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Apache is functioning normally

July 15, 2023 by Brett Tams

The Consumer Financial Protection Bureau (CFPB) this week filed an amicus brief in a Maine Supreme Judicial Court in a case involving a married couple’s loan, joining with state officials including the attorney general, its Bureau of Financial Institutions and Bureau of Consumer Credit Protection.

The Maine state agencies filed the lawsuit, Franklin Savings Bank v. Bordick, under the federal Truth in Lending Act (TILA) on behalf of a couple that took out a mortgage in 2008 in order to purchase land for the construction of a new home. While they sold the home in 2014, the sale proceeds were not enough to cover the debt since the home lost value during the 2008 financial crisis.

In an effort to cover the deficit, the couple took out a new loan and made regular payments for nearly four years. The dispute emerged at the end of the loan’s term, the CFPB explained.

“[A]t the end of the loan’s term, the couple was unable to make the balloon payment that was due,” CFPB said. “When they failed to pay the whole amount, the bank sued, and the couple tried to present evidence that the bank had not provided them with disclosures required by [TILA] or determined that they could repay the loan. The bank has argued that because the loan documents stated that the loan had a commercial purpose, the law does not apply.”

However, the brief filed by the CFPB explains the Bureau’s firm belief that “why the consumer borrowed the money – not the label that the company sticks on the loan – determines whether the loan is covered by the law,” the agency said.

“[L]enders can’t escape coverage under [TILA] by labeling their loans as ‘commercial,’” the Bureau said. “As many courts have held, and as the law clearly states, the borrower’s purpose for taking out the loan determines whether the law applies.”

The CFPB goes on to cite U.S. Supreme Court case law which previously noted that TILA’s language “evinces the awareness of Congress that some creditors would attempt to characterize their transactions so as to fall one step outside whatever boundary Congress attempted to establish.”

Letting lenders “escape coverage just by sticking a particular label on their loans” would also be inconsistent with the intention of TILA, the CFPB added.

Source: housingwire.com

Apache is functioning normally

July 15, 2023 by Brett Tams

Depending on the loan amount you need and where you’re buying a home in Vermont, you may find it difficult to find financing beyond the conforming loan limits. If this is the case, you may need a jumbo loan.

What is a jumbo loan?

So, what exactly is a jumbo loan in Vermont? A jumbo loan is a mortgage loan that allows borrowers to finance a property that exceeds the conforming loan limit (CLL) set by the FHFA. In simpler terms, a jumbo loan is a specialized mortgage that enables you to borrow more money than you would be able to with a conventional loan. These loans are typically used to finance high-end or luxury properties in areas with high home prices.

If you’re considering purchasing a home that requires financing beyond the conforming loan limit, then you’ll need to go for a jumbo loan. It’s important for homebuyers to understand the requirements and implications of obtaining a jumbo loan in Vermont. For instance, borrowers typically need a higher credit score and a larger down payment to qualify for a jumbo loan.

What is the jumbo loan limit in Vermont?

In Vermont, the conforming loan limit is $726,200 across all counties. For example, if you’re buying a home in Windsor County, where the median sale price is $393,000, a loan limit exceeding $726,200 would be considered a jumbo loan.

Keep in mind that the amount being borrowed is what determines whether or not you’ll need a jumbo loan, not the price of the home. So, if you were to put $100,000 down on a $780,000 home in Windsor County, the mortgage would be $680,000, which is under the CLL for this area. In this case, your loan wouldn’t be considered a jumbo loan.

For more information on the conforming loan limit in your county, use the FHFA map.

What are the requirements for a jumbo loan in Vermont?

To qualify for a jumbo loan in Vermont, borrowers must meet stricter requirements than they would for a conforming loan. Each lender may have different requirements or processes, but below are the typical requirements for borrowers seeking a jumbo loan.

Higher credit score: To qualify for a jumbo mortgage, borrowers typically need to have a credit score of at least 720. However, some lenders may be willing to accept scores as low as 660, although less frequently. A higher credit score demonstrates a borrower’s ability to manage credit responsibly and is an important factor that lenders evaluate when reviewing jumbo loan applications.

Larger down payment: Jumbo loans typically require larger down payments than conventional mortgages. While the exact amount varies depending on the lender and the borrower’s financial situation, down payment requirements for jumbo loans can be as high as 20% or more. That said, some lenders may offer jumbo loans with down payments as low as 10%, provided the borrower meets certain credit and income requirements.

More assets: Jumbo loan borrowers are typically required to have additional assets. In particular, lenders may require borrowers to demonstrate sufficient liquid assets or savings to cover one year’s worth of loan payments.

Lower debt-to-income ratio (DTI): Lenders look at a borrower’s DTI (debt-to-income ratio) to assess their creditworthiness and spending habits. For a conforming loan, a DTI as high as 50% may be acceptable to some lenders. However, jumbo loan applicants are required to have a lower DTI, ideally under 43% and closer to 36%. This is because jumbo loans are riskier for lenders due to the larger loan amounts. Borrowers with a higher DTI may still qualify for a jumbo loan, but it could result in a higher interest rate or a stricter approval process.

Additional home appraisals: A home appraisal is required whenever a homebuyer receives financing for their home purchase. However, for jumbo loans, your mortgage lender may require an additional appraisal. In areas with limited comparable property sales, this appraisal can be more expensive than in places with higher sales rates.

Source: redfin.com

Apache is functioning normally

July 15, 2023 by Brett Tams

With the news of the Federal Trade Commission opening an investigation into OpenAI and its technology ChatGPT’s potential harm to consumers just this week, it appears that the tool faces its first serious regulatory hurdle just as mortgage professionals are beginning to embrace it.

Since the technology’s debut last year, real estate players have rushed to boost their artificial intelligence bona fides. Redfin and Zillow have incorporated ChatGPT plugins to serve prospective homebuyers, while some lenders have touted their own AI chatbots.

But ChatGPT specifically has already suffered from one security vulnerability exposing chat history titles of other users. The FTC says it intends to investigate whether OpenAI “engaged in unfair or deceptive privacy or data security practices or engaged in unfair or deceptive practices relating to risks of harm to consumers.”

