The Accunet Mortgage and Realty Show
The Accunet Mortgage and Realty Show
The Accunet Mortgage & Realty Show 8-25-24
The following program. The ENT , mortgage and Realty Show is paid for in full by ENT mortgage, LLC and equal housing lender consumer access.org number 2 5 5 3 6 8. The advice and opinions expressed during the Academic Mortgage and Realty Show are solely that at the hosts and guests of ENT mortgage, LLC, and not WTMJ or Good Karma Brands.
Speaker 2:Welcome to the Accu Net Mortgage and Realty Show, getting you inside information on buying, selling, and financing your home with expert advice from Accu Net Mortgage and Realty. And now here's Brian and David Wickers.
Speaker 1:Welcome to the Accu Mortgage and Realty Show. I'm Brian Wicker, licensed real estate broker with Academic Realty Advisors and majority owner of Academic Mortgage, where my N-M-L-S-I-D number individually is 2 5 9 6 1 0. I'm here today along with my son David, who's one of Ed's Senior loan consultants, also a managing owner and our Chief client experience Officer. His individual MLS ID number is 3 2 8 8 4 7. If you've got a question or a comment, you can always call or text us on the WTMJ talk and text line , which is 8 5 5 6 1 6 1 6 20. And you can always grab a podcast if today's show anywhere you normally get your podcast. So David, another good week for interest rates, by the way. And the stock market too . Yeah. And uh, why is that?
Speaker 3:Well, we're all approaching that magical moment, dad, where the Fed is gonna cut rates at their September meeting, culminating on Friday when Chair Powell at the, you know , uh, central Bankers , uh, party in Jackson Hole, Wyoming
Speaker 1:Retreat, which is, we've been there one time and it's beautiful.
Speaker 3:Yeah , it is beautiful. And he said, I'll, I'll, I'm gonna , the most important sentence, I'm looking at the speech quote . The time has come for policy to adjust, which is nerd talk for, Hey, at that September 18 second day of our meeting, we're gonna cut rates, the rates dad, all of 'em . Right? All the rates . That's right . The rates.
Speaker 1:Well, we've been living in a world for three or four weeks already where mortgage rates reflect the idea
Speaker 3:Today, the expectation Yeah.
Speaker 1:That , that, that the Fed has, it's like the Fed has already made their rate cut. Okay. So now really, in my opinion, the only question is , um, are they gonna cut their overnight rate? 'cause remember, they really only control one rate. Yes. The rate that banks charge each other overnight. They do not have a dial in the Federal Reserve office in Washington, DC or New York that says mortgage rates. Nope . They do not have that dial that's set by the free market. And , um, and , and so the question now is it's gonna be a quarter point cut or a half percent cut. Yeah . And I looked up on the betting parlor known as the CME. What's that ? The Chicago
Speaker 3:Mercantile Yeah .
Speaker 1:Exchange. Yeah . Mercantile Exchange where you can bet on, hey, what is the Fed gonna do with Fed funds rate? And as of Friday, there was a 63.5% chance of a quarter point cut, and the other money, 37.5% was not a half percent cut. Yeah . And not too long ago it was over 50% , um, betting on the , uh, half a point cut. So today's mortgage rates already reflects some, some kind of combination. If they were to cut a half, that probably would be slightly favorable for mortgage rates. Do you agree with that?
Speaker 3:Yeah. Well, and but to our point, if mortgage markets have already baked this cake , uh, and , and rates have begun to come back to us, thankfully, let's then pivot to, you know, the real world. Who, among our listeners or who among, you know, our active buyers here on Sunday morning and be like, well, I heard this speech happened on Friday, and then I listened to Brian and David on Sunday. Honey, let's get out there and start looking now, because I heard Chair Powell's gonna cut rates by something in September, right ?
