Planet Home Lending hired Matt Kingsborough as regional sales manager, the Connecticut-based lender, servicer and asset manager announced Thursday.
Kingsborough has more than 20 years of experience in mortgage lending and will be responsible for driving the company’s expansion plans in the western U.S.
“Stepping into Planet Home Lending marks a pivotal chapter in my career,” Kingsborough said in a statement. “It’s an opportunity to align with an organization that not only values excellence and innovation in mortgage lending but also deeply invests in the growth and success of its sales professionals.
“I’m here to build on our presence in the West by fostering an environment where mortgage loan originators and branch managers can truly thrive.”
“Matt’s role is crucial as we look to attract and support the best talent in the industry,” John Bosley, Planet’s president of mortgage lending, said in a statement. “His ability to mentor, coupled with a keen understanding of the mortgage landscape, makes him the perfect fit to lead our expansion efforts in the West.”
Prior to joining Planet, Kingsborough was a multistate regional area manager for HomeBridge Financial Services and was the Northern California regional manager for Prospect Mortgage. Adding his leadership skills will be beneficial at a time when Planet is looking to differentiate itself with various purchase loan products, one-time-close construction loans and other niche programs, the company stated.
Planet Home Lending is an originator, correspondent lender, servicer and subservicer of agency and nonagency residential and commercial mortgages. Founded in 2007, it was the only top 10 national lender to grow its sales volume on a year-over-year basis in the first half of 2023, according to Inside Mortgage Finance data.
Bolstered by its 2022 acquisition of Homepoint’s delegated correspondent channel, Planet originated $13.9 billion in the first six months of last year, an 11.7% increase. By contract, the country’s top 50 lenders as a whole saw volumes fall by more than 50% during the same period.
Earlier this month, Planet added Doug Long as a senior vice president and divisional sales manager. He will focus on product development and building the company’s retail lending network.
In remarks made Thursday to the Senate Banking Committee this week, Federal Reserve Chair Jerome Powell said he expects some U.S. banks to fail in the coming months because of declining values and defaults in their commercial real estate loan portfolios.
According to reporting by multiple outlets, including The Hill, Powell indicated that the risk is tied to small and midsized banks, and there is no systemic risk to the banking sector posed by the potential collapse of major institutions.
“We have identified the banks that have high commercial real estate concentrations, particularly office and retail and other [property types] that have been affected a lot,” Powell said. “This is a problem that we’ll be working on for years more, I’m sure. There will be bank failures, but not the big banks.”
Powell’s remarks came about a month after U.S. Treasury Secretary Janet Yellen expressed similar concerns to the Senate Banking Committee. Yellen told lawmakers that bank regulators are working to address risks tied to rising vacancy rates and lower valuations for office buildings in major cities.
These stressors are tied to the post-pandemic increase in remote work, as well as higher interest rates that have made it difficult to refinance commercial real estate debt.
“I hope and believe that this will not end up being a systemic risk to the banking system,” Yellen said in February. “The exposure of the largest banks is quite low, but there may be smaller banks that are stressed by these developments.”
Although commercial mortgage debt is propelling these concerns, the possibility of failure for a federally insured bank has implications for the residential mortgage sector. According to the Federal Deposit Insurance Corp. (FDIC), banks held $2.78 trillion in residential mortgage debt as of first-quarter 2023.
Community banks — commonly defined as those with less than $10 billion in assets — accounted for nearly $477 billion (or 17%) of the total debt. And the FDIC reported that home loans are the largest lending segment by dollar volume at more than 40% of community banks.
New York Community Bancorp (NYCB) is one institution that is facing a “confidence crisis” related to commercial real estate, primarily multifamily loans. NYCB, one of the largest U.S. residential mortgage servicers, received an equity investment of $1 billion earlier this month that is designed to strength the bank’s balance sheet.
In the wake of last year’s failures of First Republic Bank, Silicon Valley Bank and Signature Bank, smaller U.S. banks moved away from commercial real estate lending. Data from MSCI Real Assets showed that after originating a record-high 34.2% of all commercial mortgages in Q1 2023, regional and local banks trimmed their share of originations to 25.1% in Q2 2023. The latter figure represented a 53% year-over-year decline.
Still, small banks are more exposed to commercial mortgage debt than larger banks. Federal Reserve data from September 2023 showed that commercial real estate accounted for an average of 44% of the portfolios at small banks, compared to 13% at the country’s 25 largest banks.
Funding a potential bailout could be another concern for banks. When the FDIC rescued Silicon Valley Bank and Signature Bank in March 2023, the price tag was $22 billion. The regulator recouped $16 billion of that through a special assessment on more than 100 of its institutions.
