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Apache is functioning normally

It’s not uncommon for homeowners to take out a home equity line of credit (HELOC) behind their first mortgage to pay for home renovations or to pay off other high interest rate debt.

Or simply to take one out as a second mortgage to get the financing they need to purchase a home.

But the way HELOCs are currently structured, homeowners have a tendency to get into a lot of trouble, especially if monthly payments rise significantly after the initial 10-year draw period.

These days, most HELOCs allow for a 10-year interest-only period, followed by a 10- or 15-year repayment period.

In other words, homeowners can make interest-only payments for a decade before actually paying back any of the money they borrow.

Once the draw period ends, they must begin paying back all the debt over a shorter term (not 30 years), which will result in much higher payments.

For example, a $25,000 line of credit set at 3.25% (current prime rate) would cost about $68 per month when making the interest-only payment.

Payment Shock = Payment Default

That payment jumps up to over $175 a month once you’re required to make the full principal and interest payment and pay it off in just 15 years. And that’s assuming the prime rate remains at a super low 3.25%.

If interest rates rise during the draw period, which they probably will, the payment shock will be even greater. Many of these products don’t have any periodic interest rate caps in place, just a max interest rate of say 18%.

Long story short, the greater the payment shock, the greater the default rate. It’s actually perfectly correlated, as you can see from the graph above from Equifax/WSJ.

Clearly this is a problem, especially if homeowners take out of these HELOCs when home prices are inflated, which many did during the past boom years.

In 2004, HELOCs outstanding increased 42%, so many of these products have now switched over to the fully amortized payment. These so-called resets pose a threat to the ongoing housing recovery, and many more are expected in 2015, 2016, and so on.

And with home prices still not back to peak levels, many of these homeowners are still in underwater positions, meaning their motivation to make a higher payment each month might be quite low.  Hello default.

Wells Fargo Is Ending Interest-Only on HELOCs

  • Most HELOCs have an interest-only option
  • For the first 10 years
  • Removing it will make the loans safer
  • Assuming the borrowers hold a balance long-term

To combat the possible repercussions of these nasty resets, Wells Fargo is getting rid of the interest-only option on its HELOCs.

Wells Fargo Home Mortgage Executive Vice President Brad Blackwell told the WSJ that “it’s the right thing to do for our customers,” and that they want to the lead the industry toward a “more responsible” product.

Additionally, he said they wanted to “fix a flaw in the product” that allowed monthly payments to rise significantly. Clearly this is also bad for Wells Fargo, which happens to hold billions in home equity debt.

So the move should help the bank as well. It also aligns with the new Qualified Mortgage rule, which banned interest-only first mortgages.

Lenders are still allowed to offer an IO option on home equity lines, and they probably will continue to do so because of the harsher rules on first mortgages. Consider it a loophole.

For the record, Wells will continue offering an interest-only option on HELOCs to wealthy customers who can handle any and all payment increases without batting an eye.

In the meantime, they still have to contend with $28 billion in HELOC resets from now through 2017. The bank noted that it reaches out to borrowers facing a reset to lessen the blow of a payment increase.

The San Francisco-based bank accounted for about 14% of all home-equity lending in 2013, making it the nation’s largest first and second mortgage lender.

Source: thetruthaboutmortgage.com

Apache is functioning normally

Wildfires are destructive and can be catastrophic for homeowners, especially those who are lower income. And unfortunately, fires are getting more frequent, larger, and stronger. The wildfire season in the western US has increased by more than 100 days since 1970, along with larger and more frequent fires. These fires are expensive, too; from 2017-2021, they have cost governments more than $90 billion and have dramatically altered landscapes in forests across the country. As such, it’s important to be prepared.  

Regardless of whether you live in a high fire-risk area, like Brentwood, CA, or somewhere with very little risk, such as Duluth, MN, these tips are essential. Climate change is accelerating, helping to prolong and intensify droughts and heat waves throughout the country. This creates a greater risk for wildfires anywhere in the US. So no matter where you live, read on for essential tips from Redfin to learn how to prepare for a wildfire. 

1. Clear the ignition zones around your home

First, it’s essential to create defensible zones around your home to reduce the fuel sources for a wildfire. This is called the Home Ignition Zone (HIZ), which is broken up into three subsections ranging from 0-200 feet away from your house. Here’s a quick breakdown of the zones.

Immediate zone (0-5 feet)

The immediate zone is the area directly adjacent to your home, including the structure itself and its immediate surroundings. This is the most important zone to take immediate action on. Make sure to clear your house first and then work your way around your property. The goal of this zone is to eliminate fire risk as completely as possible.  

  • Keep this zone free of all flammable vegetation and materials, especially anything underneath decks and between cracks in patios. Ideally, you shouldn’t have any vegetation in this zone.
  • If you have trees with long branches, make sure none of them get within five feet of your home. 
  • Clean roofs and gutters regularly to prevent a buildup of flammable debris.
  • Use non-flammable landscaping materials and high-moisture-content plants.
  • Store firewood, propane tanks, and other flammable materials away from this zone.
  • Make sure your home siding is at least six inches off the ground. 

