Word on the Street vol11

Blackstone now rules America’s real estate

Steve Schwarzman is America’s landlordhw_logo

November 16, 2015

Brena Swanson | Housing Wire

Blackstone (BX) is now nearly four times the size of when it originally filed its IPO in 2007. Most notably, it has expanded its real estate division from a $17.7 billion business when the company went public to one that today manages nearly $100 billion worth of property.  Per Business Insider:

“We’re now, we believe, the largest owner of real estate in the world,” Steve Schwarzman, CEO, told Business Insider in an interview at his company’s Park Avenue headquarters in midtown Manhattan.

“We have a performance record that is… pretty much in a league of our own, we’ve compounded [returns of] around 18% after fees. We’ve had almost no losses of any type.”

And real estate is just part of the giant growth Blackstone is witnessing.

Back in August, HousingWire wrote that Finance of America Holdings, a Blackstone portfolio company, revealed that it snatched up several major lenders, a move likely destined to make it one of the nation’s largest nonbank originators, if all goes as planned.

The significant list of acquisitions included Gateway Funding Diversified Mortgage Services, Pinnacle Capital Mortgage and certain assets and operations of PMAC Lending Services. Finance of America Holdings also owns Urban Financial of America.

And this probably won’t be the last thing that Finance of America announces. An internal email, shared privately with HousingWire at the time, revealed that Finance of America president Steve McClellan expects to announce more “exciting plans for the future.”

From the Training Room vol1

by Brian Fraibble

In many of our TNT training sessions we stress the importance of establishing relationships with builder representatives. Our clients are so bombarded with floor plans, sale pitches, web pages and location choices, a well-established relationship with the seller leads to more closings, and, of course, the residual referrals from satisfied clients.

“Knowing the deal” is an essential ingredient that provides comfort to your client. The friendly introduction to an “associate” is far more effective than you and your client meeting a stranger and attempting to make a half a million dollar decision.

No matter what your individual closing style, if you know:

  1. STANDING INVENTORY HOMES = BARGAINS
  2. The “wiggle room” the site agent has on said property.
  3. All other “unadvertised incentives”.

We at TNT believe you will close more homes.

When a builder has a fallout  (cancellation) or an “aged inventory” incentive opportunity for a quick move in home, a good relationship with site agents will most assuredly afford you a personal call notifying you of the need to move home and associated specials including increased commissions.

Choose the option hug in lieu of handshake at sales office;  it is the true secret to more closings, more leads and more success to your bottom line…

“Each TNT session includes discussions relating to how to add more power to your presentation and give you insights to effectively dealing with local Las Vegas Builders.”

Word On The Street Vol10

Is the mortgage industry ready for TRID and more next year?rewired

November 2, 2015
Kurt Noyce | REwired

As we head into the end of the year, there is always much discussion around what the next year will bring for the mortgage industry. Will lending slow or tick upwards, will home prices decline or rise, will interest rates increase, and so on. To make these types of predictions, you must look at what the mortgage industry can expect for the rest of this year, then delve into how that may impact the following months.

First, TRID will grow in its impact on the loan cycle, as lenders’ pipelines become more populated with TRID-eligible loans and those LE’s move toward CD’s. Process delays will trigger criticisms, especially from those who were not well prepared for the change — including lenders, Realtors and title agents. We believe that will be, albeit vocal, a minority of the industry, though, as most have invested considerable time and resources over many months to prepare their employees and their business partners, getting processes and operating systems redesigned.

The challenge, however, may be the industry’s perception of itself. Historically, the mortgage industry has prided itself on being able to “turn on a dime” or “make miracles happen” at the very last minute. Those are going to be the greatest challenges in terms of lenders’ culture, selling strategies and how they define themselves with customers and Realtors. But for those who have done their due diligence, there will be much less disruption.

If there is any lesson to be learned, it’s that there is no substitute for Day-One thoroughness. You simply cannot make it up after the fact. TRID demands that the lending industry be more efficient. Lenders need to be more proactive and attentive at the beginning in terms of their communication with borrowers, Realtors and vendors. As a result, the borrower is not thrown into a whirlwind and has the proper time to understand and make a sound decision. This benefits the entire industry.

