Apache is functioning normally

July 10, 2024 by Brett Tams

Homes in Nunaka Valley neighborhood of East Anchorage. (Loren Holmes / ADN)

Last year in Anchorage, housing reached its least affordable level in the last 21 years — worse even than during the Great Recession more than a decade ago, according to new data from the Alaska Department of Labor and Workforce Development.

State economists reported a similar statewide trend in May. In 2023, housing in Alaska was at the least affordable level since 2006.

The cost of home ownership in Alaska has increased dramatically since 2018, according to data provided by Alaska Housing Finance Corp. The average mortgage payment — principal loan amount plus interest, but excluding property taxes, insurance and other costs — rose by 52% between 2018 and 2024.

Rents have soared in that same time period.

“The rental market has gone up by about 24% in terms of the pricing escalation across the state,” said Daniel Delfino, an economist and director of planning at Alaska Housing Finance Corp.

City officials have called the situation in Anchorage a housing crisis. They’ve pointed to a tangle of factors: the spike in housing costs, a low rental vacancy rate, a rising number of short-term vacation rentals, a decline in housing development, increasing building costs and a labor shortage, among others.

The new data sheds further light on the difficulties of renting or buying a home in Anchorage today.

It’s become a central issue in recent city policymaking and discourse. Mayor Suzanne LaFrance, sworn in on Monday, says housing is a top priority for her administration.

The Assembly has aimed to spur more housing development with a series of changes made to city code over the last two years. Late last month, the Assembly voted to essentially eliminate single-family zoning in the Anchorage Bowl, by allowing duplexes to be built in areas that were previously zoned only for houses.

To Assembly Vice Chair Meg Zaletel, one of the sponsors of last week’s measure, a housing crisis means that people across the economic spectrum “can’t achieve appropriate housing, attainable housing that’s suitable to their needs,” she said.

“That’s renters who are stuck at the top of the rental market who can’t move into home ownership. That’s people needing to double or triple up in order to afford rent. That means there just aren’t enough housing units for the market to respond to the various circumstances and needs,” she said.

More expensive, fewer homes for sale

Downtown Anchorage, photographed from Fish Creek. (Loren Holmes / ADN)

The median rent in Anchorage increased by 7.8% since last year, rising from $1,275 to $1,375 in 2024, according to AHFC’s data. That doesn’t include the cost of utilities.

AHFC’s rental data comes from a yearly survey in March done by the state Department of Labor. It “runs the full gamut” of rental housing, from studios to four bedrooms and larger, and excludes rentals that have income restrictions, like those for affordable housing programs, Delfino said.

This year’s increase comes after Anchorage rents rose 14.2% in 2022 and jumped another 5% in 2023, according to state data.

The U.S. Department of Housing and Urban Development defines being “housing cost burdened” as spending more than 30% of a person or household’s monthly income on rent or mortgage payments and utilities.

Among economists, there isn’t a broadly used definition of a “housing crisis,” nor is there a defined level of ideal affordability, said Rob Kreiger, an economist with the Alaska Department of Labor and Workforce Development who authored the May report.

That’s because what may be affordable varies by the circumstances and income of an individual, he said.

But with Anchorage housing at its “least affordable level” in two decades, “I think right now, what we’re seeing is, it’s really prohibitive for first-time buyers to afford a home, and it’s really expensive to rent as well,” Kreiger said.

Statewide, “it’s more expensive, and there are fewer homes on the market,” Delfino said, adding that the reported number of homes sold and mortgage loans recorded has dropped “pretty significantly over the past couple of years.”

According to the National Association of Homebuilders’ chief economist, more than 86% of residents can’t afford the cost of a newly constructed home in Anchorage.

State economists measure home purchase affordability with the Alaska Affordability Index, a calculation that uses the average mortgage payment and average monthly wages to determine how much income it takes to afford a home.

An average index of 1 would mean that average monthly wages are just enough for one person to afford the average monthly mortgage payment for an average priced home.

The state and Anchorage saw the lowest indexes — the most affordable housing — in 2020 and 2021. Mortgage interest rates dropped significantly during that time as the federal government took actions to stabilize the economy during the pandemic, Kreiger said.

But by 2023, Anchorage’s affordability index jumped to 1.8. That means to afford the average Anchorage home, it takes about two people working full time at the average wage.

The Anchorage-specific data only dates back to 2002, and housing last year was at its least-affordable level in that timespan.

In 2023, Alaska’s overall affordability index was 1.66, the highest since 2006. That dataset dates back to 1992.

‘Alaska has a problem with keeping young people’

What the state data doesn’t show or quantify is how the rapid increases in housing costs are affecting everyday residents, Delfino and Kreiger said in separate interviews.

