FOR IMMEDIATE RELEASE: CBC Mortgage Agency Encourages Small-Balance Lending With Additional Lender Incentives

FOR IMMEDIATE RELEASE

CBC Mortgage Agency Encourages Small-Balance Lending With Additional Lender Incentives

Leaders at down payment assistance provider inspired by New York Times story about difficulties minority homebuyers face obtaining small-balance loans

 

CEDAR CITY, Utah – Aug. 24, 2020 CBC Mortgage Agency (CBCMA), a nationally chartered housing finance agency and a leading source of down payment assistance for first-time homebuyers, is taking steps to increase financing availability in low-priced communities by making small-balance mortgages more lucrative for its network of correspondent lenders. 

 

The management team at CBCMA decided to contribute additional funds to small-balance mortgage transactions after reading a story, “Where a Little Mortgage Goes a Long Way,” by The New York Times reporter Matthew Goldstein. According to the story, home lenders are reluctant to write loans in areas where mortgages are too small to be profitable. The story noted that Blacks and Hispanics looking to buy homes in lower priced neighborhoods are particularly impacted by this trend.

 

Home lenders struggle with profitability on low-balance loans because of the high cost to originate a loan. In the Mortgage Bankers Association’s Quarterly Mortgage Bankers Performance Report, the trade group indicated that the average cost to originate a loan climbed to $7,982 in the first quarter of this year.

 

For loans up to $120,000, CBCMA’s correspondent lenders will earn up to an additional 200 basis points, or 2 percent, of the loan amount as additional profit. On a $100,000 loan, the contribution works out to $1,750.  The contributed percentage is highest on loans $85,000 or less. 

 

The additional payments are on top of existing contributions CBCMA already makes for low-balance transactions, which range from 1.50 percent to 2.50 percent on CBCMA’s Edge and Advantage loan programs.

 

CBCMA provides down payment assistance programs directly to consumers through its network of correspondent lenders across the country. A majority of its borrowers are minorities.

 

“Our mission is to make homeownership possible for more low-income consumers,” said CBC Mortgage Agency President Richard Ferguson. “After reading Matthew Goldstein’s article, we saw an opportunity to further our mission. We are proud that most of our customers would not have been able to become homeowners without our programs.”

 

Tai Christensen, director of government affairs at CBCMA and the subject ofstory recently published by The Washington Post, had a more personal take on the contribution.

 

“In 1936, my great grandmother – who was the daughter of slaves – saved $500 and purchased a property in North Carolina,” Christensen said. “With the equity from that property and the mindset of homeownership, she inspired and helped finance the educations and home purchases of her children, her grandchildren and her great grandchildren.

 

“I am so proud that through my company I can help other people of color, who would otherwise be unable to achieve homeownership,” she added.

 

About CBC Mortgage Agency

Founded in 2013, CBC Mortgage Agency is a nationally chartered housing finance agency. As a leading source of down payment assistance, the company helps low-to-moderate income consumers, often in minority neighborhoods, achieve the dream of homeownership. CBCMA is a wholly owned subsidiary of Cedar Band Corporation, a federally chartered tribal corporation founded by the Cedar Band of Paiute Indians. More information can be found at chenoafund.org.

 

 

Press Contact:

Sam Garcia
Publicist

Strategic Vantage Marketing & Public Relations

214.762.4457 | SamGarcia@StrategicVantage.com 

 

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For Immediate Release: CBC Mortgage Agency Hails Cedar Band of Paiute Indians’ Letter to White House