Cybersecurity firm Cyberhaven earlier this year suggested 11% of the data employees paste into the software is confidential.

Massive tech players and mortgage giants like Wells Fargo and JPMorgan have placed restrictions on ChatGPT in recent months over concerns that confidential data could be exposed. The Mortgage Bankers Association said it doesn’t have specific guidance around ChatGPT. The National Association of Realtors said in a statement one of its goals is to create policies on AI use and educational materials for Realtors, but the work is in its infancy.

Lenders who spoke with National Mortgage News said their companies don’t have specific policies around use of chatbots but are proceeding with caution.

“If people were going to start [using personally identifiable information] then yeah, you need to have some policies and procedures,” said Kristin Hess, a mortgage loan originator with CMG Home Loans in Middletown, New Jersey. “But I don’t think we need to go that deep. I don’t think we need to just put that much detail in.”

Hess posted on LinkedIn in June a certificate that she’d completed an introduction to ChatGPT course online with edX, an online platform that offers training courses. She uses ChatGPT like Google to find more relevant search results and to write unique marketing posts. But she doesn’t enter what she described as customers’ six points of financial and personal identifying information including names and Social Security numbers.

OpenAI’s potential use of personally identifiable information that has been entered into ChatGPT is at the heart of the FTC’s investigation.

“Whoever’s information is in prompts that you give ChatGPT, they didn’t necessarily consent for you to do that,” said Jordan Roe Bingham, CEO of LendSafe, a Salt Lake City-based cybersecurity company. “You are giving that information to the company that owns a chatbot and they’re using that for their own reasons and their own purposes.”

Mortgage professionals should stick to doing generic, non-PII type of work in open AI models, said Rutul Dave, co-founder and chief technology officer at mortgage fintech Maxwell.

“You cannot just say, ‘Alright, I’m going to offload this [information] to some other third-party and then I’m just going to get the benefit of it,” said Dave. “That doesn’t work in the highly regulated, compliant industry that mortgages are.”

Raymond Grewe, a branch manager for Paramount Residential Mortgage Corp. in the Greater Baltimore area, said he uses ChatGPT sparingly, but not for many mortgage functions. He said he’s used the chatbot for scripting messages. Other lenders said they have used the chatbot to check grammar and edit paragraphs of text.

“I always feel weird about putting third-party information into a system like that,” he said. “I personally used it for creating some scripting.”

ChatGPT has limited information beyond 2021, and can’t provide users answers about current mortgage rates or home prices. Grewe expressed interest in Bing AI, the new AI chatbot tied to Microsoft’s search engine that can provide real-time information. Microsoft is also a $10 billion investor in ChatGPT.

Grewe said he’s an “early-to-mid” adopter of ChatGPT, and said his firm leans into tech heavily, a distinction amid a generally tech-averse industry. Grewe questioned aloud whether the technologies could eventually replace loan officers, or at least help speed the mortgage underwriting process.

The industry’s biggest lenders haven’t publicly integrated ChatGPT into their operations, while smaller entities like InstaMortgage have enhanced their own AI for customers. ChatGPT may not be ready to originate a mortgage, but originators will continue to utilize the chatbot.

“I’m authentic. I do create my own content,” said Hess. “That’s how this ChatGPT has really helped me because now I have what I want to do, but maybe I don’t know the proper wording for it. So that’ll help me so I can connect with the right people…It’s the way of the future and I don’t want to stay stagnant in the past.”

Source: nationalmortgagenews.com

Apache is functioning normally

July 15, 2023 by Brett Tams

If your home’s market value exceeds the debt you owe on your property, you could take advantage of this home equity and borrow against it. There are two options: a home equity loan and a home equity line of credit (HELOC), both of which are types of second mortgages. Learn more about what HELOCs and home equity loans involve, including how they work, how they differ, which advantages they offer and how you can apply for one.

What is a home equity loan?

A home equity loan allows you to borrow against some of the equity you have in your home. It provides you with a lump sum of money upon closing, and you can spend it on home improvements, medical bills, existing debt repayment or other purposes. Like a traditional mortgage, a home equity loan is a secured debt where the lender uses the associated property as collateral.

How does a home equity loan work?

When you ask a lender for a home equity loan, you can specify the amount you want to borrow, but a common limit is 85% of your home’s available equity. You can subtract your current mortgage balance from your home’s current appraised value to determine the equity available. If you lack enough equity for your desired loan amount, you may need to wait and look into how to build equity in a home. Additionally, your financial situation must show the lender that you can afford your home equity loan payment.

Home equity loans usually have a maximum term of 30 years, during which you make equal monthly payments that include the interest and principal. These loans typically have interest rates that stay the same over the entire term, and factors such as the loan amount, term and your credit score affect the rate. You may have to pay fees and closing costs when you take out the loan.

Until you fully pay off the home equity loan, the lender could begin the foreclosure process if you fall behind on payments and don’t work out some arrangement. This risk means you should choose your loan amount carefully and make your monthly payments on time.

What is a HELOC (home equity line of credit)?

Instead of providing you with a one-time sum of cash, a HELOC is a credit line that you can readily access during a specified draw period. It compares to a credit card since paying back what you borrow will replenish the available credit. Like with a home equity loan, you use a HELOC to borrow funds based on your home’s equity with your property serving as collateral.

How does a HELOC work?

While policies vary, lenders often allow a HELOC limit of up to 85% of your home’s equity. The limit ultimately depends on your financial situation as well. Note that since you don’t get this money in a lump sum, you might not end up actually using all your available credit.

When you get a HELOC, you may pay upfront fees and closing costs. You then enter a draw period that typically lasts up to 10 or 15 years. During that time, you might use a card or check to withdraw from the HELOC, subject to terms such as minimum withdrawal amounts.

While you have access to the HELOC funds, the lender requires at least a partial payment on the borrowed amount during this period. This may include just the interest or a set minimum amount. Lenders most often offer variable HELOC rates, so the payment amount can change as rates do.

