Overall taxation increasingly determines where people and companies choose to relocate. Last week Rob Chrisman talked about what makes homebuyers move in his daily newsletter. According to MarketWatch jobs are the determining factor for someone to relocate, second to state and local taxes.
ATTOM Data Solutions, national property database provider, released its 2017 property tax analysis for more than 86 million U.S. single family homes which shows that property taxes levied on single family homes in 2017 totaled $293.4 billion, up 6 percent from $277.7 billion in 2016 and an average of $3,399 per home — an effective tax rate of 1.17 percent.
For Daren Blomquist, Attom’s senior vice president, the story of national property taxes is the story of migration around the country. Blomquist told MarketWatch that taxes are “the icing on the cake” in areas that are seeing strong population inflows anyway.
“Among the counties that saw the biggest percentage of in-migration in 2017, according to Census data, all are in Texas, Florida, Georgia, or the Carolinas. Texas doesn’t have particularly low property taxes, but it has no personal income tax, making the overall tax burden much more manageable,” said Andrea Riquier of MarketWatch.
Texas is a pro-business state that continues to attract business and population.
Business Facilities Magazine ranked Texas as the top state in the nation for the Best Business Climate in the magazine’s 13th Annual Rankings Report. Out of all 50 states, Texas achieved the best overall performance in the 2017 State Rankings Report.
According to Texas Governor Abbott, “economic liberty is why Texas leads in job creation and in corporate expansion and relocations. Restrained government, lower taxes, smarter regulations, right-to-work laws and litigation reform—these are the pro-growth economic policies that help free enterprise flourish and that attract business to Texas from states that overtax and overregulate.”
Austin continues to attract businesses, and is a hub for corporate and regional headquarters, including AMD, Apple, Bazaarvoice, Cirrus Logic, Dell, Dimensional Fund Advisors, eBay, Facebook, Freescale, General Motors, Hanger, Hewlett-Packard, HomeAway, Home Depot, IBM, LegalZoom, National Instruments, Oracle, Whole Foods, and Visa. Check out the Austin Chamber of Commerce Austin’s major employers map.
Best and worst business climates.
24/7 Wall Street ranked best and worst business climates looking at nearly 50 measures of doing business, including economic conditions, business costs, state infrastructure, the availability and skill level of the workforce, quality of life, regulations, technology and innovation, and cost of living.
Massachusetts ranked No. 1 with a well-educated population that is a boon for state businesses. Such a population presents a more flexible and skilled talent pool for employers. Also, people with college educations tend to have higher incomes, which means they have more disposable income to spend. A nation-leading 42.7% of Massachusetts adults have a bachelor’s degree, compared to 31.3% of adults nationwide. The typical state household earns $75,297 a year, the fourth highest median income of any state and over $17,000 greater than the national median.
And, Louisiana ranked last. Working-age Louisianans are less likely than working-age Americans to have the qualifications for higher-skilled, higher-paying jobs. Just 23.4% of adults in the state have a bachelor’s degree, nearly the lowest percentage of all states. Unlike most states, Louisiana’s working-age population is also declining. In the Census’ American Survey of Entrepreneurs, 46% of state businesses reported unpredictable conditions having a negative impact on their business, and 48% reported slow business or lost sales, each among the highest shares in the country.
Texas ranked among the top states at No. 13.
According to USAToday, “like North Dakota and a few other oil-producing states, Texas’ economy has taken a beating from the more-than-three-years-long stretch of depressed crude oil prices. However, the state’s economy is more diverse than that of North Dakota, and GDP has contracted by just 0.3% in the most recently reported year. Credit agencies Moody’s and Standard & Poor’s clearly recognize the state’s stability and rate its debt a perfect AAA and Aaa, respectively, with a stable outlook. The state’s businesses not only benefit from a stable economy, but also from a growing labor force. Texas’ working age population is projected to grow by 14.9% between 2020 and 2030, the fourth most of any state.”
Austin MSA stands out with 42.8% having a bachelor’s degree or higher, as compared to 28.9% in Texas, and 31.3% in the United States. And, WalletHub ranked Austin-Round Rock No. 9 in the Most & Least Educated Cities of America.
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Here are some great articles highlighting the continued trend of corporations relocating to Texas and the Austin area:
Today, Ray Perryman reports that Texas again wins of Site Selection Magazine’s “Governor’s Cup” competition: Another Win for Texas – This award goes to the state with the most major corporate location and expansion projects in a year. The 2017 win is the sixth in a row for Texas. Lone Star State also won in 2004, 2005, and 2010 (and was a close second in several of the years between). Last year, Texas had 594 projects with a capital investment of at least $1 million, 20 or more new jobs, or 20,000 square feet of new construction. Texas has resources corporations need: a large and growing population, oil and gas, a coastline favorable to shipping, abundant land, a relatively moderate climate, and a central location, among others.
Greater Austin Chamber of Commerce reports on Relocations and Expansions: 2016-2017 RELOCATIONS & EXPANSIONS LOG – note the large number of Headquarters that are expanding.
Other tech companies moving to Austin: Texas takeover: Why 5 tech companies relocated their headquarters to Austin – Great article which highlights the many reasons why companies want to relocate to Austin.
San Francisco article: Tech pipeline to Texas: Tax money, people flow out of Bay Area – which highlights the struggles of keeping companies in the bay area vs. moving to Austin for the labor they need to grow and expand. This is a 2016 article but highlights the ongoing trend of companies moving from other states, particularly California, to Austin.
Links to articles:
Listed below are excerpts from Rob Chrisman’s http://www.robchrisman.com/ daily blogs from August 22nd to September 7, 2017 regarding FEMA and lender disaster notices for your quick reference. Great advice for lenders, servicers and borrowers for dealing with disaster/flood related issues from Hurricane Harvey.
With the natural disasters already plaguing regions across the United States, the FEMA website lists all declared incidents with a link to provide details specific to that area, including leaking chemical plants.
