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Broker Pricing, Non-QM, Lead sourcing, Tech Products; STRATMOR on Employee Culture; The Fed and Rates

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Broker Pricing, Non-QM, Lead sourcing, Tech Products; STRATMOR on Employee Culture; The Fed and Rates

By:
Rob Chrisman

7 Hours, 34 Min ago

For those attending the Western Secondary, remember, it never rains in Southern California. Except for now. Here’s one person who won’t be seeing So Cal any time soon, and dare I say, every honest person in our biz is happy when this happens. Daniela Rendon, 31, was a Miami real estate broker but was sentenced to three-and-a-half years in prison for stealing $381,000 in COVID relief funds, wire fraud, money laundering, and identity theft. Rendon probably won’t care too much about what the Federal Reserve does while she’s working in the laundry room or serving up oatmeal, but the Fed will probably restate, through Chairperson Powell speaking at the end of the week, its intent to keep interest rates high for an extended period to make sure inflation does not flare up again. In other legal and compliance news, Freedom Mortgage’s RESPA Consent Order with the CFPB is getting some attention from Mortgage Musings author and attorney Brian Levy. (Today’s podcast can be found here and this week’s is sponsored by PHH Mortgage. For over 30 years, PHH Mortgage has provided industry-leading mortgage services and helped countless homebuyers and homeowners find financing solutions to meet their needs. Hear an interview with Arrive Home’s Matt Pettit on down payment assistance programs and the push for more affordable housing.)

Lender and Broker Software and Services

If you’re in Dana Point for CMBA Western Secondary, you may be able to spot a blue whale lobtailing or a playful pod of dolphins on the water. But inside the Waldorf Astoria, there is ample opportunity for a type of spectating to help you run your business better. On Wednesday at 11 am PT, grab a seat for the engaging session, “How is Technology Providing Efficiencies in the Secondary Market.” Jay Arneja of SimpleNexus, an nCino company, will be weighing in on a wide range of technology options that can make your firm nimbler during a time of market volatility. If you can’t make the show, check out this blog on how different types of eClosings can save you $160-$440 per loan.

Nationwide Appraisal Network (NAN) is thrilled to announce that it has made the 2023 Inc. 5000 list of fastest-growing private companies in America for the fifth time. This accomplishment is a testament to its sustained commitment to excellence and growth. The Inc. 5000 recognition underscores NAN’s dedication to providing top-notch appraisal services and fostering innovation in the industry. Through its unwavering commitment to client satisfaction and technological advancement, the company is proud to have achieved this milestone for three consecutive years, demonstrating resilience and adaptability in a dynamic market landscape. “We are honored to once again be recognized on the Inc. 5000 list as we continue to grow at an extraordinary pace, even after 19 years in business. This achievement reflects the hard work of our team, and their commitment to deliver concierge-level service for our valued clients on every order” said Steve Sussman, Chief Business Development Officer.

It’s been an impressive year for Flagstar Bank, a business that now has nearly $119 billion in assets, thanks to the merger with New York Community Bank and acquisition of certain lines of business from Signature Bank. Flagstar continues to expand their products and services for their customers, further highlighting that their commitment to the mortgage space is just as strong as it has been for the last 35 years. The newest addition to the Flagstar mortgage family is the Specialized Mortgage Banking Solutions (SMBS) group. This team of seasoned financial professionals focuses on deposit gathering and customized treasury management services and products for all types of businesses connected to mortgage loans. Structured Cash Management Services from SMBS is designed to simplify and streamline operational costs and improve your cash position. At Western Secondary this week? Be sure to connect with a Flagstar team member to learn how their many offerings can help your business thrive in today’s market.

Free report: These growing borrower segments present opportunities for new business in 2023’s market. Wondering how to fill your pipeline when loan volume is scarce? New data from Maxwell gives lenders an exclusive look into home buyer groups taking on higher rates head-on. Did you know, for instance, that the share of 18 to 24-year-old borrowers has increased by 18 percent year-over-year? Now is the time to cater to these rising home buyers. For exclusive data and actionable takeaways, click here to download Maxwell’s Q2 Mortgage Lending Report.

Take Advantage of LoanStream’s Summer Specials to help you Grow that Pipeline! NON-QM Special for Purchase, Refinance & Cash-Out Programs. 50 BPS Price Improvement on all 740+ FICO Non-QM Programs (Special may not be combined with Select Non-QM Programs). Only Non-QM Special available for Correspondent. Prime Special: 35 BPS Price Improvement on Government Purchase Loans, 35 BPS Price Improvement on Government and Conventional High-Balance Purchase, Refinance and Cash-Out Loans (Specials are not available for use with DPA loans and cannot be combined together or with Select Loan Promotions. Restrictions apply. For loans locked 8/1/2023 through 8/31/2023. Visit LoanStream for more information or speak with your Account Executive.

“In this market, hustle is everything. You can’t afford to waste a single dealor a single minute. That’s why ReadyPrice has launched its innovating new Shop, Lock, & Deliver loan exchange platform, designed to help independent mortgage brokers like you save time and money. Now you can shop competitive loan offerings from multiple lenders, get rate lock guarantees in real time, receive underwriting findings, and deliver the borrower’s complete loan file to lenders and all on a single platform, at no cost to brokers. It’s the industry’s most powerful universal delivery portal, and it’s already helping brokers around the country thrive and compete in even the toughest market environments. Multiple lenders. One platform. Zero b.s. Check us out today.”

STRATMOR on Employee Culture

Have you visited a Chick fil A restaurant lately? When the employes say, “It’s my pleasure,” and not just “you’re welcome,” you believe them. They seem genuinely happy to serve their customers, and their happiness makes their customers smile. Maybe the mortgage industry can learn something from this fast-food giant’s approach to employee engagement. In his August Customer Experience Tip, STRATMOR Group’s MortgageCX Director Mike Seminari addresses how lenders can build a vibrant, positive employee culture that begets a world-class customer experience. He suggests three steps lenders can take to foster an employee-prized culture that can’t help but make for a better customer experience. Check out the new Customer Experience Tip, “Happy Employees, Happy Customers: A Page From a Fast-Food Giant’s Playbook.”

Capital Markets

Stocks and bonds both fell last week as healthy economic data drove the narrative that the Federal Reserve will keep interest rates higher for longer, though prices stabilized on Friday. After settling Thursday at its highest level since November 2007, the benchmark 10-year U.S. Treasury yield fell back below 4.3 percent but still logged its fifth straight week of higher rates, once again proving that rate predictions should be taken with a grain of salt.

The steady rise in yields is making investors nervous because past surges have at times proved destabilizing for markets. With the 10-year yield still well below the level of short-term rates set by the Fed, some analysts see room for the benchmark rate to keep climbing. Bond yields continued to rise across the board, extending an upswing that began nearly three months ago at the beginning of the summer. The latest FOMC minutes, which stressed that additional interest rate hikes might be needed, nudged rates even higher. Investors are still sizing up how rising yields compare with stock valuations, but the immediate consequences might be more apparent in the housing market. LOs everywhere know that 30-year fixed-rate mortgages solidly topped 7 percent on the latest developments, marking the highest level seen in more than 20 years.

Fed Chair Powell speaks at the end of the week, and is expected to highlight some of the progress made in combating inflation but stay on script with his most recent commentary about the need to stay vigilant. Some think Powell leaves enough of a hawkish edge that the door remains open to more rate hikes. Certainly, he is likely to reiterate the Fed’s commitment to its 2 percent inflation target and to push back (implicitly or explicitly) against the degree of rate hikes that markets are pricing for next year.

As the Federal Reserve looks to restore its dual mandate of price stability and maximum employment, originators are looking at long-term mortgage rates in the U.S. reached a two-decade high. The 30-year fixed mortgage rate hit 7.09 percent, a level not seen since April 2002, crimping both sales and refinancing activity. Back then, the average U.S. home price was roughly $187,000 versus $416,000 today. Despite elevated mortgage rates, there is activity amongst potential home buyers, especially in the new home market where builders have been offering seller concessions, rate incentives, and price cuts to move inventory. New home building permits increased in July to a 930,000-unit annual pace.

And our market has taken note of troubling data out of China. This adds to the hawkish rhetoric from Federal Reserve officials and has investors rethinking the economic landscape which led to last week’s Treasury rout. That rout pushed 10-year yields close to their highest point since 2007. It has also spurred a debate over why the bond market has turned dangerous. Economic activity continues to expand and has led many analysts to shift their outlooks regarding possible contraction. However, monetary policy lags (e.g., the time it takes before central bank tightening fully works through the economy) are longer now. The reasons include fewer variable rates on U.S. debt relative to a few years ago, businesses’ reluctance to let go of workers after the pandemic shortages, and the Fed’s large balance sheet that currently contains over $8 trillion in assets.

If Fed officials think interest-rate hikes are going to impact the economy sooner than in actuality, that means the Fed is very likely to keep rates too high for too long, raising the risk of a larger-than-expected decline in growth, and eventually, inflation. Pricing in futures markets now implies that the first Fed Funds rate easing won’t come until the Spring of 2024. The minutes from the Fed’s July meeting echoed those sentiments as well as noted that upside risks to inflation remain which would necessitate further tightening. For now, the message may be as important as any action as interest rate markets resign themselves to adjust to a higher for longer mindset.

