Episode 7: From Greenspan to Geopolitics

What do Alan Greenspan, TikTok real estate advice, AI-generated lawsuits, builder downgrades, state regulators, and geopolitical tensions have in common?  All of it impacts housing...and we're breaking it all down LIVE.

🔥 The impact of "doomers" on SM
🔥 Greenspan's Legacy
🔥 CHLA's Concerns Over State Regulators
🔥 AI Lawsuits Causing Heartburn
🔥 Builders Downgraded by Fitch
🔥 War / No War? What It Means for Housing

Grab your lunch and join us Thursday at 1PM ET. 🎙️🔥 Erin Dee, MBA Coby Hakalir

Transcript

Greg 0:36

Are we really back? We really are. Is this not the best part of all of our weeks?

Erin 0:43

Yes. Man, we are just I hope the show goes better than the the production, the pre-show.

Greg & Coby 0:52

Oh my goodness. It was rough. People only knew. People only knew what we're dealing with here.

Coby 0:56

I think that should be a whole separate like BTS where we like put the whole pre-show. Like we've started doing that with the production, but I think people would really like to see those 15 minutes before we start and see what a mess it is.

Greg 1:07

Oh, oh my goodness. Then we'd have to behave ourselves. Uh Erin's internet has been not working. Blurry. She had to reboot. I'm dealing with a new computer that is not behaving that well because mysteriously, on my trip that I just returned from, my computer stopped working when my IT department opened it up. It was soaking wet inside. Of course, the kids have no idea what happened, right?

Coby 1:33

Yeah. I think I know what happened. I think you've been downloading it. You've been downloading too much of Doom porn.

Greg 1:41

Right.

Erin 1:42

What did Logan say?

Greg 1:45

I know. Well, we love, you know, we're gonna talk about Doom porn for sure today. But first we have to talk about how cute my new dog is. How cute is Maple? In all seriousness. I mean, have you ever seen a cuter dog? It looks like she looks like a stuffed animal. She's seven months old and she's an absolute tyrant. You have to watch her at all times. It puts everything in her mouth. It's very dangerous.

Erin 2:06

Sounds a lot like you.

Greg 2:08

Well, that's a great point. Thank you. That's a show for another day. Um that that's that's Doom porn 2.0. So we'll get to that.

Erin 2:16

The ultimate Doom porn.

Greg 2:18

Yeah. So somehow we got into a conversation earlier about pantries. So just at the last minute, like two hours ago, we all took pictures of our pantries. And um, it's pretty interesting here. Uh you know, who would guess? You know, like if you had to guess whose pantry is whose. Actually, you can see on the left the dark wood. That's one pantry, then the one in the middle is another one, and then the one on the right is just an absolute shit show. Um, very interesting. They're all very different. Coby's is on the left, Erin's is in the middle. Look how neat and organized this pantry is here. I mean, this what is going on on the third road down? Are those trash bags?

Greg & Erin 2:58

What no, those are my netties. Those are like very barren.

Greg 3:06

I mean, you have more alcohol than you have everything else on top of the case.

Erin 3:09

Anyone who knows me should not be surprised by this.

Greg 3:10

And how do you get to that anyway? You're not that tall.

Erin 3:13

Well, that's because that's my third reserve. I have my liquor collection, and then I have two reserve collections, and then that's my third reserve for if I'm really desperate.

Greg 3:21

Got it. And you see, mine on the far right is just it's a catastrophe. And that's after uh, you know, our nanny cleaned it up. So I don't know. I mean, it's between the biggest my bedroom.

Coby 3:32

Yeah. Um clean mine. That's why mine's such a mess. The nanny just hasn't gotten there yet. Or the guy mowing my lawn might come in and sort it out for me. I know. It's all the same person.

Greg 3:43

It's all the same person. Well, it's good to see the three of you. We have a lot of ground to cover today, as usual. There's so much going on. Um, Road to Housing Act that was, maybe won't be. Alan Greenspan dies at par at 100. Uh, we've got fine, happy states, doom porn, AI in the courtroom, FHFA, uh, rewrites duty to serve, war, no war, why reigns aren't following oil. Fitch downgrading home builders, HUD cuts 14 FHA rules. I mean, this thing is chalked full of what's that, Erin?

Erin 4:18

I don't know. I'm just being dramatic.

Coby 4:20

Yeah, boom, a lot of stuff.

Greg 4:22

Yeah. All right. So um, we're gonna start here. This is where we're starting. What do you think, Kobe? Take it away. What are we looking at?

Coby 4:29

Yeah, well, that is uh the current acting director of national intelligence who um was uh you know the word I love to use, bloviating, bloviating about the road to housing bill. Um, and uh of course uh mentioned Biden in it because that's relevant. You know, this was uh this was a bill that had, you know, kind of a false start yesterday. It it came with a lot of fanfare, everybody was very excited about it. Um, I was not among those big fans, um, but uh Poulty obviously was, even though it's pretty clear he didn't really read the bill. Um, you know, this this was touted as uh CNN and the Wall Street Journal both touted it as one of the most progressive and and far-reaching housing bills of our generation. And I'm not sure why they drank the Kool-Aid on this, but um the bill really did not have a lot of meat on the bones. It offered a lot of what I would call feckless demand side uh solutions, most of which won't have any impact on the housing crisis. It offered no real supply side other than the institutional ban on investors from owning more than 350 homes, even though we know that that's a tiny, tiny segment of the market to begin with. Um, so no, no, no real meat there. It was a midterm election play, in my opinion. And then it gets to the White House for the big signing, and the president decides to uh hold it hostage over a voter ID act, which is you know another Hail Mary to try to turn the tide in November. And so it's a it's this double, double whammy thing of let's put a bill out there that really doesn't do anything and and gets some voters to perhaps think the GOP cares about housing. And then, oh, by the way, we're gonna make sure that we tack a voter ID bill on top of it to to really uh tilt the scales. Um so overall, just uh, you know, what where where this sits, in my opinion, is we really need local, state, city, municipality. Those are the reforms that we really need to move the needle on housing. Um, and and I would point to the FHA uh 14 things that they did, but that's a separate conversation. But this was a bill that had a lot of fanfare to it. It had a lot of finger pointing at kind of the wrong people as far as the institutional investors go, and a lot of solutions, in my opinion, really go nowhere and do nothing. But you know, Congress at least is talking about housing, so maybe that's a good thing.

Greg 6:46

Erin, he's pretty negative on this. How about you? Um you're all you're a uh glass half full kind of person. So I'm sure you've you've gleaned a thing or two that you liked out of it, right?

Erin 6:54

Absolutely. And I would just like to say here's my shocked face at Coby clutching his pearls. So there are a couple good things in here. Uh, it opens up uh FHA appraisals to license, not just certified. It's got the rule for manufactured homes not having to be on the permanent chassis. And also for crazy libertarians like myself, we're very happy about the central bank digital currency ban, even though it's only until 2030. Um Coby's right, though, there's there's not a lot to it. But where I do want to give shout out and praise is, of course, to the MBA legislative and lobbying team, because there were some things in here that could have been bad. The way the bill was written, it actually would have lowered the FHA multifamily, obviously the bill to rent, the seven-year dispense rule on there and a few other items. So, you know, shout out to MBA for getting things fixed and making sure that the final bill that was passed was not gonna have any bad unintended consequences. Um, and there are a few good things here. Um, but yeah, a lot of it is is is, you know, things that they're trying to fix to Coby's point, a lot of it really just needs to be at the at the state and local level, and and it's not gonna do anything to truly make a meaningful impact on affordability.

