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Despite the economic headwinds, the title industry remains strong, according to Fitch Ratings’ title industry September 2023 Peer Review.

According to Fitch, the Big Four title companies, Stewart, First American, Fidelity and Old Republic, accounted for approximately 82% of all the title premiums written during the first quarter of the year. Fidelity recorded the largest market share at 29%, followed by First American at 26%, Old Republic at 16% and Stewart at 11%.

However, Fitch noted on Tuesday that premiums were down 37% year-over-year for the first half of 2023. Fitch attributed this decrease to macroeconomic headwinds, including rising mortgage rates and housing affordability challenges brought about by low inventory, which have greatly diminished origination volumes. The firm said it expects these headwinds to persist for the next 12 to 18 months, with refinance volumes remaining depressed. But, Fitch noted that it anticipates purchase order volumes will rebound slightly in 2024 thanks to the persistent high levels of housing demand.

In addition, Fitch said it “expects profitability to remain somewhat depressed as rates should remain elevated,” but it noted that the strength of home prices and a potential uptick in commercial order flow could result in better than anticipated results.

With premium volume down, title companies have cut expenses, resulting in the aggregate title operating margin for the Big Four rising 3% quarter-over-quarter in the second quarter of 2023. Fitch said it expects margins to continue to improve through the end of the year.

Overall, the industry’s aggregate 2022 risk-adjusted capital ratio (RAC) dropped to 168%, due to declines in statutory surplus and Fitch’s estimated statutory reserve redundancy.  The 168% RAC score meets Fitch’s guidelines for the “A” rating category and the organization said it remains in support of the outstanding ratings. Fitch also noted that it does not anticipate further material declines this year.

Of the three national title underwriters Fitch rates, Stewart has the lowest company profile rating at an “A-,” while both Fidelity and First American hold “A” ratings.

Source: housingwire.com

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Related: Expert says fall in monthly mortgage arrears indicates Kiwis adapting to the inflationary environment. Credits: Video – AM; Image – Getty Images

ASB has become the only big retail bank in Aotearoa charging more than 7 percent for its two-year fixed mortgages – and other banks could follow, says a leading economist. 

Banks have continued to hike their home loan rates, despite the Reserve Bank/Te Pūtea Matua having stopped its increases to the official cash rate (OCR) since May. 

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Brad Olsen, Infometrics chief executive and principal economist, told Newshub ASB’s decision reflects the fact retail banks are facing higher international borrowing costs. 

“And those higher costs are being passed on to consumers,” he said.

Other banks may follow ASB’s lead, Olsen said – but that depends on whether they want to protect their profit margins at the expense of attracting more customers. 

“They might try to absorb some of the increased wholesale rates increases to keep their mortgage rates competitive.” 

But there’s “quite a gap” between the one-year fixed rates among the bigger banks, he added.

Brad Olsen.

Brad Olsen.

Photo credit: AM

What are the big banks doing?

Kiwibank currently has the lowest one-year fixed rate among the big banks, while ASB has the highest. 

ASB increased a range of its mortgage rates, including its two-year fixed rate which went up to 7.05 percent – the highest in 14 years. ASB also hiked its one-year, four-year and five-year rates by between 0.16 and 0.20 percent.

However the bank doesn’t have “special” rates unlike others. 

The Australian-owned bank reported in August its profit for the year ended June was $1.5 billion – up 9 percent on the previous year. 

David Cunningham, chief executive of mortgage brokers Squirrel, said the Reserve Bank has already signalled twice Aotearoa has likely hit the peak of the interest rate cycle. 

He said longer-term mortgage rates, like the five-years being lower than the short-term rates suggests markets expect the OCR to start falling 2024. 

But banks have been slow to increase their term deposit rates for savers, which has helped increase their profit margins as a result. 

Banks’ retail profit margins are sitting at about 2.4 percent, a record high, after rising sharply since early last year.

ASB.