Speaker 1:I I was on , uh, WBBM in Chicago News Radio seven 80 a couple of weeks ago and was asked, because that's when the first dip in rates happened. Yeah. Like three weeks ago. And so their noon business hour host asked me, so Brian, is this gonna make a lot more people list their homes for sale now that rates are down? And I said, unfortunately, no <laugh> . You know, I think rates have to get well into the fives, is my opinion. And I don't know if that's gonna happen. 'cause we can talk in a later segment of the show, Fannie Mae's out with their most recent , uh, forecast for interest rates and home sales, and they have wisely adjusted to the new , um, market conditions, by the way. And , and so no, this isn't gonna all of a sudden cause more people to list their homes. Maybe at the very, very margin, maybe, maybe a little bit. But this is not gonna cause a gush of , uh, new homes turn .
Speaker 3:No , I'm gonna say that those clients who we have helped get into their home in the last few years are going to want to tap into the equity that they probably have accumulated since purchasing their home 3, 4, 5 years ago. More than perhaps getting back out into the market. That would be, I think, a lot of homeowners first move. How can we improve our current home rather than venture back out? Yeah.
Speaker 1:Go back into that. Yeah . Still painful market for Yeah . For buyers are still competitive, at least in our corner of the world. Remember, all real estate is local. If you're talking Florida, that's a different kettle of fish altogether than Mm-Hmm . <affirmative> Southeast Wisconsin or even Chicago or others. A couple of things to keep in mind between now and the next Fed meeting, which is on the 17th and culminates on the 18th of September. So it's , we'll find out what they're actually gonna do with their overnight rate on the 18th of September. Here are the things that we're gonna be looking at and the Fed will and the market on August 30th. We've got the Fed's favorite measurement of inflation, the personal consumption expenditures index that comes out the end of this month. Mm-Hmm. <affirmative> , uh, you get the jobs report another big one. That's probably the biggest 'cause . What did Fed po chair policy say about the jobs market? Do you remember? Do you have that up?
Speaker 3:I don't have it in front, but I can, I can guess. He said, wow, we've, we've done what we need to do and now we need to approach balance in the jobs market. Did I get
Speaker 1:That right? Yeah . He said some . Yeah. He , he commented that, you know what, the current unemployment rate at 4.3%, we we're not looking to make that any worse. No, there you go. That , that's kind of what he said is we , we do not wanna see the jobs market deteriorate. Then we have the consumer price index report. That's the broadest measure of inflation is on nine 11. And finally we get retail sales, which is two thirds of the American economy comes out on the first day of the Fed meeting. So lots of data, lot of data. And that's what the Fed says they wanna see here . We wanna see the data. Uh , so lot , lot to come yet on that. Alright , when we come back, let's talk about the , uh, buyer's agency commissions because we're now living in the new world. This last week was the first full week of the New World of Buyer Agency commissions. We'll talk about that when we come back. You are listening to the Academic Mortgage and Realty Show on a M six 20 WT MJ
Speaker 2:Home buying advice from the guys who know it best. This is the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 1:Welcome back to the ACU Mortgage and Realty Show. I'm Brian Wicker, the elder. That's David Wicker, the younger over there. Well, David, this last week was the first week, first full week since implementation of the new buyer agency fee , uh, practices, I'm gonna call it under the National Association of Realtors Class Action Lawsuit settlement. And as a refresher, the, the old practice for decades was for listing agents to tell the world via the multiple listing service how much they, the listing broker was willing to pay a cooperating broker who found a buyer. Mm-Hmm . <affirmative> . It's a very simple system. You just look in there and you say, well, how much is , um, you know, Keller Williams willing to pay any other broker who brings a buyer? And in southeastern Wisconsin, the most common figure we would see was 2.4%. Mm-Hmm . <affirmative> in other parts of the state of Wisconsin, it was very common to see 3% as a cooperating broker's percentage. And , you know , that was kind of the basic problem that this class action lawsuit drew out, is that that practice amounted to price fixing. And it was antitrust anti-competitive because there was no negotiation between the buyer and the buyer's agent as to how much , um, they were gonna be compensated. And so, under the settlement , uh, one of the rules now is that before a buyer, if they're working with a buyer's agent , um, goes out and sees any property, they have to have a written buyer's agency agreement, which we've had, by the way, for years and years in the state of Wisconsin that articulates how the buyer's agent is gonna get compensated. You over there, you're gonna ,
Speaker 3:I just want to , if you want, basically if you want a private showing to a home , you must execute a buyer's agency agreement before you cross the threshold. If you as a buyer go to a publicly available open house , no such agreement is required. You can go walk through. So my, my thing is, you want that private showing. You must have formal representation. Now
Speaker 1:What if you go to a, if , can you still go to an open house and say, Hey, I'm here at the open house, but I'm gonna be working with Fred Sch Slamowitz from a BC Realty as my buyer's agent,
Speaker 3:I guess. Oh yeah. Why wouldn't you? Right? Because the only way that representation works right now is upon the execution of the agreement, not just procurement.