After last week closed with a rally in bond markets due to China debt and financing concerns, this week brings the Kansas City Fed’s Jackson Hole Economic Symposium over Thursday to Saturday, with Fed Chair Powell scheduled to speak on Friday. Economic data releases are mostly second tier including regional Fed surveys, housing data, durable goods orders, S&P Global PMIs, and Michigan sentiment. Supply consists of the usual T-bills, as well as $16 billion 20-year bonds, $24 billion reopened 2-year FRNs, and $8 billion reopened 30-year TIPS. With no economic releases of note scheduled today, we begin the week with Agency MBS prices worse .125-.250 and the 10-year yielding 4.29 after closing last week at 4.25 percent.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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Reaction to a recent decision by Fannie Mae to not go forward with a proposed title-waiver pilot is drawing both praise and pushback from stakeholders in the space.

The government-sponsored enterprise first floated a potential program this spring that would have waived title insurance requirements on some loans sold to it in the secondary market. 

Along with fellow GSE Freddie Mac, Fannie Mae has actively looked for solutions to address affordability and widen homeownership opportunities across the country. Among several developments emerging in the past several months are new underwriting guidelines as well as decisions by both Fannie Mae and Freddie Mac to allow the use of attorney-opinion letters in lieu of title insurance in limited cases. But the suggestion of waiving insurance requirements altogether drew criticism and challenges from the title industry.

Upon learning of Fannie Mae’s decision to not move the proposal forward, the American Land Title Association lauded the outcome. 

“This is a significant achievement to protect consumers, lenders and the housing finance system, and showcases the benefits of our products, industry and your business,” the trade group said in a message to its members last week.

“We will also continue to collaborate with Fannie Mae and Freddie Mac to deliver innovative and cost-effective title insurance products and solutions that best protect lenders and consumers,” ALTA stated. 

Providers of attorney-opinion alternatives also came forward this week to clarify that the end of the title-waiver pilot had no connection to the products they offer. 

“Certain title alternatives, such as the attorney opinion letter (AOL), have been deemed acceptable alternatives to title insurance by agencies and investors,” said Stacy Mestayer, chief compliance officer at Voxtur Analytics, in a statement sent to National Mortgage News. 

“Importantly, the recent reports related to halting title waiver initiatives has no impact on existing agency approvals of title alternatives, including Fannie Mae’s approval of AOLs,” she said. 

Harsher words came from Theodore Sprink, founder of iTitle Transfer and a former executive at insurers Fidelity National and First American Financial. A frequent critic of ALTA, Sprink alleged the trade group “fabricated the title waiver ‘pilot’ program,” in multiple LinkedIn posts.

“ALTA created a solution in search of a problem,” he wrote, adding the waiver program had “nothing to do with AOLs as an alternative to costly and unnecessary title insurance.”

Fannie Mae’s title-waiver proposal emerged as both GSEs were tasked with introducing equitable housing plans in late 2021 to help close homeownership and disparity gaps. Subsequently, both Fannie Mae and Freddie Mac took a closer look at alternatives to title insurance, such as attorney-opinion letters, which they began accepting last year. 

The use of AOLs, similarly, has drawn its share of critics from within the title industry. But the GSEs’ announcement it would begin to consider them also drew increased interest from major industry names, such as United Wholesale Mortgage, in providing such options at the tail end of 2022.  

Adding further fuel to recent title industry discussions was a recent blog post by mortgage banking consultant Rob Chrisman, who highlighted an article claiming less than 5% of money collected from title insurance premiums went to claims, “the rest of it going to fat profits.” ALTA and mortgage industry lawyers attempted to refute the findings in following days. 

In 2022, the title industry collected approximately $21 billion off of premiums based on mortgage volume totaling $2.25 trillion, ALTA reported. Insurers also paid $596.1 million in claims last year, representing an increase of 25% from 2021. 

In the second quarter, five publicly-traded title insurers reported profits, recovering from a lackluster start to the year. But only two saw their profits increase on an annual basis as mortgage originations slowed substantially.

Source: nationalmortgagenews.com

Apache is functioning normally

Whether you’re in the heart of Orlando, Florida, or the sprawling landscape of Oklahoma City, the dream of renovating or updating your property is nearly universal. And a project like building a detached garage combines practicality with creativity, providing space for your vehicles, storage, and hobbies. However, beginning this project requires careful planning and execution to ensure that your detached garage not only meets your needs but also adheres to local regulations and stands the test of time. 

In this Redfin article, we’ll take you through each step of the process and what to expect, from researching and planning to adding the finishing touches. Whether you’re aiming for a small workshop or a spacious multi-bay garage, this guide will serve as your roadmap to success.

1. Research and planning

Local building codes and zoning regulations: Research your local municipality’s building codes and zoning regulations. These guidelines will dictate aspects such as setback requirements (how far the garage must be from property lines), maximum height, size restrictions, and any necessary permits. For example, some areas might require a minimum distance of five feet from property lines.

Permits: Obtain the necessary permits before beginning construction. Common permits might include building permits, zoning permits, and possibly environmental permits if your area has specific regulations regarding construction on the land.

Design considerations: Think about the purpose of your garage. Will it simply be for parking vehicles, or will you need additional space for storage, a workshop, or other uses? Consider the number of bays, ceiling height, and any unique features you’d like to incorporate.

2. Design and budget

Layout and dimensions: Sketch out the layout of your garage, including the placement of doors, windows, and potential interior walls. Decide on the dimensions based on the space available and your needs. For example, a two-car garage typically measures around 20 feet by 20 feet, but you might need more space if you plan to include a workspace.

Roofing and siding choices: Choose roofing materials and siding options that complement your home’s design and suit your climate. Asphalt shingles, metal roofing, and cedar shakes are some common roofing choices, while options for siding include vinyl, wood, and fiber cement.

Cost estimates: Research the cost of construction materials, labor, permits, and other potential expenses. Obtain quotes from contractors for the work if you plan to hire professionals. Be prepared for unexpected costs that might arise during construction.

3. Site preparation

Choosing the location: Select a location on your property that is both practical and adheres to local regulations. Consider factors such as ease of access, distance from the main house, and terrain. For example, if your property has a slope, you might need to consider leveling the area before construction.

Clearing the area: Remove any vegetation, debris, or obstacles from the chosen construction site. This might involve clearing shrubs, trees, rocks, or other objects that could impede construction equipment or foundation work.

Excavation and grading: If your chosen site isn’t level, you’ll need to excavate and grade the area to create a flat and stable foundation. This might involve moving soil, adding fill dirt, and compacting the ground to ensure a solid base for construction.

Utilities and drainage: Check the location of underground utilities (water, gas, electrical lines) before digging. Ensure proper drainage by grading the area away from the garage site to prevent water accumulation around the structure.

4. Foundation and footings

Foundation Type: Choose the appropriate foundation type based on your garage’s design, local climate, and soil conditions. Common options include:

  • Slab-on-grade: A concrete slab poured directly on the ground surface. It’s cost-effective but lacks a crawl space or basement.
  • Crawl space: Elevating the garage slightly with a crawl space underneath for ventilation and access to utilities.
  • Full basement: Providing additional space and potential for utilities but is more complex and expensive.
  • Excavation and footings: Excavate the area according to the foundation type chosen. Pour concrete footings that will support the weight of the garage walls and distribute it evenly across the ground.
  • Concrete slab: If opting for a slab foundation, pour and finish the concrete to create a level surface. Ensure proper curing to prevent cracking.

5. Framing and structural work

Wall framing: Use the appropriate framing materials (wood or steel) to build the garage’s walls. Follow building codes and engineering specifications to ensure structural integrity. Place framing members at the correct intervals to provide stability and support.

Roof trusses or rafters: Depending on your design, install roof trusses or rafters to form the roof’s framework. These components should be accurately positioned and securely fastened.

Sheathing: Apply sheathing (plywood or OSB panels) to the exterior walls and roof to create a solid surface for siding and roofing materials. This also contributes to structural stability.

Bracing and reinforcements: Install diagonal bracing and reinforcements as needed to prevent sway or structural weaknesses. This is particularly important in areas prone to high winds or seismic activity.

6. Roofing and siding

Roofing material: Install the chosen roofing material, considering factors such as durability, aesthetics, and weather resistance. Common options include asphalt shingles, metal panels, clay tiles, or wooden shingles.

Weatherproofing: Ensure that the roofing material is properly installed, and all seams and edges are sealed to prevent leaks. Install appropriate underlayment, flashings, and ventilation to promote moisture control and prevent condensation buildup.

Siding installation: Apply the selected siding material to the exterior walls. Follow manufacturer instructions for installation and maintain proper clearances to avoid moisture-related issues. Different materials may require specific installation techniques, such as nailing patterns and overlapping.

Insulation: While not part of the traditional roofing and siding process, this is a good time to consider adding insulation to the walls and roof if it wasn’t addressed during framing. Proper insulation helps regulate temperature and improve energy efficiency.

By carefully executing these steps, you’ll create the foundational structure of your detached garage and establish the exterior shell. These steps are crucial for ensuring the stability, weather resistance, and overall functionality of your garage.