Once the draw period closes, a repayment period of around 10 to 15 years begins, and you’ll make larger monthly payments to cover the principal and interest. The lender could also ask for a large lump sum, called a balloon payment.

You’ll need to pay the HELOC amount as agreed to avoid default and potential foreclosure. After payoff, you may have an option for HELOC renewal, but you could incur a maintenance fee for this.

What is the difference between HELOCs and home equity loans?

Either a HELOC or home equity loan can provide the funding you need as long as you qualify. However, they differ in how the loan amounts, interest rates and repayment processes work.

Loan amounts

While the home equity percentage you can borrow against is similar, HELOCs and home equity loans provide the funds in different ways. You get the entire loan amount at once with a home equity loan, and you make monthly payments based on that whole amount. On the other hand, a HELOC has a maximum limit you can borrow and the amount you have to repay depends on how much you ultimately withdraw from the line.

Fixed and variable interest rates

Home equity loans usually have fixed interest rates that allow for steady monthly payments. While getting fixed HELOC rates is possible, most lenders offer variable-rate HELOCs where caps on rate changes apply. The variability makes HELOCs riskier since you could have a low rate at first but then see it go up if the market changes. Keep in mind that these increases could lead to unaffordable monthly payments.

Repayment schedule

With a home equity loan, you’ll make full monthly payments during the entire term. A HELOC, on the other hand, requires partial payments during the draw period and larger monthly payments — or a balloon payment — during the repayment period. So, a HELOC features payment variability for which you must prepare. To compare how your monthly payments could look, consider using a home equity loan calculator or HELOC payment calculator.

How to get a home equity loan

To get a home equity loan that fits your needs, start researching potential lenders that offer competitive rates, good customer service and low closing costs. You should then check a prospective lender’s home equity loan requirements to make sure you can qualify.

You’ll need sufficient home equity to take out the loan. Lenders also look at financial factors such as credit score, a stable and sufficient income and a debt-to-income (DTI) ratio not exceeding 43%. If you have bad credit, you will most likely pay a higher interest rate and/or be required to get a co-signer.

Ask the lender about prequalification so you can see if you meet home equity loan requirements before you do an official application. This involves providing property, loan and personal details. Once you officially apply, the lender will check your credit and request documents verifying your income and various property details. The lender may also request a property appraisal before you can close on the loan, pay any closing costs and get the funds.

How to get a HELOC

Getting a HELOC involves a very similar process as a home equity loan. It includes researching the best HELOC lenders, looking for the best HELOC rates and checking if you meet the lender’s HELOC requirements. You’ll also want to read the lender’s terms on rate caps to know how high or low your variable rate could go. If you need a HELOC for an investment property or if you have bad credit, verify that the lender can help with these cases.

You can provide property, financial and personal information during the prequalification process to learn if your lender could approve you. The official application will require the same types of property and income verification documents and possibly a home appraisal as with a home equity loan. You may pay closing costs to finalize the process and then get access to your HELOC.

Benefits of HELOC vs home equity loan

Besides letting you tap into your home equity, these financing products offer different advantages. Let’s take a look at some of them.

HELOC benefits

HELOC loans give you more borrowing flexibility than home equity loans. Since you have a lengthy draw period, you can access just the amount of money you need, right when you need it. In other words, this option could help you reduce the chances of borrowing too much.

The repayment process for a HELOC home equity line of credit comes with advantages as well. You may find it easier to budget for the smaller payments during the drawing period. During that time, you can also prepare for the larger payments that you’ll make during the repayment period.

HELOC interest rates are usually lower than interest rates for home equity loans and unsecured credit options like credit cards. Moreover, if you use the HELOC’s funds on qualified home improvements, the IRS may even let you deduct the interest paid on your tax return.

Home equity loan benefits

If you need all your money at once, you may prefer the lump sum that a home equity loan provides and the predictability that comes from it. The best home equity loans feature fixed interest rates and stable payment amounts. Your budgeting becomes easier when you know how much you pay each month.

Although home equity loans can have higher interest rates than HELOCs, you may still save money over alternatives like credit cards. Additionally, the fixed rate means you won’t have to worry about rising interest rates increasing the cost of the debt. The federal tax deduction for interest paid applies to home equity loans as well.

Which is better, HELOC or home equity loan?

To decide on a HELOC versus a home equity loan, consider whether you prefer flexibility or predictability. As long as you understand the key home equity line of credit pros and cons, this option can suit situations where you prefer an open credit line and don’t mind a variable interest rate and monthly payment. If you know exactly how much money you need, a home equity loan conveniently provides that amount upfront and leads to more stability with the interest rate and payment amount.

Can you convert a HELOC to a home equity loan?

Some lenders, such as Bank of America, allow you to directly turn your HELOC into a fixed-rate loan. You can also consider options such as taking out a home equity loan or doing a cash-out refinance and using the proceeds to pay off the HELOC.

To learn about your options, speak with a lender. You’ll need to have enough unused home equity and not exceed the lender’s DTI ratio limit to qualify for these new loans. You should also weigh the potential closing costs and fees against the benefits of a fixed-rate loan. Additionally, if you currently have a high HELOC interest rate, consider asking your current lender for a possible reduction.

Summary of Money’s HELOC vs home equity loan

Whether you want to consolidate debt or make a major purchase, home equity loans and HELOCs can let you access funds from the equity you have already built in your home. Considering when and how you want to access the funds and whether you prefer fixed or variable monthly payments will help you decide between a HELOC and a home equity loan. Make sure to compare current HELOC and home equity loan rates and calculate potential payment amounts to see what makes financial sense to you.

Source: money.com

Apache is functioning normally

July 15, 2023 by Brett Tams

When employees feel financially secure, they can be more engaged, focused, productive, and loyal workers.

But simply offering a variety of financial benefits may not be enough to let all members of your workforce actually achieve financial wellness. And that’s especially true today, as employees navigate higher prices, elevated interest rates, and uneven wage growth.

So what are you doing right? And what can you improve?

Measuring financial well-being can help you answer those important questions.

Why Measure Financial Wellness and Why Now?

