April 2017 Issue by HousingWire

HOUSINGWIRE MAGAZINE ❱ APRIL 2017

STUDENT LOAN DEBT Paying for college means putting off homeownership for many Millennials.

P.36

SFR ALL-STARS Five companies to watch in the booming single-family rental market. HOUSINGWIRE MAGAZINE ❱ APRIL 2017

P.42

BUILDTO RENT

THE NEWEST TREND IN SINGLE-FAMILY RENTALS PRESENTS A BIG OPPORTUNITY FOR BUILDERS AND INVESTORSPG. 30

HOUSINGWIRE APRIL 2017 EDITORIAL EDITOR-IN-CHIEF Jacob Gaffney MAGAZINE EDITOR Sarah Wheeler ASSOCIATE EDITOR Caroline Basile SENIOR FINANCIAL REPORTER Ben Lane DIGITAL REPORTER Brena Swanson REPORTER Kelsey Ramirez CONTRIBUTORS Casey Cunningham, Tim Reilly

CREATIVE CREATIVE ASSOCIATE Chantae Arrington

SALES AND MARKETING NATIONAL SALES DIRECTOR Jennifer Watson Laws jlaws@HousingWire.com MARKETING DIRECTOR C. Scott Smith SALES DIRECTORS Christi Lingard clingard@HousingWire.com David Wilson dwilson@HousingWire.com Tyson Bennett tbennett@HousingWire.com

RENTAL RISE THE RATE OF HOMEOWNERSHIP FELL to its lowest point in 50 years in 2016, settling at 63.4%. That means that more than a third of American households are now renters. Exploring how that affects the mortgage industry is one of the themes of this issue, as we look at several key questions related to single-family rentals. In our cover story, Kelsey Ramírez talks to industry insiders who see a serious upside for builders who hold on to properties and become landlords. Or, alternatively, who sell large swaths of new construction houses to SFR companies instead of individual homeowners. This trend provides exciting opportunities for builders, investors and renters, but also squeezes housing inventory even further, driving up prices and keeping more people out of homeownership. We cover another factor in the rental boom in our feature on student loan debt. A college degree used to mean greater earning power and a better shot at the American Dream, but now those with student debt have a hard time qualifying for a mortgage under strict debt-to-income ratios, even with a good job. This one issue has been blamed for keeping Millennials on the sidelines for too long, but what’s the reality? Find out on page 36. Finally, we spotlight five companies innovating in the single-family rental space in our SFR All-Stars section. The long-term impact of such a large renter population on our industry is still unfolding. Count on HousingWire to keep you in the loop.

AD OPERATIONS MANAGER Kristy Figueroa

CORPORATE PRESIDENT AND CEO Clayton Collins CONTROLLER Kimberly Hudson OFFICE ADMINISTRATOR Stephanny Morales

Subscriptions are available for $149.00 for one year. A subscription includes the print magazine and online access to the digital magazine. Canada and foreign are only eligible to purchase the “Digital Only” subscription plan at $149 for one year. For subscription orders, call 1-800-869-6882 or email HW@ kmpsgroup.com. Postmaster: Send change of address to HW Media, P.O. Box 47627, Plymouth, MN 55447. Subscribers: Please send last magazine label along with change of address requests. The information contained within should not be construed as a recommendation for any course of action regarding legal, financial or accounting matters. All written materials are disseminated with the understanding that the publisher is not engaged in rendering legal advice or other professional services. HW Media does not guarantee the accuracy of information provided, and is not liable for any damages, losses or other detriment that may result from the use of these materials.

Sarah Wheeler Editor @swheelerHW

TWEETS FROM THE STREET Economic realities may be leading people to prefer little dogs. The Economist @TheEconomist

HOUSINGWIRE ❱ APRIL 2017 5

CONTENTS

FEATURE

THE AMERICAN DREAM REVISITED Homeownership and higher education have long been at the core of the American Dream. But are the two together sustainable amid mounting student loan debt? By Deborah Huso

FEATURE

42 FEATURE SFR ALL-STARS

The newest trend in single-family rentals presents a big opportunity for builders and investors.

As the single-family rental market grows hotter and surges ahead, new investors are jumping in. We look at five companies delivering products and services in the SFR space.

By Kelsey Ramirez

By Caroline Basile

BUILD TO RENT

HOUSINGWIRE â?ą APRIL 2017 7

APRIL ‘17

THE LINEUP 12 PEOPLE MOVERS Jay Farner takes over as CEO of Quicken Loans, while Bill Emerson is promoted to vice chairman of Quicken’s parent company, Rock Holdings.

14 EVENT CALENDAR The MBA Secondary Market Conference roars into New York City at the end of the month, followed by IMN’s SFR East in Miami Beach starting on May 1.

15 ON THE SHELF

Our selections this month include “The Airbnb Story” and “Black Edge,” about hedge fund manager Steve Cohen, “the most wanted man on Wall Street.”

16 TECH INNOVATORS Thanks to data standardization and uniformity, lenders can now get Day 1 Certainty from Fannie Mae — freedom from reps and warranties on key loan components.

18 DISPATCH 1 After nine years of innovation, Auction.com continues to push the envelope for real estate bought and sold online, helping clients to optimize their disposition strategies.

20 DISPATCH 2 Metrostudy’s MortgagePro expands lender opportunities with access to builder data. The customizable platform delivers proprietary research for organic and M&A growth.

VIEWPOINTS 24 THE SFR MARKET IN 2017

21 HOT OR NOT

Tim Reilly, president of Green River Capital, looks at the new players, changing deal structures and a rediscovered business model — cash flow — of the SFR market this year.

26 HOW TOP PRODUCERS LEVERAGE SOCIAL MEDIA

See what’s trending, for good or for ill, in housing this month. Ben Carson is on the list, along with appraisers, Wells Fargo bonuses and banking customer satisfaction.

Casey Cunningham, CEO of Xinnix, shares how the mortgage industry’s top producers leverage technology, especially social media, to achieve incredible results.

22 SOUNDING BOARD

28 CUTTING HOUSING OFF AT THE KNEES HousingWire Editor Sarah Wheeler outlines why President Donald Trump’s proposed budget for HUD could cripple housing for decades.

What is the industry saying about the future of Fannie Mae and Freddie Mac? We’ve rounded up some of the more interesting quotes from around the web.

TWEETS FROM THE STREET We’re hardwired to read emails in a more negative tone than how they were actually written. Fast Company @FastCompany

HOUSINGWIRE ❱ APRIL 2017 9

APRIL ‘17

50 BACK DEPARTMENTS 50 INSIDE BASEBALL The U.S. Court of Appeals ruled against investors in the conservatorship fight in February and shareholders in Fannie and Freddie won’t be able to pursue claims.

54 CFPB WATCH If President Donald Trump wants to fire Richard Cordray, he’s going to have to wait a little longer to do it, as the Court of Appeals finds for the Bureau in PHH case.

58 KUDOS Ally Bank takes home two Stevie Awards for its sales and customer service efforts, while Guild Mortgage donates to the Infinite Hero Foundation for military vets.

60 INDUSTRY PULSE Wells Fargo committed to lending $60 billion toward African-American homeownership. The company plans to create at least 250,000 new homeowners through the effort.

62 KNOWLEDGE CENTER Epiq outlines what loan servicers need to know about the CFPB’s new rule, while Floify releases its loan officer recruitment and retention study.

66 Q&A Read executive insights from Sean Faries, CEO of Land Gorilla, and Shannon Faries, director of risk management at the company.

68 COMPANIES/PEOPLE INDEX

69 AD INDEX 70 PARTING SHOT

70 HOUSINGWIRE ❱ APRIL 2017 11

Jay Farner Quicken Loans

12 HOUSINGWIRE ❱ APRIL 2017

COTTEN

CRAWFORD WELCH

ATAYA HANSON

oanDepot promoted Dan Hanson as its new chief production officer. Hanson’s 30-year mortgage career includes working with lending brands including Bank of America and Countrywide. Starkey Mortgage announced Tim Cotten as its new director of recruiting. Cotten previously worked at SWBC Mortgage as assistant vice president and manager of talent acquisitions and at Chase as assistant vice president and senior sales recruiter. The Mortgage Action Alliance Steering Committee elected Brigitte Ataya, New American Funding senior vice president regional manager, to its committee in 2017. Ataya brings more than 20 years of mortgage experience to the committee. The MAA also elected Lisa Amato, New American Funding’s senior loan consultant, to serve on the steering committee as a non-voting member. Amato has more than 15 years in the mortgage industry. Primary Residential Mortgage announced Bo Crawford and Diana Dikes as the leaders of its new Nevada branch. Dikes will serve as the company’s product manag-

PEYTON

AMATO DIKES

Quicken Loans promoted Jay Farner, the company's former president and chief marketing officer, to CEO. Farner replaces Bill Emerson, who was promoted to vice chairman of Quicken Loans' parent company, Rock Holdings. Former Chief Economist Bob Walters will step into the roles of president and COO.

er and Crawford joins as branch manager. Mortgage Guaranty Insurance Corp. announced the promotion of James Hughes to executive vice president of sales and business development and Salvatore Miosi to executive vice president of business strategy and operations. Previously, Hughes held the position of senior vice president of sales and business development with the company. Miosi was promoted from his position as senior vice president of business strategy operations for MGIC, where he has worked since 1988. Miosi has held a variety of leadership roles in operations, technology and marketing divisions at the company. Finlocker announced mortgage industry veteran Mike Atwell as its new vice president of sales. Atwell brings more than 25 years of experience in business development and sales leadership, including working with companies such as IndyMac and Prospect Mortgage, to his new position. Previously, he helped launch and grow Generation Mortgage, where he served as vice president. HomeAid America announced that

CalAtlantic Homes Executive Chairman Scott Stowell will lead its board of directors as chairman for 2017 and 2018. Previously, Stowell held various roles at Standard Pacific for nearly 30 years, including serving as president and CEO. Colonial Savings hired Leticia Mijes for the newly created position of multicultural market manager. Mijes has more than 21 years of experience and is an active member of the National Association of Hispanic Real Estate Professionals, where she served as president of the Houston, Texas, chapter in 2014. LenderLive announced Bill Welch as the new vice president of national sales for its settlement services division. Previously, Welch served as chief executive officer at JWJ Consulting. He also held senior major account management and sales positions at several technology companies such as SolutionStar, ISGN and CoreLogic. PHH announced that senior vice president of servicing Marty Foster plans to retire after spending 20 years with the company. Replacing Foster will be Stephen Staid, who joins PHH from SEMS, where he served as president. Prior to SEMS, Staid served as senior vice president at Bank of America. Earlier in his career, Staid was executive vice president at Nationstar Mortgage, CEO of Saxon Mortgage Services, managing director, servicing – Europe at Lehman Brothers and senior vice president at Litton Loan Servicing. Realogy Holdings Corp. named John Peyton CEO over its Realogy Franchise Group. Peyton currently serves as president and COO of RFG. He joined RFG in October 2016, previously serving for 17 years as a senior executive with Starwood Hotels and Resorts Worldwide.

EVENT CALENDAR

MBA’S NATIONAL SECONDARY MARKET CONFERENCE & EXPO 2017 APRIL 30-MAY 3, 2017 Host: Mortgage Bankers Association Location: New York Marriott Marquis, New York Cost: $1,050-$2,600 On the agenda: The opening session for the National Secondary Market Conference will feature Wall Street Journal columnist and author Peggy Noonan. Sessions include panels on credit risk transfer and MSR liquidity, with the Secondary Market Reform session a mustattend. Join industry leaders while they discuss and take questions about MBA’s reform proposals.

NEW YORK If you can’t get tickets to Hamilton, you can at least take a walking tour of the first Treasury Secretary's New York, including Wall Street. The tour provides insight into his influence on the city. http://hamiltonsnewyork.com/

IMN’S SINGLE FAMILY RENTAL INVESTMENT CONFERENCE (EAST) MAY 1-3, 2017 Host: Information Management Network Location: Loews Miami Beach Hotel Cost: $0-$2,595 On the agenda: This year’s conference brings together market leaders from the single-family rental industry for three days of informative sessions on all aspects of the SFR market. This year’s event follows the success of last year’s conference, which saw more than 1,100 participants and covers topics such as REO and flip markets, as well as a session on the future of the SFR economy under the Trump administration.

MIAMI Described as “the finest private house ever built in America,” Vizcaya is an expansive 34-room estate just off the Biscayne Bay coast. The house is modeled after the country estates of northern Italy and are surrounded by bright gardens. Vizcaya is open daily except Tuesdays, from 9:30 a.m. to 4:30 p.m. http://vizcaya.org/ 14 HOUSINGWIRE ❱ APRIL 2017

ON THE SHELF “The Airbnb Story: How Three Ordinary Guys Disrupted an Industry, Made Billions ... and Created Plenty of Controversy” LEIGH GALLAGHER HOUGHTON MIFFLIN HARCOURT

Leigh Gallagher explores hotel alternative Airbnb’s evolution from a quirky idea between its cofounders to becoming the world’s largest accommodations provider. Gallagher, a Fortune editor, explores how the startup disrupted the multibilliondollar hotel industry, but not without controversies of its own. The book also offers the first detailed profile of Brian Chesky, the company’s unique CEO.

“Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street” SHEELAH KOLHATKAR RANDOM HOUSE

Former hedge fund analyst Sheelah Kolhatkar shows how hedge fund manager Steve Cohen became one of the richest and most influential traders in finance until the Justice Department set its sights on him. Cohen helped shape the rise of a new class of billionaire financiers and shifted both politics and the American economy. The book offers a window into the transformation of the U.S. economy as hedge funds grew into a highly competitive asset worth nearly $3 trillion.

TECH

SPONSORED CONTENT

INNOVATORS

How “alphabet soup” led to Day 1 Certainty Fannie Mae combines big data with appraisal data standardization BY ANDREW BON SALLE 60% of all appraisals submitted to Fannie Mae! 2. Enhanced Property Inspection Waivers (PIWs) provide offers to waive an appraisal on about 20% of limited cashout refinances. Lenders get freedom from representations and warranties on property value, condition, and marketability; borrowers can save the cost of an appraisal; and a shorter origination process benefits everyone.

DATA POWERS INDUSTRY EFFICIENCY

UMDP, UAD, UCDP, URLA, UCD … the industry calls these acronyms “alphabet soup”– and not with affection. They represent industry-wide efforts to create uniform data standards, and the work to adopt them has been a pain point for lenders. But these efforts also reflect a long-overdue investment in data quality and efficiency. Now, we are beginning to see the return on investment. Thanks to data standardization and uniformity, lenders can now get Day 1 Certainty – freedom from representations and warranties on key loan components plus more speed and simplicity.

THEN AND NOW Less than a decade ago, residential appraisal reports were not even digitized, with no standard formats even for simple things like dates. Property condition was 16 HOUSINGWIRE ❱ APRIL 2017

described in wildly nonstandard free-form terms such as “Average New,” “Average Old,” and “Typical.” The number of bathrooms in a property might be listed as 1.5 or 1.1, both meaning a full and a half bath. The Uniform Appraisal Dataset (UAD) standardized appraisal data, and since 2012 Fannie Mae has required digitized appraisal reports. With that foundation, we developed Collateral Underwriter (CU). Pairing advanced analytics with a database of more than 23 million appraisals, CU is a powerful appraisal risk assessment tool that we provide free to our lenders. Now there is even more. CU enables Day 1 Certainty in two ways: 1. Lenders receive freedom from representations and warranties on the appraised property value on eligible loans with a CU risk score of 2.5 or lower – about

Combine standardization with so-called “big data” and that’s the power behind the DU validation service – another Day 1 Certainty offering. Data power enables a more accurate, simpler digital process. With electronic validation of income, assets, and employment, lenders and borrowers benefit by moving away from the manual processes prevalent in the industry today. Pilot lenders who test-drove the DU validation service told us it brought efficiencies to their business processes, shortening originations by four to seven days with quicker pre-approvals and meaningful time savings for loan processors and underwriters. And lenders get Day 1 Certainty with freedom from representations and warranties on validated loan components.

