California Real Estate – California Sunset Team http://californiasunsetteam.com/ Tue, 21 Jun 2022 21:32:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://californiasunsetteam.com/wp-content/uploads/2021/09/californiasunsetteam-icon-120x120.jpg California Real Estate – California Sunset Team http://californiasunsetteam.com/ 32 32 Where is the liquidity? Crypto lending explained https://californiasunsetteam.com/where-is-the-liquidity-crypto-lending-explained/ Tue, 21 Jun 2022 21:32:00 +0000 https://californiasunsetteam.com/where-is-the-liquidity-crypto-lending-explained/ Crypto lenders offer returns on crypto deposits, such as stablecoins, by lending them with interest – similar to traditional banking practices Crypto lending platforms are divided into two broad categories: non-custodial (decentralized) and custodian (centralized). On June 13, 2022, Celsius investors woke up to an alarming statement from the crypto lending platform: “Celsius is suspending […]]]>
  • Crypto lenders offer returns on crypto deposits, such as stablecoins, by lending them with interest – similar to traditional banking practices
  • Crypto lending platforms are divided into two broad categories: non-custodial (decentralized) and custodian (centralized).

On June 13, 2022, Celsius investors woke up to an alarming statement from the crypto lending platform: “Celsius is suspending all withdrawals, trades and transfers between accounts”.

For a platform that prides itself on its high returns without the issues of traditional finance, it left many wondering, “How does crypto lending really work and where did all the liquidity go?”

What is crypto lending and how does it work?

Let’s start with the basics. At first glance, crypto lending works the same as traditional banking, but for digital assets. Crypto lenders offer returns on crypto deposits, such as stablecoins, by lending them out with interest. The main distinction is in the type of deposit and the type of lender.

There are two very different categories of crypto lending platforms: non-custodial (decentralized) and custodian (centralized). Noncustodial lending is a new approach, while custodial lending uses the traditional model with slight variations. Celsius is an example of the latter. To understand why problems arise in the custodial loan model, we need to explain the differences in liquidity supply and collateral requirements.

Crypto Loan Categories Explained

Crypto loans on deposit (centralized)

Crypto lending on deposit looks and feels like a bank for cryptocurrencies – without the same regulatory oversight and consumer protections. It manages all deposits and loans on a centralized platform and an internal balance sheet. Anyone wishing to earn interest on their crypto savings sends their tokens to a custodial wallet address where they lose direct control of the asset. In return, the platform invests the assets at its discretion, whether through interest-bearing loans or alternative yield farming.

Noncustodial (Decentralized) Crypto Lending

A noncustodial lending platform enables peer-to-peer or peer-to decentralization-bowl ready. Unlike its traditional counterpart, it allows depositors (lenders) to retain ownership of their tokens – and the source of return is clear. Lenders earn interest and borrowers pay interest. Platforms can automate functions traditionally handled by banks or custodians using blockchain smart contracts.

Defined Crypto Liquidity

Crypto liquidity, as in traditional markets, is the efficiency with which any digital asset can be converted into cash or token equivalent – ​​without affecting the market price. Consider the total liquidity of the asset as a pool of water and the price of the asset as the level of the water. The larger the pool, the slower the level changes.

Stock markets traditionally measure cash liquidity, but crypto markets measure it across an ever-growing list of token pairs. This website can be difficult to follow, but it is essential to understand how crypto lending platforms maintain liquidity.

Where and how cryptocurrency lending platforms source liquidity

Noncustodial (Decentralized) Crypto Lending

Decentralized crypto lenders, such as Aave, source liquidity through a network of different liquidity pools. So, instead of lenders and borrowers setting the terms of their peer-to-peer loans, the protocol works by using automated smart contracts to set each pool’s interest rates.

Aave’s Liquidity Pool Protocol aims to incentivize outside lenders to keep liquid pools and borrowings functional.

For example, if an ether (ETH) pool is illiquid, these smart contracts will automatically raise interest rates to attract lenders to that pool and encourage borrowers to repay their loans. When lenders add ETH, they receive the token equivalent of Aave in the form of aETH. This asset is different from a wrapped token because there is no central custodian. Smart contracts hold ETH deposits and automatically reward the lender with loan interest.

Crypto Lending (Centralized)

In contrast, centralized crypto lenders such as Celsius source their liquidity from their centrally controlled total deposit pool. They manage interest rates and approve loans on a case-by-case basis. Unlike decentralized non-custodial lenders, centralized lenders return returns from various sources aside from interest payments. For example, Celsius invests customer deposits in what is called liquid staking.

Liquid Staking (stETH)

Because ETH staking on Ethereum’s Beacon chain locks ETH up to a future date – not yet set but expected to be mid-2023 – after the merger, Lido Finance offers stETH, a liquid derivative for ETH holders interested in staking rewards. The token allows holders to accumulate staking rewards while maintaining the flexibility to sell or transfer the asset. If they trade the token with someone else, the new owner can claim future staking rewards. Nansen Research reported that Celsius has a wallet containing over $450 million in stETH.

Differences in Crypto Loan Collateral Requirements

Cryptographic guarantee is a borrower’s pledge of token assets or currency to a lender – in case he cannot repay his loan. The borrower retains ownership of the collateral as long as the loan is repaid with interest.

Traditional banking services typically require a small fraction of the loan as collateral and use borrowers’ credit scores to assess loan risk. Because crypto loans pride themselves on providing fast credit with no minimum credit score, they require liquid collateral in order to automate liquidations. So, instead of using your house as collateral, you would need to use stablecoins or other crypto-assets – although perhaps in the future it will be easier for anyone to tokenize the property. Since crypto markets are exceptionally volatile, lenders demand a higher loan-to-value (LTV) ratio (not to be confused with total value locked, or TVL).

I know, that’s a lot to take in – so let’s review:

LTV — A loan-to-value ratio is the proportion of the value of a loan represented by collateral. A 100% LTV ratio is a 1:1 ratio, which means the borrower is putting up the full value of the loan as collateral.

TVL — Total Value Locked is the total value of cryptocurrency locked in a smart contract and represents the health and liquidity of any decentralized exchange or crypto lending protocol.

Both categories of crypto loans require a high LTV, but they differ in how they measure, report, and enforce liquidations.

Crypto Lending (Centralized)

Centralized loans can use a variety of methods to monitor LTV. If a borrower’s LTV falls below the safe threshold, the centralized lender will notify the borrower that part of their collateral may be liquidated through a margin call. If the value continues to fall, the lender will automatically trigger a partial or full liquidation of the borrower’s collateral.

