2008 & 2018 lenders: ghosts in the machine; warehouse, pre-approval, DPA, manufactured housing, marketing products
<meta name="smartbanner:author" content="We now have a native iPhone and Android app. Download the NEW APP”>
This website requires Javascrip to run properly.
2008 & 2018 lenders: ghosts in the machine; warehouse, pre-approval, DPA, manufactured housing, marketing products
By: Rob Chrisman
Wed, Aug 2 2023, 8:26 AM
“If you have no interest in banking, you are not a loan.” (Best said out loud to a 6th grader.) Cutting edge humor aside, this morning I head to Orlando for the FAMP event, in a state where there are a total of 186 banks operating with 4162 branches. Some of the conversation will be about Freddie Mac earning $2.9 billion in the 2nd quarter (how’d your company do?). Banks… Last Friday we saw something we haven’t seen for a while: a bank closure. “Heartland Tri-State Bank of Elkhart, Kansas, was closed by the Kansas Office of the State Bank Commissioner, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver… the FDIC entered into a purchase and assumption agreement with Dream First Bank, National Association, of Syracuse, Kansas…” While we’re on Agency and government news, the Federal Reserve’s quarterly Senior Loan Officer Opinion Survey found that banks have tightened credit standards for both business and consumer clients, and they expect to tighten further through the rest of the year. “…a less favorable or more uncertain economic outlook, an expected deterioration in collateral values, and an expected deterioration in credit quality of [commercial real estate] and other loans.” (Today’s podcast can be found here and is sponsored by Candor. Candor’s patented automated underwriting decision engine, CogniTech, is a state-of-the-art, 100 percent machine platform that can handle infinite loan scenarios. Listen to an interview with Polunsky Beitel Green attorney Andy Duane on recent capital rules plans changes by U.S. bank regulators.)
Lender and broker software, products, and services
In 2022, Americans spent an average of $6,000 on engagement rings to demonstrate lifelong commitment to their partners. Just as the act of proposing with a ring symbolizes a promise, SimpleNexus, an nCino company, also seeks to engage prospective homebuyers with the promise of an intuitive, modern home financing experience. A single-sign mobile app gives borrowers the convenience of managing their mortgage loan from anywhere, with a rich feature set that allows them to submit an application, scan and upload documents, eSign disclosures, and attend virtual eClosings. What’s more, built-in messaging and notification features foster meaningful connections between lenders, borrowers, and their real estate agents. See how SimpleNexus can put your organization and your borrowers on the path to a future filled with security and prosperity. Schedule a demo today.
Click links, ask questions later. The most common attack vector for a cyberattack is the human element. It’s what phishing emails, phone calls and text messages all have in common. Yet while it’s the weakest link, the human element could be your organization’s greatest prevention layer if trained correctly. In an industry that incentivizes people based on sales goals, every mortgage lead has bottom line potential. And in the current market, it’s only human to go after leads without stopping to consider their legitimacy. But recent data shows just how risky clicking without thinking can be. According to ISACA, in 2022 social engineering (tricking humans) was the #1 attack vector, and even the best teams are vulnerable. Learn how to do a better job at testing and training your team to identify legitimate leads. Talk to Richey May’s cybersecurity experts for help assessing and defining your cybersecurity training needs.
“Attention Mortgage Technology Companies! Discover the secrets to thriving in this competitive market with our free white paper, tailored specifically for you. Written by Seroka Brand Development, the mortgage industry’s leading marketing and public relations company, this exclusive guide reveals top marketing and PR strategies for 2023. As the industry faces its current set of challenges, effective yet cost-conscious marketing is more crucial than ever for companies like yours, competing for every opportunity. Learn six impactful ways to reach your target market and secure success through the rest of 2023 and beyond. Don’t miss out on this invaluable resource: download your FREE white paper now.”
“AFR Wholesale® (AFR) is teaming up with financing experts from Fannie Mae for the next session of our Why Wait Live Webinar Series! Please join us Wednesday, August 9th at 2 PM EST, where we will be highlighting what you need to know about manufactured home financing. AFR has been a leading expert in manufactured homes for over 25 years. With this added knowledge and proven experience, we’ll be an extension of your team to help the prospects in your portfolio to become borrowers. Over this series, AFR has been discussing affordable financing solutions that together will help us provide homeownership opportunities to more families. Register Today! This is a live webinar, and a recording will not be provided. Sign up today and don’t miss it! If you are currently a partner of AFR, start utilizing these programs right away! Contact AFR by going to afrwholesale.com, email [email protected] or call 1-800-375-6071.”
“Why are some lenders and LOs thriving in this market? Because they know there are still 1st-time buyers and people seeking DPA! Stairs Financial aggregates DPA information and matches homebuyers, often CRA-eligible, to lenders/programs on our platform to help lenders create customers for life. Through Stairs, borrowers are educated about loan programs and terms to better understand their loan options before connecting with our lender network. Stairs is launching in Texas and quickly expanding nationwide with licenses in 40 states. We’re partnering with national, regional, and local lenders in every market to ensure every aspiring homeowner gets the help they need. By seamlessly connecting to your PPE, Stairs can show borrowers your rates, loan terms, and DPA program options. Further, we can deliver mortgage leads to your CRM or lead management system. If your firm wants to help more 1st-time buyers achieve their dream of homeownership, contact Mike Romano.”
“This seems too good to be true” is what we hear pretty often when it comes to QuickQual. Lucky for you, it is true. Loan officers issue QuickQuals right from within the LOS and give borrowers and Realtors the ability to run payments and update pre-approval letters within guardrails you set. Check out QuickQual by LenderLogix and they’ll text a demo right to your phone!
Warehouse/liquidity programs
If you’re heading to California for Western Secondary, carve out time to meet with the team from Flagstar Bank. At a time when banks are downsizing or leaving the warehouse business altogether, Flagstar remains firmly committed to the mortgage space. They’re the second largest warehouse lender with $119 billion in assets, offering the strength, stability, and best-in-class service you’ve been looking for. Flagstar warehouses most loan types, including conventional, non-QM, and construction, and offers MSR, servicer advance, and EBO financing solutions. Their warehouse platform is flexible enough for 400+ warehouse clients of all sizes to fund quickly and easily. While you’re at the conference, talk to Flagstar about their experienced Specialized Mortgage Banking Solutions team to find out if they can help streamline operations and provide greater value for cash balances. With 35 years of experience, Flagstar is a trusted lending partner ready to unlock a world of opportunities for your business. Contact Jeff Neufeld or Patti Robins today to discuss what Flagstar can do for you.
“If you’re attending the California MBA Western Secondary Market Conference in Dana Point, make sure to include Axos Bank’s Warehouse Lending Team in your agenda. Our team will be available to discuss strategies and showcase how our diverse array of Agency, Jumbo, and Non-QM products can provide you with the flexibility and liquidity needed to become a top producer in today’s market. With our expanded portfolio programs and extended cutoff times (6:15 p.m. ET), achieving success has never been easier. To secure a meeting time, simply reach out to Eric Nelepovitz and Justin Castillo via email, or if you have any questions, feel free to contact the Warehouse Lending team at 888-764-7080. Don’t miss out on this opportunity to elevate your business to the next level.”
The only thing constant is change
Independent mortgage banks and credit unions aren’t the only entities who originate residential loans. Banks have been in the news!
Grizzled industry vet Ken Sonner, showing his age, noted, “The ‘Banc of California buying PacWest’ deal is very interesting. A $10BB bank tries to swallow a $40BB bank? Kinda like GreenPoint buying Headlands.” Don’t forget that Norwest bought Wells Fargo but kept Wells’ name.
And then there’s this story: “Donald Trump’s business empire faced a potential crisis after he left the White House and his longtime accounting firm warned not to rely on his past financial statements. But Axos Bank, an online-only financial firm headquartered in San Diego, soon agreed to loan him $225 million, stabilizing his finances.”
In general, do you think anything is permanent in residential lending? How many of 2008’s top 20 are still in the game? Wells Fargo, Chase, Bank of America, Countrywide Financial, Citi, Residential Capital LLC, Wachovia, SunTrust Mortgage, US Bank Home Mortgage, PHH Mortgage, Washington Mutual, Taylor, Bean, & Whitaker, Flagstar Bank, AmTrust Bank, National City Mortgage, ING Bank, BB&T Mortgage, First Horizon Home Loans, Franklin American Mortgage Company, and IndyMac.
How about in 2018?
Wells Fargo, Chase, Quicken Loans, PennyMac Financial, United Wholesale Mortgage, Bank of America Home Loans, U.S. Bank Home Mortgage, Caliber Home Loans, Amerihome Mortgage, loanDepot.com, Flagstar Bank, Freedom Mortgage, Fairway Independent Mortgage Corp., Guaranteed Rate Inc., SunTrust Mortgage, Nationstar Mortgage, Citizens Bank, Guild Mortgage, Stearns Lending LLC, and Navy Federal Credit Union.
Recognize some ghosts?
Capital markets: rates, as always, up some, down some
Yesterday was yet another volatile day in rates and MBS as rates staged another breakout to higher yields after shrugging off month-end buying and some weak data. While volatility remains elevated it also remains range-bound, and sentiment is that the Fed is finally finished with its historically aggressive pace of tightening.
On the data front, we received a weaker than expected ISM Manufacturing survey (Institute for Supply Management) for July as the manufacturing economy continues to contract. New Orders improved, and pricing pressures continue to fall. Supply delivery times decreased. Overall, the news on pricing should be good for the Fed, as it looks like its tightening policy is having the desired effect. There was also a smaller than expected increase in June Construction Spending (actual 0.5 percent) after increasing an upwardly revised 1.0 percent in May. Residential spending continues to be powered by new single-family construction to meet demand that cannot be satisfied through the existing home market.
Ahead of Friday’s payrolls report, job openings were 9.6 million at the end of June, according to the JOLTS report. Hires decreased to 5.9 million, with losses experienced in finance and manufacturing. The “quits” rate, which tends to forecast wage inflation, decreased to 2.4 percent from 2.6 percent in June and 2.7 percent a year ago. The jobs market remains exceptionally tight but continues to show incremental signs of weakening. Job openings have fallen 20 percent since the Fed began tightening policy in March 2022, even with the unemployment rate trending sideways. Price growth still elevated and a pullback in demand for workers ongoing, a “soft landing” remains far from assured, but this is an encouraging step toward inflation subsiding without a recession.
Today’s economic calendar kicked off with mortgage applications decreasing 3.0 percent from one week earlier, according to data from MBA. We’ve also received ADP employment (324k, nearly twice as strong as expected! We’ll learn the U.S. Treasury details of the Quarterly Refunding (3-year notes, 10-year notes, and 30-year bonds) where we can expect amounts to increase from previous auctions in the face of a Fitch downgrade of U.S. debt. We begin the day with Agency MBS prices unchanged from Tuesday and the 10-year yielding 4.04 after closing yesterday at 4.05 percent; the 2-year is at 4.90, showing no impact of Fitch’s opinion of U.S. debt. Much ado about nothing?
