Episode Transcript
[00:00:01] Speaker A: Damn, bro, I know you were ready. All right. Hey, let's do this again.
[00:00:06] Speaker B: I already hit go.
[00:00:07] Speaker A: Welcome to Real Estate makes us drink. We're happy you're here. Brian Quinlan from Daniels Real Estate.
[00:00:12] Speaker B: Brad Nickam, Nest Mortgage Group.
[00:00:15] Speaker A: And for I believe the third consecutive episode, maybe more, we have another guest today. Sir, welcome to the show.
[00:00:23] Speaker C: Thank you very much. How are you having me? My name is Josh. I'm with Union Home Mortgage. I'm the national sales manager of the third party origination team, which is basically wholesale and non delegated correspondent.
[00:00:36] Speaker B: Those are big words right there.
[00:00:38] Speaker A: A lot of that I have no idea.
[00:00:40] Speaker C: We do nation.
[00:00:41] Speaker A: What the hell all that means in a minute. Thanks for being here.
[00:00:45] Speaker C: Thank you for having me.
[00:00:46] Speaker B: I've been trying to get him here for a walk.
So what are you drinking there, Brian?
[00:00:51] Speaker A: Wow, this is very cloudy, sir.
[00:00:55] Speaker C: Definitely. Cheers.
[00:00:57] Speaker B: I bought this like my pee on New Year's Day.
[00:00:59] Speaker A: Freaking hilarious. This is called Jorts Pale Ale.
Jorts. The. The picture is fantastic. It says perfect or the article of clothing perfect for any occasion.
[00:01:12] Speaker C: It sounds like something you find in your shorts.
[00:01:16] Speaker A: That is. That is something.
What do you.
[00:01:21] Speaker B: Wow.
[00:01:22] Speaker A: This is amazing. You're drinking tequila every day.
[00:01:24] Speaker B: Brother Siempre was the empres. The emperor.
[00:01:28] Speaker C: This is so. Every day, right?
[00:01:30] Speaker B: Every day. That's right.
[00:01:31] Speaker A: Important wording there.
[00:01:32] Speaker B: Somebody asked me, they said, do you drink tequila almost every day? And I was like, well, you need to roll out the word almost.
Easy, easy.
[00:01:41] Speaker A: Every day.
[00:01:42] Speaker B: So this is a phenomenal tequila made at NOM 1414. Master distiller Sergio Cruz. That's right.
[00:01:51] Speaker A: So did he give that to you as well?
[00:01:53] Speaker B: Did.
[00:01:54] Speaker C: Sure, yeah.
[00:01:55] Speaker B: What. What did you think of that?
[00:01:56] Speaker C: I thought it was very good.
[00:01:57] Speaker B: You like it?
[00:01:58] Speaker C: I. I do. I'm typically not a. I like it on the rocks, usually.
[00:02:02] Speaker B: Oh, well, there's still a little ice behind you.
[00:02:04] Speaker A: A little ice in this little machine.
[00:02:05] Speaker B: A little ice in there. If you want to. That is help yourself. You're drinking a terra alta. It comes from NOM 1579.
It's a amazing, amazing tequila.
[00:02:15] Speaker A: We're fancy here. All right, well, if you're watching us on YouTube, please hit that subscribe button. Give us a thumbs up at some point because you're going to love something in this episode and leave a comment while you are sharing this.
[00:02:28] Speaker B: Thumbs down too?
[00:02:29] Speaker A: No, thumbs it down. I've taken it out.
[00:02:32] Speaker B: Does it hurt your algorithm?
[00:02:34] Speaker A: Probably. I mean, it's feedback, I suppose, is feedback, I guess.
[00:02:38] Speaker B: Yeah.
[00:02:39] Speaker A: And you've got us on a bunch of audio podcasts.
[00:02:42] Speaker B: I do every place that you can get audio podcasts.
[00:02:44] Speaker A: Okay.
[00:02:45] Speaker B: From Apple Podcasts, Apple, whatever it's called. I don't know. All of them.
[00:02:49] Speaker A: Yeah, all of.
[00:02:50] Speaker B: That's the one you listen to Spotify?
[00:02:53] Speaker A: No, actually, I don't. The podcast app that's on my iPhone, so probably Apple Podcast.
[00:02:59] Speaker B: Yeah, yeah, you can get it on all of them.
[00:03:00] Speaker A: Oh, that's exciting.
[00:03:01] Speaker B: It's pretty neat.
[00:03:02] Speaker A: That is good stuff.
[00:03:03] Speaker B: So. So Josh is. Is a friend of mine that I'm excited about having here. We. We first met through another guest that was on the show, Kevin Davis.
[00:03:12] Speaker C: Kevin Davis. Kevin Davis.
