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Apache is functioning normally

Rate lock volume jumped 43% in March on the back of seasonal tailwinds, falling interest rates and stronger purchase market performance.

Lock volumes increased across the board, led by purchase locks jumping 44% in March — well above the 30% average February to March gain seen across the past 5 years, Black Knight’s originations market monitor report showed.

While purchase locks showed significant improvement month over month, the volume is 40% down compared to March 2022. 

Cash-out refis were up 31% in March from the previous month, and even rate/terms – which have been all but nonexistent lately – grew by 36%. Compared to the same period last year, cash-out refis were down 80% and rate/term refis declined 71%. 

“This continues to be an incredibly rate-sensitive housing market, and March’s rate lock activity perfectly illustrates this dynamic,” Andy Walden, vice president of enterprise research at Black Knight, said. 

In early March, when mortgage rates started their climb back toward 7%, originations faced pronounced downward pressure. 

However, when investors flocked to safe-haven assets in the wake of uncertainty in the banking sectors — which led to rates coming down roughly a quarter of a point — the mortgage industry saw another quick surge in originations, particularly the purchase market, Walden noted. 

The 30-year fixed mortgage rate climbed to the highest levels of the year in early March, reaching 6.8% before dropping to 6.4% by the end of the month, Black Knight’s Optimal Blue mortgage market indices showed. 

The disproportionate surge in purchase lending pushed the refi share of the market mix down to a current cycle low of just 13%. The ARM share of the month’s activity fell to less than 9% as borrowers took advantage of falling rates and shifted toward fixed-rate products.

The Federal Housing Administration (FHA) loan share increased to more than 20% of the pipeline in March, up from 18% at the start of the year and 12% from a year ago. 

“A cooling market lacking the multiple bids and all-cash offers of the recent past has made sellers more receptive to FHA offers. That, combined with a recent reduction in FHA mortgage insurance premiums and a mid-month increase in the FHA-to-conforming spread, made FHA loans comparatively more attractive,” Walden said. 

In a widely anticipated move, the FHA announced a 30 basis point reduction in the annual premium charged to mortgage brokers in February. Most borrowers are expected to see mortgage insurance premiums (MIPs) reduce to 55 bps from 85.

With the cut, housing costs will reduce by an average of $800 for roughly 850,000 homebuyers and homeowners in 2023, the White House said following the FHA’s announcement.

Source: housingwire.com

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I’ve brought up the issue of housing affordability several times over the past year, and things don’t appear to be getting any better on that front.

The latest piece of bad news comes from the National Association of Home Builders, which released its Housing Opportunity Index (HOI) late last week.

The HOI measures what percentage of homes sold in a given area are affordable to families earning the corresponding area’s median income during a specific quarter.

During the third quarter, only 64.5% of new and existing homes sold were deemed affordable to families earning the national median income of $64,400.

That number is down from 69.3% in the second quarter, marking the largest quarterly HOI decline since the second quarter of 2004.

The index peaked in the first quarter of 2012 with 77.5% of American households able to afford the median priced $162,000 home.

Since then, there’s been a pretty steady decline as home prices seemed to hit bottom and then surge upward.

Higher Home Prices and Rising Mortgage Rates the Culprit

The ongoing problem in the housing market (assuming you’re not already an owner) is higher home prices coupled with rising mortgage rates, two trends that don’t appear to be changing anytime soon.

The median price paid for a home increased to $211,000 in the third quarter from $202,000 a quarter earlier.

Meanwhile, interest rates on the 30-year fixed mortgage jumped from 3.73% to 4.45%, which further dented affordability.

Back in the first quarter of 2012, the median price was $162,000 and fixed mortgage rates averaged around 4.32%.

So mortgage rates alone aren’t actually much of a problem. But when you consider the fact that home prices have risen around 30%, the same low mortgage rate just won’t cut it for some families.

If the Fed wants to keep the party going, it would have to drive mortgage rates down even lower to keep affordability at recent highs.

