Lending – Freedominst http://freedominst.org/ Thu, 21 Oct 2021 03:20:28 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 http://freedominst.org/wp-content/uploads/2021/03/cropped-favicon-32x32.png Lending – Freedominst http://freedominst.org/ 32 32 Big Short’s version of the housing bubble is fun but reality disappoints | US mortgages http://freedominst.org/big-shorts-version-of-the-housing-bubble-is-fun-but-reality-disappoints-us-mortgages/ http://freedominst.org/big-shorts-version-of-the-housing-bubble-is-fun-but-reality-disappoints-us-mortgages/#respond Tue, 23 Mar 2021 05:55:17 +0000 http://freedominst.org/big-shorts-version-of-the-housing-bubble-is-fun-but-reality-disappoints-us-mortgages/

One of the contenders for Best Picture at this year’s Oscars is The great short, the saga of how we cheerfully ran to the side of a financial precipice in the years leading up to 2007.

The film somehow manages to make fun of the madness behind both the housing bubble and the golden years on Wall Street that accompanied it. He talks about how some naysayers saw the writing on the wall, recognized that the lending frenzy to subprime borrowers was likely to come to a grisly end, and bet against the trend, massively.

Even as the film’s stars and producers prepare to parade on the red carpet, however, worries about a new housing bubble are mounting.

Whatever is waiting to pounce, however, will not be close to what we saw in 2007. The New York Fed Quarterly Report on Household Debt and Credit noted that mortgage debt remained substantially unchanged over the past three years, and it has fallen as a share of total debt, from nearly 80% in 2008, at the height of the subprime crisis, to just 72% at the end of 2015.

The confirmation comes from the banks. Mortgage lending has remained flat and underwriting standards are stricter, although banks sometimes complain about the impact it is having on their profits.

In other words, we have done well so far, or the banks have forced us to do well.

But will it continue? What pressures exist for this to change?

Quicken – one of several “non-bank” lenders that are increasingly dominating the mortgage lending space – raised eyebrows with the Super Bowl ad for his Rocket mortgage. The product name suggests how quickly Quicken promises to align your funding – just eight minutes, if all documentation is in order. It’s not that they’re going to violate lending standards, the lender insists – it’s just that they want to make it easier for qualified lenders to jump through hoops.

Simplifying the whole process is the mantra that Bank of America has adopted with its new product, Affordable loan solution, which requires buyers to only lower 3% of a home’s value and still qualify for a mortgage of up to $ 417,000. The bank’s public relations team went to great lengths to point out that these will not be like the infamous “liar loans” of yore. In fact, every application will be handled by real people, not just automated systems, which means humans will analyze and judge the finances of every low-income applicant (who will need to have good credit scores to qualify).

“This time it’s different” is the refrain we’re starting to hear a lot in the mortgage industry. Equifax found that in the first 10 months of 2015, 50.7 billion new subprime mortgages were underwritten, a 28% in the number of mortgages originated and a 45% increase in sales. But don’t worry, lenders are focusing more on repayment capability.

It remains to be seen how long the behavior will remain rational. The real estate industry is not known for balanced buyer behavior at the best of times, and in many areas of the country, this is not the best time.

Fitch Ratings already has rang some alarm bells, based on the forecast that the Federal Reserve will continue to raise interest rates this year and that such increases will push mortgage rates higher. This, in turn, will give mortgage lenders an incentive “to expand loan eligibility requirements, as the refinancing volume is likely to dry up.”

Translation: When the cheap rewards fade – customers with good credit scores, good earnings and disciplined payment histories, or those who need to refinance – lenders will still need to generate new business. They will have every reason to push the envelope on factors such as credit quality.

These lenders are already under financial pressure for make the mortgage loan more profitable – perhaps by cutting personnel costs, one of the biggest expenses they have to face. And what does that staff do? If that were to happen, it would be bad news, since that staff are the people who do the due diligence on mortgage loans.

Then there is the fact that some urban markets – San Francisco and the Silicon Valley area – already seem dangerously overrated from any point of view. Zillow.com has set the rise in average property values ​​in San Francisco over the past three years at 67%, a spike that cannot be traced back to anything other than speculation.

Even nationally, some opponents argue that the accessibility crisis many homebuyers experience – when they find that rent makes financial sense because the average home price is simply too high – is part of a real bubble. Mark Hanson, who may yet to become the voice of the Big Short version 2.0, has preached that a wave of all-cash buyers, or what he calls “unorthodox question with unorthodox capital”Inflated the ratings from 25% to 60%.

