How transparency drives better results in foreclosure sales

As the largest real estate marketplace, Auction.com has worked to reduce the overall loss severity through the application of innovative technologies and a data-driven approach that optimizes the real estate disposition experience for buyers and sellers. In the process, we’ve been able to provide transparency through these approaches that mutually benefit the buyers and sellers and create a healthy and scalable marketplace.

Wow! This year’s Rising Stars will be more powerful than ever

Tomorrow is the closing day for the 2018 HousingWire Rising Stars.

The 2017 Rising Stars represented the best young leaders in the mortgage industry – in lending, servicing, investing and real estate.

And they were an impressive bunch. Take as an example, Zach Dawson.

Dawson leads Fannie Mae’s collateral policy and strategy team, which is responsible for single-family collateral strategy as a whole. This includes both Selling Guide policy and the use of collateral technology tools such as Collateral Underwriter. Dawson also oversees the appraiser quality-monitoring program, collateral reporting and analytics, engagement with the appraisal community, and other strategic valuation initiatives. 

Considering Fannie Mae is the largest financier of home purchases in the United States, the nomination and award of a Rising Stars commemoration only helps solidify his influential role in the housing economy. Just think of all the innovation happening in both the valuation and housing finance landscape!

But while last year’s Rising Stars were very prestigious, this year’s Rising Stars will be more powerful than ever. There are more nominations of people who are changing the mortgage finance landscape in ways many of us would never dream.

We’ll be sharing those winners with you soon enough, but be warned, you have only one day remaining before nominations close.

So, let us know if you know someone who is strong enough to rub shoulders with the Zach Dawsons of our industry.

I’m sure you do, so give it a shot. After all, with Rising Stars, even the sky isn’t the limit. Nominate now.

These metros saw the most homebuilding activity in 2017

Homebuilding saw a pickup near the end of 2017 and is even expected to fuel the housing market in 2018 as it rises to a post-recession high. But which metros came out on top as having the most homebuilding activity in 2017? Trulia conducted a new study to find out.

Stock Investing Strategy When at All Time Highs

Now that the S&P has pulled back from 2800, investors are wondering how to maneuver their assets going forward. For those exposed to the market surge since the election, it has been rewarding, with returns around 30% in the S&P 500 alone. For those who overlooked the opportunity, there is now an urge to catch up with the rest of the pack. If you are in the latter camp I know what you’re thinking…

How did I miss out on 30%?!

Maybe you were too cautious because you didn’t feel you knew enough about stocks. Maybe it was nervousness about the uncertainty surrounding the administration. Understanding yourself and the psychology behind why you missed out is important. But more important is NOT missing the next opportunity, and NOT being fearful to take the risk that comes with nailing that move.

As we wrap up the first quarter of 2018, it is paramount to have a game plan. It’s very likely that we will see another pullback with some consolidation, before ultimately moving higher. Upcoming pullbacks will be caused by market events that will be fueled by anxious bears. This is the time to strike!

If investors know what sectors to buy and what stocks to focus on, the rewards can lead to double-digit percentage gains.

Continued . . .

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Profit from High-Frequency Trading

Computer-driven High-Frequency Traders (HFT) manipulate the market thousands of times a day. They fire off massive amounts of short trades to drive stock prices down, then profit from the rebound. Their gains come at the expense of human investors.

Zacks Counterstrike portfolio allows you to turn these “manipulated price drops” into quick profit opportunities.

Access to these recommendations must be limited; the doors close to new investors on Sunday, February 25.

See Counterstrike Stocks Now >>

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Below I talk about upcoming market risks, sector rotation winners and why buying the next big dip will be rewarding.

Short-term market risks

1) Interest rates — Perhaps the biggest fear is how much the Fed will raise interest rates this year. Will we see three or four rate hikes in 2018 and if it’s the latter, how do markets respond? The recent market dip saw a violent move lower in equities and bonds as rates went higher.