“Given that things have moved a lot, and so quickly recently, it’s that stuff underneath the data set that affects real people that I would say is probably really pressing when we talk about the affordability,” Delfino said.

Before passing the zoning measure, the Assembly last month heard an outpouring of testimony from Anchorage residents. Many described struggling to find homes to rent or buy, or told stories of loved ones moving away because housing here is scarce and expensive.

“Based on my experiences as a renter and as a young person in Anchorage, it is very difficult for young people to find adequate housing in Anchorage. If you have a pet — forget about it,” said Sean McDowell, a renter in South Addition. McDowell said he lost his previous housing because the owner turned it into an Airbnb for the summer.

“We all know that Alaska has a problem with keeping young people. If there’s nowhere to live for young people, if it’s difficult to find a long-term rental in Anchorage, young people are going to keep leaving,” McDowell said.

Sean McDowell testified before the Anchorage Assembly about the lack of affordable housing at a meeting in June . McDowell is a renter in the South Addition neighborhood, where he was photographed this week. (Anne Raup / ADN)

“To what extent is housing playing in people’s decision to leave or stay here? It’s hard to say,” Kreiger said.

As homeownership becomes more expensive, the point in a person’s life when they switch from renting to buying a home moves further out, Kreiger said in his May report.

“That gap is wider and wider, so it’s harder and harder to make that transition. So we see people that, six years ago, would have become homeowners, staying in an increasingly tight renter market,” Delfino said.

And then there’s wages.

For some Alaskans, raises and regular cost of living pay increases have helped to defray the pressure of rapidly rising housing costs.

But for many residents, it’s unlikely wages will increase quickly enough in the near term to make up the difference, Kreiger said.

“When we’re looking at inflation that’s as recent as it is, how quickly everyone’s salaries have caught up to the increased cost of living, I think, drives how acutely people feel the affordability pinch,” Delfino said.

A worker in Alaska, paid at the state’s minimum wage, $11.73 an hour, needs to work 75 hours a week in order to afford a modest, one-bedroom apartment at the statewide fair market rent, according to the National Low Income Housing Coalition’s annual report.

A full-time worker in Anchorage needs to make at least $27.96 per hour to afford a two-bedroom at the fair market rent of $1,454. A person making minimum wage would need to work 96 hours to afford the same apartment, according to the report.

Getting back to average

Homes in Anchorage’s Westpark development south of Ted Stevens Anchorage International Airport. (Loren Holmes / ADN)

Another factor in increased housing costs is how rapidly mortgage interest rates have risen. Interest rates are a “critical component” making housing less and less affordable, Kreiger said.

When rates dropped during the pandemic, “it brought a lot of competition and buyers to the market that wouldn’t have otherwise been able to participate,” Kreiger said.

The average sales price for a single-family home in Anchorage rose 26% between 2019 and 2023, from $389,477 to $490,596, according to state data.

“Because you had that big rush of buyers and all that competition, and you have on top of that, this limited amount of homes for sale and limited construction … that’s really what I think put prices up so high,” Krieger said.

Since then, the average interest rate for 30-year fixed-rate mortgages has seen an unprecedented rise, according to Kreiger’s May report.

The average rate in Alaska is 6.33% — the highest since 2006.

Not only is it more difficult for a first-time home buyer to purchase a place to live, but the high interest rates can keep people stuck in homes they’ve owned for a few years.

“When the costs go up, especially if you’re a person who locked in an interest rate at 2.5% and you’re looking at moving, it’s the question of, could you afford your own home if you had to buy it today?” Delfino said.

For many residents, the answer is likely no, he said.

It’s another impact that’s difficult to quantify.

“We know all these things are happening,” Kreiger said. “… We know that there’s people who are stuck, we just don’t know how many there are.”

Still, for many longer-term homeowners who’ve built up equity, the market has never been better, Kreiger said in his report.

Housing affordability is unlikely to change much in the near term, Kreiger said. Wages will rise over time, but not quickly. Home sales prices “may level off and may come down a bit,” but not significantly, he said.

Interest rates are the most realistic variable that could help drive the index back down, he said.

Barring another major event like the pandemic, the rate is “not going to come down to where it was,” Kreiger said. “And depending on how things go with inflation, it may not actually happen for quite some time, but eventually they will come back down and create more of a normal situation.”

Anchorage’s average affordability index between 2002 and 2023 is 1.47.

In order to get back to the average affordability, wages would need to increase 22.5%, or home sales prices would need to drop by 18.4% — or around $90,000.

If only the average interest rate for a mortgage changed, it would need to drop to 4.5%.