Woodwell explained that such extensions and modifications had allowed the CRE mortgages to mature from $659 billion to $929 billion. He added that commercial mortgages had the tendency to be long-lived with maturities spreading out over several years. “Volatility and uncertainty around interest rates, a lack of clarity on property values, and questions about some … [Read more…]
This downturn in KREF’s fortunes reflects a growing concern within the sector, especially after New York Community Bancorp announced a dividend cut last week and increased its reserves for loans at risk, particularly those to office and apartment landlords. Adding to the industry’s woes, Moody’s Investors Service downgraded the bank’s credit rating to junk status … [Read more…]
Commercial/Multifamily Mortgage Delinquency Rates MBA Research Mortgage Credit Availability Index Press Release Residential
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WASHINGTON, D.C. (January 16, 2024) — Delinquency rates for mortgages backed by commercial properties increased during the fourth quarter of 2023, according to the Mortgage Bankers Association’s (MBA) latest commercial real estate finance (CREF) Loan Performance Survey.
“Ongoing challenges in commercial real estate markets pushed the delinquency rate on CRE-backed loans higher in the final three months of 2023,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “Delinquency rates jumped to 6.5 percent of balances for loans backed by office properties and to 6.1 percent for lodging-backed loans. Delinquencies for loans backed by retail properties remain elevated from the onset of the pandemic but were unchanged during the quarter. Delinquency rates for multifamily and industrial property loans both increased marginally but remain much lower.”
Woodwell continued, “Long-term interest rates have come down from their highs of last year, which should provide some relief to some loans, but many properties and loans still face higher rates, uncertainty about property values and – for some properties – changes in fundamentals. Each loan and property faces a different set of circumstances, which will come into play as the market works through loans that mature this year.”
The balance of commercial mortgages that are not current increased in December 2023 (compared to September 2023).
96.8% of outstanding loan balances were current or less than 30 days late at the end of the third quarter, down from 97.3% at the end of the third quarter of 2023.
2.3% were 90+ days delinquent or in REO, up from 2.2% the previous quarter.
0.3% were 60-90 days delinquent, up from 0.2% the previous quarter.
0.6% were 30-60 days delinquent, up from 0.3%.
Loans backed by office properties drove the increase.
6.5% of the balance of office property loan balances were 30 days or more days delinquent, up from 5.1% at the end of last quarter.
6.1% of the balance of lodging loans were delinquent, up from 4.9%.
5.0% of retail balances were delinquent, flat from the previous quarter.
1.2% of multifamily balances were delinquent, up from 0.9%.
0.9% of the balance of industrial property loans were delinquent, up from 0.6%.
Among capital sources, CMBS loan delinquency rates saw the highest levels.
5.1% of CMBS loan balances were 30 days or more delinquent, up from 4.4% last quarter.
Non-current rates for other capital sources remained more moderate.
0.9% of FHA multifamily and health care loan balances were 30 days or more delinquent, up from 0.8%.
0.9% of life company loan balances were delinquent, up from 0.7%.
0.5% of GSE loan balances were delinquent, up from 0.4%.
MBA’s CREF Loan Performance survey collected information on commercial and multifamily mortgage portfolios as of December 28, 2023. This month’s results build on similar surveys conducted since April 2020. Participants reported on $2.7 trillion of loans in December 2023, representing 58 percent of the total $4.6 trillion in commercial and multifamily mortgage debt outstanding (MDO).
If you’re in the market for a home, you may have come across the term “single-family home” and wondered what it means and if that is what you are looking to buy.
Generally, a single-family home refers to a freestanding home set on its own piece of property. It can be occupied by a single individual or a large family, as long as it’s occupied by a single household.
Owning a single family home comes with a number of benefits, including more privacy and space than other types of residential properties. However, this type of home also tends to come with a higher price tag and more responsibility. Here’s a closer look at what single family homes are and the pros and cons of buying one.
What Is a Single-Family Home?
Generally speaking, the term single-family home refers to a home that is designed for, occupied by, and maintained by one person or household. When you buy a single-family home, you will own both the home and the property it sits on. This is in contrast to other types of properties, such as condominiums (condos), where you only own the interior of your unit and share ownership of common areas with other homeowners in the complex.
In most cases, a single-family home is defined as one that is freestanding and not attached to homes owned by other individuals. However, the government has a broader definition. According to the U.S. Census Bureau, a single-family home includes fully detached homes, as well as semi-detached row houses and townhouses. In the case of attached units, the units must be separated by a ground-to-roof wall in order to be classified as a single-family structure. Also, these units must not share heating/air-conditioning systems or utilities.
