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As we enter the second quarter of 2021, it’s time for the mortgage industry to reflect on the past 12 months and think about how to plan for the same period ahead. After all, it was mid-March of last year that the president declared a national emergency leading to school closures, the wearing of masks, and the emptying of office buildings across the country. A little over a year ago, we could have never imagined the actual implications of COVID’s impact to come on this nation, our communities, families and our business.

Take working remotely for example. In early 2020, Zoom was barely a known company in America. The impact of COVID made it a household name. By October, the market value of Zoom exceeded that of Exxon-Mobile, reflecting the dichotomy of an intransigent society staying at home and working remote. The stock value of Zoom grew 650% during this one year as many other aspects of the economy slowed or shuttered as a result of the shutdown.

But housing was the true bright spot in the economy. Low mortgage rates, driven by quantitative easing by the Federal Reserve helped fuel a boom in both mortgage refinancing and purchases, making 2020 the second-best year in U.S. history for mortgage origination volume. Augmenting the low rates was an increase in demand driven by the sudden surge of the millennials, finally now out to buy a home.

In fact, as reported in the Wall Street Journal in late August of 2020, “Mil­len­ni­als reached a housing mile­stone in 2020 when the group first ac­counted for more than half of all new home loans, and they consistently held above that level in the first months of 2021, the most re­cent pe­riod for which data are avail­able, ac­cord­ing to Re­al­tor.­com. The gen­er­a­tion made up 38% of home buy­ers in the year that ended July 2019, up from 32% in 2015, ac­cord­ing to the Na­tional As­so­ci­a­tion of Re­al­tors.”

Now, with the economy looking toward life past COVID, the focus is beginning to shift to a recovering economy, perhaps hotter than expected, driven by an excess in stimulus provided, and a likely end to the low single-digit mortgage rates seen over the previous year.

But a reminder to all is relevant now. Low rates are often the sign of a poor economy. As Bankrate’s Chief Economist Greg McBride, recently highlighted: “Bad economic news is often good news for mortgage rates. When concern about the economy is high, investors gravitate toward safe-haven investments like Treasury bonds and mortgage bonds, pushing bond prices higher but the yields on those bonds lower.”

So, the good news is that the economy will survive COVID and may actually catch on fire in the rebound with GDP forecasted to grow by 6.5% this year. Job growth will be the result of increased spending across every sector — from travel to goods and services. In fact, the pent-up demand can be reflected by the growth in retained savings after expenses during COVID, as Economist Mark Zandi of Moody’s Analytics highlights.

With 916,000 jobs created in March, many economists are bracing for what might be a spending spree from a nation that has been locked away for far too long and now recovering at a record pace. With summer on the horizon, look for the pace of spending to only grow with tourism augmenting what would already be a robust growth spree.

In fact, the recovery from the COVID pandemic is in stark contrast to that of the 2008 Great Recession. The fact that this recession was brought on by a virus versus weakening economic variables is key to the distinction. If you compare the employment growth between the two recessions there is truly no comparison.

Low interest rates, the demand surge from the millennials that are now reaching peak buying years, significant stimulus brought on by three large recovery bills, not to mention a potential infrastructure package, and massive pent-up demand from the lack of spending over the past year should have everyone simply bracing for lift off from the U.S. economic engine as it fires up.

So mortgage rates will likely continue to rise modestly as the Fed tapers from its intervention in the MBS (mortgage backed security) supply, which will slow refinancing and thus reduce mortgage volume overall in the market. Clearly, mortgage forecasts from the MBA and others reflect the expectation that overall volume will slow, but purchase activity will continue to grow.

For those that have focused on purchase lending, they will see less of a drop in total volume. But for those that have overly depended on refinancing, the impact will be more severe. Fortunately for lenders that were already more purchase-focused, the impact will be far less than many other refinance dependent operations given the strong purchase to refinance mix.

And one last perspective is important for everyone. The graph below from the Federal Reserve of St. Louis is the most important point about perspective. Look at 30-year mortgage rates as they stand today compared with any time going back decades when these rates were even captured on an aggregate basis. Rising mortgage rates will certainly be tolerated by the market.

In fact, small hikes in mortgage rates can lead to panic-buying periods which can drive small volume surges. Mortgage rates have never been this low and yet through previous cycles home sales have continued. In fact, the largest home purchase year in this nation’s history was 2005 when rates were near 7.5%.

The nation’s greatest obstacles ahead will come from the shortages in available single family home inventory across the county. But as America returns to work, supplies for builders will return to needed production levels, new home construction will continue to rise, and ultimately the supply-demand imbalance will rectify itself. The current proposed infrastructure bill includes funding for over 100,000 affordable housing units among many other housing initiatives, reflecting the recognition of the need to address access and supply to affordable homes.

For those in the mortgage banking industry, market corrections are part of the business. But in the year ahead, while having less mortgage volume overall, it will be met with a strengthening economy, a healthier nation, and enormous demand for home ownership. How lenders re-tool for this shift to a stronger economy and a purchase-dominated mortgage market will be the most important variables in long-term success. For companies that prepare for this, the market shift will be far less impactful compared to so many others.

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

To contact the author of this story:
Dave Stevens at [email protected]

To contact the editor responsible for this story:
Sarah Wheeler at [email protected]

Source: housingwire.com

Apache is functioning normally

AaronAmat / Getty Images/iStockphoto

Becoming a homeowner has been a very arduous road for many Americans. With 10 consecutive rate hikes, which have translated into higher mortgage rates, many would-be homebuyers have been forced to stay on the sidelines. But a specific type of mortgage could help them lower their rates.