CONGRATULATIONS, INDUSTRY! We congratulate and thank our lender and industry partners for making this progress possible through their hard work in implementing data standards. Day 1 Certainty is the next step forward on the industry’s journey toward a more efficient automated approach to originating mortgage loans. We’ve come a long way together … and that painful alphabet soup is now helping to bring pain-relieving Day 1 Certainty.

SPONSORED CONTENT

Leveraging technology to advance bank-owned and foreclosure sales After nine years of innovation, Auction.com continues to push the envelope

s in many other industries, the power of technology has completely reshaped the way that real estate is bought and sold in recent years. So, it’s no surprise that technology has become a game changer in the bank-owned home and foreclosure market as well. Over the past nine years, Auction.com has been effectively leveraging technology in ways that have allowed its clients to begin optimizing their disposition strategies long before properties go to foreclosure sales. Where sellers of bank-owned and foreclosure properties were previously limited in their access to potential buyers, their reach has been significantly expanded to a global audience through the Internet, mobile technology, database marketing, email, social media and search engine marketing. All of these are fully leveraged by the team at Auction.com to create enhanced awareness of properties coming to sale, thereby driving demand that directly benefits the company’s clients. “Technology is at the very core of everything we do at Auction. com,” commented General Manager Jason Allnutt. “Even the live foreclosure auction events we conduct at courthouse steps all across the country use an enormous amount of technology in the behind-the-scenes processes, our online marketing programs, and our communications with both sellers and buyers.” Indeed, technology has improved Auction.com’s buyer experience as well. While in the past a buyer may have shown up at the courthouse steps only to learn that a sale had been postponed or cancelled, or to learn that a seller had decided to bid at total debt and take the asset into their REO portfolio, today, Auction. com buyers can get this information digitally well in advance of the actual event. Buyers can find out whether a home is intended to sell at a reasonable price, review title reports and property condition assessments all from the convenience of their home or office, and even place a bid remotely through the company’s proxy services. All of these advantages have come together to form a true online marketplace where one did not exist previously. Other improvements Auction.com made to its REO and foreclosure disposition resources in 2016 include simplifying its bidder registration process, changing the format of its property display pages to make them more streamlined and adding a live-chat feature to ensure optimal customer service. The positive feedback received from buyers and growing market share from REO and foreclosure property sellers over the past year has proved what Auction.com’s founders have long believed: That real estate is moving online. And, as the world has become more dependent on mobile tech18 HOUSINGWIRE ❱ APRIL 2017

nology, Auction.com is bringing the same user experience to mobile devices. Thus, the Auction.com iPhone/iPad and Android apps were born. These apps enable buyers to search and save properties that are on the platform. And unlike other popular real estate applications, the Auction.com mobile apps actually allow buyers to bid on and buy property they’re interested in. “In partnership with our clients, and investors like CapitalG (formerly Google Capital), we believe that this technological innovation and the benefits it is creating in our industry are only the tip of the iceberg,” said Allnutt. “In the next year, we plan to launch an industry-changing program where we will be able to harness our marketplace to not only match buyers with a home, but expand that interaction to include the occupants as potential and certified renters. Just imagine the day when a seller can avoid an eviction by transitioning ownership of a foreclosed home to a buyer who could benefit from having a tenant already in place! These are the types of advances our industry can look forward to as we continue to push the envelope.”

SPONSORED CONTENT

Metrostudy’s MortgagePro expands lender opportunities with access to builder data Customizable platform delivers proprietary research for organic and M&A growth

he 2017 mortgage market provides tremendous opportunities for lenders, provided they can navigate the tight supply of new homes. Customized data and analysis from MortgagePro, developed by Metrostudy, utilizes proprietary survey research cross-referenced with public data to give lenders a critical advantage in locating and targeting new areas. By providing complete and accurate visibility into housing market opportunities, MortgagePro gives users the ability to gain critical insight into activity trends; including distribution of loans by type, a comprehensive list of builder participants with sizing and lender relationship intelligence, as well as competitive sizing and market share trends. MortgagePro is a flexible and customizable platform that allows each client to decide how to use it. The platform is capable of delivering information from a national perspective all the way down to a local ZIP code level. The platform also provides custom reporting through its powerful analytics tool, allowing for precise customization for any business strategy. Each client’s geographic target is assessed and the MortgagePro experience is tailored to that blueprint. Clients get exactly the information they need without the noise of irrelevant data. MortgagePro is comprised of two core datasets: proprietary survey research into active and future home construction, which is activity collected by Metrostudy, and public record data that Metrostudy integrates with its proprietary data. MortgagePro conducts in-field surveys of activity at new home construction sites

20 HOUSINGWIRE ❱ APRIL 2017

as well as future development plans from county municipalities, and uses daily feeds of new public records from more than 2,400 counties nationwide. MortgagePro’s use of on-the-ground intelligence gives the platform a unique advantage over competitors. “What sets Metrostudy apart from other providers of data is their boots on the ground in the vast majority of growth markets in the country,” said Jim Owen, national builders sales executive for Fifth Third Bank. “The builder market is a very fragmented market and you really need to know who they are and what they are doing if you want a scalable program.” The raw public records data is cleansed daily by algorithms that scrub and standardize it, correcting sale types and more. MortgagePro then matches the new home sales records to new home subdivision data. This matching is done by the platform’s research staff in the company’s survey areas (76% of all new construction activity nationwide and covering all the top markets). The researchers physically match each new home deed to a subdivision that’s being tracked in the field, providing for amazing data cleanliness. Lenders can use MortgagePro to review their market for trends and current business market share to effectively locate areas with the greatest opportunity for growth. Using the data in MortgagePro at the subdivision level, lenders can see not only which communities are actively selling, but which lenders are already working in that space. This effectively allows for triage of low-hanging fruit versus more strategic sales.

Hot SIZZLE? Not FIZZLE? 1 1 WHY THE

WHY THE

BEN CARSON



Ben Carson was officially confirmed as secretary of the Department of Housing and Urban Development on March 2. A few days later, in his first speech to HUD employees, he referred to slaves as immigrants, causing a media uproar. Later that day Carson sought to clarify his remarks, saying, "The slave narrative and immigrant narrative are two entirely different experiences... The two experiences should never be intertwined, nor forgotten, as we demand the necessary progress towards an America that's inclusive and provides access to equal opportunity for all."



APPRAISERS: THEY’RE STILL NEEDED The future of home valuation is a topic that weighs heavy on appraisers, understandably. Both the GSEs have expanded the use of automated models and made other appraisal changes. So HousingWire’s March webinar on the state of the appraisal industry opened with the big question: Will technology replace appraisers? The panel of industry experts included Zach Dawson, Fannie Mae's director of collateral strategy, who made it clear that technology could enhance but not supplant human appraisals.

CUSTOMER SATISFACTION IN BANKS Retail bank, mortgage and financial services firms saw a five-year trend of consistently improving customer satisfaction, but perception of excessive sales pressure now threatens that trust, according to J.D. Power's new report: Customer Views on Sales Practices in Financial Services. Despite the pressure since the financial crisis, customer satisfaction hit record highs, as seen by metrics that track customer loyalty, bank reputation and repeat usage. In fact, loyalty is so high that even after Wells Fargo's scandal, 82% of retail bank consumers say they trust their bank to do the right thing.

WELLS FARGO BONUSES



Wells Fargo announced March 1 that it plans to claw back the cash bonuses for eight of its top senior executives, including the bank’s new CEO, Tim Sloan, as the fallout from the bank’s fake account scandal continues. According to the bank, the revocation of the senior executives’ bonuses are “not based on any findings of improper behavior in the board of directors’ ongoing independent investigation” into how 5,000 of the bank’s former employees opened as many as 2 million accounts without authorization in order to get sales bonuses.



MORTGAGE RATE/TREASURY YIELD CORRELATION Since 2017 began, mortgage rates have yet to follow the 10-year Treasury yield. “For the last 46 years, the 30-year mortgage rate has been almost perfectly correlated with the yield on the 10-year Treasury, but not this year,” Freddie Mac Chief Economist Sean Becketti said. In the weeks that followed, the 30-year mortgage rate continued to chart its own course. “While we expect mortgage rates to fall into line with Treasury yields shortly, this just may be a year full of surprises,” Becketti said.

PARTISAN GAP Democrats are expecting recession and Republicans are expecting robust growth, Surveys of Consumers Chief Economist Richard Curtin said. “Indeed, the difference between these two parties is nearly identical to the difference between the all-time peak and trough values in the Expectations Index - 64.6 versus 64.4,” he said. Curtain explained the expectations of Democrats and Republicans largely offset each other, and the overall gain in the Expectations Index was due to self-identified Independents, who were closer to the optimism of the Republicans than the pessimism of the Democrats. HOUSINGWIRE ❱ APRIL 2017 21

Where experts and pundits sound off on a key industry issue

FUTURE OF THE GSEs “The Trump administration should move toward a future system in which private markets take the risks in mortgage lending, not taxpayers, and the basic infrastructure of the system is in a government utility, not a too-big-to-fail duopoly.” –Mark Zandi, chief economist at Moody's Analytics "We need to protect the buyers who can only afford the American Dream via Fannie Mae and Freddie Mac. There is always room for improvement in any program, but I would be opposed to reinventing them to the detriment of buyers with the middleto lower- price budget. Owning a home should not become an elitist amenity.”

“We are pro-Fannie and pro-Freddie. We're concerned that if they are replaced with a private version, it could affect the ability for 30-year mortgages. The private market may decide that those aren't profitable or too risky. We're fighting to keep them, unless they have a good replacement we haven't seen yet.”

– Charryl Youman, an agent with Berkshire Hathaway HomeServices Florida Realty in Venice, Florida

–Roger Piro, real estate agent and a director of the National Association of Realtors

“I’m committed that under this administration we’re going to have housing reform so that we don’t just leave these entities the way they are. They’ve been sitting there for too long of a period of time and we need a solution.” –Steven Mnuchin, Treasury Secretary “The difficult approach – legislation – likely will need to be bipartisan, and Senate Democrats have zero interest in cooperating to reform housing finance without crystal clear protections for homeowners. Those are great, but they come with a higher cost than built into the existing infrastructure.” –Jim Vogel, an FTN Financial strategist “There could be changes to Fannie and Freddie, but nobody knows what those are going to be.” –Mitch Clarfield, senior managing director, Berkeley Point Capital

“Fannie and Freddie need to be a lot smaller than they are today, and if they are going to exist they need to operate in a truly competitive marketplace.” –Michael Bright, former staffer for Sen. Bob Corker, R-Tenn.

22 HOUSINGWIRE ❱ APRIL 2017

VIEWPOINTS

Tim Reilly Tim Reilly is president of Green River Capital and Executive Vice President of Clayton Holdings, the leader in providing SFR valuations and diligence to lenders and issuers.

The SFR market in 2017 New players, changing deal structures and a rediscovered business model—cash flow

It’s the question that has intrigued our industry since institutional investors began buying single-family rental (SFR) properties four years ago: Is the single-borrower SFR really a market or just a single trade? Earlier this year, many observers felt the question was definitively answered when it was disclosed following Invitation Homes’ IPO that Fannie Mae was guaranteeing $1 billion worth of SFR debt. As the Wall Street Journal wrote at the time: “Fannie Mae’s guarantee… suggests a view that Wall Street’s housing wager is a long-term business, not just an opportunistic trade made after the foreclosure crisis.” Clearly, Fannie Mae’s actions have provided additional credibility to the market and have the potential over time to expand access and liquidity for issuers, lenders and smaller investors. However, a strong case can be made that the market’s evo24 HOUSINGWIRE ❱ APRIL 2017

lution over the last year and a half also demonstrates maturity and sustainability. The SFR market got off to a slow start in 2016, as widening spreads impacted new debt issuance. When spreads tightened later in the year, issuance picked up as six new deals, valued at $3.5 billion, came to market. They included new players and the debut of single-borrower refinances. The refinance transactions allowed issuers to realize the housing price appreciation (HPA) that had occurred in the portfolio, make strategic allocation decisions (for example, selling off one Metropolitan Statistical Area (MSA) and buying into another), and reissue debt. According to Kroll

Bond Rating Agency (KBRA), there are 15 legacy deals that could be refinanced or have their terms extended this year. Currently, institutional investors control approximately 170,000 properties (a relatively small portion of the overall SFR space, which is dominated by smaller investors, and estimated to include 11 to 13 million properties). KBRA reports that 105,000 properties have been included in the 26 single-borrower deals done to date, which suggests there are somewhere north of 60,000 properties that could still be securitized. Given the historic average deal size of roughly 4,000 properties, there remains the potential for another 15 or so new single-borrower deals. Meanwhile, institutional investors continue to make judicious purchases, often at open market prices. For example, two of the largest issuers added to their portfolios last year without bringing any new securitization to market. Most observers see this as a sign that they are investing to support their property management infrastructures, and to accommodate continued demand for rental housing. “In October 2016, the U.S. Census Bureau published research indicating that as of Q3 2016 the percentage of renters as a share of all households was 36.5%, which has increased from approximately 35% as of the 2010 U.S. Decennial Census,” KBRA noted. “Recent Urban Institute research shows this percentage growing to 37% in 2020 and to 39% by 2030.” As 2017 unfolds, our industry can expect to see more refinance deals, strategic asset allocation and higher confidence levels, thanks to Fannie Mae’s expansion in the SFR space. Historic participants and new entrants will also be using a new business model, one that relies on infrastructure and cost control, not HPA, and is laser-focused on the cash flow potential that has always been present in the SFR market.

VIEWPOINTS

Casey Cunningham

How top producers leverage social media Lenders now have a direct line to clients

Social media is one of the most revolutionary innovations of our time. Within a few short years, billions of people from every corner of the globe have begun using digital platforms to connect with family, friends, colleagues and complete strangers. This shift in the way we connect with others has also had a profound effect on the way we do business. The rise of social media provides a unique opportunity for lenders to directly reach today’s clients. As our market becomes more purchase-driven and millennials make up the largest group of homebuyers, mortgage professionals can 26 HOUSINGWIRE ❱ APRIL 2017

employ digital platforms to make connections with referral partners and the increasing number of young consumers. Many of the mortgage industry’s most accomplished producers have fully embraced the power of social media and its ability to reach an expanded customer base. Throughout my years of experience

working in the industry, I have had the great privilege of holding conversations with many of the nation’s top producing mortgage professionals and gathering valuable insights about how they maintain such remarkable success. These individuals are not shying away from the digital landscape that is now an integral part of our industry. Instead, they are leveraging technology to achieve incredible results. Here are some of their best practices for mortgage professionals ready to employ social media as a tool for growing their databases and enhancing customer relationships.

Casey Cunningham is the founder and CEO of Xinnix, the No. 1 mortgage academy in the nation.

Joel Mahakian’s strategy, on the other hand, involves being on the other end of tagged photos. “I have some great Realtor friends who put their listings on Facebook on a regular basis,” he says. “They will tag me in those posts and say customers need to call me in order to get prequalified.”

GET CONNECTED One of the primary benefits of social media is its ability to help sales professionals forge new connections. In the past, loan officers have relied primarily on referrals from Realtors for new business. Now, top producers like Cindy Laffey are using simple methods to get their names directly in front of potential clients. She explains, “We post pictures of every closing and tag our real estate agent, referral source, the buyers and their business pages. It goes on and on. That’s really getting a lot of activity and getting me a lot of exposure.”

