Embark on a journey with me, Mark Jones, as we uncover the hidden traps of housing finance regulation with the astute John Hudson. Straight from the trenches of mortgage compliance, we dive into the repercussions of navigating this minefield without the proper guidance, as emphasized by the profound cautions of Ken Perry. Our conversation is a beacon for real estate professionals, signalling the importance of transparency and the value of vetted expertise in an industry where missteps can lead to severe penalties.
Imagine navigating a labyrinth of mortgage advertising regulations without a map. This episode serves as your compass, highlighting the fine balance between genuine promotion and deceptive practices. With the support of my guest, we dissect the critical role of clear communication in financial dealings, illustrating how perplexing jargon and unclear offers can invite the ire of the CFPB and consumer complaints. It's an insider's guide for loan originators on how to safeguard consumer trust and ensure your marketing materials can weather regulatory storms.
As we peer into the future of real estate, we tackle the contentious issues of realtor commissions and the evolving public perception of the profession. The stakes are high, with lawsuits challenging traditional commission structures, potentially reshaping buyer representation. We share insights on market dynamics and the indispensable role of home builders, stressing that robust homeownership and community stability hinge on the shoulders of those who advocate for educational outreach and professional excellence. Tune in for a thought-provoking exploration of the standards that will define the future of real estate.
Key Factors Podcast is Powered by ReviewMyMortgage.com
Host: Mark Jones | Sr. Loan Officer | NMLS# 513437
If you would like to work with Mark on your next home purchase or as a partner visit iThink Mortgage.
Embark on a journey with me, Mark Jones, as we uncover the hidden traps of housing finance regulation with the astute John Hudson. Straight from the trenches of mortgage compliance, we dive into the repercussions of navigating this minefield without the proper guidance, as emphasized by the profound cautions of Ken Perry. Our conversation is a beacon for real estate professionals, signalling the importance of transparency and the value of vetted expertise in an industry where missteps can lead to severe penalties.
Imagine navigating a labyrinth of mortgage advertising regulations without a map. This episode serves as your compass, highlighting the fine balance between genuine promotion and deceptive practices. With the support of my guest, we dissect the critical role of clear communication in financial dealings, illustrating how perplexing jargon and unclear offers can invite the ire of the CFPB and consumer complaints. It's an insider's guide for loan originators on how to safeguard consumer trust and ensure your marketing materials can weather regulatory storms.
As we peer into the future of real estate, we tackle the contentious issues of realtor commissions and the evolving public perception of the profession. The stakes are high, with lawsuits challenging traditional commission structures, potentially reshaping buyer representation. We share insights on market dynamics and the indispensable role of home builders, stressing that robust homeownership and community stability hinge on the shoulders of those who advocate for educational outreach and professional excellence. Tune in for a thought-provoking exploration of the standards that will define the future of real estate.
Key Factors Podcast is Powered by ReviewMyMortgage.com
Host: Mark Jones | Sr. Loan Officer | NMLS# 513437
If you would like to work with Mark on your next home purchase or as a partner visit iThink Mortgage.
Welcome back to another episode of Key Factors Podcast. I'm your host, mark Jones, and we are powered by ReviewMyMortgagecom, the largest index of mortgage programs in the nation, and the previous episode that I recorded was a discussion with Ken Perry, and we had discussed some regulations that he felt I felt were being broken by many that maybe were unaware that they were even breaking any rules. We also discussed why the CFPB has not done anything about it. So I wanted to bring my good friend, john Hudson, on and have a good discussion and maybe educate some of those that are out there with this nuanced situation. So, without further ado, let me introduce John Hudson. How are you doing, john?
Speaker 2:Great to be back.
Speaker 1:It's always great to have you here, awesome. So, on this discussion, I want to lay it all out there for the folks, because, just like you, I'm seeing things on social media, whether it's from a sales counselor, a realtor, maybe a lender that doesn't know better. There's some violations happening and for those of you that are out there that are thinking, oh, they're not going to do anything, it's social media. It's too wide of a spectrum to cover. I'm here to tell you guys that, based on what I've gathered thus far, cfpb is basically waiting until we get back to normal business so that we've got the money to pay the fines. I think that's something that we don't necessarily think about often, but it makes sense when someone puts it in perspective. So thank you, ken Perry, for enlightening me on that concept. But yeah, john, what are your thoughts on all?
Speaker 2:this stuff. There's a lot of truth to that. Our good friends at the CFPB, the Consumer Financial Protection Bureau. They are there to enforce laws and rules and regulations and they all stemmed out of they were created from Dodd Frank, and so you know it's funny because you know, you and I had this conversation and it was we were seeing folks on social media groups posting interest rates. Yes, and the hard part with that is, you know, I know some people would say, well, it's a private group, I don't care, doesn't matter, I might buy a house, that's right. Anybody in that group might buy a house. That makes us a consumer, and so anything that's out there that may perhaps be misleading or not fully explained can cause confusion to a consumer, right? So now let's go back in history. Keep getting the Paul Revere from the Beastie Boys in the back of my head. That's awesome. It started way back in history.
Speaker 1:That's awesome.
Speaker 2:And so there's a lot of folks that are in the housing finance business, or just housing in general, that have been in the business for less than five years. Right, awesome, a lot of great, great people out there, but that doesn't mean that they remember the whole housing crisis, correct, the subprime collapse. There's a lot of people that were in grade school when all this happened.
Speaker 1:No, I kid, I was at a Chase Bank. I was an actual business banker at the time, but I remember it and I remember it well.
Speaker 2:I mean it's crazy to think so it's. I mean there's a lot of, you know, 22 year olds that are that are killing it out there in the profession right now, but 20 years ago, when they were two, you know, we had this buildup of subprime mortgage loans, Right. And so what happened with the housing collapse? And everybody should go watch the big short, because it's a good tale Great depiction of what actually took place what was happening, and there was the scene of the two mortgage guys and they were bragging about.
Speaker 2:I was a bartender and now I have a boat. That doesn't mean that bartenders can't become mortgage professionals.
Speaker 2:Absolutely A lot of them create great ones too, but the depiction there is just that, hey, these are not professionals, right, and what was happening in the industry was you had a lot of unprofessional folks that were, in essence, misleading consumers with mortgage terms Absolutely, and people didn't know that their adjustable rate mortgage was going to blow up. And now we have all this regulation that's out there. So what happened in 2008, a law called the SAFE Act was what came out, and that is the Secure and Fair Enforcement of Mortgage Rules. There you go, and so what it essentially did was it created this database, or registration of all loan originators. So if you're going to originate a mortgage loan, then if you work for a non-depository institution, you must be licensed. If you work for a depository institution, you must be registered. Right Bottom line is your name is now out there. It's publicly available. Your employment history is publicly available.
