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No Surrender with Greg Sher, Erin Dee & Coby Hakalir
No Surrender is a livestream featuring three of the housing industry's most outspoken voices. Hosted by Greg Sher, Erin Dee, and Coby Hakalir โ covering the news, macroeconomics, and political forces reshaping the industry in real time.
No Surrender doesn't just report on the industry's challenges โ it confronts them head-on. From consumer-facing crises to the nuanced, inside-baseball developments that only industry insiders truly understand, the hosts bring sharp opinions, deep expertise, and the kind of honest disagreement that actually moves the conversation forward. These three don't typically see eye to eye โ and that's exactly the point.
No Surrender with Greg Sher, Erin Dee & Coby Hakalir
Episode 6: Credit Cartel, FHA Changes, Figure & The Fed
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๐จ This Week on ๐๐จ ๐๐ฎ๐ซ๐ซ๐๐ง๐๐๐ซ:
The headlines keep coming, and we're bringing reinforcements.
Joining us Thursday will be a special guest appearance as we tackle some of the biggest stories in housing and mortgage:
๐ฅ Fighting with the "Credit Cartel"
๐ฅ FHA Premium Cuts
๐ฅ Warsh's First Fed Meeting as Chair
๐ฅ Figure's Big Move & The Future of Mortgage Finance
๐ฅ MISMO Launches FRAME AI Governance Toolkit
If you've got opinions on where this industry is headed, this is the conversation you won't want to miss.
LIVE Thursday at 1PM ET with Erin Dee, MBA & Coby Hakalir๐๏ธ๐ฅ
Hey, hey, hey. Whoa, who's that? I just told you that's unbelievable. Brendan McKay is here. What are you doing here? This is the guy that runs the BAC, the Broker Action Coalition, uh, one of the greatest lobbying arms of our mortgage industry. What's happening, brother? Good to see you.
SPEAKER_08All sorts of good stuff. Thanks for having me on.
SPEAKER_06Yeah, well, you're you're on uh about a minute before I thought you'd be on, so I'm I'm having to shuffle the deck here. Aaron, what's up? Good to see you.
SPEAKER_03What's going on?
SPEAKER_06Um, good to see you with makeup on. Um I can appreciate that very much. Um, although I will I will say this is your post, so I'm not making fun of you. That you this was a post you had yesterday. Um, you had no makeup on, but you look beautiful, natural beauty. Yeah, I'm telling you right now. I mean, this is uh this is uh quite a splendid picture of you. Um you just returned from the Ohio uh Mortgage Bankers Association. Yes, or you you and our our our uh the friend of the show, Rich Swarbinski, uh spent some time together. This is pretty good. Um, this is the four of us. We're we're all moving in together. We're just a happy family now. Me, Kobe, Rich, and of course you. Um we all know who wears. We all we all know who wears the pants in this family. Um, they're on the far left, and we're all wearing the trademark Swarbinsky vest. Yes. I'm not sure anybody's wearing pants in that picture.
SPEAKER_08I I can see why you wanted me off camera for this section of the show. This is this is wonderful.
SPEAKER_06Give us a quick give us a quick lowdown. I know that Rich was just blown away by the amount of people that came and the impact that that was seen and felt.
SPEAKER_04It was absolutely tremendous. You know, so so the first thing you have to love about Rich Swarbinski is the man never changes who he is. He rocked a Viore Vest every single day. Interviewed Bill Cosgrove on stage with that same Viore Vest. He put together an amazing lineup. I mean, he had really, really, really good keynote speakers, had had Jody Hall, Melanie Colton, a bunch of others. Uh Maurice Clarette was there, and then really good, meaningful breakouts with speakers from all around the country. I got to meet a ton of cool new people. Columbus was beautiful, the weather was amazing. I had I had an absolute blast. So well done, Rich, and the rest of the Ohio NBA. Um, Adam Rose, the outgoing president, did a great job last year. So it was wonderful. I'll be back.
SPEAKER_06Uh Bill Cosgrove from Union. Was he did he show up?
SPEAKER_04He did a keynote on Sunday. I missed it. I was in in en route, but yeah, but he was there.
SPEAKER_06Yeah, we'll we'll have to. Uh you were on route or in route?
SPEAKER_04I don't know. Whatever you're supposed to say, I'm dumb.
SPEAKER_06No, yeah, okay, sure. Yeah, far from it. Kobe, Kobe's here today. Um, we've got some things that have changed in the background. Kobe again, once now you've got a Knicks jersey hanging. I don't know what's going on there. Um, maybe I do know what's going on there. I'm surprised you're not in New York for the rally today. I thought about it.
SPEAKER_09Um, I uh was in uh did a tour of California earlier this week, and now I'm back home, but I was running around the state. Um, believe me, I wanted to get to New York for the parade. And uh um my brother's there actually. He's been sending me pictures and videos all morning long. And and uh he left his house at four this morning to go do that. Uh the FOMO is real. Uh and uh, you know, it's just been it's been a great week connecting with uh everybody on LinkedIn that knows that I'm a Knicks fan and everybody, my friends back home who uh you know are celebrating this. Um just a fun thing, a fun thing for New York. We've waited so long for it and uh some some some really good news to to revel in for the summer.
SPEAKER_06Yeah, hopefully they'll rub off on the pathetic jets. You know, the NFL season is is coming around, so who knows?
SPEAKER_07Yeah, we have a lot to cover today.
SPEAKER_06We're gonna we're gonna talk to Brendan about uh a pretty thought-provoking post he had around um credit in the bureaus, FOMC first meeting, Kevin Warsh, what do we think? Veteran United's uh uh survey they did, which uh you know I think is a little bit counterfeit. We'll talk a little bit about that. Uh figures deal. Uh you know, the PLS market continues to gain amazing steam, the FHA fund MISMO frame. And then we'll also talk about the housing bill, which we think is going to pass here in pretty short order and what's inside of it. But before we get to any of that, we've got Brendan on who um earlier uh this week or last week rather um had a pretty uh straightforward post about the three credit bureaus and um how they continue to raise prices while offshoring much of their workforce. Uh Brendan, great to have you here. Uh tell us about why you made this post and what is the point you want to drive home.
SPEAKER_08Yeah, absolutely. Thanks for having me. I mean, I I knew it would be new information uh to people, not exactly shocking, uh, that you know the the credit bureaus are interested in their bottom line and no one else's. They have no interest in you know coexisting in the ecosystem uh within the mortgage industry at large, and and as such, don't have a huge amount of interest in existing in the American economy at large. Um, I thought the numbers were absolutely shocking. I think attention should be drawn to it. And I knew it would get a lot of attention. Um, when I realized this was the case a couple months ago and we started working on it and putting all the numbers together, um, which frankly we were incredibly favorable um with. I think the real numbers are actually worse than this. Um they're they're two years old, and and we when whenever there was uh like a number like 5,000 plus, we gave them credit for 5,999 and things like that. Um, but they're turds. Uh the credit bureaus have consistently taken complete advantage of a privileged position that they have. Uh they're an underrated regulated, uh government-mandated monopoly, and they act like they're in a free market, and I'm gonna continue drawing attention to their awful abuse of this privilege until something's done about it, which is hopefully sooner than later.
SPEAKER_06So, what what made you tackle this? You just wait, why was this in your crawl? Was there any one particular thing that happened that made you shed light on this?
SPEAKER_08No, I mean, well, uh I'm coming to the realization that this was the case, um, but no.
SPEAKER_06His wifi's in growing.
SPEAKER_08Um I I've I've made had a couple years of treating the credit bureaus like a pinyata that I feel like they should. Um they uh trigger leads was what started, you know, uh their behavior that pissed me off in the first place, um, and I thought was completely unreasonable. Um, and we've addressed that problem. But the more every time we dig into something that they're doing, uh the worse and worse that it is. And I think like any bad behavior to this level should should be highlighted.