But with centralized lending, this collateral requirement does not directly protect depositors. Since centralized lenders mix deposits between various investments such as stETH and stablecoins such as Tether (USDT), depositors have little information about the total liquidity available on a centralized platform.

Celsius’s announcement suspending withdrawals on June 13, 2022 increased the selling pressure on stETH, pushing the price even lower than the price of ETH. Many have speculated that this discrepancy is what prompted Celsius to freeze the accounts. But because their total liquidity value is not public, there is no way to gauge what triggered the scare.

Noncustodial (Decentralized) Crypto Lending

Decentralized loans, on the other hand, are completely transparent. Any liquidity provider can view a platform’s TVL to gauge total liquidity and overall health. There are no alarming tweets that the core team has suspended withdrawals. There are oracle pricing and smart contract risks, but decentralized lending, in principle, is not exposed to the risks of a centralized custodian.

For example, when a lender deposits ETH into an Aave ETH liquidity pool, smart contracts make the liquidity exclusively available to ETH borrowers. No central entity can pick up the deposit and play with it off-chain.

Blockchain price oracles continuously monitor each borrower’s LTV ratios so that if there is risk of default, the protocol automatically liquidates collateral to protect the lender.

Liquidity Risks of Crypto Lending

Both categories of loans carry liquidity risks. In decentralized lending, price oracles can fail during market-wide liquidity crises, exposing liquidation to a price crash and forcing lenders to recover only part of their deposit. And in centralized lending, central players can invest clients’ deposits on leverage with the risk of draining too much liquidity from the platform.

In fact, liquidity issues on one side of the crypto lending world will often hurt the other. This contagion results from a complex interaction between wrapped tokens, staked ETH and stablecoins on decentralized exchanges such as Curve Finance.

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  • John Gilbert

    blockages

    Editor, Evergreen Content

    John is the Evergreen Content Editor at Blockworks. It manages the production of explainers, guides, and all educational content for all things crypto. Prior to Blockworks, he was a producer and founder of an explainer studio called Best Explained.

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‘We grew too fast’: Crypto faces accounts as market shakes https://californiasunsetteam.com/we-grew-too-fast-crypto-faces-accounts-as-market-shakes/ Sat, 18 Jun 2022 11:00:00 +0000 https://californiasunsetteam.com/we-grew-too-fast-crypto-faces-accounts-as-market-shakes/ That could be said for the entire digital asset market, which has seen more than two-thirds of its value evaporate since peaking at $3 trillion last fall. As the Federal Reserve steps up its campaign to contain inflation, investors are shedding risky assets in anticipation of rising interest rates. The startups that soared during the […]]]>

That could be said for the entire digital asset market, which has seen more than two-thirds of its value evaporate since peaking at $3 trillion last fall. As the Federal Reserve steps up its campaign to contain inflation, investors are shedding risky assets in anticipation of rising interest rates. The startups that soared during the stimulus-fueled two-year pandemic have begun to fall to earth.

The market drop is likely to temper expectations around a two-year lobbying campaign that has made digital assets one of Capitol Hill’s most visible industries. Crypto’s shrinking footprint could weaken a bid from major exchanges and developers to push for new, lightweight laws and regulations that they believe would allow blockchain-based businesses to thrive. And it could hurt the trust the industry has built up in Washington — especially amid growing scandals at popular lending platforms where customer accounts have been frozen or wiped.

“When everything goes up, it hides a lot,” Caroline Pham, commodity futures trading commissioner, said in an interview. “From a regulator’s perspective, it really underscores that we just have to do something.”

Major stock exchanges and industry associations injected $9 million into Washington’s lobbying efforts in 2021, more than tripling their spending from the previous year, according to a report by watchdog group Public Citizen. This campaign accelerated through early 2022 and was amplified by tens of millions of campaign contributions from power brokers like FTX founder Sam Bankman-Fried.

But the battle to shape legislation and influence agency decisions aimed at tightening industry oversight is just beginning, and Caitlin Long, founder and CEO of a Wyoming-based crypto bank, said some companies ‘digital assets were themselves responsible for the rising heat of regulators. . The representations companies make to policymakers in Washington often amount to “regulatory theater,” she said.

“They know they exist in a regulatory gray area,” said Long, who is suing the Fed to open a master account that would put his bank under direct central bank oversight. For some crypto firms, “the strategy is to get as big as possible; become too large to be required to comply with regulations.

This strategy might be too big to work. Market regulators and law enforcement have already targeted areas such as insider trading, disclosure failures and investor protection issues. And regulators, including top brass at the Securities and Exchange Commission and the CFTC, have signaled that further investigations are likely.

“Hopefully we’ll use the turmoil of the last two weeks to see where we are from a regulatory standpoint,” said Robert Baldwin, former Treasury official and policy officer at the Association for Digital Asset Markets. . While the industry has built its credibility with policy makers, he said, recent events “are forcing people to step up and think about what’s going on. It also probably forces companies to be a bit more careful.

Meanwhile, with congressional attention divided by crises from Ukraine to inflation, the urgency to pass new crypto laws will likely fade as investors shun high-end digital assets. risk. Even with celebrities making headlines for crypto companies, a recent Fed survey found that only 12% of American adults had owned or used digital currencies in the past year.

The decline in digital asset markets, coinciding with losses in more traditional financial markets, is accelerating as hedge funds, crypto-based lending platforms and stablecoin issuers scramble for cash to to save their projects.

The latest explosion began last weekend after Celsius Network – a bank-like crypto lender that has promised annual returns of up to 18% on customer deposits – announced it was suspending withdrawals and services. crypto-for-crypto trading for approximately 2 million clients” due to extreme market conditions. The company, which did not respond to multiple requests for comment, is reportedly considering restructuring.

Celsius’ woes echoed those of TerraForm Labs – the startup behind an algorithmic stablecoin that collapsed last month – which had also attracted billions of dollars from retail traders and institutional investors in linking its token to a decentralized high-yield lending program.

The market downturn is also starting to bring down big crypto investment firms. Three Arrows Capital, a Dubai-based hedge fund, is reeling after scoring hundreds of millions in losses on its investments in TerraForm tokens and other declining digital assets.

Both companies have had run-ins with securities regulators. Celsius has been ordered by four state agencies to stop offering unregistered securities in the form of interest-bearing accounts, fearing the company may not be able to meet its obligations to depositors.

“Policymakers care less about ordinary shareholders and preferred shareholders; they care about those depositors first and foremost,” said Mike Boroughs, co-founder and head of portfolio management at blockchain investment firm Fortis Digital.

