Of the total number, 69.3% of borrowers remained in forbearance plans in July because of the pandemic, 6.5% were in forbearance because of a natural disaster, while the remaining 24.2% cited other reasons such as temporary hardship caused by job loss, death, divorce, disability, etc.
MBA’s report showed that the share of Ginnie Mae loans in forbearance fell from 0.93% in June to 0.80% in July. The percentage of Fannie Mae and Freddie Mac loans in forbearance inched down one basis point month over month to 0.20%, and the share of portfolio and private-label securities (PLS) loans in forbearance decreased seven basis points to 0.45%.
“The prevalence of forbearance plans has dramatically dropped since 2020, and the reasons that borrowers are in forbearance are changing,” said Marina Walsh, MBA’s vice president of industry analysis. “About two-thirds of borrowers are still in forbearance because of the effects of COVID-19, but a growing share of borrowers are in forbearance for other reasons that cause temporary hardship such as financial distress or natural disasters.”
While Fannie Mae and Freddie Mac have ended certain COVID-19 forbearance plans and workouts, the government-sponsored enterprises offer mortgage assistance and disaster relief options, especially for homeowners and renters affected by the ongoing wildfires in Hawaii.
“Given the recent natural disasters impacting California, Washington, and Hawaii, forbearance is one way for mortgage servicers to mitigate the potential impacts on homeowners,” Walsh said.
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Given the abundance of alternatives accessible today, finding the ideal rental property can be a difficult endeavor. Making the best decision necessitates a thorough evaluation of your needs, tastes, and budget, whether you’re looking for a charming condo in the center of the city or a large suburban property. We have gathered professional information to help you choose the greatest home that completely meets your particular requirements, so you can move through this procedure with ease.
Defining Your Priorities
Before beginning your search, take some time to list your priorities. Make a list of the “must-have” features, such as the number of bedrooms and bathrooms, if pets are permitted, and whether parking is available. A fitness center, pool, or in-unit laundry are a few other amenities to take into account. If you are clear on what you need, your search will be more effective and you won’t waste time on houses that don’t meet your demands. Additionally, keep in mind how crucial it is to place an emphasis on the neighborhood’s safety and security, especially if you have a family or live alone. To feel safe in your new home, research the crime statistics and general neighborhood safety.
Setting a Realistic Budget
A realistic budget is another critical step in locating the ideal residence for your requirements. Consider all of your expenses, including not only the monthly rent but also those for utilities, parking, and any security deposits. Experts recommend that your total housing expenses not exceed 30% of your monthly pay. You’ll be able to concentrate on homes that are within your price range and save needless financial pressure by creating a budget. Although sticking to a budget is essential, keep in mind that you shouldn’t give up too many of your must-have features. A location that meets the majority of your needs and provides comfort for the duration of your visit is worth the extra money.
Choosing an Excellent Location
The location is one of the most important elements to think about. Your everyday life and overall contentment with your new house can be greatly impacted by the neighborhood. Consider factors like proximity to a place of job or education, ease of access to public transportation, and local amenities like grocery stores, parks, and recreation facilities. If you’re looking for great apartments for rent in Charlotte NC, be sure to explore neighborhoods that align with your lifestyle and offer the amenities you desire. A seamless transition into your new rental will be facilitated by selecting a location that suits your needs and improves your daily living experience.
Conducting Thorough Research
Start doing extensive research on properties with your preferences and budget in mind. To view listings in your selected area, use online rental platforms, real estate websites, and local classifieds. Utilize search filters to reduce the possibilities available to you depending on your interests. It’s also a good idea to check reviews and comments left by previous tenants to get a better understanding of how the property is managed and how it’s generally maintained. Don’t be afraid to visit the neighborhood at different times of the day to get a sense of the atmosphere, traffic, and noise levels. You can make intelligent decisions and ensure that you don’t overlook any potential warning flags by doing a comprehensive study.
Evaluating Lease Terms and Conditions
It’s critical to thoroughly assess the lease terms and conditions of the houses you’re interested in as you reduce your options. Pay special attention to the lease’s term, any potential renewal conditions, and, if applicable, the rules governing pet fees and security deposits. Look out for any limiting language that can affect how you live, such as restrictions on decorating or subletting. Ask the landlord or property manager for clarification if there is anything you are unsure of. You can ensure a straightforward experience and find a place that feels like home by being completely informed about the lease agreement to assist you avoid any surprises or disputes in the future.
Seeking Professional Assistance
It can be difficult to navigate the market, especially if you don’t know much about local real estate. Seeking professional help in such circumstances can be really beneficial. You can obtain individualized advice from real estate brokers or rental companies based on your requirements and spending limit. By providing you with pertinent and appropriate homes, their experience can help you save time and effort. They may also help you with the application and lease processes, making the whole procedure easy and hassle-free. In order for your agent to adapt their search and uncover the greatest possibilities that meet your criteria, keep in mind to explicitly convey your expectations to them.
Selecting the ideal rental property for your requirements demands a calculated strategy and a clear understanding of your preferences. You’ll be well on your way to discovering the perfect place that meets your needs if you heed this professional guidance. Happy home searching!
Amazon and the Amazon logo are trademarks of Amazon.com, Inc, or its affiliates. Rental providers will not refuse to rent a rental unit to a person because the person will provide the rental payment, in whole or in part, through a voucher for rental housing assistance provided by the District or federal government.
A rental agent is your personal guide in the world of real estate rentals. While we often associate real estate agents with home purchases, rental agents specialize in helping you find the perfect apartment or house to rent. They’re the experts who know the rental market like the back of their hand, equipped with a deep understanding of local neighborhoods, rental trends, and available properties.
In this article, we’re diving into the world of rental agents and how they can be the game-changer you didn’t know you needed for your next living space. So, whether you’re a first-time renter or a seasoned tenant, let’s uncover how a rental agent can transform your search for your next apartment or house.
Should you use a real estate agent to find your next rental?