Most investors and lenders rely on FEMA to define a disaster and the area impacted. Of course, any monies about to be lent, and recently lent, in a disaster area are questionable from an investor’s perspective. Is the borrower safe, will they make their payments, is the collateral sound? Typically a correspondent investor, such as Chase, will have verbiage in their contract referring the seller to it in the event an area is declared an investor and requiring additional appraisals.
Partners can access Sun West Seller Guide under HELP section in Sunsoft (login required). Please refer to Sun West Forward Mortgage Seller Guide (Section 404.07) and Sun West Reverse Mortgage Seller Guide (Section 3.23) for more details.
Plaza Home Mortgage is reminding its clients to follows its Natural Disaster Policy, GD-PO-008 (login required) for properties located in these areas.
Pacific Union is monitoring the impact of severe storms and disaster declarations across several states as published by FEMA. Currently, loans secured by properties located in impacted areas are subject to standard Pacific Union protocol. Standard requirements for disaster areas apply for these properties as they relate to expectations from appraisers for existing pipeline and new applications. For loans secured by properties in affected areas, the appraiser must comment on the disaster and if there is an impact to the property and value. In addition, all types of issued insurance policies (hazard, flood, windstorm, etc.) must have binding authority on the subject property. Upon delivery of a loan to Pacific Union Financial, the Correspondent must ensure that re-inspections have been completed and delivered to Pacific Union Financial for all impacted properties in accordance with Pacific Union’s Disaster Area Policy.
“The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and state bank regulators recognize the serious impact of Hurricane Harvey on the customers and operations of many financial institutions and will provide regulatory assistance to affected institutions subject to their supervision. The agencies encourage institutions in the affected areas to meet the financial services needs of their communities.
“Bankers should work constructively with borrowers in communities affected by Hurricane Harvey. The agencies realize that the effects of natural disasters on local businesses and individuals are often transitory, and prudent efforts to adjust or alter terms on existing loans in affected areas should not be subject to examiner criticism. In supervising institutions affected by the hurricane, the agencies will consider the unusual circumstances they face. The agencies recognize that efforts to work with borrowers in communities under stress can be consistent with safe-and-sound banking practices as well as in the public interest.
Community Reinvestment Act (CRA): Financial institutions may receive CRA consideration for community development loans, investments, or services that revitalize or stabilize federally designated disaster areas in their assessment areas or in the states or regions that include their assessment areas. For additional information, institutions should review the Interagency Questions and Answers Regarding Community Reinvestment here.
Freddie Mac’s disaster relief options will be available to borrowers with homes in presidentially-declared Major Disaster Areas where federal Individual Assistance programs are made available to affected individuals and households. Until then, servicers may leverage Freddie Mac’s forbearance programs to provide immediate mortgage relief to borrowers affected by the storm.
“We strongly encourage the many American families whose homes or businesses are being impacted by Hurricane Harvey to call their mortgage servicer if the Federal Emergency Management Agency’s declaration is announced,” said Yvette Gilmore, Freddie Mac’s Vice President of Single-Family Servicer Performance Management. “Relief — including forbearance on mortgage payments for up to one year — may be available if their mortgage is owned or guaranteed by Freddie Mac.”
Freddie Mac disaster relief policies authorize mortgage servicers to help affected borrowers in presidentially declared Major Disaster Areas where federal Individual Assistance programs have been extended. Freddie Mac mortgage relief options for affected borrowers in these areas include suspending foreclosures by providing forbearance for up to 12 months, waiving assessments of penalties or late fees against borrowers with disaster-damaged homes, and not reporting forbearance or delinquencies caused by the disaster to the nation’s credit bureaus.
Lenders are reminded that Fannie Mae has selling and servicing policies to assist impacted borrowers (or potential borrowers) following a disaster, such as the hurricane on the Gulf coast. Refer to Assistance in Disasters for information on where to find Fannie Mae’s policies for providing assistance to borrowers impacted by a disaster. View the press release.
Due to the potential impacts of Hurricane Harvey to the southern Texas coast, at this time, and until all affected areas have been identified by the Federal Emergency Management Agency (FEMA) and other sources, Pacific Union Financial, LLC will temporarily suspend the funding of loans secured by properties in impacted areas.
AmeriHome, with FEMA’s DR-4332, reminded clients that policies vary based on program and re-inspection requirements for transactions with and without appraisals. Sellers are reminded that they are responsible for determining potential impact to a property located in an area where a disaster is occurring or has occurred, irrespective of whether the property was included in an area covered by a disaster declaration. Sellers are also reminded that appraisal waivers and reduced appraisal types, such as Fannie Mae’s PIW and Freddie Mac’s ACE, are not eligible in areas impacted by disasters. See the respective Agency requirements for details.
AmeriHome reminded clients that for loans on properties involving transactions with appraisals for Fannie, Freddie, VA, and USDA, if the appraisal is dated on or before incident period end date, including on-going disasters where an incident end period date has not yet been declared then the re-inspection date must be prior to the declared incident period end date.
For non-agency, Core Jumbo, or FHA, if the appraisal is dated on or before incident period end date, the re-inspection date must be after declared Incident period end date. (In other words, re-inspection may not be completed until after the declared incident period end date).
For properties without an appraisal, a property inspection is required if no incident period end date has been declared and Loan Purchase is on or after incident period start date, or the incident period end date has been declared and Loan Purchase is on or within 90 days after incident period end date. Re-inspection type can utilize any of the property inspection types in Seller Guide Section 10.10.7.1., AND include an interior inspection with photos.
Sellers must follow Wells Fargo standard Disaster Policy for all properties located in ZIP codes that Wells Fargo Funding has determined were impacted by Hurricane Harvey. Precautions must be taken for Loans originated within affected areas. Regardless of whether FEMA has formally declared a disaster, all transactions showing any indication of damage to the collateral should comply with the published Disaster Policy Guidelines as outlined for customers here (login required).
