Getting laid off is never fun, whether you’re prepared for it or not.

I’ve been laid off twice. The first time was unexpected and very financially troubling. The second time, I was far more prepared and was able to relax, take my time, and find the job of my dreams.

Keep in mind that being laid off is largely a business decision, not a knock to your personal worth.

So how do you financially survive a layoff? Or better yet, be well-prepared in advance should you ever become laid off? As the old adage goes, “The best time to plant a tree is 30 years ago, the next best time is right now.”

Are you ready to invest?

One of the most frequently asked questions in the BiggerPockets forums is “How can I start investing in real estate with no money and bad credit?” The answer? You shouldn’t. You need to fix your situation and invest from a position of financial strength.

Three things to tackle immediately

If you become laid off, there are a few things you need to tackle immediately, even before the shock wears off. Why? So you can lock in your benefits now and reduce your “burn rate” on your reserves, especially if you don’t already have six months of reserves set aside.

  1. Apply for unemployment. Your employer should be able to tell you if you qualify for unemployment benefits, however, it’s worthwhile to go home and immediately apply. Depending on your state, it can take two or more weeks to get your first check, but your benefits will likely be based on the date of your application.
  2. Understand your full “package.” If you were presented with a severance package, don’t be in a rush to sign it. There may be strings attached to it to receive it (you can’t work for a competitor, you can’t sue your former company, etc.). Immediately make an appointment to discuss your package with your lawyer to understand the legal and tax implications of taking any severance package.
  3. Contact your coworkers. Let them know you have left the company. As my former mentor says, you want to own the story. When you reach out to your coworkers, let them know you would like to stay in touch and ask if they would be willing to write a reference for you on LinkedIn and for applications. Whatever you do, do not bash the company, engage in gossip, or violate the terms of your layoff agreement in any way.

Lastly, while you may be tempted to sleep in and take your foot off the gas pedal, once you have steps one through three done on day one of being laid off (yes, day one), it’s now time to create a schedule for yourself. Consider picking up a copy of Hal Elrod’s The Miracle Morning to help you establish an amazing morning routine and own your mindset.

Reduce your burn rate ASAP

As counterintuitive as it may seem, doing what you can to reduce your burn rate in the first 48 hours will help you begin to come to terms with the new reality of being laid off and perhaps let you extend your savings (if you have any) for much longer than originally intended. And if you aren’t laid off, the ideas below are just great habits to adopt to help you save some cash for that next down payment.

Cut any destructive spending immediately

These expenses might seem to help you cope in the short-term, but in the end, they will derail your health, finances, and path forward in life.

  • Drugs
  • Gambling
  • Alcohol
  • Retail therapy
  • Fees and penalties for not paying bills on time

Reduce all unnecessary lifestyle expenses

  • Travel
  • Gas
  • Dining out
  • Excessive grocery bills
  • Entertainment

Eliminate monthly subscriptions

  • Magazines. Check out your local library for free online magazines
  • Wine/beer/alcohol clubs. Save your body and mind (and sleep better!).
  • Clothing clubs. You aren’t going to be in an office right now. Get a nice suit to interview in if you don’t have one and then save your money.
  • Razor clubs.
  • Expensive gym memberships. Strike a balance here. Keeping in shape (and sane) is super important for you right now. Spending money on things you don’t need isn’t.
  • TV streaming services. Try swapping out hours of endless television (if you haven’t already finished Netflix during COVID-19) for reading to develop your communication and business skills, read faster, or learn a new trade.
  • Meal delivery subscriptions. This is a great opportunity to learn new recipes, cook up some meals from scratch, and stash them in the freezer.

Renegotiate your household bills

Now that you have a little bit of time, set aside three to four hours and make some calls to renegotiate your bills and lower your overall expenses (permanently!).

  • Car insurance. My personal favorite is GEICO because of all of the discounts I can get. Also, check here to see a full list of inexpensive providers. It is very helpful to have a clean driving record and good credit to get great rates.
  • Home insurance. I personally got a Costco membership and slashed about 45% off my home insurance policy and 50% off my term life insurance policy.
  • Phone bill. Check out US Mobile or Mint Mobile for some great low rates.
  • Cable bill. Work to cut the cord or ask your provider for a promotional rate and bundle your internet.
  • Outstanding bills. Renegotiate your loans and credit card payments before you miss a payment.
  • Fees on past-due bills.

Renegotiate your interest rates

Review all of your credit cards and loans now and negotiate the interest down to the lowest rate possible on the off chance you burn through savings and have to use credit to survive (let that credit be as cheap as possible!).

Sell things for cash

Once you have a good handle on the points above, set aside time to clean out and sell items you don’t need or want anymore and pad your savings account, such as clothes, coats, shoes, and large gear items.