While some decentralized finance (DeFi) lenders — or more centralized firms offering access to DeFi-like returns — might offer cheaper alternatives to tightly regulated banks, the lack of institutional underwriting standards injects even more risk into crypto markets.

“If you’re offering a higher return by accepting worse loans, that’s just creating a 2008 subprime mortgage crisis in a different industry,” Boroughs said.

Crypto advocates have resisted these kinds of comparisons, arguing that standalone or community-governed systems that mimic the functions of traditional lenders and exchanges could become safer and cheaper alternatives. And, as of yet, no existing platform has been developed to the point where it could pose systemic risk to the economy.

Lawmakers and crypto proponents say market volatility could present an opportunity for some companies to shine a light on their practices as a potential model for future legislation or regulation. Meaning. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (DN.Y.) say their recent crypto bill — celebrated by the industry as a milestone — was shaped by some of the issues that arose in the wake of TerraUSD’s collapse.

“We’re kind of in this ugly duckling phase,” said Linda Jeng, a former Fed official who leads regulatory and policy efforts at the Center of the crypto industry-backed standards organization. Jeng said she looked forward to working with regulators to “develop appropriate proportionate rational rules and regulations.”

Still, the onset of more scandals could create hurdles for the industry as it tries to make that point around Washington — especially with new venture-backed platforms offering similar services coming out. of the treadmill.

“If you want to start a successful platform in this space, the current framework is just hugely ambiguous as to how you would go about it,” said Tomicah Tillemann, global policy director at Haun Ventures, a venture capital firm. which recently provided seed funding to a new DeFi lending platform. “We and others have been asking the SEC for clarification for a very long time, and they have absolutely failed to do so.”

SEC Chairman Gary Gensler says the rules for crypto lending are clear.

BlockFi, another platform that recently resisted layoffs, paid $100 million to settle claims that its yield-generating accounts were unregistered securities. Coinbase scrapped plans for a product that would have allowed customers to earn interest on their digital assets after a very public spat with the regulator last year. The agency reportedly investigated Celsius — along with several other crypto lending platforms — in the months before its clients’ assets were frozen.

An SEC spokesperson declined to say whether there were any ongoing investigations.

“Lending platforms operate much like banks,” Gensler said at an event on Tuesday, adding that trading platforms and exchanges offering exorbitant returns have largely failed to disclose enough information about their businesses. products to investors.

“If it sounds too good to be true, it might just be too good to be true,” he said.

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Downside valuations have doubled since the pandemic – Forbes Advisor UK https://californiasunsetteam.com/downside-valuations-have-doubled-since-the-pandemic-forbes-advisor-uk/ Tue, 14 Jun 2022 16:48:02 +0000 https://californiasunsetteam.com/downside-valuations-have-doubled-since-the-pandemic-forbes-advisor-uk/ June 14: Supply squeeze doubles mortgage rejections ‘down’ The number of mortgage applications rejected because a lender thought a property was not worth the amount the applicant wanted to borrow has doubled since the Covid-19 pandemic. “Downside appraisals”, when there is a discrepancy between the agreed selling price of a property and the appraisal made […]]]>

June 14: Supply squeeze doubles mortgage rejections ‘down’

The number of mortgage applications rejected because a lender thought a property was not worth the amount the applicant wanted to borrow has doubled since the Covid-19 pandemic.

“Downside appraisals”, when there is a discrepancy between the agreed selling price of a property and the appraisal made on behalf of a mortgage lender, can cause serious problems with mortgage applications.

For example, a borrower may agree a sale price of £350,000 with a landlord, only to find that his mortgage lender values ​​the property at just £300,000 and rejects his request.

With demand outstripping supply in the housing market, buyers are increasingly willing to pay more for properties, leading to rising valuations on the downside, according to online mortgage broker Mojo Mortgages.

Free mortgage advice

Trussle is a Trustpilot 5-star rated online mortgage advisor who can help you find the right mortgage – and do all the hard work with the lender to secure it. *Your home can be repossessed if you don’t continue to pay your mortgage.

“Sellers try their luck”

His research shows the rate of decline in valuations was 12.8% in April, down from 10.4% a year earlier and double its mid-pandemic rate of 6.4% in December 2020.

Downward mortgage valuations were higher in April, at 15.4%.

Richard Hayes, Co-Founder and Managing Director of Mojo Mortgages, said: “The real estate market has seen unprecedented demand over the past two years, with month after month of record price increases.

“This level of demand means that, in my opinion, some sellers take a chance and set a sale price higher than that recommended by real estate agents. With some properties, like three-bedroom homes, in such high demand, sellers are trying to see what they can achieve.

“With the supply of new homes on the market still well below demand, buyers are also willing to pay more for a property due to the lack of similar alternatives.”

Dealing with a decline in value

Buyers faced with falling appraisals may be able to renegotiate the selling price with sellers, especially if the sellers themselves are looking for a new property and rely on the sale to fund their next purchase.

Some lenders also allow appeals on downgrading decisions, but require solid evidence of the sale prices of other properties in the same area in order to change their decision.

Additionally, an assessment may have been conducted remotely by someone in their office. It can be helpful to request an in-person assessment to reassess anything you think they might have missed.

Each lender handles appraisals differently. It is possible that a different lender, using a different surveyor, will return an appraisal closer to your agreed selling price.

Or if you are able to increase your deposit, you could close the gap between the lender’s appraisal and the selling price.

Alternatively, you can talk to your lender about a higher loan-to-value (LTV) ratio, which is the amount you want to borrow compared to the value of the property. Be aware, however, that higher LTVs generally mean higher interest rates and more expensive monthly repayments.

Figures from Halifax earlier this week showed average house prices rose 10.5% in the year to May, to £289,099. Prices rose 1% from April, marking the 11th consecutive month of rising prices, partly caused by the imbalance of supply and demand in the housing market.


April 27: First Direct launches its first 95% mortgage

First Direct has launched its first-ever 95% loan-to-value (LTV) mortgage for first-time buyers and movers.

Borrowers with a 5% deposit can choose between a two-year or five-year fixed rate, priced at 2.79% and 2.94% respectively. Both options are free. The deal is available on loans of up to £550,000, meaning buyers can borrow up to £522,500 if they have a deposit of £27,500.

It is not available for mortgages.

Free mortgage advice

Trussle is a Trustpilot 5-star rated online mortgage advisor who can help you find the right mortgage – and do all the hard work with the lender to secure it. *Your home can be repossessed if you don’t continue to pay your mortgage.

