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Esidential doubles single family rental portfolio

images-5Altisource said Friday that it is buying a portfolio of 4,262 single-family rental properties for an aggregate purchase price of $652.3 million, which more than doubles Altisource’s rental holdings.

According to details from Altisource, the deal is a seller-financed transaction and the homes were acquired from “investment funds sponsored by Amherst Holdings.”

Altisource said that the acquisition “greatly enhances” its presence in new and existing markets, including Florida, Texas, Georgia, Tennessee, North Carolina and South Carolina.

The company said that the newly acquired portfolio is “consistent” with Altisource’s existing holdings of “quality, affordable” rental homes.

According to George Ellison, Altisource’s CEO, the deal moves the real estate investment trust closer to its goal of moving its entire business into single-family rentals.

“These high-yielding properties are an excellent fit for the Residential brand and expand our geographic reach in strategic markets,” Ellison said. “The acquisition of these properties is a crucial milestone for Residential and keeps the company on track to achieve its stated goal of 10,000 rental homes by the end of 2016.”

David Reiner, Altisource Residential’s chairman of the board of directors, called the deal a “transformative transaction” for the REIT. “By continuing to execute on our strategy, Residential is well positioned to reward investors with long-term growth and attractive returns,” Reiner said.

According to Altisource, the seller financing for this transaction represents 75% of the purchase price and was provided pursuant to a loan agreement with a term of up to five years and a floating interest rate of one-month LIBOR plus a fixed spread.

As part of the deal, and as a condition of the seller financing, Altisource Residential will continue to use the current property manager for the portfolio, Main Street Renewal, to provide property management services to the acquired properties.

According to Altisource, the company will continue to use Altisource Portfolio Solutionsas its property manager on all of the company’s other REO and single-family rental properties.

To facilitate the new acquisition, Altisource Residential had to obtain a “waiver of the exclusivity provisions in its existing Master Services Agreement” with Altisource Portfolio Solutions.

In order to obtain that waiver, Altisource Residential and Altisource Portfolio Solutions agreed to “certain amendments” to the Master Services Agreement, including a contingent liquidation fee of $60 million in the event Altisource Residential decides to to liquidate 50% or more of its single-family rental portfolio that is currently managed by Altisource Portfolio Solutions.

“We are very supportive of Altisource Residential’s portfolio acquisition as it accelerates Altisource Residential’s transition to a 100% single-family rental company,” Altisource Portfolio Solutions said in statement.

“We believe this acquisition strengthens Altisource Residential’s position in the industry and positions them well for growth, which are positive for Altisource Portfolio Solutions. We believe the terms we agreed to with Altisource Residential further underscore Altisource Residential’s long-term commitment to the rental home business and our strong ongoing relationship with Altisource Residential.”

Home prices to peak

unduhan-7Home prices increased in August both monthly and annually, according to the Home Price Index and HPI Forecast released by CoreLogic, a global property information analytics and data-enabled solutions provider.

Home prices, including distressed sales, increased 6.2% annually in August and 1.1% from July, according to the CoreLogic HPI.

“Home prices are now just 6% below the nominal peak reached in April 2006,” said CoreLogic Chief Economist Frank Nothaft. “With prices forecasted to increase by 5% over the next year, prices will be back to their peak level in 2017.”

The HPI Forecast shows that home prices will increase by 5.3% annually by August 2017, and increased 0.4% from August to September.

The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.

“Housing values continue to rise briskly on stronger fundamental and investor-fueled demand, as well as lack of adequate supply,” said CoreLogic President and CEO Anand Nallathambi. “This continued price appreciation is contributing to a growing affordability crisis in many markets around the country.”

The summer housing market saw high demand next to rising home prices, but don’t expect Fall to bring any relief. In fact, it could bring the hottest fall in a decade, new data from realtor.com shows.

Mortgage lending set

unduhan-8Less than one month ago, the analysts of FBR & Co. predicted that 2016 could prove to the best year for mortgage lending since 2013, but a new report from those same analysts suggests that 2016 could be even stronger than they predicted.

In the new report, FBR analysts Paul Miller and Tim Hayes state that they currently estimate that mortgage originations will top $600 billion in the third quarter, topping their previous estimate of $565 billion.

If mortgage originations do indeed exceed $600 billion, that would mean that the 3rd quarter of 2016 is the best quarter for mortgage lending in nearly nine years.

The reasons for the origination surge in the 3rd quarter? A “resilient” purchase market and continued low interest rates that are boosting refinance originations.

And with a stronger than expected 3rd quarter boosting 2016’s originations, FBR’s analysts are now projecting 2016’s total origination volume to top $2 trillion, an increase from the $1.9 trillion they projected last month.

