May 22, 2025 • 60 mins
This is a MUST LISTEN to call!! Packed with information you need as an agent!!
Mortgage rates remain in the high 6% to low 7% range as the Federal Reserve continues to prioritize fighting inflation over addressing rising unemployment levels. Student loan repayment options and HOA insurance requirements are undergoing dramatic changes that will significantly impact homebuyers.
• Interest rates spiked after Japan announced negative GDP, affecting international bond markets and pushing the 10-year treasury above the critical 4.5% threshold
• Pending legislation would eliminate most current student loan repayment plans, replacing them with just two options based on discretionary income percentages
• New HOA insurance rules require master policy deductibles to be no more than 5% of the coverage amount, with homeowners needing personal policies to cover these deductibles
• Many HOA boards and management companies are unaware of the new requirements, causing financing issues and delayed closings
• Instead of price reductions, sellers should consider interest rate buydowns to attract more qualified buyers while maintaining property values
• NOC lending allows homeowners to make non-contingent offers by advancing equity and guaranteeing the purchase of their current home
• Listing agents should proactively obtain and upload HOA documents to MLS and have master insurance policies reviewed by lenders
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
All right, welcome Nikki.
Thank you so much for joiningus at our meeting.
I know we have a lot we want tocover today, so we'll let you
begin.
I know we wanted to do a littlebit more on the student loans,
on interest rate update.
Okay.
Speaker 2 (00:16):
And update on the HOAs and insurance.
Speaker 3 (00:20):
Yeah, we know that that's a hot topic as well.
Yes, absolutely so.
Let's start out with interestrates, because that's always the
you know, the fun one to getout of the way, first and
foremost.
So about a week and a half agowe were on a really good track,
seeing interest rates down inthe lower sixes.
I was logging.
When it's 6.375, six and a half, everyone was happy.
(00:44):
Japan announced that they have anegative GDP this past week.
What that means is that theamount of income that they're
bringing into the country isless than by a huge amount that
people are spending in theactual country on their product.
So when that creates a negativeGDP, that actually hurts the
(01:05):
international bonds,international situation from a
stock and bond market, which inturn hurts the 10-year treasury,
which in turn increasesmortgage interest rates.
So when they went negative ontheir GDP, it created a huge
issue in the mortgage interestrate because of the trickle-down
effect and we saw rates go upto 6.875, 7, 7.25.
(01:28):
I even saw some as high as 7.5on a couple of the days Settled
back down afterwards.
Now we are still in that 6.875range, so higher than what we
were a week and a half ago.
The big thing right now is thatthe Fed is refusing to drop
their interest rate.
The reason that they're doingthat is because they feel like
(01:49):
inflation is not going to dropin the next month, next quarter.
The reason that they feel thatway is because they haven't seen
the effects of all the tariffsand they're basically scared to
see what's going to happen froma tariff situation.
They're basically scared to seewhat's going to happen from a
tariff situation, they feel like, even though they feel like the
(02:11):
number of new jobs added in andthe is going to be less than
expected and unemployment isgoing to rise, which is also a
factor as to why they would droptheir interest rate.
They feel like the inflationpiece is more important than the
unemployment piece.
We have higher unemployment, wehave less jobs out there.
Normally, the Fed will make anadjustment on their interest
rate to help stimulate otherparts of the economy.
(02:32):
If we have lower inflation, theFed will then also drop their
interest rate in order to meetthat lower inflation mark.
But since both are, they feellike the inflation number is
actually going to go back up.
They are saying we're not goingto lower our interest rate.
As a reminder, the Fed interestrate is not the mortgage
interest rate.
However, it does influence the10-year treasury bond, which is
what the mortgage interest rateis set at.
(02:54):
The 10-year treasury is atabove 4.5 right now, which is
that 4.5 mark is a veryimportant mark within the
10-year treasury bond.
The reason for that is when wego above 4.5, we have the
potential to go up, up, up, upup in interest rates.
If we go below 4.5, we have thepotential to go down, down,
(03:15):
down, down down in interestrates.
It's kind of what we call ourFibonacci level, or the level
where we go up or down based onwhere that bond is Right now.
As of yesterday, it was sittingat 4.59.
This morning, I believe, it'sat 4.61.
So we're going to see a littlebit of an increase in interest
rates here, at least temporarily, until the Fed meets again in
June and hopefully we'll getsome more data from the tariffs
(03:38):
and more data from theunemployment and things like
that the statistics and the GDPand all those numbers that are
going to be coming in that willhopefully influence the Fed to
make a different decision thanwhat they've already put on
record.
There are two voting Fedmembers right now that are on
the fence and saying maybe it istime for us to start lowering
those interest rates.
So two out of the 12 ain't bad,so we're going to get there
(03:59):
eventually.
So that's kind of what's goingon with mortgage interest rates.
If your clients ask, the answeris high sixes, low sevens for
now and it's probably going tostay that way, with some
volatility coming into the nextcouple weeks.
So that's what's going on withinterest rates.
It's no different than what wehad last year.
We're at the exact same spotthat we were 12 months ago,
(04:19):
ironically.
So, with that being said, let'smove on to kind of just some
topics I want to talk about.
Oh, student loans.
This is huge right now for anumber of reasons.
Fannie and Freddie, if you do atraditional conventional loan,
fannie and Freddie have policiesthat work with income-based
(04:41):
repayments, save repayments,standard repayments and all the
repayment options right now thatare available with federal
student loans.
They work with those options sothat if people are
realistically paying on theirstudent loans, we use those
payments for qualifying.
They also have opportunitiesthat if you are on an
(05:02):
income-based repayment plan andyour payment is zero, freddie
will allow you to use thatpayment.
Fannie will not.
Fha is completely different.
Fha says we will use actualpayment on the credit report as
long as it meets the halfpercent mark.
So half percent of the balance,or if the payment is zero, we
(05:22):
need to use a half a percent ifwe're qualified.
So FHA is a little bit morerestrictive.
Those are the rules right now.
So what has changed?
Well, back in January and intoFebruary, anyone that was on the
forbearance plan that was donethrough the Biden administration
.
Their plan came out offorbearance, which means that
(05:45):
they were responsible forsetting up a new payment plan,
income-based save plan, standardrepayment, extended repayment,
et cetera, et cetera by February1st.
If they did not do that andtheir student loan was still in
forbearance it then went intowhat's called a default status.
Was still in forbearance, itthen went into what's called a
(06:06):
default status.
What a default status means isthat any payments that they
didn't make while in forbearanceshowed up as lates on their
credit, started reporting lateto the credit bureaus.
So therefore you have peoplethat were on forbearance for 18
months, that did not dosomething with their student
loans and show a ton of latepayments, ie dropping their
credit score.
And there were a ton of peoplethat were in the middle of
(06:30):
mortgage loans, in the middle ofpurchasing homes that therefore
could not purchase them becauseof the situation that happened.
So that took an effect on a lotof people's credit, a lot of
people's ability to enter into apayment agreement because of
that default status.
So the Department of Education,working with the federal
student loan servicers, is nowworking through those
forbearance people who did notmake a decision on how to repay
(06:52):
their student loans, trying todo some corrective action, some
disputes to the credit bureauagencies and try to get things
corrected to show an accurateforbearance status and maybe one
30-day late when they finallydo get back to a new payment
plan.
So there has been some resultsof that incident that happened
as far as helping borrowers toget back a more favorable status
(07:14):
from a student loan standpoint.
With that being said, everybodyhears in the media the big
beautiful bill.
Well, what's not being talkedabout in that big beautiful bill
is the changes to student loans.
These are super importantstages.
Now, mind you, this bill hasnot passed.
So, just so you know, these arethings that are in the bill
that could happen but have notpassed yet.
(07:37):
So, first and foremost, from astudent loan standpoint, you
will no longer have a save plan.
You will no longer have a likea graduated extended repayment
plan.
There will be only two optionsfor student loan plans, and this
(08:02):
is for existing student loansand for any new student loans
that are taken out after January1st 2025.
The first one is called thestandard plan.
The standard plan uses yourdiscretionary income and
requires you to pay 1 to 10% ofyour discretionary income as
your monthly payment.
So, for example, for someonewho's making $60,000 a year,
$50,000 to $60,000 a year, 5% oftheir discretionary income is
(08:24):
going to go towards theirstudent loan payments.
For someone making $100,000 ayear, 10% of their discretionary
income is going to go towardstheir student loan payments.
So basically, the US governmentis saying we want our money
back Now.
If you make under the standardplan, if you make payments
standard payments for 20 yearson that plan, any remaining
(08:46):
balance is then forgiven.
The other plan would be what'scalled an income-driven
repayment plan.
The income-driven repaymentplan is really focused on people
who earn lower incomes andhelping relieve their payments.
So it includes things like youdon't have to pay as much if you
have a child, so for everychild that you have, you get a
(09:11):
$50 deduction on your payment.
It focuses on people who aremaking less than $50,000 a year
and talks about how much theyhave to pay this.
If you make payments on theincome-driven repayment plan,
you have to make payments for 30years before any remaining debt
is forgiven.
Coupled with this is going tobe any new student loans taken
out for a borrower after January1st 2026.
(09:35):
You are going to be limited to$50,000 a year from the Fed
federal government inavailability of student loans
and a parent plus loan of$50,000 as well.
Per year you have to exhaustyour $50,000 as a borrower
before your parents can pay theadditional $50,000 or sign a
(09:58):
loan for the additional $50,000.
So this is very importantbecause there was no limit
before and now they're limiting,saying, hey, you can't go into
a job where they're making,where basically the pay on the
(10:29):
job doesn't equate to being ableto pay the student loans off
that the college is going to beresponsible for paying back a
portion of those student loans.
So it's designed in holding thecollege accountable and saying,
hey, we have to take someresponsibility in lending to
this person who may get a degreein, let's call it, english and
(10:50):
have the potential and anEnglish degree has the potential
to make them $30,000 a year.
We need to be, you know, havesome sort of say and be
responsible in how much we'rewilling to lend them for this
education Okay, lend them forthis education, okay.
So what it's going to do isit's going to change a lot of
not only how students go tocollege, but on the mortgage
(11:10):
side, it's going to change a loton how we determine what
payments to use for qualifyingan individual, because if you
think about discretionary incomepercentages.
What does that even mean?
Like what do they considerdiscretionary income?
You know what do they take Dothey look at your credit report
and deduct your rent amount andthen take the remainder and, you
(11:32):
know, work out the percentage.
Who knows at this point, butit's going to change the
landscape for people who want topurchase homes, who are
currently in student loanrepayment or who are going to be
taking out student loans in thefuture.
So a lot of changes are goingto be happening.
Most likely, fannie and Freddieare going to follow the changes
(11:53):
that are being made under thebill if it does get passed and
the idea that it's whatever yourpayment is, based on what the
federal student loan departmentsays.
That's what they'll use forqualifying, because there will
no longer be zero payments onstudent loans.
Now there is an option you canstill go into forbearance, but
you can only be in forbearancefor nine out of 24 months, so it
(12:15):
means nine months on a 24-monthperiod.
So there are options to go intoforbearance, but those are
based on extenuatingcircumstances medical issues,
unemployment, things of thatnature that would prevent you
from making student loanpayments.
So there is an effort to say,okay, if you do have a life
event that happens.
We're not going to completelydestroy your credit.
(12:35):
You do have an option to gointo forbearance, but, mind you,
it's only nine months every 24months.
So a lot of this stuff that'shappening, that's in this bill,
is complicated and we're goingto have to do a wait and see
approach from a mortgagestandpoint, but there will no
longer be zero payments requiredon student loans, no matter
what, if this bill does pass,and therefore I assume that
(12:56):
Fannie and Freddie and FHA aregoing to follow suit and say
whatever is showing on thecredit report is what we're
using for qualifying, becausethat's what they're responsible
to pay.
Speaker 1 (13:12):
So a lot of stuff happening with student loans.
Questions yeah.
So what is the pulse in themortgage world on this?
Is this, in your opinion, good,like thumbs up, neutral thumbs
down, if you had to give a gut?
Speaker 3 (13:20):
feel.
If I have to give a gut feeling, and I have to say my personal
opinion is I'm giving it a mildthumbs up.
The reason for that is becausewhen we qualify borrowers right
now, if we have to use 1% of theloan amount or half a percent
of the loan amount, those arelarge payments that we have to
qualify the borrower with eventhough they aren't required to
make those payments.
(13:41):
So that's one of the positivesides is that we'll know what
they're actually paying eachmonth.
Obviously, the downside isright now, if we have clients
who are an income drivenrepayment and they aren't
responsible for making paymentsbecause their income is lower,
then we have an easier timegetting them qualified to
purchase a home.
Now, should somebody bepurchasing a home if they're not
(14:02):
paying on their student loandebt?
You know that's neither.
That's not up for me to decide,so it really just depends on
talking to the client budgetingstrategy, making sure they're
aware things of that nature.
Hey, if you have to startpaying on your student loans,
are you still gonna be able toafford this house?