[00:03:14] Speaker B: Kevin introduced us and we went to Wookies, and I think we bonded over a glass of tequila and talked about mortgages.
[00:03:20] Speaker C: We definitely talked more about tequila than we did mortgages.
[00:03:23] Speaker B: Yeah.
[00:03:24] Speaker C: Told me about your bar and I was like, man, maybe he's, you know, one of those guys who, you know, exaggerates a little bit. When I got here, I was like, oh, he's very humble.
[00:03:35] Speaker A: Well said.
[00:03:36] Speaker B: Yeah, it is a bit of a bar.
[00:03:38] Speaker A: It is a sight to behold that when I first showed up at Brad's house, which was three Novembers ago, so what are we talking? November 22nd. I was here for Casino Night. First time I had been here and this was in effect, and I was like, that's pretty amazing. The amount of tequila that has absolutely taken over. And this is actually a 20, 24. Doing wasn't right. No. Yeah, yeah.
[00:04:06] Speaker B: Anyways, we're well over 146 or 148.
[00:04:09] Speaker A: Models, and you are quickly running out of space. Tequila used to just be like this wall back here, and now it's all over the side and you're about to run out of space. What is going to happen?
[00:04:23] Speaker B: Well, we're thinking about some shelf manipulation and addition, so.
[00:04:29] Speaker A: Know what I'd like to see?
[00:04:30] Speaker B: What?
[00:04:30] Speaker A: I don't know. You don't have room for it. But you know the ladders? The old library with the ladder that slides back and forth? That's what you need.
[00:04:37] Speaker B: Yeah.
[00:04:38] Speaker C: I feel a little dangerous later in the night.
[00:04:40] Speaker A: That's true.
[00:04:40] Speaker B: You know, I've already fell once standing.
[00:04:44] Speaker C: Why? That's funny to me.
[00:04:44] Speaker B: It is hilarious.
[00:04:45] Speaker A: It is.
[00:04:46] Speaker B: It was on the ring camera.
[00:04:47] Speaker C: You know, I'm not supposed to laugh at that.
[00:04:49] Speaker A: He's.
[00:04:49] Speaker B: I stepped between the ladder and the bar and ended up on the floor and just trying to get something off the bar. So this. My hips didn't break, though, so I guess that's good.
[00:04:58] Speaker C: Okay. All your ribs.
[00:04:59] Speaker B: All my Ribs are there. Yeah. I stood up. I didn't do it just that high. I was kind of like, oh, okay.
Yesterday, I fell out of the damn Bronco. Oh, boy.
[00:05:09] Speaker C: Explain that to us in detail.
[00:05:11] Speaker B: So we left to go get Taco Bell because my wife wanted Taco Bell.
[00:05:14] Speaker C: Okay.
[00:05:15] Speaker B: So we drove down to the Taco Bell New Year's. Great New Year's Day dinner. Oh, for sure. I think it's some kind of tradition right up.
[00:05:21] Speaker C: Tacos, Taco Bell and tequila.
[00:05:24] Speaker B: Mexican New Year's. Right. So when we came.
[00:05:27] Speaker C: That's in Mexico.
[00:05:28] Speaker B: It's not. There's no Taco Bells in Mexico. We looked when we were in Guadalajara. We really looked. There's a lot of Popeyes and Hardee's and McDonald's and no, no Taco Bell aerial type. So I did not wear any shoes when I drove. I just had my socks on, of course, and my floor slick. It can be kind of slippery.
So I stepped out of the Bronco, and within a millisecond, I was on the floor. And it. It did not feel good.
[00:05:58] Speaker A: Did the ring camera pick that one?
[00:05:59] Speaker B: No, but I have no bruises. I really expected to bruise like an old man.
[00:06:03] Speaker C: Right.
[00:06:03] Speaker B: It was in park already.
[00:06:04] Speaker C: It just makes.
[00:06:05] Speaker B: Yeah, I just hit the. Hit the plaster and Lucy's like, so. Yeah, I guess that happens. If I was 10 years older, I'd probably broke a hit.
[00:06:18] Speaker A: Yet you are not.
[00:06:20] Speaker B: Nope. Thank goodness.
[00:06:21] Speaker C: I would stop saying that. You might attract it a little sooner than later.
[00:06:24] Speaker B: This is true. Well, I'll keep running. Maybe I'll outrun that old man.
[00:06:27] Speaker A: There you go.
[00:06:28] Speaker B: They say, don't let the old man in.
[00:06:30] Speaker C: Right.
[00:06:30] Speaker B: That's what Toby Keith saying. Does he. Did he? It did. Well, actually, he got the advice from Clint Eastwood. He asked how you stay so young and do what you do at 90 years old. And he said, don't let the old man in. So there you have it.
[00:06:43] Speaker C: So Clint's still saying that today?