GET PERSONAL Making the initial connection is a great first step, but loan officers can also leverage these platforms to connect with clients on a personal level. Realtors and homebuyers are far more likely to do business with someone they feel they can relate to. This is the perfect area to utilize social media. As Jennifer Sims says, “It’s a way I can give them a piece of myself. They know who I am, who my family is, my cat’s name, my favorite color.” Keith Renno has a similar strategy. He wants his Facebook friends to know that he’s not just a lender, but also an individual. “We try to keep our Facebook 65% personal and 35% reminders that we’re in the mortgage business. But we do like to keep 65% personal because we don’t want to spam people or make them feel like the only thing we’re talking about is mortgages.” For Rosella Campion, social media is also a way to stay in touch with past customers and let them know she still values their relationship. “Sending out e-birthday cards has been a wonderful way to remind people that I’m here and that I am thinking of them,” she says. Shashank Shekhar highlights the importance of making a good personal impression through social media. In his experience, “When working with a client that has a listing agent I’ve never met, he or she is still familiar with me because they kind of know me since they’ve seen me on Facebook.” Whether forging new connections or maintaining ones with previous clients, social media is a fundamental aspect of the relationship between mortgage professionals and their customers in today’s market. By understanding the personal nature of social media, they will build stronger, more

meaningful connections with current and potential clients. GET EDUCATIONAL Finding the right balance between personal and business posts on social media is incredibly important for lenders, but they also must remember what their most important role is: to serve their clients. Providing helpful, insightful resources that empower the client with industry knowledge will only enhance the relationship between loan officer and customer. Yvette Clermont finds posting resources on digital platforms gets the best response from her client base. “I’m getting feedback on social media when it’s an educational piece,” she says. “Whether it’s a new program, a new product or a guideline, I get feedback when something is helpful to a consumer.” GET REVIEWS Before most people choose which car to buy, food to order, or loan officer to use, they go to the Internet. Getting positive ratings and comments on social media leads to production growth. According to Rosella Campion, “We are asking our customers to review us on different sites, and that has gotten us great leads, which has been a pleasant surprise.” Stuart Crawford says his most important utilization of social media is to share his success. “It’s a validation piece. We push clients there to write reviews, to like us. When we get a new client, we have a welcome email that has our Facebook page and says, ‘Hey, if you want to get to know more about us, you can go to this page and see what our clients say.’” Although social media has created a new landscape to navigate, it also presents countless opportunities for lenders to expand their databases and connect with more customers. By becoming more strategic with their approach to social media and incorporating these top producers’ best practices, mortgage professionals can harness the potential of these powerful tools to make a lasting impact on their business. HOUSINGWIRE ❱ APRIL 2017 27

VIEWPOINTS

Sarah Wheeler

Cutting housing off at the knees Cuts to HUD budget are short-sighted at best

In early March, a draft of proposed budget cuts to the Department of Housing and Urban Development surfaced, showing that the Trump administration was considering cutting up to $6 billion from some of the most important housing assistance programs in the country. Ben Carson, the newly installed secretary of HUD, sought to reassure HUD employees and others involved in the housing economy that this proposed 14% funding cut was simply a starting point in a long process of negotiations. “Please understand that budget negotiations currently underway are very similar to those that have occurred in previous 28 HOUSINGWIRE ❱ APRIL 2017

years. This budget process is a lengthy, back and forth process that will continue. It’s unfortunate that preliminary numbers were published but, please take some comfort in knowing that starting numbers are rarely final numbers,” Carson said. But even as a starting point, the proposed cuts are baffling if the goal is to build and sustain a strong housing market.

Among the programs that would see significant cuts are the public housing capital fund, with $1.3 billion cut —a reduction of 32%, and the public housing operating fund, with $600 million cut, or 13%. Three important programs that affect local efforts to build affordable housing would be defunded altogether: the Community Development Block Grant program, the

Sarah Wheeler is editor of HousingWire magazine.

HOME Investment Partnership Program and Choice Neighborhoods. Other programs seeing significant cuts under the proposed budget include: • Direct rental assistance programs (including Section 8 and homeless vets): $300 million cut, about 1.5% of its overall budget • Section 202 program (elderly assistance): $42 million cut, 10% of its overall budget • Section 811 housing for people with disabilities: $29 million cut, or nearly 20% of its overall budget • Native American housing block grants: $150 million cut, more than 20% of its overall budget A Chicago Tribune article quoting Douglas Rice, a senior policy analyst at the Center on Budget and Policy Priorities, estimates that the funding levels detailed in the budget document could lead to a loss of about 200,000 rental-assistance units nationwide. Housing advocates hope that some of the money cut from community housing would be replaced by increased spending in a massive infrastructure bill being prepared for Congress, but there is no definite provision as yet. HOW WILL THESE CUTS AFFECT THE OVERALL HOUSING MARKET? Megan Hustings, interim director of the National Coalition for the Homeless, predicts an increase in homelessness or shelter dependence, according to the Chicago Tribune. “It’s a cycle — a slow ride to the bottom that people tend to experience. Folks and families will use every resource they have before they go to a shelter,” she said. “You cycle down, and once people end up in a shelter or homeless, they have absolutely no resources left. They are out on their own.” This cycle of housing instability ultimately means fewer first-time homebuyers. According to the Office of Policy and Development Research at HUD, “Affordability assistance helps low-income families overcome wealth barriers

and achieve favorable debt-to-income ratios that keep monthly payments low… Even small amounts of down payment assistance increase the probability of moving first-time buyers into homeownership.” Two of the programs being defunded, HOME Investment Partnerships and the Community Development Block Grant program, help eligible homebuyers with down payment and closing costs. Programs that create homeowners just by helping with down-payment amounts are the lowest-hanging fruit in our industry. These are people with jobs and qualifying income who just need a one-time lift from the government. But that one-time lift is not just beneficial to the new homeowners — the overall housing economy benefits as well, since homeownership begets more homeownership. A study by the Joint Center for Housing Studies of Harvard University found that children of homeowners are more likely to become homeowners themselves, and at a younger age, than children of parents who did not own homes. This was true even when children stayed in the same schools as when their parents rented, as homeownership by their parents increased their chances of staying in school longer and graduating. And, according to the Pew Research Center, homeownership among minority households has seen the steepest decline of all groups since the peak of homeownership recorded in 2004. “Today, only 41.3% of black households own their homes, a 16% decline compared with 2004. Among white households, 71.9% are homeowners, down 5% from 2004. For Hispanic households, peak homeownership occurred in 2007. Since then, homeownership among Hispanic households has seen a 5% decline, from 49.7% to 47.0% today.” Therefore, cuts to HUD housing assistance programs seem likely to affect minority buyers disproportionally, who were already the most impacted by the financial crisis. An article in The Atlantic in 2015, quoting a report from the ACLU, found that

“black families will continue to suffer the effects of this disproportionately for decades to come: By 2031, white household wealth will be 31% below what it would’ve been had the recession never happened, according to the report. For black households, wealth will be 40% lower, which will leave black families about $98,000 poorer than if the recession hadn’t taken place.” Affordable housing assistance programs have been essential in helping minority families bridge the gap to homeownership, which is especially important given the increasing prominence of minorities in the U.S. population. “Families of color will make up 43% of the nation’s population by 2030. Yet, families of color have, on average, a much harder time getting a mortgage than do white families,” the Urban Institute’s Headship and Homeownership research paper stated in 2015. “Will the housing market contract as these families become the nation’s majority, or will the mortgage market become more inclusive to accommodate a more diverse population?” This is the big question our industry faces going forward, and one that is made immeasurably harder if HUD affordable housing programs are cut. Trump’s business-friendly outlook should make this one easy to remedy, as leaders in the housing business — not just affordable housing advocates — have sounded the alarm about the long-term effects of these cuts. Trulia’s Chief Economist, Ralph McLaughlin, said, “We fear that such cuts could ultimately dampen economic growth by increasing housing stress for working-class Americans – teachers, firefighters, healthcare workers and more – who are vital for supporting higher-paying base industries in their respective markets.” The short-term gains made by cutting the HUD budget today will have consequences on homeownership for decades to come. Here’s hoping the Trump administration decides to play the long game instead. HOUSINGWIRE ❱ APRIL 2017 29

BUILDTO RENT

30 HOUSINGWIRE ❱ APRIL 2017

THE NEWEST TREND IN SINGLE-FAMILY RENTALS PRESENTS A BIG OPPORTUNITY FOR BUILDERS AND INVESTORS

BY KELSEY RAMIREZ HOUSINGWIRE ❱ APRIL 2017 31

h, that new-house smell. Fresh paint, flawless floors and brand-new appliances just waiting for homebuyers to do their final walk through. Except that the first occupants of some new homes aren’t owners at all — they’re renters. And they already know their landlord since he’s the builder.

The glory days for investors where they could cheaply buy a home in foreclosure and fix it up are at their end. From 2008 to 2012 foreclosures hit record levels, but now that the foreclosure crisis is over, investors must find a new way to adapt to the evolving market. That market includes soaring home prices according to a recent study by the National Association of Realtors, which shows that many metropolitan areas hit new highs in 2016. These conditions can make it difficult for investors to find profitable areas to invest in. A growing trend within the real estate market, build-to-rent, seems to offer a clever solution. While this phenomena has been growing quietly for several years, it wasn’t until recently that it started to pick up steam. One expert, HomesUSA.com President Ben Caballero, explained that he had never 32 HOUSINGWIRE ❱ APRIL 2017

heard of builders renting out their inventory, but noticed the shift in the past year. Some builders even left the sales market entirely, focusing solely on constructing rentals, said Caballero, whose company assists builders in marketing their sales and rental listings to Realtors through the Multiple Listing System. Build-to-rent allows investors to buy newly built homes and rent them out instead of selling them. Because the homes are new,investors are able to charge higher rent prices and tenants often stay in the home for longer periods of time. “In the SFR business, our clients are building large portfolios of rental properties,” said Greg Rand, CEO of OwnAmerica, a single-family rental investment brokerage. “And as it pertains to new home sales, one of the things that has arisen in the past two years is the build-to-rent trend, builders that are building single-family homes

intentionally to create rentals out of them.” Building homes to rent them out used to be thought of as just a niche, Rand explained. Now, however, it is being thought of as a substantial market segment. And Caballero explained why builders could be choosing to rent out their new homes rather than sell them. “I think it’s probably just the philosophy of taking advantage of the market escalation,” he said. “It might be a situation where they have inventory that they wanted to get off the market, and they might be able to lease something better than they can sell it.” But the question remains: Why would builders move into the rental market during a time when homes are selling quickly and at higher prices than any time in the past decade? Rand said he understands why more builders are investing in build-to-rent.

“Builders — their life is a treadmill. They do a subdivision, they buy the land, they get the approvals, they build the properties, they sell the properties and when they’re done they’re out,” he said. “They’ve made their profit, if things go well they made a lot of profit, but they’re out and they have to go back on the treadmill and find another project.” Really good builders have a pipeline of projects they are always lining up, however it is a never-ending process where if the builders can’t find something else to construct, it creates a problem — their employees and capital are still tied up in their business. “Creating continuity for a builder is very hard, so a lot of them are getting excited about the idea of building and holding, which I had never heard of before except for in commercial real estate,” Rand explained. “Build a subdivision or buy a bunch of lots in a scattering of subdivisions and instead of building houses on them and selling them to homebuyers, they’re building houses on them and renting them to tenants and keeping them, which gives them the ability to create longer-lasting shareholder value by building a mountain of cash flow over time as opposed to just holding until they can equal the gap. That trend is really taking hold.” But that’s not the only way builders are profiting from the growing build-to-rent trend. Rand said that all his clients looking at portfolios of rentals want to buy new if they can. This means that builders who construct a 25-unit subdivision are often able to sell the entire division to just one buyer, eliminating the cost and time of searching for multiple buyers. “If they build and they want to hold, they could create the shareholder value over time,” Rand said. “If they build and they want to sell, they could sell the entire neighborhood in one transaction. It’s a very interesting twist.” But why would investors want to rent out new properties instead of older ones? One real estate investment company, JWB Real Estate Capital, gives these reasons: A house that is freshly built has a lot of money-saving advantages for investors.

The property insurance is often less expense each year due to condition of the home. More insurance companies are offering lower annual costs for homeowner’s insurance to owners of new properties versus older homes. Because many older homes have aged appliances, replacements will likely be necessary for a new investor. These costs are now always figured into the future goals of investors and can decrease passive income. A home that was recently constructed can often demand a higher rent price because of the age and location. Being the first investor on the market to own a home before it is deteriorated could secure a buy-and-hold future. JWB also explained that the age of a home is a significant factor in whether renters will sign a long-term lease agreement. Because older homes experience faster rates of deterioration, renters grow tired of continuous issues, issues that would not be present in a new home. And finally, JWB points out that the land value of a property increases over time, which means investors might have to pay more for an existing home. This would then lengthen the time required to

earn back the money put in for the initial investment. But despite these seemingly obvious upsides to renting out new homes instead of existing homes, rental prices for these new homes are still affordable, perhaps emphasizing their attractiveness. “It’s surprisingly to me, the rents are not really that significantly different,” Caballero said. “I think that their rentals are really quite competitive. I’m not sure that they’re not leaving money on the table to be honest with you.”

RENTER NATION Renter-occupied households account for 35% of single-family homes, according to the National Multifamily Housing Council. And the majority of those renters, 51%, are made up of those under 30. “This is a seller’s market so what I’m finding is that anything that is put on the market that is reasonably priced and in reasonably good condition is selling, and rentals are no exception,” Caballero said. “When you’re in a good market, everything is moving quickly.” The number of renter households increased by 9 million between 2005 and HOUSINGWIRE ❱ APRIL 2017 33

“HOMEBUYERS ARE COMPETING WITH INVESTORS BUT HOMEOWNERSHIP IS COMPETING WITH RENTERSHIP.” — Ben Caballero, President of HomesUSA.com 2015, marking the largest increase over any 10-year period on record, according to the Harvard Joint Center for Housing Studies. This high demand for rental housing from Millennials is leading builders to construct entire neighborhoods just for rental housing, according to an article in the Wall Street Journal. In the article, one expert explained how the growing appeal of renting reflects a new mindset about homeownership. “It used to be that if you were an adult and didn’t own your own home, you were kind of a bum,” said George Casey, a former homebuilder and chief executive of Stockbridge Associates, an industry consulting firm. That stigma has now “been blown into a million pieces,” Casey said. But not only is there a new mindset when it comes to renting, more families were forced into rental homes after the foreclosure crisis. “The entire rental market has been very hot for several years,” Caballero explained. “What’s contributed to that is there’s been a lot of foreclosures for a number of years. There’s a lot of people out there that can’t qualify for a new home, they’ve been living in a home, they want to continue living in a home but they can’t buy one.” With the rental market going so well, it makes sense that builders wish to capitalize on the market. 34 HOUSINGWIRE ❱ APRIL 2017

“I can tell you that the rental market is good and it’s probably even better in some areas than the sale market, and I suspect that that’s part of the information that’s considered by these builders,” Caballero said. He explained that while major investment hedge funds capitalized on this rising demand in the past, builders are beginning to recognize the opportunity for themselves. And in fact, who better to keep up with these rentals than the very builders who constructed them in the first place and have resources at their disposal for the upkeep of the homes? “They can buy the home at a good rate and then put it in their investment portfolio,” Caballero said. “And then in other cases builders are doing this as just additional business.” In total, about 5% of all new single-family construction was built for rent in 2016, up from a historical average of less than 3%. And experts say the trend will only increase over the next few years as home affordability decreases and as more and more older Americans consider downsizing.