“A person’s financial well-being comes from their sense of financial security and freedom of choice – both in the present and when considering the future,” according to the Consumer Financial Protection Bureau .

In SoFi at Work’s Future of Workplace Financial Well-Being 2022 study, four out of 10 workers rated their financial well-being as average, poor, or very poor, and 75% currently have at least one source of financial stress. This was the case across all ages and incomes, and from varying industries. In fact, even higher earners were not immune. More than half (57%) of those making more than $150,000 cited at least one source of major financial stress, including worrying about inadequate retirement savings (40%), credit card debt (33%), and not having enough money for basics like food and rent or mortgage payments (29%).

How are your employees faring? Now may be a good time to measure the financial well-being in your workforce. Doing so can let you see firsthand the financial struggles your employees may be going through, how those struggles connect to business outcomes, and how your total rewards strategy can help.

How to Better Understand Your Unique Workforce

Measuring financial well-being will allow you to determine what segments of your workforce are struggling the most. It can also help you figure out what you can provide to help all your employees move forward. For many employers, that’s a two-part process.

1. Wage Assessment

Many employers start this process by assessing wages. No doubt you’ve compared your wage and salary decisions against competitors’ offerings, the local labor market, and industry averages. Indeed, you may be paying above the industry standard. But it’s important to remember that even above-standard wages don’t ensure financial wellness. Your workers may still be struggling.

With that in mind, you may want to compare your company’s wages against what constitutes a local living wage in the areas where your employees work. MIT’s Living Wage Calculator may be able to assist you with this. This tool helps determine how much money a person in a specific area needs to earn to cover basic expenses and how much that person has leftover for disposable income, including saving for the future. This may be a more realistic gauge for all levels of your workforce when assessing wages and determining financial well-being.

Recommended: Are Inflation and Financial Stress Affecting Your Employees’ Work Productivity?

2. Self-Assessment Survey

The next step is to gather input from your employees. If you haven’t already, you’ll want to design an online financial wellness assessment survey and encourage all employees to participate.

An effective self-assessment survey analyzes four pillars of financial security.

Spending: With these questions, you’ll find out how many employees are spending beyond their incomes either because they have expenses that are higher than their income or because of bad spending habits. By asking how long employees think their money would last if they suddenly lost their income, you’ll also collect data on how many of your employees are prepared for an emergency.

Saving: Retirement savings will likely dominate this section. How many employees are participating in your organization’s 401(k) or other retirement savings programs? How much of their annual income are they saving? Are they taking advantage of any match? Do they have an idea of how much they’ll need to save for retirement?

You’ll also want to find out how much your employees are saving for other goals such as emergency savings funds, college tuition, or a home down payment. This may be especially important if your benefits package includes other types of savings programs in addition to retirement.

Debt/Borrowing: Here’s where you want employees to fess up to credit card debt, mortgages, student debt (their own or their children’s), and personal loans. Assessing debt is a vital element for financial wellness. Some leverage, such as a mortgage or tuition loans, can be useful financial wellness tools. But credit card and other debt can be among the biggest obstacles to financial well-being.

Planning: Questions concerning employees’ purchase of life insurance and disability income insurance can paint a picture of how well-protected they are — an important element of financial wellness. This is a good place to ask if employees have set financial goals for the future and if they’ve worked with a financial counselor to do so. You’ll get a sense of what percentage of your employees are looking forward while still taking care of short-term needs/desires. Importantly, this will also let you know how much of your workforce is engaging with the financial planning tools you may be offering.

Depending on your workforce and your goals for the assessment, you may also want to include more subjective elements in your research, such as employee diaries or interviews. This can add human stories to the data collected and help inform new benefits going forward.

Sofi at Work offers a comprehensive benefits assessment tool that can be customized to your workforce.

Measuring Financial Wellness Empowers Employees

When employees take a smart, well-written, and well-designed assessment survey, they’re not just providing information to their bosses, they’re also thinking through their own financial wellness strategy.

Incorporating an interactive tool that gives immediate feedback can help employees identify their current status and balance their short- and long-term financial goals.

Providing a one-on-one meeting with a financial planner or other expert for each employee to have after completing the survey encourages your workers to take action with their newfound knowledge and further enhance their overall financial wellness. (It can also prompt more willingness to take the assessment among employees.)

Recommended: Supporting the Financial Well-Being of Newly Hired Recent Graduates

Measuring Provides a Compass for Your Financial Wellness Benefits

You’ll also want to analyze your own data on the benefits you’re currently providing to determine how well they’re contributing to employee financial wellness. A comprehensive look at who is using what benefits — including everything from health insurance to 401(k)s to paid parental leave and student loan assistance — and what employees are paying for or contributing to those benefits, can unlock details about access and participation among all levels of your workforce.

A benefit analysis combined with a wage assessment and employee financial wellness survey helps provide a deeper understanding of gaps in your total benefits strategy, areas where employee engagement and education are needed, and what new tools and programs might enhance financial well-being among your workers.

The Takeaway

Measuring your employees’ financial well-being now can lead to the design and implementation of benefits that will enhance financial wellness for all of your employees in the future.

SoFi at Work can help provide the wellness measuring tools you need to achieve that goal.

Photo credit: iStock/SDI Productions

SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For information on licenses, see NMLS Consumer Access (www.nmlsconsumeraccess.org ). The Student Debt Navigator Tool and 529 Savings and Selection Tool are provided by SoFi Wealth LLC, an SEC-registered investment adviser. For additional product-specific legal and licensing information, see SoFi.com/legal. Equal housing lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Source: sofi.com

Apache is functioning normally

July 15, 2023 by Brett Tams

The U.S. is often said to be facing a “housing crisis”, with much of it centered on a shortage of available homes for sale. But a new report from the National League of Cities says that abandoned and vacant homes across the country are also a big part of the problem.

In some parts of the country, vacant homes account for up to 20% of the housing stock, the report found.

“Abandoned homes can sit for years and become a real drain on the local government,” Kim Hart, managing editor at Axios, told CNBC.