2) Inflation — As the economy strengthens, inflation starts to creep in. And the more that inflation creeps into the U.S. economy, the more the Fed will want to raise rates. This inflation issue makes risk #1 even bigger in the eyes of investors.

3) Trump doesn’t get it done — The hardest part for Trump is already done as the tax plan was passed. However, the market is still looking for infrastructure and more deregulation. If the political hurdles that Trump faces prevent an infrastructure bill from getting done, markets could see a sell off.

4) Volatility — The VIX has been elevated over the last couple weeks, meaning markets are nervous about something. While some risks are obvious, others are sometimes not seen until they show their ugly faces. A high VIX signals there is something beneath the covers.

Sector Rotation

With the Trump victory, smart money had to reallocate their assets to areas that would benefit from a Trump presidency. This reallocation lead to violent sector rotation causing certain sectors to surge.

Let’s go over some ETF stats since the election:

S&P 500 (SPY): 30%

Consumer Discretionary (XLY): 34%

Health Care (XLV): 26%

Industrials (XLI): 35%

Financials (XLF): 45%

Technology (XLK): 42%

Take note of these ETFs. The sectors that outperformed since the election will continue to perform through the Trump presidency. However, if the risks mentioned above come to light, these sectors will give investors opportunity at discount prices. Buying an ETF might be easy to do when this happens, but finding the right stocks to buy is much tougher.

Buying Stocks on a Dip

Buying stocks has more risk than buying an ETF, but can lead to greater reward. When markets sell off, we can utilize the Zacks Rank to separate the weaker stocks from the profitable ones. By combing the fundamentals of the Zacks Rank and technical analysis, investors can decipher which stocks to buy and which ones to ignore.

In addition, sell-offs tend to be manipulated by computer-driven algorithm trading that can over exaggerate a move lower. An investor who recognizes this abuse can squeeze a couple more percentage points out of a trade than an investor who doesn’t.

Since early 2016 we have seen the earnings recession, the Brexit, the election and multiple Trump/Russia impeachment rumors. Each time that investors bought the dips they have been rewarded handsomely. This should be a recurring theme in 2018.

How to Capitalize

A major bounce was already seen in February and the next three months might lead to some of the biggest market moves of 2018, so why not profit from them?

That is the mission of my portfolio, Zacks Counterstrike.

Counterstrike is designed to sniff out when High-Frequency Traders have manipulated a stock’s price. We take advantage by buying the best of these unfairly beaten-down stocks. Then when price moves our way, we lock in gains and look for the next opportunity.

We’re now holding 8 stocks and getting ready to trigger trades from my watch list at any moment. Our goal is to generate quick and consistent double-digit gains.

Get in today and as an added bonus you may download our just-released Special Report, 5 Stocks Set to Double. It spotlights 5 companies Zacks experts predict could grow +100% or more over the next year.

To maximize the profit potential of our recommendations, we must limit the number of members who have access to the Counterstrike portfolio and Special Report. This opportunity ends on Sunday, February 25.

See Counterstrike and 5 Stocks Set to Double Now >>

Wishing you great financial success,

Jeremy

Jeremy Mullin has been a professional trader for more than 12 years with specific expertise in profiting from patterns set by High-Frequency Traders. He is the editor of Zacks Counterstrike portfolio recommendation service.

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Best Charts of the Bounce

When market players were unsettled and pretty emotional during the “flash correction” of early February, many sold stocks and waited for signs of the all-clear.

Unfortunately, Mr. Market doesn’t give you a lot of time to analyze all the news and data points, make up your mind, and get over your fear.

By the time the worst news is priced-in, he’s already made some serious capitulation lows and is riding the value train to price-in rising earnings estimates in a strong economy.