THE DOWNSIDE The build-to-rent trend, however, does have a downside. Housing inventory is

hitting new lows, lingering at a supply of just 3.6 months at the current rate of sales, according to a report from the National Association of Realtors, and building to rent will only strain that supply further. Rand explained that homebuyers are facing a whole new realm of competitors for the few homes that are available. “Actually, another way to look at it is that homebuyers are competing with home renters, and because of the large number of home renters, they’re technically competing with home investors,” he said. “Homebuyers are competing with investors, but homeownership is competing with rentership.” And investors tend to have deeper pockets than a single homeowner. “If you’re in Dallas, Texas, and you’re looking to buy a $175,000 single-family home that’s really nice, there’s a very good chance that you’re competing with an investor to buy that property,” Rand explained. “When there’s new demand, and there is new demand on the investor side, new demand is going to create a shortage of inventory.” But increased competition isn’t the only downside of the build-to-rent trend. brings. As it turns out, some builders refuse to sell their homes to investors who intend to rent out the property. “Years ago there was one entire subdivision that was build out for rent – it didn’t turn out to be a very nice subdivision because you had an entire subdivision of homes that are rental,” Caballero said. “There’s a percentage level of rentals that will, in their opinion, negatively affect the saleability of the subdivision.” In order to protect their future sales profits, some builders are resisting the buildto-rent trend in order to keep the home values high in the subdivision they are working in. Even so, build-to-rent provides an attractive option for builders and investors with an appetite for growth in a constrained market. For them, and a growing pool of renters, that new-home smell is more tantalizing than ever.

RENTERS ARE PEOPLE, TOO

omeownership is a key part of the American Dream and expanding that opportunity is integral to the mortgage industry, so it’s understandable that renting is often seen as a mere stepping stone to the ultimate goal of owning a home. But for more than a third of American households, renting is the reality of where they live, and companies serving those renters see their mission as no less important than those serving homeowners. Indeed, the leader of one of those companies — Greg Rand, CEO of OwnAmerica — recently defended the role of investors in the overall housing market, and the intrinsic worth of people who rent. It all started when the National Association of Realtors seemed to draw a line in the sand on SFR, positing that investors are creating more competition for first-time homebuyers, possibly even keeping them from homeownership. The situation centered around the initial public offering for Blackstone Group’s single-family rental operator, Invitation Homes, when the company disclosed the terms of its initial public offering in January. What was unusual about this deal was the fact that it happened with the backing of mortgage giant Fannie Mae, as noted in the Wall Street Journal. NAR did not wait long to criticize the GSE, sending a letter to Mel Watt, director of the Federal Housing Finance Agency, as outlined by Lorraine Woellert at POLITICO. “Rather than focusing on allowing well-qualified Americans to build wealth through affordable mortgages options, Fannie Mae is actively financing large institutions to compete with them,” NAR President William Brown wrote in the letter. “These investors do not expand the affordable housing stock,” Brown wrote. “Rather, in this limited market they drive up the price of rents and remove affordable inventory from the hands of American homeowners.” But that wasn’t the end of the complaint. In January’s Existing Home Sales report, which came out Feb. 22, Brown once again mentioned the challenge investors pose to first-time homebuyers. “Supply and demand imbalances continue to be burdensome in many markets, and now Fannie Mae is supporting a Wall Street firm’s investment in single-family rentals,” he said. “This will only further hamper tight supply and put major investors in direct competition with traditional buyers.” Rand had apparently had enough. In an interview with HousingWire, the CEO explained that in NAR’s quest to protect homebuyers, it forgot another important housing segment – renters. “They shouldn’t necessarily be considered second-class to a homebuyer,” Rand said. Rand questioned why the idea of homeownership is limited to owner-occupied homeowners, saying that investors such as Blackstone are some of the largest homeowners in the U.S. “If you’re not a homeowner or a homebuyer who’s going to occupy the property, you don’t belong in [NAR’s] world and it’s just strange to see,” Rand said. Rand pointed out that NAR’s numbers show about 20% of home

sales are non-owner occupied, noting that is a large segment of the market to simply dismiss. And Rand said homebuyers are not competing with investors at all, but are actually competing with home renters. “If a first-time homebuyer loses a house to an investor, that means that a renter family is going to live in that house, and they’re people too,” Rand said. “So I don’t think they’re right to carve them out, but it’s simply them drawing a competitive line where investors are on one side and homebuyers and [NAR] are on the other.” “I would say homebuyers are competing with renters, and that’s life,” he said. “You don’t have a right to own a home if somebody else wants to own it more.” Rand says that while it is ultimately a free-market situation, many in the market benefit from the presence of investors. “The existing homeowner benefits from the competition because it helps support their price,” he said. “For the people who are already owners in the marketplace, it’s a good thing; for the people who are renters in the marketplace it’s a good thing; and for folks who are first-time homebuyers, they’ve got some competition that they didn’t have before.” Rand concluded by saying that instead of drawing a line in the sand between homeowners and investors, NAR should be more inclusive of the needs of tenants. HOUSINGWIRE ❱ APRIL 2017 35

36 HOUSINGWIRE ❱ APRIL 2017

THE AMERICAN

DREAM REVISITED BY DEBORAH HUSO

HOMEOWNERSHIP AND COLLEGE EDUCATION HAVE LONG BEEN AT THE CORE OF THE AMERICAN DREAM. BUT ARE THE TWO TOGETHER SUSTAINABLE IN A CLIMATE OF MOUNTING DEBT FROM STUDENT LOANS?

HOUSINGWIRE ❱ APRIL 2017 37

ichael Lux, an attorney in Indianapolis, struggled for years to buy a house while still immersed in student debt. At the time, he was a deputy prosecutor with the city, meaning his employment was stable, but he said, “my salary was fairly low relative to my student debt from law school.” “I reached out to traditional banks, credit unions, and mortgage brokers in order to find a lender that would approve my home loan,” he explained. “Lenders will not consider any income-driven student repayment plan, such as Pay as You Earn (PAYE) or Income-Based Repayment (IBR), when calculating your ability to pay on your home loan. “Despite the fact I was a very minimal credit risk, my applications were consistently denied because of this underwriting standard,” Lux added. The Millennial generation attorney became so frustrated with his own situation that he founded the blog “The Student Loan Sherpa” to try and help others navigate the hurdles of repaying student loans and addressing those loans’ impact on credit worthiness. Lux said that while new underwriting standards have certainly streamlined the mortgage loan application process, they have also made it harder for non-traditional borrowers, not exclusively student debt holders, to qualify for loans. “The standards do not accurately reflect an individual’s ability to pay,” he said.

Matthew Proctor, who holds a degree from Harvard Law School, and his wife, a graduate of both Barnard and New York University, have had a similar experience. The couple recently married and reside in San Francisco. “My wife and I have basically given up on the idea of home ownership thanks to the student loan ‘mortgage’ on us,” said Proctor. “We both have high-paying jobs in one of the hottest job markets in the country, but we won’t be able to buy a house for at least 10 years,” he added.

THE STUDENT DEBT HOME-BUYING HURDLE Today the average student debt resulting from a four-year degree stands at $30,000. According to “Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans,” a report released by American Student Assistance (ASA) in 2015, 71% of non-homeowners surveyed who carry student debt, say the burden of monthly payments has kept them from purchasing a home. More than half of those say their student debt loads will likely prevent home ownership for another five years. Meanwhile, 80% of those same survey respondents indicated student debt was preventing them from saving sufficient cash for a down payment. The National Association of Realtors co-sponsored the report, and NAR’s Chief Economist Lawrence Yun said that when one takes into account the monthly cost of housing, an automobile, and student loan payments, it can become very difficult for graduates to save, even for those earning over $50,000 per year. The report also indicates that almost one-third of

“MY WIFE AND I HAVE BASICALLY GIVEN UP ON THE IDEA OF HOMEOWNERSHIP THANKS TO THE STUDENT LOAN MORTGAGE ON US.” — MATTHEW PROCTOR, LAWYER 38 HOUSINGWIRE ❱ APRIL 2017

would-be home sellers are delaying putting their houses on the market due to student debt, often because they cannot afford the costs to move and upgrade. Alle Lanza-Cosgrove, a spokeswoman for the ASA, said, “When you think of the average student loan debt being around $30,000, that translates into an average payment of $300 to $400 per month. That can eat up a big chunk of income for someone just starting out.” While these figures would seem to shadow housing industry recovery for years to come, there’s more to the story, according to Mark Huelsman, senior policy analyst at Demos, a New York-based think tank focusing on issues of inequality.

about the working class for a long time,” Huelsman said, “but the same is also true for the college-educated.”

COLLEGE: TO GO OR NOT TO GO? Does all of this mean one should think twice before heading off to college, particularly if doing so requires assuming a significant amount of student debt? Not exactly. Huelsman said that while college degrees aren’t paying off the way they once did, “the risk of not going to college has become even riskier. He added, “Those without a degree have seen incomes decline precipitously over the past few decades. It’s not that the top line is getting big-

“MILLENIALLS ARE FACING FINANCIAL PRESSURES MUCH MORE ACUTE THAN THOSE FACED BY BABY BOOMERS OR GENERATION X.” — MARK HUELSMAN, SENIOR POLICY ANALYST AT DEMOS

“It’s important to note that the era of mass student debt is relatively new,” Huelsman said, pointing out that within the last decade, borrowing for college has become the norm for most students, whether they’re attending a private college, public university, or community or technical college. Add to that reality the fact that “many people who came of age with student debt also came of age during the greatest recession of recent memory,” and one quickly sees the issue is far more complex than student debt alone and also represents new territory for the housing economy. “Student debt will result in a monthly payment that the previous generation didn’t have,” Huelsman remarked, “and it could prevent savings, potentially for down payments or even retirement.” Student debt can also impact borrowers’ backend debt-to-income ratios, reducing their ability to qualify for a mortgage or qualify for one with reasonable interest rates and terms. Things are even worse for would-be borrowers who have fallen behind on student loan payments and have damaged credit scores as a result. Huelsman said it’s important to keep in mind that reduced rates of home buying, particularly among Millennials, have many factors at play. Even students who have debt and could nevertheless qualify for a mortgage may be deciding to hold off on home ownership until their current set of debt is paid off. Not to mention the fact, he added, that Millennials “are facing financial pressures much more acute than those faced by Baby Boomers or Generation X.” He points out that wages for college graduates haven’t been increasing much over time. “We’ve known this

ger; it’s flat really, but the bottom line has bottomed out.” 2016 research from both the Brookings Institution and the Federal Reserve Board of Governors supports this outlook. In a report from last May, Brookings researcher Susan Dynarski indicates that while more Americans without college education in their early 20s own homes than early 20-somethings with a college education, that difference is not the result so much of student debt as of the former group having been in the workforce longer. “The college-educated catch up fast,” she wrote, “and have higher rates of homeownership by age 27. By age 35, the gap in homeownership between those with and without a college education is about 14 percentage points.” And while Dynarski acknowledged that college graduates who didn’t take on debt for school buy homes faster than those who did, she said, “by the time people are in their 30s, when the typical borrower would have finished paying off her student loans, the homeownership rates of the two college-educated groups are statistically indistinguishable.” Add to that the fact that men with a B.A. earn $35,000 more per year than those without (it’s $25,000 more for women), and the risks for assuming student debt in exchange for a college education seem pretty clear. Lanza-Cosgrove thinks so anyway: “I think overall college is still a good investment and still the best path forward for economic mobility. It does still work out for most people.” However, this latest generation of adults is facing expense loads previous generations never had—child care costs are increasing dramatically, healthcare costs now represent one of the largest monthly expenses in most HOUSINGWIRE ❱ APRIL 2017 39

households, and Millennials are, as Huelsman said, “on the hook for their own retirement. The era of the defined benefit pension plan is over.”

THE ADDED STRUGGLE FOR COLLEGE ATTENDEES WHO DON’T GRADUATE That may account for why the Millennials who are buying are buying smaller, older, and cheaper, according to research from NAR. They’re also making smaller down payments and often seeking financial assistance from family or friends. Some are also benefiting from an increasing array of government programs that provide some student debt forgiveness in exchange for buying a home. For example, the Maryland Mortgage Program offers discounted mortgage rates and up to $5,000 in down payment assistance for grads who purchase homes in “sustainable communities” near Baltimore and Washington, D.C. Ohio offers “Grants for Grads” to first-time homebuyers who earned associate’s, bachelor’s, or any type of postgraduate degree in the last four years. Among the potential benefits are down payment assistance and more favorable mortgage interest rates. Huelsman doesn’t see a lot of difference between student debt relief programs designed to encourage college graduates to buy a house and those designed to get graduates to live in a certain area or follow a certain profession. “Because student debt is effectively universal, you’re seeing a lot of debt-relief programs targeted at borrowers that

maybe want to work in some sector like in public service or government or programs to get borrowers to engage in a certain economic activity,” he said. “I would prefer, however, we just lower student debt,” he adds, noting that he’d like to see programs that target people who are most likely to struggle to repay their student debts. That includes those who took on student debt but didn’t obtain a degree. “I think about this a lot in racial equity terms,” Huelsman explains, pointing out that returns for college for African-American students tend to be lower than for white students. “They tend to take on more debt and take on more debt without graduating,” he notes. “They also have higher unemployment rates.” A July 2015 report from The Pew Charitable Trusts, “The Complex Story of American Debt,” found that more than 50 percent of surveyed African-Americans and HispanicAmericans (both Gen Xers and Millennials) who assumed student debt to pay for college said if they could do it over again, they would find a way to pay for school that did not involve taking on debt...or at least taking on quite so much of it. “The biggest indicator of someone having a problem with student debt is if they drop out before completing their degree,” Lanza-Cosgrove explained. “Higher education faces this challenge right now of getting people through and getting people complete.” Regrettably, she notes, that for a long time, the focus was on getting people into college without much attention to what would happen once they got there. “We’ve seen access in and of itself is not enough,” she said. “We need to make sure people persist and graduate.” Minority and lower-income populations are more likely to drop out of college for a wide array of reasons, though they are usually financial in nature. Lanza-Cosgrove says students may need to leave college and join the workforce to help support their families, for example. Combine that with the greater hit minority families took during the recession, and the racial component of debt’s impact becomes readily visible.

