Episode 10 - Interview with Jason Sharon

In todays' episode I interview Jason Sharon a a 20-year U.S. Navy veteran, nuclear engineer, and mortgage expert. As Owner/Broker of Home Loans Inc. in Charleston, SC, he specializes in VA loans and investment property financing by serving veterans, first-time buyers, and real estate investors across the Southeast. A published author of five mortgage books and a frequent media contributor to Forbes, Yahoo Finance, and Money.com, Jason turns complex mortgage topics into clear, actionable guidance.

We discuss HOA issues with lending, AI in lending and real estate disclosures, and more.

Jason Sharon - NMLS # 1281448 (Broker) - #1728740 (Company)

jason@homeloansinc.com 

www.homeloansinc.com

Transcript

SPEAKER_00 0:00

Disclosures and Consequences. What happens when the fine print gets ignored? Welcome back to Disclosures and Consequences, a podcast about real estate disclosures. I'm your host, Jason Piskey, a California realtor and risk management specialist for real estate. And today on the phone, uh or on the podcast rather, I have Jason Sharon, and he is a mortgage broker out of South Carolina. Welcome, Jason. Well, thank you for letting me be here. Of course. So let's uh let's start with just, you know, you tell me a little bit about yourself and and my audience, uh, your background, that kind of thing.

SPEAKER_01 0:39

Sure. So real quick, uh, I guess the one-page summary on me is uh Christian, a husband, a dad, a friend, uh, and a mortgage broker. My job is to put people in debt for the rest of their lives. Hopefully hopefully not. That's just it's it's a mortgage joke, sorry.

SPEAKER_00 0:52

No, no, no. It's totally fine. Okay, so most most of the time I'm talking about like disclosures on the on the real estate side as far as uh you know, buying a house or selling a house or or whatever. It's a little bit different on the the mortgage side. So if you could talk about some things you may have seen that uh maybe made a deal fall through or or made something, you know, made you have to work a little bit extra harder just to to make things reach to the end to to close. Sure, absolutely.

SPEAKER_01 1:20

Um I mean disclosures are the thing that keeps people out of hot water. You know, and it's extremely important to read. Um, I mean uh I'm sure I'm appreciating the audience, probably appreciation the wire for your audience, but um, you know, like the the one story that pops up that I'll remember forever is I had a client that was a sweet little old lady buying out in Myrtle Beach, South Carolina, she was buying a condo. And condos have very have have a tremendously large number of additional requirements for the condo regime itself. She was a perfect borrow. A credit score, 30% down, fixed income, could not ask for a better borrow. Like I thought somebody was was playing a joke on me when the Ross taking her application. And so we get it, we get a week into this and when we're waiting for the condo association to get us back the condo questionnaire, which is an eight-page document. It used to be seven, it grew to eight after the Miami collapse Miami condo collapse, that we probably all remember from five, six years ago. Now there's a tremendous amount of scrutiny and in deferred maintenance in on that questionnaire. And that's a family mandated questionnaire. So that questionnaire comes back not with deferred maintenance, but comes back with that the association is being sued. They're they're under mitigation. And that's not necessarily a deal killer. Uh the person needs to understand what that means. And then obviously the underwriter, even if the person wants to move forward, the underwriter needs to understand what that what the limits of the risk are from that from that lawsuit. In this case, it was a tremendous it was a tra it was a tragic accident that happened. One of the previous homeowners who had documented that he had stairs that were not property maintained. He was uh he lived on the second floor, you know, and just the the the stairs were were just old and worn down. He left us he left one morning to and slipped on the stairs, which doesn't sound terrible. Yeah, it means a slip and fall is bad, you know, worse for some people than others. He fell down, and you know how in on stairs a lot of times they'll turn halfway and they'll have a little landing on the bot, you know, um guess railing. Well, this gentleman hit the railing and the railing failed to protect him as well. Wow. So he went over through the railing over the side and landed face first on the concrete below. Which when I first heard, I was like, oh, that that sounds like a bad face scrape. Unfortunately, terribly, the gentleman is now paralyzed. He hired an attorney as appropriate, and they opened up a lawsuit for $10 million. Now that's going through the court system. It may be done by the time of this recording. This was a year or so ago. Don't know what happened with that. But if you just do the simple math, and I'm a math guy, you do the simple math, that was my god, based on the number of units there, if the $10 million was successful and something will be successful. Um, if the $10 million was successful, then each homeowner is now gonna have a special assessment of over $150,000. So if it when the insurance, so then the next question that begs to get answered is what happens with insurance on this? And absolutely, insurance will cover it. Insurance has a limit. In this case, I think the HOA was carrying about a $3 million all perils policy or through about the policy limit was about $3 million. So ultimately the the lady decided she still wanted the ha the, would still want the condo. Don't know why, but I could not find an investor that was willing to risk a $150,000 special assessment onto her because in theory that then becomes another monthly debt that she has to pay. And let's say that $150,000 over five years, that you know, could be hundreds of dollars, uh, will be hundreds of dollars a month, you know, not chump change. And I could not find an investor that would that would accept that risk.

