Rental properties have tremendous potential to generate revenue. However, the success of your investment rests heavily on the quality of your property management. Finding a quality property manager (PM) isn’t as cut and dry as one might think. Many factors must be considered when assessing a property’s needs.

This article will explain what a property manager is, why they are important, and how to find the right one to maximize your rental property’s earning potential. 

What is a Property Manager?

property manager is defined as any person or firm that carries out the various tasks involved in operating a residential or commercial rental property in exchange for a fee. In short, you pay them to take care of the grunt work so that you can invest your time elsewhere. 

The tasks involved in managing property will vary depending on the type of property, size, location, and personal preferences. That being said, here are a few of the general responsibilities of a property manager:

  • Listing and advertising 
  • Scheduling showings 
  • Screening potential tenants
  • Leasing agreements/contracts
  • Collecting deposits and rents
  • Property maintenance 
  • Responding to tenant requests and emergencies 
  • Handling evictions

Not all property managers are the same. In many cases, a property manager or management firm will specialize in a specific area of expertise. Not all experienced property managers are suited for the same role. For example, a PM may have years of experience managing single-family residential properties but may fall short when managing a multi-family unit such as a residential apartment complex. 

PM responsibilities also depend on what role you’d like them to assume. You can appoint specific duties, such as responding to tenant emergencies, scheduling routine maintenance, and rent collection, while outsourcing other tasks like leasing, marketing, and legal matters. Or, you can choose to hire a management firm that can handle 100% of your property’s needs. 

Why Hire a Property Manager? 

If you have the time and resources to manage a property on your own, you can save yourself a little money. However, managing a property can be a full-time responsibility. Many investors don’t have the time or desire to manage a rental property’s nuances. Here are a few common reasons to hire a property manager.

Time

As I mentioned before, rental properties are time-consuming. Whether you have a full-time job or simply prefer to invest your time elsewhere, hiring a PM will free up your schedule. If you want to avoid 3:00 A.M. maintenance emergencies, requesting quotes from vendors, or trying to squeeze showings into your busy schedule, you’ll need a property manager. Delegating the property’s responsibilities to a PM will allow you the freedom to earn without the hassle. 

Stress

Managing a rental property means spending a great deal of time solving problems. Rental properties are not all fun and games. Sometimes you’ll find yourself in uncomfortable and challenging situations. You may face expensive repairs, storm damage, difficult tenants who don’t pay rent, or complicated evictions. It’s easier to make logical decisions when removed from a potentially emotional or stressful situation. A good PM can take some of the burdens off of your shoulders. 

Location

It is common for investors to purchase rental properties outside the state or town they reside in. Distance can make it challenging to respond to emergency maintenance requests or ensure that tenants honor lease agreements. Out-of-state investors prefer to choose a property manager that is local to the rental property. It is beneficial to hire a local PM because they know the area, can assess the property in person, have vetted lists of vendors, and can respond quickly if any issues arise.

Efficiency

A quality property manager can help to maximize your property’s earning potential. Many PMs have the expertise and reliable resources to work efficiently and prevent loss. Most PMs will know tenant/landlord laws and regulations and can handle legal disputes, leases, and money handling. They will have vetted vendors to handle maintenance and repairs efficiently. Most importantly, they will likely have established processes for vetting tenants to reduce turnover or vacancies. 

What to Look For in a Property Manager

Choosing a property manager to handle your investment property can be tricky. You’ll want to be sure that whoever takes on this vital role will meet your needs and expectations and do so efficiently. 

Here are some of the essential qualities to look for in a property manager.

Integrity 

Choosing a property manager with a reputation for trustworthiness and integrity is vital. You should feel confident that your PM will make decisions in your best interest and conduct themselves to reflect your values. Choose a property manager that you’re confident will treat your tenants with respect and fairness and make financial decisions to optimize your property’s success. A property manager who cuts corners to cut costs can negatively affect your revenue when tenants decide to take their money elsewhere. 

Expertise 

Too often, people confuse experience with expertise. Unfortunately, the amount of time a person has spent in an industry is not a reliable way to gauge their competency. 

Rather than focusing on the number of years they have under their belt, focus on these key indicators:

  • What professional licenses and certifications do they possess?
  • Do they have a good reputation?
  • What are their vacancy rates?
  • Do they have established policies and processes?
  • What does their client base look like? Do they have properties similar to yours?
  • Are their contracts transparent and accurate?
  • Do they have insurance, and what does it cover?

Communication and compatibility

Communication style & compatibility are not qualities that you can screen for on a job application. This is something that can be easily overlooked during the hiring process. However, the quality of your communication and compatibility with your property manager is key to successful management.

Think about it, a vast majority of the conversations you will have with your PM will be regarding some sort of problem that needs to be solved. In my experience, communication and compatibility play a pretty substantial role in the ability to work with someone towards a solution. 

You may find someone that checks off all the qualities of a great property manager. Still, if you cannot effectively communicate or work together, it can become a burden or even a liability. 

How to Find the Best Property Manager

Now that you have a better idea of what qualities to look for in a property manager, you may be wondering where to start. Here are a few tips to get you started with your search.   

Consult with your broker

One of the best ways to build a trusted property management team is to establish a strong relationship with a local real estate broker. Brokers can provide valuable insights and referrals. 

Ask for referrals

It never hurts to ask trusted colleagues and other investors for referrals. Be sure to get specific details about why they recommend a particular property manager. 

Do your research 

When interviewing property managers, make sure to request references. Research the PM online, read reviews, and speak to their references. Have a list of specific questions to ensure the PM fits all your needs. 

Warning Signs to Watch Out For

Unfortunately, there are bad seeds in every industry. Things can go downhill quickly when property managers aren’t upholding their end of the deal. You’ll want to pay attention to avoid a property manager that isn’t up to snuff.

Here are a few red flags when searching for a property manager:

  • Poor communication: If the PM you’re interviewing is slow to respond, late to appointments, or unwilling to meet in person, this behavior will likely be the norm.
  • Spelling and grammar mistakes: If you’re receiving emails riddled with spelling and grammar mistakes—that’s a bad sign. It shows that the PM does not pay attention to details.
  • Unprofessional behavior: Ensure that the PM you hire represents you in the highest light. Pay close attention to how they conduct themselves during meetings. Imagine how they will treat your tenants if they speak, dress, or act unprofessionally with you.
  • Lack of references: If a potential PM does not have references or refuses to provide them due to “confidentiality,” it’s best to cross them off your list. A lack of references means they are inexperienced or don’t have any good references to provide. Either way, it’s not a good look.
  • Services are not 24/7: Life happens. Water damage, burst pipes, and broken HVAC systems don’t wait for business hours to cause issues. If a PM does not have an emergency line with 24/7 assistance, move on down the line. Waiting to address maintenance emergencies can have serious consequences. Not only must tenants be provided a habitable living space, but your property can sustain severe and costly damages.

Conclusion

Hiring a property manager can help alleviate stress, free up your time, and keep your property in tip-top shape so that you can reap the appreciation benefits. However, every investor will have unique goals, preferences, and resources, and a PM might not be for everyone. Before deciding to take on landlord responsibilities or hand it off to a property manager, I recommend assessing your availability, resources, and industry knowledge.

rental property investing

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HW+ member spotlight Staurt

This week’s HW+ member spotlight features Stuart Sim, head of industry development and brand ambassador at Chime Technologies. Prior to Chime, he has held a number of leadership roles, including roles at Realtor.com and NCL Sales & Strategy Consulting.

Below, Sim answers questions about the housing industry:

HousingWire: What is your current favorite HW+ article and why?

Stuart Sim: Latest Market Trends + Real Trends lists — great information to keep me up to date to inform my customers and colleagues.