Using a real estate agent to find your next apartment or home offers many advantages that streamline the process and enhance your overall experience. These professionals possess in-depth knowledge of the local rental market, which can help them find properties that align with your preferences and budget. In highly competitive markets such as Los Angeles, New York City, Miami, and Boston, the role of rental agents becomes paramount in the quest to secure an apartment. However, it’s worth noting that rental agents are not exclusive to these larger cities; they are also present in smaller cities, offering valuable assistance to those seeking lease accommodations.
7 key ways a rental agent can help you
Navigating the rental market can be a challenge, but with a skilled rental agent by your side, you’ll have a seasoned expert to guide you. From finding the right apartment or house to handling negotiations and paperwork, here are the key ways a rental agent can make your renting journey a breeze.
1. Tailored property searches
A rental agent will curate a list of rental options that match your preferences, saving you time by presenting choices that align with your needs and budget.
2. Local expertise
With in-depth knowledge of the area, your agent will provide insights into neighborhoods, schools, transportation, and amenities, helping you make an informed decision.
3. Protection from scams
Rental agents prevent you from scams by verifying ownership, checking landlords, and ensuring legally sound leases, creating a safe rental process.
4. Schedule property viewings
Say goodbye to endless property visits. Your agent can schedule and coordinate viewings for you, ensuring you see the most suitable options without the hassle.
5. Communicate with landlords on your behalf
These agents act as intermediaries, communicating with landlords on your behalf to address queries, negotiate terms, and facilitate effective communication throughout the rental process.
6. Assist with lease negotiations
Leave the negotiating to the pros. Rental agents are skilled at securing favorable lease terms, rental rates, and other terms on your behalf.
7. Help you through the application process
Through the application process, rental agents provide the necessary forms, explain requirements, and assist with document submission.
How much do you pay real estate agents?
The cost of a real estate agent for rentals can vary based on factors such as location, market norms, and the specific services offered. Typically, you can expect to pay around one month’s rent or a percentage of one year’s rent. So if you rent an apartment in Tallahassee for $2,000 a month, you could pay anywhere between $2,000 to $2,400 if the agent takes 10% of the annual rent. However, practices can differ from region to region, so clarifying the terms and fees with the agent before entering into any agreements is essential. Consulting with the agent or agency upfront will help you understand the cost structure and any potential fees associated with their services in your market.
Where can you find a real estate agent that works with rentals?
You can find agents through various channels. A common approach is to search on reputable real estate agency websites, where agents often list their specialties and contact information. Additionally, requesting recommendations from friends, family, or colleagues who have recently rented properties can yield reliable referrals. Ultimately, online research, word-of-mouth referrals, and attending local events can help you find an excellent real estate agent to assist you in your apartment or home search.
The bottom line
In a nutshell, rental agents are your go-to resource for a stress-free renting experience. They’ve got your back, whether it’s finding the right place, protecting you from scams, or handling all the paperwork. So, whether you’re on the hunt for your first apartment or your rental dream house, partnering with a rental agent could be the key to a smoother, safer, and simpler renting experience.
Townstone Financial filed a response to the Consumer Financial Protection Bureau appealing the dismissal of a redlining suit it brought against the mortgage lender in 2020.
In a brief filed Aug. 14, the Chicago mortgage lender argued the Seventh Circuit Court of Appeals should affirm the U.S. District Court for the Northern District of Illinois decision, which granted the lender a victory and rejected the bureau’s argument that an anti-discrimination law protects prospective borrowers.
At the time, the District Court ruled that government watchdog’s suit was invalid because the Equal Credit Opportunity Act applies only to home loan applicants, not to potential applicants.
Richard Horn, co-managing partner at Garris Horn LLP and legal counsel for Townstone, called the CFPB’s appeal “an uphill battle” for the bureau and its “arguments weak.”
He noted he was not fully surprised the agency appealed the case because of the “level of hubris internally.”
“The [CFPB] may have some blinders to their legal risks because it doesn’t affect any of the staff there internally…everyone is getting paid and no one is getting fired,” he said. “If the CFPB loses, which we firmly believe they will, they could also appeal to the Supreme Court, so this could go on for a while.”
The CFPB declined to comment.
The Federal Trade Commission, however, did provide input in early June. An amicus brief authored by James Doty, an attorney for the FTC, said the “Congress’s aim of equal access to credit would be a nullity if creditors could blatantly broadcast to protected classes that their applications were not welcome.”
“In upending almost fifty years of law, the district court ignored Congress’s plain language directing regulators to further ECOA’s “purpose” and prevent its “evasion,” Doty’s letter reads.
The suit, launched by the government watchdog almost half a decade ago, accused Townstone of engaging in illegal redlining by discouraging prospective Black applicants from applying for home loans.
The bureau’s complaint alleged that from 2014 through 2017, the company’s CEO and president made statements that “discouraged prospective applicants living in African-American neighborhoods in the Chicago MSA from applying to Townstone for mortgage loans.”
Such alleged remarks included the company’s CEO describing the South Side of Chicago between Friday and Monday as “hoodlum weekend” and that the police are “the only ones between that turning into a real war zone and keeping it where it’s kind of at.”
In February, Judge Franklin Valderrama of the Illinois federal court gave Townstone a victory.
The case was dismissed with prejudice, which meant the CFPB could not refile the complaint. However, the Bureau still maintained a right to appeal. On April 3, it filed a notice with the Seventh Circuit Court of Appeals stating it would do that. The filing did not go into the specific reasons it elected to challenge Judge Valderrama’s ruling.
A handful of closely followed mortgage rates grew over the last seven days. The average 15-year fixed and 30-year fixed mortgage rates both increased. The average rate of the most common type of variable-rate mortgage, the 5/1 adjustable-rate mortgage, also increased.
As inflation surged in 2022, so too did mortgage rates. To rein in price growth, the Federal Reserve began bumping up its federal funds rate — a short term interest rate that determines what banks charge each other to borrow money. By making it more expensive to borrow, the central bank’s goal is to reduce prices by curtailing consumer spending.