See my article on how some of us played the fear and bought the lows last week in the Nasdaq 100 triple leveraged ETF (TQQQ)…

Forget the CPI, Look at the “W” Bottom

In short, BTD (Buy the Dip) is still working because the fundamentals are still stronger than the worries like rising rates, rising inflation, and rising valuations (in some industries).

Tech and Growth Lead the Charge

The Dow was getting extremely overheated last month and due for a fall as I told Zacks Ultimate members in a special Strategy Session on January 16. It actually continued to rise for two more weeks until it reached 7.5% above its 50-day moving average.

And now that convoluted price-weighted index, which was led by Boeing, 3M, Goldman Sachs, and UNH, is having trouble getting back above its lofty 50-day MA.

It’s still leading the broader S&P 500 for the past three months with a +6.5% performance, roughly tied with the Nasdaq Composite as of February 20.

But the real leader is still big-cap Tech, Biotech, and Consumer stocks as represented by the Nasdaq 100 (NDX), which is up more than 7.5% for the past three months…

As I put this article and charts together at 11am ET on Wednesday Feb 21, I am watching to see if the NDX can overcome the last two sessions of “topping tails” at 6840.

And here are some of the leaders of big-cap Tech growth that are helping…

NVIDIA (NVDA) is meeting sellers at $250, but now trading under 40 times forward EPS, it should see higher levels soon. See my recent NVDA: Bull of the Day article for all the details and logic.

Alibaba (BABA) trades on the NYSE, not the Nasdaq, but it’s a business model emblematic of the digital, global retail ecosystem. We don’t call it the “Amazon of China” for nothing as it seems to have leverage in all the same segments and industries. As I’ve been telling members since November, we can play the big expanding range here over time and be buyers near $165 and trim some profits above $200, while we hold core for the long-term.

Lam Research (LRCX) made a double top at $220 after another strong earnings report in late January. This Zacks #1 Rank saw estimates rise sharply after a great outlook from the company that confirms the global Semiconductor cycle is not topping. I’d like to see this one build a new base above $185. See my recent LRCX: Bull of the Day for more insight on my “Tech Super Cycle” and analyst reactions to the Lam report, with the average price target rising above $240.

Apple (AAPL) shares fought off the bears worried about “peak iPhone” demand and are back above their post-earnings levels. Technically, the stock has really held on to the big gap above $170 from Feb 15 and looks poised to go higher. In my view, large investors are holding and accumulating because they are looking past the iPhone to Services growth and “what comes after” in terms of Augmented Reality technology.

See my special report for Zacks Confidential, The Technology Super Cycle, for more details or hear my August podcast Why the Apple Ecosphere Could Own Augmented Reality.

Bottom line: Stick with Tech and growth this year!

Disclosure: I own shares of BABA, LRCX, NVDA, AAPL, and TQQQ for the Zacks TAZR Trader portfolio.

Kevin Cook is a Senior Stock Strategist for Zacks Investment Research where he runs the TAZR Trader service. Click Follow Author above to receive his latest stock research and macro analysis.

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Man pleads guilty to hiding body in Arizona Realtor murder case

William Glen Sanders pleaded guilty on Friday to a concealment charge and has agreed to cooperate with the Mohave County, Ariz. attorney’s office and testify against Alfredo Blanco, who is charged with the first-degree murder of Realtor Sidney Cranston.

Existing home sales see largest decline in more than three years

Existing home sales decreased in January, seeing the largest annual decline in more than three years. NAR’s chief economist explained the utter lack of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the U.S. last month.

Artificial Intelligence: Asset managers must embrace it or be competed away

There has been some fairly disconcerting commentary on the possible impact of AI on our world, writes Andrew Herberts, head of private client investment management at Thomas Miller Investment.

Loan Officers: Teach your Realtor partners how to fish

In my Mortgage Loan Officer coaching group, one of our main focal points is creating deeper relationships with Realtors.

They plan their outreach, refine their approach and hopefully get that meeting. For those MLOs that do execute on having that initial meeting, I often get the following feedback:  “The agent is asking me if I can give them leads.”

