Mr. Cooper Group’s examination of the cyberattack it suffered in late October concluded that the personal information of current and former customers was compromised. The data breach led the company to estimate an additional vendor cost related to the incident in the fourth quarter to include offering identity protection services for two years.
On Oct. 31, the Dallas-based servicer and lender said it had experienced a cybersecurity incident with an unauthorized third party accessing certain portions of its technology systems and customer data. Mr. Cooper restarted servicing operations on Nov. 4 by taking customer calls and payments, remitting to investors and onboarding new loans.
On Friday morning, the company announced in a new 8k filing with the Securities and Exchange Commission (SEC) that its “forensic review has determined that personal information relating to substantially all of our current and former customers was obtained from our systems during this incident.”
Mr. Cooper had 4.3 million customers by the end of Sept. 30.
“To assist our customers, we will offer complimentary identity protection services, including credit monitoring, to all of our current and former customers for two years,” Mr. Cooper added in the document. “We are in the process of reaching out to customers with instructions on how to sign up for these complimentary services and how to contact us with questions.”
The initiative will add to Mr. Cooper’s costs. The company’s guidance for the fourth quarter will now include vendor expenses related to that incident of $25 million, compared to their previous estimate between $5 million and $10 million. The company included an accrual for the cost of providing identity protection services for two years.
Meanwhile, the company maintained its forecast for Q4 originations segment pretax operating earnings between $0 and a $10 million loss. The pretax operating earnings for the servicing segment is expected to be from $200 million to $210 million (excluding mortgage servicing rights mark-to-market net of hedges.)
Mr. Cooper delivered $275 million in net income in the third quarter, compared to $142 million in the second quarter. The company’s funded volume reached $3.3 billion from July to September. Its servicing portfolio was at $937 billion in UPB at the end of September.
Forensic review of the cyberattack, engagement with law enforcement and regulators, and litigation defense are ongoing. Due to the incident, several customers filed class-action lawsuits against the company, claiming Mr. Cooper failed to comply with industry standards to protect their information.
Phone interview questions often cover a lot of ground, from your professional motivations to your preferred style of being managed. Phone interviews also typically include several behavioral questions, too, in which you’re asked to recount specific experiences from your previous jobs.
They can seem intimidating, but phone interview questions are a lot less scary when you’ve rehearsed your answers and prepared stories that demonstrate your strength as a candidate.
Below, you’ll find 20 questions commonly asked during phone interviews, as well as advice on how to best answer them.
Phone interview questions
In preparing for your phone interview, set aside a few hours to reflect on how you’d answer each question. Write or type out your answers, then practice answering each question out loud.
Focus on speaking slowly and clearly, and run through your answers several times — that’ll help you eliminate filler words and speak comfortably when you’re talking to the interviewer.
When you’re on the phone interview, smile while speaking, recommends Robert Half, a human resources consulting firm. Even though the interviewer can’t see you, you’ll sound more enthusiastic and confident.
You can also keep a cheat sheet with key dates, sales figures or other information you want to easily access. Don’t overly rely on them, though, and be prepared to complete the interview without having to visit your notes.
Question about the company or position
1. What are your qualifications for this position?
If you’re asked this question, talk about your hard skills or competencies learned through training or education, says Heather Livingston, a career advisor at University of Phoenix.
Bring up any specific qualifications you have that were in the job description. Such qualifications might include knowledge of a specific software, coding language or experience working with a certain type of customer.
Be sure to mention any professional certificates or licenses relevant to the position, too, Livingston says. You can also mention any college courses or professional training you’ve completed that relate to the role.
2. Why do you want to work for us?
To effectively answer this question, you’ll need to research the company, Livingston says. Familiarize yourself with its history, mission statement, purpose and leadership.
Mention explicit parts of the company’s mission that you agree with, and how helping the company achieve that mission aligns with your overall career goals.
3. What do you know about the company?
Similar to the question above, you’ll need to research the company to answer this question. Spend some time on the company’s website and read the “About Us” page. You can also visit the company’s LinkedIn page and see if it’s recently been in the news.
You don’t need to memorize every part of the company’s history, but make sure you’re aware of any major events — such as mergers, acquisitions or product launches — and can speak confidently about the company’s main product or service.
4. What do you see as the biggest challenge coming into this role?
It can be tough to answer questions that require you to admit your vulnerabilities. But employers know that even the best employees inevitably struggle with one or more aspects of any job.
“The key is to be honest,” Livingston says.
There’s a fine line between being honest and undermining yourself as a candidate, though. Avoid mentioning challenges that relate to critical components of the job.
For example, if you struggle with time management, and the job requires you to manage multiple deadlines, sharing that struggle might give the hiring manager pause. Similarly, sharing that you aren’t detail oriented might not be a great idea if you’re interviewing for a data-focused role.
On that note: If several key parts of the job sound like significant challenges, do some soul searching and think about whether the job is a good fit for your skillset.
Also, offer solutions to any potential challenges you foresee, Livingston says. If you tell the interviewer you might find a particular software challenging, for example, share your plan for overcoming that challenge.
5. Why should we hire you?
This can be a tricky question to answer; you want to sell yourself, but don’t want to appear cocky or entitled. Write and practice an elevator pitch for yourself as a candidate, Jennifer Preston, an HR consultant, told U.S. News and World Report.
