Episode 8: VA Fees, Pulte's Pilot & GSE Loans

Episode 8 kicks off with a surprise as Greg, Erin, and Coby welcome some very special guests—their moms—for laughs, stories, and a side of No Surrender you've never seen before.

Then the gloves come off as the crew dives into some of the biggest stories impacting housing and mortgage:

🔥 Proposed VA funding fee increases
🔥 Pulte's title waiver pilot
🔥 GSE construction lending
🔥 UWM & CrossCountry developments
🔥 Non-QM market trends
🔥 Federal Reserve independence
🔥 Student loan reform and housing affordability

Hot takes. Fierce Debates. No Surrender.

Transcript

SPEAKER_02 0:00

Right on the mighty bring the facts. Everything in the bring no turn of bags. Copy that numbers clean up there. Starts in the morning space right here. How the facts every word way when the snakes don't sleep. Credit board, you can feel that star. Every point is hard. Every stay is hard. Capital field efforts stay high. Consolidation makes the small ones fly. Trouble seems round, every detail counts.

SPEAKER_01 0:37

Oh my goodness.

SPEAKER_05 0:39

America.

SPEAKER_03 0:40

She went there.

SPEAKER_05 0:41

Let's go.

SPEAKER_01 0:43

That was a quick costume change, too. Wow. That's incredible. Well, people need to know those tattoos are actually real.

SPEAKER_05 0:50

Yes, absolutely.

SPEAKER_01 0:52

And the hair.

SPEAKER_05 0:53

Yes. I grew this out last night.

SPEAKER_01 0:57

I love it. Um, did you have to buy that whole thing, or did you have that in the closet somewhere?

SPEAKER_06 1:02

Well, listen, you don't want to know what's in my closet, buddy.

SPEAKER_01 1:05

Um, you know, that's a perfect segue because we're about to find out. Uh we have a lot to talk about today. You know, first of all, there's breaking news. Our friend, uh, our uh one of our FOTS friends of the show, Rich Swarbinski. He doesn't have a bigger fan than me, by the way, just so you know. I don't know.

SPEAKER_05 1:21

I'll fight you with that. I'll fight you with that.

SPEAKER_01 1:23

Real breaking news. Two Harbors Investment Corporation shareholders have voted in favor of a sale to Kobe Cross Country Mortgage. It's happened. It's finally happened. According to Rich, this sets up UWM for a spiral of epic proportions. We'll find out what exactly that means. I'm sure he'll be writing about it in the days ahead. Yes. And we'll certainly be discussing it in the days ahead. But before we do anything, we've got a lot to get through uh here today. Pulti, title waiver, penny max senlar, VA Earl fee, uh, which could really materially change the ability for veterans to refi, uh, Fitzgerald construction lending, the GSE's getting into the construction game potentially, non-QM delinquencies. Are there changes happening right before our eyes? And student loans, uh, two percent potential cap being floated around. Uh, but before we do any of that, we we've got to see what's in Aaron's closet, and what better way to do that than to bring on the woman that raised her? Um, so let's bring on Aaron's mom, Greg's mom, and Kobe's mom. And uh Kobe, this is this this was your idea. Hi, moms. How are you?

SPEAKER_08 2:35

Hey there. Hi.

SPEAKER_01 2:37

Yep, we've got all the moms under the kids. Kobe, you came up with this idea. You get full credit. Tell us what you were thinking.

SPEAKER_03 2:42

Well, you know, as we uh come into this very special weekend that Aaron is so artfully illustrating in real time, celebrating the birth of our country uh with her Trump voter starter pack outfit. We are also wanting to celebrate the births of the no surrender hosts. And this week we've done a lot of celebrating around the show. We celebrated the FOTS, the friends of the show, and so many have raised their hands to talk about how much they love the show and the impact it's had on them. And I thought we should be celebrating our fans, we should be celebrating our country, but most importantly, we should be celebrating our moms, who are the reasons we are all here today.

SPEAKER_01 3:17

They're the moths, they're the mothers of the show. They're the moths. I mean, we we have to, I mean, uh, let's start off with uh with Aaron's mom. Uh good to have you with us.

SPEAKER_07 3:27

Hi.

SPEAKER_01 3:28

Do you go by Jan?

SPEAKER_07 3:29

Jan.

SPEAKER_01 3:30

Good to see you, Jan. Are you surprised that Aaron showed up in this outfit today?

SPEAKER_07 3:35

I think she's rather calm. Yeah. Yeah, that's taking her.

SPEAKER_01 3:41

How much time would it take for us to cover the question? What was it like to raise Aaron D?

SPEAKER_07 3:49

It might take a minute or two. Um, I can tell you a little story when when she was a toddler. We were trying to get Aaron to walk. And Aaron did not want to walk. My cousin came over and she had a beer in her hand, and she looked at Aaron and she goes, Aaron, you want a beer? Up and walks right over to her. So I knew that.

SPEAKER_06 4:10

America.

SPEAKER_07 4:10

Yeah, yeah, America. Yeah. No, Erin. Yeah, exactly. I knew it. You know, she Aaron has always been very smart. Aaron has kept me on my toes always. Very smart, very independent. Um, you never know what she was going to do. She probably could write my name better than mine because I know she used to sign all the things from school.

SPEAKER_06 4:36

I can sign her name like a champ.

SPEAKER_07 4:38

Yep, yep, yep. She's good at sneaking out of the house. I I know that. Um she's good at having a small birthday party, small, and then I find out 50 kids are there. And and the day before we sold the house, we had to scrape off all of the confetti and icing and everything that was on the ceiling. So uh I love her to death. I am so proud of my daughter, and she's just she's always been dynamite. And when you guys started this show and it was no surrender, I'm like, oh my god, that's Aaron. That is so Aaron.

SPEAKER_01 5:12

Well, you're what what how old was she the first time you got a call from school? Um see who wins this contest.

SPEAKER_07 5:19

Honestly, you want to know. I got a call from preschool.

SPEAKER_01 5:23

Yes. How old? Yes.

SPEAKER_07 5:26

Yes, she was a guy's not minding. Yeah, yeah, I wasn't surprised, but it wasn't that one wasn't too bad. And actually, I think a lot of the stuff in high school, I probably either didn't know about it or she had somebody answer our phone. So I I looked at it this way. Well, honestly, Erin, I've said this to you when Aaron was growing up, she was either going to be in jail or a CEO. One of the two, undecided.

SPEAKER_06 5:56

DVD. Both are equally optional at this point. Could be, yeah.

SPEAKER_01 6:03

Kobe, take the horns here.

SPEAKER_03 6:05

Oh, yeah. Uh, you know, I I know that Aaron and I have been dying to find out um from Annabelle what it was like having Greg in the house. And Greg talks a ton, a ton about what a pain in the ass he was as a kid. And we just want to know from you is that true? And give us a little bit of context around that.

SPEAKER_08 6:24

Uh, well, you guys know it's true. Look at the intro to the show, what's going on so far. I I mean, are all these mothers gonna be the same, have the same story to tell? I can just imitate what was just told. Um I have to say that we have three sons. The first was a challenge, the second one was a pleasure and a joy, and the third one was a pleasure and a joy. That I'm serious, that's Greg, until he reached two. And the uh the terrible twos. I'd say they left when he went to college.

SPEAKER_03 7:07

What was the what was the seminal moment, though? What's the seminal moment when you were like, oh my god, this kid's different?

SPEAKER_08 7:13

Oh well, let's go back, let's go to sneaking out of the house. Greg snuck out of his bedroom window. I have no idea how he got out and how he got back in. And I didn't know till many times after he had done it. I think you confessed, Greg. So that was one. Um, Greg's question when did you get a uh first call from the school?

SPEAKER_09 7:38

Oh yeah.

SPEAKER_08 7:39

Three years old. I was at work and I got a call from there. Very proper. And they called me at work and asked me if I would stop by on the way home and meet them in the office. So I did. And they said, Mrs. Cher, we would just like you to know that for all the good money that you're spending, he's spending so much time in the office. I can't repeat what they said.

SPEAKER_01 8:24

Yes, you can. Actually, you can.