HousingWire: What are you fast thoughts on the following:

Stuart Sim:

  1. My most useful tech tool is… my iPhone.
  2. The weirdest job I ever had was… Club Med GO.
  3. My biggest learning opportunity was… leading people and learning as we grew rapidly.
  4. If I had picked a different career path, I would be a… pilot.
  5. I felt like a success at my job when… when I hit unexpected high targets.

HousingWire: What is the best piece of advice you’ve ever received?

Stuart Sim: Live life to the fullest and enjoy what you do for a career.

HousingWire: What’s one thing that people aren’t paying attention to that you think they should be paying attention to?

Stuart Sim: Listed as follows:

  1. State of the Industry — Seller’s market, low inventory, high prices, Interest Rates
  2. How Realtor’s need to change their way of thinking — Top of funnel is in the past
  3. Traditional Real Estate vs. New Concepts — Ibuyer/Power Buyers/EXP model
  4. Recruiting is hard for brokers
  5. Thoughts on Crypto for Real Estate and how it can change traditional transactions with NFT’s as partial ownership or tokenizing Real Estate

HousingWire: If you could change or implement one piece of housing regulation, what would it be and why?

Stuart Sim: I live in Canada where we have high foreign ownership that is driving prices very high in Vancouver. I think the current tax directive needs to be increased to make it less attractive to foreign investment.

To become an HW+ member, click here.

For more information on HW+ benefits, click here.

To view past issues of our HW+ exclusive HousingWire Magazine, go here.

The post HW+ Member Spotlight: Stuart Sim appeared first on HousingWire.



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United Wholesale Mortgage’s CEO Mat Ishbia is a finalist to buy the Denver Broncos, which have been up for grabs since February 2022.

As first reported by 9NEWS, four contenders are currently in the running to snatch the team: Ishbia and his brother Justin Ishbia, who owns 22% of UWM; Josh Harris, owner of NBA Philadelphia 76ers and NHL New Jersey Devils; Rob Walton, son of Sam Walton, who was the founder of Walmart; and Jose Feliciano, co-owner of Clearlake Capital, which was the money behind Todd Boehly’s successful bid for Chelsea Football Club in London.

Ishbia and his brother reportedly toured the Broncos’ facilities in mid-May.

The decision of who will become the team’s next owner may be just around the corner. The deadline for submitting second-round bids is on Monday, June 6, per 9NEWS.

Bidding for the team is expected to start somewhere around $4 billion, but the final purchase price is likely to be higher. When the sale was originally announced, the football team, which has three NFL championships under its belt, was valued at $3.75 billion.

Ishbia, who, according to Bloomberg, has a net worth of $5.45 billion, has been actively involved in sports since his college years and continues to be. UWM’s CEO played for four years as a backup point guard for National Championship-winning Michigan State from 1998-2002.

In June 2021, UWM, the nation’s largest wholesale lender, announced that it was the new jersey sponsor for the Detroit Pistons. Financial terms of the deal weren’t disclosed to the public.

The Pontiac-based wholesaler also sponsors Ishbia’s alma mater, Michigan State. Last year he made a $32 million donation for a new football building Ishbia announced in September 2021 that UWM will sponsor all men’s basketball and football players with $500 dollar monthly stipends. The only catch is that players have to advertise UWM on their social media pages.

It is not unusual for lenders to be involved in the sports world, whether that be basketball, football or baseball.

Dan Gilbert, founder of Rocket Mortgage, is the majority owner of the Cleveland Cavaliers. And in 2020, Rocket become the official mortgage sponsor of the NFL.

loanDepot on the other hand is an official mortgage provider of Major League Baseball (MLB). In March 2021 loanDepot announced that it was named the presenting sponsor of the American and National League Championship Series through 2025.

The post UWM’s CEO Mat Ishbia a finalist to buy Denver Broncos appeared first on HousingWire.



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The pandemic changed the way people do everything from work and school to grocery shopping and medical appointments and the real estate industry has been working to keep pace with the demand for digitization. HousingWire recently spoke with Brendon Weiss, co-founder of EscrowTab, about how lenders can streamline their eClosings with the help of IPEN.

HousingWire: What are some of the potential challenges lenders and borrowers face when it comes to the traditional in-person signing process and how can in-person electronic notarization, or IPEN, solve some of those challenges?

Brendon-Weiss-Head-Shot-1

Brendon Weiss: Lenders and homeowners will agree, the traditional in-person signing process has long been plagued with inefficiencies. Challenges accompanying the traditional methods used to complete in-person signings are not ‘new’ obstacles – they were only made more obvious in recent years as digitization has accelerated in an increasingly tech-forward world. Can you imagine needing to pay for groceries using cash or checks? We can’t either. Soon, we believe printing and signing hard copies of loan documents will also largely be a thing of the past. 

In-person electronic notarization (IPEN) is quickly gaining industry-wide traction with lenders, title agencies and settlement companies due to its convenience, cost savings and improved borrower experience. IPEN allows a signer and notary signing agent in the same location to apply the signer’s electronic signatures to digital documents. The notary signing agent is then allowed to eNotarize the documents without any paper involved.

To better understand the advantages of IPEN, first consider the implications of facilitating traditional in-person notarization. All documents are paper records, which come at a financial cost to print, costs related to administrative hours to prepare, process and maintain. Paper records can be more susceptible to data security risks or human error – such as skipped pages or incorrectly-placed signatures. Handling tangible paper records with or without having to correct human error can result in delayed processing time.

As the traditional in-person notarization process can involve hundreds of paper records, you’re also losing the eco-friendly appeal with modern borrowers expecting a paperless process.

IPEN enables eClosings with enhanced security, compliance and accessibility for all parties involved and depending on the vendor, can be more quickly implemented than other solutions available in the market. An IPEN solution like EscrowTab helps streamline closing operations with reduced loan lifecycles – all the while adding value to the borrower experience with convenient full eClosing options.

HW: IPEN provides both lenders and borrowers with a level of automation that a traditional signing doesn’t. How are current market conditions necessitating flexible and convenient solutions like EscrowTab?

BW: At a time when margin compression is high and closing volume is low, implementation of a solution like EscrowTab would position lenders and title agencies for streamlined efficiency throughout your business.

While some solutions take months to implement, EscrowTab bypasses the bottlenecks of system integrations and allows companies to start enjoying cost savings sooner rather than later.

EscrowTab’s solution is designed to work as close to paper as possible, except better. This includes functionality like allowing for edits to the document in real-time without redrawing the docs, and the ability to clear a single page if a borrower signs in the wrong location. And because all EscrowTab’s services – DocPrep, eNote creation, eClosing and eVault – were designed and built in-house, everything works seamlessly to the benefit of the users.

HW: Why would a lender, title agency or settlement company choose an In-Person Electronic Notarization (IPEN) method over remote online notarization (RON), which has been the talk of the media for the past few years?

BW: In-Person Electronic Notarization (IPEN) has been around for many years, often referred to as simply electronic notarization. Even though this type of notarization has been legal nationwide, and it holds versatile advantages over other notarization methods, there haven’t been many companies providing a simple, intuitive IPEN-based product.

Only 40 states have legislation in place permitting the use of RON. Of those 40, several are still operating under temporary emergency orders enacted in response to the COVID-19 pandemic. Temporary orders may – for now – still allow the use of RON; however, there’s no guarantee which states with temporary policies will pass permanent legislation.

A nationwide IPEN solution offers simplicity and consistency for the notary signing agent and the borrower. In the states with approved use of RON, all parties must meet multi-factor verification requirements. Acceptable multi-factor requirements are state-specific and may include knowledge-based authentication (KBA), automated authentication of government-issued photo ID, or visual inspection of ID through two-way video technology. Accessing multi-factor verification requirements may not be feasible for all parties, who may have inadequate technology means or feel intimidated by the process.