You know those types ofquestions that you wanna ask
your client as you're kind ofgoing through the strategy, any
(14:28):
other questions.
It's a lot and I only gave aquick summary on that.
Changes with the big beautifulbill as far as student loans go,
so that's just a summary.
There's a lot more that goesinto it as far as what they use
to determine this information,but it's you know, in summary,
it's going to make it quite adifferent landscape from a
mortgage standpoint as far asqualifying goes.
(14:50):
So my job just got more fun.
Speaker 1 (14:55):
Always on your toes.
Yeah, exactly, exactly Good.
Speaker 2 (15:01):
I'm sure.
And when did you say it?
Say, you said the bill hasn'tpassed yet.
Speaker 3 (15:06):
So the big beautiful bill just passed through the
Budget Committee for theCongress.
It goes to vote in Congress, Ibelieve this week into next week
.
They believe that they haveenough support to pass it first
time around.
But there are some Republicanvoters that are going on record
already saying that they do notsupport the bill.
Republican voters that aregoing on record already saying
(15:27):
that they do not support thebill.
And so it may or may not.
It's going to take a little bitfor it to pass through the
House and I'm sure there'll besome changes and then if it goes
again to the Senate, then wehave to wait for the Senate to
pass it, so the Republicans havethe majority in the House and
the Senate.
This bill was designed by onlyHouse Republicans in a budget
committee, so no Democrats wereon the committee to help design
(15:49):
this bill.
So you can imagine from apolitical standpoint, as it goes
to Congress it's going to beprobably an automatic no from a
lot of Democrats without evenreading it, because they didn't
have input.
Speaker 2 (16:03):
But you said there's a couple republicans that are
already on record.
Speaker 3 (16:07):
They're more middle-of-the-line republicans,
um, that, have you know, aremore on the independent side but
go under the republican youknow party.
So there are some goods andbads to the to the bill.
Um, there are some very helpfulthings, um, I think there's
some helpful things for studentloans and the idea that you
don't, you're not going to letsomebody go into $300,000,
$400,000 in debt to go tocollege to get a job that's
(16:31):
$40,000 a year, things like that, and it's holding the college
accountable for the majors thatthey're offering and the
education that they're offeringand the job placement that they
can help with.
Speaker 2 (16:49):
Yeah.
Speaker 1 (16:51):
I think there's some good things to come of it in the
future.
Speaker 3 (16:57):
I know they wanted to pass by Memorial Day, but that
again is yeah, that's.
I mean, they are, they are.
It is sitting with the houseright now, but I really I don't
know when their first vote is.
I highly doubt it'll pass thefirst time, but what do I know?
Speaker 2 (17:09):
Yep, you just don't think it stays Okay.
Well, this is really good info,because I was kind of in the
dark on this.
Speaker 3 (17:12):
So yeah, yeah, and I would just encourage, if you do
have people who are first-timehomebuyers or people that you
know have student loan debt,make sure they're in
communication with theirservicer out of any changes that
are happening so that they canmake those decisions on making
sure that they have some sort ofpayment plan set up so that
they are protected in case thesechanges do come through.
(17:32):
And you know they're made aware.
But there's millions of studentloan holders that don't have
updated addresses, updatedcontact information, updated
emails, so they were not gettingthe notifications for the
February 1st changes.
Speaker 2 (17:48):
yeah, I think something may have happened with
my daughter.
With that I remember.
Speaker 3 (17:53):
I believe it, especially for young, you know,
20 something year olds who havemoved around.
I mean, the last thing thatthey think about is updating
their information with theirstudent loans, you know but all
of a sudden her paymentskyrocketed.
Speaker 2 (18:08):
She was on like a you know, income driven payment
plan and all of a sudden it justexploded.
Speaker 3 (18:16):
Yeah, cause she got put on what's called the safe
plan.
So anyone who is on an incomedriven repayment plan as of
January 31st got automaticallyflipped over to what's called a
save plan, and the save planbasically is based on last
recorded income and a certainpercentage of the balance.
So that's probably why it gotincreased so quickly.
Speaker 4 (18:40):
Wow.
Speaker 3 (18:41):
Okay so she could go back to the servicer and work
out another payment plan.
Okay, so I'm sure that they, uhyeah, overwhelmed with phone
(19:06):
calls and all of this.
So you have the one servicerthat's reporting them
continuously late even thoughthey don't hold the debt, and
then you have the new servicerthat can't get them set up in
the system to make payments.
So I have one client that'sstruggling with that right now.
That's been going on for notthree, four months.
So kind of crazy, yeah, yeah,super fun.
(19:30):
So kind of crazy, yeah, yeah,super fun.
Speaker 1 (19:33):
Thank you for all that information.
Yeah, yeah.
Speaker 2 (19:37):
So our last meeting we kind of in-house here talked
a little bit about I think Angiebrought up what was going on
with insurance and HOAs andwhatnot, and so maybe we can
talk about that.
I mean does?
Yeah, I quite didn't understandthe situation before.
Speaker 5 (19:55):
So if you could like, break it more down for me,
because I'm not computing.
Speaker 1 (20:00):
So the question's going through the HOA and what's
happening with insurance.
I know with like the one thatwe just went through with the
master insurance and everythingthat's changed that no one
really knows about, and nowespecially the HOA doesn't know.
So in our case, the one that Iworked through that ended up
canceling, it's the HOA and thenit's the management company and
(20:23):
then behind the managementcompany is the master insurance
policy holding company.
So there's actually threeentities and most associations
board members are members in thecommunity that are volunteering
.
So it's not like a positionthat you have to be hired for,
know our past tests or whatever.
So it's a lot of and what I sawand this is why we want you to
(20:48):
talk to us a little bit the lefthand definitely doesn't know
what the I saw and this is whywe want you to talk to us a
little bit the left handdefinitely doesn't know what the
excuse me right hand's doingwalking, running, crawling.
I mean no one understands whatthey don't understand.
And I know, nikki, I love thecomment you made at one point.
You said you could literallymake a career right now going
out and being a consultant forthese HOAs, because no one
(21:08):
understand what's going on.
Therefore, we're not educatedon it.
And it just all happened inthis first quarter and there was
no turnabouts.
All of a sudden, turnaboutshowed up everywhere.
You just drove up and you hadto figure out how to do a
turnabout.
So it's kind of like this, aroundabout type of a thing, so
same thing here.
So we'd love to have a littlebit of education on where we're
(21:30):
at as it sits today.
Speaker 3 (21:32):
Okay, so big changes implemented from HOAs and the
insurance requirements, as youmentioned, angie.
I'll preface this by saying usin the lending world, we've been
known about this for six monthsbefore it changed in January,
and it is impossible for us toget the word out in a meaningful
way to every single HOA andevery single association
(21:52):
management company.
Here's what I will say.
Most HOAs do have anassociation management company.
That association managementcompany is responsible for
helping the board members withbudgeting, insurance reserves,
maintenance items, assessments,things of that nature that help
(22:13):
the association run.
It is also their responsibilityto fill out lender
questionnaires as it pertains toindividual homeowners
purchasing homes or refinancinghomes within the community.
These lender questionnaires askquestions about ownership, in
other words, percentage ofownership by primary residence
holders, second home residenceholders and investment home
(22:36):
residence holders.
What percentages are owned bythose types of qualifying
borrowers?
It asks questions about themaximum number of properties
that one individual owns or oneentity owns within a community.
It asks what the reserve amountis.
It asks about different budgetquestions and it asks about HOA
(23:02):
coverage and special assessments.
These are all important thingsthat changed from a requirement
standpoint as of January 1st tomake sure that associations have
healthy budgets, properinsurance coverage, any deferred
maintenance taken care of andto make sure that if there was a
(23:26):
special assessment, that thehomeowners have the ability to
pay for it, outside of anythingthat's already in the reserve
account for the HOA First andforemost insurance.
It used to be that if you hadat least a million dollars in
liability coverage and twomillion dollars in building
coverage that you could qualifyand pass on the lender
(23:48):
questionnaire or the lenderrequirements.
On the lender questionnaire orthe lender requirements, the
important change that happenedwas the deductible amount.
It used to be that you couldhave a higher deductible for
your master policy insurancebecause that deductible amount
is paid for by the members ofthe home owners.
So, for example, if you had a$25,000 deductible and there was
(24:10):
, you know, 250 homes, everybodyhas to pay $1,000.
That homeowner in theirpersonal insurance policy has
coverage to cover their portionof the master insurance policy's
deductible.
Does that make sense?
So, $25,000 deductible, eachhome is assessed $1,000.
(24:30):
That homeowner says to theirinsurance company hey, I'm
assessed $1,000 deductible.
Each home is assessed $1,000.
That homeowner says to theirinsurance company hey, I'm
assessed $1,000 for deductibleon the master insurance.
The homeowner's insurancepolicy says no problem we got
you.
Here's your $1,000, goes to themaster insurance, your cover.
Okay, what was happening is thatyou'd have $100,000 deductibles
, $25,000 assessed per ownerinsurance coverage on the per
(24:51):
owner's end of $5,000deductibles $25,000 assessed per
owner insurance coverage on theper owner's end of $5,000.
So all of a sudden they have tocome up with $20,000.
So that's the reason that thatdeductible amount or percentage
changed.
It is now no more than 5% ofthe coverage amount.
So in other words, you cannothave a deductible that's
(25:13):
$100,000 for the homeowners.
It's going to be more like the$25,000 as described.
It can be no more than 5% ofthe replacement cost coverage
for the building for the masterinsurance policy.
On the flip side, the HO6policy or the homeowner's
personal policy is required tohave coverage for the deductible
(25:38):
for the master insurance.
They don't really say how much,but they are required to have
that coverage so that thatpolicy will kick in, pay for the
master insurance deductible tofix whatever needs to be fixed.
So this is a huge change.
Most insurance policies are atsomewhere around 10%.
(25:59):
Most master insurance policiesare somewhere around 10%.
Speaker 4 (26:03):
I just wanted to know on the HO6, then is that
something that they can put intothe HO6 that it would pay the
deductible up to a certainpercentage, correct?
Speaker 3 (26:18):
Yeah, it's either a certain percent.
Most of the time it's a dollaramount, most of the time we see
up to $5,000, but they can electto have more.
Okay, so if you you know yourinsurance, their insurance agent
should be able to talk to themabout the options, should be
able to look at the masterinsurance policy and should be
able to say, hey, fyi, thismaster insurance policy, you're
(26:38):
going to be responsible for sixthousand dollars, we'll cover
you for at least that much, youknow.
Whatever that amount is, that'swhat should be happening in
theory.
Speaker 4 (26:48):
So I have yep, I have um one client who have been
trying to deal with theirassociation the big one that
they have and they're like oh,you know what?
Our insurance hasn't beenupdated here since 2018.
But they don't have any ideawhat the deductible or anything
is Correct.
Speaker 3 (27:09):
So what's happening is is, as these policies come to
renewal, the associationmanagement company is supposed
to renew the insurance incompliance with fannie mae and
freddie mac guidelines when itcomes to coverages.
Now, whether they do remains tobe the question.
So a lot of times so when youare renewing master policy
(27:34):
insurance, it comes up everyyear to renew.
Most of the time, homeowners,board members, association
management companies they don'tlook at it, they're just like
renew it, move on.
Well, what's happening now isthe increase in cost of
insurance in general is causinga lot of these HOA management
companies and HOA board membersto say whoa, whoa, whoa, whoa,
(27:54):
wait a second.
This is a major increase to ourinsurance cost.
What's going on here?
The other thing is so they'llhave to correct it at that point
.
The other thing is is let's sayyou have a homeowner that wants
to purchase a home and close endof May, that new insurance
policy doesn't kick in untilAugust.
(28:15):
Let's say so.
In other words, they know theyneed a correction.
The new insurance policy willhave the correct deductibles
that fall within compliance ofFannie Mae and Freddie Mac, but
that won't go into effect untilAugust because that's when their
renewal is.
Fannie Mae and Freddie Mac sayif that renewal is within 60
days of your closing date and itis in effect by the time that
(28:40):
the client makes their firstpayment, then it is acceptable.
If you are closing May 31st,your payment is July 1st.
If that new thing doesn't gointo effect until August, nope,
got to delay closing.
Does that make sense?
So yeah, so what I've seenboard members say okay, can we
(29:02):
look at renewing early?
Well, if they look at renewingearly, it's costing them double
insurance, basically for howevermany months that they're
renewing early at.
So in other words, if thepolicy goes from August to
August and they need it renewedin June, they've already paid
the August to August.
So they're basically doublepaying for June and July.
So a lot of associations aresaying no, we're not going to do
(29:25):
that, that's not a fiscallyresponsible thing for us to do.
Speaker 1 (29:27):
So in the case, nikki , of what you know, I went
through with this and back whenthis happened, I had a seller
who we had the buyer.
It was two, three weeks pastclosing.
They had moved out and ended upcanceling because of this
reason very quickly, because ittook two to three weeks for us
(29:52):
to get to the right personwithin again, the association,
the management, then theinsurance master policy, and
then the association said theycould approve it, but then the
master insurance policy person'slike not a chance.