SPEAKER_00 4:59

Aaron Powell Interesting. And the and I know you you may not have answers because it's uh litigation for an HOA, uh but would was the HOA looking for any kind of financing for the tenants that live there, you know, to help to cover uh when the special assessment comes out?

SPEAKER_01 5:14

Aaron Powell I mean they probably would have at some point. I don't think they were to that place uh to start thinking about that, because it was they were still you know in they were they're still you know fighting the the There was not a final decree yet, I guess that is the easiest way to say it.

SPEAKER_00 5:28

Aaron Powell Right. No, no, that that makes sense. I saw a uh here in California, we've got a new balcony law for all condos and apartments. And the so the state now mandates that that they go through and they have a a general contractor and an engineer come through and and look at all all balconies and at all apartment complexes and all condos. And you know, the the older the condo, the more sketchy the safety of the balcony is. Sure. And I was looking at one for for one of my clients that they were there was a known special assessment that was coming because the repair bill to repair all of the balconies was two and a half million dollars. And insurance isn't covering that. That's that that's just you know what it's going to cost. And the client was a VA borrower, and so the and and buying on the second floor, so they had one of the impacted balconies, so the VA was asking for all this extra information, and the special assessment was about thirty thousand dollars, but they had uh secured some additional financing that would have spread it out over ten years. But even that, still, you know, thirty thousand over ten years is an additional amount. The VA was okay with that part of it, surprisingly, but they wanted to make sure that the repairs were going to be done and when and and all that, and and we couldn't get the the HOA and the the contractor and everybody all on the same page to to get us an answer fast enough. We were in escrow for about four months. Wow. Before before the seller was finally like, look, I can't I I gotta sell this thing. He wasn't living there. It was a rental property for him. And after this assessment, he's like, it doesn't make sense. And he was just trying to sell. And he was he was trying. I mean, he it it just it was just a timing thing, you know. There was too it was just taking too long. Sure. You know, this is a little bit different because it was fully disclosed. We knew about it up front. Right, right, right. Well, well, kind of like you did, I guess. You you knew about it up front. But yeah, it's definitely even knowing the the truth, it it can still be challenging to a deal. Have you had any situations where you you found something and you're still able to close the deal, that it didn't just completely torpedo it all together and something unique that you were able to kind of work through and and and still get it all accomplished?

