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Harassment a Problem in the Mortgage World

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | February 23rd, 2018

#MeToo, say as many as 3 out of 4 women in the mortgage business.

That’s how many say they’ve experienced sexual harassment as defined by the Equal Employment Opportunity Commission (EEOC).

Claire Weber, chief operating officer of FormFree -- a technology company that provides verification of borrower assets, employment and income -- is one of them. She says she has been assessed and devalued by men who assume her goal is to be physically pleasing in a professional setting.

“Frank, unwarranted, unrelated assessments of my appearance and the fit of my clothing in the middle of a serious business conversation is one of the milder examples that I can cite,” Weber says.

She has experienced such poor behavior on numerous occasions. So she knew instinctively what could happen to a new female employee, just five months out of college, at the Mortgage Banker Association’s (MBA) convention last fall in Denver.

It “was a topic I could not overlook, both as a female professional in this industry and as an executive at our company,” she says. So over lunch with her rookie worker, Weber got right to the point:

“At this conference, one or more of the following will happen: You will be spoken to inappropriately, looked at inappropriately, touched inappropriately, have comments about your appearance or clothing made, have inappropriate invitations extended to you,” she warned. “One way or another, you will be treated as a sexual object instead of a business professional.”

Sure enough, within a few hours of the opening bell, Weber recalls, “one of the very things I had warned her of took place right before my eyes.” She quickly interrupted the unwanted interaction and escorted the powerful man back to his male colleagues.

“Despite the fact that I have encountered this so many times myself, and despite the fact that I was prepared and had prepared her, I felt shocked,” Weber says.

Scenes like this seem to play out just as often in the mortgage business as they do in the worlds of entertainment, politics, the media and sports. “It is an open secret that the mortgage industry harbors a subculture of male privilege and adolescent impulse that repulses female professionals,” says Weber.

According to a poll by the MBA’s mPower platform for female members, 3 out of 4 of the approximately 260 respondents said they had experienced at least one incident of sexual harassment.

The most frequent incidents happened in the office, and the most frequent behavior was inappropriate comments. But less than 1 in 10 reported the offending remarks to human resources, and just 1 in 5 ever mentioned them to someone in the chain of command who could address the poor behavior. Sound familiar?

The survey was not scientific, nor can the results be seen as indicative of the broader population, says Marcia Davies, chief operating officer at the MBA. Rather, mPower intends to use the data to start a conversation among its members about workplace sexual harassment.

“The women in mPower have been eager to discuss the issue head-on,” Davies says.

Some people maintain that they don’t know exactly what sexual harassment is, just that they “know it when they see it.” But the federal government’s definition is quite explicit. The EEOC defines it as: “unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature.”

Whether such conduct expresses itself as open leering and suggestiveness, or the subtler practices of minimization and exclusion, says Weber, “there is a vestigial fraternity of poorly evolved males for which women have developed a keen sense, and aversion.”

Other than perhaps a little flirting, Rosalie Berg says she has been the target of improper and unwanted sexual advances twice in the 15 years since she opened Strategic Vantage, one of the top marketing and advertising companies in the mortgage field. Both incidents were instigated by “very well-known, very powerful CEOs, who were probably used to getting what they want,” she recalls.

In one case, she was asked to continue a business conversation in the “gentleman’s” hotel room. Twice he implored her to join him in his room, and twice she said “no.” After that, it never came up again, Berg says. “When men leave home, many feel like they never had a wedding ring on.”

As Berg sees it, the way a women deals with harassment is paramount. “How you handle it defines who you are,” she says. “In my case, I felt empowered enough that if I lose business, so what? At least I still feel good about myself.”

As the MBA survey pointed out, many women aren’t in that strong of a position. And many simply don’t know how to handle it when men come on to them in a business setting.

Davies of the MBA says that, based on mPower’s poll, “it is clear that many women in our industry have to put significant effort into dealing with workplace sexual harassment.”

But, she adds, “the business does not need a scientific survey to estimate how many women (this has to affect) before we start to take action, because one is too many.”

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Odd Parcels: Immigrants, Love, Alexa

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | February 16th, 2018

While the immigration debate rages in Washington, it needs to be pointed out that any new restrictions are likely to impact the new-home sector in a “bigly” way.