According to Realtor.com, more than 80% of home-shoppers looking to buy and sell a home feel locked in by their current mortgage rate. In turn, buyers are seeing fewer available homes on the market. Realtor.com detailed in a recent report that it expects to see this trend continue as mortgage rates are likely to remain elevated for some time.

And as of July 18, the current average 30-year fixed mortgage interest rate is 7.23%, falling 14 basis points from a week ago. With the Federal Reserve expected to hike rates once again at its next Federal Open Market Committee (FOMC) on July 25-26, mortgage rates will likely increase as well.

That’s why several experts say that by turning to so-called assumable mortgages, many buyers could afford a house.

As Rocket Mortgage explained, an assumable mortgage allows the buyer to purchase a home by taking over the seller’s mortgage loan.

“One reason buyers decide to buy a home with an assumable mortgage is to take advantage of financing with a lower interest rate if rates have risen since the seller originally purchased the home,” according to Rocket Mortgage.

To put this in context, 91.8% of U.S.-mortgaged homeowners have a rate below 6%, down from a record high of 92.9% in the second quarter of 2022. In addition, 82.4% have a rate below 5%, 62% have a rate below 4% and 23.5% an interest rate below 3%, according to Redfin.

This silver lining has limitations for would-be buyers interested in an assumable mortgage. First, as Redfin noted, “Many would-be sellers are staying put rather than listing their home to avoid taking on a much higher mortgage rate when they purchase their next house.”

However, not all home loans are assumable — and unfortunately, most conventional mortgages are not assumable, per Rocket Mortgage.

Loans that are insured by the Federal Housing Administration (FHA) or backed by the Department of Veterans Affairs (VA) or United States Department of Agriculture (USDA) are assumable as long as specific requirements are satisfied. But again, as during the past three years, government-backed loans have only accounted for 18% to 26% of residential loan applications, according to CNBC, which makes inventory for these types of mortgages very low.

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Source: gobankingrates.com

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Prospective home buyers arrive with a realtor to a house for sale in Dunlap, Illinois.

Daniel Acker | Bloomberg | Getty Images

Mortgage rates didn’t move at all last week, and are still sitting near a recent high. With home prices continuing to rise, that pushed more potential homebuyers to the sidelines.

Total mortgage application volume dropped 1.8% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

related investing news

2 days ago

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) remained unchanged at 6.87%, with points decreasing to 0.65 from 0.66 (including the origination fee) for loans with a 20% down payment. That rate crossed over 7% a few weeks ago and has yet to retreat much.

As a result, applications for a mortgage to purchase a home dropped 3% for the week and were 23% lower than the same week one year ago, when rates were in the mid 5% range. The decline in purchase activity was driven partly by a 10% drop in FHA applications. The Federal Housing Administration, which offers low down payment loans, is favored by lower-income buyers. Clearly, the market is becoming less and less affordable for them.

“The decrease in FHA purchase applications contributed to an increase in the overall average purchase loan size to $432,700, its highest level since the end of this May,” said Joel Kan, an MBA economist, indicating that more activity is now on the higher end of the market.

Applications to refinance a home loan were essentially flat for the week and 30% lower than the same week one year ago. Most borrowers today carry interest rates far lower than the current rate and would therefore not benefit from a refinance. Those wishing to take cash out of their homes are choosing second, home equity loans rather than lose the rate on their primary loan.

Mortgage rates moved higher to start this week, crossing over 7% Tuesday to 7.04%, according to Mortgage News Daily. Rates will likely move later today, following the latest interest rate decision and press conference at the Federal Reserve. The Fed is widely expected to increase its benchmark interest rate by 0.25%.

“The Fed Funds Rate doesn’t directly dictate mortgage rates. In other words, mortgage rates CAN move lower tomorrow even if the Fed hikes. They can also move higher depending on what [Fed chief Jerome] Powell has to say about the Fed’s policy stance,” wrote Matthew Graham, chief operating officer at Mortgage News Daily..

Source: cnbc.com

Apache is functioning normally

In a cyclical mortgage industry, hedging is key to maintaining a buffer against losses. For New American Funding (NAF), the country’s 33rd-largest mortgage lender, hedging is how the company was able to manage through the troughs of the mortgage business cycle, Rick Arvielo, co-founder and CEO of NAF, said in an interview with HousingWire. 

“We’re always looking for hedges,” Arvielo said. “The outside distributor retail is a hedge against the call center in the different environments. Servicing is a hedge against origination.”

Since launching as a call center in 2003, the California lender has expanded into the outside distributed retail model with a target on the purchase mortgage market, serviced its own loans and developed its tech stack in-house.

But there have been rough points for the lender recently, too. As rates increased in 2022, the California lender laid off nearly 1,000 staff to cut costs and meet shrinking demand in the industry.

However, NAF said it is done with rightsizing and has been adding more employees this year. When rates start to trend down, the company expects to add more loan officers, call center staff and operation staff.

With increased M&A activity in the industry, NAF hasn’t ruled out the possibility of acquiring a regional lender with an established customer base, either.

“Yes, I’d love to acquire a smaller, independent regional player (…) Anything in the Northeast, kind of above the Carolinas, we really don’t have anything. The northern part of the United States – you get above the Arizona, Colorado market – we don’t really have much there,” Arvielo said.

Read on to learn more about New American Funding’s business model of outside distributed retail, their in-house tech stack rebuild, its expansions plans and prospects in 2023. 

This interview has been condensed and lightly edited for clarity.