Greg 8:07

FHA small dollar mortgages, a pilot to expand FHA backed loans under $100,000 plus an F uh CFPB study on why the points and fees threshold choke the segment. So there could be a change there, and then LOComp back in the conversation. This is what I most pleased to see. And I this is a lot of uh Bob Broke Smith's doing and everyone else that lobbies on behalf of the Mortgage Bankers Association. The bill directs the CFPB to study how loan origination compensation practices affect the availability of small dollar mortgages. And Aaron, you're on the inside inside of the MBA. Um, you know, how impactful could that be?

Erin 8:46

Well, if you remember, there was the the EO um that came out as well, same thing looking at so this is basically it's kind of similar to what was in the EO, at least as far as I understand. But MBA is is this is one of their top priorities is working with the CFPB on getting LO comp. So, you know, it's just more conversation around the fact that we need to look at LO COMP rules, so it can't hurt.

Greg 9:06

Yeah. So I talked to Scott Olson, who runs the uh another great trade group, Community Home Lenders, just moments ago. And I asked him about the technicalities around this bill because it was thought that it was presented by Speaker Johnson to the president, which starts a clock of 10 days, and uh because they're in session for longer than 10 days, he doesn't have options to veto. Uh, but but now we learn that the bill has not been presented to the president. And so that opens up a whole Pandora box for what's possible. He truly has leverage, and they say, they, whoever, that Speaker Johnson and the president are not in cahoots. But come on, give me a break. Give me a break. Come on. It's a technicality. Hey, don't hand me that bill. We don't want the clock to start. It's his handpicked guy. I mean, this is really, really unfortunate that homeowners and the housing market is being held hostage. We are now the ransom note for the president's own agenda around elections.

Erin 10:04

Well, and it's just gonna end up by shooting him in the foot. I do not understand this move at all. Elizabeth Warren is already out there saying Democrats are trying to help, Republicans aren't. Remember that in the midterms.

Coby 10:15

I'm not I'm not sure it matters. Uh again, I don't have a lot of yes.

Coby & Greg 10:19

First of all, to Erin's point, of course it matters.

Greg & Coby 10:23

It matters to who it I'll tell you why it doesn't matter. Because yes, I like the manufactured housing rule in here. I I do think that opens up some possibilities. But aside from that, if this bill passes or doesn't pass, it doesn't really change anything about the housing market as it stands today. So to me, I don't think we're being held hostage. I think the president is starting to look a little bit foolish that this is a bill he advocated for and now he won't sign it. But aside from that, is this gonna change how we do business in the next six months, whether it passes or not? Not likely. Well, Coby, what would move your needle? Supply side solutions. What could what what could have happened that would have made you optimistic that you just made the comment that in the next six months it's not really gonna impact anything? I mean, short of saying tomorrow uh we're removing uh mortgage insurance premiums or giving some kind of a sunset and LLPAs or wave for first-time home buyers, right? Uh which can't happen overnight either, I don't think. But like what could have been. Some of that could okay. Isn't it all gonna take some time?

Coby 11:20

Uh everything everything takes time in terms of providing real solutions. Some things can be done quicker than others. My point, though, is that whether this bill gets signed into law or not is not going to move the needle on housing. And that was my issue with it. It was mostly pageantry for the midterm elections. Uh, I stand by that. Yes, there are some more positive things in there. There's nothing really negative, but there's nothing in there that's really so impactful that it that it changes the scope of what the affordability crisis looks like right now and what buyers are looking at in terms of their outlook on purchasing a home in the next one to two years. So it doesn't do anything, is my point. A study for LO COMP. Well, great. We've been talking about it for a while. Let's keep studying it.

Greg 12:00

Well, it seems like it's going to happen though now. It seems like it's getting close. It's more it's more it's more in the conversation. I mean, these the this act came from the president's orders for there to be uh all these things looked at. And you have to admit, you know, whether you like the changes or not, there are a lot of items here on the agenda, and it did happen relatively quickly. So, you know, that gives me hope that uh on the LO comp side, and I like the small loan amounts, you know, I think that there are a lot of people out there that that have small loans that are ignored largely because lenders can't make enough money. Um, no one's doing this for free. But the bigger question before we move on is what does this say uh to the housing industry? What does this say to us? Like what should be our takeaway here that we're being used as pawns?

Erin 12:46

Well, I, you know, I don't know that it's aimed at us specifically being used as pawns. I think I think we're we just happen to be the ones up and the the ones that are able to do it. But I think at the end of the day, this is this is just gonna make Trump look really, really bad.

Greg 13:01

Yeah, so I'm like when you look at the report card almost two years in, like a year and a half in, when you look at what has or hasn't happened in housing, when you look at the LLPA changes that Barry Habib said were coming that turned out to, you know, they haven't even happened yet, right? And that was gonna be around just refis and second homes. Did that never happen, correct?

Coby 13:21

Correct.

Greg 13:21

Yeah. So I mean, like we were hoping that we would get some incentives for first-time homebuyers, but we know that the administration, it seems like, is is hellbent on and driving as much revenue to that top line as possible. So when you take all of that and the ineffectiveness and inaction and then you marry it with this moment, I think if you're in housing, you cannot be a fan of this administration at the moment.

Erin 13:45

Yeah.

Coby 13:46

No, I mean I mean, I think it's hard to be a fan of this administration in general, but certainly when it comes to housing, um, you know, have have they talked about housing much more and in a much more positive and much more real way than the previous administration? Yes, I'll give them that. And I know people think I have, you know, Trump derangement syndrome. I saw that in the comments after last week's episode. But I'm looking at reality. And the reality is that this administration does a lot of talking about affordability in general, about housing affordability, about moving the needle, about making America a better place to live. I kept I keep getting told my 401k is doing better than it ever has in the history of 401ks. But the reality is it's all talk. Nothing really gets done. The the the effort is to elect more Republicans. It's not really to make America a better place for those that are struggling. And and we keep seeing that in the K-shaped economy, that K is getting bigger and bigger and bigger every week.

Erin 14:35

Well, and and it goes back to when Trump, when, you know, how many times have we had have we had the the Lucy pulling the ball from Charlie Brown moment where he was supposed to make all of these big speeches and announcements and in Davos and all of this? And all he came out and said was, I have zero intention of doing anything to impact property values and make them go down. And that is the one thing that could absolutely help affordability the most. And it's the one thing he said he absolutely refuses to do. And so I don't think he is serious at all about this unless it's something that can make him look great.

Coby 15:06

I think what happens is, and to Erin's point, I think he sees that when he starts to talk about anything that might bring home values down a little bit, he starts to get pushback from congressmen who are like, wait, those homeowners are the stalwarts of my constituency, and those are the people that re-elect me. And if I piss them off, that's going to open the door for a primary challenger. I think he gets that pushback and then he starts to walk back whatever answers he has for the housing industry. And I think that's what's going on.

Erin 15:34

I mean, the one constituency he has left are the Fox News boomers, and those are the ones that would be hurt the most by falling property values.

Coby & Greg 15:40

100%. All right, let's pivot into another legacy of a 100-year-old man who's no longer with us. Let's take a look.