Beyond TRID, the industry continues to predict and prepare for slightly higher interest rates in 2016; however, we don’t see that having a material slowing on home buying. We believe the improving economy and pent-up demand will more than offset modestly higher interest rates.

The recent regulatory attention being paid to marketing service agreements and other types of referral arrangements will be very interesting to watch, as many used these to align themselves with referral partners. We welcomed the clarity from the CFPB and look forward to an environment where lenders differentiate themselves by their service and solutions, and not their checkbook.

The rising complexities and heightened risk exposure will likely lead to continued retreat from smaller financial institutions and probably consolidation in the marketplace among independent lenders. Community banks and credit unions are continuing to be pushed out because they view the risk and cost as not being warranted. This is likely to be more visible in 2016.

We believe there is opportunity for growth. The National Association of Realtors reported that home sales have risen year-over-year for 12 consecutive months. Additionally, the cost to rent is at an all-time high, making home buying an attractive alternative for many consumers. The economy is stabilizing and incomes are growing; therefore, growth – albeit slow – is inevitable.

While there is good support for lenders to concentrate on Millennials, that segment will continue to face struggles, such as tremendous student loan debt. Therefore we are not ignoring traditional segments, like Baby Boomers and Generation X, which make up two-thirds of the market. Baby Boomers are downsizing, while Gen X has emerged as a demographic with growing wealth. There is much there to capitalize on.

We believe the future for our industry – these last months of this year and into 2016 – is bright, despite the reality of greater regulation and the prospect of rising interest rates. Embrace is very optimistic about the future. We are aggressively expanding and recently recruited several key executives to help push us forward. We join those in our industry that have prepared for these challenges and are therefore well positioned to optimize them.

View From The Top, vol10

By Nat Hodgson
Executive Director
Southern Nevada Home Builders Association

The Southern Nevada Home Builders Association is pleased that the association is joining with one of our industry partners, the Greater Las Vegas Association of REALTORS®,  to present a real estate expo geared for local industry professionals and potential home buyers.

The Real Estate Expo Las Vegas is scheduled for April 8-9 at the Cashman Center. The estimated 80 exhibitors on 50,000 square feet of floor space will include REALTORS®, brokerages, home builders, master-planned communities, financial institutions, government agencies, chambers of commerce, utilities and others.

We expect to see more than 15,000 attendees over the two-day period.

In addition to the vendors on the exhibit floor, there will be nearly 30 educational and information sessions to cover topics such as the home buying process, mortgage financing, financial planning, home technology and programs to assist home buyers. There will be sessions with continuing education credits for industry professionals.

The expo will feature the popular “Las Vegas Housing Outlook” presentation by Home Builders Research the morning of April 8. HBR President Dennis Smith and special guests will offer statistical and demographic information about the current housing market and projections for 2016.

This isn’t a ‘home show.’ This will be a major forum to bring together top real estate and home building industry professionals with local home buyers to educate them about what’s available and how to purchase a home in our community. This will be the place to get their real estate questions answered.

The exhibits and informational sessions are geared for first-time home buyers, move-up and downsizing home buyers, “boomerang buyers” who are recovering from the recession or bankruptcy following the economic downturn of the late 2000s, and members of the “millennial” generation (born between 1982-2002) who are investigating housing market options.

In addition to the GLVAR and SNHBA, the expo partners include the Las Vegas Review-Journal, Running Bull Productions and TrainNTour Real Estate Education.

The expo will be open to the public from 12 p.m. to 7 p.m. on April 8, and 10 a.m. to 6 p.m. on April 9. Admission to the expo is free. There is a $5 charge to park at Cashman Center. Free shuttle service will be offered from the Cashman Center parking lots to the expo site. Also, there will be an Industry Mixer from 7 p.m. to 9 p.m. on April 8 for industry professionals.

