Michael Nierenberg Post Bear Stearns in Residential Investing

True or False, Part 1: Residential Real Estate in Portland, Oregon

This is the first part in a series that uses true or false questions to review trends in the mortgage industry. The initial article starts with questions (and answers) about residential property in Portland, Oregon.

True or False? — T/F: Residential Mortgages and Property in the Portland, Oregon Area

Here are eight questions that feature residential living conditions in the Portland, Oregon metropolitan area (explanations and answers are shown in the next section):

• 1 — On a 2019 list of the best places to live in the United States, Portland ranked ahead of Seattle and Raleigh/Durham. — T or F
• 2 — The median home value in Portland is slightly less than $300,000. — T or F
• 3 — The most expensive neighborhoods in the Portland area typically include Lake Oswego, Forest Park and Linnton. — T or F
• 4 — Portland is not included among the recent rankings for the top 100 best cities to live in America. — T or F
• 5 — Greater Portland is the 50th largest metropolitan statistical area in the U.S. — T or F
• 6 — Portland is the largest city in Oregon and is the state capital. — T or F
• 7 — Mount Hood is located about 100 miles (driving distance) from Portland. — T or F
• 8 — Of the three most populous cities in the Pacific Northwest, Portland has the fewest inches of snowfall and rainfall, the most hours of sunshine and the highest average temperature. — T or F

Answers and Explanations: Portland, Oregon — Residential Real Estate

1 — True. Portland ranked eighth, Seattle was ninth and Raleigh/Durham was tenth. The top two were Austin and Denver.

2 — False. Based on data from Zillow, the 2019 median in Portland is about $420,000.

3 — True. In one recent ranking of the most expensive housing in Portland, these were the top three (in the order shown above). Next were Alameda, Hillsdale, Bridlemile and Sherwood. Lake Oswego includes a 400-acre lake, is rated A+ for livability and is ranked as the second-best in the state for raising a family. The Linnton Loop is a favorite hiking destination in Portland and goes through Linnton Park and Forest Park.

4 — False. Portland ranks 50th. Vancouver, Washington is the largest suburb of Portland and ranks 151st.

5 — False. The Portland-Vancouver-Hillsboro MSA is the 23rd largest MSA in the United States with a current population of about 2.4 million. This MSA includes two counties in Washington and five counties in Oregon. The Washington portion of the Portland metro area is Washington’s third largest urban center.

6 — False. While Portland does have the largest population of all Oregon cities, Salem is the state capital. It takes slightly less than an hour to drive from Salem to Portland.

7 — True. Mount Hood is visible from some locations (such as Washington Park) in Portland. Mount Hood is Oregon’s highest peak (elevation is 11,250 feet) and is a popular destination for both residents and visitors. Other scenic places to visit from Portland include the Oregon coast, Columbia River Gorge waterfalls, the Rowena plateau, Haystack Rock and Oregon wine country.

8 — True. The most populous cities are Seattle, Vancouver (British Columbia) and Portland. On average, there are only two days per year when the high temperature in Portland does not rise above freezing. Portland’s growing season is typically 240 days, and annual snowfall averages slightly more than four inches (although the seasonal total of snow reached 60 inches in 1949-50). Portland does periodically experience heat waves due to an inland location (70 miles from the coast) that limits the moderating impacts of the Pacific Ocean. Two popular nicknames for the city include City of Roses (also Rose City) and Stumptown — the latter is due to the practice in the mid-19th century of not removing stumps in a timely fashion after trees were cut down to clear more land for building.

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

True or False, Part 2: Residential Real Estate in Georgia

This is the second article in a series featuring true or false statements to illustrate consumer and investor challenges in the residential mortgage sector. The first segment analyzed real estate in Portland, Oregon — this installment will examine residential property in Georgia.

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

Here is a group of 10 questions covering residential property in Georgia (answers are shown after all of the true/false questions):

• 1 — The 2019 median housing value in Georgia is $275,000. — T or F
• 2 — Based on population, the six biggest Georgia cities (in order) are Atlanta, Columbus, Augusta, Macon, Savannah and Athens. — T or F
• 3 — Georgia’s 2019 population places the state as the 11th largest, behind North Carolina and Virginia. — T or F
• 4 — Georgia was one of the of the original 13 British colonies. — T or F
• 5 — Among all states that are entirely east of the Mississippi River, Georgia is the largest in land size. — T or F
• 6 — The 2019 Fortune 500 List included fewer than 10 companies headquartered in Georgia. — T or F
• 7 — Georgia’s population remained about the same between 2010 and 2019. — T or F
• 8 — Georgia has the third highest percentage of people 65 and older in the U.S. — T or F
• 9 — The majority of Georgia has a humid subtropical climate. — T or F
• 10 — In a recent review of the best places to visit in Georgia, the top 4 were Savannah, Atlanta, Golden Isles and Augusta. — T or F

Answers and Explanations: Georgia — Residential Real Estate

1 — False. The average housing price in Georgia is $195,500.

2 — True. The next biggest cities are Sandy Springs, Roswell, Johns Creek and Albany.

3 — False. With an estimated population of 10.5 million, Georgia ranks 8th, behind Pennsylvania, Illinois and Ohio but ahead of North Carolina, Michigan, New Jersey and Virginia. About 60 percent of the state’s population is located in the Atlanta metropolitan area (6 million).