7. Electrical and plumbing

Electrical planning: Determine the garage’s electrical needs based on its intended use. Plan the placement of outlets, switches, and lighting fixtures. Decide if you’ll need dedicated circuits for power tools or other equipment.

Wiring installation: Install electrical wiring according to local electrical codes. This involves running wires through walls and ceilings, connecting them to outlets and switches, and ensuring proper grounding. Hiring a licensed electrician is recommended for safety and compliance.

Electrical fixtures: Install light fixtures, outlets, and switches as per your electrical plan. Consider energy-efficient lighting options for both interior and exterior spaces.

Plumbing (if applicable): If your garage requires plumbing for a sink, bathroom, or other utilities, this is the stage to install the necessary plumbing lines, fixtures, and drainage systems.

8. Doors and windows

Garage doors: Install the garage doors based on your design. Choose from single or double doors, sectional doors, or roll-up doors. Ensure proper installation and mechanisms for smooth operation.

Windows: Install windows to allow natural light into the garage. Choose window sizes and placements that enhance both aesthetics and functionality. Properly seal and weatherproof around windows to prevent leaks.

9. Interior finishing

Insulation (if not done earlier): If insulation wasn’t installed during framing, add it now. Proper insulation helps maintain a comfortable interior temperature and reduces noise transfer.

Drywall or paneling: Cover interior walls and ceilings with drywall or paneling, depending on your design preference. Proper installation and finishing techniques are crucial for a polished appearance.

Painting and finishing: Paint the interior surfaces to enhance the space’s aesthetics. Choose paint colors that complement the overall design and lighting of the garage.

Flooring: Choose and install the appropriate flooring material for your garage. Options include concrete, epoxy coatings, rubber mats, or even tiles. Consider durability and maintenance when making your choice.

10. Final inspections and touch-ups

Inspections: Schedule final inspections with local authorities to ensure that your garage complies with building codes and regulations. This may include structural, electrical, plumbing, and fire safety inspections.

Addressing inspection feedback: If inspectors identify any issues during the final inspection, address them promptly to ensure compliance. This might involve making corrections, adjustments, or improvements.

Landscaping and exterior: Complete any exterior work, such as landscaping, driveway installation, and exterior lighting. This enhances the overall look of your property and provides a welcoming environment.

Final touch-ups: Take care of any remaining cosmetic touch-ups, such as paint touch-ups, caulking, and garage cleaning. This ensures that your detached garage is ready for use and visually appealing.

By following these final steps, you’ll complete the construction of your detached garage and transform it from a construction site into a functional and aesthetically pleasing addition to your property.

Source: redfin.com

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Pricing, Internal Audit, CRM, Home Insurance, Lead Generation Tools; Comp Survey; MBA’s Cost Per Loan Stats

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Pricing, Internal Audit, CRM, Home Insurance, Lead Generation Tools; Comp Survey; MBA’s Cost Per Loan Stats

By:
Rob Chrisman

Fri, Aug 18 2023, 10:49 AM

As numbers approaching a thousand head to Orange County, CA, for the California MBA’s Western Secondary, keeping an eye on the remnants of a hurricane, it is not an easy lending environment with mortgage rates at 20-year highs, firmly in the 7’s. Thomas Edison believed, “Vision without execution is hallucination.” Many owners of lenders and vendors had very good vision and execution some years ago when creating their companies. But thinking that 2020 and 2021 would continue indefinitely would have been classified as a hallucination, and obviously things have become much more difficult with many wondering where things go from here. I don’t have a crystal ball, but a certain percentage of those owners who deferred being serious about exploring a sale, waiting, until after the cycle was obviously on the downside, they’ve perhaps undermined an opportunity for negotiating more favorable deal terms. It can be argued that the smarter entrepreneurs engaged in company sale negotiations while industry mindset is mostly driven by prosperity. (Today’s podcast can be found here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades.)

Lender and Broker Software and Services

“No time for social media marketing? Introducing… Social Media Marketing for Busy Loan Officers. Tired of stressing over what to post on Facebook or LinkedIn? Want to grow your audience on Instagram without spending hours each week crafting the perfect post? With Be Loangendary, we do all of it for you. Here’s how: 1) Our team of mortgage copywriters and designers craft your social posts every week. 2) Once they’re perfect, we schedule and post to your social accounts. 3) You sit back, relax, and watch the “likes” start rolling in. With Be Loangendary, you get engaging mortgage content without breaking a sweat. That’s social media done for you. Want to get started? Enjoy a 14-day free trial on us!”

“Salesforce is committed to partnering with mortgage lenders to drive their technology transformation with modern solutions that are already in practice and serving many of the top mortgage lenders in the country. As part of its efforts to drive the industry forward through the adoption of a modern tech stack, Salesforce identified UMortgage to establish the precedent of utilizing its mortgage and lending software to its fullest potential to facilitate better client experiences. Using customized task management systems and automations within Salesforce, UMortgage has been able to achieve 300% year-over-year growth and near-perfect 95 net promoter score (NPS), an indicator of a best-in-class client experience. Check out the following link to learn more about the innovative technological systems that are helping UMortgage Loan Originators maximize their lead generation & conversion. With an investment in intuitive solutions, UMortgage is driving the mortgage industry towards a better future that enables brokers to thrive.”

We’re hearing that lenders are ramping up their tech stacks and (most importantly) focusing on the quality of the data powering that technology. If you’re considering taking your company’s tech stack to the next level, look for a property data provider that delivers the most comprehensive data through the best channels to meet your unique business needs. That’s why we’re highlighting First American Data & Analytics and its repository of more than 8+ billion recorded documents. First American is more than just a data provider. It offers end-to-end solutions for the mortgage lifecycle. From detecting fraud and risk to providing valuation solutions, First American powers lenders to make informed, data-driven decisions. If you’re ready to have access to the most accurate, complete, and current data, reach out to the team and get a data sample now.

“Lenders, the home insurance market is facing unprecedented volatility. We want to hear if it’s affecting your business and the closing process. Take our five-minute survey to share your thoughts. As a thank you, you can select to be entered to win a $100 Amazon gift card, compliments of Matic Insurance. Click here to begin the survey. Matic is a home insurance marketplace built for the mortgage industry. Learn how mortgage enterprises can implement a new revenue stream that helps borrowers navigate the insurance buying process. Book a demo today.

Wholesale lending is undergoing a transformation that will leave those who cling to outdated processes behind. Using bargain CRMs as electronic phone books or even worse, spreadsheets to track brokers, is a clear sign that your sales process is holding you back. Modern CRM technology like OptifiNow provides a comprehensive, out-of-the-box solution that helps wholesale lenders create a sales and marketing process that drives broker engagement and significantly increases loan volume. Download our guide to finding the right CRM for wholesale lenders to learn how to transform your wholesale business and stay ahead of the competition!

What’s an internal audit anyway and do you need one? An internal audit acts as a third line of defense for your mortgage operation. It provides comprehensive assurance based on the highest level of independence and objectivity to evaluate the effectiveness of management’s internal controls. This function should advise your mortgage operation on plans to achieve the company’s strategic, operational, financial and compliance goals. An effective internal audit should go far beyond just checking a compliance box; it should be an integral part of protecting your company. If you want to ensure you’re adhering to regulatory requirements and demonstrating good faith business practices, a Richey May internal audit is a good fit. If you’re looking to be Fannie Mae approved in the future or want to maintain your approved status, it’s required. If you’re unsure whether you need an internal audit, ask one of Richey May’s experts today or learn more here.

Pricing Products and Programs

“Lender Price introduces Composable Pricing UI, an innovative user interface that empowers lenders to effortlessly customize their pricing engine using No Code or Low Code options. With a variety of skinning options and increased flexibility, Lender Price users can now easily create a personalized pricing experience with an abundance of options to choose from. Surpassing the limitations of single UI platforms seen with competitors, the era of rigid, one-size-fits-all PPE’s is over. With a flexible pricing engine like Lender Price, users now have the ability to tailor their interface based on their individual needs and preferences. Composable UI represents a paradigm shift in digital lending technology UX, liberating both individuals and organizations from the constraints of single UI platforms,” said Dawar Alimi, Lender Price CEO. “With an abundance of options and unparalleled flexibility, users can personalize and take charge of their pricing experience.” Email us or request a demo today.”

In this market, hustle is everything. You can’t afford to waste a single deal or a single minute. That’s why ReadyPrice has launched its innovative new Shop, Lock & Deliver loan exchange platform, designed to help independent mortgage brokers like you save time and money. Now you can shop competitive loan offerings from multiple lenders, get rate lock guarantees in real time, receive underwriting findings, and deliver the borrower’s complete loan file to lenders and all on a single platform, at no cost to brokers. It’s the industry’s most powerful universal delivery portal, and it’s already helping brokers around the country thrive and compete in even the toughest market environments. Multiple lenders. One platform. Zero b.s. Check ReadyPrice out today.