Make your move

Now that you have reduced your burn rate and created some breathing room, it’s now time to get down to business and figure out your next move.

Take inventory of what you want to do and build your network

It’s not what you know but who you know that will land you that next great career move. Proximity is power. Grab a copy of The 2-Hour Job Search from your local library and methodically work through the process. (Spoiler, it takes more than two hours!)

This book will help you take inventory of what you like doing, what you are good at, how you want to work, and how to craft a networking plan to land that job that isn’t even listed yet. For added inspiration of the power networking, grab a copy of The Third Door.

Overhaul your resume and online presence

If your resume hasn’t been updated in the last five to 10 years, you should know that bullet points of projects aren’t going to cut it anymore. Companies want to know the impact you have created, so you have to learn how to market yourself. Check out a copy of Guerilla Marketing for Job Hunters and get to it. This book will help you identify all the ways you created value at your previous jobs and create a resume that will tell the story of your true value.

Use this time to create personal development habits

Now is the time to add more tools to your toolbelt and to develop great personal development habits. Maybe you need to learn new skills for your next career path via a site like Khan Academy, LinkedIn Learning, Udemy, or MasterClass. Or perhaps you need to bust through some limiting beliefs (try the book Limitless by Jim Kwik). Regardless, you can never go wrong brushing up on communication and priority management skills.

Once you have steps one through three identified, schedule time daily to execute your outreach and personal development plan like it is your new job.

Getting unexpectedly laid off sucks. Just remember, don’t take the layoff personally, guard the doors of your mind and self-talk, and keep your body healthy.

Smart financial solutions

There are some other things for you to work on during this time that will propel your financial situation forward.

Roll out your former 401K into a self-directed environment

This will help you invest in assets you can control (psst… real estate!).

Build your financial moat

As soon as you land your next job, and put a plan into action to never let this stress happen again.

  • Build up your emergency accounts. Build up cash reserves to cover six months of all expenses plus your insurance premiums for health, home, and car.
  • Lower your interest fees across the board. Look to refinance your mortgage, car loan, or investment property loans to take advantage of historically low interest rates.
  • Reduce/eliminate the fees you pay on investments like stocks, bonds, and mutual funds. Reducing fees by just 1% can save huge amounts of money in the long run.

Lastly, build multiple passive streams of income so one day work can become optional for you as you continue your adventure toward financial independence and freedom.

More personal finance on BiggerPockets

Strong personal finance and financial literacy lays the groundwork for much investing and business success. Here, you’ll find hundreds of articles written by personal finance experts on topics like saving, earning more, and investing. A strong knowledge of personal finance can seriously expedite your real estate investing career.
A great credit score, some cash in the bank, and strong stable income can be invaluable assets for those looking to begin or add to their real estate portfolio. For a more in-depth discussion and debate about best practices in personal finance, you may want to check out the Personal Finance Forum.

Personal Finance

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New GSE guideline updates to Fannie Mae and Freddie Mac forces them to cap the amount of second home and investor properties delivered at 7%. This means a meaningful amount of supply will have to come to non-QM sector.

The FHFA’s announcement that they will be reducing mortgage purchases to 7% of a lender’s pipeline of second home and investment properties has thrown some originators’ volume into disarray. The industry should remember that this will have a more immediate impact on the borrowers themselves.

As the model by which some investor clients built their whole real estate businesses changes, brokers and correspondent partners need to stay focused on those customers by providing options and education that can help them navigate this shift and keep their businesses growing.

That’s the view taken by Keith Lind, executive chairman and president of Acra Lending. He explained that while non-QM lenders are set to benefit, more investors will be looking for products which allow investors to access non-QM programs backed by private capital. In turn, lenders and originators need to focus on what this means for the individual borrower. He explained that while this might mean slightly higher rates and higher monthly payments, the underlying strength of the market combined with the right products will still help investors thrive.

“I think if you’re acquiring a second home or an investment property, the cost for that risk has just gone up because of the cap,” Lind said. “If you’re forced to go to the private market, the mortgage rate will definitely be higher but there will be more loan options to chose from. There’s plenty of options for borrowers, brokers and our correspondent partners. If you’re looking to buy an investment property or a second home, you’re just going to use a different route.”

In this environment, Lind believes that borrowers, brokers and correspondent lenders should be working to quickly expand their knowledge of non-QM products to serve customers better. He sees this move from the FHFA as motivated somewhat by a desire to reduce the burden of risk on the government’s balance sheets. If the housing market does take a dip, he sees second homes and rental properties as likely carrying greater risk. He also expects that the already strict agency guidelines will likely tighten further, resulting in more loans going to non-QM lenders.