Customers of Chase can visit the Correspondent Site for more information on appraisal requirements, and re-inspection requirements.
And, the same with SunTrust – it is spelled out in SunTrust’s seller guide.
NewLeaf Wholesale reminded its brokers that If the subject property is located in an impacted area, with a completed appraisal dated prior to the incident start date, a 1004D re-inspection completed by the Appraiser must certify that the property is free from the applicable natural disaster damage. For appraisals in an impacted area dated during the incident period, the Appraiser must: Comment on the condition of the property and any effects on the marketability AND add detailed language into the body of the appraisal confirming that the property is free from the applicable natural disaster damage OR provide a 1004D re-inspection to certify that the property is free from the applicable natural disaster damage. For appraisals in an impacted area dated after the incident end date, the Appraiser must: Comment on the condition of the property and any effects on the marketability AND add detailed language confirming that the property is free from the applicable natural disasters damage into the body of the appraisal.
As of August 30th, Flagstar Bank is suspending funding in Texas counties: Aransas, Bee, Brazoria, Calhoun, Chambers, Fort Bend, Galveston, Goliad, Harris, Jackson, Kleberg, Liberty, Matagorda, Nueces, Refugio, San Patricio, Victoria and Wharton. Louisiana parishes include: Beauregard, Calcasieu, Cameron, Jefferson Davis, Orleans and Vermillion. Once funding has resumed, a re-inspection will be required in the counties identified. Loans that have already been issued a Final Approval Clear to Close status will be placed in an Approved with Conditions status until a re-inspection is performed. Please note that appraisal re-inspections are not required to be completed by the original appraiser; however, a Flagstar Bank eligible appraiser must be utilized. For loans that have an appraisal that was ordered via Loantrac, an appraisal re-inspection may be requested via the Appraisal Management module by selecting “Yes” to the “Do you need a property/Disaster Inspection” question.
M&T Bank will enforce the Disaster Re-Inspection Policy for all properties located in the affected counties of Aransas, Bee, Brazoria, Calhoun, Chambers, Fort Bend, Galveston, Goliad, Harris, Jackson, Kleberg, Liberty, Matagorda, Nueces, Refugio, San Patricio, Victoria, and Wharton.
Appraisals Completed prior to 8-28-2017 (Refer to Ex #03-600: Disaster Affected Areas, for expiration). For loans secured by properties, in the designated disaster areas, and appraised prior to the Federal Government / State Government declaration, please refer to the matrix for required Re-inspection guidance.
First Community Mortgage disaster policy and procedure can be viewed in its product full guidelines. View a copy of the FEMA declared disaster counties.
Wells Fargo Funding Sellers must follow its standard Disaster Policy for all properties located in counties identified by FEMA as being impacted. Precautions must be taken for Loans originated within affected areas. Regardless of whether FEMA has formally declared a disaster, all transactions showing any indication of damage to the collateral should comply with the published Disaster Policy Guidelines as outlined in Seller Guide Section 820.19: Disaster Policy and 820.20: When Required both found in our Conforming Underwriting Guidelines. (Government Loans must follow FHA/VA guidance.) Reminder: When the appraisal is completed on or after the disaster incident period end date, a full appraisal with exterior and interior inspection is required. This includes Loans where a PIW or equivalent was requested by the Automated Underwriting System (AUS).
PennyMac has posted Disaster Policy Implementation: Texas Hurricane Harvey. In response, FEMA has declared 18 counties in Texas as eligible for Individual Assistance. PennyMac’s Disaster Policy requires a post-disaster inspection on all properties located in counties eligible for Individual Assistance. Due to the continued impact of Hurricane Harvey, FEMA has not declared an incident end date and PennyMac will not be accepting post-disaster inspections and additional counties may be added. PennyMac has also paused funding in the additional counties where the Texas Governor declared a State of Emergency due to the ongoing rain and flooding and potential for additional damage. PennyMac will continue to monitor counties not yet declared for Individual Assistance for reinstatement.
AmeriHome is implementing re-inspection requirements for four additional Texas counties that were included in an amended State of Disaster declaration made 8/28/2017 by Texas governor Abbott. Those counties are Angelina, Orange, Sabine and Trinity. AmeriHome is also re-inspection requirements for FEMA declared Texas DR-4332 and Louisiana EM-3382.
“As we work together to support borrowers affected by Hurricane Harvey, lenders are reminded that Fannie Mae has selling and servicing policies to assist borrowers (or potential borrowers) affected by disaster. Refer to the Assistance in Disasters page for information about its policies for providing assistance to borrowers impacted by a disaster. Fannie will provide additional policy guidance in a separate lender communication.
In light of the devastation caused by Hurricane Harvey, if you have mortgages secured by properties in the affected areas that are in the delivery pipeline, you should remove these mortgages from a Guarantor pool or Cash commitment.”
Additionally, you should review Freddie Mac requirements related to properties affected by disasters to prepare to address impacted mortgages you originated and planned to sell to Freddie. “While it’s premature to determine the full impact of Hurricane Harvey, review the applicable sections of the Single Family Seller/Servicer Guide and your procedures for inspecting and updating a property’s value, condition and marketability when a major disaster or emergency occurs. Guide Section 5601.2 (c) – Requirements for properties affected by disasters, Guide Section 5601.2 (b) – Requirements for incomplete property improvement, Guide Section 4201.13 – Circumstances that adversely affect the value of the property.
We rely on you to determine the number of mortgages secured by impacted properties and the extent of damage to each property that may affect its acceptability as security for the mortgage.
As we continue to closely monitor the situation, we are grateful to our Seller/Servicers who are responding to requests for assistance from borrowers who are facing unexpected hardships because of the hurricane.”
As always, clients should read the full bulletins from lenders and investors.