SPEAKER_01 7:32

Aaron Powell I mean nearly every file dies at some point. I know that that sounds just concerning that sounds concerning for a lot of people listening to this for a tattoo industry professionals say that. But you know, there's a there's a reason to decline every single file. Even the like in like that lady, she was the perfect, but she was the perfect borrower. There's nothing that her stuff was flawless. There's nothing. You could not ask for a better borrower, but you know, the the condo, you know, with the the collateral itself was an issue. I had another actually a veteran buying a condo, so similar to your to your situation, where the somebody back up. So VA has a condo list. And if the if the condo's ever been submitted to the VA proper, it's in the list. And that list is either approved or or not approved, right? Rejected or whatever. This had been rejected due to insurance. So the condo did not have the proper insurance. And the insurance needed was I I don't want to bore people with the exact name, but it basically if the if someone on the associate uh someone on the board steals money, someone on the board that has nefarious actions, there's insurance that covers that. And that's required. Whether it's VA, FHA, Fannie, Freddie, it doesn't matter. That's that's typical customary insurance that condos should cover. But a lot of condos start whenever, whenever the budget starts getting tough, they start the first thing they do is start paring down insurance coverage. And for this case, the HOA had in the past let that coverage lapse and chose not to renew it due to budgetary constraints. The present HOA was a veteran and had the wherewithal to realize that if you did not have a VA certification on your condo association and or a HUD certification for FHA, the properties are going to drop in value because you just have less borrowers that can purchase in that. So he had figured out, hey, it's not terribly expensive, maybe a thousand bucks a year, eight hundred bucks a year, and it was a couple hundred units. So you're looking at you know less than a dollar a person is really what it was. So the board voted and it to reenact that insurance, and we were able to get you know the that to the underwriter. The underwriter's happy, the cloud owner was happy. So yeah, condos are just I joke, I jest in my book, the book on VMOs is called VA Mortgages Declassified. And it's just that it's it's the stuff that you know that nobody tells you that you should know about VA mortgages. The chapter in there about condos is labeled condos suck. And I obviously I wrote it for veterans to understand, right? I mean, I'm not gonna put that you know on a real fancy book, but for veterans that want to understand their VMO and and what a thing about buying a condo, condos suck. As we just had three examples off the heads.

SPEAKER_00 10:17

Right. They're they're definitely challenging. Um that's probably more the the proper way of saying it, but I I don't disagree. They're yeah, yeah, you're not wrong in the proper way to say it. Yeah. Uh but no, you're you're correct. Uh and it it's not always just the condo itself. It's oftentimes it's it's the association that's that's tied to it, you know, and and board members and presidents come and go. Sounds like you had one that, you know, at least had a board president that was a little more self-aware and you know, wanting to make sure that they they were protecting the value of the property itself overall. And not everybody, not every president or board is the same way. I've got several podcasts that just talk about HOAs, so I'm not gonna dive back into that again.

SPEAKER_01 11:05

But yeah, so you want a non-HOA story. I've got a loan right now, FHA, cash out. So it's disclosure, but it it's not uh something that could have been disclosed. Lady owns a house, wants to do a cash out refund to get some money out to accomplish whatever. Title Work came back with a $4,000 lien against the property. She's like, I obviously she's furious. She's like, I don't have a lien on my property. Well, ma'am, uh, you know, give the title company a call. They could help you walk through it. I don't know what it is, I don't know the details. You know, it's it's in public record, you know, that some you know, some stranger to you found it. Her husband, who passed away, had a lien against him. That lien, if you have a personal lien and you have a primary residence, and I believe this is in all 50 states, that lien will be attached to your primary residence, whether you're alive or dead. It doesn't matter. So she went off, and this is kind of kind of funny. She went off, that MFR is even screwing me over what is debt. I can't believe that. So there's all different kinds of ways that things are gonna get weird on every real estate transaction, whether it's a purchase, a refi, it's a condo, it's a rare, uh, it's just a cash out, simple, single family, detached cash-out refi that has good credit, try trying to pay off debt. There's always something that's gonna pop up. And it can even be your dead spouse that's causing an issue.

SPEAKER_00 12:23

And yes, that at least here in California, that's that holds true as well. That's not right.

SPEAKER_01 12:28

So you guys are a little bit different, and there there's 11 states out of 50 that are that are community property states, which means that you know you're you know, you you understand this, your your your listeners won't, where the that's the spouses of the debt even need to be considered in the mortgage, even if the person's not on the mortgage application. So if I was doing a loan for, you know, for somebody and I'm doing the loan in just the wife's name, and the husband's not on the loan for whatever reason, credit or name cover, whatever, but the husband's got a thousand dollars a month truck payment, the wife has to qualify for the house, including the husband's thousand dollar a month truck payment, which can be deal killing on a in a lot of conditions.

SPEAKER_00 13:09

It it is. I've I've seen it happen on several occasions on on my end as as a realtor.

SPEAKER_01 13:14

Yeah.

SPEAKER_00 13:16

Where the the couple gets so excited to buy their new home, they go out and they they buy furniture and they open up a credit card to to finance the furniture that they're gonna put in the house, and then it doesn't make them qualify for the home anymore. Yep. So it it I got burned one time. And then it became part of my my regular opening conversation with every every buyer I ever worked with. You know, don't don't buy a car, don't buy furniture, just wait. Let's close escrow first, and then you can go and do whatever you need.