Speaker 2:If there's ever been any enforcement actions against you, it's now publicly available. The purpose of it is so that the consumer can again make an informed decision about who they're going to do business with.
Speaker 1:Absolutely, and you know, I don't think that that is publicized enough, because that is one thing that a consumer should be utilizing to shop for their lender in addition to the fees and the loan estimate and things of that nature for their lender, in addition to the fees and the loan estimate and things of that nature, because it has a lot to do with the person's character and what you're about to go through with that person, or even you know where are they.
Speaker 2:I mean, you and I talked a lot about why mortgage folks should use or you know real estate professionals consumers. They should work with local mortgage professionals that are in their community, not somebody sitting in a cubicle 2,000 miles away.
Speaker 1:right, that's right Reading off of a screen.
Speaker 2:Correct. So the law came out and it put everybody into this deal. Now you have to be licensed criminal, background check, credit check, they're going to be looking after you, and so that's the federal law. The state also enacted their own version, so it's actually the Texas SAFE Act. There you go, and it's part of the Texas Finance Code, chapter 157. For anyone that wants to go out there- there you go, read this and again it requires licensing for anybody discussing or offering mortgage terms.
Speaker 2:So let's talk about that right. It defined what is a mortgage loan originator, so I've got some notes. I'm sure you're shocked? No, not at all, not at all. So a mortgage loan originator and this is per the reg here is an individual who number one takes a residential mortgage loan application. So let's think, like that Facebook post, we saw right. Well, somebody might say well, I'm not taking a loan application, that doesn't apply to me, I'm not acting as a loan regenter.
Speaker 2:Okay, All right, Technically you're not taking a loan application. Then there's this one Offers or negotiates terms on residential mortgage loans for compensation or gain. There you go. Well, you put an interest rate out there and by the definition that you offered financing.
Speaker 1:Absolutely, and it is a public offering at that.
Speaker 2:And so then, what that also did was they might say, well, I'm not going to get paid as a loan officer, that doesn't matter. No compensation or gain is directly or indirectly. So if you're a real estate professional and there's a transaction involved, will you get compensated directly or indirectly on that particular loan closing? If you're a new housing counselor, would you get paid on that directly or indirectly? The law doesn't discriminate. It's there, it's a blanket, and if you fall under it you're going to get covered.
Speaker 1:That's right, and there is something called guilty by association.
Speaker 2:Correct Absolutely, and so then that kind of goes into right. So then there's some questions of well, you know, if I'm a real estate professional or a housing counselor, what does it not include? You know? Can I talk to them about anything? And actually, yes, there are some things. So mortgage loan origination activity does not include administration or clerical activity. There you go. Does not include, let's see an individual licensed and only performs real estate brokerage activity. So if you're a licensed real estate agent and you're just acting in the capacity as a realtor, not as a loan officer, then you're not going to be considered in violation of mortgage loan origination activity. So it also kind of goes into the law and it gave us this really kind of cool long appendix here, and so I wrote some of these down.
Speaker 2:Well, you know, I geek out on this stuff and I just want people to know, right, right, you know, because just have it just in the back of your head so that way it pops up when you're about to discuss things that you probably should not.
Speaker 1:Well, even more so, john, is the excuse or reason that somebody gives that they didn't know or they didn't know better, didn't know they couldn't do that. Yeah, it's not acceptable, unfortunately. Right, it's just not. It's just not and I say unfortunately, I really mean to say fortunately, because the ones that are doing it correctly, the ones that are publicizing themselves the right way, are the ones that take the brunt of this situation on the upfront. But in a tough market like we are in, there's not tons of deals like there were going on in 2020, 2021. So everybody's clawing and scratching for whatever they can get at the moment, basically posting and publicizing rates in the effort to induce someone to pick up the phone to call inquire message. Whatever the case, whether it's in a private group or not, it's still public. It's still portraying yourself as this is an offering. This is something that we can offer. Well, guess what? We? You're included and guilty by association.
Speaker 2:Correct, yeah, and so, and we're only on mortgage loan origination activity. That's right. That's right. There's a whole alphabet soup of other regulations that, as a mortgage professionals, you know in the wake of the housing collapse and that you know the really I mean the housing financial crisis. These were all regulations that really got amped up or imposed or created because people were not doing the right thing. And yeah, to your point that you know ignorance is bliss. Yeah, it's never gotten me out of a speeding ticket.
Speaker 2:No, not never Me, neither I'm not cute enough, I didn't know what the speed limit was.
Speaker 1:That's right, not my problem. It doesn't matter if you're from here or not, you're speeding.
Speaker 2:So that's what we. I just want people to know and be aware and tread lightly and I get it. Look, we are all in sales, absolutely so if you're a housing counselor man, I want you to go be the number one in your builder. If you're a real estate professional, I want you to be the number one realtor in your brokerage. If you're a loan officer, I want you to be the number one loan officer and just go out there and be better, absolutely so. Just go out there, be better, absolutely so.
Speaker 2:Kind of coming back on this real quick so appendix, a right. It kind of goes into presenting for consideration by a borrower or prospective borrower particular loan terms, whether verbally, in writing or otherwise, which, okay, the law covers all. So verbally in writing, I don't know what otherwise is. Right Hand signal, who knows that? Look, but you're going to be in violation if your quote has further verification as necessary of it.
Speaker 2:If the offer is conditional, do other individuals have to complete a loan application process? Does the individual lack the authority to negotiate on the interest rate I mean, if you're not a loan officer but you're quoting rates, you don't have the authority to do that At all or lacks the authority to bind a person that is the source of the financing. So think about that. Just as an example. Let's say I'm a new housing counselor. Well, yeah, we've got an in-house lender over here, but if I'm quoting rates, I can't legally bind my lender over here to honor that rate. That's right. So if I put out just you know, example 3.99, well, is that for a 720 credit score? Is that? Well, what if I have a 500?
Speaker 1:credit score.
Speaker 2:You're offering me a 3.99 rate that doesn't exist.
Speaker 1:That's correct.
Speaker 2:Let alone what kind of loan is it?
Speaker 1:That's correct Let alone.
Speaker 2:what kind of loan is it? That's right. So there you go and again it kind of goes into what is not included in that loan origination activity. Providing a general explanation of mortgages, right. So in the examples that the law or the commentary in the law cites, is explaining what a debt to income ratio is explaining what is an FHA loan, what is a VA loan. So very general, generic explanations.
Speaker 1:And now just a reminder these are things that they can actually discuss because they have not mentioned any, and the big word here that I want people to take note of is triggered terms. Triggered terms is the one thing, and there are many of them, but they're all under an umbrella that is protected. That requires additional disclosure. It requires you to be licensed, and rightfully so, because of the SAFE Act.
Speaker 2:Yes, yeah, yeah, I mean 100%, and so kind of coming back here and then wrap up on-.