Plus, thanks to the moves, or lack thereof, of the Federal Reserve, 2017 is looking to be a strong year for mortgage lending, too.

“Reflecting the continued low interest rate environment and a rebound in the purchase mortgage market to more normalized levels, we are updating our 2016 industry mortgage originations estimate to $2.0 trillion from $1.9 trillion and our 2017 estimate to $1.8 trillion from $1.75 trillion,” the FBR analysts state.

“We have long adopted the ‘lower for longer’ view toward interest rates, and recent commentary from Fed Chair Janet Yellen seems to reinforce this view, suggesting that low interest rates could support the refi market through next year,” the analysts add.

The FBR analysts also stated that they believe the purchase market is below what their view of normalized levels and will continue to experience positive growth on a year-over-year basis, albeit it at a more modest pace than from 2012 through 2016.

The analysts noted that the trailing four-quarter purchase average jumped to $241 billion, the highest level since the 3rd quarter of 2007.

“Over the last year, average purchase originations have totaled $241 billion on a quarterly basis, which compares to $222 billion merely a year ago and post-crisis lows of $108 billion,” the FBR analysts write.

“These results continue to support our thesis that the ‘new normal’ of $1.5 trillion in sustainable originations is already here,” they continue. “Ultimately, the improvement in the U.S. housing market has been gradual, but we believe purchase volumes will continue to grow and approach $1 trillion in 2017, which is more in line with what we believe to be a ‘normalized’ level.”

The analysts state that there are other reasons that show that the current origination volume is sustainable, namely the “most stable regulatory environment in years.”

The analysts state that regulatory risk consistently figures into the downside risk to their mortgage origination estimates, especially in recent years, as the industry adjusted to the “definition of a qualified mortgage, reworked mortgage disclosures required by TRID, or adjusted credit boxes to avoid rep and warranty risk/specialty servicing risks.”

The analysts say that these new rules and regulations “certainly continue to factor into the overall size of the origination market, but they are no longer the headwind they once were” because the industry has now transitioned and adjusted to the “new” regulatory reality.

“We fully continue to expect some growing pains as regulators continue their supervisory and enforcement activities over the mortgage market,” the FBR analysts state. “However, the lack of any large-scale new regulatory requirement in the mortgage market provides for the most stable regulatory environment in recent memory, which reinforces the confidence we have in our estimates.”

Hits highest level since recession

In 1985, the index was set to 100, representing the index’s benchmark. This value is adjusted monthly based on results of a household survey of consumers’ opinions on current conditions and future economic expectations. Opinions on current conditions make up 40% of the index, while expectations of future conditions make up 60%.

“Consumer confidence increased in September for a second consecutive month and is now at its highest level since the recession,” said Lynn Franco, The Conference Board director of economic indicators. “Consumers’ assessment of present-day conditions improved, primarily the result of a more positive view of the labor market.”

“Looking ahead, consumers are more upbeat about the short-term employment outlook, but somewhat neutral about business conditions and income prospects,” Franco said. “Overall, consumers continue to rate current conditions favorably and foresee moderate economic expansion in the months ahead.”

Consumers assessment of current conditions improved in September. Those that said business conditions are good, however, decreased from 30.3% to 27.4%, but those saying conditions are bad also declined from 18.2% to 16.2%.

Those who said jobs are plentiful increased from 26.8% to 27.9% and those who said jobs are hard to get decreased from 22.8% to 21.6%.

Americans were also more confident about the short-term outlook in September. While those who expected business conditions to improve over the next six months decreased from 17.6% to 16.5%, but those expecting conditions to get worse also declined from 11.4% to 10.2%.

More consumers expect the labor market to improve in the next six months. Those who said jobs will increase went up from 14.4% to 15.1% in September. In addition, those who expect there to be fewer jobs declined from 17.5% to 17%. Those who expect their incomes may have decreased from 18.5% to 17.1%, but they are not expecting a demotion either. Those who expect a decline in pay decreased from 11% to 10.3%.

“The rise in the present situation index appears to reflect an improvement in labor market conditions,” Capital Economics Chief Economist Paul Ashworth said. “The net proportion of respondents saying that jobs were plentiful rather than hard to get improved to a nine-year high.”

“But that doesn’t necessarily mean that faster wage growth is coming soon,” Ashworth said. “Overall, a lot better than expected, but confidence hasn’t been a great guide to actual consumer spending in recent years.”

However, household income posted its first significant increase in eight years, new data from the U.S. Census Bureau showed.