Intermediate zone (5-30 feet) 

This zone acts as a buffer and is primarily focused on landscaping and creating breaks that can reduce fire spread. Depending on where you live, it may still be beneficial to keep vegetation to a minimum. 

  • Use “fire-resistant” plants that are strategically spaced to prevent the fire from spreading continuously.
  • Remove dead vegetation and prune trees regularly to keep them away from the ground (creating a separation between low-level vegetation and tree canopies). 
  • Space trees so they have a minimum of 18 feet between crowns and are no closer than ten feet from your home. 
  • You can have grass in this area, but it should be mowed to a maximum of four inches. 
  • If possible, create breaks with driveways, walkways, and lawns.

Extended zone (30-100 feet, 200 feet in sloped areas)

The goal of this zone is to disrupt a fire’s path, not eliminate it entirely. Landscaping should be maintained, but doesn’t necessarily have to be fire-resistant. 

  • Remove ladder fuels (vegetation that can carry a ground fire to treetops) by pruning and maintaining space between shrubs and trees.
  • Remove any vegetation adjacent to sheds or other small structures within this area.
  • Keep grass and other vegetation mowed to a short height.
  • Regularly remove dead plant and tree material.
  • Keep at least 6-12 feet between the canopy tops of trees.

2. Update your landscaping 

Landscaping plays a crucial role in preparing for a wildfire, especially in areas prone to wildfires, like San Bernardino and Riverside counties. Apart from creating a defensible space using the HIZ, there’s a lot you can do. Here are a few suggestions.

  • Plant selection: Opt for fire-resistant plants that are native to your region. These plants typically have a high moisture content, are low-growing, and don’t accumulate dead branches or leaves. Examples include succulents, some species of rockrose, lavender, and yarrow. Avoid plants that produce resins, oils, or waxes, as they can be highly flammable. 
  • Hardscaping: Use hardscaping elements like stone walls, pavers, concrete pathways, and patios to create firebreaks in your yard. These non-flammable elements can act as barriers, slowing or stopping the progress of a fire, and are great elements to add to your intermediate zone. 
  • Water features: Water features aren’t viable for every home, especially if you live in a drought-ridden region. However, if you are able to install them, consider ponds, streams, fountains, or even birdbaths. These can act as barriers to wildfires and can be a water source for firefighting if needed. 
  • Yard equipment: Avoid storing equipment with fuel still in the tank, such as lawnmowers, chainsaws, leaf blowers, and other gas-powered tools. 

3. Use fire-resistant building materials

You can retrofit your home to prepare it for a wildfire, but installing fire-resistant materials at the outset is much more cost-effective. 

Regardless of when you fireproof your home, it’s important to note the Flame Spread Index, which measures how far and how fast flames spread across the surface of a material. There are three ratings from best to worst: Class 1 (A), Class 2 (B), and Class 3 (C). Ideally, most of your home would exclusively contain materials in the Class 1 and 2 categories. 

Ensure you never use non-treated materials, especially not fiberboard, hardboard, and plywood. Additionally, some types of wood are more flammable than others, such as pine, oak, and douglas fir. Here’s a list of essential fire-resistant building materials to consider.

  • Roofing and siding: Metal sheeting, fiber cement, slate tiles, fiberglass-based asphalt shingles, and brick and stone. Brick and metal are some of the most fire-resistant materials commonly available.
  • Decking and framing: Composite wood, Structural INsulated Panels (SIPs), aerated concrete, steel, and Fire-Retardant Treated (FRT) wood. You can treat wood after installation, as well as purchase pre-treated wood. 
  • Windows and doors: Insulated, double pane, tempered glass windows; steel; fiber-cement; and fire-rated wooden doors. Fire-rated doors have cores that can limit fire and smoke for up to three hours, although 20 minutes is the most common. If you have a garage door, metal is the best choice. 
  • Insulation: Fiberglass, radiant/reflective barriers, foam, and mineral wool. There are many types of wool to choose from, including glass, rock, and slag. It’s also important to note that reflective foil insulation conducts electricity.

4. Consider Insulated Concrete Forms (ICFs)

Insulated Concrete Forms (ICFs) are a material and system that consists of hollow blocks or panels made of insulating materials, which are stacked to form the shape of the walls of a building. Once in place, these forms are filled with concrete, creating a solid, insulated wall system. ICFs are extremely energy efficient, durable, and resistant to various natural disasters, including wildfires. 

ICFs have unique properties that can withstand wildfires for up to four hours. While a bit more expensive than traditional wood, if you’re building a new home, ICF may be the most fire-safe option.

5. Install fire alarms and monitors

Your next step should be to know when a fire is happening in your home. In the case of a wildfire, you’ll likely know when it’s coming, but it’s still useful to install alarms and protection, so you can help limit the spread to other homes. And without fire detection, you are at increased risk of harm and damage to your home.