[00:06:45] Speaker B: Yeah, Clint still says it doesn't sound the same.
[00:06:47] Speaker A: So I think you remember don't let.
[00:06:49] Speaker B: The old man in.
That's right.
[00:06:53] Speaker A: Oh, damn.
[00:06:54] Speaker B: That sounds like a dirty, hairy type voice. Right?
[00:06:56] Speaker A: Yeah, definitely nailed that.
[00:06:58] Speaker B: All right, so, Josh, we have you here to explain a portion of the real estate world, which we haven't talked real estate in a few shows.
[00:07:06] Speaker C: Correct.
[00:07:07] Speaker B: We had a beer guy on and a handyman guy on, and we talked about television shows and firemen and we talk about everything on that one.
[00:07:16] Speaker A: Before you get to your question, you know what we did talk about?
[00:07:18] Speaker B: What's that that I.
[00:07:19] Speaker A: Maybe we need to update the folks maybe there.
[00:07:22] Speaker B: You're gonna run a marathon.
[00:07:24] Speaker A: I. I did agree to run a marathon, which I've never done in my life. The goal is to raise a thousand dollars for charity of my choice. And so we're. We're in the process of going through.
[00:07:38] Speaker B: That because the last guest laid how.
[00:07:40] Speaker C: Much money I got.
[00:07:41] Speaker B: He laid a hundred dol and said.
[00:07:44] Speaker C: About this but oh, oh, I got 60 bucks.
[00:07:46] Speaker B: Oh, there you go.
[00:07:47] Speaker A: There we go.
[00:07:48] Speaker B: We are closer already to Brian running a full marathon. I'm gonna get you a training.
[00:07:55] Speaker C: Never have cash on me ever.
[00:07:57] Speaker B: That's why it was meant to be. It's meant to be.
[00:07:59] Speaker C: It was.
[00:07:59] Speaker B: I'm telling you what I. I'm gonna go ahead and.
[00:08:01] Speaker C: It was just in my jeans today. So I was like, okay. I guess it's staying there.
[00:08:04] Speaker A: Outstanding.
[00:08:05] Speaker B: I'm going to email you a training regiment tomorrow because you're going to need it. I already know because I. Fred is probably already venmoed 100 bucks if I know Fred. Fred's already on.
[00:08:14] Speaker A: It's in, baby.
[00:08:15] Speaker B: So okay, you're ready to marry.
[00:08:16] Speaker A: Wife may actually throw some money.
[00:08:19] Speaker B: We're just gonna hold that money down.
[00:08:20] Speaker A: With some people to train me to do this though. She doesn't do that either.
[00:08:25] Speaker B: But whatever.
[00:08:25] Speaker C: So she's gonna train you to do it. Is she gonna have a scooter? Right.
[00:08:28] Speaker A: I have no clue what she's planning.
[00:08:30] Speaker B: We shall see. Wow. It could be like Rocky where they just drove in a car ahead of you.
[00:08:34] Speaker A: This is exciting. I'm looking forward to that.
[00:08:36] Speaker B: You're going to.
[00:08:36] Speaker C: Congratulations. I'm excited for you.
[00:08:38] Speaker A: Thank you.
[00:08:39] Speaker B: And you lose £50.
[00:08:40] Speaker A: Whoa.
[00:08:41] Speaker B: You're going to look like a toothpick.
[00:08:43] Speaker A: Oh, the best. All right. So you were going to ask Josh.
[00:08:46] Speaker B: So Josh, we have you here because you're going to explain a portion of this business that I've been in for 30 years that is confusing to a lot of people.
So as a non delegated mortgage banker, we write the loans, we fund the loans, but we don't take the payments.
So we call that a servicer.
[00:09:09] Speaker C: Yes. You sell the loan.
[00:09:11] Speaker B: Sell the loan to this guy over here. And then what do you do with it? Explain how it gets securitized in a.
[00:09:22] Speaker C: In a way that's a whole separate.
[00:09:24] Speaker B: Subject that people can understand. You gotta. We're gonna bring this down to the. The way you'd explain it at a bar. Drink with crayons.
[00:09:31] Speaker C: Yeah, let me get my crayons.
[00:09:32] Speaker B: Out crayons.
[00:09:33] Speaker A: Yep.
[00:09:34] Speaker C: All right, so I'll try to do that. So you, they closed the loan with you. Right. And so at about, so when they sign, they sign a note and in about three to five days you, the, you ship the title, ships that note to your warehouse bank.
[00:09:49] Speaker B: Yep.
[00:09:49] Speaker C: And then that warehouse bank ships the note to us, that wet document. And then at that point we then purchased the loan, we wired the money to your warehouse bank, reimbursing your company. So at that point we own the loan and we basically over. It's about a 60 day process. We call it onboarding. And so then we send out a welcome letter, we place a phone call just letting them know, you know where to make the payment. Really?