Labor law will change the housing industry

In summary, the Wage and Hour Division of the Department of Labor finalized the Fair Labor Standards Act on May 23, 2016, which goes into effect on Dec. 1, 2016. This law “guarantees a minimum wage for all hours worked during the workweek and overtime premium pay of not less than one and one-half times the employee’s regular rate of pay for hours worked over 40 in a workweek.”

While it’s not unprecedented for the DOL to update the overtime law, this one is drastically different than adjustments made in the past since it increases the White Collar Exemption salary threshold by more than 100%.

Here are the major changes in a nutshell that help give a rough answer on if these changes apply to you. Hint, the answer is likely yes, and if it doesn’t impact you, it probably impacts someone close to you.

  • The White Collar Exemption salary threshold increased from $455/workweek (or $23,660 for a full-year worker) to $913/workweek (or $47,476 for a full-year worker).
  • The Highly Compensated Employee salary threshold increased from $100,000/annually to $134,004/annually
  • Automatic updates to the salary threshold every three years (first update due Jan. 1, 2020)

The reason behind the new $47,476 threshold is that the DOL set the standard salary level for exempt EAP employees at the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region.

The final rule, which can be found in the Federal Register here, is very intensive. And similar to many other housing regulations, the industry has had to implement (cough, cough, TRID), there are a lot of exemptions, details and clauses to be mindful of.

Some keys details to know include:

  • The 40-hour benchmark is on a week-by-week basis. For example, say an employee worked a lot of overtime at the end of the month since mortgages mostly close at the end of the month. However, they worked less than 40 hours at the beginning of the month, so overall, they didn’t exceed 160 hours for the month. It doesn’t matter that it averages 40 hours for the month, they are still entitled to overtime for the weeks they worked for more than 40 hours.
  • Also, employees do not have to be approved for the overtime that they work. For example, say your company is hosting an event one week for clients, and an employee spends extra time one night to organize the extra details, even though they were allotted time during the day for it. They don’t have to be approved to do that extra work, and you still have to pay them if they go over 40 hours for the week.

In essence, all the extra work and effort you’re putting into beefing up your client retention management system or understanding Fannie Mae’s new Desktop Under writer Version 10.0 is about to get called into question with this new rule.

This new law has wide ramifcations beyond employees making less than $47,476 a year. Top executives and managers are now having to balance if they will have to adjust employees’ pay, modify job descriptions or add in disciplinary actions for working overtime.

On Tuesday, AFairchild PC, a CPA firm in the DFW metroplex, hosted a seminar featuring Traci Clements, an expert attorney on the new Human Resources las at Ferguson, Braswell & Fraser, to unpack the new rule with a group of small companies, consultants and business owners trying to digest exactly how this law will impact their business.

With each question Clements fielded from the audience, it became clear that people are extremely concerned with the implications of this law, mentioning the potential impact to employee morale or the amount of time off employees are given.

Clements noted that there are two laws in place challenging FLSA, H.R. 5813 and S.2707, both exclusively Republican sponsored, but it’s unlikely anything will become of either of these before the Dec. 1 implementation date.

Home sales sink to lowest level

The Pending Home Sales Index decreased by 2.4% to 108.5 in August, down from a downwardly-revised 111.2 in July and from last year’s 108.7.

An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed. Coincidentally, 2001 was the first of four consecutive record years for existing-home sales.

“Contract activity slackened throughout the country in August except for in the Northeast, where higher inventory totals are giving home shoppers greater options and better success signing a contract,” NAR Chief Economist Lawrence Yun said.

“In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the miniscule number of affordable listings,” Yun said.

Without new housing construction, the housing recovery could stall, Yun said. Housing inventory declined annually for 15 consecutive months, and properties close  11 days quicker than August last year.

After last month’s increase of 5.1%, existing home prices rose annually for 54 consecutive months.

“There will be an expected seasonal decline in new listings in coming months, which could accelerate price appreciation and make finding an affordable home even more of a struggle for would-be buyers,” Yun said.

“Given the current conditions, there’s not much room for sales to march again towards June’s peak cyclical sales pace,” he said.

After last month’s decline, existing-home sales in 2016 will be around 5.36 million, a 2.1% increase from 2015 and the highest annual pace since 2006, Yun said. The national median existing-home price growth is forecast this year to rise around 4%.

Highest level since recession

In 1985, the index was set to 100, representing the index’s benchmark. This value is adjusted monthly based on results of a household survey of consumers’ opinions on current conditions and future economic expectations. Opinions on current conditions make up 40% of the index, while expectations of future conditions make up 60%.

“Consumer confidence increased in September for a second consecutive month and is now at its highest level since the recession,” said Lynn Franco, The Conference Board director of economic indicators. “Consumers’ assessment of present-day conditions improved, primarily the result of a more positive view of the labor market.”