  • Smoke detectors: Smoke detectors are legally required. Ensure you have working detectors in every room of your home, test them monthly, and replace batteries annually. Make sure to follow your local building codes when installing and maintaining detectors. 
  • Heat sensors: These can detect unusual spikes in temperature and can be especially useful in garages or workshops where you might store flammable materials.
  • Remote monitoring: Some smart security systems can pair with smart smoke and carbon monoxide detectors to offer remote fire monitoring, allowing you to be alerted even if you’re not home. This can be crucial for early detection and response.

6. Purchase and maintain fire extinguishers

Home fire extinguishers may not be useful for large wildfires, but they can help suppress a fire and prevent it from spreading further. While not required for one- and two-family homes, they are invaluable tools. 

Maintaining extinguishers is crucial. Every month, check the pressure gauge to ensure it’s in the “green” zone. And once per year, have a professional inspect it. After any use, recharge or replace the extinguisher. Over time, even if unused, extinguishers degrade; typically, you should have them served every six years and replaced every twelve

7. Invest in a home sprinkler system

Home sprinkler systems can be an invaluable tool to reduce your risk of fire damage inside and outside your home. There are two types of sprinkler systems that can be useful during a wildfire: interior and exterior. 

Home sprinkler systems are similar to those found in commercial buildings but are tailored for residential environments. They can play a crucial role in saving lives, reducing property damage, and providing an added layer of safety to homeowners. Homes that had 

Exterior sprinkler systems, sometimes called “wildfire sprinkler systems” or “defensible space sprinklers,” are designed to wet the home and its immediate surroundings. This helps prevent wind-blown embers, radiant heat, and direct flame contact.

The benefits of these systems usually outweigh the costs of installation and use, as damage from a fire or firefighters is often far worse. Remember that your system must also be able to deliver water for up to eight hours straight. So if you live in a region parched by drought, this may be impossible. And, if you live in a windy area, an exterior sprinkler system may not be able to reach as far or as consistently. 

8. Install a generator for emergencies

Power outages are common during wildfires, as fires can damage infrastructure and utility service providers may perform Public Safety Power Shutoffs (PSPS) to prevent further fire spread. 

A generator can provide power to a home or facility during these outages, ensuring that essential appliances and systems remain operational. This can include supporting medical equipment, running external sprinkler systems, and charging communication devices. 

It’s also critical to keep an AM/FM/weather radio and battery-powered lanterns on hand for government communications. 

9. Keep your emergency kit stocked

Your emergency kit should contain essential supplies that will last at least 72 hours. This includes food, water, a first aid kit, tools and supplies, clothing, shelter, identification, cash, and special needs products. It’s also critical to keep an AM/FM/weather radio on hand to communicate with authorities and emergency responders.

10. Make sure your community is prepared

Protecting your own home is the first step, but is ultimately futile if your neighbors aren’t protected as well. Even if you install state-of-the-art sprinkler and fire detection systems on your property and follow the HIZ guidelines perfectly, water can run out, the power can go out, and fires can spread from your neighbor’s house more quickly than an exterior sprinkler system can put them out. 

To truly reduce your wildfire risk, it’s critical to talk to your neighbors and ask them to remove fire risks. For a community to survive a wind-driven fire, each household must properly prepare. One of the primary ways fires spread is by jumping from an unprotected house to a protected house. This means that even if you prepare your house using the HIZ, if your neighbors aren’t prepared, your home is still at risk.

Preparing for a wildfire hinges on small daily tasks and community responsibilities more than individual action. Communities must prepare together to reduce the risk of burning together. 

How to prepare for a wildfire: final thoughts

While there is no surefire way to protect your home from wildfires, preparing individually and as a community can help reduce risk. While reducing your risk is the best short-term action, the best long-term solution is to reduce your carbon footprint and slow the effects of climate change. If you have any questions, contact your local authorities or utility company.

This article is for informational purposes only. Individual results may vary. This is not intended as a substitute for the services of a licensed and bonded home services or fire prevention professional. Always seek expert advice and follow all official guidance before, during, and after a fire.

Source: redfin.com

Apache is functioning normally

The nationwide delinquency rate decreased for the second consecutive quarter, dropping to a decades-long low, the Mortgage Bankers Association said.

The share of outstanding mortgages for one-to-four unit properties with a missed payment stood at a seasonally adjusted 3.37% at the end of June, according to the MBA. The percentage reflected a 19 basis-point drop from 3.56% at first-quarter’s end, the second lowest delinquency rate at the time since at least 1979, when the MBA first began reporting the data. At the end of second quarter 2022, the national delinquency rate was 3.64%.

rawGenerally favorable economic data, including wage growth and historically low unemployment figures, are helping to keep borrowers from distress, according to Marina Walsh, MBA vice president of industry analysis.

“Buoyed by a resilient job market, homeowners are continuing to make their mortgage payments,” she said in a press release. 

Second-quarter numbers fell across all primary mortgage types: conventional loans and government products guaranteed by the Federal Housing Administration and the Department of Veterans Affairs. The delinquency rate for conventional mortgages declined 15 basis points quarter-to-quarter to 2.29%, its lowest since 2004. For VA-backed loans, the share of delinquent mortgages relative to overall volume was 3.7%. The FHA rate came in at 8.95%, reflecting a 32 basis point reduction. 