[00:10:19] Speaker A: Hey, we bought your loan.
[00:10:20] Speaker C: Yeah, here we go. Hey us and you know to let them know to set up and log on to the website, set up ach all that fun stuff. And at that point really we're just collecting payments.
We have the loan insured through Fannie Mae or Freddie Mac, you know, the government agency that does the AUS underwriting and basically we just continue to collect payments until they either refinance it or they sell it and they need a payoff. And to send. That's in layman's terms.
[00:10:53] Speaker B: That's very, that was a very short.
[00:10:55] Speaker A: Yeah.
[00:10:56] Speaker B: Answer to what could have taken three hours to explain. Well, you got into securitizing now maybe.
[00:11:03] Speaker A: Without, maybe there is no technicality to this at all. You said it takes about 60 days to do all of that. What's happening in those 60 days?
[00:11:10] Speaker C: So at that point, you know, we get back the closing package, the hundred pages of documents either wet or electronically signed, we sort through that, then we take that package and our team loads the data into a separate servicing system. So that's the portal where the borrower would log into to make payment to see escrows, see how much upload insurance. They have homeowners insurance. So if they ever had to make a change they can then upload it there. So if their loan is escrowed, we make that insurance payment for them every six months or, or a year. And we have a separate team that has that file. We send it to Fannie Mae and then they insure that file. And so at that point really it's, I mean it's, it's really basic. It's, it's not complicated. So it's just a lot of paperwork dealing with a lot of agencies auditing the file and getting the borrower ready to collect payments. I mean make money on the interest. It's as simple as that.
[00:12:10] Speaker B: Okay, so. So when you say insure the loan, that doesn't mean it's not a Fannie Mae loan or a Freddie Mac loan. It's still your loan. They only get involved if that borrower goes into foreclosure or stops paying their payment, correct?
[00:12:24] Speaker C: Yes, correct. Because. Yes.
[00:12:27] Speaker B: And that's where mortgage insurance, which is.
[00:12:30] Speaker C: The big if there's mortgage, big bad thing.
[00:12:32] Speaker B: Right.
[00:12:33] Speaker C: All loans have mortgage insurance. Right. So certain loans of values.
[00:12:36] Speaker B: Mortgage insurance would cover that first 20% and then Fannie Mae would cover the rest. And you're off the hook. And I'm off the hook.
[00:12:45] Speaker C: The kind of.
[00:12:47] Speaker B: As long as it doesn't happen within so many days.
[00:12:49] Speaker C: Correct. A lot. Depending on, you know, the situation. You know, we can be on the hook and you can be on the hook. Depending.
[00:12:56] Speaker B: Absolutely.
[00:12:57] Speaker C: You know, if there's, you know, the F word or, you know, if there's no payments, defaults, you know, there's. There's certain risk that everybody does take.
[00:13:06] Speaker B: There's two F words. One of them is first payment default is one of the efforts.
[00:13:11] Speaker C: You know, it's interesting. So you bring up first payment defaults. And So I manage 28. Well, 27 salespeople. I still produce myself. But at the end of the past, the 16th. Right. And the 15th, you have zero late fees. If you go to the 16th, you have to pay a late fee. Sometimes it's 1 or 2%, you know, so it could be, depending on your payment, you know, 200 to $500 late fee.
But then we get a list and senior management gets a list and we share it with sales. And you see, all right, we had 18 first payment defaults potentials coming up. So they're all late. They all have a late fee, FYI. So certain, we have a special team that starts calling them. Hey, make your payment, make your payment. You know, this is the first payment. And usually the borrower would get that first payment coupon at the closing. Sometimes they don't. They also should get the welcome letter. They should have the welcome phone call. So they shouldn't know where to make the payment. But for whatever reason they have it in this situation, at least that's the.
[00:14:11] Speaker A: Excuse they give you. I never got that.
[00:14:14] Speaker C: Yeah, but you know, you just signed, you know, 45 days ago, per se, give or take on average.
But it was. So we kept discussing a lot of these people we couldn't get a hold of. And you know, the holidays are here, right during the middle of the week. So people are traveling. But we realized all these people are waiting to the last day of the. Because they're spending money on Christmas, right?
[00:14:35] Speaker B: Yeah.
[00:14:35] Speaker C: And it was just like it was. But it was, it was nerve wracking. We all of all 20, 18 or 19, I forgot what exact number it was, but we got them all except for one.
[00:14:44] Speaker B: Nice, very nice. Like you said. And I've never had a first payment default.
[00:14:48] Speaker C: Well, I never.
[00:14:49] Speaker B: 27 years, so.
[00:14:50] Speaker C: Right. But out of the TPL team, which wasn't me, my loan.