• • •

Source: adn.com

Apache is functioning normally

July 10, 2024 by Brett Tams

As a type of alternative investment, real estate can add diversification to a portfolio and act as a hedge against inflation. Real estate investment trusts (REITs) and real estate crowdfunding offer two unique entry points to this alternative asset class.

Both allow you to invest in real estate without being required to own property directly. Comparing the pros and cons of real estate crowdfunding vs. REIT investing can help you decide which one makes the most sense for your portfolio.

Understanding Real Estate Investment Trusts (REITs)

Real estate investment trusts are legal entities that own or finance income-producing properties or invest in mortgage-backed securities. The types of properties a REIT may invest in can include:

• Hotels and resorts

• Office space

• Warehouses

• Storage space

• Multifamily apartment buildings

• Data centers

• Medical facilities

• Retail shopping centers

• Single-family homes

The primary attraction of REITs is the ability to enjoy the benefits of property investment — namely, dividend income — without purchasing real estate directly.

REITs are also considered a type of alternative investment. As with many alternative investments, real estate-based assets don’t tend to move in sync with the stock market. For this reason, investing in REITs may provide portfolio diversification.

REITs may be publicly traded, meaning they trade on an exchange like a stock. REITs must pay out 90% of their taxable income to shareholders as dividends, though some may pay as much as 100%.

If you compare REITs vs. real estate mutual funds, dividends aren’t always required with the latter. Real estate mutual funds can invest in REITs, mortgage-backed securities, or individual properties. While you may have access to a broader range of properties, you may enjoy less liquidity with real estate funds.

Recommended: SoFi’s Alt Investment Guide for Beginners

Alternative investments,
now for the rest of us.

Start trading funds that include commodities, private credit, real estate, venture capital, and more.

💡 Quick Tip: While investing directly in alternative assets often requires high minimum amounts, investing in alts through a mutual fund or ETF generally involves a low minimum requirement, making them accessible to retail investors.

Overview of Real Estate Crowdfunding

What is real estate crowdfunding? It’s a strategy that allows multiple investors to pool funds for property investment. In return, investors share in the profits generated by the investments. Regulation crowdfunding makes real estate crowdfunding possible, as entities can raise capital from investors without registering with the SEC, as long as they offer or sell less than $5 million in securities.

In terms of how it works, real estate crowdfunding platforms seek out investment opportunities and fully vet them before making them available to investors. Individual investors can then choose which properties they’d like to invest in.

Depending on the nature of the investment, you may collect interest payments, rental income, or dividends. Real estate crowdfunding can offer access to a variety of property types, including:

• Multifamily housing

• Industrial space

• Build-for-rent projects

The minimum investment varies by platform — it is commonly upwards of $5,000, but may be $500 or even lower in some cases. Some real estate crowdfunding platforms require investors to be accredited, meaning they must:

• have an income exceeding $200,000 (or $300,000 with a spouse or spousal equivalent) in each of the two prior years, with an expectation of the same income for the current year, OR

• have a net worth exceeding $1 million, alone or with a spouse/spousal equivalent, excluding the value of their primary residence, OR

• hold a Series 7, Series 65, or Series 82 license in good standing

Comparing REITs and Real Estate Crowdfunding

When choosing between a REIT vs. crowdfunding, it’s helpful to understand each option’s potential advantages and disadvantages.

Pros and Cons of REITs

Here are the main benefits of investing in REITs vs. crowdfunding.

• Risk management. Alternative investments like real estate may help you balance risk in your portfolio. REITs and real estate in general have a lower correlation with the stock market.

• Accessibility. Purchasing an actual investment property usually requires getting a loan and raising capital for down payments and closing costs. REITs can offer a much lower barrier to entry for investors.

• Dividends. REITs must pay dividends to investors, which may be attractive if you want to generate passive income with investments.

• Liquidity. Publicly traded REITs offer liquidity since you can buy and sell shares as needed, similar to a stock.

• Returns. REITs can potentially generate significant returns in a portfolio compared to stocks or other investments.

Now, here are some of the drawbacks of REIT investing.

• Fees. You’ll typically pay management fees to invest in REITs, as with any investment, but some may charge more than others. Paying attention to investment costs is key, as the more fees you pay, the less of your investment returns you keep.

• Overweighting. You can choose which REITs to invest in, but you don’t have a say in the underlying properties. Investing in REITs that own similar properties could overweight your portfolio in a single sector (e.g., malls or office buildings) and thus increase your risk profile.

• Interest rate risk. Changing interest rates can affect the value of REITs, which can influence the yield you might get. When rates rise, REIT values can decline, requiring you to adjust your expectations for a profit.

• Taxes. REIT dividends are typically taxed as ordinary income, up to 37% (plus a 3.8% investment surtax). But investors may also see a short- or long-term profit from the REIT, which would be taxed as capital gains. There is also the potential for return on capital, which can be complicated. It may be wise to consult a professional.