Speaker 1:No, keep going, I like this.
Speaker 2:And then we'll go into Reg Z, tila and all that other fun stuff. But so again, what can a non-licensed person talk about? Generic mortgage terms? What is a debt to income ratio? What is an FHA loan Processing on the mortgage loan, your mortgage processor does not have to be licensed so long as they're not explaining terms, they're not offering terms or conditions on the mortgage loan, that is correct Underwriters don't have to be licensed. They're not really consumer facing. Correct Explaining the application process doesn't matter, no problem so again.
Speaker 2:Housing counselor guy says hey, great, you're going to get with, you know, jc, our in-house lender, over here and he's going to walk you through the loan application process.
Speaker 1:That's fine and that is one thing that I make sure that I'm clear with my borrowers, realtors and my actual team. My team knows, borrowers know and clients and realtors know that if it's anything related to the loan and terms, they need to contact me. My processor is not going to talk to them about the interest rate. My processors I will not even go as far as to, and I don't want to say allow, but have them discuss how much they need to bring to closing Any of those things either, because that's something that, honestly, jackie and myself, my operations manager, we have a term that we use. That's why we get paid the big bucks. We take on that responsibility, we take on that burden to make sure that they understand what they're going through and throughout the process until closing and all of the financial nuances. That's my responsibility. Yep, you know.
Speaker 2:No, it is. And so, along those points, that's an excellent, excellent point because, again, the home buying journey is supposed to be a beautiful, fun, amazing, awesome journey. But there's going to be a lot of questions, absolutely, and if you can't confidently answer those questions for a consumer, then there's the potential for the not pleasant experience and outside of somebody having their fun, awesome, amazing journey destroyed. It also puts you in liability for if they complain, that's right. Cfpb has a very extensive complaint database now that is publicly available, absolutely, and a borrower can go in there write virtually whatever they want about you, right, and it's going to be public, regardless of whether it was right, wrong or indifference, True or false, that's right, yeah, but no, going back to this.
Speaker 2:So what can they do? And this is an interesting one and I want to make sure that people understand this one clearly Offering on behalf of a licensed originator. So if I have a flyer and you and you work for me, that has, and I, I drew up a flyer, I'm a licensed loan originator. I put you know FHA, a six and a quarter rate, a 6.5 APR, 30 year fixed, based on a seven 40 credit score. Blah, blah, blah blah. It's got all the fine print and all the disclosures in there. If I give that to you and then you pass it out to a consumer, that's okay, because I still prepared it. My license number is on there. The borrowers could come to me if they have any questions and you're just the middleman, You're just the middleman. Here's what they're offering today.
Speaker 1:Now let's say, john, if me, being the middleman, is handing this to the borrower, borrower asks me a question about that document, I begin to answer. Now I'm in a situation to where I'm walking the line.
Speaker 2:You're in a tough pickle. That's right and really the answer should be well, you need to go talk to our licensed loan officer, and that's just the reality, and so I. This is you know, you're, I can't discuss, I don't know about your specific credit score or anything else. This is just the window or the bucket that we're presenting terms, clear terms and processes are set up.
Speaker 1:For many reasons. Protection of the consumer is number one, yes, but what I'm also thinking about is it allows folks like myself who do quite a bit of production to grow a team and assign their roles. You can absolutely go ahead and disclose for me, but if they ask the questions, you got to refer them back to me. I'm the head of the snake, the rainmaker, so to speak. I take on the burden of answering those questions, making sure that they understand everything that they're going through. But if they ask you, you can talk to them about the process. You can talk to them about the conditions. You can talk to them and explain why we need certain documents and items from that. But if it goes into the rate, how much you need to close all of those things, refer them back to me, correct?
Speaker 2:And I will say this, and I know for a fact that on the state level, the Texas Department of Savings and Mortgage Lending our regulators, mortgage professionals. One of the big audit buttons that they're popping people for right now is unlicensed loan origination activity.
Speaker 2:Oh yeah, so if you have an assistant in your office or processor, or any teammate if they're not licensed and they're crossing that line and discussing terms or conditions of a mortgage loan, the state's finding out about it and they're auditing people and they're finding them. Absolutely, Absolutely. You just don't do it. Don't do it. Let's talk about Reg Z for a second. Let's talk about Reg Z. So Regulation Z. I told you it's an alphabet soup, TILA, truth in lending. And so truth in lending. It defines what advertisements are, and this is a big one, because, again, go back to the Facebook post Well, I wouldn't advertising anything.
Speaker 1:Nothing was explained to me. Matter of fact, the rate with the disclosures, that's more of an education session than just a flat face rate.
Speaker 2:Just to put something out there. Yeah, no, absolutely. So, check this out. So advertisements, right, is a commercial message provided in any medium, so that's anything that promotes, directly or indirectly, a credit transaction. There you go, there you go. I mean, you're trying to sell a house, there's a credit transaction involved.
Speaker 1:Well, let's put it this way, you wouldn't need a rate if you were paying cash. That's exactly right.
Speaker 2:Or if the borrowers had the ability, or is it free, that's right.
Speaker 2:So it's a commercial message in any medium that promotes, directly or indirectly, a credit transaction. And so, again, these laws are written by regulators. And I will say this the consumer groups have a huge influence on this and it's unfortunate. But there's a lot of consumer groups that do amazing, great things, but unfortunately and I've come head to head with some consumer folks in the past where they almost feel that anyone that's making a profit is doing bad and that is something to be concerned about. So they're gunning for you and I know we're going to touch on the real estate industry first in a few, but that's where part of that is coming from.
Speaker 2:So, with that, if I put out there in something that is under this blanket statement of what is an advertisement, well now terms must also be available. That's right. So there's your disclosure piece, right, and the required disclosures must also be available. That's right. So there's your disclosure piece, right, and the required disclosures must also be clear and inconspicuous.
Speaker 1:That's right.
Speaker 2:No confusion, no minutia guys, we all call it the fine print, but even your fine print can't be it has to be clear. That's right and that's why you'll see the people that are doing it right. You're like man, there's like a paragraph underneath there it's like, yeah, well, they're putting out there here's all the terms and conditions, correct? This advertisement is based on a 720 credit score, with XYZ down that I get to play every once in a while.
Speaker 1:So, if I look back on the folks that are doing it the right way, who are more than likely posting payment flyers or loan flyers that have the disclosures at the bottom, as we moved forward in technology, the attention span of consumers it's not as flashy, it's not as catchy, it's very boring. People scroll right past it and it's not as flashy, it's not as catchy, it's very boring. People scroll right past it and it's not working for them, right. So in turn, they're coming up with utilizing big bold letters, big bold text, to be able to capture the eyes or attention of a viewer, a I or IE potential customer In those case scenarios. So what is some advice that you maybe would give to that? Because me, on the other side of the coin, that has always walked the line. I will be honest, I know the years has been. Some would call outlandish, but it works Right. Wrapping of the trucks, wrapping your boat, uh uh, uh. Different things.
