The Pulse Premiere with Greg Sher & Jennifer McGuinness

The wait is over.

The Pulse launches today.

Jennifer McGuinness and I are bringing you the reality behind the headlines—the context, the trends, and the insights shaping where we are today and where housing goes next!

Join us for the premiere.

Transcript

SPEAKER_00 0:36

Hell yeah.

SPEAKER_03 0:38

Heck yeah, game on. Loving that intro.

SPEAKER_00 0:41

I mean, you gotta give Nyoung all the credit. She does it all. Uh we're back. You and I you and I are back. I've missed you. Wow. We've not done we've not done this for way too long. Good to see you.

SPEAKER_03 0:51

No, agreed. I think our last one-on-one kind of discussion like this was live at MBA.

SPEAKER_00 0:57

That's right. Yeah. We were talking, we were up on the stage at Zactus, and then uh during a break, we uh broke off uh to well, actually that was the that was a conference after that, right? We we have that was housing wire. Yeah, yeah, we did we did our thing in the in the lobby. We grabbed a table, and before we knew it, like 15,000 people. Uh it's not because of me, it's because of you. You're you're one of the most respected voices in our game and a voice that's not heard often enough. So we're gonna start the pulse. And uh the pulse uh came about, Jen. Um, you had some really incredible ideas, and you and I have mixed and matched and done some other shows, but at the end of the day, I think uh I felt really strongly that you deserved a stage of your own. And uh, you know, you are really big on noise versus signal and uh determining what's what. And so I got to be really careful not to speed here because you will call me out. And I, you know, I have a tendency to get emotional. So sometimes, sometimes I'm more noise than signal. So you got to help me and take it easy on me. My parents watch these things, okay?

SPEAKER_03 2:00

Yeah, I'm not worried about it. I saw your mom on no surrender. I think she knows your MO.

SPEAKER_00 2:07

Yeah, yeah. She she said that uh I grew out of my terrible twos when I went to college.

SPEAKER_03 2:12

Yeah, you know, I could see that.

SPEAKER_00 2:14

Yeah. So what should people expect from uh from the pulse? What do you what are we doing here?

SPEAKER_03 2:19

Well, I think this is what I would lovingly call the no bullshit podcast, right? So we're gonna look at what's happening in the market, we're gonna talk about it, and we're gonna talk about it for real. What's really gonna move something, what's not? You know, does any of it matter? You know, those types of things. You know, obviously that's our opinions, but um, you know, I think that we're pretty thoughtful about considering other people's feedback as well. And, you know, following these, if people have different opinions, reach out to us. And if we think we need to amend the opinion, we'll do that too. I'm happy to.

SPEAKER_00 2:52

And we're doing this live. I love that. We had initially thought about taping, and then we're like, you know what? What the hell? Let's dive all the way in the deep end. Uh yeah, and that's what we that's what we do, and we love doing it. So without further ado, let's get into it uh right now, starting with the CPI mess. Uh, because uh, you know, is this noise, is this signal the consumer price index fell 0.4 in June, a bigger decline than investors anticipated, bringing its annual increase to 3.5. Expectations for an interest rate increase by the Fed in its July meeting declined sharply after the report, Jen, uh, placing just a 17% chance of a 25-bip hike after giving it 42% just yesterday. Noise or signal?