Pros and Cons of Real Estate Crowdfunding

Here are the main pros of crowdfunding real estate investments.

• Diversification. As with REITs, real estate crowdfunding allows you to diversify beyond traditional stocks and bonds.

• Low minimums. Some, though not all, real estate crowdfunding platforms allow you to get started with as little as a few hundred dollars. That can make entering this alternative asset class or spreading your investment dollars out over multiple property types easier.

• Geographic diversification. Real estate crowdfunding platforms can offer investors exposure to markets across the country. That can make it easier to target a specific region if you’re looking for the next “hot” market.

• Returns. Crowdfunded real estate may generate above-average returns, or exceed the returns you could get with REITs.

• Passive income. Owning a rental property can be time-intensive if you’re managing the property yourself. Real estate crowdfunding allows you to reap the benefits of rental income, without the typical headaches that go along with being a property owner.

And now, here are the cons.

• Fees. Just like REITs, real estate crowdfunding platforms can charge fees. Fee structures can sometimes be complex, making it difficult to assess what you’ll pay to invest.

• Illiquidity. Liquidity in the stock market is one thing, but when it comes to real estate crowdfunding, it’s an even bigger consideration owing to the length of time your capital may be locked into an investment. Once you invest in a property, you’re essentially committed to owning it for the duration of the holding period. It’s not unusual for real estate crowdfunding platforms to offer investments with holding periods of five years or more, making them highly illiquid.

• Accreditation requirements. Some crowdfunding platforms only accept accredited investors. If you don’t meet the standards, you won’t be able to invest through those platforms.

• Taxes. Income from crowdfunded real estate investments is taxable, though not always in the same way. You may be subject to different tax rates based on how dividends and interest are paid out to you. You may want to consult with a professional.

Which Investment Strategy Is Riskier?

It’s difficult to pinpoint which is riskier when comparing a REIT vs. real estate crowdfunding, as each one has different risk factors.

With REITs, the biggest risks may include:

• Liquidity risk, which could make it difficult to sell your shares if you’re ready to leave an investment.

• Changing market conditions or rising and falling trends, either of which could directly impact real estate values.

• Interest rate sensitivity, which can influence REIT values.

The main real estate crowdfunding risks may include:

• Platform risk, or the risk that the marketplace you’re using to invest could shut down before you’re able to withdraw your capital.

• Poor vetting, which may allow unsuitable investments to make it onto the platform.

• Changing regulations, which may affect the real estate crowdfunding space as a whole.

Whether you choose a REIT vs. crowdfunding, lack of education or understanding is also a risk factor. If you don’t understand the basics of how either type of investment vehicle works, you could be putting yourself in a position to lose money.

Due Diligence Considerations

REITs and real estate crowdfunding platforms should perform due diligence in vetting investments to make sure they’re suitable. However, it’s wise to do your own research to understand what you’re investing in, who you’re investing with, and the potential risks.

As you compare REITs or real estate crowdfunding platforms, keep the following in mind:

• Minimum requirements to start investing, including accredited investor status

• Range of investment options

• Transparency concerning fees and investment selection

• Holding periods

• Performance track record

• Overall reputation

Talking to other investors who have used a particular crowdfunding platform or invested in a certain REIT can offer perspective on the good and bad.

The Takeaway

Real estate can be an addition to your portfolio if you already have some experience in the market, and have an affinity for real estate. As a type of alternative asset class, investing in real estate can add diversification to your portfolio, and potentially act as a hedge against inflation. Both REITs and real estate crowdfunding enable you to invest in real estate without the hassle of actual property ownership and maintenance, but come with different risk factors than you’d find with traditional securities.

Ready to expand your portfolio’s growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi’s easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it’s important to consider your portfolio goals and risk tolerance to determine if they’re right for you.

Invest in alts to take your portfolio beyond stocks and bonds.

FAQ

What are the main advantages and disadvantages of investing in REITs?

Investing in REITs can offer the benefits of dividend income and portfolio diversification, without requiring you to own property directly. The disadvantages of REITs can include interest rate risk and market risk, both of which can affect the value of your investments.

How does real estate crowdfunding differ from traditional REIT investments?

Real estate crowdfunding allows investors to pool funds together to invest in property and collect interest, dividends, and/or rental income. REITs own and operate investment properties and pay dividends to investors. REITs and real estate crowdfunding can differ concerning the types of properties you can invest in, the minimum investment required, and the fees you’ll pay.

How are taxes treated for REITs and real estate crowdfunding?

REIT dividends are primarily treated as ordinary income for tax purposes (although you may face capital gains on any profits). Real estate crowdfunding returns may be subject to capital gains tax and/or ordinary income tax rates, depending on how they’re structured. Because the tax treatment of these two entities can be complicated, it’s probably wise to consult a professional.