[00:14:52] Speaker A: Sure, sure.
[00:14:53] Speaker C: But yeah, we had one.
[00:14:54] Speaker B: Wow. So now, so what does it hurt for the customer? Because you know, I have people say this all the time, what happens when my loan gets sold? You know, is it going to cost me more? You know, how does my interest rate change when somebody buys a mortgage from another mortgage company? So as a servicer, if you sell that to somebody else, how does that affect the customer?
[00:15:17] Speaker A: I'm Brian, your Indianapolis Realtor. If you are looking to buy or sell a house in the Indy area, I'm your guy. If you're coming from out of state, want to make a move to the Indy area, I'm your guy. Check out the show notes for a link. We can get in touch and get you started. Thanks for watching. Now back to the show.
[00:15:35] Speaker C: It really doesn't, besides the portal they're making the payment to so I mean it might be a pain in the butt because they have to, you know, go in and, and reprogram it or set their ach. But a lot of times with the technology today we sell loans. You know, we, in the, in March or April we sold roughly 10,000 loans. You know, of the 30,000 or so we had 40,000, give or take.
And that technology transferred over that bank we sold them to was utilizing the same technology. So that ACH automation, they didn't have to even go and reset that up, which was nice.
[00:16:10] Speaker B: So there's no fear if your loan gets sold, you're buying the note as is and that note can't be altered or changed because you're buying what's already been recorded.
[00:16:18] Speaker C: 30 are fixed.
[00:16:19] Speaker B: Right.
[00:16:20] Speaker C: I mean so there's. Loans have value, right? So yeah. But the first payment, obviously that the values deteriorate if they don't make that.
[00:16:29] Speaker B: Right.
[00:16:30] Speaker C: So at that point we believe there's something that went wrong in the origination process or that loan shouldn't have been originated or there's an extenuating circumstance like the one that didn't make their payment. We learned through servicing she was Caring for her brother because he got shot five times.
[00:16:47] Speaker B: Wow.
[00:16:47] Speaker C: So we, I mean, obviously. And then she had an issue, her employer supposedly had an issue with their payroll system and whatever. You know, the combination of.
[00:16:58] Speaker B: I have a customer right now that hasn't been paid for 90 days from their employer.
[00:17:02] Speaker C: I mean not even cash.
[00:17:03] Speaker B: No.
[00:17:04] Speaker C: And they still going to work.
[00:17:06] Speaker B: Yeah. And it's a fairly big press, a fairly big tech company.
[00:17:10] Speaker C: I think I would have stopped after 60, 90.
[00:17:13] Speaker B: And they've promised them all this back pay and there's a promise that their company's being purchased and it's a huge tech firm and. Wow. And then I, I'm having trouble doing that loan. I can't prove that they're getting paid.
[00:17:25] Speaker C: Yeah. I would not do that loan. I wouldn't, we wouldn't take that.
[00:17:28] Speaker B: Oh, it's, it's insane. It's his employer.
I mean, crazy.
[00:17:34] Speaker A: So how do you decide when you all sell the loan, which ones to sell?
[00:17:41] Speaker C: Well, it depends on how the interest rate. The depends when the loan was originated in some cases depends on the type of loan because we also originate fha, usda, va. So usually we'll sell, you know, conventional as a, as a batch and then fha.
And then it also depends on the secondary market conditions, you know, how much those loans can be worth. If interest rates are rising and they're lower interest rates, those loans are worth more because they're not going to refinance so quickly. Right. So they're going to continue to pay their payment because they're. Unless they sell the home or they need cash out. Right. That loan is going to continue to repay.
[00:18:22] Speaker B: Okay. What's the average length that a person pays a 30 year mortgage?
[00:18:28] Speaker C: About 4 to 5 years.
[00:18:30] Speaker B: Used to be 7 back in the day.
[00:18:32] Speaker C: Yeah. But it's on average it's 5. If I had a, you know, isn't that something?
[00:18:37] Speaker B: You didn't know that is it?
[00:18:38] Speaker A: No, I had no idea.
[00:18:39] Speaker B: Yeah, it's, it's amazing.
[00:18:41] Speaker A: Would have guessed longer.
[00:18:42] Speaker B: It's because rates are cyclical. So, you know, everybody's into a higher rate today. Three years from now, maybe rates will be lower. They're all refinanced. They've. They're now, they've been there six years, seven years. So they sell their house and buy a new and start it all over again.
[00:18:55] Speaker C: Right. I mean that was the previous average. Right. We just went through covet in the lowest rate term coming back up.
[00:19:00] Speaker B: Yeah, I really.
[00:19:01] Speaker C: You have a batch of loans that have high 2 to low 3% interest rates and it'll be very surprising to see us get back down there. So those loans have a long shelf life.