But yeah, we can, and there'sjust so, again, no one knew what
they didn't know.
So so we can, we can protectour clients.
What questions do we ask?
(30:14):
And how do we get to thisquicker than three weeks when
you have your seller sleeping ona blow-up mattress, two pots
and pans moved out?
Speaker 3 (30:22):
Yeah, okay.
So question In Minnesota andI'm somewhat familiar with this,
but I know that when you signup for a scrim you have up to 10
days to get the condo docscorrect Condo or townhome docs.
Okay, then how long is your, isyour review time?
Does it still?
It is still within those 10days, so they have to give them
to you and you have a new time.
Is there a point, is there alike?
(30:45):
Do they have to give them toyou within a certain number of
days or is it just everything'shas to happen within 10 days?
Speaker 2 (30:50):
once they give them to you, day one starts day one
starts once they are handed over.
Speaker 3 (30:55):
Okay, cool, that's what I thought up to 30 days to
redo.
Okay, so in that 10 day mark, Iwould actually suggest that you,
as a listing agent, put thosedocuments up on the mls, upload
them to the MLS.
You, as a listing agent, get ahold of that master insurance
policies.
(31:15):
Talk to a lender, say, hey, Ihave this master insurance
policy, I need you to reviewthis and this lender
questionnaire.
I need you to review this forlisting purposes.
No problem, I'll review it.
Not a problem, no big deal.
Don't ever, ever, ever, ever,ever, trust what another listing
(31:35):
agent is putting online as faras approved financing for any
condo or any townhome.
Love you agents.
You guys can do all theresearch in the world, but 90%
of the time that information isinaccurate.
So that's just how it is, eventhough they think they know, oh,
how'd you buy this house?
Why bought a conventionaldoesn't mean it's approved.
(31:55):
It doesn't mean anythingbecause things could change.
And therefore it's on you asthe listing agent number one do
your research and make sure itcan do it.
But not all the agents are doingit and they don't know who to
talk to and they don't know whoto contact to get those
documents into the right handsto get reviewed for FHA and
conventional financing.
(32:16):
Okay, as a buyer's agent, ifthose documents are not on the
listing, talk to the listingagent, see if you can get the
documents before they even makethe offer.
Because and then again, hi haveme take a look at them and say
yes or no, because it'll take me20 minutes to review something
(32:40):
and say, hey, the insuranceisn't going to be good, you're
going to be screwed up here, orthe reserves aren't enough, or
there's too many investmentproperty owners, or there's too
many owned by one person.
Whatever those problems arethat continuously come up with
associations, those are going toreally help your client
determine what they're going tooffer and how they're going to
(33:01):
offer on any property.
Speaker 4 (33:04):
So with the client that I'm working with right now,
he had gotten a notice beforeour first listing consultation
that his insurance company wascanceling him but switching him
over to another company thatoffered an HO6.
So do you think?
Speaker 3 (33:19):
that means that.
So that's personal insurance.
So there's two types ofinsurance.
There's the master insuranceassociation.
And then there's his personalinsurance.
Maybe his personal insurancecompany just said we're not
doing HO6s anymore, but thisother company is that's probably
what happened.
Maybe his personal insurancecompany just said we're not
doing age of sixes anymore, butthis other company is that's
probably what happened.
A lot of insurance companieslike State Farm and things like
that are pulling out of age ofsix policies because of the
(33:40):
liability it holds with themaster insurance and they're
seeing that the master insurancepolicies aren't exactly where
they need to be.
So they're saying we're notgoing to cover this mess.
That's inevitably going tohappen over here.
Now, with that being said, alittle trick.
(34:01):
If there are reserves that area little bit short of Fannie Mae
and Freddie Mac's requirements,you can obtain six months of
meeting minutes from the boardto determine whether there's
assessments, indication ofdeferred maintenance,
assessments that are going to becoming up, that are not
assessed yet or not, or thatcould cause problems in the
(34:22):
future.
If in those six months ofmeeting minutes they don't
mention anything, it's justbusiness as usual then you don't
have as much of a reserverequirement restriction.
So we use that a lot because alot of these places do not have
reserve requirements met.
So there are options in thatrealm to say, okay, they don't
(34:43):
quite meet the reserverequirement, but we know that
over the last six months there'sbeen no mention of a deferred
maintenance item such as roofing, decking, asphalt, parking lots
, painting, landscaping, poolmaintenance, et cetera, et
cetera, et cetera go down theline, and there's been no
mention of special assessmentsfrom a tax standpoint or from
(35:04):
assessing the homeowners for anyof these expenses.
Therefore, we know thatnothing's going to come up
within the next three to fourmonths and we can likely say
that.
So there's a lot that happenswith HOAs.
Like I said as a listing agent,send me the insurance, send me
the insurance.
If the only thing you do issend the insurance over to me
and say, hey, can you take alook at this?
(35:25):
That's one way to prevent a lotof problems.
If there's reserve requirementissues, investor issues, things
of that nature, those things canbe either resolved or we can
use what's called a non-QMproduct or a non-warrantable
condo product to finance it.
But if the insurance is screwed, you don't finance it, plain
(35:47):
and simple.
Speaker 5 (35:49):
That's what I'm not understanding, because you said
Freddie and Fannie set theguidelines, so that means it's
just conventional or it'sconventional.
Fha, DVA, all of them.
Speaker 3 (35:58):
The insurance requirements for any lending are
the same FHA, va.
Fannie Freddie, if it's harderfor buyers.
Speaker 5 (36:06):
They would have to do a loan.
That's a little bit different.
Speaker 3 (36:10):
If the insurance is screwed up, they're not getting
a loan, any loan.
Well, they could go to a localbank and a local bank and be
like, yeah, we'll take a chanceon the roof not falling off in
the next 12 years, no problem.
But I highly doubt it.
So if the insurance is screwedup, they're not getting a loan.
Speaker 5 (36:27):
So it's just something these associations are
going to have to work throughto get proper insurance Correct
To be able to sell their homeright now.
Speaker 3 (36:35):
Correct.
That's just a time issue thenit is a time issue.
When does the insurance renewalcome up?
Is the board willing to renewearlier, make changes earlier
than the renewal time, and willthe insurance company insure
them for the proper amount, ordo they have to change insurance
companies?
(36:56):
okay thank you so much yes so,just as a reminder, this all
happened.
All of these changes happenbecause, as a result of the
condo collapse in miami, okay,florida has extremely
restrictive policies withintheir hoAs right now that
basically say that by January1st 2025, the reserve
(37:17):
requirements for everyassociation in the state of
Florida had to be fulfilled.
They had to have enoughreserves and all of their
insurance had to be changed overby January 1st 2025.
That was a Florida-specific lawthat happened.
So when Florida sorry, my catloves to bug me while I'm on
Zoom.
So in Florida, if you are in anHOA in Florida, you're going to
(37:39):
have proper insurance andproper reserves by now.
The problem that happened inFlorida is if you had an
association that didn't meet thereserve requirements, of course
that gap was assessed to thehomeowners and we saw HOA dues
go from $300,000 to $3,000 tomake up for the reserve
requirement within thattimeframe.
So that's been a huge issue inFlorida.
(38:01):
Now A lot of people trying tosell their condos with HOA dues
of $1,000, $1,500, $2,000, whichis more than the actual payment
, thousand, which is more thanthe actual payment.
Therefore the values of thehomes are decreasing because
people just can't afford to buythem at the purchase price with
those HOA dues.
Now, in theory, could they havemade the reserve requirement and
lowered the HOA dues back down?
(38:22):
Yes, but will they Probably not, you know.
So it's a huge problem inFlorida, or it was a huge
problem in Florida.
It's a huge problem now withthe HOA dues, but in, like
Minnesota and Arizona, most ofthe time the reserves are okay.
It's the insurance that theyhave to be working through this
year most of the year, this year, and if the board members don't
(38:48):
know, it's up to theassociation management company.
If the association managementcompany doesn't know, or they
don't know, it's up to theassociation management company.
If the association managementcompany doesn't know, or they
don't care, or they're justcollecting their fees and they
don't really pay attention, itcould go unnoticed for the
entire year.
Which I've seen happen as well.
Speaker 1 (39:08):
Oh, my seller two days before no, can you guys
hear me?
Speaker 3 (39:21):
yep, we can, I'll put you back.
Okay, you were frozen for alittle bit, but yeah, I mean
that's like the hoas are aregoing to continue to be an issue
for everyone this year and likeI said, if you're a listing
agent, get those documents onthe mls for review.
If you are a buyer's agent, geta hold of the master insurance
at the very least and send it toyour lender.
And if you're a listing agent,get a hold of the master
insurance, at the very least,and send it to your lender and
(39:42):
if you're a listing agent, get ahold of the documents and send
it to your lender anyway.
So the other thing that we cando and this applies to not only
just condos and townhomes withHOAs, but this applies to any
single family residence the newkind of idea behind listing
homes right now and kind of, youknow, instead of talking to
(40:04):
your client about a price drop,you know things of that nature
what we can do is we can say OKfor this specific listing we
will offer you know, the selleris willing to offer a 5.99%
interest rate buy down to anybuyer that comes in.
The reason that this isimportant in the condos is
(40:24):
basically what happens is if yousay, let's just say you have a
home that's you listed for$500,000 and it's just not
getting a lot of activity, yourfirst gut instinct is going to
be what?
Lower the price, right?
Well, instead of lowering theprice, it might be more
attractive to say okay, we'regoing to attach a mortgage loan
offering to this property that'sgoing to offer a 5.99% interest
(40:47):
rate if you purchase thisproperty and the seller is going
to pay that buy down.
So on a $500,000 property,let's say, the buy down is 3%.
So the seller is paying 3%,$15,000, to get a buyer in there
, basically to get a loan at5.99%.
Why that's advantageous isnumber one, you're not having to
(41:08):
lower the purchase price.
But number two, it actuallyhelps get more buyers qualified
at lower interest rates.
So what you're doing isbasically saying, well, sell
your home for more and if we doa price drop you're gonna lose
out that money anyway.
So we might as well take thatmoney and use it to your
advantage.
So in other words, instead ofsaying let's go from 500 to 485,
(41:28):
that 15,000 is gone and hasliterally no use to it, but at
500,000, with a seller buy downto let's call it, 5.99, 5.875,
whatever that amount is, all ofa sudden that 15,000 that they
were going to lose anyway is nowput to good use in attracting
more buyers.
This can be extremely helpfulin condo situations, because
(41:49):
then you have a lender that'salready reviewed the condo,
already has approval for it andcan basically plug and play any
buyer in there.
So it helps with condos gettingthe HOAs reviewed, getting
those approved in advance sothat buyers coming in can
actually close on loans.
And, number two, helping on anylisting single family listing
(42:13):
if you're looking at a pricedrop, use it to your advantage.
Take that price drop money anduse it to offer to buy down a
rate to the buyer.
Builders do it all the time.
Builders offer 4.99%, 5.5%,whatever they offer, and they
just work that amount into thesales price.
The buyer's just paying morefor the house.
(42:35):
It's the same way with thisBuyer's just paying more for the
house.
It's the same way with this.
Buyers are just paying more forthe house.
So it's a good strategy.
I've seen it started.
I've started using it,especially in Arizona.
That's all we have is condosdown here, basically HOAs.
I shouldn't say all we have,but there's a ton of HOAs down
here and it's been prettyeffective in saying, okay, the
(42:55):
HOA has already been reviewed,let's get a buyer in here and
plug and play.
Speaker 4 (43:05):
Okay, yep, okay, that was good Okay.
Speaker 3 (43:09):
Very good.
Yes, what other generalquestions do you guys have?
I know it's a lot ofinformation.
Speaker 2 (43:16):
Do we want to?
Can you hear me, nikki?
Do you want to just kind oftouch a little bit?
Let these guys know I just kindof mentioned we've got a mutual
client that we have them readyto go with the NOC program to
help.
Speaker 3 (43:37):
Yeah, I can talk about it a little bit.
So NOC lending is basically acash buyer for the client's home
.
When a client is going in andthey have to offer contingent
upon the sale of their house,obviously that can be a
(43:59):
detriment to competing withother offers on homes that can
go non-contingent Knock.
But basically knock lendingdoes is it writes a purchase
agreement for that client's homeand advances their down payment
on the new home via earnestmoney.
So in other words, if your homethat you have to sell is
$500,000 and you need $100,000to put as down payment on the
new home, noc will write apurchase agreement for $500,000
(44:21):
and give you earnest money of$100,000 so that you can close
on that home.
The reason that this works isthat Fannie Mae and Freddie Mac
say that as long as you have anaccepted purchase agreement with
no financing contingencies,closing any time after your next
purchase with a close date, anytime after your next purchase
(44:42):
with a close date, any timeafter your next purchase date,
as long as there's no financingcontingencies, you are
considered a non-contingentbuyer.