Speaker 1:Hmm . Yeah. We'll have to ask some of our friends who are both attorneys and real estate brokers, what , what their opinion is on that. But nonetheless, what we now have happening is, remember, there are three parties who can pay the buyer's agency fee, the buyer. And that's what essentially when you're signing a buyer's agency agreement with a brokerage, you're saying, Hey, help me find a home and negotiate on my behalf, be my advocate. And when you do that, I am willing to pay you. And then there's a line on there. You'll , you know what? You could pay 'em an hourly fee, you could pay 'em a flat fee. Mm-Hmm . <affirmative> . But I think the still most common thing, I haven't seen that by the way, on any buyer's agency agreement yet, it's still a percentage of the , um, offer to purchase price. And so if you write in there, and I've, I've looked up a couple here from this past week. I saw one where , um, they agreed to pay 3%. The buyer said, you know what? Hey Mr. Agent , I'm gonna pay you 3% of the purchase price of any home that I buy. Mm-Hmm. <affirmative> . Then I looked at the contract and the contract said that the listing broker was willing to pay 2.5%. So what happens to another half percent, David, in my
Speaker 3:Example? Well then, then you as the buyer have to come up with the difference in order to make whole what you signed with your buyer's agent to, for them to represent you.
Speaker 1:That's right. And , um, I looked at another one. Uh , and so in that example, by the way, where the, where the listing broker said, Hey, I'm willing to pay any cooperating broker 2.5%. So in that example, by the way, the listing broker cannot publish in the multiple listing service what amount that they are willing to pay , uh, to the , uh, buyer's agent. And though that would also tell me that since the listing agent is offering to compensate buyers agents, they've got a little thicker , uh, listing fee. Whereas another example that I looked at , uh, from this past week, the seller themselves, not their broker, the seller , uh, was willing to pay 2% of the , um, uh, offer price , uh, for the buyer's agency fee. Mm-Hmm. <affirmative>. And in that example, the buyer had agreed to pay 2.4. So what happens to that gap between what either the seller or the seller's broker is willing to pay and what the buyer agreed to pay their buyer's agent?
Speaker 3:Well, and then in that example there, if, if the numbers come together and your buyer's agent wants that last 0.4 per what you agreed you as the buyer, just like your other example, the gap between 2.5 and three, you gotta come up with that gap as the buyer yourself. Either, either, either as cash or perhaps you've got some wiggle room and your friendly lender is smart enough to say, I can lend you maybe a little bit more money so you don't have to come out of pocket for that gap. Yeah .
Speaker 1:Yeah. Depending on what your original plan is for the , uh, that's a good point. Alright. And then , um, the , uh, so , so it's, it's no longer easy. What, what , how, how are listing agents communicating? What, what does a buyer's agent or have to do in order to figure out, hey, what kind of compensation is being offered?
Speaker 3:The answer is one by one, which is tedious.