Crisis Levels Are Still a Few Years Away, Hopefully…

Still, we aren’t nearly as bad as we were before the entire housing market unraveled.

In much of 2005, 2006, and 2007, just over 40% of American households could afford the median priced home.

In fact, there was a point when the number nearly dipped into the high-30% range. At that time, home prices were closer to $250,000 and 30-year fixed mortgage rates were nearly 7%.

So one could argue that things aren’t too bad, yet. But we’re already starting to see bubbly characteristics, like arguments to go with an ARM instead of a fixed mortgage.

The ARM-share of mortgage applications is still low, but it will likely inch up as home prices and fixed rates continue to rise.

At the same time, lenders will probably come up with clever new products to boost affordability, and before you know it, we’ll be back to square one.

For the record, the California Association of Realtors also released its housing affordability indices last week.

Their “Traditional Housing Affordability Index” (HAI) revealed that just 32% could purchase a median-priced, existing single-family home in the Golden State during the third quarter, down from 36% in the second quarter and 49% a year earlier.

In the San Francisco Bay Area, only 21% of households could afford to buy a home, compared to 35% in the third quarter of 2012.

Statewide, it’s the first time the HAI has been below 35% since the third quarter of 2008. Affordability peaked at 56% in the first quarter of 2012.

This is worrisome, given how low mortgage rates continue to be. But with a lack of inventory, there’s no reason home prices shouldn’t continue their meteoric rise.

The question is when do we hit that tipping point where everyone tries to sell at the same time?

Source: thetruthaboutmortgage.com

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An exit strategy is a plan to leave an investment, ideally by selling it for more than the price at which it was purchased.

Individual investors, venture capitalists, stock traders, and business owners all use exit strategies that set specific criteria to dictate when they’ll get out of an investment. Every exit strategy plan is unique to its situation, in terms of timing and under which conditions an exit may occur.

What Is an Exit Strategy?

Broadly speaking, the exit strategy definition is a plan for leaving a specific situation. For instance, an employee who’s interested in changing jobs may form an exit strategy for leaving their current employer and moving on to their next one.

What is an exit strategy in a financial setting? In this case, the exit strategy definition is a plan crafted by business owners or investors that cover when they choose to liquidate their position in an investment. To liquidate means to convert securities or other assets to cash. Once this liquidation occurs, the individual or entity that executed the exit strategy no longer has a stake in the investment.

Creating an exit strategy prior to making an investment can be advantageous for managing and minimizing risk. It can also help with defining specific objectives for making an investment in the first place. In other words, formulating your exit strategy beforehand can give you clarity about what you hope to achieve.

Exit strategies often go overlooked, however, as investors, venture capitalists, and business owners may move ahead with an investment with no clear plan for leaving it.
💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.

How Exit Strategies Work

Investors use exit strategies to realize their profit or to mitigate potential losses from an investment or business. When creating an exit strategy, investors will typically define the conditions under which they’ll make their exit.

For instance, an exit strategy plan for investors may be contingent on achieving a certain level of returns when starting to invest in stocks, or reaching a maximum threshold of allowable losses. Once the contingency point is reached, the investor may choose to sell off their shares as dictated by their exit strategy.

A venture capital exit strategy, on the other hand, may have a predetermined time element. Venture capitalists invest money in startups and early stage companies. The exit point for a venture capitalist may be a startup’s IPO or initial public offering.

Again, all exit strategies revolve around a plan. The mechanism by which an individual or entity makes their exit can vary, but the end result is the same: to leave an investment or business.

When Should an Exit Strategy Be Used?

There are different scenarios when an exit strategy may come into play. For example, exit strategies can be useful in these types of situations:

•   Creating a succession plan to transfer ownership of a profitable business to someone else.

•   Shutting down a business and liquidating its assets.

•   Withdrawing from a venture capital investment or angel investment.