Even imagining what might happen to some of these new borrowers who lowered a $ 400,000 home by 3%, if the value of that home drops by even 10%, it gives me a headache. They might have the cleanest credit in the world and the most stable jobs, and their lender would still have a panic attack.

And that’s assuming nothing else goes wrong: that there are no job losses, that the lender hasn’t pushed the envelope in terms of loan criteria, or hasn’t decided to go back to some of those bizarrely structured loans. to convince people who otherwise might not buy to consider it: a 0% teaser rate, for example, followed by a floating rate?

This brings us to the intentions of homebuyers and borrowers themselves: always the wild card.

LoanDepot, one of the emerging lenders in the non-bank and mortgage lending industry, recently interviewed American homeowners. He found them even more optimistic than they expected about the value of their homes. The extent to which the 2007-2008 subprime crisis failed to make them more cautious in tapping into their real estate assets also took the people of LoanDepot by surprise.

It seems that nearly half of Americans with mortgages expect the value of their home to rise this year; 85% expect it will increase by at least 10%. (LoanDepot notes, carefully, that industry insiders predict a gain of less than half that.)

New buyers are the most optimistic of all when it comes to price gains, but they may be more cautious about taking out loans against any equity in their home. But only 14% said the crisis made them more cautious in taking out a home equity loan, and nearly 6% said they still didn’t believe that having a high level of equity in their home would protect them if they did. crash.

If we can avoid the recurrence of the events recounted in The Big Short, it will be because some sort of rationality emerges and prevents all of us – bankers, home lenders and homebuyers alike – from behaving like reckless lemmings ready to rush to the edge of the road. next financial cliff.

There are no bright lights and arrows flashing now, pointing straight into the next crisis; just a few indicators of patterns of behavior that, if they continue in the same direction and persist over time, could lead us in the wrong direction.

It is good to ensure that homes become more affordable and mortgage financing more affordable. What’s not good is having someone on a low income buy a property in an area where property prices have soared over the past four or five years, with a minimal down payment, in the name of that goal. Or for a bank, desperate to bolster its profits, loosen its standards, and structure a mortgage product that will only work for, say, 75% of its borrowers.

History probably won’t repeat itself, but the echo alone could be deeply unpleasant.

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Veteran Maintains Family Legacy of Service | News, sports, work http://freedominst.org/veteran-maintains-family-legacy-of-service-news-sports-work/ http://freedominst.org/veteran-maintains-family-legacy-of-service-news-sports-work/#respond Tue, 23 Mar 2021 05:55:16 +0000 http://freedominst.org/veteran-maintains-family-legacy-of-service-news-sports-work/ – Photo sent

Lieutenant Colonel Todd Essing retired from the Army National Guard in October after 32 years of service.

After his grandfather served in World War II and his father and two uncles served in the Vietnam War, Lieutenant Colonel Todd Essing knew he had to keep his family’s legacy in the service of their country.

But when 9/11 struck, the former Twin Lakes mortgage lender knew he too had to up the ante.

“I was inspired by my family’s service to serve in a wider capacity”, Essing said. “I have always tried to be ready for the opportunities that present themselves. Part of being in the National Guard (of the army) meant being ready to take sides ”.

After 32 years of service in his country, Essing retired on June 30. Since 1988 he has served in Kosovo, Afghanistan, Mexico and with the United States Northern Command in Colorado Springs.

After working in the 1st Battalion of the 194th Field Artillery and the 2nd Battalion of the 34th Infantry Brigade Combat Brigade, Essing was first deployed in 2007 on a peacekeeping mission in Kosovo, a remnant of the Eastern Europe of the Soviet Union which declared independence from Serbia in 2008 with the support of the United States under the administration of President George W. Bush.

– Photo sent

Twin Lakes Lieutenant Colonel Todd Essing, left, was inspired to serve his country by his family’s legacy of military service. His father, Mark Essing of Manson, right, served in the Vietnam War.

There, he served as an executive officer and worked with the Kosovar equivalent of FEMA, the EPA and National Guard units to test for radiation and clean up the remains of 100 abandoned state-owned factories left by the USSR decades after his. collapse.

“We were trying to help them stabilize all the remnants of the Soviet-era factory”, Essing said. “It was very rewarding to be able to work with them.”

As an emergency management consultant for a team of 24 in Kosovo, Essing has worked with NATO stakeholders over seven of the past 11 years to define goals and make plans to achieve them.

