Unemployment

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As unemployment numbers continue to rise, many employees are stressed about whether they’ll have a job next week or not.  Some have already, some have already lost their jobs and are scrambling to find new employment.   In this time financial planning is crucial.  This is a time when people are feeling and are desperately in need of guidance.  If you think that you are about to encounter a layoff,  you need to be focusing your attention on what can be controlled:  cutting expenditures, figuring out emergency funds, evaluating how to replace lost benefits, and making a game plan for the job search.

1. Save Emergency Cash

For those that are still employed but the future of their job is uncertain, I would encourage them to have at least 12 months of savings in cash.  Unfortunately many will not have enough.  But if they’re still employed and the emergency funds are not there, tapping into their 401(k) might be a viable option.  I know what you’re thinking.  Tapping into your 401k usually goes against all that I stand for.  And with this dismal market,  it might be a dangerous move, but;  if they become unemployed that option might now be available to them.

Typically if you’re still employed you’re allowed borrow up to half of your 401(k) balance, up to a maximum of $50,000.  Running these numbers you can guesstimate the period of how long you think it will take you to find a new job and then how much you would need to borrow to get you by until the new job is made.  If you borrow from your 401k while you are still employed then you avoid the 10% withdrawal penalty.  Sure there is some speculation in this move, but if you’re in a high demand field you may be able to use this move to your advantage.

Warning: If you do this, be sure to double check with your employer when you are due to pay it back.  It tends to vary from employer, but it could be due back immediately, within 60 days or some period greater.

2. Don’t Pay Off Debt

Another common misconception of after being laid-off is that most people want to take their savings or take their retirement savings and pay off debt, such as credit cards or even the 401(k) debt.  But in this type of market, paying off debt should not be the priority especially if you are unemployed.  The priority is to keep get your savings intact and making sure that you have plenty of cash on hand.  Sure credit card debt is bad, but just focus on making the minimum payment until you get your job situation in check.

3. Focus On Crisis Budgeting

If you’re used to going to shopping every weekend or eating out every other night at fancy restaurants, then most likely those changes are just around the corner. You need to sit down and seriously hammer out a budget of things that you need and things that you don’t need.

You may even consider working out two budgets, one for while you’re working and one for when you’re not working, so that way you can truly see how much you’re spending per month. And then, you can contemplate whether you can go on a cheaper cell phone plan, or cut your cable bill services. Sometimes adding that extra payment per month might not seem like a big deal, but $50 here and $50 there will surely add up, especially on a limited budget. Also, too, knowing which expenses you absolutely must be covered will help you realistically search for your future job.

4. Replace Lost Benefits

In the aftermath of a job loss, people should take stock of what benefits have been lost, which ones you are entitled to by law, and which ones may be portable.  how to continue health care coverage, especially if there are dependents.

Typically, employees are eligible to keep the same coverage through COBRA for at least 18 months. But, they may have to pay 102% of the cost of their insurance premium. If there premium have been subsidized by their employer, then that cost will be a rude shock.  COBRA can often be a good bridge choice, but it ends up being a health benefit. Families paying $200 a month for insurance under COBRA, it could be $1,000.  Luckily, the government just passed new law concerning COBRA benefits that qualifying period will be only responsible to pay for 35% of the benefit.  This comes at a time that should be very helpful to many that are facing layoffs ahead.

Many employers offer life insurance, long-term care insurance, disability policies and they may be portable as well. For another person or one who is not in good health, ability to take over the payments on existing $100,000 life insurance policy may save the worry of having to find another carrier. It’s better to keep it for a few months, although make sure they don’t need it, and drop it later.

5. Consider a Career Transition

Many people will be forced by an unforeseen job layoff to reassess what they want in their lives and what is meaningful to them. They may have to craft resumes, cover letters for the first time in years, and feel at a loss especially if they are switching to a new career path, which is an unfamiliar field.

If you haven’t jumped on the social media bandwagon, it’s time.  Consider Facebook, LinkedIn, Twitter and other social media sites to reconnect with old networks and also create new ones.  The more people that know your situation the better.   Also, consider starting a blog to showcase your talents. Need a good blog for inspiration?  Guess what, you’re already here.

by Steve Rhodes

Source: goodfinancialcents.com

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Warehouse, Appraisal, Non-QM, RON Products; Reverse Mortgages: Catch the Wave; Mortgage Apps Continue Decline

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Warehouse, Appraisal, Non-QM, RON Products; Reverse Mortgages: Catch the Wave; Mortgage Apps Continue Decline

By:
Rob Chrisman

3 Hours, 24 Min ago

A biologist, a chemist, and a statistician are out hunting. The biologist shoots at a deer and misses five feet to the left. The chemist takes a shot and misses five feet to the right. The statistician yells, “We got ’em!” Are you selling your house? Me neither. Few people are: there are only about 564,000 active listings. That’s about 11,000 per state. In California, where there are 58 counties, that is an average of less than 200 per county. In Wyoming, the least populated state, there are 58 counties so that’s 190 listings per county. Of course, averages don’t apply like that, but it is important to keep things in perspective, and the overarching issue is a continued lack of supply and a strong demand impacting prices, affordability, and sales numbers. Can lighthouses help? Since 2000 about 150 lighthouses have been transferred to new owners, about 80 given away at no cost to agencies, nonprofits or educational organizations willing to maintain them, and about 70 auctioned off for a total $10 million so far. This year, six lighthouses are up for offer. (Today’s podcast can be found here and this week’s is sponsored by Lenders One, one of the largest mortgage co-ops in the country with a diverse mix of 250+ member companies and providers of an end-to-end solution independent mortgage professionals trust to drive profitability and growth. Listen to an interview with Verisk’s Kingsley Greenland on climate risk, stress testing, catastrophe modeling, and macroeconomic policy.)

Lender and Broker Products, Software, and Services

“Have you found yourself digging through loan files to find price concession records while an auditor awaits? Have you ever wondered if your margin is better or worse than your peers? Have you been looking for a way to track how competitive your pricing is, in real time? Optimal Blue, a division of Black Knight, offers data and analytics tools that provide this actionable business intelligence, and more! Our granular rate lock data provides key insights into your business, as well as benchmarking against 42% of all rate lock activity. Reach out to Optimal Blue now to learn how our data and analytics platform can help you develop smarter, more profitable pricing strategies!”

Beer – it’s not just for drinking anymore. In fact, beer is just one of many everyday items with multiple uses that would surprise you. Want another? Remote online notarization (RON) isn’t just for originations anymore. Recently, servicers have discovered the benefits of using RON for loan modifications, partial claims and even assumptions. On average, servicers reduced the average cycle time from 21 days down to 7 days. While we all know that time is money, the reduction in cycle time and carry costs resulted in a savings of about $500 per loan. In today’s environment where we all need to find savings to help improve our margins this is an easy way to get there. Email Suzanne Singer or stop by NotaryCam’s booth 22 at NS3 in St. Louis next week to learn more about the many uses of RON.

“No one does Non-QM like Newfi Wholesale! Our newly expanded Non-QM product suite offers 90% LTV up to $1.5M, loan amounts up to $4M, 2-1 buydowns, DSCR (no minimum ratio) 1-8 units, and alt-doc solutions that make sense for your borrowers. Most of all, we have a passion to close deals and about 1/3 of all of our funded Non-QM deals have common-sense exceptions! In the words of one of the brokers who work with us: “Looking for an amazing Non-QM lender? Newfi is your go-to lender.” We offer industry-leading Non-QM pricing, technology, and product innovation. For more information contact SVP, Non-QM Development & Strategy Dan Bayer or 925-584-0579.”