Fannie Mae reminds clients that “Following a disaster, we rely on our customers to implement our disaster relief policies and assist impacted homeowners. We require servicers to assess property damage and the needs of homeowners in order to provide appropriate relief. In addition, our Account Teams work closely with our customers to determine physical and operational impacts to their business operations and their ability to service mortgages owned or guaranteed by Fannie Mae.”
“Citibank Correspondent Lending is ready to help residents regain pre-storm business functionality. Among other assistance, Citibank will work with you on a case by case basis regarding loan file delivery and lock expiration dates, consider rate lock extensions based on your business needs due to storm damage1and consider fee waivers on issues arising due to the impact of the storm.
“As a reminder, Lenders represent and warrant that the properties securing all loans submitted to Citibank for purchase consideration have not been negatively impacted by any natural or man-made disaster as of the date Citibank purchases the loan. The Lender also represents and warrants that the borrower’s credit qualifications for the underlying loan have not been negatively impacted by any natural or man-made disaster as of the date Citibank purchases the loan.
“Lenders must have a process in place for identifying disaster areas and potential impact to properties that are the subject of loans proposed for sale to Citibank. If the Lender’s disaster policy includes a requirement for re-inspection of the property, the re-inspection should be included in the closed loan file submitted for purchase (i.e. appraisal ordered prior to the storm with closing after the event).”
Citi’s note finished with, “For loans originated after the storm, it is important to note that section 501 of the Correspondent Manual. Lenders are responsible for ensuring that the borrower’s credit qualifications for the underlying loan have not diminished because of the storm. Property or Lender’s place of business must be located in a FEMA disaster area.”
Because of the Presidential Declaration of a Major Disaster Area (PDMDA) in designated counties in the State of Texas due to damage caused by Hurricane Harvey, FHA is issuing this reminder to mortgagees originating and/or servicing mortgages in the affected PDMDAs: FHA-insured mortgages secured by properties in a PDMDA are subject to a 90-Day moratorium on foreclosures following the disaster. HUD provides mortgagees an automatic 90-Day extension from the date of the moratorium expiration date to commence or recommence foreclosure action or evaluate the borrower under HUD’s Loss Mitigation Program.
Mortgagees should review complete servicing guidance in the Single-Family Housing Policy Handbook (SF Handbook) 4000.1, Sections III.A.2 and III.A.3.c relating to the servicing of mortgages in PDMDAs.
In preparation for assisting homeowners with longer-term recovery efforts, mortgagees should also review: FHA’s 203(h) Mortgage Insurance for Disaster Victims requirements in Section II.A.8.b of the SF Handbook. The 203(h) program allows FHA to insure mortgages for victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home. FHA’s 203(k) Rehabilitation Mortgage Insurance Program requirements in Section II.A.8.a of the SF Handbook. The 203(k) program provides mortgage financing or refinancing which includes the cost of home repairs – both structural and non-structural – into the loan amount. Mortgagees can find more information about the policies referenced above and other FHA PDMDA policies on the FHA Resource Center’s Online Knowledge Base.
Mortgage Solutions guidelines have been updated to address any property area located in a FEMA declared disaster area requiring individual assistance or as determined by MSF. Search for a specific property provided by Disaster Assistance.gov.
Conventional, VA and USDA: Properties with an appraisal effective date prior to the date of the disaster, appraiser to provide a 2075 drive-by, 1004D update/completion report, or Disaster Inspection Report, or Disaster Area inspection prepared by a certified appraiser to verify home is not affected Specific requirements must be met within the inspection.
Specific to Conventional properties, disaster inspections are not required for DU Refi Plus and LP Open Access transactions. Property Inspection Waiver (PIW) is not eligible in disaster-impacted areas. If a FEMA disaster is declared after the loan has closed with a PUW, one of the above-listed exterior inspection documents is required.
FHA Properties with an appraisal effective date prior to the date of the disaster, appraiser to provide a 1004D update report, prepared by a certified FHA Roster Appraiser to verify home is not affected. Disaster inspections are not required on new FHA transactions endorsed by FHA prior to the disaster date. Disaster inspections are not required for FHA Streamline without Appraisal transactions.
NewLeaf sent out, “All subject properties in the areas impacted by the disaster require evidence that the subject sustained no damage from the identified disaster for NewLeaf transactions. As the effects of Hurricane Harvey are continuing, please note impacted areas are subject to change without notice.
If the subject property is in an impacted area listed on the NewLeaf incident table with a completed appraisal dated prior to the incident start date, a 1004D re-inspection completed by the Appraiser must certify that the property is free from the applicable natural disaster damage. For appraisals in an impacted area dated during the incident period, the Appraiser must: Comment on the condition of the property and any effects on the marketability AND add detailed language into the body of the appraisal confirming that the property is free from the applicable natural disaster damage OR provide a 1004D re-inspection to certify that the property is free from the applicable natural disaster damage.
Prior to closing and funding, ResMac, Inc. will require a property inspection for any loan secured by a property in the FEMA declared Texas DR-4332. If the subject property is in one of the impacted counties and the appraisal was completed prior to the incident period end date, ResMac will require a post disaster inspection confirming the property was not adversely affected by the disaster. The inspection report must be dated no earlier than the date of disaster conclusion as determined by FEMA and/or the State of Texas. Clients may utilize any of the following re-inspection options to satisfy the post disaster inspection requirement, with a photograph of the subject property: Property Inspection Report (Fannie Mae Form 2075/ Freddie Mac Form 2070), or Appraisal Update and/or Completion Report (Fannie Mae Form 1004D/Freddie Mac Form 442), or Uniform Residential Appraisal Report (Fannie Mae Form 1004/Freddie Mac Form 70), Exterior Only Appraisal Report (Freddie Mac Form 2055), Individual Condominium or PUD Unit Appraisal Report (Fannie Mae Form 1073/Freddie Mac Form 465), Disaster Inspection Certification from a Licensed Certified Inspector.
