Downes, who currently serves as Enterprise Housing Credit Investments EVP, will succeed current president Scott Hoekman who has spent the past 30 years at Enterprise.

In addition to serving as president, Downes “will also serve as a member of the leadership team of Enterprise’s Capital division, which collectively oversees a $16.6 billion affordable housing and community development investment platform,” according to an announcement from the company.

“It has been a great privilege to be a part of Enterprise over for the past 30 years, and I am making the decision to step down with the utmost confidence in our extraordinary team, all of whom are committed to creating and preserving affordable homes by providing best-in-class service to our investor and developer partners,” Hoekman said in a statement. “With Kari as Enterprise Housing Credit Investments’ next leader, I know that the organization is in the best possible hands.”

Downes will assume the leadership position at the organization as it marks a milestone of $20 billion in cumulative investments. These “have financed 2,800 developments, creating or preserving 200,000 affordable homes nationwide,” The company said. $7.1 billion of that total investment figure occurred during Hoekman’s tenure as president, which began in 2018.

Last year marked “a fifth consecutive year of record investment,” as Enterprise Housing Credit Investments deployed $1.729 billion, the company added.

Downes is looking forward to serving in the new position.

“The Low-Income Housing Tax Credit is the most powerful and impactful way to increase the supply of affordable homes. With the help of our incredible team here, we will continue to grow our impact so that everyone can have a safe and affordable place to call home,” she said.

HousingWire: How do you view the lending landscape for 2024? The 10-year Treasury is about 5%, which is not outrageous by historical standards, but given that rates were half that amount a short while ago, borrowers may have different expectations. How do you overcome that?

Jon Irvine: We view 2024 very favorably based on several positive economic indicators we saw at the end of last year. The economy was expanding, people were working, inflation was cooling and consumer sentiment was rising. The 10-year Treasury closed 2023 below 4% (3.87%) from more than 5% just a month earlier. To the buyer of an $800,000 home putting down 20%, the mortgage savings would be roughly $500.

Granted, mortgage rates aren’t at their pandemic lows, but historically they are in line with what homeowners have typically paid. 

If buyers try to time their home purchase to the return of record-low rates and the historically low rates don’t return, their wait could prove costly. Since 2000, the average home appreciation rate has been 4.7%, according to the FHFA. Since 2012, the average rate has been 7.7%. A $500,000 home that appreciates 5% a year would be worth more than $1.3 million in 20 years.*

HW: There’s a growing affordable housing crisis in the U.S. As a major lender, what role do you see Change playing in making housing more affordable and more accessible to more people, especially in underserved communities?

JI: The short answers are innovation and education. By developing innovative products built around how people today live and work — as self-employed workers, contractors, business owners and so forth — and by demonstrating to the capital markets that these non-QM loans consistently perform at a high level, we can recycle that capital into more markets, including traditionally underserved markets. If consumers, Realtors and builders know affordable financing exists for potential buyers, more Americans will have the opportunity to get into a new home.

HW: How did Change become the nation’s No. 1 non-QM lender?

JI: We knew consumer demand would be there if people knew about our products. The easiest way to build that awareness was to build a robust lending platform. We also have been able to educate the capital markets, which helped to scale the financing, gain high rating agency acceptance and create significant investor demand. The continuing performance of these loans is a testament to the quality of our borrowers and our catalyst to serve even more communities.  

HW: Can your model of doing well as a company and doing good for the community thrive in 2024?

JI: In 2023, the same year we saw the Fed raise interest rates three times, we also became the nation’s largest non-QM lender, proving we can do well for the company and the communities we serve in any lending environment. Driven by our community development mission to create lending solutions for how people live and work today, we’re always going to be relevant.

Likewise, as investor awareness of our products continues to increase and as rates steady or begin to fall, we anticipate demand for the adjusted-risk returns these products produce will be too good to pass up.

*https://www.whatisvalueofmyhome.com/future-home-value-calculator/

It took $279 less per month to purchase the median-priced home in November compared to October, according to ICE Vice President of Enterprise Research Andy Walden. As a result, mortgage demand ticked up as well last month.

