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Residential Real Estate Questions with Former Bear Stearns Leader Michael Nierenberg


True or False, Part 1: Residential Real Estate in Ohio

This is the first part in a series highlighting true or false questions to help analyze trends in the mortgage industry. The initial article starts with questions about residential property in Ohio.

True or False? — T/F: Residential Mortgages and Property in Ohio

Here is a group of nine questions covering residential property in Ohio (answers are shown after all of the true/false questions):

• 1 — The recent median price of homes sold in Ohio is $188,000. — T or F
• 2 — In a 2019 analysis of all 50 states and Washington DC, Ohio is among the top three for affordability of housing based on median listing price. — T or F
• 3 — According to the National Association of Realtors in February 2019, the most expensive neighborhood in Ohio is Indian Hill. — T or F
• 4 — In a review of 300 places with the most residents in Ohio, both Toledo and Dayton are in the Top 10 based on the lowest overall cost of living. — T or F
• 5 — Based on the percentage of household income required to make housing payments in 2019, Columbus, Ohio is the second most affordable city in the nation. — T or F
• 6 — Ohio is currently the fifth most populous state in the country. — T or F
• 7 — The 3-C Highway was paved in 1922 and was designed to connect the three largest cities in Ohio. — T or F
• 8 — Dayton is the fourth-largest city in Ohio. — T or F
• 9 — Based on recent population data, about 60 percent of the total U.S. population lives within 600 miles of Ohio. — T or F

Answers and Explanations: Ohio — Residential Real Estate

1 — False. Based on November 2019 data, $145,000 is the median selling price of homes in Ohio. In comparison, the recent median sales price for the United States is $237,000.

2 — True. Only West Virginia and Arkansas are currently less expensive than Ohio, although Iowa is a close fourth with a median listing price of $180,000. The four most expensive are Hawaii, Washington DC, California and Massachusetts. In the overall rankings, Midwestern and Southern states are the least expensive places for buying a home.

3 — True. Indian Hill is an affluent suburb of Cincinnati with a median listing price of $744,000.

4 — False. Neither Dayton nor Toledo are in the Top 10 in the study that combined costs for housing, food, gas, health insurance, utilities and transportation. The Top 2 on the list are Youngstown and Warren.

5 — True. Only Detroit is more affordable than Columbus. In Detroit, typical home purchases require 13 percent of income — in Columbus, the average scenario involves 22 percent of household income. At the other end of the affordability spectrum, 94 percent of income is required for typical home purchases in Los Angeles.

6 — False. Ohio ranks seventh with about 11.7 million residents — behind California, Texas, Florida, New York, Pennsylvania and Illinois. Ohio’s land area ranks 34th.

7 — True. Ohio Route 3 predated the interstate highway system and connected Columbus, Cleveland and Cincinnati. It is the second longest state route in Ohio. I-71 has effectively replaced the 3-C Highway as the major route for transportation between these three cities.

8 — False. Toledo (275,000) ranks fourth behind Columbus (892,000), Cleveland (384,000) and Cincinnati (303,000). Akron is fifth with 198,000 and Dayton ranks sixth with 141,000.

9 — True. For many years, the standard was that half of the population of the United States and Canada resided within 500 miles of Ohio. The appealing geography caused many companies to locate manufacturing and distribution operations in Ohio. For example, Honda’s decision to locate their first U.S. production facility (opened in 1979) in Marysville, Ohio (near Columbus) was a reflection of easy transportation access to about 50 percent of U.S. residents. A few years ago, the standard was updated to 60 percent of U.S. residents within 600 miles of Ohio based on population changes — 600 miles also includes the most populous areas of Quebec and Ontario in Canada.

A reminder — The True or False series will continue with “Part 2: Residential Real Estate in Tampa/St. Petersburg.”

True or False, Part 2: Residential Real Estate in Tampa/St. Petersburg

This is the second article in a series that features true or false statements (and answers) to illustrate investor and consumer challenges involving the mortgage sector. The first segment covered real estate in Ohio, and this article will examine residential property in the Tampa Bay area of Florida.