Tired of slow, low-quality appraisals? Try The Appraisal Marketplace. The Marketplace allows you to fulfill appraisal orders directly from your LOS, without relying on an AMC or managing a panel. Even better, by leveraging real-time appraiser performance data, its “Uber-style” algorithm matches every order with the appraiser that’s truly right for the job. This gives you the fastest turn times, lowest revision rates & lowest fee escalation rates in the industry. Seriously. Learn more.

“CWDL is committed to empowering our clients and friends with mortgage industry-specific education and insights, even when it’s outside of our core focus on audit, accounting, and tax. So, when our clients mentioned they’d like to better understand the perspectives of warehouse bankers and how they evaluate lenders, we organized a panel of industry veterans to share their insights. Join us for our webinar on June 15 to “Meet the Warehouse Bankers,” as we discuss such topics as when and how to best communicate with your warehouse partners; how warehouse banks evaluate counterparty risk in their clients; what lenders should consider or plan for regarding M&A, a winddown or facility consolidation; and much more. This webinar is free and open to all lenders who are looking for more insight into their warehouse relationships. To register, contact Kasey English.”

Agencies, Investors, Lenders, and Reverse Mortgage Biz

The last time I saw a stat, 10,000 people a day were turning 62. And a lot of them have equity in their houses. The National Reverse Mortgage Lenders Association points out that, “Homeowners 62 and older saw their housing wealth grow by 1.95 percent or $226 billion in the third quarter to a record $11.81 trillion from Q2 2022, according to the latest quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index… The increase in older homeowners’ wealth was mainly driven by an estimated 1.95 percent or $268 billion increase in home values, offset by a 1.93 percent or $42 billion increase in senior-held mortgage debt.” So, if you’re looking for a growth business…

Need a Pre-Qual? Plaza’s Reverse Mortgage staff will run a complete analysis of your submitted information and send the findings back to you via e-mail, typically within a few hours. The analysis details available funds, interest rates, fees, and other loan information.

Plaza Home Mortgage posted Video Marketing to Seniors. And brokers can use Plaza’s Reverse Calculator to run scenarios and you’ll quickly and easily see how much borrowers could receive, no personal information required.

Fairway Independent Mortgage Corporation has had a reverse division for many years and has seen continued growth.

CrossCountry Mortgage (CCM) announced that it is expanding its reverse mortgage division by making additional investments, resulting in what it calls “enhancements.” “Borrowers heading into retirement are seeking solutions that will benefit their future. CCM’s newly established Reverse One Team offers a specialized network of advisors and tools for loan officers to become certified specialists in originating reverse mortgage loans.”

Reverse training and certification programs among “forward” lenders are increasing. Fairway Independent Mortgage Corp. and Guaranteed Rate, for example, offer pathways within their organizations for forward professionals to become certified in reverse mortgages. Broker shops including C2 Financial also maintain a reverse training and certification program.

PHH Mortgage delivers for the entire mortgage lifecycle: non-delegated, best efforts, mandatory, bulk MSR, and reverse.

While bringing more forward specialists up-to-speed with reverse origination practices can certainly help to expand an LOs or lender’s business, it is well known that anyone interested in the business must be aware of some of the specific differences inherent in originating the product when compared with more traditional, forward mortgage options. And a solid month, volume-wise, might only be one or two loans.

Anyone interested should check out Reverse Mortgage Daily, and think about the use of video in their marketing and consulting with client’s families. “Homeowners aged 55 and over increasingly embrace online video as one of their preferred ways to research and discover information…68% of Baby Boomers use YouTube to watch videos. Half of them watch videos more than once per week, and they’re watching news, educational content, and DIY tutorials.”

Capital Markets: Housing Prices Ramping Up

The bad news is that mortgage applications continue to falter. The good news is that we finally had a little rally yesterday as bond markets responded to weekend news that President Biden and House Speaker McCarthy reached an agreement to raise the debt ceiling. Rates had risen of late as fears of a U.S. default gained momentum. A default would force the Treasury Department to pay higher interest on its bonds to convince investors to stick around, with mortgage rates and other borrowing costs tending to follow Treasury rates.

In Federal Reserve news, New York Fed President Williams discussed inflation, the labor market, and the importance of price stability yesterday by saying, “Inflation remains too high, and high inflation is hardest on those who can least afford to pay higher prices for food, shelter, and transportation.” He explained that the U.S. is seeing signs of a gradual cooling in the labor market, along with a rebound in labor force participation. Still, unemployment nationally remains historically low, at 3.4 percent.

The first trading day of a shortened week was headlined by house price indexes. The FHFA Housing Price Index was up 0.6 percent in March after increasing a revised 0.7 percent in February. The index was up 4.3 percent year-over-year, with prices in many western states starting to decline for the first time in over ten years. The fastest growing states were South Carolina, North Carolina, Maine, Vermont, and Arkansas. The declining states included Utah, Nevada, California, Washington, and D.C. Separately, the Case-Shiller home price index rose 0.7 percent in March, suggesting that the decline in home prices that began in June 2022 may have come to an end. The S&P Case-Shiller 20-city Home Price Index was down 1.1 percent in March with big declines out West, and the Southeast remaining the country’s strongest region.

Today’s calendar kicked off with the usual mortgage applications from the MBA for the week ending May 26. Mortgage applications decreased 3.7 percent from one week earlier, with activity expected to decline again following last week’s increase in yields amid increasing odds of a 25 basis points hike at the June FOMC meeting. During the reporting period, 30-year mortgage rates hit new highs for the year and their highest since last November.

Later this morning brings Chicago PMI for May, Job openings from JOLTS for April, and Dallas Fed Texas services for May. Four Fed speakers are scheduled: Boston President Collins, Governor Bowman, Governor Jefferson, and Philadelphia President Harker. The latest Beige Book will be released in the afternoon ahead of the June 13/14 FOMC meeting. The rest of the week will be dominated by the jobs report on Friday, the last jobs report before the mid-June FOMC meeting. Fed funds futures currently see a 60 percent chance for another 25-basis point hike. We begin the day with Agency MBS prices better by .125-.250 and the 10-year yielding 3.65 after closing yesterday at 3.70 percent; 4.40 percent on the 2-year.

Employment and Transitions

“Are you an account executive looking to change it up!? Why not Kind Lending!? At Kind, our family of diverse and talented Kind Ambassadors are the driving force behind our new approach to the mortgage experience. We are focused on serving the broker community and their borrowers by providing an array of products, top-notch service by experienced and friendly professionals and superior resources to support their business model. Founded by Glenn Stearns in 2020, Kind Lending is one of the fastest growing mortgage lenders in the country, building partnerships with our customers, who ultimately become family and our reason why. At the heart of it all, our people believe kindness matters and a client’s positive experience is everything. Come grow with us! Contact Delfino Aguilar, SVP TPO Production (619.726.0377).”