When employing IPEN methods in eClosings, tangible paper documents are eliminated, but the in-person connection that is very valued by many borrowers, title companies and signing agents, remains. Tech-shy borrowers can feel confident as they move through a simplified eClosing process with guidance from an industry professional by their side.

HW: What is EscrowTab bringing to the market that lenders and title agencies haven’t experienced yet and how will you continue bringing value to the industry?

BW: Recent years forced global adaptation to remote work – not just work, but adaptation to living a digitally-enabled life. It’s safe to assume fast-tracked acceptance of digitized operations is a trend borrowers would want to see spill over into other processes – especially if that results in enhanced convenience for all parties. Borrowers’ expectations for efficiency will only continue to rise. For lenders and title agencies, the question is no longer ‘If’ you need to offer eClosing solutions, but rather, ‘How?’

There are many eClosing solutions lenders and title agencies can choose from to ensure borrowers a modern, secure experience. Where EscrowTab has a leg up on the competition is our simplicity and accessibility – and ability for lenders to maintain their current processes.

EscrowTab employs In-Person Electronic Notarization using an EscrowTab-enabled tablet and stylus. We are the only eClosing platform that allows borrowers to sign notarized documents and eNotes with a forensically-verifiable handwritten electronic signature on each page that needs to be signed.

Lenders can implement eClosings without retrofitting existing operations to a new software – drastically reducing time and resources required for the post-close quality control process.

With EscrowTab, lenders can also rely on their trusted partners – the title agencies and settlement companies – to drive this process forward. Lenders simply ship docs to title agencies like they do today, allowing the title agencies and settlement companies to do what they do best – close loans.

Title and settlement will gain efficiencies for their organizations, for the lenders, and to close loans the way borrowers expect – technology-driven and eco-friendly.

EscrowTab offers efficiency without disruption, as it’s designed to work seamlessly with the processes lenders, title agencies and settlement companies already have in place. We’re here to help simplify, not complicate, your business with a truly ‘plug and play’ eClosing solution. 
To learn more about seamless electronic closings and IPEN, visit escrowtab.com.

The post Here’s why some lenders choose IPEN over RON appeared first on HousingWire.



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HW+ lawsuit

CrossCountry Mortgage is suing Guild Mortgage for poaching a former Las Vegas branch manager and allegedly convincing her to steal proprietary information, the latest escalation in a brewing legal battle between the retail mortgage lenders.

CrossCountry alleges that San Diego-based Guild Mortgage offered Mirajoy Casimiro, former branch manager and loan originator at CrossCountry, a lucrative employment package and persuaded her to take “massive amounts” of confidential business and client information in the period spanning between mid- 2020 and January 2021.

The lawsuit also claims that Guild convinced Casimiro to divert loans in process to be closed.

The accusations are part of a lawsuit filed in late-May in the U.S. District Court of Nevada. CrossCountry Mortgage seeks an undisclosed amount as compensation for “the continuing loss of its competitive position, loss of market share, and lost profits.”

Guild Mortgage did not respond to a request for comment. Ohio-based CrossCountry Mortgage also did not respond to a request for comment.

According to the lawsuit, Casimiro was “in active coordination” with Guild in exporting confidential information and data while she was still employed with CrossCountry. The lawsuit also said that CrossCountry did not receive a warning from Casimiro when she left to join Guild in January 2021.

CrossCountry alleges that Guild intentionally made Casimiro breach her contractual obligations and duties of loyalty, and as a result, CrossCountry has suffered substantial harm, including loss of investment made in the former branch manager and a disruption to the company’s Las Vegas operations.

This is not the first spat between the two lenders. In October 2021, Guild Mortgage sued CrossCountry for allegedly engaging in similar practices. As of June 2022, litigation is ongoing.

A lawsuit filed by Guild in the Western District of Washington U.S. District Court alleges that CrossCountry monetarily enticed three former Guild employees, who worked at the lenders’ Kirkland branch, to convince other Guild employees to defect en masse to CrossCountry.

The lawsuit said that the three former Guild employees, a former branch manager, a senior loan officer, and an operations manager, received “lucrative employment packages” from CrossCountry.

In early July 2021, virtually the entire Kirkland Branch resigned from Guild and left to CrossCountry, the lawsuit said. Former employees took a “massive amount” of confidential business and client information, and loans were also diverted in the process at Guild to be closed at CrossCountry, the lawsuit alleges.

Another lawsuit was filed by Caliber Home Loans in May 2022, which accused CrossCountry of executing an “illegal scheme of unfair competition” by targeting its employees, stealing trade secrets and diverting customers. 

The accusations are part of a lawsuit filed in May in the U.S. District Court for the Western District of Washington in Seattle.

Caliber claims its rival hired more than 80 of its employees, among them 40 loan producers, beginning in February 2021. The staff worked across 18 different branch offices in six states: Washington, Oregon, Texas, Florida, Tennessee and California.  

At the time, neither lenders responded to requests for comment.

The post Tensions rise between CrossCountry and Guild appeared first on HousingWire.



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We are coming off a tumultuous two years of growth in the U.S. housing market. And now we are facing a tumultuous year of mortgage market normalization. So it’s true to say that turmoil and mortgage outlooks are strange bedfellows, but it’s true. Interest rates are rising, affordability is a challenge, and geopolitical conflicts impact global supply markets. 

It’s only natural that market players might be skittish over what direction housing will trend. In the coming months, you’ll read headlines on a housing “bubble” or maybe even a looming “crash,” but cooler heads can still prevail. That’s why knowing the signs and interpreting them can provide invaluable direction for your clients and your business.

What’s critical is that you know what is moving the market. Runaway headlines that predict housing doom shouldn’t be what dictates your business or your client’s next move. After all, the media would be remiss not to be apprehensive in the current market environment.

Behind those negative headlines is the hot housing market that has contributed to some all-time high housing prices across the U.S. Throw in rising rates and you get is ensuing panic. How can high prices be sustained when a buyer’s buying power is stretched so thin?

Recent bias is driving negative housing headlines

First, it helps to understand why press headlines and your clients might quickly interpret today’s housing trends as fatal. Recency bias is a psychological phenomenon where you give more importance to recent events than taking in the bigger picture, and it’s the main culprit as to why so many people are executing a housing crash.

The housing market has only experienced a crash once in 70 years! That’s a fantastic track record that should speak to the resilience of housing.

Here’s the problem, what we all remember is the housing crash of 2008 to 2009. Because of its recency, that event is what resonates with people today. You don’t think that for the majority of the housing industry, housing has stood the test of economic trials. Here’s how recency bias works in housing — because we experienced a crash in the not-so-distant past and it was brutal, that’s what we remember. We can convince ourselves that it will happen again despite history telling us that it likely won’t.

How data can help you interpret trends

Here’s where you, the real estate professional, can set yourself apart from the negative headlines driving uncertainty in the market today. Knowing where we are standing in terms of the housing industry and the trends that will prevent an imminent crash can be determined through data!

Recently, mortgage rates have been a primary driver of the negative headlines that serve to incite panic over an imminent housing crash. The narrative is that mortgage rates are now at a three-year high, housing affordability will go down, people might panic, and people will buy fewer homes. There will be less demand for homes and that would be one of the big reasons there might be a housing crash.

No document has ever correlated rising interest rates with falling house prices.

In reality, mortgage rates have little correlation to home prices. The data shows us that rates have had no impact on prices in the last 40 years. Historical data shows that house prices have continuously gone up irrespective of where interest rates are; that is because mortgage rates are cyclical, they go up and they go down. Surprisingly home prices are not; they continue to rise.