Photo credit: iStock/kate_sept2004

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.

1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.

2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.

For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.

Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor’s risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at [email protected]. Please read the prospectus carefully prior to investing.

Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.

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.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.
SOIN-Q224-1900951-V1

Source: sofi.com

Apache is functioning normally

July 10, 2024 by Brett Tams

As expected, Federal Reserve Chairman Jerome Powell did not set a timeline for lowering interest rates during his semiannual monetary policy report to Congress on Tuesday morning when participants complained about the effects of a tightening monetary policy in the housing market.

Powell indicated that Fed officials are not there yet, but suggested a better balance of inflation and employment in the U.S. economy. Most monetary policy watchers – about 70% – project a reduction in rates for the Fed meeting in September, according to the CME Fedwatch Tool.

Powell said during the congressional hearing that reducing the federal funds rate target range will be appropriate once Fed officials have gained greater confidence that inflation is moving sustainably toward the 2% target.

Incoming data for the first quarter of this year did not support such greater confidence, he said. One caveat: “The most recent inflation readings, however, have shown some modest further progress, and more good data would strengthen our confidence that inflation is moving sustainably toward 2%.”

Regarding the labor market, Powell said that the U.S. economy has a “strong labor market” but not an “overheated labor market,” which “appears” to be back in balance and is not a source of broad inflationary pressures now.

“If we loosen policy too late or too little, we could hurt economic activity. If we loosen policy too much or too soon, then we can undermine the progress on inflation. So, we’re very much balancing those two risks,” Powell added.

Affordability challenges

High housing costs and mortgage rates were mentioned several times during the congressional hearing, with members saying these are concerns of their constituents at the moment.

“Keeping rates too high for too long threatens workers’ paychecks while keeping other costs high – particularly housing,” said Senator Sherrod Brown (D-OH), the chairman of the Senate Banking, Housing and Urban Affairs Committee. “It is no surprise that since the Fed began raising rates, the amount of income families need to qualify for a mortgage has nearly doubled.”

Brown added that higher interest rates make the housing supply shortage “worse, not better.” According to him, the U.S. needs more housing construction, but higher rates lead to the opposite and “particularly make it harder for multifamily construction to work financially.”

Powell agreed that the COVID-19 pandemic created new distortions in the housing market, and the Fed’s tighter policy is affecting the housing sector.

“But I would also say the best thing we can do for housing is to succeed in getting inflation down to 2% on a sustainable basis so that rates can come down so that the housing market can get back to what was the pre-pandemic normal, which is still a housing shortage,” Powell added.

Basel III Endgame rules

The Basel III rules (aka the Basel endgame) were criticized by participants during the congressional hearing. They significantly increase bank capital requirements and, if implemented, affect the mortgage industry.

Ranking Member Tim Scott (R-S.C.) said the proposal is an example of “overregulation” that would “cost millions of Americans their chance to own a home.” It would “force more money to the sidelines of the greatest economy on the planet and out of the hands of first-time homebuyers,” he added.

“We need transparency in your rulemaking process, as this enormous proposal lacks any form of clear justification… That’s why I believe that it is absolutely necessary to have a complete re-proposal of Basel III Endgame.”

Powell, however, said that over the last several months, the Fed has held a series of discussions with the other bank regulatory agencies – the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) – about potential changes to the original proposal.

“I’m pleased to say that we’ve made quite a bit of progress on those and are very close to agreeing on the substance of those changes. And I can’t really be specific because nothing is agreed until everything is agreed,” Powell said.

According to Powell, it has been a practice to put a revised proposal out for comment when there are broad and material changes for some period, probably 60 days. The expectation is to have final recommendations at the beginning part of next year.

In reaction, the Mortgage Bankers Association (MBA) president and CEO, Bob Broeksmit, said in a statement that the association agrees “wholeheartedly with Fed Chair Powell’s comments that it is ‘essential’ to re-propose the flawed Basel III Endgame proposal.”

According to Broeksmit, “certain provisions of the proposal would harm the U.S. economy, diminish mortgage credit availability – especially for low- and moderate-income homebuyers – and have detrimental impacts to the broader single-family housing and commercial real estate finance markets.”

Broksmit called on the Fed, FDIC and the OCC “to scrap this proposal and conduct a rigorous quantitative analysis – with ample time for stakeholder feedback – before the re-proposal of any new capital framework.”

Apache is functioning normally

July 9, 2024 by Brett Tams

Social Media Compliance, Client Retention; Freddie/Fannie Changes; Square Footage Stats

This website requires Javascrip to run properly.

