good morning good afternoon

good evening

wherever you are and whenever you're listening

I wanna congratulate you

on taking steps towards bettering yourself

and furthering your career in real estate

today we are joined by Sherry Rihanna

what's up Sherry yeah

living a great day how about you

doing well and we are also joined by Chris Brazil

what's up Chris Hunter how you doing Sherry

how you doing I'm good

good this is

actually

the first episode that has Chris and Sherry together

we usually have some one of the older

I mean the more experienced generation and I'm sorry

we gotta get my foot out of such a certain area

I'll be back in a moment

we usually have one of the two of them on

but net we've never had both of them on before

and I think

today is a perfect episode to have them both on

just because the topic we're gonna be discussing um

they saw pre and post 2,008 lending

and so they can speak to what it's like now

versus what it was like before

and so if you haven't put it together yet

we are of course

talking about Fannie Mae and Freddie Mac

of the mortgage gods that be

these two entities affect almost every loan we do

and even the ones we don't have to go through them with

they

those loan options are there because of Fanny Lane

Freddie Mac in the first place so without you know

hyping this up anymore

let's kind of just talk about a pre 2,008

versus post 2,008 Fannie Mae and Freddie Mac

Sherry Chris

take it over well

they're both large companies

that guarantee most of the mortgages

in the United States together

they're known as the government sponsored enterprises

we call that the GSE's so

you know they're historically

they were private companies

operated with the government's permission

and under the government's regulation

I can't talk today gonna be one of them days

so you know I can speak to a lot

I know Chris can't too

but let's just talk about before the crash of 2008

yeah and we were right mortgages it in

this is no no lie

and I remember doing this in

back in 0 5 where we basically

if you had a pulse you could get a mortgage

that's nuts if you could breathe

you could borrow you had a credit score

you needed this credit score

the credit score was in yeah

we doing Nene's no income

no assets didn't know where your money was coming from

of course you know

all of that great stuff which you know

was very scary

if a stated income fixed assets

Sisa stated income stated assets

you name it it was out there wild

wild wild

just nuts I mean what Washington Mutual's product

this was a great movie yeah

yeah you

you could just you you had three options

on how to make your mortgage payment

I mean you could pay interest

only to pay principal and interest

and then

there was some kind of deferred thing they were doing

I don't know no wonder they went barely fast

but I I remember sitting in a room with a bunch of LOEs

I think it was about 0 6

and we were like this cannot continued

something's going on so even you knew before

like even before the regulations

even for the guidelines

you knew like this is not a sustainable method

like this is coming and they knew yeah

and what I loved about it is when it all shook out

the lone officer was the bad guy

we weren't the bad guy well

the big short man that's the movie

if you look at

while the Wall Street entities in the banks

gave us the products to sell

or we wouldn't have been able to sell yeah

we didn't create them we didn't back them

we had didn't have the money to bag them

and but

you know

when they were out there and they were pushing us

I remember you know

early on in my career I mean

they give us extra money for selling that touch right

they would that's not

you could put points on the front

points on the back

and they wanted you to sell those products

because everybody was making money at the time

so if you're a loan officer that got into the game

after 0 8

I personally was graduating high school in 2008

so you know

if you are one of those oh my God

isn't that special here in

this just kind of blows your mind that like

you know because we're so regulated on

how many points we can charge

when we can charge and when we can

what has to be titled especially North Carolina

what's loan origination

what's loan what's discount points

this kind of stuff just kind of blows your mind

but let's talk about a loan guarantees

like loans begin meeting certain criteria

and what that means for Fanny and Freddy

and why do we have two entities in the first place

why not just one yeah

so let me talk about that for a minute

so Fanny main Freddie Mac

they came up you know Dodd Frank was the

the congressman back in was a 2,010

2,012 some DOD and Frank yep

and they set the regulations

and the regulations were set back then

and Fanny Mae Freddie Mac

they're the ones who followed the regulations

and endorsed these loans

basically said that if you follow these guidelines