Connie Kim: NAF’s business model of a call center and the outside distributed retail business seems like a hedge against when the rates are low and when the market pivots to purchase mortgages. Now that the market has turned, do you see any challenges for your purchase call center agents? Because there are retail LOs building that in-person relationship with their real estate agents and financial advisors.

Rick: The way people purchase homes is going to be different tomorrow than today (…), so we developed a network. When we get a borrower that comes in online, we do our good work to get them qualified to buy a home – these are mostly early stage buyers. 

That referral process is an age old, where the real estate community will give up a third of their commission for being delivered a qualified, pre-approved borrower that came out of the relocation world. The borrowers became more sticky with us, (and) then we were able to accomplish profitability to originating the purchase business through the call center.

That journey took about two years. We dabbled under the hood from mid-2016 to about mid-2018, and then really started to perfect it. And that’s why that business is bigger today than the refi call center, because rates are higher, so you don’t have a lot of refi opportunities.

Kim: So the model focuses on connecting the retail LOs and the call center agents together to bring up that efficiency to target the purchase market. It’s a different audience that NAF is targeting via the outside distributed retail channel and the purchase call centers.

Rick: Yes. If I could just add one little bit, we took it a step further. We realized through our analysis that a lot of these borrowers, even though they started the journey online, they really want to work with an in-market agent. The call center is going to be the in-market agent’s best friend. 

We set up a program called LBC – which is local buyer connect, where an in-market agent can choose to join the purchase call center for a percentage of their business. 

Kim: NAF bought Marketplace Home Loans in 2018. Are there plans to acquire a regional purchase lender?

Rick: I would love to take looks. It’s not something that we’ve really done. We’re in the process of talking to some of the business brokers out there to get some looks. 

Anything in the Northeast, kind of above the Carolinas, we really don’t have anything. The northern part of the United States – you get above the Arizona, Colorado market – we don’t really have much there. 

Texas is a big one for us. We do a good job in El Paso, Texas. But outside of that, we really don’t have much in Texas.

Florida, we’re okay, but I can see us filling in some geographies there. Nebraska and Louisiana. I could go on with a lot of these states that we just don’t really have a presence in at all. We have almost nothing in Illinois. 

So the short answer is yes, I’d love to acquire a smaller, independent regional player, so long as it’s not in a region that I already have well covered with leadership. 

Kim: One of NAF’s priorities is on lending to the Hispanic community. While Hispanic homeownership continues to grow, high DTI ratios is a main stumbling block to getting mortgages. What are some of the ways NAF is assessing credit risk for potential Hispanic homebuyers?

Patty: I’ve been underwriting the creditworthiness of Hispanic homebuyers the exact same way since 1994. We pretty much just adhere to Fannie Mae, Freddie Mac and the Department of Housing and Urban Development’s guidelines. You know, we’ve had to argue some points with every agency at some point. We still do a large percentage of manual underwrites. 

Part of the process of the way we credit underwriting is that if we do hit a stumbling block, it’s not an automatic denial [for us]. We go back to the borrower and ask if they have a cosigner, if they can source the downpayment or if they can get additional funds. So it’s really just a slow play to close. A lot of lenders don’t want to do that.

Rick: It does deserve noting that Patty started the initiative for Latino lending back in 2013. But in 2016, Patty was challenged when was speaking one time from a Black gentleman who said, “What are you doing for African Americans?”

We’re basically replicating what we did in the Latino communities that got us a little bit of notoriety. 

Kim: NAF has been building its in-house tech stack since its inception. Can you share some of the features that paid off? What are some of the features that NAF is building?

Rick: We built our system out, called Bankerview, but it’s 20 years old. It’s a flat system. Architecturally, we needed to essentially start over, and we couldn’t really do it with the resources onshore. 

We decided to bite the bullet and actually form our own business in India. We literally did it from scratch [in March, April 2022]. We got an office and we currently have about 100 technicians in India.

They’re a lower-cost provider and we still have our onshore teams, because that’s absolutely vital to success. Now we’re going back through our tech stack, and we’re literally rebuilding it from the ground up, to be able to take us for the next 20 years. 

Kim: It was a hard year for the production side, but what really kept a lot of lenders stay afloat was the servicing sector. NAF has been servicing its own loans. How did that help your firm’s business? Are there any plans to sell some of that? 

Rick: We’re always looking for hedges, so it was very intentional to build this asset. When you start bringing a lot of African American and Latino borrowers into your servicing, we started with subservicers like everybody else. But they’re not equipped to deliver the level of service that those borrowers need.

We would have endured losses like everyone else had we not had the servicing business, because it’s a $65 billion servicing portfolio at this point. So it does throw an awful lot of cash. And the last thing in the world I want to do is to spend all the money I’m earning in servicing, but that’s why we did it. We did it to give ourselves that hedge. 

We’ve been servicing our loan for maybe six years now, and we have sold servicing just to raise cash. We sold a grand total of about $3 billion out of $65 billion, and that’s a cumulative of what we sold going back years.

Kim: I believe it was in November 2022 when NAF said it laid off more than 900 employees. Were there additional layoffs in 2023? Is NAF done rightsizing? 

Rick: I think we’re probably done rightsizing. You lose people through attrition, too. That’s very common, especially in a call center. 

We haven’t had layoffs for this year. We were knocking on the door of 5,000 employees, and I think we’re probably at about 3,600 or so.

Patty: We’re actually up this year in employee headcount. We’re growing quite a bit. There are support staff that come along with them (loan officers). So bigger teams or a team will bring their operations people.

I would say that out of the last 11 years we’ve been doing distributed retail, outside of just initially growing and how crazy it was, this is the busiest I’ve been in recruiting since then. 

