Million Dollar ZIPs

shutterstock_672200080Increasing home prices aren’t a trend that just the middle and lower classes are experiencing—those in the million-dollar range are noticing, too. In fact, some of those that used to not have million-dollar price tags now do, according to research by Zillow.

Zillow examined the distribution of single-family home and condominium Zestimates across 29,991 different ZIP codes starting in 2007, considering areas with more than 10 percent of properties valued at 1 million or more to be a million-dollar area for the year. Compared to the national Zillow Home Value Index, which rests at $200,000, the average million-dollar ZIP had a Zillow Home Value Index of $900,584.

In 2007, there were 1,108 ZIP codes (3.77 percent of all examined) that were considered “million-dollar ZIPs”. Though in 2014 that figure had decreased to 958 (3.26 percent), that number has now increased to 1,280 (4.35 percent) as of May of this year. .

Property values are a big factor in million-dollar ZIP codes, with many concentrated in coastal markets. According to Zillow, of the 346 ZIP codes that were considered million-dollar ZIPs, 114 (32.9 percent) are on the West Coast in Seattle, Washington; Portland, Oregon; San Francisco, California; San Jose, California; Los Angeles, California; and San Diego, California. On the East Coast, New York, New York; Boston, Massachusetts; Miami, Florida; and Washington, D.C. made up another 92 new million-dollar ZIPS (26.6 percent).

However, Zillow explained that this growth is furthering the divergence in affordability between costal and interior cities. “Tech hubs” are largely considered million-dollar ZIPs with San Francisco (74 percent) and San Jose (77 percent) leading the way leaving other coastal ZIP codes to catch up. Seattle, for an example of a tech hub, has almost doubled it’s million-dollar ZIP codes from 2007’s 19 ZIP codes to now 38, which is 24 percent of the areas total ZIP codes.

To see the full article and take a look at your specific metro, click here.

Freddie Mac is ACE

home appraisalIn a buying climate that’s moving at an incredibly fast pace, Freddie Mac has announced a way to make things run even faster. Their automated appraisal alternative could possibly save homebuyers or homeowners looking to refinance up to $500 and cut as many as seven to 10 days off of closing. That is if Freddie Mac’s new technology determines them as not needing a traditional appraisal.

“By leveraging big data and advanced analytics, as well as 40+ years of historical data, we’re cutting costs and speeding up the closing process for borrowers,” said David Lowman, EVP of Freddie Mac’s Single-Family Business. “At the same time, we’re providing immediate collateral representation and warranty relief to lenders. This is just one example of how we are reimagining the mortgage process to create a better experience for consumers and lenders.”

The automated collateral evaluation (ACE) establishes whether consumers must use a traditional appraisal or not by “leveraging proprietary models and using data from multiple listing services and public records as well as a wealth of historical home values to determine collateral risks”. In order to find out if a property is eligible, lenders must submit the loan data through Loan Product Advisor, Freddie Mac’s smart end-to-end technology solution that assesses credit, capacity, and collateral to help lenders validate the quality of loans they originate.

If the estimated value of the home provided by the lender is acceptable to ACE, the lender can receive immediate representation and warranty relief related to the value, condition, and marketability for the property upon delivery of the loan to Freddie Mac. It will be available for qualified home purchases on September 1, 2017, but has been available for qualified refinances since June 19, 2017.

“When we launched Loan Advisor Suite in July 2016, we set out to give our customers certainty, usability, reliability, and efficiency,” said Andy Higginbotham, SVP of Strategic Delivery and Operations for Freddie Mac’s Single-Family Business. “ACE is our most recent capability to deliver on that vision.”

For more information on Loan Advisor Suite, click here.

Meet Mr. Cooper

shutterstock_365222318Nationstar Mortgage officially announced at the opening bell of the NYSE Monday morning its rebranding as Mr. Cooper. DS News sat down with their CEO, Jay Bray, to discuss this monumental change in an exclusive interview. 

This change has been in the works for some time now. Could you talk a little about all the moving parts that come into play when trying to rebrand a national corporation?