You will find more information at the website, www.realestateexpolv.com or send an email to [email protected] I look forward to seeing a strong turnout of our residential construction professionals and REALTORS at the expo in April.

By The Numbers, vol9

alpine

Our September housing statistics in Las Vegas were very similar to what was counted in August. Several of the categories for new and resale home activity were virtually unchanged month to month. However, we counted 636 recorded new home sales in August. It was a one-month increase of 97 closings, or 18 percent. Our 2015 sum is now at 4,212, which is an annual increase of 475 transactions, or 12.7 percent. Not a bad year for new home sales, right? The month-to-month closing activity is displayed on the following graph. The Las Vegas new home segment is improving.

by-the-numbers-1

The median price of the August new home closings was $305,047. It is relatively unchanged from July, actually an $881 decrease. However, year-to-year the August median price is a $15,419 increase, or 5.3 percent. There were 24 high rise developer closings included in the August figures, so when we remove them from

the August totals, the median price increases by $1,698 to $306,745 for the remaining recorded sales. The price segmentation of the new home closings in August pretty much followed the trend we have documented during 2015. The next chart displays the market share of the new home recorded sales (closings) by price range. We included two data sets from 2014 and from 2015. It appears the change in price segmentation began in 2015 and has continued during the year. The largest change was in the $400,000 – $499,999 price segment.

by-the-numbers-2

There were 696 permits pulled in the metropolitan area of Las Vegas in August, putting the annual total at 5,506. This is an increase of 800 permits, or 17 percent. This seems like another nice year-to-year escalation in home building activity.

The industry has averaged 688 permits per month in 2015 up to this point. It this carries forward for the remainder of the year, we could see 8,250 or so permits. That would be an annual increase of more than 1,600 permits or 24 percent. We don’t think the total will end up that much, because typically demand will soften during the 4th quarter.

by-the-numbers-3

Word On The Street, vol9

bloomberg-reportsby Bloomberg Report

The ability to get a mortgage has been one of the biggest obstacles to the housing market since the financial crisis, as only the most qualified borrowers were able to get a home loan. Now, that’s changing.

Outstanding home mortgage debt in the U.S. posted a 0.5 percent increase in the second quarter from the year before, the Fed’s financial accounts report on Friday showed. That’s the first year-over-year gain in mortgage debt since 2008, ending a streak of contraction that was unrivaled in data going back to 1949. word-on-the-street-1

“This strikes us as a key turning point for the U.S. housing market, since it is obviously much easier to support an increase in sales volume and prices with a growing pool of finance,” Michael Shaoul, chief executive officer of Marketfield Asset Management LLC in New York, wrote in a note to clients. “It also confirms some of the loan officer surveys that have suggested that mortgage lending standards are finally loosening at the same time that a stronger labor market increases the pool of willing and able borrowers.”

In the aftermath of the housing-market crash, which was sparked by lenders giving mortgages to just about anybody who wanted one, banks tightened up on their requirements for borrowers’ credit history and income. That’s part of the reason the housing recovery has been so gradual.

Near the height of the housing bubble in late 2006, the median credit score for mortgage originations got as low as 707, according to the New York Fed’s report on household debt and credit, which uses Equifax data. After the crisis the median score rose to 781 in the second quarter of 2012, which matched the highest in data going back to 1999. As of the second quarter of this year, it was 764. The New York Fed says scores in its data set range between 280 and 850, with the highest score being viewed as a better risk. Scores are calculated from credit history.word-on-the-street-2

In addition to less stringent lending standards, a labor market that’s added 1.7 million jobs this year should help potential home-buyers get back in the game. Rising rents may also provide some incentive as they rival a mortgage payment.

Data on August sales of existing homes are scheduled for release Monday by the National Association of Realtors, followed by the Commerce Department’s report Thursday on new-home sales. We’ll see then if these trends are sustained.

View From The Top, vol9

By Nat Hodgson
Executive Director
Southern Nevada Home Builders Association

 

Universal Design in Housing

An increasing number of new homes now include features and products that are part of the “universal design” movement launched in the late 1990s.