STRATMOR Comp Information and Survey

Yesterday I published, “What do underwriters and processors and LOs make? STRATMOR has the information, spelled out in a recent Perspectives piece.” Several wrote to say that there is a wide disparity in pay based on experience, at every level, and that averages may not be telling the whole story. Point well taken, although the drop in volume/units has not been matched by the drop in personnel. Stay tuned…

Information is critical in making payroll decisions. STRATMOR Group’s Compensation Connection® Study provides valuable insight into compensation components, incentive plan structures, role specifics and more, aggregated by company type, annual volume, and region. Prior three-year trending is also included on most metrics. Get the compensation data you need: sign up for the Fall 2023 Compensation Connection® Study today!

Lenders can Relive the 2nd Quarter of 2023

Spoiler alert: Losses continue but at a slower pace. The MBA has crunched the numbers of those surveyed and calculated that independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $534 on each loan they originated in the second quarter of 2023, an improvement from the reported loss of $1,972 per loan in the first quarter of 2023.

Marina Walsh, CMB, MBA’s Vice President of Industry Analysis and overall good person, summed up the Quarterly Mortgage Bankers Performance Report. “After 11 consecutive quarters of increases, origination costs declined by over $2,000 per loan. Volume picked up during the spring homebuying season and additional personnel were shed. However, the substantial cost savings per loan was not enough to put the average net production income in the black… Production losses were less severe than the previous two quarters and net servicing financial income was strong. Additionally, most mortgage companies in our survey managed to squeeze out an overall profit during one of the toughest times for the mortgage industry.”

Once again, servicing income helped big time. Think about that as companies sell it off. When the MBA looked at both production and servicing, 58 percent of companies were profitable last quarter, an improvement from 32 percent in the first quarter of 2023 and 25 percent in the fourth quarter of 2022. Still, the average pre-tax production loss was 18 basis points (bps) in the second quarter of 2023, compared to an average net production loss of 68 bps in the first quarter of 2023, and down from a loss of 5 basis points one year ago. The average quarterly pre-tax production profit, from the third quarter of 2008 to the most recent quarter, is 47 basis points.

“Total production revenue (fee income, net secondary marketing income and warehouse spread) decreased to 328 bps in the second quarter, down from 358 bps in the first quarter. On a per-loan basis, production revenues decreased to $10,510 per loan in the second quarter, down from $11,199 per loan in the first quarter.

“The purchase share of total originations, by dollar volume, increased to a study high of 89 percent in the second quarter. For the mortgage industry as a whole, MBA estimates the purchase share was at 80 percent in the second quarter, with the average loan balance for first mortgages increasing to $343,386 in the second quarter, up from $329,159 in the first quarter.

It ain’t cheap to do a loan. “Total loan production expenses (commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations) decreased to $11,044 per loan in the second quarter, down from a study-high $13,171 per loan in the first quarter of 2023. From the third quarter of 2008 to last quarter, loan production expenses have averaged $7,236 per loan.

“Servicing net financial income for the second quarter (without annualizing) was $94 per loan, up from $54 per loan in the first quarter. Servicing operating income, which excludes MSR amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses, and gains/losses on the bulk sale of MSRs, was $105 per loan in the second quarter, up from $102 per loan in the first quarter.”

For all the stats, there are five Mortgage Bankers Performance Report publications per year: four quarterly reports and one annual report. Contact Falen Taylor (202-557-2771). The reports can also be purchased on the MBA’s website.

Capital Markets

At this point it can be argued that the Fed doesn’t want to see higher long-term rates. But bond yields continue to rise across the board, impacting mortgage rates of course, continuing an upswing that began nearly three months ago at the beginning of the summer. In fact, the yield on the benchmark 10-year Treasury (US10Y) closed at 4.25% on Wednesday, the highest level since 2008. The upward march this week follows the release of the latest Federal Open Market Committee minutes, which stressed that additional interest rate hikes might be needed.

“With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy… Participants generally noted a high degree of uncertainty regarding the cumulative effects on the economy of past monetary policy tightening... and emphasized the importance of communicating as clearly as possible about the Committee’s data-dependent approach to policy and its firm commitment to bring inflation down to its 2% objective.”

Stronger-than-expected economic data continues to pour in, helping stock market prices, especially if you think the Fed to end its hiking cycle soon. Others say 10-year yields above 4 percent still present a good buying opportunity, in contrast to the potential rewards from pricey stocks and multiples that might not be as appealing. But it seems that bond investors have shifted to a “higher-for-longer” narrative coming out of the Fed, causing nominal rates and real rates to keep moving higher. Not good for housing affordability.

Strong economic data continued yesterday with initial jobless claims -11k and Philly Fed beating expectations by 22 points. That helped to lift benchmark 10-year U.S. Treasury yields above 4.30 percent as MBS once again sold off across the coupon stack. The recent surge in U.S. mortgage rates to anywhere between 10-month and two-decade highs, depending on who you ask, has pushed housing affordability to the lowest level in nearly four decades. Yesterday also brought another troubling sign for the Chinese economy as Beijing authorities are said to have told state-owned banks to step up intervention in the currency market in a push to prevent a surge in yuan volatility.

With no major data releases or Fedspeak today, the market will be left to its own devices. We begin the day with Agency MBS prices better from Thursday afternoon by .250, the 10-year yielding 4.22 after closing yesterday at 4.31 percent, and the 2-year at 4.91: yield curve inversion is alive and well without a recession.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

Apache is functioning normally

One of the venture capital firms represented in the Geek Estate Mastermind, HousingTech Ventures, has partnered with the San Francisco Bay Area corporate law firm, Montgomery Pacific LLP and employment law firm, Daijogo & Pedersen, LLP to provide a brief presentation on critical issues that startups should be considering as the country and the economy face many unknowns due to COVID-19. Topics covered will include:

  1. How should your Board exercise its fiduciary duties, including its duty of oversight, in the current environment?
  2. In the face of this unprecedented disruption, are contractual obligations modified in any way?
  3. How should you care for employees and stay in compliance with employment laws?
  4. What additional risks does remote working pose?

Webinar will take place on April 9th, at 2 PM EST // 11 AM PST.

Montgomery Pacific’s founding partners Kathy Woeber Gardner and Karen Masterson Dienst and Daijogo & Pedersen’s founding partner Maki Daijogo will apply their decades of experience of working with startups to frame issues and questions that the COVID-19 situation presents to early-stage companies.

Please reply here to register and you will be sent a link.

Request an Invite

Source: geekestateblog.com

Apache is functioning normally

The chasm runs the full length of the condominium complex, from the shuttered tennis court to the shuttered pool. Measuring more than 500 feet long and 20 feet wide, the gash divides the complex in two, its weed-choked perimeter cordoned off with chain-link fencing. A grimy trickle of water oozes along the chasm’s concrete floor a dozen feet below, like some ugly open wound that just won’t heal.

Welcome to Coyote Village, a 70-unit condo complex in suburban La Habra whose residents have been living out a homeowner’s nightmare. Over the last four years, portions of the tree-lined greenbelt that once shaded the complex have violently collapsed into a concrete maw below. That’s because, unbeknownst to most residents, the greenbelt wasn’t built on solid earth. Running beneath it is a cavernous flood channel that decades ago was sealed with a concrete lid then topped with mounds of soil and landscaped with pine trees.

The first collapse of the concealed lid came in January 2019, when a section of the greenbelt near the tennis court caved in, exposing the flood channel below. The second implosion came in March, when heavy winter rains saturated the greenbelt and the concrete lid couldn’t handle the weight of the soggy soil and towering pines. This time, the collapse took out a huge swath of the greenbelt near the community pool.

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Most residents were shocked to learn that their complex was built on top of a private canal that plugs into Orange County’s larger Imperial Channel, which routes storm water out of La Habra, Brea and Fullerton. It stood as the only covered private channel in the county’s 380-mile public storm drain system.

And that “private” designation is where the residents’ encountered another chasm, in the form of a years-long legal battle.

After the 2019 collapse, the county did some cleanup work at the site and provided security fencing around the exposed portion of the channel. Following the March 15 collapse, La Habra brought in construction crews to excavate the channel, which at that point was clogged with dirt, tree limbs and concrete that the city worried would create a damming effect in the broader drainage system during future storms.

But the city’s work stopped there.

Over the last four years, portions of the tree-lined greenbelt that once shaded the Coyote Village condo complex have collapsed into a concrete maw below. That’s because, unbeknownst to most residents, the greenbelt wasn’t built on solid earth.

(Robert Gauthier / Los Angeles Times)

La Habra officials have argued since the first collapse that the channel belongs to the complex. And worse, that the channel’s concrete lid had been improperly covered with a breadth of landscaping that violated what had been approved in the city permitting process. According to the city, the homeowners association that represents Coyote Village is responsible for repairing and rebuilding the channel.

The Coyote Village Homeowners Assn. has challenged that stance in a running legal battle, started in 2020, contending the channel is integral to a larger public system and was damaged by public use without just compensation. It has sued the city, the county and the county flood control district, among others, for relief.

“While the conduit runs through the HOA property, the water is public,” said John Peterson, an attorney representing the homeowners group. “The public needs to share in the responsibilities.”

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State Sen. Josh Newman, a Democrat whose district encompasses La Habra, tried to broker a solution last summer and was able to secure $8.5 million in state funding to repair the flood channel. “The residents were wholly unprepared and financially unequipped to deal with this,” Newman said. “I was happy to secure those funds.”