“THE BIGGEST INDICATOR OF SOMEONE HAVING A PROBLEM WITH STUDENT DEBT IS IF THEY DROP OUT BEFORE COMPLETING THEIR DEGREE.” — ALLE LANZA-COSGROVE, SPOKESWOMAN FOR AMERICAN STUDENT ASSISTANCE 40 HOUSINGWIRE ❱ APRIL 2017

“The loss of wealth in African-American communities during the recession was massive compared to in white communities.” Huelsman said. “We need to have healthy skepticism about the risks and rewards of home ownership. From a policy perspective, we need to increase the number of avenues to the middle class, so a four-year college degree and home ownership aren’t the only ones”

THE IMPACTS...AND ANSWERS...MAY BE DECADES OUT So just how much impact is student debt having on the housing economy and economic recovery at large? Huelsman said we can’t really be sure, at least not right now. “It’s often hard to separate absolute financial pressures facing Millennials and the financial de-

Kevin Fudge, ASA director of consumer advocacy and ombudsman, said he thinks those looking to take on student debt to attend college need to look at that debt the same way they would the debt they might take on to buy a house. He notes that very few individuals think in terms of “can I afford to go to that school?” Instead they think, “what can I do to afford to go to that school?” “People think of getting into a name brand school as a guaranteed investment,” Fudge explained. “But that’s not always the case, even with gilded Ivy League schools. The farther you are from college, the less where you got your degree matters.” There’s a big difference between assuming debt to buy a house and assuming debt to go to the college of one’s dreams. “If you get in over your head with a house, you

“COLLEGE IS ONE OF THE FEW INSURANCE POLICIES LEFT THAT WE HAVE OF GUARANTEEING FINANCIAL SECURITY. AT WHAT POINT, ARE WE SHOOTING OURSELVES IN THE FOOT?” — MARK HUELSMAN, SENIOR POLICY ANALYST AT DEMOS cisions they’re making,” he explained. One example of that would be the Proctors and others like them who have chosen to live in hot job markets like San Francisco where home prices are higher than anywhere else in the country. Anecdotally, Huelsman also wonders how much psychological impact Millennials have experienced as a result of coming of age during a massive housing crash where they watched parents or friends of parents lose tremendous home equity if not lose their homes entirely. “When housing seems to be an extremely safe economic bet, there has to be shell shock when you know someone who has lost a home or whose parents couldn’t pay for college.” “Millennials are delaying things overall,” LanzaCosgrove remarked. “Some of it is student debt, and some of it is the changing mores of the time.” While Huelsman believes buying a home will continue to be a big part of the American Dream, he also feels there need to be more avenues toward securing a place among the middle class as well as toward gaining overall financial security. Right now, buying a home and getting a college degree seem to be the only way. “College is one of the few insurance policies left that we have of guaranteeing financial security,” says Huelsman, but he acknowledges that taking on massive debt to secure an education eventually doesn’t make sense. “At what point,” he asked, “are we shooting ourselves in the foot?”

can sell your home,” Fudge remarked. “You can’t sell a college degree.” For whatever reason, he said plenty of people make the assessment when looking to buy a home that a certain property is “too much house to buy. But people don’t apply that same mentality to college. People don’t say ‘this is too much college to buy.’” Fudge says ASA doesn’t want to discourage people from being aspirational. Rather, he said, “We want people to recognize that education debt isn’t like other consumer debt. How can you obtain a degree and get the credentials you need with minimal risk?” And still, even if this next generation of borrowers can limit their student debt loads, will they continue to delay the milestones of the American Dream anyway? “As the goalposts keep moving, that can have a drag on our whole economy.” Lanza-Cosgrove said. “They’re not buying homes or the consumer goods that good along with starting your own household.” Fudge thinks it’s going to be 20 years or more before we see the real impacts of student debt and delaying forays into the housing market among Millennials, in particular. “Student loan debt has increased so exponentially in such a short window of time,” he said. “It takes awhile for the evidence to catch up with what’s happening.” If Millennials buy homes and start saving for retirement five or 10 years later than previous generations, what will that mean for the economy long-term? Right now, not even the experts know. HOUSINGWIRE ❱ APRIL 2017 41

S I N G L E - F A M I L Y

R E N T A L

ALL-STARS As the single-family rental market grows hotter, new investors are jumping in to take advantage of the opportunity and existing investors are expanding their portfolios. According to tax-assessment data compiled by ATTOM Data Solutions and Clear Capital, 37% of homes sold in 2016 were purchased by buyers who didnâ&#x20AC;&#x2122;t live in them. In this section, we take a look at five companies delivering products and services designed to achieve the best value for SFR investors.

42 HOUSINGWIRE â?ą APRIL 2017

HOUSINGWIRE ❱ APRIL 2017 43

THE ALL-STARS

CAPAVEN

FOTONOTES

RENTERS WAREHOUSE

ROOFSTOCK

49 XOME

44 HOUSINGWIRE ❱ APRIL 2017

Columbia, South Carolina capaven.com

The

C OM PA N Y

Traditionally, there has been a lack of options for investors to diversify into real estate without any experience in the field. With the majority of real estate investors investing in properties within a 20-mile radius of where they reside, most markets are not conducive to producing their expected returns. And most investors never take the leap out of fear of getting in over their head. By evaluating its assets with compressed risk in mind, Capaven enables investors to invest in long-term rentals or lease options by focusing on stable mid-range returning assets. The company identifies the tenant or option holder first and allows them to select their property from pre-underwritten inventory. Capaven then pairs the tenant and property with one of the company’s investors. Lauren Taylor, Capaven’s founder, said this provides the tenant with more stability and satisfaction by offering them more options than they have elsewhere. Many investors don’t have the time to manage their own properties and need a solution to capitalize on the industry without all of the headaches. Capaven controls this process by underwriting the tenants first on their net income, selecting only well-qualified and stable candidates. The strategy of using net income is not just a benefit to the investor, but an education process for the tenants. “We are in the business of preparing our clients, by telling them what they can actually afford. There is a disparity in this industry of mortgage companies and others setting the consumer up to fail, by putting them in properties they technically cannot afford. The process takes more time, but we want our inves-

tors and tenants to win,” Taylor said. For Capaven’s investors, the tenants will move in after the property is purchased to provide cash flow for the investor faster and more effectively, putting them in a position to start earning cash flow from day one. “These things, coupled with our underwriting strategy and strong focus on utilizing experienced real estate experts, ensure that our asset selection is unlike any other,” Taylor said. “The primary issue is that buying a property, renovating and then waiting for it to perform can affect the returns, as well as being stressful on the investor,” she added. “This is an antiquated model in terms of an individual. With rent demand constantly growing, investors need not expose themselves to the unnecessary risk that comes with using this tenant placement process that was built for companies with more assets and diversified risk.” Capaven’s investors get excited about the thorough vetting process for its tenants and they rely and trust the company’s experienced market experts in their prospective markets. The start-up company was founded in January 2017 and is out to prove that providing great returns doesn’t have to be at the expense of the consumer. Capaven’s goal is to improve the real estate industry by educating the consumer and client, centering on changing the dynamic of the tenant and landlord relationship for the better. Taylor said Capaven will be expanding and offering its investors more options in the top real estate markets. “We will use this platform to create more opportunities for consumers to achieve their goals of home ownership or give renters better, more stable homes to live in,” she said.

Lauren Taylor Founder

FAST FACTS: • Founded January 2017 in Columbia, South Carolina. • A new start-up offering handsoff investment diversification in rental and lease options in the Southeast U.S. • Company’s mission: To provide a real estate investment solution to the masses by taking the guesswork and uncertainty out of buying property, providing all of the benefits with none of the headaches. We are out to provide great returns and help consumers in the process, with a goal to save millions from rental purgatory.

WHY DID YOU CREATE THIS COMPANY?

“

After working with local investors, institutional funds, and investment companies, I wanted to create a company that would solve issues for not only the investors but for the public as well. I feel there is an opportunity to put the power back in the hands of local expertise, allowing us to take the time needed and focus on quality investments and great experiences for consumers.” HOUSINGWIRE ❱ APRIL 2017 45

SINGLE-FAMILY RENTAL ALL-STARS | SPONSORED CONTENT

Capaven

SINGLE-FAMILY RENTAL ALL-STARS | SPONSORED CONTENT

FotoNotes

4096 Piedmont Ave, #610, Oakland, CA 94611 510-545-9030 fotonotes.com

The

Kamal Shah Founder and CEO

FAST FACTS: • Founded in 2010 in Oakland, California. • Provider of the award-winning software product FotoNotes, used by real estate owners, property managers, contractors and maintenance companies to operate more efficiently, save money and grow their businesses. • Four times growth in customers and usage in 2016 compared to 2015. • Mission: We are a team of veteran Silicon Valley technology professionals and real estate industry experts with a mission to transform the way single-family residences are managed and maintained through our mobile and cloud solution.

C OM PA N Y

FotoNotes, a mobile- and cloud-based software solution specifically built for automating real estate field operations, is being rapidly adopted in the single-family rental industry. FotoNotes enables companies to better manage field services such as bidding, estimation, repair and maintenance, as well as renovation and inspection processes. FotoNotes’ solution includes several key features that are integral to managing and maintaining properties: work order management, vendor management, mobile forms for field data and photo collection, and report generation. The solution is flexible and configurable to meet the specific needs of each customer. It also supports integration with Salesforce, as well as other industry standard technologies. “We see our biggest opportunity in the SFR market, where there is heavy investment and growth and an obvious need for technology to help companies expand and operate efficiently at scale.” said Kamal Shah, founder and CEO of FotoNotes. Shah explained the company is dedicated to working closely and collaboratively with its customers to solve their biggest problems, and has developed a solution to specifically meet the needs and demands of the growing SFR industry. “FotoNotes’ solution is rapidly being adopted in SFR because our mobile applications provide the best user experience for field staff and our back-office cloud solutions allow managers and executives to effectively manage all property-centric field service operations,” Shah said.

Will Gunderson, a business systems analyst with online marketplace Roofstock, said the company selected FotoNotes because it is the best solution for the company to easily manage its inspection network. “The platform enables us to quickly issue inspection orders to our vendors’ mobile devices, monitor incoming data and photos in real-time, and generate highly informative reports for our clients,” he said. FotoNotes, founded in 2009, makes a significant impact in this industry by providing its customers greater visibility into field operations, improved communication with field staff and vendors, elimination of manual paper-based processes and mechanisms to ensure compliance standards are met. These efforts have resulted in faster completion times with lower costs, and have allowed companies to more effectively scale and expand their businesses. MarketReady, a company that provides field services to a variety of large institutional real estate investors and asset managers, has experienced this impact first hand. “FotoNotes and their team have been critical to our success and growth. If you believe that mobile should drive your field operation approach, and if you need your mobile endeavors to be supported by a robust desktop and backend, then I can assure you that there is no better option available than FotoNotes.” said Mitch Davidson, vice president of MarketReady. FotoNotes is quick to launch with little or no setup cost. Its SaaS-based pricing allows customers to start small, with the option to expand services as their business needs grow.

WHERE DO YOU SEE TECHNOLOGY IN THE INDUSTRY MOVING NEXT?

“

We’re still at the early days of adoption of mobile and cloud technologies to replace email, Excel spreadsheets, and paper. There is still a huge opportunity to drive further adoption there.”

46 HOUSINGWIRE ❱ APRIL 2017

13200 Pioneer Trail #100, Eden Prairie, MN 55347 952-746-6666 renterswarehouse.com

The

C OM PA N Y

Renters Warehouse provides national, third-party single-family rental leasing and property management services for both homeowners and institutional level investors through a combination of centralized services, vertical integration and local market expertise. With advanced, highly standardized servicing capabilities, Renters Warehouse can successfully manage a wide range of portfolio sizes - from one to more than 5,000 doors. The company is the only national property management firm focused on single-family rentals to be rated by Morningstar Credit Ratings, a nationally recognized statistical rating organization. Renters Warehouse offers 24/7 property management for one low, flat monthly fee, providing detailed inspections and a best-inclass rent collection system with less than 1% delinquency. They offer certified and competitive maintenance solutions with work order avoidance, making any request a non-issue for homeowners. To help redefine the entire SFR industry, Renters Warehouse trademarked the term Rent Estate, which means “real estate for the rest of us,” or the process of owning and renting one or more properties. “Single-family renting is the new owning, fueled by generations used to the new sharing economy,” CEO Kevin Ortner said. “Renters Warehouse is perfectly poised to help investors capitalize on this rapidly developing asset class.” The company calls its agents Rent Estate Advisors, and no other property management company has their unique abilities, expertise or mindset. They advise on finding, financing and managing one or many investment

properties, and help investors make more informed decisions about their portfolios. “Our staff is specially trained to make the process of owning Rent Estate easy, fast and profitable,” Ortner said. Renters Warehouse offers a free Home Rental Price Analysis, free property marketing and a 17-day placement average nationwide. All properties are personally listed and shown by Rent Estate Advisors. The company ensures reduced tenant turnover rates through higher quality tenant placements, performing 100-point background checks and offering a 6- to 18-month Tenant Warranty with extended leases. “If you’re a real estate investor with rental properties across the country, you can confidently trust in Renters Warehouse to manage every single one of them with the same high standard of care, and through one point of contact,” Ortner said. “We are the only company who can offer this unprecedented and scalable level of service for investors.” With customer service top of mind, Renters Warehouse’s new specialized Portfolio Services Division, led by President and Chief Investment Officer Anthony Cazazian, offers more advanced real estate investors a corporately owned, centralized services model with a single point of contact and a hassle-free integration period. “Investors can relax knowing their properties are receiving first-class care regardless of portfolio size. No matter the location or size of their portfolio, investors have access to expert on-the-ground operations, with consistent processes, accounting and institutional level reporting,” said Cazazian. “We help investors rapidly expand into any U.S. market through flexible operations and hiring, and flat-rate pricing to reduce typical P&L variability.”

Kevin Ortner President and CEO

FAST FACTS: • Founded in Minneapolis, Minnesota, in 2007. • Renters Warehouse services 13,000+ investors across 18,000+ residential homes in over 35 markets and 20 states. • Renters Warehouse manages more than $3 billion in residential real estate, expanding into over 20 new corporate markets in the last 15 months alone. They have been awarded 22 Stevie Awards for business and management excellence in real estate, and named to the Inc. 500/5000 list of fastest-growing privately held companies in America seven consecutive years in a row. • Renters Warehouse aims to be the most recognized and awarded brand in SFR property management nationwide.

WHAT IS ONE THING HOMEOWNERS SHOULD KNOW BEFORE PUTTING A HOME ON THE RENTAL MARKET?

“

Perception is reality! How prospective tenants view the property the first time is how they will feel about it and ultimately treat it. This means be sure all cleaning, painting, and minor repairs are done BEFORE you list the home for rent and begin showings.” HOUSINGWIRE ❱ APRIL 2017 47

SINGLE-FAMILY RENTAL ALL-STARS | SPONSORED CONTENT

Renters Warehouse

SINGLE-FAMILY RENTAL ALL-STARS | SPONSORED CONTENT

Roofstock

1625 Clay St. Oakland, CA 94612 (800) 378-9961 www.roofstock.com

The

Gary Beasley Co-founder and CEO

FAST FACTS: • Founded in 2010 in Oakland, California. • Roofstock is the first online marketplace created exclusively for investing in leased Single Family Rental homes that generate cash flow from day one. • Expanded to 12 markets, including: Atlanta, Dallas, Indianapolis, Jacksonville, Las Vegas, Miami, North Carolina, Riverside/San Bernardino, San Francisco Bay Area, and Tampa, Florida. • Company Mission: Create an entirely new way to transact which will fundamentally change the way real estate is bought and sold.

COMPANY

Roofstock is a free, curated marketplace for buying and selling leased single-family rental homes. Roofstock centers on leased properties, allowing buyers to benefit from cash flow from day one. Sellers earn income through closing and will not need to displace current tenants and renovate property to make it ready to sell to owner occupants, thus being able to sell for a fraction of the cost. Traditional transactions for single-family rentals are time consuming and costly. Selling a property can cost more than 10% in expenses, commissions and lost revenue. Roofstock allows sellers to earn rent from current tenants through closing and has a fee of just 2.5%, resulting in substantial savings for sellers. Properties on Roofstock’s marketplace are simultaneously marketed worldwide to institutional as well as individual retail buyers. “Our internal mantra is ‘TLC’: radically increase transparency, dramatically improve liquidity, and provide significantly more control for investors. We use these principals to guide us as we build our marketplace with our clients in mind,” said co-founder and CEO Gary Beasley. Roofstock’s tech-enabled platform allows investors to diversify their portfolios without worrying about daily management responsibilities. Investors may manage properties themselves or use one of Roofstock’s vetted third-party property managers, who pass a thorough diligence process before becoming certified. Roofstock’s focus on transparency with its unique up-front diligence approach means

buyers can relax and be confident in the properties they purchase. The rental homes on Roofstock’s site are certified, passing a rigorous inspection process that includes a preliminary title search, on-site property inspection, a review of lease terms and payment, and valuation. The certification process provides analytics based on actual rent, rather than estimated rent, since Roofstock’s focus is homes with tenants in place. “We are turning the real estate process on its head by creating a process where diligence is completed before hitting the ‘buy’ button, reducing surprises and uncertainty for both buyers and sellers. By providing all the information online, investors are able to purchase properties through Roofstock that are across the country just as easily as if they were around the corner,” Beasley said. Homes in Roofstock’s marketplace can all be purchased at their listing prices. Some listings include the ability to make an offer, which will be considered by the seller. Roofstock works with sellers to determine fair listing prices, considering local market conditions, market rent, and property condition after inspection, and sharing the savings from the low cost of selling on the Roofstock Platform with buyers. Roofstock has expanded to a dozen markets, with more markets slated to open this year. Roofstock’s founding team brings together Silicon Valley talent with several early pioneers of the SFR industry. “We work collaboratively and we get things done,” Beasley said. “Everyone is part of the team, collaborating and building something special from the ground up.”

