[Editor’s Note: Geek Estate Offers are special offers members of the Geek Estate Mastermind]
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Hear how to generate and convert more real estate leads on today’s podcast with Carrot’s Trevor Mauch! Trevor and Aaron dig deep on what’s working (and what isn’t) in the real estate space right now. In addition to tips on building credibility via your searchability and your website, Trevor shares where many agents fail when it comes to social media. Don’t miss it!
Listen to today’s show and learn:
About Trevor Mauch and Carrot [1:03]
What’s happening with leads and conversions right now [2:59]
The homeowners who are most likely to sell [5:08]
Why it’s harder close deals right now [7:25]
Two ways to do more business when competition is tough [9:58]
What to do when volume is down [11:33]
Thoughts on standard real estate websites and agent credibility [13:10]
The decision-phase audit [16:21]
A simple, super-successful retargeting strategy [20:31]
The resurgence of PPC ads [26:10]
Conversions via social media and video [30:03]
Final words of advice from Carrot’s Trevor Mauch [35:11]
Trevor Mauch
Trevor cut his teeth in real estate in college and through years of trial and error, learned how to generate leads online effectively through inbound online marketing (to the tune of 84,000+ real estate related leads and counting). He leads the Carrot team and focuses on helping members get the result they want. But, away from the business, Trevor loves mountain biking, golfing, and spends most of his time with his wife and 3 young kids.
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There are some changes in store for homeowners looking to refinance with high loan -to-value (or LTV) ratios.
At the end of 2017, the Federal Housing administration plans to launch a new refinance program.
But first, they’ve extended the popular Home Affordable Refinance Program (HARP)–which was created to for homeowners who owe more than their home is worth thanks to the housing crisis–through the third quarter of 2017.
Why the extension?
To ensure that high LTV borrowers who are eligible for HARP will not be without a refinance option while the new refinance offering is being implemented, FHFA is creating a bridge to this future program. HARP has been extended through September 30, 2017.
HARP continues to be one of the most successful crisis-era programs with more than 3.4 million homeowners already having been approved. An estimated 300,000 owners are eligible for HARP but have not yet applied.
The new program, meanwhile, will help homeowners who want to finance but whose loan to value ratios are lower than those required by Fannie or Freddie.
“Providing a sustainable refinance opportunity for high LTV borrowers who have demonstrated responsibility by remaining current on their mortgage makes financial sense both for borrowers and for Fannie Mae and Freddie Mac,” said FHFA Director Melvin L. Watt.
“This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac.”
What we know about the new program
Though it’s still almost a year away, we do know a few things about the new refinance program.
Eligible borrowers are not subject to a minimum credit score, there is no maximum debt-to-income ratio or maximum LTV, and an appraisal often will not be required. There are a few requirements, though. Homeowners:
Must not have missed any mortgage payments in the last six months
Must not have missed more than one payment in the last 12 months
Must have an income source
Homeowners must also benefit from the refinance in one of four ways:
Reduced monthly principal/interest payment
Lower interest rate
Shorter amortization term
More stable mortgage type, like moving from an adjustable-rate mortgage to a fixed-rate mortgage
However, unlike HARP, there are no eligibility cut-off dates connected with the new offering, and borrowers will be able to use it more than once to refinance their mortgage.
Borrowers with existing HARP loans are not eligible for the new offering unless they have refinanced out of HARP using one of the Enterprises traditional refinance products.
Incenter plans to soon put their new mortgage servicing rights platform to work, adding to the increased attention technology in this space has gotten as higher interest rates have raised the business line’s profile.
Incenter aims for the eMSR Exchange to have its first loans committed for co-issue transactions by Sept. 1.
The venture adds to other examples of investment in MSR technology from the past year, which also include Mortgage Capital Trading’s launch of functionality for co-issue sales and Voxtur’s purchase of the Blue Water Financial Technologies’ loan/servicing platform.
The rights to handle cash-flows from mortgages aren’t completely standardized assets, which added to the challenge of setting up an exchange for them, said Tom Piercy, president of national enterprise development.
“We feel we have come as close as we can to commoditizing this asset, which will never be commoditized entirely,” said Piercy, who also is a managing director at Incenter Mortgage Advisors, the company’s capital markets and trading subsidiary.