First tier boost

With the added aim of alleviating affordability constraints, First Direct’s 95% mortgage is available with a repayment term of up to 40 years. However, it also allows unlimited overpayments that can be made at any time, allowing borrowers to essentially reduce this term without penalty.

Chris Pitt, Managing Director of First Direct, said: “As the property market continues to accelerate into the fast lane, first-time buyers have been left behind. As property prices continue to outpace deposits, we see this as a viable way to help people move up the ladder. »

Mortgages also come with an agreement in principle (AIP) of six months, compared to the industry average of two to three months.

What other lenders offer 95% mortgages?

There are currently 56 mortgages available at 95% LTV, according to online mortgage broker Trussle. This is a huge improvement from 2020, as deals all but disappeared from the market during the pandemic due to affordability concerns.

In March 2021, the government launched a new mortgage guarantee scheme to encourage lenders to start offering high mortgages again.

Lenders that offer 95% LTV mortgages include Barclays, Santander, HSBC, NatWest, Skipton Building Society and Clydesdale Bank.

How do First Direct offers compare?

First Direct’s offers compare well to other 95% deals which, due to higher loan risk, come with higher rates than mortgages with lower LTVs.

Barclays has a two-year fixed-rate mortgage priced at 2.67% no charge – a bit cheaper than First Direct’s two-year deal at 2.79%. However, under the government’s mortgage guarantee scheme, Barclays’ offer comes with associated restrictions, such as it cannot be used to buy new homes.

HSBC, the parent bank of First Direct, offers the choice of a two-year fixed rate of 2.69% with a fee of £999, or the equivalent of 2.79% no charge, while the Newcastle Building Society charges £3 .15% free and £500 cashback.

For five-year 95% fixed rate mortgages, Barclays offers the same rate as First Direct’s 2.94%, while HSBC’s offer is slightly higher at 2.99%. Both offers are also free.

However, all transactions except First Direct limit overpayments without penalty to 10% per annum.

For up-to-date mortgage rates, enter your criteria in our mortgage tables below.

Choose an offer

It’s important to take all considerations into account when choosing a mortgage, including charges over face rate, bonds, and prepayment charges.

Also look at the tracking rate, which is what the deal will revert to at the end of the term. That said, many homeowners are looking to remortgage at another rate after their initial fixed rate period is over.

A toll-free independent mortgage broker, such as our partner Trussle, will work out the numbers on your behalf and advise you on the best deals for your situation.

Amanda Aumonier, Head of Mortgage Operations at Trussle, said: “High loan-to-value mortgages can play a crucial role in ensuring the market remains accessible to everyone, by significantly reducing the size of deposits needed to secure a home. . We hope this trend will continue so that everyone can aspire to own their own home.

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UK regulator puts Credit Suisse on watch list after scandals https://californiasunsetteam.com/uk-regulator-puts-credit-suisse-on-watch-list-after-scandals/ Sun, 12 Jun 2022 20:00:12 +0000 https://californiasunsetteam.com/uk-regulator-puts-credit-suisse-on-watch-list-after-scandals/ Britain’s financial regulator has placed Credit Suisse on its watch list of institutions needing stricter oversight, the latest blow to a bank struggling to draw a line under a series of crises. The Financial Conduct Authority told Credit Suisse last month it was taking the action because it was concerned the bank had not done […]]]>

Britain’s financial regulator has placed Credit Suisse on its watch list of institutions needing stricter oversight, the latest blow to a bank struggling to draw a line under a series of crises.

The Financial Conduct Authority told Credit Suisse last month it was taking the action because it was concerned the bank had not done enough to improve its culture, governance and risk controls.

In a letter sent in mid-May and seen by the Financial Times, regulators asked the bank’s senior management to provide evidence of steps it would take to prevent misconduct and improve accountability.

Officials also urged the bank to address “persistent” cultural issues, including a lack of internal challenges to risky transactions, and said they had yet to see “sufficient evidence of effective remediation”.

Being added to the watchlist signals that the FCA has serious concerns, according to a person familiar with how the list works. Only about 20 institutions are on the list at any given time out of the approximately 60,000 regulated by the FCA, the person added.

Groups on the list are closely monitored by high-level officials in the regulator, required to show progress and address the root causes of issues of concern.

Among the companies that were on the list are Lendy, the now-defunct UK peer-to-peer lender, and Provident Financial, the subprime lender that has been investigated by the regulator over its loan valuation.

Scandal after scandal at Credit Suisse over the past 24 months has exposed weak risk controls, forced the bank to issue a series of earnings warnings and sent its stock price plummeting.

Among the most high-profile is the implosion of Greensill Capital in March 2021, which forced the bank to close $10 billion in funds linked to the supply chain group. Weeks later, Credit Suisse suffered a $5.5 billion business loss – the largest in its 166-year history – following the collapse of the Archegos family office.

Last October, the bank agreed to pay a £147million FCA fine as part of a settlement package with four regulators in three countries for its role in the long-running ‘tuna bonds’ scandal. Mozambique.

The FCA has put the bank’s international division and UK operations on the watchlist because it regulates them.

In the May letter, the watchdog asked the bank to take a number of steps, including conducting a second-half review of the effectiveness of the board, risk and audit committees. of Credit Suisse International.

The FCA said it made the requests for review after consulting Finma, the Swiss regulator. Finma declined to comment.

The FCA is also concerned about whether the bank has properly reported breaches of conduct for a number of years, the letter said, which also noted a lack of curiosity on the part of the bank about the root causes. of its shortcomings.

In late April, Credit Suisse announced that David Mathers, the bank’s chief financial officer and managing director of Credit Suisse International, a position he has held since 2016, would step down from both roles once a successor has been found.

Several people with direct knowledge of the internal discussions said Mathers had been in talks with the group’s chief executive, Thomas Gottstein, about his departure for at least two years and that it was not related to any regulatory issues.

In a statement to the Financial Times, Credit Suisse said: “We do not comment on our discussions with regulators, and it would not be appropriate for us to do so. As we summarized earlier, we are now well advanced in executing the plan to strengthen our business and our risk culture. »

The FCA declined to comment.

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Wyndham Capital Mortgage to have another round of layoffs https://californiasunsetteam.com/wyndham-capital-mortgage-to-have-another-round-of-layoffs/ Fri, 10 Jun 2022 21:21:03 +0000 https://californiasunsetteam.com/wyndham-capital-mortgage-to-have-another-round-of-layoffs/ Direct-to-consumer lender Wyndham Capital Mortgage is proceeding with a new round of layoffs, according to a Worker Adjustment and Retraining Notice (WARN) filed with the North Carolina Department of Commerce. The company announced that it would lay off 48 employees effective August 1. Staff work either at the lender’s headquarters in Charlotte, NC or remotely […]]]>

Direct-to-consumer lender Wyndham Capital Mortgage is proceeding with a new round of layoffs, according to a Worker Adjustment and Retraining Notice (WARN) filed with the North Carolina Department of Commerce.