Highlight your work experience that most closely aligns with the role and your strongest skills related to the job. Talk about the job objectives you’re most excited to accomplish, and tell the interviewer how you’d achieve those goals.
You can also mention the little things that distinguish you from other candidates, too — whether that’s your passion for building relationships or your long-term career goals that make you a good fit for the company.
Behavioral questions
6. Tell me about a tough decision you’ve had to make in the past.
Behavioral questions are designed to predict a candidate’s future job performance, according to the Journal of Business Research. So, for this and the remaining behavioral questions, answer with a workplace anecdote that illustrates how you behave in certain situations.
Think about difficult decisions you’ve made on the job. Have you ever been asked to mislead a customer? Has a manager ever acted inappropriately, leaving you to decide whether to report them? Share a story that shows your integrity, work ethic or another quality that makes you a desirable employee.
7. Tell me about a time you failed.
This question isn’t meant to highlight your failures or mistakes. Instead, it’s a chance for the interviewer to see whether you learn from your mistakes, Livingston says.
“Failure is how we learn. And good employers, good bosses and good managers know this,” Livingston says. “Nobody’s perfect.”
Don’t be the candidate whose biggest failure is that they care too much. Be honest and candid, and talk about a genuine error you made on the job.
Avoid dwelling on the mistake itself — or the panic and consequences that followed — and instead emphasize the insights you gained, and how you grew from the experience, per the Harvard Business Review.
8. Tell me about a time you didn’t get along with a coworker or colleague.
The interviewer knows that nobody gets along with every person they encounter. They’re trying to see if you’re able to work with people you don’t particularly like, Livington says.
Don’t spend too much time explaining why you disliked a particular colleague. Focus on how you were able to put your differences aside and accomplish the task at hand.
9. Tell me about a time you had to work under pressure or stress.
Can you handle the heat, or do you collapse under pressure? That’s what the interviewer is trying to determine.
Talk about a time when you worked under tight deadlines or external stress. Specifically list the ways you handled that stress, whether it was by staying organized, building small mental health breaks into your day or eating well and getting plenty of sleep during busy weeks.
10. Tell me about a time when you took initiative.
Finally, an opportunity for a positive story! Share an instance in which you proactively completed a task or contributed to a project — ideally, without being instructed by your manager — that benefited your employer or made things easier for your team.
Work style questions
11. Do you prefer working on a team or alone?
There’s no right or wrong answer to this question. But given that most jobs involve some form of collaboration, your answer should make it clear that you’re able to work on teams, according to the Harvard Business Review.
You can also list the instances in which you prefer working alone or collaboratively, recommends the Harvard Business Review. For example, you could say that you love brainstorming ideas and developing sales pitches with your colleagues, but enjoy the freedom to work independently when on a deadline or during certain chunks of the day.
12. How do you manage stress to avoid burnout?
The interviewer isn’t looking for a specific method of stress management; they’re just making sure you know how to handle stress and won’t crumble under tight deadlines.
Share a work experience that illustrates how you effectively manage stress, recommends the Harvard Business Review. Feel free to get specific: If you utilize tools like meditation, journaling or morning runs to manage day-to-day stresses, say that.
13. How would people you’ve worked with describe you?
To effectively answer this question, first consider the qualities that might make someone successful in the role you’re interviewing for.
If the job requires a lot of collaboration, for example, say that your coworkers would describe you as communicative, accountable and a team player. If the job involves number-crunching, you could say that your colleagues would call you detail-oriented and conscientious. Think of past experiences you can mention that illustrate those qualities in action.
You can also use this question to highlight a few of your unique characteristics that aren’t directly tied to the role. Knowing that your coworkers would describe you as personable or funny, for example, can paint a more well-rounded picture of you as an employee.
14. What kind of management style works well for you?
Like many of these questions, you’ll want to answer honestly while keeping things relatively broad. Make it clear that you can work effectively under any manager, according to multiple career experts.
For example, instead of saying, “I prefer to work under managers with a hands-off leadership style, and can’t work well if my boss is always looking over my shoulder,” you could say, “While I prefer a hands-off managerial style, I’ve worked well with plenty of supervisors who prefer frequent check-ins and close collaboration.”
15. What are you passionate about? What motivates you?
Are you externally motivated by rewards, growth opportunities or bonuses? Or are you intrinsically motivated by doing work you believe in? Reflect on what motivates you in the workplace and honestly answer the question. You want your employer to understand what motivates you, according to BetterUp, a behavioral career coaching company.
To kickstart your reflecting, here are some potential motivators:
Promotions and leadership opportunities.
Contributing to a team.
Solving problems for customers and clients.
Learning new things.
Developing certain professional skills.
Making a difference.
“You can be passionate about things in your personal life, but whatever this answer is should show relevance to how it will enhance your success at this position in this company,” Livingston says.
16. What is your experience with remote work?
This question may not be relevant to you, depending on the job you’re interviewing for. But if you’re interviewing for a remote role, the employer may want to know if you can effectively manage your time and responsibilities.
Describe your experience with remote work — or lack of experience, if you’ve never worked from home — and make it clear that you can perform the job’s functions without reporting to an office or workplace.
Logistical questions
17. Are you currently employed, and why are you thinking about leaving your current job (or why did you leave your previous job)?