SPEAKER_06All right, so you your your beef here is that Experian has 73% of their workforce overseas, Equifax 62, and TransUn 42. You think that this says something about their commitment to America? Sure.
SPEAKER_08Yeah, absolutely. Um, and and I recognize they're not alone in moving uh employees offseas, but I think when you look at it in in the in the uh through the lens of the fact that the United States government has essentially mandated that they're a monopoly or oligopoly, yeah, like uh the United States government sure as hell is treating is treating them real good and creating a a business environment that everyone would kill to have. And what do they do in return? They move all their workforce overseas. Um, I'm not a big fan of corporations moving their workforce overseas in the first place, but I think that if if they're gonna get their back scratched to the degree that they have by by by regulators, um it's the least that they could do to create some American jobs, absolutely.
SPEAKER_06Kobe, what are your thoughts on this? Is this something that we should be upset about?
SPEAKER_09Um yeah, something something definitely to be upset about. I mean, you know, look, trigger leads to me, and and I'll push back a little bit on you, Brendan, just in terms of where to spend political capital, trigger leads was a huge thing, right? It was a huge nuisance to borrowers. It eroded the trust of the industry. Uh, it created major headaches for lenders when when they started pulling credit and customers are getting bombarded. Um the uh I know that there's talk about the $540 cost from the CHLA. I know that um you spent, based on the article that I read, $5,000 in one month on credit reports. But is this where we want to spend political capital or are there bigger issues that the BAC should be tackling?
SPEAKER_08Uh, there are bigger issues, um, and we are tackling them. Whether we're making as much public noise about those issues or not, um, it it can be two different things. Um, because we're fighting multiple battles at the same time. Like we are fighting a bunch of battles on a lot of different issues on Capitol Hill. We're also fighting a battle for attention within our industry, largely online. And it and we think about uh what we're gonna make the most noise about, not just about what the most important issue like, uh, but what is an issue that is also something that we think we can make movement on, right? Like uh there are a lot of issues that we we are focused on or paying attention to that we think are losing battles at the moment, or that we don't think is gonna get a ton of attention online, right? So we're considering all these things at the same time. And uh uh so to your point, I was having a conversation um with a colleague about how out of control the cost of title insurance has gotten and how much worse that is than the cost of credit. And I'm like, you're absolutely right. We have made noise about this in the past, and we could be sitting over here in a lone voice uh off in the corner, spouting off about something no one else is paying attention to, or we can ride a wave of the fact that the credit bureaus have been getting the crap kicked out of uh uh uh them of them by the rest of the industry for the entire time and join a conversation that's already happening and bring uh new information or unique perspective to it. Um, and there is a strategy approach to that, undoubtedly. Um, but no, is is uh getting credit report costs down gonna fix the you know housing affordability crisis overnight? No, and no one thing is, but I agree it's not the most important thing in it, but but it's a problem that needs to be solved, no doubt.
SPEAKER_06Aaron.
SPEAKER_04I'm so glad that you brought this all of this up because I know that sometimes uh you know in DC there there can be a difference between brokers and bankers, and we can be at odds. But I think this is something that we all agree on and that we the that we can all fight for. Because at the end of the day, FICO's increased prices and the CRAs have increased prices, they've all achieved higher revenues. And the only person who is losing in this is the consumer, the American homeowner who is now paying however many times or percentage higher, whatever number you can pick, is it 500%, is it 15%, 1500%? They're paying more and they are getting absolutely nothing in return for those higher costs. And so one of the things that interests me about what you put out is talk getting Congress to act, right? And so, what are your thoughts on trying to get Congress to treat the the CRAs more as utilities who would have a mandated cap on what their ROE could be because they are mandated? We do have to use them. We have to use all three because the data all three have individually is such garbage. We have to use all three together. Um, what are your thoughts on on something like that?
SPEAKER_08So I think there's two ways that you can go about it. And and and we always want to present both options um because you know we want to be careful about throwing around um regulation. Um it's a big scary word in our industry, as well as with um one of the political parties in DC. And the two options being either open up the market and allow other data aggregators to become credit bureaus, set the bar very, very high. Um, but but that is possible, um, or keep it closed and regulate it to your point, just like the energy providers. Um, and uh Senator Josh Halley um is is you know going down the antitrust uh path uh with FICO. Um and we have had conversations with their office about, you know, yes, here's the problem with FICO. By the way, uh they're probably the second biggest asshole in the room when it comes to this kind of stuff, and the credit bureaus um might be worth looking into as well. Um, so that is the if you're talking about actually solving the problem, that that it that is what who is the first asshole in the room?
SPEAKER_06Is that the bureaus?
SPEAKER_08The three-headed monster of the credit bureaus.
SPEAKER_06Interesting. I I find it interesting that you have it in that order. I have it in the opposite order. I mean, I I I mean that the the price that the price the price increases start with FICO and it starts to roll downhill from there. Maybe I'm missing something.
SPEAKER_08You you sound like you're reading right from like one of the credit bureau's uh uh press releases when they're increasing costs.
SPEAKER_06I mean, I'm just talking, I'm just talking facts. Where does it start? It starts it starts with FICO, doesn't it?
SPEAKER_08You I you could say it starts with FICO. You could also say the credit bureaus have been using FICO as coverage um and completely throwing them under the bus and and beating the shit out of them in a PR battle um over the last couple of years, which I think has happened. Has FICO been increasing their costs more than I think is reasonable? And are they also in a privileged position as a monopoly? Yes, absolutely. And is the percentage increase massive? Yes, absolutely. When you're looking at raw dollar amounts, uh the majority of the bloat, at least according to CHLA's white paper from a couple years ago, does sit with the credit bureaus. So that is the reason. If we're talking about actual dollars coming out of my bank account or the American consumers, I think I think the credit bureaus are the larger problem than FICO. But if you're right, Greg, as soon as Vantage is fully implemented in the market, like we're gonna see $60 credit reports if that's the case, right? Like the credit bureaus are the ones that own own own vantage, so they should, and if FICO's the problem, we're gonna find out really quick um it what what what the actual truth is.
SPEAKER_09Brendan, where where does the uh what's the path to the fix? Because you mentioned Josh Hawley and an antitrust suit potentially, but isn't this something that soon-to-be former acting DNI Bill Poulty could remedy if he wanted to from a policy standpoint?
SPEAKER_08Yes, absolutely.
SPEAKER_09Um so why so why why do we need to go to Congress? Is it just the political pressure that Congress can deliver? But do we need that?
SPEAKER_08Uh no, you don't need it um necessarily. Um but uh do I uh I approach this and I'm incredibly proud of the work that the back has done in a short period of time, but I also recognize um that we're not the Mortgage Bankers Association. And are they gonna do things simply because we asked? No, uh maybe, but like I would rather put as much pressure from as many different angles as humanly possible um to solve a problem that large. I mean, what you're talking about, uh, for example, FHFA saying, okay, credit bureaus, we need to re rework this system or else we're gonna open it up and put some contracts in place and this and that. They're not, I I and I don't know that it would necessarily be reasonable for them to do that um on, I don't want to say a whim, that's way too um, you know, uh casual. But to do it without serious thought or consideration or Congress pushing them in that direction, um, I think I think there would it be some appropriateness to it, even if it was in the form of them sending formal letters rather than actual legislation and things like that. Um, but it's more of just a strategy of getting as much pressure as possible.
SPEAKER_09Do you feel like you're aligned with the MBA in this?