The company announced that it would lay off 48 employees effective August 1. Staff work either at the lender’s headquarters in Charlotte, NC or remotely and report to the location.

“Of those impacted employees, 38 work off-premises or hybrid (office and remote) in North Carolina and South Carolina, and 10 are fully remote employees living in other states outside of the Carolinas,” Angela Fumo, senior vice president of capital human resources, wrote in the WARN notification reviewed by HousingWire.

Founded in 2001 by Jeff Douglas, Wyndham has positioned itself as a fintech-focused mortgage lender with a proprietary software system that allows the company to close loans 20% faster than the national average.

The lender provides loans in 47 states and Washington, D.C., both conventional and ginnie mae-guaranteed loans. The company says it has 350 employees and has served 100,000 borrowers.

Last year, taking advantage of falling mortgage rates and a refi boom, Wyndham actively expanded, opening two hubs in Dallas and Phoenix, bringing its office count to five. The company also launched a retail division in July 2021 and hired former Town Executive Karen Mayfield in August to lead the national effort.

However, like other lenders with direct-to-consumer models, the company tends to be refi-heavy and relies on call centers for hospitality, struggling to find its place in a buying market so as rates rise and spreads begin to compress.

In January, Wyndham experienced a series of layoffs when pink slips arrived for 35 loan officers at its offices in Dallas, Charlotte, Salt Lake City, Kansas City and Phoenix.

Like Wyndham, other lenders cut jobs in the second half of 2021 and the first quarter of 2022 in view of rising mortgage rates and reduced refinancing volume. Purchase mortgage rates hit 5.23% this week – and some of those same lenders are making further cuts. As the market contracts, originators Interfirst Mortgage Co. and better.com are implementing their second and third rounds of layoffs, respectively.

These companies are part of a wider list of companies reducing their workforce, including Wells Fargo, Pennymac, Mr. Cooper, loanDeposit, Guaranteed rate, Fairway Independent mortgageand Motion mortgage.

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Mortgage Approved Achieves Another Important Milestone https://californiasunsetteam.com/mortgage-approved-achieves-another-important-milestone/ Thu, 09 Jun 2022 17:27:40 +0000 https://californiasunsetteam.com/mortgage-approved-achieves-another-important-milestone/ Greenwood, IN, June 09, 2022 –(PR.com)– Approved Mortgage is proud to announce that it has achieved 30 years of business providing mortgage services and home loans to thousands of families and real estate professionals. The company has been in the mortgage industry since 1992. It has funded over $6.5 billion in home loans, making the […]]]>
Greenwood, IN, June 09, 2022 –(PR.com)– Approved Mortgage is proud to announce that it has achieved 30 years of business providing mortgage services and home loans to thousands of families and real estate professionals.

The company has been in the mortgage industry since 1992. It has funded over $6.5 billion in home loans, making the dream of owning a home a reality for thousands of families in communities across five different US states.

“There’s nothing better than the feeling you get when you make someone’s dream come true,” said Derrick Christy, CEO of Approved Mortgage. “For the past 30 years, our business has helped people get the financing they need to get a home, which has allowed us to build lasting relationships with our customers and in the communities we serve.”

As part of the celebration, the company is throwing a party for hundreds of clients, real estate professionals, team members, family and friends from the past 30 years. The 30th anniversary party includes food, drink, music and more in collaboration with local businesses.

“We thought throwing a party would be a great way to reconnect with everyone who, over the years, has made our company the success it is today,” said Jim Landwerlen, president of Approved. Mortgage. “We have so much to be grateful for, and we thought this event would allow us to show our gratitude.”

Over the years, the company has grown and earned several accolades along the way. From building a 60,000 square foot headquarters to expanding multiple offices, Approved Mortgage has received a 5-star rating from Zillow®, Rated Top 20 Broker by Expertise®, Received an Entrepreneur® Top-Company Culture Award and became Great Place to Work Certified®.

Today, Central Indiana’s largest and oldest local mortgage banker, has 250 years of in-house experience, including processing, underwriting, closing and financing. The company is licensed in several US states and has expanded its product line to include all residential mortgage programs that serve all types of borrowers.

About the Approved Mortgage
Approved Mortgage is Central Indiana’s largest and oldest local mortgage banker, with over $6.5 billion funded for Indiana families. As an industry leader for over 20 years, Approved Mortgage is recognized by Zillow® as a 5-Star Lender, ranked in the Top 20 Brokers by Expertise®, and rated by Entreprenuer.com® as one of the Top 25 Small Crops. businesses. . Approved Mortgage is a direct lender with in-house underwriting that allows for same day approvals. We offer a wide range of residential mortgages that have served thousands of families making their dream of home ownership a reality. Our residential product line includes conventional, jumbo, FHA, VA loans, reverse mortgages, and portfolio loans for purchase, refinance, and construction transactions. We also offer a variety of commercial real estate loans for multi-family buildings, offices, retail, warehouse/flex space, as well as business loans including SBAs, lines of credit, merchant services accounts credit cards and factoring. We look forward to helping you with your mortgage needs by providing you with the product you need and the service you deserve. Approved Mortgage has served thousands of satisfied clients and is an accredited A+ member of the Better Business Bureau.

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RBI monetary policy: what does a hike in the repo rate mean for your home loan EMIs https://californiasunsetteam.com/rbi-monetary-policy-what-does-a-hike-in-the-repo-rate-mean-for-your-home-loan-emis/ Tue, 07 Jun 2022 17:33:34 +0000 https://californiasunsetteam.com/rbi-monetary-policy-what-does-a-hike-in-the-repo-rate-mean-for-your-home-loan-emis/ Interest rates on term loans such as houses, cars and individuals are linked to the external benchmark, including the repo rate. When the RBI policy rate increases, it also leads to an increase in the cost of funds for banks. As a result, banks raise interest rates, which eventually hits your pocket as monthly installments […]]]>

Interest rates on term loans such as houses, cars and individuals are linked to the external benchmark, including the repo rate. When the RBI policy rate increases, it also leads to an increase in the cost of funds for banks. As a result, banks raise interest rates, which eventually hits your pocket as monthly installments (EMI) become more expensive.