Imminent wave of foreclosures?

Another culprit behind the negative housing headlines is the so-called imminent wave of foreclosures that will come as the number of people in COVID-19 forbearance exits. In 2006, a flood of foreclosures flooding the market did trigger a dramatic drop in home prices. Today the reality is vastly different.

In 2021, the record increase in home prices helped homeowners build equity to roughly $2.1 trillion, the most significant annual increase in equity. Data shows homebuyers since 1954 built equity for decades; those who did not build equity purchased between 2003 and 2007. That means that in the last 70 years, only for four years, people who had purchased a home lost equity, and it took them about six or seven years to recover. Which other asset class has the same kind of history?

Another misconception is that people believe that equity builds only for those without mortgages. That is not true. You can build equity in your home so long as what you owe is worth less than what your asset is worth. History has taught us that for the better part of the U.S. housing market, home prices keep building, and the data shows us that at this time, less than 2% of U.S. households are underwater.

When talking to your customers, two critical data points highlight why a crash isn’t imminent.

A data point that explains the resiliency of the housing market: the number of households forming vs. the number of homes constructed. Data shows that before 2013 fewer households were forming and more construction was happening, so we had a surplus of homes.

Since then, homebuilders have been so terrified that one of these days, demand will go down that they have constantly looked to keep their construction low, which Covid only worsened because of supply chain issues.

In 2021, we had a shortfall of about 5.1 million homes in the U.S. — this is the gap between how much we need and how much we are building. From 2015 to 2021, average household formation was about 1.5 million and 889,000 homes were built. Even if the building pace were to pick up by two times, it would take seven years to close the existing gap.

Start building your business for the future of housing

There’s a seismic shift happening in U.S. housing and it will reshape how we conduct business. There will be 7 million new homeowners in the next decade, a nearly 9% increase from the last decade. That’s great news!

Even more startling is that 100% of new homeownership growth will come from people of color. The number of white homeowners will decline by 1.8 million. One of the most significant demographic shifts that has happened under our nose was that we saw an increase in single, female household formations.

In 1981, 11% of all homebuyers were single females, which was pretty significant. Today, single females make up 19% – that is nearly double-digit growth. The rise has been pretty substantial. And that will continue to grow given that one of the final battlegrounds that have kept single women from forming households has been the wage disparity – what the males earn vs. females. Pew research shows that females now make as much as males in 22 of the biggest metros.

These changes are a significant shift for the housing industry because, historically, when we think about homeownership, the old white male is the image that comes to mind. How do we prepare for that shift?

One straightforward thing is to have a team that looks like the client community. At InstaMortgage, 70% of our people are people of color 50% are female. It gets displayed in the kind of loans we do because over 60% of our loans are to minorities. Making changes is not just good for the community; it’s good for you as a business owner.

The following 20 years will be driven by single, younger females and people of color. This demographic of consumers has grown up in Amazon’s prime days; they expect predictability in the homebuying process. The ability to provide predictability and transparency is a feature that will set you, the mortgage industry and everyone else apart from the rest.  

Shashank Shekhar is founder and CEO of InstaMortgage.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the author of this story:
Shashank Shekhar at at Shashank@instamortgage.com

To contact the editor responsible for this story:
Sarah Wheeler at sarah@hwmedia.com

The post Opinion: Understanding trends is key to predicting the next housing shift appeared first on HousingWire.



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HW+ house technology

Even though J.P. Morgan CEO Jamie Dimon is famously no fan of crypto, the bank dove into the enigmatic world of blockchain-based finance in 2020 with the launch of Onyx, a business unit devoted to exploring and expanding the use of blockchain technologies. 

Soon after Onyx was formed, the bank launched Onyx Digital Assets, a blockchain-based platform that makes possible transactions that involve tokenization — or creating digitized tokens linked to or backed by real-world assets. Recently, J.P. Morgan announced that it had settled its first tokenized transaction involving money-market fund shares as collateral — with plans to eventually pursue blockchain-based transactions for tokenized collateral involving equities and fixed-income securities, which include mortgage-backed securities (MBS).

J.P. Morgan’s interest in blockchain technology is echoed by Ginnie Mae, a major player in the agency MBS-guarantee market. Ginnie announced earlier this year that its Innovation Lab is exploring the use of blockchain and distributed-ledger technologies for potential future use in loan-pool issuance, servicing and bond management. The lab also unveiled a private- and public-sector exploratory initiative called the Federal Housing Blockchain Network.

So, it should come as no surprise that two well-known mortgage finance companies in the non-agency space also are deep into exploring opportunities in the blockchain market. Blockchain technology links transaction records instantly in an encrypted data chain reproduced across a network of distributed computers, creating a transparent yet indelible and authenticated cyber record, or ledger, that can be accessed securely by authorized parties.

“This structure is built on nodes, and it’s completely decentralized,” explained Michael Carpentier, CEO and co-founder of Vesta Equity, which is working to create a marketplace for tokenized home-equity investments using blockchain. “It’s very hard to hack a blockchain.”

Carpentier added that blockchain represents a “fundamental shift in how we approach business transactions” because it allows users to instantly verify a transaction occurred via a permanent record kept on the blockchain. 

The technology not only addresses concerns about fraud, Carpentier said, “it [also] allows you to digitize real-world assets,” such as a mortgage loan or loan pools. In other words, it flattens out the space between the primary and secondary markets, allowing mortgages to essentially be originated and securitized nearly instantaneously across a distributed computer network that is accessible to authorized investors.

“It [promises to] completely remove, or disintermediate, the higher market,” he added. “You don’t need it.”

That full promise is still years away, some experts say at least five or more years in the future, in terms of broad market buy-in and use among the many parties now involved in originating and later trading or securitizing a mortgage via the traditional secondary market. 

“As you look at on the origination side, you have the call for efficiency and cost savings,” said John Toohig, managing director of whole-loan trading at Raymond James in Memphis. “And on the other side, you see, well, that just means I’m going to make less when making a loan.

“There’s so many different pieces to it that I think present a long-term challenge. I do believe we will get there, but I don’t think it will be a snap-your-finger, overnight kind of evolution.”

Marianne Bailey, a partner at cybersecurity firm Guidehouse and former deputy national manager for national security systems at the National Security Agency, stressed that when we see something new come along like blockchain technology, “that’s really cool, people expect miracles to happen.”

“But it takes time,” she added. “It takes time for the systems to integrate it, but I definitely think that [blockchain] is the future.”

The ‘early innings’

Both real estate investment trust (REIT) Redwood Trust as well as non-QM lender Angel Oak Cos. also recognize the industry-changing potential of blockchain-enabled technology. It may still be a ways down the track, but the engine powering the blockchain train is already rattling the tracks.

Consequently, both non-agency players have opted to be on front end of the technology-adoption bell curve through their partnerships and/or investments in blockchain-based platforms.

Redwood and Angel Oak, of course, are not alone, in seeing blockchain’s potential, as the J.P. Morgan and Ginnie Mae examples illustrate. In addition, crypto-assets backed by mortgage loans are already being securitized via the blockchain by other lenders who have chosen to act now and seek permission from regulators later, if necessary — after formal rules are developed for so-called nonfungible tokens (NFTs) and other crypto-assets.

Nonbank lender LoanSnap, for example, has launched a fledgling crypto-mortgage program that relies on artificial intelligence and blockchain technology along with a cryptocurrency called stable coin. The stable coin, pegged to the U.S. dollar on a one-to-one basis, is sold to investors via a blockchain platform and backed by real-world mortgage lien wrapped in or mirrored by a digital NFT — or a nonfungible token. 