SPEAKER_01 13:44

I have three automatic emails in my system for that. Once at pre-quall, what's a contract, once at unapproved with conditions because they're not gonna listen, they're not gonna hear. They only hear what they want to hear. And I've had the same thing. I've had a deal fall out because the person went and bought $4,000 worth of furniture to save $400, and that kicked the debt to income ratio up too high whenever I had to manually add it. So so the Ulicers may be wondering, well, how are they gonna know? It's it's two days before closing. How the underwriter knows is there's a quality control credit check that occurs there at the end. So the the federally mandated thing is within the last 10 days prior to closing. So if you closing on the 10th, it's gonna happen between the first and the 10th. A lot of times it doesn't happen until the day before closing due to workflows and that kind of stuff for the for the underwriter. So the day before closing, your credit's gonna get a soft pull. It's not gonna include the score. It's not gonna, it's only gonna, it's it's only gonna look, it's it's called an undisclosed debt monitor, UDM. It's gonna look for inquiries, it's gonna look for new lates, it's gonna look look for new liabilities or new derogatories. So if you had if a collection popped up, if a if a charge off popped up, or if a new lewan popped up, or there's a credit inquiry. So even if you did not open the credit, you're gonna get asked about an inquiry on your credit report. So that's how it's found, and it's happen it happens in the last 10 days, normally with the last 48 hours.

SPEAKER_00 15:00

Yeah, that's that's that's actually a good tip for for everybody because it it it does happen often. Like you said, you even have automated emails that you send out, and and I got into the habit of of doing the same, you know, and kind of beating that drum, if you will, of, you know, hey, don't don't do this if you're in the middle of you know buying a house because you you you could lose the house. So you you mentioned that you're an author. Tell me tell me a little bit more about the books that you've written.

SPEAKER_01 15:24

Great. I appreciate that opportunity to plug. All the books are on Amazon, they're all mortgage-related. The first one I wrote is called VA Mortgage Declassified. And that's book is designed, written for the audience is veterans that want to buy a house. And essentially, VA mortgage declassified, don't get screwed by the lender. So it's all the ins and outs of what you need to understand on a VMON written by a veteran for a veteran to understand inventor speak. I poke fun at the Marines in it. So I was the Navy. Obviously, the Navy comes out good in the book. I poke fun at the Marines and the Army and the Army, and I call the Air Force the Cher Force. So you're the typical fun interdepartmental, you know, ribbing, but it goes through, you know, what's a loan estimate, how to look at a loan estimate, you know, not just define it, right? And I try not to write these books, any of them, in mortgage ease. I try to write them, you know, for a person. And they're 40 to 70 pages long each. You know, they're all available on Amazon for about five to ten bucks. I mean, and I don't make a whole lot of money from them, but they're good educational tools. The second one is called I Hate Renting, and that's really designed for the first-time homebuyer. You know, what they need to understand in order to prepare to buy a house, you know, down payment, credit, debt to income ratio, gifts, that kind of stuff. The third book I wrote is actually for your colleagues. It's called Mortgages for Realtors. And it's all the stuff that I keep getting asked over and over. The all the books are the stuff I keep getting asked over and over and over. And I'll come back in a minute to how I wrote the first book. But the the third book is mortgages for realtors, which is what realtors need to understand about the mortgage world and how they can guide their clients in the mortgage transaction, right? Because your job as a real estate agent is first half of your job is to define the house. Second half of the job is risk mitigation, right? Once you're in a contract, your job as a real estate agent, the only thing your job is is to keep that deal apart. I mean keep that deal from falling apart. And how you how do you do that? You do that through your vendor relationships, right? The inspector that's gonna do a thorough job but give proper perspective. The insurance person that's not gonna have them have, you know, a way over insurance of the property, the mortgage guy that knows his stuff, you know, the the termite inspector that's you know, not gonna, you know, call an ant infestation, you know, termite. Yeah, you you you've got your vendor relationships, the title company that's not gonna gouge, you know, that doesn't have Gucci insurance policies. You're gonna have that. So this mortgage for realtors is how the realtor can can navigate and mitigate risk in the mortgage world and make sure that the person is talking to the right person for that for that mortgage product that's needed for that client. Fourth book was Nobody, listen, this is gonna care. It's called Loan Officer Success Manual, Don't Be the Christopher Columbus of Mortgages. It could be applicable to anybody in sales. Christopher Columbus, I think, was probably the greatest salesman ever to walk the earth. Think about it, he convinced Queen Isabella from another country to fund him and a bunch of guys to sell over the edge of the earth. And the the spoils that she would get were very minimal. Columbus and all of his crew were gonna be the keep the lion's share of anything they found. Whether you love or hate Columbus Day, not getting any of that, just talking about from a pure technical sales standpoint. He had gone through like eight different places to try to get funding before Queen Isabella finally said yes. Now, do we live in the United States of Columbus? No, we're not we don't live in North Columbus and South Columbus. We don't, there's not Latin Columbus. We live in Latin America. I mean, we live in North America, a United States of America, not United States of Columbus. And why is that? It's because Columbus did not service the account. He found, quote unquote, found the the Americas, but he didn't service it. Who did? America Vespucci. He set up the trade routes, the shipping routes, the navigation schools. He did the marketing post-closing and kept the account so much that there's two continents named after the guy. We as mortgage guys close the deal. Some of us do a good job, some of us do a crappy job. Do we get called back for every deal that our client our past clients do? No. 30% of my I'm I think I've got I've done okay at 30% of my past of my current deals every month are from past clients because I try to service the account. That's what the book talks about how to service the account post-closing. Don't be Christian Columbus. The fifth book is called Renters Make You Rich. And it's all about how building a real estate portfolio expands your expansion your financial wealth. And it's not about financial wealth growth. The book is how to finance and how to identify investment properties. So we go through loans where you don't use your personal income, it only uses the rental income from the property to qualify. So that's the kind of stuff that I talk about in that book.