But a year later, that money remains unspent.

La Habra initially questioned the propriety of expenditure, asking the state Atty. General’s Office if the allocation could be considered an improper gift of public funds. The state’s Legislative Counsel determined it was not. In the months since, the city and homeowners association have haggled over who would run the major construction project, with the HOA concerned it does not have the expertise and city officials reluctant to take charge of repairs on a canal they consider private property.

Residents have watched in a mix of frustration and resignation as the saga has unfolded.

Jan Duncan, an HOA board member, said she put her Coyote Village loft on the market in June and received six offers the first week. Then came questions about the flood channel and why it hasn’t been fixed in four years. In short order, every offer was rescinded.

“I cannot give buyers anything in writing to guarantee that this is going to be resolved,” she said. “Without that, they’re uncomfortable. I can’t blame them.”

Justin Marinello, who has a 4-year-old son, is among the parents who worry about the safety risk the exposed channel poses for children.

(Robert Gauthier / Los Angeles Times)

Justin Marinello is among the parents in the complex who worry about the safety risk the exposed channel poses for children. His condo looks out on the gritty channel and his 4-year-old son had a front-row view of the city’s excavation work after the March collapse.

“My son enjoyed watching the construction because he likes giant Tonka toys playing with dirt,” Marinello said. “But it would be nice to be able to open the door up and just have some grass for him to run on.”

On the other side of the chasm, Lizeth Ruiz knew about the exposed channel when she moved to her condo in 2019 but figured it would be quickly repaired. Instead, she finds herself fending off mosquitoes that breed in the canal’s dingy water. “Now, I keep everything closed and have to be more mindful about wearing pants instead of shorts,” Ruiz said, holding her newborn baby tight.

As the summer heat soars, the concrete channel is lined with dry weeds that rise taller than the 6-foot safety fencing. The channel itself is defaced with graffiti. Residents continue to pay $390 in monthly homeowners fees even though the channel’s collapse has sidelined amenities like the tennis court and pool.

It marks a wrenching chapter in the life of a property with an eccentric history.

In mid-century La Habra, a ranch owner flooded a portion of the area to create a lake and islet, deemed “Monkey Island,” where he let feral monkeys roam free. He also eyed the land for a track that would host ostrich races. At the time, ostrich farms were a popular tourist attraction in Orange County.

Later, the lake was drained and La Habra city leaders opted to go a development direction they considered more forward-thinking, erecting a shopping plaza and post office on the site.

In 1978, developer Loren Hendrix proposed an adjacent 70-unit condominium complex, when such communities were still novel in Orange County as an affordable alternative to single-family homes. Without yards to maintain, he envisioned residents being able to stroll along a landscaped creek — a dressed-up version of the flood control channel that crossed the property — as a key selling point.

But Hendrix faced stiff questions from city staff about how he planned to protect children from hazards posed by the channel-turned-creek. Archival records show the county flood control district rejected Hendrix’s creek design. The district recommended design changes Hendrix considered too costly. Instead, the complex would host an enclosed flood channel masked with landscaping.

La Habra City Council members approved the development in April 1979 on the condition that Hendrix’s design be approved by the city’s chief building inspector and the county flood control district. A year later, the building inspector wrote that the complex was “substantially in compliance” with applicable codes. It’s not clear in county records whether the flood control district ever approved the design.

In any case, the condo development and greenbelt were built. And for 40 years, storm runoff flowed through the underground channel unbeknownst to most residents until the 2019 collapse.

La Habra city officials say the cave-ins are more about what was built on top of the channel than what lies below.

Deputy City Atty. Gary Kranker contends that at the time of the 2019 collapse the soil piled above the channel ran 9 feet deep — 6 feet more than the greenbelt design approved by the city — and that the pine trees that by then stood 80 feet tall contributed to the channel lid’s failure.

“It’s the obligation of the individual constructing the channel, or in this case, the channel roof, to make sure it was done properly,” he said. “Based upon the calculations that we have, it would have been done properly had it only had 3 feet of soil.”

And he faults the homeowners association for failing to take aggressive action to alleviate the risks between the first cave-in and the implosion in March. “To be quite candid, [they] did not do anything to try and alleviate this condition,” he said. “They could have hired someone to remove the soil, one wheelbarrow at a time.”

The second collapse of the storm drain channel at Coyote Village came in March, when heavy winter rains saturated the greenbelt that concealed its concrete lid.

(Irfan Khan / Los Angeles Times)

Last year, the homeowners association sued Hendrix, the complex developer, for fraud. The complaint alleged that he concealed the channel and any maintenance responsibilities from the association so he could sell condos “more quickly and at higher prices.” Peterson, the association’s attorney, said a settlement agreement compels Hendrix to find the insurance policies that covered the development and assign the rights over to the association.

Hendrix did not respond to requests for comment through his attorney.

Last week, representatives for the city and homeowners association said they were closing in on an agreement for moving forward with repairs that would free up the $8.5 million in state funding. Once a resolution is reached, the canal’s reconstruction is expected to take at least a year.

Roma Damo, who has lived at Coyote Village for 35 years, doesn’t see much light at the end of the tunnel — or flood channel, in her case.

“I’m seriously thinking about renting this condo out and getting myself an apartment,” said Damo, 88, eyeing the degraded channel outside her condo windows. “I don’t want to spend the rest of my life here looking at this.”

Source: latimes.com

Apache is functioning normally

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Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

Passive income refers to earnings derived from an enterprise in which a person is not actively involved on a daily basis.

Unlike active income, where earnings are directly linked to the amount of work performed, passive income flows whether you are working, sleeping, or vacationing.

As Robert Kiyosaki (2017) explains in his best-selling book “Rich Dad Poor Dad,” passive income can be a way to achieve greater financial independence.

Unlike the typical income that requires constant work, passive income typically flows with less hands-on involvement. However, this doesn’t mean no work is involved; it’s often the initial setup that demands considerable time, effort, or capital.

If you’re looking for more passive income ideas, click below:

Purpose and Importance

The purpose of passive income is broad, spanning from financial cushioning to the possibility of early retirement. By generating continuous revenue without daily effort, it offers a means to enhance one’s lifestyle, build financial security, or pursue other interests and hobbies.

The significance of passive income goes beyond mere monetary gain, as it also provides a pathway to greater control over one’s time, a diversified income stream, and potential long-term growth.

EXPERT TIP:

Consider starting small and gradually building your passive income portfolio.

By investing in a diverse array of income-generating opportunities tailored to your risk tolerance and financial goals, you can create a resilient and sustainable revenue stream.

As emphasized by many financial experts, including those mentioned in “The Intelligent Investor” by Benjamin Graham (2003), careful planning and consistent monitoring of your passive income sources can lead to greater financial freedom and control over your time.

This step-by-step approach allows you to learn and adapt, maximizing the potential benefits of passive income without overextending your resources.

How Passive Income Works

Table of Contents

Sources of Passive Income

Passive income can stem from various sources, such as rental properties, investments in stocks or bonds, a wide of array of apps, and royalties from intellectual properties like books or patents. Each source has its unique characteristics, risks, rewards, and requirements.

While some sources, like savings accounts interest, are readily accessible, others may need significant financial investment or specialized knowledge, like creating a successful blog that earns ad revenue.

Source of Passive Income Characteristics Risks Requirements
Rental Properties Steady Income, Property Growth Market Fluctuations Initial Investment, Maintenance
Dividend Stocks Potential Growth, Regular Dividends Market Volatility Investment Capital
Peer-to-Peer Lending Interest Earnings Default Risk Platform Registration
Royalties Income From Intellectual Property Contractual Risks Creative Skills, Legal Agreements

Automation and Minimal Active Involvement

Passive income often involves an automated process where money is earned with minimal active involvement. This includes setting up businesses that run themselves or investing in dividend-paying stocks that provide regular income.

Though these may require substantial initial setup, the ongoing maintenance is often minimal. But it’s worth noting that these ventures must be monitored and sometimes adjusted to ensure continued success.

Tax Considerations

Tax implications for passive income differ from those of active income. Passive income may qualify for different tax rates or deductions, depending on jurisdiction and the type of income. For instance, rental income may be subject to specific property tax rules.

Understanding these rules or consulting a tax professional is vital to maximizing after-tax returns and compliance with tax laws. You can read more about here about how passive income is taxed.

Active vs Passive Income

Understanding the difference between active and passive income is essential for anyone looking to diversify their income streams and work towards financial stability or even independence.

What is Active Income?

Active income refers to earnings that require consistent and direct effort. This includes wages from a job, salaries, hourly payments, commissions, and tips. Essentially, active income requires trading time for money.

This type of income is what most people rely on to pay bills, purchase necessities, and maintain their current lifestyle. The major limitation of active income is its direct correlation to time; you can only work a certain number of hours in a day, thus capping your earning potential.

Passive Income Contrasted to Active Income

Contrastingly, passive income is earned with little to no daily effort to maintain, after the initial setup or investment. It includes revenue from rental properties, dividends, royalties, or even a business that doesn’t require daily involvement.

Passive income provides a means to break free from the time-for-money trade and opens doors to greater financial growth and freedom.

