Before You Defer Your Mortgage Payments, Listen to This – Episode 230

Refinance or forbearance? What home loan strategies work best in today’s lending market?

On this episode of the Dentist Money™ Show, Ryan interviews a 20-year veteran of the home loan industry, Tim Peterson of Cornerstone Home Lending. 

Federal stimulus has resulted in low, low interest rates causing some to wonder if now is a good time to refinance? And media coverage about forbearance has others wondering if that’s the right strategy during unusually tight times? Listen as Ryan and Tim take on the difficulties and surprising positives of today’s lending market.

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Podcast Transcript

Ryan Isaac:
Hey, everybody. Thanks for joining us on the Dentist Money Show. Today we are joined by a longtime friend of mine and an expert in the home mortgage industry. It’s Tim Peterson from Cornerstone Home Lending. Today Tim talks about where the industry was headed pre-COVID, what’s going on right now, and what to expect as we come out of this and some action items for everyone to think about.

Ryan Isaac:
Really helpful show, a lot of information to digest and a lot of things going on. So I thought this was a really appropriate time to cover this subject. We hope everyone’s doing okay out there. We wish everyone the best of luck in getting back to work soon. Let us know if you have any questions. Just go to dentistadvisers.com. Book a free consultation. Let’s have a chat. Thanks for joining us, and enjoy the show.

Announcer:
Consult an advisor or conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a registered investment advisor. This is Dentist Money. Now here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to the Dentist Money Show, where we help dentists make smart financial decisions. I’m your host, Ryan Isaac. Joined today by good old friend of mine, goes way, way back, new friend of the show, Tim Peterson from Cornerstone Home Lending. Tim, what’s up, man? Thanks for joining us. How you doing today?

Tim Peterson:
I am doing great, all things considered. It’s great to be with … Like you said, we go back. I mean, I look at how long I’ve known you and Reese now, and it’s fun that we’re touching base professionally again.

Ryan Isaac:
What a weird world. So Reese and Tim and I probably … Was that your first house ever in your adult life in the same [crosstalk 00:01:27]?

Tim Peterson:
Yeah, it was. It was. We went from town home to first home. That’s right.

Ryan Isaac:
Yeah, man.

Tim Peterson:
All of our careers were all kind of really getting launched at the same time as well, and here we are-

Ryan Isaac:
Babies.

Tim Peterson:
… 14 years later.

Ryan Isaac:
Yeah. Yeah, it was crazy, man. It was like early-

Tim Peterson:
14 years later.

Ryan Isaac:
… mid-twenties. We were all having our first kids, and it was cool, man. Well, life’s funny. Today on the show, let’s let’s do a little intro real quick, though. Tim, give us some background about kind of your career, where you’re at now, how it’s evolved, and what you do for Cornerstone Home Lending right now.

Tim Peterson:
No, absolutely. I’ll be brief on that. I’ve been involved in the mortgage banking industry for over 20 years, by education and some professional practice, an accountant. Got an undergraduate and graduate degree in accounting and then went and worked for a Big Four firm, KPMG. But then it was always I’ve had kind of my hands tied in the mortgage world, and I’ve done everything from production level to executive level management. I ran operations for a large national company.

Tim Peterson:
I’ve run a big swath of retail production for companies as well, and I’ve been with Cornerstone for, geez, almost a year now. In July, it’ll be a year. I did some consulting with them for seven, eight months and participated in some other housing activities in the form of the world of modular and manufactured building, which is still going, but moving along at its own pace. I’ve been a regional production manager and somewhat of a business consultant for Cornerstone for the last while and just have my hands deep into housing finance, which touches so many aspects of the economy these days and is a really pertinent issue for all of us.

Ryan Isaac:
Yeah. Huge, man. I forgot that you had the accounting background. I remember that. So you have now … Let’s see. Did you start in the mortgage business in the housing crash of ’07, ’08? Were you involved then?

Tim Peterson:
Yeah, I was. I was involved then. I had just left a very technically comfortable job at an accounting firm, and, of course, I walked right into a crisis. But out of the ashes, you build, right?

Ryan Isaac:
Yeah. That’s what … Yeah.

Tim Peterson:
Through the chaos, you try to find the calm in the storm and the light in the darkness, if you will. I think focusing on that always results in good fruits for everyone.

Ryan Isaac:
While we’re on the topic, it’s just such an interesting thing for somebody who’s built their career in an industry where you’ve now been able to see some pretty wild events, unprecedented events. We were going to get to this anyway, but let’s just do it now. Do you draw any parallels or similarities between that time in ’07, ’08 and right now, with what you’re seeing in lending and mortgage and housing? What’s the same, and what’s different to you, from your experience in it?

