Monthly Archives: May 2016

Bank cutting back on mortgage business

Compare that to 35 prime jumbo securitizations issued in 2015, 28 issued in 2014, and 31 issued in 2013.

Well, it appears that one major player could be scaling back its mortgage securitization business.

According to a report from Reuters, Deutsche Bank is planning to reduce its securitization business, and perhaps its mortgage business altogether.

From Reuters:

Deutsche Bank is looking to cut its loan securitization business further starting with repackaged U.S. mortgages, two people familiar with the matter said, as the lender braces for a large fine in the United States for alleged mis-selling of such debt.

A final decision about this core business is set to come early next year, the people said, and securitization cutbacks could become a central part of an expected strategic overhaul at the bank, once U.S. authorities have settled on a penalty.

“We have already shrunk the business over the last two to three years,” a person with direct knowledge of the bank’s plans said. “It could shrink a lot more. Not only sales and trading, but also in origination.”

According to Reuters, one of the reasons Deutsche Bank is considering scaling back its mortgage business is due to the amount of capital banks are now asked to hold in relation to such transactions.

Pam Patenaude, who was in HousingWire’s backyard last week at the Housing America’s Families Forum at the George W. Bush Presidential Library in Dallas, is rumored to be on the shortlist to serve as the secretary of the Department of Housing and Urban Development in President-elect Donald Trump’s administration.

But Patenaude, who currently serves as the president of the J. Ronald Terwilliger Foundation for Housing America’s Families, isn’t the only name that’s being considered to lead HUD beginning in January.

According to a Friday evening report from the Washington Post, Robert Woodson, who runs the Center for Neighborhood Enterprise in Washington, D.C., is also under consideration for the top position at HUD.

According to the Washington Post article, Woodson is a close advisor for Speaker of the House Rep. Paul Ryan, R-Wisc., on poverty issues.

From the article:

If selected, Woodson, who is black, would add diversity to Trump’s team. And he would be responsible for leading education and social reforms in predominantly African American areas, which Trump repeatedly described during the campaign as “failed” and vowed to repair.

“They seem to be very serious about it,” Woodson, 79, said in an interview with The Washington Post. “I’m not job hunting, but we’re talking about how I could possibly work with him. We’re talking about how we could work with those across the aisle to do these things together.”

When asked if Trump officials have specifically discussed a potential Cabinet appointment, Woodson said, “Yes, we’re talking about HUD.”

If selected to the HUD post, it could provide an indication of how closely the Trump administration plans to work with Ryan and the established Republican base in Washington.

Again from the Washington Post:

“It’s fair to say that Paul wouldn’t mind having me there to work with them on all of this,” Woodson said with a chuckle.

As a side note related to Patenaude and the Housing America’s Families Forum, HousingWire has served as a media partner with the Terwilliger Foundation since its inception and was in attendance at the event.

Our editor-in-chief, Jacob Gaffney, posted a couple of blogs from the event. Click here and here to check those out.

Also, check out the Twitter feeds of Gaffney (click here), our digital reporter, Brena Swanson (click here), and our CEO, Clayton Collins (click here), all of whom were in attendance at the forum.

And be sure to check HousingWire this week for more highlights from the event.

Michael Burry was immortalized on the big screen by Christian Bale in last year’s The Big Short, based on the book of the same title about the investors who cashed in on the housing crash.

And Burry isn’t done with the mortgage business.

Just over a year ago, he invested in a new mortgage venture, PeerStreet, which bills itself as an online marketplace for real estate-backed loans.

At the time, CNBC wrote of PeerStreet:

PeerStreet’s mission is to open up a particular segment of the real estate market — residential, typically non-owner occupied — to a wider swath of investors, thus adding capital to the system and ultimately bringing down borrowing costs.

Burry was one PeerStreet’s first investors, but now the company is adding another big name to its roster of investors, Andreessen Horowitz, the Silicon Valley venture capital firm.

Andreessen Horowitz boasts Facebook, Airbnb, Foursquare, Lyft, Skype, and Twitter in its current portfolio.

Now, Andreessen Horowitz is leading a $15 million round of Series A funding for PeerStreet.

According to an announcement issued last week by PeerStreet, Alex Rampell, general partner at Andreessen Horowitz, led the investment and will take a seat on PeerStreet’s board.

Additionally, the Kaiser Family Foundation, Rembrandt Venture Partners, Montage Ventures and others participated in the round of funding, the company said.

“PeerStreet is one of the fastest growing marketplace lenders we’ve seen, scaling to $165 million in originated loans in a little over a year, with great returns against a secured asset,” Rampell said. “They have a unique distribution model that allows them to leverage existing lending networks to lower loss rates, and grow without direct marketing.”

