KCAA: The Mortgage Voice with Jeff Barton (Sun, 7 Jul, 2024)

KCAA: The Mortgage Voice with Jeff Barton on Sun, 7 Jul, 2024

Episode Transcript

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eight hundred for details. Wanted VoiceWhat Jeff Barton Your voice in the mortgage
industry. Each week on this program, Jeff and his guests share their expertise,
personal antidotes, and the latest industrynews to keep you in the loop.

(06:55):
Now to provide you with insight andhelp you navigate the consistently changing world
real estate lending. Here is yourhost for the Mortgage Voice, Jeff Barton.
Welcome back everybody on Jeff Barton,your voice in the mortgage industry.
Thanks very much for tuning into theshow, for listening to us on a
weekly basis. We really appreciate it, appreciate the feedback. We're on CACAA
that's in the Inland Empire. Allour friends out there, been on that

(07:18):
radio station for about ten years.AMFM signals bringing to you the best mortgage
information that you can get anywhere onthe radio. And why do I know
this? Because I listen, Isee what's out there in the marketplace.
And you know what, if you'relooking for firsthand information and people that you
can rely on, you can cometo us each and every week, and

(07:39):
we come to as I said,on Saturday and Sunday. You can also
go to Casea website. If yougo to that website, not only this
week's show, but past shows.We have many, many years, ten
years worth of shows. I don'tknow how many are archive, but certainly
the last eighteen months or so.And it's interesting to see how the trends
in the mortgage interest rates as wellas the programs being offered. Difficulties of

(08:01):
getting a loan, whether you're inthat category of low FCO scores or high
Fyco scores, what are the loansfor you do? You need to go
to the non QM route, whichare a little bit higher but also a
little bit easier to get. Allthese information is available to you. If
you want to see me, goto YouTube Jeff barton the Mortgage Voice on

(08:22):
YouTube and that's where you can seeme again all the archive shows that have
been on there for year after yearafter year and again. For me,
the best part of that is Iget to see myself. I get to
see the people who come on theshow. You can also go to the
Mortgage Voice dot com. It's anotherway to get the information from us.
Contact the guests individually and by yourself. Nobody hals to know what you're doing.

(08:46):
Just contact them. We always havegreat guests on the show, people
who come to us and talk aboutrates, and they talk about differences in
why this particular program is good nowversus what it was good last week,
what was good last week, andwhat's going to be available in the future.
Most of the reps that we haveon the show have been in the

(09:07):
business for years and years and years. Friends of mine that I've known,
and again this week is no exception. We bring or going to bring to
the show about three or four differentguests that are going to talk about the
rates, the programs, the market, and where you stand in it,
and what they're trying to do inorder to get it okay. Again,
I'm Jeff Barton. This is theMortgage Voice, and again thanks for listening

(09:30):
to the show. The mortgage interestrates. We always bang out the show
right at the beginning with what ishot in terms of the mortgage interest rates.
I can say honestly that this sevenpercent ceiling and floor has been around
for about two months. And whetherwe see a reduction based on what the
Fed is doing, or based onwhat the mortgage bonds are doing, or

(09:50):
just based on market conditions in general, I think we're going to see seven
percent or thereabouts a little above alittle below for the rest of the year.
Don't see this particular economy changing allthat much. I do see some
good signs upon inflation. I dosee some good signs that it looks as

(10:11):
if the economy is going to begood for the foreseeable future. And that's
about six months, and that'll getus by the election, and everybody who
watched that absolutely horrible debate the othernight is settling into the fact that we're
probably going to get a change inpresidency. One of the good things about

(10:31):
the debate, and it was avery short moment or two for people like
us who talk about housing, whotalk about mortgage mortgages and the interest rates
thereabouts, there was some small abit of information about housing in the debate
came out of Biden's mouth, andI went to my local and my guy

(10:54):
that I always go to, andit's on Housing Wire. Logan Matsashami is
the economist over at Housing. HousingWire is a great source of information.
It's kind of industry, but atthe same time you do get to see
what's going on out there and whatdrives us in the business to do what
we do. But this economist talkedabout several things. He said, look

(11:18):
what they offered in terms of programsor solutions for the economy. He had
his take on it, and I'lljust go through a little of it so
you're aware of what's happening in termsof what's going on in the presidential election
year about housing and about mortgage interestrates. Okay, about housing two million
supply. That was what Biden hadsaid he wanted to bring to the economy

(11:41):
two million new homes, and Logansaid, yes, that's a good thing.
He also said rent control, andI as well as he don't think
that's a good idea. I don'tthink it's a good idea because what it
does is it caps the available profitin any market, and what happens is
the market doesn't play as big arole, and therefore the investment in something

(12:05):
that you have a capped return onyour money, that's not a good thing.
And that's anti So he's a noon that. I'm a know on
that as well. The first timehome buyer's credit is a yes. I'm
not saying no to it. Ijust don't know enough about it. How
do you qualify, what does itreally mean? Who's giving you the credit,

(12:28):
where does the money come from?All that kind of stuff. I'm
basically a very conservative person when itcomes to spending money, or basically spending
your money. If I was inthat position, I would be very hesitant
as to say yes, I'm allfor these things that give people money,
and without knowing exactly how I wasgoing to get that money and where it

(12:48):
was going to come. So thesethree things, that's two yeses and a
no from Logan. I'm one yes, one no, and maybe he came
to the conclusion as well as Ido that supply is the best thing.
The only way to increase supply ofhousing in the marketplace is the one try
to do away with some of theregulations that it requires. I know that

(13:11):
in some areas, especially in California, where we deal with a lot of
environmental issues, we deal with alot of insurance issues, we deal with
earthquakes and fires, there are manyrestrictions on building, which is more than
just your local building and safety,which says you have to have a building
like this, and you have tohave a certain strength to the building for