Knock Lending writes a purchaseagreement for cash, gives you
$100,000 or whatever it is thatyou need for your down payment
on your next house you $100,000or whatever it is that you need
for your down payment on yournext house and then closes,
(45:03):
writes a close date six monthsafter your purchase date on your
next home.
So you have.
So the listing agent has up tosix months to sell it to anybody
and if they don't Knock,lending will come in and
purchase that house at theagreed upon sales price.
Why this is interesting is itdoes come with fees around 2.25%
(45:28):
of the purchase of the listprice but if you are in a
situation where you need tooffer non-contingent, you do not
have to pay that 2.25% upfrontto knock.
You can have it in place sothat in case your home doesn't
sell by the time you close onthe other one, you know that
there is a purchase agreementthere.
(45:49):
Now not only do they collectthe 2.25% as their fee, but they
also collect that six months ofmortgage payments right away as
well.
So in other words, thatmortgage is paid, you are truly
a non-contingent borrower.
With your home already sold atthe agreed upon price, you
already have your down paymenton your new house, you already
(46:10):
have accounted for the sixmonths of PITIA on your home and
you can use that money to andput yourself in there as a
non-contingent buyer.
Super useful tool, especiallyfor people who have a lot of
equity in their home.
They don't go to a hundredpercent of the purchase price
but they'll go to like 90% asfar as how much money they'll
(46:30):
give you up front, so like froman earnest money standpoint.
So it's it's super useful.
We're using it with one ofChrissy's clients right now.
They happen to have gotten apurchase agreement within the
meantime that they accepted, sowe won't need the NOC lending.
But it is something that, aslong as you can be approved for
a normal mortgage loan, you willget the approval for the NOC
(46:50):
lending and it's zero percent,zero dollar payments, et cetera.
Speaker 5 (46:58):
Chrissy, do you write that offer as a cash fund?
No, okay, no, but's anon-contingent okay with just a
normal down payment with thatnon-contingent it's for it.
Speaker 2 (47:11):
So it is non-contingent because we have
the knock program approval andso, either way, the house is
going to be, we're going to havethe down payment and they can
purchase non-contingent Whetherwe get their house sold
beforehand or not.
Noc is stepping in.
Speaker 1 (47:29):
It's like an ace in the pocket.
Speaker 4 (47:34):
None of the financing .
Is that what you're saying?
You don't put on anything onthe financing and that part
where it says buyer, yeah, Iguess you wouldn't be like a
cash buyer then.
Speaker 2 (47:44):
No, because it's not a full cash.
It's still being financed.
Speaker 3 (47:49):
Well, no, they'll pay cash, not pay cash for it in
six months if it doesn't close.
Speaker 2 (47:53):
Yes, yes, yeah, we didn't write the offer as a cash
offer because they'd only becoming in with $100,000 down.
Speaker 3 (48:05):
Yeah, you didn't write their offer as a cash
offer, but the offer that NOCsends is a cash offer.
Speaker 4 (48:11):
Yeah, what you were saying about the purchaser.
Speaker 3 (48:15):
The purchaser of their home is a cash offer from
NOC.
Speaker 4 (48:21):
Yeah, but the person that got the cash offer from
NOC're purchasing.
How does that go into ourparticipation?
Speaker 5 (48:24):
yeah, I'm wondering how the listing agent would know
this is special by looking atyour purchase agreement it's not
any different than any otheroffer.
There's nothing but it isbecause it's not contingent on
financing, and so that'sattractive, isn't it?
Speaker 2 (48:39):
to.
Speaker 3 (48:39):
Nikki, can you hear?
Not really.
Speaker 5 (48:46):
Something about I said well, as a listing agent,
how would we know this is a morespecial offer?
How would we know this is notcontingent?
And so I'm asking how shefilled out her PA to let them
know that, hey, this is a suredeal.
Speaker 3 (49:04):
So okay.
So let me explain it from thebeginning.
So you have the home thatyou're selling.
Noc comes in and says I'm goingto write a purchase agreement
offering cash for this cashpurchase for this home six
months from now.
Speaker 1 (49:16):
So you have a purchase agreement from NOC
that's going to close six monthsfrom today.
Speaker 5 (49:21):
They're going to buy it cash, so you don a purchase
agreement from NOC that's goingto close six months from today.
They're going to buy it cash.
Speaker 3 (49:26):
Oh, they're buying your home, so you don't need to
sell your home, correct, correct, you can sell the home anytime
within that six months and nothave to use NOC.
Speaker 2 (49:33):
So you're not even committed to that.
So the goal was let's hurry upand get your house listed and we
are really going to ultimatelytry to get your house sold
period before the closing dateof your purchase.
If we can't, we have knock as abackup.
Speaker 5 (49:49):
We already have that lined up.
Speaker 2 (49:50):
I'm starting to follow.
We're trying to save them thefees that are associated with
going that route.
Either way, the house myclients are buying, they have to
close on the closing datebecause it is a non-contingent
offer so for some reason wecan't close on their the sale of
their house with this otherbuyer.
Okay, we're gonna have todivert knock knock.
Speaker 5 (50:14):
Yep, we're gonna have to assume those extra fees okay
, yeah, so you're just, you'rejust writing this amount down,
correct.
Speaker 4 (50:24):
Just like and then there'll be, but you're not
paying any kind of a mortgageamount on the new house.
Speaker 3 (50:31):
Yes, you are.
You're just using the.
Yeah, you are because you'rejust using the equity of your
home in advance is basicallywhat happens.
So that earnest money amountthat knock puts on the purchase
agreement is the amount thatthey will send you to put as
down payment on the new house.
It could be all cash, you justdon't know.
I mean, it could happen to bethat you don't need a mortgage
on the new purchase, but most ofthe time you will, because you
only have a certain amount ofequity.
(50:51):
So, for example, you owe$300,000 on your house, you're
listing it at $500,000, notcomes in and says we're going to
pay $500,000, but we're goingto give you $100,000 as earnest
money.
You take that $100,000, you'renon-contingent as down payment
on the new house and then youmortgage the rest of it.
Speaker 5 (51:12):
Trying to make an offer to get a new house for
your clients.
Speaker 2 (51:16):
And, but oh, I think your question.
Can you hear me, nikki?
Yeah, I think the question isis there a finance contingency
on the offer?
Speaker 3 (51:29):
yeah, and on the offer of the home that you're
purchasing I still included afinance?
Yeah, of course because theydon't in this case you don't
have.
You're only getting 150150,000in equity, so you're not going
to buy a house for $150,000.
That's going to be your downpayment amount.
So you have to finance the restof what you're purchasing.
Speaker 1 (51:51):
It's just non-contingent on the sale.
Speaker 3 (51:53):
It's non-contingent on the sale not non-financed.
Speaker 2 (51:59):
Yeah, it's still.
It's still contingent onfinancing.
Speaker 3 (52:04):
Yeah, it's contingent on financing, not contingent on
the sale.
Yep, so business as usual,business as usual.
Yep.
Now this only works for FYI.
This only works forconventional buyers.
This does not work for FHAbuyers because FHA buyers do not
have the same guideline from aclosing financial contingency
standpoint on the lending side.
Speaker 2 (52:25):
Okay, got it.
Speaker 4 (52:27):
All right, One we're throwing it out there because
you have to have enough equityin your house in order for this
to work.
Speaker 2 (52:35):
Yeah, you do.
We talked about another clientand they don't have it.
Do you know what the thresholdis for equity?
Speaker 3 (52:41):
90%.
So if so, they'll go up to 90%of the home of the listing price
.
So, between what they owe onthe mortgage and 90% of the
listing price, that's the amountthat they'll give you basically
.
Speaker 2 (52:54):
Minus the sellers have to have.
In their home.
The homeowners like how muchequity do they have to have?
Speaker 3 (53:03):
Well, I would say I would say at least 20%, because
they're only going to need 5% onthe new home.
You know, 5% to close, but Iwould say at least 20%.
Okay, all right, that'd be agood threshold.
Okay, that'd probably be theminimum I'd want, okay.
So yeah, it's a good program, Imean very easy to use so what
(53:28):
other?
Speaker 4 (53:28):
questions do you?
Speaker 2 (53:29):
guys have anybody else have anything.
Speaker 1 (53:32):
We're obviously over our time, but yes, thank you for
all the great information.
Yeah absolutely.
Speaker 4 (53:39):
Can you hear me?
Yeah, does the student loansituation affect credit score at
all?
Speaker 3 (53:48):
The not loan no not does not affect credit.
Yeah, doesn't affect credit atall.
Speaker 2 (53:56):
Wait, you just said student loan.
Speaker 4 (53:58):
Student loan.
Speaker 2 (53:59):
Oh.
Speaker 4 (53:59):
I thought he said oh, what's?
Speaker 2 (54:02):
that.
Speaker 4 (54:03):
Which part what?
Speaker 2 (54:05):
do you mean yes?
Speaker 4 (54:06):
Well, the whole thing with the student loans, does
that affect?
You know, debt to income andall that?
Speaker 5 (54:12):
Yes, when that starts changing.
Okay.
Speaker 3 (54:16):
Yeah, so a lot of people have already been
affected by the change thathappened on February 1st.
Anyone that didn't declare whatthey wanted to do with their
student loans, they wereaffected.
If this new bill passes,there'll be payment plan unless
(54:40):
you say otherwise, so you won'thave the same situation that
happened where all of a suddenthere's late payments reporting
and you didn't go make yourdecision and all these things.
You will automatically betransferred over to the standard
payment plan If you you know ifyou're on one of the ones that
isn't available anymore.
Speaker 2 (54:58):
Hmm, that could be a lot.
Speaker 3 (55:01):
Yeah Well, I mean, I'm just wondering, you know,
for me it's like I'm justwondering going gosh, how are
they going to determinediscretionary income?
That's insane, like what goes?
Speaker 1 (55:15):
into that and what doesn't?
What does that even mean?
Determined, I know?
Speaker 2 (55:22):
Well we're my daughter with three kids.
I don't think there is anydiscretionary well, that's
exactly the point, you know.
Speaker 3 (55:29):
And then are they is it discretionary income of the
borrower, or is it discretionaryincome of the married couple,
or is it discretionary income?
You know what I Like?
What does that mean?
And then also, I mean the VA,for example, has residual income
requirements that you have tomeet in order to qualify for a
mortgage loan.
So I wonder if it's going tofollow their same guidelines as
(55:51):
far as discretionary income.
Who knows?
Speaker 2 (55:55):
Interesting yeah.
Speaker 3 (55:57):
But if you think about, like, let's say, you have
what they determined to be $500a month in discretionary income
and you're saying, oh, that's10% of that, that's a $50 a
month payment.
So you make a $50 a monthpayment for what?
20 years?
And then the rest of it isforgiven.
I mean, 20 years is a long time, but people have been sitting
with this student loan debt for30, 40 years.
Speaker 2 (56:19):
I just paid off my student loans, like last month.
Speaker 3 (56:24):
I still owe $29,000.
Speaker 5 (56:26):
30 years, I know.
Speaker 3 (56:29):
I'm 30 years later and I still owe $29,000.
And guess how much I startedwith, how much 31.
Yeah, that's how like.
If you guys really like, if youreally looked into, like, the
student loans and how theyoperate and how predatory they
are, it is crazy how much youcan end up owing on those
(56:49):
student loans If you, if youlike, go on different payment
plans and stuff like that,because they're basically a lot
of them are negativeamortization and I can't.
You know, it's just crazy thatthey let it go on this long.
It is and it's, you know, it'sbeen a mess for a really, really
, really long time.
Speaker 1 (57:14):
And this solution isn't going to be a great
solution, but it's.
It's a solution.
Speaker 3 (57:18):
It's headed the right direction, hopefully.
Yeah.
I mean, at least there's someforgiveness in there and at
least it's based ondiscretionary income and not,
hey, we're just going to startscrewing you over and have you
pay one percent of the balanceyou know, I mean the amount of
and then holding the college isresponsible as well as.
Like you know, that's probablya good thing as well.
Speaker 1 (57:34):
So all right, you guys.
Right then that.
Then what does that?
look like Like dominoes, yeah, Iknow We'll have so much to talk
about too.
So everyone anyone listening tothe recording are in this room.
Nikki and I meet every Monday,1130, central Standard Time, for
(57:55):
a quick 20 minute, and this isthe type of stuff Nikki brings.
I don't talk hardly at all.
I'm like Nikki what's happening, what's new in the market?
Uh, and up to 20 minutes ofjust this type of stuff.
That's so, so important.
So if you can't make it to that, zoom live, then definitely
watch the recording.
I put it LinkedIn, I put it onYouTube, I put it on Facebook,
(58:18):
um, and Nikki is on all thechannels TikTok, instagram,
facebook.
Every day she's posting thistype of information.
That's so, so, very helpful.
Show up and educate yourclients.
She has given us permission torip off duet, stitch, rinse and
repeat.
Anything that she puts outonline we can use as well.
(58:39):
So she is the person to go towith any questions.
So we really, really appreciateyou.
She's been doing this for avery, very long time and, first
off, so yeah, 50 years.