During its July 26 meeting, the Fed initiated a 25-basis point (or 0.25%) hike to its federal funds rate, marking its 11th increase in the current rate hiking cycle. The most recent increase could have an impact on mortgage rates, but experts say the markets may have already factored it into rates.
Current mortgage rates for August 2023
The Federal Reserve just increased interest rates. That might cause a change in mortgage rates. Shop around and find a rate you can afford now. By entering your information below, you can get a custom quote from one of CNET’S partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
The Fed doesn’t set mortgage rates directly, but it does play an influential role. Mortgage rates move around on a daily basis in response to a range of economic factors, including inflation, employment and the broader outlook for the economy. A lower inflation rate is good news for mortgage rates, but the potential for additional hikes from the central bank this year will keep upward pressure on already high rates.
Rather than worrying about mortgage rates, though, homebuyers should focus on what they can control: getting the best rate they can for their financial situation.
30-year fixed-rate mortgages
For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 7.39%, which is a growth of 5 basis points from one week ago. (A basis point is equivalent to 0.01%.) The most frequently used loan term is a 30-year fixed mortgage. A 30-year fixed mortgage will often have a higher interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. You won’t be able to pay off your house as quickly and you’ll pay more interest over time, but a 30-year fixed mortgage is a good option if you’re looking to minimize your monthly payment.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 6.65%, which is an increase of 6 basis points from the same time last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a larger monthly payment. But a 15-year loan will usually be the better deal, if you can afford the monthly payments. These include usually being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.
“Mortgage rates have hovered in the 6% to 7% range for the past 10 months. Though home prices have softened slightly nationally, the still-high cost of borrowing means hopeful home buyers have felt little relief,” said Hannah Jones, economic research analyst at Realtor.com.
A bipartisan energy bill that was introduced to the Senate late last month would benefit mortgage borrowers who buy or refinance energy-efficient homes.
The SAVE Act, co-authored by U.S. Senators Michael Bennet (D-CO) and Senator Johnny Isakson (R-GA), would allow federal mortgage agencies to consider a property’s energy efficiency and expected energy bills when determining a homeowner’s ability to repay their mortgage.
Energy Reports Become Part of the Mortgage Underwriting Process
When applying for a federally backed loan, such as an FHA loan, VA loan, or Fannie Mae/Freddie Mac loan, the borrower would have the voluntary option to submit a so-called energy report.
From this report, lenders would determine the energy savings associated with any green fixtures, such as energy-efficient appliances, windows and insulation, or solar panels, and compare them to average energy costs for similar homes in the area.
Those savings could then be used to offset other monthly liabilities when determining the borrower’s debt-to-income ratio, thereby giving the consumer more purchasing power.
It could also mean the difference between an approval and a denial if the borrower’s DTI was right on the cusp, particularly important with the new Qualified Mortgage rules.
Additionally, lenders would be able to factor in the present value of energy savings into the value of the home when calculating the loan-to-value ratio.
So if a home came equipped with solar panels or some other energy-savings upgrades, they could actually lower the LTV, and potentially push a loan below key thresholds.
For example, a lender could add energy upgrades to a home’s value to push the LTV down to 80% or lower to help a borrower avoid private mortgage insurance.
Lenders would also be required to inform loan applicants about the benefits of energy efficiencies and the resources available to them.
Additionally, the legislation would allow homeowners to finance energy upgrades into their mortgages.
Homeowners Spend $70,000 on Energy Costs During 30-Year Mortgage Term
The lawmakers claim the average homeowner spends $2,500 in energy costs annually, or a whopping $70,000 during a 30-year mortgage term.
Energy efficiency upgrades can lower these costs by 30% or more, putting cash in the pockets of homeowners that could even go toward paying down the mortgage earlier.
Last year, a study conducted by the University of North Carolina at Chapel Hill (UNC) Center for Community Capital and the Institute for Market Transformation (IMT) found that owners of energy-efficient homes were about a third less likely to miss their mortgage payments.
The author of the study argued that green homeowners could be entitled to lower mortgage rates, further increasing their purchasing power.
If passed, the SAVE Act could result in energy savings of $1.1 billion, which in turn would be funneled back into the economy.
Investment in energy-efficient home building also has the potential to create an estimated 83,000 construction jobs.
The agencies intend to tackle two challenges evident during the Covid-years refi boom: higher costs due to appraiser shortages and concerns regarding bias in home valuations.
In their letter, MBA and CBA said that AVMs and technologies like them can alleviate appraiser shortages, reduce transaction costs, and safeguard against individual appraisal bias. Ultimately, a robust regulatory framework continues to be a critical imperative to achieve these outcomes.
However, any regulation should consider the practicalities of model risk management and its potential unintended consequences.
For example, the associations said the proposed rule includes Fannie Mae and Freddie Mac to the new standards, which creates a level playing field in the market. But the trade groups are worried about the impact of quality control standards on the GSEs’ alternative valuation methods, such as desktop appraisal, since these tools are essential in times of high demand.
“MBA and CBA suggest that the agencies consult with the GSEs to ensure that application of the quality control standards would not create adverse effects on the availability of alternative valuation methods,” the letter states.
In addition, regulators should be aware of any unbalanced market effects of AVMs regulations, conflicting interpretations of the legal framework, and the lack of established methodologies in examining systemic bias in the U.S., the trade groups state.
The agencies involved include the Federal Housing Finance Agency; the Consumer Financial Protection Bureau; the National Credit Union Administration; the Federal Deposit Insurance Corporation; the U.S. Department of the Treasury; and the Federal Reserve System.
Per the proposed rules, each institution using AVMs will adopt and maintain its practices, procedures, and control systems, reducing the burden on smaller institutions. But the trade groups request the agencies to include a small lender/servicer exemption from the standards, as these companies are likely to rely on larger outside service providers subject to a thorough review by regulators or larger clients.
Regarding third-party providers, the associations suggest that the CFPB expand its Compliance Bulletin 2016-02, Service Providers to outline expectations and potential recourse “for quality control and fair lending oversight” of third-parties providing AVMs services. In addition, MBA and CBA said that creditors should not be liable for violating nondiscrimination law when relying on third-party AVMs, disagreeing with the agencies’ interpretation of the Fair Housing Act.
