October 30, 2024 • 44 mins
What if you could navigate the complexities of construction lending and housing market trends with expert insights at your fingertips? Join us for a compelling conversation with Taylor Ashburn, Senior Vice President of Residential Construction Lending at Westgate Bank. Taylor shares both personal milestones, including the new freedoms and challenges of having a teenage driver in the family, and professional insights. We track his path from a bank teller to a leader in the construction lending field, offering a glimpse into the unique processes at Westgate that prioritize personalized service and efficiency in draw processing.
The 2023 housing market has seen its share of trials, from the lowest permit totals since the Great Recession to mortgage rates hovering around 8%. Yet, there is hope around the corner, with projections suggesting a rebound in single-family housing permits in 2024. Taylor and I discuss the surprising surge in multifamily permits and the implications of Fannie Mae's adjusted guidelines for self-employed individuals. With increasing conforming loan limits, we look ahead to a more balanced mortgage landscape, reflecting on past market challenges and considering what the future holds.
The conversation takes a turn toward retirement planning and the critical role of homeownership in securing financial stability. We dive into the nuances of Federal Reserve decisions and their impact on loan rates, clearing up common misconceptions about their relationship with mortgage rates. Taylor underscores the value of shopping locally for lending needs, ensuring proactive support from engaged local lenders. As we wrap up, we explore the importance of strong relationships with builders and informed insurance choices, especially in light of recent natural disasters and evolving policies. Tune in for an episode packed with expert guidance and practical advice to navigate today's housing and financial markets.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Thanks, guys, for joining us on another episode of
Stay Modern with Murray.
Today, our special guest is theSenior Vice President of
Residential Construction Lendingat Westgate Bank, taylor
Ashburn.
Taylor, thank you so much.
Speaker 2 (00:14):
A round of applause.
Speaker 1 (00:15):
Yeah, yes, very nice.
So this is actually your secondtime on and I appreciate you
doing this again.
Of course, hopefully you had afun time the first time.
Yeah, I think your episode gotreally good feedback.
So appreciate you doing thisagain.
Um, hopefully you had a funtime the first time.
Yeah, I think I think yourepisode got really good feedback
.
So nice, figured we'd have youon again.
But, um, this mic, I was justtelling you this is the first
one I think I've shot for three,four or five months, so you're
(00:35):
gonna have to help me out here.
I well, you're saying that if,if you follow our podcast
matthew, who works for us nowjust he, he had his own podcast
before this and he loves doingit.
So whenever I have a schedulingconflict or whatever, rather
than rescheduling, he's justlike let me do it.
So I've just been letting himdo it.
So perfect.
But, uh, yeah, go ahead.
Uh, refresh the listeners mindson where you're from.
Speaker 2 (00:58):
Tell us about yourself?
Yep, absolutely, and thanksagain for having me.
This is.
This is a so, born and raisedin Lincoln, graduated from the
University of Nebraska.
My wife and I have fourchildren, three boys and a girl,
so our lives are busy runningaround from sporting event to
sporting event.
A big change since the lasttime we talked is that my oldest
(01:19):
turned 16 and now he can drivehimself, which was a game
changer, because now it's, youknow, getting to school early,
staying late after footballpractice, he can drive himself,
which was a game changer,because now it's, you know,
getting to school early, stayinglate after football practice,
he can drive himself home If hewants to go visit a buddy.
I never thought about that.
Oh it's, it's awesome.
Oh gosh, because the liabilityin the but that would be a game
changer, I had about two days oflike, oh crap, I mean you watch
(01:41):
him drive away the first timeand it's, it's nuts, but you get
over that pretty quickly.
So, other than the fact thatcar insurance is really
expensive for a 16 year old male, I bet, um, it's, it's been
really great.
So, um, but yeah, so we've uhlived in Lincoln my whole life
and uh been with Westgate nowalmost nine years.
Uh got my start in college andI like I kind of said this last
(02:05):
time too, you know, didn't haveany desire to get into banking.
But I was in college lookingfor a job.
Union Bank had a teller job andthey provided lunch every day.
So as a poor college student, Ithought, well, that's a pretty
sweet deal.
So I did the bank teller thingand had some opportunities to
get some exposure to lending andkind of found a strong desire
(02:26):
to do that and kind of, the restis history.
So Westgate, you know, is alocally owned, family owned
community bank which is a reallynice setup to be in lending
because all the decision makersare right there in my physical
location, so all of ourcommittees that approve loans,
you know everybody's right thereso we can make decisions
quickly and it's just been areally nice fit for me over the
(02:50):
last nine years yeah.
Speaker 1 (02:51):
Well, you guys do good work.
A little bit of that's happenedon our end is we finally grew
to the point where we needed asecond lender.
Everybody knows I've been loyalto Pinnacle Bank for 17 years
of my existence, but we finallygrew to the point where we
needed another one.
And now you guys are doing someof our spec home financing.
Speaker 2 (03:09):
And that's a big win for us.
So thank you for that.
Yeah, it's great.
Speaker 1 (03:14):
So obviously we're bringing you here just to kind
of do a market recap.
A lot's happened since the lasttime.
I didn't even look at the datathe last time we had you on, but
was it a year and over a yearand a half ago, right In the
middle of all the COVID stuff,right, interest rates and all
that.
But discuss the constructionlending process for you guys,
(03:37):
cause I know that it's different.
Has anything changed?
Cause I know I went into thatgreat, because on the last time,
because you guys do it what Iwould consider a lot different
than what other people do.
So kind of go into that alittle bit.
Let us know if anything'schanged in your world as far as
construction lending goes.
Speaker 2 (03:57):
Sure.
So our process is very hands-onand it's a niche within lending
that our ownership has investeda lot of resources into.
So what's a little unique aboutWestgate Bank versus other
banks that I've worked at orthat I run into is we have a
dedicated construction loandepartment.
So myself, one other lender inLincoln, one lender up in Omaha
(04:21):
and then our four loanassistants who do a great job
for us.
That's all we do.
So I'm not a commercial lenderthat does you know big.
You know industrial warehousebuildings and commercial real
estate and then constructionlending.
When I get the chance In thebackground, yeah, that's my sole
focus.
That makes us a little unique,but our process is very, very
(04:43):
hands-on.
These loans aren't hard to putinto place.
Where problems can pop up, asif you stop paying attention, if
you take your eye off the ball.
So our onsite inspections andhow we process the draws try to
get the draws paid within 24hours.
It's just that little extraservice and that little extra
monitoring that I think can seta bank apart, because at the end
(05:06):
of the day, it's a prettysimple loan in and of itself,
right, but it's all about youknow what you do after the
closing takes place and how youget everything funded.
So you know in terms of what'skind of new in the industry.
For us at Westgate Bank that's abig change is we did a full
core software conversion, so weleft our previous provider and
(05:27):
migrated to a brand new computersystem for everything that we
do at the bank.
Wow, the software I use towrite loan memos, the software
we use to look up accounts, toopen accounts, to basically run
the bank it's all brand newsoftware.
And for the customer on theirend, they've got some new toys
to deal with.
We have an online bankingplatform and a mobile banking
(05:48):
platform.
That is now state of the art,but that was about an 18-month
process from start to finish,because you basically have to
convert all your customers intoa new system.
And so you do about four or fivetest runs a lot of late nights
for some people on our team justmaking sure that it works.
Or five test runs a lot of latenights for some people on our
team just making sure that itworks.
You know because literally whathappened you know, one Sunday
(06:09):
night we flipped the switch andwent live and you got to just be
darn sure that everything'sgonna, you know, go as as
planned.
So with anything new, there'salways, you know, challenges and
new, new um things to learn,but, um, it's been really good
and I think our customers havereally enjoyed, you know, these
new pieces of software.
Speaker 1 (06:26):
What was the reason?
Integration.
Speaker 2 (06:30):
So, not to get too far into the weeds, but if there
was, there's four or five kindof main systems that a bank uses
, and three of them were withone company, one was with
another, the last one was withanother the system we're under
now it's all under one roof,gotcha, and so the synergy and
the way those systems talk toeach other yep is is awesome.
That's kind of what we werelacking a little bit when the
(06:53):
you know, the, the loan documentsystem is made by a different
company that does the loanorigination platform, and then
the servicing you know, thesystem we used to pull up the
accounts is different too.
Right, right Now it's all underone roof.
That's awesome.
So that's been really good.
And, you know, customer serviceis important.
We maybe weren't getting thebest customer service when
(07:14):
things would go down, whichimpacts our customers, and so we
found a partner that is reallysolid.
They're used by about I think athird of the banks in the
country use this, this company,and we've been really happy with
them.
Speaker 1 (07:28):
I'm assuming that wasn't a small decision for
leadership and opportunity costto get it reported over, because
it's not everybody.
Speaker 2 (07:34):
It's not like, you know, going online and
downloading a new piece ofsoftware for your computer,
Right, and then you fire it upand it works.
I mean, you're building it fromthe ground up and so, like I
said, it was about an 18 monthprocess, a lot of different
projects, a lot of you have tohave a lot of buy-in from your
team, because we're the onesthat are going to have to do the
work.
So, but everyone did great andreally sacrificed a lot to to
(07:58):
make it work so that on day oneit was ready to roll.
You know, for our customers,that's awesome awesome.
Speaker 1 (08:02):
It sounds a lot like it gives me nightmares and and
hope with our uh process withbuilder trend.
So, builder trends, you knowour client facing portal that we
use much the same way.
It's just a kind of a shell ofa program, a process that you
have to build out customtailored to your needs and your
desires.
Yeah, it has all thefunctionality there, but you
(08:23):
have to tell it what to do, sure, and and it brings everything
together, like you are saying,saying so, rather than doing our
estimates over here, ourcontracts over here, our
invoicing over here, our jobscheduling over here, brings it
into one portal and shares itall to to the, to the crowd that
you want, right, right, butit's just been or two years and
and it's still a work inprogress.
(08:44):
But the huge thing that youtouched on is just beginning
people to buy in, because theminute you you run into
something that you didn't expect, it's so easy just to say why
don't we go back to the originalway that we were doing it?
For sure, yeah, for sure youknow.
Speaker 2 (08:59):
so other things that are new since the last time we
talked.
I would say, you know, just inthe market it's getting.
I would say, you know, just inthe market it's getting busy
again, which is awesome.
You know, and I'm sure you'reseeing that too, if you look at
single family and townhomepermits for the city of Lincoln
and you look at them year overyear so at September of last
year versus September at thisyear, they're up 33%, which is
(09:21):
awesome.
We're trending in the rightdirection.
You know, 2023 was a was a toughyear.
Um, it was the lowest permittotals since the great recession
, like 2008, nine and 10.
And actually it was about asbad as it had been, going back
to 1985.
Holy cow.