Kim: I often hear that mortgage volume will be similar to last year, but more back-end loaded. What are your thoughts on this for NAF’s origination volume?

Rick:  I wouldn’t say it’s going to be anything like last year. I think what you’re going to see in 2023 is a gradual rise; I don’t think it’s going to be big pops. My biggest concern, to be honest, is inventory. 

Inventory is lighter now than I think it’s been in decades. Part of that is because of the government not letting foreclosures happen. There’s a foreclosure process for a reason. It feeds inventory to the market that benefits the new first-time homebuyers. If you don’t let that dam kind of break, all you’re doing is hurting the new family formation and the new homeowners of tomorrow.

The minute rates drop into the fives, you’re going to see real estate activity heat up, and you’re going to see house prices just start to pop again.

Source: housingwire.com

Apache is functioning normally

There are certain aspects of personal finance that I’ve never had to deal with. Student loans are one of these. But student loans are a huge concern for many people. This guest-post from SJean is an introduction to repaying these debts.

There are really two things to know about student loans: How to get them, and what to do when you have to start paying them back. I’m going to write about the latter, as I am more experienced with that aspect. It seems everyone can figure out how to get student loans (whether or not they are getting the best deal), but paying them back can be more confusing.

Most federal student loans come with a grace period of six months during which you are not required to make payments. That means if you graduated in May of this year, your grace period is coming to a close and you have some decisions to make.

What do I owe?
The first step is to find out how much you owe and to whom. Your financial aid office can help you with this, as can this site.

There are three major types of federal loans you may have: Federal Subsidized Stafford, Federal Unsubsidized Stafford, and the Federal Perkins loan. Some people may also have private loans, which I’ll cover at the end of this article. (They’re a different beast than federal loans.) For now, let’s focus on the federal loans. According to the U.S. government’s Student Aid site:

During the grace period on a subsidized loan, you don’t have to pay any principal, and you won’t be charged interest. During the grace period on an unsubsidized loan, you don’t have to pay any principal, but you will be charged interest. You can either pay the interest or it will be capitalized (added to your principal loan balance, thus increasing the amount you’ll repay).

Can someone PLEASE make these go away?
You may feel overwhelmed by your loans and wish that they would just go away. Actually, there are a few ways that they can be diminished without you paying them, but these are special cases. Most of us are going to pay back every dollar we borrowed. And more.

If you are interested in volunteer work, check out the benefits provided by joining the Peace Corps or AmeriCorps. (For strictly financial reasons, you are probably better off getting a job and paying back the loans, but there are other reasons you may want to consider volunteering). If you are planning to be a teacher, join the military, or work in the legal or medical profession, there are some loan forgiveness programs you might be able to take advantage of.

Other than that, your student loans are going to be with you until you pay them back. Even bankruptcy will not destroy them. (But if you die, they are forgiven.) If your best shot of getting out of your loans is death, you probably should start working on a plan to repay them.

Consolidation: What is it?
Consolidating your federal student loans may lower your total monthly payment, but note this is primarily because you are extending the terms of your loan and paying more interest in the long run. If you can afford your monthly payment, and would rather not have a loan for 20 years, you still should consider consolidation. You also can stick with a standard repayment if you know you can afford it and don’t think you are disciplined enough to make extra payments. There are no prepayment penalties in consolidation loans and there are a lot of benefits.

Consolidation: Can I consolidate?
Before you concern yourself with whether you should consolidate, you should check to make sure you are eligible. If you haven’t graduated yet, you cannot consolidate your loans. (This was not true a year ago!) You must either be in your six-month grace period or in repayment. You must have eligible loans, usually totaling over $7,500 (you may be able to find some lenders who will do it for less). You can consolidate a single loan, as long as the loan being consolidated has not previously been consolidated. You can’t consolidate with your spouse anymore, but that was usually a bad idea anyway.

Consolidation: Should I do it?
Student loan rates are adjusted annually on July 31st, based on the 91-day T-bill rates.

Years ago, rates were very low (as low as 2%!), and consolidation was a no-brainer. When I consolidated, they were around 4.5%. As of today, you can probably consolidate at 6.62% (before discounts) if you are in your grace period. If you don’t consolidate, that rate will jump to 7.22% when the grace period ends.

Students who received Stafford Loans on or after 01 July 2006 have a fixed 6.8% rate of interest for the life of their loan. The rate on previous loans will continue to be adjusted annually. If you have loans that were dispersed both before and after that date, the interest rate is averaged and weighted accordingly.

The decision isn’t as clear cut as it once was — it’s something you have to decide for yourself. But my opinion is that for most people, consolidation makes a lot of sense. If you aren’t happy with the current rates you could wait for lower rates, but who knows when they will be coming? In the meantime, you’ll be subject to a variable interest rate. Consolidating now may result in lower payments and a lower fixed interest rate immediately.

Consolidation: How do I do it?
From the day I graduated (and even before), my mailbox was filled with offers to consolidate my student loans. Why does everyone want to help me with this? I was surprised to learn that my student loans are backed by the US government. If I default on my loan, the government will pay it, then try to get the money from me themselves. This means that the companies are essentially guaranteed to get their money back! Because of this, you will have plenty of offers to choose from. In reality, most of the offers are nearly identical, but pick wisely — this is a relationship you may have for a long time!

Remember, if you consolidate during your grace period, you can lock in your interest rate 0.6% lower and still not make any payments until your grace period ends. If you graduated last May, your grace period is probably ending very soon. Don’t hesitate!