(13:33):
earthquakes, you have to have acertain fire for fire season. But there
are many regulations, whether as Isaid, they're environmental or they're beyond the
scope of what a local municipality wouldask you as a home builder. And
the large home builders have really stayedaway from areas like California because of the
wildfires and the earthquakes. And sowe do get some building up the fifteen,

(13:56):
as everyone knows, and we doget some down in the areata.
We do get some down in tTopee and some of the other places in
the IE. And again everybody outthere, Hello San Bernditta, Riverside Counties.
We say hello each and every week. And I just don't want to
remiss and say, hey, youknow what I forgot you. No,
I don't. But in terms ofwhat's happening and how it affects you and

(14:18):
your home buying process, these thingsthat come from you know, the big
people up above, or from ourfriendly neighborhood economist logan, you have to
take them into consideration. I mean, obviously, each and every buyer is
different, and each and every buyerhas their own specific needs and their own
specific requirements, whether it be yourFICO score is bad, whether it means

(14:41):
you need more income, whether itmeans you need more down payment. And
this is all for house purchases,of course, anybody who's looking to take
money out of their house in orderto you know the big three, right,
you have health reasons, you havecollege reasons, or you have retirement
investment that you want to do tohave it add another stream of income to
what you already have. Well,what happens if you're stuck in a three

(15:03):
or four or five percent interest rateon your house, you know it's stuck.
Obviously that's a great indust rate,but you can't tap into that equality
unless you either refinanced the whole thing, or get a second or get some
kind of a he lock. Allof these things are what you need to
consider and when that particular lock inwill become something that's in the past.

(15:24):
Eighty percent or over eighty percent ofpeople have under six percent mortgages, and
right now we've got seven percent isare base thirty year fixed, So you
know you figured it out. Nobody'sgoing to want to refinance those things.
I'll quickly get to what the interestrates are. I went on a bit
of a tangent about what's happening notonly locally, but also what Logan was
talking about in terms of you andyour buying season and what has happening in

(15:46):
the presidential debate on housing. Sevenpoint one four is a thirty year fix,
six point four to nine is thefifteen year, six point six y
two is the FAHA, seven pointthree zero is the jumbo, and six
point six four is VA the twoyears at four point seven four four points
seven seven four the ten is atfour point four eight about thirty basis points.

(16:10):
We've seen a shrinking of this basispoints, and they've made on several
of the websites I go to.Mortgage News Daily is one of them.
They make a big deal about thespread, right, and not so much
as to this poor ten's recession,But now they're talking about Okay, since
the spread is narrowing, that isan indication that what we have here is

(16:32):
a narrowing of the two and theten, and it keeps the interest rates
kind of where they are. Andone of the reasons for that is that
the spread when it was higher orwhen it was lower, was wider,
and now that it's narrower, itreally indicates that where we are is probably
where we're going to stay for thelong term. I don't know this trying
to understand what the two and theten are doing and how it affects you.

(16:56):
I just know that if we usedto look at the ten that would
say, Okay, your rates areprobably this, I would say, in
a normal market. Is it anormal market? Now? No, it's
not. Anyway. We'll get moreof that later on in the show.
I'm Jeff bartin your voice in themortgage Industry. Thanks for tuning in.
We'll be right back. You're listeningto the Mortgage Boys with Jeff Barton.
We'll be right back with more andjust a moment for questions or comments,

(17:21):
send emails to info at melibucuning dotnet. Now back to the Mortgage Boys
with your host, Jeff Barton.Welcome back everybody on Jeff Barton, your
voice in the mortgage industry, andI am the expert resident expert here at
the Mortgage Voice to talk about what'shappening both locally as well as what's happening

(17:41):
nationally in the economy, as wellas the rates and the programs and the
scarcity of good loans, good loanrates, and most people who come to
the table and want to buy ahouse, first thing they ask you their
mortgage professional, their mortgage loan officers, Hey, what of the rates?
Well, as we know, onthis show, we talk about non QM

(18:03):
a lot. We talk about differenttypes of loans, different types of funding
sources, and a different way bywhich those are underwritten. There's a lot
of ways I can go with thatparticular sentiment, but one of the ways
that we're looking to reduce overall costs. I was listening to well, and

(18:23):
it was a tough listen because hejust doesn't have a radio friendly voice.
Had a lot of knowledge. Smartguy, but it's the head of the
CFP. No, head of theCFPP. Yes, the ahead of the
CFPP was talking on Housing Wire andI was listening is it the Housing Wire
or Mortgage News Daily, one ofthe two sites talking about how junk fees

(18:45):
are what they're going after, andthere it seems to be a refrain something
that we've heard again and again fromthe last twenty five thirty years. Used
to be title insurance and the feesthat junk fees that they charge, and
now it's more about just a plethoraof different fees that consumers are complaining about,

(19:07):
according to what the head of theCFPP is. And I'm remiss because
I didn't write down the guy's name. It was a name I'm not all
that familiar with, even though they'vebeen in the job for quite some time.
But as is always going after junkfees, small fees, those fees
that don't really seem to make sensein terms of what the consumer is aware
of, what they're spending. That'swhat they're going after. And they're trying

(19:30):
to shorten that ability for either lendersor title companies or ESCO companies or whoever
it is company to tack on thefifty dollars fee, the twenty five dollar
fee, the one hundred and seventeendollar fee, whatever it is. If
you're pulling your credit or if they'repulling their credit for you, and those
fees show up as a fifty threedollars fee, is it really fifty three?