Jobs and transitions
“FLCBank is looking for seasoned Wholesale Account Executives in the northeast, southeast, central, and northwest regions. If you are looking to make a move and join a company with a tenured culture of collaboration, team-based success, and the security of working for a federally chartered national bank, then it’s time to call Bob Eisendrath, Strategic National Account Manager (414.350.3986). FLCBank is an agency-approved lender, offering a suite of Jumbo products with IO, fixed, and ARM options, as well as bank portfolio products like bridge loans. Our AEs work with Brokers, Non-Delegated Correspondents and have the opportunity to offer warehouse lines to your customers. FLCB cultivates a fun team environment where both sales and the operations staff are passionate about delivering exceptional customer experience with every loan. We offer competitive compensation, an energized culture, and seasoned operations and support staff. FLCBank is an Equal Opportunity/Affirmative Action Employer.”
Do you have what it takes to be a mortgage superstar? Do you want to work with a lender that is leading the way in using AI to revolutionize the mortgage industry? If so, you need to check out Stockton Mortgage, a proud adopter of Lender Toolkit and its revolutionary solution, AI Underwriter™, which automates and applies underwriting conditions in 90 seconds or less. With just one click, you can review credit reports, income, assets, appraisals, loan data, fraud reports and more. Stockton Mortgage is using AI Underwriter to boost its productivity, quality, compliance, and find issues earlier in the process, delivering faster communication to Stockton’s customers. Stockton is looking for talented and ambitious professionals to join its team and grow with others on the team. If you’re ready to take your career to the next level and be part of the tech future of mortgage lending, visit Stockton’s website or contact the team today.
“Security National Mortgage Company (SNMC) has announced that Austin Jacks has joined the Company to serve as its Chief Marketing Officer. Mr. Jacks has over a decade of mortgage industry marketing experience focused on creating marketing products and building teams to enable loan originators to thrive. Mr. Jacks most recently served as the field marketing manager for Nations Lending. Joel Harward, SNMC’s SVP, stated, “Austin’s approach to modern marketing and his extensive experience will help us elevate awareness of the Company’s brand and expand its market share. His passion for marketing, strategic focus, and creativity will make him a great addition to the SNMC team. We are confident that Austin will play a key role in SNMC’s continued growth and success.” If you are interested to find out why Austin Jacks joined SNMC and why “It is Better Here”, please check us out here.”
How many ads for mortgages have you seen like this ad for mobile homes?
Download our mobile app to get alerts for Rob Chrisman’s Commentary.
Share via Social Media:
All social media shares will include the image and link to this page.
Have you ever wondered what a 9-figure amount looks like? It’s a sum of money too big to ignore, with a whopping total of 100 million to less than 1 billion. Discover more about this colossal figure and the wealth it represents
When we mention nine-figure sums, we’re talking about a truly astronomical level of wealth. To put it in perspective, nine figures represent anything from $100,000,000 all the way up to $999,999,999.
This figure surpasses the GDP of several small nations. For instance, Samoa reported a GDP of approximately 843.8 million USD in 2021.
Or consider that according to Investopedia, 7-figure wealth is what puts you among the top 0.1% of the wealthiest people on the planet. This means that having nine figures puts someone at an even more elite level, one whose luxury extends far beyond mere financial freedom.
Only a small fraction of individuals or companies globally can boast such immense wealth. However, it is not an unattainable goal. Let’s take a look at some of the strategies you can employ to accumulate substantial wealth while also examining the lifestyles and pursuits of those who have successfully achieved it.
How Much Is a 9-figure Salary?
Table of Contents
A nine-figure income signifies any earnings that flaunt nine digits, starting from $100,000,000 and soaring upwards. To put it into words, we’re discussing one hundred million dollars.
Quite a mind-boggling figure, isn’t it?
It’s like being handed the keys to a kingdom of unimaginable wealth. But remember, this is a sphere occupied by only a select few worldwide.
Their playgrounds? Often, you’ll find them in the tech sector, inheriting vast wealth or expanding an already thriving family business.
Now, let’s delve a bit deeper, shall we?
When we speak of nine figures, are we referring to the lower end close to one hundred million, the middle ground around 550,000,000, or the staggering high end nearing 999,999,999?
So, the next time you find yourself daydreaming about a nine-figure salary, remember this: It’s not just a number; it’s a lifestyle, a testament to extraordinary achievements, and a beacon of exceptional success.
And who knows? With the right mix of passion, dedication, and a sprinkle of luck, you might just find yourself joining this elite club.
After all, isn’t the sky the limit when it comes to chasing our dreams?
Examples of People Who Earn 9-Figure Incomes
Cristiano Ronaldo: A Sports Icon – With an astonishing income of $105,000,000, this celebrated athlete is not just a football superstar but also a nine-figure earner.
Safra A. Catz: Leading Oracle – As the CEO of Oracle, Safra A. Catz’s leadership prowess is reflected in her staggering earnings of $108,200,000.
David Zaslav: The Discovery Dynamo – Captaining Discovery as its CEO, David Zaslav, commands a whopping $129,500,000.
Nikesh Arora: The Palo Alto Networks Powerhouse – As the CEO of Palo Alto Networks, Nikesh Arora’s genius is rewarded with a hefty paycheck of $125,000,000.
Roger Federer: Tennis Titan – This globally recognized athlete proves that sports can indeed yield nine-figure incomes, as evidenced by his impressive earnings of $106,300,000.
Case Study: What Does A 9-Figure Earning Look Like?
Understanding the intricacies of nine-figure earnings can be a complex undertaking due to the lack of universally defined parameters. For the context of this case study, we will consider an annual income of at least $432K as the lower limit for this category. It is worth noting that any figure below this threshold would classify one into the realm of billionaires.
Renowned business magnates such as Warren Buffet and Mark Zuckerberg exemplify this earnings bracket, with annual incomes reported around $51M and marginally less than $50M, respectively.
Reaching the stature of a nine-figure income earner typically necessitates either a substantial inheritance or proprietorship of a prosperous company with diverse revenue channels. The case of Elon Musk serves as a prime example, with his considerable income derived from two distinct sources – Tesla and SpaceX.
Aspiring for this scale of income undoubtedly sets a high bar. However, with the appropriate strategy and relentless determination, it is not beyond reach. Be prepared to tread a path akin to those who have already achieved this feat.
What Is the Potential Monthly, Weekly, Daily, or Hourly Income in the 9-Figure Range?
How Much Is 9 Figures Monthly?
To figure out the monthly income from a massive annual salary, just divide the yearly amount by 12. Keep in mind that this will give you a range of values. But if you want to earn a nine-figure salary, the smallest monthly income would be $8,333,333.33.
$100,000,000 per year / 12 months
= $8,333,333.33 per month
This question might take a different perspective if you’re raking in 9 figures every month. That means your annual income would be at least $1,200,000,000 or even more.
How Much Is 9 Figures a Week?
If we were to divide the 9-figure annual salary by 52 weeks, we’d be looking at a minimum weekly income that could make anyone’s head spin – a cool $1,923,076.9! 💸💼.
$100,000,000 per year / 52 weeks
= $1,923,076.9 per week
While you’re at it, if you manage to rake in a solid 9-figure sum every week, your annual income will soar to a minimum of £52,000,000,00 or maybe even more.
How Much Is 9 Figures a Day?
Want to know how much you can earn daily from a nine-figure income? Just divide it by 365! If you make money every day, your minimum daily earnings would be $273,972.6. That’s your ticket to the nine-figure club!
Here’s the breakdown:
$100,000,000 per year / 365 days
= $273,972.6 per day
Now, let’s say you take weekends and U.S. holidays off. In that case, you’d need to earn around $381,679.3 per day to make $100,000,000 per year. It’s a good goal to aim for if you want that nine-figure salary without burning yourself out.
How Much Is 9 Figures an Hour?
If you’re seeking a nine-figure income from hourly wages, the calculations are slightly different. Just divide your per day salary by 8 hours, and voilà! The minimum number is $47,709.90per hour. This calculation is based on working days – usually 262 days per year in the US.
How Much Is 9 Figures After Taxes?
Achieving a 9-figure income is quite an extraordinary feat, one that is typically reserved for the most successful entrepreneurs, athletes, and entertainers in our society. It’s almost impossible to reach that level through a single salary alone.
Instead, individuals in this income bracket often have multiple income streams, such as investments, business ventures, and other revenue-generating activities.
Calculating the exact tax on a 9-figure income can be a challenging endeavor. Taxes can vary greatly depending on many factors, including location, type of income, applicable deductions, and more. However, it’s safe to say that anyone earning in the 9-figure range will face a significant tax bill.
What Is the Pathway To Achieving a 9-Figures Income?
If you are in pursuit of a 9-figure income, it is essential to have an understanding of the components that fuel this elusive status. What sets apart these high-net-worth individuals from the rest is their capacity to create multiple streams of passive income and capitalize on them.
Here are some tips to help you achieve this milestone:
Acquire Valuable Skills and Experience
The first step towards achieving a 9-figure income is building a solid foundation of high income skills and experience in a high-value field. This could be anything from technology and finance to entertainment and sports. The key is to become exceptionally good at what you do, often necessitating years of dedication, learning, and practical application.
Build or Join a High-Growth Venture
Next, it’s super important to either build or get involved in a high-growth venture. This could mean starting a business with a game-changing idea or joining a rapidly expanding company in a leadership position. The aim here is to use your unique skills and experiences to create substantial value and wealth, which could potentially lead to a massive income if the venture becomes incredibly successful.
Invest Wisely and Diversify Your Income Streams
Who said you can’t have your cake and eat it too? Investing in the stock market, real estate, bonds, and other alternative investments is another way to generate a 9-figure income. It’s important to diversify your portfolio across multiple strategies so that you’re not overly exposed to any one asset class.
Let’s give you an example.
If you’re already running a successful business, consider investing in cryptocurrency or another digital asset class to increase your income streams. This could provide an additional source of passive income that can help solidify your journey to a 9-figure salary.
Equities and Derivatives Trading
The stock market is an incredibly powerful tool that can help you to achieve a 9-figure income. Through equity and derivatives trading, you can tap into the world’s most lucrative markets and make substantial returns on your investments in a short amount of time.
Learning how to navigate this complex ecosystem of risk and reward requires patience, dedication, and a lot of practice. Start by investing in the stock market or trading on a simulated platform to get comfortable with the process before taking it to the next level.
Leverage Networks and Opportunities
Networking is a critical component of achieving a 9-figure income. By cultivating meaningful relationships with influential people in your industry, you can open doors to opportunities that might otherwise remain closed. These could include partnerships, investments, or high-profile job offers that can significantly boost your income.
Jobs That Pay 9 Figures
Earning a nine-figure salary is an incredibly rare achievement reserved for the top echelons of various lucrative industries. Here are some of the highest-paying jobs and industries that can bring in nine-figure salaries.