Here are some important things to consider when choosing a lender:

  • interest rate (will likely be the same for all lenders)
  • discounts for auto-payment
  • discounts for on-time payments
  • website and user interface for payments
  • ability to pay with credit card with no fee (to get cash back bonus, not to convert to credit card debt!)
  • ability to use Upromise rewards to
    pay back the loan (Sallie Mae)

I chose Wells Fargo because my other banking is there, making it really easy to make extra payments. I wouldn’t exactly recommend them (a lot went wrong during the consolidation process), but now that everything is consolidated, they are working out just fine. Honestly, I wasn’t as well informed as I should have been, and if I could do it again, I’d do more research.

Here are some sites to get you started on your research:

What if I can not afford my payments?
If you are unable to pay the monthly bill, there are a few things you can do, all starting with talking to your lender.

  • You can usually arrange an alternative payment plan, where you pay less now and payments increase as your income increases.
  • You also may qualify for a deferment, where you are not required to make payments for some set period of time (interest will still accrue though!). Your credit score will not be hurt, but these require special circumstances.
  • As a last resort, there is the option of forbearance. This is similar to deferment, but you don’t need qualifying circumstances, and it will negatively impact your credit score.

I can pay them… and more! Should I pay them back quickly?
The general advice on this is no, as long as the interest rate is low. This does make sense if you are investing the difference of what you can pay and what you are paying. By the math, you should hang on to them as long as the term allows. Personally, my loan is for 20 years, and I just don’t think I want to have them around when I’m in my 40s. Mathematically sound or not, I will be paying them off a bit early, but they are the lowest priority of my financial goals. The Get Rich Slowly philosophy “Do what works for you” certainly applies here.

The most often cited reason for not repaying student loans early is that the interest is generally tax deductible and you don’t even have to itemize to take this deduction. Also, if you have a government loan, your money usually can make more for you elsewhere, though there is often more risk involved. If choosing between a Roth/401k or paying off loans early, I would recommend investing in your future.

What about private loans?
Private loans usually aren’t low interest, and they don’t have as many nice benefits as federal loans. If you consolidate, you typically aren’t locking into a lower rate, just switching lenders. There may be some benefits, but be skeptical and don’t consolidate them with your federal loans, as you will lose some important benefits. The best way to handle private loans is to pay them off as soon as possible.

Among the reasons private loans should be repaid as soon as possible:

  • You cannot defer payments on a private loan consolidation if you want to go back to school.
  • You cannot forbear payments in case of economic hardship.
  • You cannot apply for forgiveness on a private loan consolidation.
  • If you should pass away, private loans are passed to your next of kin. Federal loans are forgiven.
  • Private loan consolidation very often has variable rates, which means you cannot lock in today’s current historic low rates. Those rates may be tied to volatile indexes like the Prime Rate, which can jump as high as 13%.

My private loans were somewhere around 8%, and I paid them off in about six months. I focused all of my financial energy on them, and even did a balance transfer to a 0% interest card, but paid it off as quickly as I could.

For more information on anything about student loans, visit FinAid! This site is excellent and should answer all of your questions.

You can read more from SJean at Stacking Pennies.

Source: getrichslowly.org

Apache is functioning normally

The real estate investing landscape has changed dramatically since the big bust of 2008. Confidence is still not what it once was, and for smaller investors, the risks seem to outweigh rewards. However, an article I read from Forbes back in the summer of 2017 shined a light onto diversified investments into commercial as “the way.” With this in mind, news from an innovative social platform for real estate investments called “iintoo” led me to request an interview with the company’s Managing Director, Shoshana Winter.

The new epiic revolutionary equity principal protection for real estate investments

Here is the gist of our Q & A session.

Phil Butler: Can you outline briefly an ideal/characteristic iintoo deal or investment?

Shoshana Winter: Iintoo is designed to remove every possible barrier to entry for investors who are interested in exploring alternative asset classes to help diversify their portfolios, but don’t want to take the time to develop the expertise necessary to choose the right deal. The ideal investment for iintoo is, therefore, one that makes it through a long and rigorous vetting process which is designed to weed out less opportune deals. Our platform leverages AI as well as the expertise of our team to identify those deals that meet the core standards in our methodology: commercial-grade, income-generating (value-add capital improvement projects for senior living, student housing and multi-family, etc.), in B and C geographies, and in short exists (no later than 36 months). These criteria have historically demonstrated positive returns for investors, even through economic downturns. 

Our goal is to deliver double digit returns on each investment and to do so in short timelines so investors can either roll their returns into another deal or be able to use that yield to fund home improvement projects, vacations or special occasions like a wedding. This vetting process has resulted in iintoo offering only 53 projects to investors out of the 4000 plus deals they’ve seen over the past 4 years. This strategy has returned a 16.78% average annual yield across the 11 exits completed. iintoo’s vetting of these projects does not end with the offering – our team of analysts and business development professionals stay involved in every step of the project ensuring that the developers they are working with stay on time and budget according to the business plan of each project. iintoo will be in contact with the sponsor, do site visits and deliver quarterly reports to its investors to provide complete transparency on progress through the life of the project.

Phil Butler: What’s the benefit that iintoo provides to investors looking to capitalize on the CRE market?  

Shoshana Winter: Iintoo provides easy, direct access to curated, premium commercial grade real estate deals designed to drive maximum yield in short time frames. That means that many investors can enjoy these yields in a very immediate way. For example, if they want to see their retirement funds deliver higher returns than traditional products (IRA’s), they can invest a portion of their retirement fund in iintoo through the use of a custodial trust that we make available to them, which allows them to invest without the tax penalties of withdrawing their retirement funds early. iintoo takes a lot of the guesswork out of the process by only offering deals that are designed to deliver the highest potential yields. This means that investors do not need to be real estate experts to make these investments. In addition, iintoo offers investors the industry’s only Equity Protection Investment Community (Epiic) platform which protects them against a loss of value of real estate projects. Epiic adds a two-layer protection benefit for investors who are seeking the safety of principal protection for their initial investment.