Speaker 2:But I guarantee you, on on, in your wrapping you had your NMLS number. Absolutely, I remember seeing your truck, yes, sir.
Speaker 1:And not once did I mention an interest rate Right, not once did I offer anything Yep, once did I offer anything other than my services, my expertise.
Speaker 2:You were advertising you.
Speaker 1:That's correct and, matter of fact, one of the raps actually said stay in your lane, bro. That was not just talking about consumers, it was talking to realtors, insurance sales counselors, all the above Because, let's face it, you don't go to an attorney for your health advice, correct? You know? It's just one of those things that I believe it is.
Speaker 2:It's very tough to navigate. It is extremely tough to navigate and I want to put out I'm in sales. Yes, I've been doing this for 26 years. I mean, I want to make more money.
Speaker 1:We all do?
Speaker 2:I mean? I want to trust me, I want to serve more families better homes. But I also want to get rewarded for it for doing that. So I get it and I understand how frustrating it can be, because you're like man no one's going to read all these disclosures and you know what. You're right, they're not.
Speaker 1:They're not, that's right.
Speaker 2:And so I think you're right. You did the right thing by finding okay, I'm going to find another avenue to promote myself, to get attention Right, do it. You could say easily say hey, our you know in-house lender is offering amazing pricing specials on their mortgage loans.
Speaker 1:Right, you didn't mention a term, a rate, any of those things.
Speaker 2:You're just, you're trying to catch the borrower's attention to come and apply. Right, you know I do. I help educate a lot of folks on down payment assistance, for example. Right, so I do advise, you know, real estate professionals. Hey, if you've got a listing, why not promote that? This house qualifies for down payment assistance. Absolutely, it does, because there's down payment assistance programs everywhere. Now you're not stating specific. Hey, here's X.
Speaker 1:Y Z rate with X amount of funds.
Speaker 2:You're just saying this house qualifies for down payment assistance. It does. So there are ways to be very generic with your advertising and it's also your messaging and your delivery. You don't have to just go out there and throw out the. You know, it's almost like the race to the bottom. Yeah, Is almost what I would call it.
Speaker 1:I agree, and that's what's happening right now, and it's challenging for those loan officers, realtors, that are doing it the right way, because of a couple of factors. Number one it is going to be there for a while. Yeah, um, they the statute of limitations on this kind of stuff. I have no idea what it is, because I don't know if it was created when social media was around, but I do know that if you are posting a rate and that rate changes, you're supposed to update your post or get rid of it. Yeah, so we could go through several pages and see hey, this 3.99 that you offer your post is still up. I need that rate, yeah.
Speaker 2:Yeah, absolutely, you know, unless again in disclosure, you're having the fine print somewhere that it says this rate is as of 1230 on Wednesday and we know that's not happening. Correct, so again, just avoid it altogether. You mentioned trigger terms and it's kind of like okay, if you're quoting a note rate. First of all, the big one is the APR always has to be there, right?
Speaker 2:But yet we don't see it anywhere, never. And so you know, I would almost kind of equate to, because the APR varies on every single loan and how it's structured and how it's put together. You know home loans, you know consumers or snowflakes no two are alike, and I've literally seen tens of thousands of loan applications across my desk and no two are alike, which means that any APR that you put out there in general is going to be unique to any individual borrower. So it's very tough to put a blanket one out there, which is why, again, a lot of people refrain from doing that kind of advertising. That's right Down payment, if you're quoting out there that only 5% down or as low as $100 down, or move-in cost totaling X, y, z, $800, those are trigger terms.
Speaker 1:You're missing a whole lot. That's right. What credit score? How much down? What's the APR? All of the things that should be there are not. Pr all of the things that should be there are not. And it's very, very frustrating to not only see it happen, but to see it happen, with them believing that it's going to be okay, that's right.
Speaker 2:So that's a great segue, because I believe that you've got a flyer that we could talk about. Oh, absolutely, so there was a home builder that Is this the Pennsylvania?
Speaker 1:This is the Pennsylvania one JC. If you want to throw that reference up there, there it is, there it is, and do you have the actual flyer?
Speaker 2:I think-.
Speaker 1:There you go.
Speaker 2:Okay, so this advertisement I mean. Right out of the gate you go, zip, zero, nada. Purchase a new townhome from the villas in highgate upper, whatever township, and you'll pay zero money down, receive 100 financing, zero transfer tax, paid at settlement. Save thousands plus. Purchase today and you can choose from one of the following for free zero for a free finished basement, zero dollars for a free upgraded kitchen package or zero for paid for paid closing cost and this is funny to me, because it's almost as if they attempted to be clever and get past it by using spanish zero, nada, but that that doesn't fly, guys.
Speaker 2:Just so you know and so there's, there's a lot of things wrong, wrong with this, but but right out of the gate, okay, I'm going to put my, take my mortgage hat. There you go. If I'm a consumer and I just see this quote, I'm going, wow, I can get that house for twelve hundred dollars a month and and I'm not gonna when I'm gonna pay zero, that right, because it says zero.
Speaker 1:I'll take two.
Speaker 2:Right, I mean, that's awesome. And so where the CFPB sued this builder and they fined him, by the way, to the tune of $650,000. Wow, wow. Now one thing I will tell you, too, about litigating with the CFPB it's like dancing with a bear, and you're only going to stop when the bear gets tired. That's right, and so in reality and you are not stronger than a bear.
Speaker 2:And in reality too. So I would say that this $650,000 fine, which is what they settled for, probably cost closer to the tune of a million dollars once you add in all the legal expense and everything else that had to be tied in there. So nonetheless, I mean right out of the gate, I mean one of the big things that you have, and what the CFPB got them under was unfair, deceptive and abusive action practices.
Speaker 2:So they have this thing called UDAP, u-d-a-a-p, and there's no clear definition of what the term abusive is. Basically whatever they decided to, and so, in this case, they decided that it was abusive to mislead a consumer that they're going to pay $1,200 a month which they did have disclosure in there, by the way, down at the bottom Very tiny yeah. But it didn't go into also sales price. What kind of loan?
Speaker 1:So look, it just says so they're basically giving you all these big font catchy terms to get you to bait into that. But then they imitate that they are giving you disclosures here at the bottom, correct, but they're not disclosing what they should be disclosing.
Speaker 2:And in this particular case too, they never said that you're getting a USDA loan.
Speaker 1:Yeah, wow, which USDA Not mentioned at all.
Speaker 2:Not mentioned at all anywhere in there and that was one of the things that the Bureau cited was USDA loan has income limits. How do you know if the borrower is even going to qualify for that? That's right. You don't. That's right.