The company said that in its first year of business, it brought in “thousands of investors,” and returned more than $50 million to investors; all with zero losses.

PeerStreet also said that is significantly expanded its national footprint, and now works with more than 50 lenders and offers investments in half of the country.

“I speak for the entire team at PeerStreet when I say how incredibly excited we are to include Andreessen Horowitz on the roster of stellar investors in our company,” said Brew Johnson, CEO and co-founder of PeerStreet. “This round of funding will help us further execute on our goal of building a world class investment platform for real estate debt.”

Racial discrimination in housing ads

This selective advertising is a clear violation of the Fair Housing Act, however Facebook denied any wrongdoing.

Now, the company announced that marketers placing housing, employment or credit ads will not be able to target people by ethnicity, according to an article by Sapna Maheshwari and Mike Isaac for The New York Times.

Even with the new change, Facebook still did not admit to wrongdoing, but instead stated that disabling the ability to advertise by ethnicity was a better option.

From the article:

“There are many nondiscriminatory uses of our ethnic affinity solution in these areas, but we have decided that we can best guard against discrimination by suspending these types of ads,” Erin Egan, Facebook’s chief privacy officer, said in a blog post on Friday.

The option is still available to advertisers outside of the realm of housing, employment or credit ads.

While the upcoming term of President-elect Donald Trump could bring less regulation to the industry, a new kind of regulation is emerging: cybersecurity.

Federal agencies are pushing for enhanced regulation for cybersecurity, however in New York that push became a proposal, according to an article by The National Law Review.

The proposed regulation would apply to most entities “operating under or required to operate under a license, registration, charter, certificate, permit, accreditation or similar authorization under the banking law, the insurance law or the financial services law,” according to the article.

From the article:

The scope of the Proposed New York Requirements is very broad. For example, they define “Nonpublic Information” as any information that is not public record or widely known and falls into one of four categories, including any information a person provides to a Covered Entity in connection with seeking or obtaining a product or service, or that a Covered Entity obtains in connection with providing a financial product or service. In combination, these categories likely include any information that is not already obtainable from government records or “widely distributed media.”

The Proposed New York Requirements would task covered entities to develop a Cybersecurity Program that can (1) identify internal and external risks, (2) use defensive infrastructure, (3) detect Cybersecurity Events, (4) respond to and mitigate such events, (5) recover and restore normal operations and services and (6) fulfill reporting obligations.

But regulation isn’t the only change Trump is bringing with him. The time for the new president-elect to take his place as president is rapidly approaching, and he has some decisions to make first.

Trump has 15 cabinet positions that he needs to fill, and he is already narrowing down his options.

Among those closest to the financial industry is the Treasury Secretary. Here are the options Trump’s team is considering so far, according to an article by The New York Times.

  • Thomas Barrack: Founder, chairman and executive chairman of Colony Capital; private equity and real estate investor
  • Jeb Hensarling: Representative from Texas and chairman of the House Financial Services Committee
  • Steven Mnuchin: Former Goldman Sachs executive and Trump’s campaign finance chairman
  • Tim Pawlenty: Former Minnesota governor

Trump also narrowed down his choices for Commerce Secretary, who is in charge of a diverse portfolio, including the Census and the Bureau of Economic Analysis.

  • Chris Christie: New Jersey governor
  • Dan DiMicco: Former chief executive of Nucor Corporation, a steel production company
  • Lewis Eisenberg: Private equity chief for Granite Capital International Group

So far there is only one name up for consideration for the Labor secretary, who dispenses the monthly jobs report, among other things.

  • Victoria Lipnic: Equal Employment Opportunity commissioner and work force policy counsel to the House Committee on Education and the Workforce

For a list of people being considered for all 15 cabinet positions, click here.

Among the list of possible new members in Trump’s administration is Pam Patenaude, current president of the J. Ronald Terwilliger Foundation for Housing America’s Families, who could soon be the next HUD secretary.

While housing did not get much focus during the campaign trails, Patenaude is now seeking to ensure that it gets the attention it needs during the next presidency.

This Friday, the J. Ronald Terwilliger Foundation for Housing America’s Families will host a full day national Housing Forum at the George W. Bush Institute in my hometown of Dallas, Texas, of which HousingWire is a media sponsor.

Speakers at the Forum will include top Congressional leaders and individuals likely to play prominent roles in the presidential transition process and the incoming Administration as well as key housing industry leaders and practitioners. The list of speakers includes Matthew Desmond, author of Evicted, Carol Galante, former assistant HUD secretary and FHA Commissioner and Laurie Goodman from the Urban Institute.