Phil Butler: How does iintoo help investors limit risk?

Shoshana Winter: Iintoo does everything it can throughout the process to ensure the best possible investor experience. Though no investment is risk free, iintoo’s methodology is based on a proven model, a highly rigorous criteria-driven vetting process, hands-on management of the investment, and equity principal protection. (See above)

Phil Butler: I’ve taken note of the fact iintoo does not offer investments for those interested in the luxury market. How can your platform/service be helpful to these investors?

Shoshana Winter: Iintoo’s model is based on over 30 years of historical performance of commercial grade real estate investments across multiple geographies. The reasoning for focussing on B and C grade geographies and commercial grade projects (vs. hotels and retail) is they have proven to deliver better yields even through economic downturns. iintoo is looking to capitalize on what is delivering returns vs. other criteria; our analysts and business development team continue to evaluate deals across the spectrum and if new opportunities present themselves that serve our goal of maximum potential returns than we might expand our offerings to include those kinds of deals. But, the guiding principle is always about insuring the most positive outcome for our investors.

I asked the iintoo executive about her company’s successes/profits for investors, which she expressed in terms of a 16.78% average annual yield for our 11 exits. According to Ms. Winter, by using the iintoo platform, accredited investors can now access commercial-grade real estate opportunities without the normal barriers to entry smaller investors usually face. iintoo specializes in grouping investors from all over the country into bigger, multi-million dollar positions and investing that in commercial grade real estate like hotels, student housing, storage facilities, as well as multifamily complexes.

Phil Butler is a former engineer, contractor, and telecommunications professional who is editor of several influential online media outlets including part owner of Pamil Visions with wife Mihaela. Phil began his digital ramblings via several of the world’s most noted tech blogs, at the advent of blogging as a form of journalistic license. Phil is currently top interviewer, and journalist at Realty Biz News.

Latest posts by Phil Butler (see all)

Source: realtybiznews.com

Apache is functioning normally

Multiple agencies across the federal government including the U.S. Department of Housing and Urban Development (HUD), the Federal Housing Finance Agency (FHFA) and the Consumer Financial Protection Bureau (CFPB) have all renewed their efforts to protect tenants renting in multifamily housing units as costs continue to climb, according to an announcement from the White House.

“[HUD], the U.S. Department of Agriculture (USDA), [CFPB], the Federal Trade Commission (FTC) and [FHFA] are each releasing guidance or best practices to landlords, operators, and stakeholders who rely on tenant screening reports when evaluating applications from renters,” the White House said in its announcement. “This guidance communicates the administration’s expectations on informing renters of what information in their screening report is responsible for their application being denied.”

For HUD, the department has announced $10 million in new funding for “tenant education and outreach in properties it supports,” and “has committed to issue a notice of proposed rulemaking that would require that tenants of public housing and properties with project-based rental assistance receive a written notice at least 30 days prior to lease termination for nonpayment of rent,” the White House said.

HUD also separately announced “an $85 million first-of-its-kind competitive [Pathways to Removing Obstacles to Housing (PRO Housing)] funding opportunity for jurisdictions and new guidance for providers of affordable housing will help communities address local housing challenges,” the department said.

On a call with reporters on Thursday morning, White House Chief Domestic Policy Adviser Neera Tanden described how the administration is promoting more widespread conversion of commercial buildings to residential space, following up on a research grant detailed by HUD this week on the topic.

“With high rates of commercial vacancies across the country, we see a tremendous opportunity for conversions to residential housing,” Tanden said.

Also on Thursday in conjunction with the announcements, the CFPB released a blog post describing how “federal housing agencies strongly encourage landlords to provide tenants written notice of their rights.”

“We must provide renters with the necessary resources to safeguard their interests and enhance their communication with landlords,” said HUD Secretary Marcia Fudge. “HUD is dedicated to collaborating with renters and ensuring they are well informed about their rights.”

Source: housingwire.com

Apache is functioning normally

My sister and I have called Westlake and Koreatown home our entire lives, but rising rent priced us out of our own community. Southern California’s high costs of living and limited homeowner support programs made it nearly impossible to find a better housing situation for our family.

Growing up in a predominately low-income immigrant community, we assumed living in an overcrowded apartment was the norm.

For more than 25 years, our family of four lived in a rent-controlled, cramped 450-square-foot studio with a walk-in closet and tiny bathroom. We converted the walk-in closet into a bedroom and our parents slept in a twin-sized bed right outside the kitchen. Our apartment was old, moldy and infested with roaches and hadn’t been renovated since we moved in — hence the rent being cheaper than the market rate for L.A. County.

As we got older, we realized that we had lived in two scenarios identified by health and other organizations as threatening housing instability: living doubled up, meaning when adults beyond a head of household and partner have to share a home, and then living crowded, where the number of residents exceeds the capacity of the space, often leading to poor physical and mental health. An L.A. Times analysis published last year found that Los Angeles was the most overcrowded city in America as of 2020.

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Right before COVID-19 hit, we held unstable minimum wage, temporary and stipend-based positions and struggled to pay rent. Then during the pandemic, we found it increasingly difficult to complete remote work and online school in our crowded living situation. As COVID cases subsided, we got our first full-time jobs and considered moving to a bigger place. But the cheapest apartments we looked at were at least half of our combined income.

