Goldman Sachs lends New Residential money so it can buy Genesis Capital from Goldman Sachs

New Residential Investment announced that it has entered into a definitive agreement with affiliates of Goldman Sachs to acquire Genesis Capital.

Genesis is a leading business purpose lender that provides innovative solutions to developers of new construction, fix and flip and rental hold projects, and acquire a related portfolio of loans. 

Genesis is expected to originate approximately $2 billion of loans in 2021 and has originated over 12,000 loans since 2014, according to a statement.

Michael Nierenberg, CEO of New Residential said: “We see the acquisition of Genesis as a great opportunity that supports our growing single-family rental strategy and one that allows us to capture additional unmet demand from our Retail and Wholesale origination channels.”

Genesis supports developers throughout the property lifecycle, partnering to create value for their long-standing and new borrower relationships. 

New Residential intends for Genesis to operate as an independent subsidiary of New Residential.

New Residential intends to finance the transaction with existing cash and committed asset-based financing from Goldman Sachs. 

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Well, since it’s coming up on Halloween, why not demonize some appraisals? 

According to a paywall article in the WSJ, an unusually high number of homes across the country are being appraised below their agreed-upon sales prices, causing a number of deals to collapse.

Home prices have soared in recent months. Buyers are frequently paying above the asking price to win bidding wars, and appraisals haven’t always kept up with those rapid price increases. 

About 13% of appraisals came in below the contract price in August, according to housing-data provider CoreLogic. 

That was down from a recent high of 19.7% in May but above 7.3% in January 2020, a rate CoreLogic said is more typical for the housing market.

The gulf between contract prices and appraised values highlights the risks to buyers in the current market, especially those stretching their budgets to win a bidding war. 

Therefore, many buyers are plunking down payments of just 5% to 10% because they need extra cash available in case the house is appraised below the sales price.

However, it sounds like the appraisers are doing their job: Preventing lenders from overlending on mortgages, but let the Witch Hunt begin!

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🔥 Creating a customer for life guarantee 🔥

With Josh Pitts & Joe Welu

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While some Millennials are missing out on getting a mortgage due to appraisers doing their jobs, others have come up with a novel solution.

For millennials, many of whom are getting married later in life, swimming in student-loan debt and facing soaring home prices, homeownership can feel more like a fantasy than an achievable goal. 

So, some first-time homebuyers are taking a more creative route to make it happen—by pooling their finances with partners, friends or roommates. (WSJ, paywall.)

The pandemic added fuel to that trend, according to data from the National Association of Realtors. Among all age groups during the early pandemic months—April to June 2020—11% of buyers purchased as an unmarried couple and 3% as “other” (essentially, roommates). 

Those numbers were up from 9% and 2%, respectively, in the previous year.

There may also be cultural factors at play in the co-buying trend. Many millennials are putting off getting married and having children until later in life than previous generations, but not all of them want to live alone. “A lot of them want to live in a communal setting, but they have enough money and they’re looking around at the increase in real-estate prices, and they want to get a foothold in this appreciating market,” says Andy Sirkin, a real-estate attorney specializing in co-ownership. 

Mr. Sirkin, who has worked on tenancy-in-common and joint-tenancy agreements for co-buyers since 1985, says he has seen a surge of interest over the past five years. A decade ago, he got maybe five requests a year, he says. Now, Mr. Sirkin estimates, he receives closer to two to three inquiries each week. 

A joint tenancy is more popular among unmarried couples or family members, because it allows owners to pass along their ownership rights to their co-owners in the event of their death. 

Tenancy-in-common agreements are more popular between friends and roommates who prefer their ownership to pass to their heirs rather than their co-owners.

Another option for groups who plan to rent the property or don’t use it as their primary residence is to form a limited-liability company, which can provide co-owners with protection from individual liability. But doing so can eliminate some tax benefits of homeownership, like mortgage-interest tax deductions. 

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