[00:19:14] Speaker B: Sure. Yeah. I told my kids that I ruined them.
They'll never buy another house because they got twos. But you know, I in I told Brian that, yeah, the mortgage business before Christmas was dead. Like if, if they would have said, if you're a loan officer, it's illegal, I would not have been arrested for two weeks before Christmas. You couldn't have told I was in the mortgage business. And the day after Christmas it's blown up.
[00:19:42] Speaker C: And for you specifically, for me personally.
[00:19:45] Speaker B: And so, and one of the things that I've had people tell me is, screw it, rates aren't coming down, I'm buying a house.
[00:19:51] Speaker C: Oh yeah, you have to.
[00:19:53] Speaker B: They finally have just given up on it. Yeah. And let's just go buy a house. So which if you want to move. No one ever, I always, no one ever buys their house. And like, what do you like best about your house? Oh, my interest rate.
[00:20:05] Speaker C: Yeah. Well, no, it'll be a significant event. And values aren't coming down.
[00:20:11] Speaker B: Right.
[00:20:11] Speaker C: It's a supply and demand issue. And so all it's going to do is cost you more if you wait for the rate because the house is going to be more expensive. Right. At least you're building equity at the same time. And if, you know, you're so concerned with the rate, get a 20 year or 15 year mortgage and pay a little bit more, have a lower interest rate and pay your principal down faster.
[00:20:31] Speaker B: Okay, so here's a question is, do you think that ARMS are going to come back in a really competitive fashion with Fannie Mae and Freddie Mac like they were say 10 years ago?
[00:20:46] Speaker C: I don't see that. I don't, I don't really see it.
[00:20:51] Speaker B: They still don't have an appetite for any adjustable rate mortgages.
[00:20:53] Speaker C: Not right now, no.
I don't see it. I think maybe it would have to be, you know, non QM or, or community banks is really that just kill the market.
[00:21:04] Speaker B: That's the only place you see arms.
[00:21:05] Speaker C: Correct. Right. Because they hold that paper, they write that paper themselves. Right. They're not selling it and they're doing it to acquire banking business.
[00:21:13] Speaker B: Right.
[00:21:13] Speaker C: And really none of us can compete with that. Right.
[00:21:17] Speaker B: So, so what's Fannie Mae and Freddie Mac's aversion to ARMS today? Do you know, do they publish of why they don't want to do arms?
[00:21:23] Speaker C: I think from 2000, I think Fannie and Freddie, right. They got Away from second homes. They got away to. From investment properties.
[00:21:29] Speaker B: Did they ever.
[00:21:30] Speaker C: Primarily on owner occupied. And I think Fannie's more focused on, you know, the next administration coming in and them coming out of conservatorship. Right. And it gives two shits about the ARM product and what the street thinks.
[00:21:43] Speaker B: That's true.
[00:21:43] Speaker C: So.
[00:21:44] Speaker B: So do you think under the next administration, this conservatory that both Fannie Mae and Freddie Mac have been in and giving billions of dollars back to the United States government, do you think they're going to come out of it? You think, you think that's going to happen?
[00:21:58] Speaker C: I believe the, from what I hear from the industry experts, yeah, we believe that's going to happen by the end of the four years.
[00:22:06] Speaker B: So that help interest rates?
[00:22:08] Speaker C: I believe it will. Right.
[00:22:10] Speaker B: So you and I were talking before we started this. I want to say it like this. We were talking off camera.
[00:22:19] Speaker A: That sounds official.
[00:22:20] Speaker B: It did, didn't it? So real show. I said I think the interest rates are going to stay in the high sixes mid sevens through 2025. What's your thoughts?
[00:22:34] Speaker C: I believe they will as well. Probably mid sixes is my guess. You might see high fives for moments.
Very quick. 5, 8, 7, 5, 5, 9, 9.
[00:22:47] Speaker B: But other than that, I'd be cheering like a cheerleader at a Pacer game, no doubt.
[00:22:52] Speaker C: Yeah. Other than that, I think they'll just hover in mid sixes.
[00:22:55] Speaker B: I do.
[00:22:55] Speaker C: Two low sevens.
[00:22:57] Speaker B: And do you think that's just a.
And because of the environment of the economy that we're in, that's going to just keep it plug in there?
[00:23:05] Speaker C: Well, I think after the. Well, the first year needs to digest the administration's like tariffs. Right. That's scaring the market. Right. And so anytime you have instability, you're going to have, you know, fluctuating rates. So until they understand what the administration is going to do after the inauguration and then you'll, they'll. The Fed will meet more. Right. They'll give a few different guidances, then you'll see the rates settle down and hopefully come down.
[00:23:32] Speaker B: So what do you think we're going to see? Changes in maybe the CFPB or any loosening.