SPEAKER_08 8:26

No.

SPEAKER_01 8:26

Yes, you can. I can't yes, you can. We insist.

SPEAKER_08 8:30

I can't do it.

SPEAKER_01 8:32

You can use okay.

SPEAKER_08 8:33

I can use all right. They said, Mrs. Shear, for all that, we just cannot have Greg running around the program saying running around the playground saying F you, F you. So that was does that give you enough background, or do you need more?

SPEAKER_03 8:50

No, that's good.

SPEAKER_01 8:50

That's good.

SPEAKER_08 8:51

He hasn't changed, hasn't changed a bit. I love it.

SPEAKER_03 8:54

Yeah, I would say we definitely want more. We're gonna have you back for sure.

SPEAKER_01 8:58

All right, all right, Esther, you're up. This this uh this man Kobe who was bartending during COVID. Uh, you know, he's got a quite a story behind uh the the hood here. So tell us tell us about Cobes. Tell tell us about Kobe. What do we need to know?

SPEAKER_04 9:14

Oh wow, you have like three years? No, I'm not kidding. I'm just kidding. Ditto. I do want to say ditto ditto because I think we've all have children that were that are very intelligent, that always thought they were smarter than us um from birth on. Um and we we truly enjoyed it. You know, there were a lot of challenges um going from preschool. Um, our favorite one was when he was in first grade. Um, Kobe read very quickly. He was one of the first readers, so he was always very bored, but he was always correcting the teacher. So one day he really got upset with the teacher, and he said to her, Tomorrow you can mark me absent because I'm not coming to school. And um yeah, so that that's just uh a little blimp of it. But we we've uh we've had a you know preschool, elementary, high school, college, but but you know, we're here, thank God, and we're uh very happy. And um we we've got this in the past, like we all do. So, but but we've got some good memories too, which is very, very, very important to us too. Um go ahead. Go keep going. No, so that that's really the crux of it. I mean, you know, this is um that little picture of Kobe is a very innocent picture. Um yeah.

SPEAKER_06 10:39

I would like to know who's most embarrassing celebrity crush when he was a kid.

SPEAKER_04 10:45

Celebrity crush. Oh wow. Kobe, I I'm blanking on that one.

SPEAKER_03 10:52

I mean, in fact, it was probably Don Mattingley, the first baseman of the year.

SPEAKER_01 10:55

It was probably John Travolta. Let me ask you what what Kobe asked my mom. When was that moment you knew he was different?

SPEAKER_04 11:07

Um, about six months old.

SPEAKER_01 11:11

Oh gosh.

SPEAKER_04 11:13

Yeah, yeah. Kobe, Kobe's always been independent, that I could tell you. Um we we were in Israel when he was about 11 months old, and he he was walking and running and everything else. And this this gentleman came up to us and he said that he's he said, wow, that he's how old is he? And we said he's about he's 11 months old. And he said, I have to take pictures of him. And we were like, my husband and I looked at each other and we were like, wait, what? You're taking pictures of like, you know, we were kind of like a scance on this. And he said, No, no, I'll send you the pictures, don't worry. And and Kobe was posing for him and like, you know, running back and forth and everything else. Sure enough, three months later in the mail, we got pictures of Kobe at the coatel. And it was amazing. And he wrote us this beautiful letter stating how we was so impressed with him and how so independent, how and he was, you know, and he just cherished the pictures and cherish him. And that was that was one of the that was a pleasant surprise. So yeah, he was uh yeah, yeah.

SPEAKER_03 12:18

Touching and touching and creepy at the same time.

SPEAKER_06 12:20

I was gonna say that that that leaned heavy on the creepy, but I love it.

SPEAKER_04 12:24

Yeah, yeah. We were kind of like, uh, do we call the police on here? What do we do? You know, but but we were, you know, we let it go and we figured, okay, we we've got our child with us, we can leave the place now. And that was that was assurance. So we let it go. But but it was pleasant to see a letter coming from this gentleman and and and praising our child. So we gotta turn this around.

SPEAKER_06 12:46

Taking pictures, Kobe. Like, do you still get pictures from him in the mail sometimes of you in the shower?

SPEAKER_03 12:50

Or I yeah, I send him stuff every once in a while. We still keep in touch.

SPEAKER_01 12:55

Well, I think that we should turn we should we should turn this around before we let our moms go and turn this into a serious thing for a moment and talk about what we got from our, you know, what what can we attribute our our success, what elements of our success we can attribute from our mothers. And for me, it's very easy. My mom is super smart, uber hardworking, very loyal, you know, very dedicated. And uh I think I got my my uh my grit and my work ethic from her for sure. So thank you, mom. I appreciate that. I will say I was the hardest kid to raise. I got kicked out of, I don't know, how many schools do you think, mom, legitimately? What's the number? I'm being serious. What do you think? If you had if you had to guess, what is the number?

SPEAKER_08 13:39

I'd have to go for three, it could do four.

SPEAKER_01 13:42

Wow, so I mean it's more than that for sure. I can beat three. I could take a three just in high school. Uh, but it was not an easy road, and and here we still are, and I owe a lot to you, so I appreciate it. All right, Aaron, your turn. Let's let's talk about Jan.

SPEAKER_06 13:57

First, I would like to say Jan. At least I wasn't that bad. So come on now. But you know, I I say the same. So one of my favorite stories about Jan is whenever I was on vacation for from school for a day or what a week, whatever, she would have me go to her office and you know, collate papers, do basic things. Two weeks later, I get would get paid a paycheck, but she would deduct taxes out of that paycheck. And so, you know, I would say work ethic and kind of my understanding of of what the work system is like and probably my my initial hatred for the government. Good girl.

SPEAKER_03 14:31

Well, you know, I love you, Larry.

SPEAKER_06 14:33

At least my taxation system.

SPEAKER_03 14:35

Here we go. Well, well, I've told this story many times about how I got my start in mortgage working for my mom, who's been in the mortgage business now for almost 40 years. I think she's got almost 40 years in. So next year we'll have her back on to celebrate her 40th year in the business. And I started, and then when I was 10 years old, helping her in the office, 10, 11 years old. And then when I was 19, 20, she got me my first job at Fleet Bank on the East Coast. And I remember I got to that job and I thought I could just call my mom every time I had a question about something, and she would just be my, you know, my my claude or my chat GPT. Um, and very quickly she made it clear that I was on my own to learn the business and to figure it out and to and to find my own mentors and find my own resources. And I remember being very upset about that because I was like, what do you mean? You're my mom. You're supposed to help me. But she taught me how to help myself in that first job. Um, and that's something, a lesson that stayed with me ever since. And now coming into my 29th or 30th year in the business, it's still very much with me. So I appreciate that.

SPEAKER_01 15:31

Yeah. So today we celebrate you three moms. Uh Nyoung, pop on here real quick before we let him go. I do have a question. Come on, Nyoung. Hold on, moms. Stay on. Where are you, Nyoung? You better be listening.

SPEAKER_09 15:44

There she is.

SPEAKER_01 15:45

Now is responsible for putting all these crazy ideas together. Nyoung, without without naming anyone in particular, how long would you say it took cumulatively to get the moms to figure out how to use the links, what to do? Oh, the whole thing. If you had to package it up in the last couple of days, how much time did you have to dedicate to this?

SPEAKER_10 16:06

I would say let's just say let's just keep this uh a one episode only kind of thing.

SPEAKER_01 16:13

Okay, well, that explains needless to say, hours. Um it's yeah, it's it's hours.

SPEAKER_10 16:22

We're there, we're there.

SPEAKER_01 16:24

All right, now thank you. Moms, any any uh any closing thoughts here before we let you roll? But they did great. They did great.

SPEAKER_08 16:31

I think we all love our we all love you guys. We all love our definitely, definitely, absolutely. So Greg, after all that, so could not be prouder of you. You're just a super guy. Seriously. Love you.

SPEAKER_04 16:47

Thank you guys. Yeah, it was really a pleasure.

SPEAKER_08 16:50

Thanks for coming on. Goodbye.

SPEAKER_01 16:52

All right, see you later.