We were torn. On the one hand, we had stayed far too long in an uncomfortable living situation. Seeing apartment complexes in our neighborhood be demolished and replaced by luxury high-rises also made us fear that it was just a matter of time before we would be evicted. On the other hand, we could not justify spending so much on rent, especially since a rule of thumb is to spend no more than a third of your income on housing. And since we had both been laid off during the pandemic, we feared becoming unemployed again in the future.

After crunching the numbers, we decided to pursue an option we previously considered out of reach: saving up to buy a home. Given the rising local costs of rent, in the long run we’d be better off buying. We also wanted to repay our parents for all the sacrifices they made to ensure we had a roof over our heads, and for their love and support. So we continued to live in our crowded apartment while aggressively saving up for a down payment and for an emergency fund because we feared going back to job instability.

As first-generation Latina home buyers, we did our best to navigate the process by combing through programs for buyers like us. Those didn’t end up helping.

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The first program we tried was Bank of America’s Community Affordable Loan Solution, which among other benefits provides up to $15,000 in down payment assistance for first-time home buyers in L.A. and a handful of other cities to purchase in a community that is predominantly Black, Latino or both. But we were told we were ineligible for the program because our combined annual income just exceeded the maximum limit of $136,650. At the same time, we are considered low-income in L.A. County, suggesting the program’s cutoff is too strict to help everyone who needs it.

Next we considered applying for the California Dream for All Shared Appreciation Loan program, which provides a loan worth up to 20% of a home’s sale price. However, the program also requires borrowers to pay 20% of the home’s increase in value once it’s sold on top of paying back the original loan. We worried that borrowing this amount would ultimately hurt us by taking away a portion of our future equity. Then that consideration turned out to be moot: The program ran out of funds two weeks after launching, before we could even complete the preapproval process.

We also found significant problems with the equity of these programs. Although the Community Affordable Loan Solution is meant to support Black and Latino communities, which have historically low rates of homeownership, it does not require individuals to identify as Black or Latino to qualify. Similarly, though the California Dream for All program was meant in part to reduce racial wealth gaps in the state, CalMatters found that 65% of the initial recipients were white. Only 34% of beneficiaries identified as Latino and just 4% identified as Black. California’s longtime affirmative action ban restricts the agency’s ability to target funds for people of color.

Fortunately, we finally found a home for our family in a different part of Los Angeles. Looking back, we’re grateful that our relatively low-cost living situation allowed us to save. Even so, families should not have to live in cramped, small living spaces to afford rent — and tolerating these conditions should not be the only option renters have when trying to save up for a down payment.

Moreover, since we were unsuccessful with first-time buyer programs, we felt compelled to make the risky decision to deplete our emergency fund to place a 3% down payment. Although that enabled us to buy our home, we aren’t sure what the future holds for us. We can’t say it was an easy process.

Federal and state officials should evaluate how first-time homebuyer programs are designed, rolled out and made available particularly to Black and Latino applicants. Providers should consider offering assistance on a sliding scale based on income level rather than using relatively low cutoffs. Other alternatives might be to create down-payment assistance grants rather than loans, or loans that do not accrue interest until a home buyer reaches a small portion of equity (such as 3%). Such approaches may help people get into homes sooner and obtain equity faster.

We hope to see better options for all low-income renters. Homeownership should not be this inaccessible, especially for people who are seeking to become the first in their families to buy a home and build generational wealth.

Jennifer Nazario is a systems administrator at a network of college-preparatory schools and a first-generation college graduate with a master’s degree in economics. Paula Nazario is an assistant director at UCLA and the first person in her family to go to college. She has a master’s degree in public policy.

Source: latimes.com

Apache is functioning normally

A union is a group of workers who join together to negotiate with an employer over pay, benefits, scheduling, and other workplace policies and conditions. The process of negotiating with an employer as a unified entity is known as collective bargaining, and it gives workers some power to set the terms of their employment.

The size and scope of each union varies. For example, you may have seen the International Brotherhood of Teamsters in the news; it represents more than 1.2 million people in a wide array of occupations across the U.S., Canada and Puerto Rico, according to its website. The Teamsters union represents 340,000 UPS workers, and it recently negotiated a deal with UPS after threatening a strike.

Or maybe you’ve read headlines about the Writers Guild of America (WGA) — a union representing 11,500 screenwriters — and the Screen Actors Guild and the American Federation of Television and Radio Artists (SAG-AFTRA), which represents 160,000 performers. Both unions are on strike, meaning they’re refusing to work as a way to compel employers to agree to the unions’ demands.

How do unions work?

A group of workers interested in bargaining collectively with their employer can organize a new, independent union or join an existing union. After a group agrees to unionize, the union can negotiate a collective bargaining agreement — a legally binding contract between the union and employer.

Forming a union

To form a union, workers must take a couple of official steps to both show interest in forming a union and gain that recognition from their employer. Here’s how they can do that.

Voluntary recognition. A majority of employees can sign union authorization cards, which are forms that record a person’s interest in a union. At that point, workers can request recognition as a union from the employer, and the employer can voluntarily do so.

A majority vote in an election. If the employer doesn’t voluntarily recognize the union, but at least 30% of employees sign union authorization cards, the employees can file a petition for an election conducted by a labor agency such as the National Labor Relations Board (NLRB), which is tasked with protecting workers’ rights to collective bargaining.

If the majority of employees vote to unionize, the labor agency will certify the group as a union. Then the employer is required to bargain with the union in good faith.

The NLRB conducted 1,363 elections in 2022, according to the agency’s records. Unions won 1,041 of those elections.