So 2023 was was about the worstyear that any of us had seen in
(09:43):
our lifetimes, going back to1985, with the exception of the
Great Recession in 08, 09, and10, which were not great years
either, but it makes sense.
Prime was at 8.5.
Mortgage rates were flirtingwith 8% and when you've got a
population of people who live intheir homes who probably have a
mortgage rate that starts witha three or a four or maybe a two
(10:05):
, and you're looking at the costof borrowing being what it is,
it makes you stop and it makesyou pause and, yeah, maybe I
don't want to do this, you knowright now, but you know, over
the last, you know, 15 years,you know, and even through COVID
, up until last year, you know,lincoln was building or pulling
permits for single family of.
You know, and even throughCOVID, up until last year, you
(10:26):
know, lincoln was building orpulling permits for single
family of.
You know, 680, 690,.
You know, per year, singlefamily permits 2023, there was
only 395.
Wow, and so if you look atwhere we are in 24, I think
we'll probably hit about 500.
So we're trending back in theright direction, which is good.
The other thing that I foundkind of interesting is looking
(10:47):
at the number of multifamilypermits that have been pulled in
the last couple of years, andwe all see it when we drive
around Lincoln there'sapartments popping up everywhere
.
If you look at the last threeyears and what we're doing this
year, it's approaching 6,000multifamily permits in the last
three or four years, and so Idon't know if that has anything
(11:09):
to do with it where, wherethere's just more inventory of
apartments and so people aredeciding that's what they want
to do and how that has impacted.
You know what you do and what Ido in terms of you know
building houses and financinghouses.
So I mean Lincoln's grown about6% in the last four or five
years.
People got to live somewhere,and so you know other things
(11:30):
that have changed.
You know Fannie Mae, which iswhere we get our mortgage money
from.
They've actually loosened upsome of their underwriting
guidelines, which is kind ofnice to see.
Two things in particularself-employed borrowers.
Now they'll allow you to onlyhave one year of self-employed
income, one year of tax returns,if certain conditions are met.
Like anything, there's always alittle asterisk next to
(11:52):
anything.
I say, when it comes to mortgagelending that sticks a lot of
people, though it does Threeyears or three years of tax
return and also how they look atrental properties owned.
They're changing their approachwhere if you have a loss on one
property but you have prettygood income on the other, they
can balance each other out.
So it's nice to see that FannieMae is loosening up, because
(12:12):
back in 2005, six and seven, itwas really really loose.
There was so much stated income, stated debt.
If you had a good credit score,you could tell them I make
$500,000 a year and have no debt, and they'd say, great, here
you go, no wonder we had a goodcredit score.
You could tell them I make$500,000 a year and have no debt
, and they'd say, great, hereyou go.
You know, no wonder we had ahousing crisis then.
Well, then the pendulum swungway too far in the other
direction where, especially onself-employed people, they were
(12:35):
so hard on those people and thelevel of documentation and
verification just was ridiculous.
So they're swinging back to apoint where they're being a
little bit more.
I don't know common sense.
Speaker 1 (12:46):
Yeah, that's good.
It was always rough at thebeginning of my business career
trying to deal with that howmany years of tax returns you
have to have and all that stuff.
Speaker 2 (12:57):
And the other thing is that.
So the conforming loan limittoday is 766,000.
I've heard that could be up toabout 800,000 come next year.
And again the conforming loanlimit is basically just a
traditional mortgage loan.
You get above that limit.
Now you're in the jumbo space,which means a higher rate, maybe
a second appraisal, morescrutiny with the underwriters.
(13:19):
So the getting-.
Speaker 1 (13:21):
I know that time flies and it seems like just
yesterday.
Which by yesterday I mean acouple of years ago.
Wasn't it just a couple ofyears ago?
That was in the 500s.
Speaker 2 (13:29):
It was yeah, and actually it was.
It was four hundred andseventeen thousand for what felt
like five or six years, so Ithought so it's.
It's crazy how quickly that'sgone up, but it's good because
jumbo loans, you know there's aneed for those.
Speaker 1 (13:51):
But, boy, if you can get to a conventional loan, it's
going to be, just, you know,much easier for you.
Yep, you know what's crazy is?
I had a lot of deja vu and wewere talking about COVID and the
recession of 2023, so to speakas far as number of permits and
loans.
We we were all, I think, veryreluctant in our space to make
predictions about the future.
But if you go through,historically, our podcasts, I
think we did a pretty damn goodjob of hitting the nail on the
(14:11):
head.
I remember I was doing one withyou or somebody else when we
were in the middle of COVID andthe 2% or 3% interest rates and
we were all working 80, 90 hoursa week and beating our head
against the wall and getting nosleep and we were all saying can
it just be a happy medium,right?
Which we were saying it neverseems like it is right, so we
(14:33):
can't complain.
We were hoping at that timethat it didn't swing in the
other direction.
But then, right when it did, youhad a lot of these people
saying that you date the rate,you marry the house or whatever,
yeah, right.
And there was a lot of peoplejust saying that they didn't
think that the rise in interestrates were going to affect the
housing market.
Because I mean, if you lookback 20, 30 years ago, our
(14:54):
parents and grandparents werepaying 20 and 30 percent and me
and you were saying the exactsame thing, like if you just
bought a house at two percent,why are you going to move into a
house at six, seven, eightpercent?
Of course, and I think thestatistics show and the numbers
show by what you were justsaying that it did in fact slow
down.
Yeah, um, we were fortunateenough.
I know that you know, speakingwith a lot of bankers in the
(15:17):
community, you guys were prettyslow, which, you know, not
financially speaking butmentally speaking was probably a
good refresher from coming offof.
COVID, but, like I've alwayssaid, we were just fortunate
enough to have enough peoplesigned up that were still in the
drafting process from the lowinterest rate days and then had
a couple of however you want tosay it more successful farmers
(15:39):
where maybe the couple points ofinterest rates didn't matter.
More successful farmers wheremaybe the the couple of points
of interest rates didn't matter.
They had a cash surplus thatneeded a house built on on on
their family land or acreages,and so we were able to keep 2023
pretty normal for us, but itdefinitely here and here, and
what went on in the communityand the higher interest rates
did suck, though.
Speaker 2 (16:01):
And I think something you said just a second ago you
hit the nail on the head it's.
We need to find just somenormalcy in all this, because
two and a half percent mortgages, while that's awesome, probably
wasn't really good for us inthe long run, right.
And 8% mortgages, and howquickly they went up, is also
not good for us.
(16:21):
What we need is just steady,yep, find somewhere in the
middle and just hang there forthe next 10 years and everything
will be fine.
But the Fed has just been soaggressive, ratcheting up their
rate I know we'll talk aboutrates here in a little bit that
it went too low for too long andthen it went up too fast and
now we're stuck with again.
(16:43):
You just put yourself in themind of the average consumer If
my rate's 3%, why would I move?
If my new rate's going to be 8?
, yep, I mean, they're just notgoing to do that.
Speaker 1 (16:53):
I was speaking to another realtor in town and he
just got back from Boston and hewas talking about the number of
multifamily homes being built.
And he was talking about thenumber of multifamily homes
being built In Boston downtownnear a university.
So we're talking, not peoplethat are in the workforce.
The average rent was $5,000 to$6,000 a month Wow, and they had
(17:18):
a huge banner on all thebuildings that said renting is
the new revolution or somethingto that extent.
Interesting Millennials are theway to go or whatever, but they
they're literally.
That's what they're banking onis the fact that the younger
generation doesn't want amortgage and doesn't want
permanent living.
They want to live in multipleplaces and they just want to
(17:39):
rent.
Speaker 2 (17:39):
That's crazy.
I mean crazy to me, you know,because you know you want the
house and the yard.
But look all these apartmentsthat are popping up.
You know the city needs them.
Of course you know we needhousing, we need affordable
housing and whatnot.
But it's just interesting to me, you know, that I think that
younger generation is OK, youknow, moving in an apartment and
starting a family there, agreed.
Speaker 1 (18:01):
My thought is this and I haven't thought about this
a lot, but with my workforceand my friends, including myself
, the only real way I got aheadand this isn't just because I'm
in the construction industry,but years I owned my house and
(18:22):
then selling, taking that equity, buying again If you're just
dumping your money into rent forthe first X amount of years of
your life, how are you going toget ahead?
Where are you going to getahead in life?
To where you know?
I think we all look at you knowI'm already counting.
How many years do I have leftbefore my kid retires?
(18:45):
You know what I mean, Like whencan I move to Florida for six
months?
Not that I want to get rid ofmy kids I love them to death and
I'll miss them.
But you're already lookingforward to that those?
How many more years do I haveto stack up money and let my
houses appreciate before I cankind of step away from the
day-to-day rigmarole?
Right, but if you're not doingthat, I mean, what's the end
goal?
You're just working untilyou're 80?
(19:05):
.
Speaker 2 (19:06):
Or always having a house payment or a rent payment.
You know, when my wife and Italk about retirement, one of
the first things that we know isthat our house has to be paid
off, whether it's our currentone or whether we move.
You know, at some point, youknow, fine, but to think about
shutting it down and not workinganymore if I got a big house
payment, I don't know how youmake that work.
So all I can do is you know,you buy that first house, you
(19:29):
live in it for a while, you sellit, you make money, you move on
to the next one, you move on tothe next one, you know,
accumulating that equity so thatsomeday that housing expense is
gone.
Correct, you know?
That's why I've always lookedyeah, so I can go into
retirement and not have a housepayment anymore.
And there's no way to do that ifyou've rented your entire life.
Correct, you know.
And so you know for everysituation.
(19:49):
I think you know, for somepeople it makes sense, right?
My hope is that, in lieu ofputting a down payment down on a
house, they're investing thatmoney or they're finding ways to
, you know, save a little morefor retirement.
Right, you know, if, if theycan, because you know you look
at someone's personal financialstatement and usually the equity
in their home is one of thebiggest line items, and at least
(20:12):
for for most people that I runinto it is you know what I find
really cool.
Speaker 1 (20:16):
Cool and also sad is that you know when I started,
when I was 27, 28, when I wasinterviewing people to build a
$650,000 house, back then I wasdealing with, you know, 50, 60
year old CEOs um, just accepteda big job in Lincoln we're
moving to town presidents ofbanks.
(20:36):
You know older lawyers, sothere's always people that were
substantially older than me.
And now I've had the benefit inthe last couple of years of,
when I go into an interview, wejust built a $1.5 million house
on a farm and I go into themeeting just with this natural
mindset they're going to be 50,60 years old, have accumulated
(20:57):
money, successful farm, andthey're in the mid late twenties
to early thirties.
A, that's awesome, right, thatthey, they've been so successful
at such a young age.
I I'm not upset about that atall, um, but it's just weird.
