Fannie Mae Note Filled: Fill & Download for Free

You can go to places like Bankrate to see who is offering what rates, but it is overall an exercise in futility.The first thing for consumers to realize is the fundamental business model for the mortgage industry. The “lender” originates, underwrites and funds the loan. The money they give you comes from a specialized line of credit called a warehouse line. The source of the money doesn’t matter to the borrower because they have gotten the money they want for the rate and terms they agreed to.The “lender” (the reason for the scare quotes will become evident shortly) then sells the loan to an investor for cash. The investor pays more than the face amount of the loan. The lender pays off the warehouse line, covers overhead and expenses and ultimately earns a small profit on the sale of the note.The reason I put “lender” in scare quotes is that mortgage companies—including the Too Big To Fails—are not actually lending money. They are originating, underwriting and funding loans to sell to the ultimate investor. Fannie Mae, Freddie Mac and Ginnie Mae all fill this function. They pool the purchased mortgages into a type of bond called a Mortgage Backed Security (MBS). These are traded by investors in the same way that other types of financial instruments are.The rates lenders charge for mortgages fluctuate according to the market activity in MBS. When buying activity is heavy, the price of the MBS goes up, and rates go down. Everyone sells their loans to the investors at the same rate. A big bank, like TBtF, N.A. doesn’t get a higher price for the loans they sell than a small, local mortgage bank. Furthermore, the profit margins on sold mortgages is not very wide for anyone.Because of this fact, there is a very small rate difference between lenders.When a lender calculates a rate for a given borrower, they have to take several factors into account. The first of these is credit score and loan to value ratio.Fannie Mae and Freddie Mac use risk-based pricing. This means that they adjust a loan’s pricing according to a grid where credit scores are on the vertical axis and loan to value ratio is on the horizontal. Where the two axes intersect for a particular borrower, we find the adjustment applied to the “raw” (unadjusted) pricing on that day’s rate sheet. A borrower with a 740 credit score applying for am 80% loan, for example, will see an upward adjustment of about .125% in rate. A borrower with a 620 score (the minimum allowable for a conventional loan) will see an adjustment of approximately .75% in rate from the rate sheet. A borrower with a 740 score looking for a loan for 60% of the property’s value would see no adjustment from the rate sheet pricing.The property type can have a bearing on rate, as well. A condominium with an 80% loan, for example, will carry a rate about .25% higher than an equivalent loan for a single-family home. Similarly, a multi-unit owner-occupied property will have a rate approximately .25% higher. The adjustments are all cumulative.When you view lenders’ rates on line, they are publishing the best case they can offer, with no adjustments to loan pricing. Typically, they will show rates for a borrower with a 740 score, a 60% loan to value ratio and a single family home. This best-case scenario may not match up with the reality of your situation.As if all the foregoing were not enough to make your head spin, there is the fact that rates change every day based on the day’s market action. A rate someone quoted you last week is unlikely to be valid today.Here is an example of what has been happening very recently. This is a daily chart of the Fannie Mae 4% MBS:On Thursday, September 6, two weeks from this writing, the bonds were selling for 101.80. At the close on Friday, 9/21, their price had fallen nearly a full point, to 100.87 from 101.80. This corresponds to a rate increase of almost exactly .25%—for all lenders funding conventional loans.The best advice I can offer you is to find a local mortgage banker, preferably an independent company as opposed to a commercial bank or credit union, and ask a loan officer to construct a quote for you based on your situation. They’ll be able to look at your credit scores, the type of loan you want and what sort of down payment you plan to make (if you are a buyer). They should be able to discuss your choices with you and give you suggestions about how to get the best possible outcome.Getting a mortgage is not the same as picking up a pound of coffee. It is a process—and the lender you ultimately decide to work with is far more important than the generalized rates a lender may publish on line.I hope this is helpful.