Clip replay 15:48

One of the problems that surprised me when I got into public life was that uh open, clear talk is uh often creates problems. In 2007, there were serious worries about a financial bubble. Greenspan's response When you get bubbles like this, there is no way of diffusing them until the speculative fever breaks on its own. Soon after came the 2008 financial collapse, and Greenspan's reputation quickly reversed. He was widely criticized for having allowed the housing bubble. You know, financial bubbles are super disruptive. And to ignore them is a big mistake. And Greenspan made that mistake, and that is where I fooled him. But when he appeared before a House committee in 2008, Greenspan sort of admitted that he put too much trust in markets to self-correct. Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself especially, are in a state of shocked disbelief.

Greg 16:57

Greenspan died at 100 years old from complications from Parkinson's. He was the 13th Fed chairman and served 19 years from 87 to 2006. I don't think that'll ever happen again. It's so politically charged the position now. Appointed by Reagan, reappointed by presidents of both parties. They called him the maestro. Aaron, starting with you, how should uh Alan Greenspan be remembered?

Erin 17:23

As a a traitor to his initial philosophy, he in 1966 wrote a paper that was published in an Ayn Rand publication talking about how great the gold uh standard was, that we needed to be on the gold standard to prevent excesses of the of a of a central bank. And here is a just a small excerpt from it. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. He knew, he understood what happens when a central bank played with the system when the markets were not allowed to correct themselves. And so he started his career like this. And then he ended with something called the green span put, which is when the markets knew that he would rush to them and he would inject liquidity into the system. He would lower interest rates to basically save them. And that did two things. One, it encouraged excessive risk taking because there was minimal to no downside for the risk takers. And number two, it created inflation. And inflation is the absolute most insidious tax that we have ever put on, and it has robbed our children of their future. And so I look at Greenspan as somebody who got it at the very beginning of his career. He understood and then just completely betrayed it by the end. And I'm going to read a quote by the great Ron Paul, specific in regard to this. I get the sense that I am listening to the chairman of the board of central economic planning rather than the chairman of the board that has been entrusted with protecting the value of the dollar. And that's all I have to say.

Coby 19:05

Well, first of all, it's hard to find a picture of Alan Greenspan where he doesn't look 100 years old. But, you know, to everything, everything Aaron just said, you know, I agree with.com bubble burst. And he encouraged Americans to go out and get an arm loan and said, you know, maybe we're paying too much by going for a 30-year fix, and Americans are probably uh costing themselves money by not getting an arm loan. And then, you know, people went out and did what he advised. And then over the next, I forget how many uh months it was, but raised interest rates from 1% to 5.5, which um, you know, was was a was a uh persistent rate hike quarter after quarter after quarter. Now, did he did he encourage investors to ingest no income, no asset, and stated income loans and all that kind of garbage that that led to the to the bubble, or at least helped the bubble burst? No, but he did give some advice that was that was ill-timed, that he later regretted. Um, his approach to the markets, having the belief that the banks would would do what was in the best interest of the consumers and essentially self-regulate. Um, those those beliefs did not age well. His advice did not age well. So it's a complicated legacy. But earlier in this week we talked about this, and I called his career remarkable. Um, you have to, you know, remarkable doesn't necessarily mean great, it just means of note. Um, 18, 19 years under four presidents, you know, from Reagan to George W. Bush and a Democrat in between there. Um, just you know, an amazing run. Um, changed the job forever. Like you said, Greg, we're not gonna see that again. We're not gonna see somebody sitting in that job across four presidencies. It's become a highly politicized position. Um, but uh, you know what he did do, you know, he he did help us recover from some from some other things earlier in his career. I think the 87 stock crash or the Black Monday, I think he was instrumental in in riding the ship after that.

Coby & Greg 21:08

It just seemed like as he got went down a massive amount in a 24-hour period. Yeah, just a he calmed fears and it bounced right back.

Coby 21:18

He did, he did. So a lot of things that he did earlier in his career. There's an argument to be made that later on in his in his career where where we talk most about what his checkered past around that. Um, there's an argument to be made that that he may have gotten away from his initial core beliefs, and and and that's what led to this complicated past. Um, but um certainly somebody that uh has his fingerprints on our industry today in in many of the same ways that Barney Frank did. So uh what a couple of months we've had losing two people that have had such a tremendous impact on our business. Yeah, for sure.

Greg 21:48

I mean, he was soft spoken in the beginning and then became more outspoken as he went along. And it there seems like there's some kind of star power that goes on, uh goes along with that position. Um Now we have Walsh that's looking more like Greenspan did in the beginning, wanting to stick to few words and not uh stoke any any flames um out there. So um I think what it does underscore though is the importance and sensitivity of the position and the power behind it. Um so you know there's more scrutiny now than ever, and I think it's deserving. I mean, he did call, you know, he said there we there wasn't a bubble, it was uh it was froth, right? And um, you know, of course, you you spoke to the arm speech. So I mean, certainly he gave anytime someone gives their life to that kind of that length and tenure of service, you got to tip your cap to them. And and no body of work is perfect for any of us.

Erin 22:41

But was the tenure too long? I mean, you know, to your point where you're you get consumed with that power, you get consumed with what you can do. And he had a much better start than a finish. So is that tenure too long? Did he serve too long? And now, how are with granted, we're dealing with a lot of inflation from the CARES Act and all of that, but he he created an inflationary pressure. He created an environment where we encourage risk taking, we injected liquidity into the system when we shouldn't have necessarily done that. And so, like sometimes maybe the tenure is too long.

Greg 23:15

Well, how long should the tenure be?

Erin 23:17

I don't know the number to that, but his tenure, I think, would say is I would say is too long.

Greg & Coby 23:22

Coby, anything before we get to find happy states? No, let's go. All right, let's do it. Oh, that's not it. See? Now you're you're always counting on me, Erin, to have some kind of a mishap here. And so uh I have done that.

Erin 23:37

Um it would not be an episode of No Surrender without it.

Greg 23:40

It's probably gonna be, oh, here we go. Well, what this is just uh terrible highlighting. Who who who's un? I don't want this person um you know doing surgery on me. Good lord.

Greg & Coby 23:51

It's uh this Coby's work it might it probably the same person whose pantry looks like a disaster, I would guess. All right, what's going on here? Cob uh so the there's we certainly know about the the gutting of the CFPB under this administration. We know they're they're two-thirds less the employees they were. They've basically been given a cease and desist order for lack of a better term. Uh, and a lot of the regulatory oversight has now shifted to the states, and that is becoming the problem that many of us thought it might become, which is the states are after the money and they're not really after working with mortgage lenders in a supervisory and cooperative way. Uh many can make that claim about the CFPB, but at least with the CFPB, you had one body to deal with. The issue here is that some of the states, and particularly New York and California, surprise, surprise, that have become uh extra onerous on some of these lenders. The the fear is that when you have a centralized body like the CFPB, well, yeah, you deal with it, but it doesn't affect your decisions as far as how to deploy resources and where to where to where to lend and where to do business. When you have an issue like this, and Mark McCardle uh talked about it as um, you know, I think it was a revenue, basically a revenue play, um, excessive fines for relatively minor offenses is what he says here. Um, it starts to determine where banks do business. And if you're an IMB and you're in growth mode and you're thinking about should I open an office in California or should I open an office in Texas? And I have to make a decision because I can only deploy so many resources with so much money, I'm going to default to the state where it's easier to do business. And then what happens to the citizens of the states if more and more banks decide, well, I'm not going to do business there? And we see that in real time in New York State. New York State has a real problem with this, and New York borrowers wind up paying more as a result. So another unintended consequence of de-gutting or gutting, not gutting, defanging and gutting the CFPB is the fact that the states have this power and it's causing IMBs to make decisions about where to do business and how to do business. And that's bad for the consumer, and we should be very concerned about it.