SPEAKER_08 16:53

Thank you. Bye.

SPEAKER_01 16:57

Um, Aaron, do you do you continue to wear that outfit the entire show or do you return back to Aaron now that we're shifting focus?

SPEAKER_06 17:04

I mean, do you want me to take this outfit?

SPEAKER_01 17:06

What do you think, Cobe? I'm 50-50. I might be able to leave it on. I might want to leave it on 545. You want to leave it on?

SPEAKER_03 17:11

Yeah, because all the clips now are gonna be like her talking about serious topics looking like that, and that's gold. It's gonna be like, why is why is kid why is kid rock breaking?

SPEAKER_06 17:22

Listen, box population.

SPEAKER_01 17:25

Yeah, we're gonna have these clips going around. I think maybe time swap it out. I don't know. That's what I think. There you go. Come on. Let's get back to Aaron D. I was overruled.

SPEAKER_06 17:36

Okay. Back to Aaron D.

SPEAKER_01 17:39

Oh my goodness. Whoa, what was that a hair net? What the hell was that? Uh like a skull cat.

SPEAKER_05 17:45

It was a wig.

SPEAKER_01 17:46

It's amazing. Just you know, don't go robbing anybody after this. All right, if you need a loan, we got you.

SPEAKER_06 17:52

But now you're you're stuck with this. I can't do anything about this.

SPEAKER_01 17:55

So I mean, it looks great on you. On second thought, please put it all back on. Uh all right, so so alright, let's get into let's get into the news because we got a lot to go over here in the next 40 minutes. That was amazing. Kobe, great idea. Thank you for suggesting it. Uh really came together. We're so we're so fortunate to have our moms, right? I mean, mine's in my 80s. I don't know about you two, but you know, every day is a precious gift. Uh so at the top, we talked about uh cross country winning out the bid, according to Rich Swarbinski of Two Harbors. Any thoughts on that before we get into it?

SPEAKER_06 18:29

I think it's probably the right decision. Probably probably the right decision, but we'll see.

SPEAKER_03 18:34

Yeah, early early moments here. Um, you know, this did feel inevitable for a long time. Then there was a period of time when when when two harbors tried to vote twice and they couldn't get enough shareholders in where it looked like the was it three times that got canceled?

SPEAKER_09 18:47

No.

SPEAKER_03 18:48

Um two or three times where it looked like the tide might be turning in UWM's favor and it looked like Matt Ishbia might have pulled a victory out of nowhere. Um, but much like the referee in the World Cup match last night, at the last minute, their legs were taken out from under them. Um and cross country stumbles across the finish line here. And um, what this means for UWM, I think those opinions are across the board right now. Um, I'm not sure this this is the initiation of a death spiral, but I know that that opinion is out there. Um, but uh certainly not a good look, certainly, certainly a big L for UWM. But you know, when you're when you're playing in the major leagues, uh the L's get plastered across the scoreboard and you got to deal with it. So uh interesting to see how they come back from this.

SPEAKER_01 19:30

Yeah, well, there was an announcement today that also this has not been a good day for them because uh one of their biggest groups that sends a lot of business to them, uh run by Mike Cortes, Nexa, also had an announcement to make. I don't know if you guys have this at your fingertips right now. Uh I think that you do. So um, he announced uh new initiative and is going to be, I think, co-issuing potentially with also cross country. Um who can who can read his post? I don't have it queued up here. Aaron, you want to you want to take the horns here?

SPEAKER_06 20:02

No, I don't have it up here. I don't have it up.

SPEAKER_01 20:05

Um probably not best. I'll I'll grab it really quickly, but um so Mike announced um Evolend. Uh he announced Evelyn. It's the evolution of the mortgage industry, the way it should have been for loan officers and for loan officers because they are exactly what this industry should be about. Um he doesn't specifically mention uh cross country here. Um but it is but it is mentioned, uh I'm not sure by whom that they're going to be uh you know spinning off servicing in multiple directions, potentially getting uh into a deeper, a deep relationship with cross country. Um I I think this there's a lot here to unpack. Um I think that on a positive note, you know, not not not predicting any downfalls. I think we've really got to tip our cap to what Ron's been able to do at cross country. I mean, he's playing in the big leagues, definitely. He's big time, he's crossing over into servicing. Um now he's crossing over into the servicing acquisition game, potentially co-issuing. Um there there seems to be very little that he can't accomplish when he wants it.

SPEAKER_06 21:14

Well, and I think, you know, now is the perfect opportunity. He's it's almost like the Berkshire Hathaway model, right? Like the industry right now is is in a down phase and he's taking full advantage of that. And so when things pick back up again, he's gonna be absolutely poised to be at the very top of it.

SPEAKER_03 21:28

Yeah, it's uh it's a scramble. Um, the other thing for UWM that that uh I talked about a couple of weeks ago was the fact that uh they were just recently issued, uh put in contempt of court by a federal judge for not um putting Matt Ishbia out to testify in the uh case with Atlantic Bay, where um Atlantic Bay is challenging UWM's all in mandate to say, you know, this is not uh there's disparate impact here, and it's it's a penalty, it's not actual damages. Um and that could be the end of the all in mandate. And so if we if we look at them losing this defense. Their uh stock price plunging, um, losing the all-in mandate. Um, does that does that create a whole different future landscape for UWM and the broker channel, especially if if uh if Nexa starts to go their own way, Nexa one of the biggest, if not the biggest, in the broker channel right now? So um lots to see, uh lots to lots to kind of wait and see here. But um, you know, I I still, for as much as I criticize UWM, I still respect what they've built and I still respect uh their operation. I still respect uh certain parts of of how they're committed to the industry. And and I just I kind of feel like if anybody's gonna find a way to recover from this and and regain their footing, it's gonna be them. So I'm I I still think we're gonna see uh an act two here.

SPEAKER_01 22:41

Yeah, I think I think an interesting way to look at it is you're you're only as good as uh as yesterday, right? I mean, Matt Ishbio rewrote the the book here. He he you gotta give him if you were looking for to give somebody credit for taking the broker channel from a a paltry eight percent up to the 28, 30 percent, he would be the guy. He would be on that he'd be the only face on that rushmore, and he deserves credit. Having said that, things change. And just like Blackberry couldn't figure out what to do to become the iPhone, uh, this could be UWM's Blackberry moment here. I hope it's not. Um, a lot of respect for what Matt's built. I mean, it used to be that you could say uh to uh someone you were recruiting, don't go the broker outlet because you'll you won't have any control over your files, the tech is terrible, you'll never be able to get up holding anybody, the pricing will be awful. All those things are not true anymore. I mean, if anything, they excel in every one of those uh departments, and you've got to give Matt credit. So definitely don't want to lose sight of that. Let's jump into the uh Pulty uh title wet uh title waiver. That's not it, Kobe. I don't know if you gave me anything here, but I've got so many things on my screen. Essentially, Open Door bought DOMA and DOMA built the GSE title waiver program, which has been extended. Um, Kobe, you have some very strong thoughts on this uh as it relates to open door somehow finding their way into the mainstream plumbing of the GSEs.