Flagstar will apply a 15 day, no cost extension to loans in the counties/parishes impacted by Hurricane Harvey that meet the following criteria: Must have a lock expiration date that falls between Friday, August 25, 2017 and Friday, September 15, 2017. Loan must be in underwriting and is not funded or in a closing package received status (i.e. approved with conditions, conditions received, and final approval). Flagstar will reduce funding extension fees to 1 basis point per day on delivered loans provided that all conditions are cleared except for the appraisal re-inspection.
AXIS AMC has been through several disasters across the country, and has been here to help guide and navigate our industry partners through each of them. Axis expects to see a multitude of Disaster Certifications needed on properties in those markets that have been affected although lending partners and other clients may have different reporting requirements and needs. If possible, send Axis any policy or requirements that you feel are specific to you and Axis will try to accommodate.
CoreLogic estimates that about 70% of the flood damage in Houston was uninsured. Lenders are worried about everything from lost closing packages to forced-placed insurance policies. The ABA estimates about 1,000 bank branches were impacted by the unprecedented rainfall and flooding of Hurricane Harvey. Hurricane Harvey comes at a time when the National Flood Insurance Program owes $24.6 billion to the Treasury already. This will put pressure on a program that is expiring this month. The impact of Harvey following Katrina means bankers should prepare for extreme regulatory scrutiny around all things flood-related at upcoming exams.
With the odds increasing that Irma will impact U.S. holdings, including Florida, the Federal Emergency Management Agency (FEMA) is busy indeed. Those impacted should register with FEMA online, in person at a disaster recovery center or by calling 1-800-621-3362. They should also have their homeowner’s insurance company contact info, plus flood or earthquake insurance company, if either applies, and their mortgage servicer.
What if a borrower can’t pay their mortgage? If the disaster makes it impossible to make monthly house payments, borrowers should ask their servicer for mortgage forbearance. A forbearance allows one to stop making payments for an agreed-upon time. In a forbearance agreement, one might make partial payments or stop making payments for a specific time. Generally, a forbearance lasts up to six months and can be extended up to another six months. Interest still accrues during the time the debtor isn’t making full monthly payments. But under a forbearance agreement, the lender won’t charge late fees or report them to credit bureaus.
Of course, the lender/servicer will want the mortgagor to catch up on missed payments after the forbearance period is over. That might involve paying extra every month for a few years, modifying the loan, or reaching some other negotiated agreement. Freddie Mac spread the word that if applicable, a mortgage loan is in forbearance for 24 months, Freddie will repurchase the loan from its mortgage participation certificates.
Some borrowers talk with a Department of Housing and Urban Development-approved housing counselor before agreeing to forbearance. HUD: 1-800-569-4287.
There is also aid available. Direct federal aid consists mostly of loans from the Small Business Administration which oversees delivering disaster-related loans to individuals and families. The SBA extends loans at favorable interest rates to replace or repair primary residences. Someone can borrow up to $200,000 to cover renovation or construction costs, and regardless of whether someone is a renter or a homeowner, the SBA will lend you up to $40,000 to replace personal property such as clothing, furniture, appliances and vehicles.
FEMA offers grants to fill in gaps between insurance payouts and SBA loans. The maximum grant is $33,300 per household for disasters that happen in the fiscal year that ends Sept. 30, 2017. Grants can be used for expenses such as basic home repairs that aren’t covered by insurance, temporary rent and disaster-caused medical and child care. For more information, read the section called “What Does Individual Assistance Cover?”
The Federal Housing Administration has a program that’s designed to help disaster survivors rebuild or buy replacement homes. Under the Section 203(h) program, the FHA insures mortgages for people whose homes were destroyed or damaged in disasters. Borrowers don’t have to make a down payment.
Even when a house is destroyed the mortgagor should continue paying on the note until they have talked with the servicer and have reached a settlement with the insurance company. After all, the borrower promised to repay the loan when they signed the mortgage documents at closing. The borrower is liable for the loan debt, and making their payment is part of the borrower’s contractual obligation.
Servicers are contacting borrowers. In response to Hurricane Harvey, Freddie Mac is allowing servicers to “verbally grant” 90-day forbearances, and Fannie Mae is letting servicers grant 90-day forbearances “even if they cannot contact the impacted homeowner immediately.”
AFR Wholesale is conducting a webinar for brokers to provide answers and solutions to guide their customers with the best options to help them rebuild in the wake of natural disasters, like Hurricane Harvey. The webinar will focus on products, like the 203(h) mortgage insurance program that helps victims in Presidentially designated disaster areas recover by making it easier for them to re-establish themselves as homeowners. Scheduled for this Friday, September 8th from 2-3PM EST, those interested in this timely webinar on disaster relief resources can register here.
Wells Fargo is taking steps to assist borrowers in the Hurricane Harvey affected areas. If you’re aware of a Wells Fargo Home Lending borrower in need, share the following information: Wells Fargo Home Lending customers can contact us at 1-888-818-9147, Monday through Friday from 6:00 a.m. to 10:00 p.m. CT, and Saturday from 8 a.m. to 2PM CT. All Wells Fargo customers can reach us at 1-800-TO-WELLS if they need assistance or have questions. Our mobile response unit will be deployed to the affected area once the situation is stabilized. Wells Fargo customers will be able to receive in-person assistance with their mortgage, home equity or auto loans. Wells Fargo is waiving ATM fees for customers in the affected areas, as well as reversing other fees – such as late fees – for all our consumer products, including credit cards and checking accounts.
On 9/1/2017, with Amendment #3 to DR-4332, FEMA announced federal disaster aid with individual assistance for 3 additional Texas counties.
The Texas Appraiser Licensing and Certification Board (TALCB) has announced that any appraiser license that expires in the month of August will be extended 30 days due to delays caused by Hurricane Harvey. In addition, open applications for licenses that expire between August 21, 2017 and September 30, 2017 will be extended by 30 days. If a Pacific Union Financial loan file includes a Texas appraisal license with an expired license that is within the dates detailed above, include a screenshot of the TALCB announcement with the appraiser’s license in the loan file.