The MBA and the CBA requested an adequate implementation timeline of at least 12 months.
The White House supports a new rule for AVMs, which follows goals set out by the president in addressing issues of racial bias that have exacerbated homeownership and wealth gaps. When announcing the proposed rule, Vice President Kamala Harris weighed in.
“Today, I’m proud to announce we are developing a rule that will require that financial institutions ensure that their appraisal algorithms are not biased, for example, that they do not produce lower valuations for homes owned by people of color,” Harris said. “We are also releasing the guidance to make it easier for consumers to appeal what they suspect to be unbiased valuation.”
Another trade group weighed in on the newly proposed rule.
The National Association of Mortgage Brokers (NAMB) said it supports new federal regulatory proposals governing the use of AVMs.
“The reality is the systems and structures are themselves, in some cases, problematic,” said NAMB President Ernest Jones in a statement. “Even when appraisers follow the intended approach, it may result in an outcome that disenfranchises people. They could be doing everything in a way they feel is consistent with the approaches they’ve learned and for which they’re certified, but there are some underlying issues that need to be addressed.”
The mixed-use structure at 843 N. Spring St. designed by Lever Architecture is one of the largest mass timber structures in Los Angeles.
(Paul Turang)
From a distance, the building under construction at 843 N. Spring St. in Chinatown might seem like many of the commercial structures popping up around L.A.: four stories of open-plan offices rise above ground-level retail spaces that one day will house restaurants and shops. But move in closer and you’ll find some surprising details‚ including a ground-level arcade dotted with rough tree ferns and a rooftop patio planted with foxtail agaves and purpletop vervain. What is most notable, however, is wood — which is everywhere.
Look up and you’ll find that the building’s floor plates are partly supported by broad panels of mass timber, the generic term used to describe a variety of industrial, engineered woods. 843 N. Spring is part of a wave of such structures springing up around the United States. In Milwaukee, you can find a new 25-story mass timber residential tower, and a forestry college in Oregon now inhabits a pair of graceful mass timber buildings.
It may seem counterintuitive, but mass timber can match or exceed the strength of concrete and steel. Also counterintuitive: The material performs well in a fire. (In much the same way a large log will fail to ignite in a campfire, mass timber’s solidity is not conducive to rapid fire.) And, in fact, it has been subjected to a battery of testing both in the U.S. and abroad, including blast tests that have allowed for its use by the military.
Thomas Robinson, co-founder of Lever Architecture, a firm with offices in Portland, Ore., and L.A. that has helped pioneer the use of mass timber in the U.S., says, “It’s very different from what you buy at Home Depot.”
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An atrium features landscape design by James Corner Field Operations.
(Myung J. Chun / Los Angeles Times)
Thomas Robinson is a co-founder of Lever Architecture, which is known for its mass timber projects.
(Myung J. Chun / Los Angeles Times)
Among Lever’s projects are mass timber buildings for Adidas and the Oregon Conservation Center in Portland. The team is also behind the thoughtful design at 843 N. Spring, which includes landscape design by James Corner Field Operations (the studio behind the remarkable Tongva Park in Santa Monica).
At the moment, 843 N. Spring is probably the largest structure employing mass timber in Los Angeles, though it could soon be outdone by a mixed-use development at the border of Culver City and West Adams designed by Shop Architects. Whatever its scale, the building is an intriguing example of the possibilities of the material.
Trees, for one, sequester carbon, and unlike concrete and steel they don’t require intensive fabrication processes — they just grow. A study published in 2019 in the Journal of Building Engineering, which examined the use of mass timber from harvest to construction, found an average reduction of 26.5% in global warming potential. Mass timber is also produced in prefab panels, which means it can be milled to the specific dimensions of a project, thereby limiting waste, staging and construction times. If a mass timber building is torn down, wood can be reused. Concrete is not nearly as flexible: When it meets the wrecking ball, it generally ends up as landfill.
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Mass timber was used in the floorplates of a hybrid structure in L.A.’s Chinatown for L.A. developer Redcar.
(Myung J. Chun/Los Angeles Times)
A view of City Hall from the rooftop at 843 N. Spring St., which features landscape design by James Corner Field Operations.
(Myung J. Chun / Los Angeles Times)
Certainly, just because it’s wood doesn’t make it environmental. Clear-cutting, for example, is devastating to local ecologies. “Part of our job is to ask the right questions,” Robinson says. “You’re really trying to identify forests that are managed in a way that really thinks about sustainable forest practices for the long term.”
Lever prefers wood that has received sustainability certifications from the Forest Stewardship Council, which includes the timber used in the Spring Street project. Transport to the site is also key. Wood for the building was harvested in British Columbia and transferred to L.A. by ship, which is less carbon intensive than trucking it in overland.
The Spring Street building is a hybrid structure, meaning it still employs steel and concrete. But this is mitigated by other elements in the design.
843 N. Spring St., in the foreground at right, is next to the Chinatown Metro station.
(Myung J. Chun / Los Angeles Times)
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Rather than tear out the vacant big-box store that inhabited the site, the architects built on top of it, thereby avoiding additional emissions and demolition waste. In the existing underground lot, they added stacked parking, which made room for additional cars without more digging, and — more important — added generous bicycle storage. (The building practically sits on top of the Chinatown stop of the A Line, making it an ideal hub for multimodal transit.) Unusual for a commercial building, the design also prioritizes fresh air: Each unit has operable windows and sliding doors that allow for passive ventilation.
No building can be carbon-zero — construction consumes resources. But the process can be far less carbon intensive. And, as 843 N. Spring also proves, it can look really good.
During the initial wave of the banking crisis in March, I published “Truist: Immense Unrealized Bond Losses Threaten Core Equity Stability.” At the time, Trust Financial Corp. (NYSE:TFC) had suffered the most significant drawdown among the top-ten US banks. Roughly five months ago, I was among the few analysts with a definitively bearish outlook on the bank, while many had viewed it as a dip-buying opportunity. My perspective was that although TFC’s “bank run” risk was low, the vast extent of its off-balance sheet losses left it with little safety for a potential rise in loan losses. Further, I expected that growing net interest margin pressures would substantially lower the bank’s income over the coming year, potentially compounding its risks.