Social Media Compliance, Client Retention; Freddie/Fannie Changes; Square Footage Stats

By:
Rob Chrisman

Mon, Jul 8 2024, 11:48 AM

During a recent password audit, it was found that a blonde was using the following password: “MickeyMinniePlutoHueyLouieDeweyDonaldGoofySacramento”. When asked why such a long password, she said she was told that it had to be at least 8 characters long and include at least one capital. What’s today? It’s “change every password you have” day. Money is the focus of a lot of evil activity on the internet (look at credit union Patelco), but what about useful, constructive monetary activities? Location, location, location. What new home buyers get for their money varies by region. The median price and square footage of new single-family homes sold in 2023, according to the Census Bureau, was $760,700 and 2,430 square feet in the Northeast, $396,300 and 2,172 square feet in the Midwest, $388,800 and 2,335 square feet in the South, and $536,200 and 2,170 square feet in the West. (Today’s podcast is found here and this week’s is sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender, uniting the people, systems, and stages of the mortgage process. Hear an interview with Candor’s Mark Hinshaw on expectation versus reality when it comes to AI in the mortgage industry.)

Lender and Broker Software, Services, and Products

With high interest rates keeping more people in their homes, new revenue opportunities will come from places that don’t fit the typical servicer playbook. ICE has identified four key areas where technology can help set servicers up for success in today’s low-movement housing market. Explore how you can retain customers, capitalize on your existing portfolio, and streamline your back office in ICE’s complimentary new white paper, Technology helps servicers find opportunities in unusual places.

ActiveComply is excited to be part of the Mortgage Bankers Association’s RegTech Demo Day event on Thursday, July 11th at 12:00pm ET. Register to see the latest technologies, services, and insights from leading technology providers in the industry. This session is specifically for compliance professionals, legal counsel, and risk officers, among others. See high-level overviews of vendor technology that may provide value to your organization and help you succeed in an increasingly complex and competitive environment. See how ActiveComply identifies other language advertising as part of your LEP initiatives, consumer complaints on social media, & brand reputation concerns current events and political movements (just in time for an election year). Don’t miss these power-hour sessions designed to help decision-makers clarify the rapidly changing mortgage tech ecosystem. This event, normally priced at $399.00, is free to MBA members. Register today!

Winning Agent Business: The lender’s guide to building a strong referral network updated for 2024. The new rules mandated by the NAR settlement go into effect August 17th. That means agents are more incentivized than ever to show their clients value—and they’re actively looking to partner with top-tier lenders in their market. Want to take advantage and grow your referral business? Maxwell just updated its Winning Agent Business eBook with new tips straight from agents to help you better network to create a strong funnel of referral leads. Download your free copy to learn qualities agents value in their lending partners, networking dos and don’ts, ways to become a go-to lender, and more.

Agency News and Updates

Freddie Mac published the company’s annual Sustainability Report, which provides details about the company’s 2023 sustainability strategy, activities and performance. The report also includes the company’s Sustainability Accounting Standards Board (SASB) Index and Metrics for the years 2021-2023, as well as a Taskforce on Climate-Related Financial Disclosures (TCFD) Index.

Many families are looking into properties with ADUs for multi-generational living to offset rising housing expenses. Others are seeking a balance between caregiving for aging parents and providing a space for privacy and independence. Whatever the reason, ADUs have been on the rise. Many borrowers are looking to purchase or refinance homes with these units or build one on their existing property. Approximately one quarter of borrowers and homeowners that show interest in ADUs are caregivers or anticipate being a caregiver. Learn more about the benefits Freddie Mac offers for financing ADUs.

In recognition of National Homeownership Month, Freddie Mac is encouraging borrowers to benefit from CreditSmart® Homebuyer U, a free course within Freddie Mac’s CreditSmart ® suite of educational resources. It’s designed to empower them with skills and knowledge.

Freddie Mac updated Stable Monthly Income FAQ for Employed Income Calculation with a new question (Q5) concerning calculating the income average for fluctuating hourly earnings and/or additional employed earnings (e.g., bonus, overtime, tips) if there is an occurrence that prevented the borrower from working and/or earning full income for a period of time.

Freddie Mac Single-Family Seller/Servicer Guide (Guide) Bulletin 2024-9 announces updates pertaining to rental income requirements to provide additional flexibility. Shared amenities requirements for residential projects. Aligning the Guide with treatment of documentation provided, but was not required, in Freddie Mac’s quality control review.

Fannie Mae is continuing its work with Freddie Mac to create standardized subordinate documents, publishing documents for Ohio, New Jersey, and Pennsylvania. Learn about efforts to expand access to down payment assistance.