Loans secured by properties located in impacted areas are subject to suspension of funding or proceeding with caution according to standard Pacific Union protocol. Standard requirements for disaster areas apply for the funding of properties as they relate to expectations from appraisers for existing pipeline and new applications. For loans secured by properties in affected areas, the appraiser must comment on the disaster and whether there is an impact to the property and value. In addition, all types of issued insurance policies (hazard, flood, windstorm, etc.) must have binding authority on the subject property. Its Disaster Area Policy, Pacific Union reserves the right to impose restrictions and/or suspend funding, without notice, in additional areas subject to any adverse event that may impact the safety/habitability/value of impacted properties.
Mortgage Solutions Financial has posted revised information on affected areas due to Hurricane Harvey. Lenders are reminded its disaster policy must be followed.
PennyMac posted updates to Texas Hurricane Harvey requirements.
FAMC is requiring disaster re-inspections that are dated after the incident end date on properties affected by Hurricane Harvey. Due to unprecedented levels of rainfall and the ongoing flooding caused by this event, the extent of all impacted areas is currently unknown. Once the incident end date is established by FEMA, it will be published on the Disaster County Detail Worksheet located on the FAMC website.
M&T Bank will enforce the Disaster Re-Inspection Policy for all properties located in the affected counties. For loans secured by properties, in the designated disaster areas, and appraised prior to the Federal Government / State Government declaration, refer to the M&T Bank matrix for procedures.
Before going on, readers should a commentary piece yesterday was written by NerdWallet’s Holden Lewis. The article for those impacted by disasters is titled, “What to do after a disaster hits your home, mortgage,” was published on Sept. 1 and can be found on this page. Credit is due where credit is due, and in this case to Mr. Lewis – my apologies.
Of particular interest to lenders looking to pick up a point or two is the Community Reinvestment Act (CRA) information. “Financial institutions may receive CRA consideration for community development loans, investments, or services that revitalize or stabilize federally designated disaster areas in their assessment areas or in the states or regions that include their assessment areas. For additional information, institutions should review the Interagency Questions and Answers Regarding Community Reinvestment here.”
Freddie Mac confirmed that its disaster relief options, like Harvey, will be available to homeowners in impacted areas. “Freddie Mac’s disaster relief options will be available to borrowers with homes in presidentially-declared Major Disaster Areas where federal Individual Assistance programs are made available to affected individuals and households…Freddie Mac mortgage relief options for affected borrowers in these areas include: Suspending foreclosures by providing forbearance for up to 12 months; Waiving assessments of penalties or late fees against borrowers with disaster-damaged homes; and not reporting forbearance or delinquencies caused by the disaster to the nation’s credit bureaus.”
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It is that time of year to start planning your summer vacations. The days are longer, Spring Break is over, and now we can look forward to a sunny spring and summer. This planning brings to mind our Texas beaches. On that note, today I would like to highlight Corpus Christi.
The South Texas Economic Development Center Economic Pulse, 2017, Issue 4 on the “Housing Market Downswing?” covers how the Corpus Christi housing market has boomed since the beginning of the decade. According to the article, “recently, the local economy has stalled in the wake of falling oil prices. Still the area’s residential construction remains remarkably active, and home prices stay at historically high levels.”
Here is a snapshot of the article:
Let’s talk about seasonal activity.
According to the Texas A & M Corpus Christi South Texas Economic Development Center Corpus Christi employment and unemployment reflect remarkable seasonal fluctuations. This to me, is no surprise given the tourist attractiveness of the city. In this article, Jim Lee covers the seasonal variations in unemployment not only from tourism, but also other cyclical activities which greatly effect South Texas, like harvest seasons and how this effects the agricultural sector, as well as government job and hiring patterns and their contribution to seasonal fluctuations. The graph below shows the Corpus Christi MSA unemployment rates, both the original and then in blue the seasonally adjusted rates.
“The level of farm employment indeed shows considerable seasonal variations. For the United States as a whole, the peak months for farm employment are March and September. Another regular seasonally pattern occurs in retail sales, which tend to peak during the holiday season in November and December 2017.” For Corpus, “employment typically peaks in April, and dips the most in January with New Year holidays.”
To explain the dips in the latter summer months, Lee attributes this to local government. He states, “compared to the average for the first half of the year, employment in the local government sector fell about 1,500 positions on average in July and about 1,200 position in August. This regular pattern was attributable to the summer break taken by some of those 2,500 local grade school teachers. The public sector typically recovered most of the jobs lost from those two summer months in the latter part of the year beginning in September.”
The bottom line, Corpus Christi will continue to be a strong housing market. There is inventory, homes continue to be affordable and the city is on the upward swing of recovery from the energy crisis. And, we now have the seasonal activity to look forward to. Bring on the summer.
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Texas is almost like a country in itself with 12 economic regions including: High Plains, West, Northwest, Metroplex, Upper East, Capital, Central, Southeast, Upper Rio Grande, Alamo, Gulf Coast and South.
Today I would like to take a look at what we Texans call “the Valley”, to look at our economy and job growth.
The much talked about border towns of Texas are growing, as is the opportunity for jobs. Texas’ South Region is comprised of the 28 counties covering the Gulf Cost and Mexico border and offers a “young, growing workforce”. According to the Texas Comptroller, “the South Region added more than 138,600 jobs from 2004 to 2014, led by Hidalgo County. Its 26 percent job growth accounted for 37 percent of the region’s net new jobs.”
Here is how South Texas ranked against Texas and the US on Job Growth.
Job growth 2004 – 2014
South Texas – 20.1%
Texas – 21.7%
U.S. – 5.5%
In the Texas Comptroller’s Regional Snapshot, they conclude that “The South Region is one of Texas’ fastest growing and most diverse. It overlies a portion of the Eagle Ford Shale that has helped fuel the state’s energy resurgence. It also serves as a hub for shipping, farming and manufacturing. Meanwhile, tourists flock to shoreline destinations such as Corpus Christi and South Padre Island.