The term refers to products and environments that are designs so they are usable by all people, to the greatest extent possible, without the need for adaptation or specialized design. These products and features are especially appealing to home buyers with disabilities, and now, the aging Baby Boom generation, many of whom have entered the “senior citizen” years of their life.

But since the concept gained traction in the early 2000s, it turns out that universal design appeals to more people than just the disabled and the aging.

Universal design takes into account the full range of human diversity, including physical, perceptual and cognitive abilities, as well as different body sizes and shapes. By designing for this diversity, we can create things that are more functional and more user-friendly for everyone. For instance, curb cuts at sidewalks were initially designed for people who use wheelchairs, but they are now also used by pedestrians with strollers or rolling luggage. Curb cuts have added functionality to sidewalks that we can all benefit from.

Here are some of the more common universal design features that are showing up in new-home construction because of the growing interest:

No-step entry. No one needs to use stairs to get into a universal home or into the home’s main rooms.

One-story living. Places to eat, use the bathroom and sleep are on one level, which is barrier-free.

Wide doorways. Doorways that are 32-36 inches wide let wheelchairs pass through. They also make it easy to move large objects, such as furniture, in and out of the house.

Wide hallways. Hallways should be 36-42 inches wide. That way, everyone and everything moves more easily from room to room.

Extra floor space. Everyone feel less cramped. People in wheelchairs have more space to turn. Some universal design features just make good sense.

 

For example:

  • Floors and bathtubs with non-slip surfaces help everyone stay on their feet. They’re not just for people who are frail. The same goes for handrails on steps and grab bars in bathrooms.
  • Thresholds that are flush with the floor make it easy for a wheelchair to get through a doorway. They also keep others from tripping.
  • Good lighting helps people with poor vision. And it helps everyone else see better, too.
  • Lever door handles and rocker light switches are great for people with poor hand strength. But others like them too. Try using these devices when your arms are full of packages. You’ll never go back to knobs or standard switches.

The basic principles of universal design are the minimization of physical obstacles inside and outside the home, the addition of spaces for socializing, and a reduction in the amount of work related to homeownership.

For example, when it comes to the exterior of the home, eliminate as many stairs to the front door as possible (minimize physical obstacles), include an oversized front porch deep enough for chairs (encourage socialization) and use low-maintenance building materials such as vinyl siding, stucco, stone or brick (reduce work).

The term Universal Design was coined by Ronald L. Mace, founder and former program director of The Center for Universal Design at North Carolina State University. In 1997 Ron Mace collaborated with a group of architects, product designers, engineers and environmental designers to develop the Seven Principles of Universal Design.

The seven principles of Universal Design are as follows:

Equitable Use: The design is useful and marketable to people with diverse abilities.

Flexibility in Use: The design accommodates a wide range of individual preferences and abilities.

Simple and Intuitive Use: Use of the design is easy to understand, regardless of the user’s experience, knowledge, language skills, or current concentration level.

Perceptible Information: The design communicates necessary information effectively to the user, regardless of ambient conditions or the user’s sensory abilities.

Tolerance for Error: The design minimizes hazards and the adverse consequences of accidental or unintended actions.

Low Physical Effort: The design can be used efficiently and comfortably with minimum fatigue.

Size and Space for Approach and Use: Appropriate size and space is provided for approach, reach, manipulation, and use regardless of user’s body size, posture, or mobility.

It turns out that universal design is a solution and strategy for living well.

By The Numbers, vol8

alpineThe July housing statistics in Las Vegas once again came in pretty much as we expected. Most of the data we track (daily, weekly, and monthly) indicates the housing market is still on a steady upward trend. It has not been at a rapid pace, but rather a slow, stable positive trek, trying to get to a level where we might classify it as a “normal” housing market. However, in our opinion that is still months and maybe years away.