SPEAKER_03 3:35

Yeah, I think they're all misguided. I mean, if you look at the actual CPI numbers, the biggest decreases, you know, between May and June data is in uh fuel costs, energy, et cetera. And um, is anybody paying attention to what's going on with the US and Iran? Right? You know, we're back in a place where, you know, crude and uh fuel prices are going up, up, up, you know, $86, $88 today. And um, I think you're gonna see all of that come back unless we see something, you know, really get reined in um, you know, over with the Iran activity. So um if you look at this, you know, early year stability, right? January, February, the spring reacceleration, you know, the core and um, you know, headline CPI, they really, you know, came apart in May, right? You see that 4.2, 2.9 number. And now you're seeing what everybody's calling a cooling off um in June. But that cooling off is energy, oil, et cetera. And that's not what's happening. If you look at what's happening with uh, like I said, the crude prices fuel, look what's happening $86.99 and counting again as of today. And you know, this visual really tracks to, you know, the MOU, the ceasefire. And then, you know, now the blockade has been put back in effect. The US is now blocking, you know, um, the trait of Hermuz. And um, you know, this ceasefire has continued to break down, and they're, you know, actively, you know, taking action against each other. The US and Iran again, another large attack last night. Um, in addition, another thing that's gonna really, you know, change things is, you know, Trump needs to stop being ADHD on some things. Yesterday it was, you know, to get past the U.S. blockade, we're gonna charge you a 20% fee versus the value of what you're transporting. Today it's oh, you know, there's gonna be investments made in America and we're not gonna charge the fee. So it's like you can't go from $200 billion of possible cash in to invest in us overnight with no details and expect the markets to just ignore all that.

SPEAKER_00 5:53

Well, you don't expect that. I mean, that's his MO, though, right? So talk about it. So it that's probably not gonna change. And I think everybody's used to it. What is alarming is that it can happen so fast. You one minute you feel like you're on the road to maybe some uh calmer heads prevailing, and then the next thing you know, the missiles start flying again. And there's a lot to this, right? I mean, this is gonna raise oil prices, as you pointed out, it's gonna make inflation stickier. At the same time, you've got Kevin Warsh uh with his task force trying to get it all together um and identify uh what he's going to do and um and how he's gonna impact things uh moving forward. And um, so you know, he has said that uh he plans on uh making some changes here uh that are gonna impact uh in in a good way, according to him. And he said the Fed's number one objective is to get monetary policy right or as near to it as we possibly can. That's our clear, consistent aim, the star we steer by. This was earlier uh today, I believe. And if we get policy right and we will, the inflation surge of the last five years will be a thing of the past. I don't how can you say that when there are things happening around you that you cannot control, no matter how many tasks force you have?

SPEAKER_03 7:08

Well, I'm kind of hoping that he actually uses the tasks force well. Um, the reality is those are either going to be helpful or they're not. Some of the appointees in those tasks force don't make sense, in my opinion. Some do. And some do not track to what he's usually been a fan of. You know, he's usually been a someone who focuses on, you know, decreasing the size of the balance sheet. Well, not everybody is appointing does. So I'm hoping he's looking to either learn something or come up with reasonable strategies that will not, you know, impact things negatively. Um, but you know, we also can't just sit around and wait for uh Kevin to, you know, decide what he wants to do. We have to take action, right? And uh absence the absence, excuse me, you know, something starting to chill over in Iran, you know, this inflation number is going back up next month.

SPEAKER_00 8:05

Yeah, it really is. I mean, he said that inflation has been a tax on the American people and businesses. We plan on getting rid of that tax. I mean, this this does not seem like Kevin Warsh's talk. I mean, normally he's very calculated. So I don't know where he's going with this, but it it should be interesting. And I just have to ask you what you think. Um, my my colleague Kobe Hackelier, um, who's who does no surrender with me and and you previously, um, you know, Kobe, he's uh sometimes he's anti-uh Trump administration, and uh although he claims he's not, um he he he did make the call. He did say that he didn't he didn't believe in the ceasefire. Um so I will give him credit on that. But um when it when it comes to uh when it comes to Warsh, you know, he doesn't trust Warsh either. Like he feels like 2.0 is in the bag for Trump. I would love to know your opinion. Do you think that he's gonna uh pivot? I had to get the word out there. We love Pivot Financial. That's your company, right? Um so uh do you do you think that that Kevin Walsh 2.0 is gonna be different than Kevin Warsh 1.0?

SPEAKER_03 9:11

We can hope. Um, but like the commentary you just read is very political, right? It sounds like it was written for somebody to say, you know, it does not sound like a off-the-cuff comment that you would expect. Not that it wouldn't have been thought out previously with Powell, but Powell would have given you more of a market-centric, you know, discussion. It sounds scripted. Um, but with that said, I think everybody wanted to know if Horsh was just gonna bow down to Trump and, you know, decrease rates in his first meeting, and he didn't. Um, with that said, um I think the jury's out. I don't think you can call it one way or the other.