Speaker 1:So, so your buyer's agent has to contact a listing broker and say, Hey, is the seller willing to pay anything? Uh, are you the listing broker willing to pay me anything? Yep . And then we figure it out from there. So it's gotten more complicated, all with the eye towards , uh, making things more negotiable. Yeah . And hopefully less expensive for buyers. We'll see if that actually happens. More on that as , as the weeks unfold. Alright, when don't we come back, David, what are we gonna talk about?
Speaker 3:I have a home buyer story that I want to get into 'cause it's real life and no ma neither rates nor commission are getting in the way of people getting out there looking for a house. After this break, you are listening to the Accident Mortgage and Realty Show on AM six 20 WTMJ
Speaker 2:Getting you into the home of your dreams. Here's more of the Accu Net Mortgage and Realty Show with Brian Weer on WTMJ.
Speaker 3:Welcome back to the Accu Net Mortgage and Realty Show. I'm David, that's Brian over there. Uh, dad, I would venture to say that one of the things you , uh, take honor from the most if that was English, is when our clients send their children or grandchildren for us to connect. Yeah . Yeah .
Speaker 1:That , that is a great feeling when they say, Hey, I trust you so much as our family mortgage lender, that , uh, here please take care of my precious children.
Speaker 3:And so I uh , was in , uh, contact with the daughter and son-in-law of a many time customer who gave that endorsement like, you need to call Brian and David. You need to have a conversation. And these buyers already had an accepted offer. And what I enjoyed about the conversation, like when I have the ability to kind of like get into it, right? Like, let's talk about, I don't, I wanna do more than just give you numbers. And, and we did. But there were two other elements, dad, that I, I talked about with this client that made it more than just like, yeah, I got this rate and these are the closing costs and we'll see you, you know, at the closing table. Yeah . There were two elements. One, they are both working professionals. They are buying a home out in the western suburbs. And I posed this question and I tried to frame it in the most like, gentle way possible. I said, do you think that there's a possibility that if you guys have kids, is one of you gonna be taking time off to care for said child after they arrive? And the answer is yes. Aha . One, one of the rea or one of the things that led me down that path, this client is unbelievably financially strong. They would like to do a 20% down payment. Dad and I asked this, I I, it was this simple, simple, basically I was like, why, why do you want to do a 20% down payment?
Speaker 1:Well , let me pause it an answer. 'cause I don't want to pay for that evil private mortgage insurance. Is that what they were thinking? Or just because they thought it was cool?
Speaker 3:It wasn't so much that PMI is evil. And by the way, I believe PMI is the greatest invention in the history of home ownership. But that's David's hot take. But the reason why dad is they're mindful of payment. Hmm . Well, I'm mindful of payment, but you guys are strong. Like, why are you guys worried about payment? Oh, well, payment is derived from income and this is all going on in my mind as we're on the phone, I'm like, payment, you know, obviously you gotta , you make your payment from your income probably. It's like, which is why I said, do you expect your income to be different to change in two or three or four years? And their answer was , well , aren't you ? Yes .
Speaker 1:Aren't you saying it's gonna be less because one of 'em is not gonna be working?
Speaker 3:Well, exactly. But as like in any financial decision, you're doing it for a reason. You're, you know, this is, you're you're trying to achieve an outcome. Yeah . And particularly for home buyers, the outcome is life based . What is it that they're trying to, how are they trying to live their life in this house? And , and so that, that was helpful for me to understand. 'cause ultimately whether they do a 20% down payment, a 15% down payment, an 11% down payment, we are agnostic. Right. I wanna deliver the plan that makes you comfortable. But here's the other part of the , uh, story. They're buying a house that needs some love.
Speaker 1:Oh, okay.