SPEAKER_03 24:07

Yeah, it's uh it's a it's a story of innovation having strange bedfellows. Um the title waiver program, I think it's great for the consumers, great for the industries. What they're they're doing it in a limited geographic area, 80% or less LTV with no historical defects. Um the um there's two vendors that are at the at the crux of this. It's DOMA and Westcore that were selected. Uh DOMA, I think it was already after they were selected as a partner, and they just had never been profitable since they went public in 2021, was subsequently purchased by Opendo. Um and so now Opendoor, this company that spreads malicious falsehoods about the industry being this bloated, profitable industry that that adds 300 to 350 mar basis points of margin to every deal, um, they're now embedded with a GSC program meant to alleviate costs on title for a whole swath of consumers. So it's interesting to say, to see, okay, we've got this good program, we like it, it's good for consumers, it potentially could expand beyond where it is now. Um, but who are the people that are involved with it? And I think that's interesting. And and and I've I've have a lot of beef with Open Door for just the the marketing campaign that they've spread, and and they're all over Twitter constantly talking about how our industry is bloated, our industry makes too much money, and we're ripping off consumers. And I don't even think we're giving them enough attention as far as what they're doing because this is a coordinative, massive campaign on Twitter. If you go on there, you'll see what I mean. On the other side of this is the title industry, and the title industry is involved now in this protectionist campaign because they want to keep their piece of the pie. And they're saying, well, you can measure defects in a pilot program for a couple of years, but really what happens is you'll see the results of this in eight, 10, or 12 years. And that's when the uh the rubber's gonna meet the road, and we'll see if there are really some negative implications here. So the title company, specifically Alta, which represents 6,400 different title companies and title agents, massive lobbying power in Washington is fighting this. They've already gotten something like 40 or 45 senators to start pushing back on this. Um, and uh, we'll see where this lands. So ultimately, is it going to be the consumer that wins here, or is it going to be the lobbyists? And and then we can start to pick apart who the partners are in this program. So there's so many layers here, super interesting. But I do love that I'll give credit to Poulti. I'll give credit to Poulte that he's doing something to actually lower the cost of buying in our country. He's actually doing something. Look at that. Um, so yeah.

SPEAKER_01 26:32

I go 10 T, yeah. Do you do you think that happens if Poulti's not in office? Because I'll tell you.

SPEAKER_03 26:36

I'll give him credit for that too. I'll give him credit for that. That's a lot of that's a lot of credit. Okay, there's a lot of credit. That's it. That's all you're getting out of me today. It's enough. Yeah.

SPEAKER_01 26:43

Aaron, what are your thoughts on the on the title waiver?

SPEAKER_06 26:45

So I I I think I tend to trust Kobe's instincts when it comes to the open door DOMA. I'm not going to get involved in that. My concerns are we are seeing a rise in fraud and title claims. We are seeing a rise in fraudulent deeds. We are also seeing, we just talked about this the other day, AI lawsuits that are being filed that are BS, right? And so, and my conversations with people in the title industry, shout out to my friends of the show, Natalie Hill et al. Is that it costs six figures to defend against a bogus title claim. And so now if we are starting to go and have where part where where borrowers do not have this duty to defend, you know, duty to to protect against the against these fraudulent claims, that we could be setting consumers up for very, very expensive legal processes that they're currently protected from right now. And so I am concerned that this could not be the consumer protection that we think that it is to save $1,000 or $1,500, whatever on title. Um, I'm very concerned because of what AI especially is perpetrating and how we know that there are people that will go and take advantage of loopholes and will take advantage of um of gaps in legal protections to go and file lawsuits. And I'm very concerned that even if these are bogus and can be batted away in court, that consumers are not going to have protections here.

SPEAKER_01 28:03

All right, that's good on that. I mean, for me, consumers are saving money.

SPEAKER_03 28:08

Title has future future is scary. Hang on to the status quo. Right.

SPEAKER_06 28:13

That's fine. Until you're one of the ones that gets that has having to pay 150 grand to defend a baseless claim.

SPEAKER_01 28:19

So the specific things a mortgage company should worry about, no insurers reserves behind the loan when a defect surfaces. That's one thing we're kind of talking about. It less exposure shifts to whoever holds the paper, the lender, service, or GSE. Um, title has been egregious, and I know because I owned a title company once upon a time and I saw the amount of the premiums that we were able to keep. Um, so it's good that there's progress being made if consumers are benefiting. Um, I'm not sure they're gonna be the ones holding the bag at the end. Um, normally they are, right? So I'm good uh in in watching this play out a little bit. Let's shift to the VA uh Earl fee increase. Um this is something that kind of came out of nowhere. Our good friend Brendan McKay, he runs the back, the Brokers Action Coalition, has been working really hard um both on Capitol Hill and behind the scenes to make sure that this doesn't happen. What's being projected is potentially the refi fee going from 0.05 um to 1.42. And just to give you an example, on a $325,000 loan, um, your that fee will go from $1,625 to a little over $4,600. And that's going to take uh the the recoup period of time close to five years, uh, which will knock a bunch of people out of contention for getting um you know the ability to refi. It completely smacks in the face of what the Earl is all about. On the other side of the coin, um, it does help um, you know, some some veterans that are in even worse shape, um, you know, disabled veterans and such. So it's a very, very tricky situation here. Um it's like anything else, you got to look at it and see what the benefits are. Um, in this instance, taking so many veterans have been have gotten into loans with the promise of being able to uh do an Earl behind it, and they have served our country. We need to keep, we need to protect this for them, find another way to get to the funds, and some have been appropriated already. I asked Brendan McKay this morning to give us the absolute very latest on the progress of trying to thwart this momentum. And here's what he had to say.

SPEAKER_00 30:26

Hello, no surrender. Brendan McKay here for a quick legislative update on a bill moving through Congress and the cost of funding fee on Earls to go from a half a percent to 1.42%. It is part of the Take Care of American Veterans Act. This is a package of large veteran bills, many of which would enhance benefits for some veterans, but all at the cost of others. Once it got rolled in, there it was all hands on deck. Industry groups came together, started collaborating, syncing or messaging up and pushing back. We honestly thought we were done the water in the house. There was a vote scheduled for last Wednesday that we thought was going to pass. But then the day before, in response to pushback from industry groups as well as from veteran groups, that vote was canceled. So where are we at right now? Well, we're still in trouble. This very much could still happen. Um, but given the Senate schedule, we don't think there's going to be a time for a vote until later this year. So for now it appears we have time, but that could change and it could change very quickly. So we need you to make your voice heard and make it heard now. If you have not already, please complete the back's call to action. It is written in a channel agnostic manner, and every single letter matters. You've already said 866 and they are making a difference. Thank you, Greg, Kobe, and Aaron. Back to you guys.

SPEAKER_03 31:27

Whoa. So, first of all, were you playing that at like 2.0 speed or or did you crack in his cereal this morning?

SPEAKER_01 31:34

No, it's not that. It's it's that I I challenged him to be a minute or less. And so he initially sent me a note saying, Hey, I'm at 90 seconds right now. Will that work? I said, You got to cut it down. So, I mean, he was talking, he's probably still catching his breath from that, but my heart's beating from he's just that guy is amazing. Let's just call it what it is. And you know, I love how he points out channel agnostic, right? Because there has been friction between broker and the guy just wants what's best for the consumer, right? And so he's he's definitely all of us, he's one of us. Um, but let's get to the issue because this can bypass uh the committee and go straight to the floor, and it can do a lot of damage here. Um, you know, Aaron, we'll we'll start with you on this.

SPEAKER_06 32:13

Yeah, so first I'm gonna say, Greg, this is where you and I differ because I usually challenge guys to be a minute or more, not a minute or less, but that's a whole other topic. So um, you know, I'm honestly just super frustrated with uh the the lending industry, people constantly coming and dipping their toes in the lending industry. Do you want me to stop for a minute?

SPEAKER_01 32:32

Oh my God. How red is my is my is my shirt, is my face redder than my shirt now? Oh my god. Well, all right, keep going. No, sir. Well done. Well done. Bravo.

SPEAKER_06 32:43

The one thing that we need to clarify is you can actually remove deduct the funding fee from your recruitment period. So, so that is that is like a caveat that I want to give. But that doesn't make this any better. And the fact that we are funding one veterans program on the back of another veterans program is absolutely egregious. When this was originally proposed in November, they were trying to uh remove the exemption for second use from disabled veterans. So maybe this is a little bit better, but you're still using mortgage lending as a reason, uh, you know, using that to benefit other programs. And we all want vet veterans. And I think there's other ways we can look to find the funds. Don't subsidize one set of veterans for another set of veterans. It's just absolutely bad policy. You know, MBA, BAC, CHLA is all behind this. All of the veterans groups are, I mean, are against this. Um, all the veterans groups are against this. And I just don't understand why we are trying to con to why we're having to hurt one set of veterans for another. It's it's absolutely egregious.

SPEAKER_01 33:42

I mean, Kobe, can you imagine rates going down uh you know 1% to five and seven eights and not being able to help veterans that you put in at six and three quarters all of a sudden because of this?