Kosovo, a former part of Yugoslavia, was left with defunct factories that produced items such as textiles and car batteries, which left behind toxic and dangerous materials. Slowly, Kosovo sold factories to private civilian companies as they were being cleaned up.

Ever since President Woodrow Wilson advocated for Albanian independence more than 100 years ago (the vast majority of Kosovo are ethnically Albanian), Essing has said that Kosovo has had great appreciation for Americans, noting that what he said is still a strong position of the United States on the world stage.

– Photo sent

Lieutenant Colonel Todd Essing served in the Army National Guard from 1988 to 2020.

“They really looked to the United States for strong leadership to work side by side,” Essing said: a learning moment for him abroad.

Essing worked with US Northern Command in Colorado to coordinate US responses to disasters such as wildfires and hurricanes. His experience there also included two years in Mexico City, where he developed and planned exercises to strengthen the capabilities of the Mexican army.

Later, in 2010, in the height of the war in Afghanistan, Essing returned to the service, with two weeks’ notice, to prepare for departure for the Middle East.

“I’m ready, let’s go”, He said.

During Essing’s year in Afghanistan, he served as a human resources officer for 3,200 soldiers in the 2nd Battalion of the Infantry Brigade’s 34th Combat Team. There, he was promoted to lieutenant colonel and was awarded the Bronze Star for meritorious service.

-Photo sent Lieutenant Colonel Todd Essing spent a lot of time in Kosovo while in the National Guard, including 2008 when the country declared independence from Serbia.

Although it was a different line of work, it was something Essing was eager to roll up his sleeves to jump into.

As if that weren’t enough variety, Essing was one of the first Iowans chosen to go to the Joint and Combined War Fighting School, where he became a certified Joint Qualified Officer.

“I was very lucky to do many things”, He said. “Part of being in the National Guard meant being ready to take sides.”

Another thing he has learned in 32 years is that the Iowans are prepared for the unexpected in a way that is unlike many others.

“The Iowan are used to tornadoes and harsh conditions,” Essing said. “When the alarm goes off, we are always ready to go out. … Let’s take a look outside and see how we can help others ”.

In his retirement, the 52-year-old hopes to put his decades of experience and instinct to work for FEMA, helping Americans endure natural disasters.

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Mortgage loan on condominium properties http://freedominst.org/mortgage-loan-on-condominium-properties/ http://freedominst.org/mortgage-loan-on-condominium-properties/#respond Tue, 23 Mar 2021 05:55:16 +0000 http://freedominst.org/mortgage-loan-on-condominium-properties/

Shared ownership in one form or another has been a feature of the real estate market and government housing policy for many years with the underlying principles largely unchanged.

The current scheme is Shared Property Buying Aid, and this gives some homebuyers who buy certain types of properties the opportunity to buy a share of the property and pay the rent for the rest.

In due course, as the buyer’s income improves further, shares in the property can be purchased (via a process called “scales”) up to 100%.

Under the current agreement, buyers can purchase between 25% and 75% of the property with the help of a mortgage from one of the mortgage lenders who support the scheme.

The remaining 75% to 25% will be rented by a housing association at a subsidized rent. In England the applicant’s family income from all sources must be £ 80,000 or less to qualify, except in London where the limit is £ 90,000. Different schemes apply in other UK countries.

Applicants must be first-time buyers, individuals who used to own their property but currently do not, or existing shared property owners who wish to relocate.

Eligible properties must be new construction purchased from a developer (usually a housing association} or an existing resale of a housing association.

Under previous agreements, we had an additional program called Do It Yourself Shared Ownership whereby buyers could find a house or apartment for sale on the open market and then agree with a real estate association to buy it together with them on a shared basis. . However, this is no longer available.

Applicants must deal with a purchasing help agent in the locality and the agent will guide them through the process. Most applicants are first-time buyers, typically young singles or couples with insufficient income to support a conventional purchase and mortgage.

What to pay attention to …

It must be said that shared ownership may not always be the best way for young people to gain a foothold in the real estate market ladder.

If the purchase is a new apartment, the outgoings will include not only the mortgage payments on the purchased share and the increasing rent on the rented share but also the land rent and condominium expenses.

Service costs have a habit of steadily (and sometimes dramatically) increasing in line with rising maintenance costs.

Also, when it comes time to buy extra shares, the purchase price of the shares will reflect the market values ​​at that time, so if real estate prices have risen, the cost of the shares will also rise.