(19:52):
Is it forty six fifty? Theseare the kind of junk fees that
they're looking at to combat. AndI'm thinking, as I'm I'm listening to
this, No, this is notthe most pressing issue, even though the
Consumer Finance Protection Bureau has the mandateto get out there and see what's going
on in the marketplace and correct itand if there are offenders, take those

(20:15):
people to the woodshed. I understandall that, but to me, it's
the availability of funds and the easeby which a borrower can borrow those funds.
Tightening of lending restrictions on a loanis really what has happened over the
past COVID years. Right what wesaw is since COVID has happened we've seen

(20:38):
restriction on the amount of money availablebecause of the tightening that the FED put
on. Now, I was thinkingbecause and that's not a good thing sometimes,
but if it was a good thing, and I said, look,
there is money out there to lend, but it's difficult in the debt that

(21:00):
we accrue as people who borrow money, that debt needs to be sold.
If that debt can't compete with governmentdebts that's being sold or private equity money
that's being sold, then it's aloan that has to sit on your books
until those times where you can actuallyunload that. Now, there aren't enough

(21:22):
lenders out there with deep enough pocketsto be able to take on a million
loans, let's say, at acertain percentage below what currently Fanny and Freddy
is selling. As I said,it's seven point one four is the thirty
year fix. It's been around sevenpercent forour I don't know for the last
six months. If we could geta loan for five percent, where are
you going to sell that loan?You can't because the yield that they're receiving

(21:47):
on mortgage backed securities or any otherkind of debt that the treasuries that the
US government is involved with is yieldingmore than what you're going to yield at
a five percent mortgage back security evenif you wanted to, even if there
were people out there that had plentyof money that said, you know what,
if we were to solve this problem, this is how we would go
about it. We would sell cheaperloans. Well, you can't do it.

(22:11):
So we all are waiting the privatemarket, those of us that are
in government loans, we are waitingfor the Fed to eventually say, Okay,
inflation is under control, let's dropour interest rates and then tangentially,
because the yield on those rates thatthey were getting previously or now less,

(22:33):
that means everybody else can breathe asigh relief and lower their yield on their
debt because as long as we're allin the same ballpark, that means that
depending on the criteria for selling thedebt, at least with the rate and
the yield involved, we can allsort of say, Okay, we're all
competing against each other as opposed toI can't compete against them because those are

(22:56):
the people selling the loans, andwith my loan being what they are,
who am I going to sell thisto because the yield isn't high enough.
If that's not confusing enough, let'sget to some other things that might be
a little bit simpler for you tounderstand. The real estate market. Okay,
we are predictions that real estate marketis going to soften quite a bit.
So we went to the archives andlooked up what is happening out there

(23:22):
in America in terms of real estate, both statewide, citywide, and what
may be coming up in the nextsix months. Okay, the cities that
have already dropped in terms of theirreal estate prices, it may surprise you.
Austin, Texas down twelve point fourpercent, Quarterlaine, Idaho down eight
percent, Punta Gorda, which isdown in Florida, down seven and a

(23:47):
half percent, Idaho falls down sevenpoint two percent, and Pueblo, Colorado
down six percent. These are citiesin America where the real estate prices have
dropped. Now, we in southernCalifornia are looking for that right price is
to drop, and of course whenprice is dropped, you're gonna find more
people jumping in the market, whichshall of course raise the price of the
house. It's a vicious cycle.And as they said in the debate,

(24:11):
we need more housing. Okay.States that have dropped Idaho, we just
mentioned two cities in Idaho down fourpercent, Montana down point two point eight
percent, Wyoming one point seven percent. Okay, none of those places are
you moving to. You're in southernCalifornia. You're not moving to Wyoming.
It's just is not happening. Okay, But that's what's trending across the US.

(24:32):
And then two other places. DCis at one point seven percent down
and Utah is at one point threepercent. Now you may look at Utah
because it's you know, I mean, it's five six hundred miles away,
but it's it's not one thousand milesaway anyway. So when looking at cities,
there are some cities that are predictedover the next six months to lower

(24:53):
in value, and a couple ofthem are here in California or close thereby.
San Francisco down five to ten percentby the end of the year.
Now it is so overinflated there,I don't even know if that's good for
us here in southern California. Tosee that. I didn't see Los Angeles
on the map. I didn't seeSan Bernardino, I didn't see Riverside.
I didn't see Rancho, I didn'tsee Palm Springs. I didn't see anything

(25:18):
in that area dropping. Although theyare, you know, obviously twenty to
thirty percent lower than Los Angeles orinto Orange County in terms of the prices
lowering. However, the other coupleof cities on this New York City down
five to eight percent, Honolulu downfour to six percent, Miami three or
five percent, and Las Vegas,interesting enough, four to seven percent.

(25:40):
Now, Las Vegas has been growingexponentially, you know, they get all
those sports teams and gonna have baseballin a couple three years. It has
become a different place, although theexodus from California to go to Vegas is
still extremely strong. Seeing prices dropis it's just just one of those things

(26:00):
where we go huh okay. Alsopersonal consumption expenditure, which is a measure
of inflation. As I said,inflation. Good news on the inflation front.
Will have more news next week foryou. It comes out Friday.
We record on Tuesday. This week. The person of the PCEE report in
June rose two point six percent.That's the lowest annual rate since March of

(26:22):
twenty twenty two. That's a prettyinteresting thing. Two point six. Think
about that. We're looking at twopercent inflation as the benchmark and where we
want to go according to the Fed, maybe we're not that far off.
We'll just have to see where asthey say, where the data leads us.
The personal income rose half a percent, that's good, and consumer spending
was off to zero point two percent. That means that the economy is cooling.