On an annual basis, both conventional and VA delinquency rates also dropped by 35 and 52 basis points, respectively. But the share of FHA-guaranteed loans in arrears grew by 10 basis points, a possible sign of economic and credit stress hitting some segments of consumers, Walsh said.

‘Delinquencies are rising for other forms of credit such as credit cards and car loans,” she said. “As the economy slows and labor market cools, homeowners with FHA loans are likely to feel the distress first.” 

The MBA’s report comes after Federal Reserve economists revealed this week credit card balances surpassed $1 trillion for the first time ever. Late payments on credit cards also rose compared to a year ago but showed more recent signs of moderation.

MBA calculates delinquencies based on the volume of loans at least one payment past due but does not include mortgages in the foreclosure process. In its research, MBA asks servicers to report loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage.

By stage, the rate of mortgages with payments 30 days past due came in at 1.75%, while the 60-day delinquency share stood at 0.55%. Loans delinquent by 90 days or more equaled 1.07%. 

Foreclosure numbers, while not included in the MBA’s delinquency data, appeared to be on a similar downward track. The total share of mortgages going through some stage of the foreclosure process was 0.53% as of June 30, down by 4 and 6 basis points quarterly and annually. New foreclosure starts in the second quarter inched down to a rate of  0.13%, 3 basis points lower from where they sat at the end of March.

The MBA’s findings corresponded somewhat to similar trends reported by real estate business intelligence provider Attom, who this week said both starts and foreclosure inventory were decreasing this summer. But Attom found the total number of properties with a foreclosure notice against them higher on a year-over-year basis.

Source: nationalmortgagenews.com

Apache is functioning normally

If you’re wondering how popular non-QM lending is these days, the answer is not very.

The National Association of Realtors, which conducted its 2nd Survey of Mortgage Originators back in April, revealed today that just 1.6% of loan production in the first three months of the year was considered non-QM.

The overwhelming majority (90.1%) of mortgages originated by lenders who responded to the survey were Qualified Mortgages with Safe Harbor, those which provide the most legal protection to lenders in the event of foreclosure or another loan issue.

Another 8.3% were Qualified Mortgages with Rebuttal Presumption, those which cover higher-priced loans that exceed certain APR thresholds. These QM loans provide less protection in the event of litigation or a buyback.

Most Lenders Have Adapted to QM, Though Rules Have Prevented Some Lending

Despite the low volume of non-QM loans, nearly three-quarters (73.7%) of lenders indicated that they had fully adapted to the new Qualified Mortgage rules.

However, since the rules went into effect at the beginning of 2014, nearly half of lenders said they have been unable to close mortgages as a result.

It’s unclear why or how many loans weren’t closed, but it could be related to debt-to-income ratio issues (max 43%) and/or points and fees (max 3%) issues.

Some lenders have buffers in place to deal with these new limits. For example, the maximum back-end DTI ratio for a QM loan is 43%, but some lenders are limiting it to 41% or 42% in case a mistake is made.

Of course, loans backed by Fannie and Freddie, along with FHA loans, are exempt from the DTI rule, so not all lenders limit DTI ratios to 43% or lower.

As far as the max points and fees of 3%, some lenders have implemented buffers of 2.8% or 2.9%, just in case something unexpected comes up.

If fees were an issue, most lenders simply reduced them, or outsourced title insurance and other services that would have otherwise been handled by an affiliated company. Others simply chose not to originate the loan at all.

Most non-QM lending these days involves interest-only options or jumbo loans with DTI ratios north of 43%, seeing that they’re not exempt from the rule like conventional loans.

But these non-QM products are reserved for high-quality borrowers, not just anyone, and most are staying on the originating lender’s books for now.

As I noted a couple months back, banks have come up with some pretty creative ways to offer aggressive financing without breaking the QM rules, including the ability to get a high LTV QM loan just days after foreclosure or short sale.

So with the exemption of the DTI rule on most loans and the ability to stay in the QM realm while still offering low down payments with flexible terms, there’s not much incentive to go outside of QM.

Only time will tell if more lenders get into the space, but as of now it seems like more of a specialty product designed for high-net worth individuals.

Still, Wells Fargo, the top mortgage lender in the country, believes non-QM lending could eventually represent five percent of all mortgages originated by the bank.

Source: thetruthaboutmortgage.com

Apache is functioning normally

Apache is functioning normally

Banking today has a lot of one-click convenience, and you may hear the terms EFT and ACH used interchangeably. There is, however, a key difference between these two acronyms: ACH is one kind of EFT.

To understand this better, first know your definitions. Automated Clearing House (ACH) is a national network linking U.S. financial institutions. This electronic system allows them to debit money from one account and then credit it to another. ACH payments are one variety of EFT, or electronic funds transfer. The term EFT includes additional methods of moving money electronically, such as wire transfers.

So all ACH transactions are considered EFT, but not all EFTs are ACH.

Keep reading to learn more including:

•   Which payments are considered ACH?

•   What are some other EFT payment methods?