SPEAKER_00 19:48

Aaron Powell Okay, nice. So what what are some things that maybe agents need to be aware of when talking to a mortgage broker like yourself? What in in your opinion, what separates a good agent from I don't want to say a bad agent, but you know, from how about from a good agent to a stellar agent? How about that?

SPEAKER_01 20:06

Aaron Powell Yeah, for sure. So I do say I know all the good agents and do know all the bad agents. So whenever someone wants an agent referral, and I make nothing out of agent referrals, right? That's illegal for a loadout for a non-agent to make money out of out of an agent referral. But I refer agents at least once a week. I I have a pretty decent consumer direct pipeline coming in. If I was going to talk to a client, and let's and since we're we're talking about VMOs of this majority of what I do, I use these words almost every day whenever I'm talking to somebody. I actually used them yesterday. A person wants to buy making Georgia, a veteran wants to buy in Making Georgia. She doesn't have an agent there. She said, Hey, do you have somebody there? I said, I do, but I not something I'm willing to risk my reputation on because I did a transaction with her and she wasn't that great. She wasn't bad, but she wasn't that great. I said, Here's what you do. So you call an agent, you research, you know, reviews, that kind of stuff, and then you ask the agent one question. And you're gonna get two different answers. That's gonna be some flavor of one of these two answers. Say, hey, what do you think about VA loans? Then you just shut your mouth and sit there and listen. They're gonna give you two flavors of answers. You're either gonna say, Yeah, they're tougher, maybe talk to your load officer about doing a conventional loan and we'll go that route. I said, if you get that person on the phone and that's the answer you get, you block their contact. If they say, yeah, VA loans are tougher, and by the way, both of those answers are wrong, VMOs are not tougher. But if you get the answer, yeah, they're tougher, but you know what, I'm gonna be on team veteran, me and your load officer, and you get you the house that you that you want. Then you hug that agent, you close the deal, and you give his or her number out to everybody you know. So that's how I I would define, you know, going from good to stellar is understanding that we need to serve the client how they want to be served. Of course, there's limitations. I mean, if their budget is two hundred thousand, you don't go show four hundred thousand or houses or whatever. But i i if it's if it's in the wheelhouse to do, it's their house, it's their loan, not not ours. Correct. That's actually