•   Selling stocks or other securities to minimize losses.

•   Giving up control of a company or merging it with another company.

Generally speaking, an exit strategy makes sense for any situation where you need or want to have a plan for getting out.

Exit Strategy Examples

Here are some different exit strategy examples that explain how exit strategies can be useful to investors, business owners, and venture capitalists.

Exit Strategy for Investors

When creating an exit strategy for stocks and investing, including how to buy stocks, there are different metrics you can use to determine when to get out. For example, say you buy 100 shares of XYZ stock. You could plan your exit strategy based on:

•   Earning target return from the investment

•   Realizing a maximum loss on the investment

•   How long you want to stay invested

Say your goal is to earn a 10% return on the 100 shares you purchased. Once you reach that 10% threshold you may decide to exit while the market is up and sell your shares at a profit. Or, you may set your maximum loss threshold at 5%. If the stock dips and hits that 5% mark, you could sell to head off further losses.

You may also use time as your guide for making an exit strategy for stocks. For instance, if you’re 30 years old now and favor a buy-and-hold strategy, you may plan to make your exit years down the line. On the other hand, if you’re interested in short-term gains, you may have a much shorter window in which to complete your exit strategy.

Exit strategies can work for more than just stock investments. For instance, you may have invested in crowdfunding investments, such as real estate crowdfunding or peer-to-peer lending. Both types of investments typically have a set holding period that you can build into your exit plan.

Recommended: Bull Put Spread: How This Options Trading Strategy Works

Exit Strategy for Business Owners

An exit strategy for business owners can take different forms, depending on the nature of the business. For instance, if you run a family-owned business then your exit strategy plan might revolve around your eventual retirement. If you have a fixed retirement date in mind your exit plan could specify that you will transfer ownership of the business to your children or sell it to another person or company.

Another possibility for an exit strategy may involve selling off assets and closing the business altogether. This is something a business owner may consider if the business is not turning a profit, and it looks increasingly unlikely that it will. Liquidation can allow a business owner to repay their creditors and walk away from a failed business without having to file bankruptcy.

Exit Strategy for Startups

With startups and larger companies, exit strategies can be more complex. Examples of exit strategy plans may include:

•   Launching an IPO to allow one or more founders to make an exit

•   A merger or acquisition that allows for a transfer of ownership

•   Selling the company

•   Liquidating assets and shutting the company down

If a founder is ready to move on to their next project, they can use an IPO to leave the company intact while extricating themselves from it. And angel investors or venture capitalists who invested in the company early on also have an opportunity to sell their shares.

Startup exit strategies can also create possible opportunities for some investors. IPO investing allows investors to buy shares of companies when they go public.

The mechanics of using an IPO as an exit strategy can be complicated, however. There are IPO valuations and regulatory requirements to consider.

It’s important for startup founders to know how to value a business before taking it public to ensure that an IPO is successful. And early-stage investors may have to observe IPO lock-up period restrictions before they can sell their shares.
💡 Quick Tip: IPO stocks can get a lot of media hype. But savvy investors know that where there’s buzz there can also be higher-than-warranted valuations. IPO shares might spike or plunge (or both), so investing in IPOs may not be suitable for investors with short time horizons.

5 Types of Exit Strategies

There are different types of exit strategies depending on whether you’re an investor, a business owner, or a venture capitalist. Some common exit strategies include:

1. Selling Shares of Stock

Investors can use an exit strategy to set a specific goal with their investment (say, 12%), reach a certain level of profit, or determine a point at which they’ll minimize their loss if the investment loses value. Once they reach the target they’ve set, the investor can execute the exit strategy and sell their shares.

2. Mergers and Acquisitions

With this business exit strategy, another business, often a rival, buys out a business and the founder can exit and shareholders may profit. However, there are many regulatory factors to consider, such as antitrust laws.

