BMO commits $5B to inclusive economic recovery in the U.S.

Chicago’s BMO Financial Group, the eighth largest bank in North America by assets, has pledged $5 billion over the next five years “to advance inclusive economic recovery in the United States.” 

The $974 billion company,a highly diversified financial services provider that has been serving customers for 200 years, pledged to commit up to $3 billion of that total to community reinvestment in affordable housing and neighborhood revitalization. Another $500 million will go to mortgage lending in low-to-moderate income communities.

BMO Empower initiatives aim “to address key barriers faced by minority businesses, communities and families” through a series of long-term commitments, to be fully unveiled on Thursday, Nov. 12, 2020 at 1:00 pm CT a virtual event hosted by BMO.

The company also announced that the virtual event, themed “Getting to Economic Equity,” will feature a panel discussion with distinguished business and community leaders, including Chicago Mayor Lori Lightfoot and Earvin “Magic” Johnson, chair and CEO of Magic Johnson Enterprises, and will focus on the role public-private partnerships play in advancing racial and economic equity. (Anyone can register here.)

“The barriers that disproportionately affect minorities and in particular, Black and Latinx communities have only intensified during the COVID-19 pandemic,” said David Casper, U.S. CEO, BMO Financial Group. 

“The bold commitments outlined in this pledge are designed to help tackle barriers to inclusion in the financial services industry and create more opportunity for our clients, communities and colleagues to succeed in business and in life.”

“We must work together to break down the economic inequities created by generations of systemic racism,” said Marc Morial, president and CEO of the National Urban League. “I am excited to see BMO stepping-up to help create a more just and equitable society.  BMO EMpower represents a transformative approach for addressing the key drivers of the racial wealth gap through direct investment in Black and Latinx communities.  We are proud to partner with BMO as we endeavor to pave the way for a brighter future for all.”

Other BMO’s commitments to empower a more equitable economy include:

  • $500 million for minority commercial lending to minority-owned commercial businesses
  • $500 million to advance supplier/business diversity initiatives, diverse talent
  • Advancement and philanthropy targeted at systemic change including: An additional $250 million in spend with diverse suppliers across North America and supplier outreach; and increase minority investment managers on the company’s platform 
  • $300 million for small business lending to expand resources for women, Black and Latinx owned small businesses
  • $300 million for critical support for municipal and non-profit clients

The commitment builds on BMO’s continued focus “on creating a society with zero barriers to inclusion,” the company said.  

Inclusion efforts also are taking place among BMO teams at all levels, as well as through community alliances and partnerships via BMO’s recently announced increased representation goals and by donating to organizations focused on social and racial justice. 

Supporting an inclusive society is one of the three key commitments in BMO’s purpose to Boldly Grow the Good. (Regular updates on the BMO EMpower initiatives will be available online.)   

“There is no middle ground on issues of racial injustice and inclusion, and we are working to ensure that we are a meaningful part of that change,” added Casper. “That includes making direct investment to empower economic equity for underserved communities.”

Dodge: Slow construction recovery — except SFH 

The 2021 Dodge Construction Outlook report released by Dodge Data & Analytics expects total U.S. construction starts will increase 4% in 2021, to $771 billion, led by single-family housing.

“While the recovery is underway, the road to full recovery will be long and fraught with potential potholes. After losing an estimated 14% in 2020 to $738 billion, total construction starts will regain just 4% in 2021,” said Richard Branch, chief economist for Dodge Data & Analytics, a construction industry forecasting and business-planning firm in operation for more than 125 years. 

“Only the residential sector will exceed its 2019 level of starts thanks to historically low mortgage rates that boost single family housing,” he said.

The report predicts single-family housing starts will be up 7% in dollar value, while the number of units will grow 6% to 928,000 (Dodge basis) driven by low rates “and a preference for less dense living during the pandemic” that are clearly overpowering short-term labor market and economic concerns.

As a result, multifamily construction ”will pay the price for single family’s gain,” as high-end construction in large metro areas combined with declining rents will cause a decline of 1% in dollar value and 2% drop in the number of units started to 484,000 (Dodge basis).

After the strong impact of the COVID-19 pandemic and recession, leading to a deep drop off in construction starts in the first half of 2020, Branch continued, “uncertainty surrounding the next wave of COVID-19 infections in the fall and winter and delayed fiscal stimulus will lead to a slow and jagged recovery in 2021.” 

He expects business and consumer confidence to improve however, by further stimulus in early 2021 and if a vaccine becomes more widely distributed, “but construction markets have been deeply scarred and will take considerable time to fully recover.”

The dollar value of starts for residential buildings will increase 5% in 2021, nonresidential buildings will gain 3%, and non-building construction will improve 7%, the report notes. 

Following are the 2021 patterns for other specific segments.

  • Commercial/Office  building starts will increase 5% in dollar value led by warehouse construction “as e-commerce giants continue to build out their logistics infrastructure.” Office starts will also increase “due to rising demand for data centers and renovations to existing space. Retail and hotel activity will languish.
  • Institutional construction starts will increase only 1% “as growing state and local budget deficits impact public building construction.”  The forecast I up for healthcare starts as hospitals seek to grow bed counts, while education construction will continue to decline.
  • Manufacturing plant construction will remain flat mostly due to “weak domestic and global activity.” 
  • Public works construction starts also will see little improvement due to continued uncertainty surrounding additional federal aid for state and local areas. 
  • Utilities/gas/wind plants will gain 35% in 2021, driven in part by an increasing number of wind farms.

Firm formed to focus on mobile home loans

Matt Douglas, principal of Venture West Funding (VWF) a mortgage broker headquartered in El Segundo California, has organized SJM Mohome, LLC as an investor group that specializes in purchasing portfolios of mortgage loans on mobile homes. 

“Among the changes caused by the Covid-19 pandemic, we have seen renters in densely populated cities eager for more space and the pride of homeownership, and the mobile home market is flourishing,” said Douglas.

SJM Mohome has now officially entered the market with the acquisition of its first portfolio of 60 mobile home loans, according to Douglas, “owned by a trust which was eager to liquidate and donate the proceeds to charity.”

The majority of these mobile homes are located in Southern California, backed by well performing loans “with satisfactory yields.”

“We’re looking for more opportunities like this to grow the SJM Mohome portfolio to 500 -1000 loans,” added Douglas.

SJM Mohome will benefit from the wholesale broker and correspondent business expertise of VWF executive team. Privately owned, VWF has consistently produced nearly one billion dollars in annual funding, according to the company website, since founding over 20 years ago to provide mortgage loans secured by apartment buildings, commercial properties, and single-family homes.

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