SPEAKER_08Yes. Well, I don't want to speak for them. And and I almost wanted to, you know, when when Aaron mentioned brokers and bankers not always being aligned in DC, I would actually push back on that. Um, I had drinks with Bill Kilmer on Monday, um, in fact, and we I am in regular communication with the MBA, and we're on the same page the overwhelming majority of the time. I think the division between bankers and brokers is largely something that um what was real a couple of years ago, five, six years ago, and now is just perception hasn't caught up with reality, at least in in Washington, DC. And my message to brokers all the time is like, we need to be aligned here. It we should be aligned everywhere. I would love everyone to knock it off on social media, but when you're in Capitol Hill, you've got to be on the same page and we don't throw anyone under the bus. Um, but on exactly what uh the path forward is, I think that we would have uh some different, like uh uh different exact ways of going about it, but we all agree that that this is the root problem. I mean, uh, you know, Bob is throwing around terms like oligopoly and things like that too. So I think when it comes to the big picture stuff, yes. Are they out there saying either open it up or regulate it like I am? I'm honestly not sure, but um, but I don't think they'd be like that's a crazy idea either.
SPEAKER_06Aaron, you want to jump in here?
SPEAKER_04Yeah, I mean, I I'm actually really glad to hear you say that because I agree. And I think, especially from a legislative and DC perspective, different business models, we still have the same issues that we need to address. And so I I love that. That's fantastic. Um, so we talked about regulation, right? And I I agree I'm not a fan of regulation. I uh but if we're gonna be forced to use them, I think that's an option we have. What are your what are your thoughts on some of the other non-regulatory ideas that have been thrown out there to address the problem?
SPEAKER_08Sure. I so I think if you're talking about whether it's single bureau polls or are the back is pushing, uh making credit reports portable, um, just like appraisals, um, I think they are uh more than a band-aid solution, but they're not a total solution to the problem either. I think they improve things and start moving a conversation in real ways towards uh uh uh towards the actual solution, but they're not gonna solve it in and of itself. Um, we are supportive of single bureau. I recognize that there's valid criticism of it, um, but I do we do think the back thinks it's a net positive. Um our energy is focused on when it comes to more medium-term uh improvements, making credit reports portable rather than driving the actual cost of reports down, just reducing the number of wasted polls that are happening so that the cost goes down in the aggregate is something that we're pushing very much and working on talking to FHA about FHFA about. What is the reason why go ahead, Aaron?
SPEAKER_04So so I think you're right. I mean, some of the ideas that single poll, again, it's got its critics, it's got its its its proponents, but I think what is happening is the conversation is being pushed forward. We're now talking, you know, can we can we leverage Fannie and Freddie don't even use the score, it's just if used for pricing. Is there a way that we can leverage the internal analysis by DULP? Or can we look at cash flow underwrite, that kind of thing? And so I do agree with you there. We're getting some some interesting ideas thrown out there. Some are better than others, but it's the conversation is that we're having we weren't having two years ago.
SPEAKER_08100%. I think obviously D U and LP have some sort of uh uh behind the scenes, you know, risk. Like there's there's there's shades of gray that are happening back there. Um, and I think uh what are three of them?
SPEAKER_04Are there are at least 50 shades of those?
SPEAKER_08Okay, I expect that from Greg, not from you.
SPEAKER_06Um you don't know Aaron D. Buckle up, buddy, buckle up.
SPEAKER_08I I think it would be a good thing, but and it essentially eliminates FICO or vantage from the equation. But as you know, I and and and I all of these things would move the needle in the right direction, but would it really solve the root problem that we're talking about here that we have an underregulated oligopoly happening, uh government mandated? No. And like there's counter-arguments to all of this. It's like, well, if you're going to reduce the revenue that bureaus are getting, they're just gonna raise the costs in response. And my response to that is is twofold. One, I reject it on the premise because you're taking a a free market argument and applying it to a situation that's not, right? So, but secondly, I'm like, okay, like I don't want to say good, but kind of good because the more they raise these costs out of control, the more pressure that gets put on, both socially and politically, towards what we all seem to agree as the actual solution to the problem, and that's where we want to get.
SPEAKER_06Well, I'll tell you what, Brendan. The portable credit report idea is a great idea. There's there is there is no reason of all the ideas that have been kicked around, uh, you know, there's only one reason, actually, that I can think of why while this wouldn't happen. And it's it's all the money that's flowing in every direction. Why should a consumer have their credit owned by another entity and have it you know be charged every time they want to ring that bell? I mean, if anything, it pushes them against uh competition, right? Because how many times do they want to get dinged every time it happens? Someone's paying a price in some way. Um, but aside from that, there is progress being made. I mean, there is if the advantage score is out here now, it's probably it's too early to tell the impact that it's gonna make. But you know, um there there has been progress, and I think it's a wait-and-see game now to see how it gets adopted. And and you know, as far as Poulti's concerned, what you know, he came out, and maybe all of this is for not anyway. Maybe we're just wasting a lot of time because when he came out and announced that vantage score was live, him and Secretary Turner at Fannie Mae headquarters, I don't know, it was probably two and a half months ago or so, he did throw in a comment there that with AI uh making the strides that it is, that there should be another better way. And so you you would have to think that we're gonna uh reach a time where this isn't as costly, and there is there are easier ways, and maybe it's not under the control of these companies anymore. It it should be really, really interesting as this develops. Any any parting thoughts from you, Brendan?
SPEAKER_08Yeah, on on vanage quickly. Well, I don't think it's Going to bring the cost of credit uh down, I think, or credit reports down. I think vantage entering the market is an overwhelmingly positive for much bigger reasons than credit report costs. So um I'm I'm of the opinion that uh especially when FHA um has vantage, it will turn some people who could not get qualified um for mortgages into homeowners. It will turn some FHA borrowers into conventional borrowers, and it will um give some conventional borrowers even better terms than they had previously, right? I'm not saying Vantage is better than FICO, but it is better for some consumers, right? And if also if that if I'm right about that, I think we're gonna see uh a big uh opportunity for refinances. Um, once Vantage is live, anyone that does any relevant amount of FHA business should be sending out uh an email to their entire past FHA database and saying, hey, there's a new scoring model out that may be more favorable for you than FICO was. Why don't we take a look, do a soft pull, um, see if it's helpful for you? Um and I think there's gonna be a massive amount of opportunity for refinancing those eligible bars from FHA ones into conventional ones. So I and I think bringing down the cost of homeownership and making people homeowners that wouldn't be otherwise is a much bigger deal uh than bringing down the cost of credit report, something that I'm also incredibly passionate about.
SPEAKER_06Amen. Amen. And later in the program, we're gonna tackle uh FHA delinquencies and a rising number, Kobe says is conflated and he will bloviate. Brendan, thank you, my man. Great seeing you.
SPEAKER_08Appreciate you guys. Thanks for having me on.
SPEAKER_06Yep, keep advocating for the industry, man. You do you do incredible work. Thank you very much for all you do for all of us. Appreciate y'all. All right, brother. See you later. All right, let's jump into the FOMC meeting. The first one Kevin Walsh ran. It was a lot different than the ones that we're accustomed to. Here's just a little blurb from yesterday's meeting.
SPEAKER_00I heard was the kind of humility that I think we should have. I did not submit a uh a dot. For me, it's not helpful in the conduct of policy. I suspect by year end, as I mentioned in my opening statements, there'll be a review about communications broadly, press conferences, dots, uh meetings and the like, transcripts, minutes. This will be part of that.
SPEAKER_06Loved it. Loved everything about yesterday's uh presentation. It was short, it was sweet, it wasn't forward-looking. Let's be honest, every time we see a dot plot, every time there is forward-looking whatever, it always gets adjusted anyway. It's like a weatherman trying to see if it's gonna rain in six weeks. It's just impossible, right? So I liked what he did. He's got a task force, which I know you're gonna focus on here, um, Aaron. Is there anything that you didn't like about how he presented himself yesterday? And then we should get into it contextually how that compares to what Chairman Powell uh did over many, many years. Aaron, you get first at bat here.