This can feel like a tricky question to answer. The key is to answer honestly without getting into too much detail. Saying that you’re looking for a job that better aligns with your goals, values and growth plans is typically a safe bet, Livingston says. Be prepared to talk about those goals and values, as the interviewer may ask follow-up questions about them.
Don’t badmouth anyone from your previous employer, though. It’s an unprofessional look. If you quit your job (or are planning to leave) because you don’t get along with your manager or another coworker, keep things broad, Livingston says.
“Say something very general to the effect of having different values and different goals,” Livingston says. “That way, you’re not saying something bad about the previous employer or manager. You never want to do that.”
18. Are you interviewing with other companies?
Most candidates in the job market are applying for and interviewing with multiple companies. If you’re interviewing with other companies, you should feel comfortable sharing that, Livingston says. You don’t need to mention which companies or roles you’re interviewing for, though.
Also, be sure to emphasize your excitement for the role you’re discussing with the interviewer. You can say something like, “At this time, I am interviewing for other positions, but this is the role that best aligns with my interests and career goals.”
19. What salary range are you looking for?
There are a few ways you can answer this question.
First, you can provide an ideal salary range. To avoid giving a range that’s unrealistically high (or lower than you could get), research salaries for similar positions in your industry and city. Then, provide a salary range with around $10,000 of wiggle room, Livingston says. If your ideal salary is $75,000, tell the interviewer you’re looking for compensation between $75,000 and $85,000.
If you’d like to buy some time before sharing an ideal salary, another option is telling the interviewer that you’d like more information on the role, according to U.S. News & World Report.
You could say something like this: “Until I learn more about the job and its responsibilities, I’d rather not decide on a fair salary range. Could we discuss compensation at a later date, perhaps after I’ve spoken with other members of the team?”
When you do share an ideal salary range, ask for more money than you’re currently making. Changing jobs is often an effective way to significantly increase your salary.
Half of the American workers who switched jobs between April 2021 and March 2022 saw their wages increase 9.7%, according to a July 2022 Pew Research Center report. Meanwhile, the median worker who stayed in their job over that same period saw their wages fall 1.7%.
20. When can you start working?
Ideally, you want to give your interviewer a firm date. But if you’d have to submit a two weeks’ notice at your current job, simply tell the interviewer that.
Say that, out of respect for your employer, you’d like to help transition your responsibilities and complete any outstanding tasks before your departure. In most cases, the new employer will be fine with figuring out a start date later in the interview process.
It’s hard to say what’s cooler about the Japanese shōya house at the Huntington Library, Art Museum, and Botanical Gardens — the centuries-old wood structure that was once the center of a small farming village in Marugame, Japan, or the backstory of how it got to its new home at the Huntington’s Japanese Garden.
The journey took nearly eight years of negotiations, bureaucratic wrangling and skilled craftsmanship to dismantle, reassemble and, in some cases, re-create the 3,000-square-foot house and gardens. And starting Saturday, visitors can finally tour the compound, which will be open daily from noon to 4 p.m. (except Tuesdays, when the gardens are closed).
Los Angeles-based Akira and Yohko Yokoi donated their ancient family home to the Huntington, but the $10 million job of moving it to San Marino was far more complicated than just taking apart a puzzle and putting it back together.
Consider the distinctive conical ceramic tiles covering the pitched roof like rows of tight curls. All those silver-gray tiles had to be remade by Japanese craftsmen because the originals were mortared to the roof and had to be broken to disassemble the house. The exquisite garden outside the largest and most important room of the house was carefully mapped and measured, and every stone numbered by landscape designer Takuhiro Yamada so it could be re-created at the Huntington.
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And outside the gatehouse that protected the house, built new because the original was damaged by a storm, the Huntington installed a terraced mini farm growing small plots of rice, buckwheat, sesame, wheat and other traditional Japanese crops, surrounded by a riot of colorful cosmos flowers. The house sits higher than the farmland, so water collected from the roof and ponds all drains down to irrigate the farm land.
So this installation isn’t just an exercise in cultural awareness, says curator Robert Hori, the Huntington’s associate director of cultural programs, who oversaw the project from start to finish. To him, the Japanese Heritage Shōya House is a quiet but effective example of sustainability — “learning from the past for a better future” — and a reminder that farmers “are really the backbone of our society.”
There were plenty of trying times — more than two years of negotiating with city, state and federal officials to get the necessary approvals and occupancy permit to move and rebuild the house. And in the midst of the pandemic, when the disassembled house sat in dozens of packing crates for nearly nine months, Hori had to coax reluctant Japanese craftspeople to come and put it together so the ancient wood pieces didn’t warp in SoCal’s dry summer heat.
“When you’ve spent two years lovingly repairing this wood and then you’re told everything might be lost, that was a call to action to the craftspeople who painstakingly worked on this,” says Hori. “Even in the face of a pretty scary time, they felt like it was their responsibility to put this house back together.”
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The project started with a chance meeting in 2016 during a party at the Beverly Hills home of Los Angeles philanthropist Jacqueline Avant. Hori had come to talk with Avant about a Japanese art collection she wanted to donate to the institution. During their conversation, Avant introduced Hori to her friend, Yohko Yokoi, who soon would be traveling to Japan.
“I said, ‘Oh, that will be a wonderful visit because the cherry blossoms will be in full bloom,’” Hori recalls, “and [Yokoi] said, ‘No, because I have to take care of my house.’ And then she began to tell me the story of this house.”