4 — True. Of the 13 colonies, Georgia was the southernmost and last to be established. Georgia became a state in 1788. Parts of Georgia were split off during the 1802-1804 period to form the Mississippi Territory and eventually the states of Mississippi and Alabama.

5 — True. In the overall United States, Georgia ranks as 24th in area.

6 — False. The 2018 total was 21 companies and this decreased to 18 in the most recent ranking. Of the total, 16 are based in the Atlanta area. The top 4 and the ranking on the Fortune 500 are as follows: Home Depot (number 27), United Parcel Service (number 41), Delta Air Lines (number 69) and Coca-Cola (number 100).

7 — False. The state’s population grew by about 9.4 percent during the past decade. This growth rate places Georgia 15th among all states in the same time period.

8 — False. The state ranks as the third lowest with slightly less than 13 percent.

9 — True. This means that humid and hot summers and cold to mild winters are typical except for portions of the state that are at the highest elevation — the northernmost region includes the Blue Ridge Mountains. The highest point in the state has an elevation of 4,784 feet.

10 — True. Savannah is a coastal city that is renowned for antebellum architecture and is the oldest city in the state. The Golden Isles are barrier islands along the Atlantic coast — including St. Simons and Sea Island. The next four highlighted places include Athens, Macon, Jekyll Island and Dahlonega. Jekyll Island is the southernmost of the Golden Isles, and the entire island is designated as a state park. Dahlonega (in northern Georgia) has become a wine destination with five wineries and 12 tasting rooms.

A reminder — The True or False series will continue with “Part 3: Residential Mortgages and Retirement.”

True or False, Part 3: Residential Mortgages and Retirement

This is the third part in a series focusing on a true-or-false format to assess mortgage business practices. The first two articles reviewed residential real estate in Georgia and Portland, Oregon. This installment will take a closer look at retirement strategies using mortgages.

True or False? — T/F: Retirement and Mortgages

Here is a collection of five questions reviewing knowledge about retirement and residential mortgages (answers and explanations are provided after all of the true or false questions are listed):

• 1 — About 22 percent of Fortune 50 companies offer pensions to new employees. — T or F
• 2 — Approximately two-thirds of retirees have already moved or have plans to relocate. — T or F
• 3 — In a 2019 Kiplinger review of the 50 best places to retire in the United States, the publisher selected the top location in each of 50 states. — T or F
• 4 — Approximately 80 percent of future retirees in the United States have retirement savings of $25,000 or more. — T or F
• 5 — A qualified mortgage (QM) loan from a traditional lender is easy to obtain for retired individuals. — T or F

Answers and Explanations: Mortgages and Retirement Strategies

1 — True. The trend toward less participation by employers in providing retirement benefits continues to gain momentum. The trend is even more pronounced with transportation companies like FedEx: only 11 percent provide pension plans. FedEx announced in November 2019 that in 2020 the company would be phasing out its pension plan for new hires in the United States. This trend makes alternative strategies for retirement saving more important than ever before — for example, by buying a home and gradually paying off the mortgage. By the way, a traditional employer-provided pension plan does not require employees to contribute in order to obtain a pension benefit. On the other hand, a 401(k) plan typically involves only contributions by employees or employer contributions that are contingent on the amount of an employee’s contribution.

2 — True. This is a dramatic statistic because it clearly involves a significant amount of retiree activity in the residential real estate market — buying a new home, selling the current home (and possibly both) or possibly renting a new place. Even though many retirees plan to stay in the same area, about 40 percent expect to move to a new region or state. Either way, this suggests a plethora of buying or renting choices and decisions.

3 — True. This is an ideal approach since (as noted above) approximately 60 percent of retirees expect to remain in the same state or region. Most of the “Best Places” lists ignore this key fact and ultimately recommend places that are not practical possibilities for a wide audience. In the Kiplinger list, retirees and other potential buyers can start by selecting a preferred state and take a closer look at one ideal location — for example, Cape Coral in Florida, Round Rock in Texas, Augusta in Georgia, Lexington in Kentucky, Bozeman in Montana, Albuquerque in New Mexico, Rochester in New York, Columbus in Ohio and Corvallis in Oregon.

4 — False. About 33 percent have $5,000 or less and an estimated 20 percent do not have any retirement savings. To overcome this practical and common challenge, a long-term savings strategy with a home mortgage can build equity even when appreciation rates are uncertain.

5 — False. This might come as an unpleasant surprise for retirees about to buy a new home for retirement. The residential mortgage process has changed since many individuals last obtained a mortgage. For example, traditional lenders like banks are now making fewer mortgages and non-traditional lenders like NewRez (a subsidiary of New Residential Investment Corp.) are making more mortgages. To help retirees and individuals such as foreign nationals and self-employed borrowers overcome the current challenges of getting a mortgage, NewRez offers non-qualified mortgages (non-QM) in 49 states and the District of Columbia.

Michael Nierenberg and NRZ: Residential Financing Innovation

• Michael Nierenberg — Chief Executive Officer of New Residential Investment Corp. (NYSE: NRZ) since 2013 and Board Chairman since May 2016. He has been an innovator in the residential mortgage market for more than 25 years.
• Covius Holdings Investment — During 2019 NRZ announced an investment in Covius Holdings, a provider of technology-related services to the financial industry.
• New Residential Ownership of Mortgage Servicing Rights (MSRs) — NRZ has been qualified for MSR ownership in all U.S. states since 2016. At the end of 2018, NRZ was the fifth largest owner of MSRs in the United States.

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