Speaker 3:<laugh> and I counseled this home buyer. I was like, have you gone out? You know, now they, they have the house and they know implicitly, Hey, there's some work that's gonna need to get done. You know, painting, flooring, whatever else, landscaping, who knows. But like some of the, the , the immediate tasks, not big remodels, but just some of those immediate things I said, I was like, have you gone out and quantified what , what is that going to cost you? Yeah. Where are you gonna get the money? I hadn't done that yet. Right. Where are you gonna get the money to do that? And I said one thing to keep in mind. If you want just an easy rule of thumb for every thousand dollars you borrow or don't borrow, it's about a $7 a month decision. And that's including the p if you scope out right. If you scope out honey, ah , all the things that we want to do to just make this house nice, it's gonna be $30,000. It's entirely reasonable that you could decide we're gonna borrow 30,000 more dollars in our mortgage on the day we buy, which is a $210 monthly payment decision so that they can keep the cash to do the work that they have in mind. Right. Alright . I , I'm , I'm running, I'm running up against the bottom of the hour here. I just, I got like one little extra nugget on this one that I wanna reference after we come back. But now it's time to turn it over to the WTMJ Breaking News Center.
Speaker 2:Don't break the bank to get into a house. Back to the Accu Net Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 3:Thanks for hanging out with us here on the Sunday edition of the Academic Mortgage and Realty Show. The only edition , although I am humored when people say that they hear us on the Saturday show and I say show you're listening to. Yeah . But we'll take credit any day . This is the Sunday edition at least. Uh, so dad talking counseling, a first time home buyer on beginning with, beginning with the end in mind. Unlike there are chapters in the book of your ownership of this house. And chapter one is, you know, getting in there, getting in there at a , a downstroke and a monthly payment that makes you comfortable. But then also like, you know, hey, there's gonna be chapter two, chapter three, chapter four of making this mortgage better, smarter, cheaper. As I I've joked with clients, Hey, it's been 25 years. Do you know how many clients from 1999 are probably still in their mortgage that you gave them back there at the end of the Clinton administration? Yeah . In year one. Yeah . Zero. None of them, none of them are five years away from paying off that 30 year from 1999. If you are out there, please call. I would love to talk to you <laugh> . But , uh, the , the other element, and we don't really talk about this a lot, but I wanted to, I'm gonna put you on the spot to get your take. They're closing 35 days in the future. Okay. And at the start of the show we were referencing Federal Reserve, cut this, cut that date . This data that, Hey Brian, should I float my interest rate or should I lock my interest rate? 'cause there's a lot that could or could not happen between now and when I buy my house close on my house 35 days from now. Sure. I have my version. What's your version off the top of your head?
Speaker 1:Okay, so the technically correct uh, uh, answer would probably be float your rate. Okay. But, you know, I think the bigger question, and we're gonna talk maybe in the next segment about , uh, Fannie Mae's future outlook for interest rates through the end of 2025 is maybe it doesn't matter. And so if you wanna like not worry about things, you know, remember we said today's interest rates already reflect the idea that the Fed is cutting rates some blend of a quarter and a half, you know, over the next couple of months. Yep . And uh, so you know, if you want peace of mind, you just want to set it and forget it, this probably isn't gonna be the final rate, you know, that, that you end up with for the rest of your ownership of this house or
Speaker 3:For the longest stretch of your ownership.
Speaker 1:Yeah. Yeah. So what's your take on it?
Speaker 3:My take is that being right is a small victory. Honey, I was Right. Rates did go down between when we got the accepted offer and the closing table and that's gonna save us Yeah . 36 bucks a month if you're right, the victory .
Speaker 1:So you quantified it Yeah . For them in terms of, hey, if rates went down, what is that an eighth of a percent on their loan
Speaker 3:Or even a quarter? Right? Because again, they're kind of also thinking about, oh , down payment, how much of this, how much of that. But if you're right, you are tens of dollars, right? Yeah. Which is a lot of anxiety for not a lot of payoff.
Speaker 1:Yeah.