Photo credit: Getty Images

One-year fixed-term home loan rates

  • Kiwibank – 6.99 pct
  • BNZ – 7.19 pct 
  • Westpac – 7.25 pct
  • ANZ – 7.25 pct
  • ASB – 7.45 pct

Two-year fixed-term home loan rates

  • BNZ – 6.85 pct
  • Kiwibank – 6.89 pct
  • Westpac – 6.89 pct
  • ANZ – 6.99 pct
  • ASB – 7.05 pct

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Reserve Bank’s moves and the market

The Reserve Bank / Te Pūtea Matua started hiking the OCR in October 2021 to try and tame inflation. 

Retail banks then started to hike their interest rates too. 

In August, the Reserve Bank/Te Pūtea Matua raised its peak OCR forecast – predicting a 20 to 40 percent chance of a further increase. 

“It is awake to the idea that it might have to raise rates again if inflation doesn’t cool as expected,” Olsen said. 

Infometrics’ main forecast is for the OCR to remain on hold until the second half of 2024, he added. 

And even though the OCR hasn’t changed in months, Olsen said 10-year New Zealand bond rates have gone up 0.28 percent, which is “in line with rising bond rates across the world”. 

At the same time, concerns are growing worldwide about persistent inflation and, as a result, many countries’ central banks have raised interest rates. 

Stronger-than-expected activity, especially in the US, “has increased the chance that the US Federal Reserve will need to keep increasing interest rates, and for longer”, Olsen told Newshub. 

Adrian Orr.

Reserve Bank Governor Adrian Orr.

Photo credit: Getty Images

Inflation and other factors

Factors including domestic food prices, affected by weather events, and higher demand than supply across the economy have driven up domestic inflation, Olsen said. 

OPEC+ nations have been cutting production of crude oil to drive higher prices and profits, and they’ve agreed to keep production lower into next year. 

In August, Saudi Arabia pledged to cut its output by one million barrels a day, while Russia later announced it would cut output by 300,000 barrels a day. 

“Lower fuel prices over the first half of 2023 helped tame overseas-based (tradeable) inflation, but the reintroduction of the full fuel tax, plus higher global fuel prices, will provide a boost to inflation in the September 2023 quarter,” Olsen told Newshub. 

The price of Brent crude, which influences global fuel prices, has risen to US$88.20 a barrel – the highest in nearly a year. 

It comes after the New Zealand Government’s 25-cent discount on fuel excise ended on June 30. 

And the economic and property downturn in China is starting to bite here in Aotearoa too. 

“China’s more sluggish economic growth is a challenge for the New Zealand economy and that’s already being seen in the primary sector, with lower revenue for farmers etc. now expected,” said Olsen. 

This week, consumer website Canstar released data showing comparisons of mortgage rates and there were a few changes. 

Back in August 2021, the average one-year fixed mortgage rate was 2.58 percent – now it’s 7.26 percent. 

Canstar’s Jose George said it’s interesting banks are changing their mortgages rates to get in a comfortable position if the OCR did rise. 

“Kiwis facing big hikes in mortgage payments may want to try and negotiate a better deal, or look around the market.” 

He said some banks offer cashbacks or other incentives to entice new customers, like lower mortgage rates. 

With high inflation, weaker economic growth, but at the same time as record-low unemplyoment and a turning housing market, it could make for an interesting year ahead for banks and their customers.

Source: newshub.co.nz

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QC/Fraud, LO AI, MSR Financing, GNMA Programs; Disaster Updates and Guides – The CFPB is There for Us

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QC/Fraud, LO AI, MSR Financing, GNMA Programs; Disaster Updates and Guides – The CFPB is There for Us

By:
Rob Chrisman

Tue, Sep 5 2023, 10:40 AM

It was a rough weekend. My cat Myrtle, resting comfortably at the top of the food chain, was visibly miffed at me not nominating her (again) for the vaulted “40 under 40” award. I reminded her that she is way over that in cat years, but my explanation fell on her one deaf ear and her one good ear despite me telling her how much line-caught salmon we could buy with the nomination fee. (Hey, don’t get me wrong. I know some of those folks who were nominated or selected, and the industry is better off because of them!) If lenders would like a little good news, they should know that, despite the low interest rates we saw a few years ago, people are still moving, and that’s a source of business. Around 8.6 percent of Americans moved last year, slightly more than the previous year, but still below pre-pandemic levels. Accordingly, WalletHub released its report on 2023’s Best States to Live in. Chalk it up to complete East Coast bias, but Massachusetts, New Jersey, New Hampshire, and New York took the top four spots. Really? (Today’s podcast can be found here and this week’s is sponsored by LoanCare, a Fidelity National Financial (NYSE: FNF) division and award-winning developer of the most sophisticated mortgage servicing portfolio management tool, LoanCare Analytics, built to support MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with Flagstar’s Jason Lee on how capital markets departments balance volume and margin.)