When you think of an incredible customer experience, the mortgage industry doesn’t come to mind. And it’s time for a change. As the leading nonbank servicer, change has to start with us, and now our goal is to completely transform our company and the industry. Monumental change like that is no easy task, so we knew we needed to start from the inside out. We started our journey by building our business on the foundation that happy team members lead to happy customers—it was a cultural shift we knew would take time. To convince our team that we were dedicated to this new journey, we have redefined our values, improved benefits, offered additional training and mentoring opportunities, listened to team member feedback, created engagement teams, and opened additional channels of communications for our team members.

We simultaneously focused on our brand name change, researching names that would resonate with both our team and customers. We needed to pick a bold name that matched our bold aspirations. Once we selected Mr. Cooper, we developed creative assets to bring the brand to life and fostered an understanding internally to breathe life into the name with all 7,000 of our team members who are the embodiment of the Mr. Cooper brand and strive to be advocates for our customers.

In a parallel path, we’ve been investing in the customer experience, creating new tools and features that will make the home loan journey more rewarding for our more than 3 million customers.

Now, on August 21, we take our next big step in our transformation journey—officially changing our name to Mr. Cooper.

What sort of obstacles did you encounter on the road to renaming Nationstar?

With any major transformation, as was true with our company transformation to Mr. Cooper, there are goals to meet and perhaps even more challenging perceptions to change. With happy team members and happy customers as our north stars, we knew we had to prioritize communication and develop a better experience for both of those audiences.

We spent an entire year rolling out this transformation to our team members, ensuring their understanding and embodiment of the ideals of Mr. Cooper, to align our entire company. This involved months of trainings, information and goal sharing and two-way communication. The impact of our investments in our team are infectious and it is amazing to see how our team has embraced Mr. Cooper.

Following our rollout of our internal transformation, we sought to transform the customer experience–we needed to do more than just talk about an exciting rebrand—we had to walk the walk. In taking a close look at customer feedback, we made real, substantial changes: we launched a new website and mobile app, with user-friendly tools and features and completely changed our operational and customer-facing technology. We have also moved all of our customer service operations back to the U.S., removed all fees for on-time online payments and offered more robust, easy to understand content. To do this we’ve invested more than $90 million in our technology and infrastructure and completed more than 50,000 hours in customer service training company-wide. We think it’s working too. Our complaints are down over 70 percent in the past two year. 

Looking forward, what do you hope to accomplish with the rebranding?

I’m glad you asked that. It’s been an incredible transformation—but we still have work to do. We want to build trust by putting the service back in the servicing industry, using innovation and technology to create an incredible customer experience. To grow our business by retaining existing customers and reaching new customers, we had to give our customers a reason to believe in us. We had to change from the inside out, and we are excited to have a tangible representation of that promise in our rebrand to Mr. Cooper.

In the near future, Mr. Cooper will be launching exciting new technology that will further assist current customers and prospective homeowners as they prioritize their finances. 

Can you tell me a little bit about the significance of the name Mr. Cooper?

After extensive research and testing, Mr. Cooper was selected as our new brand name. It personifies the next generation of home loan servicing and lending for the company and represents a more personal relationship with customers can have with their home loan provider. We recognize the critical role of a customer advocate in delivering a positive experience and aligns the entire company behind the spirit of customer advocacy.

The New York Stock Exchange is quite the stage. What were your goals or intentions behind unveiling this move here?   

Our sentiments exactly. We can think of no better way to literally ring in a new day and new brand than with the honor of ringing the bell at the NYSE. We are also very excited to have ten team members join us on the podium—each selected for their role in the successful launch of Mr. Cooper and their embodiment of Mr. Cooper core values. The launch of Mr. Cooper is really a celebration of our team and their hard work and we look forward to showcasing their achievements.

Adding to the Ranks

JK HueyOperation Homefront, a nonprofit organization dedicated to serving our military heroes after they return home from service, has recently announced the appointment of JK Huey to its Board of Directors. Huey brings over 35 years’ experience in the mortgage industry to the cause.

Recently retired from Wells Fargo, Huey will offer her expertise to Operation Homefront, specifically in helping military families obtain homeownership, but will also advise the organization on its other endeavors, including providing relief to returning veterans from Afghanistan and Iraq in the form of financial assistance for auto and home repairs, food assistance, essential home items, rent-free transitional housing, moving costs, holiday meals, and even back-to-school initiatives to provide school supplies to the children of veterans.