SPEAKER_03 33:53

Yeah, I mean, this this hurts the most uh this hurts the active military and active duty more than it hurts anybody else. Those are the people that are moving around, they're buying houses, or the people that are just recently, the the veterans that have just recently retired and were discharged and are moving their families. Um, I heard Gay Veal on Sarah Wheeler's podcast, I think it was yesterday or this morning, and she she brought up a good point. Gay Veal, um, very prominent uh broker now, uh served in the Air Force for 30 years, and she said, this is not a veteran responsibility to fund other veterans. This is essentially an American responsibility. We have a responsibility as American citizens to take care of our military and those that are putting their lives on the line. Um without draping myself in the flag here, um, she's she's 100% right. You know, the the other thing that this does is on subsequent VA loans, where uh disabled veterans were exempt from the funding fee, now you're only exempt from that funding fee if you're 80% um disabled or more. The the the bar for anybody 70% or less on a subsequent VA loan is now no longer uh eligible for the waiver on the second loan, second time around. Now, if you're 70% disabled, that's still a significant set of injuries. Imagine if you lost 70% of your capabilities today and what that would look like for you. So again, we're not just punishing people on the refines and and and look at all the people that are coming out of the last couple of years with VA loans who were told, um, you know, wait for rates to come down a little bit because here's what your funding fee is going to look like, here's what your payment could look like. And now, you know, that's changed dramatically. So that's unfair. Um, but then also taking away that benefit from the subsequent VA loan use. That's bad for the industry, bad for our military, and and just a bad look. And there's just other ways to fund this. And I just I don't like the I don't like the way this is set up. Uh, and I don't like the way that we have to challenge it and point out the fact that you're taking from one, you're paying robbing Peter to pay Paul, so to speak. Um, you know, I just uh I think we should all come together and get rid of this thing as fast as well.

SPEAKER_01 35:49

There's there's another part here that we're not talking about, and maybe it shouldn't matter. NFM, my company, uh, we're probably 15% VA loans. The industry as a whole is probably 10 to 12 percent. And uh in a favorable rate climate, that number goes up even more. And so we're already in a rate compressed environment, a revenue compressed environment. And so there's that factor too. Um, that should probably be the last thing that uh legislators worry about. But for us inside the trenches and at mortgage companies, it's a scary thought to think that we can't add uh VA Earls when the when the going gets good. Um, before we move on to the next topic, uh Actually, before we move on, I need to make a quick correction.

SPEAKER_06 36:31

When we were talking about the UWM, Kobe said Atlantic Bay, it is not Atlantic Bay that is um in the lawsuit with uh UWM, it's Atlantic Trust. And so just want to make sure we make that no problem.

SPEAKER_01 36:41

Appreciate you doing that. As long as you go back and correct it, it's good. Hey, we've been talking about this FOTS thing, and we've got we have a we have a logo now, we're getting swag built up. If you're a FOT, an FOT, you're a friend of the show, right? And a friend of the show is actually a FOTS. And uh if you're from Boston, that's not gonna sound good, by the way. Right? Try and say FOTS uh five times in a row. But we have a friend here that we know is watching. We love this guy. I mean, who's got better energy than Larry Silver? I mean, this is a Maryland guy, he mentors uh young athletes, the guy he he's he's someone that gives back in every way possible. He's also a hell of a recruiter, by the way. He helped us grab our uh direct consumer guy. Just a big shout out to our boy Larry Silver coach.

SPEAKER_03 37:29

He's also he's also the guy that took pictures of me when I was 11 months old. I don't know if you knew that. He's the same guy.

SPEAKER_01 37:34

Uh all right. Now, for some reason, Kobe, you you cannot stop talking about this right here. And uh Aaron and I have been busting your balls a little bit on this. The Penny Mac Senlar um acquisition. Penny Mac uh, of course, acquiring Senlar subservicing business, roughly $740 billion. And uh recently it closed its Franklin, Tennessee site and uh cut customer direct roles siting uh macro conditions rate outlook with severance and some internal transfers. You feel like this could be a canary in the coal mine. Tell us why.

SPEAKER_03 38:09

Well, Penny Mac recently, or they're about to close. I don't think they've completed the deal with Senlar, but Senlar, you know, the $740 billion in unpaid loan balance, two million loans, the direct-to-consumer uh call channel with rates that don't seem to be coming down. So you think about, you know, where MSRs are in a high-rate environment, they have more value. You think about where a direct-to-consumer division has in a high rate environment, they have less value. And to me, it's like, well, we've seen the industry take servicing more and more seriously and it's become more and more prominent as a play. Um, I think the the COTIS post today just shows you where Nexa is thinking about servicing as a recruiting and retention play with loan officers to have them get in on the action as far as the income. And I just feel like, you know, are we going to start to see this push away from or this pull away from direct to consumer operations and more towards what can we do on the customer retention side on the servicing? So, which also has a direct-to-consumer element. Let's let's not let's you know, let's let's be clear on that. But I, you know, Penny Mac doing better in terms of originations year over year. So the layoffs to me are not, you know, even though they talk about it being the current market environment, I think it's it's a strategic play because they're they're they're you know still a top five lender with year over year gains. Um and I just think it's interesting to as we continue to see servicing become more of a strategy than ever and more of a uh of a component of a mortgage company that that that's becoming a pillar. Um, I think to me it's worth talking about and thinking about. So that's why I was interested in it. Um I know you two thought it was kind of a non-story, yeah. But uh but to me, but but to me, when I see when I see a top five lender make a move like that, I have to think, well, what does it mean for the rest of the industry?

SPEAKER_01 39:52

Yeah, I think you just it's it's one office. I think you applaud them for being proactive. They made a bet that rates would go down, all of a sudden bombs started dropping, and you know, they pivoted quickly. More companies should pivot quickly like this. So I tip my cap to them. They're they're one of the stalwarts in our industry. I don't expect that to change anytime soon. And I don't think there's anything we could should really read into it other than everyone's making adjustments right now based on forecasts and and how we were uh forced to pivot, you know, from what we thought would be an environment of sub-six percent rates.

SPEAKER_06 40:24

That office was only open since 2022. I mean, that's that's you know, we know rates are going to be higher for longer. We're not gonna have that environment. And also that same way Penny Mac uh, you know, just also just announced massive uh investments in AI, you know, voice technology and all of that. So I think they're just kind of doing what we all know where the industry is going for this.

SPEAKER_03 40:42

Yeah, you you guys are making my point for me. This is exactly, I just thought it was worth mentioning and worth noting since we're, you know, we have the pulse of the mortgage industry.

SPEAKER_01 40:50

Oh, I like that. And soon we'll have even more of a pulse when I have my podcast with Jen McGuinness, the wonderful Jen McGuinness. We're gonna be starting a show called The Pulse. So thank you for that layup, my friend. Supreme Court and the Fed. The Supreme Court rules Trump can't fire Fed member Lisa Cook, grants him more power over other independent agencies. And uh Kobe sort of kind of like the the uh what we just covered with Penny Mac. You know, nothing's really changed for the CFPB or FHFA. I mean, they they have been uh at the uh beck and call of the president here since I think 2021, something material happened. So, you know, there are a couple more uh departments where uh the president can can push people out, you know, many more departments, but the Fed is still protected, and I think that's the most important thing here. Um so um to me it's official now. You know, you can't it can't be done. The vote was five to four. I think it happened on June 29th. Aaron, your thoughts on this?

SPEAKER_06 41:50

Yeah, I mean, I think it's important a couple of things. One to say it's not that Trump can't fire, it's that there's a procedure and a process that has to be followed, and he did not follow that, right? So it has to go back. She has to be notified, she has to have the opportunity to defend her case, right? She has to be given due process. And that's why that is so important, especially with the Federal Reserve, is because this, this, this organization sets monetary policy, right, and executes monetary policy that doesn't only affect the United States, but it affects, you know, the whole world. And so we need to make sure that that's not blowing with the wind. Um, and so now Trump has to go back and he has to follow the process. So it's not that federal, you know, Federal Reserve governors can't be fired, period. It's just that there actually has to be cause and you have to you have to follow a procedure, and that is absolutely important, is important in following the rule of law. You have a uh federal governor government turns that have 14 years, and there's a reason for that. It's because they need to be able to withstand the the winds of politics, right? And so I think this just helps reinforce this, and I think it was the right decision.