“Rate relief has also nudged both home affordability and purchase demand in the right direction after hitting pandemic-era lows in recent months, with the prospect of further improvement in both as we make our way into the new year,” Walden said.

According to ICE’s report, it took 35.9% of the median household income to cover the principal and interest payment on a median-priced home, down from 40.3% less than two months ago. The last time homebuying was this affordable was in May 2023.

However, affordability hurdles persisted in November

Home prices rose at a pace of 5.1% on a year-over-year basis, straining buyers’ purchase power. It was up from a revised of 4.5% in October. Regionally, prices rose the most in the Northeast, led by Hartford, Connecticut (+0.85%), and Providence, Rhode Island (+0.50%). Meanwhile, Portland, Oregon (-0.38%), Minneapolis (-0.35%), Austin (-0.35%), San Antonio (-0.27%), and New Orleans (-0.24%) posted the largest rate decreases in the country.

“Price growth has been much more modest in recent months, which should help to moderate that annual growth rate as we make our way through early 2024,” Walden said in a statement.

Leaders in Colorado districts are entering the housing market in a variety of ways, including engaging in partnerships with developers, constructing tiny homes and even becoming landlords, according to a story published by the Denver Post.

Getting more involved in housing

“School districts in Colorado’s pricey high country are leading such efforts, but at least one metro Denver district — the Douglas County School District — is eyeing a partnership with developers to turn district land into housing for its employees,” the story explained. 

Leaders in other counties explain why the move is necessary: raising teacher salaries doesn’t work since funding for the state’s K-12 programs doesn’t allow for wages to rise commensurately with housing costs, necessitating more affordable options for housing.

“We’re solving for an issue that is much more systematic,” said Tony Byrd, superintendent of the Summit School District serving the micropolitan area of Breckenridge, in an interview with the Denver Post. “Frankly, the cost of living vs. wages makes it such that if we are going to staff our schools… for many districts we have to jump in and do it.”

An expensive noncoastal market

According to data from real estate research firm Zonda, Colorado stands as one of the most expensive non-coastal housing markets in the United States.

“Potential buyers in expensive noncoastal markets, but also in many metros across the country, have had to get creative to find paths to homeownership,” said Ali Wolf, chief economist at Zonda in October. “Those looking to buy are considering their options such as buying a smaller home, moving farther from a central business district, stretching their budget, looking for creative financing, and even uprooting their lives and moving to a more affordable market elsewhere in the country.”

The state is also experiencing a shortfall of housing inventory, as is the case with many major housing markets across the country. Rents also remain challenging according to data the Post cites from Zillow. On the extreme high end, median rent in Aspen is $35,000 according to recent estimates. But all the ski towns have an affordability issue.

“In Frisco, the median rent is $5,500 and in Breckenridge it’s about $6,000. By comparison, the median rent in Denver is $2,169, according to Zillow,” the report said.

Traditional methods aren’t enough

Leaders have turned to more traditional means for increasing teacher salaries, including local levies asking voters for a tax increase to fund additional salary increases or district investments. While some of these have worked, they still often fail to unlock enough additional funding to offset the increases in housing costs.

The state’s Douglas County, which is part of the Denver-Aurora-Lakewood metropolitan statistical area, recently saw voters approve a tax levy that would increase teacher salaries by an estimated 9.2%.

“Even then, our starting salary will be about $50,000 and you just can’t live in Douglas County for $50,000,” Douglas County School District Superintendent Erin Kane told the Denver Post.

The district is now exploring “using some of our district land and partnering with developers to potentially do housing that would be inexpensive for our teachers and staff to access,” Kaine told the outlet.

The actions of these districts in Colorado is not unprecedented. Earlier this year, a district in the state of Florida began exploring a similar measure to bring in more teachers, one that would see a former junior high school in St. Petersburg, Fla. being targeted for redevelopment into an affordable housing apartment complex.

Read the rest of the Denver Post article here.