The region offers a dynamic workforce. Both birth and graduation rates top state averages. It has also added jobs at a faster rate than Texas as a whole, though wages lag significantly behind the state average. Rapid growth, coupled with drought conditions, has strained the region’s water supplies.
Thriving cities, agriculture and mining helped drive Texas’ largest consumption increase over the past decade. In all, the region offers much promise. It will remain relatively young and culturally dynamic while supporting some of Texas’ key industries.”
Here is the rest of the story from the Comptroller.
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Can you believe it is February already? 2017 is flying by already. February tends to be a seasonally slow month for real estate. As we hit February 1st, homebuyers should be on the lookout for home price bargains. Per ATTOM Data Solutions, February is the best month for homebuyers to buy a home at a discounted rate. ATTOM data solutions looked at more than 50 million single family and condo sales for the past 16 years to determine the numbers of sales, median sales prices, and calculated the discount/premium against the annualized sales price. In their findings, “Homes in February sold at a price per square foot that was 6.1% less than the rest of the year on average – the biggest discount of any month of the year.”
Check out the ATTOM infographic for the details on the best bargain months.
It is not a strange coincidence that the first four months of the year are also in the Top 4 list of the best month to purchase a home at a bargain. We in real estate know that real estate is seasonal. November – January are typically slow due to the holidays. As the new year rolls in sellers who have homes on the market tend to get a little impatient, which could be why home prices decrease. In the early part of the year the spring and summer frenzied selling seasons have not yet hit, but more people begin to list their homes making it a more competitive buyer’s market. Then comes the summer when buyers and sellers want to complete a move before school which helps drive peak activity and increase home prices.
Let’s bring on the real estate seasons.
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I have said before, 2017 is looking very hopeful – reports are predicting a slow and steady growth. We may not increase at a rate that we have in the past, but we are still on the rise. This is confirmed by the Federal Reserve Bank of Dallas and the Austin American Statesman. The Federal Reserve Bank of Dallas released their Regional Economic data for December 2016, and all major metro business cycles indexes increased, except for a small dip for Houston.
The Austin American Statesman reports that Texas is ready to shift into 2nd gear in 2017. According to AAS, Keith Phillips senior economist of Dallas Fed, reported that, “Texas employers should expand payrolls by 2 percent this year, about 242,000 jobs. While far lower than the state’s long-run average, which typically exceeds national job growth rates, the job gains in 2017 are expected to surpass the estimated 1.6 percent annual growth rate through November of last year.”
Phillips said, “Texas still fared better than most energy states. And the Interstate 35 corridor, particularly Dallas and Austin, remained an exception to the otherwise modest growth in Texas.”
Phillips went on to say, “job growth picked up in the second half of 2016 due to a stabilization of the energy sector,” he said. “With that positive momentum, the Texas economy enters 2017 poised to shift into ‘second gear.”
Hear first hand from Phillips on how our Texas economy will be “slightly better than last year”.
Mine Yucel, Dallas Fed’s director of research, supported this with, “Despite the sharp drop in oil prices that sent the energy industry into a tailspin over the past two years, Texas did not drop into a recession at any point. And the modest recovery in commodity prices has helped stem the bleeding of oilfield services jobs and helped buoy statewide manufacturing outlooks.”
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A new year is full of potential – the promise of what is to come. People make resolutions and promises to themselves on what they want to accomplish or how they will improve in the year to come. Curiosity has gotten me when it comes to the resolutions people make, especially as we enter into the post-New Year’s Day weeks where these promises to ourselves begin to become less of a priority.
According to Inc.com the Top 10 New Year’s Resolutions are:
Not too far off from what I was thinking: be healthier, kick an old habit, save money, advance your career… I don’t think there are any huge surprises on the list. Today I want to focus on one in particular – finding another job. If your resolution happens to be in line with #8, one of advancing your career or finding a new job then, this will come as good news to you. According to NerdWallet, Austin is the best city for job seekers.
Here are the Top 10 lists of cities for job seekers:
The report analyzed federal data for the 100 largest cities to see where there is the most potential coupled with affordability. Data included the U.S. Bureau of Labor Statistics, the increase in the working-age population from 2010-2015 with U.S. Census Bureau data, as well as census data for median earning and monthly rent in each city to factor in the cost of living.
Laura McMullen & Sreekar Jasthi at Nerd Wallet summarize the Top 10 list by saying job seekers should follow the young people, find fast growing hubs (like technology or healthcare), and head to the state capitals. And wherever you are, volunteer to grow your professional and friend network. They say to surround yourself by people who know and like you and want to help you. I could not agree with this more.
Two Texas cities made the list. Austin at #1 and Irving at #9. Austinites understand this, but for those looking to change up your career or job here is a breakdown for you on why Austin and the Dallas area could help you fulfill your new year’s resolution.
Unemployment in Austin was 3.2% in October 2016 and 3.6% in Irving. Texas unemployment held steady in December at 4.6% overall. And, according to Sterling’s Best Places, “the unemployment rate in Irving, Texas, is 3.60%, with job growth of 3.09%. Future job growth over the next ten years is predicted to be 42.59%.”
High quality jobs in technology
Bureau of Labor Statistics’ 2014-2024 employment projection says that technology is one of the fastest growing in terms of output. Austin is no stranger to technology, being the home of two major technology companies, Dell and IBM, with many other companies following suit, like Apple. Forbes argues that Austin is the most attractive tech hub attributing the draw to the “young, educated population, large VC presence and burgeoning restaurant and music scene”. Companies see the potential of Austin’s labor pool and are taking advantage of this to grow their tech advantages.
According to Christopher Calnan at the Austin Business Journal, “Texas ranks No. 2 in the nation for number of tech jobs, 585,614, second only to California. And, tech companies accounted for 6 percent of the Lone Star State’s private sector jobs, the report by Computing Technology Industry Association found.”