Tech Company Bosses
Tech company bosses, particularly those at the helm of companies like Amazon, Facebook, and Tesla, are among the highest earners globally. Their compensation often comes in the form of stock options, which can value in the hundreds of millions or even billions when their companies perform well.
Examples include:
Elon Musk, CEO of Tesla ($242.4 billion)
Jeff Bezos, CEO of Amazon ($151.5 billion)
Mark Zuckerberg, CEO of Facebook ($103.4 billion)
Professional Athletes
In the world of professional sports, athletes like Cristiano Ronaldo, Lionel Messi, and LeBron James have managed to secure contracts and endorsement deals that push their annual incomes into the nine-figure realm. These athletes excel in their respective sports and have built strong personal brands, attracting lucrative sponsorship deals.
According to reports, these athletes earned more than $100 million in a single year:
Hollywood Celebrities
Hollywood is no stranger to nine-figure earners. Actors like Dwayne Johnson and Robert Downey Jr., thanks to their roles in blockbuster franchises, command massive salaries. Additionally, they earn significantly from endorsements, producing roles, and profit participation deals.
Media Stars
Media stars, especially those with a strong presence on digital platforms, can earn nine figures. For instance, YouTubers and influencers with millions of followers can generate substantial income from ad revenue, brand partnerships, and merchandise sales.
Hedge Funds & Investment Bankers
Investment bankers and hedge fund managers are some of the highest earners in the financial sector due to their expertise. Some notable examples include:
Ray Dalio, founder of Bridgewater Associates ($19.1 billion)
David Tepper, hedge fund manager ($18.5 billion)
Carl Icahn, founder of Icahn Enterprises ($10.1 billion)
Pop Superstars
The music industry has always been a lucrative field for successful artists. Pop superstars like Taylor Swift and Beyoncé have made fortunes from their music sales, concert tours, and endorsement deals. These musicians not only create hit songs but also build powerful brands that amplify their earnings.
Entertainment (actors, singers, dancers, etc.)
Performers in the entertainment industry, including actors, singers, and dancers, can achieve nine-figure incomes. Successful film actors can earn millions per movie while top-charting musicians make a significant portion of their income from touring. Broadway performers and dancers in high-demand shows can also command high salaries.
Top-notch Business Owners
Business owners, especially those who own large corporations or successful startups, can earn nine figures. This income comes from their business profits and, in some cases, from selling their businesses. Entrepreneurs like Elon Musk and Jeff Bezos have made billions from their ventures.
These careers represent the pinnacle of earning potential in their respective fields. However, it’s essential to note that reaching this income level requires exceptional talent, hard work, and often a good dose of luck.
Are 9-Figures Rich?
When we talk about money, figures, and digits start dancing in our heads. Six figures? That’s quite impressive. Seven figures? Now you’re playing with the big boys. But when we leap into the world of nine-figure incomes, we’re talking about a whole different ball game. It’s like comparing a kiddie pool to the Pacific Ocean!
A nine-figure income means someone is raking in between $100,000,000 and $999,999,999 annually. That’s right. There are more zeros in that figure than in a beginner’s Sudoku puzzle! This income bracket places individuals among the financial titans of the world. To put it plainly, if you’re earning nine figures, you’re not just rich—you’re Scrooge McDuck swimming in a vault of gold-level wealth.
But let’s be real, nine-figure incomes are as rare as a unicorn at a donkey convention. Even some of the world’s wealthiest individuals, like Bill Gates and Warren Buffet, didn’t make their billion-dollar fortunes overnight. It took years of smart decisions, a bit of luck, and probably a few sleepless nights.
And don’t forget, these ultra-wealthy folks aren’t waiting for a paycheck every month. Their wealth comes from various sources, including investments, real estate, and businesses3. They’ve got their fingers in so many pies; they could open a bakery!
What Does a 9-Figure Lifestyle Entail?
Living a 9-figure lifestyle is beyond the realm of what most people could even imagine. It involves not just extraordinary wealth but also the responsibilities and opportunities that come with it. Here’s a detailed look at what such a lifestyle might entail:
Extreme Luxury
A 9-figure lifestyle allows for some of the most opulent luxuries in the world. For instance, consider real estate: billionaires often own multiple properties around the globe. According to a report by Economics Times, the average billionaire owns 4 homes, with each worth nearly $20 million.
Traveling is another area where this wealth is evident. Private jet travel is commonplace among this group. The cost of owning a private jet can range from $3 million to over $90 million, not including the ongoing costs of maintenance, fuel, and crew salaries.
Philanthropy
Philanthropy is a significant aspect of a 9-figure lifestyle. Many ultra-wealthy individuals are committed to giving back to society. For example, Warren Buffett, one of the richest people in the world, pledged to give away 99% of his wealth to philanthropic causes.
The Giving Pledge is another example of this. Initiated by Bill Gates and Warren Buffet, it’s a commitment by some of the world’s wealthiest individuals and families to give away more than half of their wealth to solve societal problems.
Investments
Individuals with a 9-figure income often have vast and diverse investment portfolios. For instance, Jeff Bezos, the founder of Amazon and one of the wealthiest individuals on the planet, has investments spanning multiple industries. He owns The Washington Post, has a venture capital firm called Bezos Expeditions, and invests in space exploration with his company Blue Origin.
Personal Staff
Having a 9-figure income often means employing an extensive personal staff to handle daily affairs. For example, Oprah Winfrey, a billionaire media mogul, reportedly employs a team of over 3,000 staff, including gardeners, chefs, housekeepers, and security personnel.
This level of staffing isn’t uncommon among the ultra-wealthy. After all, managing a 9-figure lifestyle requires a lot of planning and assistance to make sure everything runs smoothly.
Political Influence
The ultra-wealthy have significant influence in politics due to their large contributions to political campaigns and the influence they can wield over policy decisions. This influence can be used for both good and bad purposes, depending on who is wielding it.
However, the effects of political influence by wealthy individuals shouldn’t be underestimated. It can have a profound impact on policy decisions and shape public opinion in powerful ways. This level of influence is not available to everyone, but those with 9-figure incomes typically use it to their advantage.
Privacy and Security
With great wealth comes the need for privacy and security. People with a 9-figure income often invest in advanced security systems, hire personal security staff, and take measures to maintain their privacy.
This isn’t just to protect their money; it’s also about protecting themselves and their families from potential threats. After all, when you’re one of the wealthiest people in the world, there are bound to be a lot of eyes on you.
High-End Experiences
Those with a 9-figure lifestyle often have access to experiences that are out of reach for most. This can range from private concerts with top musicians to exclusive dining experiences with world-renowned chefs.
This level of wealth also opens up opportunities to travel to the most luxurious places in the world. From private island getaways to luxury cruises, the experiences available to 9-figure earners are limited only by their imagination and budget.
The Bottom Line – Making 9 Figures
Taking all of this into account, it is clear that those with a 9-figure income have access to exclusive and luxurious experiences, as well as the privacy and security often associated with great wealth. This level of influence can also be extremely powerful. Therefore, it should not be underestimated or overlooked.
Overall, 9 figures is an amazing achievement and one that requires hard work and dedication. It is often an indicator of success and can open up a world of new possibilities for those who have achieved it.
Regardless of your current financial status, never forget that anything is possible with determination and perseverance! With the right attitude and mindset, you, too, could one day reach 9 figures or more. Start planning today, and remember to take every opportunity that comes your way. With a bit of luck and the right attitude, success is just around the corner.
FAQs – Making 9 Figures
How many words are nine figures?
Nine figures is a term used to refer to incomes between $100,000,000 and $999,999,999. It does not refer to the number of words.
Does anyone make nine figures?
In the United States, a remarkably small number of individuals achieve the remarkable milestone of earning nine figures or more. According to a report by Market Watch, only 205 people in America earn an astonishing sum of over $50,000,000 in wages alone annually.
To put this into perspective, a nine-figure income would be twice the amount of $100,000,000! As a result, the exclusivity of this income bracket is amplified, leading to a limited number of individuals who can boast such astronomical earnings.
What do “figures” mean in money?
Figures is a term used in accounting and finance to refer to digits of numerical values. It does not refer to physical currency or coins. For example, if you have $50,000, five figures are present (50000). This can also apply to other forms of money, such as stocks, bonds, and investments.
What is a nine-figure job?
A nine-figure job is a term used to refer to the careers of those who have achieved the tremendous milestone of earning nine figures or more annually. This could include professionals from various industries such as tech, investment banking, and sports.
These individuals are typically highly successful in their fields and command higher salaries than other professionals due to their extensive experience and knowledge.
What’s the difference between a 9-figure salary and a 9-figure income?
A 9-figure salary is an annual income of $100,000,000 or more. A 9-figure income is a measure of all sources of income that a person has, including wages, investments, and other revenue streams like royalties. This means that a person can have a nine-figure income without having an extremely high salary.
For example, someone who earns a salary of $1,000,000 but has investments of $100,000,000 would have a 9-figure income. This demonstrates why it is important to consider all sources of income when assessing the overall financial health and status of an individual or family.
What is the difference between 9 figures and 8 figures?
Eight figures refer to financial values between $10,000,000 and $99,999,999. In contrast, 9 figures are incomes of $100,000,000 or more. This is an important distinction to make when discussing the wealth of individuals because it shows how much greater the income of a nine-figure earner is compared to someone with eight figures.
For example, someone who makes $100,000,000 in a year would have twice the earnings of someone who makes $50,000,000. This is why it is important to consider figures when discussing wealth and income, as they can provide valuable insight into the financial status of an individual or family.
Is 9 figures a lot of money?
Yes, 9 figures is a lot of money. It is an astronomical amount that few individuals ever reach. As such, it demonstrates the impressive achievements of those who have managed to achieve nine-figure incomes and provides insight into their level of success and financial status.
The Jefferson Avenue commercial district in Buffalo, New York, is anchored by a supermarket.
There are dozens of other businesses and services along the 12-block corridor — a couple of bank branches, a library, a coffee shop, gas stations, a small plaza with a dollar store and a primary care clinic and a business incubator for entrepreneurs of color.
But Tops Friendly Markets, the only grocery store on Buffalo’s vast East Side, is the center of activity. More than just a place to buy food, pick up medications and use an ATM, the store is a communal gathering space in a predominantly Black neighborhood that, for generations, has been segregated, isolated and disenfranchised from the wealthier — and whiter — parts of the city.
Which explains how it came to be the site of a mass shooting on a spring day in May of last year. On that Saturday, a gunman, who lived 200 miles away in another part of the state, drove to Jefferson Avenue and went into Tops, and in just a few minutes killed 10 people, injured three and inflicted mass trauma across the community.
It is a scenario that has sadly, and repeatedly, played out in other parts of the country that have experienced mass shootings. But this one came with a twist: The gunman’s intention was to kill as many Black people as possible.