Speaker 3 (58:53):
I didn't say that that was her.
You see how young I look fordoing this for 50 years, it's
beautiful for 70.
No.
Speaker 1 (58:59):
I'm kidding.
That's kind of what you youfeel sometimes.
I bet with some of thesesituations we put you through.
Speaker 3 (59:04):
Yeah, no, 26 years so long time Cool.
Speaker 1 (59:10):
Well, thank you so much.
We appreciate you and yeah,we'll talk soon, all right?
Speaker 4 (59:15):
Bye guys, Bye Bye.
All right, welcome Nikki.
Thank you so much for joiningus at our meeting.
I know we have a lot we want tocover today, so we'll let you
begin.
I know we wanted to do a littlebit more on the student loans,
on interest rate update.
Okay.
Speaker 2 (00:16):
And update on the HOAs and insurance.
Speaker 3 (00:20):
Yeah, we know that that's a hot topic as well.
Yes, absolutely so.
Let's start out with interestrates, because that's always the
you know, the fun one to getout of the way, first and
foremost.
So about a week and a half agowe were on a really good track,
seeing interest rates down inthe lower sixes.
I was logging.
When it's 6.375, six and a half, everyone was happy.
(00:44):
Japan announced that they have anegative GDP this past week.
What that means is that theamount of income that they're
bringing into the country isless than by a huge amount that
people are spending in theactual country on their product.
So when that creates a negativeGDP, that actually hurts the
(01:05):
international bonds,international situation from a
stock and bond market, which inturn hurts the 10-year treasury,
which in turn increasesmortgage interest rates.
So when they went negative ontheir GDP, it created a huge
issue in the mortgage interestrate because of the trickle-down
effect and we saw rates go upto 6.875, 7, 7.25.
(01:28):
I even saw some as high as 7.5on a couple of the days Settled
back down afterwards.
Now we are still in that 6.875range, so higher than what we
were a week and a half ago.
The big thing right now is thatthe Fed is refusing to drop
their interest rate.
The reason that they're doingthat is because they feel like
(01:49):
inflation is not going to dropin the next month, next quarter.
The reason that they feel thatway is because they haven't seen
the effects of all the tariffsand they're basically scared to
see what's going to happen froma tariff situation.
They're basically scared to seewhat's going to happen from a
tariff situation, they feel like, even though they feel like the
(02:11):
number of new jobs added in andthe is going to be less than
expected and unemployment isgoing to rise, which is also a
factor as to why they would droptheir interest rate.
They feel like the inflationpiece is more important than the
unemployment piece.
We have higher unemployment, wehave less jobs out there.
Normally, the Fed will make anadjustment on their interest
rate to help stimulate otherparts of the economy.
(02:32):
If we have lower inflation, theFed will then also drop their
interest rate in order to meetthat lower inflation mark.
But since both are, they feellike the inflation number is
actually going to go back up.
They are saying we're not goingto lower our interest rate.
As a reminder, the Fed interestrate is not the mortgage
interest rate.
However, it does influence the10-year treasury bond, which is
what the mortgage interest rateis set at.
(02:54):
The 10-year treasury is atabove 4.5 right now, which is
that 4.5 mark is a veryimportant mark within the
10-year treasury bond.
The reason for that is when wego above 4.5, we have the
potential to go up, up, up, upup in interest rates.
If we go below 4.5, we have thepotential to go down, down,
(03:15):
down, down down in interestrates.
It's kind of what we call ourFibonacci level, or the level
where we go up or down based onwhere that bond is Right now.
As of yesterday, it was sittingat 4.59.
This morning, I believe, it'sat 4.61.
So we're going to see a littlebit of an increase in interest
rates here, at least temporarily, until the Fed meets again in
June and hopefully we'll getsome more data from the tariffs
(03:38):
and more data from theunemployment and things like
that the statistics and the GDPand all those numbers that are
going to be coming in that willhopefully influence the Fed to
make a different decision thanwhat they've already put on
record.
There are two voting Fedmembers right now that are on
the fence and saying maybe it istime for us to start lowering
those interest rates.
So two out of the 12 ain't bad,so we're going to get there
(03:59):
eventually.
So that's kind of what's goingon with mortgage interest rates.
If your clients ask, the answeris high sixes, low sevens for
now and it's probably going tostay that way, with some
volatility coming into the nextcouple weeks.
So that's what's going on withinterest rates.
It's no different than what wehad last year.
We're at the exact same spotthat we were 12 months ago,
(04:19):
ironically.
So, with that being said, let'smove on to kind of just some
topics I want to talk about.
Oh, student loans.
This is huge right now for anumber of reasons.
Fannie and Freddie, if you do atraditional conventional loan,
fannie and Freddie have policiesthat work with income-based
(04:41):
repayments, save repayments,standard repayments and all the
repayment options right now thatare available with federal
student loans.
They work with those options sothat if people are
realistically paying on theirstudent loans, we use those
payments for qualifying.
They also have opportunitiesthat if you are on an
(05:02):
income-based repayment plan andyour payment is zero, freddie
will allow you to use thatpayment.
Fannie will not.
Fha is completely different.
Fha says we will use actualpayment on the credit report as
long as it meets the halfpercent mark.
So half percent of the balance,or if the payment is zero, we
(05:22):
need to use a half a percent ifwe're qualified.
So FHA is a little bit morerestrictive.
Those are the rules right now.
So what has changed?
Well, back in January and intoFebruary, anyone that was on the
forbearance plan that was donethrough the Biden administration
.
Their plan came out offorbearance, which means that
(05:45):
they were responsible forsetting up a new payment plan,
income-based save plan, standardrepayment, extended repayment,
et cetera, et cetera by February1st.
If they did not do that andtheir student loan was still in
forbearance it then went intowhat's called a default status.
Was still in forbearance, itthen went into what's called a
(06:06):
default status.
What a default status means isthat any payments that they
didn't make while in forbearanceshowed up as lates on their
credit, started reporting lateto the credit bureaus.
So therefore you have peoplethat were on forbearance for 18
months, that did not dosomething with their student
loans and show a ton of latepayments, ie dropping their
credit score.
And there were a ton of peoplethat were in the middle of
(06:30):
mortgage loans, in the middle ofpurchasing homes that therefore
could not purchase them becauseof the situation that happened.
So that took an effect on a lotof people's credit, a lot of
people's ability to enter into apayment agreement because of
that default status.
So the Department of Education,working with the federal
student loan servicers, is nowworking through those
forbearance people who did notmake a decision on how to repay
(06:52):
their student loans, trying todo some corrective action, some
disputes to the credit bureauagencies and try to get things
corrected to show an accurateforbearance status and maybe one
30-day late when they finallydo get back to a new payment
plan.
So there has been some resultsof that incident that happened
as far as helping borrowers toget back a more favorable status
(07:14):
from a student loan standpoint.
With that being said, everybodyhears in the media the big
beautiful bill.
Well, what's not being talkedabout in that big beautiful bill
is the changes to student loans.
These are super importantstages.
Now, mind you, this bill hasnot passed.
So, just so you know, these arethings that are in the bill
that could happen but have notpassed yet.
(07:37):
So, first and foremost, from astudent loan standpoint, you
will no longer have a save plan.
You will no longer have a likea graduated extended repayment
plan.
There will be only two optionsfor student loan plans, and this
(08:02):
is for existing student loansand for any new student loans
that are taken out after January1st 2025.
The first one is called thestandard plan.
The standard plan uses yourdiscretionary income and
requires you to pay 1 to 10% ofyour discretionary income as
your monthly payment.
So, for example, for someonewho's making $60,000 a year,
$50,000 to $60,000 a year, 5% oftheir discretionary income is
(08:24):
going to go towards theirstudent loan payments.
For someone making $100,000 ayear, 10% of their discretionary
income is going to go towardstheir student loan payments.
So basically, the US governmentis saying we want our money
back Now.
If you make under the standardplan, if you make payments
standard payments for 20 yearson that plan, any remaining
(08:46):
balance is then forgiven.
The other plan would be what'scalled an income-driven
repayment plan.
The income-driven repaymentplan is really focused on people
who earn lower incomes andhelping relieve their payments.
So it includes things like youdon't have to pay as much if you
have a child, so for everychild that you have, you get a
(09:11):
$50 deduction on your payment.
It focuses on people who aremaking less than $50,000 a year
and talks about how much theyhave to pay this.
If you make payments on theincome-driven repayment plan,
you have to make payments for 30years before any remaining debt
is forgiven.
Coupled with this is going tobe any new student loans taken
out for a borrower after January1st 2026.
(09:35):
You are going to be limited to$50,000 a year from the Fed
federal government inavailability of student loans
and a parent plus loan of$50,000 as well.
Per year you have to exhaustyour $50,000 as a borrower
before your parents can pay theadditional $50,000 or sign a
(09:58):
loan for the additional $50,000.
So this is very importantbecause there was no limit
before and now they're limiting,saying, hey, you can't go into
a job where they're making,where basically the pay on the
(10:29):
job doesn't equate to being ableto pay the student loans off
that the college is going to beresponsible for paying back a
portion of those student loans.
So it's designed in holding thecollege accountable and saying,
hey, we have to take someresponsibility in lending to
this person who may get a degreein, let's call it, english and
(10:50):
have the potential and anEnglish degree has the potential
to make them $30,000 a year.
We need to be, you know, havesome sort of say and be
responsible in how much we'rewilling to lend them for this
education Okay, lend them forthis education, okay.
So what it's going to do isit's going to change a lot of
not only how students go tocollege, but on the mortgage
(11:10):
side, it's going to change a loton how we determine what
payments to use for qualifyingan individual, because if you
think about discretionary incomepercentages.
What does that even mean?
Like what do they considerdiscretionary income?
You know what do they take Dothey look at your credit report
and deduct your rent amount andthen take the remainder and, you
(11:32):
know, work out the percentage.
Who knows at this point, butit's going to change the
landscape for people who want topurchase homes, who are
currently in student loanrepayment or who are going to be
taking out student loans in thefuture.
So a lot of changes are goingto be happening.
Most likely, fannie and Freddieare going to follow the changes
(11:53):
that are being made under thebill if it does get passed and
the idea that it's whatever yourpayment is, based on what the
federal student loan departmentsays.
That's what they'll use forqualifying, because there will
no longer be zero payments onstudent loans.
Now there is an option you canstill go into forbearance, but
you can only be in forbearancefor nine out of 24 months, so it
(12:15):
means nine months on a 24-monthperiod.
So there are options to go intoforbearance, but those are
based on extenuatingcircumstances medical issues,
unemployment, things of thatnature that would prevent you
from making student loanpayments.
So there is an effort to say,okay, if you do have a life
event that happens.
We're not going to completelydestroy your credit.
(12:35):
You do have an option to gointo forbearance, but, mind you,
it's only nine months every 24months.
So a lot of this stuff that'shappening, that's in this bill,
is complicated and we're goingto have to do a wait and see
approach from a mortgagestandpoint, but there will no
longer be zero payments requiredon student loans, no matter
what, if this bill does pass,and therefore I assume that
(12:56):
Fannie and Freddie and FHA aregoing to follow suit and say
whatever is showing on thecredit report is what we're
using for qualifying, becausethat's what they're responsible
to pay.
Speaker 1 (13:12):
So a lot of stuff happening with student loans.
Questions yeah.
So what is the pulse in themortgage world on this?
Is this, in your opinion, good,like thumbs up, neutral thumbs
down, if you had to give a gut?
Speaker 3 (13:20):
feel.
If I have to give a gut feeling, and I have to say my personal
opinion is I'm giving it a mildthumbs up.
The reason for that is becausewhen we qualify borrowers right
now, if we have to use 1% of theloan amount or half a percent
of the loan amount, those arelarge payments that we have to
qualify the borrower with eventhough they aren't required to
make those payments.
(13:41):
So that's one of the positivesides is that we'll know what
they're actually paying eachmonth.
Obviously, the downside isright now, if we have clients
who are an income drivenrepayment and they aren't
responsible for making paymentsbecause their income is lower,
then we have an easier timegetting them qualified to
purchase a home.
Now, should somebody bepurchasing a home if they're not
(14:02):
paying on their student loandebt?
You know that's neither.
That's not up for me to decide,so it really just depends on
talking to the client budgetingstrategy, making sure they're
aware things of that nature.
Hey, if you have to startpaying on your student loans,
are you still gonna be able toafford this house?
You know those types ofquestions that you wanna ask
your client as you're kind ofgoing through the strategy, any
(14:28):
other questions.
It's a lot and I only gave aquick summary on that.
Changes with the big beautifulbill as far as student loans go,
so that's just a summary.
There's a lot more that goesinto it as far as what they use
to determine this information,but it's you know, in summary,
it's going to make it quite adifferent landscape from a
mortgage standpoint as far asqualifying goes.
(14:50):
So my job just got more fun.
Speaker 1 (14:55):
Always on your toes.
Yeah, exactly, exactly Good.
Speaker 2 (15:01):
I'm sure.