The eMSR Exchange, which was announced alongside a new Incenter due diligence and document management affiliate in May, aims to both help match buyers and sellers based on price and relieve operational burdens involved in co-issue servicing transactions.
Incenter’s MSR exchange ecosystem.
Incenter is starting with a focus on co-issue deals, which typically involve splitting off servicing from loans sold to the GSEs so that a separate investor can buy the MSRs.
Its technology is primarily aimed at small- to medium-sized originators. Bigger ones may have their own proprietary technology.
Freedom Mortgage, for example, has its own co-issue platform.
“We have a large network of correspondent lenders, and we have a platform capable of acquiring large quantities of MSRs,” said David Sheeler, president of residential servicing and correspondent lending at Freedom Mortgage.
“We’ve been able to use that platform to assist other investors interested in owning MSRs,” he added. “We basically take care of all the sales, marketing and the operations for the loans, and then transfer the MSRs to a partner or investor of ours.”
In contrast to Freedom, more moderate-sized companies don’t often have the secondary trading units that bigger players do. As a result, they may find platforms like Incenter’s appealing — with some caveats.
“Tools like that are great in terms of facilitating a more efficient diligence process for buyers,” said Toby Wells, president at Cornerstone Servicing. “I would tell you the counter to that, though, is that while MSR trading sometimes is as simple as the best price, buyers and sellers still need to know one another.
“You need to know what one another’s capable of, making sure you have an efficient process to transition the consumer from one platform to another,” he added.
And consumer data in servicing also has proved sensitive to data breaches.
Incenter limits which parties handle borrower information and heavily outfitting its system with cybersecurity, said Jessica Pejka, vice president, transaction management, when asked about this risk.
“We don’t take in borrower data at Incenter proper. Our system houses the information needed to price loans to track delivery of them, but the actual borrower information goes to our subservicer directly,” she said.
Piercy declined to identify the subservicer involved.
“Right now, we’re dedicated to one and they’re absolutely a partner in managing and supporting standardization,” he said.
Incenter’s system can take in MSR data and documents from multiple sellers through the subservicer. That information then gets circulated through the exchange entity, due diligence and Incenter Mortgage Advisors. After that, the MSRs are matched with buyers.
“This would be very difficult to do without the technology on all sides, especially this pricing/ recording piece that is inherent to MSR, which is proprietary for us,” said Pejka.
The platform consists of a mix of time-tested technology and newer automation, and was primarily developed in-house with the exception of the subservicing functions.
“The base technology has been used by us for over 10 years in managing our co-issue transactions,” said Piercy. “It’s all technical development by our in-house programming.”
The pricing component in particular requires finesse, Piercy said.
“When you have underwriting guides for a loan, you go to the screen, you can get the [to-be-announced securities] price. That’s all commoditized. Servicing is never that way because you have a different approach by every buyer with regard to how they service loans and how they perceive certain characteristics of loans,” said Piercy.
The pricing in the system is customized by investors to address differences between buyers, and is live so that it can be changed at any time as the market shifts, he said.
“It is not disclosed to any other party, so that there is no competitive disadvantage. There is no disclosure of how you’re pricing to other buyers,” added Piercy.
And the due diligence done as part of the eMSR exchange also is specialized, said Pamela Hamrick, president of the Incenter affiliate focused on this area. That affiliate, Incenter Diligence Solutions, was built following the company’s acquisition of EdgeMac last year.
“The elements of the review are important for an MSR buyer, which are different from the elements that are important to rating agencies review, for example,” Hamrick said.
The big picture
The Incenter platform acknowledges the broader existence of technology developed in the market to handle mortgage servicing rights and seeks to improve on it, according to Pejka.
“We have selected vendor partners both in our subservicer and Incenter Diligence Solutions who are doing innovative work in their spaces, to help us move those forward,” she said.
The Incenter affiliate has collaborated with other technology providers in the space such as LauraMac and LoanLogics.
Due diligence for MSR deals has been a space ripe for automation that’s been evolving in recent years, said Bob Fulton, CEO of LauraMac.
“There really wasn’t a tool that I could find that allowed the user to create workflow, create tasks, and standardize the work,” Fulton said.
Bob Fulton, CEO of LauraMac
Artificial intelligence and other technology have reached a point where providers feel they can produce offerings that fulfill both goals.
