It was all the rage before coronavirus.
Mortgage lenders were funding deals that allowed everything from just listing liquid assets on the mortgage application with employment information being left blank. Another was 12 months of bank statement deposits as income proof alternative to tax returns. And, yet another example was bank and stock accounts being aggressively reformulated as high monthly returns to claim as monthly qualifying income.
Ten weeks ago, with the full force of COVID-19 converging on America, non-QM institutional buyers of these funded loans lost their nerve. They panicked. No sale was the sound! Just like that, there was nothing but a graveyard of unfunded risky mortgages. Across the country, perhaps tens of thousands of purchases and refinances about to fund, all died before arrival.
The non-QM market froze in response to COVID-19 and all of the economic ripples from lost jobs to shuttered businesses to death all around us. “Lenders didn’t know how to deal with risk,” said Guy Cecala, CEO and publisher of Inside Mortgage Finance.
Non-QM mortgages accounted for just 2% of the $2.3 trillion mortgages funded in 2019, according to Cecala.
S&P analyzed 85 non-QM securitization pools from February 2017 through February 2020 indicating that 50% of those non-QM loans reside in California. Those loans were characterized by lower FICO scores, alternative income documentation and self-employed borrowers.
This week the Mortgage Bankers Association reported 8.46% of all mortgages in forbearance.
Through the end of February non-QM delinquency data (pre-COVID-19) was just 4%, according to Jack Kahan, senior managing director, Kroll Bond Rating Agency. Delinquency is defined as at least 30 days mortgage payment past due. “Through the end of April non-QM delinquencies are running 20%,” said Kahan. Wow!
No distinction is made about forbearance borrowers vs truly delinquent borrowers.
What lenders, investors and bond rating agencies don’t know is the level of struggling non-QM borrowers that can’t pay and which are able to pay but won’t pay since forbearance is an option without penalty of late charges or bad credit marks. Most all non-QM lenders have offered at 90-day mortgage payment forbearance even though they fall outside of the Cares Act in which Congress passed-mandating up to a 12-month mortgage payment forbearance for Fannie, Freddie, FHA and VA mortgage holders.
Few saw the non-QM comeback this quickly. Thirty-one of 33 secondary mortgage market executives concluded that the non-QM market was “largely dead for a year or more” in a May survey conducted by industry researcher Tom LaMalfa.
Citi research analyst Roger Ashworth thinks there is a plethora of reasons for the non-QM market to come back in addition to tighter non-QM lending standards. “We are past peak unemployment. Employment will improve,” said Ashworth. “Home supply is low. Demand is increasing to pre-coronavirus levels. Pandemic is placing a premium on maintaining your shelter and space.”
Non-QM will help the Fannie Mae rejects. Several people I interviewed think Fannie’s current obsession with proving self-employed borrowers’ have six months cash reserves, ongoing business deposits that are consistent with pre-coronavirus deposits and current income levels are similar to previous levels will be credit denied.
Non-QM includes expanded prime which means the loan falls outside of the Fannie credit box but does not extend to alternative income sources like bank statements instead of tax returns. There are plenty of high-quality self-employed borrowers being turned down from Fannie Mae type mortgages because of their self-employment temporary income disruption or decrease.
Non-QM standards are much more conservative 10 weeks later.
A sampling of lenders finds mortgage rates up a good two points or more. Previously, you might find non-QM in the 4% range, and now it is in the 6% or even higher range. Down payments are now minimally 20% whereas it was 10% ten short weeks ago.
Required middle FICO credit scores have gone from a minimum of 580 to 680. Cash-out has gone from 80% maximum loan-to-value to 70% plus a haircut on the FICO score now needing to be 740 whereas it was 720.
That debt-service-coverage-ratio rental property formula that got you in with rents being just 80% of the total mortgage payment now requires the rents to be 115% of the mortgage payment. For example, if the payment was $3,000, the rents only had to be $2,400. Now, at 115% your rents have to be $3,450 to qualify.
Caution may still be in the wind. “Although there appears to be some non-QM ratings activities, we don’t necessarily think that marks the return of the non-QM market,” said Scott Anderson of DBRS Morningstar Credit Ratings.