To achieve that, he specifically targeted a ZIP code with one of the highest percentages of Black residents in New York state. All 10 who died that day were Black.
“The mere fact that someone can research, ‘Where will the greatest number of Black people be … on a Saturday morning,’ that’s not by chance,” said Franchelle Parker, a community organizer and executive director of Open Buffalo, a nonprofit focused on racial, economic and ecological justice. “That’s not a mistake. It’s a community that’s been deeply segregated for decades.”
The day of the shooting, Parker, who grew up in nearby Niagara Falls, was driving to Tops, where she planned to buy a donut and an unsweetened iced tea before heading into the Open Buffalo office, which is located a block away from Tops. The mother of two had intended to complete the mundane task of cleaning up her desk — “old coffee cups and stuff” — after a busy week.
She saw the news on Twitter and didn’t know if she should keep driving to Jefferson Avenue or turn around and go back home. She eventually picked the latter.
When she showed up the next day, there were thousands of people grieving in the streets. “The only way that I could explain my feeling, it was almost like watching an old war movie when a bomb had gone off and someone’s in, like, shell shock. That’s how it felt,” said Parker, vividly recounting the community’s collective trauma in a meeting room tucked inside of Open Buffalo’s second-story office on Jefferson Avenue.
Almost immediately following the May 14, 2022, massacre, which was the second-deadliest mass shooting in the United States last year, conversations locally and nationally turned to the harsh realities of the East Side and how long-standing factors that affect the daily life of residents — racism, poverty and inequity — made the community an ideal target for a white supremacist.
Now, more than a year after the tragedy, there is growing concern that not enough is being done fast enough to begin to dismantle those factors. And amid those conversations, there are mounting calls for the banking industry — whose historical policies and practices helped cement the racial segregation and disinvestment that ultimately shaped the East Side — to leverage its collective power and influence to band together in an effort to create systemic change.
The ideas about how banks should support the East Side and better embed themselves in the neighborhood vary by people and organizations. But the basic argument is the same: Banks, in their role as financiers and because of the industry’s history of lending discrimination, are obligated to bring forth economic prosperity in disinvested communities like the East Side.
I know banks are often looked upon sort of like a panacea, but I don’t particularly see it that way. I think others have a role to play in all of this.
Chiwuike Owunwanne, corporate responsibility officer at KeyBank
“Banks have been very good at providing charitable contributions to the Black community. They get an ‘A’ for that,” said The Rev. George Nicholas, an East Side pastor who is also CEO of the Buffalo Center for Health Equity, a four-year-old enterprise focused on racial, geographic and economic health disparities. “But doing the things that banks can do in terms of being a catalyst for revitalization and investment in this community, they have not done that.”
To be sure, banks’ ability to reverse the course of the community isn’t guaranteed — and there is no formula to determine how much accountability they should hold to fix deeply entrenched problems like racism. Several Buffalo-area bankers said that while the Tops shooting heightened the urgency to help the East Side, the industry itself cannot be the sole driver of change.
“There are a lot of institutions … that can certainly play a part in reversing the challenges that we see today,” said Chiwuike “Chi-Chi” Owunwanne, a corporate responsibility officer at KeyBank, the second-largest bank by deposits in Buffalo. “I know banks are often looked upon sort of like a panacea, but I don’t particularly see it that way. I think others have a role to play in all of this.”
A long history of segregation
How the East Side — and the Tops store on Jefferson Avenue — became the destination for a racially motivated mass murderer is a story about racism, segregation and disinvestment.
Even as it bears the nickname “the city of good neighbors,” Buffalo has long been one of the most racially segregated cities in the United States. Of the 114,965 residents who live on the East Side, 59% are Black, according to data from the 2021 U.S. Census American Community Survey. The percentage is even higher in the 14208 ZIP code, where the Tops store is located. In that ZIP code, among 11,029 total residents, nearly 76% are Black, the census data shows.
The city’s path toward racial segregation started in the early 20th century when a small number of job-seeking Black Americans migrated north to Buffalo, a former steel and auto manufacturing hub at the far northwestern end of New York state. Initially, they moved into the same neighborhoods as many of the city’s poorer immigrants and lived just east of what is today the city’s downtown district. As the number of Blacks arriving in Buffalo swelled in the 1940s, they were increasingly confronted with various housing challenges, including racist zoning laws and restrictive deed covenants that kept them from buying homes in more affluent white areas.
Black Buffalonians also faced housing discrimination in the form of redlining, the practice of restricting the flow of capital into minority communities. In 1933, as the Great Depression roiled the economy, a temporary federal agency known as the Home Owners’ Loan Corporation used government bonds to buy out and refinance mortgages of properties that were facing or already in foreclosure. The point was to try to stabilize the nation’s real estate market.
As part of its program, HOLC created maps of American cities, including Buffalo, that used a color coding scheme — green, blue, yellow and red — to convey the perceived riskiness of making loans in certain neighborhoods. Green was considered minimally risky; other areas that were largely populated by immigrant, Black or Latino residents were labeled red and thus determined to be “hazardous.”
“The goal was to free up mortgage capital by going to cities and giving banks a way to unload mortgages, so they could turn around and make more mortgage loans,” said Jason Richardson, senior director of research at the National Community Reinvestment Coalition, an association of more than 750 community-based organizations that advocates for fair lending. “It was kind of a radical concept and it has evolved over the decades into our modern mortgage finance system.”
The Federal Housing Administration, which was established as a permanent agency in 1934, used similar methods to map urban areas and labeled neighborhoods from “A” to “D,” with “A” considered to be the most financially stable and “D” considered the least. Neighborhoods that were largely Black, even relatively stable ones, were put in the “D” category.
The result was that banks, which wanted to be able to sell mortgage loans to the FHA, were largely dissuaded from making loans in “risky” areas. And Buffalo’s East Side, where the majority of Blacks were settling, was deemed risky. Unable to get loans, Blacks couldn’t buy homes, start businesses or build equity. At the same time, large industrial factories on the East Side were closing or moving away, limiting job opportunities and contributing to rising poverty levels.
“Today what we’re left with is the residue of this process where we’ve enshrined … a pattern of economic segregation that favors neighborhoods that had fewer Black people in them and generally ignores neighborhoods that had African Americans living in them,” Richardson said.
Case in point: Research by the National Community Reinvestment Coalition shows that three-quarters of neighborhoods that were once redlined are low- to moderate-income neighborhoods today, and two-thirds of them are majority minority communities.
Adding to the division between Blacks and whites in Buffalo was the construction of a highway called the Kensington Expressway. Built during the 1960s, the below-grade, limited-access highway proved to be a speedy way for suburban workers to get to their downtown jobs. But its construction cut off the already-segregated East Side even more from other parts of the city, displacing residents, devaluing houses and destroying neighborhoods and small businesses.
As a result of those factors and more, many Black residents have become “trapped” on the East Side, according to Dr. Henry Louis Taylor Jr., a professor of urban and regional planning at the University at Buffalo. In 1987, Taylor founded the UB Center for Urban Studies, a research, neighborhood planning and community development institute that works on eliminating inequality in cities and metropolitan regions. In September 2021, eight months before the Tops shooting, the Center for Urban Studies published a report that compared the state of Black Buffalo in 1990 to present-day conditions. The conclusion: Nothing had changed for Blacks over 31 years.
As of 2019, the Black unemployment rate was 11%, the average household income was $42,000 and about 35% of Blacks had incomes that fell below the poverty line, the report said. It also noted that just 32% of Blacks own their homes and that most Blacks in the area live on the East Side.
“Those figures remain virtually unchanged while the actual, physical conditions that existed inside of the community worsened,” Taylor told American Banker in an interview in his sun-filled office at the center, located on the University at Buffalo’s city campus. “When we looked upstream to see what was causing it, it was clear: It was systemic, structural racism.”
Banks’ moral obligations
As the East Side struggled over the decades with rampant poverty, dilapidated housing, vacant lots and disintegrating infrastructure, banks kept a physical presence in the community, albeit a shrinking one. In mid-2000, there were at least 20 bank branches scattered across the East Side, but by mid-2022, the number had fallen to around 14, according to the Federal Deposit Insurance Corp.’s deposit market share data. The 14 include four new branches that have opened since early 2019 — Northwest Bank, KeyBank, Evans Bank and BankOnBuffalo.
The first two branches, operated by Northwest in Columbus, Ohio, and KeyBank, the banking subsidiary of KeyCorp in Cleveland, were requirements of community benefits agreements negotiated between each bank and the National Community Reinvestment Coalition. In both cases, Northwest and KeyBank agreed to open an office in an underserved community.
Evans Bank opened its first East Side branch in the fall of 2021. The office is located in the basement of an $84 million affordable senior housing building that was financed by Evans, a $2.1 billion-asset community bank headquartered south of Buffalo in Angola, New York.
Banks have been very good at providing charitable contributions to the Black community. They get an ‘A’ for that. But doing the things that banks can do in terms of being a catalyst for revitalization and investment in this community, they have not done that.
The Rev. George Nicholas, an East Side pastor who is also CEO of the Buffalo Center for Health Equity
On the community and economic development front, banks have had varying levels of participation. Buffalo-based M&T Bank, which holds a whopping 64% of all deposits in the Buffalo market and is one of the largest private employers in the region, has made consistent investments in the East Side by supporting Westminster Community Charter School, a kindergarten through eighth-grade school, and the Buffalo Promise Neighborhood, a nonprofit organization focused on improving access to education in the city’s 14215 ZIP code.
Currently, Buffalo Promise Neighborhood operates four schools. In addition to Westminster, it runs Highgate Heights Elementary, also K-8, as well as two academies that serve children ages six weeks through pre-kindergarten. Twelve M&T employees are dedicated to the program, according to the Buffalo Promise Neighborhood website. The bank has invested $31.5 million into the program since its 2010 launch, a spokesperson said.
Other banks are making contributions in other ways. In addition to the Jefferson Avenue branch and as part of its community benefits plan, Northwest Bank, a $14.2 billion-asset bank, supports a financial education center through a partnership with Belmont Housing Resources of Western New York. Meanwhile, the $198 billion-asset KeyBank gave $30 million for bridge and construction financing for Northland Workforce Training Center, a $100 million redevelopment project at a former manufacturing complex on the East Side that was partially funded by the state.
BankOnBuffalo’s East Side branch is located inside the center, which offers KeyBank training in advanced manufacturing and clean energy technology careers. A subsidiary of $5.6 billion-asset CNB Financial in Clearfield, Pennsylvania, BankOnBuffalo’s office opened a month after the shooting. The timing was coincidental, but important, said Michael Noah, president of BankOnBuffalo.
“I think it just cemented the point that this is a place we need to be, to be able to be part of these communities and this community specifically, and be able to build this community up,” Noah said.
In terms of public-private collaboration, some banks have been involved in a deeper way. In 2019, New York state, which had already been pouring $1 billion into Buffalo to help revitalize the economy, announced a $65 million economic development fund for the East Side. The initiative is focused on stabilizing neighborhoods, increasing homeownership, redeveloping commercial corridors including Jefferson Avenue, improving historical assets, expanding workforce training and development and supporting small businesses and entrepreneurship.