Homebuilders are already dealing with a labor shortage, perhaps the No. 1 issue they face -- over and above rising material prices and a lack of buildable home sites. If new immigration is curtailed, and if immigrants already here are deported, the labor problem will be exacerbated greatly.

The result: New houses won’t be built as quickly as they are today, and they may not be built as well, either. If builders have to pay more to find the workers they need to put up their houses, which they most assuredly will, the end product is likely to be even more expensive.

According to the Census Bureau, immigrants now account for almost 1 in 4 workers in the construction field. That’s the highest share ever recorded by the Bureau’s American Community Survey (ACS).

In some states, builders’ reliance on foreign-born workers is even more pronounced. In California and the District of Columbia, 42 percent of the construction workforce comes from abroad. In Texas, it’s 41 percent; in New York and Nevada, 37 percent.

In Georgia, Virginia and Maryland, immigrants account for close to 30 percent of the construction labor force. Interestingly, while immigrants comprise less than 16 percent of the labor force in Virginia, their share in construction exceeds 29 percent. Similarly, in Georgia, less than 14 percent of the labor force is foreign-born, but the share of immigrants in the construction labor force is twice that.

Even though the share of immigrants in construction is now at its highest since the ACS was fully implemented in 2004, and their number exceeds 2.5 million, this is still almost 200,000 fewer than in 2007, according to the National Association of Home Builders (NAHB).

The flow of new immigrants into the construction workforce is also significantly slower than it was in the housing boom years. Fewer than 60,000 new immigrants entered the construction industry in 2015. By comparison, over 130,000 were joining the construction labor force annually in 2004 and 2005.

The rising share of immigrants in construction, says NAHB economist Natalia Siniavskaia, is attributable to “a slow, delayed and reluctant post-recession return of native-born workers.”

Close to 1.7 million native-born workers left the construction labor force during the housing downturn, and the vast majority had not returned to the business as of 2016. That year, the number of native-born workers remained 16 percent below the cyclical high reached a decade earlier.

Homebuyers: Write all the love letters you want to sellers, to try to persuade them you’re the right buyer for their home. But leave your heart-wrenching missive out of the package of documents to give to your lender.

That’s the word from Rob Spinosa, a loan adviser with Supreme Lending in Mill Valley, California, who says some letters contain not-so-flattering information about the house that you probably don’t want underwriters to know. Such as these three examples:

-- “The repairs in the downstairs kitchen don’t concern us. John is good with his hands, and we plan to fix this upon moving in.”

-- “We realize that the home has some deferred maintenance, but we find it charming and are ready for the challenge.”

-- “The termite damage in the report is trivial, in our opinion ... we still love the house!”

Spinosa says he has nothing against love letters per se. He and his wife wrote one themselves when they made an offer on a home. But he and his colleagues remove them from the loan package when they notice them.

Still, he says, “it only takes one oversight from me or anyone on my team before a love letter that may say something (like the above) finds its way in front of an underwriter.”

Lending is not like it used to be, when any applicant who could fog a mirror could get a mortgage. Today, it’s full-bore, full-documentation underwriting. And as Spinosa cautions, “what’s been seen cannot be unseen.”

So go ahead and woo your seller, just don’t let the lender in on the love-fest. Otherwise, you could get the equivalent of a Dear John letter from the lender -- one that says something like, “We’ve found another borrower to love.”

“Alexa, make my mortgage payment.”

Yes, Quicken Loans, the nation’s largest online lender, has developed technology that allows its clients to ask Amazon’s Alexa to make a monthly payment by a secure voice command.

By asking Alexa, clients also can review nearly all account details, such as their current loan balance and payment due dates, and listen to Alexa deliver current interest rates for all of Quicken’s mortgage programs.

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Mortgage Payments Likely to Keep Zooming

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | February 9th, 2018

It’s the age-old chicken-or-egg story of the housing market: Should you buy that home now, while interest rates are still fairly low? Or wait for rising prices to moderate?