When affordability meets fair housing

Recently, during a coaching session with an agent, that agent shared how a recent seller, Bob, sold his home of 20 years and made so much money on the sale that he was able to purchase a retirement home in Savannah, Georgia, and have plenty of money left over for a nice retirement nest egg. This doesn’t take into account any of his pension as an auto plant worker. Congratulations to Bob, as that is the power of U.S. homeownership.

Today’s reality of affordability

But imagine if Bob’s appraisal had been lowballed? Or, if he had not even been able to purchase that particular home because he was steered elsewhere or was unfairly denied the loan he needed? What if the community was currently being redlined, which would limit the types of homebuyers bidding on his home?

Sadly, those hypotheticals are still a reality for some, even as we approach 2024.

Interestingly, there are two common trends the Department of Justice is seeing in redlining and other unfair housing (and lending) enforcement actions — both of which impact and trigger unaffordable housing. They include:

1. Lenders’ awareness of redlining risks, sometimes for years, without taking corrective action.
2. Evidence of discrimination in employee or manager emails, i.e., disparaging descriptions of certain neighborhoods or overt animus towards protected groups.

Recent examples from the news

“CFPB fines BofA $12M for failing to collect data on mortgage applicants”

“The Consumer Financial Protection Bureau (CFPB) imposed a $12 million penalty on Bank of America (BofA) for violating federal laws by submitting false mortgage lending information for about four years, it announced on Monday. According to the CFPB, hundreds of loan officers at BofA failed to ask mortgage applicants demographic questions and falsely reported that they had chosen not to respond.” (Source: HousingWire)

This is significant not only because it violates federal law, but often, the only way we can hold companies accountable for unfair lending and housing practices is through the data collected. In other words, the expression, “No face, no case; no names, just games,” becomes a diabolical prophecy.

“KeyBank’s betrayal of Black and low-income homebuyers continued in 2022”

“KeyBank made 19.2% of its home purchase loans for the year to low- and moderate-income (LMI) borrowers, down from 19.7% in 2021. This modest but significant one-year decline understates KeyBank’s longer-term performance for non-wealthy families seeking to buy a home to live in: In 2018 more than 38% of such KeyBank loans went to an LMI borrower. Both data points look even uglier when compared to other top lenders, who made more than 30% of their 2022 purchase mortgages to LMI borrowers …” (Source: NCRC.org)

Fair housing and lending is for everyone and not simply the wealthy. Back to Bob’s American dream. Can you imagine if he did not even have the ability to apply for his home loan? As an auto plant retiree, he likely would have been excluded based on this data.

“Citigroup fined $25.9M for discriminating against Armenian Americans, federal regulator says”

“In its investigation, the bureau found that Citi employees were instructed to single out applications that had Armenian last names, but then to conceal the real reason why those applications were denied. These employees knew they were running afoul of bank laws that prohibit discrimination against national origin, and kept any decisions off recorded phone lines or writing it down. ‘Citi stereotyped Armenians as prone to crime and fraud. In reality, Citi illegally fabricated documents to cover up its discrimination,” said Rohit Chopra, the director of the CFPB, in a statement.'” (Source: ABC7.com)⁣

Unfortunately, the implications of someone’s name or how they sound when speaking are not a new consideration in unfair housing, meaning there is still work to be done. Imagine if Bob’s credit application was instantly rejected simply because of his last name. How quickly he would have been thrust into an American nightmare.

How to make a difference in your market

With just these three instances, clearly unfair housing (and lending) still exist. But we are not powerless. 

Consequently, we need more Fair Housing DECODERS, which is an acronym for all of us who are fair housing advocates.

As Fair Housing DECODERS, let’s reflect on how we can demonstrate the letter “R,” which stands for “Reporter” from the acronym in relation to the above recent real estate news.

What do reporters do? They report!

To elaborate, let’s make sure we are aware of and are sharing vital fair housing and lending news with our networks so everyone can make informed decisions about which banks (and other companies) to patronize. 

1. Keep up with critical fair housing and lending data. I recommend signing up for no-fee Google alerts. You can set up an alert for national as well as local news with an alert like, “fair housing in [insert your town and/or state].”
   