•   How do EFT vs. ACH vs. wire transfers compare?

ACH Transfers

ACH stands for Automated Clearing House, a network governed by Nacha (National Automated Clearing House Association). The first ACH association appeared in 1972 in California; by 1974, multiple regional networks joined together to form Nacha, which has since overseen the ACH network nationally.

But what is ACH? Put simply, ACH is a type of electronic fund transfer (EFT) that allows individuals, corporations, and even the government to electronically move money from one bank account to another. It can be thought of as a hub that keeps funds flowing.

ACH payments work domestically; that is, among banks and credit unions within the United States. You may be able to send money via international ACH transfers, but other countries will have their own networks and governing bodies. Some countries do not have an equivalent network at all.

Funds first go to the Automated Clearing House, which then reviews the payments and releases them in batches throughout the day. For this reason, ACH transfers are not immediate. How long ACH transfers take can vary: Traditional ACH transfers can take one to two business days, but in recent years, Nacha has enabled same-day transfers for eligible transactions.

How Do ACH Transfers Work?

ACH transfers work thanks to a data file that includes information about a prospective payment. The file goes to the payor’s bank to the clearing house and then on to the payee’s bank, with details on the transaction. The funds get moved into the intended location, and the process is completed, transferring money from one account to another.

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How Is ACH Used?

Consumers and businesses can use ACH for a variety of purposes. For example, employers often use the ACH network for direct deposit. This enables them to deposit paychecks directly into employees’ bank accounts. When an entity, like an employer or the government, initiates the ACH process to send funds, this is classified as an ACH credit.

Individuals can provide bank account information to businesses, such as mortgage lenders and utility companies, to enable ACH debit transactions as part of their electronic banking. This means those companies are able to directly debit funds from the individual account using ACH as a form of electronic bill payment. Businesses and individuals may utilize ACH debit for autopay (recurring payments) or for one-time payments.

Even peer-to-peer (P2P) payment methods like PayPal and Venmo can utilize the Automated Clearing House network for electronic transfers. (When such services offer instant payments, they may charge a fee and use your credit card instead, so proceed carefully in these situations.)

Typically, the employer or merchant enabling ACH payments is the one to pay ACH fees.

Recommended: ACH Payments vs. a Check

What Is EFT?

Electronic fund transfers (EFTs) refer to a much broader range of electronic payments. ACH is a type of EFT, but EFT can also include payments like wire transfers, debit card payments, credit card payments, local bank transfers, instant P2P payments, and even ATM transfers. Electronic fund transfers can be domestic or international in scope.

The Consumer Finance Protection Bureau refers to electronic fund transfers as “any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape.”

Note: Another common term in finance is ETF (exchange-traded fund). The acronyms are similar, so it’s important to recognize that an ETF is an investment security, not a payment method.

How Do EFT Payments Work?

EFT payments may use the ACH network, or they may not. An example of a transaction that doesn’t use ACH is tapping or swiping your debit card to make a payment. It’s an instantaneous transfer of funds, without banking information being exchanged. The money is moved from your account to the store’s without any verification other than your PIN.

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Types of EFT Payments

EFT payment is a broad category, including common transfers like ACH and wire transfers. Here is just a short list of payment methods that can be classified as EFT:

•   ACH transfers

•   Wire transfers

•   Peer-to-peer payments (often done through ACH)

•   Debit card transactions (in person or online)

•   Credit card transactions (in person or online)

•   ATM transfers

•   E-checks

•   Telephone orders

Do EFT Payments Have Fees?

Typically, a merchant will pay a small percentage of a transaction’s amount for the privilege of using an EFT method. In some situations, you, the consumer, may be assessed a fee for using these methods. For instance, some merchants may add a surcharge for credit card vs. cash or debit card payments. Or if you pay by phone, there may be a surcharge. You should be alerted to these add-on costs, however, in advance, so you can decide if you want to proceed or not.

What Is the Difference Between ACH and EFT?

We’ve established that the key difference between ACH and EFT is that an ACH is a type of EFT. This table further breaks down the distinction:

ACH EFT
Availability Traditional ACH is available domestically (in the U.S.). Various types of EFTs can be used internationally.
Security Transfers pass through the ACH, which provides an added level of security over paper checks and debit card transactions. While ACH and wire transfers are less prone to fraud, other forms of EFTs (like debit and credit cards) can be susceptible.
Speed Can be same-day but never instant; may take multiple days. Can be instant.

ACH vs EFT vs Wire Transfers

When banking, you’re likely to hear about different ways to move money, including ACH, EFT, and wire transfers. Here’s a closer look: ACH is a type of EFT, but another common type of EFT is a wire transfer, which can be used to send money to someone’s bank account.

Wires can be both domestic and international and often have a fee for both the sender and the receiver, depending on the banks or transfer service agencies (like Western Union) involved. Wire transfers allow you to make an electronic payment “by wire,” such as through SWIFT, the Clearing House Interbank Payments System, or the Federal Reserve Wire Network. Wire transfers can take up to two days to fully process; international ones might take longer.

Should You Use Electronic Transfers?