Now I'm the old guy in the room, right, it just makes me feel
(21:18):
really old.
I hear you, man Proud.
I mean, we're, we're gettingready to build for an ex Husker
volleyball player that was sixor seven years younger than me
and they're building the nicemultimillion dollar house.
So it's just.
Yeah, it's cool to see thatsome, some of the younger
generation, are having successwith financials and money and
doing it the right way.
Speaker 2 (21:38):
Getting old catches up on you, sneaks up on you.
My, uh, my youngest son isseven and a lot of his buddies,
so he's my youngest.
Well, a lot of his buddies,that's their first kid.
And so we go to these you knowfootball game, flag football
games or whatever.
And I'm looking around likethese parents are all like 25
years old.
I was like what, what the heckhappened?
(21:59):
I got old.
Speaker 1 (22:01):
I know, you know what's crazy is?
I think about the same thing.
I'm fortunate enough to be onsome sports teams for my son
where all the parents are aroundthe same age.
And then when I startedthinking about that, when I had
my son, I was always like I'myoung, I'm going to be the young
parent, right, because I, youknow, I just thought that I was
(22:22):
having kids before other people.
And then now I'm, you know,right there, or a little bit
older than everybody, sure, sure, yeah.
It's like, how did this happen?
How did I get so old, right,right, yeah, well, dive into the
next subject.
I mean the big pink elephant inthe room.
I know we've asked you to makepredictions before and we all
kind of like want to tiptoearound it, but I mean, I'm sure
(22:46):
if you listen to your oldpodcast, you're probably pretty
spot on with what you thoughtwas going to happen.
I should go back and listen, Iknow.
I didn't do my preparation forthis busy week.
But no, tell us what you think.
Interest rates, inflation, surewhen we are, where you think
we're going to go.
Speaker 2 (23:03):
Yeah.
So I'm going to talk about twodifferent things.
One would be kind ofconstruction loan rates Yep,
that also mortgage rates alittle bit, because the two are
different.
Obviously, a construction loanis Westgate Bank money that
we're loaning to the customer,to the builder, whereas a
mortgage loan, those dollarscome from the secondary market,
so Fannie Mae and Freddie Mac.
(23:24):
So, as far as constructionloans are concerned, when the
Fed makes a move, that's thetype of loan that is impacted,
and so we all know that inSeptember, the Fed finally
dropped rates and they did ahalf a point rate cut, which was
very welcome for me, verywelcome for you.
I don't like these high ratesany more than anybody else does.
(23:44):
They're annoying.
But Prime went from eight and ahalf to eight, and when I say
Prime, that's typically the ratethat a bank would charge their
best customer.
So that had been at eight and ahalf since July of 2023.
And it got there in a hurrybecause two and a half years ago
of 2023, and got there in ahurry because two and a half
(24:06):
years ago, prime was at threeand a half.
So they went from three and ahalf to eight and a half very,
very quickly, which is one ofthe best tools they have to try
to pull inflation back.
Okay, so the Fed's just tryingto do their job, but, uh, it was
nice to see that half a pointcut, and where we go from here
is up in the air, nobody reallyknows.
(24:27):
Um, they, uh, the people thatare on that fed committee.
They're asked to complete asurvey and they call it a dot
plot, and I've I know I've sentthat to you before and it's
basically that they ask eachcommittee member to predict
where they think rates will beover the next three or four
years.
Then you can kind of look atthe dot plot and find the middle
(24:49):
ground of where the averagewould be.
The most recent dot plot shows,remember, primes at eight,
seven and a half by the end ofthe year, six and a half by the
end of 2025, and 6% at the endof 2026.
So a few observations from that.
This is the third consecutivemeeting where they had kind of
(25:12):
raised what I'll call theirneutral rate or their final
resting rate.
It implies that members feelthat maybe a higher kind of
resting rate I'll call it isgoing to be necessary to keep
inflation at 2%, and so 6% iskind of that number today.
So I think the days of 3.5% and4% prime are probably gone.
(25:34):
I sure would like to see itstart with a 5%.
I think 5.5% to me seems fair.
I think five and a half to meseems fair.
We can sustain inflation.
We can promote growth.
People will keep borrowing butwe'll see they're going to keep
(25:54):
watching inflation.
They have to believe that theyhave it under control.
The other thing is just theyhave to watch the employment
data.
That unemployment rate isreally important.
The Fed has to protect thatdata.
That unemployment rate isreally important.
The Fed has to protect that.
The September jobs report itshowed that the labor market is
actually in much better shapethan I think people thought.
And they actually revised Julyand August and it went up and
(26:15):
then the actual unemploymentrate went down.
So I'm wondering how thatchanges what the Fed is going to
do in November when they meetnext, and then again in December
.
Will they do a quarter inNovember and a quarter in
December?
Will they do nothing inNovember and a half a point in
December?
Who knows?
So it's a very challengingthing to predict what the Fed is
(26:37):
going to do, because the windblows in a different direction
every day and as differentreports come out, sometimes you
feel like, well, maybe theeconomy is not that bad.
And then sometimes you're like,oh shoot, this looks like a
sign of weakness.
So, but for now, looking at thedot plot, it would be, you know
, we could hopefully go fromeight to six over the next
(26:57):
couple of years, which would begood yeah.
Speaker 1 (27:00):
Which I'm assuming, the world forum right now
probably is a little bit inlimbo and you know, as far as
Israel and Gaza and all thatstuff, You've got inflation,
you've got unemployment, you gotjob reports.
Speaker 2 (27:18):
You've got an election.
You've got the Middle East.
There's so many factors.
Speaker 1 (27:22):
So let me ask you this, without having to stand on
one side of the political lineor the other, or saying who you
want to win Right, do you thinkthat what we just discussed the
projection of the numbers willbe impacted by the election in
November?
Speaker 2 (27:42):
whether it goes right or left Right.
It's not supposed to be,because the Federal Reserve is
supposed to be independent ofthe executive branch of our
government.
I would say that what theeconomy seems to like is balance
.
So if there's a Republican inthe Oval Office, but maybe the
(28:02):
House or the Senate iscontrolled by the Democrats, it
makes it hard to get anythingdone because they're never going
to agree.
Or if the House is Republicanand the Senate's are Democrats,
same sort of thing.
Where the market, I think, kindof, might freak out is if it's
a blue wave or a red wave andone of the parties has the House
(28:22):
and the Senate and the OvalOffice, because then it's like
well, they're going to dowhatever they want and nothing
can stop them.
So, that being said, you know II'll come back to it.
I don't think it probablymatters a ton.
Okay, um, but we'll see.
Speaker 1 (28:38):
That's it's.
It's funny that you say that.
Cause that, because I tend toagree.
I think people overreact ifthis side wins, are going to do
A, b, c, d, which is going toruin the economy, and if this
other side wins, they're goingto do F, g, right, but I think
it's a little overboard and Ithink it'll be a month or two of
hell right after whoever wins,regardless of whoever wins.
(29:01):
So polarized right now, yeah,then it'll settle back into
normalcy, some sense of normalcy, hopefully.
Speaker 2 (29:06):
Right, which is kind of sad.
That it's, you know I, Iremember, you know, being being
a kid and watching the news withmy parents and watching the
results roll in, or watching thedebates, you know, and whatnot,
and and today it's sopolarizing, it's there's so much
anger and hate that with my ownkids I almost they'll say, can
I watch the debate?
And I'm like, well, let mewatch it first, Because our
(29:30):
country was built on.
We don't have to always getalong, but we want to be
tolerant of each other.
Agreed, and I just hope thatboth sides can find some common
ground, Agreed.
Speaker 1 (29:41):
Agreed, no matter what side it is.
I totally agree.
That's.
What I've definitely noticedover the last few years is,
whether you're right, left or inthe middle, there's just been
this new norm of if you don'tagree with each other, then just
don't have the conversationRight or walk away from the
conversation or get upset aboutit.
(30:02):
We can sit here and talk normalabout it and have differing
opinions, and the biggest thingI've learned over the last
couple of years is we can bothbe right.
You know, I didn't used to.
I'm very black and white, notvery gray, but I'm learning more
and more.
There's there's more than oneanswer.
Speaker 2 (30:19):
Yeah.
And and, like I said, both ofus can be right, we don't have
to both Sure, one person canonly be right, everybody always
talks about tolerance, andthat's fine, but tolerance means
that I don't agree with you,but I'll respect you and your
views.
So both sides need to betolerant of each other, yeah.
Speaker 1 (30:37):
Well, what other statistics and numbers do you
have?
Any recommendations for ourlisteners?
Speaker 2 (30:41):
Well, as it pertains to mortgage rates, I think
something that's reallyimportant for listeners to
remember is that the Fed'sdecision to raise or lower rates
has nothing to do with mortgagerates and, in fact, what we saw
recently, when the Fed droppedtheir rate by a half a percent,
the jobs report actually cameout stronger, it changed
(31:02):
expectations about what the Fedmight do going forward, and
mortgage rates actually went upa little bit.
I heard that, and so thenpeople call and they're like
well, the Fed lowered rates.
What happened?
It's like, yeah, two differentworlds.
So I think that's important forpeople to understand.
Inflation's probably the biggestthing with mortgage rates.
If they can keep inflationunder control and hammer it down
(31:22):
a little bit more, I think that, um, that mortgage rates should
start to trickle down, you know, and so where we go from here
and what's my prediction I mean,it's impossible to know.
Um, I found this earlier that Iwrote it down because I wanted
to share it.
In October of 2022, bloombergeconomists predicted a 100%
(31:48):
chance of a recession in thecoming 12 months.
They said that in October of2022.
They said there's 100% chanceof a recession in the next year,
and it did not happen.
Speaker 1 (31:58):
I'm really surprised you used 100% Exactly.
Speaker 2 (32:06):
I should have used 99%, 99%, right, cover your tail
Right, right, so it didn'thappen.
I mean inflation's 2.4.
It's the lowest it's been sinceFebruary of 2021.
We already talked about all theother factors the Middle East,
the election, unemployment ratesand whatnot.
Mortgage rates are about sixand an eighth today, as of this
morning.
Fannie Mae thinks they'll beback into the mid fives by next
(32:29):
year.
5.6, 5.7, you know somewhere inthere, which is certainly
better than the 8% rates we saw,excuse me, a year ago.
You know that was the highestin 20 years.
But you know, on a $500,000mortgage loan, a 1% change in
the rates, about 320 bucks.
So we're we're starting to talkreal dollars and cents, so it's
(32:50):
impossible to know kind ofwhere we go from here.
I think the dot plot gives ussome pretty good indications.
I think, if they can keepinflation down, we should get
back to the day hopefully not intoo far along in the future
where prime 6% mortgage ratesare in the fives and if that
could just hold steady for likefive or 10 years, it would just
(33:13):
be fine.