Several midsize cities in the Midwest and Northeast regions have very high levels of vacancy rates, Hart said:

“Many of these cities were once manufacturing hubs and mills that employed a large number of people … but the populations have shifted,” she noted. And now, these cities are left with hundreds—even thousands—of vacant homes that are pulling down nearby property values and even posing safety concerns.

Some of the cities with big vacancy problems include Detroit; Cleveland; Baltimore; Philadelphia; Gary, Indiana; Youngstown, Ohio; and Flint, Michigan. For example in Gary, around one third of all homes (around 7,000 in total) are either abandoned or currently unoccupied.

At least, lawmakers in Gary are trying to tackle the problem. Their idea is to demolish many of the abandoned homes and make way for new lots for developers to build more affordable housing.

But demolition isn’t always the best course of action from a financial perspective, Hart said. The problem is it costs around $10,000 to demolish just one home, and that’s a conservative estimate. So Gary’s plans to demolish 7,000 homes could well cost it upwards of $70 million, which of course simply isn’t feasible.

Other cities have different ideas. For example in Baltimore, authorities are simply taking possession of abandoned homes and working with nonprofits to try and rehabilitate them for new buyers.

The report from the National League of Cities has called abandoned housing one of the “greatest challenges for cities.” But it’s too often overlooked as a way to boost economic growth, the report notes. When vacancies are higher than 20% of a community’s total properties, the number of vacant buildings may grow indefinitely and the market stops functioning, according to the report.

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]

Apache is functioning normally

July 15, 2023 by Brett Tams

SAN FRANCISCO —

Gia Gray seems like a dream client for any bank: a well-off family doctor living in an exclusive Bay Area town, in a 5,000-square-foot mansion with a master bath bigger than my office.

With a credit score topping 800, she expected little drama when she and her husband decided to refinance their Danville home and two other investment properties in 2020 to capture some of the lowest interest rates in recent history — remember when 3% loans were a thing?

But after endless excuses and delays in her applications, “I started feeling Black,” Gray told me. Her bank, Wells Fargo, flat out turned her down on the investment properties, she said, and slow-rolled the application on her residence, coming up with new requirements as the process dragged on.

“At the visceral level, I felt that something was not right,” she said.

Across the country, other borrowers have had similar experiences. Earlier this year, a federal court in Northern California, where Wells Fargo is headquartered, consolidated the claims of Gray and seven other Black plaintiffs into one case that may be certified as a class-action suit in coming months.

The lead attorney in the case, Los Angeles-based Dennis S. Ellis, says up to 750,000 minority customers nationwide — Black, Asian and Latino — could have been affected by what he sees as a pattern of discriminatory lending that left qualified borrowers denied or pushed into higher interest rates and more expensive loans.

It’s a form of modern-day economic redlining, he told me, that if proven true inflicted pain that resonated beyond the borrowers, many of whom lost out on a chance to save hundreds or thousands off their loans each month. It also hurt Black and minority communities as a whole, because it took away an exceptional chance to build generational wealth through affordable homeownership.

“Realizing the American dream of owning your own home is not just about having a safe place to live,” Ellis pointed out. “It’s about securing the future of generations that follow because of the incredible financial stability that homeownership provides.”

Ellis contends that the problem developed in part because Wells Fargo was short-staffed during the pandemic and relied on flawed algorithms and an automated system that may have had discrimination baked into it.

But it wouldn’t be the first time Wells Fargo was found to have discriminated. In 2012, the U.S. Department of Justice won a $175-million settlement against the bank, the second-largest fair-lending settlement in the department’s history, over allegations that Wells Fargo engaged in a pattern or practice of “discrimination against qualified African-American and Hispanic borrowers in its mortgage lending from 2004 through 2009.”

The cities of Oakland and Philadelphia have also sued Wells Fargo for discriminatory lending practices; Philly settled its case for $10 million in 2019.

Wells Fargo has been accused of holding fake job interviews with minority candidates for posts that had already been promised to other applicants, low-balling home appraisals and ignoring issues of discrimination that, as they come to light, may be harming the bank’s bottom line.

Wells Fargo has denied all of the allegations, including those made in this lawsuit. In a statement, the company said it was confident it was following all required guidelines and that its underwriting practices are consistently applied regardless of a customer’s race or ethnicity.

“These allegations against Wells Fargo stand in stark contrast to the company’s significant and long-term commitment to closing the minority home ownership gap,” the statement read.

It’s not just owning a home, though. It’s owning it on good terms.

Google tells me that a $500,000 30-year loan at 3% interest costs about $900 less a month than a loan at 6% interest — about $324,000 over its lifetime. For the folks who weren’t able to refinance, that’s money lining corporate pockets instead of paying for college or retirement or funding other investments.

The lawsuit alleges that in 2020, “at a time when millions of white Americans were able to take advantage of historically low-interest rates for home loans,” Wells Fargo approved 47% of refinancing applications from Black homeowners, 53% from Hispanic and/or Latino homeowners, and 67% from Asian American applicants. That compares with 71%, 79% and 85%, respectively, for these same groups across all other lenders, according to the lawsuit.

That same year, Wells Fargo approved 71% of residential refinancing applications from white borrowers.

Ouch, Wells Fargo. Those are some dismal numbers.

The lawsuit also alleges that federal data show Wells Fargo was more likely to approve refinancing applications from low-earning white borrowers than high-earning Black borrowers. Analyzing data from 8 million refinancing applications filed in 2020, Ellis and his team found white applicants earning less than $63,000 a year were “more likely to have their refinancing application approved by Wells Fargo than Black refinancing applicants earning between $120,000 and $168,000 a year,” according to the lawsuit.

The insidiousness of financial discrimination lies in how hard it is to prove on an individual basis — and in how hard it is to even believe it’s happening. The loan process can be so remote and impersonal — even more so during the isolation of the pandemic — that Gray and her co-plaintiffs were at first unsure if what they felt was really taking place.

Last week, Gray met two of those other borrowers in person at a news conference in San Francisco. I spoke with the three of them in a coffee shop afterward, but mostly I just listened, because there was a tremendous sense of relief and camaraderie as they shared how similar their experiences had been.