Electronic transfers are common in modern banking. It is likely that you already utilize some form of electronic transfer, whether you receive a direct deposit from your employer like 96% of American workers, have your utility bills on autopay, pay for groceries with a debit card, or use peer-to-peer transfer apps to split the dinner bill or pay a friend for concert tickets. When you buy a house, the mortgage company may even ask you to wire funds in time for the closing.

The Takeaway

Automated clearing house (ACH) transfers are a type of electronic funds transfer (EFT), which allows for the direct debiting and crediting of funds from one bank account to another. Common examples of ACH include direct deposit from an employer into your bank account or an automatic bill payment debited from your account.

ACH is only one type of EFT, however; other types include wire transfers and debit and credit card payments, among others. These kinds of payments are commonly used today to keep funds flowing quickly and securely and play an important role in your banking life.

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FAQ

Is EFT the same as direct deposit?

EFT stands for electronic funds transfer. Direct deposit is one example of EFT.

Is ACH a wire transfer?

While ACH and wire transfers are similar transactions, they operate on different timelines and according to different rules. Wire transfers (especially domestic ones) can occur almost immediately, while ACH transactions can take a couple or a few business days.

What is the difference between ACH and autopay?

ACH is a method for electronically transferring funds between accounts. Autopay involves your setting up recurring payments of bills with a vendor. It typically uses the ACH network to complete those transactions.

Is ACH the same as direct deposit?

Direct deposit is one kind of ACH payment, but other kinds of ACH transactions are possible as well.

What is the best EFT payment method?

The best EFT method will depend upon various factors, such as timing and the technology you can most easily access or are most comfortable using.

Photo credit: iStock/Cecilie_Arcurs

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Source: sofi.com

Apache is functioning normally

[Editor’s note: This is an excerpt from the conclusions from the category product review series for the small landlord property management software sector. It is an answer to one of the questions posed in the mini-series introduction. Originally published in the Geek Estate Mastermind.]

It’s just a matter of time, particularly with Covid-19’s destruction on the short-term rental sector. Resources and capital are obviously not an issue, which is even more true after Silver Lake and Sixth Street Partners put another $1 billion in Airbnb to mitigate the fallout from the COVID-19 coronavirus. CEO Brian Chesky mentioned that “the future of Airbnb will focus on three core products: hosts, long-term stays and Airbnb Experiences.”

But going long-term does present a challenge with product confusion. That’s why I believe it will come via a joint venture with an existing long-term rentals portal rather than putting that inventory on its own site. Short- and long-term rentals are regulated differently, and there’s not a ton of overlap between DIY landlords doing both short- and long-term rentals, though Covid-19 is going to flip that a bit—as the short-term rentals market tanks due to travel restrictions, a portion of that inventory is moving into the long-term rental market. Zumper would seem to be a natural partner that aligns well. When that happens, they will nearly instantly rival Zillow as the place to go.

Longer-term rentals have already made its way into the product…in the form of a “Monthly Stays” tab on their primary search. Don’t say I didn’t give you advance warning.

Source: geekestateblog.com

Apache is functioning normally

Manufactured, HELOC, Automation, Home Insurance Products; Wholesaler Earnings and News; Inflation and Rates

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Manufactured, HELOC, Automation, Home Insurance Products; Wholesaler Earnings and News; Inflation and Rates

By:
Rob Chrisman

Thu, Aug 10 2023, 10:02 AM

A general discussion topic of those here at the MMLA conference in Michigan is the ups and downs we’re all facing. While mortgage applications drift down, and industry headcounts go down, and towns on Maui like Lahaina burn down, here’s something that isn’t going down: credit card debt. Talk to any underwriter or loan officer and they will tell you that loans have become more difficult, in part because of borrower debt loads, and sure enough credit card balances hit $1.03 trillion in the second quarter. And it ain’t going down. The number is up 4.6 percent from $986 billion in the preceding three-month period. For some good economist’s perspectives and interest rates in general, and one capital markets guy’s, tune in to “Unparalleled Insights into Trends and Bold Predictions” with Selma Hepp (CoreLogic’s Chief Economist), Michael Fratantoni (MBA’s chief economist), and Rob Chrisman” on Wednesday August 16th at 1PM ET/10AM PT, sponsored by TrustEngine. (Today’s podcast can be found here and is sponsored by SimpleNexus, an nCino Company, developer of mortgage technology uniting the people, systems, and stages of the mortgage process into one seamless, end-to-end solution. Hear an interview SimpleNexus’ Jay Arneja on closing technology initiatives, standardization, and digital transformation impacting the industry at the moment.)

Lender and Broker Software, Products, and Services

Mortgage leaders: The home insurance market is facing unprecedented volatility with carriers declining new business and increasing premiums to an all-time high. This can delay closings and even lead to DTI exceeding acceptable limits once accurate insurance costs are factored in. Matic, a home insurance marketplace built for the mortgage industry, helps borrowers save time by shopping multiple A-rated carriers at once and providing transparent pricing and coverage options. With flexible integration options for your company, Matic adds visibility and control, allowing lenders to foresee potential issues that could result in delayed closings. To learn how mortgage enterprises can gain efficiencies and add a new source of revenue with Matic, book a demo today. For more strategies on how to navigate the next phase of the housing market, get Matic’s latest report.