Many young buyers typically find their best first purchase to be a small home on a conventional mortgage, especially if they have some DIY skills and the property responds well to modernization.

Therefore, no rent, no land rent, no service charge and the value of the improved property will outstrip the market in general. However, not all young people with busy lives want to own a property and if they need a new apartment in an expensive area, shared ownership may be the only way to make their dream come true.

Mortgage lenders who agree to support shared ownership will need some reassurance about the safety of their loans as these are loans to buyers who, by definition, have low incomes, high percentage (up to 100%) down payments and are financially quite strained.

The mortgage deed should provide that the mortgage lender’s burden on the property takes precedence over that of the Housing Association.

In the event of shared ownership insolvency, mortgage lenders need to know that their loans are easily recoverable as the resale and marketing of these properties in the used market will typically be in the hands of housing associations who will offer them to applicants on their lists. while some co-ownership properties arrive on the market through a conventional real estate agency.

Peter Glover is a surveyor and author of “Building Surveys” and “Buying a House or Flat”

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The court orders the arrest of a ferry docked at the maritime terminal of the port of Olympia http://freedominst.org/the-court-orders-the-arrest-of-a-ferry-docked-at-the-maritime-terminal-of-the-port-of-olympia/ http://freedominst.org/the-court-orders-the-arrest-of-a-ferry-docked-at-the-maritime-terminal-of-the-port-of-olympia/#respond Tue, 23 Mar 2021 05:55:16 +0000 http://freedominst.org/the-court-orders-the-arrest-of-a-ferry-docked-at-the-maritime-terminal-of-the-port-of-olympia/

A lawsuit filed in federal district court against the owner of a former Washington state ferry led to a court-ordered “arrest” of the ship, the port of Olympia announced Wednesday.

The ferry has been moored at the port’s maritime terminal for more than two years, after the original plan was for it to be there for only a couple of months. The docking agreement at the port has been extended, but the shipowner has not always been prompt in paying the mooring fees. The port says it hasn’t been paid since January and is now in debt of $ 67,000.

Although Jones Global Investment LLC is the current owner of the ferry, a company called Jones Broadcasting LLC bought it from the state in 2017 for $ 300,000. The 310 foot ferry previously operated under the name “Evergreen State”.

The port was supposed to impound the ferry in June, but then worked with the owner to try and sell it, port spokeswoman Jennie Foglia-Jones said. When that didn’t work, the port filed a lawsuit.

A U.S. marshal issued an arrest warrant this week and a court-appointed ship keeper representative – a company called Marine Lender Services LLC – also checked the ferry, Foglia-Jones said.

“We were hoping that the owner would find a buyer and that we would work with him on this,” he said, adding that now the port’s goal is to recover the money he is owed.

The next likely step for the ferry is a court-ordered sale of the ship, he said.

What was the original plan for the ferry? It was never entirely clear.

Washington State Ferries said at the time of the sale in 2017 that the new owner planned to use the old ferry for ferry service in the “protected waters of the Southern Caribbean.”

A request for documents from the port of Olympia shows that another destination was Panama, according to The Olympian. There were other ideas, such as using the ferry as an event center with fine dining and vendor stalls in Pensacola, Florida, according to the port.

An attempt to sell the ferry on eBay was also unsuccessful.

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COVID vaccine delays could hinder Bosnia – IMF economic recovery http://freedominst.org/covid-vaccine-delays-could-hinder-bosnia-imf-economic-recovery/ http://freedominst.org/covid-vaccine-delays-could-hinder-bosnia-imf-economic-recovery/#respond Tue, 23 Mar 2021 05:55:16 +0000 http://freedominst.org/covid-vaccine-delays-could-hinder-bosnia-imf-economic-recovery/

* Delays in the arrival of vaccines can harm Bosnia-IMF growth officer

* The economy grew 3.5% this year, after falling 5.5% in 2020

* Talks about a new loan deal will require IMF-compromises

SARAJEVO, March 8 (Reuters) – Delays in the arrival of Covid-19 vaccines could hinder the recovery of the Bosnian economy, which was expected to grow 3.5% this year after falling 5.5% in the 2020, an IMF official said Monday.

Ethnically divided Bosnia launched only partial vaccinations last month after the Autonomous Republic of Serbia received its first batch of 5,000 Russian Sputnik V vaccines and health workers were asked to be inoculated in neighboring Serbia.

Bosnia’s other region, the federation dominated by Bosniaks and Croats, expects to secure its share of 2.1 million state-ordered strikes under the COVAX program for poor countries and the European Union, but they have yet to get.