SPEAKER_04I generally really liked what he said. I thought, I thought, you know, he came out with a, like you said, he was short, he was concise, he wasn't overly combative with at the presser. I thought he answered questions reasonably. I thought he was fairly open in answering questions. I mean, honestly, the only thing that I didn't like about it is he's changed the flag configuration behind him from how J Pow was. J Pow had the US flag, the Fed flag, the US flag, the Fed flag. This time it was like each on separate him in the middle. So, you know, that was another big contrast that that I saw. But generally speaking, I liked it because it shows that he's being thoughtful. He's not just trying to do things the way they've always done it. Obviously, you know, the devil's going to be in the details, but I like that he's looking at re-looking at how the Fed operates.
SPEAKER_09Yeah, I don't trust this guy. I don't trust this guy. I mean, you know, we we we know who appointed him, we know he's like Estee Lauder's grandson-in-law. So this is like a Trump family pick from day one. Um, you know, he had no choice but to say what he did yesterday. And I think the fact that he's going to put out less forward-looking views, of course, things change, but you've got to put some signal into the marketplace so that the market can have a reaction so that we can, you know, kind of digest that information and then a reaction or an overreaction?
SPEAKER_06Because that's always what we get.
SPEAKER_09Well, uh, we, you know, we don't always get an overreaction. We've gotten some overreaction from Powell. Um, but we had we had one of the strangest markets anybody's ever had in the history of markets with uh with the pandemic and then the post-pandemic surge.
SPEAKER_06Um if you go if you go back through the notes, there have been instances where Powell moved the market, okay, when everybody was saying rate cuts were coming, and and Trump was even saying it, he went to great lengths on that same stage to say, you know, not so fast, literally said, I wouldn't count on that. Like that's he's not supposed to be interjecting those. And that moved the market, by the way. The market went down considerably on the back of those words. I don't suspect that Warsh is gonna do that kind of thing, Kobe. And I know I cut you off, but let me continue. Let me let me let me don't be mad at me. Are you mad at me?
unknownI'm not mad at me.
SPEAKER_06You're not mad at me. I'm not mad at you.
SPEAKER_09Aaron are his feelings hurt. Should I be mad?
SPEAKER_06Well, I mean, your first your first comment really really takes me aback a little bit that we know who appointed this guy. I don't trust this guy. He's Estee Lauder, this or that.
SPEAKER_09I mean, we know his past.
SPEAKER_06Yeah, well, his past is extremely hawkish. So yesterday he yesterday he seemed to be yesterday, he seemed to be himself. Why would he come out knowing how the midterms are coming up, knowing the direction things are heading in, it's not a good one for Republicans. Why would he waste any time? Why did he have to say what you said? You said he had to do this yesterday. He didn't have to do shit. He could have come right out and said the things that you uh obviously think he's eventually going to say.
SPEAKER_09Yeah, I and I think he will. And and and what worries me most about this pick is not what he's gonna do under the Trump regime. He'll do he'll do under the Trump regime whatever he can to implement the policies that he's ex he was expected to when they brought him on the job. The the two questions I have are what kind of consensus can he build with the board? Number one. And number two, what happens in a year and a half when the Trump presidency is over and he's still the Fed chair, but now he can go back to the way that he used to run things back in 2011 or the way they used to act in 2011, 2012, 2013. So what kind of what kind of warsh are we gonna get when this current presidency is over? And what kind of consensus can you build, especially with a board that still has Powell on it?
SPEAKER_04But wasn't it 12 to nothing? Like wasn't the vote 12 to nothing unanimous?
SPEAKER_09This is yesterday. What I'm what I'm what I'm talking about is what's going to happen going.
SPEAKER_06Yesterday was very yesterday was very divide. Yesterday was very divided. I don't have the exact stats with me, but there was nothing.
SPEAKER_02Oh, I don't know that I'm wrong on that.
SPEAKER_06I thought that I thought that's yeah, Aaron, pull it up while we're talking, if you would. Yeah. Um, but um Kobe Brian. The vote was unanimous. No, there was there there was there was unanimous what? That there would be no right.
SPEAKER_03They all voted for all voted to say.
SPEAKER_06No, I understand that, but there were positions in terms of who thinks dot plots and projections, and people who thought there would be two cuts uh, you know, at this period of time this year, and some thought no cuts, some wanted cuts. That's what I'm referring to. So yeah, unanimous that there wasn't a cut yesterday, yeah. But I mean there, but it's inside that room based on that, the numbers I just talked about, which aren't precise, but it's it's I think you want a divided room. You want conversation, you want a good, strong dialogue. We are definitely at an inflection point, but I just find it so interesting, Kobe, that you are worrying about what's gonna happen when Trump's uh regime is over, when we have a lot hanging in the balance today. I'm also surprised, you know, I feel like this is just a red-blue thing with you. Like I'm I'm surprised that you don't like you, you're a very orderly guy. You like things very, you know, in their place. And for him to come on like that and not bloviate, we know who the the number one bloviator is in the history history of blow bloviation, by the way. That's Donald Trump. You shared that with us last week. But in all seriousness, I mean he came out very in control, right? He could have sent the market spinning in one or the other direction yesterday. He did he, if anything, the market tightened a little bit. We lost considerable ground, I believe, in the bond market yesterday because of that. That's not Trump-ish S. That's not good for Trump. So I'm really surprised. Maybe, you know, maybe talk to your therapist about whether you're just sticking to the red lines there. I don't know.
SPEAKER_07He said that was incredibly nuanced.
SPEAKER_04When someone asked him if they thought current policy was was restrictive, he he got nuanced. He said, in housing, I think it is overly restrictive, and in other areas, probably not, right? Which I thought that was a very interesting way to delineate. And I think when we get these these task forces, like I'm a super nerd, and like when he mentions that they're gonna look at the data because the data that they see is an echo of a of the past, he's acknowledging that the Fed is acting and making decisions on data that is not timely, not relevant anymore. And and I immediately, when I heard that, texted Danielle Di Martino Booth, and she's pumped about that too, because we've got to be using alternative data sources that are far more timely. And so if if one of the the outcomes of Warsh is going to be that the Fed starts to look at better data, that's a win right there.
SPEAKER_06Yeah. Kobe, did Pal do a good job? No.
SPEAKER_09No, pal, pal, well, for for some of the reasons you you delineated, you know, he was he was overly reactive. He uh he made it personal at times. Um, he he he thought he was bigger than the job itself at other times. Um, you know, towards the end, it was a complete disaster where he just decided to go to war with the administration because you know Trump was picking on him, even though he was a Trump pick. Um it he didn't do a good job. My my worry about Warsh is, you know, yeah, he's saying the right things now. He he he's he said repeatedly in that press conference, he used the term strictly independent as far as the Fed goes. Um, so if you if you look at what his words were yesterday and the things that he signaled, was that uh something that I could say, okay, I can I can accept that? Yes. And my point wasn't to tear him down for what he said yesterday. It's more I still don't trust the guy. I don't trust the pick. I don't you don't trust his boss, you don't trust his boss, and I and I don't trust his boss, correct? Yeah, that's really what it is, right? That's not that's that's part of it. That's part of it. And I but I think but I think anybody that was going to supplant Powell was going to be the pick of his boss and would have would have elicited probably the same reaction from me.