[00:23:40] Speaker A: You can't tell what CFPB is. I don't know.
[00:23:43] Speaker C: Consumer Financial Protection Bureau.
[00:23:45] Speaker A: Thank you.
[00:23:45] Speaker B: That's right. Are they helpful?
Ah.
[00:23:51] Speaker A: That was excellent.
[00:23:54] Speaker C: I'm a loss for words.
[00:23:57] Speaker B: They make Wells Fargo look bad, don't they?
[00:23:59] Speaker C: They definitely have brought some institutions to their knees.
[00:24:02] Speaker B: All right, so do you think.
[00:24:04] Speaker C: I don't think what they Got Wells Fargo, I mean, got in trouble for was bad. Right. So I mean they've done a few good things, but it's just more bureaucracy that charges that, that, that inflates the cost to produce and it gets passed on to the consumer. So today the consumer. So I got in the business in 2001, right before the 0809 market crash and I was a subprime rep. Imagine that.
[00:24:29] Speaker B: Yeah.
[00:24:30] Speaker C: And so it was my, my fault. And the appraisers, what company were you at? I worked for First Franklin.
[00:24:36] Speaker B: First Franklin Financial.
[00:24:37] Speaker C: Yeah. One day out of bankruptcy. Yeah.
[00:24:39] Speaker B: 100% finance, 580 credit score.
[00:24:42] Speaker A: Nice.
[00:24:42] Speaker C: Yes sir. But aside from that, that, that was healthy.
But I lost my train of thought.
[00:24:49] Speaker B: It's just thinking about those loans.
[00:24:51] Speaker C: Yeah, I thought about that. I'm like, those are not good loans right today.
[00:24:54] Speaker B: So, but so do you think we'll see any loosening of Fannie mae, Freddie Mac, FHA, go.
[00:25:02] Speaker C: So at that time between 2002 and 2009, the borrowers are making or being charged less per loan, 100% than they're being charged today. And part of that is due to the CFPB and all the over regulation of mortgage companies. Then they have to comply with that regulation. And that takes lawyers, compliance people, I mean all types of different departments, technology, right. To keep up with those regulations year after year. And you got to pay those people. So guess that's passed into the cost of, to produce and the loan. So on average, you know, people, they're probably being charged 30% more than they were, you know, 20 years ago.
[00:25:43] Speaker B: 100%. Dodd Frank created this whole system that just created extra expense not only in the mortgage world, in the compliance world, but then also in the appraisal world. I mean think about it. We took an appraiser and said, okay, you no longer can just appraise for this company. Now you have to have a company in the middle that we have to pay to manage. You have break that company and it's doubled the cost of appraisals it's taken. You know, we used to say that a processor could close 30 loans for a loan officer back in the day before 2008.
[00:26:16] Speaker C: That's a great processor.
[00:26:17] Speaker B: That's a great processor. But today I'm going to say that that's 10, that's 10. 10 loans for a processor for a month. And then now you have two compliance people.
[00:26:30] Speaker C: Yeah.
[00:26:31] Speaker B: And usually a junior processor involved as well.
[00:26:33] Speaker C: Wow, I can see that.
[00:26:35] Speaker B: And all those people are getting paid. So I have to Pass all that cost on.
[00:26:38] Speaker C: Yes.
[00:26:39] Speaker B: And a loan is so much more expensive today. The fee incomes on loans today versus the profit is so much different.
[00:26:44] Speaker C: Yeah, I mean every, every income inflation is up. Right. So. Well, it's all just passed down to the consumer.
[00:26:50] Speaker B: It's almost always when any government official from any aisle says, hey, we're going to help you.
Yeah, charge you a fee for that. Exactly.
[00:27:01] Speaker C: And you won't even know.
[00:27:04] Speaker A: But we're saving money over here.
[00:27:06] Speaker B: So do you think we'll see any lessening of actual loans or the process? You could get easier or they hard.
[00:27:13] Speaker C: Be neutered per se. With this administration, they just won't be enforcing as, as hard say their quota would be less. Right.
I mean, I think, you know, with this administration being pro business, you know, you want people to be able to develop, but not at the cost of, you know, bad business.
[00:27:32] Speaker B: No, a hundred percent.
[00:27:33] Speaker C: So I think, yeah, I think it'll be easier.
[00:27:36] Speaker B: No, nobody wants the cfp, the CFPB to go away so people can do unscrupulous things.
[00:27:42] Speaker C: No, nobody. I mean.
[00:27:43] Speaker B: Right.
[00:27:44] Speaker C: But the, the free market manages those companies out of business, naturally.
[00:27:48] Speaker B: Every time. Yeah. So except for Wells Fargo, they just hang on like a hair and a biscuit.
[00:27:54] Speaker C: I bet you bank there too, don't you?