“Throughout her exceptional career, Huey has demonstrated her passion for helping families succeed financially, and to achieve the dream of homeownership. She also shares our collective commitment to supporting our military families so they can thrive in the communities they have worked so hard to protect,” said Brig. Gen. (ret.) John I. Pray Jr., President and CEO of Operation Homefront. “Huey is absolutely perfect for Operation Homefront and all are excited to have such an extraordinary industry leader join our very talented board. We look forward to Huey helping us do even more to support the very real and growing needs of our military families in the years to come.”

Huey has indeed led an impressive career. Before her role at Wells Fargo, she held senior management positions at IndyMac Bank and Homeside Lending, where she oversaw a variety of areas, including customer service, investor reporting, default management, retail production, and acquisitions.

“Our service men and women and their families have given so much to our country through their service, and I’ve seen firsthand what it means to a military family to finally have a place to call home thanks to Operation Homefront’s Homes on the Homefront. I am honored to accept this appointment and stand behind an organization that does so much to protect the heroes who protect us,” said Huey.

In addition, Huey boasts a broad range of accolades: such as being a Certified Mortgage Banker, an Accredited Mortgage Professional, member of MORPAC and Loan Administration Steering Committees, as well as the Chariman Emeritus of the National Mortgage Service Organization, recipient of the 2014 Five Star Lifetime Achievement Award, the 2012 Larry E. Temple Distinguished Service Award, and the 1992 Young Mortgage Banker of the Year award. In the past, she served as President of the Texas Mortgage Bankers Association, the Black Knight Mortgage Advisory Board, the Fannie Mae Customer Advisory Board, and the Freddie Mac Servicer Advisory Board.

“I am honored to welcome JK Huey to Operation Homefront’s Board of Directors, and look forward to working together with her in advancing Operation Homefront’s goals” said Ed Delgado, President and CEO of the Five Star Institute, who is also a member of Operation Homefront’s board. “Her extensive career and dedication to caring for those that protect our freedoms will be invaluable to the organization.”

Operation Homefront will provide mortgage-free homes to veterans at the Come Sail Away Military Heroes Keys for Life Dinner & Concert on Tuesday, September 19 at the Hyatt Regency Hotel in Dallas, Texas, which will be followed by a performance from the legendary rock band, Styx.

Looking out for the Rural Communities

New legislation was pushed through the U.S. Appropriations Committee recently that would, if passed into law, force the U.S. Department of Housing and Urban Development (HUD) to recalibrate how it determines eligibility for Community Development Block Grants (CDBG).

The bill, introduced by Rep. Jaime Herrera Beutler (R-Washington), would require that HUD report any area it uses “flawed income data”—or data with a margin of error that’s 20 percent or higher—to evaluate CDBG eligibility. These reports would need to be submitted to both the House and Senate appropriations committees within 90 days of the evaluation.

Until now, HUD has calculated community income levels by averaging five-year data from the American Community Survey. HUD data from 2014 shows many towns in Beutler’s district—including Pe Ell, Vader, and Morton—have been deemed “too affluent” to benefit from CDBG grants.

According to Beutler’s office, “This requirement would impact rural communities in Lewis County [Washington] that, based on inaccurate household income data, were determined to be ‘too affluent’ to qualify for Community Development Block Grants.”

Beutler says HUD has often made mistakes when deeming a community “too affluent,” and that the agency has even used data with margins of error as high as 91.5 percent when determining eligibility.

“This agency is supposed to return tax dollars to the communities that need it most, but it has made serious mistakes in disqualifying communities like Toledo, Pe Ell, and Vader for being ‘too affluent,’” Beutler said. “It can’t cover up these mistakes if this legislation becomes law.”

This isn’t the first time Beutler has taken on HUD. She also created a provision that requires HUD to have alternative methods of measuring income levels.

“After years of pressuring for transparency, my efforts will again require HUD to make the extent of inaccuracy of its data public—and it will be held accountable for its reporting errors,” she said. “While it shouldn’t take an act of Congress to get a public agency to provide basic transparency, I’m not going to let up on this issue or the needs of our rural communities until we have a long-term solution.”