True or False? — T/F: Residential Mortgages and Property in the Tampa Bay Area

Here are seven questions that focus on homes in the Tampa/St. Petersburg metropolitan area (explanations and answers are shown in the next section):

• 1 — The Tampa-St. Petersburg area has only three census-designated places with a population in excess of 100,000 residents. — T or F
• 2 — Tampa and St. Petersburg frequently have temperatures over 100 degrees. — T or F
• 3 — Median 2019 selling prices in the Tampa-St. Petersburg-Clearwater area are about $300,000. — T or F
• 4 — At the end of 2018, the Tampa Bay area had a lower percentage of underwater mortgages than the state of Florida. — T or F
• 5 — Based on 2018 population estimates, the Tampa Bay metro area ranks 22nd, behind Baltimore, Denver and Pittsburgh. — T or F
• 6 — As reported in June 2017, only one of the top 25 most expensive Florida zip codes was in the Tampa Bay metro area. — T or F
• 7 — In a 2019 analysis of the best neighborhoods to live in the Tampa area, Davis Islands ranked first. — T or F

Answers and Explanations: Tampa and St. Petersburg — Residential Real Estate

1 — False. There are five places with more than 100,000 people in the Tampa-St. Petersburg-Clearwater metropolitan area: Tampa, St. Petersburg, Clearwater, Brandon and Spring Hill. The metro area also includes about 45 places with 10,000 or more residents — these include Zephyrhills, Tarpon Springs, Seminole, Plant City, New Port Richey, Largo and Dunedin.

2 — False. As of 2019, the temperatures in St. Petersburg and Tampa have never exceeded 100. The record highs are 99 degrees in Tampa and 100 degrees in St. Petersburg. Both areas do have high humidity, and heat index levels often exceed 100 degrees.

3 — False. Recent median sales prices in the area are $211,000. This is about 7 percent less than for the state of Florida ($227,0000). Rents in the area are about $1600 compared to $1800 statewide.

4 — True. The statewide percentage was 6.7 percent and the Tampa Bay area had about 6.3 percent. The area has exhibited major improvements, with about 38,000 underwater homeowners at the end of 2018 compared to an estimated 340,000 in 2010. The Tampa Bay area was in the top 10 most-improved metropolitan areas for underwater mortgages during 2018.

5 — False. With a 2018 population of slightly more than 3.1 million, the Tampa-St. Petersburg-Clearwater area ranks 18th, just behind Seattle, Minneapolis and San Diego and just ahead of Denver, St. Louis and Baltimore. The area grew by about 12.9 percent between 2010 and 2018. In comparison, the Miami-Fort Lauderdale-Pompano Beach area ranked 7th (6.2 million) and Orlando-Kissimmee-Sanford was 22nd (2.6 million).

6 — True. The highest-ranking was zip code 33786 (Belleair Beach) in Pinellas County — in 21st place at a median selling price of $520,000. The most expensive zip code in the state was 33109 (Miami Beach, $3.4 million). Other Tampa Bay zip codes in the top 50 ranked 38th, 40th and 43rd (two of them in Hillsborough County and one in Pinellas County).

7 — True. Ranked just behind Davis Islands were Spanishtown, Hyde Park and Harbour Island. Davis Islands are an archipelago of two islands in Hillsborough County just south of the Hyde Park area. The population of Davis Islands is about 5300. These are two man-made islands that were built on two natural islands originally known as Little Grassy Key and Big Grassy Key. They were built by developer D. P. Davis in the 1920s. There are no traffic lights on the islands.

A reminder — The True or False series will continue with “Part 3: Zombie Foreclosures.”

True or False, Part 3: Zombie Properties and Foreclosures

This is the third installment in a series that uses a true-or-false format to review different mortgage business scenarios. The first two articles assessed the residential real estate in Tampa/St. Petersburg and Ohio. This installment will highlight zombie foreclosures and properties.