In some places, a single-family home is defined in part by how many kitchens it has. Depending on zoning laws, adding a second full kitchen to an in-law’s apartment, for example, can cause a house to be redefined as a multi-family building. If you’re planning on doing this type of renovation, be sure to check local zoning laws beforehand.
Whether a home is classified as a single-family or multi-family home can have an impact on the type of mortgages you qualify for. Both single-family homes and two- to four-unit properties fall under residential lending guidelines. (A property with five or more units is considered commercial property.) You can use a conventional mortgage to purchase a home with four or fewer units, whether it’s a single- or multi-family home. If you’re buying a multi-family home with five or more units, you must use a commercial mortgage. Commercial mortgages have different terms than residential mortgages do. 💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.
First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.
Pros and Cons of a Single-Family Home
As you shop for homes, it’s important to consider the various advantages and disadvantages of a single-family residence.
Some of the advantages are:
• More space Single-family homes tend to offer more space than other types of housing, and it belongs to you alone. They may have large yards where children and dogs can play or where you can plant a vegetable garden. They may also have storage in attics, garages, or basements, which aren’t shared between multiple units.
• Privacy Single-family units that don’t share walls with neighbors offer more privacy. You are less likely to hear neighbors’ activities, and they are less likely to be bothered by yours.
• More design features Single-family homes may be available in a broader range of designs and layouts, from Cape Cods or colonials to ranch homes and contemporary designs. You can also make changes to the building or landscape design without input from neighbors with a shared interest in the space.
• Room to grow Single-family homes may offer you more options for additions if you have a growing family or if aging parents may come to live with you. For example, single family detached homes with larger plots of land may allow additions that wouldn’t be possible in condo units.
• May offer higher appreciation Single-family homes tend to appreciate in value more than condos and townhouses.
• Option to rent As the sole owner of a single-family home, you have the option to rent out the house if you decide to move and wish to hang on to the property.
While these factors are attractive, it’s important to weigh potential disadvantages of buying a single-family home as well. Here are some to keep in mind:
• More expensive Single-family homes tend to be more expensive than other types of homes. That can mean a larger down payment and higher closing costs, and your mortgage payments may be higher.
• More maintenanceUnless your single-family home is part of a homeowner association (HOA) that provides basic services, you’ll be in charge of all home maintenance like lawn mowing and roof repairs. You’ll either have to take the time to do it yourself or hire help.
• Possible HOA fees Planned developments usually require HOA fees to cover the upkeep of common areas and shared structures.
• Less income potential With multi-family homes, you have the option to live in one unit while renting out the others. This allows you to bring in regular income to cover the cost of the mortgage and maintenance expenses.
Finding a Single-Family Home
Before you start looking for a single-family home, you’ll want to first determine how much home you can afford. You might start by calculating mortgage costs and getting prequalified for a home loan; prequalification often only takes a few minutes and provides an estimate of how much you might be able to borrow and at what rate (without impacting your credit).
You’re probably already searching real estate listings online and noting the property types. You might also want to do some research on housing market trends, especially if you live in one of the nation’s real estate hot spots.
You may also want to engage a real estate agent. They have expertise in local housing and zoning laws, know whether a list price is fair or above or below average, and can help you negotiate the price of a home you’re interested in buying.
If there’s any question about how a house is zoned, you can often look up zoning information through a particular city’s website.
Recommended: First-Time Home Buyer’s Guide
Who Should Get a Single-Family Home?
Single-family homes are a good fit for people who can cover the higher price tag, want privacy and flexibility, and are willing to take on a lot of responsibility.
If you qualify as a first-time homebuyer, there may be help available to buy a single-family home in the form of down payment assistance and low- or no-interest loans.
If you’re looking for a more affordable home and don’t mind giving up some privacy, you might want to consider a condo or townhouse.
A condo is like an apartment but is available for purchase. These units share walls with neighboring units, but you generally won’t have to worry about maintaining the property.
A townhouse, on the other hand, has multiple stories and will share one or two walls with other units. Like condos, townhouses are typically less expensive than single-family homes. Unlike a condo, you’ll own the property that the townhouse sits on.
If you’re looking to invest in real estate, you might consider buying a multi-family home. While this will likely cost more than a single-family home, you may be able to recoup the added cost (and, over time, earn even more) by collecting rent from tenants. 💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.
If You’re Thinking of Purchasing a Single-Family Home, SoFi Home Loans Can Help
Single-family homes are one of the most popular real estate options and often what people envision when they think about achieving the dream of home ownership.
This type of property typically sits on a parcel of private property and doesn’t share walls with neighbors, affording you a high level of privacy. You generally have more control over making enhancements to your home than you have with other types of properties, and usually have access to extra storage, including exterior storage space like a shed or garage.
