Prior to the pandemic, with each new announcement apparently not starting a bidding war, Evergreen Home Loans was set to launch a cash bid program in Washington state.

An independent regional mortgage bank licensed in 10 western states, Bellevue-based Evergreen, prides itself on the level of service it provides to realtors – 70% of the company’s fixtures are purchase loans.

Founder and Chairman Don Burton is a former real estate agent who started Evergreen in 1987, with the goal of eliminating long delays and last-minute surprises in loans that can derail closures.

The CashUp by Evergreen program – in which Evergreen pays cash for homes on behalf of homebuyers and then provides ongoing financing when it transfers ownership to them – was Burton’s idea, said Tamra Rieger, chief operating officer of Evergreen.

Burton “is actively involved in the business every day, and it was his idea,” said Rieger. “He was a real estate agent before starting the mortgage company, and Evergreen’s goal has always been, ‘How can we help agents and add value to agents?’ “

Rieger oversaw a special product team at Evergreen which developed the CashUp program over six months. The team was preparing to launch the cash offers program in March 2020 when the pandemic struck.

“There was so much risk in the regular lending environment that we had to opt out of the CashUp program,” Rieger recalled. But, “Fast forward a year, and we’re getting through COVID and managing the risk pretty well.” So we started with a pilot launch in February.

A handful of Evergreen’s top loan officers – about 10 out of a total of 260 – have dedicated themselves to deploying the CashUp program in Washington state, she said.

Once homebuyers have been pre-approved, the CashUp program allows them to submit a cash offer without funding or unscheduled appraisals. If the offer is accepted, Evergreen purchases the home and transfers it to the buyer once its permanent financing is finalized.

“What’s exciting for the agent is that this is a guaranteed cash close,” says Rieger. “There is nothing that will derail the closure. I have respected the closing date each time.

Because Evergreen is a mortgage bank, it has the funds to not only buy homes for cash, but also to provide permanent financing directly to the buyer. That means it can close faster than cash offer programs that outsource funding, Rieger said.

“We have our own funds and we control the mortgage process,” Rieger said. We fully approve the buyer in advance for the cash offer and can close in as little as 10 days. “

The buyer’s mortgage is finalized after Evergreen purchases a home on their behalf. Because they have already been pre-approved, permanent funding ends quickly.

“About a week after closing with cash, I close the client’s financing” to buy the house at Evergreen, said Rieger.

Some large real estate brokerage firms cannot meet this deadline because they are relying on another lender to pay off their purchase in cash, Rieger said.

“I spoke to a real estate company that is setting up a cash offer program that asked for our help,” Rieger said. “Because they don’t have control over the mortgage process, it takes them 30 days from the time they close with their money for their client’s loan to close. It is too long.”

Develop in new markets

Evergreen, which partners with real estate agents to make the CashUp program accessible to more homebuyers, says the program was successful, leading him to expand the program beyond Washington State to Arizona and Idaho . A pilot program is operational in Nevada and Rieger hopes to launch it in California in October.

As Evergreen rolled out the program, “The good thing is that I was able to talk to everyone involved, including the buyer’s agent and the listing agent. Especially at the beginning, they wanted to talk to me to make sure it was real, ”said Rieger.

“I have received great feedback from agents that this is a real cash offer. The only contingency I have is on inspection, and I will accept seller’s inspection if Evergreen can verify that it was not produced by a related party.

Not all customers start with the CashUp program, Rieger said. But once a buyer has made several traditional offers on different houses, “you get a little discouraged when you don’t win the house.”

To help the CashUp program gain traction, Evergreen has tried to cut costs, she said. Evergreen charges a 1% origination fee at the close of the buyer’s loan, and other costs such as escrow, title and registration fees typically add up to around $ 1,400, Rieger said.

The CashUp program requires home buyers to use Evergreen for financing their permanent home. Evergreen’s goal is to help buyers get their offer approved, then provide them with ongoing financing, not make money on fees.

“A lot of the programs charge higher fees – I saw 2.3 percent,” Rieger said. “We are doing this to help our buyers win the home. We have really tried to keep CashUp attractive to the customer, so that the cost does not prevent them from using it.

When deciding in which market to deploy the CashUp program, it is necessary to take into account the property transfer taxes.

“When I close in cash, I own this house and the seller pays the property transfer tax. In the second step, I am the seller and I technically transfer ownership of Evergreen to the borrower, ”generating another transfer of ownership or excise tax, Rieger said.

So the easiest states to run a cash offering program are those that don’t have an excise tax, Rieger said. Then, she searches for states with lower transaction fees, such as Arizona, Idaho, and Montana.

Although closing costs in Washington state may be higher than in other states, Evergreen started CashUp there because that’s where the company is headquartered and “because probably 50 or 60 % of our transactions are done in Washington, ”said Rieger.

The long term goal is to make CashUp available in all states where Evergreen is licensed. So far, that’s 10 states: Arizona, California, Colorado, Idaho, Montana, Nevada, Oregon, Texas, Washington and Wyoming

But Colorado, Texas and Montana are recent additions to Evergreen, which also plans to expand into other western states, Rieger said.

“We have a bit of a philosophy of knowing your market and going into states that are close to where you already do business, rather than going across the country across the country to somewhere like Florida,” said Rieger. “We’re out west and we’re moving east,” while continuing to add branches into Evergreen’s existing footprint.

Will each lender have a cash offering product?

If a licensed regional mortgage lender in 10 states can offer a cash offer product, does that mean each lender will eventually launch their own offer?