Since then, TFC has declined by an additional ~11% in value and recently retraced back near its May bottom, associated with the failure of the Federal Republic. I believe the most recent wave of downside in at-risk banks is a notable signal that the market continues to underestimate systemic US financial system risks. Of course, following TFC’s most recent bearish pattern, I expect many investors to increase their position, viewing the company as significantly discounted. Accordingly, I believe it is an excellent time to take a closer look at the firm to estimate better its discount potential or the probability of Truist facing much more significant strains.
Estimating Truist’s Price-to-NAV
On the surface, TFC appears to have considerable discount potential. The stock’s TTM “P/E” is 6.3X compared to a sector median of 8.7X. Its forward “P/E” of 7.7X is also below the banking sector’s median of 9.3X. TFC’s dividend yield is currently at 7.2%, nearly twice as much as the sector median of 3.7%. Finally, its price-to-book is 0.66X, considerably lower than the sector median of 1.05X. Based on these more surface-level valuation metrics, TFC appears to be around trading around a 25% to 35% discount to the banking sector as a whole. Of course, we must consider whether or not this apparent discount is pricing for the bank’s elevated risk compared to others.
Importantly, Truist is one of the most impacted banks by the increase in long-term securities interest rates, giving the bank huge unrealized securities losses. Based on its most recent balance sheet (pg. 12), we can see that Truist has about $56B in held-to-maturity “HTM” agency mortgage-backed-securities “MBS” at amortized cost, worth ~$46B at fair value, giving Truist a $10B loss that is not accounted for in its book value. That figure has remained virtually unchanged since its Q4 2022 earnings report through Q2 2023; however, it will rise with mortgage rates since higher rates lower the fair value of MBS assets. Truist’s Q2 report also notes that all of its HTM MBS securities are at due over ten years, meaning they’re likely ~20-30 year mortgage assets that carry the most significant duration risk (or negative valuation impact from higher mortgage rates).
Significantly, the long-term Treasury and mortgage rates have risen in recent weeks as the yield curve begins to steepen without the short-term rate outlook declining. See below:
Data by YCharts
From the late 2021 lows through the end of June, the long-term mortgage rate rose by around 4%, lowering Truist’s MBS HTM assets fair value by ~$10B, while its available-for-sale securities lost ~$11.9B in value (predominantly due to MBS assets as well). Accordingly, we can estimate that the duration of its securities portfolio (almost entirely agency MBS) is roughly $5.5B in estimated losses per 1% increase in mortgage rates. Since the end of June, mortgage rates have risen by approximately 35 bps, giving TFC an estimated Q3 securities loss of ~$1.9B. Around $1B should show up on TFC’s balance sheet and income, while ~$900M will remain unrealized based on its current AFS vs. HTM portioning.
For me, we must value TFC accounting for both. Total unrealized losses and estimated losses based on the most recent changes in long-term interest rates. That said, should mortgage rates reverse lower, Truist should not have that $1.9B estimated securities loss in Q3; however, should mortgage rates continue to rise, the bank should post an even more considerable securities loss. At the end of Q2, Truist had a tangible book value of $22.9B. After accounting for unrealized losses, that figure would be around $12.9B. After considering the losses associated with the recent mortgage rate spike, its “liquidation value” is likely closer to $11B. Of course, Truist has a massive ~$34B total intangibles position due to goodwill created in its acquisition spree over the past decade. Although relevant, I believe investors should be careful in accounting for goodwill due to the general decline of the financial sector in recent years.
While much focus has been placed on unrealized securities losses, the risk associated with those losses is vague. Truist can borrow money from the Federal Reserve at par against those assets, partially lowering the associated liquidity risk. However, the Fed’s financing program is at a much higher discount rate (compared to deposit rates) and only lasts one year, so it is not a permanent solution. Further, the unrealized securities losses are on held-to-maturity assets, meaning it will recoup the losses should the assets be held to maturity. Of course, that means it may take 20-30 years, and Truist may need that money before then.
Further, Truist has a substantial residential mortgage portfolio at a $56B cost value at the end of Q2 (data on pg. 48). Those loans had an annualized yield of 3.58% in 2022 and 3.77% in 2023; since the yield did not rise proportionally to mortgage rates, we know the vast majority of those loans are likely fixed-rate long-term. Since they’re not securities positions, Truist need not publish their changes in fair value; however, should Truist look to sell its residential mortgages, they would almost certainly sell at a similar total discount to its MBS assets, considering its yield level is akin to that of long-term fixed-rate mortgages before 2022. I believe the unrealized loss on those loans is likely around $10B.
The rest of Truist’s loan portfolio, worth $326B at cost, is predominantly commercial and industrial ($166B), “other” consumer ($28B), indirect auto ($26.5B), and CRE loans ($22.7B). Excluding residential mortgages, all of its loan portfolio segments have yields ranging from 6-8% (excluding credit cards at 11.5%), with those segments’ total yields rising by around 3-4% from June 2022 to 2023. Accordingly, it is virtually certain that most of its non-mortgage loans are either short-term or fixed-rate since their yields rose with Treasuries, meaning they do not likely face unrealized losses based on the increase in rates.
Overall, I believe that if Truist were to liquidate its assets, its net equity value for common stockholders would be roughly zero, technically $1B. That figure is based on its current tangible book value, subtracting known unrealized losses on securities (~$10B), estimated recent Q3 realized and unrealized losses (~$1.9B), and estimated unrealized mortgage residential loan losses (~$10B). While the bank does have some MSR assets, worth ~$3B, that are positively correlated to rates, I do not believe that segment will offset unrealized losses in any significant manner. Together, those figures equal its tangible book value and would lower the total book value to about $34B. However, in my view, intangibles are not appropriate to account for today because virtually all banks have lost value since its 2019 merger, making its goodwill an essentially meaningless figure.