In conjunction with the funding, a public-private partnership called East Side Avenues was created to provide capital and organizational support to the projects happening along four East Side commercial corridors. Six banks — Charlotte, North Carolina-based Bank of America, the second-largest bank in the nation with $2.5 trillion of assets; M&T, which has $203 billion of assets; KeyBank; Warsaw, New York-based Five Star Bank, which has about $6 billion of assets; Northwest and Evans — are among the 14 private and philanthropic organizations that pledged a combined $8.4 million to pay for five years’ worth of operational support, governance and finance, fundraising and technical assistance to support the nonprofits doing the work.
Laura Quebral, director of the University at Buffalo Regional Institute, which is managing East Side Avenues, said the banks were the first corporations to step up to the request for help, and since then have provided loans and other products and education to keep the program moving.
Their participation “is a signal to the community that banks cared and were invested and were willing to collaborate around something,” Quebral said. “Being at the table was so meaningful.”
Richard Hamister is Northwest’s New York regional president and former co-chair of East Side Avenues. Hamister, who is based in Buffalo, said banks are a “community asset” that have a responsibility to lift up all communities, including those where conditions have arisen that allow it to be a target of racism like the East Side.
“We operate under federal charters, so we have an obligation to the community to not only provide products and services they need but also support when you go through a tragedy like that,” Hamister said. “We also have a moral obligation to try to help when things are broken … and to do what we can. We can’t fix everything, but we’ve got to fix our piece and try to help where we can.”
In the wake of a tragedy
After the massacre, there was a flurry of activity within banks and other organizations, local and out-of-town, to respond to the immediate needs of East Side residents. With the community’s only supermarket closed indefinitely, much of the response centered around food collection and distribution. Three of M&T’s five East Side branches, including the Jefferson Avenue branch across the street from Tops, became food distribution sites for weeks after the shooting. On two consecutive Fridays, Northwest provided around 200 free lunches to the community, using a neighborhood caterer who is also the bank’s customer. And BankOnBuffalo collected employee donations that amounted to more than 20 boxes of toiletries and other items that were distributed to a nonprofit.
At the same time, M&T, KeyBank and other banks began financial donations to organizations that could support the immediate needs of the community. KeyBank provided a van that delivered food and took people to nearby grocery stores. Providence, Rhode Island-based Citizens Financial Group, whose ATM inside Tops was inaccessible during the store’s temporary closure, installed a fee-free ATM near a community center located about a half-mile north of Tops, and later put a permanent ATM inside the center that remains there today. And M&T rolled out a short-term loan program to provide capital to East Side small-business owners.
One of the funds that benefited from banks’ support was the Buffalo Together Community Response Fund, which has raised $6.2 million to address the long-term needs of the East Side.
Bank of America and Evans Bank each donated $100,000 to the fund, whose list of major sponsors includes four other banks — JPMorgan Chase, Citigroup, M&T and KeyBank. Thomas Beauford Jr., a former banker who is co-chair of the response fund, said banks, by and large, directed their resources into organizations where the dollars would have an immediate impact.
“Banks said, ‘Hey, you know … it doesn’t make sense for us to try to build something right now. … We will fund you in the work you’re doing,'” said Beauford, who has been president and CEO of the Buffalo Urban League since the fall of 2020. “I would say banks showed up in a big way.”
Fourteen months later, banks say they are committed to playing a positive role on the East Side. For the second year, KeyBank is sponsoring a farmers’ market on the East Side, an attempt to help fill the food desert in the community. Last fall, BankOnBuffalo launched a mobile “bank on wheels” truck that’s stationed on the East Side every Wednesday. The 34-foot-long truck, which is staffed by two people and includes an ATM and a printer to make debit cards, was in the works before the shooting, and will eventually make four stops per week around the Buffalo area.
Evans has partnered with the city of Buffalo to construct seven market-rate single family homes on vacant lots on the East Side. The relationship with the city is an example of how banks can pair up with other entities to create something meaningful and lasting, more than they might be able to do on their own, said Evans President and CEO David Nasca.
The bank has “picked areas” where it can use its resources to make a difference, Nasca said.
“I don’t think the root causes can be ameliorated” by banks alone, he said. “We can’t just grant money. It has to be within our construct of a financial institution that invests and supports the public-private partnership. … All the oars [need to be] pulling together or this doesn’t work.”
‘Little or no engagement with minorities’
All of these efforts are, of course, welcomed by the community, but there is still criticism that banks haven’t done enough to make up for their past contributions to segregating the city. And perhaps more importantly, some of that criticism centers on banks failing to do their most basic function in society — provide credit.
In 2021, the New York State Department of Financial Services issued a report about redlining in Buffalo. The regulator looked at banks and nonbank lenders and found that loans made to minorities in the Buffalo metro area made up 9.74% of total loans in Buffalo. Overall, Black residents comprise about 33% of Buffalo’s total population of more than 276,000, census data shows.
The department said its investigation showed the lower percentage was not due to “excessive denials of loan applications based on race or ethnicity,” but rather that “these companies had little or no engagement with minorities and generally made scant effort to do so.”
“The unsurprising result of this has been that few minority customers or individuals seeking homes in majority-minority neighborhoods have made loan applications … in the first instance.”
Furthermore, accusations of redlining persist today, even though the practice of discriminating in housing based on race was outlawed by the Fair Housing Act of 1968.
In 2014, Evans was accused of redlining by the New York State Attorney General, which said the community bank was specifically avoiding making mortgage loans on the East Side. The bank, which at the time had $874 million of assets, agreed to pay $825,000 to settle the case, but Nasca maintains that the charges were unfounded. He points to the fact that the bank never had a fair lending or fair housing violation, no specific incidents were ever claimed and that the bank’s Community Reinvestment Act exam never found evidence of discriminatory or illegal credit practices.
The bank has a greater presence on the East Side today, but that’s because it has grown in size, not because it is trying to make up for previous accusations of redlining, he said.
“Ten years ago, our involvement [on the East Side] certainly wasn’t what you’re seeing today,” Nasca said. “We were looking to participate more, but we were participating within our means and our reach. As we have grown, we have built more resources to be able to do more.”
Shortly after accusations were made against Evans, Five Star Bank, the banking arm of Financial Institutions in Warsaw, New York, was also accused of redlining by the state Attorney General. Five Star, which has been growing its presence in the Buffalo market for several years, wound up settling the charges for $900,000 and agreeing to open two branches in the city of Rochester.
KeyBank is currently being accused of redlining by the National Community Reinvestment Coalition. In a 2022 report, the group said that KeyBank is engaging in systemic redlining by making very few home purchase loans in certain neighborhoods where the majority of residents are Black. Buffalo is one of several cities where the bank’s mortgage lending “effectively wall[ed] out Black neighborhoods,” especially parts of the East Side, the report said.
KeyBank denied the allegations. In March, the coalition asked regulators to investigate the bank’s mortgage lending practices.
Beyond providing more credit, some community members believe that banks should be playing a larger role in addressing other needs on the East Side. And the list of needs runs the gamut from more grocery stores to safe, affordable housing to infrastructure improvements such as street and sidewalk repairs.
Alexander Wright is founder of the African Heritage Food Co-op, an initiative launched in 2016 to address the dearth of grocery store options on the East Side, where he grew up. Wright said that while banks’ philanthropic efforts are important, banks in general “need to be in a place of remediation” to fix underlying issues that the industry, as a whole, helped create. (After publication of this story, Wright left his job as CEO of the African Heritage Food Co-Op.)
Aside from charitable donations, banks should be finding more ways to work directly with East Side business owners and entrepreneurs, helping them with capital-building support along the way, Wright said. One place to start would be technical assistance by way of bank volunteers.
“Banks are always looking to volunteer. ‘Hey, want to come out and paint a fence? Want to come out and do a garden?'” Wright said. “No. Come out here and help Keshia with bookkeeping. Come out here and do QuickBooks classes for folks. Bring out tax experts. Because these are things that befuddle a lot of small businesses. Who is your marketing person? Bring that person out here. Because those are the things that are going to build the business to self-sufficiency.
“Anything short of the capacity-building … that will allow folks to rise to the occasion and be self-sufficient I think is almost a waste,” Wright added. “We don’t need them to lead the plan. What we need them to do is be in the community and [be] hearing the plan and supporting it.”
Parker, of Open Buffalo, has similar thoughts about the role that banks should play. One day, soon after the massacre, an ATM appeared down the street from Tops, next to the library that sits across the street from Parker’s office. Soon after the ATM was installed, Parker began fielding questions from area residents who were skeptical of the machine and wanted to know if it was legitimate. But Parker didn’t have any information to share with them. “There was no outreach. There was no community engagement. So I’m like, ‘Let me investigate,'” she said. “I think that’s a symptom of how investment is done in Black communities, even though it may be well-intentioned.”
As it turns out, the temporary ATM belonged to JPMorgan Chase. The megabank has had a commercial banking presence in Buffalo for years, but it didn’t operate a retail branch in the region until last year. Today it has four branches in operation and plans to open another two by the end of the year, a spokesperson said.
After the Tops shooting, the governor’s office reached out to Chase asking if the bank could help in some way, the spokesperson said in response to the skepticism. The spokesperson said that while the Chase retail brand is new to the Buffalo region, the company has been active in the market for decades by way of commercial banking, private banking, credit card lending, home lending and other businesses.
In addition to the ATM, the bank provided funding to local organizations including FeedMore Western New York, which distributes food throughout the region.
“We are committed to continuing our support for Buffalo and helping the community increase access to opportunities that build wealth and economic empowerment,” the spokesperson said in an email.
In the year since the massacre, there has been some progress by banks in terms of their interest in listening to the East Side community and learning about its needs, said Nicholas. But he hasn’t felt an air of urgency from the banking community to tackle the issues right now.
“I do experience banks being a little more open to figuring out what their role is, but it’s slow. It’s slow,” said Nicholas. The senior pastor of the Lincoln Memorial United Methodist Church, located about a mile north from Tops, Nicholas is part of a 13-member local advisory committee for the New York arm of Local Initiatives Support Coalition, or LISC. The group is focused on mobilizing resources, including banks, to address affordable housing in Western New York, specifically in the inner city, as well as training minority developers and connecting them to potential investors, Nicholas said.
Of the 13 members, seven are from banks — one each from M&T, Bank of America, BankOnBuffalo, Evans and KeyBank, and two members from Citizens Financial Group. One of the priorities of LISC NY is health equity, and the fact that banks are becoming more engaged in looking at health disparities is promising, Nicholas said. Still, they have more work to do, he said.
“I need them to think more on how to strengthen and build the economy on the East Side and provide leadership around that, not only to provide charitable things, but using sound business and banking and community development principles to say, ‘OK, if we’re going to invest in this community, these are the types of things that need to happen in this community,’ and then encourage their partners and other people they work with … to come fully in on the East Side.”