“We’ve implemented document AI so that documents can be read automatically,” Fulton said.
Buyers also have increasingly been using technology to identify where document shortfalls exist, noted Craig Sylvestre, senior vice president, sales, at LoanLogics.
“What we’re automating is the review of that loan file to make sure that everything is present and that loan is ready to on-board to servicing,” Sylvestre said.
Technology also helps buyers remedy any lapses, said Terrell Cassada, executive vice president, digital operations, architecture and innovation at LoanLogics.
“They can see the results of what documents may be missing on those loans, and facilitate the collection of those missing documents from their seller,” Cassada said.
And the industry has been responding to the need not just to have effective automation for this purpose but to have technology available at the right price point, other players in the market said.
“Clients are trying to understand the risks on a given pool with minimal investment and without materially destroying the economics,” said Mike Margolf, managing director, secondary market technology at SitusAMC, in a video blog.
The MSR valuation component also has been a key part of the value proposition when it comes to technology efforts in this space, said Al Qureshi, managing partner at Blue Water Financial Technologies.
“We have a patent pending around our key core technology, where we can take anybody’s valuation and deliver it in real time,” he said.
“We provide investors with a machine-learning driven approach to understanding how they can be more competitive,” he added. “We never shop other investors’ prices, we would never do that, but we use machine learning to understand preferences vis-a-vis win/loss, and we’re able to help them price better, and drive towards more volume or less volume, depending upon what they’re trying to solve for.”
Meanwhile, on the other side of the trade, “we’ve got all the different pieces in place for that seller to slot their loans from a price perspective and a transfer perspective,” Qureshi said. “Because we digitized all this, the lift that’s required is very democratized.”
The GSEs, Fannie Mae and Freddie Mac, also have co-issue platforms.
“The agency exchanges are very good, and what they’ve created is a great efficiency, but it requires each individual buyer and seller to create their relationship, and then they’re utilizing the platform to run that relationship,” said Piercy. “What we have is much different in the sense that any seller has the ability to look into the exchange, look at pricing, get a sense of what it is. And if they’re interested, they go through an application process, same with buyers.”
Incenter also has designed its reporting capabilities on things like portfolio performance to be a competitive edge, he said.
“That, in turn, is generating much more interest to where I feel we will have, based on not formal commitments but preliminary indications, a far greater number of buyers that could create greater opportunities for sellers than other platforms,” said Piercy.
The “data dependent” waiting game is nothing new, even if there have been some changes in how the market has interpreted data. Specifically, the days of relying on CPI as the month’s one and only big ticket market mover are over. Traders and the Fed already know that month-over-month inflation is currently on track for 2% based on the last 2 reports.
This has caused some to cry foul over the absence of a more dovish shift, but in his two most recent appearances Powell has reminded us that they’re not ignoring the progress on inflation and instead are actually looking ahead to how the next 8 months of inflation might evolve based on other econ data. To that end, “other econ data” is as important as anything right now, and this week brings a ton of it.
Apart from Monday, each of the remaining days has a big ticket event (all times ET):
We may have seen the bottom in the average 30-year fixed mortgage rate, at least for the next few weeks, said Freddie Mac Chief Economist Sam Khater in a report on Thursday that showed mortgage rates rising 2 basis points to 2.93% this week.
A rise in the yields on 10-year Treasuries, which serve as a benchmark for investors in mortgage-backed securities, will make it difficult for mortgage rates to move lower in the short-term, Khater said. In the first week of August, the 30-year average rate fell to an all-time low of 2.88%, according to Freddie Mac data.
In recent weeks, the “spread,” meaning the difference between mortgage rates and 10-year Treasury yields, have narrowed, but Khater said that isn’t likely to be enough to overcome the rise in the so-called long bond – at least, in the short term.
“Spreads may decline even further but the rise in Treasury rates will make it difficult for mortgage rates to fall much more over the next few weeks,” Khater said.
While the 30-year rate rose, the less-popular 15-year average fixed rate set a new low at 2.42%. That’s down from 2.46% last week and breaks the record low of 2.44% set in the first week of August.
Despite this week’s bump in the 30-year average rate, the long-term trend shows it heading down through next year, according to a Fannie Mae forecast last month.