FOR IMMEDIATE RELEASE:
August 4, 2020
CONTACT:
Jamie Morris (530) 545-9274
CBC Mortgage Agency Hails Cedar Band of Paiute Indians’
Letter to White House
Cedar Band’s Chairwoman Implores President Trump to Halt Damaging HUD Restriction on Governmental Entities Providing Down Payment Assistance
CEDAR CITY, Utah – CBC Mortgage Agency today applauded a letter (attached) sent to President Trump and U.S. Department of Housing and Urban Development (HUD) Secretary Carson, calling on the administration to “Carefully consider the long-term ramifications” of its potential rule to limit the scope of governmental entity down payment assistance providers. The letter further calls on HUD to “Consult with the communities that rely on down payment assistance programs provided by federally chartered government entities…before proceeding with a rulemaking.”
The letter, penned by Delice Tom, Chairwoman of the Cedar Band of Paiutes, which owns the federally chartered tribal corporation, Cedar Band Corporation (CBC), and CBC’s subsidiary, CBC Mortgage Agency, which provides the Chenoa Fund down payment assistance program, responds to HUD’s announced plans for a proposed rulemaking that would have a devastating impact on the Cedar Band, other tribal nations and the millions of minority borrowers.
“If HUD were to implement its rule to severely restrict the availability of governmental entities providing DPA to borrowers within a specific geographic area, it would cause a devastating impact not only to the Cedar Band’s source of revenue, it would also exclude minorities and low-to-moderate income borrowers who rely heavily on governmental DPA programs like the Chenoa Fund,” said Richard Ferguson, President of CBC Mortgage Agency.
Chairwoman Tom highlighted the importance of the availability of governmental down payment assistance programs, including the Chenoa Fund, to minorities and low- to-moderate income homebuyers who lack the intergenerational wealth to rely on for down payment assistance, exacerbating the racial wealth and homeownership gap in the U.S.
“In the first quarter of 2020, the U.S. Census Bureau reported the country’s overall homeownership rate was 65.3 percent. Among white households, the homeownership rate is 73.7 percent. However, the black homeownership rate is only 44 percent, hovering near 50-year lows,” the letter continued.
In 2019, over 55 percent of CBC Mortgage Agency’s borrowers were minorities. Nearly 35 percent of those borrowers were the first generation in their family to ever own a home.
“We strongly support Chairwoman Tom and other efforts by the Cedar Band to defend the availability of affordable DPA programs across the country to potential homebuyers seeking the American Dream of homeownership, which is at serious risk if HUD has its way,” concluded Ferguson.
About CBC Mortgage Agency
CBCMA provides secondary financing to borrowers, who are receiving loans insured by the Federal Housing Administration (FHA). CBCMA takes great care to ensure that the FHA loans perform well, including providing education as well as 18 months of counseling to borrowers after the purchase of their home. In addition, CBCMA regularly reviews its credit standards to ensure that the borrowers it assists are credit worthy.
CBCMA is a wholly owned subsidiary of Cedar Band Corporation, a federally chartered tribal corporation wholly owned by the Cedar Band of Paiutes, a federally recognized American Indian band. For more information about CBCMA and its programs, visit chenoafund.org.

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20-07-30 Bridge the Wealth Gap While Growing Your Business: DPA is Key

CBCMA invites you to join us in a discussion panel sponsored by The Mortgage Collaborative entitled: Bridge the Wealth Gap While Growing Your Business: DPA is the Key. (Click the link to register for the webinar.) This discussion panel will focus on how we as an industry can play a role in assisting minorities to become homeowners, which must happen in order to eventually eliminate the wealth disparity in our nation. Ideas will be shared on how to encourage this largely untapped demographic to apply for a home loan.

Thank you, CBC Mortgage Agency

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To Buy or Rent? What is the Best Option?

Author: Christian Olin, VP of Direct Lending at OnQ Financial 

Unless you plan on living with your parents forever, you’ll need to explore housing options. One of the first decisions you need to make is whether to rent or buy. There are a few factors that play into this choice. Think about how long you’re planning on living in the area, the cost of the area, and your down payment. 

 

Advantages of Buying

When you purchase a house, every monthly mortgage payment you make builds your equity. By owning a home, you’re adding to your worth. With higher equity on your home, you can apply for things like an equity loan or line of credit if you need it.

 

Another substantial financial advantage of owning a home is that property taxes are tax-deductible. You can also deduct your mortgage interest in your tax returns. Tax deductions can add up quickly, and when tax season rolls around, you could see a hefty return!

 

With home improvement shows rising in popularity, it’s hard to avoid the renovation itch. While there are options to improve your rental property’s appearance with things like peel-and-stick wallpaper or cabinet covers, these are temporary and can seem like a waste of money. By owning a home, you can invest in long-term improvements that make your house feel like a home. 

 

Finally, by owning your house, you don’t have to deal with landlords. While some landlords have minimal contact with their tenants, some may be a bit difficult to deal with if they are breathing down your neck. Renting can sometimes feel like you don’t have much privacy in your own home, and who wants to feel like that?

 

While these are all considerable advantages to purchasing a home, there are also situations where renting is a better option. We’ll dive into those later.

Look at Rent or Buy Calculators for Your Area

Many people think that having a mortgage is more expensive than renting, but this is a myth. The difference in cost does depend on your area, but in many areas it is cheaper to buy a home. If you are wanting to compare the prices of buying or renting in your area, there are a few calculators you can use to help you.

 

Trulia has a great page where you can enter your zip code, target monthly rent, target home price, and the down payment amount you have available. It’ll give you a graph comparing the costs of buying and renting and tell you at what point buying becomes cheaper than renting. 