Speaker 3:Because, because if you're wrong, being wrong is not bad either. Ah honey, I was floating our interest rate. I don't know if I told you that or if you were listening to me when I told you that, but I floated our interest rate and I was wrong and now our payment went up $36 a month.
Speaker 1:Right. That just feels bad.
Speaker 3:Oh yeah, of course. But it's not that bad. But of course it feels , uh, losing always feels 2, 3, 4 times worse than winning . Winning.
Speaker 1:That's right . That's right. Hey , and then what are these people thinking in terms of uh, closing costs ? Do they wanna pay up now? You know , that's kind of the other side of the same it discussion or a cousin to the same discussion.
Speaker 3:My version is, I asked the client, I was like, what do you think interest rates are gonna do in the next 18 months? And this client, what's the answer ? This their , their personal answer was, I think they're gonna come down. Okay. And so I said, if you want your clo if you want the rate here, when you buy this house this fall, if you want it to reflect your opinion, you should not be paying points to get a lower rate. Why would you pay for a rate that's lower if you're gonna try to trade it in sometime soon in your ex in , you know , in the next 18 months.
Speaker 1:Yeah . In the next Yeah. Because when you pay those points in order to achieve a lower rate here in the fall, let's say in September of 2024, you never get that money back. No. It's not like, oh, you know what, then I , then I refinanced that loan and they gave me some of that money back. Nope. You don't, it doesn't work that way. That money is a sunk cost as they say. Yeah. Alright. So a lot, a lot going on there. Uh , anything else to add about that ?
Speaker 3:No , that was, but it was like one of those conversations where I always try to ask permission, like, would it be okay if I kind of gave you like a little bit more like I, I'll just give it if you're, if you're not really interested in me telling you all the ways you can think about this, I'm not gonna Yeah . But when I, when a client engages in that, you know , like wholeheartedly, I really enjoy those conversations. 'cause we get to Yeah, we get to give, we get to talk about more than just like, oh well what's the principle and interest on this payment? And yeah, what are
Speaker 1:The, what's the rate and the closing cost ? Yeah . It's , it seems like a commodity on the surface, but you're kind of swinging a big stick 'cause it's a large amount of money and so you can use it as a financial planning, a family planning tool. Yeah. Alright , why don't we come back, David, let's take a quick peek at what Fannie Mae says the future is gonna look like in terms of interest rates and home sales. You are listening to the Academic Mortgage and Realty Show on Wisconsin's radio station AM six 20 WTMJ.
Speaker 2:Important home buying questions and answers you can count on. This is the Accu Mortgage and Realty Show with Brian Wicker on WTMJ. Welcome
Speaker 1:Back to the Accu Mortgage and Realty Show. I'm Brian Wicker, the elder. That's David Wicker, the younger, taller, more handsome of the wicked men. And , uh, David Fannie Mae is the biggest thing in mortgage lending. My former employer back, by the way, way back in the day, 1999, I forget what year he worked for 'em . It was the longest year of my life. 1994 <laugh> . Okay . But , uh, they have got the best , uh, economics department. They've won awards and um, and so they came out with their latest uh , predictions on the housing market for the future. And they're smart enough that , uh, they bake in the current reality. So since we've been talking about rates coming down here this great month of August, they've guess what lowered their interest rate forecast. And so they are now saying that in the third quarter of the year , uh, they expect the 30 year fixed rate mortgage to average 6.6%. And that in the fourth quarter, which would be October, November, and December, they expect the 30 year fixed rate to average 6.4, which by the way is where we are right now. Yeah. If you wanted to borrow $375,000 on a $500,000 home purchase , uh, it could give you an interest rate of 6.375, assuming it's seven 80 credit and all the other Right . Stuff. The a PR would be 3.9, I'm sorry, 6.396, which is pretty much 6.4. And uh , then they see that the , um, interest rate's gonna continue to feather down , uh, starting the year of 2025 in the first three months at about 6.2 and then drifting down towards 5.9 by the end of 2025. So that's nice. Mm-Hmm. <affirmative> . However, despite , despite that , uh, improvement, there are still , um, they've revised downward their forecast for total existing single family home sales. They're now saying that we're gonna have 4.1 million for the year of 2024, which is only a 1% improvement over 2023 at one time. Weren't they predicting it was gonna be up like 20% or 15%? Yeah , yeah. Yeah. So that's quite the downward revision. And then , um, for all the real estate agents out there, existing home sales, they are now predicting nationwide that we're gonna have a 8% better market in 2025. So about 4.5 million units. And then the real problem , uh, is that new home construction Mm-Hmm. <affirmative>, They're pro projecting it's only gonna amount to 651,000 units, not even a million that is just so far below what is needed to replace the housing stock. And , um, and now, you know, the Democratic , um, presidential candidates is out with a proposal to somehow create 3 million new construction homes. I have no detail on that. That is a really tall order. And then also to incentivize builders to build starter homes instead of, you know, McMansions.