[00:27:56] Speaker B: No, they don't bake in Indiana. You can't go to Wells Fargo in Indiana.
[00:27:59] Speaker C: I did not know that.
[00:28:00] Speaker B: No, you have to go to Chicago, which is great. If you have a customer moving Chicago.
[00:28:05] Speaker C: And I didn't know that, let's say.
[00:28:07] Speaker B: Have a customer moving to Indiana and they have all their money in a Wells Fargo bank and they've got to close on their loan and they need to do a wire. Wells Fargo will allow you to do a wire remotely, so you have to go to the bank to send your wire. So I had a, I've literally had a client that had to drive to Nashville, Tennessee to walk into a Wells Fargo bank branch to.
[00:28:27] Speaker C: What happened? Louisville. There aren't any in Louisville either.
[00:28:30] Speaker B: Not, not a single open branch. So what we did was close. We mapped out time wise. Yeah, he could drive to Nashville in four hours and get to a branch versus drive to the one in Chicago, which was in, in Chicago. So the, when we Google mapped it, one was like, you know, five and a half hours into Chicago and one was four hours into Nashville.
[00:28:52] Speaker A: So they're driving the wrong way.
[00:28:54] Speaker B: Have you driven in Chicago? Yes.
[00:28:56] Speaker C: Did they stop here and have some of your tequila before they.
[00:28:59] Speaker B: They did not. That's before my bar was Built. It's been a little while ago.
[00:29:03] Speaker C: Just checking.
[00:29:05] Speaker B: Yeah, that's how it works.
[00:29:07] Speaker C: So, you guys, Nashville's a fun place. I was just there a couple weeks ago.
[00:29:10] Speaker B: It's gotten pricey and crowded. Yeah, I told you. I told too many people about it.
[00:29:16] Speaker A: Damn you, Brad.
[00:29:17] Speaker B: So are you guys, like, a bank bank or just a mortgage bank?
[00:29:20] Speaker C: No, we are not a depository bank. We're just a mortgage bank.
[00:29:23] Speaker B: That's what I thought.
[00:29:24] Speaker C: Yes, sir.
[00:29:25] Speaker B: So the difference is someone that can go get a checking account or a savings account, that's a depository, but, yes, you're like me, just a mortgage bank.
[00:29:33] Speaker C: We only service mortgage loans, originate mortgage loans, buy mortgage loans, move papers. That's it.
[00:29:39] Speaker B: I always say we're in the business of selling money to people who buy money and sell money.
[00:29:45] Speaker C: That's a clear way to say it, I guess. Makes him 8 cents.
[00:29:50] Speaker A: That'll do.
[00:29:51] Speaker B: All right. Well, Josh, I appreciate you taking your time on a Thursday night, even though this is going to come out on a Sunday night.
[00:29:58] Speaker A: Correct.
[00:29:59] Speaker B: So we pretend it's a Sunday, but I know.
[00:30:01] Speaker A: Don't pretend it's a Sunday. We did.
[00:30:03] Speaker B: Yeah, we always do. Let's pretend it's today's Sunday.
[00:30:05] Speaker C: Well, I think you just, you know, let the secret out.
[00:30:08] Speaker B: I blew it. Yeah.
[00:30:09] Speaker A: Or 87. What? It's not even 87 watchers. It's teens of Watchers.
[00:30:14] Speaker B: Yeah, we have tens of followers now. This is something you don't want to put any ice in. Okay. This is a Siempre reposado. This is one of the best repos you will ever have. And we'll do our closing drink with a little repo.
[00:30:31] Speaker A: Let me pour my own.
[00:30:34] Speaker C: All right.
I think I'll come back again next week. You guys around?
[00:30:38] Speaker B: Yeah, we do it every other Thursday.
That's like a quarter ounce.
[00:30:42] Speaker C: I'll sit in his chair out there.
[00:30:44] Speaker A: That's why you're welcome anytime. There's always drinking.
[00:30:47] Speaker C: I appreciate you guys having me.
[00:30:48] Speaker A: Well, you know, we appreciate you being here to clear up something people know nothing about but always wonder, how did my loan get somewhere else?
[00:30:55] Speaker C: We bought it.
[00:30:56] Speaker B: There you go. All right. Well, cheers. Cheers.
[00:30:59] Speaker C: Cheers. Cheers.
[00:31:01] Speaker B: Alex, thanks for making fantastic tequila.
[00:31:03] Speaker A: Yeah. Thanks for watching Real Estate Makes Us Drink. Subscribe Share Comment. We'll see you next time. Cheers.
[00:31:11] Speaker B: Cheers. Wait.
[00:31:13] Speaker C: That is good.
[00:31:13] Speaker B: Isn't that freaking good?
[00:31:14] Speaker C: Delightful.
[00:31:15] Speaker B: It is.