Earlier this month Freddie Mac (OTCQB: FMCC) announced the winners of its Home Possible RISE Awards®. The annual program, RISE (Recognizing Individuals for Sustained Excellence), salutes Freddie Mac’s top clients across multiple categories for excellence with the Home Possible® mortgage, Freddie Mac’s affordable lending solution for very low- to low-income homebuyers. Hallmark Home Mortgage earned the Home Possible RISE Award for Greatest Volume. “I’m thrilled and honored that Hallmark Home Mortgage has been recognized with the Freddie Mac Home Possible Rise Award for the Greatest Volume in the Corporate Segment. This award is a testament to the hard work and dedication of our entire team, and we are incredibly proud of this achievement,” noted Deborah Sturges, CEO & Founder Hallmark Home Mortgage.

Evergreen Home Loans™ adds to its awards line up. This year, the company placed on the Puget Sound Business Journal Corporate Philanthropy List for the third year in a row. It honors the region’s corporate philanthropists and companies who have made significant contributions to the community through philanthropic work. “We are committed to making a meaningful impact in our local communities,” said Don Burton, Founder and CEO of Evergreen Home Loans. “And we are humbled by the recognition for this award.” As loan officers, you already positively impact lives and communities… Continue to do so with a company that helps associates give back, provides paid hours for volunteer work, celebrates individual growth, and truly lives its unique and award-winning culture. Visit the Evergreen careers page to explore current opportunities.

Are you a loan officer or mortgage banker frustrated with the constraints of retail lending? Tired of competing against lower rates, fees and closing costs? Then now’s the time to take control of your pipeline and career by making the switch to wholesale lending as an independent mortgage broker. Whether you’re looking to open your own brokerage or join a team as a loan officer, you can get up and running without missing a beat with support from the team at BeAMortgageBroker.com. You have nothing to lose and only clients, greater flexibility and compensation to gain.

loanDepot, Inc. has promoted Alec Hanson to serve as its chief marketing officer (CMO). Hanson will “lead a consolidated marketing team, overseeing the development of brand, digital marketing, and organic and digital lead generation campaigns that drive awareness and revenue growth while differentiating loanDepot’s marketing engine as a competitive advantage for loan originators. Hanson will also be responsible for the company’s originator-led field-level marketing capabilities.”

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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The Federal Reserve (Fed) on Wednesday raised the federal funds rate by another 75 basis points, to 2.25%-2.50%, delivering what was expected by most investors and economists in recent weeks. 

Designed to control persistent inflation, the decision comes amid slowing home sale velocity, as the housing sector is particularly interest-rate sensitive. 

“Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low,” the Federal Open Markets Committee said in a statement Wednesday afternoon.

To stimulate economic activity during the COVID-19 pandemic, the Fed maintained the federal funds’ rates at 0%-0.25% between March 2020 and March 2022, when it started a tightening monetary policy to slow inflation. 

So far, it has resulted in a cumulative 225 bps hike: 25 bps in March, 50 bps in May, 75 bps in June, a hike not seen since 1994, and today’s 75 bps. 

It brought rates back to the level of December 2018 – and marked an end to the easy money that gave rise to the hottest mortgage market in U.S. history. 

Prioritizing home equity solutions in a rising rate environment

The 2022 housing market has been underscored by interest rate spikes and refi decline and lenders are working hard to adjust to new borrower trends. HousingWire recently spoke with Barry Coffin about the ways lenders can capitalize on these trends by revving up their home equity solutions.

Presented by: ServiceLink

Surging prices drive the Fed. Inflation in the U.S. hit 9.1% in June, the highest level in 40 years, the Bureau of Labor Statistics reported on July 13. By then, the news raised the specter that the Fed would raise the benchmark rate by 75 or even 100 basis points today. 

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures,” the FOMC said. “Russia’s war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity.”

On Thursday, gross domestic product data will be released, and observers believe it will show that the U.S. economy grew marginally or shrank again in the second quarter, which many economists say officially marks a recession. The Biden administration has argued that two consecutive quarters of negative GDP does not constitute a recession.

Fed Chairman Jerome Powell echoed the administration’s talking points during a news conference following the committee meeting. “I do not think the U.S. is currently in a recession, and the reason is too many areas of the economy are performing,” he said, citing the strong labor market as an example. According to Powell, the Fed is trying to do “just the right amount (of interest hikes). We’re not trying to have a recession.”

Looking forward, Powell said the pace of new rate hikes will continue to depend on the incoming data and evolving outlook for the economy as “these are not normal times and there’s significantly more uncertainty now.”

“While another unusually large increase could be appropriate at our next meeting, that’s a decision that will depend on the data we get between now and then,” Powell said.      

In the housing market, the tightening monetary policy has brought volatility to mortgage rates. According to the latest MMS survey from Freddie Mac, after jumping 20 basis points in the previous week to 5.50%, purchase mortgage rates increased last week to 5.54%. 

This has reduced the number of sales and cooled housing prices.

Sales of new single-family houses in June fell 8.1% from May, to 590,000 at a seasonally adjusted annual rate, the U.S. Census Bureau and the Department of Housing and Urban Development reported on Tuesday. Pending home sales also fell 8.6% in June from the prior month, according to data released by the National Association of Realtors on Wednesday.

Although price cuts and contract cancelations are increasing, home prices have remained stubbornly high in housing markets across the country.

“Affordability is the biggest issue in the housing market today, and higher rates will make that worse on a monthly basis, even as the Fed does the important work of slowing down price growth,” said Skylar Olsen, Zillow’s chief economist, in a statement.  

“Because the housing sector is particularly interest-rate sensitive, it is one of the primary levers through which tighter monetary policy can slow economic activity,” Doug Duncan, chief economist at Fannie Mae, said in a statement. “We continue to forecast slowing home sales through the rest of the year as the Fed continues to raise interest rates and run off its balance sheet.” 

Source: housingwire.com

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The co-founder and CEO of a so-called “tech-enabled residential mortgage servicer” named Valon (formerly Peach Street) has warned we could be on the brink of another foreclosure crisis.

While real estate is flying high at the moment, it’s appears that two very different stories are unfolding at the same exact time.

On the one hand, the housing market has never been hotter, with supply at record lows and dwindling, while demand from prospective buyers skyrockets.

Meanwhile, home builders are playing catch-up, which has pushed property values to all-time highs, with a further 10% increase expected in 2021.

Then there’s the other story, which got some press early last spring when the pandemic took hold, but has since been somewhat ignored.

Nearly 3 Million Homeowners Have Their Mortgage Payments on Hold

  • Currently 2.7 million borrowers are taking part in COVID-19 mortgage forbearance
  • These programs essentially put payments on hold for up to 360 days
  • But once the forbearance ends the borrower must at least resume regular payments
  • This could lead to another wave of short sales and foreclosures if the economy doesn’t get back on track

There are 2.7 million U.S. homeowners in mortgage forbearance plans at the moment, which represents 5.38% of loan servicers’ portfolio volume, per the latest weekly report from the MBA.

These borrowers essentially have their payments on hold for up to 360 days due to a COVID-19-related issue, such as unemployment or reduced earnings.

It’s even worse for government-backed loans like FHA loans and VA loans, with the Ginnie Mae forbearance rate at 7.61%.

Simply put, there are millions of existing homeowners unable to make payments, and scores of prospective buyers unable to land a property due to supply constraints.

At some point, these two stories will merge, and it could land us right back in another foreclosure crisis, similar to what was seen back in 2008.

What Happens When the Mortgage Forbearance Runs Out?

  • Using a conservative estimate of 20% of borrowers in forbearance falling into foreclosure
  • We would be back at 2008 levels with a 1.8% foreclosure rate across all housing
  • This could lead to another downturn similar to what was experienced a decade ago
  • But better loan servicing and more efficient loss mitigation has the potential to curtail some of this negative activity

One thing that should concern any homeowner, prospective home buyer, and loan servicer (the entity that collects monthly payments) is what happens post-forbearance.