Some bankers agree with the community activists.
“Putting a branch in is great. Having a bank on wheels is great,” said Noah of BankOnBuffalo. “But if you’re not embedded in the community, listening to the community and trying to improve it, you’re not creating that wealth and creating a better lifestyle for everyone.”
What could make a substantial difference in terms of banks’ impact on the community is a combination of collaboration and leadership, said Taylor. He supports the idea of banks leading the charge on the creation of a comprehensive redevelopment and reinvestment plan for the East Side, and then investing accordingly and collaboratively through their charitable foundations.
“All of them have these foundations,” Taylor said. “You can either spend that money in a strategic and intentional way designed to develop a community for the existing population, or you can spend that money alone in piecemeal, siloed, sectorial fashion that will look good on an annual report, but won’t generate transformational and generational changes inside a community.”
Banks might be incentivized to work together because it could mean two things for them, according to Taylor: First, they’d have an opportunity to spend money in a way that would have maximum impact on the East Side, and second, if done right, the city and the banks could become a model of the way to create high levels of diversity, equity and inclusion in an urban area.
“If you prove how to do that, all that does is open up other markets of consumption all over the country because people want to figure out how to do that same thing,” Taylor said.
Some of that is already happening, at least on a bank-by-bank case, said KeyBank’s Owunwanne. Through the KeyBank Foundation, the company is able to leverage different relationships that connect nonprofits to other entities and corporations that can provide help.
“I see this as an opportunity for us to make not just incremental changes, but monumental changes … as part of a larger group,” Owunwanne said “Again, I say that not to absolve the bank of any responsibility, but just as a larger group.”
Downstairs from Parker’s office, Golden Cup Coffee, a roastery and cafe run by a husband and wife team, and some other Jefferson Avenue businesses are trying to build up a business association for existing and potential Jefferson-area businesses. Parker imagined what the group could accomplish if one of the banks could provide someone on a part-time basis to facilitate conversations, provide administrative support and coordinate marketing efforts.
“In the grand scheme of things, when we’re talking about a multimillion dollar [bank], a part-time employee specifically dedicated to relationship-building and building out coalitions, it sounds like a small thing,” Parker said. “But that’s transformational.”
A “share certificate” is the credit union equivalent of a bank certificate of deposit (CD).
Share certificates have a fixed annual percentage yield (APY) for a fixed period.
Share certificates can offer better rates than “share accounts,” which correspond with bank savings accounts.
A share certificate can be a good option for earning interest on cash you’ll want to use in the future.
Share certificates: Credit union version of CDs
A share certificate is a type of savings account with a fixed APY for a fixed period. Credit unions offer share certificates. They’re equivalent to certificates of deposit (CDs), which you can get at banks. Think of a share certificate as a credit union CD.
Share certificates vs. share accounts
While share certificates are equivalent to CDs, share accounts at a credit union are similar to savings accounts at a bank. Here are some critical differences between share certificates and share accounts:
Higher APYs. Share certificates usually offer a higher APY than share accounts, but a share certificate requires that you keep your money in the account for the entire period you selected.
Fixed APYs. For that period, your share certificate will earn a fixed APY. On the other hand, the APY of a share account can change from time to time, so the rate of earnings (called “dividends”) you get can change.
No access to funds. If you withdraw your money from a share certificate before the end of its fixed term, you may have to pay a penalty fee. With a share account, you can add or withdraw funds when you need.
Why do credit unions call it a share certificate?
Credit unions use the term “share” because members (that is, depositors) at a credit union are part owners of the institution. Just as stockholders have a share of stock in a company, credit union members have share accounts or share certificates in a credit union. Your earnings from a share certificate are called “dividends,” equivalent to “interest” earned from a bank.
In the context of investing, a share certificate is a legal document that proves you own some stock (that is, a share of ownership) of a company. The company issues it to the shareholder; a “share certificate” is synonymous with a “stock certificate” in investing terms.
How do share certificates work?
A share certificate works this way: You choose a term (length of time) to open and deposit money into the account. Sometimes a minimum opening deposit is required.
Once you’ve deposited funds and the term begins, you cannot add or withdraw any funds until the term has ended (or “matured”). You may have to pay a penalty if you withdraw your money before the certificate term ends.
While your money is kept with the credit union, the credit union will pay you dividends. Dividends may be compounded daily or monthly (learn more about compound earnings).
When your share certificate matures at the end of the term, you can either roll your certificate funds into another share certificate (using the CD ladder strategy), transfer your money to a checking or share account, or withdraw your money.
June 21 (Reuters) – Commonwealth Bank of Australia (CBA.AX) on Wednesday cut its buffer rate for some borrowers refinancing their existing home loan to 1% from the industry standard of 3%, providing relief to many clients who would otherwise fail to qualify due to high interest rates.
The country’s prudential regulator advises lenders to refinance home loans only if they believe the customer could repay at 3% higher than current market rates.
While CBA’s alternate buffer is not in line with the regulator’s recommendation, it does not break the serviceability buffer, the regulator said, as it allows exceptions to the policy but warns against high volumes.
CBA has a quarter of the Australian mortgage market, where thousands of borrowers are expected to end their fixed rate loans this year, forcing them to shop around for new loans at current rates.
The Australian Prudential Regulation Authority (APRA) in a letter earlier this month said banks could face heightened supervisory attention if they report large volumes of policy exceptions which could pose risks to the banks’ loan books.
Starting Friday, CBA will allow select customers who meet some “strict eligibility criteria” to refinance their loans if they are capable of repaying at 1% above current market rates, the bank said, adding that a track record of no missed payments for at least a year was among several criteria for customers to be considered eligible.
“We know that due to the current interest rate environment some home owners are facing challenges refinancing their home loans so we are introducing an alternate interest rate serviceability buffer,” CBA’s Michael Baumann, executive general manager home buying said.
Westpac Banking Corp (WBC.AX), the country’s second-biggest mortgage provider, also offers modified serviceability assessment rate to customers unable to meet the industry standard.
The Reserve Bank of Australia has raised interest rates by 400 basis points to an 11-year high of 4.1% since May last year.
Reporting by Sameer Manekar in Bengaluru and Byron Kaye in Sydney ; Editing by Nivedita Bhattacharjee
Our Standards: The Thomson Reuters Trust Principles.
Just days after Houston was named the 4th best city in the United States for women in technology by SmartAsset, Parkway Property Investments lands more technology tenants at fabulous Greenway Plaza. The Houston Chronicle reported AI leader ThoughtTrace, the engineering company DMC, IoT provider Detechtion Technologies, and seven other major technology leaders as tenants. Despite being shunned by Amazon, the Texas energy town could emerge as a glowing tech hub.
Greenway Plaza is a 52-acre master-planned, mixed-use development of 11 buildings and almost 5 million square feet of office space in the center of Houston business. The development includes on- site amenities like fine dining, an underground food court with over 16 options, multiple fitness facilities, three full service banking centers, and unlimited conferencing facilities. The center also has full-service automotive care, commercial printing and graphics services, and a long list of other amenities for tenants and their clients.
Rounding out the list of new tenants were Nuveen Real Estate, Goldman Sachs Asset Management Private Real Estate, Liberty Lift Solution, Texas Installs, NAI Partners’ Investment Fund, TriArc Properties, and SLI Group.
Meanwhile, Houston as a tech professional magnet is not only reflected in the migration of technology firms moving to the city center. The SmartAsset study mentioned above showed that Houston’s tech pay makes the city a standout for men and women. For female tech workers, the usual disparity in pay between men and women is almost non-existent. With a ratio of 99 percent, Houston’s wage gap when it comes to tech jobs ranked the city No. 3 for the smallest wage gap among major U.S. cities.
A long-time energy hub, Houston, is in the process of transitioning to become more of a tech hub through an Innovation Corridor anchored by physical structures being rebooted to push the city forward. Some of the properties being reworked are the 1939 Sears department store at 4201 Main, the former Exxon Mobil building at 800 Bell; and the former KBR complex at the East End.
Even though the city was recently shunned by a “no vote” for Amazon’s HQ2, the city is seeing healthy growth in this sector. The news that digital payments leader Bill.com is moving to the Westchase area of Houston illustrates this too. In addition, the coming Green New Deal from Rep. Alexandria Ocasio-Cortez and Sen. Ed Markey may just be a cloud with a silver lining for Houston of the energy sector can rethink renewable. Whether it’s the “Trump” energy first way or the opposing “Green Deal” – Houston planners only have to tool up for “next.”
Evidence of such forward thinking comes in the form of a report by Robert Vaughn, the Houston metro market manager for Robert Half Technology and The Creative Group. According to Vaughn, Houston actually leads the U.S. in tech job hiring plans for 2019. And despite the fact that Austin is currently a more attractive tech startup hub, Houston has huge advantages thanks to its population and age distribution- With the right incentives by city decision makers, the city could take off to match New York as in the next couple of years. And this, of course, would be a shot in the arm for every Houston real estate metric. Stay tuned, we’ll do more in-depth coverage soon.
Phil Butler is a former engineer, contractor, and telecommunications professional who is editor of several influential online media outlets including part owner of Pamil Visions with wife Mihaela. Phil began his digital ramblings via several of the world’s most noted tech blogs, at the advent of blogging as a form of journalistic license. Phil is currently top interviewer, and journalist at Realty Biz News.
Fannie Mae Moderator: Good day, and welcome to the Fannie Mae Second Quarter 2023 Financial Results Conference Call. At this time, I will now turn it over to your host, Pete Bakel, Fannie Mae’s Director of External Communications.
Pete Bakel: Hello, and thank you all for joining today’s conference call to discuss Fannie Mae’s second quarter 2023 financial results. Please note this call includes forward-looking statements, including statements about Fannie Mae’s expectations related to: economic and housing market conditions; the future performance of the company and its book of business; and the company’s business plans and their impact. Future events may turn out to be very different from these statements.
The “Forward-looking Statements” section in the company’s Second Quarter 2023 Form 10-Q, filed today, and the “Risk Factors” and “Forward-Looking Statements” sections in the company’s 2022 Form 10-K, filed on February 14, 2023, describe factors that may lead to different results.
A recording of this call may be posted on the company’s website. We ask that you do not record this call for public broadcast, and that you do not publish any full transcript.
I’d now like to turn the call over to Fannie Mae Chief Executive Officer, Priscilla Almodovar, and Fannie Mae Chief Financial Officer, Chryssa C. Halley.
Priscilla Almodovar: Welcome, and thank you for joining us today. Let me begin by spending a few minutes on the economic environment before turning to our performance in the second quarter of 2023. After that, our Chief Financial Officer, Chryssa Halley, will discuss our second quarter results and current outlook for the economy.