2. Proactively keep your network informed with vital fair housing and lending news. However you currently reach your network is a great start. Do you enjoy sending a mailer or newsletter? Great, try adding a “fair housing corner.” Prefer TikTok, Instagram or YouTube videos? Videos work well, too. Simply add a monthly or quarterly vlog on fair housing. There is no limit to how you can keep your network informed.
   
3. Improve your personal business dealings based on the various fair housing and lending news alerts. Perhaps your preferred lenders and other vendors lists could use some end-of-the-year purging. We have the local sway to hold fair housing and lending violators accountable by asking them how they plan to champion fair housing and lending going forward (they should include timelines and benchmarks). I would also suggest not recommending them until they have a satisfactory, proactive plan with corresponding actions. All businesses should be given another chance if they are willing to remain accountable and supportive of fair housing. When we know better, let’s do better.

As real estate agents, we have an opportunity to decode and interrupt unfair housing when it tries to rear its ugly head in our everyday operations, which can influence affordability for our neighbors. Let’s make the most of each opportunity.

Lee Davenport, PhD, is a real estate coach/trainer and blogger who trains real estate agents and brokerages on how to work smarter with technology.

The updates include increases in the maximum rehabilitation costs for the program’s limited version, an extension of the allowable period for more complex projects and changes in consultant fees, among others. 

The 203(k) Rehabilitation Mortgage Insurance Program helps borrowers purchase a home or refinance an existing mortgage and includes the cost of repairs or rehabilitation into one new mortgage.

There are two versions: the standard, which includes structural repairs and requires an approved consultant, and the limited version, which is focused on minor renovation and repair and does not require a consultant. 

In 2022, HousingWire reported that the FHA was looking to revamp the 203(k) program to address the current affordability crisis by boosting the supply of homes. Changes also intend to align the program to be more similar and as popular as Fannie Mae‘s Homestyle for conventional borrowers.

“Thanks to the enhancements we proposed today, home rehabilitation will be more accessible for millions of homebuyers and homeowners through the Federal Housing Administration,” HUD Secretary Marcia L. Fudge said in a statement. 

“Our proposed changes to the 203(k) program add to our larger goals of increasing both housing supply and affordability through FHA’s offerings,” Julia Gordon, federal housing commissioner, added in a statement.  

In February, the FHA launched a request for information regarding the 203(k) program. 

After receiving the industry’s feedback, the FHA proposes that the maximum costs for the program’s limited version increase from $35,000 to $50,000. In high-cost areas, however, it can go up to $75,000. 

Also, in the limited program, the FHA proposes that consultant fees be included in the financed mortgage, as it is permissible in the standard version. 

Regarding consultant fees, the FHA said it’s updating the schedule, “including a streamlining of and substantial increases for, allowable fees for preparation of work write-ups and architectural exhibit reviews.” 

For example, the document says if requested by the borrower or mortgagee to determine if a 203(k) loan is feasible, the consultant may charge an additional fee of $375 to prepare a feasible study. For the preparation of work write-up, consultants may charge up to 1% of the repair costs or $2,000, whichever is lower, for repairs over $140,000. 

Changes also include increases to the maximum amount for other allowable fees, including for draw inspection, which is $375. 

“Proposed fee increases are designed to appropriately compensate consultants for their role and incent more consultants to participate in the program,” the FHA stated.

The proposal increases the allowable rehabilitation period from six to 10 months in the standard version and from six to seven months in the limited program. The change considers repair and rehabilitation timeframes common for more complex projects, per the FHA. 

Borrowers would also be allowed to include 75% of material costs into the initial draw amount, compared to 50% under the current rules, so that they can make payments to a supplier or manufacturer. 

The deadline to comment on the proposals is Jan. 5, 2024. 

Couples who may have locked in a very low mortgage rate in previous years — but who are now seeking to end their marriages — are finding themselves needing to remain in their homes together as high rates make moving out an unaffordable prospect, according to a report at the Wall Street Journal.

“Mortgage rates are over 7% and average home prices have hit record highs,” the report says. “This means more couples can’t afford to leave their home with its less than 3% mortgage interest rates and set up two different households. Renting isn’t always an option either given that rents have risen more than 9% over the last two years.”