“VCs seem to be hiding under their chairs,” I said. “You can get meetings, but they’re really distracted. And the last thing they seem to want to do is give you money.”Am I talking about raising money in the aftermath of COVID-19? No. I’m talking about my own experience successfully raising money during The Great Recession. I think raising money during the mother of all economic downturns (up until this economic downturn) is instructive.Don’t kid yourself, raising money during a massive economic downturn is hard.In early 2008, just like in early 2020, the economic world and the venture capital world seemed fine. However, the warning signs, just like with COVID-19, were all around us:A. January 2008.On January 22, 2008, the Fed dropped the Federal Funds Rate, the benchmark for interest rates, to 3.5% to support the struggling housing market. One week later, the Fed dropped rates to 3.0%.The Fed’s action didn’t help. Mortgage foreclosures kept increasing year over year. And existing home sales dropped by 23.4%.B. February 2008.President Bush signed a tax rebate bill allowing Freddie Mac to repurchase Jumbo Loans. Existing home sales dropped another 24%.Yet in VC land, all seemed well. We had just started raising money, and within a month we had found our first investor, Gill.You need to budget more time to raise your funding.As spring 2008 turned into summer, you could feel the economic change beginning to hit the VC world.C. March 2008.We signed Gill’s “half-filled” term sheet at the end of March. Gill was committing to give us $5.5M. We needed to find another investor to give us the other $5.5M.The common belief is that once you find a lead investor, then it’s pretty easy to find your second investor to close the round. In our case, due primarily to the changing economy, this proved to be really difficult.The Fed continued taking aggressive action, just like it is taking now, to prop up the economy. The Fed announced it would lend $200 billion in Treasury notes to bail out bond dealers. That was the first of several moves the Fed took in March 2008.The Fed also dropped the Fed funds rate to 2.25%. Freddie Mac and Fannie Mae were allowed to take on another $200B in mortgage debt. Yet the VC world still seemed not okay.But come April, things started getting rougher.We could still get meetings, but the tone of the meetings started changing. The enthusiasm and excitement that was there when we met with investors went away.This was backwards what it should have been. We had a term sheet from a well respected investor on Sand Hill Road. Our team was getting stronger. Yet, we couldn’t get a nibble from anyone.When you look at what we were fighting, it was obvious why:D. April 2008.The Fed lowered rates, again, to 2%. And the Fed added another $100B to their term auction facility.E. May 2008.The Fed auctioned another $150B of its term auction facility.Contrast this to where we are today (March 29) as I write this regarding the COVID-19. The Fed and other banks around the world have taken preventative measures to prop up the economy. Deaths from COVID-19 are around 60,000 worldwide.So what does this mean for you raising money against the backdrop of COVID-19? If I were in your shoes, I’d budget more time to raise money. If it normally takes 6 months to 12 months to raise money, then I’d add at least another 6 months to your planning. Assume it will take at least 12 months to 18 months to raise your funding.I’d also assume that the world economy is going to be disrupted at least through March 2021. Even then, the economy will likely come back slowly, not like a rocket.The easy money is gone. Your goal is getting funded.I was having lunch with my daughter, Avery, today. I told her that the news we are likely to hear over the next few weeks is going to be bleak. I told her, based on what I have been reading, that the death toll in the US will likely be over 100,000 and worldwide the death toll will be over 1,000,000.We are likely in for a long fight.F. July 2008.This is when things started accelerating in a bad way. IndyMac bank failed on July 11. Freddie Mac and Fannie Mae were on the verge of failing. They had to be nationalized to be saved.We could still get meetings, but interest in investing in us slowed down.The bar went up to get funded. And I would expect the bar to go up in this downturn too. You may be able to get funded, but don’t expect the great terms you might have received earlier.The goal is to find a good VC that is aligned with you. Don’t worry so much about the valuation. It’s not likely to be what you thought it would be.G. September and October 2008.The shit really hit the proverbial fan when Lehman Brothers filed for bankruptcy on September 15. Interestingly enough, we had been pitching to Lehman’s VC arm during this time period.The economy tanked. The stock markets tanked too. Sequoia issued their famous RIP Slide Presentation to their portfolio companies telling them to conserve cash.Yet, amazingly we received a term sheet in September. Gill had worked with the investor before, but he didn’t want to work with him again. He called me to tell me.I knew we were in for a long, cold winter.In early October, Blossom asked me when she thought we would close our funding. I confidently told her, “I can’t see this lasting beyond January.”It turned out I was right. After 63 investors passed on investing in us, we ended up closing our funding in January 2010! LOL.That’s how bad things can be during a downturn.Here’s my advice to you. Take advantage of the opportunities this downturn will give you.For example, there is likely to be displaced talent. We took advantage of the downturn to line up top-notch engineers to join us after we closed funding.Rents are likely to get cheaper too. We ended up getting a great space at incredible terms. Plus the landlord did a bunch of work renovating the space for free.There are vendor deals to be had as well. We ended up signing a deal right before our funding closed with one of the leading electronic distributors in the world.Oh, and I saved the best for last. Real entrepreneurs aren’t deterred by a Great Recession or a global pandemic, but the wannabe entrepreneurs will be gone. That means you’re likely to have less competition once you close your funding.The point is that you can’t sit around feeling sorry for yourself. You can’t control the situation, but you can control how you and your team react to the situation. Plenty of great companies have been funded in downturns, maybe your company will be next.For a real great analysis of what Israeli VCs are doing read, Yuval Ariav (יובל אריאב) ‘s excellent analysis here: VC in the Time of Corona.For more, read: The 11 Steps You Need To Take To Deal With Coronavirus - Brett J. Fox