(26:47):
Now. They like to attack thelabor market in order to have inflation
be more under control. It's somethingthat I wish there was a better way
to do it, and I'm notsmart enough to give you the answer,
but that is where we are rightnow. Let's see, I got a
bunch of things here, but Ican't get to it because we're at the
end of the ten minute segment.I'm Jeff Bartin, your voice in the

(27:07):
mortgage Industry. Thanks very much fortuning into the show, and we'll be
right back. You're listening to theMortgage Boys with Jeff Barton. We'll be
right back with more and just amoment. For questions or comments, send
emails to info at Melobou Fundings dotnet. Now back to the Mortgage Boys
with your host Jeff Barton. Welcomeback everybody on Jeff Barton, your voice

(27:30):
in the mortgage industry. Thanks verymuch for tuning into the show, listening
to us eachin every week as webring to you the best possible news to
use. And all of the reallypoints to rates, points the programs,
It points to the people we bringon the show. And you know what,
we'd bring the best guests on fora mortgage talk show. We just

(27:51):
do. We bring people who areboots on the ground work for good companies
and bringing you the best products availablein Suthery, California. Next guest who's
been on the show several times before, Lewis Caranza from Mega Capital. He
joins us now and it's no exception. He's one of the best. Thanks
Lewis for coming on the show.How are you. I'm doing well,
Jeff, Thank you so much forhaving me again. It's always a pleasure

(28:11):
to be on your show. Ohexcellent. Okay, So Mega what is
happening there? Where do you seethe market going? And what kind of
loan production might you bring to usthis summer? Well, you know,
I mean the market business has obviouslybeen a bit of a roller coaster ride.
As we all know right now,the majority of the business that we're

(28:32):
getting and what we're leaning towards ismore than non QM. Okay, the
bank statements we've got written VOE profitand loss ten ninety nine only d SDRs
at the utilization. Those type ofprograms are the ones that seem to be
getting the most attention, probably inthe last six to eight months. So

(28:53):
in your product mix, do yousee more purchase or refinance? Probably purchase,
right, definitely, definitely more purchasesthan refis. I mean, the
majority of the people, you know, the last year's refinance, they've got
something in the threes or fours.Yeah. Of course we're not anywhere near
there, So it's mostly purchases rightnow that we're seeing in the non QM

(29:14):
space. Yeah. I love thenon QM space for a couple of reasons.
One, the customer is looking fora lower documentation type loan, and
two there are funds available and peopleready to obviously purchase those loans once you've
funded them. Is that right?Absolutely? Absolutely, Yeah. And the
people have been coming out of thewoodworks, the investors that are switching more

(29:37):
to non QM where you know,when rates were low it was mostly Fanny
Freddy, right, the government loanstoo, But now it's sort of switching
gears. Not so much now ithas been for quite several months. But
yeah, at least a year,right, at least a year, year
and a half maybe, yeah,yeah, definitely, definitely, and more
so probably in the last six monthsor so. Okay, Now, I

(30:00):
don't know if you watch what's happeningwith the Fed. I think everybody in
our business does. But at thesame time, looking at inflation, looking
what the FED is saying about inflation, we did see some interesting reduction in
overall inflation over the last month.I think we'll see some more coming Friday
when the news comes available to usabout the PCEE and some of the other
things. Where do you stand interms of what the Fed is doing and

(30:23):
how that, even though it isnot a direct effect, affects interest rates
overall. I mean, I thinkyou're right, it's you know, we're
going to see some of the movementmaybe next week, but I don't see
them improving. There's a lot ofpeople saying that not even into twenty twenty
five. A lot of people saidat the end of this year, but

(30:45):
now it's sort of being pushed backinto twenty twenty five for us to see
a little bit more. You know, with all this inflation, it just
needs to get back to where itneeds to be to be able to be
right, to be competitive again.What do you think that sweet spot is?
Do you think it's about between fiveand six percent lower? I think
so. I mean, we've hada couple of dips even we still do

(31:07):
you know the Fanny and Freddie papers, it's been in the sixes. I
mean, I've been surprised sometimes hadsome depending on the fighter scores and the
LTVs obviously, but we've had somein the low sixes, so I think
I don't think we'll see it inthe fours. Maybe high fours, but
I'd say probably the mid fives orso, you know, mid fives.

(31:27):
Yeah, I think so too.I like that just because historically five percent
was like, oh my gosh,we'll never get to rate this low again.
So anything, you know, ifit's five and a half to six
and a half in that range,I think you'll see a lot of people
jump back in the market. AndI think being poised to be able to
take advantage of that. How isMega looking to position itself for when eventually

(31:48):
that happens. Do they gear up? Do they do they get more technology
driven in terms of driving down overalloperational costs to be able to meet the
demand. How are you guys handlingthat? Yeah, we're actually in the
process of doing that as we speak. We're working up with our technology now
more towards the non QM space,and we've got people that are you know,

(32:15):
we've hired more people underwriters and thingsof that sort in the non QM
portfolio. We're doing some interesting jumbosas well. But but the non QM
really is mostly that in government.I mean, government's pretty stable right around,
got you know, lowering people threeand a half percent down, Those
are fairly stable, mostly purchases.OK. Yeah, tell me a little

(32:37):
bit about your non non QM bankstatement program. How many do you have?
What are the types of programs?What are you looking for in terms
of FIGHTCO and down payment. Yeah, we've got we've got four different types
of bank statement programs, OK,a lot of them. We've got some
that go up to nine down.Of course, we're looking at the higher

(32:59):
fight O bracket for those probably aboutseven to twenty, so not super high,
but still you know, not notin the low is it on't most
loans nowadays even with non qm Aabove seven hundred or is that not true?
I mean, we're pretty lenient whenit comes to the lower LTV.
So if they've got a little moreskin in the game, we'll we'll drop

(33:19):
down to six sixty. Okay,you know, as long as we're looking
at the twenty five percent down toget a six to sixty you know FICO
score. So as long as they'vegot a little skin in the game where
we're willing to go with the riskyour borrow. You know, with the
situation, a lot of people havea lot of credit that not necessarily bad