Speaker 1:Minimum credit score requirements.
Speaker 2:There's all kinds of things. So they were found in violation, okay, and so check this out. So they were found in violation from the Federal Trade Commission Act, the MAP rule, mortgage Acts and Practices rule, which is Regulation N, tila, truth in Lending, which is Regulation Z, and UD, such as the total cost, any materials, restriction, limitations, conditions, including that consumers will pay zero money down to purchase a home for a mortgage Wow and that consumers will receive 100% financing, pay no closing costs to buy a home or get a mortgage loan. So now you take that and apply it just to what we see today, because one of the big things I see, because, of course, mortgage rates stink right now in comparison.
Speaker 1:In comparison and I appreciate you saying that. Yeah, I do appreciate you saying that you can pull the reference.
Speaker 2:Yeah. So over the case of the course of the last 20 years, rates are fine, they're normalized, but compared to what we saw three years ago, they're higher. But I see a lot of people going out there oh, we're going to get you a now and we're going to get you a free refinance. Okay, that falls right into this here. That's right. You can't guarantee A number one, you can't guarantee that rates will ever be down enough to refinance. That's correct. I mean, the CPI data came out tomorrow and guess what? We've got Higher rates for longer. That's right. That's exactly correct. It is what it is. You don't know that if the borrower is even going to be able to get a refinance, because if they have a mortgage, late payment or their credit, goes down they won't qualify for refinance.
Speaker 2:You don't know what kind of mortgage loan they're doing. And then this one just kills me. I don't know. I see our credit report bills. What is your?
Speaker 1:credit report bill. It's pretty high. That is the highest bill that we have. Matter of fact, it competes with my lease each month. I believe it, it does.
Speaker 2:I believe it so for non-mortgage folks, just so you know, I mean credit reports now are costing upwards of $100 a pop Each one.
Speaker 1:That's exactly right.
Speaker 2:Yeah. So just be aware that that yeah.
Speaker 1:When your lender says we're going to do a soft pull, it's for our benefit too. Yes, absolutely. Even soft pulls have gone up, But- 40 something bucks.
Speaker 2:But yeah, so the credit agency. They're not giving you a free credit report. The title insurance that's going to be needed on that. They're not doing it for free. That's correct. There's no such thing as a free refinance.
Speaker 1:Correct.
Speaker 2:So to have anywhere in your advertisements or messaging that anything is free is just a bad, bad, bad idea. Yeah, because I mean, technically, you can say, hey, I'm going to give you a free water when you come in. Well, you know what? At the end of the day, though, if I really really wanted to boil down to it that free water is still somehow factored into your P&L.
Speaker 1:That's exactly right.
Speaker 2:And you're still setting a margin that you've got to make Based on my time. I don't care if you're trying to make a dollar, that's still a profit. That's correct, which makes it not free refi.
Speaker 1:Matter of fact, I don't even like the term that has been used recently marry the rate or date the rate, marry the home. You can't really say that because you can't guarantee that they will qualify. You can't guarantee that their living situation won't change, that they won't miss a payment, et cetera. That gets them to not be able to qualify when the time comes that if rates do happen to come down. Now I had to get with my compliance department to structure the most specific terms of this policy. Matter of fact, it's not a free refinance, it's lender fees. We will cover our lender fees and it's within a certain period. There are certain things that have to be met, but those you have conditions on it.
Speaker 2:All the conditions are on there. Absolutely yes, no, and that's the right way to do it. And so again, I want everybody to excel in sales. Absolutely yes, no, and that's the right way to do it. And so again, I want everybody to excel in sales.
Speaker 1:Absolutely.
Speaker 2:We want to put families into homes because homeownership is the path to wealth creation in this country, no question about that. But so the messaging really should shift from hey look, we're getting you into a house today with a very fair rate, because they're not going to say it's the best. I'm not going to say it's the worst, it's fair. What I'm giving you is what we're getting you into today is with a fair rate, based on where you're at in your position, Correct and should the market conditions change in the future, God willing, we're going to be able to put you in a position to possibly refinance and do a lower interest rate and maybe save some money on a monthly basis. I know that's super long-winded. We don't want to put that into. It's hard to condense that into, you know, get chat GP to put it into eight words.
Speaker 1:You're exactly correct. It is long-winded. The need for the correct disclosures and all of the nuanced marketing that we're seeing out there is long and boring. That's why they're not doing it. Nothing sexy about mortgages, Right, but it does not change the simple fact that it is required if you use trigger terms Correct and towards the end. Here we can get into the right and the wrong way to go. I mean, we've already talked about the wrong way plenty. But the right way to go about marketing is if you're doing it at a high level and the best of your ability, you don't have to mention rates at all.
Speaker 2:You really don't, to be honest. I mean, you should be selling yourself as a professional, absolutely. And you know what? I don't care if you've been in the business for six months or you're not. Are you a professional, yes or no? Correct, and if you are, then that's how you should be projecting yourself and selling yourself. You know, on the advertisement side, right? So what is the MAP rule? And so the MAP rule. So you kind of said, well man, I don't even know how long we're supposed to keep these things. So here's the MAP rule. Mortgage action practices there you go. Any person to make material representation, expressly or by implication, in any commercial communication regarding any terms of any mortgage credit product. That is the mortgage action practice rule. That's the umbrella that they've got in there.
Speaker 2:And so the answer is two years. Okay, you're supposed to be required to keep these on record for two years. Now it's kind of like the IRS Well, if there's fraud or anything illegal, there's no statute of limitations on that, correct, and I think that that works the same way with this, as I was reading an article kind of.
Speaker 1:What I was talking about a bit ago is if you put a social media post out that says 3.99 rate and it days go by, year goes by, two years go by, we're past this statute of limitations, but it's still out there, so you are still held liable for that. Correct, I mean, that's not a limitation. What you're talking about is the other side of the token on that.
Speaker 2:Yes, yeah, no, absolutely so. And in the commentary to this rule they put in there the FTC uses the term any person, so loan officer or not. Right, you know it could be my daughter.
Speaker 2:That's right, that's right, she's quoting rates, she's going to be in trouble, that's right. They wanted to apply the message as broadly as possible to individuals or entities that supply information regarding a mortgage product, possible to individuals or entities that supply information regarding a mortgage product. So I mean, they flat out said and they put in here, including real estate agents or even advertising agency that pass along information that turns out to be misleading. So you know, real estate agents were specifically mentioned in the commentary of the mortgage action practices rule and I believe for that reason it's, you know, as you put, stay in your lane, that's right. You sell the house. Work with a mortgage professional to handle the financing. Work with a professional housing counselor to find what their new home stuff. I mean there's, you know, hey, let's focus on what we do.