From a NAV standpoint, TFC is not trading at a discount and is most likely trading at a significant premium. Further, based on these data, Truist is, in my view, seriously undercapitalized. Although TFC posts a CET1 ratio of 9.6%, which is also relatively low, its common tangible equity would be essentially zero if its loans and securities were all accounted for at fair value. To me, that is important because most of its losses are on ultra-long-term assets so it may need that lost solvency sometime before those assets’ maturity. Further, even its 9.6% CET1 ratio is close to its new regulatory minimum of 7.4%, so a slight increase in loan losses or a realization of its estimated ~$22B in unrealized losses would quickly push it below the regulatory minimum.
Truist Earnings Outlook Poor As Costs Rise
To me, Truist is not a value opportunity because it is not discounted to its tangible NAV value. Even its market capitalization is around 65% above its tangible book value, which does not account for its substantial unrealized losses. However, many investors are likely not particularly concerned with its solvency, as that could not be a significant issue if there are no increases in loan losses, declines in deposits, or sharp NIM compression. If Truist can maintain solid operating cash flows, that could compensate for its poor solvency profile.
Of course, TFC cannot continue to try to expand its EPS by increasing its leverage since it is objectively overleveraged, nearly failing its recent stress test. On that note, poor stress test results are essential, but “passing” is somewhat inconsequential, considering most of the recently failed banks would have passed with flying colors, as the test does not account for the substantial negative impacts of unrealized losses on fixed-income assets. That is likely because, when “stress testing” was designed, it was uncommon for long-term rates to spike with inflation as it had, and banks had much lower securities positions compared to loans. Thus, it is quite notable that TFC nearly failed a test that does not account for its substantial unrealized losses.
Looking forward, I believe it is very likely that Truist will face a notable decline in its net interest income over the coming year or more. Fundamentally, this is due to the decrease in Truist’s deposits, total bank deposits, and the money supply. As the Federal Reserve allows its assets to mature, money is effectively removed from the economy; thus, total commercial bank deposits are trending lower. Truist’s deposits are trending lower in line with total commercial banks. I expect Truist’s deposits to continue to slide as long as the Federal Reserve does not return to QE. As Truist competes for a smaller pool of deposits, its deposit costs should rise faster than its loan yields. Today, we’re starting to see the spread between prime loans and the 3-month CD contract, indicating that bank NIMs are declining. See below:
Data by YCharts
Truist’s core net interest margin has slid from 3.17% in Q4 2022 to 3.1% in Q1 2023 to 2.85% in Q2. Truist’s deposits (10-Q pg. 48) have generally fallen faster than its larger peers, so it needs to increase deposit costs more quickly. Over the past year, its total interest-bearing deposit rate rose from 14 bps to 2.19%, with the most significant rise in CDs to 3.73%.
Notably, Truist has increased its CD rate to the 4.5% to 5% range to try to attract depositors. However, the bank continues not to pay any yield on the bulk of its savings account products, causing a sharp increase in customers switching toward the many banks which pay closer to 5% today. Over the past year, the bank saw around $10B in outflows for interest-bearing deposits and about $25B from non-interest-bearing deposits, making up for those losses with new long-term debt and CDs. Problematically, that means Truist is rapidly losing more-secure liabilities to more fickle ones like CDs and the money market. While this effort may slow the inevitable decline of its NIMs, it will also increase Truist’s solvency risk because it’s becoming more dependent on less secure liquidity sources as people move money between CDs more frequently than opening and closing savings accounts at different banks.
Truist also faces increased expected loan losses due to a rise in late payments last quarter. That trend is correlated to the increase in consumer defaults and the sharp decline in manufacturing economic strength. See below:
Data by YCharts
Consumer defaults remain normal, but I believe they will rise as consumer savings levels continue to fall and should accelerate lower with student loan repayments. The low PMI figure shows many companies face negative business activity trends, increasing future loan loss risks on Truist’s vast commercial and industrial loan book. Of course, Truist also has a notable CRE loan portfolio, which faces critical risks associated with that sector’s colossal decline this year.
The Bottom Line
Overall, I believe Truist has become even more undercapitalized since I covered it last. I also think Truist faces an increased risk of recession-related loan losses and has a more sharp NIM outlook. Even more significant increases in mortgage rates recently exacerbated strains on its capitalization, while its low savings rates should cause continued deposit outflows. Further, its increased CD rates should create growing negative net interest income pressure.
If there was no recessionary potential, as indicated by the manufacturing PMI, then TFC may manage to get through this period without severe strains; however, its EPS should still decline significantly due to rising deposit costs. That said, if Truist’s loan losses continue to grow due to increasing consumer and business headwinds, its low tangible capitalization leaves it at high risk of significant downsides. If its loan losses grow or its deposits decline, it will need to realize more losses on its assets, quickly pushing its CET1 ratio below its new regulatory minimum. Personally, I strongly expect TFC’s CET1 ratio will fall below the 7.5% level over the next year and could fall even lower if a more severe recession occurs.
I am very bearish on TFC and do not believe there is any realistic discount potential in the stock besides that generated by speculators. Since there is a significant retail speculative activity in TFC and some potential for positive government intervention due to its larger size, I would not short TFC. Although TFC downside risk appears significant, many factors could create sufficient temporary upside that it is not worth short–selling. That said, I believe Truist may be the most important financial risk in the US banking system due to its solvency concerns combined with its size and scope. Accordingly, regardless of their position in TFC, investors may want to keep a particularly close eye on the company because it may create more extensive financial market turbulence than seen from First Republic Bank should it continue to face strains.
Inside: Are you looking for a safe and convenient way to buy and sell gift cards? If so, CardCash may be the perfect option for you. This comprehensive review will explore everything you need to know about this popular online marketplace.
Gift cards often seem like the perfect hassle-free gift solution, but receiving a card from a retailer that doesn’t align with your interests can result in unused potential and wasted money.
This is a common occurrence, with Americans currently holding around $21 billion in unused gift cards (source).