While there are a variety of solutions to pay back the forbearance, such as a partial claim or payment deferral, most expect the homeowner to resume regular payments.

That means they won’t necessarily have to pay back the missed payments right away (no lump sum necessary), but they’ll at least have to get back to making regular monthly payments.

If they’re unable to do that, possibly due to a shuttered small business or long-term unemployment (or COVID-19 illness), they may be offered a loan modification plan.

But for some, the reality is going to be the loss of the property, either via a short sale, deed-in-lieu of foreclosure, or straight up foreclosure.

Valon co-founder and CEO Andrew Wang told me that the “forbearance and foreclosure moratoriums were a temporary fix,” and that the “stockpiling of forbearance and foreclosures will come to a head when these leniencies are lifted.”

While he does believe government efforts can help us avoid a full-scale industry-wide crisis, there’s still a good chance many Americans will lose their homes.

He expects “some in the forbearance pool will be OK,” but others will need to “move to liquidation scenarios – nearly all of which requires a homebuyer to leave their home.”

That means another wave of short sales and foreclosures, similar to what was seen about a decade ago when home prices plummeted during the Great Recession.

“Even if a conservative 20% of the current loans in forbearance move forward as foreclosures, we’ll be back at that level,” he added, noting the comparison to the 1.8% foreclosure rate for all housing in 2008.

Disrupting the Stale Loan Servicer Model

  • Valon says the largest mortgage servicing software controls more than half of all U.S. residential loans
  • This effective monopoly has apparently driven servicing costs up nearly 250% in the past decade
  • Their mobile-first cloud driven platform can reduce costs and improve borrower’s access to loan information
  • A more empowered borrower working with a more efficient servicer could reduce foreclosures and help us avoid another crisis

So you might be wondering how Valon can help us avoid another foreclosure crisis?

Well, their mission is essentially to disrupt the stale loan servicing industry, which like all parts of the home loan process, was in dire need of a refresh.

Their mobile-first mortgage servicing software that is built in the cloud (Google Cloud specifically) can reduce servicing costs by 50% and increase borrower self-service capabilities.

These features include improved access to their home loan information and the ability to make payments from wherever they are using a simple interface.

They also believe their tech can eliminate lengthy paper-intensive processes associated with loss mitigation and potentially keep more Americans in their homes.

After all, there are lots of borrowers who never even know they have options to avoid foreclosure simply because of poor (or no) communication from their loan servicer.

And when you think about how much time a homeowner spends with their loan servicer (potentially the entire loan term) vs. their lender (a month or so), you realize the importance of getting it right.

Valon just raised $50 million in Series A Funding, led by Andreessen Horowitz, and gained Fannie Mae approval to service agency-backed residential mortgages.

They will use the proceeds to acquire more mortgage servicing rights (MSR), with commitments already in place to grow to roughly $10 billion in servicing volume this year.

Valon operates in 49 states, and expects to add New York to the fold later this year.

Not only do they think they can reduce servicing costs, which can in turn pass savings onto consumers, they believe a technology-enabled alternative can keep borrowers better informed.

And a better-informed borrower may know just that little bit more to actually keep their home, thereby helping us all avoid another full-scale crisis.

Source: thetruthaboutmortgage.com

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Save more, spend smarter, and make your money go further

Labor Day is a time to recognize the hard work we all put in year-round. Why not get away for the weekend? Here are some helpful tips to save money while you relax, plus a look at Labor Day’s origins and some fun facts.

Save more, spend smarter, and make your money go further

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Source: mint.intuit.com

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At long last, the White House and House Republicans have reached a tentative agreement to raise the debt ceiling. But a deal isn’t over yet: Congress still needs to vote on the deal – far from a guaranteed outcome – and President Joe Biden would need to sign it before the US defaults or misses a scheduled payment.Video above: House Speaker Kevin McCarthy speaks after debt ceiling agreement in principleEvery day that passes without a bill to raise the debt ceiling, the probability of the United States reaching the critical date that it can no longer meet its financial obligations steadily grows.If lawmakers fail to pass the tentative agreement, and they don’t raise the country’s debt limit by early June, the government may confront an unprecedented challenge: determining which bills to prioritize for payment as the Treasury Department grapples with insufficient funds. Debt vs. other payments If the United States doesn’t raise the debt ceiling in time, the Treasury may have to decide whether to make interest payments to its debtholders or to pay its non-debt obligations, such as Social Security, veterans’ benefits, unemployment insurance, food stamps, and running government organizations like the military and the US Centers for Disease Control.The United States government makes millions of payments each day, but the overall economy would pay a far greater price if it were to miss payments on its debt, according to Mark Zandi, the chief economist at Moody’s Analytics. Moody’s Analytics is separate from Moody’s Investor Service, the credit rating agency.If the United States defaults on its debt, it would undermine faith in the federal government’s ability to pay all its bills on time, affecting the government’s credit rating and unleashing massive turbulence in financial markets.Countries with lower credit ratings face higher interest rate costs than those that are viewed as more trustworthy borrowers. The three largest credit rating agencies – Moody’s Investor Service, S&P Global Ratings, and Fitch Ratings – rate borrowers based on their perceived ability to pay back debt. If America’s credit rating were downgraded, that could raise borrowing costs for millions of Americans, sending mortgage, personal loan and credit card rates higher. It could make business’ borrowing costs rise and lead to layoffs – and ultimately a recession.What gets prioritized?Absent a bill passed by Congress and signed by Biden, Treasury will likely do everything in its power to avoid a debt default.In contrast to debt payments, government payments like Social Security or federal worker salaries aren’t considered debt instruments, so they are less likely to come into play when the agencies rate the United States’ debt. Zandi acknowledged that a government decision to pay back bondholders, including foreign governments like China and Japan, over an elderly Social Security recipient will likely be politically unpopular. However, he believes the government would try to prevent a debt default for as long as it can. “The reality is, if they don’t do that, then the economy is going to evaporate, the budget deficits are going to explode, and our interest expense is going to rise because investors are going to demand higher rates,” Zandi said.“A grandmother 10 to 20 years from now looking for a Social Security check will be much less likely to get one. At least not one as large because we’ll be in a much more precarious financial situation.”Treasury Secretary Janet Yellen, however, has not said what the Treasury Department would do if the country hits the so-called X-date, when the government can no longer meet all its obligations. In March, she called prioritizing payments “effectively a default by just another name.”Treasury will not be able to make everyone happyOn Friday, Yellen updated her estimate of the X-date, to June 5.Though prioritizing debt payments might stave off an even-greater economic collapse, the United States may not emerge unscathed.In 2011, then-Treasury Secretary Tim Geithner compared the government picking and choosing which bills to pay to a homeowner who pays their mortgage while pushing off their car loan and credit card bills: while that key housing expense is taken care of, that person would likely still have damaged credit.Betsey Stevenson, a professor of economics and public policy at the University of Michigan, said no matter which payments Treasury decides to put first, the agency will likely be sued by those left behind. “What should Treasury do? Should it issue new debt it’s not authorized to issue? Should it fail to pay a bill it’s required to pay? Should it fail to honor the debt that the US government has issued? There is no clear legal answer,” she said.“Treasury doesn’t really want to answer that question, and they don’t really want to be in that position.”