 

Nerd Wallet has a similar calculator, but it also includes the interest rate and length of the loan. This can be helpful if you’re wanting to explore different loan options and are looking to weigh out the benefits of each. 

 

Consider How Long You Want to Stay

A big factor to take into consideration is how long you want to stay in the area. While it may save you money after a few years to buy, it doesn’t make sense to invest in property if you’re planning on leaving before you hit the breakeven mark. The calculators mentioned previously are excellent tools to utilize to see if buying a house is sensible with your projected timeline. 

 

A mortgage is a significant responsibility and should take a lot of consideration. You’ll know you’re ready to buy if you’re willing to invest in that area. 

If You’re Looking at an Expensive Area, Consider Renting

Housing shortages and surpluses occur in different areas across the nation. With a shortage, housing prices will skyrocket since you’re in a market where sellers have the upper hand. On the flip side, housing surpluses can cause prices to drop, and it would be more financially reasonable to buy a house then while it’s inexpensive.  Check out areas with a housing shortage here.  

 

Some areas have rent gaps, where it is significantly cheaper to own than rent. Urban did a study of some major metropolitan areas around the country to show the percent difference in average price. In cities like Miami and Detroit, it can be over 10% cheaper to buy. In San Francisco on the other hand, it’s over 40% more expensive to purchase a home. Make sure to look into these gaps in your area to determine which is best for you and your family.

Will You Have a Down Payment?

A down payment is one of the most overwhelming parts of buying a home. It’s a large chunk of change! It’s essential to save for a down payment to lessen your monthly mortgage costs later on. Explore different loan options to see what’s available with the down payment you’re comfortable paying. 

 

Home buying courses are also available both online and in-person and can help you navigate through this process. You can learn valuable information to help you make informed decisions. If you’re looking for a tool to help figure out your down payment, you can check out this calculator.

Make the Best Choice for You

Owning a home comes with many advantages, but it is a big decision that should not be taken lightly. There is no single answer to the question of whether you should rent or buy, given so many factors that play into it. Utilize tools available to you, such as courses and calculators, to help find what’s best for you.

 

Renting can save you money if you’re planning on living in a more expensive urban area, or if you’re planning on moving soon. Buying may be your better option if you want to build equity, invest in property in a specific area, or want to use property taxes and interest as tax deductions. In some places around the country buying a home is 26.3% cheaper than renting. So it may all depend on where you choose to live.  Don’t forget the appeal of the freedom of renovating as well! 

 

Renting and buying both have their benefits and drawbacks, but by becoming more informed on each option, you can make the decision that is best for you and your family.

 

Meet the Author:

 

Christian Olin, VP of Direct Lending at OnQ Financial 

Christian started his career right out of college as a rookie on Wall Street with Morgan Stanley. After cutting his teeth there, he was quickly poached by a private investment bank, which is where his love of finance grew into a lifetime obsession. With over 20 years of experience, he has become a specialist at sales management, strategic business development, building best of breed teams, and cross-functional selling. In particular, his experiences in emerging finance technologies have been useful in his current role as Vice President of the direct lending team at On Q Financial. A place where he continues to create new opportunities for mortgage lenders and their partners while improving the bottom line.

 

 

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07-15-2020—DPA for Conventional Loans Returning July 20th

Announcement:

On Monday, July 20th CBC Mortgage Agency will re-release its conventional DPA offering for both standard conventional and HomeReady loans. CBCMA qualifies as a Community Second (R) provider and our secondary financing conforms to Fannie Mae’s(R) Community Second(R) checklist.* Our program guidelines have not changed and are available on our website at chenoafund.org.

In order to see this program in our online portal, your company will need to be approved by Data Mortgage, Inc. dba Essex Mortgage and by Castle Mortgage Corporation in the Universal Collateral Data Portal. If you have not already been approved by either or both of these companies and wish to offer our conventional product, please reach out to Shaunna.King@chenoafund.org to request that an invitation be sent to you. Questions can be answered by your assigned account executive.

*Chenoa Fund is not approved by Fannie Mae and Fannie Mae (R) and Community Second (R) are registered trademarks of Fannie Mae(R)

 

Click here for daily rates and to access the SRP schedule.