Erin 25:54

Yeah, totally agree. I mean, as an IMB, we we make these decisions. We we look through this whenever we're trying to decide where and how to expand and and what that looks like. And Mark McGardle, friend of the show, loved that guy. You know, when he was with the CFPB, he actually used to hold regular calls with the state regulators and kind of talked about how we're interpreting certain certain statutes, certain regulations, things like that. And so it kind of gave guardrails. Like I think about like bowling, right? So so it kind of let the states know, hey, this is kind of where we're looking. And it helped rein in the ones that are kind of go that were going crazy on either side, right? And so I think, you know, I was a fan or am a fan of not having a CFPB like the Chopra CFPB necessarily. Um, but I like that we had this kind of overarching guardrails that would keep the states in line. And I think that that's important. And as somebody who, you know, with a tough CFP or not, I still have 50 state regulators I have to deal with. The problem is, is now with those guardrails gone, it's just more extreme state regulators. And that makes it far more challenging to do business. And I looked up the numbers and on the revenue thing, I think part of this is because we're mortgage companies are not the only ones who have suffered from originations going down and people leaving the business. There's over a hundred thousand fewer originators licensed now than there were in 2022. That means lost revenue for the states because that's how states and licensing and they get their their revenues. And so I absolutely think it makes sense that they're using this as a way to recapture that that revenue. And if they're using increased fines and and really high fines for a way for penalties that aren't that severe, that's just another form of Chopra enforcement by or regulation by enforcement.

Greg 27:41

I would take the CFPB that we had under Chopra over this.

Coby 27:47

100%. Um, you know, look, the CHLA is calling for three things here that I think make a lot of sense. One, coordination and proportionality from the state regulators. Just treat us fairly and actually work on the problems. Don't try to just have us write a check. Um, honoring the existing uh CSBS multi-state cooperative agreement with 39 states. And then the third thing is for the shrunken CFPB to keep issuing interpretive guidance. So, but the CFPB to okay, if you don't have the enforcement arm, at least you know keep your voice up and and and tell us, you know, where to where to be, as Aaron calls the bowling lane. So those are three things that I think make a lot of sense. Um unfortunately, the states have no reason to listen to that and they're still gonna act out of their own self-interest. And many states, as we know, are are running tight on budgets, so they look to the mortgage industry to make up that shortfall. And and until we have a state, a federal regulator that actually works with us, this is gonna continue to happen. It's gonna continue to get worse, unfortunately.

Greg 28:40

All right. Take a look at this caption. You guys recognize that handsome face with the unmistakable full head of hair?

Coby 28:48

Who who doesn't know Logan Manashami? And uh is he a friend of the show? I don't know.

Erin 28:53

He's friend of the show, fo sho.

Coby 28:56

Friend of the show and friend of each of us, I think.

Erin 28:58

Agreed. Yeah, I would say he's a friend.

Coby & Greg 29:00

Yeah, we're all we're all friends with Logan. Yeah, Logan. Uh so he came up with this thing, Doom porn. He talks about it all the time. And you know, what this is, is the idea that we're just too negative out here in social media land, that we're telling too many of the stories of people that can't rather than can. Uh and when we say can't versus can, we're talking about homeownership, right? And to me, there's a fine line, right? Like I think I probably, you know, Logan probably reads my posts uh and says, you know, there's a doomer right there. Um, but to me, there's also reality.

Coby 29:35

Do you say doomer or boomer?

Greg 29:37

Doomer and a boomer and a boomer. But you gotta call you gotta call it like it is, you know, and so if it's if it's tougher than it's ever been, if there are things that are getting in the way, I think that you don't want to obstruct that, that you want to be a t a teller of truth. Now, to the degree that it's outweighs the positivity, yeah, I see that. Um, before we get into this, I asked my good friend Jennifer Beeston, who has talked about this a lot. Um, she works at Rate. She is one of the top VA lenders in the world. Um, she serves veterans to the tune of well over 200 million a year. Um, she's just super fabulous and very passionate. She's on social media, all over the place on YouTube, over 100,000 followers, and the majority of that 200 to 300 million a year comes from her YouTube channel, believe it or not. So she's you know, she is as advocate as it comes. Here's what she had to say about this idea of Doomers.

Clip replay 30:33

What would you do if I told you the housing industry is actually killing the American dream? That's right. You can blame rates, you can blame affordability, but you know what? The blame lies on us. Why? Look at the content that's out there right now. Everybody's on social media. I've been saying it for years. You have loan officers chasing clicks by saying things like, rates are so high, no one can buy a house. Is that true? No. Does it get views? Yes. Does it get clicked? Yes. I see the videos where someone takes some statistic out of a poorly formed survey and says, oh, everybody needs money from their parents to buy a house. You have to be a rich kid. It gets clicks, it gets views, it kills the American dream. So be thoughtful with the messages you're putting out there. Personally, I don't chase clicks. I chase helping people build their dreams because that's what people are missing. Take out the math, take out the news, take out the noise. People want to be home. Show them how to get there and show them how wonderful it is once you are a homeowner. That is how we save the housing industry and the American dream.

Greg 31:45

Erin, is there a fine line or is she 100% right? Should it be all positive all the time?

Erin 31:50

No, I think it needs to be all truthful all the time. And I don't, uh, you know, and I think that's what she's saying, right? I think she makes some really good points there. Um, I checked and right now the Google searches for housing crash are at an all-time high. And there's apparently like, I'm not on TikTok, so I can't, I did not confirm this independently, but there's apparently a whole like 2026 housing crash TikTok thing that's happening. And so I do think that there is something to the that the doomers are out there, they're getting clicks. I mean, my my Twitter algorithm gets into that loop sometimes. Kobe's Twitter algorithm, I don't even know what it does. That's some weird stuff, but mine gets into like weird housing doomer stuff. And and I'm like, God, and it really is, it's crashing. The market, we're cooked, the market is done. Stuff like that. I agree with her. It's not helpful. And it is creating a psychology within home buyers and even sellers, thinking that the market's gonna crash. And you see that in the Google searches, you see that in in TikTok land, right? To me, I think what it needs to be is you just need to be truthful and honest, and you need to break apart the numbers. And where I think it think what we need to be doing is breaking apart the numbers and showing the reality of it, like looking at the jobs numbers and saying maybe they're not as rosy as what everyone thinks they are, or breaking out other numbers and saying maybe this isn't as bad as you think it is. And I think that's where we have to live. We have to live in a world of truth, and we have to live in a world where we call out the people who are too rosy or too doomy.

Coby 33:18

I like Jennifer Beeston. I think she's a little bit confused. Um, and I think be this argument is a lot more nuanced than you know, whether we scare people or not scare people. And the reason it's nuanced is those aren't loan officers on YouTube and TikTok talking about rates are too high, you can't buy. Loan officers don't do that. If anything, loan officers aren't on TikTok and YouTube enough or on LinkedIn. They're not spreading the message of what is positive about housing. The people she's seeing that are trying to get clicks, those are people trying to get clicks. They're not in our housing industry. They are there to scare people about the housing process buying process. They're there to tell people that the mortgage companies are out to screw them, they're there to tell them that agents on the real estate side shouldn't get commissions because they don't deserve it. Those are not people within our industry. If anything, we are not telling the story of our industry effectively enough. Here's the bifurcation. On that side, it's it's it's that it's not the right people telling the story, and it's the people getting clicks that are spreading the bad news. When you take it to a higher level, the 30,000-foot view, what scares me about this are not those people on social media, and it's not social media in general, because we're all savvy enough at this point to know when you know we're we're we're getting just somebody's hot take on something. What scares me is when the Wall Street Journal puts out doom porn, when the mainstream media, the places that are supposed to be balanced and fair and honest and reporting just the facts, when they're putting out sensational headlines talking about the housing market and how bad it is and how expensive it is to own a home. I I put out a post earlier this week about the Wall Street Journal putting a chart out that called principle a rising expense of home ownership when it's not that. Um and we see that time and again where the mainstream media is now trying to compete with social media by putting out sensationalist headlines. The lines are getting blurred between what's actually journalism and what's opinion. And that's scary because that does uh create misinformation and uh and fear in the public. And that's what we need to look out for. That's the danger of the Doom porn era.