To date, LoanSnap has locked in about $6.9 million in crypto-loan value across 35 homes that have a total market value of some $44 million. The annual percentage yield for holders of LoanSnap’s stable coin used to fund the mortgage loans, called bHome, as of this week was 3.521%

The crypto-mortgages originated by LoanSnap so far are essentially home-equity loans as opposed to home-purchase or rate-and-term refinance loans. The liens linked to NFTs represent a portion of a home’s value as a result. 

Angel Oak Ventures is not far behind LoanSnap in capability, however. In April, the non-QM lender formed a partnership via its Angel Oak Ventures arm with Brightvine, a startup blockchain-based investment platform. Brightvine plans to allow Angel Oak “and other issuers to tokenize their real-world assets” and to “seamlessly raise funds on the blockchain,” Brightvine said in the press statement announcing its “strategic venture” with Angel Oak.

Sreeni Prabhu, co-founder and managing partner of Angel Oak Cos., said Angel Oak Ventures is focused on technology that creates a “more frictionless” business environment for investors and borrowers. He added that the company “believes in the potential for blockchain to bring about new and innovative investment solutions in the mortgage credit space.”

“Angel Oak intends to explore utilizing Brightvine’s platform and could securitize non-QM loans via tokenization on the blockchain,” Prabhu added. “Although still in the exploratory phase, Angel Oak Ventures believes that there is potential for blockchain to enable a better secondary market, reducing costs and improving efficiencies for all parties and improving the investor experience.”

Joe Vellanikaran, founder and CEO of Brightvine, said the company, launched about two years ago is, working to build an alternative to the existing secondary market that will increase liquidity for mortgages, MBS and other fixed-income vehicles. Brightvine estimates the size of the global fixed-income market at $123 trillion.

“… Our goal is to eventually move the entire securitization process to the blockchain,” Vellanikaran said. “Our focus right now is really to reach institutional investors and accredited investors for these types of products. And then further on down the line, open it up to other retail investors, but that depends on the regulations in place.”

Brightvine is working to comply with all applicable securities regulations in developing its platform. Currently, regulators such as the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency, the White House and industry groups such as the Financial Accounting Standards Board(FASB) are all focused on developing more targeted rules and regulations for blockchain-based crypto assets and related crypto-securities trading. 

Redwood Trust is on a seemingly even faster glide-path than Angel Oak with respect to employing blockchain technology and exploring its potential use in creating an additional liquidity channel for the company. Redwood Trust’s venture arm, RWT Horizons, is an investor in Vesta Equity as well as three other companies with a strong blockchain focus — Oasis Pro MarketsLiquid Mortgage and Canopy Financial Technology Partners.

Ryan McBride, chief investment officer of RWT Horizons, says the company’s goal is to invest in firms that have a “direct nexus” to Redwood Trust’s operating companies, which are largely focused on buying, selling and securitizing residential and investment-property mortgage loans. 

“We do not disclose the size of our investments in individual companies and would anticipate continuing to look for … investment opportunities that can help drive further innovation in housing finance,” McBride added.

Two of the companies McBride singled out as examples of its investments matching a commitment to technology innovation are Vesta Equities and Oasis Pro Markets, the latter a U.S.-regulated alternative trading system that allows subscribers to trade securities digitally, via secure blockchain technology, and make payments in digital cash (such as stable coin, a type of crypto-currency). Executives with Oasis Pro declined to comment for this story.

“Specifically, we see opportunity for Oasis Pro to potentially distribute both residential and business-purpose [investment-property] loans and securities in tokenized form, adding an incremental distribution channel for both of Redwood’s operating platforms [Sequoia and CoreVest],” McBride said. “Vesta Equity’s vision of creating a marketplace for tokenized home-equity investments using blockchain fits well with our existing partnerships with Liquid Mortgage and Point.

“As home equity currently sits at an all-time high, this remains an area of key strategic focus for us.”

Redwood Trust also is an investor in Point, a non-blockchain-based fractional home-equity lender that provides homeowners with cash upfront in exchange for a contract providing Point with a slice of the homeowner’s equity. That share, via Point’s home equity investment contracts (HEIs), is typically around 10 percent or so. 

Last year, Redwood and Point, the latter founded in 2014, completed a first-of-its- kind securitization backed by HEI contracts. The private-label securities (PLS) transaction, which closed in late September 2021, involved issuing $146 million in securities through a conduit dubbed Point Securitization Trust 2021-1. 

Also last fall, Redwood announced a separate $449 million residential mortgage-backed securities (RMBS) private-label offering backed by 497 jumbo residential loans that was securitized with the help of a fintech startup, Liquid Mortgage, in which the Redwood holds a minority stake. As part of the deal, Liquid Mortgage is leveraging blockchain technology to track loan-level payment and transaction-reporting data for borrowers and lenders. 

Liquid Mortgage is expected to report RMBS payment data to users of its proprietary platform on a daily basis, as opposed to monthly.”

Redwood President Dashiell Robinson said during the Q1 2022 earnings call that through the end of January of this year, a total of five Sequoia Mortgage Trust (SEMT) deals, including the initial SEMT 2021-6 offering last September, have made use of Liquid Mortgage’s blockchain-based tracking technology. Those five securitizations involved prime jumbo loan pools valued at $2.5 billion with average loan balance of $902,582, according to private-label deals tracked by Kroll Bond Rating Agency. The latest SEMT deal closed on Jan. 26, 2022, according to Kroll’s data.

“We are working as well in parallel for CoreVest securitizations to leverage the same technology,” Robinson said during a first-quarter 2022 earnings call. “We think that will be an exciting development for that part of the market.” CoreVest is Redwood’s business-purpose/investment-property lending and securitization affiliate.

Liquid Mortgage also has an agreement with Canopy Financial Technology Partners through which Canopy will integrate its loan-level due-diligence product with Liquid Mortgage’s platform, allowing due-diligence reporting and data to be tied directly to mortgage-backed digital assets on the blockchain. As mentioned, Redwood’s RWT Horizons also is an investor in Canopy, which provides key third-party loan-review services for the RMBS market.

“This partnership is a giant first step in the migration toward a true digitally native mortgage,” said John Levonick, CEO of Canopy, in announcing the deal with Liquid Mortgage.  “This solution gives loan investors, and all subsequent assignees, access to verified and timely data, for the entire lifecycle of the asset … diligence by a third-party review firm conducted once, but accessible to all future parties [via the blockchain].”

So, with its investments in Point, Oasis Pro Markets, Vesta Equity, Liquid Mortgage and Canopy, and other fintech plays, Redwood Trust has established a strong bench for employing blockchain-based technology in the not-so-distant future as a potential additional loan-trading and securitization channel for its mortgage assets.

RWT Horizons completed five investment deals in the first quarter of this year. Since inception, RWT Horizons has made over $25 million in technology venture investment commitments, Redwood Trust CEO Christopher Abate said during the company’s earnings conference call in late April.

Redwood’s Robinson added during the same Q1 2022 earnings call that Liquid Mortgage is a “pioneering platform” but stressed it is only one part of a larger blockchain-based “ecosystem.”

“The intriguing thing is how transformational we can be to the securitization space, which is really exciting,” Robinson added during the earnings call. “… As we have talked about before, having the remittance information [via Liquid Mortgage] on the blockchain really is just step one….

“We are still in the really early innings here. From our perspective, it is about the ecosystem, and the more we can help other people adopt in, we think the better things would be.”

McBride told HousingWire that RWT Horizons will continue “to look for Web3 [blockchain-based] investment opportunities that can help drive further innovation in housing finance.”

“We are excited about the possibilities created through our partners at Oasis Pro and Vesta Equity to apply new technologies as a way to reach new investors,” he said.

The post Big non-agency players prepare for a blockchain future appeared first on HousingWire.