Hori recalls Yokoi saying the house had been built after the war, “so I thought it was a prefab house from the 1950s with poor construction, built after World War II. But then she was saying, ‘We used to have a castle,’ and that’s when it came to light that this house was built around 1700, after the war that unified Japan.”
Prior to that final battle, Japan had been a confederation of warring city-states and provinces, he said. It took 100 years of battles to create a cohesive central government known as the Tokugawa Shogunate. The Yokoi family’s castle was destroyed during the war. They had been fighting on the losing side, Hori said, but the victorious Tokugawa clan decided to incorporate all the losing factions into its new bureaucracy, to become tax collectors and shōya, or village leaders.
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The Yokoi shōya house was built around 1700 in Marugame, says Hori, and was the family’s private residence as well as a kind of community center for the village.
Inside the gatehouse, a large courtyard provided space for weddings, funerals and celebrations. Farmers and merchants entered the shōya house through one entrance, to measure and store their rice, pay their taxes and try to collect funds for other provisions. These rooms had floors made from hard-packed earth, and rustic beams hand-hewn from pine.
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Adjacent to the dirt-floored rooms were the places where the family lived and worked. These raised floors were covered with rice-straw tatami mats. The wood-framed walls and beams were planed to feel as soft to the touch as satin sheets. Sliding walls with windows covered in rice paper and glass opened to reveal exquisite gardens, enjoyed only by visiting dignitaries who entered through their own special gate.
After the military shogunate system was overturned in the late 19th century, the house became the Yokois’ private residence and went through several renovations, according to Yokoi and her husband, Akira. The last family member to live there was Akira’s mother, who died around 1988. The couple moved to California in the late 1960s, says Hori, where Akira worked as an executive for Matsushita Panasonic, the parent company of Panasonic. They visited the house regularly and kept it maintained, with the idea of retiring there someday.That plan faded, however, and eventually, he adds, the upkeep became a chore.
Hori already was thinking about a big project for the Japanese Gardens when he first met Yohko Yokoi. The Huntington’s Chinese Garden was in the midst of a huge expansion, and the discussion was how to add to the Japanese Garden to balance the two, says Hori. “This was an ongoing conversation we’d been having [at the Huntington] since 2012, and I’d been taking several trips to Japan to figure out what we should be adding next to that garden,” he says.
The Yokoi house sounded promising, so even though he had just returned from a visit to Japan, he made another trip within a few weeks so he could see the house while Yokoi was visiting. And that’s when he got the vision that sustained him through all the difficult years to come.
“I thought it had good bones when I first went to look at it, but also, I was interested in the house because it was really a conglomerate of various styles: the front room with its very rustic wood beams and style on one side, and then on the other side a formal reception room with the elegant carvings and mix of styles; a public face and private face of a scale big enough to accommodate visitors circulating through it.”
There were other signs too. The Huntington’s historic Japanese Garden, with its curved wooden Moon Bridge over a small lake and display of a Japanese home, first opened in 1912 when the West was fascinated by Japanese culture, plants and architecture. The garden fell into disrepair during World War II but was refurbished with support from the San Marino League. In 1968, the garden was expanded with a bonsai collection and Zen Court of plants and raked stones. Then in 2010, the Pasadena Buddhist Temple donated a small ceremonial tea house to the garden, which was disassembled and sent back to Japan to be refurbished before being shipped back to San Marino, where it was reassembled.
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The tea house was much smaller than the shōya house, says Nicole Cavender, director of the Huntington’s botanical gardens, but it gave them the confidence to tackle a much larger structure and create a reconstruction of village life.
“We wanted this to be an immersive experience,” says Cavender, “so it has to be productive as well as beautiful.” The fields of tall magenta, pink and white cosmos flowers that edge the farm weren’t added just to enchant, she said, “but to show that we’re actually trying to grow something. The flowers draw pollinators who help the crops grow.”
Eventually there will be koi in the garden pond by the house, and the water circulating in that pond will be enriched with their poop, she says, and help feed the farmland below. Around the house is decorative edging called rain catchers — narrow drains filled with smooth gray rocks to collect any rain or dew falling off the roof, which also drained to the farming areas below.
Three hundred years ago, the Japanese didn’t have a word for sustainability, but they lived the concept every day with this type of regenerative farming, says Hori. “It’s how you survived. We want people to understand that ornamental gardening started with the ability to move water, and to move earth, which is what we have in farming. It all came out of farming.”
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Hori’s vision encompasses more nuanced lessons too. The house has few furnishings. The smooth wood decking around the perimeter of the house is patched in places where the wood was worn, but the patches were done decoratively in the shape of a small gourd. And the simplicity of the furnishings is a gentle question.
“It gets you thinking … do we really need all this stuff we have? We want this to be a living museum, and walking through the house you can really find the three Rs of sustainability — reduce, repair and recycle, reuse or remake,” says Hori.
“It was all part of a circular economy where nothing was wasted. A ‘circular economy’ is a big concept, but we’re hoping these small doses of a big concept can help people take away these lessons and understand them. As a nonprofit we are in the business of inspiring and changing lives. We can make a difference, and that’s a great thing to come to work to.”
Legg Mason’s Capital Management Unit disclosed that it has raised its stake in beleaguered mortgage lender Countrywide Financial to 14.9 percent of shares outstanding, up from 11.8 percent at the end of December.