Macroeconomic Conditions
Economic data was mixed in the second quarter, though GDP growth was stronger than anticipated. The Federal Reserve continued tightening monetary policy and raised their target Fed Funds rate twice in the past few months. One of the focal points in their decision-making has been how much housing contributes to inflation. And while overall inflation has slowed, housing’s contribution to inflation has remained elevated.
The resiliency of the housing market continued to surprise many of us, especially since mortgage rates and high home prices continue to weigh on housing affordability. The lack of housing supply is a major contributing factor. Many current homeowners are reluctant to sell their existing homes and give up their low mortgage rates they locked in in 2020 or 2021. Earlier this month, the National Association of REALTORS® reported that there were 1.08 million existing homes for sale last month compared with 1.92 million in June 2019. This lack of existing home supply drove stronger than expected home price growth. In fact, we estimate that single-family home prices rose about 5% during the first six months of the year, while many of us were anticipating a decline.
Single-family mortgage origination volumes in the overall market were about 35% lower than the same time last year, despite the estimated $120 billion increase quarter-on-quarter due to the typical spring homebuying season.
It continues to be a tough market for our lender counterparties — something we are monitoring closely.
Thanks to the dedication of our leadership and teams across the company, we continued to support an unprecedented housing market while generating strong financial results and effectively managing risk.
Second Quarter Financial Results
Now, turning to our second quarter financial performance. The strength in home prices during the quarter had a direct impact on our earnings, largely due to the decrease in our single-family allowance that Chryssa will talk about.
We reported $5 billion in net income and $7.1 billion in net revenues. As a result, through retained earnings we continued to build our net worth, which reached $69 billion as of the end of June.
I’m proud that through our efforts, we provided $104 billion of liquidity to the single-family and multifamily markets. In doing so, we helped borrowers obtain mortgage credit for approximately 420,000 home purchases, refinances, and rental units. This included approximately 139,000 units of multifamily rental housing, a significant majority of which were affordable to households earning at or below 120% of area median income. We also helped 108,000 first-time homebuyers purchase a home.
Mission Performance
Despite challenges with housing affordability and supply, consumers’ homeownership aspirations remain high. And while Fannie Mae cannot directly control these factors, we are working to help address housing challenges consumers face — especially those that disproportionately burden underserved renters and homeowners. And we’re doing so safely and soundly. Let me touch on a few examples.
First, we advanced our mortgage pricing model. The new construct improves support for traditionally underserved borrowers while further aligning our pricing model to our capital requirements. Second, we continued to support Special Purpose Credit Programs, currently active in six markets, that are expected to make loan qualification easier for underserved borrowers. And third, we introduced a new option for lenders to verify a property’s market value and eligibility as part of our journey to make the home valuation process more effective, efficient, and unbiased.
Now, our role is not just about helping consumers get into a home — it is also about ensuring they remain stably housed. Housing stability is key to well-being, for both individuals and communities. On that note, I’m gratified that as of the end of June, we stood at less than 100,000 seriously delinquent single-family loans, coming a long way from the over 1 million seriously delinquent loans we saw in our single-family book in February of 2010. In addition to market factors, this is a testament to the enhanced underwriting policies, servicing options, and support we give to lenders and borrowers. This includes things like free counseling assistance to borrowers and renters impacted by natural disasters and free foreclosure prevention assistance to borrowers in distress. We remain focused on continuing to support renters and homeowners as they face the uncertainties of the current market.
Wrap Up
You know, this fall marks 15 years since Fannie Mae was placed in conservatorship. A lot has changed since that time. Today Fannie Mae has been transformed. Fannie Mae is safer and stronger, thanks to years of work to improve the resiliency of our business and our steadfast focus on strong risk management. Because of this, we continue to be a stabilizing force in the market and to deliver on our mission — like we did through the COVID-19 pandemic, and how we’re doing now through this challenging economic cycle. We are committed to being a reliable source of liquidity and stability to the housing finance system in the United States.
Now, I’ll turn it over to Chryssa to discuss our second quarter financial results.
Chryssa C. Halley: Second Quarter Results
Thank you, Priscilla. And good morning.
As Priscilla mentioned, we reported $5 billion in net income in the second quarter, a $1.2 billion increase compared to the first quarter of this year. Our second quarter net revenues remained strong at $7.1 billion thanks to healthy guaranty fee income. This is relatively flat compared to the prior quarter. A $1.3 billion benefit for credit losses was the primary driver of the quarter-over-quarter growth in net income. This was mainly driven by stronger than expected actual home price growth during the quarter of 3.6% that resulted in a decrease in our single-family allowance.
Let me now turn to a few highlights of our Single-Family business. Despite higher mortgage interest rates quarter-over-quarter, our single-family acquisition volumes increased by 32%, to $89 billion in the second quarter compared to $68 billion in the first quarter. However, this was still 48% lower than the $172 billion of single-family loans we acquired in the second quarter of last year. Not surprisingly given the rate environment, the purchase share of our acquisitions reached 86% in the second quarter — a level we have not seen for at least 23 years. Our overall single-family book of business remained strong, with a weighted average mark-to-market loan-to-value ratio of 51% and weighted average credit score at origination of 752. Our single-family serious delinquency rate remained at historically low levels, and as of June 30 stood at 55 basis points. We continue to manage credit risk through credit risk transfer transactions. In the second quarter, we transferred a portion of the credit risk on approximately $116 billion of mortgages through our single-family credit risk transfer programs.
Shifting to our Multifamily business, we acquired $15.1 billion of multifamily loans in the second quarter, bringing our acquisitions through June 30 to $25 billion. Our volume cap for the year is $75 billion. The overall credit profile of our multifamily book remains strong, with a weighted-average original loan-to-value ratio of 64% and a weighted-average debt service coverage ratio of 2.1 times. However, our multifamily seniors housing loans, especially those that are adjustable-rate mortgages, remain stressed. Seniors housing loans represent 4% of our multifamily book as of the end of the second quarter, but nearly 40% of these loans had a debt service coverage ratio below 1.0 as of June 30, indicating a heightened risk of default. We recorded a $152 million provision for credit losses in the second quarter in our multifamily book, primarily due to decreases in estimated property values seen in the overall multifamily sector following years of strong growth. Our multifamily serious delinquency rate increased slightly to 37 basis points as of the end of June, up from 35 basis points at the end of March. Our primary way to share risk on our multifamily book is through our unique DUS® risk-sharing model, where originating lenders typically retain approximately one-third of the credit risk on loans we acquire. In addition, in April of this year, we closed a multifamily credit insurance risk transfer transaction, transferring a portion of risk to diversified insurers and reinsurers.
Outlook
Before we close out, I’ll touch on our current economic outlook. The economy has remained more resilient than we expected earlier in the year, but we believe it is still on a decelerating path, and additional drags are likely forthcoming. While noting the probability of a “soft landing” may have increased of late, our Economic and Strategic Research Group expects the economy will enter a modest recession in the fourth quarter of this year or the first quarter of next year. The full effects of tighter monetary policy and tightening credit conditions to date have yet to be fully felt in the real economy and on consumers, and additional banking stress remains a possibility. Given current housing demand and the lack of existing homes for sale, we expect strength in new home sales and construction will support the overall economy as it exits a modest recession. We currently forecast the 30-year fixed rate mortgage rate will average 6.6% for the year.
When we spoke last quarter, we anticipated single-family home price declines on a national basis in 2023. However, given strong home price growth in the first half of the year, we now project national home price growth of 3.9% for the full year. We continue to expect regional variation in home price changes. Our expectations are based on many assumptions, and our actual results could differ materially from our current expectations.
As a reminder, we make available on our webpages a financial supplement with today’s filing that provides additional insights into our business.
Thank you for joining us today.
Fannie Mae Moderator: Thank you, everyone. That concludes today’s call. You may disconnect.
I’ve got a bone to pick…it seems you aren’t bothering to shop around for your mortgage?
Instead, you’re just going with the first lender you come across, for better or worse. This is according to a new survey from the Consumer Finance Protection Bureau (CFPB).
The agency claims in their National Survey of Mortgage Borrowers that nearly half of those who take out a mortgage to purchase a home only “seriously consider” a single lender or mortgage broker before applying.
Equally troubling is that the mortgage borrowers simply rely on information from a lender/broker, followed by their real estate agent, as opposed to outside sources, such as websites, housing counselors, family/friends and so on.
It makes me wonder why I bothered creating this site. If you’re not going to take the time to learn about mortgages or shop around for the largest purchase in your life, I’m concerned.
But do take the time to comparison shop for your toaster. That’s important.
No Time to Shop
As you can see from the graphs, an overwhelming number of consumers only considered one candidate. And an even higher number (~77%) applied with just one lender.
Interestingly, first-time home buyers were a bit more shop-happy, though not by much.
The good news is that most consumers (51%) indicated that they’re “very familiar” with the loan options available in the marketplace.
For those who said they weren’t, they’re more likely to rely on the real estate agent or a personal acquaintance for direction. See my piece on using the real estate agent’s lender for more on that.
Those who did shop around indicated that they did so mostly to find better loan terms, such as a lower interest rate and/or reduced fees.
Others did so over qualifying concerns, some because of information learned from their GFEs, and of course more still because they were denied a mortgage from a prior lender.
What Are Consumers Looking for in a Lender?
This might explain the lack of shopping around. The report revealed that “having an established banking relationship” was the number one reason why a consumer chose a certain lender/broker.
While this makes sense, there are a lot of great banks out there that do a poor job originating mortgages. Sure, it’s convenient to use a one-stop shop, but it might not make sense for your pocketbook.
And if you use an inept bank or broker, you could miss out on a chance to buy your dream home. So it’s not always the best strategy.
Fortunately, reputation of the lender/broker came in a close second, and that’s certainly important if you want to receive a loan approval and a good rate.
The takeaway from the report is that a lot of homeowners don’t shop around for mortgages, and the CFPB wants to change that.
Check Out the Rate Checker
Today, the CFPB also released a new tool known as the “Rate Checker,” which uses real lender data from Informa Research Services.
It’s updated daily to give mortgage shoppers a good idea as to where interest rates should be for a given loan scenario.
The CFPB notes that the tool is unbiased, meaning you don’t actually get paired up with any particular lenders. Instead, you get to see the rates lenders are offering most frequently to borrowers based on certain criteria.
For example, if you tell the tool you’ve got an excellent credit score and a 20% down payment, it’ll tell you what lenders are typically offering for such a loan.
So if a lender tells you they can offer a rate of 4.5% for a 30-year fixed mortgage, but the tool tells you that most lenders are offering 3.625%, you might want to ask some questions.
Sure, there are situations where rates could fluctuate based on pricing adjustments. But if the rate you’re offered is way off from the tool’s data, there should be a pretty clear explanation.
On a $200,000 loan, a difference in rate of 50 basis points (4% instead of 4.5%) results in nearly $60 in monthly savings.
Over the first five years, that’s about $3,500, along with an additional $1,400 in principal paid down. So it can make a pretty big difference. But continue not to shop for your mortgage.