The bill was passed by the House Appropriations Committee on Tuesday, but has not been scheduled to appear in front of the House floor as of press.

 

Government-Sponsored Rental-Prise?

Freddie Mac BHFreddie Mac might be following in Fannie Mae’s footsteps, according to a recently published New York Times article, and get a hand in the single-family home-rental market, now that the Federal Housing Finance Agency (FHFA) has given the Enterprise the go-ahead to shop around.

According to the piece, the bank wants to supply up to $1 billion for affordable housing rentals to mid-sized landlords, with the possibility of bringing in nonprofits as well. Affordability is the Enterprise’s main goal, Freddie Mac VP David D. Leopold said in a statement.

Freddie’s proposed deal would be much different than Fannie Mae’s, which reached a $1 billion financing deal with Invitation Homes, one of the largest private-equity-backed landlords in the country. The firm holds 50,000 single-family rental-homes in 13 major markets, and had an initial public offering netting $1.7 billion around the time of signing.

There’s still plenty of rental homes to go around, though. The New York Times reports that there are 17 million homes rented, a figure that has grown from 11 million in 2007. Freddie Mac would like to find itself somewhere in the middle. From the article:

The vast majority of rentals are still managed by mom-and-pop operators who own a small number of homes. And Fannie Mae and Freddie Mac have long provided financing to small investors. But financing has been hard to come by for nonprofit housing groups and midsize investor landlords who have had to rely mainly on private-equity-backed firms for financing.

The goal of the move would be to add some stability to mid-sized landlords by guaranteeing loans, thereby encouraging more traditional lenders to get into this underrepresented portion of the single-family rental market. The Senate Committee on Banking, Housing, and Urban Affairs has recently been calling for reforms to the government-sponsored Enterprises, and the move to single-family rental homes could be a step in that direction when considering the future.

The FHFA will still have to approve of any financing deal Freddie Mac comes up with, though, and has only approved of Freddie and Fannie’s move to the rental market in limited quantities. The agency had previously denied Freddie Mac in 2012, when the Enterprise wanted to finance buyers of foreclosed homes, citing concerns that low cost loans would hurt the banks and encourage home flipping.

Slow Down Ahead

The share of American homeowners who are underwater has fallen by the second smallest percentage on record, according to Zillow’s Q1 2017 Negative Equity report released on Friday. Though the number of underwater borrowers is now less than a third of its 2012 peak, this significant slow down isn’t a trend to ignore.

Between Q4 2016 and Q1 2017 just over 5 million U.S. homeowners—or about 10.4 percent of all borrowers—were behind on their mortgage loans. According to the Zillow report, more than three times that—15.7 million—were underwater in 2012.In Q4 2016, 12.7 percent of borrowers were underwater, and in Q1 2012, it was 31.4 percent.

“The 0.1 percentage-point quarterly drop between Q4 2016 and Q1 2017 negative equity was the smallest since a barely noticeable drop from Q3 2014 to Q4 2014,” Zillow reported. “The Q1 2016-Q1 2017 annual change of 2.3 percentage points is the smallest on record (data dates to Q2 2011), tied with the annual drop recorded in Q3 2012 and again in Q2 2016. The annual change, spread over four quarters, is smaller than the one-quarter change recorded between both Q2-Q3 2012 and Q2-Q3 2013.”

The amount that borrowers are underwater is also of note. According to Zillow’s report, an overwhelming majority of America’s underwater borrowers are behind 20 percent or more. Another 15 percent owe twice as much as their home is worth.

“The bulk of those homeowners that remain in negative equity are very deep underwater—56.7 percent of those in negative equity were underwater by more than 20 percent as of the end of Q1,” Zillow reported.

According to the report, homeowners with “shallow negative equity”—or those who are only slightly behind on their loans—have likely caught up by selling in today’s highly appreciating market.

“Essentially, those ‘easy’ homeowners in relatively shallow negative equity have likely already or will soon re-surface as home values have grown over the past few years,” Zillow reported. “That leaves just those millions of harder cases remaining that are likely to take much longer to free.”

Read the full report at Zillow.com.