I know I have plenty of unused gift cards – probably around $300 worth laying around.
In response, companies like CardCash.com have stepped in to make these cards useful again and alleviate this universal frustration.
The simple goal is to help you extract value from those unwanted or unused gift cards by providing a platform to sell them safely. The solution not only converts unused cards into cash but also offers the opportunity to swap them for discounted cards from preferred retailers or a prepaid Mastercard.
Here is my CardCash review on the simplicity of getting cash for my unused gift cards.
In an era of savvy shopping and financial mindfulness, CardCash is a promising solution to make the most of every gift card.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What is CardCash?
CardCash is a valuable online platform you can tap into for buying, selling, and exchanging gift cards. A brainchild of Elliot Bohm and Marc Ackerman, it was launched in 2009 with the goal of solving the problem of unused gift cards in America.
Via the CardCash platform, you can:
Sell your gift cards for up to 92% of the card’s value based on the popularity of the retailer.
Use CardCash to purchase gift cards, at a discounted rate, in bulk from over 1100 brands including big names like Amazon, Walmart, Starbucks, and CVS.
Swap your gift card for another retailer. You won’t get the same value though.
Remember, though, you won’t quite get the full value of your card as CardCash keeps a small percentage.
Does CardCash pay you instantly?
No, CardCash does not provide instant payments with cash.
Instead, after your order is approved, payments are typically made within a 48-hour window. This is due to standard processing times.
However, if you select another gift card. That will be available once your order is approved.
The invoice for the gift card claims to offer approximately 92% of the card’s value, but it’s worth noting that the actual payout can be lower at times.
How Does CardCash Work?
CardCash is a brilliant platform if you’re looking to sell, buy, or exchange gift cards. Here’s a quick guide on how you can get started:
Sign up on CardCash.com.
To sell a gift card, enter the merchant’s name and the balance on the gift card.
CardCash will give you an offer; if you accept, you get paid via mailed check, ACH payment, or PayPal. Or you can opt for a Prepaid Mastercard or another retailer gift card of your choice.
To buy a gift card, browse through the list of available cards and pick one that suits you.
Proceed to payment and enjoy your discounted gift card!
Pro Tip: Always check the price differences between the card value and the purchase price for the best deals.
How much does CardCash pay for gift cards?
Contrary to what CardCash claims, you won’t receive the full 92% of your gift card’s value.
The actual amount you’ll get depends largely on how popular the issuing merchant is. For popular sellers like Amazon or Walmart, you might get closer to their claim, but not always.
Sadly, for less-known retailers, offers might sink as low as 50% of your gift card’s worth.
Pros of CardCash
Considering an online platform for buying, selling, or swapping gift cards? CardCash is definitely one to consider.
Personally, I wanted to test it out and today you can find my CardCash Review.
The distinct features of CardCash include:
A wide selection of gift cards from over 1100 retailers
Instant payment in cash or a swap for another gift card when you sell your unused gift cards
Exclusive offers and discount opportunities for regular users
Convenience as the platform is easy to use and provides a hassle-free experience for users who buy or sell gift cards.
Unused gift cards can be sold for cash or swapped for your preferred merchant’s gift cards, giving value to otherwise wasted money.
Very user-friendly: It’s simple and effortless to buy and sell gift cards on this platform – a massive plus for users.
With all these advantages, CardCash makes a pretty compelling case as your go-to online gift card marketplace.
CardCash, a reputable gift card marketplace, might just be the perfect match for your needs!
Cons of CardCash
Before you decide to use CardCash, it’s important to weigh the drawbacks of the platform against its benefits.
Recognizing these concerns helps you make an informed decision and avoid potential hiccups along the way.
Here are the top cons to using CardCash:
Lower Payouts: When you decide to sell your gift cards on the platform, you might receive lower payouts than you’d expect. Be sure to carefully evaluate these potential losses.
Merchant isn’t on Platform: Not all merchants are available on the platform, which is unfortunate.
Short Buyer Protection Guarantee: Compared to other gift card marketplaces, CardCash’s 45-day buyer protection guarantee feels rather insufficient. For comparison, Raise offers a guarantee for a full year.
Disappearing Balances: Many users have reported issues with their card balances mysteriously disappearing, which can be quite unsettling. Learnwhy this unfortunately happens.
Is CardCash Legit?
Yes, CardCash is legit.
They’re a longstanding player in the gift card industry, thanks to robust security measures and a user-friendly platform.
Established over a decade ago, they have experience in offering a secure platform for buying, selling, or trading gift cards.
How do you go about sending eGift cards to CardCash?
Converting eGift cards works essentially the same way as converting physical gift cards. You still get the same benefits whether you are converting eGift cards or physical ones.
All you need to provide is the relevant information about the eGift card.
The payment process for selling eGift and physical gift cards is the same.
You can receive payment in cash or you can exchange for another gift card of your choosing.
Expert Tip: Make sure to accurately provide all necessary details regarding your eGift card to ensure a smooth transaction process.
CardCash Common Questions
CardCash is a website that allows you to buy, sell, and trade gift cards.
I tested out the site with various gift cards as part of my Cardcash review.
As this concept may be new to you, let’s answer some common questions about CardCash and give you our honest opinion on whether or not it’s a legit website.
1. Are CardCash transactions safe?
CardCash transactions are generally safe.
As a reputable marketplace for gift cards, CardCash enforces strict security measures like other platforms such as eBay or Amazon. However, it’s important to remember that you’re dealing with third parties that could potentially misuse gift card PINs.
To counteract this, CardCash offers a money-back guarantee for unsatisfied purchases. For example, if a gift card you bought is exposed as fraudulent, you can get your money back.
Despite this, always exercise caution, and use common sense while making transactions.
2. Are there any fees when buying or selling a gift card?
When you’re buying or selling gift cards on CardCash, there are no fees applied to your transactions.
The platform allows free signup and doesn’t charge for usage.
Purchasing a gift card? Absolutely zero fees. All you pay for is the discounted cost of the card itself.