Lender and Broker Products, Programs, and Services

Mortgage servicers of all sizes trust their portfolios to MSP®, Black Knight’s loan servicing system. In fact, Fahe (Federation of Appalachian Housing Enterprises), a nonprofit that serves the people and communities of Appalachia, recently signed a contract for MSP. In Black Knight’s recent announcement, Fahe states that top-tier technology will help it realize its mission and better serve its communities. Wondering if the MSP loan servicing system is the right fit for your servicing business? Learn why it’s the one loan servicing system for every mortgage servicer.

NEW: Maxwell’s Mini-Guide to Surviving Today’s Big Housing Market Reset, ft. advice from Maxwell Co-founder & CEO John Paasonen, Rob Chrisman himself, theLender EVP Chris Ledwidge, and more. Is your lending business prepared for a market reset? To thrive, lenders need a fresh game plan driven by home buyer trends, creative lead generation, and insightful data. Maxwell put this guide together to help you refresh your thinking for the market ahead. In it, you’ll learn ways to rebuild your pipeline, the borrower segments that are still rising in the housing market, and how to better leverage data to make confident business decisions. Lenders: The next five years likely won’t be anything like the last five. Now is the time to rethink your business. Click here to download your free copy of Maxwell’s Mini-Guide to Surviving Today’s Big Housing Market Reset.

Profitable Mortgage Companies are focused on the long-term value of the customer relationship. Essex Mortgage’s partners enjoy greater customer retention, GNMA pass-thru pricing, no overlays, no LLPA’s, NO EPOs and NO EPDs, as well as Tax Deferred asset growth and a long-term cash flow stream without having to be a GNMA issuer themselves. Please contact us to discuss how the Essex GNMA Excess MSR program can help retain and enhance your customer relationship, broaden guidelines, and expand into new markets. Please contact Kimberly Schenck.

“Your business can benefit from powerful national banking resources that incorporate personalized, one-on-one relationships with industry experts. Western Alliance Bank delivers stable, trusted treasury management and fraud protection services from cash management to financing to account security. These tools can help you keep operations running smoothly, conveniently manage custodial and payroll accounts, and originate streamlined online wire transfers. Our Specialized Mortgage Services team tailors mortgage finance products to your needs, including warehouse lending, MSR financing, note financing and corporate credit card services that offer speed to approval and certainty of execution. Discover how competitive rates, efficient cash flow cycles and a streamlined banking relationship can help you achieve your goals. Contact Mark Short (469) 702-6212, Nick Richards (646) 708-1211, Nicole Avey (720) 633-4759, Elizabeth Mix (480) 329-2122, Jim Karr (626) 390-8534 or Chris Martin (480) 341-5483. Western Alliance Bank, Member FDIC.”

Ready to mend your relationship with your loan origination system? Join the TRUE team on September 20th and hear directly from TruStone and V.I.P Mortgage on how they’re applying AI technology to solve the challenges related to their LOS platforms. The roundtable discussion will unpack the frustrations related to most of today’s more popular LOS platforms, the crucial importance of well-organized borrower data, and how applying AI at specific points in the document journey can dramatically change the way LOS platforms perform. Sign up today.

Capacity is heading to The Mortgage Collaborative’s “Music in My Ears Conference” in Nashville, TN, next week! CEO David Karandish will speak on Monday, September 11th, at 3:15 p.m. about our latest offerings: generative AI-powered Guideline Search and tailored AI Assessments. Get game-changing, personalized insights on successfully implementing AI and automation in your business! Be sure to stop by our session in Nashville or book one-on-one time with our team here. The mortgage industry desperately needs a platform that securely integrates with lenders’ key systems, providing loan officers with instant, actionable answers about borrower opportunities, loan statuses, guidelines, and more. Capacity reduces the time LOs spend logging into a sea of endless systems to find information. If this sounds familiar, why not find out how Capacity can save your team time and frustration? See how it works.