SPEAKER_06Yeah, and so Trump, you know, we're we're not focusing on his words at all, but maybe we should be, because yesterday what he said was basically whatever. Right? So it like how long until he starts like slamming this guy, and that I think that we there there should be some kind of a bet in Vegas on it, you know. I I think as the midterms approach and the press and the pressure ratchets up, like there's got to be like the predictions market's gotta be saying, you know, when is the first time Trump is gonna rail on his his you know handpicked choice? Because, you know, pal was his choice too. Let's not forget that. So to your point, Kobe, but I think it starts up there. I don't think it starts to, I think for all that that he's accomplished and how hawkish he's been, and and look, he didn't like uh Warsh didn't like the he didn't like QE. He didn't like that last tranche, which basically, you know, locked up, it was very bad in hindsight. Now, granted, it was on the backs of a once-in-a-lifetime pandemic, so pal was just doing what he thought was right, not taking anything away from him, but at the time he said it was unnecessary, that we didn't need to do that. So I really don't want to impugn the guy. I want to give him a shot. I'm not saying you do. By the way, before we move on to the next topic, Brian View, our good friend, um, wants to know if that's Spike Lee's jersey back there behind your shoulder looks like an extra small. Um not sure what's going on there. Any feedback on that?
SPEAKER_09Um, it it it's uh it's really just a perception thing. It's not a tiny jersey, it's just about 15 feet behind me. Uh, but that's uh Josh Hart's jersey, uh, who is probably the heart and soul of the Knicks and one of my favorite players. And same number that John Starks wore back in the 90s. So it's a very special number for Knicks fans.
SPEAKER_06Oh, excellent. Uh, we've got we're we're gonna start to read some feedback here. Normally we don't do this that often during the show, but we'll take a couple of breaks here and there. Um Iris Selwyn, the market needs to hear what the Fed is thinking. We do need to hear forward thinking. Task forces are good, yes, but more volatility will occur without the updates. Interesting, uh, contrarian take to what I said, Kobe. It seems like you might agree with that a little bit more than I do. Uh Margaret, huh? Smart guy.
SPEAKER_07Iris, okay.
SPEAKER_06Oh, there you go. Uh, Margaret uh Templeton, there are no guarantees elections have consequences, or so I have witnessed. Sorry, I've been told. Okay. All right. Well, let's uh let's look at another thing we've been told. This is really controversial in my eyes.
SPEAKER_09Uh, not one one one one thing though. I do want to I do want to give a shout out to Brian View. I know he watches us every week. He is a big fan of the show. Uh, and I even forgive him for actively rooting against the Spurs when we went out to watch the game together last week. So um what's that?
SPEAKER_04He actively rooted against the Knicks.
SPEAKER_09Not he did, yeah. So I I do I do forgive him for that. Still much love to B V.
SPEAKER_06Yep, he's one of the he's one of the great guys in this business. Uh, we'll be talking about him in just a little bit as we talk about uh frame, which is you know probably the most important uh white paper um that we've seen in many, many years coming out of the NBA. Uh, but we need to talk about a lot of other things. And this thing really got to me this week. Um, this is uh Veteran United survey, okay? So Veteran United did a survey uh surveying 400 people, half of whom were veterans, asking would this population of 400 people be comfortable with an end-to-end mortgage experience, no human involved. And uh basically their findings were that 53% of the people that were surveyed said, yeah, that's what we'd want. We'd want a uh an experience and we'd be fine with an experience that did not involve a human. And um definitely I took exception with this because what happened then, uh ladies and gentlemen, is everything started to hit you know the headlines. You know, this is just one little Google search. More than half of buyers comfortable with AI-driven homebuying, more than half of buyers saying they'd purchase a home without human help. Home homebuyers now trust AI at every step of the biggest financial decision Veterans United survey finds. So, you know, why does this bother me? Well, first of all, it's a very small population of people. It's 400. And so for this to be painted with such a broad brush, and I don't blame Veterans United for that aspect, right? The the news feeds picked it up and they just run with it as well. But 200 of the people, 50% of those surveyed are veterans, and and it's it is a fact that veterans are much better with tech than than uh civilians. It's just they they even mention it in their survey. So that's skewed right there. And then some other bits and pieces that I found fragmented that didn't really hit the mark. 36% surveyed were 18 to 34. So I mean, if you're my son is 16, if you asked him about this, he'd have no clue. 48, 33 to 54. Okay, that seems like in the groove there. 16, 55 and older, 68% were repeat buyers, but only 32% were first-time homebuyers. Shouldn't we be talking to first-time homebuyers? This is a very forward-looking thing. So I feel like it was I feel like it's not not a real uh true indication. And and and it's not that I'm against it. I think we're gonna reach a day when there potentially the majority of consumers are gonna want to do it this way, but it's not today. And so for the message that sends to LOs, um, the the competitive advantage in a very sneaky way that it gives Veterans United perceptually because they are heavily direct-to-consumer, I I I see I have problems littered all over this. Aaron, enough of my rant.
SPEAKER_04Yeah, I, you know, I Kobe and I had the opportunity to meet a very nice gentleman uh at Chairman's named Adam, I believe, from Veterans United. So I'm I'm sure he'll have some feedback for us on this. But you're right, it's a limited study. And if you look at the totality study that was released in April of this year, it shows very different numbers. It shows that 55% of home buyers prefer to work with a human. It said that 44% would would pay extra to have that human in the loop. And it's showing declining numbers of people who have trust in AI throughout the home buying process. And there's lots of other stats I could rat I could rattle off. So if you want to get a true feel for where consumers are, the Cotality study is is a much more comprehensive, large scale, and I I challenge people to look at that when looking at the veterans numbers.
SPEAKER_06So do you buy the survey, Aaron? Yes, yes or no? Are you do you do you think the survey is good, is indicative of what the market feels, or do you feel like it's misleading?
SPEAKER_04I think it's misleading if you're representing the market as a whole.
SPEAKER_09Okay, thank you. Kobe? Yeah, I mean, several problems here. Um, and you know, anyone who follows me on LinkedIn knows that I I talk often about controlling the narrative and how we need to be the ones in this business telling the story, uh, being honest about what the problems are, being honest about what the advantages of homeownership are, what the mortgage process looks like. Um, I have to say I'm a little disappointed that a member of our community, a mortgage lender in our community, put out a survey with such a small sample size that that was actively trying to get this kind of uh news media and earned media attention. Um, 400 respondents, some of them of the respondents that you didn't notice, uh or that you didn't note in your rant, um, said that they were at least almost three years from buying. So these were people that were not even in the market now and may not be for another few years. And if you're three years from buying, you might as well be 30 years from buying because it's just something that's in the future that you're not thinking about at this moment. Um, the totality study, not only is that 55% number, but it was up from 46% a year earlier. So the trend is going towards people wanting a human in the loop and at least that human off-ramp. It also fell from 14 points from a year before, it fell to 16%. Um, the number of people that would uh that trusted AI to find a home, and the number of people that would pay extra to have a human in the loop actually went up as well. And that was a study that was across four different countries. So the sample size there was much bigger. Um it's uh in that study as well, only you know, the the 53% said they would feel comfortable, only 25% said they would feel very comfortable. So, what's the distinguish between comfortable and very comfortable? Very comfortable to me means I would actually action on it. Comfortable means like, yeah, I'd take a look at it. Um, you know, it it's it's uh the fact that we're talking about it today and it got that much attention to me um shows that you know we've had a visceral reaction to it. I think the mortgage market has had a visceral reaction to it. I think everything's pointing to the data being uh you know shaky at best. Um, and I think we need to do a better job of uh of being out there combating this sort of misinformation. So I I I do like Veterans United as an organization. I do like the gentleman that we met last week, but uh they're off the mark here.
SPEAKER_06Got it. Is it's is it brilliant marketing though, the fact that we're talking about it and that it's and that they got what they got? Yeah, great job.
SPEAKER_02Yeah, it got a share rant.