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“We gotta buy the land we walk on”: Waka Flocka Flame, Miki Adams, and others talk Black Homeownership with the Cleveland Realtist Association

“We gotta buy the land we walk on.” Not everybody knows this, but Waka Flocka Flame, the infamous rapper, is also a strong advocate for black homeownership. He bought his first home in 2009 and wasn’t even aware of how wealthy that home was going to help make him—he just knew that he wanted a place away from his parents, a place where he could party with his friends. Years later, Waka found himself in financial trouble and risked having to live on the street. That’s when a Realtist friend taught him about home equity, how to use wealth to make more wealth. He took money out of his home, funded his record, bought more homes, and continued to educate himself. He now tries to help other African Americans learn about how homeownership can benefit them.

 

 

Waka met with other industry leaders and black community leaders in a virtual panel discussion hosted by the Cleveland Realtist Association. Also present was Miki Adams, executive vice president of CBC Mortgage Agency. She spoke about millennials and homeownership, how millennials were buying homes later and later and how this pattern may stunt the wealth accumulation of the millennial generation. She also spoke of the importance of educating borrowers and homeowners, particularly first-time homeowners.

 

 

This panel event was full of exciting and passionate discussion, including a Q&A session with all speakers. Viewers were able to submit questions to Waka, Miki, and others, and questions ranged from student loans to credit and education.

You can find the entire video linked below, along with selections relevant to Chenoa Fund and down payment assistance.

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July 2, 2020

Chenoa Fund demonstrates how responsibly run national DPA programs benefit the consumer. Innovative financial solutions, such as our CRA Note Exchange, have allowed us to offer the Rate Advantage program, which offers rates competitive with standard FHA loans, even with DPA included. Also, by running mortgage banking in-house vs. outsourcing operations through large bankers, we have brought costs down to consumers, while helping lenders avoid losses on DPA. Additionally, through careful monitoring of our loan defaults, we added overlays to mitigate risk without eliminating offerings to underserved populations. Independent financial/operational audits are conducted throughout the year to assure partners our compliance with all industry requirements. We constantly strive to improve our offerings, pricing, and service. These measures allow us to serve significantly more minority homebuyers than any other DPA program (54% of borrowers are minorities). We sincerely thank each of our amazing correspondent lenders, making our program available where most needed.”

 

Read the full report here.

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21 Years to a 20% Down Payment: USMI Reveals the Massive Down Payment Barrier

Recently, U.S. Mortgage Insurers (USMI) published a report revealing that, on average, it takes borrowers 21 years to save up for a 20% down payment. This number falls to 7 years for a 5% down payment, which is still a long period of renting and saving. In either case, waiting this long deprives borrowers of a significant amount of wealth accumulation from equity.

 

Opportunity Costs: Losing Equity

Let’s put this into perspective using USMI’s numbers (a national median income of $63,179 annually) and assume yearly home value appreciation of 5%. If a borrower saves for 7 years, a home worth $274,600 today (the national median average) would be worth about $386,389. A borrower saving 21 years for the same home would find a new home price of $728,595. The following chart illustrates the price difference for both scenarios and the difference in down payment costs.

 

 

Home Value:
$274,600.00
Home Value:
$274,600.00
Value +7 Years:
$386,389.78
Value +21 Years:
$728,595.55
Difference:
$111,789.78
Difference:
$453,995.55
Original DP (5%):
$13,730.00
Original DP (20%):
$54,920.00
DP +7 Years (5%)
$19,319.49
DP +21 Years (20%)
$145,719.11
Difference:
$5,589.49
Difference:
$90,799.11

 

Waiting only 7 years for a 5% down payment has the lowest opportunity cost of these two scenarios, but that opportunity cost is still very stiff: $111,789.78 difference in home value lost, and a down payment over $5,000 more expensive. It’s clear that waiting costs borrowers a lot of money, even when the down payment is smaller.

 

Opportunity Costs: Worse for Minorities

These numbers aren’t good, and they are much worse for borrowers in demographics that statistically struggle with the down payment barrier. For example, if the above averages were broken down nationally by race, white Americans average about 20 years to save up for a 20% down payment, putting them about on par with the national average. Hispanic Americans average about 26 years, raising the above projections and wealth loss by a decent amount. Black Americans, on the other hand, average a whopping 42 years (Private Mortgage Insurance, 6). Black Americans are also much less likely than white Americans to have family that can assist with the down payment, making it more likely that their only option is to save up. Taking twice as long to save up for a down payment, and with home values increasing yearly, black Americans lose over twice the equity wealth that white Americans do when waiting to buy a home and saving for a down payment, whether it’s a 20% down payment or a 5% down payment.