“TENA Companies, Inc. is your strategic mortgage Quality Control partner in the fight against fraud. Develop your strategy against evolving mortgage market fraud with help from our proficient and highly trained auditors. Fraud involving income and employment schemes, as well as occupancy-related deception, continue to impact risk levels for all lenders. As highlighted in Fannie Mae’s July 2023 Quality Insider: Reviewing your fraud controls in QC, a robust Quality Control plan is an integral component for identifying patterns that can be indicative of fraud. These insights enable lenders to proactively implement processes for fraud prevention. Safeguard your operations, ensure risk mitigation, and strengthen your Quality Control by partnering with TENA. Contact us today!”

Disaster News and Updates

Last year, U.S. disaster damage totaled $171.5B. Destructive weather and climate events, or bad forestation or building practices, factor into the mix of hurricanes, wildfires, tornados, and drought. Few are forecasting them to decrease or affect a smaller geographic range. Is your lending operation ready? What are you telling your borrowers about insurance? Major insurers say they will cut out damage caused by hurricanes, wind, and hail, not to mention along coastlines and in wildfire prone areas, suggesting that companies will just insure for liability and fire. So if that is the case, will insurance rates fall? Of course not. But where does all of this leave the mortgage servicers?

When disasters strike, lenders often postpone loan closings, impacting origination revenue and impairing the ability to fund new loans. Loans that have already been funded may be difficult to sell, further limiting liquidity. Black Knight has a piece worth skimming, or more, about how you can reduce your financial exposure, decrease costs, and better serve borrowers by preparing before, during and after a disaster. Download a complimentary ebook: Climate-Change and Weather-Related Disasters: How to Manage Mortgage Risk.

Nearly every part of the United States faces natural disasters, whether they be earthquakes, hurricanes, tornadoes, forest fires, drought, or volcanoes. A declaration by FEMA triggers lender and servicer policies and procedures.

Mortgage Quality Management & Research (MQMR) sent out Fannie Mae Disaster Relief – FAQ. Check out more equally insightful FAQs. (To learn more about Mortgage Quality Management & Research, download MQMR’s white paper.)

Recently we’ve had Florida Hurricane Idalia FEMA-4734-DR, Illinois Severe Storms and Flooding DR-4728-IL, Mississippi DR-4727, and Vermont DR-4720: Update to End Date of Occurrence.

Florida, Georgia, and the Carolinas were hit by Hurricane Idalia, causing damage from storm surge, flooding, and high winds. Recovering from a catastrophic event like this one can feel overwhelming. It’s not always easy to know where to turn for help and what steps to take. The CFPB put together a guide to handling finances that you can share with the people you serve, to help them manage the money decisions they face. View CFPB’s disasters and emergencies guide providing resources to help recovery, including how to tackle housing issues, protect finances, deal with property damage, manage bills, and ask financial companies for help.

Freddie Mac issued a reminder to homeowners and mortgage servicers of its relief options for those affected by Hurricane Idalia. Freddie Mac’s forbearance program provides homeowners mortgage relief for up to 12 months without incurring late fees or penalties. Freddie Mac’s disaster relief options are available to homeowners who have been impacted by an eligible disaster. This includes anytime the homeowner’s property experiences an insurable loss, and also covers instances where their homes or places of employment are located in Presidentially Declared Major Disaster Areas where federal Individual-Assistance programs are made available to affected individuals and households. Foreclosure and other legal proceedings are also suspended while homeowners are on a forbearance plan. More information is available on My Home by Freddie Mac where owners can read about the steps they can take to help recover from a natural disaster, including frequently asked questions related to disaster and mortgage relief.

Fannie Mae reminded homeowners and renters impacted by natural disasters, including Hurricane Idalia, of available mortgage assistance and disaster relief options. Mortgage servicers are also reminded of options to assist homeowners under Fannie Mae’s guidelines.