A top bank isn’t always the highest flier, but one that can survive the tough periods in a more turbulent economy.
That’s the story of Gateway First in Jenks, Oklahoma, the No. 1 bank on the 2022 list of top-performing banks with $2 billion to $10 billion of assets compiled by the consulting firm Capital Performance Group. The list ranks the banks by their three-year average return on average equity. The $2.1 billion-asset Gateway’s three-year average ROAE of 25.36% put it at the top of the list.
But compared to its top-performing peers that hovered in the 20% to 30% range in the last three years, Gateway First had a very different journey. Its ROAE was slashed in half from 2020 to 2021, going from 45.66% to 26.58%. This then plummeted down to 3.84% in 2022.
“I don’t think there’s any company I’ve seen that has been through more change in the last five years than we have,” said Scott Gesell, CEO of Gateway First Bank. This included changes brought on by an acquisition and a change in strategy.
“But we’ve weathered the storm,” Gesell added. “And it’s because we got great people.”
The bank, originally an independent mortgage company called Gateway Mortgage Group, acquired Farmers Exchange Bank and became Gateway First Bank in 2019. Gateway First’s dominance in the mortgage market proved to be a boon during the pandemic when rates were cut in an attempt to spur economic activity. In 2020, the 30-year fixed-rate mortgage fell below 3% for the first time, and then hit an all-time low of 2.65% in January 2021.
Gesell noted that those were some of the “best years in the history of mortgage lending.” The bank’s mortgage loans peaked at $11.8 billion dollars in the middle of 2020, he added.
Then came the end of 2021, when the bank’s mortgage loans fell to only $4 billion. “It was a transition year away from that and into kind of the worst year in mortgage banking, probably since 2008,” he said.
Interest rates have spiked to more than 7% this year. Ninety-nine percent of borrowers had a mortgage rate lower than 6% or the current market rate, according to Goldman Sachs earlier this year. This has deterred refinancing, with the number of these loans dropping from 1.8 million in the first quarter of 2021 to just 9,700 in the fourth quarter of 2022. Gesell called it a “perfect storm in the mortgage industry today.”
Gateway has made efforts to diversify its balance sheet by racking up more commercial loans while maintaining and monitoring its current mortgage portfolio. Gesell highlighted that mortgage banking is a more “fickle and volatile business” than other lines of business.
Steven Reider, president of the consulting firm Bancography, said that facing a dearth of refinancing and mortgage activity, it’s good for a bank to look for other revenue streams.
“There’s a benefit from diversification because all of our business lines and all our economic sectors don’t tend to move in lockstep,” he added. “But it takes time to build the product. It takes time to build the personnel.”
The industries of Gateway’s commercial loans are diverse, according to Gesell, ranging from hospitality to energy lending. Meanwhile, the bank has steered clear from lending on commercial office real estate given the uncertainty of that business right now. Remote work has persisted since the pandemic, and office vacancies have reached an all-time high at 16.1% in the first quarter.
Besides diversifying its loan portfolio, the company also cut operations and staffing since the mortgage boom ended. The company cut its number of mortgage centers from 170 to 125 and trimmed its headcount from 1,800 employees who work on mortgage originations to 1,100.
“It’s a tough deal but people know that we aren’t doing it lightly,” added Gesell. “The nice thing is we had a couple good years that allowed us to buffer and soft-land the process of downsizing.”
Gateway’s near-future growth strategy will continue to focus on commercial lending, while fortifying its deposit base — the bank currently has one of the highest loan-to-deposit ratios in the top-performing banks ranking at around 140%. Gesell said that they will be able to do this through organic customer growth and acquisitions of banks heavier on deposits than loans. He is aiming to decrease Gateway’s loan-to-deposit ratio to 90% by the end of 2024.
“That’s sort of been the history of the organization. There has been a commitment to reinvesting in the organization on an ongoing basis because you want to maintain yourself in a position to continue to grow,” said Gesell.
Take a closer look at some different types of savings accounts and how you can use them to reach your goals
July 31, 2023
Savings accounts allow you to safely store your money while earning interest on it over time. They’re an important component of your overall financial plan, specifically designed to help you safely and steadily achieve your financial goals.
Saving money regularly in a savings account can help you make progress toward a number of goals, such as a down payment on a home or a secure retirement. A savings account can also serve as your emergency fund when unexpected expenses like home repairs or medical bills pop up. Different types of savings accounts can help you meet different goals, however, and you can even use multiple savings accounts to keep them all on track.
But how do you know which types of savings accounts make the most sense for your life and your goals? The first step to figuring that out is to learn more about the seven options and how each one can fit into your financial plans.
Online savings account
As the name implies, online savings accounts offer a digital account that can be accessed through your computer, phone, or tablet. Without the overhead costs associated with brick-and-mortar banks, these accounts can provide customers higher interest rates and other benefits. Simply put, online savings accounts provide a safe and easily accessible way to build up your emergency fund and put money toward other goals.
Benefits of online savings accounts
They typically offer higher interest rates than traditional savings accounts. For example, the Discover® Online Savings Account features rates more than five times the national average.1
They often have lower fees and smaller minimum balance requirements than traditional savings accounts. (For example, the Discover Online Savings Account has no monthly fees and no minimum opening deposit.)
Features can include robust mobile banking capabilities and 24/7 access to your accounts.
Other considerations
Some online banks don’t have dedicated ATMs, which may result in ATM fees. However, online banks like Discover partner with nationwide networks for convenient, no-fee ATM access.
Traditional savings account
Traditional savings accounts typically offer brick-and-mortar bank branch locations where you can speak in person with a representative during bank hours. However, interest rates offered for traditional savings accounts can be less competitive than the typical interest rate for online savings accounts.
Benefits of traditional savings accounts
You can walk into a bank branch for face-to-face customer service.
Dedicated ATMs may not charge ATM fees.
Other considerations
Bank branches have limited operating hours, so they’re not always open when you need them.
It takes more time to visit a branch than to bank online.
They typically have higher fees and offer lower interest rates than online savings accounts.
High-yield savings account
High-yield savings accounts offer significantly higher interest rates than the national average, so your money can grow more quickly. What’s more, virtually all high-yield savings accounts are also online savings accounts, which means you can manage your money from your phone or other device at any time. These accounts work well for emergency savings, big-ticket purchases like a home theater, and longer-term savings goals like buying a car.
Benefits of high-yield savings accounts
Higher interest rates allow you to accelerate earnings.
Easy access to your money when you need it.
Other considerations
Some banks have minimum deposit requirements for high-yield savings accounts.
Make sure your high-yield savings account doesn’t include fees that can eat into your interest earnings.
Money market account
Money market accounts combine some of the benefits and functionality of checking and savings accounts. They pay interest like savings accounts and, in some cases, can offer debit cards and checks like checking accounts. Some, such as the Discover Money Market Account, offer higher interest rates when the account balance is over a certain amount. Money market accounts are great for stashing money so it can grow over time while still providing access to the funds.
Benefits of money market accounts
They can be FDIC insured.
You have easy access to your money when you need it.
They can offer competitive interest rates, though often not as high as online savings accounts.
Other considerations
They may require a higher minimum deposit to open the account, sometimes as much as $5,000 or $10,000. (Discover has a $2,500 minimum initial deposit.)
The number of withdrawals and transfers allowed by your financial institution may be limited, so check for any account restrictions.
Certificate of deposit (CD)
Certificates of Deposit offer a guaranteed, steady interest rate on the money you agree to leave in the account for a specified term, usually ranging from three months to 10 years. If you don’t require access to your funds during the CD term and you’re looking for a secure way to increase your savings, these accounts are ideal. Be sure to understand how CDs work, so you can use them to enhance your savings over time.
Benefits of CDs
You often earn a higher interest rate with a CD than with a savings account.
Your rate is locked in and guaranteed for the full CD term, no matter what happens in the markets.
CDs can be FDIC insured.
Other considerations
CDs often have higher minimum deposit requirements than savings accounts. (Discover has a $2,500 minimum for CDs.)
If you take the money out before the CD term ends, you may face early withdrawal penalties. For that reason, savings accounts are better options for emergency funds.
IRA CD
Choose your term, lock in your rate, and watch your CD grow
Discover Bank, Member FDIC
Owning a CD within your IRA gives you the best of two worlds: the high interest rate of a CD with the tax advantages of an IRA. That adds up to a bigger win for your long-term financial planning. IRA CDs can give you peace of mind knowing that your money will be there for you in the future, and they also offer a way to reduce risk while living in retirement.
Benefits of IRA CDs
You receive guaranteed returns on your money.
Taxes on earnings are deferred, so you can grow your savings faster. (Make sure you know the difference between Traditional IRAs vs. Roth IRAs: Traditional IRAs allow you to deduct your contributions from your taxable income now, but you have to pay taxes on distributions in retirement. Roth IRAs allow you to contribute after-tax funds to your account now, and you don’t have to pay taxes on distributions in retirement.)
They can be FDIC insured.
Other considerations
If you take the money out before the CD term ends, you will usually face early withdrawal penalties.
Taking withdrawals from retirement accounts before age 59½ can result in a tax bill and IRS penalties.
IRA savings account
An IRA savings account combines the security and steady earnings of a savings account with the tax benefits of an IRA. Whether you have a Traditional IRA or a Roth IRA, your earnings in an IRA savings account grow as your money compounds, allowing you to build a larger nest egg without risking it in the stock market. As a result, it can be a convenient spot to park rollovers, like a 401(k) from an old job, or to safely grow your money while in retirement.
Benefits of IRA savings accounts
A market crash won’t affect your retirement savings.
You can move money in and out of it—just be sure to check with your bank about any withdrawal limits.
They offer dependable, tax-deferred growth.
Other considerations
Taking early withdrawals from retirement accounts can result in a tax bill and IRS penalties.
Some banks may charge monthly maintenance fees.
Choose the right savings accounts for you
Now that you know all about the different types of savings accounts, you can figure out which savings accounts best suit your goals and where to open a savings account for yourself.
Once you’ve made those decisions, you’ll set up your savings accounts. Though there may be slight differences, most banks have similar steps for how to set up a savings account:
Complete an application that includes personal information such as your address, phone number, and Social Security number.
Select the type of account you want to open.
Deposit money into the account.
There’s no limit on the number of savings accounts you can have, so you can even use different types of savings accounts to customize your personal financial plan.
If you’re ready to take the next step toward a more secure financial future, check out the benefits of a Discover Online Savings Account today.
Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.
1 The Annual Percentage Yield (APY) for the Online Savings Account as of 07/01/2023 is more than five times the national average APY for interest bearing savings accounts with a balance of $500 as reported by Curinos as of 07/01/2023. National average is based on information regarding the top 50 banks (by deposit size) and may not include information from variations in regional pricing at such banks or information from products that may not be widely available to their customers. Rates were obtained from Curinos, who relies on the data from the banks it tracks and such information cannot be guaranteed. APYs are subject to change at any time.