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From the White House and Congress to multiple federal agencies, one of the top concerns is housing affordability. Consumers are worried too. About half of U.S. adults (49%) say the availability of affordable housing is a major problem where they live, up 10 percentage points from 2018. The same 2021 Pew survey, 70% of Americans said young adults today have a harder time buying a home than their parents’ generation did.

While it’s getting more expensive to buy a home, it’s also getting pricier to originate one also. According to the Mortgage Bankers Association (MBA), total loan production expenses increased to an all-time high of $9,470 per loan in the fourth quarter of 2021. This was up from $9,140 per loan in the third quarter as the market transitioned from a rate-term refinancing market to a purchase and cash-out refinancing market.

With the current cost of origination, combined with higher interest rates and low housing inventory on the horizon, the MBA reports that 2022 is likely to see about a 30% decline in overall mortgage originations, as compared to 2021.

With revenue tightening and volume slowing, it is becoming increasingly important for companies to adjust costs. As a result, lenders and title companies are seeking ways to invest and implement solutions that will further streamline operations, grow market share, remain competitive, and improve borrower experience while providing increased ROI.

One avenue to reduce cost and streamline the closing process is to offer digital closings. A recent Marketwise eClose ROI study found that lenders can save nearly $450 and settlement agents up to about $100 per loan due to time eliminated, improvements in transactional quality, and costs associated with printing and mailing documents. Lenders and title agents also reported they can close more loans faster with the same or fewer people, and improve overall loan quality by reducing critical errors, avoiding missed signatures and unnecessary rework. Full e-closed loans also reduce funding time during post-closing to the secondary market and results in an improved, measurable overall return on investment, according to the study. A 2021 digital closing survey by the American Land Title Association (ALTA), found 52% reported closing times decreased utilizing RON due to the number of documents signed ahead of time, while 43% reported cost savings.

“Consumer expectations have shifted to digital-first, and that’s an incredible opportunity for the lender and title industries to be at the forefront of both what consumers want and what is also most financially and operationally efficient,” said Terri Davis, GM of Real Estate at Notarize. “eClose is the final frontier of real estate, and we’re seeing the incredible ROI, both in the numbers and in consumer feedback, of those who fully embrace eClosing mortgages with online notarization.”

To help drive adoption of digital closings, ALTA partnered with the Mortgage Industry Standards Maintenance Organization (MISMO) to be the sole provider of title and settlement agent data for the MISMO e-Eligibility Exchange, powered by Snapdocs. The e-Eligibility Exchange serves as a central source of information on the criteria that impact digital closings. The data will be provided to MISMO under a contributor agreement with the ALTA Title & Settlement Agent Registry (ALTA Registry), a national database of title and settlement agents.

The MISMO e-Eligibility Exchange features information on trading partner requirements, e-notarization regulations, county recording requirements, settlement agent readiness and title underwriter restrictions. The platform helps real estate and finance professionals navigate these factors so each closing can be as digital as possible.

The ALTA Registry is a unique real estate utility created specifically for the mortgage industry and service providers. For the first time, the ALTA Registry will provide data on individual title insurance and settlement services companies, identified by an ALTA ID. The ALTA Registry identifies title and settlement companies that can perform RON closings. This helps mortgage companies identify closing companies that offer this increasingly in-demand service. The ALTA Registry is free and ALTA membership is not required.

“We’re pleased to collaborate with MISMO and provide the e-Eligibility Exchange with the most accurate title and settlement services company data available in the industry,” said ALTA CEO Diane Tomb. “It’s crucial that the title insurance industry urge progress and innovation in the digital closing space. With 9,000 locations already listed in the ALTA Registry and 2,000 of them showing a state of ‘RON readiness,’ now is the time for all title insurance companies and real estate attorneys to register.”

ALTA launched the ALTA Registry in 2017 as the first national database of title insurance and settlement services companies. In addition to contact information and branch locations, each ALTA Registry listing also includes a title insurance company’s or real estate attorney’s unique seven-digit ALTA ID.

The e-Eligibility Exchange is now available to all MISMO members via an online interface and APIs that can be integrated into other technology platforms.

“The MISMO e-Eligibility Exchange serves as a resource for the entire industry and its success relies on the quality and accuracy of the contributed data,” said Seth Appleton, president of MISMO. “The exchange will benefit tremendously from ALTA participation, with its timely and accurate title insurance and settlement services company data. The fact that a title agent can only join the ALTA Registry after its title insurance underwriter has confirmed its information gives us ongoing confidence that we will have data that is unique and up to date. This accuracy, together with the uniqueness of the ALTA ID, will help make the e-Eligibility Exchange a compelling and innovative industry resource.”

The e-Eligibility Exchange draws on Snapdocs’ and MISMO’s respective areas of expertise, with Snapdocs providing the technology that powers the e-Eligibility Exchange, and MISMO working with industry participants such as ALTA to collect and maintain the most robust and up-to-date digital closing criteria possible.

The number of title and settlement companies offering digital closings increased 228% compared to 2019, according to ALTA’s 2021 Digital Closing Survey. The survey of 300 title professionals showed that 46% offered digital closings in 2020 during the COVID-19 pandemic. Prior to the health crisis, a 2019 survey showed that 14% of companies offered digital closings two years ago.

While the number of digital mortgage closings completed continues to rise, industry-wide adoption is still hindered by the complexity and lack of transparency into factors that determine how “e” closings can be. The e-Eligibility Exchange helps to maximize the digitization of closing processes, including shifting to eNote and RON, and increasing these benefits for every participant involved in a mortgage loan’s life cycle.

“eClosing volume has grown significantly in the last two years due to growing acceptance from stakeholders such as investors, servicing buyers, etc., as well as the growing adoption of e-recording and e-notarization at the jurisdictional level,” said Raj Penugonda, product development director at Freddie Mac. “However, since acceptance and adoption are not yet uniform across the ecosystem, lenders need to make a loan level determination of which loan documents can be electronically signed. This makes it difficult for them to scale their eClosings. MISMO e-Eligibility Exchange helps address this challenge. As part of our efforts to help the industry’s journey towards a true digital mortgage, Freddie Mac is excited to work with MISMO in developing e-Eligibility Exchange.”

Balancing high-tech with high touch was a priority for companies even before the pandemic. In a 2020 report by Forbes Insights in association with Freddie Mac, 85% of firms surveyed described their efforts at mortgage digitization prior to COVID-19 as aggressive or very aggressive. During the global crisis, lenders already focused on technological capabilities were the most prepared to help borrowers.

As people have become accustomed to using smartphones for shopping and applying for jobs and expectations for technology continue to increase, businesses are responding by meeting the client where they want to be—on their screens. According to a 2020 study by J.D. Power, 64% of consumers believe that a digital process would make buying a home or refinancing easier than one conducted in person.

In an effort to permit immediate nationwide use of RON, ALTA and other groups continue to support the SECURE Notarization Act, which now has 83 co-sponsors in the House of Representatives. The bill would create national minimum standards and provide certainty for the interstate recognition of RON. At the state level, Maine joined 39 other states to allow remote online notarization (RON) after Gov. Janet Mills signed into law LD 2023. The legislation will go into effect July 1, 2023. 

“There is a need and demand for this approach to notarization throughout the United States,” Tomb said. “The SECURE Notarization Act allows businesses and consumers the ability to execute critical documents using two-way audiovisual communication. Current requirements for a signer to physically be in the presence of a notary are often impractical and sometimes impossible due to social distancing limitations resulting from the COVID-19 pandemic, as well as other roadblocks for in-person signing, like overseas military service and time constraints.”