Last month, RBI raised the key repo rate under the Liquidity Adjustment Facility (LAF) by 40 basis points to 4.40% with immediate effect. The rate hike was made to maintain sufficient liquidity and to combat inflationary pressures.

After the rate hike, many banks, including SBI, HDFC Bank, ICICI Bank, Axis Bank, Bank of Baroda, Canara Bank, and Kotak Bank, among others, also increased their MCLR (Marginal Cost of Lending Rates). funds) and other lending benchmarks.

What do experts expect from the next RBI policy?

According to Dhananjay Sinha, Managing Director and Chief Strategist, JM Financial Institutional Securities, the combination of external vulnerabilities and higher fiscal deficits will complicate things for RBI as it juggles multiple objectives of controlling inflation, orderly money and yield scenario Gsec. Our assessment indicates that RBI’s currency management in the face of rising US rates and dollar strength has resulted in increasing exchange rate rigidity and is reflected in a decline in RBI’s foreign exchange reserve of 42 billion USD from the peak at 600 billion USD. So, in the context of continued quantitative and rate-tightening by the US Federal Reserve, this will result in both moderating liquidity in India and further rate hikes.

In addition, Sinha said, inflation management is tricky as the real repo rate is deeply negative at -3.4% (4.4% – headline CPI at 7.8%) and -2.6% assuming underlying inflation of 7%. Thus, to arrive at a neutral real rate of 1%, RBI will have to substantially increase the repo rate and tighten liquidity. Assuming core inflation falls to 6% over the next 12 months, short-term rates will need to be at 7% from the current level of around 4% (overnight money rate). day). This would ideally call for a repo rate hike of around another 200-250 bps.”

“Over the next 12 months, RBI can be expected to raise rates by at least 150 basis points and 40-50 basis points on June 8,” Sinha added.

Indranil Pan – Chief Economist of Yes Bank said: “We see the RBI extending its May 40bps hike with a 35bps increase in June, followed by 25bps each in August and September. . By then, we expect global growth to have slowed. enough to pull down commodity prices and thereby also reassure the domestic inflation cycle So we factor in the RBI to hit the pause button again after a 15bp hike in the repo rate in December and let’s analyze the implications of its 140 basis point rate hike cycle on growth before making any further decisions.”

On market sentiment towards RBI’s upcoming policy, Vinod Nair, Head of Research at Geojit Financial Services, said: “The market has priced in a rise of up to 50 basis points in the rate. repo and CRR, but any other tighter measures to limit liquidity due to persistent inflation will have ramifications on the market trend.Besides monetary measures, RBI guidance on growth and inflation will determine the market trend.

What does a rate hike mean for your home loan EMIs?

Ashish Khandelia, Founder of Certus Capital, said: “We expect the repo increase to be between 40-50bp at the next MPC meeting, with future increases leading to around 5.75% (where we were exactly 3 years ago) or rising by the end of FY23.”

On home lending, Khandelia said: “The latest 40bp increase in May has taken home lending to +/-7% from ~6.5% earlier. And by the end of This fiscal year, mortgage rates will likely hit ~8% This is unlikely to derail housing momentum, but it will certainly dampen it Coupled with higher prices, growth could slow down a bit over the next fiscal year 23, after a record for fiscal year 22.”

Here are the mortgage rates of some major banks:

National Bank of India:

Since June 1, SBI home loan rates have been increased. However, to qualify for the lowest interest rate at SBI, your CIBIL score is important.

On regular SBI home loans, for a credit score of 800 or higher, the interest rate will be lowest at 7.05% with a maximum gain of 7.45%. Between 750 and 799 credit scores, the interest rate is 7.15%, while on credit scores 700 to 749, the interest rate is 7.25%. For credit scores 650 to 699, the interest rate will be 7.35%, while for credit scores 550 to 649, the rate is 7.55%. For the NTC/non-target score, the interest rate is 7.25%.

HDFC Bank:

The lender offers special home loan rates. For loans up to 30 lakh, the interest rate is 6.75-7.2% for salaried women and 6.80-7.30% for others.

Meanwhile, for home loans of 30.01 lakh to 75 lakh, the interest rate is 7.00-7.50% for salaried women and 7.05-7.55% for others.

For the above mortgages 75.01 lakh, a salaried woman will have an interest rate ranging from 7.10 to 7.60% and the others will pay a rate of 7.15 to 7.65%.

ICICI Bank:

From May 4, ICICI Bank revised its mortgage rates linked to a repo rate (RR) of 4.4%.

To salaried borrowers, ICICI Bank home loans of up to 35 lakh has an interest rate of 7.1% to 7.55%, while for loans up to 35,000,000 75 lakh – the rate is 7.1% on the lower front and 7.7% on the maximum.

For the above mortgages 75 lakh, the lowest rate is 7.1% but can go up to 7.8% maximum.

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Opinion: Banks must stop financing oil expansion. If they don’t, their net zero commitments are greenwashing. https://californiasunsetteam.com/opinion-banks-must-stop-financing-oil-expansion-if-they-dont-their-net-zero-commitments-are-greenwashing/ Fri, 03 Jun 2022 18:05:00 +0000 https://californiasunsetteam.com/opinion-banks-must-stop-financing-oil-expansion-if-they-dont-their-net-zero-commitments-are-greenwashing/ UN Secretary General Antonio Guterres recently called on banks and other financial firms to stop funding fossil fuel expansion. “For too long,” he said, “the financial services industry has enabled the world’s reliance on fossil fuels. … The scientific and moral imperative is clear: there must be no new investment in fossil fuel expansion, including […]]]>

UN Secretary General Antonio Guterres recently called on banks and other financial firms to stop funding fossil fuel expansion.

“For too long,” he said, “the financial services industry has enabled the world’s reliance on fossil fuels. … The scientific and moral imperative is clear: there must be no new investment in fossil fuel expansion, including production, infrastructure and exploration.

Lily: ‘Don’t work for climate saboteurs’: UN’s António Guterres to 2022 graduates

Guterres adds to a growing chorus of voices — including the World Council of Churches, the Muslim Council of Elders and the New York Board of Rabbis — which he spoke in support of the statement. It also aligns broadly with the Science-Based Targets Initiative to unify reporting of greenhouse gas (GHG) emissions and other impacts, and the Oxford Sustainable Finance programme.

They join the United Nations Intergovernmental Panel on Climate Change (in April), the International Energy Agency (in 2021) and a range of Indigenous and environmental advocates (in recent years). years) to call for an end to the expansion of fossil fuels.

The direction of travel is unmistakable: to bend the curve towards a zero-carbon future, stopping the construction of new fossil fuels must be the next step.