(33:40):
credit. It's just that they're maxedout, and you know, the them
just hit them hard sometimes when they'reclose to maxed out. So it's not
that you have a negligent barrower thatmismanages their fund. It's just their economy.
And unfortunately it's the reality right nowfor a lot of people. Yeah,
you know what interesting explain that topeople? Why it is somebody who

(34:01):
has not missed a payment but maybeover extended in their credit cards will have
a low fucker score than someone whoyou know, obviously missed a payment or
two. But you know, doesaren't maxed out on their credit cards?
Yeah, well, historically the FYCOscores, I mean they some of the
things make sense, others not somuch. But you know, there they

(34:22):
have their rhyme and reason for everything. So ideally what they want to see
in a perfect world is twenty fivepercent of the balance. So you know,
I say, thousand dollars line ofcredit on your credit card, if
you keep it at two hundred andfifty dollars, they like that because it's
not if it's zero, then theycan't really see. They're like, well,
he's not a heavy credit user,so they don't have anything to go

(34:45):
by, right, right, Butif you have it maxed out, they're
like, Okay, this guy ismismanaging his funds. Maybe there's some income
issues. He's living off his creditcards, so that drops the fight tho.
So the full spectrum not using themand using them too much is bad.
Fifty percent is decent, but thattwenty five percent sweet spot is where

(35:06):
you seem to get the highest cyclescores, where they say, okay,
he's using his credit cards managing them. You know, they still have a
seventy five percent balance on those andthat's that seems to be where they like
to see the Fyco scores go uphigher. Now, do you do automated
underwriting with that kind of stuff,so it's just spit out from a computer
program? Or is this a personactually looking at it where you might be

(35:28):
able to tell a story. Yeah, we on the non QM, it's
more of a person. We wantto see somebody manually underwrite it because you
know, there's a lot of scenarios. I mean I've seen sure there is,
yeah lately where it's just situations thatyou just think, wow, it's
you know, sometimes it's bad luck, but rarely is it mismanaged funds like

(35:49):
we saw back in two thousand andseven, you know when the subprime market,
I mean that was a whole differentball of act. Sure it was.
Yeah, it's just a lot ofpeople having hard times. You know,
COVID didn't help. That really hitpeople hard businesses clothing having to switch
gears, changing careers, things ofthat sort, and starting businesses. We

(36:09):
see a lot of people or Iactually see a lot of people that are
you know, they're just not quiteat the two year mark for their self
employed business. Yep, they're juststarting and that's where they want to see,
Hey, let me see two yearhistory because a lot of people,
you know, their businesses aren't ableto function after a year they close down.

(36:31):
So a two year mark right nowis where we have a lot of
people struggling to get to and that'swhere we are with you know, we
use some of the non QM becausewe say, okay, we use a
combination of both self employed and fullDOC. So maybe the husband's self employed,

(36:51):
the wife's W two. Oh Isee, so you can do kind
of a hybrid type loan, right. Yeah, yeah, we do a
lot of those. We blend themeven with bank statements we use somewhere we
use twelve month's business or personal bankstatements, and we blend it with the
W two pasteum as well. Soyou just kind of help that debt ratio
drop. It's just trying to beas creative as possible. Sure, everybody,

(37:13):
Hey Louis, we've come to theend of it. I really appreciate
you coming on the show. Wouldyou let people know how they might be
able to get in touch with youand then get advantage some of these programs
you're offering. Sure, absolutely,yeah, I work for a Mega Capital
Funding and you can reach me onmyself and that's the area code three one
zero six five eight eight eight sevenzero. Excellent, Lewis, thanks very

(37:37):
much for coming on. Always appreciateit. And then good info. Thanks.
Oh, you're welcome, Jeff,thank you for having me. Thank
you very much. That's Lewis Carnzafrom Mega Capital Funding. I'm Jeff part
and your voice in the mortgage industry. We'll be right back. You're listening
to the Mortgage Boys with Jeff Barton. We'll be right back with more and
just a moment. For questions orcomments, send emails to info at melibocumdings

(38:00):
dot net. Now back to theMortgage Boys with your host, Jeff Barton.
Welcome back everybody. I'm Jeff Barton, your voice in the mortgage industry.
Thanks very much for tuning into theshow, for listening to us each
and every week. We try tobring to you the best information. I
know it's difficult out there, andI don't know if you're a first time
home buyer or somebody that's locked intoa low interest rate and you just can't

(38:23):
access that money that you want tobecause you have to have an operation,
or send somebody to college, oryou just want to invest in something.
There's a lot of problems out there. But what we try to do on
this show, and we do iteach and every week, and we've been
doing it for ten years, isbring you some solutions. And not my
solutions, of course, I justgive you some history and update. But

(38:43):
the people we bring on the showare the solution people and the problem solvers.
And then this next guest, mysecond guest of the day, Chris
calder On from Forward Mortgage, isthe guy that can help you do that.
Chris, Welcome to the show.Thanks for doing this. How you
doing, sir, I'm great?Thanks, thanks very much. Hope you
like that intro. I surely did. I cutly did. What's going on?