Comparison and Significance

The main distinction between active and passive income lies in the involvement and time required to generate revenue. While active income necessitates ongoing work, passive income aims to create sustainable income streams that flow regardless of daily activities.

Active income offers stability but often lacks scalability. Passive income, though requiring initial effort and possibly capital, offers the potential for long-term growth and diversification.

By combining both active and passive income streams, individuals can create a more resilient and flexible financial portfolio, allowing for the pursuit of broader life goals and interests, such as early retirement, travel, or investment in hobbies and personal development. The insights from Kiyosaki (2017) in “Rich Dad Poor Dad” emphasize this balanced approach to building wealth and achieving financial freedom.

The inclusion of both active and passive income in one’s financial strategy offers a multifaceted approach to wealth building. It’s an essential concept for anyone aiming to enhance financial security, diversify income, or explore new financial opportunities.

Feature Active Income Passive Income
Effort Required Daily, consistent effort needed Little to no daily effort after initial setup
Time Dependency Directly tied to hours worked Not tied to hours; can earn 24/7
Income Type Wages, salaries, commissions, tips Rental properties, dividends, royalties
Scalability Limited by time and energy Potential for growth without proportional time input
Financial Growth Potential Often stable but limited in growth Potential for long-term growth and diversification
Risks & Challenges Job loss, income stability Market risk, initial investment required

Benefits/Advantages/Pros of Passive Income

Financial Independence

Financial independence means having enough income to cover living expenses without needing to actively work. Passive income is often vital in this quest, allowing people to live comfortably without a regular paycheck. It offers an escape from the traditional work routine, opening doors to new opportunities, hobbies, or even early retirement.

“If you don’t find a way to make money while you sleep, you will work until you die.”

Warren Buffett

Flexibility and Freedom

The freedom granted by passive income extends to various life aspects. Whether it’s spending more time with family, traveling, or engaging in hobbies, the financial flexibility offered by passive income can significantly enhance life quality. It also provides an opportunity for strategic investments, exploring new ventures without the financial strain that might come without this income cushion.

Diversification of Income Streams

Having multiple income streams reduces the risk of financial hardship if one source diminishes or fails. By diversifying across various passive income avenues, financial stability is often enhanced.

Whether it’s investment in different market sectors, rental properties across various locations, or a mix of bonds and stocks, diversification is a fundamental risk management strategy in financial planning.

Potential Long-Term Growth

Some passive income sources offer potential for substantial long-term growth. Investments like stocks may appreciate over time, generating not only regular income but also an increase in underlying asset value. This growth potential can substantially contribute to financial goals, whether saving for children’s education, building retirement funds, or other long-term planning.

Benefit Description or Example
Financial Independence Reduced Dependence on Active Employment; Flexibility in Lifestyle Choices
Income Diversification Spreading Income Sources; Reducing Financial Risk
Potential Long-Term Growth Opportunity for Compounding Returns Over Time

Drawbacks/Disadvantages/Challenges/Limitations/Cons of Passive Income

Potential Risk and Volatility

The potential risks and volatility in passive income sources must not be overlooked. Market fluctuations can significantly impact investment returns, while real estate investments can be influenced by economic conditions and property market dynamics. Careful risk assessment and strategic planning are vital to mitigate these risks and ensure consistent income streams.

High Initial Investments or Skills Required

Some passive income streams necessitate significant initial investments or specific skills. Purchasing real estate, developing software, or creating a successful YouTube channel, for example, may require substantial money, time, and expertise.

These barriers must be considered and planned for, as they can deter or delay the successful implementation of a passive income strategy.

Regulatory and Compliance Challenges

Different passive income streams come with varying regulatory and legal considerations. Landlords must adhere to housing regulations, while stock investments may involve understanding complex financial laws. Failing to comply with these regulations can lead to legal troubles or financial losses. Professional guidance may often be required to navigate these complexities.

Maintenance Requirements

While often touted as ‘set and forget,’ passive income streams usually require ongoing attention. Whether it’s maintaining a rental property, adjusting an investment portfolio, or updating a mobile app, these tasks, though generally minor, are essential.

This continuous oversight ensures that passive income sources remain lucrative and aligned with financial goals.

Drawback Description or Example
Potential Risk and Volatility Subject to Market or Economic Changes
High Initial Investments May Require Significant Capital or Effort to Start
Regulatory Challenges Must Comply With Various Laws and Regulations
Maintenance Requirements Ongoing Management or Oversight May Be Necessary

Building a Passive Income Portfolio

Choosing the Right Passive Income Streams

Identifying the right mix of passive income sources is a tailored process that considers individual risk tolerance, financial goals, and personal preferences. Whether it’s the stability of government bonds or the potential high returns of startup investments, these choices should reflect the individual’s unique circumstances. Proper research, planning, and professional advice can ensure a balanced portfolio that serves both current needs and future aspirations.

In Vanguard’s Four principles for successful investing they stress:

The best way to work toward an investment goal is to start by defining it clearly, take a level-headed look at the means of getting there, and then create a detailed, specific plan. Being realistic is essential to this process: Investors need to recognize their constraints and understand the level of risk they are able to accept.

Vanguard

Strategies and Planning

Creating a successful passive income portfolio isn’t just about choosing the right investments; it requires a well-thought-out strategy and continuous planning. Factors to consider include risk diversification, liquidity needs, time horizons, and long-term goals. Regularly reassessing and adjusting this strategy ensures that it stays aligned with evolving needs and market conditions, safeguarding the financial future.

Monitoring and Adjustments

Regular monitoring and necessary adjustments are key to maintaining a robust passive income portfolio. The landscape can change due to market conditions, new laws, or personal circumstances. Regular assessments and prompt adjustments ensure that the strategy remains relevant, meeting its objectives while maximizing potential returns.

The exploration of passive income is not a simple undertaking but rather a multifaceted approach to building a sustainable financial future. The understanding of various sources, the recognition of benefits, and the consideration of potential drawbacks are essential components in the effective management of passive income streams.

From aspiring to retire early to simply wanting a more flexible lifestyle, passive income provides opportunities and challenges worthy of thoughtful exploration and careful planning.

The Bottom Line – Passive Income Explained

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Passive income might seem like a complex idea, but it’s really about making your money work for you instead of the other way around. From investments to side businesses, there are ways to create a steady stream of cash that doesn’t tie you down to a 9-to-5 grind. Mixing active income from your regular job with passive income can lead to a more relaxed and secure financial life.

It’s not a get-rich-quick scheme, but with some thought, effort, and patience, passive income can be a valuable part of your financial picture. Whether you’re aiming for early retirement or just some extra spending money, understanding passive income is a good first step.

FAQs – What is Passive Income?

What is Passive Income, and How Does It Differ from Active Income?

Passive income is earnings derived from investments, properties, or business ventures where a person is not actively involved daily. Unlike active income, where constant work is required, passive income generally flows with minimal ongoing effort, often after an initial setup phase.

Can Anyone Create a Source of Passive Income, or Does It Require Special Skills?

While some sources of passive income might require substantial initial investments or specialized skills, there are various opportunities available for different skill levels and financial capabilities. Proper research, planning, and sometimes professional guidance can help in successfully establishing a passive income source.

What Are Some Common Sources of Passive Income?

Common sources of passive income include rental properties, dividend-paying stocks, bonds, royalties from intellectual properties, and interest from savings accounts. The choice of sources often depends on individual risk tolerance, financial goals, and personal preferences.

Is Passive Income Taxed Differently Than Other Types of Income?

Yes, passive income may be subject to different tax rules depending on jurisdiction and the specific type of income. It’s advisable to consult with a tax professional to understand the applicable tax laws and ensure compliance.

About the Author

Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance book Soldier of Finance. He was a financial planner for 16+ years having founded, Alliance Wealth Management, a SEC Registered Investment Advisory firm, before selling it to focus on his passion – educating the masses on the importance of financial freedom through this blog, his podcast, and YouTube channel.

Jeff holds a Bachelors in Science in Finance and minor in Accounting from Southern Illinois University – Carbondale. In addition to his CFP® designation, he also earned the marks of AAMS® – Accredited Asset Management Specialist – and CRPC® – Chartered Retirement Planning Counselor.

While a practicing financial advisor, Jeff was named to Investopedia’s distinguished list of Top 100 advisors (as high as #6) multiple times and CNBC’s Digital Advisory Council.

Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.

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Source: goodfinancialcents.com

Apache is functioning normally

This article originally appeared on The Financially Independent Millennial and was republished with permission.

In the US, REIT stands for Real Estate Investment Trusts. The real estate industry is booming, which is great news for real estate investment trusts as they grow further. Anyone seeking a career opportunity with a REIT company can enjoy hearing the news that there are plenty of jobs available. How many jobs are available in real estate investment trusts? What kind of roles are available in the REIT industry?

This guide will explain how many jobs are available, how these real estate investment trusts work, and much more.

What Are Real Estate Investment Trusts?

In the United States, there are more than 225 REITs with a combined market capitalization of over $1 Trillion. A real estate investment trust (REIT) is a public investment vehicle and listed on the Stock Exchange. Furthermore, investors can even buy REIT ETFs to spread their investments among many real estate asset classes.