“Looking ahead, consumers are more upbeat about the short-term employment outlook, but somewhat neutral about business conditions and income prospects,” Franco said. “Overall, consumers continue to rate current conditions favorably and foresee moderate economic expansion in the months ahead.”

Consumers assessment of current conditions improved in September. Those that said business conditions are good, however, decreased from 30.3% to 27.4%, but those saying conditions are bad also declined from 18.2% to 16.2%.

Those who said jobs are plentiful increased from 26.8% to 27.9% and those who said jobs are hard to get decreased from 22.8% to 21.6%.

Americans were also more confident about the short-term outlook in September. While those who expected business conditions to improve over the next six months decreased from 17.6% to 16.5%, but those expecting conditions to get worse also declined from 11.4% to 10.2%.

More consumers expect the labor market to improve in the next six months. Those who said jobs will increase went up from 14.4% to 15.1% in September. In addition, those who expect there to be fewer jobs declined from 17.5% to 17%. Those who expect their incomes may have decreased from 18.5% to 17.1%, but they are not expecting a demotion either. Those who expect a decline in pay decreased from 11% to 10.3%.

“The rise in the present situation index appears to reflect an improvement in labor market conditions,” Capital Economics Chief Economist Paul Ashworth said. “The net proportion of respondents saying that jobs were plentiful rather than hard to get improved to a nine-year high.”

“But that doesn’t necessarily mean that faster wage growth is coming soon,” Ashworth said. “Overall, a lot better than expected, but confidence hasn’t been a great guide to actual consumer spending in recent years.”

Mortgages can compete in today’s market

It’s a common misconception for borrowers to think they need to put 20% down on a mortgage, which often becomes the biggest roadblock to homeownership.

And in addition to this, markets across the country are plagued by continued lack of inventory, making borrowers believe a higher down payment will help them compete against other buyers.

But according to Redfin, success with a low down payment is possible even in highly competitive markets.

The survey found that 22% of Redfin agents in California, a state notorious for bidding wars and high prices, said their clients were successful with 3% to 5% down.

“The conditions that challenged first-time and Millennial homebuyers this spring are starting to ease,” said Redfin chief economist Nela Richardson. “There are fewer bidding wars and less of a need to escalate significantly above the list price to get an offer accepted.”

Richardson explained that the pace of the market is also slowing, which helps buyers since they can now afford to be patient.

The latest report from CoreLogic recorded that cash sales fell to less than 30% for the first time since the housing crisis began.

And sellers are also adjusting and learning about the growth of low down payment products.

Approximately, 61% of respondents said they had advised sellers that the highest offer is not necessarily the best.

“Sellers are getting used to the idea that all-cash buyers and investors have given way to traditional buyers who need financing to purchase a home,” said Richardson. “They are demanding less from buyers than they were just a few months ago, which means a wider spectrum of buyers and down payments can be successful now.”

Roddy de la Garza, a Redfin real estate agent in Los Angeles who is included in the 61%, commented on the news and said, “One major piece of advice I always give to sellers is that the highest offer is not necessarily the best. You have to look at the whole package. If a buyer has a low down payment but comes in with a fully pre-approved and underwritten loan agreement from their lender, and agrees to waive the appraisal contingency, that’s practically as good as cash.”

This change is good news for first-time buyers and Millennials as low down mortgages become the new normal.

Mat Ishbia, CEO of United Wholesale Mortgage, recently explained to HousingWire that 3% down mortgages will be the new normal.

The upcoming October issue of HousingWire magazine zeros in the idea low down mortgages, expanding on how banks of all sizes are implementing and originating the low down product. Check back here at the beginning of the month for a link to the piece to see how lenders are doing the 3% down.

Ultimately for borrowers unsure if they should so a 3% to 5% down mortgage, Tracy Salisbury, a Redfin real estate agent in Seattle, said, “Talk to a lender now and become educated on all of your options, even if you don’t think you’re able to buy. You might be surprised at the possibilities.”

Detroit’s appraisal gap roadblock

The city’s median home price is just $24,000, according to RealComp, due to the fact that so many homes are foreclosures or have been purchased by investors using cash. Investors renovate the homes, driving up the values, but the original, low sale prices are still used as comparables for neighboring appraisals. Regular, mortgage-dependent buyers who want to rehab homes and live in them, are unable to get large enough mortgages because the homes they want to buy are appraising too low. Detroit Home Mortgage is offering an option.