Fannie Mae issued a Request for Proposal (RFP) to evaluate qualified interested industry participants for potential inclusion in its Title Acceptance pilot and other suppliers that have viable solutions to reduce borrowers’ closing costs. Vendors can respond to the RFP in ProcureOne. The RFP market interest period closes on July 26, 2024.

Fannie Mae posted the June Appraiser Quality Monitoring (AQM) list to Fannie Mae Connect™. The monthly list will also be available on the AQM page through July 30, 2024, when Fannie Mae Connect will be required for viewing.

FHFA published updated aggregate statistics from the National Mortgage Database (NMDB®) and launched the NMDB Aggregate Statistics Dashboard, a new data visualization tool for the NMDB Outstanding Residential Mortgage Statistics. The release describes outstanding residential mortgage debt at the end of the first quarter of 2024. FHFA Releases Data Visualization Dashboard for NMDB Outstanding Residential Mortgage Statistics has been posted.

Capital Markets

There was plenty of economic data released over last week’s holiday-shortened week. The U.S. economy is based on jobs and housing, and last week it was jobs’ turn to be center stage. The focus was on employment stats for June which saw nonfarm payrolls increase by 206k in June. Despite the increase, the previous two months were revised down by a combined 111k which brought the average increase over the second quarter to 176k per month. The unemployment rate rose from 3.96 percent to 4.05, the first time above 4 percent since January 2022. Labor force participation also increased slightly.

As the labor market continues to become more balanced the upwards pressure on wages has eased and average hourly earnings were down 0.2 percentage points on a year-over-year basis to 3.9 percent. The other major data out last week was the Institute of Supply Management indices which both came in below economists’ expectations. The Personal Consumption Expenditure deflator eased to 2.6 percent over the last twelve months in May as well. Sustained easing of inflation as well as a looser job market bode well for a potential rate cut in September. Following last week’s data, the odds of a cut in September are nearly three-in-four.

This week’s economic calendar includes some Treasury auctions of notable duration (3-year, 10-year, 30-year), May Wholesale Inventories, CPI and PPI, as well as preliminary July University of Michigan Consumer Sentiment. The only data point on today’s calendar is May Consumer Credit, due out this afternoon. We begin the 5-day work week with Agency MBS prices little changed from Friday, the 10-year yielding 4.29 after closing Friday at 4.27 percent, and the 2-year at 4.62.

Jobs

Seeking growth capital, equity, debt, or strategic alternatives? An IMB consultant with 34 years of executive management experience in the mortgage space is available to support your efforts! E-mail industry veteran Steve Landes for more information on helping you grow your business.

Top Producing Loan Officer Alex Rayner Partners with Service First Mortgage to Launch Haymaker Home Loan! Alex Rayner has partnered with Service First Mortgage to launch Haymaker Home Loans, a company dedicated to supporting top producers. “This collaboration provides access to cutting-edge technology, products and services, ensuring loan officers thrive in a competitive industry,” Rayner said. Earning an MBA from the University of Houston, Alex is dedicated to providing exceptional service. His industry acumen and skill with client relations set him apart. For loan officers looking to start their own mortgage company, Rayner advises exploring options with Service First Mortgage. “Starting a mortgage company from scratch is a daunting task,” Rayner said. “By partnering with Service First Mortgage, you gain immediate access to essential resources, advanced technology, and a support team. This allows you to focus on what you do best, e.g., originating loans and serving clients, without the overhead and operational challenges of building a company from the ground up.” Inquiries should be directed to James Wallace!

“ACC Mortgage is coming off its 2nd best month in its 25-year history. 2024 is shaping up to be our best year ever! How many mortgage companies can claim that? Are you planning for your next 25 years? ACC is seeking four (4) well-qualified Account Executives or a team that is looking for support, pricing, culture and stability. ACC makes Non-QM easy. Recent articles discuss ACC’s vision. For example, ACC’s Senko talks non-QM outlook! Send a resume for confidential interview.“

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

Source: mortgagenewsdaily.com

Apache is functioning normally

July 7, 2024 by Brett Tams

The Federal Housing Administration (FHA) this week announced that its FHA Connection (FHAC) portal — which provides FHA-approved lenders and business partners with secure online access to computer systems at the U.S. Department of Housing and Urban Development (HUD) — will be updated to accommodate the implementation of a new Reconsideration of Value (ROV) policy for appraisals.

Alongside the publication of Mortgagee Letter (ML) 2024-07, FHA said the new policy would enable mortgage borrowers to “request a re-assessment of the appraised value of their property if they believe that the appraisal was inaccurate or biased.”

The new rule, which must be implemented by lenders by Sept. 2, 2024, applies to all FHA single-family forward and reverse mortgage programs. It enhances current ROV policy while adding additional clarity for appraisal reviews, according to FHA. These include “improvements to the process by which borrowers may request an ROV if they identify a problem with the appraisal.”