However, don’t forget to consider the added responsibilities and costs when deciding on the right type of home for you and your family.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
How much does a single-family home cost?
The median price for an existing single-family home — one that’s already standing, not new construction — was $387,600 as of November 2023, according to the National Association of Realtors.
How much do I need to build a single-family home?
The cost of building a single-family home (not including land) can range anywhere from $42,000 to $900,000-plus depending on the home’s type and size and where you build. On average, the cost to build a house in the U.S. is about $329,000.
Can you get a loan to build a single-family home?
If you’re planning to build a single-family home from scratch, you can apply for a construction loan. With this type of loan, money is usually advanced incrementally during construction, as the home-building project progresses. Typically, you only pay interest during the construction period. Once the construction is over, the loan amount becomes due, and it is converted into a regular mortgage.
Photo credit: iStock/Dean Mitchell
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Some Americans who are high earners, but not rich yet are opting for non-traditional mortgages.
Interest-only mortgages offer lower monthly payments, at least initially, but can be risky.
They’re best suited for buyers of higher-end property who invest their money elsewhere.
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With home prices and mortgage rates sky high, potential homeowners — even those with deep pockets — are looking for ways to ease the cost burden.
Some Americans who are high earners, but not rich yet, known as HENRYs, are opting for unusual interest-only mortgages that boost affordability, at least in the short-term. These loans allow the borrower to pay just interest and none of the principal for a certain number of years. The loans are generally reserved for more affluent buyers of higher-end property who can afford a sizeable down payment and have sufficient money saved.
There are some attractive benefits of this kind of loan. They offer lower monthly payments at first, which allow borrowers to invest the money they would otherwise spend to pay off their house on other, higher-return investments. They also allow borrowers whose incomes are expected to rise in the future to buy more expensive homes than they otherwise would be able to afford.
There are also higher risks than a conventional mortgage. Borrowers won’t gain equity in their home, beyond the down payment they made. They’re on the hook for potentially higher mortgage payments in the future, and if their home value declines, they could lose the equity they have or the ability to refinance. Some interest-only loans require borrowers to pay off the entirety of the principal once the interest-only period ends.
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When Sam, whose last name is known to Business Insider, and his wife were looking to buy a home in Brooklyn in the spring of 2022, the homes they liked largely exceeded their budget, which was between $2–$2.5 million.
But one day they got an unexpected opportunity. Their neighbors directly across the street from their rental apartment in Carroll Gardens were about to put their three-bedroom brownstone on the market. The house was exactly what they were looking for, except it was priced at $3.1 million. But their neighbors offered to sell it to them before putting it on the market. Without broker’s fees, the home would cost about $2.8 million.
Sam, a self-employed marketing consultant, was initially concerned the house was just too risky and expensive of a purchase. The future of New York City real estate was still somewhat unclear as many who fled the city when the pandemic hit were slow to return.
But when First Republic bank offered him and his wife a 40-year interest-only loan, they sprung for it. They paid a 20% down payment and locked in a low mortgage rate of between 2.6 and 2.7% for the first 10 years of the loan, and a guarantee that their rate would double at that point.
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Their monthly, interest-only mortgage payment is just under $5,000 per month, which is just a few hundred dollars more than they were previously spending on rent.
Eighteen months later, Sam and his wife are still happy with their decision. They can easily afford their payments now, are saving up for the future rate-hike, and Brooklyn real estate is booming. The couple thinks they’ll be in the house for fifteen or twenty years, at which point their kids will be through high school and they might downsize or leave the city.
“These days, it seems like a pretty safe bet that in 10 to 20 years from now, the value will be higher,” he said. “I don’t know if it’s going to skyrocket or be a little bit higher, but we don’t think it’ll go down.”
A deal for ‘sophisticated investors’
Sam and his wife are the target demographic suitable for an interest-only loan. But these mortgages can be very risky if a borrower doesn’t have sufficient funds to handle higher payments down the line, or the property loses value, in which caseborrowers have to be prepared for potentially higher interest rates after the initial stage of their loan is over.
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These loans are a “niche product” that should be reserved for high-end real estate purchases by borrowers who are “sophisticated investors,” said Chen Zhao, the head of economic research at Redfin. Since you’re not building equity in your home under an interest-only mortgage, those who take out these loans should be investing their money in other ways that are likely to give them a better return, Zhao said.
The proliferation of interest-only mortgages could also evenhurt buyers who can’t afford to take advantage of them. Because they allow affluentborrowers to buy more expensive homes, they can help inflate prices in already high-cost markets. Claes Bäckman, a researcher at the Leibniz Institute for Financial Research SAFE in Germany who has studied the introduction of interest-only mortgages in Denmark, says the loan type doesn’t significantly boost affordability or allow more young people to become homeowners.