(39:05):
Box man? Hey? Okay,So yeah, everybody out there is
so tired of it. I mean, first thing, and first question everybody's
mouth is always what's the rate?What's your answer when somebody asks you that?
You know? I mean right now? I mean it depends that you
can vary from week to week,you know, I mean, you know,
one day you're you're in the midsixes. You know, next day
you're you're in the seventh, right, So it really just kind of depends,

(39:28):
you know, are we talking prime, are we talking ninety non?
QN. So general is to answeranywhere from six and a half to seven
right now. And that's a goodanswer because I think what that does is
it spikes the curiosity of the listenerby saying, well, what do you
mean? It could be this,it could be that. Tell me about
how I can get the lowest possiblerate, or tell me how I can
quickly get into the property I wantto buy? What do What do you

(39:51):
answer when somebody is like that,you know, when when someone asked that,
you know, my first question isare you wagered? Are you self
employed? Okay? So if youfile your taxes right, okay. You
see a lot of lenders, youknow, kind of start to tying up
their guidelines, right, which hasbeen happening for a couple of years now,
I'd say maybe since the beginning oftwenty twenty two. So really right

(40:15):
now, what we're seeing a lotof is the structuring of loans has become
a little bit more challenging. Yep. And so you need more out of
the box creative thinking. Okay,and what is what does that actually mean,
I know people say that it usedto be the catch all phrase was
think outside the box or you know, any such wording. And I know,

(40:37):
for you, for you and me, we're talking about a different kind
of program a way by which wecan present you to the underwriter to be
able to say, hey, thisperson is like this, not like this.
How do you approach it? Andwhat kind of programs are we're talking
about? So here's how we approachit. You know, we understand that
barbers don't live their lives to underwriteguidelines. Right, barers are gonna do

(40:59):
things that maybe you know, bankswon't understand. And you know, barbers
are going to look at banks andsay, you know, you're doing things
that we don't understand. So again, you know, when I use the
term thing outside the box, Ithink really more what I mean to say
is is we think with inside thebox, we just have a bigger box,
you know, because it's bank statementprograms for barers who are self employed.

(41:19):
You know, some DSCR products.You might have some people that own
a bunch of rental properties that maybedon't claim enough income, so we can
just go off of the income theyearn off the rental properties. You know,
we have some really good faha downpayment assistance programs. Obviously, with
prices being as high as they arehistorically, right, some people might have
some money saved, but they mightneed a little bit of extra house to

(41:40):
kind of get them across the goalline. Not only that, this kind
of like our culture that we builtfrom, like the underwriting Again, my
underwriters are just flexible. They understandbarers are not living their lives to underwrite
guidelines, and that's kind of reallywhat we stress. So again, we
we want to look at things alittle bit more from how could we make

(42:00):
it work as opposed to how couldwe shut it down? Are you looking
to the future when rates do eventuallyfall either two thousand and six, twenty
six or twenty seven, And howthe model that we currently have, which
is you know a lot of underwriterslooking at files moving it to a technology
driven underwriting process more because as Iread more and more about it, all

(42:24):
all the big banks and all thebig you know, the uwms or the
Quicken Rocket people, this seems tobe the way they're trying to either get
rid of people, lower their costor increase their margins. How are you
in this space? Being able to, you know, keep up with that,
especially when you're going to get thedemand that is inevitably coming when rates
get lowered. Got it. SoI'm a little bit more hawkish on when

(42:46):
I think rates are going to comedown. Okay, I think one of
the things that people aren't paying attentionto is really what's going on in the
economy. You know, when you'vegot figures that are coming out, when
you've got a spike in bar ismaking minimum payments on their credit cards,
when you got a spike and chargeoff rates on credit cards that we haven't
seen since two thousand and eight,when you have a spike in borrowers,

(43:09):
I'm sorry an American taking out fourone K withdrawals. You know, you
might see the unemployment rate low,you might see inflation starting to come down,
but Americans are still really hurting.One of the things that people forget
is if inflation comes down, itdoesn't mean the price of goods and services
comes down. It just means thatthey're not increasingly as rapidly. Right.

(43:31):
They are, right, right,And so those are the things when people
are saying, even last year,when people were telling me, Chris,
we're gonna see you know race dropin twenty twenty four. You know,
I was like, based off thedata, I don't think so. Based
off you know, the history thatI've read off of Jerome Powell, I
don't think so. I realistically don'tsee rates coming down maybe until twenty twenty

(43:55):
six. Now, does that meanthat we might not see a quarter drop
at the end of the year.It's possible, but because home prices have
gone up so much, it'll becanceled out by how much home prices have
risen since the last time we sawrates lower. So I think it'll be
canceled out then. Now, thesecond part to your question was in regards
to artificial intelligence AI. We're alsoworking on that as well. Okay,

(44:20):
but at the end of the day, what I remind people is it's not
AI that's going to be using people. It's people that are going to be
using AI. And I think that'sone people that's one thing that people forget.
They get a little fearful about AI. AI is going to help make
things more efficient. AI will costpeople some jobs, but AI is going
to create a lot of newer typeof jobs, kind of like something that

(44:42):
we saw back in the Industrial Revolution, you know, one hundred and twenty
one hundred and thirty years ago rightnow. So AIS will be implemented I
think by the end of the decade, which sounds like a long time away,
but it's really not. I thinkAI is going to be a huge,
huge factor in our industry. Butat the end of the day,
it's going to require lending will alwaysrequire a human touch, because as long

(45:04):
as barbers, like I said before, as long as barbers don't live their
lives to underwriting guidelines, you haveto have a human on the other end
of that computer to make these loanswork. That it's so interesting because there
is such a divergence in what youread and what people are predicting, Like
you're, as you said, aconservative or more of a hawkers person on

(45:25):
when rates are going to fall,and I completely see and agree with you
on that particular front. And theother side is, of course nobody really
knows because this is really uncharted territories. But the hard facts of credit card
debt delinquencies, auto loans being called, there are a lot of indications that,

(45:46):
as you just said, people arehurting, they're trying to live the
best life they were living during COVIDwhen money was just handed to them,
but it's not there. When dowe start to see the economy reflect those
numbers? And then therefore, whenthe economy slows, that's when we usually
see rates drop significantly. So historicallyafter the last rate hike, right,

(46:12):
typically eleven months after the last FEDrate hike is when we generally tend to
see a recession fallen. The lastrate hike was in September of last year,
so obviously we're running on that elevenmonths month right now. It doesn't
mean August first a recession hits,right, And again it's not it's not
a rule of economics, but typicallythat's what we've seen after the FED has