Speaker 8 35:11

Yeah. I at the same time, I I am with Erin. We we've got to be telling the truth because a lot of times that amplifies and ends up in the ears of people that can impact change.

Erin 35:23

Well, and I think, you know, I think there's a perfect opportunity here for the loan officers and and realtors out there who want to be that source of truth to come out and be the voice of reason, right? If we're if we're seeing record numbers of Google searches for home ownership crashes, put the data out there. Look at foreclosure filings today compared to 2007, 8, 9, 10. Look at the amount of equity that we have compared to that period of time. It's a completely different period of time. And you're not going to see the same thing because the numbers are different. Back then, people had no equity, so they got rid of their house and kept their credit cards and car. It's probably going to be a lot different if people get into stressful times now. And so I, you know, I think that is an opportunity for us if there truly is this undercurrent of people who have been swept away by the Doomers. Because I disagree with Kobe. I think that in, you know, talk to a normie who's not a housing person, and I think they still do believe some of the shit that they see. And so I think this is a good opportunity for the people who want to spread the message to spread the message and get it out there that it's it's not a it's not 2008.

Greg 36:27

I think we can all do our part to be a little bit more positive. I'm I'm challenging myself to do that. Today I had a post, uh I stumbled upon a survey that Bank of America did, an actual real survey, not like the one that United uh, you know, veterans did, where they handpicked 200 people or 400 people, 200 of which were veterans, where they they knew what the answer would be. Bank of America surveyed 100 renters, 100 people that currently owned homes. And um, you know, they asked uh how optimistic they are uh about the idea of purchasing a home. And the majority of them said they're they're much more optimistic than they were last year. And so I think if everyone out there with a voice leans in a little bit when we see positive things, and I'll be, I'll help lead the charge, right? I'm gonna make more of an effort, more of a concerted effort, because honestly, it is easy to write about negative stuff. It is easy to talk about the negative things because we're there's a lot of fear out there, right? We don't, we're in such a precarious time in our industry. Nobody really knows whether we're gonna go left or right, or you know, looking at real.

Speaker 5 37:28

Oh, Coby's gonna go left?

Greg 37:30

Yeah, or or even if there's gonna be a you know a business out there anymore. Look at Relo, look at Pylon, look at these companies out there that are trying to originate loans without even a loan officer. Like, what happens to this whole thing? It probably all just comes crumbling down. See, I'm I'm dooming again. You see what I'm doing? You see that? You see what I just did? He did. He went straight to doom.

Erin 37:47

You just got it, you just got a doom boner.

Greg 37:50

I did, I did. I'm gonna, I need to, I need to look at this. This will help it go back down. Um, all right, uh AI lawsuits. Now, this is becoming a real menace in particular for the servicers, Erin. I know you're quite fascinated by this new phenomenon of regular Joes fighting back with a couple of clicks.

Erin 38:12

Yeah, it's super interesting to me because this isn't just a mortgage. Uh, I was listening to Breaking Points on Monday morning getting ready, and they actually had a story, just generally speaking, how AI lawsuits have exploded through the whole country. And then right after that, this article came out basically saying that servicers are seeing it where borrowers are actually like just going to Chat GPT and saying, file a lawsuit against my servicer for charging me too many fees. And so now servicers and their legal departments are having to spend time and resources responding to these. And like I was thinking about this in in show prep. I'm like, all right, let me like steel man the the side of the the chat GPT attorneys, right? Like, could this be good, right? It's it's more accessible. So maybe if a borrower, there's a $3,000 overcharge, but the borrower would normally have to pay $30K in attorney's fees, does this make it easier for some borrowers if they've been truly wronged, right? Could this could this bring out some issues, some underlying issues that were previously undiscovered that need to be corrected? And I'm like, well, maybe, but like there's so many hallucinations, there's just so many, just people trying to kick the can down the road from going into foreclosure that this is just going to increase costs for everybody.

Coby 39:32

Yeah, I mean it it's it's also the uh the FCRA filings that are up, it's the TCPA. Now, and if we think about how the mortgage companies, and we've done you know quite extensive talking about the mortgage companies deploying AI voice agents. Um that's going to be deployed. Now you've got an army of voice agents on the mortgage side. Now you've got an army of uh ChatGPT lawyers on the other side. And the danger of not regulating the AI on our side is the fact that we're going to have these AI lawsuits being filed. And they're up 50% since the release of Chat GPT, uh, I think Model 4 in 2023. AI lawsuits are up 50%. Now that's not the mortgage industry, that's across the board. But that's a huge number. That means that the couch surfing of just being able to say, hey, put this lawsuit together because I just got a call from my lender that I didn't authorize and I don't have a business relationship with. And they're targeting, by the way, they're not targeting the big guys, they're targeting the smaller lenders that are going to probably make it go away by writing a check to make the ducence lawsuit go away. So if you've got, you know, couple that on to the pressure from the states, and you know, we're already down to 16 bips of profitability, despite what Open Door says. Um, and and we're looking at liars. They're liars, Coby.

Greg 40:47

You should write about that sometime.

Coby 40:48

I I may, I may just do that, but I'll do it positively. The the uh the issue that we're going to have in this in this country heading forward is is responsible AI deployment on one side, but then we're gonna have AI weaponized on the other side. And and and what is that going to look like? And that that doesn't scare me. It's just an interesting thing that we're gonna be dealing with over the next few years that I think is going to become more and more of a mainstream conversation as we get deeper in it.

Erin 41:14

I think after all these years, we finally proved Green Span wrong and we're realizing we have to uh regulate ourselves or Greenspan right. We're finally finally doing right by Greenspan.

Greg 41:23

Here's the thing, we're all still trying to figure out the the how AI is gonna land. And in this instance, it's gonna cost us more.

Erin 41:29

Yeah.

Greg 41:30

Because now you've got to have additional attorneys, you've got to have more staff, now you've got to you've got to set up an army, a bunker to be able to deflect these things and figure out what's noise and what's real, right? Because any one of these things that turns out to be real could be seismic in how it impacts these lenders who are already struggling from a rate compression standpoint. Kobe just pointed out, as an industry, what 16 bips is the man, Kobe, that's thin profit right there. At some point, you know, what is the number that you look at and go, man, this is not worth it for all the risk I'm taking on, for all these loans, for the tail behind me that that that can hit me at any time over two, four, six, eight years. You gotta think you want to make at least 30 basis points uh for that to be worth it.

Coby 42:15

Well, I don't know, I don't know what the right number is, but it's certainly not 16.

Greg 42:19

No, it's not 10, which is you know, this all this is gonna do is drive that number down.

Erin 42:24

Correct.

Greg 42:24

Right. So um now we got to talk about something I know absolutely nothing about. Um uh and this is what happened yesterday when Erin told me that we were gonna talk about the chattel, the shadow, the shittle. I don't know what to do.