The average 30-year rate probably will be 2.7% next year, down from 3.1% in 2020. Both would be record lows.
Low rates likely will boost mortgage lending to $3.4 trillion this year, which would be the highest since 2003, the Fannie Mae forecast said.
That would be a $1 trillion increase over last year.
If you’re dreaming of closing on a mortgage loan and getting the keys to your very own home, you’re not alone. Unfortunately, mortgage interest rates jumped from the 3% range to touch 7% over the course of 2022, and despite a few dips here and there, as of this writing we’re still sitting at an average rate of 6.81% on a 30-year fixed mortgage (according to Freddie Mac).
A higher mortgage rate only serves to make the most expensive purchase of your life even more costly, so as we watch inflation fall, you’re likely wondering if mortgage rates will follow suit. Let’s take a closer look at inflation and the federal funds rate, and see some expert predictions for the future of mortgage rates.
The Fed just raised rates again, despite inflation easing
Yes, inflation is finally easing — hooray! The most recent Consumer Price Index found that inflation stood at 3% in June 2023, which is a stark contrast from the 9.1% just a year prior. This is clearly a welcome change, and you might expect that as prices ease elsewhere, we could see mortgage rates take a similar dip.
However, despite the lower inflation and taking a break on interest rate hikes at its June meeting, the Federal Reserve just elected to bump rates up yet again in July. This was the 11th rate hike since March 2022, and the current federal funds rate is 5.25% to 5.50%.
While this rate isn’t directly correlated with consumer borrowing rates, the two are linked — if it costs banks more to loan to one another, consumers will pay more to borrow as a result. The Federal Reserve has three more meetings left this year, and it remains to be seen what will happen next. AP News reported that Federal Reserve Chair Jerome Powell was noncommittal about future moves.
Some experts are predicting a modest drop in 2024
Unfortunately, some mortgage experts don’t expect to see lower rates until 2024. The National Association of Realtors is predicting a return to rates under 6% by the end of 2023, and a rate of 5.6% next year. The Mortgage Bankers Association released data in June that predicted a rate of 5.8% in Q4 2023, and a further drop over the course of 2024 to land at 4.9% in Q4 2024.
More: Check out our picks for the best mortgage lenders
These are optimistic predictions, but no one really knows for sure what comes next. One silver lining to stubbornly higher rates is that they’re an indication that the much-predicted 2023 recession hasn’t yet come to pass.
Should you buy a home now?
If you can afford a higher monthly cost due to higher mortgage rates, there’s really no reason to wait if you want to buy a home. To put yourself in the best possible position, it’s worth saving up as much as you can for a down payment — remember, the more you put down, the less you have to finance at 6% or higher. Work on improving your credit score, as the higher it is, the more likely you’ll be to qualify for a better rate when you’re ready to buy.
And shop around with the best mortgage lenders rather than going with the first offer you get. You may be able to refinance your mortgage later, if rates come down, but it’s still worth trying to secure the best deal possible now.
It’s certainly frustrating to look back at the recent past and see mortgage rates in the 3% range just a year and a half ago. Take a deep breath and rest assured that none of us really know where rates will go — but we all get to sit and watch together.
Intercontinental Exchange Inc. (ICE) and Black Knight announced late Friday an agreement with the Federal Trade Commission (FTC)for the $11.7 billion merger deal to go through. The settlement comes months after the FTC sued ICE alleging antitrust concerns surrounding a buyout of Black Knight.
According to the agreement, ICE is expected to complete the acquisition of Black Knight on September 5. In addition, the two companies are set to complete the previously announced divestiture of Black Knight’s loan origination system (LOS) Empower business and product and pricing engine unit Optimal Blue to a subsidiary of Constellation Software Inc. within 20 days after the acquisition.
September 1 is the deadline for Black Knight stockholders to decide if they want to receive cash or ICE stock in exchange for their shares as part of the merger deal.
ICE’s planned acquisition of Black Knight — announced in May 2022 — has been stalled due to antitrust concerns raised by the FTC.
The companies that have the two largest loan origination systems would allegedly raise costs to lenders, which would then be passed to homebuyers; and the deal would eliminate competition for product, pricing and eligibility engines (PPEs) and other various ancillary services that are add-ons to LOS, the FTC alleged in a suit against ICE in March 2023.
