Apr. 13: Retail & sales jobs; warehouse lender change; Millennials: wedding vs. a house – parents ride to the financial rescue

Rob Chrisman

Rob Chrisman began his career in mortgage banking – primarily capital markets – 31 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management firm. He was an account manager and partner at Tuttle & Co. until 1996, when he moved to Scotland with his family for 9 months. Read more...

We’re approaching the home buying season. What could $412k pick up in Detroit during the last home buying season? Here you go. Thanks to Brian B. for passing this along.

 

In company news, there’s no longer a requirement to sell business to Flagstar’s Wholesale division to have a Flagstar warehouse line. “Flagstar also offers lines of all sizes both for established bankers, as well as emerging correspondents. Even better, customers get to deal with their own direct point of contact—not rotating representatives in a phone queue. ‘We offer customers a relationship, not just a transaction,’ says Joe Lathrop, who has headed warehouse lending at Flagstar for 16 years. ‘Plus, we have the stability and capabilities of a federal savings bank behind us.’  Flagstar has been in wholesale lending since the bank opened in 1987 and has been offering warehouse lines since 1992, so it’s earned its chops in the space.” Today, per IMF, Flagstar ranks sixth nationally in warehouse lending commitments (just hit “Cancel” when the first password site pops up) and ninth in mortgage originations. Equal Housing Lender, member FDIC. For more information click on the link or call 800-945-7700.

 

In the retail channel Gateway Mortgage Group, LLC, is expanding its presence in the Southeast. In business since 2000 and headquartered in Tulsa, Gateway was founded on the principle of building strong communities through home ownership with local mortgage professionals meeting the needs of each market they serve.  Gateway is a direct seller/servicer for Fannie Mae and a direct issuer of Ginnie Mae MBSs and retains the servicing rights on the majority of the loans it originates. The company currently has 55+ branches throughout the 28 states where it is licensed and is ranked among the top-50 mortgage originators in the country.  Gateway is looking for experienced, licensed loan originators and producing branch managers to join its team in the states of FL, AL, SC, NC, TN, VA, WV and MD. Among other things it offers a non-centralized fulfillment model. For additional information on the company, please visit Gateway or contact Steve Frink, Southeast Regional VP by email or 904-349-1399.

 

In personnel & hiring news Valuation Partners, a leading national AMC, has hired industry veteran Tim Bartek to expand sales in the Eastern United States. “Tim has an extensive track record of building long term relationships that are anchored by performance driven results. He has a broad background in mortgage lending, loan fulfillment services, CRM reporting, and financial software sales with PC Lender, Lender Processing Services, Integra Software Systems, and Gallagher Financial Systems. Tim will be responsible for selling real estate valuation services to mortgage bankers, banks and credit unions in the Eastern US. ‘Hiring Tim will complement our sales team by identifying new opportunities and implementing strategies to increase our client base,’ said Clint Reinhardt- SVP National Sales and Marketing Director. ‘We are confident Tim will be instrumental in our future success.’ For additional sales opportunities, forward resume’s to Clint Reinhardt.

 

Realtors, lenders, and anyone who likes filming commercials with unshaven youngsters are focused on Millennials. (Is the industry going to be hearing about this every week for the next 50 years?) Battered by the financial crisis, environmentally conscious and not willing to commit to long-term investment in a property, millennials—defined by the U.S. Census Bureau as Americans between the ages of 18 to 34—are eschewing home ownership, in a departure from previous generations. Among a multitude of other traits, these folks seem to want to protect the environment and also live near the office. Today, the majority of multifamily developments are no longer in the traditional suburbs, but in urban centers that are well connected with mass transportation and in pedestrian friendly areas, to meet the needs of young people who don’t want a car (or can’t afford one).

 

Developers are focusing on building rental buildings in order to meet increased demand. That has also triggered increased debt demand for multifamily construction and rehabilitation. Companies such as Walker & Dunlop, Fannie Mae’s largest partner in multifamily lending in the last three years, have seen the changes. Founded in 1937, Walker & Dunlop debuted on the public market in 2010 and since then it has aggressively expanded its lending business, acquiring competitors such as CWCapital in 2012 and Johnson Capital in 2014. Last year, Walker & Dunlop originated $11.4 billion of loans, up 35 percent from 2013.

 

At the end of the fourth quarter of 2014, outstanding multifamily debt in the U.S. rose to $964 billion, up 2.5 percent, or $23.7 billion, from the third quarter of 2014 and up 6.6 percent, or $60 billion, from the fourth quarter of 2013, according to MBA’s data.

 

Among households with the highest rent burdens, half of the household’s income is dedicated towards rent. The highest rental burdened households spent 68 cents of every dollar on rent, whereas the lowest rental burdened households spent between 14 and 15 cents of every dollar on rent. Half of the households with high rent burdens in Denver, Los Angeles and Portland and one third in San Francisco, San Jose and Seattle live in poverty. Households with higher rent burdens live in smaller, older units and overly burdened renters tend to be older. High rent burden households are more likely to have children living with them, are more likely to be single parent homes and spend more time commuting via public transit. Among the six cities Zillow analyzed, households with high rent burden are more likely to be racial/ethnic minorities than low rent-burdened households. In Sane Jose alone, 55 percent of those in high rent-burdened household are Black or Hispanic, compared to 31 percent in low rent-burdened households. In Denver, 58 percent of people in high rent-burdened households are Black or Hispanic, compared to 42 percent in low rent-burdened households. Millennials are overrepresented in low rent-burdened households, in San Francisco, 42 percent of people living in households with low rent burdens are millennials, compared to 27 percent in high rent-burdened households.