Inventory drives down days on market

Homes were flying off the market in Chicago this October due to the rising demand for housing, according to a new report from RE/MAX.

In October, homes stayed on the market an average of 83 days before finding a buyer. This is down a full week from last year’s 90 days, and the shortest average for October since 2005.

The shortened timeline is due to an increased demand for housing caused by the shortage of inventory in the metro. Inventory of homes for sale in October fell 10% from last year. This in turn reduced the total home sales by 5% annually to a total of 8,693 sales.

Not only are homes staying on the market for less time, but they are also selling at higher prices. The median sales price in October increased 9.5% to $219,000 from last year’s median sale price of $200,000.

“This is an outstanding market for those with a home to sell,” said Jack Kreider, executive vice president and regional director of RE/MAX Northern Illinois.  “An average market time of under 90 days puts upward pressure on prices, and we certainly saw that play out in October.”

“The increase in mortgage interest rates since the presidential election will serve to reinforce the urgency homebuyers already feel, so we expect an active market right through the holiday season and into 2017,” Kreider said.

The home sales data used for the RE/MAX analysis is collected by MRED, the regional multiple listing service. It covers detached and attached homes in the Illinois counties of Cook, DuPage, Kane, Kendall, Lake, McHenry and Will.

The home price increase is good news for homeowners who are experiencing higher levels of home equity. In fact, 23.4% of all homeowners with a mortgage are now consideredequity rich, an increase of 2.6 million from last year to 13 million in the third quarter, according to a report from ATTOM Data Solutions, a fused property database.

However, the obvious downside is for potential homebuyers, who are struggling to find a home at an affordable price. Home affordability is at the worst level in seven years, with 24% of the U.S. county housing markets less affordable than their historic affordability averages in the third quarter, the most recent ATTOM Data Solutions Home Affordability Index for third quarter 2016 recorded.

Questions to ask your Realtor

unduhan-78If you’re a first-time homebuyer, you may be wondering how to start the process. After browsing homes online, the next step for homebuyers is often choosing a Realtor.

But how do you find the best ones out of all the available choices? HousingWire has you covered.

We asked one of the top five agents in Atlanta, Matt Hermes, and Happy Grasshopper Co-Founder Dan Stewart for their best advice and distilled that into these five questions to ask your real estate agent:

1. What is your experience working with first-time homebuyers?

Oftentimes, first-time homebuyers will rely on a personal referral from a family member or friend when they start the buying process. While this is a great way to be introduced to a real estate agent, you need to make sure the agent has the skill set and patience to work with a first-time buyer. A real estate agent should take the time to walk through the entire purchase process from loan pre-qualification, a needs analysis (what are you looking for, the area you want to live, commute times, price point, etc), how to look at homes objectively, reviewing the contract with you prior to writing an offer, how a contract will be written to your benefit, funds needed to close, funds needed AFTER closing, closing time lines, etc.

2. How long have you been in the real estate business and how many homes have you sold this year?

While there are many excellent agents that are new to the business, making sure you have experience working on your side is a key to your success in finding and negotiating a great deal. Working with a new agent or even an agent who has had his/her license for years, but has not closed a lot of transaction may not be in your best interest. Don’t get me wrong, there are some exceptional agents who have not closed a ton of transactions, but you should consider experience over someone you “like.” You want to make sure your agent is knowledgeable about writing offers with the terms working in your favor.

3. Are you working for me and in my best interest throughout this transaction?

Buyers often call on a home for sale from a sign in the yard, and the listing agent wants to show you the home. The listing agent has signed a contract with the seller to work on their behalf. They cannot work for you and the seller at the same time while trying to get both sides the best deal. If you do hire a real estate agent that also works with sellers, ask them up front how this will work if you are to view a home they are selling. Buying at a discount or at terms that work in your favor are extremely important when buying a home for the first time. I like to say that you earn your equity in the purchase of the property, not necessarily when you go to sell the home, but when you buy. Equity is wealth. You will need someone working FOR you and in your best interest.

4. How will you communicate with me?

The right amount of communication from an agent should reassure you that the agent is working hard to find you the home of your dreams. Buyers should hear from their agents without prompting. Agents should communicate often about open houses, new listings, setting up showing times, and changes within the market.

With prices high and inventory low in the current market, there’s likely to be multiple offers on the home you want, and a breakdown in communication could be the difference between an accepted and a denied offer. Ask how often the agent will communicate and what’s his/her preferred method. Will he/she primarily use email or phone, and how does that lines up with what you’re looking for?