(46:35):
gone through, you know, alarge rate ice cycles like we've seen over
the past couple of years. ButI really think that we're really going to
start to see the economy start toslow, right, maybe by the end
of this year, beginning of nextyear. Right, And and again I'm
not talking politics, regardless of whogets in the White House. That was
the next question. Yeah, okay, good, right, regardless we get

(46:58):
sin. Now, depending on whogets SIN will dictate how quickly it could
be fixed. Now, if ifyou're looking to Trump I think if Trump
was to get you know, electedback into office, I could see rates
going down, right, but itmight have the reverse effect because it might
cause prices to go up. Now, what we have seen, right,

(47:20):
what we have seen is we've seena huge spike in listings right right now.
Granted, you know, it's local, depend on where you're at,
you know, cal Southern California mightbe different than maybe Columbus, Ohio for
instance, of course, Right,so we have many huge spikes. But
one thing I've told some of myclients is this, right we're on pace
for the fewest amount of home soldsince nineteen ninety five. It's awesome.

(47:44):
We're going to have the huge amountof home sold right since by tent five.
But yet there's sixty more million morepeople live in the United States.
So to me, that says alot about where the state of our of
the housing industry is at. Now. What we are seeing a lot of,
right, we are seeing a lotof and this is me going back
for the four to one K withdrawalspeople you know now making minimum payments on

(48:07):
their credit cards. We are seeinga lot of people refinancing those two point
eight seven five, three and ahalf interest rate to payoff debt, and
they're taking a seven percent or they'retaking a six and a half. Right
now, I know you might beasking, well, why don't some of
those barbers keep that low rate andjust take out a close in second.

(48:27):
Well, in some cases, dependingon the situation, when you do the
blended rate, the borrower might bebetter off just refinancing out of that two
and a half three percent three anda half, taking a seven and then
when rates eventually do come down again, they're never going to go back at
least I don't see any time seeinggoing back to to that low of an
interest rate, but maybe they mightbe able to refinance to at six five

(48:49):
and a half or a five,right, and so we're seeing a lot
of that. And one of thethings that a lot of my brokers are
telling their barers is why would youWhy are you so worried about that three
and a half percent, but you'repaying a nineteen percent on a second?
Right of course on the credit card, right, I mean right exactly,
you've got two or three credit cardsand you've got thirty forty thousand dollars on
them at thirty percent, maybe it'stime to get into a seven percent and

(49:13):
make the payments. It's about cuttingthe credit cards. For most people,
they just can't seem to wean themselvesoff that lifestyle they had during COVID.
Correct. Correct, you nailed iton the head right, Hey, Chris,
we have run out of time.I wish we had more time.
What you're talking about is extremely interesting. Want to have you back. Obviously
we always say that, but it'strue, and you've got some great insight.

(49:35):
But if you could let people knowhow they can get in touch with
you at Forward Lending, that'd begreat. You've got it. You guys
could alwaysuse for my cell phone thearea code eight ninety six seven zero seven
eight. Once again, ninety sixseven zero seven eight. Chris, thank
you very much for coming on.Always appreciate it. You got appreciate it.
Take care everybody. Thank you.That's Chris Calderon from Forward Lending.

(49:57):
I'm Jeff bart and your voice inthe mortgage industry, and we'll be right
back. You're listening to the MortgageVoice with Jeff Barton. We'll be right
back with more and just a moment. For questions or comments, send emails
to info at melagupondings dot net.Now back to The Mortgage Voice with your
host, Jeff Barton. Welcome backeverybody on Jeff Bartn your Voice in the

(50:20):
mortgage industry. Thanks very much fortuning into the show. Each and every
week, we come to bring toyou the best information that's available out there.
It's current, it's topical, andwe try to bring solutions in the
people that we bring to the show. If you want to see and hear
the show. We're on a numberof different podcasts, Daryl, do you
have a list of those for us? I sure do. Jeff It's Apple
Podcast, Google Podcasts, Spotify,Speaker, Stitcher, I Heard, Media,

(50:45):
Odyssey, YouTube, podclips dot io, and the Mortgage Voice dot com.
Okay, all of those great placesto go and hear what we do
each and every week. CACAA dotcom is another great place. The Mortgage
Voice on YouTube is another good placethat Podclips dot io central place. Lots
of great podcasters go there if youjust want one place to get a lot

(51:07):
of different, great and variety oftype shows. Mine is one of them,
and there are a lot of otherones too. Podclips dot Io,
thank you very much again for comingon the show. Okay, each week
we bring great guests. I know, I say that a lot. What
it's true. We have seasoned peoplewho have been in the business a long
time. They're kind to come onfor me and I do appreciate that.

(51:29):
But they bring to you a wealthof information and experience, so you don't
have to shop around and look forsomebody to talk to. These are the
people that you can do it for. Dean Garrett from Remen real Estate Mortgage
Network is joining us again. He'sone of these people. Dean. How
are you all doing good, Jeff? Another day in Paradise excellent? Yes,
another day in Paradise absolutely outside ofthe weather turning hot everywhere even here.