FHAC will be modified for both forward and Home Equity Conversion Mortgage (HECM) loan programs to include a “Borrower Request for Appraisal Review Information” in the portal’s endorsement information section of the insurance application screen.

Lenders will be required to respond to a host of new questions to progress, including whether or not a borrower requested an ROV, as well as several related queries about the basis for such a review.

There will also be several selections for the lender to answer regarding how such a request was resolved. Options include resolution by the underwriter (so long as sufficient information is included in the case binder); the underwriter’s submission of an ROV request to the appraiser; the underwriter’s determination that the appraisal was “materially deficient”; or an “other” option that can be filled in with relevant details.

“The FHAC Guide has been updated and is available on the portal homepage,” the department explained this week. The guide has detailed instructions for the new section on page 20 for single-family forward mortgages and page 17 for HECM loans.

Lenders must also retain any documentation related to an ROV for inclusion in the case binder.

“This includes all written communication among the mortgagee, the borrower, the appraiser, and any other parties involved in the ROV process,” the announcement said. “As a reminder, the provisions of ML 2024-07 may be implemented immediately but must be implemented for FHA case numbers assigned on or after September 2, 2024.”

FHA will also be holding a virtual stakeholder briefing on Aug. 8 where industry members can ask questions of FHA’s subject-matter experts. Event registration is now live.

Apache is functioning normally

July 4, 2024 by Brett Tams

The U.S. Department of Housing and Urban Development (HUD) on Wednesday announced that it has released five new language translations for 19 separate single-family mortgage documents used for Federal Housing Administration (FHA)-insured mortgage servicing.

The new translations — which are available in Chinese, Korean, Spanish, Tagalog and Vietnamese — are accessible from FHA’s language access webpage and are designed to “assist lenders, servicers, housing counselors, and other FHA program participants in explaining information related to FHA-insured mortgages to those with limited English proficiency prior to the execution of these documents in English, as required by law.”

This latest set of translations expands the availability of “40 previously published translated mortgage origination documents and homeownership education resources,” the department stated, and will help to remove language barriers in accessing FHA-insured mortgage financing.

“At HUD, we are working to ensure that homeownership is accessible to everyone who wants it — particularly for first-time homebuyers,” HUD acting secretary Adrianne Todman said in a statement. “To do that, we must make sure everyone has access to information about our programs. This common-sense action will help families achieve their dream of owning a home. Today, we are taking a crucial step towards a more inclusive, diverse, and equitable generation of homeowners.“

FHA Commissioner Julia Gordon said that these newly translated resources will be a valuable tool for helping more borrowers “understand the options for purchasing a home and for accessing assistance if an existing borrower has difficulty in making their mortgage payments.”

“With almost 60 mortgage documents translated into multiple languages, we now have a comprehensive collection of translated tools and resources for our program partners to use to more effectively reach those whose first language is not English,” Gordon added.

A full list of the newly translated documents is available on HUD’s website.

Apache is functioning normally

July 3, 2024 by Brett Tams

#masthead-section-label, #masthead-bar-one display: none

SKIP ADVERTISEMENT

You have a preview view of this article while we are checking your access. When we have confirmed access, the full article content will load.

New Home Construction Slows as Mortgage Rates Remain High

Home building in May fell to its slowest pace in four years despite a supply shortage. That trend could put even greater strain on buyers.

Learn more

More expensive, fewer homes for sale

‘Alaska has a problem with keeping young people’

Getting back to average

Understanding Real Estate Investment Trusts (REITs)

Alternative investments, now for the rest of us.

Start trading funds that include commodities, private credit, real estate, venture capital, and more.

Overview of Real Estate Crowdfunding

Comparing REITs and Real Estate Crowdfunding

Pros and Cons of REITs

Pros and Cons of Real Estate Crowdfunding

Which Investment Strategy Is Riskier?

Due Diligence Considerations

The Takeaway

FAQ

What are the main advantages and disadvantages of investing in REITs?

How does real estate crowdfunding differ from traditional REIT investments?

How are taxes treated for REITs and real estate crowdfunding?

Affordability challenges

Basel III Endgame rules

Related

Social Media Compliance, Client Retention; Freddie/Fannie Changes; Square Footage Stats

Option 1: Copy and send this link

Related

Related

11 Most Expensive Neighborhoods in Sacramento

1. Land Park

2. Sundance Lake

3. Pocket

4. Southwestern Sacramento

5. Downtown

6. Village 5

7. Natomas Crossing

8. Richmond Grove

9. Valley Hi – North Laguna

10. North Laguna Creek

11. North Sacramento

Alternative investments,
now for the rest of us.