The benefit of learning non-QM products from a lender like Acra comes in the wide range of flexibility they offer to brokers, correspondent partners and their retail clients. With a range of products including bank statement loans based on three, 12-, or 24-months’ worth of information, full-doc loans, or even prime jumbo products, they can accommodate borrowers and originators with entirely unique needs.

Acra is also there to help educate the borrower at every stage of the process. They see the loan, Lind said, as a partnership between themselves, the mortgage professional and the borrower. Their borrowers, brokers and correspondent partners get to pull from Acra’s wealth of expertise navigating loans that fall outside agency guidelines, as well as their experience advising on difficult deals that require creativity on the part of every stakeholder.

Most importantly, Lind emphasized that Acra is there to help the borrower first.  Acra can also help ensure satisfaction and continued business for their broker and correspondent partners as well.

“It starts with the education of the products we offer to our borrowers, brokers, and correspondent partners, whether through webinars or educational materials, we’re working to ensure everybody understands our suite of products and their options,” Lind said. “Not only has that helped the broker and correspondent partners understand what we’re doing, it’s helped the borrower understand what products are available to them so they can buy that second home or that investment property they know they can afford.”

The post How new GSE guidelines will push more borrowers to non-QM appeared first on HousingWire.

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With Friday marking 100 days since President Joe Biden took office, HousingWire reviewed the actions he’s taken on housing during that time — including yesterday’s announcement of a $1.8 trillion spending plan that would eliminate a “special real estate tax break” for certain investors.

As a candidate, Biden proposed a $600 billion housing plan aimed at improving affordability, ending discrimination, protecting consumers and improving energy efficiency. Of special note, the former vice president also said he would introduce a $15,000 tax credit for first-time homebuyers, build millions of units of affordable housing and cap payments for certain renters.

Here’s what he’s done so far.

The first-time homebuyer tax credit is now a bill

One of the key planks of candidate Biden’s housing platform was the idea of a first-time homebuyer tax credit. On April 26, United States Rep. Earl Blumenauer, D-Ore., and Rep. Jimmy Panetta, D-Calif., introduced new legislation called the “First-Time Homebuyer Act.” The bill would provide a tax credit for first-time homebuyers of up to 10% of the home purchase price, or $15,000. In order to be eligible for the full credit, potential buyers must not have owned or purchased a home within the past three years.

The program is targeted to low- and middle-income earners making no more than 160% of the area median income, and the home’s purchase price must be no more than 110% of the area median purchase price. Borrowers could claim the credit for primary residences purchased after Dec. 31, 2020. The house has to be a primary residence for at least four years, or borrowers would face taxes to recover a portion of the credit.

Several weeks ago, a separate bill was introduced to bolster homeownership among those who experienced systemic housing discrimination. The down-payment assistance bill would provide $25,000 to first-time homebuyers, but only those who are also first-generation homebuyers and economically disadvantaged. David Dworkin, president of the National Housing Conference, told HousingWire that multigenerational homeownership is a “quintessential component of why and how people become homeowners.”

The American Families Plan and 1031s

In his first State of the Union address to Congress on Wednesday, Biden unveiled plans for his $1.8 trillion American Families Plan, which focuses on federal investment in education, child care and paid family leave. It’s essentially his second-half plan to boost the country’s economy, following his $1.9 trillion American Rescue Plan he signed into law last month.

Part of the American Families Plan is the elimination of 1031 exchanges in cases where the gains are more than $500,000. A 1031 exchange allows real estate investors to defer capital gains taxes by funneling the proceeds from a sold property into a new one.

The elimination of this program for high-income investors could cause them to hold on to properties for longer that they ever have before — and may have the effect of decreasing supply and demand.

To offset costs for the American Families Plan, the Biden administration wants to raise the corporate tax rate from 21% to 28%, which, when combined with measures designed to stop offshoring of profits, would fund the entire plan within 15 years, according to the White House.

The tax hike would essentially roll back tax cuts from former President Donald Trump’s 2017 bill, which capped the amount of state and local taxes (SALT) that could be deducted from federal income taxes at $10,000.

COVID-19 response

Biden was, of course, elected during the height of the COVID-19 pandemic, as millions struggled to pay their mortgages or rent. He quickly moved to extend the federal eviction and foreclosure moratoriums — twice — and distributed through Congress $27 billion in emergency housing vouchers and rent relief. 

American Rescue Plan or Infrastructure Plan

Biden has made a point to focus on rebuilding the country from the pandemic, but he’s also been pushing for the rehabilitation of affordable housing. Part of the $2 trillion American Rescue plan calls for the construction of 500,000 homes for low- and middle-income buyers, while also allocating $40 billion for the country’s public housing system.

The post A look at Biden’s first 100 days and his impact on housing appeared first on HousingWire.