Here’s how Krysta Pate, program director at Detroit Home Mortgage, a program launched in February and designed to make home ownership more affordable and accessible to local Detroiters, explained they working around this:

Through a combination of private funding and cooperation of five different banks, the program offers 3.5 percent down payment, fixed-rate loans to buyers with at least a 640 FICO score. They split the loan in two, with the first covering the appraised value of the home and the second loan covering the “appraisal gap,” which would be the value of the home once renovated and on the open market. The second loan is held by a nonprofit.

How to use Snapchat to get higher engagement

For real estate agents who want to drive sales through higher social media engagement, Jason Frazier, chief information officer for Mason-McDuffie Mortgage, gave these simple tips on how to use Snapchat to grow a following.

Need more info? Would examples help? We got you.

Now, Frazier is going to show you how to do it. He just sent me an email and it’s hard not to get pumped about what he’s doing.

He, along with four other real estate pros, put together a Marketing Mastermind group retreat in Park City, UT on October 7 to 9.

Basically, it’s a gathering of top social media real estate pros to chat about marketing, tech, and social.

Here is some more info:

“We all connected with each other on Snapchat and have been collaborating ever since,” Frazier said about the event and his fellow participants. “The mastermind is simple: Bring some of the most creative, marketing, social media focused real estate pros together to share tactics and create new ones to increase business.”

But here’s the best part. This isn’t your ordinary gathering of the best in the business.

That’s because, during the event, the experts will be launching the Snapchat account of a major real estate marketing company, by doing a group takeover of their account.

But they aren’t stopping there.

“We will also be doing a group takeover of the Snapchat account of a major real estate media company. We have a third takeover in the works,” Frazier said.

Afraid of moving outside of Facebook? Fine, this is a great course for beginners as well as experts.

So, don’t just take our word for it, or anyone else’s, just go and see for yourself.

Real estate agents are leveraging social media sites such as Snapchat more and more and laughing all the way to the bank along the way.

It’s up to you if you want to join their ranks.

Sentiment sees uptick

This increase is good news after the survey’s preliminary September results showed no change from August.

An article by Jill Mislinski for Advisor Perspectives explains what this means historically:

The Michigan average since its inception is 85.4. During non-recessionary years the average is 87.6. The average during the five recessions is 69.3.

“Confidence edged upward in September due to gains among higher income households, while the Sentiment Index among households with incomes under $75,000 has remained at exactly the same level for the third consecutive month,” said Richard Curtin, Survey of Consumers chief economist.

“Importantly, the data provides no evidence of an upward trend as the average level of the Sentiment Index since the start of 2016 is nearly identical with the September level, 91.4 versus 91.2,” Curtin said.

The Index of Consumer Expectations showed the most gain with an increase of 5.1% from August and 5.8% from September 2015 to 82.7.

On the other hand, Current Economic Conditions decreased 2.6% from last month to 104.2. This is still an increase of 3% from last year.

“All of the September gains were concentrated in the Expectations Index, while assessments of current economic conditions were slightly less favorable,” Curtin said. “Fewer reports of recent income gains were counterbalanced by an uptick in income gains expected during the year ahead.”

“The larger recent gains among upper income households was partly due to continued declines in their inflation expectations,” he said. “Buying plans edged downward mainly due to the declining availability of price discounts. Real personal consumption expenditures can be expected to increase by 2.7% through mid 2017.”

While this survey showed only a slight increase, another measure of optimism, consumer confidence, hit its highest level in nine years, right about when the last recession began, according to the Consumer Confidence Survey conducted by The Conference Board by Nielsen, a provider of information and analytics around what consumers buy and watch.

Housing market not cooling down

The summer housing market saw high demand next to rising home prices, but don’t expect Fall to bring any relief. In fact, it could bring the hottest fall in a decade, new data from realtor.com shows.

Home sales in September moved 4% faster than last year, according to the data. The number of days on market is also expected to decreased by three days from last year.

In August, Lawrence Yun, the National Association of Realtors Chief Economist, said that without new housing construction, the housing recovery could stall.

Housing inventory declined annually for 15 consecutive months, and properties closed 11 days quicker than August last year, according to the Pending Home sales report by NAR.

Inventory also remains down as less than 450,000 new listings came on the market in September, while the median home price rose 9% from last year to $250,000, a new high for the month.

“House hunters who were shut out this summer because of fierce competition could fare better this fall, with more opportunities to buy and mortgage rates still near all-time lows,” realtor.com Chief Economist Jonathan Smoke said. “But don’t expect bargains—prices haven’t come down from this summer’s record highs.”

“Overall, the fundamental trends we have been seeing all year remain solidly in place as we enter the traditionally slower sales season, and pent-up demand remains substantial as buyers seek to get a home under contract while rates remain so low,” Smoke said.