Until the lawsuit, Aaron Braxton, a Los Angeles homeowner, had been left wondering, “Are they doing this to everybody, or are they only doing this to Black folks?” he said.

Braxton was one of the first to file a complaint in 2020. A noted screenwriter, playwright and teacher, Braxton had owned his home in a historically Black neighborhood near USC for about 18 years and owed a fraction of what it was worth when he went to refinance his Wells Fargo mortgage. Like Gray, it was one thing after another, despite never missing a payment and having good credit. By the time Wells Fargo approved his loan, the interest rate had climbed and so had his frustration.

“I told them, ‘I am going to sue you. I don’t know how I’m going to sue you, but I am going to sue you, because I know I am not the only one,’” he said.

Gray was scrolling through her phone during the pandemic lockdown and came across a story about Braxton. “It was like a bright bulb,” she recalled, “and I said, ‘Oh, my God, this happened to someone else.’”

Christopher Williams flew in from Georgia, where he owns a home and rental properties. He worked in the financial industry for decades, so when Wells Fargo offered him a loan at 3 points higher than he expected, he asked why. Williams said the bank couldn’t give him clear answers, and he too began to suspect it was about the color of his skin.

Now, Williams said he wonders how many people there are who accepted loans at higher rates or with higher costs without knowing it. “How many of those loans and lines of credit are on the books of Wells Fargo right now?” he asked.

Ellis will be in federal court in San Francisco for the lawsuit on Thursday, the anniversary of the death of George Floyd. He says like the movement Floyd’s death set off to address issues of social justice, he hopes this case can raise awareness of financial injustice and its toll — which he considers the “21st century battleground of civil rights.”

“Just as we’ve cried out against policing practices that kill Black lives, so we denounce Wells Fargo’s racially motivated banking practices that kill Black opportunity,” said civil rights attorney Ben Crump, who is also involved in the case.

Interest rates are not as compelling as the tragedy we witnessed with Floyd, but Crump and Ellis make an important point.

This is a capitalist joint.

Until we all have the same opportunities to create wealth, we’re left with the oppressed and the oppressors, who too often get away with strangling equity under the cover of paperwork and algorithms.

Source: latimes.com

Apache is functioning normally

July 15, 2023 by Brett Tams

On average, stock market returns are higher than inflation, money markets, or bonds. Understanding this is an important step to any successful financial plan, but there is a huge difference between “average annual” and “every year”.

Many of the commonly-used approaches to financial planning take long-term average rates of return and then make the assumption that you will get that return every year. Say you build an investment portfolio that you think will have an average return of 8.5%. Just because the average is 8.5%, it should be obvious to anyone that has been alive the last 12 months that this does not mean we will get 8.5% every year.

While this may seem obvious, the implications are huge.

Let’s walk through two hypothetical examples. In both scenarios that follow assume:

They start with the same amount of money.
They add the same amount each month.
Both investments have the same average rate of return.

Scenario One: Bad Years First
You start with a small initial investment and then do the right thing by adding money each month. You feel like you are throwing good money after bad because each month your statement arrives and it is lower. But you continue to accumulate shares of the investment. After years of “bad” performance you have built up a sizable portfolio and the market turns, and you have years of “above” average returns. In this case the “good” returns came at the time when you had the most money to benefit from them.

Scenario Two: Good Years First
On the other hand, you could spend years adding to your portfolio every month and be very excited because the investments you have chosen perform really well right from the start. You have a bunch of “above average” returns for the early years when you don’t have a lot of money at risk. Then as you get more money “at risk” you have the normal cycle, and your investment is down for a few years. Here the “bad” returns came at the time when you had the most money at risk.

So both investments have the same rate of return, but the investor in scenario one ended up with more money.

Your investment return is only one part of the equation in a financial plan. (The other part is your life.) Because average is not normal, it is important to view financial planning as an ongoing process, and not a one-time event that assumes that we will receive that “average” rate of return.

Source: getrichslowly.org

Apache is functioning normally

July 15, 2023 by Brett Tams

New Year’s resolutions don’t have to be reserved for diets and exercise. Sometimes the area of your life that really needs attention is your finances. As 2022 ends and 2023 begins, this is your opportunity to reset and reevaluate.

The new year is the perfect time to give your finances a boost. Here are my top 15 financial New Year’s resolutions that can help improve your financial health.

I’m jumping in with the big ones first…

What’s Ahead:

1. Start investing

While it may not be the easiest resolution on this list, investing is one of the best ways to build your wealth. If you don’t think that you have time to start investing, I get it. Investing can take time to understand. We’ve done our best to lay out the different investing methods in our article: How To Invest: Essential Advice To Help You Start Investing.

While it’s totally possible to invest without the help of an advisor, many of us are choosing the advisor route because, let’s be honest, it’s just so much easier. Remember that advisors also include robo-advisors, which can help you decide what to invest in including when to buy and sell.

Read more: The Best Robo-Advisors

2. Build your emergency fund

When emergencies happen, you don’t want to be stuck without an emergency fund. Emergency funds can be lifesavers when unexpected challenges make their way into your life, like losing your job or getting into an accident, or a global pandemic.

So, if your emergency fund is non-existent at the start of the new year, it is time to change that!

To start, decide how much money you need in your emergency fund by calculating your monthly expenses. This should include not only your rent or mortgage but also your utilities and your basic expenses. Many financial experts agree that this should be at least three to six months’ worth of expenses, but it can’t hurt to overestimate how much money you would need in times of emergency.

If you need help calculating how much money you should save in your emergency fund, check out MU30’s handy emergency fund calculator to help you find your perfect number.

My husband and I like to keep our emergency fund in a high-yield savings account. These accounts allow us to access our savings quickly. Even better, high-yield savings accounts accrue interest at a higher rate than a traditional savings account, letting our money grow while it lies in wait.

Read more: Best High Yield Savings Accounts Compared

3. Pay off your credit card debt

If credit card debt is bogging down your financial success, why not make it a goal to tackle it in the new year?