SPEAKER_00 9:50

Yeah, but at the same time, though, his like you said, his task force, he's he's got some hawks on he's got some hawks on there. So he does.

SPEAKER_03 9:57

And there are some that are definitely more measured as well. So um I think the real question here is gonna be does anybody listen? Right? Does anybody listen to the actual work that's done? Look at the real details of what is necessary to effectuate change in the market for the long term and not just do another band-aid, which is what's been happening for the last, you know, call it 10 plus years. Band-aiding. Stop banding.

SPEAKER_00 10:28

Jennifer, are you ready to yawn? I've never called you Jennifer, by the way. Is it okay to call you Jennifer?

SPEAKER_03 10:33

You can call me whatever you like.

SPEAKER_00 10:34

I'm a Gregory. I'm a Gregory, but I go by Greg.

SPEAKER_03 10:37

I think Gregory and Jennifer is a little weird for us, I have to say.

SPEAKER_00 10:40

I think Greg and Jen is usually what Yeah, you have to get on there, you have to get on there and change the name. Let's uh let's hear all about a yawn. Oh, I mean the 21st Century Road to Housing Act, according to the president.

SPEAKER_01 10:52

I I I have that uh it hasn't been sent to me yet. It's coming, I understand.

SPEAKER_02 10:55

And then I'll make it here's what I would like to say.

SPEAKER_01 11:00

Much more than a bill that's a big deal. It's a yawn.

SPEAKER_00 11:05

It's a yawn. And I have to say, I kind of agree. I mean, there's some things in here that are uh that that could be favorable, a lot on the supply side. None of that moves the needle overnight. There's no new money. Um, there's even a provision in here that states no additional funds are authorized to carry out the act. Uh so, Jen, uh, what does and doesn't the 21st Century Road to Housing Act do?

SPEAKER_03 11:33

So I'm gonna tell you in its current state, without all the other things that have to be implemented, et cetera. I agree with him that it's a yawn. There is a lot of work that has to happen for any of this to move the needle. Um, and one of the bigger things here, Greg, that nobody's talking about is how many of the actions needed to get any real outcomes here are now allocated to the FHA, right? And FHA had a big, you know, uh reduction in staffing in 2025. And then their budget was decreased 24% in 2026. And they've just been given, by virtue of this act, about 35 plus new jobs. And the question is, if you're gonna have a reduction in staff and a you know, 24% decrease in budget, how many of those new jobs can you really do? And the answer is not that many unless you steal money or take money from other places if they don't give you any budget back, right? So, what I would say is a lot of the headline is gonna take a long time to be implemented if it ever is implemented. Um, so I'm going with, you know, quasi yawn here, Greg, right? Some of the things that were big ticket items that are clear wins are clear wins until for one aspect, but it's gonna take multiple aspects to move the needle. Manufactured housing modernization is an example. Getting rid of the chassis is one thing, but now you have to overhaul the process at the state level and create real financing programs via mortgage. Genre types of housing. Let's stop there.

SPEAKER_00 13:15

Unpack getting rid of the chassis because I'm gonna be honest, I've been in this industry 29 years and I don't completely understand it. So I'll be vulnerable here and defer to you to say what does that mean?

SPEAKER_03 13:26

Yeah, do you have the visual that I gave you on this?

SPEAKER_00 13:29

Um, believe me, I am looking for it right now. Trust me, and I'm looking for it.

SPEAKER_03 13:33

Um chassis.

SPEAKER_00 13:35

Here it is.