True or False? — T/F: Zombie Foreclosures and Properties

Here are eight questions that feature zombie properties and foreclosures (explanations and answers are shown in the next section):

• 1 — A zombie foreclosure happens when a lender forecloses on a homeowner with an underwater mortgage. — T or F
• 2 — A zombie property often involves a home that is owned by an individual without their knowledge. — T or F
• 3 — Based on 2019 data, about 10 percent of all U.S. homes in the foreclosure process are vacant. — T or F
• 4 — New York currently has the highest number of zombie properties. — T or F
• 5 — In 2019 Washington DC has the highest percentage of zombie foreclosures. — T or F
• 6 — At the height of the housing crisis, there were about 300,000 zombie properties in the United States. — T or F
• 7 — Zombie foreclosures will not impact an individual’s credit score or cause additional debts to accumulate. — T or F
• 8 — Mortgage lenders are not always required to notify a homeowner that the foreclosure process has been discontinued. — T or F

Answers and Explanations: The Zombie Property and Zombie Foreclosure Challenge

1 — False. While underwater mortgages (when the value of a home is less than the mortgage balance) can present a challenge when homeowners need to sell their home, zombie foreclosures represent a different situation — this scenario occurs when lenders start the foreclosure process, homeowners decide to leave right away and then for a variety of reasons the lender does not complete foreclosure proceedings.

2 — True. When lenders begin foreclosures, it is not unusual for the current owners to move out quickly and begin the next phase of their life. Some of these owners make the (incorrect) assumption that the lender will take over the property immediately. Regardless of the underlying reasons, the property ends up vacant for an extended period of time. When lenders fail to finish the foreclosure process, the original owner retains title — in many such cases, this owner is not aware because of the mistaken belief that the foreclosing lender either took title right away or eventually did so by finishing the foreclosure.

3 — False. Recent statistics reveal that just under 3 percent of homes in some stage of the foreclosure process are vacant.

4 — True. With slightly less than 2,300 zombie properties, New York ranks first and is followed by Florida (just under 1,500), Illinois (almost 900), Ohio (about 825) and New Jersey (not quite 400). States having the fewest zombie properties are North Dakota, Arkansas, Idaho, Colorado and Delaware.

5 — True. With 10.5 percent of foreclosed homes being vacant, Washington DC is well above the nationwide average of 2.9 percent. The next highest areas are Kansas and Oregon (just under 8 percent), Montana (about 7.5 percent), Maine (6.7 percent) and New Mexico (5.8 percent).

6 — True. This is an estimate and the actual number is believed to have been much higher than 300,000. In comparison, the current number is about 8,500.

7 — False. If title is not transferred out of an individual’s name, the homeowner of record continues to have a legal obligation for debts such as homeowners association (HOA) dues, property taxes and local government cleanup costs when yards and homes are not maintained as required by housing codes. When these debts are not paid, credit scores are usually hurt.

8 — True. The legal requirements vary in different jurisdictions. Part of the challenge occurs when a lender cannot locate the homeowner who moved out of the property. Because the problem of zombie properties and foreclosures can negatively impact neighborhood home values due to neglect, some states have passed more stringent guidelines. But homeowners should remain vigilant by confirming that title has been transferred after a foreclosure sale.

Practical Mortgage Solutions: Mike Nierenberg and New Residential

Mike Nierenberg formerly of Bear Stearns leads the executive management team for New Residential Investment Corp. (NYSE: NRZ). New Residential is one of the largest non-bank owners of MSRs (mortgage servicing rights) in the United States. NRZ is a Top 10 non-bank servicer and originator after completing the acquisition of Ditech’s mortgage servicing and origination operations in October 2019. New Residential’s portfolio includes MSRs, residential loans, call rights, residential mortgage-backed securities (RMBS), consumer loans, revenue from ancillary services and complementary operating businesses.