(51:54):
How's the business and what are youthinking about in terms of products you
might be offering for the rest ofthe summer. Yeah, actually, Jeff,
you know, as we say,it is what it is, right,
We've got to keep going forward.But what products that's been our hottest
product here is our he lock.Okay, it's pretty interesting what happens on

(52:19):
these are it's a separate portal,okay. And you can go in there
and you can pull out an application. You can also you know, brand
the link and send it out toyour bowers it's it's it's an eighty percent
you know, interest only five years, then a twenty five year payback based
off prime whatever margin you can.This is a new feature that's got us

(52:44):
all excited. You can pay offdebt now to qualify. So while we
weren't allowing that, but now goup to fifty percent with paying off debt.
Okay, explain that now we talknumbers and programs like our audience knows
is what we're talking about. It'sI know what it is. It sounds
awesome. Explain it really slowly.Okay. So the ELC, you know,

(53:10):
home equity line of credit right bebased off the equity and the property
right now is where we can saveyou some money in the borrow money.
Is we pull an AVM okay ratherthan rather than a full appraisal? Okay?
Okay, yes, So based offthe ABM on an owner occupied property,

(53:31):
we'll do a second mortgage up toeighty percent of whatever that AVM comes
in at. Okay, if it'sif it's a second home, we'll go
to seventy five percent, and ifit's an investment property, we can go
to seventy percent. Is the max? Okay? Okay? The minimum.
The minimum FCO is the six forty. It's good too. Yeah, that

(53:54):
will reduce your loan to value.But if you have a seven forty or
better, actually we're down to aseven hundred or better, you can do
the numbers that I said initially.Okay, but the new feature that I
was talking about before, we weren'table to pay off any debt. So

(54:14):
if a borrow wanted to pay offdebt, they would have had to qualify
with that debt and then pay itoff on their own. Right right now,
we can pay it off through theloan to get them qualified. So
it's opened up, and now we'regetting all I would say, you know
two three times the borrowers approved thatwe were getting before. Now in that

(54:37):
are you looking for a higher FICOscore that's why you're allowing it, or
are you're just looking for less debt? Well it really doesn't matter. You
know. Whatever they qualified based offloans of value and credit score, they
can pay off the debt. LikeI said it, it was a little
bit of an issue before. Youknow, people wanted this but had to

(54:59):
qualify with all their death right right. Well, we kind of do like
a limited tidelet on this, andwe're just trying to keep the cops down.
Of course, of course I sawthat. The best news on it
all, Jeff is we pay ourbroker one point seventy five. Oh that's
excellent too. Yeah. Yeah,so you can get paid on them.

(55:22):
You know a lot of people aregiving them away. But it's a real
simple process. It's five minutes ofyour time and you can make one point
seventy five of the loan amount.What is the typical loan amount on these
these types of seconds, Tho,they're pretty high, you know, here
in California, they're probably you know, at least one hundred. I've done

(55:43):
the max will do around four hundred. I see. Okay, but you
know the end they can go downto twenty five. Someone just wants a
smaller amount. A couple other greatfeatures on this is that there's no prepayment
penalty. Oh that's good too.Know. What really helps is it's actually
a perfect bridge loan. Yeah,that's it's interesting. So and how would

(56:07):
how would that work in terms ofthe bridge loan? What are you looking
for a full you mean on asale or a rehab or Yeah, what
I mean on that is someone youknow is wanting to buy a property,
has a little equity and the propertythey're selling but haven't been able to sell
it yet or write by the newproperty because they don't have the funds.

(56:29):
They need the funds out of youknow, the old house. Sure.
Sure, as long as long asthe house isn't listed, you can get
a second get your equity out ofthis, use that to buy your new
home, and then when the housesells, you can pay it off with
no penalty. Well, Bowers andbrokers, we don't come back to the

(56:50):
broker either. Well, there's there'sa pretty good loan. I bet it's
pretty popular right now. It is, it is. I think as a
company we did. I think itwas forty five million last month. Wow.
Wow. And this is a nationwideprogram here or just southern California.
No, No, it's it's nationwide. It's even in Texas now. Wow.

(57:13):
Well, Texas is kind of astate where you can't do more than
one REFI right. Yeah, it'sjust a little funky with them with they
are some rules on that. I'mnot all the way familiar. I'm lucky
enough not to deal. Well that'sthe way it was for a long time
one time, and that's it.You're done. You can't do more than
one. But with a he lock, that's kind of a different type of
product anyway. It's not a second, it's not a first. It's a

(57:36):
kind of revolving credit line. Yeah. I know they require like a twelve
day cool enough period. Oh Isee. There are some funky rules on
that, but there are some statespecific you know, I can let anybody
know if they had any questions onthat, but they're really really easy program
man, it's nice on this helock, which it's a little bit different

(58:00):
the last one we had is there'sthe actual portals where the can go into
it and can see exactly what stepsare needed we're at with everything, and
you know, can follow along ourold one. There was a morble mystery
on that, but this one isvery simple. And the a v M

(58:22):
product that you're using to valuate theproperty. Yes, okay, so that's
just a desktop under a desktop appraisalsystem, right and like automated value Yes,
I know, but exactly the anachronismshowever they are. But really for
people who are listening, it's it'sjust, you know, just that someone

(58:42):
who is an appraiser just going there'sno cost on that. Now, that's
reason if the if the brokers unhappy, because the problem you run into the
with those av ms is if there'sbeen some upgrade to the house or renovations.
Right show, Okay, because allthey're doing is basically pulling comps in

(59:04):
the neighborhood. Yeah, right right. If the borrow joice, they can
then pay for a full appraisal ifthey're not happy with the evaluation. Right,
well, even at the tip topof a fix up, your property
is only going to vary fifteen percentfrom you know, the neighborhood. I
mean, that's just the way appraisalsgo anyway. So you have to weigh

(59:25):
whether that extra amount that you're goingto get in the AVM, if you
get it and it's not guaranteed thatyou will, is worth it to wait.
I mean a lot of people whoneed money need it now. They
don't want to wait. That's thebeauty of this program. If you need
it, we can get it toyou pretty quickly. That's awesome, Dean,
We have run out of time.I can't even believe it. I

(59:47):
just looked at the clock. Wow. Could you let people know how to
get in touch with you? Thisis a great program and I think people
should be able to take advantage ofit. It's a good time a year
to do it too. Yeah,you could email me at Dan D e
A N dot Yer at g AR R E T T at r e
m n dot com, or alwayscall me name