And when did you say it?
Say, you said the bill hasn'tpassed yet.
Speaker 3 (15:06):
So the big beautiful bill just passed through the
Budget Committee for theCongress.
It goes to vote in Congress, Ibelieve this week into next week
.
They believe that they haveenough support to pass it first
time around.
But there are some Republicanvoters that are going on record
already saying that they do notsupport the bill.
Republican voters that aregoing on record already saying
(15:27):
that they do not support thebill.
And so it may or may not.
It's going to take a little bitfor it to pass through the
House and I'm sure there'll besome changes and then if it goes
again to the Senate, then wehave to wait for the Senate to
pass it, so the Republicans havethe majority in the House and
the Senate.
This bill was designed by onlyHouse Republicans in a budget
committee, so no Democrats wereon the committee to help design
(15:49):
this bill.
So you can imagine from apolitical standpoint, as it goes
to Congress it's going to beprobably an automatic no from a
lot of Democrats without evenreading it, because they didn't
have input.
Speaker 2 (16:03):
But you said there's a couple republicans that are
already on record.
Speaker 3 (16:07):
They're more middle-of-the-line republicans,
um, that, have you know, aremore on the independent side but
go under the republican youknow party.
So there are some goods andbads to the to the bill.
Um, there are some very helpfulthings, um, I think there's
some helpful things for studentloans and the idea that you
don't, you're not going to letsomebody go into $300,000,
$400,000 in debt to go tocollege to get a job that's
(16:31):
$40,000 a year, things like that, and it's holding the college
accountable for the majors thatthey're offering and the
education that they're offeringand the job placement that they
can help with.
Speaker 2 (16:49):
Yeah.
Speaker 1 (16:51):
I think there's some good things to come of it in the
future.
Speaker 3 (16:57):
I know they wanted to pass by Memorial Day, but that
again is yeah, that's.
I mean, they are, they are.
It is sitting with the houseright now, but I really I don't
know when their first vote is.
I highly doubt it'll pass thefirst time, but what do I know?
Speaker 2 (17:09):
Yep, you just don't think it stays Okay.
Well, this is really good info,because I was kind of in the
dark on this.
Speaker 3 (17:12):
So yeah, yeah, and I would just encourage, if you do
have people who are first-timehomebuyers or people that you
know have student loan debt,make sure they're in
communication with theirservicer out of any changes that
are happening so that they canmake those decisions on making
sure that they have some sort ofpayment plan set up so that
they are protected in case thesechanges do come through.
(17:32):
And you know they're made aware.
But there's millions of studentloan holders that don't have
updated addresses, updatedcontact information, updated
emails, so they were not gettingthe notifications for the
February 1st changes.
Speaker 2 (17:48):
yeah, I think something may have happened with
my daughter.
With that I remember.
Speaker 3 (17:53):
I believe it, especially for young, you know,
20 something year olds who havemoved around.
I mean, the last thing thatthey think about is updating
their information with theirstudent loans, you know but all
of a sudden her paymentskyrocketed.
Speaker 2 (18:08):
She was on like a you know, income driven payment
plan and all of a sudden it justexploded.
Speaker 3 (18:16):
Yeah, cause she got put on what's called the safe
plan.
So anyone who is on an incomedriven repayment plan as of
January 31st got automaticallyflipped over to what's called a
save plan, and the save planbasically is based on last
recorded income and a certainpercentage of the balance.
So that's probably why it gotincreased so quickly.
Speaker 4 (18:40):
Wow.
Speaker 3 (18:41):
Okay so she could go back to the servicer and work
out another payment plan.
Okay, so I'm sure that they, uhyeah, overwhelmed with phone
(19:06):
calls and all of this.
So you have the one servicerthat's reporting them
continuously late even thoughthey don't hold the debt, and
then you have the new servicerthat can't get them set up in
the system to make payments.
So I have one client that'sstruggling with that right now.
That's been going on for notthree, four months.
So kind of crazy, yeah, yeah,super fun.
(19:30):
So kind of crazy, yeah, yeah,super fun.
Speaker 1 (19:33):
Thank you for all that information.
Yeah, yeah.
Speaker 2 (19:37):
So our last meeting we kind of in-house here talked
a little bit about I think Angiebrought up what was going on
with insurance and HOAs andwhatnot, and so maybe we can
talk about that.
I mean does?
Yeah, I quite didn't understandthe situation before.
Speaker 5 (19:55):
So if you could like, break it more down for me,
because I'm not computing.
Speaker 1 (20:00):
So the question's going through the HOA and what's
happening with insurance.
I know with like the one thatwe just went through with the
master insurance and everythingthat's changed that no one
really knows about, and nowespecially the HOA doesn't know.
So in our case, the one that Iworked through that ended up
canceling, it's the HOA and thenit's the management company and
(20:23):
then behind the managementcompany is the master insurance
policy holding company.
So there's actually threeentities and most associations
board members are members in thecommunity that are volunteering
.
So it's not like a positionthat you have to be hired for,
know our past tests or whatever.
So it's a lot of and what I sawand this is why we want you to
(20:48):
talk to us a little bit the lefthand definitely doesn't know
what the I saw and this is whywe want you to talk to us a
little bit the left handdefinitely doesn't know what the
excuse me right hand's doingwalking, running, crawling.
I mean no one understands whatthey don't understand.
And I know, nikki, I love thecomment you made at one point.
You said you could literallymake a career right now going
out and being a consultant forthese HOAs, because no one
(21:08):
understand what's going on.
Therefore, we're not educatedon it.
And it just all happened inthis first quarter and there was
no turnabouts.
All of a sudden, turnaboutshowed up everywhere.
You just drove up and you hadto figure out how to do a
turnabout.
So it's kind of like this, aroundabout type of a thing, so
same thing here.
So we'd love to have a littlebit of education on where we're
(21:30):
at as it sits today.
Speaker 3 (21:32):
Okay, so big changes implemented from HOAs and the
insurance requirements, as youmentioned, angie.
I'll preface this by saying usin the lending world, we've been
known about this for six monthsbefore it changed in January,
and it is impossible for us toget the word out in a meaningful
way to every single HOA andevery single association
(21:52):
management company.
Here's what I will say.
Most HOAs do have anassociation management company.
That association managementcompany is responsible for
helping the board members withbudgeting, insurance reserves,
maintenance items, assessments,things of that nature that help
(22:13):
the association run.
It is also their responsibilityto fill out lender
questionnaires as it pertains toindividual homeowners
purchasing homes or refinancinghomes within the community.
These lender questionnaires askquestions about ownership, in
other words, percentage ofownership by primary residence
holders, second home residenceholders and investment home
(22:36):
residence holders.
What percentages are owned bythose types of qualifying
borrowers?
It asks questions about themaximum number of properties
that one individual owns or oneentity owns within a community.
It asks what the reserve amountis.
It asks about different budgetquestions and it asks about HOA
(23:02):
coverage and special assessments.
These are all important thingsthat changed from a requirement
standpoint as of January 1st tomake sure that associations have
healthy budgets, properinsurance coverage, any deferred
maintenance taken care of andto make sure that if there was a
(23:26):
special assessment, that thehomeowners have the ability to
pay for it, outside of anythingthat's already in the reserve
account for the HOA First andforemost insurance.
It used to be that if you hadat least a million dollars in
liability coverage and twomillion dollars in building
coverage that you could qualifyand pass on the lender
(23:48):
questionnaire or the lenderrequirements.
On the lender questionnaire orthe lender requirements, the
important change that happenedwas the deductible amount.
It used to be that you couldhave a higher deductible for
your master policy insurancebecause that deductible amount
is paid for by the members ofthe home owners.
So, for example, if you had a$25,000 deductible and there was
(24:10):
, you know, 250 homes, everybodyhas to pay $1,000.
That homeowner in theirpersonal insurance policy has
coverage to cover their portionof the master insurance policy's
deductible.
Does that make sense?
So, $25,000 deductible, eachhome is assessed $1,000.
(24:30):
That homeowner says to theirinsurance company hey, I'm
assessed $1,000 deductible.
Each home is assessed $1,000.
That homeowner says to theirinsurance company hey, I'm
assessed $1,000 for deductibleon the master insurance.
The homeowner's insurancepolicy says no problem we got
you.
Here's your $1,000, goes to themaster insurance, your cover.
Okay, what was happening is thatyou'd have $100,000 deductibles
, $25,000 assessed per ownerinsurance coverage on the per
(24:51):
owner's end of $5,000deductibles $25,000 assessed per
owner insurance coverage on theper owner's end of $5,000.
So all of a sudden they have tocome up with $20,000.
So that's the reason that thatdeductible amount or percentage
changed.
It is now no more than 5% ofthe coverage amount.
So in other words, you cannothave a deductible that's
(25:13):
$100,000 for the homeowners.
It's going to be more like the$25,000 as described.
It can be no more than 5% ofthe replacement cost coverage
for the building for the masterinsurance policy.
On the flip side, the HO6policy or the homeowner's
personal policy is required tohave coverage for the deductible
(25:38):
for the master insurance.
They don't really say how much,but they are required to have
that coverage so that thatpolicy will kick in, pay for the
master insurance deductible tofix whatever needs to be fixed.
So this is a huge change.
Most insurance policies are atsomewhere around 10%.
(25:59):
Most master insurance policiesare somewhere around 10%.
Speaker 4 (26:03):
I just wanted to know on the HO6, then is that
something that they can put intothe HO6 that it would pay the
deductible up to a certainpercentage, correct?
Speaker 3 (26:18):
Yeah, it's either a certain percent.
Most of the time it's a dollaramount, most of the time we see
up to $5,000, but they can electto have more.
Okay, so if you you know yourinsurance, their insurance agent
should be able to talk to themabout the options, should be
able to look at the masterinsurance policy and should be
able to say, hey, fyi, thismaster insurance policy, you're
(26:38):
going to be responsible for sixthousand dollars, we'll cover
you for at least that much, youknow.
Whatever that amount is, that'swhat should be happening in
theory.
Speaker 4 (26:48):
So I have yep, I have um one client who have been
trying to deal with theirassociation the big one that
they have and they're like oh,you know what?
Our insurance hasn't beenupdated here since 2018.
But they don't have any ideawhat the deductible or anything
is Correct.
Speaker 3 (27:09):
So what's happening is is, as these policies come to
renewal, the associationmanagement company is supposed
to renew the insurance incompliance with fannie mae and
freddie mac guidelines when itcomes to coverages.
Now, whether they do remains tobe the question.
So a lot of times so when youare renewing master policy
(27:34):
insurance, it comes up everyyear to renew.
Most of the time, homeowners,board members, association
management companies they don'tlook at it, they're just like
renew it, move on.
Well, what's happening now isthe increase in cost of
insurance in general is causinga lot of these HOA management
companies and HOA board membersto say whoa, whoa, whoa, whoa,
(27:54):
wait a second.
This is a major increase to ourinsurance cost.
What's going on here?
The other thing is so they'llhave to correct it at that point
.
The other thing is is let's sayyou have a homeowner that wants
to purchase a home and close endof May, that new insurance
policy doesn't kick in untilAugust.
(28:15):
Let's say so.
In other words, they know theyneed a correction.
The new insurance policy willhave the correct deductibles
that fall within compliance ofFannie Mae and Freddie Mac, but
that won't go into effect untilAugust because that's when their
renewal is.
Fannie Mae and Freddie Mac sayif that renewal is within 60
days of your closing date and itis in effect by the time that
(28:40):
the client makes their firstpayment, then it is acceptable.
If you are closing May 31st,your payment is July 1st.
If that new thing doesn't gointo effect until August, nope,
got to delay closing.
Does that make sense?
So yeah, so what I've seenboard members say okay, can we
(29:02):
look at renewing early?
Well, if they look at renewingearly, it's costing them double
insurance, basically for howevermany months that they're
renewing early at.
So in other words, if thepolicy goes from August to
August and they need it renewedin June, they've already paid
the August to August.
So they're basically doublepaying for June and July.
So a lot of associations aresaying no, we're not going to do
(29:25):
that, that's not a fiscallyresponsible thing for us to do.
Speaker 1 (29:27):
So in the case, nikki , of what you know, I went
through with this and back whenthis happened, I had a seller
who we had the buyer.
It was two, three weeks pastclosing.
They had moved out and ended upcanceling because of this
reason very quickly, because ittook two to three weeks for us
(29:52):
to get to the right personwithin again, the association,
the management, then theinsurance master policy, and
then the association said theycould approve it, but then the
master insurance policy person'slike not a chance.
But yeah, we can, and there'sjust so, again, no one knew what
they didn't know.
So so we can, we can protectour clients.
What questions do we ask?
(30:14):
And how do we get to thisquicker than three weeks when
you have your seller sleeping ona blow-up mattress, two pots
and pans moved out?
Speaker 3 (30:22):
Yeah, okay.
So question In Minnesota andI'm somewhat familiar with this,
but I know that when you signup for a scrim you have up to 10
days to get the condo docscorrect Condo or townhome docs.