“Consumers expect greater digitization in the mortgage process like they do with other experiences. From a homebuyer perspective, digital closings can help bring the reality of homeownership to a wider swath of consumers. For businesses, digital closings improve efficiency through reduced operational cost and increased productivity. Solutions like the MISMO e-Eligibility Exchange can help bridge the gap between housing affordability and accessibility,” Tomb concluded.

Diane Tomb is chief executive officer of the American Land Title Association, which represents more than 6,000 title insurance companies, title and settlement agents, independent abstracters, title searchers and real estate attorneys.

The post Opinion: how digital closings can help with housing affordability appeared first on HousingWire.



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 2022 HousingWire Rising Star Morgan Salama, pictured above, is portrayed on the cover of the June HousingWire Magazine issue. Photo credit: Chris Plavidal

Strategy is the foundational element in building the future of the housing sector. And, if strategy is the foundation, we’d say that Morgan Salama is one of the key people building that foundation. First joining Realogy in 2017 under the company’s chief strategy officer, Salama, who now serves as the head of growth and partnerships her strengths in strategy and critical thinking to build partnerships and drive growth in the company.

But what really stands out about Salama is how she, from a young age, has learned to always find the power in connecting with people — whether that’s learning what growing in your career looks like from her parents or even diving into a group think tank to brainstorm potential partnerships in the housing space.

Salama met with the HousingWire team in Dallas to shoot the cover of this month’s magazine after being selected as a 2022 Rising Star, and during our time together, it was easy to see how she is capturing the attention of the housing industry as a force to be reckoned with.

For her interview, she shared that the best piece of advice that she’s ever received is to “listen up close,” and it’s that same advice that we share with you as you read through this interview.

HW: First off, congrats on being named a 2022 Rising Star. If you were standing on a stage giving an acceptance speech, who would you want to thank for helping you get where you are today?

Morgan Salama: First, if there’s anything that I have learned in my career, it’s that nobody gets anywhere alone. Not even sort of, and that’s probably a cliché thing to say, but I truly believe it. I’d say the first two people I would have to thank who I would be almost nowhere without is first my friend and mentor, Eric Chesin, Realogy chief of strategy, who was my very first boss at Realogy and without fail has made me better and believes in me. He is such an amazing and intelligent person who has shaped my career. 

I always joked that these two people make up my personal board of directors. The other is Kristin Aerts Bourgoin, who serves as vice president of strategy and integration at Realogy and who I worked with for like six or seven years now. She’s a close friend and a force of nature. Whenever I’m in a spot with my career, where I either don’t know what to do or I don’t know how to solve a problem, she’s one of the first people I call just to get that advice and perspective. 

Of course, I have to thank my parents and my close friends, they’re really my family as well, because they have built this space for me to have such a joyous career. Learning from my parents from a very early age that work is something that you can get a lot of joy from, that numbers can bring joy, that it’s this great part of life, and not just this thing that you have to do, shaped who I am, and shaped my ability to understand workplaces. When everybody else was sort of just sitting in high school classes, I was always involved in their life. 

HW: You’ve accomplished a lot in your career, and yet, I still think this is the beginning of even more for you. What would you say is your “why,” meaning what keeps you motivated and passionate in your field?

Morgan Salama: I have a deep belief that kind of like hiking, living is a responsibility to leave things better than you found it. I think at work, and specifically working in an industry with such a responsibility to other people’s lives and livelihoods, I am motivated every day by the ability to have some small impact on other people’s experiences and housing and what it means to own something and to have a place where you belong. It motivates me. I am passionate about it, and it’s a huge part of the reason why I can wake up every day and be really excited to do this work. 

The second part of my why I think people actually talk about a little bit less and that is the workplace side of it. I am very, very motivated by being a part of, in any way, making workplaces better. I think when people talk about impact in your career, you get so focused on customers that you forget that, especially at a large employer like Realogy.

Thousands of people have 40 hours a week affected by what this workplace is like, and I’m very motivated by building positive, inclusive, funny and kind workplaces. And, I deeply believe that both make the customer impact bigger and is a big part of the footprint we all have on the world around us if you’re in any industry. 

HW: What’s one of your proudest accomplishments so far in your career?

Morgan Salama: I’d say the creation and building of the Realogy Leads Group a few years ago. I was really lucky to get to be a part of conversations with our CEO and business leaders about where we needed to focus strategically, and I got a chance to advocate and build a business case and be a part of the forming leadership team for Realogy Leads Group. The group is Realogy’s business unit that really focuses on the consumer and just on the consumer. But unlike a lot of folks out there that are just starting to focus on the consumer now, this Realogy Leads Group business unit was built on the back of 30 years of serving consumers directly and providing excellent experiences. I think by far, the fact that I was able to be a part of that conversation, be a part of that focus on the consumer, and then help and be part of the early leadership team building it out is something I’m really proud of. I remember the Word documents that I was writing out in the beginning, just talking about why and building these numbers-based cases. There was always a lot of passion behind it for me and all the other awesome leaders of that business unit. I think as more and more players coalesce around the consumer as a key focal point in our industry, it’s just something that I’m really proud of.

HW: Knowing there’s exciting room for growth and innovation in housing, why do you think strategy is a critical skill to have in this space? 

Morgan Salama: I’ll start by defining what strategy means to me, because I’ve learned that everybody has a different version of that in their head. Strategy, to me, is putting real intent and listening and data behind how an organization prioritizes and focuses. It’s being thoughtful and intentional about that focus. 

I would say the reason why I love strategy and the reason why I believe it’s absolutely critical, especially in this space and now, is because strategy becomes the focus when there’s a lot of potential things you could focus on. There are a lot of options in this industry of how to spend your time, and there’s hundreds of millions of dollars of funding coming in to solve different problems or improving different experiences. And with all that transformation and change, I really believe that you have to spend the time that is a real investment in listening and planning before you jump in and decide what’s going to be the highest impact. Especially when you’re at a company like Realogy, where we are the largest player in residential real estate in the United States. This comes with not only high stakes, but also a responsibility to ourselves, to our agents, to our consumers for focusing on what’s really important. It’s strategy that helps you get to that right focus for all of those involved.

HW: How have you witnessed the power of strategy in action? 

Morgan Salama: Honestly, I’m very biased here — but I think the creation of my new role at Realogy Title Group is a great example! For the first time, Realogy has a role 100% dedicated to building simple and high-impact joint ventures with our franchisees. It’s a classic strategy story: Realogy has a clear competitive advantage in our title and mortgage expertise, we have this incredible group of more than 1,900 affiliated brokers, and clear industry focus on the intersection of primary services and the consumer experience. So we’re going big on it.

HW: How have you seen this industry come together through partnerships to create change?

Morgan Salama: The best part about partnerships is you can acknowledge what you do well and where you really want to invest time and energy. Ultimately, your partners have got to be focused with you on something that you have all decided is really high impact.

One of those that I’m most excited about is our partnership with Home Partners of America and the creation of our RealSure joint venture. I’ve watched as the company has really rallied around this amazing value proposition. I was a part of it from the Realogy Leads Group perspective, as we decided that not only did we want another partner in it, but we wanted to create a third-party joint venture whose sole focus was going to be on this pretty incredible consumer experience that unlocks accessibility and homeownership for people who can’t carry a balance in between buying and selling a home and unlocking a truly different experience, instead of just playing around the edges of the base consumer experience of buying and selling home. 

HW: What can we expect next from you?

Morgan Salama: If there’s one thing that I’ve learned over the last couple of years, it’s that I am motivated by who I work with, and I am motivated by solving interesting problems with impact on all sorts of different constituents. I’m really excited about my new role at Realogy Title Group because it checks those boxes, and I really believe that ancillary services, and title and mortgage specifically, are a huge part of the experience. It’s a huge part of what consumers are craving in the real estate experience — it’s a really smooth, seamless and positive experience. Many people are a little scared off from title and mortgage because they’re complicated, but I think that’s exactly why it’s exciting to me. It’s complicated, and it’s high impact. And the team here has built a world-class business that I am learning and becoming more and more a part of. If you ask me, I will continue to build on those principles of what’s important to me and continue to focus on whatever I can do to make a small, positive dent in this real estate universe we’re all in.