SPEAKER_00 22:00

Something that I try to I I run across often is that, you know, the the real estate agent ends up kind of putting themselves in their client shoes and and you know, oh I don't particularly like this view or I don't like this HOA or I don't whatever. And it's not about the agent, it's about the client. And if the client wants to live there and they're okay with whatever the the the glaring issues are, that's it's it's okay to point them out and say, hey, there's there's this, this, this, but it's not you shouldn't buy it because of this. It's it's ultimately the their decision and and the the agent is supposed to be a facilitator in making sure everything happens. You know, documenting everything and and making sure that they don't come back and say, oh, you didn't tell me this later, but it's it's not about the agent. And it's also not about the agent's commission. And that's that's the other thing I see all the time is agents, and I've other people say this. I didn't invent this word, but other agents get commission breath. Sure. And you can you can see it. There's that desperation. And here in California, at least over the last couple of years, I there's been more and more of that. Uh I go out and meet realtors all the time. And the ones that are doing a steady business or have some other source of income to where real estate isn't the thing that's driving them and they and they have to they have to close on this deal in order to, you know, make their car payment or their house payment or whatever. Those are the agents that the agents that aren't doing that are the ones you want to work with. Correct.

SPEAKER_01 23:25

You know, the worst thing is a part-time agent.

SPEAKER_00 23:28

I'm not gonna say anything bad about part-time agents. I started out as a part-time agent. You know, it's just because not everybody can just go all in uh all at once. You know, they've got whatever kind of financial hurdles that they have to overcome, and they have, you know, they're not always able to completely commit, which was what happened with me. But eventually I was able to get enough deals going and enough, enough of everything to where I could quit and and go into it full time and just and just run with it. So but yes, as a part-time agent, it's it's very challenging. Um you know, taking time off work to go to uh home inspection or or whatever, because it's not not everything happens on the weekend, which for the most part, when you're showing houses, yeah, it is. But then once you get into escrow, then everything happens Monday through Friday only. Yeah. You know, and you have to you have to make sure that you can you can help facilitate everything that needs to be done, especially if you're not part of a team or have have some other backup to help you fix it.

SPEAKER_01 24:21

Well the team part there is the is the the key part that you said. I was a part-time agent where I'm not an agent anymore. I I would never go back to be an agent, but I was way back in the day. And I was on a team, wonderful team. And if I could not make it to an inspection, I was active duty military at the time. So I there wasn't the option to go take time off for closing or an inspection or whatever, right? So yeah, you would just you know pay one of the other team members, you know, a hundred bucks or fifty bucks, whatever, depending on what the what the task was, and they'd cover it for you. If you've if you're a part-time agent, you've have that capability, then that's wonderful.

SPEAKER_00 24:54

I I agree, especially as a part-time agent. You need you need a team. If you're especially if you're new because you don't know what you don't know. And and including vendors and uh this is a good lender or this is not, or this is a you know, all of all of everything that you said earlier. Uh you know, especially when you're you're first starting out or you're or you're brand new, if you don't have a team, you don't know who's a good plumber to call and tell you if if the plumbing is actually good. The the inspector noted it, but now the the buyer is more curious about, well, how much is this going to cost us? And you know, if if you're just calling any random person out of the phone book, that's if they even have phone books anymore. But if you're just calling any random person off of Yelp, it may or may not be you know helpful to you.

SPEAKER_01 25:38

So I just thought of a horrible story for plumbing. Client was buying a short sale, and then you can imagine already the terrible things that happened in a short sale. And no, I'm sorry, not it was a foreclosure. I correct myself. It was a foreclosure. Client was buying a foreclosure. And they had to turn on the the water. They turned on the water, had the inspection, and one of the toilets wouldn't flush. They resolved in their head, it's not a big deal. We could replace the worst case scenario, we gotta we could replace the toilet. They move in. Worst case scenario was not worst case. They replaced the toilet, couldn't figure it out, hired somebody to put a boroscope down the plumbing drain, and the boroscope hit a wall, couldn't go any further. Okay, so then they started well, they'd already tried to, they already tried to put a snake down there. They hired they hired somebody with a bigger snake, couldn't get through it. Whenever they put the boroscope down, they found out that it was concrete. The departing resident was so bitter that they took a bag of con b quit crete and flushed it down the toilet.