Coby 42:39

By the way, the best the best part the best part of this is before the show, uh Erin, when you were rebooting and Greg asked me how to pronounce the word.

Greg & Coby 42:50

You asshole. Uh anyway, I sent a few pictures last night on my phone. I mean, you should see the back and forth. We have the best week long uh you know tag team going on. We have the best text thread in the industry. If anybody ever got a hold of that thread, we would all be flipping burgers at McDonald's. Is that safe to say?

Erin 43:09

Yes, yes, yeah, because we may be doing that anyway if we go any further further down than 16 bips.

Greg 43:15

Yeah, that's true, right? And then I'm just gonna then then instead of just hiding in the backseat of my truck for promos, I'll just live back there. I'm never gonna leave it. Uh but so you know, Aaron's like, we gotta talk about the chattel. And I'm like, uh uh, this is gonna be my look when she starts talking about. I don't know what it did here with my nose. What is this picture? I took I took three pictures and then I just you know, basically in saying that I'm gonna freeze when Aaron starts to talk about this because I have zero value to bring. But Erin, as always, you have so much to bring. So okay.

Speaker 5 43:48

Well, I love you for that. Thank you.

Speaker 8 43:51

Yes, ma'am.

Speaker 5 43:51

One, I have far too many group chats that if they make were made public, I would be in trouble. So I keep my phone locked and near me. Um Also, second, seeing that picture right before I went to bed last night did did wonders for my my my nocturnal dreams. So your nightmares. Yes. Okay. So duty to serve, this came out, I think, yesterday. Really just the thing I found interesting about this is FHFA is kind of scrapping their old dirty duty to serve. So duty to serve, uh, which is basically just saying we have to serve the very low, low and low to moderate income borrower, right? That's all it is, is is they've got to have these AMI programs, your homes, you know, that's renovation, you know, home ready, all that stuff. Um they're kind of scrapping it. It used to be very prescriptive, like you've got to do this, this, this, and this, as Fanny and Freddie, making it a little more, hey, just do whatever you feel is right as long as it doesn't fall outside of the acceptable parameters. But what they're pushing on this is basically the chat alloans to basically allow you to do a loan on a manufactured home that is not real property, that is considered personal property. They've been trying to do this for years. It's been part of the duty to serve, but it not, I don't think they've originated one single loan on it. I remember here talking about this year in 2018. Um, and they're having a renewed push through the revamping of the duty to serve to try to push this. And so, are we gonna be now getting getting into for real personal property loans on you know on manufactured homes? So manufactured homes that are like on a mobile home lot kind of thing and that where you don't own the land. Um, what is that, what does that mean for the industry? And so I just thought that was worth pointing out.

Speaker 8 45:35

So, so question here, and then I'm gonna seem completely ignorant on this because I am. Um, why why don't they own the land? Is it because the mobile home park owns all the land? And can that change uh where or are they gonna be giving loans on on land that is not owned by the person that has the mobile home?

Speaker 5 45:53

It's not it's not a loan on the land, it's a loan on the just the mobile home itself, right?

Speaker 8 45:57

And it's a personal loan, right?

Speaker 5 45:59

Yes, correct.

Speaker 8 46:00

Yeah, so now it's now the agencies are gonna get involved and make it a government-sponsored loan, government backed loan?

Speaker 5 46:06

It'd be an If Fanny Freddie loan.

Speaker 8 46:07

Oh yeah. And is this do we think this is good for the industry? How can it not be?

Speaker 5 46:12

I mean, it's it's more originations, but it's more risk. What does the pricing look like? What is the risk? What are the underwriting? You know, what does it look like to underwrite these? So I am honestly like I don't know that I have all the answers.

Speaker 8 46:23

Well, the the rates for the personal loan, as I understand it from what little I read, are somewhere or hovering around 10%. So if you take a borrower from 10% down into the sixes, obviously that's going to help more people be able to afford these.

Speaker 5 46:35

Yeah.

unknown 46:36

Yeah.

Speaker 9 46:36

What's interesting to me about this is that this was both in the road to housing bill, as far as the manufactured housing, and this was something that Poulty was talking about. So it's it's kind of being talked about on two different tracks right now. And what's interesting to me about it is we've seen nothing from the GSCs over the last two years other than pulling back, pulling away from the bleeding edge and marginal loans. And now what we're pushing, what we're seeing them push is loans that aren't securitized by land or collateralized by land and are and have traditionally been much more risky. There's like a 65% denial rate to these historically. Interest rates are 3% higher than than than than normal rates on these historically. Um so it's it's interesting to me that we're seeing this push for this this kind of lending to be more prevalent when other kinds of lending that has been more successful, like ITIN, uh we're seeing uh we're seeing the administration walk away from that, or the and and and by extension, Congress who put the road to housing bill in place. So I I think that's interesting to note. I wonder, I'm sure if we spent some more time on it, we could break down and figure out what the political agenda was behind that. Um, who owns manufactured homes and and whom do they typically vote for uh versus ITIN loans. So I think there's a bigger conversation there. And it's just interesting to see where the where the push for housing actually is.

Speaker 5 47:55

Right. And well, and it's interesting because they're pulling away from condos and leaning in on manufactured housing.

Speaker 9 48:00

Yeah. Guess who guess who condo voters typically vote for?

Speaker 8 48:04

Well, the condo changes aren't coming till August?

unknown 48:07

Or are they?

Speaker 5 48:08

Well, some there's some that start July 1st and then the limited review August 3rd, and then the but the reserves on January 1st.

Speaker 8 48:16

Yeah, I mean any chance that gets reversed that they're we can create enough pressure to to turn that around or I know MBA is actively having conversations.

Speaker 5 48:25

Um through TMC, we're we're actively having conversations with FHFA, but so far they're not they're not moving.

Speaker 8 48:30

I I have to say, as it relates to the MBA, that they seem to be in a groove right now. They seem to be connected to the administration. I remember talking to people inside those walls when uh Trump was elected and dealing with some of the people in the administration, certainly not going to mention any names, but that it was really choppy and really uncertain, and the doors weren't necessarily opening as wide as they had hoped. It appears now as if they're in those rooms.

Speaker 5 49:04

Well, look at look at what we've had in the last 12 months. We've had trigger leads, we've had VA partial claims, we've had road to housing, maybe, but that's still a win for NBA. And I I agree. I mean, they're there, they're in all the rooms having all the conversations, talking to Treasury, talking to everyone. And so I think they're killing it.

Speaker 9 49:21

Fingers certainly seems to be on the pulse. I'll give them that.

Speaker 8 49:23

Yeah. Let's talk about uh the war that you know maybe is over. Kobe was uh thinking maybe it's really not over. He didn't believe last week that it was over. Kobe, this week, let's take a temperature check here. Do you think the war is over?

Speaker 9 49:37

Um I think it's more over than it was over last week. I think we're closer to over than we've ever been with this war, but you know, this is a war that ends every week, doesn't it?

Speaker 8 49:47

You know, this show is great for interest rates. The uh tenure is rallying beautifully right now. It's down to four point four point three eight. You know, we were bumping up against four seven during the war. And so uh oil prices have plummeted. Uh rates have not followed that trajectory. And I make it a part of every one of my mornings to listen to um Sarah Wheeler and most of the time Logan Matashami. And this morning I listened to Logan talk about uh just how rates are not following oil and why. And so, you know, first thing I want to do is give uh kudos to Housing Wire and this show that I listen to every day that I highly recommend everybody does. I am stealing this audio, uh, but hopefully they will not sue me as I am saying it is a must listen to, and they're my friends over there. So this is what Logan had to say this morning.