SPEAKER_03 13:35

You know, on a on a manufactured home, there was a chassis requirement. And the chassis required that every one of these homes be on a permanent steel, basically base. Okay. And that actually limited how the design of these homes could actually take take place. So they, you know, have looked more like the home you're seeing in this visual. But there are modular and other manufactured types of housing that really are put together in component parts or can be multi-story, some tiny homes, etc., that could also assist us with the shortage that we have in housing supply in our nation. So removing the chassis is one step for that because now you can build multi-level manufactured housing and certain other things. But what it doesn't do is it does not actually make it so that this is more easy to finance. You know, at the state level, there are ownership requirements, permit and inspection requirements, affidavit and conversions to permanently affixed. Remember, these things get delivered. Some of them are even on wheels, you know, legal description requirements, um, etc. And you now need a new format at the state-federal agreement level, because it's different at different state levels, to really move the needle here. And then financing programs would need to be revised.

SPEAKER_00 15:11

Um, this is gonna take the bottom line is it's gonna take a minute. They're focusing their the the idea. Well, the idea is a good one, right?

SPEAKER_03 15:19

This is it's a good idea.

SPEAKER_00 15:20

It's an it's an area that needs attention. Yes, but but right now we have an affordability crisis on our hands.

SPEAKER_03 15:26

This does nothing for affordability today.

SPEAKER_00 15:29

Well, well, how concerned should we be about affordability? I'm terribly concerned about it.

SPEAKER_03 15:33

No, I'm concerned about affordability. I'm significantly concerned because of the gap between wage increases and the price of a home.

SPEAKER_00 15:43

You know, you're talking about wage increases of a max of three percent when you look across the nation, and the price of a home, you know, is now 5x what it used to be as an but but but the the opposition, the critics, whatever, would say the the pundits that homes are pretty flat right now, so they're not accelerating. So if you have wage growth at three to four percent and you have houses roughly flat, that that eventually the two will catch up to each other and will be it'll be more normalized.

SPEAKER_03 16:12

Yeah, no, you'd need a lot of other things to happen. You need the actual current prices to decline at least slightly, probably at least four to five percent. You'd need a bunch of other aligned issues to um be rectified side by side. I actually did a post about it yesterday, but you know, it's this is not a one size fits all. I know, like you posted about ICE's report, you know, with regard to, you know, let's just get 16% home price decline, right?

SPEAKER_00 16:39

I was that was tongue in cheek, by the way. A lot of people took that literally. They gave, they said there were three things that could make it happen. I, you know, any one of these three happens. And it seemed to me like it seemed to me like a price decline was the most realistic of the three. But but you have told me in the past that's not a good idea, and that will break the entire uh system uh pretty substantially.

SPEAKER_03 16:59

What it does is destabilize valuation, and valuation is a core component to how we price loans and understand what our possible losses would be if the loan were to default and the asset needed to be liquidated differently, versus the borrower actually paid.

SPEAKER_00 17:19

Yeah, and is that is that not just the part of the cycle?

SPEAKER_03 17:24

You know, I mean No, I think you gotta stop thinking about cycles as you know, housing crisis forward. You know, there were other corrections that took place, you know, in the years, you know, leading up to um the housing crisis in 2008. Great example, you know, 97, 87, there were all corrections, but a correction versus a crisis or a real reset are two very different things, right? Um, when you look at you know the housing crisis, there was a really good reason that happened. You can't give every loan program to every borrower, and you can't, you know, tell the appraisers, you know, what the properties are supposed to be worth. You need independent verification and you need to use the products that are really meant for each individual party and what they're looking to achieve from a home ownership perspective.

SPEAKER_00 18:13

Jen, but I get a little lost here, so help put me back on the right track. And I'm we may have just had our first disagreement, and look how well we worked our way through that. It's just wonderful. This is Jen and Greg 2.0, or Jennifer and Gregory, or uh Gregopher.

SPEAKER_03 18:28

One of those, one of those people.

SPEAKER_00 18:29

Yeah, could be there. Yeah, you know, like when Ben Affleck and uh and Jen Lopez were dating, it was uh Benefer. We could be uh Gregopher or Jennifer.

SPEAKER_03 18:40

No, I'm just kidding.