At long last, the White House and House Republicans have reached a tentative agreement to raise the debt ceiling. But a deal isn’t over yet: Congress still needs to vote on the deal – far from a guaranteed outcome – and President Joe Biden would need to sign it before the US defaults or misses a scheduled payment.

Video above: House Speaker Kevin McCarthy speaks after debt ceiling agreement in principle

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Every day that passes without a bill to raise the debt ceiling, the probability of the United States reaching the critical date that it can no longer meet its financial obligations steadily grows.

If lawmakers fail to pass the tentative agreement, and they don’t raise the country’s debt limit by early June, the government may confront an unprecedented challenge: determining which bills to prioritize for payment as the Treasury Department grapples with insufficient funds.

Debt vs. other payments

If the United States doesn’t raise the debt ceiling in time, the Treasury may have to decide whether to make interest payments to its debtholders or to pay its non-debt obligations, such as Social Security, veterans’ benefits, unemployment insurance, food stamps, and running government organizations like the military and the US Centers for Disease Control.

The United States government makes millions of payments each day, but the overall economy would pay a far greater price if it were to miss payments on its debt, according to Mark Zandi, the chief economist at Moody’s Analytics. Moody’s Analytics is separate from Moody’s Investor Service, the credit rating agency.

If the United States defaults on its debt, it would undermine faith in the federal government’s ability to pay all its bills on time, affecting the government’s credit rating and unleashing massive turbulence in financial markets.

Countries with lower credit ratings face higher interest rate costs than those that are viewed as more trustworthy borrowers. The three largest credit rating agencies – Moody’s Investor Service, S&P Global Ratings, and Fitch Ratings – rate borrowers based on their perceived ability to pay back debt.

If America’s credit rating were downgraded, that could raise borrowing costs for millions of Americans, sending mortgage, personal loan and credit card rates higher. It could make business’ borrowing costs rise and lead to layoffs – and ultimately a recession.

What gets prioritized?

Absent a bill passed by Congress and signed by Biden, Treasury will likely do everything in its power to avoid a debt default.

In contrast to debt payments, government payments like Social Security or federal worker salaries aren’t considered debt instruments, so they are less likely to come into play when the agencies rate the United States’ debt.

Zandi acknowledged that a government decision to pay back bondholders, including foreign governments like China and Japan, over an elderly Social Security recipient will likely be politically unpopular. However, he believes the government would try to prevent a debt default for as long as it can.

“The reality is, if they don’t do that, then the economy is going to evaporate, the budget deficits are going to explode, and our interest expense is going to rise because investors are going to demand higher rates,” Zandi said.

“A grandmother 10 to 20 years from now looking for a Social Security check will be much less likely to get one. At least not one as large because we’ll be in a much more precarious financial situation.”

Treasury Secretary Janet Yellen, however, has not said what the Treasury Department would do if the country hits the so-called X-date, when the government can no longer meet all its obligations. In March, she called prioritizing payments “effectively a default by just another name.”

Treasury will not be able to make everyone happy

On Friday, Yellen updated her estimate of the X-date, to June 5.

Though prioritizing debt payments might stave off an even-greater economic collapse, the United States may not emerge unscathed.

In 2011, then-Treasury Secretary Tim Geithner compared the government picking and choosing which bills to pay to a homeowner who pays their mortgage while pushing off their car loan and credit card bills: while that key housing expense is taken care of, that person would likely still have damaged credit.

Betsey Stevenson, a professor of economics and public policy at the University of Michigan, said no matter which payments Treasury decides to put first, the agency will likely be sued by those left behind.

“What should Treasury do? Should it issue new debt it’s not authorized to issue? Should it fail to pay a bill it’s required to pay? Should it fail to honor the debt that the US government has issued? There is no clear legal answer,” she said.

“Treasury doesn’t really want to answer that question, and they don’t really want to be in that position.”

Source: kcra.com

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Is a business degree worth it? There are plenty of benefits to earning a business degree. In this guide, you will learn is business a good major for you.

This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.

A business degree can open up doors to many different career paths and can give you the skills you need to be successful in the world of business. However, not all business degrees are created equal. There are a variety of different business degrees available, and each one has its own strengths and weaknesses.

A business administration degree gives you a general introduction to the business world and teaches you the basic skills you need to be successful in the workplace. In addition, it provides a foundation for further study in specific areas of business such as accounting or marketing.

The value of a business degree depends on a variety of factors, including what you hope to gain from the degree, your field of study, and your career goals. However, there are some things to consider when making this decision.

According to PayScale, the average ROI for a business degree is about $1 million. This number takes into account both the cost of getting a business degree and the increased earnings potential that graduates typically experience.

While many jobs require at least some level of post-secondary education, not all jobs require or even prefer candidates with a business degree specifically.

In this article, we will highlight everything you need to make a decisive decision for you.

Is a business degree worth it? There are plenty of benefits to earning a business degree. In this guide, you will learn is business a good major for you.

Why a Business Degree?

There are many reasons to get a business degree.

For starters, they offer great flexibility and come with an abundance of valuable career resources. Additionally, business degrees can lead to even more opportunities in the business world.

Finally, it’s important to note that getting a business degree is very profitable and attractive.

Is a business degree worth it?

Picture of a pig with a graduation hat on wondering if a business degree is worth it.

There is no one-size-fits-all answer to this question. 

A business degree can be an excellent investment if you are looking to start or grow a business or are interested in finance, accounting, human resources, or marketing. 

Finally, think about the cost of tuition and other associated expenses. 

What Can You Do with a Business Management Degree?

Picture of a group of graduates.

Business management degrees can prepare students for a variety of careers in the business world.

Some possible careers include:

  • Business analyst
  • Accountant
  • Human resources manager
  • Event planner
  • Marketing manager
  • Operations manager
  • Financial analyst
  • Business owner

A business management degree can open up a variety of doors for you! You can go into many different industries and have a number of career options available to you.

Business management degrees provide opportunities in growing fields like finance and marketing. In addition, business and financial operations occupations are projected to grow on a national level more than other careers.

This means that if you have a business management degree… You will be entering an occupation that is expected to have continued growth in the future.

Types of business degrees

Picture of a graduation cap, diploma, and books for the types of business degrees.

First, consider what type of business degree you want.

There are three options:

  1. Bachelor of Business Administration (BBA): This is a general degree that provides students with a broad knowledge of business. It includes subjects like management, accounting, economics, and marketing. Perfect for those who want managerial positions or start their own company.
  2. Bachelor of Arts in Business Administration (BABA): This degree consists of business subjects along with humanities and social science courses. This type of degree may be a good option if you want to pursue an international career.
  3. Bachelor of Science in Business Administration (BSBA): This type of degree has a strong analytical and math-oriented focus. It’s excellent for careers like financial analysis.

Once you have decided on the type of business degree you want, consider your field of expertise.

  • Do you want to work in finance? Marketing? Human resources?

Each field requires specific skills and knowledge. So, make sure the degree you choose will provide you with the necessary training. This would be your minor (area of expertise).

Just remember… Each different types of business degree offer students a variety of opportunities. Thus, can help students develop the skills they need for success in the workplace.

Getting A Business Degree

So why should you consider getting a business degree? First and foremost, they offer great flexibility in careers.

Additionally, most programs come with access to a wealth of career resources that can help you land your dream job after graduation.

And finally, having a business degree is highly profitable and attractive in the current job market.