ICE and Black Knight’s agreement to sell Black Knight’s Empower business and Optimal Blue was to address antitrust concerns, leading to speculations of a possibility that the FTC would settle on the merger deal with ICE and Black Knight.
However, amid expectations that FTC would settle on the merger deal, the FTC dropped a federal lawsuit seeking to block ICE’s acquisition of Black Knight earlier this month.
Despite the agreement for the merger deal to go through, antitrust concerns surrounding ICE’s acquisition of Black Knight still linger.
In a recent letter, representative Maxine Waters, the ranking member of the House Committee on Financial Services, raised concerns that the deal will “no doubt” affect the pricing of mortgage loans and mortgage servicing rights.
Waters urged the FTC to ensure safeguard protections to avoid additional pricing pressures in a housing market that already faces serious consolidation and affordability concerns.
In recent years, ICE has sealed several deals to expand beyond its core exchanges business.
ICE’s acquisition of Black Knight would be the second massive mortgage tech deal for ICE, which acquired Ellie Mae from Thoma Bravo for $11 billion in 2020.
Finnair, the Oneworld alliance airline based in Helsinki, will switch its loyalty currency from Finnair Plus award points to Avios early next year.
As part of the changes, Finnair will also tie award prices more closely to the cost of ticket prices, meaning more expensive flights will likely cost more Avios. Spend-based rewards are becoming increasingly common in loyalty programs.
Finnair is also adding award space, particularly on long-haul international flights. This evolution of Finnair Plus, the airline’s loyalty program, should make it more useful to international travelers hoping to redeem credit card rewards, whether they’re headed to Finland, elsewhere in Europe or another part of the world.
What will happen to Finnair Plus Award points?
Once the changes go live in the first few months of 2024, Finnair Plus award points will convert to Avios at a rate of 3:2. So, if you had 90,000 points in your Finnair Plus account, you would get some 60,000 Avios.
NerdWallet values Avios at 0.8 cent per point when you redeem them for economy award flights on British Airways, but you can transfer Avios to any of the airline loyalty programs that use them.
Airlines that use Avios
Perhaps the biggest impact of Finnair’s shift to Avios for U.S. travelers is the ability to earn and redeem Avios on a wider range of international airlines.
Avios used to exclusively be the currency of International Airlines Group, the European conglomerate of British Airways, Aer Lingus, Iberia and other carriers. But now, the points are used by a half-dozen carriers, including a handful of prominent Oneworld Alliance airlines.
Upon Finnair’s adoption of Avios, the currency will be used by the following carriers:
Aer Lingus (based in Dublin).
British Airways (based in London; Oneworld Alliance partner).
Finnair (based in Helsinki; Oneworld Alliance partner).
Iberia (based in Madrid; Oneworld Alliance partner).
Qatar Airways (based in Doha, Qatar; Oneworld Alliance partner).
Vueling (low-cost carrier based in Barcelona, Spain).
Customers can seamlessly transfer Avios between loyalty programs that use the currency. And, though Avios are exclusively used by overseas airlines, there are some redemption sweet spots in the U.S.
Increased award availability on Finnair
The airline also plans to increase the number of award seats available on a flight, providing customers with more space to redeem Avios for a trip to Europe or within the continent. It will guarantee at least four seats bookable on points for flights within Europe, and at least eight on long-haul flights.
Finnair flies nonstop to Helsinki from a handful of U.S. airports including Boston, Chicago, Dallas/Fort Worth, Las Vegas, Los Angeles, Miami, New York, San Diego and Seattle.
Avios is becoming even more flexible
Finnair’s upcoming shift to Avios is just the latest example of an international airline adopting the loyalty currency.
For U.S. customers considering converting credit card rewards into Avios, the currency will now be usable on a longer — and growing — list of international carriers in Europe and beyond.
(Top photo courtesy of Finnair)
How to maximize your rewards
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“All of ours are relationship referral-based,” he added, emphasizing the company’s focus on cultivating genuine connections. Dunn’s dedication to face-to-face interactions and attending real estate closings ensures clients receive personalized attention. “I feel like I’m very good at developing relationships with people. For me, it’s much more relational, but it is a lot of hard … [Read more…]