“I think it will certainly help the buyers who can afford to get one of these, but if they are competing against other buyers who can also get an interest-only mortgage, they might not get much of a benefit in terms of affordability,” Bäckman said.
A history of predatory lending
Interest-only mortgages were much more common, especially for less-affluent borrowers, in the years leading up to the 2008 financial crisis. At the time, many homebuyers were offered risky loans they couldn’t afford, which ultimately led to the subprime mortgage crisis.
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After the financial crisis, the federal government passed regulations on risky mortgages, making interest-only loans much less common. But with home prices soaring and interest rates stubbornly high, buyers are again opting for riskier loans, including interest-only.
Hillary, whose last name is known to Business Insider but requested partial anonymity to protect her husband’s business, and her husband were victims of these predatory lending practices. In 2007, the couple took out an interest-only mortgage to buy a $585,000 home in San Diego. The house was down the street from Hillary’s motherand the couple wanted it to be their forever home, so they splurged. While their real estate agent warned them against taking out such a large, high-interest loan, the bank encouraged them to take on two loans without any down payment — one at 8% and the other at 9% interest.
When the financial crisis hit, Hillary’s husband, a commission-based financial advisor, saw his income plummet. Hillary, a self-employed photographer, also took a hit. Then the couple had a new baby. They were soon forced to take out loans to make their $4,000 monthly mortgage payments. When they asked their bank to modify the terms of the loan, it refused. The couple declared bankruptcy and ultimately sold the house in 2012 for just $365,000.
Looking back now, Hillary thinks she and her now ex-husband were too optimistic about their future income when they bought the house, but that her bank was reckless.
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“They clearly should never have given us a loan,” Hillary said. “But when you’re young and it’s the, quote, perfect home for you, you know, what are you supposed to do?”
She’s concerned that some buyers are now falling into a similar trap of believing they’ll be able to refinance their loans later for a better deal.
In the broader world of real estate, interest-only mortgages could be contributing to another crisis. These days, interest-only mortgages are increasingly popular among commercial real estate buyers. They made up 88% of new commercial mortgage-backed issuances in 2021 — an increase from 51% in 2013, The Wall Street Journal reported based on data from the company Trepp.
And it’s not going well for borrowers. Commercial mortgage defaults are on the rise. With interest rates so high, many office building owners aren’t able to secure new loans they can afford. In May 2023, Fitch Ratings estimated that 35% of pooled securitized commercial mortgages due between April and December of this year would be ineligible for refinancing.
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Consumer protection advocates are are concerned that homebuyers are increasingly opting for non-traditional mortgages that carry higher risks. Some borrowers are attracted to interest-only loans by the lower monthly costs, but aren’t prepared for worst-case scenarios, and to ultimately pay more to own their home.
“It’s a question of, do people understand that this is a product that’s going to be more expensive for them long term, or are they just enticed by the lower monthly payments?” Bäckman said.
Multichannel business model delivers double-digit growth in Q2 2023
MERIDEN, Conn., Aug. 10, 2023 /PRNewswire/ — In the second quarter of 2023, Planet Financial Group, LLC, parent of national mortgage lender and servicer Planet Home Lending, LLC and Planet Management Group, LLC, reported double-digit growth in origination, servicing and asset management.
Banks seeking to sell commercial-property loans are encountering a dried-up market with few options for an easy exit.
Lenders including Goldman Sachs Group Inc. and JPMorgan Chase & Co. have been trying to sell debt backed by offices, hotels and even apartments in recent months, but many are finding that tidying up loan books is no easy feat when concerns about commercial real estate have surged.
This year’s rise in borrowing costs has made commercial real estate one of the hardest-hit areas of the economy. Property sales, especially for office buildings, have slowed to a trickle, giving landlords and lenders few markers to determine the value of certain assets. In the absence of transactions, stakeholders are closely watching the loan sale market to see what price banks can ultimately nab for some of the loans.
Banks have been eager to sell what they can, at times to shore up liquidity or to avoid complicated situations that may crop up when a loan is maturing and needs to be refinanced. For some lenders, taking a slight haircut on the price may be better than running the risk that the lender has to foreclose and ultimately ends up stuck with the property, according to Gregory Hagood, president of SOLIC Capital, which has an investment banking practice.
“Even if most of these are performing loans today, they’re trying to reduce their exposure by selling loans at a discount as they head into a refinance cycle,” Hagood said. “A lot of these banks will say, ‘I’d rather take the hit there than take the hit on a foreclosure and have to deal with the asset after.'”