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Despite 2020’s pause in originations and securitizations, the 2021 outlook for non-QM lending is promising. In fact, a recent report from S&P Global estimates that “non-QM issuance volumes will return to 2019 levels this year, reaching an estimated $25 billion” as agency refinance activity slows down and the purchase market remains strong.

Even with 2020’s liquidity problems and subsequent pause, the non-QM sector closed out the year strong, with $18.9 billion in total securitizations – only a 33% decrease from its 2019 high. Investors are returning to the space with more confidence, and new investors like private equities and insurance companies are showing interest.

There are also increased opportunities for non-QM originations. For example, the number of self-employed borrowers has grown as more people go into work for themselves or join the gig economy. This makes it more likely that their best loan fit falls under non-QM rather than agency products.

Additionally, the rise in home prices over the last year has led to more need for jumbo non-QM loans as borrowers look to purchase or refinance higher value properties. And investors are turning to non-QM products like a Debt Service Coverage Ratio program as GSE guidelines around investment properties shut them out of agency loans.

Plus, as rates rise and the refinance boom slows, non-QM lending is a way for many originators to expand their product offerings to replace volume.

However, amid this growth are a number of changes affecting the non-QM market.

Evolving market conditions

The issuance of the Revised Qualified Mortgage Rule by the Consumer Financial Protection Bureau could expand funding options for non-QM borrowers. The new rule establishes a pricing threshold that effectively replaces the DTI limit of 43% with a price-based approach. Its mandatory compliance date is now Oct. 1, 2022.

Fannie Mae and Freddie Mac recently confirmed that they will be moving to the new non-QM pricing definition beginning July 1, 2021. Loans purchased by the GSEs with applications dated on or after July 1 will be required to meet the standards of the new QM Rule.

Under the new rule, mortgages currently labeled as non-QM per the DTI ratio cap could be eligible for agency backing. Lenders will still need to carefully verify borrower documentation to ensure ability to repay.

In addition to regulatory changes already in motion, the new administration brings new leadership for the CFPB. President Joe Biden’s nominee for CFPB director, Rohit Chopra, is expected to reinvigorate the bureau with a new energy for enforcement, heightening the need for lenders to ensure compliance. And there may be further changes as Fannie Mae and Freddie Mac continue to move toward the conservatorship exit.

Given the changing rules and wave of new entrants coming back into the non-QM market, it’s an excellent time for lenders to evaluate their tech stack and consider adding an automated underwriting system (AUS) to ensure compliance and expedite the origination process.

How lenders benefit from an AUS

An automated underwriting system can be a critical tool for non-QM lenders navigating the changing regulations or even beginning to offer new products.

An AUS helps accelerate the origination and underwriting of non-agency products, enabling lenders to better serve a broader range of borrowers. Just as Desktop Underwriter and Loan Product Adviser do for agency loans, a non-agency AUS, like LoanScorecard’s Portfolio Underwriter, can help non-QM lenders understand whether a borrower fits their market and product.

The non-QM market has a pull through rate of about 50%, as these borrower scenarios tend to be unconventional and complex.

By implementing an AUS early in the origination process, lenders can understand more quickly whether a borrower fits their product profile and can avoid untenable loans moving further into their manufacturing process. This improves the pull through rate and decreases touches by underwriting staff, resulting in increased efficiency overall.

In addition, using an AUS can assist lenders with compliance risks. Lending decisions are fully documented at the time of origination, providing clear audit trails for CFPB reviews and regulatory audits.

Automated solutions keep lenders compliant with HMDA, Fair Lending, ATR/QM and CECL to ensure that loans are underwritten without bias. These solutions can be updated easily, facilitating immediate changes to loan programs as guidelines change.

An AUS adds accuracy, consistency and transparency to the loan qualification process, helping take risk and structuring out of the equation. By leveraging technology, lenders can reduce human errors and the need to analyze the loan against hundreds of applicable underwriting guidelines.

Now is a great opportunity for non-QM lenders to adopt an AUS as part of their tech stack.

Portfolio Underwriter, for example, can be custom-tailored to reflect a user’s underwriting guidelines and generates a detailed underwriting analysis based on user program guidelines, credit policies and criteria. It also presents a branded, in-depth findings report and provides a clear audit trail for CFPB reviews and consistency in credit decisioning.

As the non-QM market expands, implementing an automated underwriting system can help simplify the origination process for lenders, increasing efficiency, reducing compliance risks and improving consistency in decisioning.

To learn more about LoanScorecard’s Portfolio Underwriter, click here.

The post Non-QM lenders, it’s time to embrace automated underwriting systems appeared first on HousingWire.

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The parent company of Veritex Community Bank will acquire a 49% stake in Texas-based mortgage lender Thrive Mortgage, the firms announced late Tuesday afternoon.