 

LoanDepot has recently released a report highlighting trends of parents helping their millennial children purchase a home. Their research predicts that parents who aid their offspring when buying their first home will increase by 31 percent in the near future, compared to the past five years, from 13 to 17 percent. Half of the parents surveyed who will aid their children say their gift will go towards a down payment, 20 percent will cover closing costs and 20 percent will cosign the loan. About 67 percent of parents said they’ll use savings to help their children, compared to 72 percent in the past and 8 percent of parents are expected to refinance and 8 percent are expected take out a personal loan, compared to the historical 4 percent and 3 percent, respectively.

 

Parental financial support is helping aid the housing recovery, as first time home buyers make up 28 percent of the market, but the survey indicated that 75 percent of Millennial buyers were able to purchase their home because they received assistance from their parents. Ironically, most parents (68 percent) viewed the financial support as a gift, whereas only 29 percent of their children agreed and 36 percent believed the financial backing was a loan to be repaid. The many ways that parents are expected to help their children purchase their first home in the future is to pay their other expenses (30 percent), help pay down student loan debt (18 percent) and allow their children to continue living at home or move back home (33 percent). Millennials were also more motivated to cut back on entertainment and eating out (39 percent) in order to save money to purchase a home and 16 percent said they would live/move back in with their parents, whereas only 6 percent said they would get a second job. The survey proves that parents play a significant role in the housing recovery and we will begin to see more parents financially supporting their children so they can purchase their first home. Click here to read more about Loan Depot’s survey results.

 

It’s a well-known fact that Millennials are the largest generation in U.S. history, representing more than 80 million people. According to Wells Fargo Economics Group, Millennials are often portrayed as city goers, but the rate of young adults moving to the city is below the rate at which those are moving to the suburbs. Older Millennials, those between 30-34 years old, are more likely to move to the suburbs, whereas younger Millennials prefer city-living.  When Millennials move, they tend to stick to the same area, as 70% of city-dwellers who moved in 2014 ended up in the same city or another city and 29% of Millennials moved to a suburb than a city. In 2014, 16% moved from a city to a suburb compared to 13% moving from a suburb to city. The main motivators behind Millennial movers include cheap housing and job-related reasons, as suburban-living is more economical than city-living, enticing more young adults to move to the suburbs, particularly when looking to purchase an affordable home. Although, this generation is moving less frequently than prior generations as young adults today are becoming less mobile with the share of 18-34 year olds who move declining since 2000, in line with the general population as the moving rate of all Americans declining from 20 percent in 1985 to 11.5 percent in 2014. Despite the low mobility rates, the number of young adults moving to establish a household has steadily increased since 2001 as well as their desire to move closer to work. Overall, millennials do have a desire to own a home, but their reasons for moving is more so driven by the current economic environment.

 

An article recently published by Redfin indicates that more Millennials are now choosing to buy a home rather than pay for a wedding, as more Millennial couples are opting to purchase a home first, then get married once they are more financially stable. In a recent Redfin survey, 38 percent of Millennials said that they would, or have, put off a wedding or honeymoon in order to afford buying a home. The average cost of a wedding in the U.S. was $29,858 last year, not including honeymoon expenses. Many young adults are delaying marriage to lessen the financial burden from paying for a wedding and purchasing a new home all within the same year. Unmarried couples who choose a mortgage over marriage may not realize the difficulty decoupling from a co-ownership situation can be and may often be more complex than a divorce. To reap any benefits from homeownership it’s suggested that one lives in the home for at least five to seven years and view homeownership as a long term investment. Millennials should make sure that buying a home with their significant other is the best path to take, as 27.4 percent of couples who cohabitate prior to marriage, break up the third year of living together.

 

But according to an article published by HousingWire.com, two out of every three Millennials who plan to buy a home don’t know what closing costs are and more than one-third of adults seeking homeownership are “not very” or “not at all” aware of closing costs. Millennial homeowners are more likely to learn about closing costs from a Realtor than a lender in a two-to-one ratio, thus indicating that more Millennials are dependent on realtors. The study suggests that lenders should do more on their part to better explain the home buying process to clients in order to educate them and become a more dependable resource for their purchasing needs.

 

Last week was a light week for U.S. economic data, but as the economist at Comerica observed, “Three data releases all reinforced our view that the weaker-than-expected March jobs report, with just 126,000 net new jobs added, was a normal abnormality, and does not represent the start of a cooler labor market.”

 

This week, however, is chockfull of news that can jar rate sheets, for better or worse. Place your bets! After zip today tomorrow we have Retail Sales and the Producer Price index. Wednesday is some forgettable Empire Manufacturing number, but also the Industrial Production & Capacity Utilization couplet, NAHB Housing Market Index, and the release of the Fed’s Beige Book. The 16th bring Housing Starts and Building Permits, Initial Jobless Claims, and the Philly Fed Business Outlook. Friday is the Consumer Price Index, University of Michigan Sentiment numbers, and Leading Economic Indicators.

 

For those quantitatively inclined we closed Friday with the 10-yr. at 1.95% but this morning we’re at 1.98% with agency MBS prices worse than Friday afternoon by about .125.

 

 

The stockbroker received notice from the IRS that he was being audited. He showed up at the appointed time and place with all his financial records, and then sat for what seemed like hours as the agent poured over them.

Finally the IRS agent looked up and commented, “You must have been a tremendous fan of Sir Arthur Conan Doyle.”

“Why would you say that?” wondered the broker.

“Because you’ve made more brilliant deductions on your last three returns than Sherlock Holmes made in his entire career.”

 

 

Rob

 

(Copyright 2015 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)