There is one hard, undeniable fact driving this consensus: the potential emissions from the fossil fuels already in production – the wells already drilled, the mines already dug – are driving the world well beyond 2°C of warming. dangerous medium targeted at the Paris climate summit and the target backbone of most policies.

Even if coal fell to zero tomorrow — which is far from the case — oil in production BRN00,
+1.14%
and NG00 gas,
+0.64%
alone depletes more than the preferred carbon budget of 1.5°C.

Banks must stop financing the expansion of fossil fuels. If they don’t, their net zero commitments are greenwashing. These commitments largely target the direct pollution that banking operations, in branches, for example, create. And some banking sector commitments have pulled funding from coal expansion and targeted renewable energy projects.

(Editor’s note: JPMorgan Chase signed a commitment late last year to align its loans and net-zero emissions investment portfolios by 2050, joining more than 40 rival financial firms in the Net-Zero Banking Alliance. JPM has committed to “funding and facilitating” more than $2.5 trillion over 10 years to the end of 2030 to advance long-term solutions that combat climate change and contribute to sustainable development.)

Related: Banks are still working with oil and gas companies, despite their adherence to the climate pledge

It is in the interests of all businesses and the global economy to halt the expansion of fossil fuels and curb rampant climate change. Increasingly frequent and severe heat waves, droughts, fires, storms and floods are destroying value in sectors ranging from real estate to agriculture CBD,
+0.95%.
Careless development of fossil fuels as business as usual risks an unpredictable and disorderly devaluation of these carbon-intensive assets, threatening to cause a macroeconomic shock. In fact, the US Treasury Department and other major financial watchdogs released a report warning of the disastrous consequences of climate chaos on the financial sector.

Don’t miss: A retirement sheltered from climate change? Ask the tough questions about real estate and property insurance

Lily: Landmark SEC ruling on climate change could require companies to account for pollution they don’t directly create

A remarkably small group of nefarious corporations are driving the fossil fuel boom and threatening the stability of the economy.

Only 20 oil and gas companies, including Saudi Aramco, Russia’s Gazprom RU:GAZP
and ExxonMobil XOM,
+1.45%,
are responsible for more than half of upstream expansion plans – bringing new reserves online and exploring for new reserves. And just seven global banks are responsible for more than half of the lending and underwriting to those 20 companies in the six years since the adoption of the Paris Agreement.

The main lender is JPMorgan Chase JPM,
-1.39%,
which financed these 20 companies to the tune of $65 billion over the period 2016-2021. This includes, last year alone, $1.7 billion for Qatar Energy, $1.2 billion for Saudi Aramco, $1.1 billion for Exxon and $665 million for Petrobras PBR,
+3.13%.
JPMorgan Chase was the only US bank to lead deals with Gazprom, providing $1.1 billion backing in four separate bond deals during 2021.

They are the top five companies in terms of bringing new oil and gas reserves online, and account for more than a third of planned expanded upstream supply. Support for JPMorgan Chase, which the bank is targeting for its oil and gas portfolio, saying it has engaged in diversified investments, mocks its climate rhetoric.

Lily: ‘They lie. And the results will be catastrophic’: UN climate panel warns emissions pledges are not actions

In recent weeks, CEO Jamie Dimon has doubled down on his support for fossil fuel expansion. In March, he reportedly pushed President Biden to expand US fracked gas production and build new liquefied natural gas infrastructure – despite years of commissioning new LNG terminals, rendering them useless to meet global demand. immediate energy demand.

At the bank’s latest shareholder meeting, responding to a general question about fossil fuel financing, Dimon questioned the bank’s ability to meet even its current weak climate targets: “These targets set the bar high and are also subject to other prerequisites and considerations both within and beyond our control.

Two weeks ago, a crucial constituency – the bank’s shareholders – helped put JPMorgan Chase on the right track. Investors Mercy and Harrington introduced a resolution calling on the bank to ensure that its funding does not contribute to the expansion of fossil fuel supply.

For any investor with a large portfolio, climate change is a clear and present threat to all of their holdings, and ending fossil fuel expansion is an urgent imperative. The JPMorgan resolution garnered strong minority support, including from the New York State Pension Fund, which manages hundreds of billions of dollars. Similar resolutions found traction in Citi C,
-2.10%
(second largest fossil fuel banker in the world), Wells Fargo WFC,
-1.13%
(#3), Bank of America BAC,
-1.39%
(#4) and Goldman Sachs GS,
-1.72%
(#4).

Lily: ‘Tectonic Shift’ to Green Stocks: BlackRock Chart Goes Beyond Oil & Gas Earnings, Momentum

More and more shareholders are living up to their fiduciary duty by asking banks to make a just energy transition a reality by investing in renewable sources rather than fossil fuel expansion. Our wallets depend on it.

Jason Disterhoft is climate and energy campaign manager for the Rainforest Action Network, at RAN.org

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Everything you need to know about business loans for women https://californiasunsetteam.com/everything-you-need-to-know-about-business-loans-for-women/ Tue, 31 May 2022 08:10:00 +0000 https://californiasunsetteam.com/everything-you-need-to-know-about-business-loans-for-women/ NNA | Updated: May 31, 2022 1:40 p.m. STI New Delhi [India]May 31 (ANI/ATK): Tanvi is a well-known businesswoman who owns a boutique in Delhi. It has consumers across the country and it receives the majority of its business orders through an online platform. His business has grown significantly in recent years. And to keep […]]]>