Speaker 1:We do best, that's exactly correct. And license to do. Yes, it is teamwork. Teamwork makes the dream work, that's right. You've made me think of something because of my ADD going crazy ADHD. Wouldn't it be funny if you did try a ploy to have your daughter's social media posting rates and things of that nature?
Speaker 2:Oh man, now you're going to give me ideas.
Speaker 1:here it's like wait a minute, wait a minute. You're trying to go around, but she still would be at fault.
Speaker 2:She's still liable. That's right, Unless she puts out there daddy's NMLS number is both.
Speaker 1:And the terms, et cetera, et cetera. That's right. Based on the credit score Everything else.
Speaker 2:So, yeah, just be careful. And that kind of leads into what the other part of our conversation was with the issues that realtors are facing today. Yes, with their commission lawsuits. The issues that realtors are facing today with their commission lawsuits. I mean, that's part of the problem and I think, is we all, as housing professionals, have to do a better job of presenting ourselves as that word, professionals. Yes, because I believe that that's what got us into this mess in the first place. It's what got mortgage into the, to the, to under the spotlight, you know, and then 2008 to spotlight, you know, and. And then 2008 to 2010,. Uh, you know, realtors are, are, are under the spotlight right now. I agree, all of these, you know these lawsuits there, you know, I'm waiting for Jeff Davis to file one.
Speaker 1:You know they do say that, uh, pigs get fat and hogs get slaughtered, and I think it's one of those. On the line of the past several years have we gotten too hoggish, to the point that we've raised the wrong flags and the wrong eyebrows, and now the eyeballs are looking, and it's even past that. We've gone to the point that it's gone to court. We lost or not we? They lost in court. Now, of course, they're going to fight it and all that good stuff. But now we're seeing changes come about, or potential changes.
Speaker 2:You're seeing changes now, but you're also seeing, you know, that ultimately, the court is public opinion and so and the public is who we are actually servicing. So this article came out today. So this morning I was reading it and it's on the Business Insider and I just jotted down a couple of notes in here because they really stuck out and they bothered me. But there's something that every realtor needs to hear out there. So this is a publication that consumers read. They cite, you know, related to these lawsuits and realtors. The bar for entry into the industry is shockingly low.
Speaker 1:And they're talking about realtors, lenders or both. They're talking about realtors, okay gotcha.
Speaker 2:Here's another one. Low standards and lack of oversight can create hazardous conditions for buyers and sellers. Wow.
Speaker 1:Now here's a real question Are they wrong?
Speaker 2:Because I can play both sides of this coin A hundred percent. And so then you put it into okay in the court of public opinion. I mean, is this true or false? And again, real estate professionals, we're all individuals, we're all not alike. But you think, okay, the National Association of Realtors ballooned up to 1.5 million from 1 million, just in so half a million more realtors in a three, four year period. Well, this is interesting. So the National Association of Realtors. Their membership has fallen below 1.5 million, it's like 1.486 right now.
Speaker 2:For the first time in three years. They've lost 81,000 members since October. Wow, Wow, I mean.
Speaker 1:I track the number of loan officers that are out there. Matter of fact, we discussed this with Ken Perry and he was saying how some of the figures on the mortgage side are misleading, because there are plenty more than we think that renewed their license, et cetera. Because there are plenty more than we think that renewed their license, et cetera. But I think it goes hand in hand with the maybe 80-20 rule. In our industry it's probably 10-90, to the point that the top 10% is doing most of the business, and that's realtors, lenders, all of that good stuff, absolutely.
Speaker 2:So. The point is, are these quotes, are they wrong? I don't, I mean, I'm afraid to say not human speaking in general.
Speaker 1:Yeah, I mean it's what was the first one? The first one-.
Speaker 2:The bar to entry into the industry is shockingly low. Okay so I would say I would take shockingly out of that.
Speaker 1:So Jeff Garza, broker for Redbird Realty. Yeah, I had him on several weeks back when we were talking about the NAR lawsuit and one of his comments which struck me. I was thrilled to hear this from him Great advocate. He said the bar is too low. It's to the point that, let's be honest, if you and I wanted to get licensed as a realtor and we're not saying we're smarter than anybody else or anything like that it requires X amount of hours, whether that's in a classroom or online. We all have access to the internet. We can knock it out in a day or two. Then it requires you to get fingerprints, pay the fees and go take a test. So you pass that test and technically, you can get licensed. You're good, that's it. Matter of fact, going back to 2012, I was licensed as a mortgage lender within two weeks of me making the decision to do so, and we had to take two tests. I drove up to Austin, passed, came back, took the 48 hour second state course, boom, drew back up there and that was it Showed back up.
Speaker 2:Craig Jennings' door. I grandfathered I only had to take one. Okay, okay, I took the first one.
Speaker 1:So Very good, that was prior to me getting in. Yes, yes, yes, and that's also why I'm not getting licensed in other states, because I'm not about to do that again.
Speaker 2:Oh, but my point is like, regardless of whether they're right or wrong, this is what a consumer out there is reading Correct, and a consumer is also a member of a jury. That's right and clearly. You can see, with these lawsuits after the first one was lost, it's like, yeah, every attorney is piling on because they see easy money.
Speaker 1:Meanwhile it's like, well, all these companies are going to go file for bankruptcy protection. In addition, you've got realtors for several years, lenders for several years that have been and I can't say flaunting, but posting all of their wins. They've been posting all of the things that they've purchased and the trips that they've taken, things of that nature. So when you reflect back, let's say, a mirror image of the consumer and what they're seeing, those statements right there ring home to them right away. They're going well, I make 50 grand a year. I don't have the ability to make more in a month. I don't have the ability to go on this trip or buy that vehicle, et cetera, et cetera. So I feel like it is a topic that we maybe didn't foresee coming before it came, but it's definitely something that we provoked, absolutely so, and so that goes back to it right.
Speaker 2:So that's where the PR campaign is really needed, and I'm not talking about just the talking point from the National Association of Realtors or even local groups, but the PR campaign needs to come from you as the individual, I believe. I agree, I saw there was a great somebody put out there and of course it got copied and pasted into like multiple groups, but there was a list of like 70 things that realtors do for borrowers and transactions and of course, because we're humans, we're not going to read all 70 things in there. I did because I geek out on that stuff, but in the general public's not. But I'm thinking to myself man, that would be great. That would be like 70 days worth of content right out there.
Speaker 1:I mean that should be.
Speaker 2:You should be putting. Take each bullet point and make that your own personal.
Speaker 1:Each one a video. Boom, boom, boom.
Speaker 2:Smart. I'm a real estate professional and this is what I do for my consumers.
Speaker 1:Yeah, over the next 70 days, I'm going to take you on a journey of what?
Speaker 2:I do. Yes, it's a great idea. Now, hopefully, we start seeing a bunch of people.