Yeah, because you can live withthat If your mortgage today is
at four and the going rates fiveand a half you can.
You can make that work Correct.
But my advice for the listenersas they navigate the market and
what's going on, I would say,first and foremost, shop local
for your lending needs.
(33:34):
Agreed, having a constructionlender that's here in town who
can do some on-site inspections?
Having boots on the ground isimportant.
That monitoring of your projectis so key, and that is not a
reaction to a bad experiencewith whatever builder, it's just
being proactive.
It's the right way to do things.
Well, if you're working withABC Bank out of you know,
(33:55):
missouri, no one is ever goingto have any eyes on your project
, and so I think that thatmatters.
I think it's okay to shoparound for your mortgage, but I
would remind your listeners thatmortgage rates really don't
differ from bank to bank,because we all pull our money
from Fannie Mae, from FreddieMac, from the secondary market.
So if another bank or amortgage broker, if my rate is
(34:20):
six and someone's like, well, Ican do four and a half man red
flag right there.
There's gotta be more to thestory.
There's probably a bunch offees, you know, loaded in.
You know what I heard thismorning and this, this was crazy
.
Something that's happening inthe mortgage world trigger leads
.
And so what I mean by a triggerlead is that somebody comes to
(34:41):
the bank and applies for amortgage loan.
That inquiry hits their creditreport as a mortgage loan
inquiry.
Those credit bureaus areactually selling those lists to
mortgage brokers and mortgagebanks, and if those people are
willing to basically make a firmoffer to extend credit, they're
allowed to call the customer.
(35:02):
So you walk into my bank, youapply for a mortgage loan, right
?
That's not Westgate bankselling your info to somebody
else.
That's Experian, that's Equifax, that's TransUnion, who are
providing lists for a fee.
You Google it trigger leads,mortgage lending, and I heard
this morning that a customer got30 phone calls.
(35:22):
There's actually legislation inplace to try to get this stopped
, because what happens is mostpeople don't.
They don't really know whatthey're doing.
I mean that with the totalamount of respect, right, but
it's the biggest financialtransaction any of us will ever
make, yep, and people don'talways know the right questions
to ask.
So if you've applied for amortgage loan with your bank and
(35:42):
somebody calls and says, well,you know, I can get you 5%, you
might go.
Oh well, okay, let me look intothat.
And then you're like, well, now, wait a minute, that seems like
a lot of fees.
Well, you're going to make upfor it in the long run, or no?
That's, everybody charges feeslike this.
So these companies are gettingvery sophisticated with how they
market to individuals, and so Ialways just encourage the
(36:05):
listeners shop local for yourlending needs.
If something seems too good tobe true, it probably is Ask
questions Because, like I said,if somebody's telling you their
rate's a full percent lower,there's probably a huge fee
involved to get it where itneeds to be.
Or there's probably a huge feeinvolved to get it where it
needs to be.
(36:27):
The other thing I would tell thelisteners is, when you do close
on your loan, there seems to bea big uptick in the amount of
junk mail that people aregetting.
So these companies will watchwhen a deed of trust gets filed,
and then they will solicit youand they'll say you know, for
$100, we'll sell you a certifiedcopy of your warranty deed.
Or, hey, can we interest you inbi-weekly payments?
Or, you know, hey, let's talkabout.
You know credit, life insuranceor something like that, and it
(36:50):
it it'll say, regarding yourloan, with whoever it's not on
bank letterhead, but they knowhow much you borrowed, who you
are and who you borrowed themoney from, and so they will
solicit the customer with allthis junk mail trying to get
them to buy something or pay forsomething that they don't need.
So again, if something seemsodd, raise a hand, ask a
(37:11):
question.
If it seems too good to be true, it probably is so between you
know, these, these crazy triggerleads and these calls people
are getting and all the junkmail, I just feel bad.
You know it sucks.
Speaker 1 (37:22):
I deal with it every day.
I get four to five voicemails aday from overdue back taxes.
I don't have any, but theyleave me a voicemail every day
saying that they see that I haveoverdue back taxes and want to
help me get debt relief andstuff like that.
And when I when I the mortgagefor my personal house, same
thing people calling me andasking me for all kinds of
different information,soliciting information and it is
(37:44):
hard, like what you're saying,I didn't know who was working on
behalf of the company or whowas soliciting my information
unsolicited.
But yeah, it's good advice.
Speaker 2 (37:53):
So, you know, shop local.
I think that's important.
Work with a reputable builder,you guys are awesome, you know.
Thank you, you have, um.
Work with a reputable builder,you guys are awesome, you know,
and so you have to say thatyou're on my podcast.
I.
I mean that though, but you'reright, I probably do have to say
that.
No, just kidding.
Um, no, you guys are great.
Here's one thing that I'venoticed lately that I want to
just advise customers, becausesometimes people will shop two
(38:15):
or three builders yep, okay,fine, I'm.
I'm noticing people that arepaying way too much attention to
the bottom line and not doingtwo things that I think are
really important.
Number one make sure that youhave a good relationship, just
on a person to person level,with the builder.
You know, and you guys and yourteam here are awesome, because
not only through the designphase, but the construction
(38:37):
phase, but the warranty periodafterwards, you're in a
relationship with this companyor with this builder for a while
.
Make sure you're a good fit.
But what I've noticed lately isthe allowances being a bait and
switch to.
I think it's somebody to sign acontract knowing that I think
they got to be the lowest priceor they're not going to pick me.
And then what happens?
You go to the flooring store,you go to the countertop store
(38:59):
and you're like this is all junk.
Speaker 1 (39:01):
You know it's funny.
It's eerily similar to what youjust said about people shopping
for cheaper mortgages.
They don't know what questionsto ask, right?
And so I have to educate people.
Hey, go get another price, butto your credit, you're exactly
right.
If our contract is $750,000 andthere's another builder that's
$750,000, that doesn't mean thatour price is the same, right,
(39:25):
because what happens?
People are doing it all thetime.
They walk in.
I ask them I'm like hey, Idon't need your final price of
your contract, it's not what I'masking for.
Let me look at your allowancesand compare your allowances to
our allowances, right, andpeople will walk in and they'll
(39:45):
have a $2,000 allowance forappliances.
I looked at one the other dayand it was $1.75 for tile and it
literally had in parenthesesprefer that you buy your tile
from a big box store.
Oh, really, $1.75 tile, andours is a $5 allowance tile.
So even though our contractswere the same, we had about a
$50,000 to $60,000 gap in theamount of money allowances and
the amount of money that we givethem to go spend on their house
, right?
So that's, that's great.
I didn't want to cut you off,but no, no, you're fine, I mean
(40:06):
Lincoln's.
Speaker 2 (40:07):
Lincoln's very fortunate to have a lot of
really great home builders andso, um, you know, in, in 90% of
the cases, you know, I'm seeingallowances that make sense.
But I had one recently wherethe person took the lowest of
the three and as we got intothat project they quickly
realized I can't even get a nicecountertop and in the end I bet
(40:29):
that house costs just as much.
So if the Murray estimate is750 and whoever is 700, ask some
questions, you know, because,because I think that's that's so
important and really encouragethe listeners to get
pre-approved before they get toofar down the tracks.
Yes, um, I had some people inmy office yesterday that hadn't
(40:50):
even talked to any builders yetand, um, I'll, I'll give you
their name off air, cause youwere one of the ones that they
mentioned.
Uh, but uh, you'd be surprisedhow often people come in and
they're like well, we signed acontract with the builder and I
guess we need to talk about aconstruction and a mortgage loan
.
And for me I'm like in my head,I'm like, oh shoot, I hope this
(41:12):
works.
I hope there's not something Idon't Cart before the horse,
cart before the horse, you knowexactly.
The last thing I would say isjust, insurance costs are going
up in a hurry.
I would really encourage thelisteners, if they shop around,
make sure you're payingattention to the deductibles,
because we're starting to see 5%deductibles for wind and hail
(41:36):
in addition to $10,000 foreverything else, and so, again,
sometimes you get what you payfor.
Don't focus on that bottom line, absolutely.
Make sure you're you're askingthe right questions and I think,
like you said, matt, sometimespeople don't know the right
questions to ask.
Speaker 1 (41:51):
That's why, working with a good builder, a local
bank, people that can help thatcustomer, you know, go through
this Cause you know, for a lotof these, these people, they
might build a house once or that, you know, maybe twice, and
they may, just they may not knowwhat questions to ask.
It's kind of funny.
You bring up the insurancewe're we're so owning a roofing
company.
We're very much in the throesof the insurance policies and
(42:13):
how they're going to be changing, how they have been changing,
and there's major, major changescoming.
Stuff that you usually only seeon the coasts are now going to
become normal and linking, suchas the percentage of house value
deductibles.
Sure, having separate wind andhail deductibles and the
insurance companies are a littlesneaky, right.
So I mean, sometimes you don'teven know it's buried on page 43
(42:34):
, underline c, that your windand hail deductible is different
, or that wind driven hail, winddriven rain is different than
non-wind driven rain, right, andacts of god are different than,
yeah, other.
So it's, yes, you're absolutelyright.
People really really near inthe near future, in the coming
months and years, need to bevery particular about the
questions they're asking and thenumbers they're looking at when
(42:55):
they're looking at theirinsurance policies.
Right, because we're going to gothrough even more changes,
especially, I think it's goingto be hurried because of all the
hurricanes that hit this year.
But last year, and uh well, in2024, in march, when we went to
our gaf wealth buildersconference, which is a week-long
roofing conference, 90 of itwas on the changes that is that,
right, we were going to begoing through in the insurance.
Yeah, a lot of a lot of rooferslive and die by storms, right,
(43:19):
you, you, you get to know theinsurance companies and how they
work and the policies werewritten and et cetera, et cetera
, and it's going to be a bigchange coming.
So, that's good advice, but anyfinal thoughts?
Speaker 2 (43:31):
Nope, I appreciate the chance to sit and chat with
you, Always enjoy doing this and, um, you know, keep up the good
work.
Lincoln's lucky to have goodbuilders, you know like you guys
Appreciate it and we'll hopefor lower rates next year and
increasing permits and hopefullyget back to some of the levels
we saw you know, I want to go onrecord and say that I think
we're going to be a half a pointlower by the end of the year.
Speaker 1 (43:53):
Okay, maybe a quarter and then another quarter, yeah.
And then I think I agree withyou and your your preview of
2025, I think, will be hopefullysomewhere in the mid fives.
I'm only putting on a recordbecause I think it's kind of fun
.
Now, like during COVID stuff, Iwas really nervous to talk
about it Cause it was like doyou buy?
Do you not buy?
Do you date the rate, do younot?