Whether you’re just starting out in your career or looking to advance further, getting a business degree is an excellent choice.

They provide students with valuable skills for entry-level positions that are highly sought after by employers. Plus, an accredited program will likely lead not only to an invigorating educational experience but also to a job that meets your needs and drives your passions

Is Business a Good Major?

Picture of business people wondering is business a good major.

There are associate’s degrees, undergraduate degrees, and graduate degrees in business administration available at schools across the country. Which one is right for you? That depends on your goals and what you want to study.

If you’re not sure what you want to study, or if you want to explore your options before making a decision, consider an associate’s degree in business administration first. This type of degree can give you a basic understanding of the field. Then, it can help you decide if you want to continue your education or go into the workforce directly.

If you already know that you want to study business administration at the undergraduate level, then look for a school that offers a broad range of courses in this area. So, you can gain exposure to as many different aspects of the field as possible.

If you’re interested in pursuing a career in business administration but want to take your education one step further, consider a graduate degree in business administration. This type of degree can prepare you for management-level positions and help you stand out from the competition.

Pros of getting a business degree

Picture of a sign that says positive and negative

A business degree can give you many advantages in your career!

  • Help you advance in your career.
  • Give you the skills you need to start your own business.
  • Teach you how to manage a company effectively.
  • Help you develop marketing and sales skills.

Pursing a business degree may lead to a rewarding educational experience! As well as a career that meets your needs and drives your passions.

In addition, there are plenty of accredited colleges and universities that offer online business degrees. These choices are often convenient and affordable.

Pro #1 – Versatility of a business degree

A business administration degree program can provide a diverse range of career options and prepares students for success in any industry.

Business administration courses are foundational for a variety of careers.

Core coursework in areas such as:

  • Finance
  • Accounting
  • Marketing
  • Management

These areas of study teach students how to think critically and make sound decisions in a variety of business scenarios.

In addition, many programs offer specializations or concentrations in specific fields such as:

  • Entrepreneurship
  • Human resources
  • Information technology

Thus, allowing students to focus their studies on an area that interests them.

Business graduates are well-prepared to take on a variety of roles within organizations. Plus can usually find jobs with good pay and benefits.

And because the skills learned in business school are applicable in so many different settings, graduates typically have multiple career options available to them if they decide to change jobs or careers down the road.

Pro #2 – Advancement Opportunities

Employers respect and value a business degree from a well-respected school, which can open doors to advancement opportunities.

With a business degree, you can move up the corporate ladder more quickly or start your own successful company.

In addition, a business degree gives an individual the ability to understand the latest changes in the business world and understanding of new strategies, insights, and ideas that can improve a company’s performance.

Business degrees are necessary for individuals who want to stay ahead of the curve in their industry.

If being successful in your field is important, then getting a business degree is essential. Additionally, new opportunities are presented to you.

Pro #3 – Higher Salary

A business degree can lead to a higher salary than an undergraduate degree for the same job.

The impact of your salary depends on a number of factors, including your school, the chosen field, your position, and your past experience.

Many business administration graduates specialize in a discipline, which leads to different salaries for those same careers depending on the discipline.

For example, if you are making a $45k salary a year, then a business degree might help you increase to $60k a year.

Pro #4 – Career resources and networking opportunities

To make the most of a business degree program, consider taking advantage of your school’s unique resources, including career centers and alumni networks.

Then, you are able to use their resources to open the door to a variety of job opportunities.

The career resources will help you find internships and jobs. While the networking opportunities will help you connect with professionals in your field.

Business management degrees can also benefit from extra-curricular activities like clubs and networking events.

Pro #5 – Transferable skills

Business is present in nearly every modern industry. That means degree holders have the option to apply their business degree to just about any area of industry.

Thus, provides skills that are in high demand in the workforce, such as critical thinking, problem-solving, decision making, communication, and leadership skills.

Professionals with a business degree have many options for employment and provide a competitive edge in the job market.

Cons of Getting a Business Degree

A college degree is still the gold standard for obtaining good employment. However, it is no longer the only way to achieve success.

Though there are many benefits to getting a business degree, there are also some potential drawbacks you should consider before making your decision.

Con #1 – Cost of the degree

One such drawback is the cost of tuition and other associated expenses.

The average tuition for an in-state student at a public university is $10,388 per year, and the average tuition for a private university is $38.185 per year (source). That doesn’t include room and board, books, supplies, or other fees. If you’re attending school out-of-state or out of the country, your costs will be even higher.

You can apply for scholarships and grants, take out loans, or work part-time while you’re in school. But no matter how you pay for it, the cost of a business degree is significant.

Con #2 – The job market doesn’t have enough jobs

Getting a business degree isn’t always the best option for career advancement.

There are disadvantages to getting a business degree, such as lower unemployment rates and higher wages compared to other occupations.

Even though a bachelor’s degree in business is required for many jobs in the industry. If you’re interested in pursuing this path, it’s important to make sure you choose a program that will prepare you well.

Con #3 – Certifications are better

Certifications can also help you learn new skills and stay up-to-date on the latest trends in your industry. This comes without the time and money needed for a degree in management.

In fact, both Microsoft and Google have stated that certification for hiring for jobs is more important than a college degree (source).

For example, getting certified in specific areas can help you become an expert in a particular field and make you more marketable to employers.

While both can lead to a variety of career opportunities, you must decipher which is best for your situation.

Con #4 – You don’t need a business degree to work in business

A business degree is not always necessary to work in a corporate setting.

While getting a business degree can help you learn about the inner workings of businesses and how to run them effectively, you can also learn the same skills with hands-on job experience.

In fact, many people who work in business don’t have any formal education in it at all. There are a number of things you can do to gain the skills you need to work in the business without getting a formal degree.

Con #5 – Not Needed to Start Your Own Business

Most importantly, a business degree may not be the best route for you if you want to start your own business.

A business degree won’t give you all the skills and knowledge you need to succeed as a small business owner.

Many times, the best lessons are taught through hard work and perseverance.

Con #6 – Not Truly Prepared for Career Path

Another potential downside to getting a business degree is that not all degrees offer the same level of preparation for specific careers.

So, it’s essential to do your research and choose a program that will give you the skills you need to pursue your desired career path.

Con #7 – Time Consuming

Finally, getting a business degree can be time-consuming and require significant dedication. So make sure you’re ready for the challenge before embarking on this journey!

How to decide if getting a business degree is worth it for you?

There are a few things you should consider when making this decision:

  • What industry do you want to work in?
  • What is the job market like for business degrees?
  • Will you be able to get scholarships or grants?
  • What are the salaries for business degree holders?
  • What are the opportunities for advancement for business degree holders?
  • Will you be able to work while your degree?
  • What are the costs of getting a business degree?

It is important to remember that business degrees are not just useful for starting a company! They can also lead to lucrative careers in other fields such as finance or law.

So if you’re still undecided on whether or not getting a business degree is worth it for you, consider all of the possibilities!

Tips to Ask Yourself Before Enrolling in Business School

A business degree can be expensive, but it may offer opportunities for career growth and earning potential that outweighs the initial investment. You must weigh the pros and cons carefully before making a final decision

When making the best decision for you, there are many factors to consider, such as time commitment, cost, and potential return on investment.

Tip #1 – Consider your goals and objectives.

What do you hope to gain from a business degree? Are you looking for career advancement opportunities, or do you want to learn more about business fundamentals? Knowing what you want out of a business degree will help you narrow down your options.