SPEAKER_03 42:53

Yeah, I agree. Um, I think it affirms the independence of the Fed. Um, the fact that the Fed is a quasi-private agency to begin with, and as Aaron pointed out, the the staggered terms and and uh and just the expectation that we have that they're going to be able to guide us without interference. And I think it's uh this is a reaction to all of the haranguing that the president did of Jerome Powell in the last uh year of his term. Um and uh does it further protect Walsh when he's looking at this ruling to say, okay, you know, yeah, I was appointed and I was a friend of the program, but um I still have to now act independently. And I've got my own term to consider after Trump leaves office. So what does it mean for me now? Um so I I applaud it. I think it was good to kind of say, hey, you know, you can you can still get involved in uh publicly calling someone out, but you can't make, you can't just stack the board with people that you think are going to do what you want to do to further your own economic policies. That alone has estimated to inject about 150 to 200 basis points into the market in the wrong way. So I think this independent affirmation, I think, is good for Fed policy. For the Fed, it's good for monetary policy, it's good for us in the mortgage industry.

SPEAKER_01 44:03

Let's do the hackalier worst check if we can. First week you thought the guy was full of it. Second week, you were starting to warm up. It was a wait and see. We have a little more data this week, you know, the way he's been behaving and presenting to the market. Um what do you think now? Are you warming up even just a slight bit more to him, or are you still where you were last week?

SPEAKER_03 44:24

I I would say warm is is probably a strong word. Uh tepid.

unknown 44:29

Okay.

SPEAKER_03 44:32

Negative. No, I probably fingers are under the faucet. I'm I'm testing it out. We'll see.

SPEAKER_06 44:37

He's not ready to put his toe in yet, though. He's not ready for that bubble batter.

SPEAKER_03 44:40

No toe, no toe. It's like a you know, tip of my finger, just the tip. Just the tip.

SPEAKER_01 44:44

How many fingers, more importantly?

SPEAKER_03 44:46

Uh, just you know, I think I think two.

SPEAKER_01 44:48

How many fingers does it take for you, Kobe, to get that real that good feel?

SPEAKER_03 44:51

With Kevin Walsh? It's a it's it's at least two or three. Yeah.

SPEAKER_01 44:55

Oh, wonderful. Very good. All right, excellent. All right, uh, let's shift now to the Fitzgerald construction lending bill uh that would let GSEs buy construction loans for the first time, opening up a new capital channel for builders targeting middle income housing. Kobe, this was just introduced June 26th as part of a three-bill package. What do we need to know?

SPEAKER_03 45:16

Yeah, Fitzgerald is a congressman from Wisconsin, very active in uh opining on housing policy based on the committee that he's in. Um, his last big uh statement, by the way, was about limiting uh Fannie and Freddie conventional loan limits. He wanted to limit that and push more money into the uh into the uh the secondary, the private secondary market. Um, so didn't agree with that. Do agree with this. This is part of a of a of a uh three-part bill that also wants to take Fannie and Freddie out of conservatorship. He says enough is enough. Um, it's time for it to come out, but we'll focus here on the construction end. Um, I I really like this bill because it's the first time I've seen a politician at least acknowledge that, hey, we've got a massive supply-side problem and we need some solutions. And so what he's wanting Fannie and Freddie to do is back construction loans, which they've never done before. Um, and not only back construction loans, but back construction loans for people that are in a certain segment of median income so that more starter homes can be built. Where this misses the mark, I don't think it misses the mark, but I say where this falls short is that you can lower the, you can, you can provide better financing and bring a lot more people into the construction loan game and make it cheaper. It doesn't solve the labor problem that construction has in in keeping its costs down. We lost about 2 million construction laborers doing during the Great Recession. Uh, and it also doesn't eliminate any of the permitting and zoning issues that we have at the local level. So it provides financing that's probably one and a half to 2% cheaper if it were ever to go through, but it doesn't solve the problems on the other end, which is labor costs are too high, the zoning costs are too high. Uh, but I think it's a step in the right direction. So I applaud it. And when we look at it, juxtaposed against the Road to Housing Act that I thought was full of a lot of meaningless gestures, this one has real levers attached to it that I think could actually help us. So um I applaud uh Congressman Fitzgerald. I want to see more of this stuff and and and keeping this conversation in the forefront.

SPEAKER_01 47:07

Aaron, can it happen if uh if the GACs are still in conservatorship? It doesn't feel like it like it could.

SPEAKER_06 47:13

Um I mean, I I there's probably still levers for that. But I mean, I I think that the the conservatorship is such a bigger issue, and I don't know that that that bill that he put forward really kind of addresses what it's gonna do to the market. But in terms of supply, I agree with Kobe generally speaking. I think that we're not, it's clear we're not gonna have one solve all problem to our housing issues. We've got to have lots of little small fixes. Um, his idea about changing the way the loan limits are set is pretty interesting to me. The conforming loan limit, instead of tying it to values, he wants to tie it to income. And if we had done that, the average, if if house prices had moved with income in the over the last 40 years, the average home price would be $291,000 right now. So that's a very, very interesting tact there. But the thing that I'm concerned about this is I don't know that it's gonna meaningfully help at all, right? So if you look at the areas where, because part of what's attached to this bill is that there you have to be building homes within the 82, 130% AMI. And if you look at the average cost to build in those areas, homes are already being built in that AMI affordable area. So yeah, maybe you're gonna have a little bit cheaper cost to build. That's always a good thing. Is it gonna bring more supply for people that couldn't otherwise get it? Probably not a lot. In the areas where they need it the most, in the Northeast and on the West, the cost to build is so much that you can't build homes within the 80 to 130% AMI in these areas for what it costs to build. So there's it can't do anything in those truly tough markets. And so again, it's another on the margins thing, but it's not gonna have a massive impact.

SPEAKER_03 48:48

Just want to learn about a conversation starter.

SPEAKER_06 48:51

Yeah, absolutely.

SPEAKER_01 48:52

Uh, for sure. In the comments, if you wanna uh if you want to submit your vote uh against the uh proposed VA hike on the refines, the link is right there in the comments. So please go in the show notes. It's very easy to fill out. Um, you know, support this for us so that uh you know veterans can still get a really nice, easy, cheap Earl when rates qualify for that. Non-QM. So uh Aaron, you and I are we must be talking to different sources. I mean, we know we I think we all see that there is some fracturing there uh in certain aspects. You know, we know about what happened in Baltimore. We we know that there's certain pockets, but you know, you first brought to my attention with Kobe during our production meeting this week that that's starting to spread a little bit more, and that you were hearing that um some of the uh lenders, wholesale lenders, were starting to um move and tighten things up uh somewhat, not not drastically, but in terms of um um appraisals and and other things, especially around the DSCR. And I can tell you that I checked with our um underwriting manager, and we did, we just closed 170 of those um non-QM loans uh for about 170 million in June. Um not seeing anything on on the baseline ratio, um, anything on on you know below one, which I know you feel strongly about. And we're seeing some tightening on appraisals a little bit, a little bit more scrutiny there. Um, and um, you know, for people that don't have any previous skin in the game, we're seeing some things bubbling up there. So if you if you're living with your parents and you've never owned a home before uh and you own no uh property, they're making it a little bit tougher. But I know you've got sources uh and you know you're hearing um different a different variation of of the story, right?