Speaker 2 (44:14):
Now it's like it before we see the fives, but I
think we're going to start tosee, hopefully, some good cuts.
That'll just make things alittle bit easier and get people
off the fence.
The construction loan rate'simportant, but sometimes I feel
like that mortgage rate's evenmore important because that's
the one they're going to havefor the next 10 years, 20 years,
(44:36):
however long it is.
Speaker 1 (44:44):
So if we could just get those mortgage rates down, I
think that would that would bea game changer.
Thank you so much for coming in.
I appreciate everything youguys do and your unique way to
approach builders and yourbuilding lending, so yeah
absolutely.
Thank you, Matt.
Everyone Thanks for tuning intothis episode of Stay Modern
with Murray.
Stay tuned for more excitingepisodes and a special remote
coming up later in the week.
Thanks, guys, for joining us on another episode of
Stay Modern with Murray.
Today, our special guest is theSenior Vice President of
Residential Construction Lendingat Westgate Bank, taylor
Ashburn.
Taylor, thank you so much.
Speaker 2 (00:14):
A round of applause.
Speaker 1 (00:15):
Yeah, yes, very nice.
So this is actually your secondtime on and I appreciate you
doing this again.
Of course, hopefully you had afun time the first time.
Yeah, I think your episode gotreally good feedback.
So appreciate you doing thisagain.
Um, hopefully you had a funtime the first time.
Yeah, I think I think yourepisode got really good feedback
.
So nice, figured we'd have youon again.
But, um, this mic, I was justtelling you this is the first
one I think I've shot for three,four or five months, so you're
(00:35):
gonna have to help me out here.
I well, you're saying that if,if you follow our podcast
matthew, who works for us nowjust he, he had his own podcast
before this and he loves doingit.
So whenever I have a schedulingconflict or whatever, rather
than rescheduling, he's justlike let me do it.
So I've just been letting himdo it.
So perfect.
But, uh, yeah, go ahead.
Uh, refresh the listeners mindson where you're from.
Speaker 2 (00:58):
Tell us about yourself?
Yep, absolutely, and thanksagain for having me.
This is.
This is a so, born and raisedin Lincoln, graduated from the
University of Nebraska.
My wife and I have fourchildren, three boys and a girl,
so our lives are busy runningaround from sporting event to
sporting event.
A big change since the lasttime we talked is that my oldest
(01:19):
turned 16 and now he can drivehimself, which was a game
changer, because now it's, youknow, getting to school early,
staying late after footballpractice, he can drive himself,
which was a game changer,because now it's, you know,
getting to school early, stayinglate after football practice,
he can drive himself home If hewants to go visit a buddy.
I never thought about that.
Oh it's, it's awesome.
Oh gosh, because the liabilityin the but that would be a game
changer, I had about two days oflike, oh crap, I mean you watch
(01:41):
him drive away the first timeand it's, it's nuts, but you get
over that pretty quickly.
So, other than the fact thatcar insurance is really
expensive for a 16 year old male, I bet, um, it's, it's been
really great.
So, um, but yeah, so we've uhlived in Lincoln my whole life
and uh been with Westgate nowalmost nine years.
Uh got my start in college andI like I kind of said this last
(02:05):
time too, you know, didn't haveany desire to get into banking.
But I was in college lookingfor a job.
Union Bank had a teller job andthey provided lunch every day.
So as a poor college student, Ithought, well, that's a pretty
sweet deal.
So I did the bank teller thingand had some opportunities to
get some exposure to lending andkind of found a strong desire
(02:26):
to do that and kind of, the restis history.
So Westgate, you know, is alocally owned, family owned
community bank which is a reallynice setup to be in lending
because all the decision makersare right there in my physical
location, so all of ourcommittees that approve loans,
you know everybody's right thereso we can make decisions
quickly and it's just been areally nice fit for me over the
(02:50):
last nine years yeah.
Speaker 1 (02:51):
Well, you guys do good work.
A little bit of that's happenedon our end is we finally grew
to the point where we needed asecond lender.
Everybody knows I've been loyalto Pinnacle Bank for 17 years
of my existence, but we finallygrew to the point where we
needed another one.
And now you guys are doing someof our spec home financing.
Speaker 2 (03:09):
And that's a big win for us.
So thank you for that.
Yeah, it's great.
Speaker 1 (03:14):
So obviously we're bringing you here just to kind
of do a market recap.
A lot's happened since the lasttime.
I didn't even look at the datathe last time we had you on, but
was it a year and over a yearand a half ago, right In the
middle of all the COVID stuff,right, interest rates and all
that.
But discuss the constructionlending process for you guys,
(03:37):
cause I know that it's different.
Has anything changed?
Cause I know I went into thatgreat, because on the last time,
because you guys do it what Iwould consider a lot different
than what other people do.
So kind of go into that alittle bit.
Let us know if anything'schanged in your world as far as
construction lending goes.
Speaker 2 (03:57):
Sure.
So our process is very hands-onand it's a niche within lending
that our ownership has investeda lot of resources into.
So what's a little unique aboutWestgate Bank versus other
banks that I've worked at orthat I run into is we have a
dedicated construction loandepartment.
So myself, one other lender inLincoln, one lender up in Omaha
(04:21):
and then our four loanassistants who do a great job
for us.
That's all we do.
So I'm not a commercial lenderthat does you know big.
You know industrial warehousebuildings and commercial real
estate and then constructionlending.
When I get the chance In thebackground, yeah, that's my sole
focus.
That makes us a little unique,but our process is very, very
(04:43):
hands-on.
These loans aren't hard to putinto place.
Where problems can pop up, asif you stop paying attention, if
you take your eye off the ball.
So our onsite inspections andhow we process the draws try to
get the draws paid within 24hours.
It's just that little extraservice and that little extra
monitoring that I think can seta bank apart, because at the end
(05:06):
of the day, it's a prettysimple loan in and of itself,
right, but it's all about youknow what you do after the
closing takes place and how youget everything funded.
So you know in terms of what'skind of new in the industry.
For us at Westgate Bank that's abig change is we did a full
core software conversion, so weleft our previous provider and
(05:27):
migrated to a brand new computersystem for everything that we
do at the bank.
Wow, the software I use towrite loan memos, the software
we use to look up accounts, toopen accounts, to basically run
the bank it's all brand newsoftware.
And for the customer on theirend, they've got some new toys
to deal with.
We have an online bankingplatform and a mobile banking
(05:48):
platform.
That is now state of the art,but that was about an 18-month
process from start to finish,because you basically have to
convert all your customers intoa new system.
And so you do about four or fivetest runs a lot of late nights
for some people on our team justmaking sure that it works.
Or five test runs a lot of latenights for some people on our
team just making sure that itworks.
You know because literally whathappened you know, one Sunday
(06:09):
night we flipped the switch andwent live and you got to just be
darn sure that everything'sgonna, you know, go as as
planned.
So with anything new, there'salways, you know, challenges and
new, new um things to learn,but, um, it's been really good
and I think our customers havereally enjoyed, you know, these
new pieces of software.
Speaker 1 (06:26):
What was the reason?
Integration.
Speaker 2 (06:30):
So, not to get too far into the weeds, but if there
was, there's four or five kindof main systems that a bank uses
, and three of them were withone company, one was with
another, the last one was withanother the system we're under
now it's all under one roof,gotcha, and so the synergy and
the way those systems talk toeach other yep is is awesome.
That's kind of what we werelacking a little bit when the
(06:53):
you know, the, the loan documentsystem is made by a different
company that does the loanorigination platform, and then
the servicing you know, thesystem we used to pull up the
accounts is different too.
Right, right Now it's all underone roof.
That's awesome.
So that's been really good.
And, you know, customer serviceis important.
We maybe weren't getting thebest customer service when
(07:14):
things would go down, whichimpacts our customers, and so we
found a partner that is reallysolid.
They're used by about I think athird of the banks in the
country use this, this company,and we've been really happy with
them.
Speaker 1 (07:28):
I'm assuming that wasn't a small decision for
leadership and opportunity costto get it reported over, because
it's not everybody.
Speaker 2 (07:34):
It's not like, you know, going online and
downloading a new piece ofsoftware for your computer,
Right, and then you fire it upand it works.
I mean, you're building it fromthe ground up and so, like I
said, it was about an 18 monthprocess, a lot of different
projects, a lot of you have tohave a lot of buy-in from your
team, because we're the onesthat are going to have to do the
work.
So, but everyone did great andreally sacrificed a lot to to
(07:58):
make it work so that on day oneit was ready to roll.
You know, for our customers,that's awesome awesome.
Speaker 1 (08:02):
It sounds a lot like it gives me nightmares and and
hope with our uh process withbuilder trend.
So, builder trends, you knowour client facing portal that we
use much the same way.
It's just a kind of a shell ofa program, a process that you
have to build out customtailored to your needs and your
desires.
Yeah, it has all thefunctionality there, but you
(08:23):
have to tell it what to do, sure, and and it brings everything
together, like you are saying,saying so, rather than doing our
estimates over here, ourcontracts over here, our
invoicing over here, our jobscheduling over here, brings it
into one portal and shares itall to to the, to the crowd that
you want, right, right, butit's just been or two years and
and it's still a work inprogress.
(08:44):
But the huge thing that youtouched on is just beginning
people to buy in, because theminute you you run into
something that you didn't expect, it's so easy just to say why
don't we go back to the originalway that we were doing it?
For sure, yeah, for sure youknow.
Speaker 2 (08:59):
so other things that are new since the last time we
talked.
I would say, you know, just inthe market it's getting.
I would say, you know, just inthe market it's getting busy
again, which is awesome.
You know, and I'm sure you'reseeing that too, if you look at
single family and townhomepermits for the city of Lincoln
and you look at them year overyear so at September of last
year versus September at thisyear, they're up 33%, which is
(09:21):
awesome.
We're trending in the rightdirection.
You know, 2023 was a was a toughyear.
Um, it was the lowest permittotals since the great recession
, like 2008, nine and 10.
And actually it was about asbad as it had been, going back
to 1985.
Holy cow.
So 2023 was was about the worstyear that any of us had seen in
(09:43):
our lifetimes, going back to1985, with the exception of the
Great Recession in 08, 09, and10, which were not great years
either, but it makes sense.
Prime was at 8.5.
Mortgage rates were flirtingwith 8% and when you've got a
population of people who live intheir homes who probably have a
mortgage rate that starts witha three or a four or maybe a two
(10:05):
, and you're looking at the costof borrowing being what it is,
it makes you stop and it makesyou pause and, yeah, maybe I
don't want to do this, you knowright now, but you know, over
the last, you know, 15 years,you know, and even through COVID
, up until last year, you know,lincoln was building or pulling
permits for single family of.
You know, and even throughCOVID, up until last year, you
(10:26):
know, lincoln was building orpulling permits for single
family of.