The Baltimore-based company also noted that it would buy more shares if provisions were removed that prevent unsolicited purchases of more than 15 percent of the company.
According to a company spokesman, Legg Mason essentially took advantage of an arbitrage opportunity, as shares of Countrywide were trading at roughly 20 percent below the $7.80 per-share value post merger as uncertainties swirled.
In fact, shares of Countrywide are still trading at about 12 percent below the Bank of America asking price, signaling that investors believe the deal still has some hurdles to climb.
Legg Mason Value Trust mutual fund manager Bill Miller wrote in a letter that he was surprised Countrywide shareholders accepted a bid below book value and noted that recent positive action by the Fed could begin to turn things around.
“We were quite surprised by the decision to sell the company at close to a seven-year low in the stock price, and agreeing to a bid that amounts to only 30% of book value and under 3x consensus earnings for 2009,” he wrote.
He also noted that his company might vote against the proposed Bank of America merger if it’s believed that the struggling mortgage lender could go it alone.
Two weeks ago, hedge fund SRM Global, which holds about a five percent stake in Countrywide, said the proposed merger “does not provide sufficient value” to its shareholders and said it may attempt to speak with the companies and/or shareholders to negotiate a better deal.
Based on this news, and opposition from consumer advocacy groups, it doesn’t look like the merger, if it does indeed occur, will take place quietly.
Shares of Countrywide were down 6 cents, or 0.87%, to $6.84 in midday trading on Wall Street.
Update: SRM upped its stake to 5.5 percent from 5.2 percent and sent a letter to Countrywide’s board saying the company failed to act in the best interest of its shareholders.
The Federal Communications Commission (FCC) — the government regulatory body overseeing communications across a wide variety of media including radio, telephone cable and the internet — adopted a new series of rules on Wednesday designed to crack down on controversial lead generation methods, including “robocalling” and “robo-texting.”
The new rules as adopted could bring a wave of lawsuits against those using the so-called “lead gen loophole,” which includes mortgage lenders, insurers and law firms.
These new rules will “further protect consumers from scam communications by directly addressing some of the biggest vulnerabilities in America’s robo-text defenses and closing the ‘lead generator’ robocall/robo-texts loophole,” according to an announcement issued Wednesday by the FCC. “The new rules allow blocking of ‘red flagged’ robo-texting numbers, codifies do-not-call rules for texting, and encourages an opt-in approach for delivering email-to-text messages.”
There are three core provisions for the new rules. They will “allow the FCC to ‘red flag’ certain numbers, requiring mobile carriers to block texts from those numbers,” the FCC said. “The rules also codify that Do-Not-Call list protections apply to text messaging, making it illegal for marketing texts to be sent to numbers on the registry.”
They will also close what the FCC calls the “lead generator loophole,” through which “unscrupulous robocallers and robotexters inundate consumers with unwanted and illegal robocalls and robotexts,” the FCC explained.
“The new rules make it unequivocally clear that comparison shopping websites and lead generators must obtain consumer consent to receive robocalls and robotexts one seller at a time – rather than have a single consent apply to multiple telemarketers at once,” the FCC added. This change will disrupt the current way potential homebuyer leads are bought and sold.
Finally, the FCC has proposed additional steps for new action, including soliciting the public for additional action it can take to combat unwanted robocalls for consumers. A new notice published by the FCC “proposes additional blocking requirements when the FCC notifies a provider of a likely scam text-generating number,” it explained.
“The Commission will also seek further comment on text message authentication – modeled on the successful implementation of STIR/SHAKEN protocols for phone calls – including on the status of any industry standards in development,” the FCC said.
The new notice also proposes “requiring, rather than simply encouraging, providers to make email-to-text services opt-in,” the FCC explained.
Experts who spoke to Reuters speculated before the rules’ adoption that they could allow consumers to bring a wave of lawsuits against those taking advantage of the so-called loophole, with one attorney saying the rules would create a “target-rich environment” in which to sue companies that may rely on such leads under the Telephone Consumer Protection Act (TCPA).
“Businesses that use leads will need to be especially careful to ensure that the contacts they use are in compliance with the new law,” said Andrew Perrong, who has filed dozens of lawsuits both as a plaintiff and as an attorney representing clients suing over unwanted calls, Reuters reported.
In a year that saw the federal funds rate reach its highest level in more than two decades, high-yield savings accounts are earning some of the best rates we’ve seen in a while. This means savvy savers are ending 2023 on a high note.
But the Fed has recently hit pause on rate increases. The target range has remained between 5.25% and 5.50% since July. The many savings account rate hikes we saw earlier in the year have leveled off accordingly.
So where will savings rates go in 2024?
Before making predictions, it’s worth taking a moment to understand what the Fed rate is, why it sometimes changes, and what effect those changes have on your savings account. Once you understand that, you can take steps to maximize your own bank moves, regardless of what the Fed announces.
A look back: The Fed rate and how it affects you
The federal funds rate is the interest rate that banks charge each other to borrow money to meet regulatory requirements. The Fed can use rate increases (and decreases) to respond to market conditions.
Raising the rate can help curb inflation by making it more expensive for banks to borrow money. This can increase the cost of loans to consumers and businesses. When loans are more expensive, some households may be less willing to spend money, which could eventually lead to lower prices and lower inflation. Fed rates increased four times between February 2023 and July 2023, following seven consecutive increases in 2022.
