customers and operating successfully. 

With this in mind, in mid-March, we made a series of decisions that have put our business in a stronger position as we enter the second half of 2020. My hope is that sharing these decisions will help other startups in the housing industry continue to grow during the uncertain months that lie ahead. 

Focus on building

Startups can be defined as a group of people who share a common belief—the world needs something that doesn’t exist yet and the team is going to deliver it. COVID-19 has made many of us question aspects of ourselves and our businesses that we never thought to doubt. With so much in flux, it’s crucial to keep your team focused on a goal.

When COVID-19 hit and the lockdowns started, at Knox, we set a two-month goal. Very simply, we aimed to make our product dramatically more scalable—financially and geographically. To put it another way, we aimed to accomplish a year of product development in about two months. The result was a laser-focused, energized team striving to complete a large body of work on a short timeline.

De-emphasize brick-and-mortar presence

Prior to COVID-19, we had plans to open an office and brick and mortar location in the heart of Boston’s shopping district. We were also considering additional satellite offices in select New England cities. Since Knox is a consumer brand, we wanted to be where our customers spend their time.

We had, in fact, signed a lease. The owners of the building presented third-party data that showed 2.4 million people per year pass by their location. The value of our signage alone would make the rent worth it. 

Now, the number of people passing by any retail location is a small fraction of what it used to be. While we’d love to gain the visibility that a premier location would bring, at the moment, this just isn’t possible. Instead, we’ve made an effort to maintain local visibility through branded lawn signs, which do get a lot of attention because ours are quite different from the usual ones you see.

Be smart with hiring

When the economy slows to a halt, the temptation can be to just put a hold on all hiring plans. We did this at Knox for a few weeks. No one knew which way was up, and it made sense to pause.

Now that we’re in a new normal (though a strange one at that) I’d encourage businesses to be smart about hiring instead of freezing hiring. If you have an open position for a role that is critical to moving your business forward, keep looking for that person.

At Knox, we filled a number of positions over the last few months, including our chief product officer. We also brought on one of Uber Boston’s first employees who is now our VP of Growth, and made a number of local hires in the markets we recently expanded into.

As our team is now completely remote, we’ve started to hire wherever the talent happens to live. As a result, we’ve added teammates in five states in the past three months. The broader talent pool makes hiring easier and faster and we’re finding great people.

Continue to grow (virtually)

Some might argue that expanding a business in the middle of a recession and pandemic is ill-advised. If your business is getting by ok and you want to just hold on and make it to the other side, there’s nothing wrong with that. But if you’re offering a product that people still want, and won’t put them in harm’s way, then there’s no better time to expand than the present.

While our team initially held off on our New England expansion, which was slated for early spring, we decided to move forward and launch in new markets in June. We’ve already secured our first customers in these new markets, and can see that this expansion will help us ensure the long-term viability of our business. 

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The U.S. forbearance rate declined for the second consecutive week, falling to the lowest level since mid-April, according to the Mortgage Bankers Association.

The share of mortgages with agreements to suspend payments fell to 7.2% from 7.21%, MBA said in a report on Monday. The forbearance rate for Fannie Mae and Freddie Mac loans dropped 1 basis point to 4.93%, while the rate for Ginnie Mae loans that include loans backed by the Federal Housing Administration was flat at 9.54%.

The decline comes even after the $600 a week beefed-up unemployment benefits that were part of the CARES Act expired on July 31. While President Donald Trump signed a directive on Aug. 8 that would pay $400 a week if states kicked in a quarter of that amount, it’s now been changed to $300 a week and only a handful of states have signed up.

“We remain surprised that forbearance rates are not climbing despite the expiration of enhanced unemployment benefits,” Jaret Seiberg, managing director of Cowen Washington Research Group said in a note to clients. “We are not sure how long this trend can continue.”

The number of Americans filing initial claims for jobless benefits rose above 1 million during the week ended Aug. 15, increasing for the first time since late July, as the COVID-19 pandemic fueled layoffs. The pandemic’s death toll topped 177,000 on Monday, according to data from Johns Hopkins University.

Calls from mortgage borrowers to the servicers handling their home loans have risen for four consecutive weeks, and exits from forbearance plans have slowed, according to the MBA report.

Measured as a percent of servicing portfolio, calls rose to 8.7% from 7.9% in the prior week, the MBA report said.

“The extremely high rate of initial claims for unemployment insurance and high level of unemployment remain a concern, and are indications of the challenges many households are facing,” said Mike Fratantoni, MBA’s chief economist.

“While new forbearance requests remain low, particularly for Fannie Mae and Freddie Mac loans, the pace of exits from forbearance has declined for two straight weeks,” he said.

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