3. Selling Assets and Closing a Business

If a business is failing, the owner may choose to liquidate all the assets, pay off debts as well as any shareholders, if possible, and then close down the business. A failing business might also declare bankruptcy, but that’s typically a last resort.

4. Transferring Ownership of a Business

This exit strategy may be used with a family-run business. The owner may formulate an exit plan that allows him to transfer the business to a relative or sell it at a particular time so that he or she can retire or do something else.

5. Launching an IPO

By going public with an IPO, the founder of a startup or other company can leave the company if they choose to, while leaving the business intact. As noted, using an IPO as an exit strategy can be quite complicated for business founders and investors because of regulatory requirements, IPO valuations, and lock-up period restrictions.

Why Exit Strategies Are Important

Exit strategies matter because they offer a measure of predictability in a business or investment setting. If you own a business, for example, having an exit strategy in place that allows you to retire on schedule means you’re not having to work longer than you planned or want to.

An exit strategy for investors can help with staying focused on an end goal, rather than following the crowd, succumbing to emotions, or attempting to time the market. For example, if you go into an investment knowing that your exit plan is designed to limit your losses to 5%, you’ll know ahead of time when you should sell.

Using an exit strategy can prevent doubling or tripling losses that could occur when staying in an investment in the hopes that it will eventually turn around. Exit strategies can also keep you from staying invested too long in an investment that’s doing well. The market moves in cycles and what goes up eventually comes down.

If you’re on a winning streak with a particular stock, you may be tempted to stay invested indefinitely. But having an exit strategy and a set end date for cashing out could help you avoid losses if volatility sends the stock’s price spiraling.

How To Develop an Exit Strategy Plan

Developing an exit strategy may look different, depending on whether it involves an investment or business situation. But the fundamentals are the same, in that it’s important to consider:

•   What form an exit will take (i.e. liquidation, IPO, selling shares, etc.)

•   Whether an exit is results-based or time-based (i.e. realizing a 10% return, reaching your target retirement date, etc.)

•   Key risk factors that may influence outcomes

•   Reasons and goals for pursuing an exit strategy

If you’re an individual investor, you may need to formulate an exit plan for each investment you own. For instance, how you exit from a stock investment may be different from how you sell off bonds. And if you’re taking on riskier investments, such as cryptocurrency, your exit strategy may need to account for the additional volatility involved.

For business owners and founders, exit strategy planning may be a group discussion that involves partners, members of the board, or other individuals who may have an interest in the sale, transfer, or IPO of a company. In either situation, developing an exit strategy is something that’s best done sooner, rather than later.

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FAQ

What are different exit strategies?

Examples of some different exit strategies include selling shares of a stock once an investor realizes a certain return or profit, transferring ownership of a family business so an owner can retire, or selling all the assets and closing down a failing business.

What are the most common exit strategies?

The most common exit strategies depend on whether you’re an investor, the owner of an established business, or the founder of a startup. For investors, the most common exit strategy is to sell shares of stock once they reach a certain target or profit level. For owners of an established business, the most common exit strategy is mergers and acquisitions, because doing so is often favorable to shareholders. For founders of startups, a common exit strategy is an initial public offering (IPO).

What is the simplest exit strategy?

For an investor, the simplest exit strategy is to sell shares of stock once they reach a certain profit or target level of return. At that point they can sell their shares for more money than they paid for them.

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Source: sofi.com

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“The consensus among the Executive Committee is we need to rebuild trust with staff and members with meaningful change. We are bringing in third party experts to carefully and comprehensively look at what we’re doing now for what works, what needs to be changed and what is missing. We also will support and empower staff in their similar efforts. The Executive Committee agreed we have a shared purpose and are united in support of our staff and that includes Bob,” she concluded.

Ahead of Thursday’s executive committee meeting, rumors were swirling that Goldberg and other executives could find themselves out of a job, but that is clearly not the direction NAR has decided to take, despite many members calling for the resignation of Goldberg on message boards and social media.