Speaker 1:That's what I was going to say. Maybe we inspire somebody to do that you?
Speaker 2:I hope so, because right now because I saw this happen to our industry the mortgages we got under the spotlight, the consumer groups had it in for us, and right now, the real estate industry is under the spotlight and the consumer groups have it in for them.
Speaker 1:I think you pulled up, yeah, yeah, we've got it here If you want to reference that JC real quick, because this article and it came out, matter of fact, I saw it from another YouTuber that does a podcast and she's a realtor over in Louisiana and brought this article up and said guys, get ready, you thought that we were going to be able to get around this and fight it, etc. Etc. But it feels and looks as though we just want to cover our butts as a whole. So, therefore, things are going to start changing Now. When they're going to change, I don't know, but, like on this article, roughly 30 billion could be slashed from real estate agents, commissions, fed economics, post.
Speaker 1:Solution to anomaly Is that right? Yes, anomaly in the American housing market. So a consumer, you've always got to think what does the consumer see? Think when they see things of this nature? A consumer is going to see 30 billion, that's a big number. Yeah, number one, number two you associate that with real estate agent and they go well, wait a minute, they don't think entire industry, they think they're realtor. Yes, instantly yes. So if you put 30 billion, your realtor, in the same sentence and now in the borrower's mind, in the consumer's mind, you go you make too much money.
Speaker 1:That's exactly correct. Yes, so what they're talking about in this article is being able to come up with a solution that allows the realtor to provide an a la carte pricing plan. Essentially, if you want to charge somebody to write a contract, it's going to be X amount of dollars. If you want me to go to your inspection, it's going to be X amount of dollars. It can be a percentage or a dollar amount, but this is what they're thinking or leaning towards. I mean, I don't even know how I feel about that.
Speaker 1:My wife is a realtor, I for one, and I will say it do realtors make too much Sometimes? Sometimes they don't make enough. And we've all had those transactions or borrowers or sellers that you've worked with for an extensive period of time that you're just trying to break even on this transaction, to be honest. Same thing for mortgage, by the way. It's true, it is true, but lo and behold, mortgage has already had their reckoning, so to speak. We've had our commissions restructured, we've had the regulations placed on us and looked at through a microscope. I mean, there's so many things that we cannot do with our commission Referrals. You can't pay a referral If I was to give you a deal at a different company, correct, that's a bad word.
Speaker 1:That's just not something that we can do For the realtors. This was set up a long while ago when pre-internet pre-a lot of these things agreements to where you would have to go to the customer to have the contract hand-signed and reviewed, etc. It would take 48, 72 hours to get a response from an offer that you submit no docusign. 72 hours to get a response from an offer that you submit no docusign. There has been a lot of efficiencies created in that side of the industry that this side and how they get paid maybe doesn't line up. I don't want to put that out there as if it is this is the gospel, but just something to think about.
Speaker 2:But when these contracts, when the buyer's rep contracts, were originally written out, just like you're inferring here, there was no internet, nope. So there was no Zillow, where a consumer had already gone and looked at 40 houses before they found a buyer's agent. Right Now. That, in and of itself, is the big concern that I have, because I feel that buyers absolutely have to be represented when they're making that offer. Yeah, and so that's my big concern in all of this is that there's going to be this erosion of buyer representation, because, again, this is the largest transaction for many people that they're ever going to possibly make.
Speaker 2:That's correct. And to not have that person on your side that's there to negotiate on your behalf, to make sure that you know what. Hey, this property is a piece of junk, you don't want this house or you know it's like. No, absolutely you're going to get a home inspection and absolutely they're going to make these repairs before they buy it. We have to protect the consumer, which is where we're not going to pay full buyer's commissions. Then buyer's agents weren't taking borrowers to go see those houses, exactly correct.
Speaker 2:Steering is what they call it. Yes, that's a very nasty word. It's a nasty word and steering, ironically enough, is what got mortgages in trouble. That's right Steering consumers in for Certain products and programs. For gain, and now you have it here being tossed around in the real estate side, and so that's, that is absolutely a uh uh. That is a game changing word steering.
Speaker 1:And I think and I don't want realtors out there to get me wrong, or John and within this topic, because let's be honest and transparent If the commission of the buyer is now placed on the buyer's responsibility to be paid for in our local market, that just doesn't work much. We've got a market to where borrowers are short on down payment, short on closing costs and now we're going to eventually ask them to pay for the commission, we're going to see a massive drop in transactions.
Speaker 2:It's not just in our market, it's everywhere, especially in this economy, it's hard for people to save money, so you're asking for extra money to be coming out of the buyer's pocket. Not only that, now we also get into implications for even qualifying for a mortgage. It's not even down payment, but reserves. How?
Speaker 1:are they going to make this?
Speaker 2:There's all kinds of problems that are going to run amok here. Currently, real estate commissions are not included or considered in seller concessions for mortgage financing. Well, fhaha, max seller concession is 6%, for conventional, it's 3%, for VA, it's 4%. So now if I have to include real estate commissions in that as a seller concession it's all eaten up, it's all chewed up. So now again, now we're getting back to the borrower being harmed. So these are all things that aren't being thought about. What the ramifications are going to be in the long run. Unfortunately, that's playing out in the courts right now because some people are looking for dollars to more of what the market is determined for their efforts.
Speaker 1:And I'm not saying plus, minus, et cetera, I'm just saying updated to what they believe. It's a tough scenario to implement this type of pay structure, comp structure. It's a catch-22. Oh, 100%. It's like we need representation but we don't want to pay for it, nor can we pay for it. Okay, so how do we do that? And all the solutions lead to leave it alone, because it's worked for years. And let's understand why it worked for years. Because you've got, what do we raise? We raise the loan amounts, allow them to go 103% financing. Well, that hurts the borrower in return again.
Speaker 2:It got us into trouble last time too. So, yeah, I'm 100% with you and, ultimately, I hope that the industry will come up with the solution before it's made for them.
Speaker 1:Yeah, that's a great point.
Speaker 2:I wish the mortgage world was a little bit more proactive with some of the regulations that came out, because what we got was really the blunt end of the instrument.
Speaker 1:And that's actually one of the unwritten rules that I have adopted from years ago, which is if you're going to come to me with a problem, also come with a solution.
Speaker 2:Whether I take the solution or not, at least you're thinking down that path, you're not just going wah, wah, wah, right, you know, right, right right, and so you know, maybe the and I don't know, I mean I really don't know because it's all separate, you know, I mean the $200,000 starter home is a lot different from the $4 million luxury home listing and then you know that goes into.