Rising Fed rates are good news for savers, as hikes tend to correspond with savings rate increases. In January 2023, the average national savings account rate was 0.33%, according to the Federal Deposit Insurance Corp. By November 2023, that figure had bumped up to 0.46%. (Both rates are significantly higher than the average of 0.06% in January 2022, before the series of rate hikes.) These increases, while notable, are just averages. The best savings rates have risen from less than 1% in January 2022 to an annual percentage yield of more than 5% today.
Here’s what a high rate means.Say you put $5,000 in your emergency savings fund and it earns 0.06% APY. If you left that amount in your account without touching it for a year, your bank balance would grow by only about $3. But put the same amount in a savings account that earns 5% APY and it would grow by more than $250 in the same period. That’s extra money without extra effort. You can use a savings calculator to tally more potential gains.
It’s worth noting that not everyone can leave money untouched in savings for a year. According to J.D. Power’s October 2023 Banking and Payments Intelligence report, more than a quarter of American bank customers surveyed reported tapping their emergency savings account in the previous 90 days to pay for regular expenses, such as gas, food or rent.
Rising costs due to inflation were a big reason customers drew down their savings over the past year, says Jennifer White, a senior consultant in the banking and payments intelligence practice at J. D. Power and author of the study. The cost of goods and services can affect customers’ ability to save.
But relief may be on the horizon.
SoFi Checking and Savings
Min. balance for APY
$0
CIT Bank Platinum Savings
Min. balance for APY
$5,000
BMO Alto Online Savings Account
Min. balance for APY
$0
What to expect in 2024
Today, the core inflation rate is lower than it was in 2022 when Fed rate increases began. Forecasters are predicting that going into next year, inflation will continue to fall or moderate.
The economic indicators now “seem to be moving in a positive direction,” White says.
Lower inflation can mean lower prices for consumers, and it could also mean no more Fed rate increases for a while. The CME FedWatch tool, which aggregates analyst predictions for Fed rate changes, shows a high probability that the Fed rate will decrease at some point in 2024, potentially as early as March. Keep in mind that this is just an estimate.
If the Fed rate does decrease, we will likely see a drop in the top savings account yields. But remember that the savings account increases we saw earlier this year didn’t happen overnight, and sudden steep slides aren’t likely to happen either.
If rates do decrease, your savings may not earn interest as fast as before. But having your money in a high-rate account still gives you the best chance to make the most of your funds. High-interest savings accounts tend to outperform their competitors even when rates drop. Back in January 2022, when the average savings account rate was a pitifully low 0.06%, high-yield savings accounts still earned around 0.50% APY — nearly 10 times more than the average at the time.
“If you are not taking whatever amount of money you have and taking a look at those high-yield options, you may be leaving money on the table,” White says.
Getting your savings ready for 2024
You can’t control the Fed, but you can control your own money moves. Here are some ways to put yourself in a strong financial position, no matter what happens with savings rates.
Review your savings plan to build your balance and prepare for unexpected expenses.
Avoid monthly fees on bank accounts.
No one can predict Fed action or savings rates in 2024. But maximizing your deposits now can help put you in the best possible position for today, next year and beyond.
The housing market cheered as the Federal Reserve signaled interest rate cuts next year after making a series of rapid rate hikes starting in 2022.
While the central bank did not completely rule out the possibility of a rate increase in 2024, that action seems unlikely. Instead, fresh economic projections from central bank officials showed rates would be slashed to a median 4.6% by the end of 2024, suggesting three 25 basis points (bps) cuts from current levels.
The so-called dot plot estimates show interest rates falling to a median 3.6% in 2025, indicating four more 25 bps cuts. For 2026, Fed officials projected rates to fall below 3% by the end of 2026 through three more quarter percentage point reductions.
What does this mean for mortgage rates?
“Mortgage rates should get better. If the spreads get better, that will be an extra plus,” said Logan Mohtashami, lead analyst at HousingWire. “The main focus now is that if the economic data gets weaker, bond traders have the green light to take yields lower.”
Mortgage rates track the yield on 10-year U.S. Treasuries, which move based on anticipation about the Fed’s actions, what the Fed ends up doing and investors’ reactions. When Treasury yields go down, so do mortgage rates. The 10-year Treasury yield hit a low of 4.007% following the Fed’s press conference, declining from 4.202% at market open on Wednesday.
“While nobody in the mortgage world would say ’tis the season to be jolly’ based on current market conditions, the Fed’s outlook at its December meeting points to an increased possibility of a happier new year,” said Marty Green, principal at mortgage law firm Polunsky Beitel Green.
Expect lower mortgage rates
With the central bank shifting toward the next phase in its fight against rapid inflation, experts expect the path for monetary policy to support further declines in mortgage rates, just in time for a traditionally busy spring housing market.
“The commentary about three expected cuts next year and no rate hikes is great news for the mortgage industry,” Michael Merritt, senior vice president of customer care and default mortgage servicing at BOK Financial. “These cuts will allow mortgage rates to fall faster throughout 2024. The conservative expectation of three cuts also paints a positive overall outlook since they are not expecting to have to make large numbers of cuts to fuel economic growth or make increases to offset inflation.”