Paying off your credit card debt is an important step in becoming financially healthy. If you don’t pay it off, you are doing a serious disservice to your credit score.

When searching for ways to pay off your debt, I recommend opening a balance transfer credit card. While it may sound counterproductive on one hand, these cards can help you consolidate your debt and even stop it from collecting interest for some time. That’s a big incentive right there!

Read more: How To Pay Off Credit Card Debt Fast – The Smart Way

4. Start a budget and track your expenses

If you don’t already have one, you need a budget. Creating and sticking to one could be the single best thing that you do for your finances in the new year. Budgets force you to take a hard look at the money that you bring in, the money that you shell out, and the money that you may owe.

If you have never followed a budget before, the thought of starting one can be daunting. The truth is, budgets can be incredibly freeing. Once you get used to following your budget, you can begin finding ways to free up cash to put towards your future.

Read more: How To Make A Budget: Our Step-By-Step Guide To Managing Your Money

5. Pay off your student loans

Student loan debt is one of the nation’s largest consumer debts and if you have it, you know just how painful it can be. Wouldn’t it be nice if you could get rid of your student loan debt altogether? Well, depending on how much you have, 2023 could be the year that you make it possible!

Making a plan to pay off your student loans is all about getting organized. Knowing who you owe, how much you owe, and how you will afford to pay off your loans should be your first priority.

If you are having trouble trying to fit your student loan payment into your budget, it’s worth it to give your lender a call. Often, you can work out income-driven repayment plans or deferments that can lessen the financial blow of your current loan payments.

Read more: Income-Based Repayment: Should You Do It?

6. Open a retirement account or fine-tune your existing one

When you are young, saving for your retirement probably sounds like the least exciting thing that you can do with your money. The truth is, the sooner that you start, the more secure you will be when your retirement comes. Investing in your retirement means that you are investing in your future.

If you’re employed, a quick conversation with your boss or human resources department can help you find out if your employer offers retirement accounts like 401(k)s or 403(b)s. Often, employers who have them will match a percentage of your annual contributions. This match is like an extra bonus from your employer that you don’t collect until retirement.

If your employer does not offer retirement accounts or you’re self-employed, you still have options for saving for your retirement. IRAs, or Individual Retirement Accounts can be opened by anyone.

Read more: The Beginner’s Guide To Saving For Retirement

7. Build your credit

If you are going into 2023 without any credit, it’s time to start building some. The credit system was put in place as a way to give future lenders and creditors information about potential borrowers. This allows them to make an informed decision and weigh the risks of loaning money to you.

If you haven’t built your credit, you could find yourself regretting it when you want to finance a car or even buy a house. Most lenders will not give out loans to people with poor credit and if you’re lucky enough to find one that does, your interest rates are often through the roof!

Taking out a loan with a cosigner or becoming an authorized user on your parent’s credit card can help you get started. Personally, I began building my credit with a secured credit card. When you get a secured credit card, you’ll need to put down a deposit, which then becomes your line of credit.

The OpenSky® Secured Visa® Credit Card is unique among secured cards in that they won’t run your credit when you apply, giving even those with no credit the ability to qualify.

Read more: Best Secured Credit Cards

8. Create a will

Don’t be fooled into thinking that having a will is just for old people. If you don’t have a will already, making it one of your New Year’s resolutions could benefit you and your family. Without one, in the event of your death, your state’s laws will determine who takes ownership of your assets and property.

If you’re wondering if you really need a will, the answer is probably a resounding yes. Most importantly, wills are strongly recommended for those who have children, have a spouse, or have a positive net worth. Having a will protects your family and your assets, something that all of us can agree is important.

If you don’t have a will, don’t put it off!

Read more: Do I Need A Will? Who Needs A Will (And When)

9. Spend less money

Everyone wants to save money, right? One of the best ways to do that is to consciously spend less of it. While it is easier said than done, spending less money in 2023 is doable with a few tweaks to your spending habits.

To begin spending less money, I recommend this: take a hard look at your budget and try to find spending categories that you can cut back on. Lessening, or even getting rid of, spending categories allocated towards things like coffee runs and eating out could save you a significant amount of money each month.

Here are a couple more of my favorite ways to save:

Find a better deal on cell phone service. Cell phone services can be expensive. If you haven’t shopped around lately, give it a try. Many cell phone service companies will work hard to beat their competitors and will often beat your current rate!
Learn how to clip coupons. Clipping coupons is an easy way to save money at the grocery store and beyond. Often found in local circulars and newspapers, using coupons can add up to some significant savings.
Make a grocery list. Grocery lists can keep you on track financially in the midst of temptation, saving you from overspending on snacks and unneeded ingredients.
Make coffee at home. Coffee runs add up quickly, but it would be hard to get through the workweek without it. Instead of running to the coffee shop, try making coffee at home and bringing it to work in an insulated thermos.
Bring lunch to work. If you are eating out for lunch every day, your finances are more than likely feeling the pressure. Why not try giving them a break and pack last night’s leftovers instead?
Have date nights at home. Date nights can be an important part of staying connected with your partner and you shouldn’t have to sacrifice them. Finding alternative date night ideas, like cooking dinner together at home, can help you rack in the savings.
Try a meal delivery service. Meal delivery services will deliver pre-portioned ingredients and easy-to-follow recipes straight to your door. Home Chef is just one option, offering meals that take as little as five minutes to prepare. Plus, whether you’re looking to cut back on meat, carbs, calories, or more, Home Chef has options for you.
Cut back on subscriptions – We live in a world overrun by subscription services. It can be easy to sign up for a bunch and then never use half of them.

10. Save money on insurance

Protecting the ones you love is always a priority. In 2023, why not make it a goal to do so, while also keeping more of your hard-earned money in your bank account? I’ve found that one of the best ways to do this is by saving money on insurance.

11. Define your long-term financial goals

Sometimes you get so caught up in your present financial situation that you forget to plan for the future. Setting long-term financial goals is an exciting way to keep yourself on track and to ensure that your money is working for you.