Now, of course, MLOs will get leads, but on average it will be nowhere near the amount that a Realtor will get. In fact, I just had a Realtor team from Las Vegas reach out to me asking how they find a lender that gives them an equal amount of leads.

Here is what they said:

“I’m not satisfied with the number of leads he sends back to us. In your opinion is it reasonable to expect a lender to reciprocate. We close about 18 deals per year with him, and over five years we’ve closed three referrals from him.”

My answer was simple. A consumer, by a high percentage, will come across a Realtor online before they do an MLO. In fact, it isn’t even close. There are a few reasons for this (Think Zillow, Trulia, etc..) but mostly it is due to how the consumer searches. But if you are an MLO you already know all this, so let’s get to the point.

What I always tell my MLOs, is teach your Realtors how to fish.

What do I mean by that? Simply stated, is that instead of giving them that “one-off lead,” teach them a strategy or tactic that will get them multiple leads per year. In this case, learn how to do Facebook Lead Ads for Real Estate.

As an MLO you could take a course, spend a few hours, and master how to do a proper Facebook Lead Ad. Not only would this help you get leads, but it will give you a unique value-add by teaching your Realtor partners how to do the same thing.

You see where I am going with this?

I speak to Realtors across the country and how to do Facebook Ads is the #1 question, and it isn’t even close. Just imagine how strong you could make that relationship if you are the one that is teaching them how to do Facebook Ads. You think that would help you stay top of mind? You think that would help you build new relationships with key Realtors? You bet it would.

And you are now teaching them how to fish.

VantageScore: Director Watt, don’t waste this opportunity

As regulator and conservator of the GSEs, Mel Watt, the director of the FHFA, has a decision to make. He could open the GSEs’ credit score requirements to include other, more predictive and more inclusive credit scoring models– broadening access to mainstream mortgage financing without lowering standards and in the process eliminating the scoring monopoly created by the GSEs.  

Or Director Watt could decide to lock-in FICO yet again, and extend its unpopular monopoly. This decision would kick the can down the road leaving the industry with no choice but to repeat this three-year saga when inevitably models are rebuilt again.

The stakes are high. In the mortgage market, a credit score is used as a gateway that determines product eligibility and pricing for every applicant whose loan is ultimately purchased by one of the GSEs.

To be sure, ending the FICO monopoly will not be a simple process, but for lenders it doesn’t have to be an expensive one either. If true and honest competition is facilitated and another mandate is avoided, lenders can choose for themselves to use VantageScore if and when they determine that it makes sense for their businesses.

Ultimately this issue is about two things: better serving consumers and supporting sustainable competition, thus creating a level playing field for new entrants.

THE LONG AND SHORT TERM BENEFITS FOR CONSUMERS

Homeownership is currently at a 50-year low. Director Watt’s decision could improve access to responsible and mainstream credit both in the near and long-term. We can argue about how much or how little, but tell that to anyone on the wrong side of the FICO arbitrary restrictive policies or to the advocates who represent them.

By our estimate, 2.5 to 3 million additional consumers (many of whom are minority borrowers) could become mortgage-eligible. In addition, consumers with no score or low scores resulting from legacy scoring models, who today self-select out of the process, would be incentivized to explore whether homeownership could be right for them. These consumers would still be subject to reliable underwriting requirements that include analyzing a consumer’s capacity to repay a mortgage loan.

Looking longer term, the Mortgage Bankers Association estimates that household growth will be led by 5.7 million additional Hispanic households, 5.0 million additional non-Hispanic white households, 2.4 million additional black households, 1.9 million additional Asian households and 730,000 additional other households.

Clearly, Director Watt needs to make a prescient decision because restrictive credit scoring models will not adequately support this anticipated demographic shift. The market should be opened to include models that are able to score more of these consumers without compromising predictiveness.