Veritex Holdings, which has a long history of making acquisitions, will pay $53.9 million for its piece of Thrive, valuing the Georgetown, Texas-headquartered company at roughly $110 million.

The investment is expected to close in the middle of 2021.

Family-owned Thrive has retail operations in Texas, Ohio, Colorado, Kentucky, North Carolina, Kansas, Virginia, Florida, Maryland and Indiana.

“We are proud to further our relationship with a valued business partner of over seven years,” Roy Jones, chairman and chief executive officer of Thrive, said in a statement. “With a similar culture and alignment of values, Veritex has helped Thrive grow by understanding our business and assisting Thrive with tailored financing, including construction warehouse lending. This expanded partnership, while retaining our nimble operating practices, will allow us to better serve our customers and employees with unequaled products and positions the company for a strong decade of growth.”

How lenders will benefit from Proctor Financial’s acquisition of Loan Protector

HW+ Managing Editor Brena Nath joins Proctor Loan Protector executives Damon Laprade and Mike Dimas to discuss the acquisition and the new brand, Proctor Loan Protector.

Presented by: Proctor Loan Protector

Veritex is one of Texas’ largest banks, with $8.8 billion in assets at the end of 2020. It primarily works with small- and medium-sized businesses. It posted net income of $31.8 million in the first quarter. It’s acquired seven community banks across Texas since 2010, including Bank of Las Colinas, Independent Bank of Texas, Sovereign Bank, Liberty Bank and Green Bank.

“I couldn’t be more excited about our partnership with Thrive,” Veritex Chairman and CEO Malcolm Holland said in a statement. “The breadth of management and experience, coupled with an industry leader in cutting-edge technology, provides a powerful earnings investment to drive consistent shareholder return and mitigates business cycle volatility to our commercial-focused portfolio.”

The investment in Thrive comes amid a wave of M&A activity in the mortgage lending space. Finance of America announced on Tuesday that they planned to acquire Parkside Lending‘s wholesale operation for $40 million.

Other M&A deals in the mortgage lending space of late include Guaranteed Rate‘s acquisitions of Owning and Stearns LendingOcwen‘s acquisition of Texas Capital‘s correspondent business, New Residential Investment Corp‘s $1.7 billion purchase of Caliber Home LoansNew York Community Bank‘s pending $2.6 billion acquisition of Flagstar, and Western Alliance‘s $1 billion purchase of AmeriHome.

The post Veritex buys 49% stake in Thrive Mortgage appeared first on HousingWire.

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Finance of America intends to acquire Parkside Lending‘s third-party origination channel operation for $40 million, the publicly traded lender and servicer announced Tuesday. It’s the latest in a string of big M&A deals in the mortgage lending space – and the growing wholesale channel in particular – over the past six months.

The deal, which is expected to close in the second quarter, will boost Finance of America’s third-party origination coverage by more than 1,000 brokers with little customer overlap, the firm said in a statement. Finance of America said it puts the company on the path of becoming a “top-five performer” in the segment, which has grown to roughly 20% of the overall mortgage market.

“This transaction aligns with our proven strategy of advancing our growth priorities through the acquisition of highly complementary businesses where we can leverage our platform and resources to drive enhanced operating and financial performance,” said Patricia Cook, CEO of Finance of America. “Parkside Lending’s philosophy is similar to our own in that the firm is able to pivot between products to maximize profits or minimize risk as market conditions shift. This approach should prove powerful in terms of fueling origination opportunities as we introduce our products to the firm’s vast network of mortgage professionals.”

Parkside, founded in 2004 in San Francisco and led by CEO Matt Ostrander, also operates correspondent and retail channels. It was also not immediately clear if Parkside’s wholesale operation would maintain its existing branding and operations, or if it would be folded into Finance of America’s.

The acquisition of Parkside’s wholesale business comes roughly one month after Finance of America’s acquisition of Renovate America’s Benji business, an expansion into the home improvement lending space. The firm said Tuesday it expects to make additional acquisitions in the future. It originated roughly $30 billion in mortgages last year across its retail, correspondent and wholesale businesses. The company notably increased the number of wholesale employees by 100% in 2020, it said Tuesday.

“Our TPO business is a part of our long-term growth strategy,” Bill Dallas, president of Finance of America, said in a statement. “We pride ourselves on offering the widest range of products and tailored solutions designed to meet the needs of our valued broker partners and their clients during any economic and home buying cycle. We’re excited about the enhanced scale this transaction provides as it will materially increase our production volume and enable us to distribute a larger number of proprietary products in the future, propelling continued growth.”

The first big acquisition to rock the wholesale channel came when Guaranteed Rate bought Stearns Lending in January of this year for an undisclosed price. The deal gave the Chicago-based retail lender access to the wholesale channel. Similarly, New Residential Investment Corp. earlier this month announced a deal to acquire Caliber Home Loans, a top-three wholesale lender, for $1.7 billion.