After hovering below 8% at the time of the last FOMC meeting in November, mortgage rates sit at just under 7%, according to HousingWire’s mortgage rate center on Wednesday.
“We’re probably at an inflection point where rates have come down enough that more buyers are coming back into the marketplace,” said Melissa Cohn, regional vice president of William Raveis Mortgage.
While mortgage rates are expected to decrease, high home prices combined with low inventory still pose a challenge for potential homebuyers.
“We don’t expect rates to fall that much in this period and it may not offset rising home prices in hot housing markets. So, homebuyers who wait on the sidelines for better rates next year may find the waiting game didn’t pay the dividends they expected,” said Max Slyusarchuk, CEO of A&D Mortgage.
The median price of single family homes in the U.S. is $424,900, which is up 2.4% from last year at the same time, according to Altos Research.
“There are really no national indicators, anywhere in the data, that show home prices currently falling,” Mike Simonsen, president of Altos, said in a recent commentary.
While inventory typically rises with higher mortgage rates and falls with lower mortgage rates, there is no signal of any flood of sellers, which would be bearish for home prices, Simonsen noted.
For there to be a supply-demand balance, rates would need to stay higher and cuts would have to come slower than markets are predicting, according to Jack Macdowell, chief investment officer at Palisades Group.
“The housing market plays a role in this given the contribution to headline inflation calculations,” Macdowell said.
“If rates come down too much (and mortgage rates follow), we’ll see the current supply-demand imbalance exacerbated as pent-up demand gets released into an undersupplied market, putting upward pressure on home values–and inflation. Until mortgage rates drop below 6% it is unlikely that pent-up deferred sales will meaningfully contribute to supply.”
Transfers of government-backed low-rate mortgages are up significantly this year in the face of higher interest rates, but some say even more of these transactions would take place if mortgage servicers picked up the slack.
Through the first three quarters of this year, the Federal Housing Administration and the Department of Veteran Affairs have both tracked record numbers of mortgage assumptions, in which homebuyers take on the mortgages held by the selling homeowner.
But, with this uptick in assumption activity has come a surge of another kind: complaints that servicers are dragging their feet on processing these transactions.
So far this year, the Consumer Financial Protection Bureau has recorded more than 130 complaints related to mortgage assumptions, according to the agency’s searchable online database, up from fewer than 100 last year and roughly double the number notched in 2020 and 2021, respectively.
Jerry Devlin, a former mortgage banker for National City, PNC and Academy Mortgage, described the current moment — in which interest rates have soared from below 3% to more than 7% in less than two years — as a “once in a generation marketplace” for mortgage assumptions. He notes that the recent uptick in interest rates bucked a 40-year trend of declining borrowing costs.
Earlier this year, Devlin co-founded Assume Loan LLC, a Brookline, Mass.-based advisory that helps facilitate mortgage assumptions. He said the appetite for assumptions has been strong and the pool of potential assumptions — more than 20% of current mortgages — is deep. But, he added, the processes and procedures at mortgage servicing companies have prevented assumptions from reaching their full potential.
“What we’ve seen almost across the board is an immediate pushback from the lending community. They say it’s going to take a lot and admit they’re not devoting appropriate resources to assumptions,” Devlin said. “It creates a ripple effect within the marketplace and the opportunity, because then sellers won’t offer it, realtors won’t accept an offer with an assumption and it puts a stall in the marketplace.”
Complaints registered with the CFPB vary, with some issues relating more directly to the assumption process than others. But numerous complaints cite issues related to the length of time it takes to process an assumption request.
One complaint, filed against Boca Raton-based Freedom Mortgage Company in November, states that the lender said it could take between 90 and 120 business days to process the assumption of a Veterans Affairs loan with an interest rate of 2.25%. The loan was being moved from one veteran borrower to another.
The complainant noted that the sale documents included a 45-day close guarantee, after which the transaction could be voided. After the complainant threatened legal action, the company finished the process in roughly 30 days, the complaint notes. But the same consumer ran into problems with Freedom Mortgage again when trying to assume a mortgage for their new home.
Freedom Mortgage did not immediately provide a comment about the complaints filed against it with the CFPB.
By law, all FHA and VA loans can be assumed by qualified purchasers. The feature is most often used in instances of death or divorce, in which a related party takes over the mortgage, but the changing interest rate environment has driven interest in assumability as a means for incentivizing sales in an otherwise stagnant housing market.
Through Sept. 30, the FHA tracked more than 3,800 mortgage assumptions this year, according to data from the Department of Housing and Urban Development, a small slice of the overall housing market, but a jump of 67% from 2022’s year-end total and more than double the amount seen in 2021. Similarly, VA assumptions through the first three quarters of this year totaled 1,037, up from 308 last year and 276 the year before that.
Devlin and others who have a stake in facilitating mortgage assumptions say the slow movement of mortgage servicers is standing between borrowers and a government-imbued right to transfer their home loans.
“The lenders are taking the position that there’s not enough money in assumptions so they’re just not going to devote the resources, and I think that in itself needs attention,” Devlin said. “That is an unacceptable position for somebody to take that’s in the business of originating and servicing loans.”
Yet, some in the mortgage space say servicers are entitled to address assumption requests at the rate dictated by their business interests, which are hindered by a government imposed cap on fees that can be charged for assumptions.