WHERE DO YOU SEE TECHNOLOGY IN THE INDUSTRY MOVING NEXT?

“

Given the emergence of increasingly better data and automated transaction processing, as well as improvements in virtual reality, I believe you will see more and more purchasing of property sight unseen, like we are facilitating on Roofstock. Also, as processes become increasingly paperless, transactions should happen faster and faster and client satisfaction should improve as a result. Technologies like blockchain have the potential to revolutionize transaction processing.”

48 HOUSINGWIRE ❱ APRIL 2017

750 Highway 121 BYP, Suite 100, Lewisville, TX 75067 (469) 240-8986 xome.com

The

C OM PA N Y

Xome Auction is an online real estate auction marketplace that features thousands of exclusively listed properties that cannot be purchased elsewhere. It’s where real estate investors and home buyers go to find their next investment property or home. Xome’s auction platform spans the full spectrum of default servicing-related property transactions, from high-end luxury estates to bulk sales. Buyers can search and filter from a nationwide inventory of REO, short sale, foreclosure and HUD CWCOT properties then place a bid and complete the purchase, all from the comfort of their home or office. Nearly 70,000 properties have been purchased through Xome Auction since its founding in 2013. Xome Auction provides buyers with a user-friendly experience, including advanced search capabilities for listings, detailed property, neighborhood and condition features, a transparent bidding environment and a streamlined fulfillment process. Xome’s platform enables users to search for auctions based on location, property type, ownership, foreclosure status and more. In addition, Xome Auction assigns a transaction coordinator to each customer, providing concierge-level service throughout the buying or selling process. “Xome Auction provides an unmatched experience for both buyers and sellers through an intuitive search and bidding process, bestin-class customer service and one of the largest online selections of real estate owned, short sale, foreclosure and luxury properties,” said Mike Hayward, vice president of Xome’s auction operations.

The company’s customer-centric environment focuses on a white-glove approach to the buyer experience. For those looking to build or expand a single-family rental portfolio, Xome Auction’s search engine provides an option to display only single-family homes. “Investors in single-family rentals can utilize Xome Auction’s search function to discover properties to expand their portfolio,” Hayward continued. The Xome Auction team is continually investing in and developing cutting-edge technology in the industry, including enhanced auction updates and mobile services. “Technology and innovation help us stay ahead of the curve in this fast-paced world,” Hayward said. “By continuing the development of new technologies, we maintain and consistently improve upon a smooth and friendly user experience.” Xome also provides education to users about the auction process by providing video training that walks customers through researching a home or property, participating in an auction, placing a bid and what to do after they win a bid. “There are many beneficial reasons to use Xome,” Hayward said. “Our visitors and users benefit from a convenient site, great selection and a transparent auction process that provides full visibility and status updates throughout each step of the auction process. We welcome single-family investors to partner with us on their real estate journey.” Xome Auct ion is headqua r tered in Lewisville, Texas, near Dallas, with a secondary operation center located in Denver, Colorado.

Mike Hayward VP of Auction Operations

FAST FACTS: • Xome’s auction business was founded in Lewisville, Texas in 2013. • Company’s mission: Xome Auction is an integrated endto-end platform connecting buyers and sellers to the major touch points in the real estate process, from initial property search to closing.

WHAT IS A COMMON MISCONCEPTION ABOUT INVESTING IN SINGLE-FAMILY HOMES?

“

Lack of inventory. Xome Auction brings thousands of properties to sale each month across the county; additionally, we are working to improve how our buyers find properties that meet their business needs.”

HOUSINGWIRE ❱ APRIL 2017 49

SINGLE-FAMILY RENTAL ALL-STARS | SPONSORED CONTENT

Xome Inc.

Inside Baseball

50 HOUSINGWIRE ❱ APRIL 2017

Inside Baseball

COU RT RU LE S AGA INST INVESTORS IN C O N S E R VA T O R S H I P F I G H T FANNIE AND FREDDIE SHAREHOLDERS WON’T BE ABLE TO PURSUE CLAIMS BY BEN LANE

ON FEBRUARY 21, the U.S. Court of Appeals for the District of Columbia Circuit dealt a sizable body blow to the investors who claim that the government’s decision to sweep all the profits from Fannie Mae and Freddie Mac into the government’s coffers was not only unnecessary, but illegal as well. In a 2-1 ruling, the D.C. Court of Appeals ruled that Fannie and Freddie shareholders, including the hedge funds that bet on Fannie and Freddie being released from conservatorship, cannot not pursue many of their claims against the government. But all is not lost for the Fannie and Freddie investors, as the court ruled that some claims are to be remanded back down to lower courts for future rulings. The issue at hand is the so-called “Third Amendment sweep,” in which the federal government modified its conservatorship agreement with Fannie and Freddie to direct all profits from the government-sponsored enterprises to the Department of the Treasury. The government claimed at the time that the previous version of the conservatorship agreement, which required Fannie and Freddie to send a quarterly dividend to the Treasury, only led to

the GSEs needing to draw funds simply to send them right back to the government. So, the government enacted the “Third Amendment sweep,” which resulted in Fannie and Freddie sending their profits to the Treasury. For example, Fannie will soon send $5.5 billion to the Treasury, while Freddie will send $4.5 billion, based on each of the GSEs financial performance in 2016. After the government approved the “sweep” in 2012, a series of Fannie and Freddie shareholders sued the government. But they weren’t the only ones to sue. Several hedge funds, including Perry Capital, sued as well, claiming the government was illegally seizing profits from Fannie and Freddie and destroying shareholder holdings at the same time. Perry Capital’s suit is the subject of D.C. Court of Appeals’ ruling, which denied much of the Perry Capital’s claims, but the decision is not a total loss for the investors. The entire decision is 103 pages, but here’s the important piece: A number of Fannie Mae and Freddie Mac stockholders filed suit alleging that FHFA’s and Treasury’s alteration of the dividend HOUSINGWIRE ❱ APRIL 2017 51

Inside Baseball

“

FHFA pole vaulted over those boundaries, disregarding the plain text of its authorizing statue and engaging in ultra vires conduct.”

formula through the Third Amendment exceeded their statutory authority under the Recovery Act, and constituted arbitrary and capricious agency action in violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). They also claimed that FHFA, Treasury, and the Companies committed various common-law torts and breaches of contract by restructuring the dividend formula. We hold that the stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f). We also reject most of the stockholders’ common-law claims. Insofar as we have subject matter jurisdiction over the stockholders’ common-law claims against Treasury, and Congress has waived the agency’s immunity from suit, those claims, too, are barred by the Recovery Act’s limitation on judicial review. Id. As for the claims against FHFA and the Companies, some are barred because FHFA succeeded to all rights, powers, and privileges of the stockholders under the Recovery Act, id. § 4617(b)(2)(A); others fail to state a claim upon which relief can be granted. The remaining claims, which are contract-based claims regarding liquidation preferences and dividend rights, are remanded to the district court for further proceedings. While the ruling, from Circuit Judge Patricia Millett and Senior Circuit Judge Douglas Ginsburg, is a setback for the investors, some of their claims can move forward. As the opinion notes, the suit’s contract-based claims regarding liquidation preferences and dividend rights are sent back down to district court. Again from the ruling: We affirm the judgment of the district court that the institutional plaintiffs’ claims against the FHFA and Treasury alleging arbitrary and capricious conduct and conduct in excess of their statutory authority are barred by 12 U.S.C. § 4617(f). We affirm the district court’s dismissal of their common-law claims because they were not properly appealed. With respect to the class plaintiffs’ claims, we affirm the judgment of the district court on all claims except for the claims alleging breach of contract and breach of the implied covenant of good faith and fair dealing regarding liquidation preferences and the claim for breach of the implied covenant with respect to dividend rights, which claims we remand for further proceedings consistent with this opinion. 52 HOUSINGWIRE ❱ APRIL 2017

But the ruling wasn’t unanimous. Circuit Judge Janice Rogers Brown dissented, arguing that the government stepped well outside its bounds when authorizing the sweep. From Justice Brown’s dissent: Regardless of whether Congress had many options or very few, it chose a well understood and clearly-defined statutory framework—one that drew upon the common law to clearly delineate the outer boundaries of the Agency’s conservator or, alternatively, receiver powers. FHFA pole vaulted over those boundaries, disregarding the plain text of its authorizing statute and engaging in ultra vires conduct. Even now, FHFA continues to insist its authority is entirely without limit and argues for a complete ouster of federal courts’ power to grant injunctive relief to redress any action it takes while purporting to serve in the conservator role. See FHFA Br. 21. While I agree with much of the Court’s reasoning, I cannot conclude the anti-injunction provision protects FHFA’s actions here or, more generally, endorses FHFA’s stunningly broad view of its own power. Plaintiffs— not all innocent and ill-informed investors, to be sure — are betting the rule of law will prevail. In this country, everyone is entitled to win that bet. Therefore, I respectfully dissent from the portion of the Court’s opinion rejecting the Institutional and Class Plaintiffs’ claims as barred by the anti-injunction provision and all resulting legal conclusions. When assessing responsibility for the mortgage mess there is, as economist Tom Sowell notes, plenty of blame to be shared. Who was at fault? “The borrowers? The lenders? The government? The financial markets? The answer is yes. All were responsible and many were irresponsible.” THOMAS SOWELL, THE HOUSING BOOM AND BUST 28 (2009). But that does not mean more irresponsibility is the solution. Conservation is not a synonym for nationalization. Confiscation may be. But HERA did not authorize either, and FHFA may not do covertly what Congress did not authorize explicitly. What might serve in a banana republic will not do in a constitutional one. FHFA, like the FDIC before it, was given broad powers to enable it to respond in a perilous time in U.S. financial history. But with great power comes great responsibility. Here, those responsibilities and the authority FHFA received to address them were well-defined, and yet FHFA disregarded them. In so doing, FHFA abandoned the protection of the anti-injunction provision, and it should be required to defend against the Institutional and Class Plaintiffs’ claims. Commenting on the ruling, Tim Pagliara, the founder of Investors Unite, said that the group of GSE investors is pleased that some parts of the suit will be allowed to move forward, but holds out hope that the Trump administration will address GSE reform. “We are pleased that the D.C. Circuit acknowledged that shareholders have direct contract rights which must be respected and

Inside Baseball

we look forward to a resolution of those rights,” Pagliara said in a statement. “We respectfully disagree with the opinion that FHFA has the power to do whatever it wants with Fannie Mae and Freddie Mac,” Pagliara added. “Neither HERA, nor any other statute gives it such power. Meanwhile, the net worth sweep continues to place the U.S. taxpayer at risk by depriving these companies of adequate capital. We hope that the Trump administration will put an end to this wrong by ending the sweep now and restoring the rights of shareholders.” Shares of Fannie Mae and Freddie Mac went into free fall on Tuesday after the U.S. Court of Appeals for the District of Columbia Circuit ruled that Fannie and Freddie shareholders cannot pursue many of their claims related to the so-called “Third Amendment sweep.” Each of the government-sponsored enterprises’ stock fell by more than 40% in the immediate aftermath of the court’s ruling being released, before recovering slightly by the end of the day’s trading. Despite the initial drop, both Fannie and Freddie are still trading above where they were prior to the election of President

Donald Trump, which brought increased enthusiasm among shareholders that releasing the GSEs from conservatorship may be in the offing. As the GSEs are currently structured, the government owns the senior preferred stock in each, with the junior shares still trading on the over-the-counter market. If GSE reform does indeed happen, the junior shareholders could cash in, especially those who bought Fannie and Freddie at the bottom, at around $0.20 per share in 2010. Fannie and Freddie were trading around $1.60 per share prior to the election and both stocks rose immediately after the election. But that rise wasn’t anything compared to the events of Nov. 30, which saw both stocks skyrocket to prices not seen since the middle of 2014. That increase was driven by Steven Mnuchin, now the secretary of the treasury, who said during an interview that “getting Fannie and Freddie out of government ownership” is one of the Trump administration’s top 10 priorities. Recently, the Trump administration reiterated that GSE reform is top priority. And if that happens, then the stock drop after the court’s ruling will be easily forgotten. HOUSINGWIRE ❱ APRIL 2017 53

CFPB Watch

54 HOUSINGWIRE ❱ APRIL 2017

CFPB Watch

THE CFPB GETS A WIN

FULL COURT WILL HEAR APPEAL IN PHH CASE

BY JACOB GA FFN E Y, BE N L A N E , BR E NA SWA NSON

IF PRESIDENT DONALD TRUMP WANTS TO FIRE Consumer Financial Protection Bureau Director Richard Cordray, he’s going to have to wait a little longer to do it, as the U.S. Court of Appeals for the District of Columbia Circuit ruled on Feb. 16 in favor of the CFPB. The ruling allows the embattled agency to defend the constitutionality of its leadership structure in front of the whole court on May 24. The ruling stems from the CFPB’s fight against PHH, which started in June 2015 with a $103 million increase to a $6 million fine initially levied against PHH for allegedly illegally referring consumers to mortgage insurers in exchange for kickbacks. The fight ended, or so it appeared, with the CFPB’s leadership structure being declared unconstitutional by the U.S. Court of Appeals for the District of Columbia Circuit in a 2-1 vote in October 2016. The CFPB fought that ruling, asking the court to rehear the case en banc, meaning that it wanted the entire court to hear the case,

rather than the three judges who ruled on the case in October. And in February, the full Court of Appeals granted that request, meaning the CFPB can now defend its constitutionality before the full court. In agreeing to rehear the case en banc, the decision from October that declared the CFPB’s leadership structure unconstitutional is vacated. And that means the CFPB can continue to operate as is until further notice. That also means that President Trump cannot fire Cordray unless it’s for cause. The previous decision made the CFPB director fireable at will, but that’s not the case anymore. The court’s ruling dictates that the parties should address the following issues at the hearing: 1. Is the CFPB’s structure as a single-director independent agency consistent with Article II of the Constitution and, if not, is the proper remedy to sever the for-cause provision of the statute? 2. May the court appropriately avoid deciding that constitutional HOUSINGWIRE ❱ APRIL 2017 55

CFPB Watch

“

According to the plaintiffs, they cannot rely on PHH to defend the panel’s constitutionality holdings as vigorously as the plaintiffs would.”