you can sell this commodity on the open market um

as a mortgage back security

and so what they did was they said

in order to sell this loan on the open market

you had to follow certain rules and regulations

which it all boils down to the

the ability to repay the mortgage

meaning I don't care if you have $1 million

and $1 million in the bank

make $1 million a year you have to prove that

you have the ability to repay this mortgage

and so everybody has to follow those guidelines now

and that's that's what set forth

and that's the ability for us to sell these loans

on the open market that is backed by Fanny Main

Freddie Mac okay

that boils it down and we

so that's why everybody swims in the same pool now

we all have to sell these loans on the open market

and we all have to follow the same rules

and regulations that were set forth

after the after the housing crash in 2008

2,010

and each of them has a little bit of nuances to them

like certain like

Freddie Mac hat

offer certain products that Fannie Mae won't allow

Fannie Mae allow certain things that Freddie Mac won't

um what do you see or it maybe you don't

but like when you look at

like a Freddie Mac underwriting

versus a Fannie Mae underwriting

do you see any differences in what

there may be looser with the goose with

on this or that what I find is

is how much volume they can hold

because they tighten guidelines

and loosen guidelines by the flow of the business

they have exactly

so if they're you know

they get backed up on a certain product

you know they might tighten up on that guideline

we've seen it happen time and time again

you'll have a 7

80 credit score that can't get approved on Fanny

and you flip it to Freddy and it gets approved yeah

um you know

it just depended again again

it could be vice versa

I don't think one's greater than the other

but they do have very distinctive products

under themselves that are not duplicated out of

you know each other

so I find that that's always interesting

it gives us more options to do things creatively

um again

within the guidelines that are dictated through that

yeah I think a couple years ago

I would have said that

Fannie Mae was my more preferred underwriting

just a little bit easier to get through

she was just she

she allowed a little bit wider net than

than Freddie would but um

I feel like over the past couple years

we've seen less waivers with Fanny

and more with Freddie

like just kind of switch roles there

and also some things that Fanny Major spits out

absolutely no on Freddie Mac except

so it's kind of fear I just feel like

you know things have switched

maybe they're tweaked a little bit of

too much for Fanny right now

and um

like you said

maybe it's just the influx that Fanny received

because of those things

and this is my personal opinion only

I think Fanny Maze

underwriting system

and initial approval is so much easier to read than

fuck yes

I don't know why Freddy's is always been complicated

I

think that's why most loan officers will lean to Fanny

over Freddy cause Fanny's very precise

it's very clear you meet this guideline

you meet this guideline you've done this

you've done that you're good to go

it just sometimes with Freddy

it's almost a Greek interpret yeah

it looks like a lawyer wrote it

uh huh it's jargony

so with Fanny maybe in more use of friendly

more loans go there and so like Sherry was saying

when they get an influx of business

you'll see those screws tightening

and then you gotta send it to Friday

and start reading that Greek and figuring it out yeah

we all like to do things a little bit easier

we're all busy we all move quick

and Fanny May being more user friendly

sometimes it means that

they get a little bit more of that business

that's it that's it

and I do think also with Freddie Mac

um in the past

you know even with pricing loans like that

certain investors would give a little bit more

on a Freddie Mac investing

pricing because it was just a little bit harder

to get approved

now I think they're balancing out a little bit more

I do think I still get a little bit more income

and asset waivers with Freddy

than I see with Fannie Mae

but I mean there's a given take on

we got a loan right now that we're working on

we're literally fanning our Fannie Mae

would not take an appraisal waiver on it

got one with Freddie and so we're going with Freddie

because we got that appraisal waivers

just say to find 600 bucks same

same house same criteria same borrower

Fannie Mae did not want it

Freddie Mac said yeah

we'll take it yeah so let's go all day and you know

we can't really talk about Fanny and Freddy

without talking about um

what we have now because of Fanny and Freddy

which are non qim loans

those loans that seem a little bit more Wild

Wild West and and and pre 2,008 um

that we have at our disposal now

we've done a few episodes

I actually did a little series on non qm loans

um earlier in the in the show