Under Fannie Mae’s guidelines for single-family mortgages impacted by a natural disaster:

Homeowners and renters looking for disaster recovery resources may visit FannieMae.com to learn more about addressing immediate needs. Fannie Mae also offers help navigating the broader financial effects of a disaster to homeowners and renters through disaster recovery counseling at 855-HERE2HELP (855-437-3243).

PHH Correspondent posted information regarding Illinois DR-4728: New Disaster Declared, Mississippi DR-4727, and Vermont DR-4720. Go to the PHH company library to view the announcement and for all disaster declared counties, requirements, procedures, and conditions.

On 9/1/2023, with Amendment No. 1 to DR-4734, FEMA declared federal disaster aid with individual assistance has been made available to 6 additional Florida counties affected by Hurricane Idalia from 8/27/2023 and continuing. See the attached announcement for inspection requirements. AmeriHome Mortgage 20230901-CL Disaster Announcement.

Capital Markets

It’s looking more and more like a goldilocks scenario for the Federal Reserve. Last week was crammed with key economic data on the labor market and inflation which will probably be instrumental in shaping the decision of the Fed’s monetary policy committee at its meeting later this month. Many of the indicators pointed towards cooling in the economy, strengthening hopes that it would be enough for the central bank to keep rates steady. Friday’s nonfarm payrolls report showed an uptick in the unemployment rate. Market participants took heart from the data, which suggests that the highly resilient labor market is finally cracking and that the effects of the Fed’s aggressive tightening campaign are showing up.

More specifically, we learned at the close of last week that U.S. unemployment rose to 3.8 percent in August, a significant increase from July’s rate of 3.5 percent and the highest percentage since February 2022, as the economy continued to lose momentum built up after pandemic lockdowns. Non-Farm Payrolls barely beat consensus (expected +170k, actual +187k) and previous prints were revised lower (June was cut from +209k to +105k). More people entered the workforce, increasing the size of the labor force by 736k, which will help bring supply and demand more into balance.

Keep in mind that increased hiring and slowing wage growth are key ingredients of the Fed’s fight against pandemic-era inflation, and the overall report was good news for the bond market, as it shows the Fed’s tightening is gaining traction in the labor market. In theory, this will take some of the pressure off the Fed to keep hiking rates and give the central bank some confidence to let previously enacted hikes work their way through the economy. The next Fed meeting is only two weeks away.

Though we’ve already received the latest rate decision from Royal Bank of Australia this morning, where rates were held steady at 4.10 percent, today is light on economic data. After this commentary goes out, markets will receive August employment trends and July factory orders. Highlights from the remainder of the week include September’s Fed Beige Book tomorrow and July Wholesale Inventories on Friday. We begin the trading week with Agency MBS prices worse .125-.250 and the 10-year yielding 4.22 after closing last week at 4.17 percent on no real news.

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

Source: mortgagenewsdaily.com

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Running an Airbnb in L.A. has never been more profitable.

As the city tries to crack down on illegal listings, and advocacy groups complain about the company’s effect on L.A.’s housing crisis, hosts are charging higher rates than ever while raking in bigger and bigger payouts.

But don’t expect them to talk about it.

Data show that a vast number of homes are operating without an active registration, which is required by the city to operate a short-term rental. Several such hosts spoke to The Times anonymously for fear of being fined by the city or, worse, getting their listing shut down by Airbnb.

“This is my primary source of income,” said one host who operates three different listings. “I’m finally making a decent living off of this. One listing alone wouldn’t cut it.”

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Since 2020, revenues for hosts have steadily risen far beyond pre-pandemic levels. The average revenue climbed to $17,654 in 2022, up more than $4,000 year-over-year, and the numbers are at a similar pace for 2023, according to data from short-term rental analytics company AllTheRooms.

In total, L.A. hosts earned a combined $375 million last year, a spokesperson for Airbnb said.

A few factors contribute to the rise. For one, daily rates for Airbnb rentals have spiked over the last four years, swelling from $152 in 2019 to $244 in 2023. It’s a trend that’s happening across the short-term rental industry, as hotel and VRBO rates have steadily risen since the COVID-19 pandemic as well.