SPEAKER_06Yeah, it's misleading though. It's uh it's it's interesting. I mean, I love marketing. It's that is that is at the root of who I am, um, a marketer for sure. So uh yeah, all right. Well, I think we've we've talked about this enough. I mean, I think it's it's it sends the wrong message, it's irresponsible, but I understand why they did it. I just think that anyone, you know, if there's a takeaway here, it should be that when you see surveys, you know, look into it, consider the source, look at the numbers, look who's paying for it. I mean, there's the the United Wholesale uh mortgage survey that said that when dealing with a broker, you save, you know, 10,000, whatever amount of money over the life of the loan. You know, turns out we we know no one sticks with the loan for the life of their loan. Um, you know, it was literally pennies on the dollar, yet they threw out this huge number and and tried to rally uh the broker community on it. And again, they you know, they paid for the survey. So just consider the source would be would be the big point. Uh Tom Anderson says misleading, not surprised. Veterans United should be more concerned with their class action bait and switch lawsuit. You know, I didn't want to bring that up. Um, but yeah, I mean, they they are in, you know, they're they're in potentially hot water. The the accusation there is that they have represented being part of the government and uh have duped people into getting some of their loans. Um, all right, so let's let's pivot into figure technology solutions, traded on the NASDAQ, acquiring Chiavi, an AI-powered lending platform for residential real estate investors, and a $717 million deal. The deal adds roughly $7 billion in annual first lien volume and $100 million in monthly flow to Figures, blockchain-based, democratized, prime tokenized asset marketplace. Aaron, I know you're all over this. Why does this deserve our attention in the mortgage business?
SPEAKER_04Well, first of all, I'm a fan of what Figures done, right? In the in the second lien, the HELOC space, they're, you know, they're doing first link HELOCs as well, but they're doing it all on blockchain. They are doing it fast, quick, efficient. They've got a great securitization platform down. And so on the surface, it's like, okay, well, now this is expanding their first lane business. Uh Kiavi has is does a lot of the the flip uh fix. And flip product. They have a really cool AI valuation that is able to look at valuation post-renovations. That's pretty cool. But there's two other things happening in the market right now that I think this spells good things for the greater securitization market. So this just kind of shows you where the PLS market has grown over the last few years, non-agency. And this is what I think is really cool about this. So the first thing is with Fanny and Freddie, we're seeing their credit box shrink, right? Second homes, non-owners, cash-out refines, condos are about to become much smaller part of the GSC business, right? And so uh yep, yep, it's exactly, exactly, right? And so we're seeing that credit box shrink. And so you're going to start to see more people that need to go outside the non-agency market. Um, and the other thing is the SEC is currently revising the Reg A B rules. And without being too technical, basically after the great financial crisis, Reg A B required um public disclosure of all of this loan level data to do um to do mortgage-backed securities that basically killed that market, except for the private side, huge and huge institutional investors. And so we lost a big part of our private label market because of these disclosure requirements. The SEC is currently revising those and looking to make it so it we don't have to disclose all of this NPI for these borrowers on a public website. And if we can do that, we're gonna bring back a ton more players into the non-agency securitization market. And so I think that market is prime to take off. And I think from there you have even more innovation. Can they do different things with appraisals, different things with credit reports, different things with income and asset verifications? And so why I like this acquisition is is figure has built this platform on blockchain. It's very efficient, and so I think this could be the start of us seeing a resurgence in a much higher burden, a much higher numbers than what you're seeing here of that non-agency market. So something to watch. I could be pie in the sky, but I think it's interesting and cool.
SPEAKER_09Kobe, what are your thoughts on this? Well, first of all, for 717 million, they they could have signed Shoe Otani. So I have some questions about the uh the acquisition. Um you know, I'm I I have to admit, I'm I'm and I don't often admit this, but I'm a bit over, it's a bit over my skis here with with talking about blockchain and tokenization. It's not something I I've I've tried to study up on it this week, getting ready for this conversation. What I did get out of it, and Aaron, you seem to have a good grasp on this, is you know, we're we're heading towards an era where, and this may also work towards credit report portability for borrowers, we're heading towards an era where where data is is more nuanced, data is more secure, data is more controlled. Um, could we be getting towards um this this this real personalization of lending products for consumers because we know so much about the valuation, we know so much about the area, we know so much about the borrower, and we can actually put all of that data together and create special specialized loan products that have just the risk, it just just is minimized and minimized and minimized because we know so much about what we're doing and and because they're not securitized in the normal way of just large pools that have similar features, we can actually do things that are much more innovative and much more creative. I think that's kind of what I got out of this from my limited understanding. But Aaron, you tell me if I'm on the right track with this.
SPEAKER_04No, that's exactly where I love it. I I love the fact that we can that this is something and it and it kind of goes back to the conversation we had on Bitcoin the other day of like we need to bring more innovation to this market. The the the economy and the borrower profile today doesn't look like it used to. And our our industry has got to adapt. And I think this is a good step to that.
SPEAKER_06Yeah, so a couple things that stand out to me here. Um, Aaron, do you have a hard stop at two? Can your boss wait a few minutes if you run a little over?
SPEAKER_04He's pumping up my salespeople at our sales rally right now.
SPEAKER_06So then all right, we we we may hold you hostage a few extra minutes here. But look, um if you look at how Figure made their splash in the second mortgage market, right? Yep, Aaron, yeah. So, you know, I think that there's two things here. What you said really profound, that there's pri a lot of private money is very interested in the business, but I think it's more nuanced than that. We've used that word a lot, by the way. That is the leading word of the day, is nuanced. No, and that is there's there's I believe 28 trillion in untapped equity in this country. Um, we've got and to me, it's not as much indicative of money flowing back into mortgage as it is people seeing and feeling that rates are going to stay elevated for a long time and wanting to cash in on this, all this uh equity that's out there. You've got the uh HEI, um, which is the acronym for home equity investments. Um, you know, this is something, uh, this is a product where you share in the upside with the investor, basically, as I understand it, uh you've got a certain amount of equity in your home. These people give you money. You never have to make a payment back until you sell the loan over 10 years or 30 years, and you then have to share in the appreciation of the property when you go to sell. That's an HEI loan. This is a market that's gone from, I believe, uh 3.3 billion last year, um, six billion this year. Uh, they think that it's gonna be 20 billion in three years. So to me, the if we're looking at a real signal here, it's that there's a rush. And I know this is not necessarily figure, right? Because they just acquired, they're gonna do start doing first mortgages. They're going the other direction, but there is a real conscientious effort uh and support for money in the second lien space and to find ways to tap into that equity that people can't get to. That's my takeaway on this. Um, let's uh let's go into the FHA uh fund, which is uh around six times uh the statutory um requirement. You know, it's just hovering under uh 12. Um and uh Kobe, you've got a lot to say about this. I mean, um FHA delinquencies, if we're to believe the headlines, um they're surging 92 percent is the number we're seeing. But uh you want to point out that this is uh this number is a foul. Tell us about it.
SPEAKER_09Yeah, the um there's been a lot of talk lately in the last few months about FHA delinquency surging. We've talked about it on our show. It's all over LinkedIn, um, it's all over you know, all the different articles that we read on a daily basis. Uh and it's been used as an excuse for why we need to either tighten the credit box for FHA or why we can't reform either the upfront MIP or the monthly. Um, and the reality is that the foreclosures are up. The foreclosures are up because of uh some of the backlog from the COVID era. And the delinquencies are up because of a change in the reporting from the uh trial payment plans. The trial payment plan change now says that you have to make three payments in a row before you're considered up to date. And that's a change from where it was. And so now there's a whole bunch of people that look like they're 90 days or 60 days delinquent or 30 days delinquent where they didn't uh, you know, just before this change was made. Now, the other thing to note is that this is a permanent change to that reporting. So these numbers that are going to look like uh rolling delinquencies on FHA are all part of the reporting change. And I shouldn't say all, there is a slight uptick, but it's like 0.13 or 1.415% is the actual uptick in FHA delinquency. So the reality is that the FHA landscape is no worse than it was before we started wringing our hands over this in early early to this year. Um, and we're in good shape. So it's time. It's it's time, it's time to it's time to dump the hunt the six times that's there, and time to give it back to the consumers in the form of upfront MIP reform. And certainly at the very least, at the very least, let the MIP burn off at 78%, just like it does with conventional lending. There's no reason not to implement that today, because by the time somebody gets to that point, they've already got, and this is from the CHLA from Scuttles, and they've already uh they've already paid off enough to be three times what the actual risk is. So no reason for that not to happen today, but they won't because it's part of the budget now and they're reluctant, and that's why Turner won't say a word about it.