Matt Van Fossen, CEO of the Fairfield, N.J.-based independent mortgage bank Absolute Home Mortgage Corp., said the current fee cap of $900 ensures that servicers will lose money on processing transactions, because the cost of processing a mortgage far exceeds that total. Most would rather risk losing the loan to a prepayment as would be the case in a traditional sale, he said.
Van Fossen said many banks do not staff their servicing departments to process assumptions quickly or smoothly, adding that retooling to do so would be hard to justify given the loss-making proposition of a fee-capped mortgage assumption and the limited volume of overall activity in the space.
“There’s no motivation for them to create a pleasurable experience, other than maybe avoiding complaints,” he said. “There’s no money in it for them.”
Over the past year and change, mortgage refinance applications have fallen off a cliff.
We had some of the biggest refi years in 2020 and 2021, followed by the worst year for mortgage applications this century.
And it’s all because mortgage rates hit all-time lows, then abruptly surged to around 8% in just over 12 months.
Rates on the 30-year fixed have since settled in around 7%, and there’s hope they’ll continue to drop into 2024.
If so, we might see a return to rate and term refinancing as recent home buyers seek out payment relief.
Does Anyone Refinance Their Mortgage Anymore?
As noted, mortgage refinancing hasn’t been very popular in 2023. After a few banner years, the low-rate mortgage party came to an end.
After all, most homeowners already took advantage when rates were low. And very few are forgoing their 2-4% mortgage rate to tap into their home equity.
Instead, they’re opting for a second mortgage if they need money, such as a home equity loan or HELOC.
This allows them to retain their low-rate first mortgage while still accessing their equity.
But because mortgage rates have hovered in the 6-8% range for much of the past year, and rates have since improved a bit, the refi applications are beginning to trickle in.
Per the latest Originations Market Monitor report from Optimal Blue, the 30-year fixed improved by 67 basis points during the month of November.
For some lenders, we’re talking a rate drop from around 8% to 7%. This resulted in a 10% month-over-month increase in rate and term refinance applications.
If rates continue to move lower, we might see apps rise even more in 2024.
And because many recent mortgage holders have very high rates, payment relief will actually be easier to come by. Allow me to illustrate.
Remember those 3% mortgage rates that were available in 2021? Well, lots of homeowners with higher-rate mortgages took advantage.
Many were able to reduce their rate from 5% to 3%, saving hundreds per month in the process.
Using our same $500,000 loan amount, the monthly P&I would drop from $2,684.11 to $2,108.02.
That’d represent a monthly savings of $576. While still a big reduction in payment, it’s about $100 less than the prior scenario of going from an 8% mortgage rate to a 6% mortgage rate.
This is why I don’t subscribe to a certain refinance rule of thumb, such as the 1% rule or some other fixed number.
There are countless scenarios, and what works for one borrower may not work for another.
As you can see, it’s easier to save money when refinancing a high-rate mortgage than it is a low-rate mortgage.
Simply put, there’s more room to save if your home loan has a higher interest rate.
Conversely, if you already have a low-rate mortgage, the savings are diminished because your interest expense is small to begin with.
What this means is as mortgage rates improve, borrowers with high-rate loans will find themselves “in the money” for a refinance more easily.
After all, if you can save more money each month, offsetting any upfront costs associated with the refinance will be less of a task. You’ll be able to break even quicker.
And you’ll enjoy more payment relief.
Lastly, your overall interest savings will be greater. We’re talking $242,000 in savings going from 8% to 6% versus $207,000 when going from 5% to 3%.
A new mortgage help plan coined “Project Lifeline” was unveiled today by the Treasury Department and the Department of Housing and Urban Development.
The plan will assist borrowers who are 90 days or more past due on their mortgage, and will not be limited to high-cost subprime mortgage holders like previous plans targeted.
Borrowers with prime loans, Alt-A mortgages, fixed-rate loans, and second mortgages will also be eligible for assistance under the new plan.
Project Lifeline will allow seriously delinquent homeowners to delay foreclosure proceedings for 30 days while lenders attempt to work out new terms to avoid one.
“For many families, Project Lifeline will temporarily pause the foreclosure process long enough to find a way out. Loan modifications may follow. And, this program is not only available to subprime borrowers but to people with any kind of home mortgage,” said HUD Secretary Alphonso Jackson.
“There’ll be homeowners who still take no action and some will still walk away,” Treasury Secretary Henry Paulson said. “But some borrowers facing immediate foreclosures may find solutions.”
Letters will be sent out to homeowners more than 90 days behind on their mortgage, at which point the homeowner has 10 days to respond and provide additional financial information so the lender is able to determine new mortgage payment options.
It will initially involve major mortgage lenders like Bank of America, Citigroup, Countrywide, JPMorgan Chase, Washington Mutual and Wells Fargo, on a pilot basis.
The move comes as banks and lenders continue to take on huge losses related to the recent rise in foreclosure proceedings.
The plan is intended to supplement efforts already in place via programs like FHASecure and Hope Now, which offer some solutions to homeowners but leave many others with few places to turn.
“The sum total of these actions is a powerful correction to the downward spiral of the housing market. It will lead to a reversal of misfortune, saving homes and equity, providing necessary sanity and salvation for many families on the brink of foreclosure,” said Jackson.
It’s good to see that government officials are finally realizing that it’s not just a subprime crisis, but rather a complete overhaul that is needed.