NNA |
Updated:
May 31, 2022 1:40 p.m. STI

New Delhi [India]May 31 (ANI/ATK): Tanvi is a well-known businesswoman who owns a boutique in Delhi. It has consumers across the country and it receives the majority of its business orders through an online platform. His business has grown significantly in recent years. And to keep up, she plans to open a second store, but in another city. However, due to a cash crunch, she has been postponing her intentions for a long time. But recently, her friend told her about business loans for women. Tanvi now wants to know more about the features and application process of this product. So to help her and other female entrepreneurs who are looking for similar information, here we are with some valuable information.
Key Features of Business Loans for Women
1. Easy availability:
The demand for business loans from the female side of society has steadily increased in recent years. More and more women are coming up with innovative startup concepts, which will require appropriate funding to grow. In light of this, many financial institutions have decided to offer business loans to women.
The lender will easily approve you for a low interest rate if you have a solid business plan, appropriate sales projections, and a solid credit profile.
2. Flexibility in terms of use
Your road as a business owner is strewn with pitfalls. You will need money to solve several problems at once. Sometimes you need funds to replenish stocks and inventories. While other times you will need funds to buy new machines. If you are an established business, you might be interested in acquiring a small start-up.
A business loan for women is designed in such a way that it can easily meet a variety of business requirements. Plus, these loans can be tailored to meet your specific needs. This means that you can apply for a working capital loan depending on your working capital needs. Similarly, a medical professional can also take out a medical equipment loan to purchase advanced medical equipment.
3. Unsecured Loans
The most common challenge women entrepreneurs face is the availability of funds in exchange for collateral. However, this is not the case with a business loan for women. Funds are readily available until you meet the lender’s minimum qualifying criteria. If you don’t meet the minimum eligibility, consider adding a co-applicant. A co-applicant can be either your spouse or your business partner.
4. Flexible plan
Business loans for women are available for a flexible term of up to 3 years. Repayment flexibility allows you to select a term with an EMI amount that best suits your budget.
Your mandate has a direct impact on your budget, so make the best decision possible. Let’s take a look at the table below to help us understand this better.
5. No Profit Sharing:
There are certain scenarios in which women entrepreneurs raise funds through private equity. However, there are a number of downsides to doing so. For example, you will have to share the profits with investors, and the investors will be involved in all aspects of the business. Moreover, whatever decision you make in your business will require the participation of investors. And if your investor isn’t impressed with your concept, you may soon have to reconsider.

So, if you don’t want to be part of the previous situation, a business loan for women is the perfect option. Interest is not requested by the lender. You will only be responsible for repaying the amount borrowed plus interest.
6. Competitive interest rate
Business loan interest rates are determined by your credit profile. The lender assesses your business finances and liabilities before deciding on your interest rate. In this case, if your business is doing well and has no defaults to its name, it is much easier to obtain financing at low interest rates.
How to apply for a business loan online for women?
If you think this loan can help you reach new heights, look no further and learn how to get an affordable business loan interest rate.
– Do extensive research to find the ideal lending institution.
– Visit their website and go to the business loans section.
– Check the list of required documents on the business loan page and read the minimum eligibility requirements.
– Complete the online application form and upload all required documents.
– The lender will verify your details.
– If the details are satisfactory, one of their representatives will contact you to obtain the additional information necessary to process the loan.
– Once you have provided the additional details, the lender will initiate a credit assessment. They will send you a proposal letter based on this. The letter will contain information such as the loan amount, interest rate, and any loan-related fees that may apply.
– You must give your written acceptance through the appropriate communication channel.
– After acceptance, the lender will pay the amount to your account shortly.
To conclude:
Business loans for women are one of the best sources of finance that can meet all the needs of small and large businesses. The flexible term, simple eligibility requirements, and simple application process make it perfect for you.
This story is provided by ATK. ANI will not be responsible for the content of this article. (ANI/ATQ)

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Financial institutions move into ARMs amid high rates https://californiasunsetteam.com/financial-institutions-move-into-arms-amid-high-rates/ Thu, 26 May 2022 20:53:14 +0000 https://californiasunsetteam.com/financial-institutions-move-into-arms-amid-high-rates/ At least two financial institutions this week brought back adjustable-rate mortgage products (ARMs) amid soaring mortgage rates and double-digit growth in house prices. Michigan-based wholesale lender Attachment point deployed a jumbo ARM product offering a maximum loan amount of $2.5 million, with a maximum loan-to-value ratio of 80%. Homepoint’s jumbo ARMs have a fixed rate […]]]>

At least two financial institutions this week brought back adjustable-rate mortgage products (ARMs) amid soaring mortgage rates and double-digit growth in house prices.

Michigan-based wholesale lender Attachment point deployed a jumbo ARM product offering a maximum loan amount of $2.5 million, with a maximum loan-to-value ratio of 80%. Homepoint’s jumbo ARMs have a fixed rate period of seven or 10 years and the loan adjusts every six months, according to Homepoint.

Credit Union of Southern California’s Interest-only ARMs, in which the borrower delays repayment of principal for a period of time, are now available as purchase or refinance loans. Rates are offered over five and seven years for primary residences $3 million and under, or secondary residences $2.5 million and under, he said.

“Homebuyers today have greater interest in variable rate mortgages as they provide a solution to affordability issues caused by the recent increase in interest rates,” said Phil Shoemaker, President of the Fixtures. at Homepoint, in a statement.

ARM requests rose 10.8% this month, a 14-year high, from just 3% at the start of the year, according to the Mortgage Bankers Association. The most recent MBA data showed that ARMs accounted for 9.4% of overall apps last week.

“As rates have risen, ARM loans have become more attractive to borrowers because they offer them a lower monthly payment,” said Joel Kan, associate vice president of economic and industry forecasting at the MBA. “Borrowers are certainly looking for any kind of advantage they can get.”


How Lenders Can Improve Business Models in 2022

As 2022 proves to be a tough year for the housing market, lenders are looking to capitalize on potential downtime by improving their internal processes. HousingWire recently spoke with James Deitch, CEO of Teraverde, about the changes lenders can make to their business models in order to stay profitable.

Presented by: Teraverde

As financial institutions take note of the increased attention to ARMs, some loan officers said many consumers believe the cost of obtaining ARMs is not worth the risk compared to a 30-year mortgage rate.

“The conventional 30-year mortgage rate would need to be in the mid to high 5% range for the ARM to be in the high 3% range,” a loan officer in Washington said. “That’s where it would make sense for an ARM 5/1. If we can get that, for me saving one percent, yes, that’s beneficial. But is it really worth it?”

The interest rate for a five-year ARM averaged 4.20% in the week ending Wednesday, according to the Freddie Mac PMM. A conventional 30-year fixed rate purchase mortgage was only 90 basis points higher at 5.1%.

Applications for ARMs increased this year for the first time since interest in ARMs declined due to the role they played in the 2008 housing crash. Prior to the housing crisis, many subprime lenders provided borrowers with interest-only ARMs, which initially offered low rates. Some buyers who couldn’t qualify for a conventional mortgage turned to an ARM to make lower monthly payments.

But when rates began to skyrocket from 2005, rising foreclosure rates led to a housing market crash in 2008. During the mid-2000s housing boom, around 35% of all loans mortgages were adjustable, according to Ali Wolf, chief economist at homebuilding. accessory technology company Zonda.

After the housing market crash, new underwriting guidelines were issued for ARMs to make it harder for borrowers to find themselves in foreclosure, industry experts said.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, created in direct response to the financial crisis, also makes the mortgage industry look different from 14 years ago, market watchers say. The Dodd-Frank Act requires lenders to verify a buyer’s repayment capacity, which protects them from predatory lending practices.

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