The reality has led to awkward arrangements for impacted divorced couples. Separately “assigned” floors for estranged spouses, separate purchases of groceries and scheduled times for doing their laundry, to name a few.

“One woman locks her bedroom door and keeps her supply of batteries and toilet paper in her closet,” the report says. “Many don’t tell colleagues about the set up because it seems unthinkable or they are embarrassed. They try to maintain civility for the kids and hold tight until they can afford to buy, rent and furnish two homes.”

In one example, a couple bought a Mesa, Arizona, home for $600,000 at a mortgage interest rate of 5.62% in the summer of 2022. The initial plan was to refinance when rates improved, but they’re now seeking a divorce and living in a home that has dropped in value.

The couple remains on amicable terms and stayed in the home together for two months, but when it became too awkward they sought out new living arrangements. One found an affordable rental via social media, while the other is staying in the house but is not making any payments on it until it sells.

Another estranged couple in the Phoenix area worked out an arrangement on their home with a 3.25% mortgage rate. The wife bought out 40% of the husband’s equity and agreed to pay the remainder within three years.

“She would have preferred a clean break from her ex, rather than dragging the commitment on for three years, but she says it was the only option given today’s elevated mortgage rates,” the report said of the arrangement.

The wife blamed elevated mortgage rates on the unusual arrangement.

“If rates weren’t so high, I would have sold the house and moved somewhere within the city or refinanced,” she told the Journal.

What’s next for the inflation fight and mortgage rates?

The Mortgage Bankers Association predicts rates will end this year at 7.2%, and that feels realistic now.

Thanks to a rate hike pause and dovish Fed statement on November 1, mortgage bonds rallied and rates dropped from near-8% to 7.5%.

But when the Fed’s preferred Core PCE inflation measure is 3.7% and their goal is 2%, it means the inflation fight isn’t over. Here’s what Fed Chair Jerome Powell said at his November 1 press conference: “Inflation has moderated since the middle of last year, and readings over the summer were quite favorable. But a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. The process of getting inflation sustainably down to 2% has a long way to go.”

How long?

Here are the MBA’s 2024 rate predictions by quarter: 6.8% for Q1, 6.6% for Q2, 6.3% for Q3 and 6.1% for Q4.

How do we help homebuyers navigate affordability?

This implies easing inflation next year, and mortgage rates near 6% would help affordability issues caused by two things:

1. The inflation fight has fueled the mortgage rate spike
2. Low inventory and a steady job market have put a floor on home prices

The good news is that GSEs remain committed to loan approval guidelines that help in these tough cycles.

Media stories about home affordability rarely cover how the GSEs allow for low down payments and higher debt-to-income ratios. Media headlines make borrowers nervous, but lenders make loans.

And when lenders — not headlines — explain cash-to-close and monthly all-in costs relative to incomes, the lights go on for borrowers.

Can flexible GSE guidelines help today’s challenged homebuyers in a systemically safe way?

I think so because total U.S. mortgage delinquencies — which include conventional, FHA and VA loans — are still near record lows of 3.37% per the MBA.

Also, U.S. housing value is now $44.5 trillion per Urban Institute, and total mortgages outstanding are $13.9 trillion per MBA. That implies there’s 68.7% equity in the American housing system.

Originators and servicers must double down on educating consumers and coaching them through this cycle.

How should mortgage firms rethink tech strategy in 2024?

Mortgage tech is a huge part of enabling this education, but in this lean period, originators and servicers will keep looking at how to streamline their tech.

In originations, lean shops have argued during this cycle that they need loan manufacturing (LOS, POS), pricing, marketing and everything else is expendable.

This implies continued mortgage origination fintech consolidation in 2024.

A good example here is CoreLogic buying a POS this year and bringing it together with their valuation and automated underwriting capabilities. This makes the POS more relevant as a loan manufacturing tool, giving loan officers and underwriters a more complete borrower and property profile sooner in the process.

In servicing, the must-have capabilities are more comprehensive: core servicing, consumer, default and loan movement (onboarding, transfers, etc.). 