Freddie Mac rate news: The 30-year fixed-rate averaged 3.18%, up 3 basis points from last week. The 15-year fixed-rate averaged 2.62%, unchanged from last week.
The Mortgage Bankers Association reported a 3.9% decrease in loan application volume from one week earlier.
Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $510,400 loan, last year’s payment was $182 more than this week’s payment of $2,202.
What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point cost: A 30-year FHA (up to $442,750 in the Inland Empire, up to $510,400 in Los Angeles and Orange counties) at 2.75%, a 15-year conventional at 2.5%, a 30-year conventional at 2.875%, a 30-year conventional high-balance ($510,401 to $765,600) at 3.25%, and a 30-year jumbo adjustable-rate mortgage that is locked for the first ten years at 3.5%.
Eye catcher loan of the week: A 29-year fixed-rate conventional mortgage at 2.515% with 2 points cost.
Jeff Lazerson is a mortgage broker and adjunct professor at Saddleback College. He can be reached at 949-334-2424 or firstname.lastname@example.org. His website is www.mortgagegrader.com.
Car Subscription Australia: How to Choose a Car Subscription Service
In uncertain times, you might think differently about things. For example, instead of buying and owning a car, there’s a chance you could have recently searched ‘car subscription Australia’, only to be confused at what is out there in the car subscription service space.
That’s understandable – car subscription is a new idea, a new way of thinking about essentially paying to borrow a car long term and being able to swap cars if your circumstances change. Or, if you don’t need a car anymore, to simply return it without having to worry about the fuss of selling the vehicle.
So what is car subscription? How does it work? What type of person would it suit? How long has it existed? Who invented it? These questions will be addressed in this article, where we take a look at the pros and cons of car subscription, and – perhaps importantly for those out there who aren’t quite sure it’s the right solution for them – we’ll look at car subscription vs buying and car subscription vs lease.
What is car subscription?
If you’ve ever paid to watch a movie using your Apple TV or Google Chromecast, this concept will be easy to understand: you pay to borrow the movie instead of buying a DVD from a shop and keeping it at home as a possession, while only watching it every now and then – if that.
With car subscription you simply pay to use a car for a period of time. And the price you pay to subscribe includes all the costs you don’t want to have to deal with when you own a car – servicing, insurance, roadside assistance, registration and depreciation.
Car subscription allows users to subscribe to a car to use – and typically, the best plans offer monthly vehicle use periods, allowing you to either keep the car you have, or return it if you don’t need it. Or, if you need to swap from a city-friendly hatchback to a seven-seat SUV, some subscription services allow you to do that, often at an extra cost.
Are car subscriptions available in all locations? Sadly, not yet. The idea is pretty new to Australia, with a number of services launching in recent years. They include Carly, Carbar, Hello Cars and Blinker (which lots of people think is actually called Blinkers!), and you can find them online or in the app store.
Depending on your location, you might have access to one, some, or all of these services. Simply search ‘car subscription’ plus the name of your city, be it Sydney, Melbourne, Brisbane, Perth or somewhere else, or just type in ‘car subscription near me.’ A lot of these services are in their infancy, so you might not have access to one depending on where you live. Keep that in mind.
Globally, car subscription has been around a while longer. The first service was apparently established in Hawaii about a decade ago. It’s come a long way since then, with luxury car brands now getting in on the action: Volvo has its own plan called Care by Volvo, and that will be launched in Australia in 2021. While in Europe, Jaguar Land Rover has recently launched Pivotal, a subscription service that could allow you to switch between an electric car for urban duties, or an off-roader for adventure times.
Who does car subscription suit?
Essentially, if you’ve thought to yourself: ‘I’d love to be able to drive rather than take public transport,’ then car subscription could be for you.
Further to that notion, it could suit just about anyone who thinks they need a car at some point in their lives. You might be the sort of person who only uses a car occasionally, travelling to friends’ places or back home to the country.
Or you work as a contractor and need to get to an office over a three-month period. Or you’ve got a family SUV and just want something smaller for your grown children to use because they keep stealing your wheels.
Pros and cons of car subscription
The pros are pretty clear: you don’t have to pay a huge lump sum for a depreciating asset, and the costs of ownership are all taken care of. That’s the biggest advantage.