On Monday, prior to Parcell’s resignation, a Change.org petition was started calling for his dismissal. By Wednesday, this effort had morphed into the NAR Accountability Project. One of the first demands of the project was that Goldberg and others within NAR’s executive committee retire early. Goldberg is currently set to retire at the end of 2024, closing out his 30-year career at the trade group.

A rough week for NAR

It has been a rough week for the 1.5 million member trade organization. In the Times exposé, published last Saturday, Parcell, who had served as NAR president since November 2022, was called out for alleged sexual harassment by 16 of the more than two dozen current and former NAR employees interviewed by the Times. Parcell ultimately resigned from his position Monday evening.

Parcell has defended himself over the allegations in the NYT story. “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, 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.

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 said that she 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.”  

In a statement on Tuesday, Kasper said that it was important to NAR that they “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.”

“This is a really hard time for our association. But I know this is an opportunity to really listen and grow together,” Kasper added. “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.”

Source: housingwire.com

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One year ago, the Community Mortgage Lenders Association merged with the Community Home Lenders of America, creating the Community Home Lenders of America.

What have we learned from the last year?  First, there is a critical need for a national trade group that distinctly and vigorously advocates for the interests of small and mid-sized independent mortgage banks.  

When Silicon Valley Bank imploded, certain parties in Washington re-doubled their efforts to engage in scaremongering Washington policy makers about the alleged significant taxpayer “risks” of IMBs. This allegation is unfounded – but these types of claims can have consequences, they can’t go unchallenged.

So, CHLA promptly released a report decisively rebutting the overhyped claims of IMB risk, documenting the “ubiquity” of both financial and consumer regulations on IMBs, and explaining how regulatory overreach could undermine the availability of affordable mortgages precisely at a time when homeownership challenges are rising because both mortgage rates and home prices are rising.

We have learned (or reaffirmed) that there is a critical need for an association that continues to educate Congress and federal agencies about the key role of IMBs in access to mortgage credit, leading the market in originating loans for minority, underserved, and first-time homebuyers.

Last October, CHLA continued the practice of releasing an annual “CHLA IMB Report.” This report explains what IMBs are, uses statistics to show the growing mortgage market dominance of IMBs (e.g.,  IMBs originate 90% of FHA and VA loans), and highlights the key issues for IMBs, along with practical policy recommendations.

We have learned that a larger organization means more resources, more member expertise, and a diversity of opinion that strengthens our advocacy efforts. CHLA and CMLA had represented slightly different arcs of the market for smaller lenders.  The combined group gives us more breadth, ranging from the smallest IMBs to much larger mid-sized IMBs that securitize FHA, VA, and GSE loans

On behalf of small correspondent lenders, for example, CHLA has advocated for a Ginnie Mae cash window and a proposal to make aggregators more accountable to correspondent lenders in challenging GSE repurchase requests. Large mortgage lenders often have their own lobbyists in Washington or an outsize role in trade groups.  So CHLA sees vigorous advocacy on behalf of smaller IMB lenders as an essential part of our mission.

We have learned that a larger organization translates into significantly greater policy successes.  Key priorities that CHLA has been an acknowledged leader on came to fruition this last year – including an FHA premium cut, a number of much appreciated flexibility provisions related to Ginnie Mae pooling, and divestitures by ICE in response to CHLA criticism and FTC opposition to their purchase of Black Knight (although our push to fight abuses continues).

We learned (or reaffirmed) that having a bottom-up, member-centric trade group makes it easier to set priorities and take actions that reflect what matters most to community-based IMBs.  Many initiatives CHLA pursued this last year were issues that Members suggested on our weekly calls.  These resulted in CHLA proposals to reign in abusive trigger leads, to fight FICO’s 400% discriminatory fee hike and to develop proposals to recruit more minority and underserved loan originators (the best way to help IMBs do an even better job of serving those borrowers).