SPEAKER_00 26:36

I've I've run into that as well. In in uh 2011, I worked for a mortgage company and I was the collector. And so I would I would call on the people. Every every house that I had to call on was within about a hundred mile radius of the office. And so I would call on the phone and try and get them and find out when they're gonna make their payment. And if they didn't answer, my job was to drive to the house and knock on the door and talk face to face. Also, when a house would go into foreclosure and we got it back from the courts, uh, it was my responsibility to sell it. So I would have to go in with a locksmith and then do an assessment on what's wrong with the house and everything else. And yeah, and we would see everything would be just completely gutted. All the all the cabinets gone, the you know, the bathroom fixtures are are ripped out. Uh in one case, somebody had gone through and and literally pulled all the copper wiring out of the walls. Like you could just see it running up the wall. So yeah, the foreclosures are they're they're personal to to the person that's that's being foreclosed. And and yeah, it it's a it's a challenge for whoever comes in to buy it after. Um and what I've what I've found is most banks when they when they get it back as a as a an REO, they they'll do an inspection, but they're not gonna do they're not gonna do a pipe inspection to find out, oh, did somebody you know dump a bunch of concrete down the down the pipes? Uh they should, uh, but they don't. And that's kind of a cautionary tale then as well for anybody that's considering buying a bank-owned property to make sure that you're doing a full inspection, including pipes and electrical and and whatever, because you you don't know what the previous owner did. They didn't leave on good terms, let's just put it that way. Yeah. So okay, one final question. This one, trying to think how to how best to phrase it, but uh it's one that I I hear all the time, and it's about AI, artificial intelligence. In in your world, are you encountering a lot of issues with with AI or are you seeing it like are are people adopting it? How how so? And it's a very open-ended, kind of broad question, but I I literally there's once a week here I'm I'm getting some invitation to go to some seminar or webinar or whatever about AI and how it can better your life and everything.

SPEAKER_01 28:48

So I so the joke in my favorite, I love the question. The joke in my fa my household right now it grew from what are you doing? And it was fighting with AI because uh because I'm knee deep into AI every night, developing out in the so I'm a systems guy. I'm a systems procedures checklist guy. We didn't get into it before this. I was a nuclear engineer. So you don't want you don't run a nuclear reactor without very specific procedures or very specific you know, processes and checklists. So I took that. One of the reasons why I think I get a lot of repeat clients is the clients have a relatively smooth process with me, and it's because I have the checklist to make sure nothing is dropped. So right now I'm using AI to ensure those checklists are even better than they are, and then how to implement them by my my work family. I don't call them employees, my work family can then utilize them, utilize that. So not only am I fighting with AI, I joke now that I use clawed desk, I use clawed code, that I made more mistakes last hour than I'd made all year to date. But where I hear Moorish guys, and this is a terrible thing to hear, like, yeah, I'm gonna have it underwrite bank statements for me. Whoa, whoa, whoa, whoa, you cannot put a person's borough's personal information into AI unless it's AI on your local server and you own the large language model yourself, which there are options out there for that. They're talking about just putting it, you know, putting bakes putting you know, W2s and pay stuff in chat GPT and say, hey, calculate income for me, or put put Schedule C's in in you know, anthropic, you know, in Gemini or whatever, and get so I actually created and implemented an AI policy in my company that if you use AI, the boundaries are borrowers' personal information. Absolutely use it for marketing, absolutely use it for research, absolutely use it for for anything to make your your life easier, but you can't go and utilize it for borrowers' personal information.