Other M&A deals in the mortgage lending space of late include Guaranteed Rate‘s acquisition of Owning, Ocwen‘s acquisition of Texas Capital‘s correspondent business, New York Community Bank‘s pending $2.6 billion acquisition of Flagstar, and Western Alliance‘s $1 billion purchase of AmeriHome.

The post Finance of America to acquire Parkside’s wholesale biz appeared first on HousingWire.

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The federal government is well aware that mortgage lenders and industry stakeholders are frustrated by the 7% cap on second homes and investment properties that was implemented as part of a broader series of amendments to Fannie Mae and Freddie Mac‘s Preferred Stock Purchase Agreements.

In a conversation with Mortgage Bankers Association President Bob Broeksmit last week, Bharat Ramamurti, deputy director of the National Economic Council, acknowledged the issue, which was designed to provide more liquidity to the GSEs.

“We recognize that the issues that you raised about second homes and so on, is a shorter-term issue,” Ramamurti said. “All I can say on that is we are aware of it, we will continue to engage with it and work on it, and are happy to talk to you and your members about it going forward, and have discussions with FHFA going forward. But we don’t have any new news to report on that.”

Lenders and the MBA have opined that the 7% PSPA cap has caused disruptions, particularly since a key provision requires a 52-week look-back. Compliance will be difficult given that the market is producing north of 7% of those products, Broeksmith said in his conversation with Ramamurti during the MBA’s spring conference last week. Those products are “very profitable for the GSEs given the loan-level price adjustments on them. They actually create more capital, which of course, is Director Calabria’s priority for them. Yet, Treasury and FHFA have not given Fannie and Freddie the flexibility they need to get to those 7% levels more gradually, say by the end of 2021.”

Broeksmit added: “The issue is time-sensitive since May GSE deliveries are affected and there are massive run-ups in price add-ons to second homes and investment properties in response to this policy.”

FHFA Director Mark Calabria last week told MBA members that, although the agency is looking to introduce additional PSPA amendments, they’ll have to manage for the time being.

“I obviously wish that we were in a better capital position and had a stronger Fannie and Freddie that could support more of the market, and that’s our objective” Calabria said. “The reality is there will be some short-run pinch, if you will, on the market, while we try to build a stronger Fannie and Freddie that can support the market. I do want to clarify because I think there’s often some misperceptions out there, and to say, the PSPA are lines of credit, Fannie and Freddie cannot legally knowingly take risk against PSPAs. That would be like if Wells [Fargo] said, ‘Well, we’ve got deposit insurance so who cares.’”

The MBA has sought clarity on the PSPAs and the 7% cap on second homes and investment properties. In a letter written in March, the MBA outlined four specific areas of concern:

1. Reports that the GSEs may be implementing limits on a per-lender basis rather than across their aggregate books of business, which “represents an overly conservative method of achieving compliance,” according to the MBA.

2. Disproportionate challenges for some lenders — especially smaller lenders — to meet lender-level requirements set by the GSEs, due to their footprints in certain geographic markets or their lack of access to non-enterprise outlets for these loans.

3. Reports that the GSEs are requiring some lenders to adjust loan deliveries as early as April. The MBA noted these loans are already locked and that lenders “cannot reasonably alter their delivery mixes on such short notice.”

4. Inconsistencies in the requirements being communicated to different lenders, which raises concerns about equitable treatment of lenders of varying sizes, charters, or business models.

In addition, the MBA also warned that cash window limits under the PSPA amendments could have unintended consequences for borrowers, lenders, investors, and Fannie and Freddie. The revised PSPAs require that beginning Jan. 1, 2022, the GSEs shall “not acquire for cash consideration from any single seller…during any period comprising four calendar quarters, Single-Family Mortgage Loans with an unpaid principal balance in excess of $1.5 billion.”

The MBA letter states that this requirement will force up to several dozen lenders to curtail their use of the GSEs’ cash windows, which will in turn force the lenders to increase their use of mortgage-backed security swaps, sales of loans to correspondent aggregators, or shifting of their business mix to other loan products.

The post White House aware of issues over investment properties appeared first on HousingWire.

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Do you run multiple businesses? Do you plan to expand the number of companies you manage? While a standard LLC, a professional LLC, or a corporation may work well for a single business, you’ll find that administration tasks and compliance rules will expand right along with your portfolio.

By establishing a holding company or a series LLC, you can gain both tax benefits and asset protection. But which structure is right for you? This article will examine what holding companies and series LLCs provide, as well as their pros and cons to help you decide.

Are you ready to invest?