Basic supply and demand is another factor. Save for a drop during the first few months of the pandemic, Airbnb occupancy rates have largely stayed consistent, with the average rental occupied more than 40% of the time. But the amount of listings has dropped dramatically.

In August 2019, there were 16,973 Airbnb listings in L.A. Currently, there are 7,360.

Supply is down for now, but advocates worry that if revenues continue to rise, more homeowners will convert properties into Airbnbs.

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Much of the drop was due to the pandemic, but the supply hasn’t risen since 2020 partly due to the city’s enforcement of its Home-Sharing Ordinance, a law that went into effect in 2019 that limits Angelenos to hosting only short-term rentals in their primary residence — homes where they can prove they live at least six months per year.

L.A. and Airbnb have worked in tandem over the years to enforce the law, launching a system in 2020 that streamlines the process of identifying and taking down illegal short-term rental listings.

It has been effective; the number of listings for short-term rental units across all home-sharing sites has dropped more than 70% over the last four years, going from roughly 36,600 in November 2019 to just under 10,000 in June 2023, according to the city planning department.

But plenty remain.

The Times previously reported that thousands of listings violate the law, and last year, a report claimed that 22% of L.A. listings host guests for more than 180 days a year.

“I can’t afford to rent out my place for only six months a year. I’d lose half my revenue,” said one host who rents a two-bedroom apartment in Hollywood on Airbnb.

Two other Airbnb hosts hung up the phone mid-interview when asked about whether their listing was their primary residence, or whether their registration number was valid.

“It’s a don’t ask, don’t tell system. I can’t afford to have my business threatened over a registration number,” one said.

The average daily rate for an Airbnb in L.A. has risen to $244 in 2023.

(K.C. Alfred San Diego Union-Tribune)

As of August, there are 4,293 active home-sharing registrations, according to the city’s planning department. But on Airbnb alone, there are currently 7,360 listings up for rent.

“L.A. has a big enough rent problem on its own, and then you have a rogue industry that swoops into the city and starts taking rental properties off the market,” said Peter Dreier, a professor at Occidental College.

Dreier worked with the team that drafted Measure ULA, a new tax that funnels money toward affordable housing initiatives, and said that the short-term rental industry is contributing to both the housing crisis and homelessness crisis.

“When you take units off the market and rent them to tourists, one consequence is that it leads to more people fighting over fewer units. And that leads to higher rents,” he said.

The planning department is preparing a report with other departments analyzing enforcement of the Home-Sharing Ordinance. It will provide recommendations to the City Council on how to improve the program.

In the meantime, more listings bring more tax dollars. L.A. charges a 14% transient occupancy tax, often called a “bed tax,” paid by guests in a hotel or a short-term rental such as an Airbnb.

In the 2021-22 fiscal year, the city collected $33.88 million in transient occupancy taxes, according to the planning department.

It’s a hefty amount, but a report from McGill University urban planning professor David Wachsmuth suggests that the city could be raking in even more by fining illegal short-term rental listings.

The study claimed that 45% of all short-term rental listings are illegal in one way or another, and that the city could have levied between $56.8 million and $302.2 million in fines in 2022.

“I’ve never paid a fine, but my guests pay the tax. As long as the city’s getting money from somewhere, they’ll be fine,” said the Hollywood Airbnb host.

Randy Renick, an attorney with Hadsell Stormer Renick & Dai LLP, serves as executive director of Better Neighbors LA, a coalition that includes hotel employees, renters’ rights groups and housing advocates. He co-founded the group in 2019 as a public education campaign to emphasize the impact that short-term rentals have on communities.

He said rental hosts bend the rules in a few ways. One strategy is the bait-and-switch, where a host will advertise that a property is somewhere near the border of Los Angeles, such as West Hollywood, and thus not subject to L.A.’s stringent rules. But when renters show up, the property is actually in L.A.

Others give false registration numbers — some more cleverly than others.

“1234567 was popular for a while,” Renick said.

Some simply use expired registration numbers, and others used an active registration number but for several properties.

The organization’s website keeps a hotline for Angelenos to call and report illegal listings in their neighborhood, and Renick said they receive multiple calls per week.