SPEAKER_00 18:42

Um, so you you had houses appreciate, obviously, and just at an unbelievable clip due to too much QE. It just so are you saying that there is no there are no repercussions to that that should that should occur that could bring things more in line?

SPEAKER_03 18:59

Not only QE, right? I think everybody likes to throw that out there.

SPEAKER_00 19:04

Let's just use that that last that last tranche of Biden money, the 2.1 trillion, whatever the number is. Like forget the Biden money. That wasn't needed. That wasn't needed.

SPEAKER_03 19:13

Forget which president was in there or whatnot. Common sense is prices are are gonna go up when there's not enough houses to buy. And all of a sudden we were all locked in our houses during COVID, right? You know, that wasn't exactly the time where everybody's gonna say, ooh, ooh, I want to relocate right now, right? So a lot less listings, a lot less purchases. People only were moving, you know, if they were forced to, in most instances, there were some voluntary movements, but we've had some just odd things happen, you know, in the last um call it 15, 18 years.

SPEAKER_00 19:51

That's my point. So, how do how do we look at historical data and trends when looking at a house someone bought for 400 grand five years ago that within two years was worth 1.1 million? How do we look and say, oh, well, this is what happens in normal times?

SPEAKER_03 20:04

Yeah, and I think, you know, normal times is really a great question. What is the new normal, right?

SPEAKER_00 20:10

Yeah, and the other question is what's our what's around the corner? I mean, Stan Middleman wrote about this in his uh Sing Around Corners book, Misery on the Eights. You had the financial crisis in 2000 uh and uh and eight. You had COVID happen around uh 2018, 19, and now we're coming up on 2000 and 2028. What's what is the next shoe that's about to drop?

SPEAKER_03 20:32

Yeah, we don't know. We don't know, or do we? I think this is a prime example of everybody going, what's the next shoe that's gonna drop? A shoe doesn't actually have to drop. If we actually manage the markets effectively and efficiently, cutting rates to be the answer and the solution to everything, and I'm sure I'll get lots of nasty grams for this comment, is not the way to manage the housing market. We need to get back to a place where reasonable rates stay in place and that we don't control the market overall by just cutting rates and doing that.

SPEAKER_00 21:09

Well, that's hard to do when that's hard to do when we're fabricating things that are helping inflation get away from us, which we're now doing again.

SPEAKER_03 21:16

Yeah, I mean, look, I think we could, you know, dumpster dive like 29,000 different categories on this and you know, really look at them. But I think we want to stay in a common sense place for a minute.

SPEAKER_00 21:28

I've always wondered what it's like to be to jump in a dumpster to dive in a dumpster.

SPEAKER_03 21:32

Have you ever I don't know, but if it was on fire, it wouldn't be any fun.

SPEAKER_00 21:35

No, that would suck. But I would you know, diving in a dumpster would probably be pretty damn nasty. But Jen, look, I know I cut you off. I'm sorry. You you love when I cut you off. That's why I did it. Um that was a joke, by the way. I got you to smile. That's amazing. I'm having such a good time. I missed this. What the hell were we thinking taking two months off? It's been longer than that. Life happens, right? But here we are again on the pulse. We are moving right along at a crisp pace. Um what else do you want to add here? Well, well let me before I before before I before I and I asked you a question, see? My hyperactivity is taking over. The thing that really puzzles me is why we didn't get even a temporary adjustment in LLPAs or a temporary adjustment uh pointed towards first-time home buyers for G fees. Like there are or something to do with FHA and the statutory limit, which is 6X. Like, how did they just not know that these are levers that they can pull? They don't have to be permanent. You can lower LLPAs for a certain set, they can do things. Like, what why haven't they pulled those levers, especially in an election year?