Other ticks for car subscription include the fact you can change cars if your needs or requirements shift. You can also cancel your plan if you don’t need a car anymore. And while you don’t ‘own’ the car you subscribe to, you don’t have to share it with anyone else – which could be a reason you’d choose a subscription service over a car share service like GoGet.
There are a few cons, though. The subscription service mightn’t have the car you want or need at a specific time. You mightn’t be able to access a service at all, based on your location. The costs can be quite high, so you need to make sure you’re actually getting your money’s worth. And there can be rules around letting other people drive the car, too.
Car subscription vs buying & lease – how do they compare?
If you’ve ever bought a car outright, you know you need a wad of cash to get the car in your driveway. That’s not going to suit everyone’s budget.
Likewise, if you’ve financed or leased a car, you need to know you’re going to have guaranteed income to be able to cover the payments for the period of the lease or car loan. Miss payments, and your car could be repossessed, leading to a bad credit rating.
But with car subscription, there’s no huge buy-in cost, and you can get out at any time. That’s part of its appeal – some providers offer no deposit subscription, and there are even some that have a no credit check policy prior to approval. That could be heaven-sent if you’ve got a chequered history with past payments.
Then there are other elements to consider when weighing up a subscription vs buying or a subscription vs lease. Only a car subscription allows you to change cars easily, and some subscription services also offer delivery and collection of your car when you sign up or finish with it.
Plus, if you happen to be in an accident, you’ve got a guaranteed loan car from most subscription providers.
How much does a car subscription cost? What types of cars are available to subscribe to?
That depends on the provider, the terms and conditions, and the type of car you need. Bigger vehicles or more luxurious models will cost you more to subscribe, as they cost more to buy.
To give you an idea, Carbar offers something like a 2016 Kia Cerato sedan for $139 a week. Think you want an SUV instead? Consider a 2019 Mitsubishi ASX or 2018 Subaru Forester for $189 a week. Want seven seats? You could get a 2018 model Toyota Kluger for $229 a week. Got posh tastes (or just want to impress someone?) Maybe a 2019 Jaguar F-Pace could be your go, but it’ll set you back $429 per week.
Just for balance, you might want to check out what Carly has on offer. You could get a 2015 Holden Barina for $133 a week or do your bit for the environment and get a hybrid Hyundai Ioniq 2019 model for $287 per week.
Or maybe you want to subscribe to a car to allow you to drive for Uber or Ola – check the terms and conditions of your subscription contract before just assuming that’s okay! – and a 2018 Toyota Camry for $336/week could be perfect for you.
The above prices are indicative and may not be correct at the time you’re looking for a car, and that’s the thing: prices vary between providers, and so will the stock available to you.
So, you might be desperate for a seven-seat SUV for an upcoming family trip – but you can’t get one. That’s a pretty sizeable downside.
Plus, most subscription services don’t offer you a brand-new car. If you’re after that new car feel and smell, you might not get it – there are near-new models on most of subscription site listings but expect to pay more for a newer car than you would one that’s older.
How many different car subscription services/companies are there in Australia?
There are several reputable subscription providers out there for you to shop between – provided the service is offered in your area. The ones we’ve already mentioned include Carbar, Carly and Hello Cars.
Blinker works a bit differently – you can visit a dealership and see what stock is available, then choose a car and pay as you drive. Other options include Motopool and Popcar.
The subscription plans vary by provider: some require you to pay a joining fee, others don’t; some will deliver and collect your car, others won’t; some offer short-term cancellation, others require up to 30 days’ notice.
You really need to make sure you’re getting the right car and the right subscription plan for you, so make sure you do your research.
Not sure you want to commit to a car subscription? You could try a car sharing service first. Take a look at GoGet, or Car Next Door – both of which are run differently to the ‘regular’ subscription services.
How do you choose the best car subscription service to suit your needs?
First off, consider your location. Search ‘car subscription near me’ or ‘car subscription’ and the name of your town or city to see if you can access a car subscription network. That’s a crucial step.
If you’ve got plenty of options available to you – if you live in Sydney, Melbourne or Brisbane/Gold Coast, this could be you – then it’s simply a matter of seeing what’s available to you. But again, be sure to read the terms and conditions to see what you are – or more importantly, are not – allowed to do with the car while it’s in your possession.