 

 

Opportunity Costs: Time

These numbers show a great deal of wealth lost when borrowers have to save for years for a down payment, but they don’t reflect the time lost as well. Waiting 21 years for a 20% down payment (or 42 years, as is the average for black Americans) sees enough time pass to have a child grow up and move out. Waiting 7 years for a 5% down payment (14 years for black Americans) sees enough time pass that a family’s babies turn into adolescents, all without the benefits of living in a home their family owns.

 

 

Opportunity Costs: Rent Versus Mortgage Payment

More immediately, borrowers miss out on a lot of wealth just from the difference between rent payments and mortgage payments. The average US rent payment is $1,343 and raises about 5% a year. Using USMI’s numbers, and assuming a fixed interest rate of 3.25% (just a little higher than the national average of 3.15%), an average mortgage payment would be $1,195—about $150 cheaper every month. This doesn’t take into account insurance, HOA fees, and other costs that come with homeownership, but fixed-rate mortgage payments don’t increase every year, while rent payments do.

 

Level the Field: Down Payment Assistance

At CBC Mortgage Agency, we are grateful for the efforts of groups like USMI that provide products and services that help borrowers buy a home with smaller down payments. The smaller the down payment, the sooner the borrower can buy the home and experience wealth accumulation. We also cheer that borrowers can get conventional loans with 3% down payments or FHA loans with 3.5% down payments, further lowering the down payment barrier. However, even with lower down payment options available, the down payment barrier is still very real, and still prevents many borrowers, particularly low-income borrowers, from buying a home and accumulating wealth. The next step needed to level the playing field and empower as many creditworthy borrowers as possible is down payment assistance.

 

Down payment assistance allows borrowers to purchase a home for $0 down, and sometimes even helps with closing costs. The difference in wealth accumulation is staggering for borrowers who can buy a home now. All the numbers presented above—the tens and hundreds of thousands of dollars lost as borrowers waited to save for a down payment—becomes future wealth when borrowers can buy now.

 

Actual Results: Chenoa Fund’s Success

Tens of thousands of borrowers have used Chenoa Fund to purchase a home, many of which were first-time homebuyers and/or minorities, and their stories are a testament to the importance of down payment assistance. For example, borrowers that received Chenoa Fund’s assistance in 2016 have since averaged over $59,000 in wealth accumulation! From 2016 to 2019, all borrowers included, Chenoa Fund borrowers have averaged over $24,000 in wealth accumulation. This difference is life changing.

 

Chenoa Fund isn’t the only down payment product on the market, and wise borrowers will shop around to find the down payment assistance that fits their unique situation best. This is a good thing—more competition means more innovation to provide a better product to borrowers, and prevents the harm or stagnation that comes with monopolies. More access to down payment assistance, specifically assistance that targets creditworthy borrowers, can only help improve American homeownership across the board, and help low- to moderate-income borrowers break the down payment barrier and see real wealth accumulation now.

 

 

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June 26, 2020

Chenoa Fund demonstrates how responsibly run national DPA programs benefit the consumer. Innovative financial solutions, such as our CRA Note Exchange, have allowed us to offer the Rate Advantage program, which offers rates competitive with standard FHA loans, even with DPA included. Also, by running mortgage banking in-house vs. outsourcing operations through large bankers, we have brought costs down to consumers, while helping lenders avoid losses on DPA. Additionally, through careful monitoring of our loan defaults, we added overlays to mitigate risk without eliminating offerings to underserved populations. Independent financial/operational audits are conducted throughout the year to assure partners our compliance with all industry requirements. We constantly strive to improve our offerings, pricing, and service. These measures allow us to serve significantly more minority homebuyers than any other DPA program (54% of borrowers are minorities). We sincerely thank each of our amazing correspondent lenders, making our program available where most needed.

 

Read the full report here.

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June 23, 2020

Monitored Marketplace: It appears HUD is considering regulating the benefits to, and geographical operating areas of, governmental entities providing DPA, like CBC Mortgage Agency. But Miki Adams, vice-president of CBC, which operates the Chenoa Fund program, says there is a better way: a monitored marketplace that tracks the pricing and performance of loans by individual governmental DPA providers, something HUD doesn’t currently do but easily could. This would allow HUD to establish performance standards for DPA loans and ensure there is a competitive market so that borrowers get the lowest costs and a variety of products. After collecting sufficient data, HUD could use the pricing and performance statistics to support rulemaking. But “HUD intends to do just the opposite: regulate without supporting data, creating onerous requirements for government DPA programs,” Adams says. “That will inevitably produce fewer options and less benefit to borrowers.” Read about the Monitored Marketplace here.

 

As seen in the Chrisman Report- full report can be read here.

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Chenoa Fund

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