SPEAKER_06 50:45

No, I think we're hearing, I think I'm hearing the same thing is where we're DSCR, especially on the DSCR portfolio, but generally speaking, non-QM lenders are starting to make adjustments based on what they're seeing in the market. I had dinner last night with a with a non-QM lender, and same thing mirrored where especially DSCRs and especially around short-term rentals, they're tightening up their guidelines there, right? And so the short-term rental thing is a is a big deal, but to get below a 1.0 uh DSCR ratio, you've got to have a much lower LTV. You've got to have a lot more assets, you know, a lot more assets in the bank. And so what I think we're seeing, and I think the crux of this is that everybody is, you know, not everybody, but the people that are out there saying that non-QM is the new subprime. What we're seeing is completely different than what we saw in subprime because we are actually seeing them make adjustments in real time to delinquencies. Delinquencies are getting higher in the non-QM space, but it's led primarily by the by bank statement loans, PL loans, right? That's really where we're seeing the delinquencies. Generally speaking, DSDRs are still performing pretty well, and they're making real-time adjustments to the guidelines. And we're also seeing um an adjustment to to fraud, something that we didn't see during the subprime uh time or the great for, you know, the lead up to the great financial crisis, is you're seeing lenders actually communicate and discuss what they're seeing from a fraud standpoint and so and trying to make adjustments there as well. And so I think this is all positive.

SPEAKER_03 52:14

Yeah, I I agree. And I think Greg, you actually made the point when you said you're not seeing big changes. What you are seeing is a little bit more thoughtfulness and intentionality.

SPEAKER_09 52:22

Yeah.

SPEAKER_03 52:23

Um, the 2023 vintage, when we were coming out of the rate shock and lenders were scrambling to make loans, maybe we got a little bit too loosey-goosey. Remember, the non-QM stuff is only about 11 or 12 years old total. So at two in 2023, it was seven or eight years old. It was still in middle school or elementary school.

SPEAKER_06 52:39

Um getting kicked out of four of them.

SPEAKER_03 52:42

Getting kicked out of four of them. In 2025, the numbers already start to look better. We're projected to do about 175 billion this year in non-QM as an industry. In 2005, 2006, 2007, what did we see happen? We saw the guidelines getting looser and looser and more products coming and the CLTV is getting higher. We saw the the the every time we saw uh one vintage of loans, you know, go through, we were like, all right, well, now we can go from 110 to 125% CLTV. We're seeing the opposite now. We're seeing a lot more discretion. We're seeing 65 uh DSCR go to one and above. Um, and uh, you know, we're but that 2023 vintage is scary. It's 11% 30-day DQ. Do you know what else was 11% 30-day DQ? The height of the height, conventional loans at the height of the Great Recession were 11% 30-day DQ. So it is a scary number. Obviously, that percentage is tiny compared to what those numbers were, but the percentage was the same. Um, so certainly something to think about, but there's no way to make the comparison now, definitively, that non-QM is the next subprime and is the same. No, no, it's it's I'm happy.

SPEAKER_01 53:42

I'm happy to see this because I threw a lot of caution to the wind thinking that they would just be overzealous and throwing more and more and more at this. The question I have, though, this is a real question. I don't know the answer. Um, you know, previously you had the big banks that were participating in in subprime, right? Um, you had Bank of America, Chase, all these people. On the non-QM side, you've got Deep Haven and some other lenders. Are they are the big, big banks the ones that are you know buying this stuff, or is it the the one the tier under? And you're saying no, and that's what I thought.

SPEAKER_06 54:13

Yeah, just the big institutional investors, especially church.

SPEAKER_01 54:16

I think that's part that's probably why they're there, it's not getting lost in the shuffle. They're they're being smarter, they're being more protective of their money. So that is certainly an element to consider there. And and great, great if this doesn't turn into a disaster. It doesn't seem like it's going to. So thank you for bringing that news to us, Aaron and Coben. I know you'll continue to track it. Just one side note on this of the 170 million we did at NFM in in uh non-QM loans, 65% in June were DSCR, 20% bank statements. The biggest growth we're seeing right now, this comes from our underwriting manager. 15% were asset loans. That's asset qualifying, money in the bank, portfolio of assets. To me, that seems like, you know, the creme de la creme. So I love that that's growing. It'd be great if that could take more market share, right? Because there's real, you know, there's real meat on that bone. Lastly, uh, let's get into this idea that student loans uh could potentially, there's a bipartisan build a cap, federal student loans, interest at 2% retroactively. Um, Kobe, I think you brought this one to the fore. I'm I'm I'm just like, you know, Biden paused it, I think shortly after COVID or before COVID, whatever. Like we keep talking about how to rejigger these loans that people took out. You know, I'm I'm the guy that when a guy signs a five-year contract to play in the NFL and um, you know, he has a banner year after after two years, you know, you can't come back to the table and say, pay me more. Like you agreed, like if you've got a student loan and you've agreed to the terms, pay the terms, right? Because someone's got to pay the price when we take that 8% or that seven or that six and knock it down to two. That money's got to come from somewhere, and we're we're fiscally not in any position to be cutting corners there or anywhere else as a government.

SPEAKER_03 55:59

Yeah. Yeah, but we have we have lied to our younger generations about uh college and and what these degrees mean and how much money they're taking out to get these degrees. Um, the the uh the university financial industrial complex is one of the biggest lies ever told. And we've basically given money by the trillions to student loan borrowers to get degrees that don't necessarily translate to anything in terms of real world work and real world opportunities. Um, and so I think we we there is a comeuppance to be had. And I and I and I think just because you signed a deal doesn't mean you have to live by that deal, especially if that deal was was signed under a faulty premise by somebody who was 17 or 18 years old.

SPEAKER_01 56:37

It's so interesting to me, Kobe. Can you give me an example of how somebody was misled into wanting to go to college and take out a loan and pay 7%? How are they? Well, just talking about something they didn't get.

SPEAKER_03 56:49

Just just look at the degrees people get. I mean, you know, the the example I love to bring up is you know, you can get a you can get a $300,000 worth of student loans to study Egyptology. Guess what you can do with Egyptology? You can teach Egyptology. Uh, you know, so there's that, and there's so many liberal arts degrees that don't mean anything and don't translate into real-world skills. To me, most kids right now are much, and we've talked about this on the show, most kids are better off going to some kind of trade school or vocational school than burying themselves in debt before they even get into the workplace. And we wonder why kids are waiting till they're people, humans, adults, waiting till they're 40 years old to buy a home. Guess what? Because they've got massive student debt with massive payments every month and they simply can't afford it and they're falling behind and the wages aren't growing. So we've we've we've perpetrated this massive lie on our on our younger generations. We're still in the midst of it. And if we want to give them and if we want to give them some relief, I think we should.

SPEAKER_01 57:38

Yeah, this isn't land, this isn't landing with me. That's like saying someone uh went to school uh to be um an architect, and now now that business is not what it used to be because AI suddenly appeared and you it's not analogous. Okay, analogous. Well, whatever no, the point the point is nobody nobody is forced. Uh you're you're saying that they were propagating lies. Like if you you decide to sign up for an institution, you should know what that profession pays. You should have a good feel for what you're getting into. And I don't agree.

SPEAKER_06 58:10

But what we're talking about here, there's there's two different things here. One is you're talking about knocking the student loan interest down to below what the government's costs of funds are. So now you're asking people that didn't take student loans, people that be paid for it themselves, worked three jobs in high school or in college, like I did, people who went into vacational school. Now you're socializing those losses. Now they're having to cover the delta between the cost of funds of the government and this 2%. But this is treating the symptom and not the disease. Kobe hit the nail on the head, but he didn't take it all the way. So, yes, absolutely. Student loan money is too easy to get. You allow these 18-year-olds to get in and takeout with like no limits, all of this money, all of this money, right? They can't discharge it in bankruptcy. And the universities have zero skin in the game. What we need is a structural fix to our student loan system. You need caps, you need to be able to discharge it in bankruptcy, and you also need these, you need universities to have skin in the game, because I guarantee you things will change if they have to start being responsible for this. And we've seen, I don't think that it is it it's just an app by accident that we've seen an actual explosion of all of these for-profit universities when we've made student loans so easy to get. And what we're seeing now, because now everybody knows what an absolute bane in our existence these student loans are, people aren't getting them. MBA programs are down, these private universities are now losing money and people are not going. And so I think I think that it this is good, meaning, like we've seen how bad this is, but we need to make a structural change to the system.

SPEAKER_01 59:38

Yeah, you have to do that. From our industry should be lowering costs, it shouldn't cost you $90,000 to go get a liberal arts degree.