77 hospitals that received $5M to $10M in PPP loans
Hospitals with fewer than 500 employees and medical offices were among the top recipients of Paycheck Protection Program loans from the federal government, according to data released July 6 by the Small Business Administration.
The data only includes companies that received loans of more than $150,000. The White House said that more than 86 percent of the loans were for less than $150,000, so the data reveals just a snapshot of the companies that received funding, according to The New York Times.
The disclosure comes after lawmakers pressed the White House to be more transparent about the loans, established as part of the $2 trillion Coronavirus Aid, Relief Economic Security Act.
The data puts the funding into ranges, with the top amount being $5 million to $10 million and the lower end of the range being $150,000 to $350,000.
Here is a list of the hospitals receiving $5 million to $10 million, by state.
Note: Some states didn’t have hospitals receiving $5 million to $10 million.
South Peninsula Hospital (Homer)
Mount Graham Regional Medical Center (Saffer)
Bakersfield Heart Hospital
Barlow Respiratory Hospital (Los Angeles)
Central Valley Specialty Hospital (Modesto)
Mammoth Hospital Southern Mono Healthcare District (Mammoth Lakes)
Aspen Valley Hospital
Southwest Health System (Cortez)
Spanish Peaks Regional Health Center (Walsenberg)
Wayne Memorial Hospital (Jesup)
Kauai Veterans Memorial Hospital (Waimea)
Kona Community Hospital (Kealakekua)
Buena Vista Regional Medical Center (Storm Lake)
Delaware County Memorial Hospital (Manchester)
Greater Regional Medical Center (Creston)
Mahaska County Hospital (Oskaloosa)
Montgomery County Memorial Hospital(Red Oak)
Bonner General Health and Hospital (Sandpoint)
Crawford Memorial Hospital (Robinson)
Jackson Park Hospital (Chicago)
McDonough District Hospital (Macomb, Ill.)
Roseland Community Hospital (Chicago)
Touchette Regional Hospital (Centreville)
Decatur County Memorial Hospital (Greensburg)
Kansas Medical Center (Andover)
Newman Regional Health (Emporia)
Labette County Medical Center (Parsons)
Harrison Memorial Hospital (Cynthiana)
Abbeville General Hospital
Mount Desert Island Hospital (Bar Harbor)
Dickinson County Healthcare System (Iron Mountain)
Kalkaska Memorial Health
North Ottawa Community Hospital (Grand Haven)
Scheurer Hospital (Pigeon)
Three Rivers Health
Aitkin Community Hospital
Community Memorial Hospital (Cloquet)
LifeCare Medical Center (Roseau)
Tri County Hospital (Carlton)
Welia Health (Mora)
Cass Regional Medical Center (Harrisonville)
John Fitzgibbon Memorial Hospital (Marshall)
Perry County Memorial Hospital (Perryville)
St. Alexius Hospital (St. Louis)
Community Hospital of Anaconda
Sidney Health Center
Kearney Regional Medical Center
Nebraska Orthopedic Hospital (Omaha)
Androscoggin Valley Hospital (Berlin)
Huggins Hospital (Wolfeboro)
Speare Memorial Hospital (Plymouth)
Artesia General Hospital
Gila Regional Medical Center (Silver City)
Nor-Lea Hospital District (Lovington)
Carthage Area Hospital
Chenango Memorial Hospital (Norwich)
Eastern Niagara Hospital (Lockport)
Erie County Medical Center (Buffalo)
The Bellevue Hospital
Van Wert Health
McBride Orthopedic Hospital (Oklahoma City)
Lake District Hospital (Lakeview)
North Bend Medical Center (Bandon)
Santiam Hospital (Stayton)
North Philadelphia Health System
The Fulton County Medical Center (Mcconnellsburg)
Sana Healthcare-Carrollton Regional Medical Center
Copley Hospital (Morristown)
Grays Harbor Community Hospital (Aberdeen)
Prosser Memorial Health
Black River Memorial Hospital (Black River Falls)
Crossing Rivers Health (Prairie Du Chein)
Reedsburg Area Medical Center
The Richland Hospital (Richland Center)
Tomah Memorial Hospital
Pleasant Valley Hospital (Pleasant Point)
Powell Valley Healthcare
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