SPEAKER_03 22:47

They've been more focused on making headlines than they have been at really adding value to our market. So I think we all thought when Barry Habib was put on, you know, the board at the GSEs that you know that voice would be listened to or get more traction. And we were waiting for it, and then all of a sudden we were only looking at adjustments for, you know, investor and second homes. And it's like, could we get some real experts on these boards in these discussion groups to have these discussions and effectuate change that makes sense? It does not make sense on certain assets to have the level of LLPA that's in play. But the G fee, look, at the end of the day, that was always there. It's too expensive today for sure. It needs to come down. But the amount of money in rate, price, et cetera, that the GSCs are charging today is way more than the risk that they are taking. And I agree that should be a core focus. But you know, everybody's more focused on making headlines, right? Let's stop focusing on headlines and let's start focusing on reality.

SPEAKER_00 23:56

Well, when Barry was working closely with them on this change, uh, was refines and second homes investment properties. I I think, but I think they did that because uh they were definitely planning on taking the the agencies out of conservatorship. It doesn't look like that's gonna happen now. Maybe they just haven't, could it just be as simpleton as they just haven't revisited that conversation?

SPEAKER_03 24:20

No, I think it could be as simpleton as they need to start allowing the experts back in the room to have the discussions.

SPEAKER_00 24:26

No, why don't we start with the floor?

SPEAKER_03 24:29

Fanny and Freddie have a vast array of very talented people, and they're not necessarily being uh made part of all of the discussions that are happening. Sometimes they're there, sometimes they're not. And I think you're seeing decision making without deep dive expertise and impacts of assessment. And I think we need to get back to, you know, the people that really know how all of this stuff happens and how to keep assets performing, you know, serve the customer well, you know, need to be back in that discussion. And we need to ensure enhanced liquidity is available, that we're not going to be stuck in a conservatorship world for, you know, the rest of our lifetimes, Greg, for example.

SPEAKER_00 25:15

Are you available to be in that room?

SPEAKER_03 25:18

Absolutely.

SPEAKER_00 25:19

All right, excellent. Uh, our mutual friend Aaron D in the comments, Texas and Florida ran up prices when Cali and New York people moved there voluntarily during COVID. Those are the markets declining the most. Stephen Moy uh says the administration is praying that AI implementation will increase productivity enough to create disinflation. You want to chime in on either of these points?

SPEAKER_03 25:42

No, I think it's I think it's good points. You know, you did see a run-up in the states that Aaron's referencing. I think you're also seeing certain corrections now because of the over-run-up. Steven spot on, right? You can't, you know, be um it's it's AI is not going to solve everything. I understand that at every conference we have 17 different, you know, panels about it right now, but AI is not going to solve everything.

SPEAKER_00 26:08

Jen, before we go, I want to congratulate you on yet another award. And you are standing here with my dear, dear close friend and president of my company.

SPEAKER_03 26:19

And one of my favorites.

SPEAKER_00 26:21

Latasha Wadi. She's incredible. This is the second day in a row I've told people how incredible she is. She deserves that. And then some. And so do you. Uh, congratulations on this honor. Tell us what it means and when you received it.

SPEAKER_03 26:34

You know, I think the Mortgage Star is an important um award because it not only looks at what you're accomplishing in this industry and the change that you're effectuating, but it also looks at women who are looking to assist and, you know, really take part regularly in bringing other women up the curve in this industry and providing or coaching them through enhanced opportunities. So um a lot of women were recognized. I think it was 14 total this year. Um, I kind of love this since we swapped posters. You know, it shows the support that both Latasha and I have for women in the industry. And um, you know, look, we uh we were also having chats there with other women about who should be mortgage stars next year. And I think that's the whole point. And this award is, you know, in concert um with Mortgage Women Magazine, the Mortgage Women Leadership Council, National Mortgage Professional, et cetera.

SPEAKER_00 27:31

Well, congratulations to you and my colleague Latasha Wadi. Congratulations to us for the pulse getting getting through the first uh edition. I now I have you all to myself, which is great. This is how it all began, and this is the ride we're gonna go on now for a really long time. Jen McGuinness. Thank you.

SPEAKER_03 27:50

Thank you, Greg Shear.

SPEAKER_00 27:52

All right, the pulse is over. We'll be back. See ya.

SPEAKER_03 27:54

See ya. Bye.