Speaker 2:You know, if I'm selling a $4 million house, I'm going to pay out how much in real estate commissions. That's right. I'll just go get my license and sell it myself, and so which we don't want people to do, no, no, we want people to use real estate professionals. So then that just kind of comes into okay. So how am I marketing myself as a professional? What is my own personal PR campaign? You know, right now you've got okay, it's hovering right, we'll call it 1.5 for easy math. I've got 1.5 million real estate professionals, realtors in the country, which is what? Two to one as far as active listings.
Speaker 1:Right.
Speaker 2:That's challenging in and of itself. Here's a fun fact for you. So this is last week's data. Last week's data, you had 60,000 nationwide 60,000 new listings. Right, compared to 2011,. There were 360,000 new listings same week. Hmm. So, wow, there's a lot less inventory that's out there. Oh yeah. New listings same week, hmm. So wow, there's a lot less inventory that's out there, oh yeah, which is why we're all fighting.
Speaker 1:We're fighting for it all.
Speaker 2:yes, you know the home builders for the most part I love the home builders Necessary. They're providing future inventory for existing. I mean, in reality, you know, and right now there's a lot of people sitting on 3% rates and they don't want to leave. That's exactly right. So we have to be creative and my marketing sense would come back to demonstrate yourself, market yourself as the professional. I like that and all the things that you want to. And for my title, friends out there, y'all are next, yeah, yes, I hate to say it, and that word steering is going to be applied and tossed in your direction. And that word steering is going to be applied and tossed in your direction. The FHFA, which is the main regulator for Fannie Mae and Freddie Mac.
Speaker 1:So conventional loans has just launched a pilot to basically not require a new title insurance when you refinance, and I heard Joe Biden talk about that in his speech. But hearing reviews and whatnot, it was a little premature for him to say something like that, but I do see the benefit in it. I mean, that was probably the only thing that made sense that it came out. Sorry, no, no, no.
Speaker 2:Yeah, the tax credit thing, don't even get me started. The last thing we need is buy side demand promotion. It's like, no, you need it on the seller side, or hey, let's go. If we're going to toss money around, let's give it to the home builders to incentivize them to build in the 250 price range. Correct, Because that's really-.
Speaker 1:That's home affordability right there.
Speaker 2:That's what we need. But here's a fun fact and my title friends can't and I've had this conversation with some of my title friends. They can't argue this Title insurance company as an industry pays out and I got it down here roughly 3% to 5% in premiums. Wow, versus your standard homeowner's insurance company pays out 70% in premiums. So it's just, I'm not going to say free money, but it's almost like sub 3% rates. Well, it's money that goes to sponsorship things.
Speaker 1:It's money that gets tossed around for a lot of different things and most of it and I hate to say this, but I'm gonna is already digitized, meaning what they're looking for is online.
Speaker 1:It's public data. They can get ahold of it to find out that there's no liens or there are liens, et cetera, et cetera. But obviously there's plenty of value there and they're going to have to fight their own battle when that time comes. But I do believe that you raised a good point about the consumers even fixing their lips to say I'll just go get my license and I'll do it. And the answer to that is, like you mentioned, realtors, you've got to show your value. You've got to show it over and over and over and you've got to separate yourself and not allow someone to even make that statement and it be even close to possible Correct. I can't just jump out there and say you know what? I'm just going to go get my doctor's license so that I can do my own surgery on my wife. It's not something I would even fix my mouth to say.
Speaker 2:I mean look, I'm not an insurance guy, I'm not a home builder, I'm not a realtor. That's yours. Yep Comes to mortgages. That's my lane, that's right and I'm going to do it extremely well. But I want people to know me as a professional of it, not just hey, I'm going to offer you a free refi.
Speaker 1:Better date that rate and marry the house.
Speaker 2:There's plenty of them out there. 3% rates you're still out there. Yes, oh, oh, no, no, no, no, just stop all that. I mean let's, let's get back to uh for the consumer's sake. Uh, clear, transparent messaging, uh, edging. You know, come from a standpoint of education, absolutely. It's funny. I taught a class in uh in el paso yesterday on down payment assistance. There you go it's kind of that's my little lane there, but to the Greater El Paso Board of Realtors did a class out there and one of the things I was really talking to with some of the questions was okay, love all these funny TikTok videos.
Speaker 1:That you guys are making because they're great, they're amusing.
Speaker 2:But what's missing in between? There are some of the educational stuff, absolutely so keep doing the funny stuff, because it catches people and gets their attention, but then come right behind it with your how come and why and educate, that's right. Because again, let's go back to why do we do it? Homeownership is the best thing for any responsible homeownership. I should say it's the best thing for any family that's out there.
Speaker 1:I agree, I agree 100% with that. The idea of having catchy, funny, quirky videos, all for it, yes, but damn it. Put some value behind it, please. Yes, because what ends up happening is it just like false rates and all of these bait posts that you're seeing. It makes us all look bad when that consumer that clicks on your funny video asks you a question and you give them the wrong answer, and then you go back to the and I'll send you the link to this article so you could post it up there too, because it is kind of interesting and it kind of gives you the red ass a little bit, like it did me.
Speaker 2:But yeah, low standards and lack of oversight can create hazardous conditions for buyers and sellers. Well, if that's the messaging that's being out there to consumers, then they're going into any advertisement that they see from you already with that frame of mind. That's correct that you're out there lurking in the dark to somehow scam them into buying a house with a mortgage. That's exactly right.
Speaker 1:Well, I mean, this was a great discussion. This was always for the folks out there. I think one of the biggest messages that I can give you and I just came to me right now is reminder that perception is reality in most consumers minds. As a matter of fact, in your mind, perception is reality. So if you want the consumers to perceive you as a professional, start acting professional. If you want them to see you as the expert, start acting like an expert.
Speaker 1:But an expert does not mean spouting off interest rates. Race to the bottom. It means education. It means doing the right things with the disclosures. It means doing the best that you possibly can for that consumer. And if the best is just posting an interest rate, if the best is taking the borrower to just open doors, I can tell you that you won't last in this industry too much longer because they are cracking down. Production is picking up, whether it be interest rates coming down just a tad, whether it be people understanding that we've normalized a bit and property values are not going backwards. Whatever it is that is inducing these buyers to get back into the market and these sellers to put their homes on the market. It's happening and that means that we've got some money to pay the fines when they come after us. So that's the warning to everybody. John, I want to thank you again.
Speaker 1:I love these conversations. Same here, man. I nerd out with this stuff. I mean, like I tell people all the time, this is like therapy. I don't get to have these conversations on a social media post, Right? No, I've been doing this for 26 years. I don't get to have these conversations on a social media post Right?
Speaker 2:No, I've been doing this for 26 years. I don't want to learn how to do anything else. I love what I do, yeah, and I want other people to love what they do too, and I want the consumers to love us for what we do. But we've all got to hold ourselves to a higher standard.
Speaker 1:I like that, and that's a great ending note. Guys, thank you for tuning in. We will catch you.