HW: Is there anything else you would like to add?

Morgan Salama: I’d add that there are so many people out there that are just starting careers, and it’s so easy to focus on what you’re doing and not who you’re doing it with. If there’s one piece of learning that I would love to share, it’s that it’s all about the people you work with, not just because you will have more fun every day and every week, and not just because they will teach you tactical things, but because they will make you better. And, they will affect the way you look at the world, whether it means your work world or your home world or a combination of both of them. This matters so much, and I am so grateful for the ability to have worked with the people that I work with, and just look forward to all the people I get to meet in the next 5, 10, 20 or however many years in my career. It’s a real joy, and I hope everybody gets that chance and builds in space to find those chances to work with great people.

To see the HousingWire June Magazine, go here. To see the June 2022 Supplement, go here.

To see the full list of HosingWire 2022 Rising Stars, go here.

The post 2022 Rising Star Morgan Salama: The intersection of strategy and real estate  appeared first on HousingWire.



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As the Federal Reserve aggressively raises interest rates and bond yields climb, we are leaving behind the era of ultra-low mortgage rates that prevailed from 2020 through the end of 2021. 

Over the past several years, we’ve become accustomed to mortgage rates below 4%, with the average rate on a 30-year fixed-rate mortgage (for an owner occupant) dipping as low as 2.65% in January of 2021. Those are extremely low in a historical context. As of this writing, the average rate on the same loan is about 5.3%.

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30-Year Fixed-Rate Mortgage Average in the United States – St. Louis Federal Reserve

For at least the next several months and perhaps for years to come, we will experience a higher interest rate environment. However, the lingering impact of these years of ultra-low interest rates could be felt for the next several years or even decades to come due to what has recently been coined the “Lock-In Effect.” 

In the short-term, rising interest rates will do what it always does to demand—curtail it. Over the last several months, we’ve seen this happening as mortgage purchase applications are down about 15% through May 13 from the same period in 2021. Rising rates reduce affordability, pricing would-be homebuyers out of the market. As long as interest rates continue to increase, they will continue to put downward pressure on demand—nothing new here. 

However, what is potentially new is how rising interest rates could negatively impact inventory. 

Recent data from Redfin shows that 51% of homeowners with a mortgage have an interest rate below 4%. With so many homeowners locked into super low rates, there could be a disincentive for homeowners to sell. 

Think, if you have a home with a mortgage rate under 4%, why would you choose to sell that home and enter a super competitive housing market with high prices, only to pay more interest on your next loan? It’s not a very attractive proposition. 

To put it in perspective, consider a $425k house. If you had a 3.5% mortgage rate, your monthly payment would be around $1,910. If you rebought a home at a similar price with an interest rate of 5.3%, your monthly payment would be about $2,360. That comes out to roughly $450 more per month or $5,400 per year. 

Or consider someone looking to downsize. Perhaps an aging couple wants to sell the home they raised a family in, get some cash to invest with, and reduce their monthly expenses. 

If this couple downsized from a home worth $425,000 to a home worth $350,000—they would be saving approximately $0 per month. That’s right, they could buy a cheaper, smaller home, and still be paying the same amount. Sure, they’d get some equity on the trade, but their monthly costs would be the same, which is super important for people in retirement. Again, not a super attractive proposition. 

It’s for this reason the term “Lock-In Effect” has been coined. Many economists and analysts believe the number of new listings could remain low for a few years while homeowners feel “locked in” to their unusually low mortgage rates. 

It is worth mentioning that the number of homeowners who may be “locked in” varies considerably. According to the same Redfin report, Utah, Colorado, and Washington, D.C. have the highest proportion of homeowners with low rates. Oklahoma and Mississippi have the fewest. 

While we don’t know if this Lock-In Effect will happen, the logic checks out. If it does materialize, it could have profound impacts on the housing market for years, if not decades to come.

It all comes down to inventory. If fewer homeowners put their homes up for sale, it could prevent inventory from recovering to more normal, pre-covid levels when the housing market was more balanced. 

As I wrote recently, inventory needs to increase for prices to moderate or go down (or whatever you think will happen). 

There are a lot of different metrics related to inventory, so let me explain. 

Inventory is defined as the total number of homes on the market at the end of a given month. It is a very useful metric because it combines both supply and demand. It factors in how many people put their house on the market (known as New Listings) as well as how many and how quickly those homes are being sold (demand). 

This is where inventory is as of March 2022. 

all homes for sale
All Homes for Sale (Mar. 2022) – Redfin

There’s a pretty dramatic story depicted in this chart. Pre-pandemic, we expected about 1.8M units of inventory over the busy summer months. Now, we’re at 600k. 

As other housing market analysts and I believe, this number needs to increase for the housing market to return to a healthier and more normal level (or to crash). Prices were still appreciating when inventory was at 1.8M, so you can bet they’ll go up with dramatically lower supply. 

As demand moderates, inventory could start to pick up, but we’ll likely need to see more new listings. As of now, that’s not happening, as New Listings are down on a seasonally-adjusted basis. 

new listings
New Listings (Mar. 2022) – Redfin

But, New Listings could increase from three places: homeowners selling, new construction, or foreclosures. 

New construction could add to new inventory, but supply chain issues have suppressed completions, and new permits started to drop as of April 2022. 

new construction
New Residential Construction (Apr. 2022) – U.S. Census Bureau, Department of Housing and Urban Development

Many people believe a wave of foreclosures is coming and will add inventory, but that’s not going to happen. You can watch my other interviews and videos about that, but to put it shortly, mortgage delinquencies have dropped for seven straight quarters. Homeowners are not defaulting. Could a recession change this? Sure, but the inventory from a potential increase in foreclosures would be gradual and take years to play out. 

The last and the most important source of New Listings are homeowners. Normally, as COVID-19 becomes a receding part of our lives, I would think that New Listings from existing homeowners would increase. But this is where the Lock-In Effect could come into play. If over 50% of homeowners with a mortgage have ultra-low mortgage rates, we may not see many homeowners list their homes for sale. 

If fewer homeowners put their homes up for sale, that will put upward pressure on housing prices. Of course, some, or maybe all of that upward pressure, could be offset by the downward force of rising interest rates, but the impact of years of ultra-low rates will be a super important factor in the housing market, likely for many years. 

I can even see a scenario where this Lock-In Effect impacts the market for decades. Again, interest rates during the pandemic were the lowest they’ve ever been, and it’s not clear if rates will ever get as low as they just were. Ever. And even if it does happen, it could be a long time before it does. 

Personally, I think rates will rise for another year or so, but then we’ll see a gradual easing of interest rates. After all, the Fed has pursued easy money policies for about 15 years under four different administrations. While the Fed is temporarily raising rates, I don’t currently think we’re going back to an era of double-digit mortgage rates. At the same time, I also don’t know if we’ll see a 2.7% fixed-rate mortgage again in our lifetimes. It’s only happened once and took a very unique set of circumstances to get there. 

Of course, no one knows what happens next. But if you’re like me and want to get a sense of where the housing market is heading, keep an eye on the Lock-In Effect. It will be very interesting to see if the predictions of lower inventory come true. To keep track, just look at new listing and inventory numbers each month. 

If you want more data-driven information about the housing market, investing, and the economy, check out On The Market, BiggerPockets’ newest podcast, where I’m the host. Every Monday, you can find new episodes on AppleSpotify, or YouTube

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