Tip #2 – Do your research.

There are many different types of business degrees available. So be sure to compare programs and find one that fits your needs and interests.

In addition, you must consider if an accredited online college or university offers a program that meets your needs.

You need to research the university’s accreditation status so you can know what that means for you when looking for work after graduation.

Finally, think about what you want to do with your degree. Find a program that will give you the skills and experiences needed for your desired career field.

Tip #3 – Ask around.

Talk to friends, family, and colleagues who have pursued a business degree. They may have valuable insights that can help inform your decision.

Do you regret getting a business degree?

Personally, I do regret getting my undergraduate degree in marketing.

I don’t think that was the best field of study for me. Plus my college at the time refused to teach social media marketing, which was brand new and my degree was quickly outdated without the proper skills.

The college experience was absolutely amazing and I grew as a human being. But, I truly believe there was a better degree for me to start out with.

However, if you were looking for a business degree with a focus such as finance, accounting, or computer information, I think those are more highly specialized to off a better benefit.

What Business careers look appealing to You?

A business degree can help you move into a different career field and earn more money.

In addition, a business degree can build a solid foundation of skills and knowledge for you to build your own business. However, there are many other ways to learn about business, so it is important to research the different options and find the best one for you.

There are many different types of business degrees available. As such, it can be difficult to decide which one is right for you.

This decision is not the same for everyone as we all have our own upbringing and experiences. Every single person you ask will tell you something different and whether their business degree was worth it to them.

Business education can be expensive, but there are many resources available to help you finance your education. There are also many benefits to earning a business degree, so weigh all the factors and make the decision that’s best for you.

Know someone else that needs this, too? Then, please share!!

Source: moneybliss.org

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Washington, DC
CNN
 — 

Mortgage rates bounced back up this week after falling for two weeks in a row.

The 30-year fixed-rate mortgage averaged 6.39% in the week ending May 18, up from 6.35% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.25%.

Economic crosscurrents have kept rates within a 10-basis point range over the last several weeks, said Sam Khater, Freddie Mac’s chief economist.

“While affordability remains a hurdle, homebuyers are getting used to current rates and continue to pursue homeownership,” said Khater.

Mortgage rates topped 5% for the first time since 2011 a little more than a year ago, and have remained over 5% for all but one week during the past year. Since then they have gone as high as 7.08%, last reached in November.

Over the last month, rates have gone up and down, but have stayed under 6.5%.

“Mortgage rates have remained in the roughly 6% to 7% range for the last eight months and will likely remain in this range until incoming economic data makes the economy’s path forward more clear,” said Hannah Jones, Realtor.com economic data analyst. “Buyer demand has been sensitive to the ebb and flow of mortgage rates, but near-peak home prices and elevated inflation mean many would-be buyers are still waiting on the sidelines.”

The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.

Inflation is cooling, but debt limit uncertainty looms

Mortgage rates went up following a rise in the 10-year Treasuries this week, as investors continue to digest data related to inflation and keep their eye on the ongoing standoff in Washington about raising the debt limit, which is creating uncertainty.

While inflation is cooling, recent data shows signs of a stubborn, though slowing economy, said Jones, suggesting that the Federal Reserve’s rate hikes are having the intended effect. However, inflation remains well above the central bank’s target level and unemployment remains near all-time lows.

If a deal is not reached providing an extension of the debt limit, the United States would default on its debts for the first time. This could further crush an already struggling housing market, sending the cost to purchase a home up 22% and spiking mortgage rates to over 8%, according to one projection.

“The economy remains on fragile footing and a US default would cause an interest rate spike that could erase any progress towards a healthier housing market by cutting deeper into home sales,” said Jones.

A default remains unlikely, but, Jones said, the closer we get to a possible event date — which could be as soon as June 1 — without an increase in the debt limit, the more households will be hurt by higher interest rates.

“The sooner the debt impasse is resolved, the less likely it is to negatively affect households already plagued by high prices,” she said.

Buyers remain rate sensitive

Home shoppers who are facing higher mortgage rates are also facing low inventory of homes to buy and still-strong competition from other buyers, especially at entry- and middle-level prices. Even though housing sales are down, demand for the few homes coming to market in an area can result in a bidding war that pushes prices higher.

This makes buyers even more rate sensitive, as they calculate how much house they can afford.

“Higher rates and low inventory levels continue to keep many prospective first-time buyers on the sidelines,” said Bob Broeksmit, president and CEO of the Mortgage Bankers Association. “Purchase applications for FHA loans — popular with many first-timers — were down 5% from last week and 17% from a year ago.”

Inventory is low because many homeowners who may otherwise put their home on the market are holding back and holding on to a mortgage rate several percentage points lower than a rate they’d take on by buying another home.

“Constrained buyers and reluctant sellers mean the spring market hasn’t picked up as much momentum as in years past, but each improvement in affordability is met with an increase in buyer activity,” said Jones. “Prices are likely to remain elevated in many markets where low inventory, especially at an affordable price point, is creating a competitive environment.”

Source: cnn.com

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Real estate doom and gloom articles are going to ramp up big time in coming months, if they haven’t already.

You’re going to hear that the second biggest housing crash since the Great Depression is upon us.

It’ll all be super scary and negative and panic-inducing. You’ll be led to believe that it’s 2008 all over again.

Except, it’s not. Nor will it be. Interestingly, this latest housing downturn, or “correction,” was manufactured by the Fed.

The same Fed that basically orchestrated the housing frenzy that preceded it. The good news is it’ll likely be short-lived and really nothing like the Great Recession.

Why Are Home Prices Falling?

First, let’s talk about why home prices are beginning to stall, and gasp, even go down.

Long story short, home price appreciation was absolutely out of control over the past couple years since the pandemic got underway. We’re talking a 50% increase in prices.

A combination of limited supply, cheap money (i.e. record low mortgage rates), and the sheer desire to own property propelled home prices to new heights.

Not only did home prices hit all-time highs, but monthly and annual gains hit records as well.

We were seeing consistent double-digit gains in property values, which we all know simply can’t be sustainable over time.

The Fed saw this happening and basically decided to pump the brakes. They discovered that recent home price gains were driven by excess demand, not just short supply.

As such, they knew that raising their own interest rate (fed funds rate) and stopping their Quantitative Easing (QE) program would eventually increase mortgage rates.

Maybe they didn’t foresee just how much they’d rise in such a short period, but mission accomplished either way.

It’s pretty much a foregone conclusion that home prices have peaked, and now after months of slowing appreciation, we’re facing actual declines in nominal prices.

In other words, a lower price than the month before, and eventually the year before.

How Much Will Home Prices Go Down?

The next logical question is how much will home prices go down. It’s important to differentiate between nominal prices and real prices, the latter of which are adjusted for inflation.

This is especially pertinent with inflation running super-hot at the moment, at 8%+.

Now high mortgage rates alone don’t necessarily lower home prices, but once you throw in a significant increase in unemployment, they do.

Per Wharton’s Susan Wachter, home prices have never fallen without “a substantial rise in unemployment,” other than during the Great Recession.

This is not the Great Recession – the mortgages underwritten at that time were utter garbage.

We’re talking 100% financing, no doc, stated income, outright fraud, and dangerous adjustable-rate mortgages like the option ARM.

Today, it’s plain vanilla, boring old 30-year fixed mortgages. And the majority of homeowners with them have absurdly low interest rates. We’re talking 2-4%. Locked in until the year 2050.