You know, 680, 690,.
You know, per year, singlefamily permits 2023, there was
only 395.
Wow, and so if you look atwhere we are in 24, I think
we'll probably hit about 500.
So we're trending back in theright direction, which is good.
The other thing that I foundkind of interesting is looking
(10:47):
at the number of multifamilypermits that have been pulled in
the last couple of years, andwe all see it when we drive
around Lincoln there'sapartments popping up everywhere
.
If you look at the last threeyears and what we're doing this
year, it's approaching 6,000multifamily permits in the last
three or four years, and so Idon't know if that has anything
(11:09):
to do with it where, wherethere's just more inventory of
apartments and so people aredeciding that's what they want
to do and how that has impacted.
You know what you do and what Ido in terms of you know
building houses and financinghouses.
So I mean Lincoln's grown about6% in the last four or five
years.
People got to live somewhere,and so you know other things
(11:30):
that have changed.
You know Fannie Mae, which iswhere we get our mortgage money
from.
They've actually loosened upsome of their underwriting
guidelines, which is kind ofnice to see.
Two things in particularself-employed borrowers.
Now they'll allow you to onlyhave one year of self-employed
income, one year of tax returns,if certain conditions are met.
Like anything, there's always alittle asterisk next to
(11:52):
anything.
I say, when it comes to mortgagelending that sticks a lot of
people, though it does Threeyears or three years of tax
return and also how they look atrental properties owned.
They're changing their approachwhere if you have a loss on one
property but you have prettygood income on the other, they
can balance each other out.
So it's nice to see that FannieMae is loosening up, because
(12:12):
back in 2005, six and seven, itwas really really loose.
There was so much stated income, stated debt.
If you had a good credit score,you could tell them I make
$500,000 a year and have no debt, and they'd say, great, here
you go, no wonder we had a goodcredit score.
You could tell them I make$500,000 a year and have no debt
, and they'd say, great, hereyou go.
You know, no wonder we had ahousing crisis then.
Well, then the pendulum swungway too far in the other
direction where, especially onself-employed people, they were
(12:35):
so hard on those people and thelevel of documentation and
verification just was ridiculous.
So they're swinging back to apoint where they're being a
little bit more.
I don't know common sense.
Speaker 1 (12:46):
Yeah, that's good.
It was always rough at thebeginning of my business career
trying to deal with that howmany years of tax returns you
have to have and all that stuff.
Speaker 2 (12:57):
And the other thing is that.
So the conforming loan limittoday is 766,000.
I've heard that could be up toabout 800,000 come next year.
And again the conforming loanlimit is basically just a
traditional mortgage loan.
You get above that limit.
Now you're in the jumbo space,which means a higher rate, maybe
a second appraisal, morescrutiny with the underwriters.
(13:19):
So the getting-.
Speaker 1 (13:21):
I know that time flies and it seems like just
yesterday.
Which by yesterday I mean acouple of years ago.
Wasn't it just a couple ofyears ago?
That was in the 500s.
Speaker 2 (13:29):
It was yeah, and actually it was.
It was four hundred andseventeen thousand for what felt
like five or six years, so Ithought so it's.
It's crazy how quickly that'sgone up, but it's good because
jumbo loans, you know there's aneed for those.
Speaker 1 (13:51):
But, boy, if you can get to a conventional loan, it's
going to be, just, you know,much easier for you.
Yep, you know what's crazy is?
I had a lot of deja vu and wewere talking about COVID and the
recession of 2023, so to speakas far as number of permits and
loans.
We we were all, I think, veryreluctant in our space to make
predictions about the future.
But if you go through,historically, our podcasts, I
think we did a pretty damn goodjob of hitting the nail on the
(14:11):
head.
I remember I was doing one withyou or somebody else when we
were in the middle of COVID andthe 2% or 3% interest rates and
we were all working 80, 90 hoursa week and beating our head
against the wall and getting nosleep and we were all saying can
it just be a happy medium,right?
Which we were saying it neverseems like it is right, so we
(14:33):
can't complain.
We were hoping at that timethat it didn't swing in the
other direction.
But then, right when it did, youhad a lot of these people
saying that you date the rate,you marry the house or whatever,
yeah, right.
And there was a lot of peoplejust saying that they didn't
think that the rise in interestrates were going to affect the
housing market.
Because I mean, if you lookback 20, 30 years ago, our
(14:54):
parents and grandparents werepaying 20 and 30 percent and me
and you were saying the exactsame thing, like if you just
bought a house at two percent,why are you going to move into a
house at six, seven, eightpercent?
Of course, and I think thestatistics show and the numbers
show by what you were justsaying that it did in fact slow
down.
Yeah, um, we were fortunateenough.
I know that you know, speakingwith a lot of bankers in the
(15:17):
community, you guys were prettyslow, which, you know, not
financially speaking butmentally speaking was probably a
good refresher from coming offof.
COVID, but, like I've alwayssaid, we were just fortunate
enough to have enough peoplesigned up that were still in the
drafting process from the lowinterest rate days and then had
a couple of however you want tosay it more successful farmers
(15:39):
where maybe the couple points ofinterest rates didn't matter.
More successful farmers wheremaybe the the couple of points
of interest rates didn't matter.
They had a cash surplus thatneeded a house built on on on
their family land or acreages,and so we were able to keep 2023
pretty normal for us, but itdefinitely here and here, and
what went on in the communityand the higher interest rates
did suck, though.
Speaker 2 (16:01):
And I think something you said just a second ago you
hit the nail on the head it's.
We need to find just somenormalcy in all this, because
two and a half percent mortgages, while that's awesome, probably
wasn't really good for us inthe long run, right.
And 8% mortgages, and howquickly they went up, is also
not good for us.
(16:21):
What we need is just steady,yep, find somewhere in the
middle and just hang there forthe next 10 years and everything
will be fine.
But the Fed has just been soaggressive, ratcheting up their
rate I know we'll talk aboutrates here in a little bit that
it went too low for too long andthen it went up too fast and
now we're stuck with again.
(16:43):
You just put yourself in themind of the average consumer If
my rate's 3%, why would I move?
If my new rate's going to be 8?
, yep, I mean, they're just notgoing to do that.
Speaker 1 (16:53):
I was speaking to another realtor in town and he
just got back from Boston and hewas talking about the number of
multifamily homes being built.
And he was talking about thenumber of multifamily homes
being built In Boston downtownnear a university.
So we're talking, not peoplethat are in the workforce.
The average rent was $5,000 to$6,000 a month Wow, and they had
(17:18):
a huge banner on all thebuildings that said renting is
the new revolution or somethingto that extent.
Interesting Millennials are theway to go or whatever, but they
they're literally.
That's what they're banking onis the fact that the younger
generation doesn't want amortgage and doesn't want
permanent living.
They want to live in multipleplaces and they just want to
(17:39):
rent.
Speaker 2 (17:39):
That's crazy.
I mean crazy to me, you know,because you know you want the
house and the yard.
But look all these apartmentsthat are popping up.
You know the city needs them.
Of course you know we needhousing, we need affordable
housing and whatnot.
But it's just interesting to me, you know, that I think that
younger generation is OK, youknow, moving in an apartment and
starting a family there, agreed.
Speaker 1 (18:01):
My thought is this and I haven't thought about this
a lot, but with my workforceand my friends, including myself
, the only real way I got aheadand this isn't just because I'm
in the construction industry,but years I owned my house and
(18:22):
then selling, taking that equity, buying again If you're just
dumping your money into rent forthe first X amount of years of
your life, how are you going toget ahead?
Where are you going to getahead in life?
To where you know?
I think we all look at you knowI'm already counting.
How many years do I have leftbefore my kid retires?
(18:45):
You know what I mean, Like whencan I move to Florida for six
months?
Not that I want to get rid ofmy kids I love them to death and
I'll miss them.
But you're already lookingforward to that those?
How many more years do I haveto stack up money and let my
houses appreciate before I cankind of step away from the
day-to-day rigmarole?
Right, but if you're not doingthat, I mean, what's the end
goal?
You're just working untilyou're 80?
(19:05):
.
Speaker 2 (19:06):
Or always having a house payment or a rent payment.
You know, when my wife and Italk about retirement, one of
the first things that we know isthat our house has to be paid
off, whether it's our currentone or whether we move.
You know, at some point, youknow, fine, but to think about
shutting it down and not workinganymore if I got a big house
payment, I don't know how youmake that work.
So all I can do is you know,you buy that first house, you
(19:29):
live in it for a while, you sellit, you make money, you move on
to the next one, you move on tothe next one, you know,
accumulating that equity so thatsomeday that housing expense is
gone.
Correct, you know?
That's why I've always lookedyeah, so I can go into
retirement and not have a housepayment anymore.
And there's no way to do that ifyou've rented your entire life.
Correct, you know.
And so you know for everysituation.
(19:49):
I think you know, for somepeople it makes sense, right?
My hope is that, in lieu ofputting a down payment down on a
house, they're investing thatmoney or they're finding ways to
, you know, save a little morefor retirement.
Right, you know, if, if theycan, because you know you look
at someone's personal financialstatement and usually the equity
in their home is one of thebiggest line items, and at least
(20:12):
for for most people that I runinto it is you know what I find
really cool.
Speaker 1 (20:16):
Cool and also sad is that you know when I started,
when I was 27, 28, when I wasinterviewing people to build a
$650,000 house, back then I wasdealing with, you know, 50, 60
year old CEOs um, just accepteda big job in Lincoln we're
moving to town presidents ofbanks.
(20:36):
You know older lawyers, sothere's always people that were
substantially older than me.
And now I've had the benefit inthe last couple of years of,
when I go into an interview, wejust built a $1.5 million house
on a farm and I go into themeeting just with this natural
mindset they're going to be 50,60 years old, have accumulated
(20:57):
money, successful farm, andthey're in the mid late twenties
to early thirties.
A, that's awesome, right, thatthey, they've been so successful
at such a young age.
I I'm not upset about that atall, um, but it's just weird.
Now I'm the old guy in the room, right, it just makes me feel
(21:18):
really old.
I hear you, man Proud.
I mean, we're, we're gettingready to build for an ex Husker
volleyball player that was sixor seven years younger than me
and they're building the nicemultimillion dollar house.
So it's just.
Yeah, it's cool to see thatsome, some of the younger
generation, are having successwith financials and money and
doing it the right way.
Speaker 2 (21:38):
Getting old catches up on you, sneaks up on you.
My, uh, my youngest son isseven and a lot of his buddies,
so he's my youngest.
Well, a lot of his buddies,that's their first kid.
And so we go to these you knowfootball game, flag football
games or whatever.
And I'm looking around likethese parents are all like 25
years old.
I was like what, what the heckhappened?