We are on the cusp of the Fed finally raising short term interest rates, which will inevitably result in mortgage rates following that movement. The print economic media has been beating up that subject almost on a daily basis. Will the increases begin at the next September meeting, or be delayed until December? Recently it seemed most of the economists and analysts believe it will happen in September, however recent monetary and economic news from China, as well as lesser concern about inflation, has led others to believe the Fed will wait until the end of the year before opening the door to higher interest rates. We don’t think housing demand will react much to the looming change, as it will probably be a very small increase. Many of the consumers who have been “on the fence” have already made their decision, so we don’t expect the sales figures to change much due to small rate changes. There has also been a lot written and discussed about what can be done to attract more millennial consumers to the housing market. Raising rates too much will NOT be conducive to getting younger customers feeling good about buying a new home.

We sorted through 583 new home recorded sales (all product types) in July. It placed the 2015 total at 3,576, a year to year increase of 378 transactions, or 11.8 percent. The monthly new home closings should rise a little going through the 3rd quarter, based on the recent net sales and permit activity. We don’t foresee any significant improvement, and the monthly figures will probably recede a little during the 4th quarter.

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The median price of the new home closings in July was $305,928. This is a year to year change of $15,928, or 5.4 percent. We think the monthly year to year comparisons of the new home median prices should stay in the single digits for the rest of 2015. Again, we see that slow, steady increase continuing.

The permit total for the metropolitan area in July was 680. It puts the 2015 sum at 4,810 permits, a year to year increase of 648 units, or 15.5 percent. The monthly permit tally should also stay pretty consistent as we progress into 2016. The current pace of gross / net sales suggests that the pace of monthly permits will remain near 600 – 650 per month entering the 4th quarter and into 2016.

According to the recorded sales data from the Clark County Recorder’s Office, there were 4,174 resale closings in July. The total for 2015 is now 25,774, a year to year increase of 3,225 transactions, or 14.3 percent. If this pace remains, it now looks like the number of recorded resales could reach approximately 43,000 in 2015.

The median price of the resale closings in July was $193,000, a year to year increase of $18,000, or 10.3 percent. There has been a small downward tendency the last 3 months, but we believe that will be short lived.

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13.4 percent of the resale closings in July were condos, a number that has been pretty consistent so far in 2015. The median price of the condo closings in July was $105,000. We assume that the number of condo resales will continue rising as the overall market conditions improve. The condo median has ranged $98,000 – $100,000 during the first half of the year, but has started to increase very slowly during the past 2 – 3 months.

Word On The Street, vol8

The Mortgage Reports: Fannie Mae Lowers Mandatory Waiting Period After Bankruptcy, Short Sale, & Pre-Foreclosure

Mandatory Waiting Period Reduced To 2 Years

It’s getting easier to get approved for a mortgage. Following in the FHA’s footsteps, Fannie Mae has reduced the mandatory waiting period for a mortgage after bankruptcy, short sale, or pre-foreclosure. Borrowers no longer need to wait 4 years before re-applying to get a mortgage.

Borrowers can now re-apply for a loan just two years after a bankruptcy, short sale, or pre-foreclosure. This is one year longer than the FHA’s minimum waiting period via its FHA Back to Work program, and a major improvement for conforming mortgage borrowers nationwide.

Mortgage guidelines are loosening across all loans and Fannie Mae is now the most recent government group to help borrowers who have a history of poor credit because of bankruptcy, short sale, and pre-foreclosure.

New Fannie Mae Rules For Bankruptcy, Pre-Foreclosure, & Short Sales

Recently, Fannie Mae changed its mortgage rules for borrowers with a recent bankruptcy, pre-foreclosure, or short sale. The group has reduced its mandatory waiting period after such an event from four years to 2 years.

The change nearly mirrors a similar update from the FHA as part of that group’s Back to Work program. Via FHA Back to Work, certain mortgage borrowers are eligible to apply for a loan just 12 months after a significant derogatory event.