Goldman and JPMorgan, along with other banks including Capital One Financial Corp. and M&T Bank Corp., have sought to sell property debt in recent months, seeking buyers both for one-off sales and transactions for portfolios of loans, according to people familiar with the matter, who asked not to be identified citing private information.
While pressure is building on banks to reduce their commercial-property exposure, distressed loan sales are still relatively rare. Many banks are opting to hold onto the debt for longer and work out situations with different borrowers.
Hit the Numbers
With so few sales occurring, it’s been hard to figure out exactly what the loans are worth. On top of that, some sellers have become more cautious about what bids they’ll accept, especially after the spate of bank failures earlier this year. Too low of a price could spook investors and raise concerns about the health of the financial institution, according to Josh Zegen, co-founder of Madison Realty Capital, a non-bank lender.
“Some banks have tested the market on office loans and they just can’t hit the numbers,” Zegen said. “There’s too much of a bid-ask spread, and there’s really nothing to talk about because agreeing to the lower pricing would make these banks more insolvent.”
Given the banks’ caution about accepting too low of a price, some lenders have opted to entice buyers through other means. Seller financing has become one option, where the seller helps the loan’s buyer finance the purchase.
It’s become particularly challenging for debt tied to offices — the property type that’s seen its value plummet the most over the past 12 months. Job cuts and the rise in remote work have led to record vacancies across major cities, while higher borrowing costs have made financing more difficult.
“We don’t know yet where tenant demand shakes out, and in the absence of that, you can’t have stability in the market,” said Winston Fisher, a partner at New York-based real estate investment firm Fisher Brothers. “We’re a contractual income business. If you don’t know where that contractual income is going to stabilize, how do you value it?”
Shopping Loans
Capital One has struggled to offload a large office debt portfolio with a heavy concentration in the tri-state area including parts of New York, according to people familiar with the matter who asked not to be identified discussing private information.
Capital One Chief Financial Officer Andrew Young told investors in July that the bank had moved about $900 million of loans from its office portfolio to a “held for sale” designation as it seeks to offload the debt.
Earlier this year, Webster Financial Corp. sold an $80 million portfolio tied to offices and mixed-use properties in Connecticut, New Jersey and New York.
JPMorgan is exploring a sale of a $350 million loan that’s backed by Manhattan’s HSBC Tower, Bloomberg reported in July. The bank has approached potential buyers to sell the loan at par, while offering cheaper-than-market financing.
Spokespeople for Capital One and JPMorgan declined to comment.
Banks have also sought to sell debt on other types of real estate besides offices, such as apartments or hotels. Pricing has held up better for those property types, with apartment values dropping 16% over the past 12 months through July compared with a 27% decline for offices, according to real estate analytics firm Green Street. Hotel prices were unchanged over that time period.
Goldman has sought to offload hotel and apartment loans, according to people familiar with the matter, who asked not to be identified citing private information. Meanwhile, M&T is in the market with a hotel loan too, the people said.
Spokespeople for Goldman and M&T declined to comment.
Lenders that have found buyers for loan portfolios have used the deals to help shore up liquidity at a time of increased stress across the banking industry. PacWest Bancorp, for example, has been selling construction loans and other real estate debt.
Because recent loans at higher rates are more profitable, banks are becoming more inclined to get rid of low-yielding, high-maintenance “dead money” loans with limited prospects for returns, according to Will Sledge, senior managing director in Jones Lang LaSalle Inc.’s capital markets group.
“Liquidity is a prized possession,” Sledge said.
The industry is keenly watching one big potential sale that’s being managed by brokerage Newmark Group Inc. The Federal Deposit Insurance Corp. is seeking to offload about $60 billion of loans — many of which are tied to real estate — from the failed Signature Bank.
Walking Away
Banks are facing the prospects of getting stuck holding the properties in some situations. Large institutions, such as Brookfield Asset Management Ltd., Blackstone Inc. and an office landlord tied to Pacific Investment Management Co., have chosen to cut their losses on some buildings, defaulting on debt. In some instances, landlords have handed the keys back for certain properties.
Aareal Bank AG is working to sell debt on two Manhattan buildings where owners walked away. A unit of the bank is offering non-performing loans on two large offices, one in the Financial District and one in Midtown’s prestigious Plaza District, according to people familiar with the matter. A spokesperson for Aareal Bank declined to comment.
Even if banks are struggling to offload loans, some lenders are controlling their exposure to commercial real estate by halting origination of new debt. Banks including Fifth Third Bancorp have said that they’ve stopped originating office loans.
More deals for old loans would give better clarity on pricing, which could reveal just how different valuations are these days, according to Martin Nussbaum, principal of Slate Property Group.