(21:59):
I got old.
Speaker 1 (22:01):
I know, you know what's crazy is?
I think about the same thing.
I'm fortunate enough to be onsome sports teams for my son
where all the parents are aroundthe same age.
And then when I startedthinking about that, when I had
my son, I was always like I'myoung, I'm going to be the young
parent, right, because I, youknow, I just thought that I was
(22:22):
having kids before other people.
And then now I'm, you know,right there, or a little bit
older than everybody, sure, sure, yeah.
It's like, how did this happen?
How did I get so old, right,right, yeah, well, dive into the
next subject.
I mean the big pink elephant inthe room.
I know we've asked you to makepredictions before and we all
kind of like want to tiptoearound it, but I mean, I'm sure
(22:46):
if you listen to your oldpodcast, you're probably pretty
spot on with what you thoughtwas going to happen.
I should go back and listen, Iknow.
I didn't do my preparation forthis busy week.
But no, tell us what you think.
Interest rates, inflation, surewhen we are, where you think
we're going to go.
Speaker 2 (23:03):
Yeah.
So I'm going to talk about twodifferent things.
One would be kind ofconstruction loan rates Yep,
that also mortgage rates alittle bit, because the two are
different.
Obviously, a construction loanis Westgate Bank money that
we're loaning to the customer,to the builder, whereas a
mortgage loan, those dollarscome from the secondary market,
so Fannie Mae and Freddie Mac.
(23:24):
So, as far as constructionloans are concerned, when the
Fed makes a move, that's thetype of loan that is impacted,
and so we all know that inSeptember, the Fed finally
dropped rates and they did ahalf a point rate cut, which was
very welcome for me, verywelcome for you.
I don't like these high ratesany more than anybody else does.
(23:44):
They're annoying.
But Prime went from eight and ahalf to eight, and when I say
Prime, that's typically the ratethat a bank would charge their
best customer.
So that had been at eight and ahalf since July of 2023.
And it got there in a hurrybecause two and a half years ago
of 2023, and got there in ahurry because two and a half
(24:06):
years ago, prime was at threeand a half.
So they went from three and ahalf to eight and a half very,
very quickly, which is one ofthe best tools they have to try
to pull inflation back.
Okay, so the Fed's just tryingto do their job, but, uh, it was
nice to see that half a pointcut, and where we go from here
is up in the air, nobody reallyknows.
(24:27):
Um, they, uh, the people thatare on that fed committee.
They're asked to complete asurvey and they call it a dot
plot, and I've I know I've sentthat to you before and it's
basically that they ask eachcommittee member to predict
where they think rates will beover the next three or four
years.
Then you can kind of look atthe dot plot and find the middle
(24:49):
ground of where the averagewould be.
The most recent dot plot shows,remember, primes at eight,
seven and a half by the end ofthe year, six and a half by the
end of 2025, and 6% at the endof 2026.
So a few observations from that.
This is the third consecutivemeeting where they had kind of
(25:12):
raised what I'll call theirneutral rate or their final
resting rate.
It implies that members feelthat maybe a higher kind of
resting rate I'll call it isgoing to be necessary to keep
inflation at 2%, and so 6% iskind of that number today.
So I think the days of 3.5% and4% prime are probably gone.
(25:34):
I sure would like to see itstart with a 5%.
I think 5.5% to me seems fair.
I think five and a half to meseems fair.
We can sustain inflation.
We can promote growth.
People will keep borrowing butwe'll see they're going to keep
(25:54):
watching inflation.
They have to believe that theyhave it under control.
The other thing is just theyhave to watch the employment
data.
That unemployment rate isreally important.
The Fed has to protect thatdata.
That unemployment rate isreally important.
The Fed has to protect that.
The September jobs report itshowed that the labor market is
actually in much better shapethan I think people thought.
And they actually revised Julyand August and it went up and
(26:15):
then the actual unemploymentrate went down.
So I'm wondering how thatchanges what the Fed is going to
do in November when they meetnext, and then again in December
.
Will they do a quarter inNovember and a quarter in
December?
Will they do nothing inNovember and a half a point in
December?
Who knows?
So it's a very challengingthing to predict what the Fed is
(26:37):
going to do, because the windblows in a different direction
every day and as differentreports come out, sometimes you
feel like, well, maybe theeconomy is not that bad.
And then sometimes you're like,oh shoot, this looks like a
sign of weakness.
So, but for now, looking at thedot plot, it would be, you know
, we could hopefully go fromeight to six over the next
(26:57):
couple of years, which would begood yeah.
Speaker 1 (27:00):
Which I'm assuming, the world forum right now
probably is a little bit inlimbo and you know, as far as
Israel and Gaza and all thatstuff, You've got inflation,
you've got unemployment, you gotjob reports.
Speaker 2 (27:18):
You've got an election.
You've got the Middle East.
There's so many factors.
Speaker 1 (27:22):
So let me ask you this, without having to stand on
one side of the political lineor the other, or saying who you
want to win Right, do you thinkthat what we just discussed the
projection of the numbers willbe impacted by the election in
November?
Speaker 2 (27:42):
whether it goes right or left Right.
It's not supposed to be,because the Federal Reserve is
supposed to be independent ofthe executive branch of our
government.
I would say that what theeconomy seems to like is balance
.
So if there's a Republican inthe Oval Office, but maybe the
(28:02):
House or the Senate iscontrolled by the Democrats, it
makes it hard to get anythingdone because they're never going
to agree.
Or if the House is Republicanand the Senate's are Democrats,
same sort of thing.
Where the market, I think, kindof, might freak out is if it's
a blue wave or a red wave andone of the parties has the House
(28:22):
and the Senate and the OvalOffice, because then it's like
well, they're going to dowhatever they want and nothing
can stop them.
So, that being said, you know II'll come back to it.
I don't think it probablymatters a ton.
Okay, um, but we'll see.
Speaker 1 (28:38):
That's it's.
It's funny that you say that.
Cause that, because I tend toagree.
I think people overreact ifthis side wins, are going to do
A, b, c, d, which is going toruin the economy, and if this
other side wins, they're goingto do F, g, right, but I think
it's a little overboard and Ithink it'll be a month or two of
hell right after whoever wins,regardless of whoever wins.
(29:01):
So polarized right now, yeah,then it'll settle back into
normalcy, some sense of normalcy, hopefully.
Speaker 2 (29:06):
Right, which is kind of sad.
That it's, you know I, Iremember, you know, being being
a kid and watching the news withmy parents and watching the
results roll in, or watching thedebates, you know, and whatnot,
and and today it's sopolarizing, it's there's so much
anger and hate that with my ownkids I almost they'll say, can
I watch the debate?
And I'm like, well, let mewatch it first, Because our
(29:30):
country was built on.
We don't have to always getalong, but we want to be
tolerant of each other.
Agreed, and I just hope thatboth sides can find some common
ground, Agreed.
Speaker 1 (29:41):
Agreed, no matter what side it is.
I totally agree.
That's.
What I've definitely noticedover the last few years is,
whether you're right, left or inthe middle, there's just been
this new norm of if you don'tagree with each other, then just
don't have the conversationRight or walk away from the
conversation or get upset aboutit.
(30:02):
We can sit here and talk normalabout it and have differing
opinions, and the biggest thingI've learned over the last
couple of years is we can bothbe right.
You know, I didn't used to.
I'm very black and white, notvery gray, but I'm learning more
and more.
There's there's more than oneanswer.
Speaker 2 (30:19):
Yeah.
And and, like I said, both ofus can be right, we don't have
to both Sure, one person canonly be right, everybody always
talks about tolerance, andthat's fine, but tolerance means
that I don't agree with you,but I'll respect you and your
views.
So both sides need to betolerant of each other, yeah.
Speaker 1 (30:37):
Well, what other statistics and numbers do you
have?
Any recommendations for ourlisteners?
Speaker 2 (30:41):
Well, as it pertains to mortgage rates, I think
something that's reallyimportant for listeners to
remember is that the Fed'sdecision to raise or lower rates
has nothing to do with mortgagerates and, in fact, what we saw
recently, when the Fed droppedtheir rate by a half a percent,
the jobs report actually cameout stronger, it changed
(31:02):
expectations about what the Fedmight do going forward, and
mortgage rates actually went upa little bit.
I heard that, and so thenpeople call and they're like
well, the Fed lowered rates.
What happened?
It's like, yeah, two differentworlds.
So I think that's important forpeople to understand.
Inflation's probably the biggestthing with mortgage rates.
If they can keep inflationunder control and hammer it down
(31:22):
a little bit more, I think that, um, that mortgage rates should
start to trickle down, you know, and so where we go from here
and what's my prediction I mean,it's impossible to know.
Um, I found this earlier that Iwrote it down because I wanted
to share it.
In October of 2022, bloombergeconomists predicted a 100%
(31:48):
chance of a recession in thecoming 12 months.
They said that in October of2022.
They said there's 100% chanceof a recession in the next year,
and it did not happen.
Speaker 1 (31:58):
I'm really surprised you used 100% Exactly.
Speaker 2 (32:06):
I should have used 99%, 99%, right, cover your tail
Right, right, so it didn'thappen.
I mean inflation's 2.4.
It's the lowest it's been sinceFebruary of 2021.
We already talked about all theother factors the Middle East,
the election, unemployment ratesand whatnot.
Mortgage rates are about sixand an eighth today, as of this
morning.
Fannie Mae thinks they'll beback into the mid fives by next
(32:29):
year.
5.6, 5.7, you know somewhere inthere, which is certainly
better than the 8% rates we saw,excuse me, a year ago.
You know that was the highestin 20 years.
But you know, on a $500,000mortgage loan, a 1% change in
the rates, about 320 bucks.
So we're we're starting to talkreal dollars and cents, so it's
(32:50):
impossible to know kind ofwhere we go from here.
I think the dot plot gives ussome pretty good indications.
I think, if they can keepinflation down, we should get
back to the day hopefully not intoo far along in the future
where prime 6% mortgage ratesare in the fives and if that
could just hold steady for likefive or 10 years, it would just
(33:13):
be fine.
Yeah, because you can live withthat If your mortgage today is
at four and the going rates fiveand a half you can.
You can make that work Correct.
But my advice for the listenersas they navigate the market and
what's going on, I would say,first and foremost, shop local
for your lending needs.
(33:34):
Agreed, having a constructionlender that's here in town who
can do some on-site inspections?
Having boots on the ground isimportant.
That monitoring of your projectis so key, and that is not a
reaction to a bad experiencewith whatever builder, it's just
being proactive.
It's the right way to do things.
Well, if you're working withABC Bank out of you know,
(33:55):
missouri, no one is ever goingto have any eyes on your project
, and so I think that thatmatters.