Finally, we have learned (or reaffirmed) that a trade group does not just have to reflexively advocate for special interest provisions for their members, but also has a vested interest in consumer protections.  

Consumer confidence in the mortgage process is critical to the success of mortgage lenders and the right thing to focus on.  So, CHLA recently released its “Consumer Bill of Mortgage Rights,” identifying seven critical gaps on mortgage consumer protections.   

These include universal licensing of all loan originators, reigning in trigger leads, rolling back the FICO credit score hikes, consumer protections for dual compensation, and FHA ending their Life of Loan premium policy.

We can’t wait for the next year.  And any IMB that likes what we are doing, give us a call, join our mission.

Source: nationalmortgagenews.com

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Affordable starter homes for first-time buyers are in great demand this year, leading to shrinking inventories and a competitive market. That means that buyers’ options are limited. This leads to increased competition for those homes that are available, spurring bidding wars and pricing out entry-level buyers.

A recent analysis by Zillow found that there were 8.6 percent fewer homes on the market in January 2016 than a year ago. Sellers have more negotiating power in competitive cities, mostly in the West, where job markets are hot, and demand for housing is heavy.

Buyers competing in a tight market must be prepared. They should get pre-approved for a mortgage and know their maximum price before house shopping so they can make a competitive offer. They should also take another look at their must-have list and decide where they’re willing to compromise, if necessary.

Here are five surefire signs that you are facing a competitive market for buyers.

1. Short time on market.

The fastest and easiest way to tell if sales are hot in your local market is to measure how quickly properties in your price range are selling. You can get a sense of the demand by simply tracking listings on real estate web sites.

A more accurate method is to review “median days on market” data from your local multiple listing service. You may not be able to access this data yourself, but your real estate agent should be able to get it for you. Look at the monthly and the year to year trends for the Zip codes where you are looking. If houses are selling in three months, that is clearly a seller’s market; in two months or less, you are probably looking at a hot, competitive market.

Another measure of demand is called “months’ supply.” It represents the number of months for the current inventory available for sale at the current rate of demand. A months’ supply of six months is considered balanced; the smaller the months’ supply, the hotter the market.

2. Jumps in sales.

An easy way to take your market’s temperature is to compare the current monthly sales rate to one or two years previous. Sales vary seasonally, but not over 5 percent when compared to the same month a year earlier.

If you see sales jump 10 percent or more, your market is taking off, and inventories may not be keeping up with demand, which is going to make it competitive for buyers. Follow local data on Zip codes or neighborhoods available on real estate listing sites, or ask your agent for information on sales trends.

3. List-to-price ratio.

When homes start selling at prices higher than their listing prices, it is a sure bet you are in a competitive market. If the list-to-price ratio is above 100%, the home sold for more than the list price. If it is less than 100%, the home sold for less than the list price.

MLSs make this statistic available to their members on a monthly basis, so you can get the data from your agent. Some also release it publicly. Some real estate web sites report local list-to-price ratios.

4. Deadlines on offers.

When sellers start placing deadlines for offers on their listings, obviously they are expecting more than one bid and they see no reason to extend the selling period. When you see a listing with deadlines, prepare for battle if you want the house.

5. Cash offers.

Cash offers, as opposed to offers financed by mortgages, are very attractive to sellers because they do not have to take the chance that a buyer’s financing will fall through or that an appraisal will come in low, and the seller might be asked to lower the price to save the deal.

In lower tier price ranges, many cash offers come from investors who are planning to flip the house or convert it into a rental. An increase in cash offers are a sign that competition is stiff.  MLSs compile data on cash sales in local communities and Zip codes and you can get the information from your agent.

Soaring sales, prices above list, days on the market below two months, months’ supply below four months, cut-off dates—these are signs that buyers will likely face multi-bid situations. Be ready to move fast with the best offer you can make and be patient if the right deal takes months to appear. Even so, never bid on a house you do not like—you might end up living in it for many years to come.

Source: totalmortgage.com