Speaker 3:Yeah.
Speaker 1:No details on how that's gonna happen, but it's a nice thing to say , uh, 'cause we need it. But it's a hard road to , um, to climb because we've been below a million ever since the housing crisis in terms of new , um, new construction homes available for sale. I, I
Speaker 3:Read , uh, there's literally not enough sawmills to do 3 million houses a year. Okay. <laugh> like , which I guess you can make a house out of other stuff. Cinder block bamboo. I don't know . You can
Speaker 1:Print one that's with a 3D printer. Um ,
Speaker 3:I can I just, I just also want to note it is my observation perhaps more than ever that different markets are behaving different from each other , uh, in, in dramatic ways that we really, we've said for years and years, you really can't look to anywhere else in the country to understand what's happening in your own backyard. I'm saying if our listeners read any headline about the housing market, America's real estate, you just can't because Florida is a basket case unto itself. Uh, the coasts are their own story. Totally . Yeah . Even the difference between , uh, you know, neighborhood by neighborhood here in the Milwaukee area. Sure there are homes languishing in in parts of the Milwaukee market. It just doesn't matter. Is that the market you are looking in? You you can't, you have to find a great agent, do your research and understand, oh, I'm looking in Franklin above half a million. What's that market? Right ? 'cause it's gonna be different than Grafton between two 50 and 300 more than ever.
Speaker 1:Yep . It's, it's the micro market and you know, we talked a couple weeks ago or maybe a month ago now it's different whether you're in a metropolitan area, a micro metropolitan area, or a rural area. Yeah. The supply and demand, you know, is, is different. You know, when you cut it that way. Alright, when we come back , uh, I saw a headline in uh, CNBC and it was talking about how an 85, you , you and Tim were talking , uh, when I was gone about co-signing. Yeah, yeah , yeah. And that was, that was a great segment. Thanks for doing that. Sure. Because co-signing on a mortgage is different than what this article was about, which the headline was 85-year-old mother who co-signed on student loan now afraid of losing her home. <laugh>. Uh , so let's talk about that malpractice of journalism when we come back. You are listening to the Academic Mortgage and Realty Show on AM six 20 WTMJ.