Joining a union

In a unionized workplace, union membership is optional. All workers covered by a collective bargaining agreement are known as a bargaining unit, and workers don’t have to be union members to be part of the bargaining unit.

Union members pay dues, participate in union activities and agree to follow union rules. Dues are used to fund union operations, including paying staff, lobbying and supporting members during a strike.

Someone who opts out of union membership may still have to pay a portion of union dues to cover the cost of collective bargaining. However, in 26 states with “right-to-work” laws, workers can’t be required to pay fees to a union as a condition of employment. Even then, those workers are still covered by the collective bargaining agreement.

An employer may work with multiple unions representing different bargaining units in its workforce. For example, public schools may have contracts with one union representing teachers and another representing clerical or janitorial staff.

Negotiating as a union

A union’s main purpose is negotiating a collective bargaining agreement. These contracts typically cover pay, benefits, time off, working conditions and worker protections.

Union members play a role in deciding what’s included in a contract. They elect union representatives, vote on what changes to make when contracts are negotiated, and approve new agreements. When contract talks stall because the union and the employer can’t agree on terms, union members might vote to strike.

What’s covered in a union contract can vary by industry.

Changes in technology are at the root of the contract changes proposed by TV and film writers. The WGA wants its contract to address the impact streaming services have had on compensation and the potential threat artificial intelligence poses to creative professionals.

For unions with members who were on the front lines of the COVID-19 pandemic, understaffing and safety protocols have been a common concern. Those issues have compelled Starbucks workers to unionize at more than 330 U.S. stores since 2021.

In another example, a new contract that the Minnesota Nurses Association negotiated in 2022 gave nurses a say in setting staffing levels, requiring consensus between nurses and management before any staffing reductions take place.

Unions also have used collective bargaining agreements to make “common good” demands — proposals that would impact the community beyond the bargaining unit. For instance, Oakland, California, teachers went on strike in May to secure higher pay and a better schedule, as well as a commitment from the school district to provide support for unhoused students.

How many union workers are in the U.S.?

About 14.3 million workers are part of a union, according to the most recent data from the Bureau of Labor Statistics. The BLS report on union membership, released in January, found that the number of unionized workers increased by 273,000 from the previous year.

Despite the year-over-year increase, the percentage of U.S. workers who belong to a union is at a record low. In 2022, 10.1% of workers belonged to a union, down from 20.1% of workers in 1983, which is the earliest comparable data available from BLS.

The BLS report gives a current portrait of America’s union workers:

  • About a third of federal, state and local government workers are part of a union. Just 6% of private sector workers are unionized.

  • Jobs with the highest unionization rates include protective services (34.6%), education (33.7%), utilities (19.6%) and construction (16.4%).

  • Black workers have higher unionization rates than white, Hispanic or Asian workers. In 2022, 11.6% of Black workers belonged to a union, compared to 10% of white workers, 8.8% of Hispanic workers and 8.3% of Asian workers.

  • While 14.3 million workers count themselves as union members, the number of workers represented by unions is actually 16 million. That’s because 1.7 million people who don’t affiliate with a union work in jobs that are covered by a union contract.

Source: nerdwallet.com

Apache is functioning normally

Nearly 90 percent of real estate agents leave the industry in five years or less. Today’s guest, Tim Garrity, has 20+ years of real estate experience, and he’s learned that relationships are key when it comes to building a resilient business. In fact, according to Tim, most agents fail because they don’t follow that principle. Tune in and hear how to build a thriving real estate business based on real relationships. Tim also discusses his approach to leadership, shares how he built a brokerage from scratch, and offers advice to Realtors who are feeling discouraged.

Listen to today’s show and learn:

  • Tim Garrity’s start in real estate [3:56]
  • Finding real estate deals after the last major crash [7:52]
  • Marketing via a real estate blog [10:17]
  • Getting your reps in with renters [11:13]
  • Tim’s first buyer client [16:24]
  • What Tim wishes he knew as a new real estate agent [19:16]
  • An alternative to real estate CRMs [23:31]
  • About Copper Hill Real Estate [25:53]
  • Building a real estate brokerage from scratch [26:34]
  • Overcoming common challenges as a real estate broker [30:29]
  • How running a brokerage compares to being a solo agent [37:53]
  • The difference between ordinary and extraordinary real estate teams [39:37]
  • Supporting your team and finding the right people [44:27]
  • Advice for agents who are feeling discouraged [51:30]
  • Where to find and follow Tim Garrity [56:22]

Tim Garrity

Tim Garrity is a Partner, as well as the Broker of Record at Copper Hill. He helps clients get to where they’re going, and he helps agents exceed their potential.

He has decades of experience in the mortgage, new-construction, and real estate sectors, and helped form the brokerage, title insurance, and development divisions within Copper Hill’s enterprise. Tim holds both BS and MBA degrees from La Salle University’s School of Business.

He grew up in Suburban Philadelphia, lived in the City of Philadelphia for 20+ years, and currently resides in Flourtown with his family. While Tim’s expertise centers around Philadelphia and Suburban Philadelphia, he also has extensive knowledge of the South Jersey Shore.

Tim’s current focus lies in running and growing the real estate brokerage division of Copper Hill. He and his staff handle all of the team’s communication, problem solving, mentoring, growth, and overall success. His goal is to personally show each Copper Hill agent how to “crawl, walk, and run” by helping them start, grow, and retain their own book of business.

Tim’s passion is to help/teach those within his network by utilizing his entrepreneurial business skills and experience as a real estate brokerage owner.

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-Aaron Amuchastegui

Source: realestaterockstarsnetwork.com