SPEAKER_06 59:44

Correct, but when the government will continue to fund it, where is their incentive to lower the cost of tuition?

SPEAKER_01 59:48

This is all about this is all about votes. Okay. You're talking about the most educated people, and neither party wants to stick them to what they agreed to. So this is why this has been bounced around so much, because you want to be on the side of the people that are educated, because those are those the ones that mostly vote.

SPEAKER_06 1:00:05

Well, I don't think we should be subsidizing uh student loans. So to be clear, I don't think we should be doing that at all. But we have to structurally fix the system itself. That's the problem.

SPEAKER_03 1:00:16

And this should concern us as an industry. We've got potentially by the end of 2026, 13 million student loan holders to go into default. 2 million now, 13 million by the end of 2026. That should concern us if we're thinking about qualifying people with these high payments, and now they're gonna go into default.

SPEAKER_06 1:00:33

And that's gonna they can't get another.

SPEAKER_03 1:00:35

Aaron's right. The universities have no incentive to police themselves, they have no incentive to keep the cost down because they know that no matter what they raise tuition to, they're gonna get the students are gonna get the loans to match it. And and that's that's a broken system of college.

SPEAKER_01 1:00:48

It's incentive to rack it. You want to start fixing costs, cost of mortgage, cost of everything. Like the cost of uh of that education, those four years, is got has gotten way out of hand. And absolutely that's right. Families should be having conversations about is it worth it? I'm talking to my kids all the time. I talked to my wife who's a doctor, she went to school for 17 years. If you're gonna be a doctor or a lawyer, you can't avoid that. You should go do that. But but for my kid who who loves to code, I see no reason why he should go to college. He's not gonna be either those other two things. He's gonna build shit and he's gonna sell and do things like that. So I'm not interested in him going to college, most likely. And I know a lot of people my age that have kids my age that feel the same way. Is that bad? Is that sending the wrong signal? To me, you get kids out in the workforce sooner. We applaud we applaud that. That's yeah, I know you do.

SPEAKER_06 1:01:35

I'm not sure, but but taking student loans to two percent is gonna have the opposite effect, it's the wrong incentive. You're just gonna encourage people to borrow more.

SPEAKER_01 1:01:43

You made a deal, you signed a piece of paper for seven percent. Kobe's saying these people were misled. You knew what you were getting into. Pay the fucking bill. I'm not sure they all knew what they were getting into when they were 18 years old.

SPEAKER_06 1:01:52

These are 18-year-old dum-dums. Listen, I yeah, you know where I stand. I don't, I'm not for subsidizing it, but I don't think they're not 18.

SPEAKER_03 1:02:00

They're not 18. They have parents, most of them. Like I do agree with the premise that if you lower it to two percent and then you keep giving out the money, then all you're doing is incentivizing the university system to keep raising their tuition. That's not what it has to come with guardrails and a fix for the future to say, okay, here's what it's gonna look like going forward, too.

SPEAKER_09 1:02:17

There's yeah, exactly.

SPEAKER_03 1:02:19

Yeah, otherwise it's runaway training.

SPEAKER_01 1:02:22

How do we solve it? Should shouldn't people just pay their debts? We can talk about a reset.

SPEAKER_06 1:02:26

Perhaps on what you can get discharge through bankruptcy, university skin in the game.

SPEAKER_01 1:02:31

At the very least, yeah, yeah, or maybe less universities, or maybe more universities collaborating, working with each other to bring down costs. I don't know. Um anyway.

SPEAKER_06 1:02:42

Work three jobs like I did.

SPEAKER_01 1:02:44

You did, but apparently you were a very bad girl, according to your mom. Sneaking out of the house, Aaron. What the hell were you thinking? Sir. A couple other things that are happening, um, and then we got to give a shout out uh to another FOTS. Uh non-farm payrolls increased 57,000 slower than um downwardly revised 129 number. This came out this morning, added in May. Household employment plummeted during the month uh to 500, uh I'm sorry, 507,000 fewer people reported to work. And then also FICO 10T released historical FICO 10T um data sets, um, loan performance from April 2013 to September 2025. We'll have to get into all that stuff on the next episode. And before we say goodbye, we got to pay homage to one of the great guys in this business, Tim Rude. And this newsletter is a must, must have. He's got 10,000 subscribers and growing impact uh capital is just it's it's the it's the most important piece that I read every morning. It's the daily dose of real estate created by Tim and the DC advisory firm Impact Capital. Uh just a couple of things that he covered uh in the last couple days. The Fed keeping its shield, we talked about that, the five to four vote. Everybody else lost theirs, talking about how everybody is uh subject to the president's uh iron fist. Um but then he peels it back another layer and says, then the staff too. A June executive order, the newest version of a policy once called Scheduled F, stripped job protections from senior career employees and made them firable at will. Um so you know, and then he says the bottom line agencies that write and enforce the mortgage rules are becoming far more answerable to the White House and far easier to reshape by removing the people inside them top to bottom. Perhaps the most salient point. This is a newsletter you must subscribe to. Kudos to Tim Rude.

SPEAKER_06 1:04:38

Love him.

SPEAKER_01 1:04:39

Good guy. Anything else, folks?

SPEAKER_06 1:04:42

Well, the cards.

SPEAKER_01 1:04:43

Oh, yeah. What happened to that? Well, they're here. You want me to pull this up right now?

SPEAKER_06 1:04:48

Yeah, so Kobe, Kobe's Kobe. We just talked about having uh baseball cards, mortgage baseball cards. So I decided to create some some in the style of garbage pail kids for the three of us. So we're kicking up.

SPEAKER_01 1:05:02

I actually have cards in front of me. I'm a sports card collector. I don't know about the RIP. That's a little sad.

SPEAKER_06 1:05:07

On the green shirt? On the green shirt.

SPEAKER_01 1:05:08

Did I not? Is that my old shirt? Like, what's going on? That's the funeral shirt. That's the shirt. That's the funeral shirt. Okay, got it. Got it.

SPEAKER_06 1:05:14

Yes, yes. So, you know, I'd like to see a new trend. I'd like to maybe we can maybe we can see some mortgage garbage pale kids out here. I love these, are my favorite as a as a kid. So thought I would, I would give a a a nod.

SPEAKER_01 1:05:26

There's a few uh why do I look like Billy Crystal? Oh, how about dude? The best part of this whole thing, you do look like Billy Crystal. I pointed that out, is uh is right on the left side of Kobe's picture, that that picture of Elizabeth Warren, Elizabeth Warren for president. I don't think Kobe would mind that, honestly. I think he might be okay with that. I don't like Elizabeth Warren. Okay.

SPEAKER_03 1:05:49

You gotta do it. But everything else is spot on. Including the fact that I including my t-shirt, I do love touchdowns. Thanks, Aaron, for helping me out.

SPEAKER_01 1:05:58

Hey, what about this uh feminist AF? Is that you?

SPEAKER_06 1:06:03

I think it is. He's got his little his little pink hat.

SPEAKER_01 1:06:07

On your computer, on the back of your computer, it says uh co-exist and then feminist AF.

SPEAKER_03 1:06:12

No one, no one, no one supports women in this industry like you and I, Greg. Yeah, of course.

SPEAKER_01 1:06:16

All right, buddy. I'll buy that. Well, look, we got through this somehow. I thought this would be like a nine-hour episode. Happy Fourth of July to you. Thank you to Nyoung. We just love her. Always pushing all the right buttons. Are we uh are we take we're not taking a break next week, right? We're full throttle ahead. Let's go.

SPEAKER_06 1:06:32

I'll be broadcasting from Houston next week.

SPEAKER_01 1:06:34

And I'll be in Ocean City, Maryland.

SPEAKER_06 1:06:37

All right, let's go. Happy Fourth of July, everybody.

SPEAKER_01 1:06:40

I'll be right back here.

SPEAKER_06 1:06:41

America.

SPEAKER_01 1:06:43

Until then. Happy fourth.

SPEAKER_02 1:06:47

No surrender on the show. We go toe to toe. What fail? What fails? Who gets the hole? Hot no.