I think it's okay to shoparound for your mortgage, but I
would remind your listeners thatmortgage rates really don't
differ from bank to bank,because we all pull our money
from Fannie Mae, from FreddieMac, from the secondary market.
So if another bank or amortgage broker, if my rate is
(34:20):
six and someone's like, well, Ican do four and a half man red
flag right there.
There's gotta be more to thestory.
There's probably a bunch offees, you know, loaded in.
You know what I heard thismorning and this, this was crazy
.
Something that's happening inthe mortgage world trigger leads
.
And so what I mean by a triggerlead is that somebody comes to
(34:41):
the bank and applies for amortgage loan.
That inquiry hits their creditreport as a mortgage loan
inquiry.
Those credit bureaus areactually selling those lists to
mortgage brokers and mortgagebanks, and if those people are
willing to basically make a firmoffer to extend credit, they're
allowed to call the customer.
(35:02):
So you walk into my bank, youapply for a mortgage loan, right
?
That's not Westgate bankselling your info to somebody
else.
That's Experian, that's Equifax, that's TransUnion, who are
providing lists for a fee.
You Google it trigger leads,mortgage lending, and I heard
this morning that a customer got30 phone calls.
(35:22):
There's actually legislation inplace to try to get this stopped
, because what happens is mostpeople don't.
They don't really know whatthey're doing.
I mean that with the totalamount of respect, right, but
it's the biggest financialtransaction any of us will ever
make, yep, and people don'talways know the right questions
to ask.
So if you've applied for amortgage loan with your bank and
(35:42):
somebody calls and says, well,you know, I can get you 5%, you
might go.
Oh well, okay, let me look intothat.
And then you're like, well, now, wait a minute, that seems like
a lot of fees.
Well, you're going to make upfor it in the long run, or no?
That's, everybody charges feeslike this.
So these companies are gettingvery sophisticated with how they
market to individuals, and so Ialways just encourage the
(36:05):
listeners shop local for yourlending needs.
If something seems too good tobe true, it probably is Ask
questions Because, like I said,if somebody's telling you their
rate's a full percent lower,there's probably a huge fee
involved to get it where itneeds to be.
Or there's probably a huge feeinvolved to get it where it
needs to be.
(36:27):
The other thing I would tell thelisteners is, when you do close
on your loan, there seems to bea big uptick in the amount of
junk mail that people aregetting.
So these companies will watchwhen a deed of trust gets filed,
and then they will solicit youand they'll say you know, for
$100, we'll sell you a certifiedcopy of your warranty deed.
Or, hey, can we interest you inbi-weekly payments?
Or, you know, hey, let's talkabout.
You know credit, life insuranceor something like that, and it
(36:50):
it it'll say, regarding yourloan, with whoever it's not on
bank letterhead, but they knowhow much you borrowed, who you
are and who you borrowed themoney from, and so they will
solicit the customer with allthis junk mail trying to get
them to buy something or pay forsomething that they don't need.
So again, if something seemsodd, raise a hand, ask a
(37:11):
question.
If it seems too good to be true, it probably is so between you
know, these, these crazy triggerleads and these calls people
are getting and all the junkmail, I just feel bad.
You know it sucks.
Speaker 1 (37:22):
I deal with it every day.
I get four to five voicemails aday from overdue back taxes.
I don't have any, but theyleave me a voicemail every day
saying that they see that I haveoverdue back taxes and want to
help me get debt relief andstuff like that.
And when I when I the mortgagefor my personal house, same
thing people calling me andasking me for all kinds of
different information,soliciting information and it is
(37:44):
hard, like what you're saying,I didn't know who was working on
behalf of the company or whowas soliciting my information
unsolicited.
But yeah, it's good advice.
Speaker 2 (37:53):
So, you know, shop local.
I think that's important.
Work with a reputable builder,you guys are awesome, you know.
Thank you, you have, um.
Work with a reputable builder,you guys are awesome, you know,
and so you have to say thatyou're on my podcast.
I.
I mean that though, but you'reright, I probably do have to say
that.
No, just kidding.
Um, no, you guys are great.
Here's one thing that I'venoticed lately that I want to
just advise customers, becausesometimes people will shop two
(38:15):
or three builders yep, okay,fine, I'm.
I'm noticing people that arepaying way too much attention to
the bottom line and not doingtwo things that I think are
really important.
Number one make sure that youhave a good relationship, just
on a person to person level,with the builder.
You know, and you guys and yourteam here are awesome, because
not only through the designphase, but the construction
(38:37):
phase, but the warranty periodafterwards, you're in a
relationship with this companyor with this builder for a while
.
Make sure you're a good fit.
But what I've noticed lately isthe allowances being a bait and
switch to.
I think it's somebody to sign acontract knowing that I think
they got to be the lowest priceor they're not going to pick me.
And then what happens?
You go to the flooring store,you go to the countertop store
(38:59):
and you're like this is all junk.
Speaker 1 (39:01):
You know it's funny.
It's eerily similar to what youjust said about people shopping
for cheaper mortgages.
They don't know what questionsto ask, right?
And so I have to educate people.
Hey, go get another price, butto your credit, you're exactly
right.
If our contract is $750,000 andthere's another builder that's
$750,000, that doesn't mean thatour price is the same, right,
(39:25):
because what happens?
People are doing it all thetime.
They walk in.
I ask them I'm like hey, Idon't need your final price of
your contract, it's not what I'masking for.
Let me look at your allowancesand compare your allowances to
our allowances, right, andpeople will walk in and they'll
(39:45):
have a $2,000 allowance forappliances.
I looked at one the other dayand it was $1.75 for tile and it
literally had in parenthesesprefer that you buy your tile
from a big box store.
Oh, really, $1.75 tile, andours is a $5 allowance tile.
So even though our contractswere the same, we had about a
$50,000 to $60,000 gap in theamount of money allowances and
the amount of money that we givethem to go spend on their house
, right?
So that's, that's great.
I didn't want to cut you off,but no, no, you're fine, I mean
(40:06):
Lincoln's.
Speaker 2 (40:07):
Lincoln's very fortunate to have a lot of
really great home builders andso, um, you know, in, in 90% of
the cases, you know, I'm seeingallowances that make sense.
But I had one recently wherethe person took the lowest of
the three and as we got intothat project they quickly
realized I can't even get a nicecountertop and in the end I bet
(40:29):
that house costs just as much.
So if the Murray estimate is750 and whoever is 700, ask some
questions, you know, because,because I think that's that's so
important and really encouragethe listeners to get
pre-approved before they get toofar down the tracks.
Yes, um, I had some people inmy office yesterday that hadn't
(40:50):
even talked to any builders yetand, um, I'll, I'll give you
their name off air, cause youwere one of the ones that they
mentioned.
Uh, but uh, you'd be surprisedhow often people come in and
they're like well, we signed acontract with the builder and I
guess we need to talk about aconstruction and a mortgage loan
.
And for me I'm like in my head,I'm like, oh shoot, I hope this
(41:12):
works.
I hope there's not something Idon't Cart before the horse,
cart before the horse, you knowexactly.
The last thing I would say isjust, insurance costs are going
up in a hurry.
I would really encourage thelisteners, if they shop around,
make sure you're payingattention to the deductibles,
because we're starting to see 5%deductibles for wind and hail
(41:36):
in addition to $10,000 foreverything else, and so, again,
sometimes you get what you payfor.
Don't focus on that bottom line, absolutely.
Make sure you're you're askingthe right questions and I think,
like you said, matt, sometimespeople don't know the right
questions to ask.
Speaker 1 (41:51):
That's why, working with a good builder, a local
bank, people that can help thatcustomer, you know, go through
this Cause you know, for a lotof these, these people, they
might build a house once or that, you know, maybe twice, and
they may, just they may not knowwhat questions to ask.
It's kind of funny.
You bring up the insurancewe're we're so owning a roofing
company.
We're very much in the throesof the insurance policies and
(42:13):
how they're going to be changing, how they have been changing,
and there's major, major changescoming.
Stuff that you usually only seeon the coasts are now going to
become normal and linking, suchas the percentage of house value
deductibles.
Sure, having separate wind andhail deductibles and the
insurance companies are a littlesneaky, right.
So I mean, sometimes you don'teven know it's buried on page 43
(42:34):
, underline c, that your windand hail deductible is different
, or that wind driven hail, winddriven rain is different than
non-wind driven rain, right, andacts of god are different than,
yeah, other.
So it's, yes, you're absolutelyright.
People really really near inthe near future, in the coming
months and years, need to bevery particular about the
questions they're asking and thenumbers they're looking at when
(42:55):
they're looking at theirinsurance policies.
Right, because we're going to gothrough even more changes,
especially, I think it's goingto be hurried because of all the
hurricanes that hit this year.
But last year, and uh well, in2024, in march, when we went to
our gaf wealth buildersconference, which is a week-long
roofing conference, 90 of itwas on the changes that is that,
right, we were going to begoing through in the insurance.
Yeah, a lot of a lot of rooferslive and die by storms, right,
(43:19):
you, you, you get to know theinsurance companies and how they
work and the policies werewritten and et cetera, et cetera
, and it's going to be a bigchange coming.
So, that's good advice, but anyfinal thoughts?
Speaker 2 (43:31):
Nope, I appreciate the chance to sit and chat with
you, Always enjoy doing this and, um, you know, keep up the good
work.
Lincoln's lucky to have goodbuilders, you know like you guys
Appreciate it and we'll hopefor lower rates next year and
increasing permits and hopefullyget back to some of the levels
we saw you know, I want to go onrecord and say that I think
we're going to be a half a pointlower by the end of the year.
Speaker 1 (43:53):
Okay, maybe a quarter and then another quarter, yeah.
And then I think I agree withyou and your your preview of
2025, I think, will be hopefullysomewhere in the mid fives.
I'm only putting on a recordbecause I think it's kind of fun
.
Now, like during COVID stuff, Iwas really nervous to talk
about it Cause it was like doyou buy?
Do you not buy?
Do you date the rate, do younot?
Speaker 2 (44:14):
Now it's like it before we see the fives, but I
think we're going to start tosee, hopefully, some good cuts.
That'll just make things alittle bit easier and get people
off the fence.
The construction loan rate'simportant, but sometimes I feel
like that mortgage rate's evenmore important because that's
the one they're going to havefor the next 10 years, 20 years,
(44:36):
however long it is.
Speaker 1 (44:44):
So if we could just get those mortgage rates down, I
think that would that would bea game changer.
Thank you so much for coming in.
I appreciate everything youguys do and your unique way to
approach builders and yourbuilding lending, so yeah
absolutely.
Thank you, Matt.
Everyone Thanks for tuning intothis episode of Stay Modern
with Murray.
Stay tuned for more excitingepisodes and a special remote
coming up later in the week.
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