Speaker 50:42

You know, a lot of people just see oil and they think oil is a 10-year yield should move one-to-one. Not necessarily. The market needs to lose this attitude, which it can change very quickly. You get two to three Fed governors coming out and go, okay, the worst case scenario is over for Fed rate hikes. You know, we could maybe be neutral or stay the course and see where it goes with inflation. If they do that, that's very beneficial. But that to me is like the main reason that oil prices have been falling for like 21 days, but the 10-year yield hasn't been budging as much.

Speaker 8 51:15

So you got to trust Logan, he's normally all over it and on it. Um, so but we're seeing now just, I mean, that that was recorded on Wednesday morning, right? And you see how quickly things change. Like when they recorded that, that was before Trump had said, you know, take all of the the balloons and get them the hell out of my office. I'm not signing this act. So, and then on top of that, 24 hours later, the bond is rallying big time. So maybe coming more into line, maybe it's becoming more believable that the war is really over and that there could be some relief. But you have to believe, Kobe, like uh the bond did shoot up dramatically and it looked like we were heading to five. Why didn't it go up a little bit more? How, why, and we're not economists here, so let's throw that disclaimer out there. But why is it hovered around four or five? What do people that look at this data know that we're not necessarily looking at? What are they saying in the numbers that leads them to believe that maybe the economy is not doing too well, even though we're having you know lots of different uh conflicting data points?

Speaker 9 52:21

Well, I I I think you have to look at you know two things. If you're if you're looking at the employment data, um, there's definitely interesting numbers coming out of that. And there's and there's some conflicting numbers. We just saw the latest jobs report where Aaron pointed out that many of those jobs were coming from the World Cup. I think if you look at it from the war perspective and and oil, there's a history now, there's a track record that Trump has where he takes us to the brink of things and makes a lot of claims and a lot of threats. And then at some point he he kind of rolls it back and and and gets us back into uh what anybody would call you know as normal as you can get under this administration. But the what is it called? The taco, Trump always chickens out. And I and I think there is something to that, but not necessarily that it's out of fear, but I think at a certain point he he shifts his focus back to the voters and back to the economy and says, okay, I've got to manage this. This is my biggest responsibility, my biggest path towards getting Republicans elected in November. And I think the bond market and the bond markets control everything. The bond markets see that. They they think that they have a good read on him now that we're, you know, six years into his presidency. Um, and I think that they look at the jobs and where that's going and they ingest all of this information and and the panic that used to be in in something like launching a war just isn't there because I think they they see that the appetite for going further. I heard some people talk about, you know, could we see ground troops by the end of the year? No, we're not gonna see ground troops in Iran. That's not gonna happen. And I think the bond market recognizes that. Um, so I think the the the bar is low for what the jobs reports are coming in. The outlook for war is not as bad as some people think it is, even if it does drag on for a little while longer. Um so I think that's creating a lot of temperance in the market, and that's what's keeping the the yields low or and it's gonna continue to. Are we gonna see five and a half percent? I don't think anytime soon, but could we get down to six in the high fives? Yeah, I think so. I think we'll see that. Interesting.

Speaker 8 54:10

Interesting. You're you're discounting the Warsh effect. So maybe now you've really pivoted, Kobe. Maybe all of a sudden you believe Warsh that uh you know he's gonna stick to you know the monetary policy and not and not cut rates uh knee-jerk wise. I mean, you've this what a difference a week has made. You've you thought the war wasn't really over. Now you think it's really potentially over. Um now you don't see rates going down, you're becoming a believer in Walsh. I mean, next thing you're gonna do. I know your pant your pantry is gonna be perfectly clean. It's gonna look like Aaron's pantry.

Speaker 9 54:43

I I gave you what I think the bond market outlook is. And I and that's who really that's who really controls things. That may be, you know, I there is some conflict between what they believe and what I believe. Um, but I I think you know, they're obviously the ones making the decision, not me.

Speaker 8 54:57

But his behavior can dictate what Worsh does the way he tries to encourage, although he's not the the one, right? It's a it's a whole board, but I'm just teasing you, buddy. I get it. I'm good.

Speaker 5 55:09

Well, and you know, now the the bond market is realizing it's not going to get its forward guidance and it needs to actually look at the data and adjust the data and make decisions on its own. I mean, the the the we did get up to four seven almost with with the 10-year at one point during the war. I mean, I think Kobe makes a good point that at a certain point the bond market realized that Trump bloviates a lot and and a lot of it is, you know, here and there. And I think I think a big reason, you know, Warsh obviously, but I also think last week it was still very tenuous. And the bar the market doesn't like volatility and uncertainty. And I think we've had a little more certainty and less volatility. And I think it it's calming down just a little bit still. Um, you know, and that also looks looks good if we're not gonna continue war, then that's not additional war spending that is gonna continue to drive things up.

Speaker 8 55:54

So well, speaking of volatility, uh, I hate to be a doomer here, but uh, we're gonna take a look at this fitch downgrade of U.S. home builders to deteriorating, Aaron. This was really important for you to to bring up this week. Why so important? I mean, isn't this just more of the same, or is there something more substantive here that we should look at?

Speaker 5 56:13

Well, I think we just had some data that came out that was that that kind of aligned with the downgrade for for U.S. home builders to deteriorating. Um, so in the last week or so, we had the the I think it was NHB Wells Fargo survey come out and state that um up from 32% last month, this month, 35% of home builders had to cut their price, and over 62% had to give incentives. And if you remember, the reason these builders are giving incentives, doing forward forward commitments, things like that, is so they don't have to cut the price. And so now builders are still giving it still giving incentives. It's been more than 60% for 15 plus months in a row now, are giving incentives, but now you have an increasing number also cutting prices. And those two, those two, that math don't math for builders. And so I think what we're seeing.

Speaker 8 57:04

Did I read that builders had something like 10 months of supplies of supply in the market right now?

Speaker 9 57:09

So some as much as 13 or 15, depending on the market.

Speaker 8 57:12

But we have, but but we have a shortage, right?

Speaker 9 57:15

Well, those are two two different things. There's a shortage in the existing home sales.

Speaker 8 57:19

I mean those homes, those homes are empty, aren't they, though?

Speaker 9 57:22

They are, but they're out of reach for most home buyers because builders can't afford to build less expensive homes. So we have we have a we have a glut of expensive homes that most American families can't afford.

Speaker 8 57:33

I don't know. I mean, we we seem to be going through uh a wealth wave right now with you know, if we're to believe it, stocks in 401k is higher than they've ever been. I don't know if that math maths totally.

Speaker 5 57:43

Well, how many, how many, what percentage of people are in the market though? That's that that number is deceiving in and of itself.

Speaker 8 57:50

To the better or the worst. What's the point?

Speaker 5 57:52

Meeting to meeting that number is Rosie. So so that's a big talking point for the Trump administration that the stock market is higher than ever. But if you look at the number of people that are actually invested in the stock market, it's it's shockingly low.

Speaker 9 58:04

And that's where you're getting your pay. A lot of people by the way, the build the builders, the builders themselves are are you know would would rate themselves deteriorating. This is you know, builder confidence. Um fell 35 in June from 37th, the 14th straight month below 40. And that's a run not seen, by the way, since 2011-2012. And certainly not a good era for the builders. So if you if you compare anything back to like 2010, 11, 12 for the builders, that's by default not a good comparison and not a good outlook from them. Yeah.