Of course, there are many factors that will go into your decision. But here’s one you probably haven’t considered, and it has real “buy now” implications: Mortgage payments zoomed last year and are likely to rise even higher this year, continuing a trend that has persisted for the past six years.

CoreLogic, a data analytics company that has been tracking mortgage payments for the past generation, says that while home prices may be up 6 percent through August of last year, the average mortgage payment went up 10.1 percent during the corresponding period. And for 2018, the typical home loan payment is likely to rise by more than 11 percent.

That’s a good bit more than most of us have been seeing in yearly raises, if we get them at all.

CoreLogic’s “typical mortgage payment” (TMP) is a mortgage rate-adjusted monthly payment based on each month’s median home sale price in the United States. It tends to move up or down based on factors such as mortgage rates and size of down payments.

Their TMP can help buyers judge affordability, according to CoreLogic’s Andrew LePage, “because it shows the monthly amount a borrower would have to qualify for in order to get a mortgage to buy the median priced home.”

Of the four components of a mortgage payment -- often compartmentalized as PITI, for principal, interest, taxes and insurance -- the TMP measures only the principal and interest payments. It assumes a 20 percent down payment, the amount necessary to avoid having to pay for private mortgage insurance (PMI), and a 30-year, fixed-rate loan. Of course, many homebuyers put less than 20 percent down and must purchase PMI, which can add several hundred dollars more to their monthly house payment.

The typical mortgage payment was higher than today’s TMP before the Great Recession, which stands to reason, as home prices climbed to unsustainable highs before the markets crashed in 2008. Back in June 2006, before things started to go south, the typical monthly payment was $1,250. That fell to a low of $546 in February 2012, and has risen steadily since then to $816 as of August of last year. That comes to about a 50 percent increase over five years, or about 10 percent a year.

Of course, in 2006, the average mortgage rate was a lot higher: 6.7 percent, compared to 3.9 percent last August. And the inflation-adjusted median sales price was higher, too: $243,000, compared with $217,000 last year.

In addition to last year’s 10 percent jump in the TMP, CoreLogic is predicting that the typical payment is projected to rise by 11.3 percent this year, to $908.

“Real disposable income is projected to rise 3.6 percent over the same period, meaning this year’s buyers would see a larger chunk of their incomes devoted to mortgage payments,” says LePage.

That makes for a good argument to buy that home now. But there’s an inventory problem, with many potential sellers on the fence about whether to sell or not.

According to down payment protection firm ValueInsured, sellers are hesitating to sell now because of the high price they feel they will have to pay for their next homes. The firm conducted a survey of about 1,000 American homeowners, and many of those who say they want to sell -- either to upgrade or downsize -- are having second thoughts.

“Homeowners, in many cases, are eager to sell but don’t want to become buyers,” says Joe Melendez, chief executive of ValueInsured.

So even though it’s a seller’s market due to low inventory, some owners are thinking of renting their houses rather than selling. Either that, or they are considering passing their homes on to a family member. Even millennials are taking a wait-and-see attitude because of uncertainty over job changes.

Here’s what the numbers look like, according to the ValueInsured survey:

-- 72 percent say they are concerned with timing the real estate market.

-- 63 percent say now is a good time for them to sell, but not to buy, due to high home prices.

-- 61 percent are “waiting until prices to buy are better to make a move.”

About 26 percent of potential sellers “say they second-guess their desire to sell because they don’t want to pay brokers’ fees, new mortgage closing costs, capital gains taxes and other associated expenses, as it would weaken their buying power for their next home,” says the firm.

There’s no doubt that many housing markets are currently overvalued: According to a recent CoreLogic report, 48 of the nation’s top 50 markets are overvalued.

According to Melendez, “These homeowners have experienced a lot of home-value volatility and see more uncertainties looming -- tax reform, for example. By hesitating, these homeowners are actually controlling the market on both sides. Reassuring these individuals is the key to unlocking inventory.”

He adds, “selling and buying are always fraught with worrying about timing the market, and life events don’t always cooperate.”

Taking the longer view may be helpful for both would-be buyers and sellers, he says. “Eventually, younger people move for jobs and empty-nesters need to leave their five-bedroom homes.”

-- Freelance writer Mark Fogarty contributed to this report.

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