From there, they urge the city to take action for matters both small and large. Sometimes it’s a call asking to enforce a fine on a certain property, and sometimes it’s a campaign on how short-term rentals can drive up long-term rent in an area by taking homes off the market and renting them to tourists.

“We try to show the impact of short-term renting and how it’s contributing to the housing and homelessness crisis,” Renick said. “Robust enforcement will result in returning thousands of units back to long-term rental.”

He pointed to Santa Monica and New York City as two cities that L.A. could model itself after. Santa Monica has a robust enforcement system, including multiple full-time staff focused on interviewing owners and issuing fines to illegal listings.

The coastal city allows only short-term rentals (less than 30 days) if the host lives on the property throughout the visitor’s stay. New York City adopted a similar rule last year, and the enforcement begins on Tuesday.

Though it has a long way to go, Renick said L.A. has raised the bar on proof required to show that a listing is the host’s primary residence.

Frank Tai, the owner of a luxury beachfront rental in Playa del Rey, has seen that process firsthand. He has only one listing and makes sure to renew his license every year, but the process has gotten more laborious over the years as both the city and Airbnb look to catch illegal listings.

“I’m in compliance, but it’s a lot of work. I fill out a 40-page application every year and send in property tax statements, utility bills and other documents,” he said. “Every year, something gets kicked back. They’re trying to stay on top of things.”

Tai said the process is well worth it. His rental is very profitable; it’s booked throughout the entire summer, and nightly rates double during vacation season. He didn’t even experience a slowdown during the pandemic, simply a switch from out-of-town customers to L.A. locals looking for a staycation.

“I don’t sneak around the system, but I’m guessing people do because it’s so profitable,” he said.

Source: latimes.com

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Two days after a New York Times exposé of alleged sexual harassment and a culture of fear at the National Association of Realtors, President Kenny Parcell announced his resignation.

Parcell was called out for alleged sexual harassment by 16 of the more than two dozen current and former NAR employees interviewed by the Times.

“I am deeply troubled by those looking to tarnish my character and mischaracterize my well-intended actions,” Parcell wrote in a letter to NAR’s Executive Committee and Board of Directors, which was first published by RISMedia. “This resignation signifies that I will put the organization’s needs first to move forward above my own personal needs to stay in this position.”

Parcell also wrote that the allegations were false, and claimed he was the victim of character assassination.

NAR president-elect, Tracy Kasper, who was set to take office in November, will begin her term immediately, according to the trade group.

In the Times investigation, three women described a pattern of inappropriate behavior by Parcell, who runs the Kenny Parcell Team at Equity Realty in Spanish Forks, Utah.

One woman reported that Parcell placed his hands down his pants in front of her, while another woman received unsolicited lewd photos and texts from him, including a picture of his crotch. Parcell denied that he had done anything inappropriate, saying the picture in question was of a promotional belt buckle and he was asking for input on the design.

A third woman, Janelle Brevard, who filed a lawsuit in the summer, disclosed a consensual relationship with Parcell that lasted months and ended with the NAR president allegedly retaliating against her. 

Brevard settled a lawsuit with NAR that included a $107,000 severance payment and a nondisclosure agreement, the Times reported. According to Bruce Fox, a lawyer who began representing Brevard in August, his client decided to settle the case after “feeling intimidated by such a powerful adversary.”

Another woman, Amy Swida, a director of business meetings and events at the organization, filed an internal complaint of sexual harassment or gender discrimination by Parcell. Swida alleged that he was cruel and condescending to her after she became pregnant. She worried about being cut off from future opportunities.

“I’m scared every day coming to work,” she told the Times. NAR said Swida’s complaint was documented and she was promoted several months later. Parcell also denied any wrongdoing.

“There is the sexual harassment, and then woven into it, this culture of fear,” Stephanie Quinn, the organization’s former director of business meetings and events told the Times. “His behavior is predatory.”  

An NAR spokesperson, in a statement, told HousingWire that it does not tolerate discrimination, harassment or retaliation. 

“We acknowledge the people who have shared their stories and we are committed to continuing our efforts to foster a welcoming and positive environment. We follow clear reporting procedures to investigate any issue of concern brought to our attention,” the spokesperson said. 