While free origination tools are tempting, they can come with hidden costs, including slowing down the mortgage process, increasing turn times, and halting productivity. Blend’s robust, comprehensive features, intuitive personalization, and automated workflows have proven results: 37% increase in transaction speed, 7 days cut from the loan lifecycle and 34% increase in pull-through. Click here to find out how Blend’s Mortgage Suite helps deliver value during every step of the process.

Problem! Your employees are wasting valuable time on tasks that aren’t generating your business revenue! Solution! Automate the time-consuming parts of the mortgage origination process with Velma Connector! Connector is an easy-to-use, rules-based automation tool that enhances your LOS! Need to put your ECOA process on autopilot? Connector takes the human element out of it. Want to know which loans need attention before it’s too late? Connector will send you the report. Want to automate borrower communications and info collection? Connector hits the send button for you. Stop wasting time and money on manual processes! Get Velma Connector today!

“Turn fixed costs into variable costs on a dime. When the market zigs, lenders need the flexibility to zag. Richey May Advisory brings the mortgage industry expertise and agility you need to convert fixed costs into variable costs. Our difference maker is your ability to outsource services to highly trained experts in a model that fits your needs. Whether that means loan-level accounting, advisory, business intelligence, compliance support, cyber services, internal audits, or underwriting automation, we have the tools, knowledge, and experience to deliver value and improve your financial performance unlike any competitor, anywhere. You’ll feel it almost immediately in your day-to-day operations. Even better, you’ll notice the difference in your bottom line. Reach out or visit our website to learn more about how we can help your operation.”

TPO Programs for Brokers and Correspondents

“Going to California MBA’s 2023 Western Secondary conference? Let’s get together and innovate! Deepen your product lineup with Planet’s Renovation and Manufactured Housing loan programs. Help your clients address today’s housing challenges by adding buydowns and USDA loans to your product mix. We make it easy and profitable to offer niche products. Reach out to Regional Sales Managers Tiffany Ta / 714-376-3214 or Jennifer Salsbury Caldwell / 909-225-8444 to explore new products to build your sales.”

Looking to gain a competitive advantage in today’s tough market? Lenders across the industry are catching wind of HELOC benefits and leveraging this tool to increase their book of business. Let us help you get a leg-up on the growing competition. Symmetry’s Piggyback, Post-close, and Stand-alone HELOCs are unlike any other HELOCs on the market, offering service, speed, simplicity, and pricing that stands up against the competition. Here are just five of the ways Symmetry’s HELOC solutions can help you win and keep more borrower business: cash for borrowers, jumbo avoidance, more second home business, increased condo business and client retention. Symmetry is ready to help you build a strong, resilient growth strategy: Contact your area manager or email us to get started!

Wholesaler Earnings and TPO News

Someone in residential lending is making some coin besides Freddie Mac and Fannie Mae ($2.9 and $5.0 billion respectively in the 2nd quarter).

Last week we learned that Rocket Companies (which, as the name implies, contains several companies) generated total revenue, net of $1.236 billion and net income of $139 million. “Generated total adjusted revenue of $1.002 billion and adjusted net loss of $33 million, or an adjusted loss of $0.02 cents per diluted share.”

Focusing on mortgage banking, “Rocket Mortgage generated $22 billion in mortgage origination closed loan volume with a gain on sale margin of 2.67 percent. Rocket gained purchase market share in the quarter, both year-over-year and quarter-over-quarter. Servicing book unpaid principal balance, which includes subserviced loans, was $504 billion on June 30, 2023. As of June 30, 2023, our servicing portfolio includes 2.4 million loans serviced. The portfolio generates approximately $1.4 billion of recurring servicing fee income on an annualized basis.”

Yesterday United Wholesale reported second quarter earnings with origination volume climbing to $31.8 billion, was up 43% compared to the first quarter and up 6.4% compared to a year ago. “Gain on sale margin compressed to 88 basis points in Q2 compared to 92 in Q1 and 99 a year ago. Purchase volume was 88% of total volume. UWM is guiding for third quarter volume to come in between $26 and $33 billion, and gain on sale to range between 75 and 100 basis points. Adjusted earnings per share came in at $0.11, which covers the $0.10 dividend. At current levels, the stock has a dividend yield of 6%.”

Speaking of UWM, “spec pools” are indeed a thing as certain investors pay up for certain loan attributes that the investor desires. In this case, UWM announced “sharper pricing on loans under $200,000, in addition to major enhancements to its Control Your Price program on non-agency Jumbo loans… UWM has removed loan-size pricing adjustments on loans under $100K and will be paying up premiums for market-based pay-ups on 30-year fixed conventional loans $200K and below.”

“UWM also announced it has increased the number of Control Your Price basis points brokers can apply to Jumbo loans, up to 40 basis points. UWM will also double or triple the Control Your Price basis points brokers apply on all non-agency Jumbo loans, up to 120 basis points.”