After the crash of 2008, the US economy has been on an upswing ever since. Granted, the recovery has been slow, but it has been stable. We have now gone almost one decade without a slowdown, which has a slew of experts predicting that another recession is around the corner. To support their prediction, they point to rising household debt, political instability, and flat corporate earnings.There may be some grain of truth to what the experts are saying, but that doesn’t mean that we can’t do something about it. Enter Millennials. Millennials get a bad rap for being entitled, shallow, and narcissistic, but they are actually doing more than any other age group to keep the economy growing.Here are 5 ways millennials are saving the national economy:1. Millennials Are Catching Up On HomeownershipHousing is a key pillar of the economy. According to Fannie Mae, housing accounts for roughly a fifth of the US Gross Domestic Product. In addition, when people buy a house, they also spend on furniture, appliances, remodelers, movers, and more. The National Association of Home Builders reveals that a buyer of a single-family home usually spends $7,400 more on average against a homeowner who does not relocate. Home buying triggers a ripple effect that stimulates greater economic activity. Accordingly, a strong housing market points to a sound overall economy.The homeownership rate among Americans has been plummeting for a decade. Recently, however, it has been stabilizing, giving experts a reason to believe that the worst is behind us. It appears that Millennials are finally becoming a major player in the housing market.Homeownership rate appears to have bottomed out. (Source: Eye On Housing)Delayed by hefty student loans, older Millennials who are in their late twenties and early thirties are finally playing catch-up in homeownership. Advances in the homeownership rate of Millennials in their late twenties and early thirties between 2012 – 2014 were significantly larger than the gains of earlier cohorts in the same age range during the housing crisis of 2006 – 2008 and during the early recovery period from 2010 – 2012. This trend led experts to believe that older Millennials are finally entering the housing market, indicating early signs of recovery in homeownership demand.Millennials in their late 20s and early 30s made homeownership gains between 2012-2014 (Source: Fannie Mae)This year, it seems that Millennials are starting to flex their muscles. According to mortgage data analysis company Ellie Mae, Millennials are now the largest group of homebuyers. January 2017 saw Millennials representing roughly 45 percent of all purchase loans, up three percent from the same month of the previous year. Although saddled by cumbersome student loans, Millennials are picking up the pace in homeownership, and that could give the housing market a much needed boost.Millennials are also boosting other sectors related to the economy, such as furniture and bedding sales. A Consumer Buying Trends Survey by Furniture Today shows that Millennials have dominated the US furniture and bedding market in terms of sales. In 2014, they comprised 37 percent of the market, more than doubling their 14 percent share in 2012. During the same period, their share of spending on furniture and bedding soared from 12 percent to 28 percent.Millennials posts strong furniture and bedding spending in 2014. (Source: Fung Global Retail Tech)2. Millennials Are Powering the Auto IndustryThe auto industry historically contributes up to 3.5 percent to the US GDP. During the 2008 recession, the auto industry was deep under water until Congress passed auto bailout legislation. Almost a decade later, the industry has managed to post increases in sales for a record seven straight years. The Millennial generation is a significant contributor to that unprecedented run.Millennials drive auto retail sales as other generations show weakening sales figures (Source: AutoNews)The graph above illustrates car sales performance across generations from 2011 to 2016 in terms of market share and units bought. Starting in 2011, we see Millennials steadily increasing their representation in the car sales market. In 2016, they surpassed Gen X to capture the second largest market share, and come within the rear view of boomers after purchasing a total of 4.1 million vehicles. Automotive News reports that in California, the largest car market, Millennials have surpassed boomers for the first time.3. Millennials Are Having KidsHaving a baby means a big rise in expenses on an individual level, so an increase in birthrate has an impact on the overall economy. According to Wharton research, infants 0 – 2 years old cost $12,940 per year. Retail stores are feeling more upbeat with an uptick in sales of baby clothes and toys. More kids also mean more beds, pillows, diapers etc. In addition, people with children are more likely to purchase a home.Of course, millennial parents will continue supporting their kids until they reach adulthood or graduate from college. The same Wharton research shows that