Selling a gift card? No worries, still no fees. After providing your card details and balance, you’ll receive an offer. If you accept, the payment goes directly to you via check, PayPal, or direct deposit with no extra charges.
For instance, you have a $50 Best Buy gift card. After inputting the details, CardCash offers $45. If you accept, the $45 is sent to you without any deductions.
3. Is there any risk of identity theft when buying or selling gift cards?
Identity theft is when someone unlawfully obtains and uses your personal information, often for fraudulent purposes.
No, there should not be the risk of identity theft when buying or selling gift cards.
4. Is CardCash safe to use?
CardCash is definitely safe for use.
Operating since 2009, the platform is not only registered but also provides users with advanced security measures to secure personal data and transactions.
With a physical address and listed contact number, assistance is always at hand. Think of CardCash like a vault – your unused gift cards are safe to sell on it and your personal details are locked away securely.
5. Does CardCash buy stolen gift cards?
No, CardCash does not buy stolen gift cards. That is 100%, not their intent.
When you sell a gift card to CardCash, they require you to provide certain personal details to comply with federal anti-money laundering laws. CardCash uses these details to verify the authenticity of the sale and the seller.
However, remember that CardCash is an online marketplace where third-party vendors sell cards. Although most users are honest, there’s a risk of encountering scams unfortunately, and you should always exercise caution when using the platform.
Learn how to handle an Amazon package says delivered but not received.
6. Is it safe to buy gift cards with a credit card?
It is safe to buy gift cards with a credit card as long as you are using a reputable source.
When you use a credit card, you have the added protection of being able to dispute the charges if you do not receive the gift card or if it is not what you expected.
Make sure you are on CardCash’s legit website and you see the lock on the search bar indicating a secured website.
7. Are there any drawbacks to using CardCash?
One key drawback is the misleading discount rates.
Partner websites listed on CardCash may promise higher discounts than they actually deliver, leaving you scratching your head when your wallet feels lighter than expected.
As part of my Cardcash review, my Red Robin gift card valued at $25 would only receive $15.75 cash, which is 63% of its value.
Another significant concern is the 45-day buyer protection. Your best bet is to use your gift card within this limited time frame to avoid losses.
8. What are CardCash’s payout options?
For most, you want a direct, monetary form of compensation which is quite advantageous for those individuals who prefer having cold, hard cash as opposed to holding onto a gift card that they will never use.
Here are CardCash’s payout options:
Cash: CardCash allows users to sell their gift cards in exchange for cash. You can get a mailed check, ACH payment, or PayPal.
Prepaid Mastercard: Besides cash, CardCash also gives users the option to receive their payment via a Prepaid Mastercard. This is a convenient option, especially for those who like to keep their funds digital or for those who might not have convenient access to a bank.
Another gift card: One of the unique payout options provided by CardCash is the ability to exchange a gift card for another one. This option typically gives you a higher payout amount as well. But, you are limited to the merchants offered.
Just remember, payouts can fluctuate and might be less depending on the popularity of the gift card’s merchant.
9. Is it safe to sell gift cards on CardCash?
CardCash is a trusted platform where you can safely sell your unwanted gift cards.
However, keep in mind that you probably won’t get the full face value of the card, as the company keeps around 8-10% of its value.
Despite this, it’s a reliable way to make some money from unused gift cards. Card Cash is not a scam
10. What should I do if I have a complaint about CardCash?
If you’ve got complaints about CardCash, it’s crucial to voice them right away – that’s how issues get resolved.
Try reaching out to their customer support using the “Contact Us” form on their website.
If your complaint is due to balance discrepancies within 45 days of purchase, then email [email protected].
If that doesn’t work, send a detailed email to [email protected]. Be sure to mention specific problems and desired outcomes.
Most importantly, if there’s an issue with a gift card you bought, ensure you file a complaint within 45 days of purchase to receive a full refund.
My CardCash Review
Having firsthand experience with CardCash, I can share my insights about the process and how it measures up to my expectations.
Firstly, the process was indeed straightforward to navigate. The platform has been designed in a very user-friendly way that facilitates convenience and efficiency. It’s quite simple to get onboard, sell, or purchase a gift card.
However, there was a slight hitch – the value percentage offered. This slippage is more than I anticipated.
According to my experience and perception, the payouts for selling gift cards felt a bit lower than expected.
Here were the values I was given:
=> Olive Garden = 71% of value => Red Robin = 63% of value => Chili’s = 70% of value => DoorDash = not an option to sell
Gauging the 45-day buyer protection guarantee initially, it seemed impressive as it ensures a refund if the gift cards don’t function as advertised. However, there’s a catch – the gift cards should be used within this 45-day window, as the 45-day guarantee goes away.
In a nutshell, the experience with CardCash has been a positive experience. Personally, I would have rather been given the cash to use as a please versus a gift card.
However, all of the local gift card exchange kiosks don’t trade in gift cards. So, I felt my options were limited and chose to use CardCash.
FAQ
Yes, selling gift cards for cash is legit.
You need to use a verified site to avoid a scam.
A credit card is needed on CardCash for several reasons.
In order to use the service, you must have a credit card so that you can be properly verified. This is necessary in order to protect both the buyer and the seller.
This CardCash Review Should Help You
So, you’re considering CardCash for buying or selling gift cards, huh?
Well, on the positive side, CardCash offers an easy channel for getting rid of unwanted gift cards or buying new ones with a discount – sounds like a good deal, right?
Buying gift cards with a credit card from sites like CardCash can be safe, provided you take some precautions.
For me, it was a simple process and I chose another gift card.
Consequently, it’s important to remember that you’re purchasing second-hand gift cards, which could potentially have odd issues come up.
To ensure your value, make use of the 45-day guarantee. For example, if you’re planning a big purchase next month, buy the gift card now and make sure to use it within this timeframe. This minimizes the risk of being left with a worthless card after the guarantee period.
So, do your homework, understand how CardCash operates before diving in, or consider other options for more reliable service.
Just remember, while buying, you pay about 90-92% of the card value, and while selling, you get the same.
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