One of the most frequently asked questions in the BiggerPockets forums is “How can I start investing in real estate with no money and bad credit?” The answer? You shouldn’t. You need to fix your situation and invest from a position of financial strength.

What is a series LLC?

A series limited liability company, known as a series LLC, is a form of a limited liability company that provides protection from liabilities arising from the other series. Each series serves as a separate LLC, with the original LLC often called the base, parent, master, or umbrella LLC.

The primary goal of the series is legal liability protection, meaning if a lawsuit is filed against one business in the series, it will not impact the others.

Let’s say you purchase 10 real estate properties over the next year and do not set up a series LLC. For a few years, everything runs smoothly, but then a slip and fall accident occurs on the porch of one of your properties. The tenants sue you.

In most cases, insurance kicks in at this point. However, the tenant’s insurance company can claim you were negligent because you should have known a dangerous condition existed. If the lawsuit ends in a settlement or judgment, it can be executed against any property in your LLC.

However, if you have a series LLC in place, the settlement or judgment can only impact the property involved in the lawsuit. Your remaining properties are legally separated.

Pros and cons of a series LLC

In addition to the legal liability protection, here are some other advantages of a series LLC.


  • Easy to manage. Separate LLCs require separate administrations. A series LLC allows you to use one administration team.
  • Less complicated at tax time. One tax return can include all the LLCs in the series.
  • Can save on expenses. The initial starting fee for a series may be higher than for a separate LLC, but you can add other LLCs to the series without paying additional start-up fees. Also, depending on your state’s regulations, the rent paid by one cell to another in the series might not be subject to sales tax.


  • State-limited. Not every state allows you to form a series LLC. Additionally, the states that do allow them have differing rules. You’ll need to check with your state and the states in which you conduct business to find out their current regulations.
  • Separate agents. You may need separate registered agents for each LLC. States vary on this requirement, which can lead to additional time and expense.
  • Separate accounting. Each LLC in a series must have its own bank account and accounting structure, which can get complicated.

What is a holding company?

Another option if you own multiple business ventures is to establish a holding company. A holding company exists for the sole purpose of owning assets in its operating companies, known as subsidiaries. The assets can include real estate, intellectual property, and equipment.

It does not participate in the buying and selling of any products and services, nor does it perform other operational roles. Instead, a holding company makes management, financial, legal, and tax decisions on behalf of its subsidiaries.

A holding company may be set up as an LLC.

Here is an example of when a holding company would benefit you as a business owner. Let’s say you own a horse farm that has been struggling financially and has been unable to pay its veterinarian, trainers, and other stable employees.

Suppose these individuals decide to sue the horse farm. In that case, their suit will only impact the subsidiary that owns the horse farm, not the assets of the apartment building, restaurant, or other businesses that are subsidiaries of your holding company.

Pros and cons of a holding company


As with a series LLC, the main benefit of a holding company is asset and liability protection. Here are other advantages of this structure.

  • Easier operations. A holding company can be more affordable and easier to manage than separate LLCs. The company needs to control its subsidiaries, but it doesn’t need to own all shares or membership interests.
  • Financial strength. The company often is able to obtain loans at a lower interest rate than its operating companies could on their own.
  • Less risk. Because operating companies are separate legal entities, there can be less risk in investing in new ventures.


Here are some disadvantages of a holding company.

  • Management challenges. The managers of the subsidiaries of a holding company do not have a legal say in the running of their businesses. Sometimes conflicts can arise.
  • Additional fees. The holding company and each subsidiary must pay formation fees and, in most cases, handle annual reports and franchise tax obligations.
  • Regulatory complexity. Holding companies are legal in all 50 states, but regulations vary. The rules for operating a holding company can be quite complex.

Is a series LLC or a holding company right for you?

As you can see, there are some similarities and some differences between series LLCs and holding companies. If you are in a state that does not allow you to operate a series LLC, then your choice is easy—you’ll want a holding company. However, if your state allows both structures, the decision may depend on your individual situation.

Generally speaking, it’s easier to set up a series LLC than a holding company. However, it’s best to consult your legal and financial team to fully understand the implications of each option.

More on LLCs at BiggerPockets

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Another partnership of asset management giants has announced a major investment in single-family rental homes.

Atlas Real Estate and DivcoWest declared last week that they will spend $1 billion “acquiring and renovating homes in high-growth states including Colorado, Arizona, Idaho, Nevada, and Utah,” according to a press release. The companies entered into a joint venture that puts $250 million of equity into single-family rental homes.

The move aligns with the current portfolio of Atlas Real Estate, a Denver-based company that reports managing more than 4,200 housing units in the aforementioned Mountain states. But for DivcoWest the single-family rental markets represents a shift from the San Francisco company’s general focus on office, retail, industrial, and multifamily spaces.