kids 6 – 8 years old cost $12,800 which is slightly less expensive than the expenses associated with infants. However, the figure goes up to $14,970 for teens 15 – 17 years old. Expenses skyrockets when these teens attend college. The estimated annual cost of higher education in 2035, when Millennial babies will be in college, is $110,674!Every purchase to support an infant adds up and eventually contributes to the whole economy.The country’s birthrate has been steadily declining since 1960s. An extremely low birth rate poses dangers such as insufficient taxes to keep the economy stable and the inability to replace an aging workforce. After some delay, however, the good news is that millennial women are finally having babies. According to the Pew Research Center, 1.3 million millennial women gave birth for the first time in 2015.The number of first-time Millennial moms rise every year. (Source: Pew Research Center)Now that Millennial women are becoming moms for the first time, the economy is bound to benefit from the notable increase in consumption.4. Millennials Are Saving the Aging WorkforceAn aging population is bad news for any country. In one study cited in a FRED publication, the authors show that a growing percentage of older workers and a decline in fertility eventually diminishes the labor pool of younger workers. Deflation ensues.Japan is a classic example of this crisis. Various Japanese industries are struggling because of a severe shortage of workers and aging owners with no successors. The cycle of low fertility and low consumption has resulted to trillions in lost GDP. Experts believe that if the cycle is not stopped on its tracks, Japan may enter a phase of long recessions that can cripple the country’s economy.Baby boomers are abandoning the workforce in a massive retirement exodus of about 10,000 a day. As they march towards their sunset years, boomers leave a workforce gap that Gen X’ers cannot fill because they simply do not have the numbers. According to a Federal Reserve study, a shrinking labor force has an impact on the local economy, tax base, and workforce. College-educated Millennials are poised to pick up the slack.Millennials surpass Gen X to dominate the labor force in numbers (Source: Pew Research Center)Generation Y has now overtaken Generation X to become the largest share of the American labor force. Pew reports that Millennials ages 18 – 34 now occupy over one-third of the country’s workforce. They often work as food servers, managers, interns, sales associates, and cashiers. While many are starting from the bottom, Millennials are helping to keep the country’s aging labor force stable.5. Millennials Wield Considerable Spending PowerEven Millennials who aren’t buying homes or cars or having children are still boosting the economy with their collective spending power. As Millennials dominate the country’s workforce, they are reaching their full income potential. According to Oracle, their projected income is expected to reach about $3.39 trillion by 2018. By that time, the income of Millennials will overshadow that of Boomers and will hover close to the income of Generation X.Growing Millennial income is about to overtake Boomers and stay a step behind Gen X (Source: LinkedIn)In previous economic booms, people spent way above their means. For instance, the upsurge before the 2007 recession saw household debt outpacing disposable personal income. A FRED study shows that in 2008, there was a wide margin between the two variables as household indebtedness peaked at $13.9 trillion while disposable personal income stood at $10.7 trillion. The rising mortgage and consumer debt eventually contributed to the 2008 economic collapse.History may not repeat itself this time around as Millennials cultivate a healthy financial approach that involves limiting debt, paying off debt in a timely manner, and saving for the future.Other than student loans, Millennials have been careful with other types of loans. Data reveal that they use credit cards as a strategic tool to build credit ratings. Whenever they incur debt, they tend to pay it off aggressively.The average credit card balance of Millennials are significantly lesser than their predecessors. (Source: The Motley Fool)Millennials have lower credit card debt compared to earlier generations. That’s because roughly 6 out of 10 Millennials prefer to pay in cash than in credit. They understand that to settle debt, they must also avoid incurring more debt. On the other hand, those who use credit cards often do so as a strategy to build their credit score.The reputation that Millennials handle money poorly isn’t born out by the data. Pew research reveals that the average credit card debt among individuals aged 25 – 34 years old actually declined from $2,500 in 2001 to $1,700 in 2010. In addition, a recent NerdWallet study showed that Millennials are on pace to out-save Boomers and Generation X’ers when it comes to retirement savings. Take note that Boomers have had decades to prepare for retirement.More Millennials are saving for retirement compared to Boomers (Source: Medium)Millennials also love to buy local products. An Edelman Digital study reveals that 4 out 10 Millennials prefer to shop local even if it’s a bit pricier. More important, they prefer to purchase products made in America. Around 7 in 10 Millennials claim that buying American products is important to them. They want to support the local and the national economy.Bottom Line: Millennials Are Saving the National EconomyMillennials have been sitting on the bench for quite some time because of the recession and massive student loans to the point of being referred to as the worst generation ever. However, their bad reputation is unwarranted. Millennials’ income and position in the labor force are growing. As a result, they are beginning to make big-ticket purchases that could potentially save the national economy.