“I don’t know if this will be the mainstream, or if all the lenders will be able to do it,” Rieger said. “It might sound easy, but there is a lot of work to be done. I have a good training process and disclosures. But for a lender to create a product like this, I think it takes 6 months to build it, 3 months to pilot it, and you need a lot of resources to do it.

Rieger said any lenders who aren’t already working on launching a cash offering product could miss the boat.

“There is a time for this product. Right now it’s very popular and I’m happy we’re positioned where we are, ”said Rieger. “I think there is a window, and as more homes come on the market and more inventories are online, it’s likely that there will be less demand for a program like this.”

At the moment, stocks are still scarce in many markets, she said.

“We’re still seeing cash offers above the list price, multiple offers, and escalation,” Rieger said. “I think Evergreen was in a good position because we launched in February. If you are a mortgage company trying to launch this product now, you might miss your window.

Email Matt Carter

Wall Street shares closed sharply lower on Monday, reflecting losses abroad and giving the S&P 500 Index its biggest drop in four months.

Concerns about over-indebtedness Chinese real estate developers – and the damage they could do to investors around the world if they default – has spilled over into the markets. Investors are also concerned that the United States The Federal Reserve could report this week that it consider withdrawing some of the support measures it gives to the markets and the economy.

The S&P 500 lost 75.26 points, or 1.7%, to 4,357.73, its biggest drop since May. At one point, the benchmark was down 2.9%, the biggest drop since last October. The S&P 500 was coming off two weeks of losses and is on track for its first monthly decline since January. The S&P 500 has lasted unusually long with no pullbacks of 5% or more.

The Dow Jones Industrial Average lost 614.41 points, or 1.8%, to 33,970.47. The blue chip index briefly lost 971 points. The Nasdaq lost 330.06 points, or 2.2%, to 14,713.90. The Hang Seng, Hong Kong’s main index, fell 3.3% for its biggest loss since July. European markets fell around 2%.

“What has happened here is that the list of risks has finally become too long to ignore,” said Michael Arone, chief investment strategist at State Street Global Advisors. “There is just a lot of uncertainty at a difficult seasonal time for the markets.”

Concerns about Chinese real estate developers and debt have recently focused on Evergrande, one of China’s largest real estate developers, which appears to be unable to repay its debts.

The fear is that a potential collapse there could set off a chain reaction in China’s real estate development industry and spill over into the wider financial system, in the same way that the Lehman Brothers failure ignited the 2008 financial crisis and the Great Recession. These real estate companies have been major engines of China’s economy, which is the second largest in the world.

If they fail to repay their debts, the heavy losses suffered by investors who hold their bonds would raise concerns about their financial strength. These bondholders could also be forced to sell other independent investments to raise funds, which could hurt prices in seemingly independent markets. It’s a product of how global markets have become tightly connected, and it’s a concept the financial world calls “contagion.”

Many analysts say they expect the Chinese government to prevent such a scenario, and that it doesn’t sound like a Lehman-type moment. Still, any hint of uncertainty may be enough to shock Wall Street after the S&P 500 has climbed almost uninterruptedly since October.

Besides Evergrande, there are several other concerns lurking beneath the generally calm surface of the stock market. In addition to the possible announcement by the Fed of a relaxation of the accelerator on its support for the economy, Congress might opt ​​for a destructive chicken game before allowing the US Treasury to borrow more money and the COVID-19 pandemic continues to weigh on the global economy.

Whatever the main cause of Monday’s market collapse, some analysts said such a drop was due. The S&P 500 hasn’t even seen a 5% drop from a high since October, and the almost unstoppable rise has left stocks more expensive and with less margin for error.

All the worries have prompted some on Wall Street to predict future stock declines. Morgan Stanley strategists said on Monday that conditions could ripen to cause the S&P 500 to fall 20% or more. They pointed to weakening buyer confidence, the potential for higher taxes and lower prices. ‘inflation to undermine corporate profits and other signs that the economy’s growth may slow sharply.

Even if the economy can avoid this worse-than-expected slowdown, Morgan Stanley’s Michael Wilson said stocks could still fall around 10% as the Fed cuts support for markets. The Fed is due to release its latest update on economic policy and interest rates on Wednesday.

Earlier this month, Stifel strategist Barry Bannister said he expected the S&P 500 to decline 10% to 15% in the last three months of the year. He cited the reduction in support by the Fed, among other factors. Bank of America strategist Savita Subramanian also set a target of 4,250 for the S&P 500 by the end of the year. That would be a 4.1% drop from Friday’s close.

Tech companies have led the market as a whole to the downside. Apple fell 2.1% and chipmaker Nvidia fell 3.6%.

Banks suffered heavy losses as bond yields fell. This impairs their ability to charge more lucrative interest rates on loans. The 10-year Treasury yield fell to 1.31% from 1.37% on Friday night. Bank of America fell 3.4%.

Oil prices fell 2.3% and weighed on energy stocks. Exxon Mobil fell 2.7%.

Small business stocks were among the biggest losers. The Russell 2000 lost 54.67 points, or 2.4%, to 2,182.20.

Airlines were among the few bright spots. American Airlines rose 3% to dominate all S&P 500 winners. Delta Air Lines rose 1.7% and United Airlines added 1.6%.

Cryptocurrency traders also had a rough day. The price of Bitcoin has fallen nearly 8% to $ 43,717, according to Coindesk.

Investors will have the opportunity to take a closer look at how the downturn has affected a wide range of businesses when the next round of corporate results begins in October. Strong earnings have been a key driver for stocks, but supply chain disruptions, higher costs and other factors could make it harder for companies to meet high expectations.

“The biggest strength in the market this year could become its biggest risk,” Arone said.

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