COMPETITION, COMPETITION, COMPETITION

Competition strengthens markets, makes them more efficient and always benefits stakeholders. Competition between VantageScore and FICO has already led to many model innovations. Indeed, since 2006, competition has led to multiple new versions of VantageScore and FICO. These new versions continue to improve in terms of consistency, predictive power, and consumer-friendliness.

It is inarguable that no one company should have a monopoly in determining consumers’ creditworthiness. The market has already weighed in: Last year, some 2,700 organizations used over 8.5 billion VantageScore credit scores. Over 2,200 of those users were financial institutions including some of the largest lenders in the world. They tested VantageScore and over 6 billion of those scores were used to make credit decisions under the watchful eye of regulators.

TIME FOR A REALITY CHECK

VantageScore 3.0 is the model that FHFA is considering in addition to FICO’s latest introduction. Launched in 2013, VantageScore 3.0 made significant strides in using credit file information to accurately score millions of consumers who were unable to obtain a FICO Score. The model also scores those who are conventionally scoreable.

The success in this arena has often been mischaracterized by FICO as one that has resulted from “lowered standards.”  

REALITY CHECK #1:  VantageScore is empirically derived, tested, and continually validated under regulatory scrutiny. Thousands of lenders currently use VantageScore, and in which case they would have all tested the model and found it to be safe and sound.

We also analyze our models internally, and we publish the statistical validations of our models’ predictive power across all populations. Those reports, which include testing the scores assigned to the expanded population of scoreable consumers, are freely downloadable on our public website. The ability to confirm VantageScore’s claims of predictiveness is made available to all who actually choose to seek that information out. 

Regarding the GSEs, the phrase “race to the bottom” between FICO and VantageScore has been raised. The reality is that this isn’t possible when regulated lenders ultimately validate models prior to implementation and use the ones that are most predictive. Further they are not meant to be used to replace the established underwriting safeguards already in place.

REALITY CHECK #2: Despite changes in credit file data and consumer behaviors, FICO has maintained the same arbitrary minimum scoring criteria since its first generic model. FICO often characterizes these criteria as representing decades of research, but we believe it is more aptly characterized as decades of inertia.

Indeed, FICO’s requirement that a consumer be “credit active” in the previous six months in order to be scored is likely an effort to ensure that lenders never have to “look under the hood” of their loan origination systems. Doing so would mean benchmarking against competitive models and a potential further erosion of its market dominance.

And finally, adhering to its minimum scoring criteria also conveniently allows FICO to sell “add-on” scores, such as FICO XD, which use data sources outside of the three national credit bureaus, to accomplish similar results as does VantageScore 3.0.

REALITY CHECK #3: A credit scoring model cannot and should not be relied upon to compensate for poor underwriting criteria (e.g., relaxing the ability to repay criteria, excessively high loan-to-value ratios or undocumented and unverified information). For mortgages, scores are used first as the gateway that determines product eligibility and then for loan pricing.

Those who cite credit scores as the reason for the mortgage meltdown demonstrate a fundamental misunderstanding about the difference between thoughtful credit underwriting and the proper use of credit scoring models.

REALITY CHECK #4: Using VantageScore will not add to consumer confusion. There has been no confusion in the credit card or auto lending space, where VantageScore and FICO have competed head-to-head for the last decade. Not only that, but Credit Karma, Chase, and Capital One (to name just a few) all use VantageScore to help their customers manage their financial health. We believe in access and transparency. Heck, if you want further evidence that competition helps consumers, before VantageScore, they had to pay to see their credit scores.

There are, of course, operational concerns, including the capital markets, which we’ve addressed in a recent whitepaper. Yet, with the right structure in place, competition between FICO, VantageScore, and hopefully the next modeling wizard to come along, can drive better outcomes for every link in the chain (perhaps with the exception of the monopolist).

Director Watt: this is a golden opportunity to create a better future for America’s mortgage finance system. Embrace it.