So, the jobs are here, and per CIO.com Austin salaries are 106% of the national average. Not too bad. For a detailed look at wages, here is snapshot of tech salaries by industry from the Austin American Statesman. In addition, the Salary Increase Forecast for U.S. Jobs projects a 3.3% increase in tech salaries from the 87K median salary as reported by the Economic Research Institute.
This is exciting news for our city.
Job growth in healthcare
On the healthcare side Will Anderson with the Austin Business Journal says that, “in the health care sector, the opening over the summer of the Dell Medical School is expected to accelerate the development of a business ecosystem that combines the city’s existing care centers with entrepreneurial startups and innovators in medicine.”
Irving attributes much of its growth to technology. According to the Irving Chamber of Commerce, “Irving was recently ranked number three for tech startups per capita in the United States by American Express through research conducted by SizeUp.com. In addition, the City of Irving is the first city in Texas and the second in the nation to earn the Malcom Baldrige Quality Award.”
The Irving Chamber of Commerce also notes that “five of Irving’s approximately 50 Fortune 500 companies have chosen Irving for their global headquarters: Celanese, Commercial Metals, ExxonMobil, Fluor and Kimberly-Clark. Irving is home to more of the DFW Metroplex’s largest private and public companies than any other city except Dallas, including Citi, Microsoft, Verizon, NEC Corporation, Allstate Insurance Company, Time Warner Cable, RIM (BlackBerry), Aviall, Michaels Stores, Pioneer Natural Resources, CEC Entertainment and TXU Energy.” These companies choosing Irving, TX as their home base no doubt makes it a hot bed for career opportunities for job seekers.
So, how about it, are you ready to make the move to one of our great Texas cities? The opportunity is definitely here.
And, of course, I would love to help you with Resolution #7. If you are trying to read more, please subscribe to my updates.
So, we know that Austin is the Silicon Hills of the South and leads the tech corridor in microchip development, tech startups and venture capital funding, outside of cities like San Francisco. I recently received the Patent Activity Report produced by Beverly Kerr, VP, Research at the Greater Austin Chamber of Commerce, and it became ever more evident to me why we are the incubator of tech development and why inventors, developers and top technology companies flock to our great city. The opportunity and the amazing talent pool is right here in our backyard.
Per the report:
These are some fantastic stats for our city and the future of tech development. According to Beverly, “patent activity is a primary indicator of Austin’s climate for innovation and is key to the region’s ability to sustain its competitive edge. Austin’s economic growth, exports, and job creation are uncommonly dependent on the concentration of high tech industries in our economy.”
Now, let’s get into the details and what this means for us.
The tech talent pool is right here
Patent growth is a direct result of the talented developers who work tirelessly to improve not only technology, but also processes and product design. We see this in Austin. According to Avalanche Consulting, Austin ranks #5 in the United States as The Most Talented U.S. Metros. We know we have a great workforce, but it is nice to have it confirmed.
In addition, according to the American Community Survey (ACS) 2015, the Census Bureau’s Population Estimates Program, the Austin MSA has a 89.2% educational attainment – this is the percent of the population that attended high school or higher. 69.5% of Austin’s population has attended some college, 42.6% has a Bachelor’s Degree or higher, and 14.8% have a Graduate Degree. Austin stands above other major metro markets, ranking 6th out of the 50 largest metros for percent of the population with at least a Bachelor’s Degree according to the Austin Chamber of Commerce.
Patent growth and its tie to jobs
Austin has the perfect environment for this talent. According to Innovate Austin, Austin has 46 tech incubators, accelerators, maker and co-worker spaces, and 5,485 high-tech companies, providing a hot bed of activity for our workforce.
It is noted in the Patent Activity that IBM is consistently the top patented company in Austin. The Austin location has in the past had the highest number of patents, beat out only by Yorktown Heights, IBM’s largest research lab. Recently there has been a decline by 52% in Austin IBM patents compared to New York, but Austin still ranks above the San Jose and other major U.S. lab locations.
Business leaders have witnessed companies’ success after success in Austin. Since 2000, IBM and Dell’s success have been drivers to bring other companies to Austin. In 2016, we have seen companies like Amazon, Google, Facebook, Apple and other giant California-based tech companies expanding in Austin or looking to setup shop. Companies moving to Austin will not only stimulate the economy, but also create jobs and, as a result, increase housing demands.
Technology trends in line with recent influx in patents
“Among the larger patent classes in Austin, ‘Semiconductor Device Manufacturing: Process’ has seen the greatest decline in patents issued,” said the Patent Activity Report. This is in line with what we are seeing with rumblings of semiconductor company declines and acquisitions.
The report continues, “a smaller but growing ‘life sciences’ grouping made up of what the U.S. Patent and Trademark Office (USPTO) calls ‘body treatment and care’ plus selected classes under ‘life and agricultural sciences and testing methods’ shows significant growth (210%) in Austin between 2001-2005 (211 patents) and 2011-2015 (443 patents).” This patent growth can be attributed to the over 200 life sciences companies now in the region fueling this growth in new products.
Virtual reality (VR) and artificial intelligence (AI) companies are on the rise in Austin. If you look at the Top 20 Hot Austin Startups to Watch in 2017, you will see that several VR and AI startups are in the rankings.
With our talent pool, technology prowess and entrepreneurial spirit, I am excited to see what new technology comes out of Austin. The proof is in the patents.
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According to the U.S. Census Bureau there is a new fastest growing state in America. This year North Dakota got outranked by Utah. Utah’s population went past the 3 million mark and increased 2% since last year.
See the Top 10 ranking below with Texas coming in at #10. Not too shabby.
But, as you know we in Texas aren’t always happy at coming in 10th place. See the following which shows that Texas had biggest gain when looking at gross numbers.
Check out the full story featured in MarketWatch here.
Was this surprising to you? Would love to get your feedback and hear about how your market is doing.