A REIT owns and runs income-generating real estate and related assets. The REIT could own buildings including offices, hotels, resorts, and more. However, real estate bought by the REIT isn’t for future resale. Instead, the property owned by the REIT is for development. Then, the property gets used as part of the investment portfolio to generate income.

Investors can buy and sell these assets easily and at a low cost. REITs also have much better liquidity than traditional real estate investments. Listings for REITs are on the New York Stock Exchange, American Stock Exchange, and the NASDAQ.

Investing in REITs allows groups of investors to make real estate scale investments that otherwise wouldn’t be possible. Smaller real estate investors can get access to larger real estate investments by investing in a REIT.

As the REIT sector continues to grow and diversify, analysts predict that many more jobs will become available in the industry.

How Do REITs Work?

In 1960, Congress created real estate investment trusts. The aim was to give everyone the chance to benefit from investing in income-producing real estate. Investing in a REIT is the same as investing in any other industry. Investors buy stock and shareholders with real estate investment trusts pay the shareholders a share of the income.

When REITs were first created by Congress, there were a set of rules established that REITs must follow. All REITs must be modeled after mutual funds, treated by the Internal Revenue Code as a corporation, and widely held by shareholders.

In addition, REITs must primarily own or finance real estate, and own real estate with a long-term investment horizon.

The Internal Revenue Code stipulates that at least 75% of the corporation’s income is either from rent from real estate, real estate interest, or the sale of real estate assets. The corporation must have at least 75% of its assets in real estate and 95% of the corporation’s income must be passive.

Are REITs a Good Investment?

Anyone wanting to diversify their investment portfolio without increasing the risk too much should consider investing in a REIT. There is still some risk as no investment is perfect. However, there are some good benefits of growing wealth by investing in a real estate investment trust.

The way a REIT works means it doesn’t pay corporate tax. Dividend stocks often face double taxation at the corporate and individual levels. The good news is that REITs are not taxed at the corporate level which means they enjoy a huge tax advantage.

REITs must pay 90% of taxable income to shareholders. Many REITs often have a dividend yield of over 5%, but average stocks have a yield of less than 2%. This makes investing in a REIT ideal for anyone looking for income or more to reinvest.

Real estate values tend to keep growing over time. Thanks to this, many REITs can capitalize by selling valuable properties and using the capital elsewhere. Many REITs provide returns far exceeding the market thanks to these strategies.

REITs Are Ideal for Smaller Investors

Small real estate investors can invest in commercial real estate that would otherwise be inaccessible. Most people can’t buy an office tower or shopping center themselves. Thanks to the creation of REITs by Congress, now anyone can invest in these types of buildings and enjoy receiving a return from them.

A sound financial plan means having a diverse investment portfolio. REITs work just like investing in the stock market, but instead of equities, it’s real estate. Investment advisors recommend owning real estate in an investment portfolio as real estate usually keeps its value even in an economic crisis. Investing in a REIT often means having a steady income.

If someone owns real estate, then it can take a while to sell. However, a REIT investment is easy to buy or sell at the click of a button. Having this level of liquidity makes REIT an attractive proposition.

Real Estate Industry Job Statistics

According to the United States Department of Labor, the need for real estate brokers and sales agents continues to grow. Average wages in the industry are $51, 220 per year with hundreds of thousands of people employed in the industry across the US.

In the REIT sector, average wages far exceed that of real estate brokers. The average analyst earns $106,412 per year which is more than double the amount of real estate brokers and sales agents.

There are 274,000 employees employed on a full-time basis by REIT organizations. An estimated 2.6 million full-time jobs get created indirectly by the real estate investment trust industry. 

The good news for anyone seeking a career working for a REIT company is that growth is happening. This means plenty of employment opportunities and the ability to command a significantly higher wage than other parts of the real estate industry.

Types of Jobs Involved with REIT’s

There’s a wide range of jobs available in the REIT industry. To understand this better, here are the job descriptions of the main roles that are available.

Development Roles

Development is responsible for building new projects. Working in this role is ideal for anyone that is looking for project management work. As well as developing new projects this role also involves working with others to finance the development.

Jobs in development are highly sought after as they pay well, are challenging, and highly respected.

Acquisition Roles

An acquisition job is a role that involves sourcing new investment opportunities. And, these roles make sure that deals get done. Further, these roles are in REITs and pay well. The work is heavily finance-related and suits anyone with a degree or background in finance, marketing, business, or capital markets.

Property Management Roles

Property managers are responsible for overseeing the operation of a property–leasing, maintenance, collections, and anything else as required.

There are no minimum requirements to becoming a property manager. Ideal candidates include those that can handle a variety of situations and have good project management skills.

Starting as a property manager in a REIT company is often a great opportunity. This is because when other roles become available within the organization, there’s a good chance for career progression.

Asset Management Roles

Asset Management looks after the operational and financial health of the real estate investment portfolio. An asset manager needs to manage the client assets in line with the investment goals and agreed preferences. Asset managers develop, organize and maintain client portfolios.

A good asset manager will need to be capable of working with a variety of other teams. Acquisitions, accounting, development, and finance all interact with asset managers to work together on achieving results. At the same time, the asset manager must ensure compliance with the SEC, REIT regulations, and Sarbanes-Oxley.

It’s not unusual to start out working in acquisitions or property management, then move up to become an asset manager. Alternatively, anyone with the skills should be able to land an asset management role straight away.

Investor Relationship Roles

Investor Relations are responsible for coordinating and handling all communication with REIT shareholders. The role pays well and is ideal for anyone coming from a finance or accounting background.

The investor relations team will organize the annual meeting and meeting documents which include the annual report and proxy statement. And, all this must get done in accordance with SEC regulations.

Anyone with a background in accounting or finance would make a good candidate to apply for this role.

How Many Real Estate Investment Trust Jobs Are Being Created?

Data from LinkedIn shows that there are currently over 1000 jobs available in the REIT industry. That’s just one site and a great indicator there is lots of opportunity in the field.

The REIT industry is a sector that is growing fast. As well as needing investors, many other support roles need filling regularly.

Conclusion

The real estate investment trust industry is already sizable and continuing to grow. Working for a REIT company means following strict protocols for reporting and regulations. Many of the real estate investment trust jobs available require the applicant to have a background in accounting or finance.

However, other roles are available that don’t have these restrictions. Once working in a REIT organization, it’s then possible to move up to other roles should one become available.

Source: credit.com

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Manufactured, HELOC, Automation, Home Insurance Products; Wholesaler Earnings and News; Inflation and Rates

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Manufactured, HELOC, Automation, Home Insurance Products; Wholesaler Earnings and News; Inflation and Rates

By:
Rob Chrisman

Thu, Aug 10 2023, 10:02 AM

A general discussion topic of those here at the MMLA conference in Michigan is the ups and downs we’re all facing. While mortgage applications drift down, and industry headcounts go down, and towns on Maui like Lahaina burn down, here’s something that isn’t going down: credit card debt. Talk to any underwriter or loan officer and they will tell you that loans have become more difficult, in part because of borrower debt loads, and sure enough credit card balances hit $1.03 trillion in the second quarter. And it ain’t going down. The number is up 4.6 percent from $986 billion in the preceding three-month period. For some good economist’s perspectives and interest rates in general, and one capital markets guy’s, tune in to “Unparalleled Insights into Trends and Bold Predictions” with Selma Hepp (CoreLogic’s Chief Economist), Michael Fratantoni (MBA’s chief economist), and Rob Chrisman” on Wednesday August 16th at 1PM ET/10AM PT, sponsored by TrustEngine. (Today’s podcast can be found here and is sponsored by SimpleNexus, an nCino Company, developer of mortgage technology uniting the people, systems, and stages of the mortgage process into one seamless, end-to-end solution. Hear an interview SimpleNexus’ Jay Arneja on closing technology initiatives, standardization, and digital transformation impacting the industry at the moment.)

Lender and Broker Software, Products, and Services

Mortgage leaders: The home insurance market is facing unprecedented volatility with carriers declining new business and increasing premiums to an all-time high. This can delay closings and even lead to DTI exceeding acceptable limits once accurate insurance costs are factored in. Matic, a home insurance marketplace built for the mortgage industry, helps borrowers save time by shopping multiple A-rated carriers at once and providing transparent pricing and coverage options. With flexible integration options for your company, Matic adds visibility and control, allowing lenders to foresee potential issues that could result in delayed closings. To learn how mortgage enterprises can gain efficiencies and add a new source of revenue with Matic, book a demo today. For more strategies on how to navigate the next phase of the housing market, get Matic’s latest report.

While free origination tools are tempting, they can come with hidden costs, including slowing down the mortgage process, increasing turn times, and halting productivity. Blend’s robust, comprehensive features, intuitive personalization, and automated workflows have proven results: 37% increase in transaction speed, 7 days cut from the loan lifecycle and 34% increase in pull-through. Click here to find out how Blend’s Mortgage Suite helps deliver value during every step of the process.