NAR has over 1.5 million dues-paying members and roughly two-thirds of its membership is female. Most of its leaders and executives are male.

“It is important to all of us at NAR that we take this moment to learn and focus on building a culture of camaraderie where we can do the good work we are all so passionate about. And, when an issue arises, that we all feel safe to say something,” Kasper wrote in a note to NAR members obtained by HousingWire. “This is a really hard time for our association. But I know this is an opportunity to really listen and grow together. As your president, I take the responsibility of rebuilding very seriously. Know I’m here for you, as is the entire leadership team, and we will get through this together.”

NAR is also facing two class-action lawsuits which accuse the trade group and several large brokerages of using MLS rules to charge excessive fees and unfairly prop up agent commissions. These topics are also being addressed in an investigation by the Department of Justice into NAR’s Clear Cooperation and Participation policies.

This article was updated to include comments from Tracy Kasper.

Source: housingwire.com

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  • Maryland realtor Bill Armstrong says now could be the time to get into an adjustable-rate mortgage.
  • He also recommended that new buyers find a realtor that isn’t actively looking for a property.
  • If looking for appreciation, he said single-family properties are best. 

With mortgage rates back above 7% and home prices still high, it’s not necessarily the greatest time to buy a rental property. Payments on new mortgages have skyrocketed, meaning it can be more difficult to cover expenses through rent payments alone. 

But in every kind of market, there are opportunities, says Bill Armstrong, a realtor in Frederick, Maryland.

In an August 25 episode of the National Association of Realtors’ “Real Estate Today” podcast, Armstrong, who says he invests in real estate himself, laid out two tips for new investors navigating the current market. 

The first piece of advice he gave is to consider getting an adjustable-rate mortgage as opposed to a fixed-rate mortgage.

Rates on 30-year fixed mortgages are at their highest levels in over two decades. Since they’re already elevated, rates are likely to come down in the years ahead to some degree. Market odds say so, at least, with investors betting that the Federal Reserve will cut rates by early next year, according to the CME’s FedWatch Tool.

Since there’s more risk associated with adjustable-rate mortgages as the Fed could hike, their rates are typically lower for the initial years than fixed ones. For example, according to Bankrate data, the average 30-year fixed-rate mortgage is 7.53% right now, while the average 5/1 adjustable-rate is 6.5%. In this context, a 5/1 adjustable-rate mortgage would mean the buyer pays a 6.5% rate for the first five years (though rates are determined by other factors as well, like income and credit score), and that rate changes every year after based on what the market rate is at the time.

“If interest rates are now in the 7% range, that’s unfortunate, but this may be the perfect time to look at an adjustable-rate product,” he said. “If you can get a preferred interest rate that’s a little bit better than market right now, on the front end, it makes a lot of sense to consider that.”

When rates do come down, one can refinance into a fixed-rate mortgage, he said.  

Second, Armstrong said to find a realtor who invests in real estate themselves, but isn’t actively looking for a new property. 

This means they know the market you’re looking in well, but aren’t considering deals for themselves first, he said. 

If the realtor says they’re looking for properties for themselves at the moment, “you have to understand that you’re going to get something that’s been looked over for their account first,” Armstrong said.

Single-family, multifamily, or condo?

When it comes to the types of properties that new investors should look at, Armstrong said to be aware of the pros and cons of each and to base a decision on your own wants and needs.

If an investor is looking for appreciation, he said single-family properties tend to appreciate the most, followed by townhomes and then condos. 

Single-family houses are also less likely to have maintenance or homeowners association fees. Of course, condos usually offer the cheapest price of entry of the three options, however.

When it comes to risk, multifamily properties have an advantage, Armstrong said. If one tenant moves out of a unit, there are still other tenants to cover at least part of the building’s mortgage payment, he said. Or if the building is paid off, at least part of your cash flow is still there. 

“I just sold a four-unit not long ago, and I explained to these folks that if one person goes down, you still have 75% of your income still coming in. If two go down, you still have 50% of your income,” he said. “Well, if you own a single-family home and it becomes vacant, you’ve got 100% vacancy.”

Source: businessinsider.com