These folks don’t really care if “home prices go down” because they’ll keep paying their super-low monthly mortgage payments and let time get their home price back to new heights.

Even if they do lose their jobs, they can sell for a profit or rent out their properties and cash flow positive.

Meanwhile, a combination of a recession, increased unemployment, and much higher mortgage rates will likely push nominal home prices lower.

But how much lower? While this is really always a regional question, not so much a national one, chances are home prices will only fall 5-10%, at least if you believe Wells Fargo economists.

And when you look at how much they went up since just the year 2020, it’s a drop in the bucket.

For example, the median existing home price was $300,000 in 2020, $357,000 in 2021, and expected to be $385,000 this year.

It is then forecast to fall to $364,000 in 2023, a 5.5% decline. Because nominal home prices don’t often fall, headlines will be grim.

It’ll technically be the second worst drop in home prices since the Great Depression way back in the 1920s/1930s. And the media will love to point that out.

Sure sounds awful, doesn’t it? In reality, it will be theoretically even worse with inflation eroding the dollar and real prices falling even more.

Real home prices could fall as much as 25%, which sounds pretty bad, but again would basically put us back to the year 2020.

Home Prices Could Bounce Back as Soon as 2024

I’ve long circled the year 2024 as the date of the next housing market crash. Or at least the peak. It appears to be coming a tad earlier than expected.

But still not too far off, especially when you consider the many years of excess seen the past few years.

It would have been easy to call a housing market top a few years ago, or even earlier than that. But yet it kept rising.

Anyway, all the major pundits are now basically in agreement that nominal home prices will drop. And due to inflation, real home prices will fall even more.

But when will they recover? Or stop falling? Well, Bill McBride over at Calculated Risk sees real home prices falling +/-25% over the next five to seven years, with much of that due to inflation.

In other words, limited nominal price declines, though as noted still potentially 5-10%. But as mentioned, 5-10% isn’t much when home prices effectively doubled in preceding years.

Anyway, McBride sees a longer timeline to recovery than Wells Fargo, though not that long. And nothing like the “cascading price declines” seen during the Great Recession.

At that time, he notes that “nominal prices fell 62% in Las Vegas, 56% in Phoenix, and 51% in Miami.”

He doesn’t see that this time around largely because supply is low, underwriting is sound, and distressed sales likely won’t be a big factor.

Turning back to Wells Fargo, they expect an even faster recovery thanks to future Fed rate cuts.

Once those happen, mortgage rates should follow suit, allowing for “a modest improvement in sales activity.”

This could “reignite home price appreciation heading into 2024,” with the median existing sales price rising back to $376,000.

Source: thetruthaboutmortgage.com

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Many people have speculated that a recession and rising unemployment could cause more foreclosures which could then cause a housing crash. If there is a recession and more unemployment that cause foreclosures it is important to know how long foreclosures take in order to get an accurate idea of when those foreclosures may hit the market. Many people may be surprised by how long it takes to foreclose on properties in the US. This article will go over the length of time it takes on overage to foreclose on a home, not the absolute fastest it can be done.

What is a foreclosure?

A foreclosure happens when a homeowner takes out a loan on their home or a home they are buying and uses that home as collateral for the loan. If the homeowner stops making payments or violates another part of the loan requirements, the lender (usually a bank or mortgage company) can start the foreclosure process.

The foreclosure process varies state by state and usually involves the local courts or a Public Trustee who oversee the foreclosure. The banks will have a lawyer prepare the paperwork, loan documents, and foreclosure documents. Those documents are sent to the courts or trustees. The courts or trustees will review everything and if in order, they will publish the notice of foreclosure. Once that notice is published, there is a certain amount of time the homeowners are given to cure (bring the loan current) the foreclosure. A sale date is scheduled and if the homeowners do not bring the loan current the house can sell back to the bank or another party at the foreclosure sale which is usually an auction. In some states, after the sale the previous owners still have time to redeem the property or other lien holders may redeem it as well which means the full foreclosure sale price is paid off.

What is the difference between a short sale and a foreclosure or REO sale?

The homeowner can sell the property right up until the foreclosure sale or even sometimes after the foreclosure sale and during the redemption period. They own the home until the foreclosure is complete. If the homeowner has equity, they may be able to sell the home and pay off the loan and any other liens. The amount owed during a foreclosure is usually quite a bit more than the loan balance because the lenders can charge lawyers’ fees and other costs.

If the homeowner owes more than the house is worth they may be able to sell it as a short sale. A short sale is when the bank or other lenders accept less than they are owed in order for the homeowner to sell the house. In some cases, the debt is forgiven and in some cases, the homeowner may still owe some money to the lien holder who allowed the short sale. Some banks even pay homeowners to complete a short sale because they do not want to have to go through the foreclosure process.

An REO sale (real estate owned or sometimes other real estate owned) is when the bank has foreclosed on a property, they bought the property back at the foreclosure sale (in some cases the homeowner just gives it back), and the bank is selling the home.

Why has the time to foreclose increased so much?

The time to foreclose on properties has increased significantly since the last housing crash in 2008. Many people think this is all due to Covid and the foreclosure moratoriums. However, the time to foreclose had increased significantly before anyone had heard of covid.

After the last crash, the US government and banks realized that selling a lot of houses at once was not good for the real estate market. it was not good for the people who owned houses or the people who lost homes to foreclosure. The US government enacted many rules that forced banks to take their time foreclosing and give homeowners many opportunities to prevent foreclosure.

The banks have to make sure they offer loan modifications, and the opportunity to do a short sale, and they have to take their time to make sure the loan and foreclosure are done correctly. You may remember, many banks got in trouble for foreclosing wrong and some people even got their houses back. I actually bought a house at the foreclosure sale where the previous owners thought they were going to get their house back for free, but that did not happen. I will do a video on that story soon but you can see some of my other crazy flip stories in in the video below.

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All of these new requirements have made the foreclosure process much longer and many banks do not even want to foreclose unless they have to because of the bad publicity foreclosures bring. A lot of banks will even sell their pre-foreclosure properties in huge bulk packages to other investors so they don’t have to go through the headaches of foreclosing.

How long does it take to foreclose on a house in each state?

As I said the average time to foreclose in the US has risen significantly from less than 200 days in 2007 to more than 900 days in 2022! The time to foreclose decreased some at the end of 2022 to less than 900 days, but increased again in 2023 to 950 days!

The chart below is provided by Attom Data.

States with the longest average foreclosure timelines for homes foreclosed in Q1 2023 were Louisiana (2,770 days); Hawaii (2,486 days); New York (1,963 days); Kentucky (1,881 days); and New Jersey (1,697 days).

States with the shortest average foreclosure timelines for homes foreclosed in Q1 2023 were Wyoming (111 days); Minnesota (141 days); Montana (143 days); Texas (146 days); and Arkansas (157 days).

While many of these states allow a lender to foreclose much faster, in reality, this is how long it is taking. As you can see from the chart covid is not what caused this massive increase in time foreclose since the massive increase occurred before covid.

Will foreclosures cause a housing crash?

Foreclosures were a huge reason for the last housing crash but as you can see the time to foreclosure is extremely long and even if there was a rush of foreclosures, it would take 2 years on average for the foreclosure process to be completed. As far as the number of foreclosures now, there are still much fewer starts and completions than before the pandemic. That previous link to Attom Data provides many of those numbers as well.

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Source: investfourmore.com