so if you'd ever like to hear more about that

I'd encourage you to listen to that um

there's a lot of good information with DSR loans

that's the no income based on appraised uh

rent rent schedule uh

with the appraisal just to qualify the loan

we've got 1099 just looking at 1099 qualifying income

there's a lot of good stuff there asset asset yeah

yeah yep really good yeah

but I'm gonna say this

ain't nobody gonna wanna hear it

cause I ain't gonna like it

but here we go again you know here we go again

if I ain't gotta

prove my ability to be able to repay the mortgage

here we go again and those products that they're cute

they used to be sub prime products

so now we made a new name for them called Non QM

whatever I'm just it just more professional

you know what I do believe is

the difference is that we have lack of inventory now

so before and in 2008 we did not have that problem

so when all these products started turning over right

there was nobody to bomb uh huh yeah

so I think that even if we went through

god I hope we never see it again

but if they did have some increases in foreclosures

and by the way we haven't had increases in foreclosures

but if we start seeing them

the potential for people to go out and buy are there

absolutely

because there's so many first time home buyers

that I don't have anywhere to go

yeah so when I say that

I don't say it like on gloom and doom

cause I don't feel that way

and people ask me all the time

when's the next bus coming about

when I don't think it's coming

until we start building a lot more houses

we get these big Wall Street

corporations out of buying whole neighborhoods

which is just wrong and the congressman

anybody here listening to me

y'all need to do something please

please please please

which I know actually

there is talk

and we are one of the states that's talking about

put a hold on that I think we should

we're just running

the first time home buyer out of the market yeah

yeah in addition to that

you also have just an influx in our state of

specifically North Carolina

of high equity bar worse

where you're seeing a lot of people putting 50

60 70% down if not paying in cash

one of the statistics I read for February of this year

one in every three transactions was a cash deal

in North Carolina that's huge

yeah a ton of equity in the

literally talk to an agent this morning

exactly what she said you know

we talked to them we tried direct them you know

to our our preferred lenders

and a lot of times

they're just looking to sell the house

wherever they're coming from

they've got enough to pay in cash and just paying cash

yeah and these are also

the borrowers that did live through the early 2

and so a lot of people are scared of that

and so they they were bit back then

you know

no matter what everybody was a little bit you know

influencer affected by what happened in 2 thousand

eight 2,010

so those borrowers now they're selling a house

they have a lot of equity in the house

because of the appreciation

and they don't wanna get into the mess of anime

Freddie Mac and the mortgages again

so cash bars hide down payment bars things like that

so you think about the people that were in California

back then yep

uh Arizona

uh Florida yeah

just a few of this they were just majorly hit

yes I mean they

they they were coming out 50

60 70% upside down

yeah you know

looking at that thing they're only option

they felt in their mind was to walk away

yeah um

which is why Fanny and Freddie are such a needed

yes absolutely

because yeah

they're there to protect the bar

or they don't want the bar to be in a situation

there are situations where Chris and I

and Sherry and Jeff we look at along

we're like

I can't figure out why this thing ain't passing

underwriting but there is something about it

whether it's the front end ratio

where the housing expense is too high

not enough reserves

where we just can't get it through Fanny and Freddy

and that what the entity is saying is this air

there's a high level of risk here

we are put we are putting the bar at risk

if we give them this loan

so we have to tweak it

we have to either change a program

put more money down something like that

we have to come up with a solution

yeah yeah

exactly right and that's where we come into play

as experienced loan officers

we know how to we don't give up we

we see the the

the denial let's call it

but it's not you know

for its refers what we call it in the business

but if we get that you know

you talk to us

we'll figure out solutions on it and we'll get you

we'll figure it out that's right

we don't know is a step one in the process

it's a step one in figuring out a solution absolutely

well look

this has been great

this has been an episode on Fanny Mae and Freddie Mac

if you'd like to know more about these entities

and how they're affecting your bars

please reach out to us our number is 9 1

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