SPEAKER_04I love so we've gone from pro clutching to hand-wringing. So I'm just as long as I'm like following along with Kobe's Comey's sayings.
SPEAKER_09We're moving, we're moving down the body.
SPEAKER_04Okay, so a couple of things on the TPP that I think we need to level set on. One is there is a 50% failure rate on those. And so the all of all of a sudden, once they clear that three payment threshold, they're not gonna all automatically be current. 50% of those are failing. Second of all, the ones that do that do go through are five to seven times more likely to go SDK again or SDQ again. Greg, if you had that graph I sent, I just want to show really quick. So this is plotting the SDQ numbers based on borrowers who have previously had a partial claim, other one, the one on the FHA. Thank you. So this is showing uh borrowers who have had who are SDK, so seriously delinquent, based on whether or not they've had a partial claim before. So they've gone through this TPP process successfully, five to seven times more likely. The current serious delinquency rate on the borrowers who have gone through this process is at 24.1%. And so I think that you know, all this whole conversation came up because somebody asked Cassidy if we should, if we should look at reducing the MIP, and he said it's something we should look at, right? Not that we should do it, something we should look at. And so I I'm not necessarily disagreeing with Kobe on this, but I'm saying that it's too early for that. We just made a big change. We're seeing that that a 50% failure rate on these TPPs, we're still within a year of of that of that change. We're seeing we're seeing really bad redelinquencies, even on the ones who make it through. And so I think we need to wait a little bit longer to see how this policy change is going to work through before we start having this conversation.
SPEAKER_06What's the point, Aaron? Then what's the point of having the fun then? What's the point of having the minimum? I mean, how do we ever get to a place or where it's six times the statutory requirements?
SPEAKER_04Listen, I don't I don't disagree with that. And I'm not here saying we shouldn't do it. I'm saying that I think we need to wait until the next, until November with the with when the next change comes up and let's see what this full cycle goes through with these changes to see what it looks like before we look at that number. But we're all three.
SPEAKER_09Aaron, walk me, walk me through one thing though. I I understand if you want to say let's wait to reduce upfront MIP because that is an important part of the fund. And if we eliminate that, the fund will be depleted pretty quickly because it is a big number. But tell me where the danger is today in eliminating the monthly MIP that that got spiked up in what was it, 2013, 2014 to be permanent for LTBs above 90%? Where is the danger today in letting that burn off at 78%? What do we need to wait for to make that happen?
SPEAKER_04So I don't disagree with you, but where the argument that you are going to get from HUD on that is that they don't charge a G fee. That is their G fee. And so when you do that, they lose that operating income that that Fannie Freddie would charge or receive in a G fee. So I don't disagree. And I do think that we should look at that, but we need to make sure that that that HUD is able to operate.
SPEAKER_09That's very short-sighted. Very short-sighted. You know how much HUD made last year? You know how much HUD made last year?
SPEAKER_04I don't know. I don't know. I'm I'm not I'm saying we should look at it. I'm telling you the argument HUD is going to get it.
SPEAKER_06Well, but it's short, the argument is short-sighted because we look people are getting into FHA loans for the most part at 96 and a half LTV. It takes forever even it takes forever to even get down to 78. And believe you me, that MIP is stopping them from going back into the market or refinancing or doing any anything they can to free up that money and get it back into the economy. Very short-sighted, in my opinion.
SPEAKER_04Yeah, no, I don't I don't disagree. I think we should look at it.
SPEAKER_0616 16.1 billion.
SPEAKER_04Yeah. There you go.
SPEAKER_06Well, I mean, if you just if you just look overall at uh Fanny, Freddie, and um and you look at the same. It's egregious. Yeah, right. I mean, it's literally become a cash cow. I know I know a lot of the money on the Fannie Freddie side, I believe, goes it gets poured into the treasury. Um so it's like how did we get here? Right? And I mean, we're this money is not it's not supposed to be building up this war chest to be deployed to help to keep the deficit, you know, down as much as it can. I mean, that's on the backs of homeowners. Like we should be enraged at this.
SPEAKER_09By the way, we talk about me using pearl clutching, aphorisms, whatever. Do you ever notice how much Greg says cash cow?
SPEAKER_04I haven't. I haven't, but you know what? I'm gonna pay attention to that. I'm gonna be the vehicle for this.
SPEAKER_06I have a proclivity for cows. I love milking them, apparently. So I've been told.
SPEAKER_09I I I think I think Nyang Nyong, can we do a cash cow mashup like of all all the episodes? Where is Nyung?
SPEAKER_06Let's see, let's see if we can get Nyon. Is she even listening? Hold on. This is gonna be this is who makes it all happen behind the scenes. Whoa! Oh, we got her. There she is. Look, she just came down from the heavens. You see that light to the right on her face? She's an angel. That we did get her. Uh one too, one and done. She came out. She's gonna kill us later. She's gonna kill us amazing. All right, we we talked about Brian View earlier. I had him on my show one-on-one this past Monday. Um, Brian is the president of uh MISMO, nonprofit arm of the MBA. Um, and uh, it's the mortgage industry standards organization. Um, and I also had Dan Sug on. And Dan is uh, I know Aaron, you're smiling. You love Dan. Everybody loves Dan. Uh he's the chair of ResBOG. You're you're a uh you're a member of ResBog. We'll throw in that disclaimer. But we we talked about um this white paper and the new uh frame, which was introduced by MISMO. The acronym uh stands for the Framework for Responsible AI and Mortgage Ecosystem. Um this is really, really, really, I can't say really enough, important that the industry stop what they're doing and listen to the threat, which is AI. We think about it a lot for how it's going to move the needle in a positive way. There are a lot of landmines out there that you've got to look out for. And the MBA has gone to great lengths to help uh make us aware of those. And um, this was my conversation with Brian just a minute or so, and then we'll we'll tackle it. And is there any one particular thing that lenders are doing that they need to stop doing right now around AI?
SPEAKER_01If you have not done a thorough inventory of your entire company in each use case where AI exists, I said it all. That's the biggest risk you have when the state comes in or multiple states come in. Should the CFPB kind of get some legs and they come in, or if you're a seller servicer and Fanny and Freddie start doing their Mora audits and you can't answer the question where you're using AI, you will have a problem.
SPEAKER_06I mean, this is uh, you know, that's that's alarming, right? Because, you know, and I talked to James Brody about this, the the high-powered mortgage attorney a couple of weeks ago. This has been coming up. Uh, and Aaron, you got a really close look at James Brody, this just in Ohio, didn't you?
SPEAKER_04I did. I had the pleasure of up close and personal on a panel with him talking about AI.
SPEAKER_06He's a great guy. But we're hearing more and more of this of this conversation, this dialogue around uh knowing what your vendors are doing, how they're interjecting AI. You know, everybody has said, including Brian on that call, that lenders are responsible for the technology that the third-party vendors are dropping into your ecosystem or using behind the scenes. To me, this is like a head-exploding thing uh to even begin to understand how to tackle it. But I'm so grateful that the NBA and uh and MISMO are doing this. Aaron, what do you want to uh say about this and how many alarm bells should be going off?