Speaker 8 58:34

So what happens, Aaron, if that inventory goes balloons from 10 months to 14 to 16, and then they start cutting and losing, and the builders start losing, and that ripples through the economy, and now values start to go down. Like you you were talking, one of you was talking earlier to in in this show about uh some TikTok channel where people are predicting a crash of the housing market. I mean, could that be a catalyst? See, I'm dooming again. You see what happened?

Speaker 5 59:00

No, but I don't I don't think it's a catalyst. I think that's where you actually get people, I think that's where you actually improve affordability and where people can can actually start to afford to buy homes again.

Speaker 9 59:09

Um, and so I think that's actually would would be helpful to we don't want to put the we don't want to put the builders out of business though, but we don't want to put the builders out of business. Oh, so that's so that's why that's why we need reform when it comes to the regulatory costs of building a home so that $100,000 of cost is not baked into the process so the builders can actually build homes that people can afford and make money. Because if we put the builders out of business again, which we did during the Great Recession, that's going to make the housing shortage even worse than it is right now because that's what started it.

Speaker 5 59:38

Yeah, well then we'd be advocating at the state and local level for those fixes.

Speaker 8 59:43

Kobe, do we need to be building more right now based on the numbers we just talked about? We need to be building better.

Speaker 9 59:48

We're not building, we're not building necessarily more. We need to build back better. We need better, we need more affordability.

Speaker 8 59:55

We need to build more, you're saying we need to build lower price point homes, but the prices are coming down every day on these houses now. So isn't affordability getting better? Shouldn't that stock be getting eaten up?

Speaker 9 1:00:06

No, because it's still not to the point where most Americans can afford it. There's they're still building way too expensive of a home because that's what that's the only point where the profits make sense is if they build something that the average American can't afford.

Speaker 8 1:00:18

You say can't afford it, but on a $400,000 home, we're $10,000. But they're not building $400,000 home. Well, $500,000 home, $600,000 let's call it $600,000 home. Okay. With with all the buy downs, you can get all your closing costs covered. And even though today's prevailing rate is six and a half, you could potentially get $499. So really what you're buying is the equivalent of a $400,000 home today for most people. So I don't know.

Speaker 9 1:00:42

But they're not selling, right? The the average the months of inventory is going up, they're not selling. There's a reason they're not selling, and it's because people tick tock. Because of TikTok. Aaron, is your boss waiting for you?

Speaker 5 1:00:52

What?

Speaker 8 1:00:53

Is your boss waiting for you?

Speaker 5 1:00:55

No, he is in a recruiting meeting, and so it's just my HR manager waiting for me, but I let her know I would be late.

Speaker 8 1:01:00

Oh, well, that's I don't want to be. And I love that you asked you are you're already a walking uh HR HR reports to me, thank you. Oh my goodness. Well, that is the way to do your thing. Well, hey, that's the way that is the way to do it. You got it all figured out, man.

Speaker 9 1:01:13

But I love that every week you ask Aaron about her meeting with her CEO. Every week, I love that too.

Speaker 8 1:01:18

I want to take care of Aaron.

Speaker 9 1:01:20

Never, but never once, never once, Aaron. Never once, Aaron, has he ever asked me, hey Cobe, what do you need to do after the show? Do you have anything going on? Never once.

Speaker 8 1:01:28

Well, Aaron is the just assumes I can sit here all day long. Yeah, she's the glue to no surrender. Plus, you have mice in your house. You have we know what you have to do when you get off. Have you eradicated the mice problem yet?

Speaker 9 1:01:40

I have. It's not a I live in my house, is in the woods. There's there's mice, there's all kinds of stuff all around. I have a raccoon that I battle with on an almost daily basis. Like it's just that that's just how it is.

Speaker 8 1:01:49

Have you ever had a snake?

Speaker 5 1:01:50

Imagine them with like a with like a broom like yelling.

Speaker 9 1:01:53

I do yell at the raccoon.

Speaker 8 1:01:55

Have you ever had a snake in your house? No, thank god. I'd have to move. That's like my worst fear is a snake coming up through the toilet. I I'd move that day. I would move. Uh, before we go, uh Christopher Whalen. I'll call him a friend of the show.

Speaker 5 1:02:11

Friend of the show.

Speaker 8 1:02:12

Love that guy. Um, now I'm catching you off guard, Aaron, but you shared something in our epic text thread about uh DSCR loans and the and the issues in Baltimore now becoming more prevailing. Um, can you just give us just a little tea leaf on that and maybe we'll cover it in more detail next week?

Speaker 5 1:02:29

Yeah, basically high level. Baltimore last year had a big problem where a big investor group, I guess out of New York, came in, um, purchased a bunch of DSCR loans, essentially because these groups are picking these areas that it's hard to tell. There's a big difference in value from one block to another. So they're able to purchase them at inflated values. Uh, it's a kickback scheme, obviously, and now they're all going into foreclosure. And now this problem is seeping into Philadelphia, starting to see it in Newark. And so there's there's some areas, and it's these are some of the poorest country, poorest neighborhoods in the country. So it's impacting these, it's impacting these neighborhoods, obviously, with increased foreclosure. So I think it's worth looking into.

Speaker 8 1:03:09

And at the same time, rents are going down. In yeah, in some markets, yeah, like a lot of places in the country rents are going down, and and the most prevalent non-QM loan is what? DSCR loans, and that's based on what rental income. This is not complicated. So Doomer. Yeah, we're really ending this on a high.

Speaker 9 1:03:34

The man who the man who volunteered to lead the charge on positivity found a way to end the show. I'm having a problem.

Speaker 8 1:03:40

I'm having a real problem. I may have to go back to my therapist. I have to find one.

Speaker 5 1:03:44

Instead of a dunce cap, I'm gonna get a doomer cap.

Speaker 8 1:03:47

Uh anything else? I love you guys. You guys are you're you the two of you are total stars. I'm so happy to be going along for this ride with you. I mean, I even had Denise uh Donahue, the mortgage nerd. Love her. Even Denise Donahue said, Oh, I didn't know you were famous. You're on that show with Aaron D, who I love. I she's basically telling me I was no one until I, you know, hitched my wagon to you, Aaron. So I love hearing that.

Speaker 5 1:04:14

Oh, she's the best. I love her.

unknown 1:04:17

All right.

Speaker 8 1:04:17

Okay, any final thoughts? Yeah, she's a friend of the show now. We need to get like no surrender friend of the show t-shirts. That's true. We need some merch. That right there is what we need. Who can help us with merch? Do we have any merch? We'll pay you. We'll pay you. We need a logo and we need some merch. We'll pay whatever the going rate is. We we just can't do it ourselves.

Speaker 9 1:04:38

Um, the last thing I would put out there, and this is something that I want to speak out into the universe, is that at some point there is going to be a no surrender live stage show at a conference near you. We are going to do this. It's going to be great. We're going to have a live audience and we're going to rock it.

Speaker 7 1:04:53

All right.

Speaker 8 1:04:55

Love Nyoung backstage for all of the buttons that she's pushing. They're all the right ones. Nigh Young, we love you. All right. Uh, another one in the books. I feel like everyone is the best one. This again um met and exceeded expectations. Kobe, Aaron, enjoy the rest of your week. We'll see everybody next Thursday on No Surrender. Until then, so long. Bye-bye.

Speaker 4 1:05:17

No surrender on the show. We go toe to toe. What fail, what fails? Who gets the whole? Hot news, hot takes, raises takes.