Problem! Your employees are wasting valuable time on tasks that aren’t generating your business revenue! Solution! Automate the time-consuming parts of the mortgage origination process with Velma Connector! Connector is an easy-to-use, rules-based automation tool that enhances your LOS! Need to put your ECOA process on autopilot? Connector takes the human element out of it. Want to know which loans need attention before it’s too late? Connector will send you the report. Want to automate borrower communications and info collection? Connector hits the send button for you. Stop wasting time and money on manual processes! Get Velma Connector today!

“Turn fixed costs into variable costs on a dime. When the market zigs, lenders need the flexibility to zag. Richey May Advisory brings the mortgage industry expertise and agility you need to convert fixed costs into variable costs. Our difference maker is your ability to outsource services to highly trained experts in a model that fits your needs. Whether that means loan-level accounting, advisory, business intelligence, compliance support, cyber services, internal audits, or underwriting automation, we have the tools, knowledge, and experience to deliver value and improve your financial performance unlike any competitor, anywhere. You’ll feel it almost immediately in your day-to-day operations. Even better, you’ll notice the difference in your bottom line. Reach out or visit our website to learn more about how we can help your operation.”

TPO Programs for Brokers and Correspondents

“Going to California MBA’s 2023 Western Secondary conference? Let’s get together and innovate! Deepen your product lineup with Planet’s Renovation and Manufactured Housing loan programs. Help your clients address today’s housing challenges by adding buydowns and USDA loans to your product mix. We make it easy and profitable to offer niche products. Reach out to Regional Sales Managers Tiffany Ta / 714-376-3214 or Jennifer Salsbury Caldwell / 909-225-8444 to explore new products to build your sales.”

Looking to gain a competitive advantage in today’s tough market? Lenders across the industry are catching wind of HELOC benefits and leveraging this tool to increase their book of business. Let us help you get a leg-up on the growing competition. Symmetry’s Piggyback, Post-close, and Stand-alone HELOCs are unlike any other HELOCs on the market, offering service, speed, simplicity, and pricing that stands up against the competition. Here are just five of the ways Symmetry’s HELOC solutions can help you win and keep more borrower business: cash for borrowers, jumbo avoidance, more second home business, increased condo business and client retention. Symmetry is ready to help you build a strong, resilient growth strategy: Contact your area manager or email us to get started!

Wholesaler Earnings and TPO News

Someone in residential lending is making some coin besides Freddie Mac and Fannie Mae ($2.9 and $5.0 billion respectively in the 2nd quarter).

Last week we learned that Rocket Companies (which, as the name implies, contains several companies) generated total revenue, net of $1.236 billion and net income of $139 million. “Generated total adjusted revenue of $1.002 billion and adjusted net loss of $33 million, or an adjusted loss of $0.02 cents per diluted share.”

Focusing on mortgage banking, “Rocket Mortgage generated $22 billion in mortgage origination closed loan volume with a gain on sale margin of 2.67 percent. Rocket gained purchase market share in the quarter, both year-over-year and quarter-over-quarter. Servicing book unpaid principal balance, which includes subserviced loans, was $504 billion on June 30, 2023. As of June 30, 2023, our servicing portfolio includes 2.4 million loans serviced. The portfolio generates approximately $1.4 billion of recurring servicing fee income on an annualized basis.”

Yesterday United Wholesale reported second quarter earnings with origination volume climbing to $31.8 billion, was up 43% compared to the first quarter and up 6.4% compared to a year ago. “Gain on sale margin compressed to 88 basis points in Q2 compared to 92 in Q1 and 99 a year ago. Purchase volume was 88% of total volume. UWM is guiding for third quarter volume to come in between $26 and $33 billion, and gain on sale to range between 75 and 100 basis points. Adjusted earnings per share came in at $0.11, which covers the $0.10 dividend. At current levels, the stock has a dividend yield of 6%.”

Speaking of UWM, “spec pools” are indeed a thing as certain investors pay up for certain loan attributes that the investor desires. In this case, UWM announced “sharper pricing on loans under $200,000, in addition to major enhancements to its Control Your Price program on non-agency Jumbo loans… UWM has removed loan-size pricing adjustments on loans under $100K and will be paying up premiums for market-based pay-ups on 30-year fixed conventional loans $200K and below.”

“UWM also announced it has increased the number of Control Your Price basis points brokers can apply to Jumbo loans, up to 40 basis points. UWM will also double or triple the Control Your Price basis points brokers apply on all non-agency Jumbo loans, up to 120 basis points.”

The FHFA, which is the conservator of Freddie and Fannie? FHFA Working Paper 23-04: How Do Students Value an Elite Education? Evidence on Residential Location and Applications to NYC Specialized Schools.

Pennymac is aligning with the adoption of Fannie Mae/Freddie Mac Form 1103, Supplemental Consumer Information Form (SCIF) as announced in FHA ML 2023-13. Use of the form is effective with FHA loan applications dated on or after 8/28/2023. View Pennymac Announcement 23-51 – FHA Mortgagee Letter 2023-13 SCIF for details.

CBC Mortgage Agency (CBCMA), a Native American wholly owned and federally chartered housing finance agency, has been approved by the U.S. Department of Agriculture to provide 30-year mortgage loans for borrowers outside of urban and suburban areas. Because the USDA loan program offers 100% financing, CBCMA enables correspondent lenders to help low- to moderate-income families in rural areas achieve homeownership. USDA loans provide low- and moderate-income borrowers with “the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas,” according to the agency. Up to 90% of the original principal amount of USDA-based 30-year notes are guaranteed by the agency.

AmeriHome Mortgage Announcement 20230707-CL summarizes previously published changes made during July, additional changes made with this announcement, and recent Agency and regulatory news.

Recently, the GSEs announced updated policies addressing critical repairs, deferred maintenance, and special assessments in projects with five or more attached units effective for loan applications dated on or after September 18, 2023. View AmeriHome Correspondent Product Announcement 20230801-CL for additional information.

PRMG Product Update 23-36 includes clarifications regarding FHA Standard and High Balance cash out transactions on Manufactured Homes, borrowers living rent free requirements on Investor Solution, self-employment verifications requirements of Ruby Jumbo and Express Jumbo. Additional updates and clarifications for Ruby Express and Onyx Jumbo.

Capital Markets

A slide in big tech equities yesterday due to President Biden’s Executive Order announcement prohibiting investment in certain Chinese technologies, as well as higher energy prices, helped mortgage-backed security “sentiment” and further flattened the yield curve, which at this point is to say it increased in inversion: “bear flattening.” Fortunately, MBS prices were not very reactive to the initial selloff in Treasuries which tightened spreads further. Investors squared positions ahead of today’s Consumer Price Index inflation data that will help shape the outlook for the Fed’s next steps.

What was the result of all this noise? The U.S. 10-year note and the 30-year bond prices, along with them MBS, pushed to fresh highs in the afternoon after the completion of the day’s solid $38 billion 10-year note offering while 5-year notes and shorter tenor prices slipped to fresh lows as the market prepared for July CPI. Some movement was driven by European equities rebounding after Italy walked back Tuesday’s windfall tax announcement, saying the tax would be capped at 0.1 percent of assets.

Today brings the CPI report for July, as expected. Headline CPI increased .2 month-over-month and () year-over-year when it was expected to increase 0.2 percent month-over-month and 3.3 percent year-over-year compared with 0.2 percent and 3.0 percent in June. The core reading, ex-food and energy, was .2, as expected, and 4.7 percent year over year versus 4.8 percent previously. Weekly jobless claims have also been released: 248k, higher than expected, 1.684 million continuing claims. Later today brings a Treasury auction of $23 billion 30-year bonds, and remarks from Atlanta Fed President Bostic and Philadelphia Fed President Harker. We begin the day with Agency MBS prices better by .125-.250 and the 10-year yielding 3.96 after closing yesterday at 4.01 percent after the inflation data.

Employment and Transitions

“Attention homebuilders and other potential joint venture partners! In today’s volatile market, a reliable lending partner is non-negotiable. Enter PrimeLending, backed by the strength of Hilltop Holdings and PlainsCapital Bank. We’re not just surviving; we’re thriving. With over 37 years in the mortgage industry, we bring more than stability and experience. We bring game-changing insight to boost your revenue. Join us at PrimeLending Ventures Management, LLC. Our proven track record, streamlined operations, and cutting-edge technology speak for themselves. Imagine this: together, we’re not just about making profits, but about evolving your brand. What are you waiting for? Reach out to Mike Matthews today to talk about a partnership built on shared success.”

Mortgage Capital Trading, Inc. (MCT®), the de facto leader in innovative mortgage capital markets technology, today announced the appointment of Steve Pawlowski as Managing Director, Head of Technology Solutions. Mr. Pawlowski will be responsible for expanding upon MCT’s proven record of driving efficiency and liquidity in the secondary market. “MCT was the fastest and most comprehensive technology partner I worked with on API development while at Fannie Mae,” said Steve Pawlowski, Managing Director, Head of Technology Solutions at MCT. “I couldn’t be more excited to apply my institutional expertise to this agile and committed technology development team.” Mr. Pawlowski will provide leadership on all MCT technology development. He brings extensive industry experience to MCT, including 30+ years with Fannie Mae’s Capital Markets and Single-Family Digital Products and Services organizations. Read the full press release or join MCT’s newsletter to stay up to date on recent news and educational content.

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Source: mortgagenewsdaily.com