SPEAKER_04I mean, if you're not looking at this, all the alarm bells should be going off. So I was fortunate enough to be part of the NBA's white paper process. It's free out there for anybody. Read it, it's got really great information. MISMO frame you get for free as a MISMO member. That is worth the price of admission, hands down, right there. The work that went into this is huge. And why I really love that is you guys know I'm a big proponent for the small and mid-sized lender. And and a lot of times those are the guys that don't really know where to start. And this does this, this helps you, this gets it there. And they they're continuing to advocate with the agencies to make sure, hey, if we follow this framework, we're gonna be in compliance with you, Fanny Freddie, right? Like they're still doing all like great work behind the scenes. And to Brian, his team, MBA, just great work. Please make sure you're going and looking at this.
SPEAKER_09Yeah. Um, you know, I Brian, uh, love the guy, you know, as uh, you know, he gives shout outs to our show every every week, and he's my partner on another podcast. And and I know he's a big fan, and I'm a big fan of his, and I know we all are. Um, never has Mizmo had as much Ms. Momentum as they do now under Brian's leadership. Um, so I just want to put that out there. Um, but uh what I love is that we're talking about this as an industry before somebody regulates us or so before somebody mandates it. And and we're actually putting our own framework and our own guidelines together and having the conversations and discussing what's right and and what do we need to be aware of. And the fact that we're doing that in in the absence of a fully fanged CFPB, I think really speaks to our maturity as an industry in that we're we're tackling issues before they're mandated upon us. So I love the fact that we're doing this. You know, the the AI bot that called you, Greg, that we, you know, you had the conversation a couple of shows ago that that was so enraging. You know, that's going to be part of this conversation of what's right to do by the customer and what are we ultimately going to uh you know get flack about from the federal government. So I love the fact that we're doing it. I love that Mizmo and MBA are leading the charge. Um, and I think we should be having more of these conversations around these kind of issues.
SPEAKER_06I feel like a yenta, like I'm always bitching. Is that me? Do you guys see me like that? I mean, I do I need to sprinkle in a little honey.
SPEAKER_09Um, you know, I I I I think you're the provocateur. I think that's your role. Yeah, I wouldn't say I wouldn't say yenta, I would say provocateur.
SPEAKER_06Yeah, that's a terrible word, but thank you. I really appreciate I really don't appreciate that. Thank you, Kobe.
SPEAKER_09And you don't you you'd prefer yenta over provocateur?
SPEAKER_06Yeah, yeah, because only you know, only Jews understand Yenta. I'm a Jew, so you know, one out of every however many tens of thousands of people understand that. So I can stay a little bit under the radar. Uh, but you know, provocateur, everybody uh everybody understands. Uh last thing here, um, senator, Senate Majority Leader John Thune said Tuesday the chamber will move forward with its uh first procedural vote on the updated by uh updated bipartisan housing affordability legislation. Um this is a long-awaited bill. It looks like there is a consensus now. There's a lot in it. It's 381 pages or so. Um, and so this is this is coming down the pike. And um, you know, how much reform it will lead to, I don't know, but certainly something that we're looking out for and that others should as well. Um any anything on those uh uh on the bill that you guys want to say or we'll wait and see.
SPEAKER_02Go ahead, Gobe.
SPEAKER_09Yeah, I haven't had a chance to really dive deep into it. I know we were circulating some emails about it prior to the show, but I I didn't have a chance to really dive into it. Um, you know, the question I'm gonna have is what actually has teeth and what's gonna move the needle. I know that earlier iterations of it had some unintended consequences around investor restrictions on properties. I'm I'm curious to know how those got fixed, uh, because I think those would have had some some bad unintended consequences for the economy at large. Um, so again, you know, I from from the executive orders down to this, you know, I want to know what's actually what actually has teeth, what actually is implementable today, um, what's going to solve some of the actual on-the-ground problems that we have. And so I'm just giving you that high-level viewpoint of how I'm going to go into to reading some of the details.
SPEAKER_06Yeah, I will say that I I I saw something that appeared to be on the surface a little bit alarming. Um, I'll probably not completely nail this, but it was something along the lines of if if someone has their DD214, if they're VA eligible and uh you're presenting them an FHA loan, you must present them also a VA loan. So that's it, that's interesting to me. I'm I'm not sure, you know, what I understand on the face what that's about. Uh but to force a lender to present another option.
SPEAKER_04Um Yeah, that was one of the MBA's advocates. So MBA really was like, there's like, I think like four main points that the MBA really advocated for. The first was to eliminate that seven years sale on bill to rent. That's out of the new bill. Um, there was also uh like a drafting error that would have made uh FHA multifamily loan limits actually go down. That's been fixed. So two big wins there. Um the two that are are still in the bill, um, that VA disclosure, it's a little watered down. I'm still trying to understand the nuance, but that's it's still in there. Um, and then there's also um that is still in there, there's one more the um housing counseling. So anybody who's a govern uh on a govy loan that's goes delinquent, so whether it's VA, USDA, or FHA, um, they have to be offered counseling, and that counseling has to be paid for out of the FHA MIP fund. Um, so those two are still in there. But I still think I just have to say a yeoman's effort, honestly, like MBA, Bob, Bill, Pete, that whole team did a great job on this. Chairman French Hill did a great job in making sure that the Senate didn't steamroll them with their job. So I just think all around another great victory for our lobbying teams.
SPEAKER_06Yep, agree with that.
SPEAKER_09Um Kobe, last word here. Yeah, I mean, and now with Bed Bath and Beyond in the business, you can offer them an FHA loan, a VA loan, and a towel. So I'm super excited about where we're going.
SPEAKER_06Yeah, we're just not going to give them any of your towels, Kobe.
SPEAKER_09If you don't know, or any of your socks.
SPEAKER_06Yes, there you go. How about that? Uh, Aaron, we know you have a meeting to attend downstairs. You're in Houston with your whole amazing team from Interlink. You guys have a little have a little rally going on?
SPEAKER_04We do. It's our sales, our sales rally, and uh, I'm really excited. I love my originators. I love building my relationship with them. So this is this is a great time.
SPEAKER_06No, well, you're doing a great job uh all the way around um for this industry, Aaron and Kobe. And this is a lot of fun. This is our sixth show in the books. We'll be back next Thursday. We'll definitely unpack the uh the housing bill, uh, Road to Home. It's road to home, right?
SPEAKER_04Um 21st century road to housing.
SPEAKER_06Road to housing, yeah. So we'll uh we'll definitely unpack that next Thursday. That'll be one of the things we talk about. Stop laughing at me, please. I've I've I've had yeah.
SPEAKER_09I was laughing at Aaron. I in fairness, I was laughing at Aaron laughing at you.
SPEAKER_06Now you now, how come you're not make making fun uh on the on the record of her shirt? Before we came on, you had some things to say. It's a lot different than when I wore my shirt, my my late shirt, I should say, where you just just buried me publicly. What do you have to say about this shirt, Kobe?
SPEAKER_09Well, I when she first wore it, I thought I thought she was, you know, wearing a sponsorship logo, like she was starting to make some money on the side. Um, but and I thought it was the Motorola logo, but it turns out somehow that's the Interlink logo.
SPEAKER_03Interlink. My number one sponsor, baby.
SPEAKER_09But how do you spell Interlink out of that?
SPEAKER_03I and then the M. Put it together. And then the I and you're not a marketer.
SPEAKER_06Yeah, Kobe, don't quit your day job, buddy. You're never gonna be leading a marketing team, clearly.
SPEAKER_04Um that's the hill I'll die on.
SPEAKER_06It is, and you're not even bloviating. This has been a great uh show number six. We'll hit seven next Thursday at one p.m. Eastern. Until then, so long, folks. Bye bye.
SPEAKER_05Don't surrender on the show. We go toe to toe. What fail, what fails, who gets the home? Hot no hot space, waiting.