Okay, then how long is your, isyour review time?
Does it still?
It is still within those 10days, so they have to give them
to you and you have a new time.
Is there a point, is there alike?
(30:45):
Do they have to give them toyou within a certain number of
days or is it just everything'shas to happen within 10 days?
Speaker 2 (30:50):
once they give them to you, day one starts day one
starts once they are handed over.
Speaker 3 (30:55):
Okay, cool, that's what I thought up to 30 days to
redo.
Okay, so in that 10 day mark, Iwould actually suggest that you,
as a listing agent, put thosedocuments up on the mls, upload
them to the MLS.
You, as a listing agent, get ahold of that master insurance
policies.
(31:15):
Talk to a lender, say, hey, Ihave this master insurance
policy, I need you to reviewthis and this lender
questionnaire.
I need you to review this forlisting purposes.
No problem, I'll review it.
Not a problem, no big deal.
Don't ever, ever, ever, ever,ever, trust what another listing
(31:35):
agent is putting online as faras approved financing for any
condo or any townhome.
Love you agents.
You guys can do all theresearch in the world, but 90%
of the time that information isinaccurate.
So that's just how it is, eventhough they think they know, oh,
how'd you buy this house?
Why bought a conventionaldoesn't mean it's approved.
(31:55):
It doesn't mean anythingbecause things could change.
And therefore it's on you asthe listing agent number one do
your research and make sure itcan do it.
But not all the agents are doingit and they don't know who to
talk to and they don't know whoto contact to get those
documents into the right handsto get reviewed for FHA and
conventional financing.
(32:16):
Okay, as a buyer's agent, ifthose documents are not on the
listing, talk to the listingagent, see if you can get the
documents before they even makethe offer.
Because and then again, hi haveme take a look at them and say
yes or no, because it'll take me20 minutes to review something
(32:40):
and say, hey, the insuranceisn't going to be good, you're
going to be screwed up here, orthe reserves aren't enough, or
there's too many investmentproperty owners, or there's too
many owned by one person.
Whatever those problems arethat continuously come up with
associations, those are going toreally help your client
determine what they're going tooffer and how they're going to
(33:01):
offer on any property.
Speaker 4 (33:04):
So with the client that I'm working with right now,
he had gotten a notice beforeour first listing consultation
that his insurance company wascanceling him but switching him
over to another company thatoffered an HO6.
So do you think?
Speaker 3 (33:19):
that means that.
So that's personal insurance.
So there's two types ofinsurance.
There's the master insuranceassociation.
And then there's his personalinsurance.
Maybe his personal insurancecompany just said we're not
doing HO6s anymore, but thisother company is that's probably
what happened.
Maybe his personal insurancecompany just said we're not
doing age of sixes anymore, butthis other company is that's
probably what happened.
A lot of insurance companieslike State Farm and things like
that are pulling out of age ofsix policies because of the
(33:40):
liability it holds with themaster insurance and they're
seeing that the master insurancepolicies aren't exactly where
they need to be.
So they're saying we're notgoing to cover this mess.
That's inevitably going tohappen over here.
Now, with that being said, alittle trick.
(34:01):
If there are reserves that area little bit short of Fannie Mae
and Freddie Mac's requirements,you can obtain six months of
meeting minutes from the boardto determine whether there's
assessments, indication ofdeferred maintenance,
assessments that are going to becoming up, that are not
assessed yet or not, or thatcould cause problems in the
(34:22):
future.
If in those six months ofmeeting minutes they don't
mention anything, it's justbusiness as usual then you don't
have as much of a reserverequirement restriction.
So we use that a lot because alot of these places do not have
reserve requirements met.
So there are options in thatrealm to say, okay, they don't
(34:43):
quite meet the reserverequirement, but we know that
over the last six months there'sbeen no mention of a deferred
maintenance item such as roofing, decking, asphalt, parking lots
, painting, landscaping, poolmaintenance, et cetera, et
cetera, et cetera go down theline, and there's been no
mention of special assessmentsfrom a tax standpoint or from
(35:04):
assessing the homeowners for anyof these expenses.
Therefore, we know thatnothing's going to come up
within the next three to fourmonths and we can likely say
that.
So there's a lot that happenswith HOAs.
Like I said as a listing agent,send me the insurance, send me
the insurance.
If the only thing you do issend the insurance over to me
and say, hey, can you take alook at this?
(35:25):
That's one way to prevent a lotof problems.
If there's reserve requirementissues, investor issues, things
of that nature, those things canbe either resolved or we can
use what's called a non-QMproduct or a non-warrantable
condo product to finance it.
But if the insurance is screwed, you don't finance it, plain
(35:47):
and simple.
Speaker 5 (35:49):
That's what I'm not understanding, because you said
Freddie and Fannie set theguidelines, so that means it's
just conventional or it'sconventional.
Fha, DVA, all of them.
Speaker 3 (35:58):
The insurance requirements for any lending are
the same FHA, va.
Fannie Freddie, if it's harderfor buyers.
Speaker 5 (36:06):
They would have to do a loan.
That's a little bit different.
Speaker 3 (36:10):
If the insurance is screwed up, they're not getting
a loan, any loan.
Well, they could go to a localbank and a local bank and be
like, yeah, we'll take a chanceon the roof not falling off in
the next 12 years, no problem.
But I highly doubt it.
So if the insurance is screwedup, they're not getting a loan.
Speaker 5 (36:27):
So it's just something these associations are
going to have to work throughto get proper insurance Correct
To be able to sell their homeright now.
Speaker 3 (36:35):
Correct.
That's just a time issue thenit is a time issue.
When does the insurance renewalcome up?
Is the board willing to renewearlier, make changes earlier
than the renewal time, and willthe insurance company insure
them for the proper amount, ordo they have to change insurance
companies?
(36:56):
okay thank you so much yes so,just as a reminder, this all
happened.
All of these changes happenbecause, as a result of the
condo collapse in miami, okay,florida has extremely
restrictive policies withintheir hoAs right now that
basically say that by January1st 2025, the reserve
(37:17):
requirements for everyassociation in the state of
Florida had to be fulfilled.
They had to have enoughreserves and all of their
insurance had to be changed overby January 1st 2025.
That was a Florida-specific lawthat happened.
So when Florida sorry, my catloves to bug me while I'm on
Zoom.
So in Florida, if you are in anHOA in Florida, you're going to
(37:39):
have proper insurance andproper reserves by now.
The problem that happened inFlorida is if you had an
association that didn't meet thereserve requirements, of course
that gap was assessed to thehomeowners and we saw HOA dues
go from $300,000 to $3,000 tomake up for the reserve
requirement within thattimeframe.
So that's been a huge issue inFlorida.
(38:01):
Now A lot of people trying tosell their condos with HOA dues
of $1,000, $1,500, $2,000, whichis more than the actual payment
, thousand, which is more thanthe actual payment.
Therefore the values of thehomes are decreasing because
people just can't afford to buythem at the purchase price with
those HOA dues.
Now, in theory, could they havemade the reserve requirement and
lowered the HOA dues back down?
(38:22):
Yes, but will they Probably not, you know.
So it's a huge problem inFlorida, or it was a huge
problem in Florida.
It's a huge problem now withthe HOA dues, but in, like
Minnesota and Arizona, most ofthe time the reserves are okay.
It's the insurance that theyhave to be working through this
year most of the year, this year, and if the board members don't
(38:48):
know, it's up to theassociation management company.
If the association managementcompany doesn't know, or they
don't know, it's up to theassociation management company.
If the association managementcompany doesn't know, or they
don't care, or they're justcollecting their fees and they
don't really pay attention, itcould go unnoticed for the
entire year.
Which I've seen happen as well.
Speaker 1 (39:08):
Oh, my seller two days before no, can you guys
hear me?
Speaker 3 (39:21):
yep, we can, I'll put you back.
Okay, you were frozen for alittle bit, but yeah, I mean
that's like the hoas are aregoing to continue to be an issue
for everyone this year and likeI said, if you're a listing
agent, get those documents onthe mls for review.
If you are a buyer's agent, geta hold of the master insurance
at the very least and send it toyour lender.
And if you're a listing agent,get a hold of the master
insurance, at the very least,and send it to your lender and
(39:42):
if you're a listing agent, get ahold of the documents and send
it to your lender anyway.
So the other thing that we cando and this applies to not only
just condos and townhomes withHOAs, but this applies to any
single family residence the newkind of idea behind listing
homes right now and kind of, youknow, instead of talking to
(40:04):
your client about a price drop,you know things of that nature
what we can do is we can say OKfor this specific listing we
will offer you know, the selleris willing to offer a 5.99%
interest rate buy down to anybuyer that comes in.
The reason that this isimportant in the condos is
(40:24):
basically what happens is if yousay, let's just say you have a
home that's you listed for$500,000 and it's just not
getting a lot of activity, yourfirst gut instinct is going to
be what?
Lower the price, right?
Well, instead of lowering theprice, it might be more
attractive to say okay, we'regoing to attach a mortgage loan
offering to this property that'sgoing to offer a 5.99% interest
(40:47):
rate if you purchase thisproperty and the seller is going
to pay that buy down.
So on a $500,000 property,let's say, the buy down is 3%.
So the seller is paying 3%,$15,000, to get a buyer in there
, basically to get a loan at5.99%.
Why that's advantageous isnumber one, you're not having to
(41:08):
lower the purchase price.
But number two, it actuallyhelps get more buyers qualified
at lower interest rates.
So what you're doing isbasically saying, well, sell
your home for more and if we doa price drop you're gonna lose
out that money anyway.
So we might as well take thatmoney and use it to your
advantage.
So in other words, instead ofsaying let's go from 500 to 485,
(41:28):
that 15,000 is gone and hasliterally no use to it, but at
500,000, with a seller buy downto let's call it, 5.99, 5.875,
whatever that amount is, all ofa sudden that 15,000 that they
were going to lose anyway is nowput to good use in attracting
more buyers.
This can be extremely helpfulin condo situations, because
(41:49):
then you have a lender that'salready reviewed the condo,
already has approval for it andcan basically plug and play any
buyer in there.
So it helps with condos gettingthe HOAs reviewed, getting
those approved in advance sothat buyers coming in can
actually close on loans.
And, number two, helping on anylisting single family listing
(42:13):
if you're looking at a pricedrop, use it to your advantage.
Take that price drop money anduse it to offer to buy down a
rate to the buyer.
Builders do it all the time.
Builders offer 4.99%, 5.5%,whatever they offer, and they
just work that amount into thesales price.
The buyer's just paying morefor the house.
(42:35):
It's the same way with thisBuyer's just paying more for the
house.
It's the same way with this.
Buyers are just paying more forthe house.
So it's a good strategy.
I've seen it started.
I've started using it,especially in Arizona.
That's all we have is condosdown here, basically HOAs.
I shouldn't say all we have,but there's a ton of HOAs down
here and it's been prettyeffective in saying, okay, the
(42:55):
HOA has already been reviewed,let's get a buyer in here and
plug and play.
Speaker 4 (43:05):
Okay, yep, okay, that was good Okay.
Speaker 3 (43:09):
Very good.
Yes, what other generalquestions do you guys have?
I know it's a lot ofinformation.
Speaker 2 (43:16):
Do we want to?
Can you hear me, nikki?
Do you want to just kind oftouch a little bit?
Let these guys know I just kindof mentioned we've got a mutual
client that we have them readyto go with the NOC program to
help.
Speaker 3 (43:37):
Yeah, I can talk about it a little bit.
So NOC lending is basically acash buyer for the client's home
.
When a client is going in andthey have to offer contingent
upon the sale of their house,obviously that can be a
(43:59):
detriment to competing withother offers on homes that can
go non-contingent Knock.
But basically knock lendingdoes is it writes a purchase
agreement for that client's homeand advances their down payment
on the new home via earnestmoney.
So in other words, if your homethat you have to sell is
$500,000 and you need $100,000to put as down payment on the
new home, noc will write apurchase agreement for $500,000
(44:21):
and give you earnest money of$100,000 so that you can close
on that home.
The reason that this works isthat Fannie Mae and Freddie Mac
say that as long as you have anaccepted purchase agreement with
no financing contingencies,closing any time after your next
purchase with a close date, anytime after your next purchase
(44:42):
with a close date, any timeafter your next purchase date,
as long as there's no financingcontingencies, you are
considered a non-contingentbuyer.
Knock Lending writes a purchaseagreement for cash, gives you
$100,000 or whatever it is thatyou need for your down payment
on your next house you $100,000or whatever it is that you need
for your down payment on yournext house and then closes,
(45:03):
writes a close date six monthsafter your purchase date on your
next home.
So you have.
So the listing agent has up tosix months to sell it to anybody
and if they don't Knock,lending will come in and
purchase that house at theagreed upon sales price.
Why this is interesting is itdoes come with fees around 2.25%
(45:28):
of the purchase of the listprice but if you are in a
situation where you need tooffer non-contingent, you do not
have to pay that 2.25% upfrontto knock.