“Significant derogatory event” is defined as any one of the following which may appear on a person’s mortgage credit report:

  1. A pre-foreclosure
  2. A short sale
  3. A deed-in-lieu of foreclosure
  4. A bankruptcy
  5. A mortgage loan charge-off

A significant derogatory events will typically affect a person’s credit score by 100 points or more. For this reason, before selecting a loan program, it’s important to compare conforming mortgage rates via Fannie Mae against FHA mortgage rates via the Federal Housing Administration.

FHA mortgage rates are typically lower than comparable conforming rates; and don’t penalize for credit scores below 740. However, FHA mortgage insurance premiums can be costly on an upfront and ongoing basis.

Any mortgage lender can help you decide which loan program best suits your needs. Explore all available options — you never know how much you might save.

New Fannie Mae Guidelines For Derogatory Events

Fannie Mae has reduced its mandatory waiting period after a pre-foreclosure, short sale, or bankruptcy.

Prior to the change, which is effective immediately for all loan applications, Fannie Mae required borrowers to wait four years after a significant derogatory credit event before re-applying for a home loan.

That mandatory waiting period is now just 2 years.

The table below compares Fannie Mae prior policy against its current one; and against the FHA Back to Work program which may be more suitable for borrowers with less available down payment.

FHA loans permit home down payments of just 3.5 percent. Fannie Mae loans typically require 5 percent or more.

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For a Fannie Mae loan, “extenuating circumstances” are situations which (1) occur one-time only; (2) are beyond the borrower’s control; and, (3) result in a sudden, significant, and prolonged reduction in income.

The label of “extenuating circumstances” may also be applied to situations in which a borrower is subject to a catastrophic increase in financial obligations.

Examples of extenuating circumstances may include divorce, illness, sudden loss of household income, and/or job loss.

Mortgage applicants wishing to apply for a loan using Fannie Mae’s Extenuating Circumstances program should be prepared to provide documentation in support of the claim. Valid documentation may include a copy of a divorce decree; medical bills; and, notice of job loss or job severance papers.

Borrowers should also be prepared to write a brief letter describing the hardship and how it directly led to the bankruptcy, pre-foreclosure, or short sale. The letter should make it clear that default was the borrower’s only reasonable course of action, given the circumstances.

Borrowers should also make it clear that the derogatory event was a one-time event, and that financial obligations have been paid on-time in the months since.

Fannie Mae Mortgage Rates Remain Near 2015 Lows

Along with softening mortgage guidelines, today’s mortgage loans are easier for which to qualify. This is because low mortgage rates lower a homeowner’s expected monthly payment, which reduces debt-to-income ratios.

The conventional 30-year fixed rate mortgage rate has averaged less than 4 percent every month since last November and many mortgage applicants report receiving rate quotes in mid-3 percents.

When mortgage rates are low, purchasing power is extended and refinance opportunities increase.

As compared to last January, 30-year mortgage rates are lower by approximately 87.5 basis points (0.875%) which has increased the maximum purchase price for today’s buyers by close to $11,000 for every $100,000 borrowed.

This 11-percent boost can mean the difference between buying a 2-bedroom home or a 3-bedroom one; a home with 3 bathrooms or 4 bathrooms; or, a home with an upgraded kitchen, for example.

Extra purchasing power can also mean the difference between buying in a top-rated school district or a second-tier one.

For existing homeowners, when mortgage rates drop, there’s an opportunity to lower your monthly mortgage payment via a home loan refinance.

Via a refinance, your home’s existing mortgage is replaced with a new one with new, different terms. For many people, these new terms include a reduction in their mortgage rate which, in turn, results in a lower monthly payment.

Refinances are also an opportunity to take “cash out” from a home for home repairs or other needs; or to reduce a loan’s length from 30 years to something shorter.

Get A Live Rate Quote Now

Fannie Mae is loosening its mortgage guidelines and making it easier for mortgage applicants to get mortgage-approved. Even better, while that’s happening, mortgage rates are trolling near all-time lows. It’s an excellent time to compare today’s mortgage rates.

Rate quotes are available online at no cost, with no social security number required to get started, and with no obligation to proceed.

 

Show Me Today’s Rates.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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