The FHFA, which is the conservator of Freddie and Fannie? FHFA Working Paper 23-04: How Do Students Value an Elite Education? Evidence on Residential Location and Applications to NYC Specialized Schools.

Pennymac is aligning with the adoption of Fannie Mae/Freddie Mac Form 1103, Supplemental Consumer Information Form (SCIF) as announced in FHA ML 2023-13. Use of the form is effective with FHA loan applications dated on or after 8/28/2023. View Pennymac Announcement 23-51 – FHA Mortgagee Letter 2023-13 SCIF for details.

CBC Mortgage Agency (CBCMA), a Native American wholly owned and federally chartered housing finance agency, has been approved by the U.S. Department of Agriculture to provide 30-year mortgage loans for borrowers outside of urban and suburban areas. Because the USDA loan program offers 100% financing, CBCMA enables correspondent lenders to help low- to moderate-income families in rural areas achieve homeownership. USDA loans provide low- and moderate-income borrowers with “the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas,” according to the agency. Up to 90% of the original principal amount of USDA-based 30-year notes are guaranteed by the agency.

AmeriHome Mortgage Announcement 20230707-CL summarizes previously published changes made during July, additional changes made with this announcement, and recent Agency and regulatory news.

Recently, the GSEs announced updated policies addressing critical repairs, deferred maintenance, and special assessments in projects with five or more attached units effective for loan applications dated on or after September 18, 2023. View AmeriHome Correspondent Product Announcement 20230801-CL for additional information.

PRMG Product Update 23-36 includes clarifications regarding FHA Standard and High Balance cash out transactions on Manufactured Homes, borrowers living rent free requirements on Investor Solution, self-employment verifications requirements of Ruby Jumbo and Express Jumbo. Additional updates and clarifications for Ruby Express and Onyx Jumbo.

Capital Markets

A slide in big tech equities yesterday due to President Biden’s Executive Order announcement prohibiting investment in certain Chinese technologies, as well as higher energy prices, helped mortgage-backed security “sentiment” and further flattened the yield curve, which at this point is to say it increased in inversion: “bear flattening.” Fortunately, MBS prices were not very reactive to the initial selloff in Treasuries which tightened spreads further. Investors squared positions ahead of today’s Consumer Price Index inflation data that will help shape the outlook for the Fed’s next steps.

What was the result of all this noise? The U.S. 10-year note and the 30-year bond prices, along with them MBS, pushed to fresh highs in the afternoon after the completion of the day’s solid $38 billion 10-year note offering while 5-year notes and shorter tenor prices slipped to fresh lows as the market prepared for July CPI. Some movement was driven by European equities rebounding after Italy walked back Tuesday’s windfall tax announcement, saying the tax would be capped at 0.1 percent of assets.

Today brings the CPI report for July, as expected. Headline CPI increased .2 month-over-month and () year-over-year when it was expected to increase 0.2 percent month-over-month and 3.3 percent year-over-year compared with 0.2 percent and 3.0 percent in June. The core reading, ex-food and energy, was .2, as expected, and 4.7 percent year over year versus 4.8 percent previously. Weekly jobless claims have also been released: 248k, higher than expected, 1.684 million continuing claims. Later today brings a Treasury auction of $23 billion 30-year bonds, and remarks from Atlanta Fed President Bostic and Philadelphia Fed President Harker. We begin the day with Agency MBS prices better by .125-.250 and the 10-year yielding 3.96 after closing yesterday at 4.01 percent after the inflation data.

Employment and Transitions

“Attention homebuilders and other potential joint venture partners! In today’s volatile market, a reliable lending partner is non-negotiable. Enter PrimeLending, backed by the strength of Hilltop Holdings and PlainsCapital Bank. We’re not just surviving; we’re thriving. With over 37 years in the mortgage industry, we bring more than stability and experience. We bring game-changing insight to boost your revenue. Join us at PrimeLending Ventures Management, LLC. Our proven track record, streamlined operations, and cutting-edge technology speak for themselves. Imagine this: together, we’re not just about making profits, but about evolving your brand. What are you waiting for? Reach out to Mike Matthews today to talk about a partnership built on shared success.”

Mortgage Capital Trading, Inc. (MCT®), the de facto leader in innovative mortgage capital markets technology, today announced the appointment of Steve Pawlowski as Managing Director, Head of Technology Solutions. Mr. Pawlowski will be responsible for expanding upon MCT’s proven record of driving efficiency and liquidity in the secondary market. “MCT was the fastest and most comprehensive technology partner I worked with on API development while at Fannie Mae,” said Steve Pawlowski, Managing Director, Head of Technology Solutions at MCT. “I couldn’t be more excited to apply my institutional expertise to this agile and committed technology development team.” Mr. Pawlowski will provide leadership on all MCT technology development. He brings extensive industry experience to MCT, including 30+ years with Fannie Mae’s Capital Markets and Single-Family Digital Products and Services organizations. Read the full press release or join MCT’s newsletter to stay up to date on recent news and educational content.

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Source: mortgagenewsdaily.com