“There’s a complete fear around office values and where they stand,” Nussbaum said. Repricing “could be a seismic shift in the asset class.”
Hawaii is an exciting place to call home. It offers incredible weather, scenic views, friendly people, and a slow-paced lifestyle. If you’re lucky enough to live or work in Hawaii, you might be looking for the best banks in the state.
While the Aloha State has fewer banks than other states, there are still plenty of reputable, member FDIC options available to you.
12 Best Banks in Hawaii
To make your search for a bank a bit easier, we’ve done some research and compiled this list of the best banks in Hawaii.
1. First Hawaiian Bank
First Hawaiian Bank, the oldest bank in the state, holds the distinction of having the most branches in Hawaii. This makes it a convenient choice for many people looking to open a checking account, as it provides three different options.
Their first option, Pure Checking, offers a straightforward, fee-free experience, complete with a complimentary debit card. The second, Priority Banking Gold, expands on these features by offering free checks and online bill pay, as well as discounts on loans.
For those seeking the most benefits, the Priority Banking Platinum provides an extensive list of perks, including a credit card with unlimited rewards and cash back, travel points, and no restrictions on redemption dates.
Beyond checking accounts, First Hawaiian Bank also caters to various other personal banking needs. They offer savings accounts, mortgage services, and wealth management solutions, among other things.
2. SoFi
SoFi serves as a top-notch alternative to traditional banking, catering to individuals seeking the convenience and flexibility of online banking. The SoFi Checking & Savings account offers a unique combination of checking account accessibility and high-yield savings account returns in a single, streamlined account.
There is no minimum balance requirement, no monthly fees, and no overdraft fees, positioning SoFi as a cost-effective solution for a broad spectrum of users. There’s also an enticing offer of earning up to $250 with qualifying direct deposits.
One of the most compelling aspects of SoFi is the impressive interest rates it offers. The savings account yields a 4.30% APY, while checking account balances earn 1.20% APY, both rates far outpacing those offered by most traditional banks. What’s more, deposits are insured by the FDIC up to $2 million, providing an added layer of financial security.
With SoFi Checking & Savings, accessing your money is both straightforward and convenient. Over 55,000 Allpoint® Network ATMs across the globe offer fee-free withdrawals, ensuring you can easily access your money whenever you need it.
3. Ally Bank
Ally Bank is an online bank that serves residents in every state, including Hawaii. It’s worth considering if you’re seeking an interest bearing checking account or competitive rates on high yield savings accounts, CDs, and money market accounts.
While deposit accounts are Ally’s bread and butter, the bank also offers mortgages, auto refinancing, and investment products. As an Ally account holder, you won’t have to worry about any monthly fees or minimum opening deposits.
Since Ally is an online-only bank, there are no local branches in Hawaii. Fortunately, it’s part of the Allpoint ATM network that will give you free access to more than 43,000 Allpoint ATMs. If you do use an out-of-network ATM, the bank will reimburse you up to $10 per month.
4. First American Trust
First American Trust operates one branch in Honolulu. If you have a particular interest in wealth planning, it should definitely be on your radar. It provides several wealth planning services, such as financial planning, retirement planning, and estate planning for individuals and families.
Its advisors can also help you set up a trust and protect your greatest assets. Additionally, First American Trust is a great resource if you’d like to build a diversified investment portfolio.
5. Bank of Hawaii
Headquartered in Honolulu, Bank of Hawaii is a regional bank and the second-oldest bank in the state. It serves local communities with a comprehensive suite of products and services as well as sponsorships and volunteerism. The bank’s lineup of personal banking products includes checking accounts, savings accounts, certificates of deposit (CDs), credit cards, personal loans, and insurance.
In addition, it supports small business owners with business deposit accounts, business credit cards, merchant services, and small business loans. The bank also specializes in investment services and long-term financial planning to help you meet your personal finance goals. If you’re interested in Bank of Hawaii, you can chat with a banker online or in-person at a local branch.
6. Central Pacific Bank
Central Pacific Bank has been around since 1954 and has physical locations in Hawaii, Oahu, Maui, and Kauai as well as mobile banking services. It was originally founded to help immigrants build a safe life.
Today, the Hawaii bank offers a wide range of products and services to individuals and small businesses in the Aloha State. Central Pacific Bank stands out for its diverse savings account options, high rates on CDs, and low minimum balance requirements.
It also provides personalized, high quality wealth planning services from a team of wealth advisors. You can download the bank’s mobile app to pay bills, send money through Zelle, check your online statements, set notifications, track your budget, and keep tabs on your financial activity.
7. CIT Bank
CIT Bank is a digital bank with several attractive products for Hawaii residents. Savings Connect is a savings account that offers a competitive interest rate you might not be able to find elsewhere.