Long-term financial goals vary depending on the person and the state of their finances. These goals could include saving for retirement, a downpayment on your future home, or even saving for that trip that you have always wanted to take. After you have defined your financial goals, it is time to start planning for how and when you will reach them.

I like to organize my long-term financial goals into my monthly and yearly household budget. This allows me and my husband to aggressively work towards our goals.

12. Track your expenses

Implementing this habit in my household was easy. My husband and I decided to ask for receipts with every purchase, ensuring that we don’t miss any expenses. After making a purchase and returning home, we began recording the totals on our receipts into monthly spending categories. These include areas of spending like groceries, entertainment, and gas.

Knowing how much we spend each month allows us to not only make a more accurate budget but also plan for the future. Keeping track of your expenses gives you a reference to look back at when creating a budget, including utility bills that may change due to the seasons.

If you have a mortgage, chances are that you would like to get rid of it. Well, making extra principal mortgage payments in 2023 could help you be free from it faster!

Those who can afford to put extra money towards their mortgage, but don’t, are missing out on some major savings. If you pay your mortgage for the life of your original loan, you could end up paying nearly as much in interest as you do for your home itself.

For example:

A $150,000, 30-year mortgage with an interest rate of 4.5% will cost a total of $273,610 by the end of thirty years. This means that $123,610 of your payments have been made towards interest.

If you take the same mortgage, but pay an extra $100 monthly, you would save $29,723.18 and shorten your loan by six years and four months.

If you want to make paying down your mortgage a priority in 2023, simple loan pay-off calculators can help you figure out how much extra money you would like to put towards your mortgage.

You could also consider refinancing your mortgage, which can provide you with a much better interest rate, which, in turn, can lower the total cost of your loan.

14. Save money with money-making and reward apps

What if I told you that you are throwing money out the window every time that you shop online? If you are shopping without a cash back app, this is most definitely true for you! And since most of us have resolved to online shopping, this extra money could be adding up quickly!

To remedy this, I like to use a cash back app. Not only do cash back apps help you save money, but they can help you make money, too!

If you are looking to save, or make, money, Swagbucks may be a great choice for you. In fact, it is the internet’s leading rewards site! For users who are hoping to save money, I recommend installing Swagbucks browser extension, the “SwagButton.”

15. Get your taxes done early

Tax season is coming and there is no need to stress about it. Getting your taxes done early in 2023 can help put your mind at ease and save you from taking an extra trip out of the house. You may even find yourself with your return in hand faster than if you wait until closer to the deadline!

Filing taxes can be complicated. Luckily, there are great tax preparation companies that can help make filing a breeze and answer many of your tax questions – you can find a list of our favorites here.

Summary

The end of 2021 is fast approaching and it’s time to start thinking about the resolutions that you’ll make for 2023. While many of us – myself included – typically resolve to follow a healthier lifestyle, we sometimes forget to think about our financial health.

As 2021 comes to a close, start thinking about what you can do to make your finances stronger, because we never know when a financially challenging year will hit again.

Apache is functioning normally

July 15, 2023 by Brett Tams

It’s been a wild week in the markets but mortgage rates are on track to finish out the week at levels very close to where they were on Monday. With current mortgage rates continuing to move higher overall, the smart decision for most borrowers is to lock in a rate soon. Read on for more details.

[embedded content]

Market Recap 2.9.18 from Total Mortgage on Vimeo.

Where are mortgage rates going?

Treasury yields move higher to end the week

Volatility was the name of the game this week with the big crash on Monday in the markets, and then a series of ups and downs that ultimately have brought long-term Treasury yields, which is what’s most important to mortgage rates, back to about where they started the week.

Click here to get today’s latest mortgage rates (Jul. 15, 2023).

The yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) is up almost three basis points (one basis point = 0.01) on the day, putting it at 2.85%. It peaked briefly during early trading on Monday at 2.88% and bottomed out later that day at 2.65%.

The situation, in the bond market at least, quickly corrected itself with the 10-year yield moving higher on Tuesday, and continued on an overall upward trajectory for the rest of the week.

Mortgage rates typically move in the same direction as the 10-year yield, and are on the rise from where they were a week ago.

Here are the numbers from the latest Freddie Mac Primary Mortgage Market Survey, which is the most comprehensive mortgage rates survey for the United States:

The average rate on a 30-year fixed rate mortgage moved up ten basis points to 4.32% (0.6 points)
The average rate on a 15-year fixed rate mortgage went up nine basis points to 3.77% (0.5 points)
The average rate on a 5-year adjustable rate mortgage increased four basis points to 3.57% (0.4 points)

Here is what Freddie Mac’s Economic & Housing Research Group had to say about current mortgage rates this week:

“The U.S. weekly average 30-year fixed mortgage rate rocketed up 10 basis points to 4.32 percent this week. Following a turbulent Monday, financial markets settled down with the 10-year Treasury yield resuming its upward march. Mortgage rates have followed. The 30-year fixed mortgage rate is up 33 basis points since the start of the year. Will higher rates break housing market momentum? It’s too early to tell for sure, but initial readings indicate housing markets are sustaining their momentum so far. The MBA reported that purchase applications are up 8 percent from a year ago in their latest Weekly Mortgage Applications Survey.”

Rate/Float Recommendation

Lock now before rates rise further

Mortgage rates continued to move higher this week. This is a trend that has persisted for five straight weeks with no end in sight. If you’re considering locking in a rate on a purchase or refinance, our recommendation is to take action sooner rather than later in order to try and get the best possible deal.

Find out how to get the best rate possible with our in-depth video series.

Today’s economic data:

Nothing

Sorry, folks. Nothing to see here today.

Get the GreenLight and close in 21 days*

Notable events this week:

Monday:

PMI Services Index
ISM Non-Mfg Index

Tuesday:

International Trade
Fedspeak
JOLTS

Wednesday:

Fedspeak
EIA Petroleum Status Report
10-Yr Note Auction

Thursday:

Fedspeak
Jobless Claims

Friday:

*Terms and conditions apply.

Carter Wessman

Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.

Source: totalmortgage.com