Speaker 2:Find a place to call home without the headache. This is the Accu at Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 1:Welcome back to the Accu Mortgage and Realty Show. Thanks for joining us today. So David, there was a story this last week on CNBC about an 85-year-old mother who co-signed for her daughter's nursing school loans like 17 years ago. And the headline was that she's now afraid that the private student loan lender Navient is gonna take her house. And according to the, so this, this is a discussion on co-signing and we're gonna make it the difference between co-signing on a student loan and co-signing on somebody's mortgage loan. So unfortunately , uh, they borrowed about 15 grand because nobody has made a payment on the student loan for 17 years. The balance is now up to $31,000. The daughter turned out to have terrible bipolar disorder and could never work as a nurse even though she got her degree apparently. And so she's never made a payment and somehow the daughter, the primary borrower has been excused from the loan because of her disability. Huh, interesting. Huh . But now the 85-year-old mother is still on the hook , uh, for the $31,000 balance and of course can't pay it back. What I have a gripe about is this idea that she's gonna lose her house. My understanding is that there's no way she's gonna lose her house because she never signed a document that said if I don't pay back the student loan, you can sell my property. Yes . And recoup the money. She did not sign that. What she said is, I promised to pay back the money in full. And so what that student loan lender is likely gonna do at some point is get a judgment from the local county court that says, this woman has never paid us back this money. And the court is gonna say, you can file a lien against her real property so that eventually when she or her estate after she dies, sells that home, there will be a $31,000 lien against it. Yeah. And, and at that point in the future, which could be another, you know, five or 10 years, they're gonna get their money back. Mm-Hmm. <affirmative> they cannot force a foreclosure. Alright. So that's just try to clear up journalism, malpractice and sensationalism. That was a good example of Yeah . Pure falsehood in my opinion. Alright . But when you co-sign on your son or daughter's mortgage loan, you're not gonna lose your house
Speaker 3:Or on your parents. I have seen it the other way, child other way . Co-signing on parents. Come on. Don't, don't just talk it one way. It can go the other way too.
Speaker 1:That can go the other way. But you know what you're, what you're doing is you're not 50% liable for the debt. You're a hundred percent liable. Oh yeah. But in that case , uh, everybody who's an owner of that real property, which is the collateral, so remember a student loan doesn't have any collateral.
Speaker 3:Your brain
Speaker 1:Car, a car loan has collateral. It says, if I don't make the payments on the loan, you can come and grab the car 'cause it's collateral. Mm-Hmm . <affirmative> a mortgage note. If you don't make the payments you've signed, the owners have signed an agreement that says if, if the payments aren't made on the note, the lender can foreclose on the property. Yep . Sell it and recoup their loss. Alright , so you got an example or a comment on this?
Speaker 3:Well, it's, and it's, we have clients who , uh, come to us and if them by themselves on the mortgage doesn't make sense. Of course, one of the tools that we reach for is, or we consider is a co-signer. A co-applicant. And that only works. I had a recent example this week. Our , uh, inquiry, our customer had 500 credit and that's pretty low. That is low. And when you've, when you've got 500 credit, even if your parents are willing to co-sign, you cannot be on the loan and get approved with 500 credit, because I have to consider everybody who's on the borrowed money and who has the lowest credit score when doing that analysis.
Speaker 1:That's right. It's a worst of , and let's just clarify that in our world we're talking about Fannie Mae, Freddie Mac, va, FHA, most, most normal loans, it is possible that a local bank, you know, the bank of something east overs shoe Wisconsin. Yeah. Could say, Hey, you know what, I , I'll I'll accept your, your low credit score and put you on the loan. But that's the tiniest of possibilities.
Speaker 3:And
Speaker 1:So what, what's gonna happen in this case,
Speaker 3:In this case, because our , um, um, first customer inquiry could not had the low credit, the only way forward is for the parents to buy the home as an investment property. Okay.
Speaker 1:Is
Speaker 3:That which , which they could still put the daughter on title. Sure . Which, so, alright . But we're all about problem solving. Right? It's like, let's at least let's at least understand the paths available to us based upon the facts on the ground.
Speaker 1:Well, if you'd like some help , uh, finding your way to home ownership, we'd love to help you . And also, hey , rates are low enough that you might be able to refinance right now. All you gotta do to get started is click on that blue button@anet.com. That's all the time we have for today's show. Thanks for tuning in. You've been listening to the ANet Mortgage and Realty Show on Wisconsin's radio station. AM six 20 WTMJ. The
Speaker 4:Proceeding was a paid program. Advice and opinions expressed during the ACU Net Mortgage and Realty Show are solely that of the host or guests of Acuate Mortgage and ANet Realty Advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.