“We assume for now that the vaccines will be widely available in Bosnia and Herzegovina in the second half of the year,” Andrew Jewell, IMF resident representative in Bosnia, told Reuters.

“We are now in March and the vaccines are a long way from being widely available, and at the same time we are seeing new strains of the virus and we are seeing more cases.”

Jewell said the worsening of the pandemic and the lack of vaccines could cause the lender to reduce its growth forecast.

Jewell said there is “enormous uncertainty surrounding growth forecasts,” but added: “If everyone is vaccinated, much of that uncertainty is eliminated.” He said the IMF sees Bosnia’s economy reaching pre-crisis level in 2022.

The lender’s talks with Bosnia on a new € 750 million ($ 890 million) loan, which its two regional governments badly needed, were put on hold in December due to a lack of agreement on some reforms.

While both regions disagreed with some conditions required by the IMF under the program, the Serbian Republic firmly rejected some reforms saying they were political.

“I suspect we will start talking again, but for the negotiations to be successful, a compromise will be needed,” said Jewell.

$ 1 = 0,8426 euro Reportage by Daria Sito-Sucic; Edited by Nick Macfie

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The cooperative bank receives an offer from Cerberus http://freedominst.org/the-cooperative-bank-receives-an-offer-from-cerberus/ http://freedominst.org/the-cooperative-bank-receives-an-offer-from-cerberus/#respond Tue, 23 Mar 2021 05:55:16 +0000 http://freedominst.org/the-cooperative-bank-receives-an-offer-from-cerberus/

The Co-operative Bank received a takeover approach from US private equity firm Cerberus, the latest in a series of potential deals in the struggling European financial sector.

The UK lender announced Tuesday that it had received a non-binding offer from a “financial sponsor with knowledge and experience of investing in European financial services firms”, which it passed on to its shareholders and advisors.

People briefed on the talks confirmed that it was Cerberus, which owns a 5% participation in German lender, Commerzbank, and this year pushed for a management reorganization and a change of strategy.

Consolidation across the European banking market has long been expected due to the need for substantial cost cuts due to the extremely low or negative interest rates affecting the sector. Activity has increased in recent weeks, with talks between BBVA and Sabadell of Spain announced on Monday evening. Sabadell also owns the UK’s TSB bank.

The cooperative has struggled for more than a decade, since its ill-fated acquisition of the Britannia Building Society in 2009 exposed it to a large number of bad debt and led to the belated discovery of a capital shortfall of $ 1.5 billion. pounds in 2013.

It was eventually taken over by bondholders in a £ 700 million bailout deal in 2017.

Last month, the bank promoted CFO Nick Slape to become its own sixth CEO in nine years, taking over from Andrew Bester, who had already begun to implement a turnaround.

At the time of his appointment, Slape said the company “was proving resilient in these difficult times.”

“The next few years will continue to be crucial for the cooperative bank as we look to build on the progress to date and complete our recovery plan,” he added.

In August, the cooperative announced it would close in quarter of its branches and cut 350 jobs, about 10 percent of its workforce.

On Tuesday, he said he was in talks with the unnamed suitor, but that the talks were at a preliminary stage. Sky News first reported Cerberus as a bidder. Cerberus declined to comment.

In Germany, the private equity group launched an attack on Commerzbank’s leadership in June, calling for “significant changes to the company’s supervisory board, board of directors and strategic plan” to stop a “downward spiral” caused by those who l investor called inflated costs, low profits and managerial inaction.

Cerberus also owns a 3% stake in Deutsche Bank.

If BBVA’s approach to Sabadell were to be successful, TSB would be considered a potential divestiture for the newly formed company.

The European consolidation also included Spain CaixaBank agrees in September to purchase Bankia. This followed Intesa Sanpaolo’s acquisition of Italian rival UBI Banca in the summer, the largest European banking deal in the 12 years since the financial crisis.

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Ares Capital Stock Rally as the lender assures investors that it can withstand the Covid-19 crisis http://freedominst.org/ares-capital-stock-rally-as-the-lender-assures-investors-that-it-can-withstand-the-covid-19-crisis/ http://freedominst.org/ares-capital-stock-rally-as-the-lender-assures-investors-that-it-can-withstand-the-covid-19-crisis/#respond Tue, 23 Mar 2021 05:55:16 +0000 http://freedominst.org/ares-capital-stock-rally-as-the-lender-assures-investors-that-it-can-withstand-the-covid-19-crisis/

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