question given the panel’s ruling on the statutory issues in this case? 3. If the en banc court, which has today separately ordered en banc consideration of Lucia v. SEC, 832 F.3d 277 (D.C. Cir. 2016), concludes in that case that the administrative law judge who handled that case was an inferior officer rather than an employee, what is the appropriate disposition of this case? Even though PHH’s battle with the CFPB is the biggest story in the fate of the bureau, it’s not the only entity fighting against the independent, regulatory agency. Battling alongside PHH is State National Bank of Big Spring, Texas. And while it’s a lesser-known case, it harbors a similar grudge against the CFPB, with a lot of its fate resting in the outcome of the PHH case. When the U.S. Court of Appeals for the District of Columbia Circuit ruled in February in favor of the CFPB to rehear the case en banc, it opted to not address the case of State National Bank of Big Spring v. Lew, leaving the case, once again, in limbo. Back in 2012, State National Bank filed suit against the federal government, claiming that the CFPB’s “unprecedented, unchecked power” violates the Constitution’s separation of powers. The stance fits right in with the court’s decisions in October 2016 in the PHH case that the CFPB’s current structure allows the director to wield far too much power, more than any other agency in the government. However, the State National Bank case predates all of this. Nearly three years prior in August 2013, after 11 states had joined State National Bank’s lawsuit, it was tossed by a federal judge, who ruled that the bank did not have standing to sue, and also said that the case was no longer ripe – meaning the suit was not filed quickly enough. The group didn’t give up and appealed the decision to the U.S. Court of Appeals for the District of Columbia Circuit, eventually winning the appeal in July 2015 when the court ruled the case could move forward. This is about where the State National Bank case starts to go into limbo and the PHH case begins. The only update to come out on the State National Bank case is that a federal judge tossed out a part of the lawsuit that challenged President Obama’s in-recess 56 HOUSINGWIRE ❱ APRIL 2017

appointment of Cordray, stating that it violated the appointments clause of the Constitution since it was an appointment made without the Senate’s consent even though the Senate was technically still in session. The judge decided to hold off on making decisions about the rest of the case until the PHH case was finalized. The initial win for PHH was great news for State National Bank, but after the CFPB asked the court to rehear the case en banc, and won, it’s fate became questionable again. According to a blog post from Ballard Spahr by Barbara Mishkin, shortly before the court ruled in favor of the CFPB to rehear the case in banc, the plaintiffs in State National Bank of Big Spring, Texas v. Lew filed a “Motion To Intervene In Any En Banc Proceeding That May Be Granted” in the PHH case. “In their motion to intervene, the plaintiffs argue that if the D.C. Circuit grants the CFPB’s petition for rehearing en banc but decides the case on RESPA grounds, their ‘constitutional claims will be left unresolved, and the district court will be left without binding guidance from this Court as to how the constitutional question should be answered,’” the blog said. “The plaintiffs argue that they meet the standard for intervention of right, which includes a requirement that no party to the action can adequately protect their interests. According to the plaintiffs, they cannot rely on PHH to defend the panel’s constitutionality holding as vigorously as the plaintiffs would,” it continued. When the ruling came out to hear the case en banc, there was no update given on the motion filed by State National Bank. But the bank is not backing down easily. State National continues to try and weigh in on the landmark case between PHH and the Consumer Financial Protection Bureau. Despite motions from other parties being denied, Competitive Enterprise Institute General Counsel Sam Kazman said they are “cautiously optimistic” that their recent motion to intervene will be approved. The CEI, which advocates for limited government, and the 60 Plus Association, a nonprofit that represents the interests of senior citizens, are also part of the State National Bank case. “We want to make sure all the constitutional arguments are fleshed out in the PHH case,” said Kazman. “Our plaintiffs wouldn’t be satisfied by the head only being allowed to be removed from the president.” While State National Bank may be relatively small, this fight stands to grow big, just on the basis of its David versus Goliath superlative. Will State National Bank rest its fate on PHH or be permitted to help fight in court? Only time will tell, for now. In the meantime, State National Bank must continue to wait and see how the higher courts play out their uncertain fate against the nation’s largest consumer-products regulator, itself an agency with a future in the balance.

CFPB Watch

The end of the CFPB complaint database? THE CONSUMER FINANCIAL PROTECTION BUREAU’S consumer complaint database has been a source of controversy since its inception, as many industry participants took issue with the fact that the complaints were made public, despite potentially being unverified and unproven. At this very moment, Republicans in Washington are working to eliminate the CFPB’s complaint database, and perhaps kill off the CFPB entirely. And based on what one CFPB analyst said recently, you can see why the complaint database is the bane of the financial industry’s existence. Speaking during the “Preparing for Servicing Exams” session at the Mortgage Bankers Association’s National Mortgage Servicing Conference, held in Dallas in February, CFPB Senior Analyst Ann Thompson said that the CFPB uses the complaint database as a guide for determining whether to pursue an exam against a particular company. Given the nature of the session and the fact that there was a CFPB analyst speaking, much of the session focused on CFPB compliance exams. It’s ironic that the session took place at the exact same time as HousingWire reported on an effort to abolish the CFPB led by Sen. Ted Cruz, R-Texas. So while the standing-room only crowd heard from Thompson and the other panelists about how to prepare for a CFPB exam, Republicans on Capitol Hill were maneuvering to make the entire session a moot point. However, for the time being, the CFPB plans to continue operating in the same form moving forward. And that means that for now, the complaint database is still standing. “We review the number and content of consumer complaints, and we weight the complaints based on potential violations of law,” Thompson told the crowded room. Thompson, who works in the CFPB’s Office of Supervision Policy, said that mortgages and mortgage servicing remain a “high priority” for the CFPB. “We take complaints to companies seriously,” Thompson said, referencing how companies deal with complaints that companies receive directly, rather than complaints sent to the CFPB. “How companies handle consumer complaints is important.” Thompson did compliment a “number of servicers” that have improved how they deal with complaints internally, but

added that the CFPB also is paying close attention to how companies deal with their service providers and vendors. THE FIGHT IN CONGRESS In-mid February, a memo reportedly from House Financial Services Committee Chairman Jeb Hensarling, R-Texas, revealed plans for an even more aggressive version of the Financial CHOICE Act, CHOICE Act 2.0, with the CFPB facing some of the most drastic changes. Aside from the major changes to the leadership of the CFPB, one of the most notable changes to the CFPB would the repeal of the consumer complaint database, established under Dodd-Frank as an integral part of the CFPB’s work. The database has undergone a lot of scrutiny ever since the bureau announced it wanted to make the consumer complaints that it receives public despite many of the companies featured in the database, as well as other industry observers, taking issue with the fact that the complaints were, in many cases, unverified and unproven. The National Association of Federally-Insured Credit Unions, which voiced concerns about the database before, Regulatory Affairs Counsel Andrew Morris commented on the data saying, “NAFCU supports consumer protection but we have always maintained that the CFPB consumer complaint database is a flawed tool that poses significant reputational risk for financial institutions.” “As a sleek, agency-branded platform, the database gives a false impression that the CFPB has investigated complaints and determined that they are true,” said Morris. “However, this is not the case, and the CFPB regularly publishes complaints that are not fully verified. Unfortunately, there is no process in place to assure that consumer complaints are fully vetted, and without an extra level of due diligence the database frequently operates as showcase for subjective criticism.” When it comes to credit unions especially, Morris stated that credit unions have unique relationships with their members and already operate robust customer service platforms to resolve complaints and solicit member feedback. “In short, NAFCU supports the resolution of disputes and investigation of valid and verified complaints, but the reputational risk posed by unverified complaints is a major concern and one not easily remedied,” he said.

HOUSINGWIRE ❱ APRIL 2017 57

Knowledge

Center

62 HOUSINGWIRE ❱ APRIL 2017

W H I T E PA PE R: Epiq | SP ONSOR E D CON T E N T

Knowledge Center

Periodic statements for bankrupt borrowers WHAT LOAN SERVICERS NEED TO KNOW NOW ABOUT THE CFPB’S NEW RULE THE CONSUMER FINANCIAL PROTECTION BUREAU recently finalized new regulations for loan servicers. Soon, mortgage borrowers who have filed for bankruptcy will have the right to demand greater transparency and more communication from the companies that service their loans. This is a key change. Under the CFPB’s former mortgage rule, servicers did not have to provide periodic statements or early intervention loss mitigation information to borrowers in bankruptcy. Penalties for violating this requirement could add up quickly for servicers who are unprepared or underinformed. Here’s what servicers need to know now to help avoid paying large penalties later.

WHERE DID THE RULE COME FROM? When the CFPB adopted a number of rules pursuant to the DoddFrank Wall Street Reform and Consumer Protection Act in 2013, it gave itself new powers to oversee consumer protection related to the mortgage market. The CFPB exercised its authority by proposing a number of amendments to its Mortgage Servicing Rules, including requiring creditors, assignees or servicers of any residential mortgage loan to provide a periodic statement to their borrowers for each billing cycle. On Aug. 4, 2016, the bureau’s massive 900-page final mortgage servicing rule went into effect. Among its many requirements are protections that require servicers to afford this greater transparency to debtors protected by bankruptcy. The director of the Consumer Financial Protection Bureau, Richard Cordray, described the new rule’s effect as “ensuring that homeowners and struggling borrowers are treated fairly by mortgage servicers and that no one is wrongly foreclosed upon.”

WHAT DOES THE RULE REQUIRE? Specifically, the new rule states that servicers must provide periodic statements to borrowers in bankruptcy who intend to retain their home, but not to borrowers who intend to surrender it. These statements must contain specific information tailored for bank-

ruptcy, as well as a modified written early intervention notice to let those borrowers know about loss mitigation options. Two types of servicers are exempt from the requirements: small servicers, i.e., those servicing 5,000 or fewer mortgage loans yearly which they own or originated; and servicers of “charged-off” loans, where no additional charges will be made by the servicer. In support of the rule, which was first proposed in 2013, the National Consumer Rights Bankruptcy Center (NCRBC) said at the time that the “CFPB found that the complexities of the bankruptcy scenario necessitated periodic statements for debtors.” The rule lets servicers “make changes in statements to reflect accurate payment obligations of the debtor, but [it puts] an end to servicers’ practice of stopping monthly statements to borrowers who filed for bankruptcy,” the NCRBC said. “Without statements, it is more difficult for homeowners to remain current on their mortgages post-petition.”

WHAT DOES THIS MEAN FOR SERVICERS? Adjustments needed to satisfy the new rule may not be so simple to put into practice — and may add significant cost and require substantial advance preparation. The CFPB recognized that the mortgage servicing industry would incur additional costs to comply with the new rule. But it also stated that it “believes that the majority of the provisions in this final rule would impose, at most, minimal new compliance burdens.” The Mortgage Bankers’ Association (MBA) is not so sure. After the Interim Final Rule was first announced, a joint letter sent by the MBA, the Consumer Bankers Association and the American Bankers Association expressed concern that “the CFPB’s view does not take into consideration common limitations of existing servicing platforms and collections systems.”

To read the entire white paper,

visit the Knowledge Center on HousingWire.com at knowledge. housingwire.com. HOUSINGWIRE ❱ APRIL 2017 63

Knowledge

Center

64 HOUSINGWIRE ❱ APRIL 2017

W H I T E PA PE R: Floif y | SP ONSOR E D CON T E N T

Knowledge Center

2016 Loan officer recruitment and retention study STATE OF MORTGAGE INDUSTRY LOAN OFFICER ATTRITION AND RETENTION EXECUTIVE SUMMARY For a mortgage lender to succeed with a recruiting and retention strategy, it is important for them to understand what offerings drive high-performing loan officer success. How satisfied are loan officers with their current companies and how does technology, systems, culture, coaching, and compensation drive their decision to stay or leave? This study is the industry’s most recent analysis of the benefits and challenges that drive loan officer satisfaction and success. The study solicited over 13,000 mortgage originators, specifically loan officers, branch managers, and area sales managers. The analysis focuses on loan originators with an average annual loan volume of $21 million or more to distinguish the needs and priorities of “high achieving” loan officers. In this study, we sought to answer questions such as: • What is the recruitment path for high-performing loan officers exceeding $21m in annual loan volume? • What capabilities do loan officers look for in a mortgage company, how do they rank them, and how long do they give a lender to deliver on capabilities before leaving? • How do high-achieving loan officers rank the importance of technology, compensation, culture, training, product diversity and marketing? • What is the current state of satisfaction for loan officers with their company? This research was conducted in response to the industry demand for insight about loan officer recruiting and retention strategies.

INTRODUCTION Recruiting and retention are top priority for lenders Attracting top-level talent is one of the most important things any business can do, but for mortgage lenders it can have even more

impact on their bottom-line when conditions exist in the market that favor the skilled and seasoned loan officer. Freddie Mac and The Mortgage Brokers Association are predicting a market shift towards purchase originations in 2017 and 2018. In a purchase market, top loan officers provide a tremendous amount of value as the relationships and reputation they’ve built up over years become critical to filling their pipelines. What infrastructure support do top LO’s need to be successful? • Scalable technologies • Compensation • Executive Management • Team culture • Training and coaching • Lender reputation Because mortgage origination is a profession that is dominated by loan officers who have their own book-of-business and generate their own leads, employers will be forced to get creative with their recruiting offerings. Mortgage companies have struggled to understand the needs of the best loan officers and have often failed to provide the support that allowed those individuals to operate at their peak. Having an informed approach to recruiting becomes vital to a business’ growth and success. This study seeks to uncover the factors and offerings that most entice the best loan officers to join a mortgage company and what motivates them to stay. These findings can serve to shape the recruiting and retention strategies of mortgage companies in order to best position themselves in their efforts to attract and retain high producing loan originators.

To read the entire white paper,

visit the Knowledge Center on HousingWire.com at knowledge. housingwire.com. HOUSINGWIRE ❱ APRIL 2017 65

Kudos GIVING BACK • In February, COLONIAL SAVINGS partnered with the MORTGAGE BANKERS ASSOCIATION’S Open Doors Foundation to provide rental and mortgage grants to families of patients at COOK CHILDREN’S MEDICAL CENTER.

• In honor of National Read Across America Day, PRIMARY RESIDENTIAL MORTGAGE, INC. hosted a book drive for JAMES R. RUSSELL (JRR) HEAD START CENTER in Rose Park, Utah, bringing in more than 400 books. In addition to the drive, on March 5, PRMI’s employees volunteered to read with the children at the center and the company gifted each of the 225 students a book to take home and presented teachers with new items for their classrooms.

• GUILD MORTGAGE donated $116,000 to the INFINITE HERO FOUNDATION, which helps provide access to innovative reha-

bilitation programs that address the unique needs of military veterans and their families. The donation was used to purchase

a wearable robotic exoskeleton from REWALK ROBOTICS, designed for individuals with spinal cord injury.

that’s ideal for temporary rehousing following emergency situations. A modular, cost effective and reusable rehousing solution, Lifeshelter can be repurposed into permanent housing. Real Relief is a company that develops and supplies a large amount of relief items to people in need worldwide, including products like life-saving mosquito nets made with insecticide.

• Several appraisal firms have

LAUNCHES • TRULIA launched two new iMessage extensions that allow homebuyers or renters to easily share homes through iMessage. The extensions enable users to view property details, saved homes, and coordinate open house visits without leaving their conversation.

• REAL RELIEF launched LIFESHELTER, a new, innovative low-cost housing solution 58 HOUSINGWIRE ❱ APRIL 2017

joined together in a partnership to offer expanded offer expanded geographical services in the valuation industry. VALUCENTRIC is comprised of THE TRICE GROUP, REAL VALUATION SERVICES, CHICAGO APPRAISAL CENTER, JSG REAL ESTATE SERVICES, and GLOBAL REAL PROPERTY SOLUTIONS, and employs more than 100 staff appraisers to provide a full range of valuation

services in 15 states and Washington, DC.

• FINANCE OF AMERICA COMMERCIAL, a new division of FINANCE OF AMERICA, provides portfolio and fix-andflip loans to real estate investors across the country. The company was founded in 2013 as B2R FINANCE with funds managed by BLACKSTONE TACTICAL OPPORTUNITIES and joined FoA in early 2017.

Kudos

MILESTONES • UNTERBERG & ASSOCIATES, P.C. will be joining creditors’ rights law firm CODILIS & ASSOCIATES. The Indiana-based firm will continue its default practice as CODILIS LAW. Codilis & Associates also recently marked its 40-year anniversary of operations.

• As of February, SNAPDOCS’ Vendor Pay technology surpassed more than $2 million in payouts to nearly 7,000 different notary vendors across the United States. Vendor Pay enables mortgage lenders and title companies to automatically compensate thousands of different notary vendors on a rolling basis through AUTOMATED CLEARING HOUSE.

• On February 21, WATERSTONE MORTGAGE rang the NASDAQ opening bell. President and CEO Eric Egenhoefer rang the bell on behalf of Waterstone’s parent companies and was joined by the executive team and 40 of the company’s top producing loan originators.