And there are two things these systems must do to ensure servicers can affordably educate and engage consumers:

1. Provide a single user experience (UX) and share data so all users — consumers, servicers, investors, regulators — see the same things across the entire system in real time.
2. Run on a cloud-native, open-API ecosystem giving servicers operational flexibility to manage easy and inexpensive integrations.

A good example here is Sagent, which will start demoing these capabilities after we move into 2024. We cannot wait to show it to you.

This is what creates a world-class experience for consumers when they need it most.

And throughout this cycle, Sagent is the only fintech player making major investments in this future when servicers need it most.

For more on strategizing for 2024 and what lenders must do to win market share profitably between now and 2025, watch Sagent’s webinar here.

While home prices in the U.S. held up in 2023, sales volume in the housing market cratered. Consumers care about home prices and mortgage rates; the industry cares about transaction volume.

The industry is in a deep housing recession this year. If we get lucky with mortgage rates, though, we might just be at the bottom of the housing market recession right now. Or does a continued lack of affordable housing mean are we in for a continued decline in the number of people buying homes?

To get the weekly picture of the housing market, watch the video above.

Don’t have time? Here are some quick takeaways from our latest data dive at Altos Research.

Inventory continues to build

There are 567,000 single-family homes on the market. As expected, that’s up 0.7% from last week. Housing inventory. growing in November is rare due to seasonality, but it looks like we’re roughly at the top.

Remember the Altos rule: If mortgage rates go up, inventory will build in 2024. If rates fall, inventory will also come down again.

Additionally, there are 62,000 new listings this week, with 9,000 of those already under contract. We have the same number of sellers now as last year, which tells us that further declines in home sales because of supply constraints are unlikely.

Transaction volume no longer decreasing YoY

Pending contracts saw fewer sales compared to last year until October. Now the trajectory is the same.

Plus, 39.2% of the homes on the housing market have had a price cut. That means the market looks a little more stabilized than it did in the fourth quarter of 2022.

We know how sensitive consumers are to changes in mortgage rates. When rates spike, mortgage demand is impacted.

Home prices still hold strong

Home prices continue to be 2% above last year and look to end the year at that level.

The median price of single-family homes is now $430,000.

Altos Research empowers real estate professionals to grow their businesses by keeping buyers and sellers engaged with market knowledge. Altos provides a competitive edge with the real-time market data that helps agents speak confidently about market stats, anticipate what’s coming, and provide expert counsel to buyers and sellers.

Learn more about Altos Research

“For all but a single day, interest rates spent the entire month of October above 7.5%, topping out at 7.80% on Oct. 25,” ICE Vice President of Enterprise Research Andy Walden said in a statement. “Mortgage rates haven’t been that high in 23 years, which continues to hammer affordability.”

However, the lack of housing inventory is also another driver of the high home prices. 

With a one-two punch of higher mortgage rates and fewer homes on the market, consumer demand fell in October. The number of purchase mortgage applications declined 47% below pre-pandemic levels for the week of Oct. 26.

Meanwhile, the refinance market remained almost “non-existent,” with the exception of equity-driven, cash-out refinance transactions, ICE reported.

“In fact, the refinance market in general is but a shadow of what it once was,” Walden said. “There are pockets of cash-out lending occurring among a particular set of borrowers, but even that has been a niche market.”

Rising home prices are boosting home equity

The good news is that U.S. mortgage holders are sitting on some $16.4 trillion of home equity, out of which $10.6 trillion is considered “tappable equity.” 

“Unfortunately, with borrower retention at a 17-year low, lenders are losing customers seeking to tap equity via cash-outs,” Walden said. “What’s notable is that they are losing this business not due to their rate offerings, but rather an inability to identify and market to those borrowers likely to transact in today’s market.” 

Overall, the coastal areas, primarily in California and Florida, remain the least affordable. New York City, Nashville, Las Vegas, Seattle and Salt Lake City round out the list of the most expensive markets.

In 75% of the U.S. markets studied, borrowers need to earn 10 percentage points more than the local market’s income to afford the median-priced home.