The joint venture announcement comes one month after homebuilding giant Lennar Corporation unveiled a new business, Upward America Venture, that plans to spend $4 billion on new single-family homes, fueled by a $1.25 billion equity infusion from investors including Centerbridge and Allianz Real Estate.

Also, less than a year ago JPMorgan Chase pledged $625 million to American Homes 4 Rent for construction of 2,500 single-family rentals in the Southeast and West.

These company’s plans to build or refurbish, and then rent single-family homes comes amid a sharply imbalanced housing market in which supply is not meeting demand. The record sales numbers of last fall have now been eclipsed by a story of free falling inventory. Total homes sales have been down in the U.S. for the last two months, according to the National Association of Realtors.

But while demand for single-family homes is greater than ever, a historic shortage in lumber is ratcheting up homebuilding prices.

Atlas’s CEO Tony Julianelle said in a statement that, “The joint venture will function to increase the inventory of single-family rentals in Atlas managed markets,” and will help “meet the supply demands by providing high quality housing.”

The post Atlas, DivcoWest prepare $1B single-family rental venture appeared first on HousingWire.

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Here it is: another article about appraisal modernization. Many are tired of hearing about how the appraisal industry needs to change and progress. But it’s true, and change is necessary. (Where would our Internet-provider world be if it hadn’t evolved beyond 9600 baud modems to gigabit fiber-optic service?)

The FHFA RFI responses to appraisal modernization are a treasure trove of insight into ideas and options for modernization from a wide variety of respondents. In many of those reviewed, there is a strong desire to keep appraisals and appraisers as key components of the mortgage lending process. A desire to see the collateral analysis and valuation process evolve, modernize, and move forward—whatever term you prefer. There are many good ideas for updating and modernizing that keep the appraiser involved, though the appraiser’s role may look different. Because Freddie and Fannie are such a large share of the market, their appraisal guidelines—forms and methods—become the de facto industry standards for residential mortgage lending.

Additionally, we’ve seen recent updates from Fannie and Freddie on their effort to redesign UAD and update the “forms.” The GSEs have been working to gather feedback on their proposed ideas and approach to appraisal reporting formats from various industry stakeholders for the past couple of years. The current notion is to adjust how an appraiser reports their value opinion with accompanying salient information—moving from a standardized form to a standard yet dynamic format that will adjust to the property’s characteristics being appraised. This approach would eliminate the need for property-specific forms and the need to cram multiple data points into a single field on a form, as we do with today’s UAD. These changes are beneficial from a simplicity and flexibility perspective. 

To paint an example of what this might look like, an appraisal form software provider would provide data input screens for the subject property address and certain property characteristics, such as single-unit or two-unit, owner-occupied or tenant-occupied, fee or leasehold ownership, and so forth. Based on these classifications, additional information would be input. For a single-unit home, HOA information or project amenities would not be needed. For a four-unit, the data fields included would expand to address information for all units, rental information and other building attributes important to multi-unit properties vs. single unit. When all required data input fields are completed, the data file is delivered to the lenders, same as it is today, and the data fields are formatted and presented in a manner that a “form” is printable or can be turned into a PDF so that the appraisal can be viewed.

The GSEs are pushing out a timeline that indicates the design and planning for this new approach will be  completed this year. The industry begins the mammoth task of rebuilding its systems, technology, processes, and product to support this new approach in 2022/2023. The changes will impact just about everything and everyone in the collateral valuation space.

As this effort’s scale and breadth are coming into focus, many are asking FHFA and GSEs to clarify and justify the  associated costs. There are numerous comments in the FHFA RFI responses, from significant entities including the MBA and ABA, asking FHFA to provide more insight into the value of the proposed changes. There is some concern that the changes will be beneficial primarily to the GSEs, with the cost and impacts borne by the lenders with minimal direct benefit. Forms providers, collateral management technology providers, automated appraisal review tools, AMCs, lenders workflow systems, and loan origination systems, to name a few, will be impacted significantly; not to mention the people, training, and process changes that will also be needed. This change is akin to pulling all of the wiring and plumbing out of your house and replacing—no small task.

As this effort by the joint GSE group is still in process, there are no finalized requirements or new data standard to build to at this juncture. It is business as usual for at least another year, likely longer. So, at this point, exactly what this new world looks like is speculation. Additionally, we have yet to see if the FHFA provides any additional direction to the GSEs based on the extensive feedback collected in the RFI. 

No doubt, investment in modernization is needed in the appraisal process. A measured, incremental, iterative approach minimizing impacts to all stakeholders seems prudent. At CoreLogic, we remain closely involved with all participants in this process and stay ready to support the needs of our appraiser, lender, and AMC clients as they help consumers find, buy and protect their homes.

The post Appraisal modernization: What is going on with the forms? appeared first on HousingWire.

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