You can have it in place sothat in case your home doesn't
sell by the time you close onthe other one, you know that
there is a purchase agreementthere.
(45:49):
Now not only do they collectthe 2.25% as their fee, but they
also collect that six months ofmortgage payments right away as
well.
So in other words, thatmortgage is paid, you are truly
a non-contingent borrower.
With your home already sold atthe agreed upon price, you
already have your down paymenton your new house, you already
(46:10):
have accounted for the sixmonths of PITIA on your home and
you can use that money to andput yourself in there as a
non-contingent buyer.
Super useful tool, especiallyfor people who have a lot of
equity in their home.
They don't go to a hundredpercent of the purchase price
but they'll go to like 90% asfar as how much money they'll
(46:30):
give you up front, so like froman earnest money standpoint.
So it's it's super useful.
We're using it with one ofChrissy's clients right now.
They happen to have gotten apurchase agreement within the
meantime that they accepted, sowe won't need the NOC lending.
But it is something that, aslong as you can be approved for
a normal mortgage loan, you willget the approval for the NOC
(46:50):
lending and it's zero percent,zero dollar payments, et cetera.
Speaker 5 (46:58):
Chrissy, do you write that offer as a cash fund?
No, okay, no, but's anon-contingent okay with just a
normal down payment with thatnon-contingent it's for it.
Speaker 2 (47:11):
So it is non-contingent because we have
the knock program approval andso, either way, the house is
going to be, we're going to havethe down payment and they can
purchase non-contingent Whetherwe get their house sold
beforehand or not.
Noc is stepping in.
Speaker 1 (47:29):
It's like an ace in the pocket.
Speaker 4 (47:34):
None of the financing .
Is that what you're saying?
You don't put on anything onthe financing and that part
where it says buyer, yeah, Iguess you wouldn't be like a
cash buyer then.
Speaker 2 (47:44):
No, because it's not a full cash.
It's still being financed.
Speaker 3 (47:49):
Well, no, they'll pay cash, not pay cash for it in
six months if it doesn't close.
Speaker 2 (47:53):
Yes, yes, yeah, we didn't write the offer as a cash
offer because they'd only becoming in with $100,000 down.
Speaker 3 (48:05):
Yeah, you didn't write their offer as a cash
offer, but the offer that NOCsends is a cash offer.
Speaker 4 (48:11):
Yeah, what you were saying about the purchaser.
Speaker 3 (48:15):
The purchaser of their home is a cash offer from
NOC.
Speaker 4 (48:21):
Yeah, but the person that got the cash offer from
NOC're purchasing.
How does that go into ourparticipation?
Speaker 5 (48:24):
yeah, I'm wondering how the listing agent would know
this is special by looking atyour purchase agreement it's not
any different than any otheroffer.
There's nothing but it isbecause it's not contingent on
financing, and so that'sattractive, isn't it?
Speaker 2 (48:39):
to.
Speaker 3 (48:39):
Nikki, can you hear?
Not really.
Speaker 5 (48:46):
Something about I said well, as a listing agent,
how would we know this is a morespecial offer?
How would we know this is notcontingent?
And so I'm asking how shefilled out her PA to let them
know that, hey, this is a suredeal.
Speaker 3 (49:04):
So okay.
So let me explain it from thebeginning.
So you have the home thatyou're selling.
Noc comes in and says I'm goingto write a purchase agreement
offering cash for this cashpurchase for this home six
months from now.
Speaker 1 (49:16):
So you have a purchase agreement from NOC
that's going to close six monthsfrom today.
Speaker 5 (49:21):
They're going to buy it cash, so you don a purchase
agreement from NOC that's goingto close six months from today.
They're going to buy it cash.
Speaker 3 (49:26):
Oh, they're buying your home, so you don't need to
sell your home, correct, correct, you can sell the home anytime
within that six months and nothave to use NOC.
Speaker 2 (49:33):
So you're not even committed to that.
So the goal was let's hurry upand get your house listed and we
are really going to ultimatelytry to get your house sold
period before the closing dateof your purchase.
If we can't, we have knock as abackup.
Speaker 5 (49:49):
We already have that lined up.
Speaker 2 (49:50):
I'm starting to follow.
We're trying to save them thefees that are associated with
going that route.
Either way, the house myclients are buying, they have to
close on the closing datebecause it is a non-contingent
offer so for some reason wecan't close on their the sale of
their house with this otherbuyer.
Okay, we're gonna have todivert knock knock.
Speaker 5 (50:14):
Yep, we're gonna have to assume those extra fees okay
, yeah, so you're just, you'rejust writing this amount down,
correct.
Speaker 4 (50:24):
Just like and then there'll be, but you're not
paying any kind of a mortgageamount on the new house.
Speaker 3 (50:31):
Yes, you are.
You're just using the.
Yeah, you are because you'rejust using the equity of your
home in advance is basicallywhat happens.
So that earnest money amountthat knock puts on the purchase
agreement is the amount thatthey will send you to put as
down payment on the new house.
It could be all cash, you justdon't know.
I mean, it could happen to bethat you don't need a mortgage
on the new purchase, but most ofthe time you will, because you
only have a certain amount ofequity.
(50:51):
So, for example, you owe$300,000 on your house, you're
listing it at $500,000, notcomes in and says we're going to
pay $500,000, but we're goingto give you $100,000 as earnest
money.
You take that $100,000, you'renon-contingent as down payment
on the new house and then youmortgage the rest of it.
Speaker 5 (51:12):
Trying to make an offer to get a new house for
your clients.
Speaker 2 (51:16):
And, but oh, I think your question.
Can you hear me, nikki?
Yeah, I think the question isis there a finance contingency
on the offer?
Speaker 3 (51:29):
yeah, and on the offer of the home that you're
purchasing I still included afinance?
Yeah, of course because theydon't in this case you don't
have.
You're only getting 150150,000in equity, so you're not going
to buy a house for $150,000.
That's going to be your downpayment amount.
So you have to finance the restof what you're purchasing.
Speaker 1 (51:51):
It's just non-contingent on the sale.
Speaker 3 (51:53):
It's non-contingent on the sale not non-financed.
Speaker 2 (51:59):
Yeah, it's still.
It's still contingent onfinancing.
Speaker 3 (52:04):
Yeah, it's contingent on financing, not contingent on
the sale.
Yep, so business as usual,business as usual.
Yep.
Now this only works for FYI.
This only works forconventional buyers.
This does not work for FHAbuyers because FHA buyers do not
have the same guideline from aclosing financial contingency
standpoint on the lending side.
Speaker 2 (52:25):
Okay, got it.
Speaker 4 (52:27):
All right, One we're throwing it out there because
you have to have enough equityin your house in order for this
to work.
Speaker 2 (52:35):
Yeah, you do.
We talked about another clientand they don't have it.
Do you know what the thresholdis for equity?
Speaker 3 (52:41):
90%.
So if so, they'll go up to 90%of the home of the listing price
.
So, between what they owe onthe mortgage and 90% of the
listing price, that's the amountthat they'll give you basically
.
Speaker 2 (52:54):
Minus the sellers have to have.
In their home.
The homeowners like how muchequity do they have to have?
Speaker 3 (53:03):
Well, I would say I would say at least 20%, because
they're only going to need 5% onthe new home.
You know, 5% to close, but Iwould say at least 20%.
Okay, all right, that'd be agood threshold.
Okay, that'd probably be theminimum I'd want, okay.
So yeah, it's a good program, Imean very easy to use so what
(53:28):
other?
Speaker 4 (53:28):
questions do you?
Speaker 2 (53:29):
guys have anybody else have anything.
Speaker 1 (53:32):
We're obviously over our time, but yes, thank you for
all the great information.
Yeah absolutely.
Speaker 4 (53:39):
Can you hear me?
Yeah, does the student loansituation affect credit score at
all?
Speaker 3 (53:48):
The not loan no not does not affect credit.
Yeah, doesn't affect credit atall.
Speaker 2 (53:56):
Wait, you just said student loan.
Speaker 4 (53:58):
Student loan.
Speaker 2 (53:59):
Oh.
Speaker 4 (53:59):
I thought he said oh, what's?
Speaker 2 (54:02):
that.
Speaker 4 (54:03):
Which part what?
Speaker 2 (54:05):
do you mean yes?
Speaker 4 (54:06):
Well, the whole thing with the student loans, does
that affect?
You know, debt to income andall that?
Speaker 5 (54:12):
Yes, when that starts changing.
Okay.
Speaker 3 (54:16):
Yeah, so a lot of people have already been
affected by the change thathappened on February 1st.
Anyone that didn't declare whatthey wanted to do with their
student loans, they wereaffected.
If this new bill passes,there'll be payment plan unless
(54:40):
you say otherwise, so you won'thave the same situation that
happened where all of a suddenthere's late payments reporting
and you didn't go make yourdecision and all these things.
You will automatically betransferred over to the standard
payment plan If you you know ifyou're on one of the ones that
isn't available anymore.
Speaker 2 (54:58):
Hmm, that could be a lot.
Speaker 3 (55:01):
Yeah Well, I mean, I'm just wondering, you know,
for me it's like I'm justwondering going gosh, how are
they going to determinediscretionary income?
That's insane, like what goes?
Speaker 1 (55:15):
into that and what doesn't?
What does that even mean?
Determined, I know?
Speaker 2 (55:22):
Well we're my daughter with three kids.
I don't think there is anydiscretionary well, that's
exactly the point, you know.
Speaker 3 (55:29):
And then are they is it discretionary income of the
borrower, or is it discretionaryincome of the married couple,
or is it discretionary income?
You know what I Like?
What does that mean?
And then also, I mean the VA,for example, has residual income
requirements that you have tomeet in order to qualify for a
mortgage loan.
So I wonder if it's going tofollow their same guidelines as
(55:51):
far as discretionary income.
Who knows?
Speaker 2 (55:55):
Interesting yeah.
Speaker 3 (55:57):
But if you think about, like, let's say, you have
what they determined to be $500a month in discretionary income
and you're saying, oh, that's10% of that, that's a $50 a
month payment.
So you make a $50 a monthpayment for what?
20 years?
And then the rest of it isforgiven.
I mean, 20 years is a long time, but people have been sitting
with this student loan debt for30, 40 years.
Speaker 2 (56:19):
I just paid off my student loans, like last month.
Speaker 3 (56:24):
I still owe $29,000.
Speaker 5 (56:26):
30 years, I know.
Speaker 3 (56:29):
I'm 30 years later and I still owe $29,000.
And guess how much I startedwith, how much 31.
Yeah, that's how like.
If you guys really like, if youreally looked into, like, the
student loans and how theyoperate and how predatory they
are, it is crazy how much youcan end up owing on those
(56:49):
student loans If you, if youlike, go on different payment
plans and stuff like that,because they're basically a lot
of them are negativeamortization and I can't.
You know, it's just crazy thatthey let it go on this long.
It is and it's, you know, it'sbeen a mess for a really, really
, really long time.
Speaker 1 (57:14):
And this solution isn't going to be a great
solution, but it's.
It's a solution.
Speaker 3 (57:18):
It's headed the right direction, hopefully.
Yeah.
I mean, at least there's someforgiveness in there and at
least it's based ondiscretionary income and not,
hey, we're just going to startscrewing you over and have you
pay one percent of the balanceyou know, I mean the amount of
and then holding the college isresponsible as well as.
Like you know, that's probablya good thing as well.
Speaker 1 (57:34):
So all right, you guys.
Right then that.
Then what does that?
look like Like dominoes, yeah, Iknow We'll have so much to talk
about too.
So everyone anyone listening tothe recording are in this room.
Nikki and I meet every Monday,1130, central Standard Time, for
(57:55):
a quick 20 minute, and this isthe type of stuff Nikki brings.
I don't talk hardly at all.
I'm like Nikki what's happening, what's new in the market?
Uh, and up to 20 minutes ofjust this type of stuff.
That's so, so important.
So if you can't make it to that, zoom live, then definitely
watch the recording.
I put it LinkedIn, I put it onYouTube, I put it on Facebook,
(58:18):
um, and Nikki is on all thechannels TikTok, instagram,
facebook.
Every day she's posting thistype of information.
That's so, so, very helpful.
Show up and educate yourclients.
She has given us permission torip off duet, stitch, rinse and
repeat.
Anything that she puts outonline we can use as well.
(58:39):
So she is the person to go towith any questions.
So we really, really appreciateyou.
She's been doing this for avery, very long time and, first
off, so yeah, 50 years.
Speaker 3 (58:53):
I didn't say that that was her.
You see how young I look fordoing this for 50 years, it's
beautiful for 70.
No.
Speaker 1 (58:59):
I'm kidding.
That's kind of what you youfeel sometimes.
I bet with some of thesesituations we put you through.
Speaker 3 (59:04):
Yeah, no, 26 years so long time Cool.
Speaker 1 (59:10):
Well, thank you so much.
We appreciate you and yeah,we'll talk soon, all right?
Speaker 4 (59:15):
Bye guys, Bye Bye.
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