AWARDS • In February, Ally Bank took home six Stevie Awards for its sales and customer service efforts. The bank received two gold, one silver and three bronze Stevies. HOUSINGWIRE ❱ APRIL 2017 59

Industry

Pulse

60 HOUSINGWIRE ❱ APRIL 2017

Industry Pulse

Wells Fargo commits to lending $60B toward African-American homeownership PLANS TO CREATE AT LEAST 250,000 HOMEOWNERS WELLS FARGO committed to lending $60 billion to create at least 250,000 African-American homeowners by 2027, directly addressing the lower homeownership rates in the African-American community. The financial commitment, announced in February, serves to help a community that is slated to significantly increase. According to the U.S. Census Bureau, by the year 2024, 75% of the expected 14 million new households (renters and owners) in the U.S. will be diverse. And of this amount, African-Americans are projected to represent 17%, or the third largest segment, of the new households. Wells Fargo said that through the commitment it plans to: • Lend $60 billion to qualified African-American consumers for home purchases by 2027 • Increase the diversity of the Wells Fargo Home Lending sales team • Support the effort with $15 million to support a variety of initiatives that promote financial education and counseling over the next 10 years. The National Association of Real Estate Brokers (composed of African-American real estate professionals), which has also set a homeownership goal, and two of the nation’s most influential civil rights organizations, the NAACP and the National Urban League, are also working alongside Wells Fargo. “Wells Fargo’s $60 billion lending goal can contribute to economic growth by making responsible homeownership possible for more African-Americans in communities across the country,” said Brad Blackwell, executive vice president and head of housing policy and homeownership growth strategies for Wells Fargo.

“NAREB applauds Wells Fargo’s $60 billion loan commitment. The bank is the first financial institution to acknowledge publicly black Americans’ wealth-building potential which could be greatly improved through homeownership,” said Ron Cooper, president, National Association of Real Estate Brokers. “NAREB welcomes their entry into the struggle to close the everwidening wealth gap for black Americans, and looks forward to having Wells Fargo as a partner in NAREB’s ‘2 Million New Black Homeowners in 5 Years’ program,” he continued. Wells Fargo’s $60 million commitment follows its 2015 announcement to help increase Hispanic homeownership. At the time, Wells Fargo Home Mortgage said it aimed originate $125 billion over the next 10 years in order to assist in the National Association of Hispanic Real Estate Professionals’ Hispanic Wealth Project, which seeks to triple Hispanic household wealth over the next decade. While Wells Fargo’s lending commitment is spread out over ten years, according to a recent interview with Raphael Bostic, a professor at the Sol Price School of Public Policy at the University of Southern California, America is projected to become drastically more diverse over the next several decades. “The Census Bureau has a projection that America will be 100 million people more in the next 45 years,” said Bostic. “And if you break down where the growth is coming, it’s coming with African-American families, it’s coming with Asian families, and it’s coming with Latino families. What we will have at the end of that period is the most diverse country that we’ve ever seen. It really won’t make sense to talk about minorities since there will be pluralities of everyone.” HOUSINGWIRE ❱ APRIL 2017 61

SPONSORED CONTENT

Shannon Faries, right, is director of risk management at Land Gorilla. Sean Faries, far right, is CEO of Land Gorilla.

Executive Conversation: Shannon and Sean Faries on the growth of construction-to-permanent loans Land Gorilla manages all aspects of the construction loan process In this installment of HousingWire’s Executive Converations, we sit down with Land Gorilla executives Shannon and Sean Faries to talk about the growing popularity of construction-to-permanent loans. HousingWire: Why are more lenders interested in construction-topermanent (CTP) loans in the current market environment? Faries: The driving force behind the growth of Single Close Construction to Perm loans over the past few years has been the secondary mortgage market and the severe lack of housing inventory. Currently Fannie Mae, Freddie Mac, FHA, VA and USDA all offer a one-time close construction-to-perm loan product. This growth is leading to construction and renovation lending becoming more of a mainstream loan product and no longer the specialty loan product it was once thought of. With interest rates slowly rising, refinance volume is falling as a percent of the total. This loss of loan volume will impact lenders across the board, and astute Lenders will be looking to add loan products that are not rate driven — this will include construction-to-perm and renovation loans. HW: What is the potential for singleclose CTP loans? SF: With the involvement of the secondary mortgage market, what was once considered to be a niche loan product has the 66 HOUSINGWIRE ❱ APRIL 2017

potential to be a mainstream loan product that lenders of all types and sizes have the opportunity to offer the consumer. Additionally, the single-close CTP product is more consumer-friendly than a twotime close product — the consumer only has to qualify once, pay closing costs once, etc. That’s a much more convenient borrower experience!

to gain efficiency, scale and manage the inherent risk associated with construction lending. HW: Where does Land Gorilla expect to see the most growth in 2017? SF: Land Gorilla is forecasting strong growth in our construction-related technology and service solutions. We are

“The single-close CTP product is more consumerfriendly than a two-time close product — the consumer only has to qualify once, pay closing costs once, etc. That’s a much more convenient borrower experience.” HW: How does Land Gorilla help lenders to mitigate their construction risk and increase their pipeline efficiency? SF: Construction lending has lacked consistency, controls, and best practices. Land Gorilla’s goal is to make construction lending safe for all stakeholders. The Construction Loan Manager (CLM) by Land Gorilla is a software solution (SAAS) that allows lenders to manage all aspects of the construction loan process. From pre-closing due diligence to post-closing administration and inspection services, the Construction Loan Manager has you covered. Used by many of the nation’s top lenders, the CLM allows lenders of all sizes

continuing to see strong growth in the construction and finance sectors coupled with the pent-up national housing shortage. In 2016 we helped consult and build many construction and renovation loan programs. Many of these programs are in their infancy or set to launch in 2017. These lenders are now well positioned to take advantage of the market conditions while growing their purchase money transactions and recruiting goals. We are confident that these loan products will become mainstream and accessible by all lenders in the next few years and look forward to providing the solutions that will make them successful.

INDEX

BUILD TO RENT

Investors seize new opportunity p30

COMPANIES

J.D. Power............................................................................................21 Justice Department......................................................................15 JWB Real Estate Capital............................................................33 JWJ Consulting................................................................................. 12

The Trice Group...............................................................................58 Trulia.....................................................................................................58

Gallagher, Leigh...............................................................................15 Ginsburg, Douglas.........................................................................52 Gunderson, Will............................................................................. 46

University of Southern California..........................................61 Unterberg & Associates.............................................................59 Urban Institute................................................................................24 U.S. Census Bureau.................................................................24, 61 U.S. Court of Appeals for the District of Columbia.......... 51, 53, 55-56

60 Plus Association......................................................................56 Airbnb...................................................................................................15 Ally Bank.............................................................................................59 American Bankers Association.............................................63 American Student Assistance...................................... 38, 40 ATTOM Data Solutions..............................................................42 Auction.com......................................................................................18 Automated Clearing House.....................................................59

B B2R Finance......................................................................................58 Ballard Spahr...................................................................................56 Bank of America.............................................................................. 12 Barnard...............................................................................................38 Berkeley Point Capital................................................................22 Berkshire Hathaway HomeServices ��22 Blackstone Group..........................................................................35 Blackstone Tactical Opportunities ��58 Brookings Institution...................................................................39

C CalAtlantic Homes........................................................................ 12 Capaven......................................................................................44-45 CapitalG...............................................................................................18 Chase..................................................................................................... 12 Chicago Appraisal Center.........................................................58 Clayton Holdings...........................................................................24 Clear Capital.....................................................................................42 Codilis & Associates.....................................................................59 Colonial Savings...................................................................... 12, 58 Consumer Bankers Association............................................63 Consumer Financial Protection Bureau............ 55-57, 63 Corelogic......................................................................................12, 69 Countrywide..................................................................................... 12

Kroll Bond Rating Agency........................................................24

L Land Gorilla..................................................................................... 66 Lehman Brothers........................................................................... 12 LenderLive.......................................................................................... 12 Litton Loan Servicing................................................................... 12 loanDepot.......................................................................................... 12

M MarketReady.................................................................................. 46 Metrostudy.......................................................................................20 MGIC....................................................................................................... 12 Moody’s Analytics.........................................................................22 Morningstar Credit Ratings...................................................... 47 Mortgage Action Alliance.......................................................... 12 Mortgage Bankers Association.......................14, 57-58, 69 Mortgage Guaranty Insurance Corp. �� 12

N Nasdaq................................................................................................59 National Association of Federally-Insured Credit Unions..................................................................................................57 National Association of Real Estate Brokers 61 National Association of Realtors...........22, 32, 34-35, 38 National Consumer Rights Bankruptcy Center 63 National Multifamily Housing Council ��33 Nationstar Mortgage................................................................... 12 New American Funding.............................................................. 12 New York University.....................................................................38

Demos........................................................................................... 39, 41 Department of Housing and Urban Development.......21 Department of the Treasury....................................................51

Facebook............................................................................................ 27 Fannie Mae..............................16, 21-22, 24, 35, 51, 53, 66, 69 FDIC.......................................................................................................52 Federal Housing Finance Agency........................................35 Federal Reserve Board of Governors ��39 FHA....................................................................................................... 66 Fifth Third Bank.............................................................................20 Finance of America......................................................................58 Finlocker.............................................................................................. 12 Fortune.................................................................................................15 FotoNotes.................................................................................44, 46 Freddie Mac..........................................21-22, 51, 53, 65-66, 69 FTN Financial...................................................................................22

Perry Capital......................................................................................51 Pew Charitable Trusts...............................................................40 PHH.........................................................................................12, 55-56 POLITICO............................................................................................35 Primary Residential Mortgage....................................... 12, 58 Prospect Mortgage....................................................................... 12

G Generation Mortgage.................................................................. 12 Global Real Property Solutions............................................58 Google Capital.................................................................................18 Green River Capital.......................................................................24 Guild Mortgage...............................................................................58

H Harvard Joint Center for Housing Studies ��34 Harvard Law School....................................................................38 HERA..............................................................................................52-53 HomeAid America......................................................................... 12 HomesUSA.com..................................................................... 32, 34

I IndyMac................................................................................................ 12 Infinite Hero Foundation...........................................................58 ISGN........................................................................................................ 12

68 HOUSINGWIRE ❱ APRIL 2017

OwnAmerica.............................................................................32, 35

Q Quicken Loans.................................................................................. 12

R Realogy Franchise Group........................................................... 12 Realogy Holdings Corp................................................................ 12 Real Relief..........................................................................................58 Real Valuation Services.............................................................58 Renters Warehouse.............................................................44, 47 ReWalk Robotics...........................................................................58 Rock Holdings................................................................................... 12 Roofstock.........................................................................44, 46, 48

S Saxon Mortgage Services......................................................... 12 SEMS...................................................................................................... 12 Snapdocs...........................................................................................59 SolutionStar...................................................................................... 12 Standard Pacific.............................................................................. 12 Starkey Mortgage.......................................................................... 12 Starwood Hotels and Resorts Worldwide �� 12 State National Bank....................................................................56 Stockbridge Associates.............................................................34 Surveys of Consumers.................................................................21 SWBC Mortgage............................................................................. 12

H Hanson, Dan...................................................................................... 12 Hayward, Mike................................................................................49 Hensarling, Jeb............................................................................... 57 Huelsman, Mark...................................................................... 39, 41 Hughes, James................................................................................. 12

Valucentric........................................................................................58

Kazman, Sam..................................................................................56 Kolhatkar, Sheelah........................................................................15

W Wall Street Journal................................................. 14, 24, 34-35 Waterstone Mortgage................................................................59 Wells Fargo..................................................................................21, 61

L Laffey, Cindy..................................................................................... 27 lanza-cosgrove, Alle.......................................................... 39-40

Xinnix.................................................................................................... 27 Xome........................................................................................... 44, 49

Mahakian, Joel................................................................................ 27 Mijes, Leticia...................................................................................... 12 Millett, Patricia................................................................................52 Miosi, Salvatore............................................................................... 12 Mishkin, Barbara............................................................................56 Mnuchin, Steven.....................................................................22, 53 Morris, Andrew................................................................................ 57

PEOPLE A Amato, Lisa........................................................................................ 12 Ataya, Brigitte................................................................................... 12 Atwell, Mike....................................................................................... 12

B Beasley, Gary................................................................................... 48 Becketti, Sean..................................................................................21 Blackwell, Brad................................................................................61 Bostic, Raphael................................................................................61 Bright, Michael................................................................................22 Brown, William...............................................................................35

C Caballero, Ben......................................................................... 32, 34 Campion, Rosella.......................................................................... 27 Carson, Ben........................................................................................21 Casey, George..................................................................................34 Cazazian, Anthony....................................................................... 47 Chesky, Brian.....................................................................................15 Clarfield, Mitch................................................................................22 Clermont, Yvette........................................................................... 27 Cohen, Steve.....................................................................................15 Cooper, Ron.......................................................................................61 Cordray, Richard..................................................................... 55, 63 Corker, Bob........................................................................................22 Cotten, Tim........................................................................................ 12 Crawford, Bo..................................................................................... 12 Crawford, Stuart............................................................................ 27 Cruz, Ted............................................................................................. 57 Curtin, Richard..................................................................................21

E Davidson, Mitch............................................................................. 46 Dawson, Zach...................................................................................21 Dikes, Diana....................................................................................... 12 Dynarski, Susan..............................................................................39

E Egenhoefer, Eric.............................................................................59 Emerson, Bill..................................................................................... 12

F Faries, Sean...................................................................................... 66 Faries, Shannon............................................................................. 66 Farner, Jay........................................................................................... 12 Foster, Marty..................................................................................... 12

N Noonan, Peggy................................................................................14

O Obama................................................................................................56 Ortner, Kevin..................................................................................... 47 Owen, Jim..........................................................................................20

P Pagliara, Tim....................................................................................52 Peyton, John..................................................................................... 12 Piro, Roger.........................................................................................22 Proctor, Matthew..........................................................................38

R Rand, Greg..................................................................................32, 35 Renno, Keith..................................................................................... 27 Rogers Brown, Janice..................................................................52

S Shah, Kamal.................................................................................... 46 Sims, Jennifer................................................................................... 27 Sloan, Tim...........................................................................................21 Sowell, Thomas.............................................................................52 Staid, Stephen................................................................................. 12 Stowell, Scott................................................................................... 12

T Taylor, Lauren..................................................................................45 Thompson, Ann............................................................................. 57 Trump......................................................................14, 22, 52-53, 55

V Vogel, Jim...........................................................................................22

W Walters, Bob...................................................................................... 12 Welch, Bill........................................................................................... 12 Woellert, Lorraine.........................................................................35

Y Youman, Charryl............................................................................22 Yun, Lawrence.................................................................................38

Z Zandi, Mark.......................................................................................22

AD INDEX A

Arch U.S MI Services Inc............................................................................................... 3

Black Knight Financial Services................................................................................ 2

CoreLogic........................................................................................................................... 17

Fannie Mae........................................................................................................................6

Freddie Mac.................................................................................................................4, 13

IMN (Single Family East)..........................................................................................25

M&M Mortgage Services..............................................................................................8

Mortgage Bankers Association...............................................................................23

Nationwide Title Clearing......................................................................................... 10

Radian................................................................................................................................19 HOUSINGWIRE â?ą APRIL 2017 69

PARTING SHOT â?ą VIRTUAL REALTY Spending an entire afternoon viewing homes may soon be a thing of the past as virtual reality headsets, which are now available for as little as $99, allow Realtors, investors and potential homeowners to walk through numerous homes or offices from one location. The complete immersive experience is also available for houses in the early planning stages, enabling viewers to see the visual future of the house with ease.

70 HOUSINGWIRE â?ą APRIL 2017