Another savings account you may want to consider at CIT Bank is the Savings Builder. While the Savings Builder has a lower annual percentage yield or APY than Savings Connect, it can encourage you to save as you must deposit at least $100 per month from your paycheck or elsewhere to secure the highest APY.
Unlike many brick-and-mortar financial institutions, CIT Bank doesn’t charge monthly maintenance fees, overdraft fees, ATM fees, or excessive transaction fees. You can open a new account and manage it via the online portal or mobile app. If you have any questions or concerns, you can contact phone support on weekdays and Saturdays during select hours.
8. Hawaii National Bank
Hawaii National Bank is a local bank that made its debut in 1960 and has branch locations in Oahu, Maui, and Hilo. It offers several checking accounts, including the Household Checking, Personal Checking, 55+ Checking, Super NOW, and VIP Money Market Deposit. Even though some checking accounts come with monthly fees, the bank may waive them if you maintain a certain balance.
Savings account options include the traditional Personal Savings account with a variable, competitive interest rate, Kids’ Savings account for kids ages 5 to 17, and Christmas Savings account that can help you save for the holiday season.
In addition to checking accounts and savings accounts, you may turn to Hawaii National Bank for personal loans, credit cards, home loans, CDs, and retirement accounts. The bank also serves small business owners with deposit accounts, business loans, and commercial mortgages.
9. American Savings Bank
Known as the third-largest bank in Hawaii, American Savings Bank serves the Aloha State with a wide range of offerings. You can choose from three checking accounts, six savings accounts, and several credit cards with cash back rewards or points. American Savings Bank also offers CDs, student loans, mortgages, and credit cards.
If you open a checking account, you’ll reap the benefits of Overdraft Courtesy, which protects you from overdrafts that may occur from checks and electronic payments. Additionally, the bank’s advisors can assist you with investments and insurance.
If you become an American Savings customer, you may take advantage of online banking, which allows for mobile check deposit, automatic bill pay, Zelle payments, eStatements, and more.
10. Synchrony Bank
Synchrony Bank is an online bank you might want to explore as a Hawaii resident. With Synchrony, you can expect high interest rates on savings accounts and CDs, no monthly fees, a variety of credit card options from popular retailers, and reimbursements for out-of-network ATM access.
If you join the Synchrony Bank Perks Rewards program, you can earn elite status if you meet certain criteria. You’ll reach Diamond status, which is the top level if you deposit more than $250,000 or stay with the bank for five years. This status comes with perks like three free wire transfers per statement cycle and unlimited reimbursements for domestic ATMs.
11. Territorial Savings Bank
Territorial Savings Bank has served Hawaii customers since its inception in 1921. If you open a checking account, you’ll be able to earn interest as long as you deposit $100.
The bank also offers numerous CDs with competitive interest rates, special mortgage rates for first time homeowners, and discounts from local merchants, like hotels, car rental companies, and restaurants.
If you’re a small business owner, you may select from a number of business deposit accounts, business credit cards, and business loans.
12. Finance Factors
Headquartered in Honolulu, Finance Factors has 13 branches throughout the Aloha State. The bank’s deposit products are savings accounts, CDs, and retirement accounts.
It also specializes in a wide range of home loans like conventional mortgages, government-backed mortgages, jumbo mortgages, and investor mortgages. You can stop into a local branch or log into the online portal to manage your account.
Bottom Line
As you can see, there are a variety of banks in the Aloha State. Before you move forward with one, it’s a good idea to weigh the pros and cons of all your options. Factors like your particular banking needs and whether you prefer an online or in-person banking experience will help you make the best choice for your unique situation. Good luck with your search for the best bank in Hawaii.
Frequently Asked Questions
What is the largest bank in Hawaii?
First Hawaiian Bank holds the title as the largest bank in Hawaii, establishing a significant presence with a total of 49 branches scattered across the state. Founded in 1858, it boasts a long history and deep roots in the local community.
Should I choose an online bank or a traditional bank in Hawaii?
An online bank is your best bet if your goal is to land the best interest rate and lowest fees. However, if personalized service is important to you, you’d likely be better off with a traditional bank. Fortunately, most traditional banks offer mobile apps and online portals.
Is a credit union a good option in Hawaii?
If you find a credit union with the ideal loan or the products and services you need and qualify for membership, you may want to join it. But you may find a wider range of offerings at a bank.
Why are there no national banks in Hawaii?
National banks aren’t in the Aloha State due to its small population and the high cost of real estate. Smaller banks are your only option if you live or work in Hawaii. The good news is you’ll find many local banks that offer just as many products and services as big banks.