SPEAKER_00 30:43

Good point. I I see agents that will take disclosures and HOA documents and whatever, and they'll they'll load that in and then just it's it's only as good as the output or the input that you get. They'll just say, oh, what what are some red flags that I need to see here? And and they miss stuff because it's it's AI. It it only it doesn't know what red flags you're looking for. And I've also discovered in in more than one case, uh, just from my own use, where and and I've seen other examples of this where I've said, okay, give me some examples of real court cases that involve this topic and and it'll spit stuff out. And then I'll go and look at that court case because I that's what I do. I go a little bit further. I'm not just gonna take AI saying, oh, it's you know, Brown versus Smith. And the the court case that they mentioned isn't even exactly tied to what I was trying to talk about. And I know that attorneys are are starting to do this and they're starting to come across problems because AI just wants to make you happy and it's gonna tell you what you want to hear. And that's a that's a challenge that a lot of people are are starting to come across uh because it's not just, I mean, it does some some great things, don't don't get me wrong. And and from a systems building and financial perspective, you can load stuff up and say, hey, I've got this complex thing, figure it all out for me and and compile it into a nice neat little report for me that I could do, but it will take me four hours and you can do it in 20 minutes. So I get that, but again, it's it's it's still it's still in in learning. It's not there yet. And it and it it's definitely it's causing some problems. You know, I I think for for marketing, it's it's fine. It's pretty easy to spot when AI has, uh at least in my opinion, when somebody's just relied on AI to do a description of a house. There's some kind of telltale clues that they literally just copied and pasted it. But, you know, I I use AI to to just give me a list of who the uh the utilities are when somebody's buying a house. You know, what are who are what are the utility companies? And then I take that and then I send that to the other agent and just say, hey, can you have your client verify if this is correct? And if they do, then great, then I can just copy and paste that and and send it on to the to the buyer. Um and it saves me from having to try and sure figure out is it is this one SDGE, is it PAC GE or or whatever?

SPEAKER_01 32:56

So I like to so I've said this several times over the last month because I really I'm normally running two laptops and I'm normally running claud code on both laptops at the same time. Like right now, uh to my to my right, I've got Claud Code working on a new website for me. And it's been working for about 17 hours because it started yesterday. But what I like to say is you have to treat AI like you have the smartest 19-year-old in the world working for you. How would you manage a 19-year-old that's uh that's a genius? You have to give very specific directions, you have to expect it to try to take shortcuts, you have to expect it to talk back to you, you have to expect it to try to do its own thing. So you have to frame it what it is that you're trying to do. So let's say it was researching a uh a court case, how I would do that, uh you know, or research to find court cases, is I would, you know, set up you are you know a legal analyst. I wouldn't say a lawyer, I'd say a legal analyst. I want you to look at you know public records for from this time to this time for this topic, and then once you've done it, return that, save it in the markdown file, and then go back and review each go review the findings from that to see if it aligns with the original prompt. So you build in how to check, you build in for it to go test itself. And a lot of people don't put in the the guardrails, and a lot of people don't put in the the retesting. So for me for guidelines, so I do guideline research a lot, you know, for mortgages. So let's say I'm gonna go look at condo stuff, since we were talking about condos earlier. So I will ask a particular condo scenario and say, go to Fannie Mae. If I just say, hey, can I do this in a mortgage? If that's my prompt, is that, then it's gonna go find joe mortgage.com slash condo and it's gonna believe whatever joe mortgage.com put on this condo page. Whereas the guardrails you have set up is you can only use.gov sites for your references. Or you only can go into the 4,000, if we're talking about you know an FHA loan, you can only go into HUD, HUD.gov and use the 4,000 point one manual, make sure it's the most recent date. And then when you find the answer, give me the page number and the paragraph where it came from. So you have to put on guardrails. You have to be very specific, yeah. For whatever you do, right? And it's no different than like if you're if you're asking your spouse, hey, hand me that. You're on the ladder and you said, hey, hand me that. And really what I'm wanting my wife to do is give me, give me the hammer that's over there. But if they hand me that and I point at the kitchen, she could show up with a hammer, she could show up with a pot. She could hook she could show up with a stick of butter, right? I mean, I have to tell her what that is. So I'd say, hey, the the hammer that has the green handle that's sitting next to the microwave, hand me that. And then I'm gonna get a good I'm gonna get the thing that I want from my wife. AI is no different. You have to tell them exactly what it is it should have been for, put in the guardrails, and put in the testing, the post-retrieval testing, to make sure that it gave you what you're looking for.

SPEAKER_00 35:48

Excellent. I I I love that answer. Thank you. Well, that's really about all that I had. Do you have any other comments or questions or no?

SPEAKER_01 35:54

It was a lot of fun and uh honored to have been here.

SPEAKER_00 35:57

All right. I I thank you, uh Jason, again for being on the show. Jason Jason Sharon, mortgage broker out of South Carolina. Uh all of his contact information and everything will be in the show notes. So once again, thank you for uh uh tuning in to Disclosures and Consequences, and I'll see you on the next one.