Tim Peterson:
Well, yeah, that’s a great question. I’m going to start out by saying they’re fundamentally different.

Ryan Isaac:
Totally different. Yeah.

Tim Peterson:
The absolute economics behind what drove the credit crisis in 2008 versus anything housing-driven today, just such different global factors. At the end of the day, 2008 was just that. It was credit guidelines became loose over … Really, it was a proceeding, I mean, 40-year history, or a 30-year history. People don’t want to look that far back, but there are things that took place that allowed credit to slowly creep in and get loose. Then as credit got extended too far across too many avenues and spectrums, of course, that bubble burst, and that had an extreme impact on the economy.

Tim Peterson:
But, at that time, you’ve got to recall that Fannie Mae and Freddie Mac, which provide liquidity for the mortgage market, so almost all the loans out there that we see, a majority of them get sold to Fannie Mae and Freddie Mac. They securitize the loan, and investors can buy those securities. They went into a government conservatorship under the Dodd-Frank Act and under the Federal Housing Finance Agency, FHFA. Remember, they’ve never gotten back out of conservatorship.

Ryan Isaac:
Yeah.

Tim Peterson:
So, interestingly enough, a lot of what helped rescue the markets back in 2008, it was easy for the feds to kind of adjust the tactic to keep it viable today, because about seven, eight … Now it’s been about eight weeks ago. Rates were coming down, and then we saw this big spike in them as all things COVID started to break. The feds jumped in at that point in time and started buying mortgage-backed securities to keep the rates low. The demand for housing loans [inaudible 00:06:16] down. So I know I’m kind of walking around in a big picture.

Ryan Isaac:
No, that’s good. Yeah.

Tim Peterson:
Some of the similarities … Well, the similarities are we’re in a crisis, and the market’s being affected, but it’s just being driven by completely different factors. The fortunate part is there’s fundamental pent-up housing demand and a lot of large markets throughout the United States. I’m coming from the Salt Lake market. You’re down in Maricopa County. The fundamental demand, I think there’s still about a 40,000, 45,000 home shortage along the Wasatch Front for first-time to kind of an upgrade home buyer.

Ryan Isaac:
Interesting. Is that just a population demographics, a younger generation, huge-

Tim Peterson:
Exactly.

Ryan Isaac:
… generation? Is that unique to Utah, Salt Lake City, or what are some of the [crosstalk 00:07:12]?

Tim Peterson:
A lot of the markets were in that, a lot of the bigger, more aggressive markets, and that was everywhere from Arizona to the front range of Colorado, the Denver market, Utah, [crosstalk 00:07:20]-

Ryan Isaac:
Oh, yeah.

Tim Peterson:
… Portland, pockets of California, Washington, all over Texas as well.

Ryan Isaac:
Are these just people moving? I mean, all the cities you’re naming are cities that, just anecdotally, I hear people moving to and wanting to move to. These are very popular places people are kind of migrating to. Is that it, or is it just existing city population that just has [crosstalk 00:07:42]?

Tim Peterson:
It’s both, and you’ve got to look at the demographics of the nation as well. I mean, the average age of a first-time home buyer still in the US is 32 or 33 across the United States.

Ryan Isaac:
Okay. First-time home buyer. Okay.

Tim Peterson:
First-time home buyer. What we have here is us Gen Y’ers, if you will-

Ryan Isaac:
Millennial here.

Tim Peterson:
Well, you’re barely a Millennial.

Ryan Isaac:
Barely. I still [crosstalk 00:08:04].

Tim Peterson:
You’re a quasi-Millennial.

Ryan Isaac:
I’m quasi, but I claim it.

Tim Peterson:
Yeah, I’m kind of in between. You have the Baby Boomers, and then the population went down. It wasn’t until the Millennial generation that it started coming back up. So we have more first-time home buyers entering the market, I mean statistically, than ever before. We’ve had that flood for the last few years, and it’s continuing. So there’s just fundamental population demand for housing [inaudible 00:08:31] across-

Ryan Isaac:
Yeah, that makes sense.

Tim Peterson:
… outside of economic growth that are occurring in a lot of these municipalities and MSAs that I just described. So there’s good positive demand, and that is 100% the good news. I mean, and here we’re sitting on record low interest rates. Sure, we have property appreciation, but most of the home builders … There was a survey that went out to home builders, and I’m just going to talk where I am right now.

Ryan Isaac:
Yeah, great.

Tim Peterson:
80% of them said that they had no plans on adjusting price to their property during this year, which is a good thing, because some people are thinking, “Well, are they going to reduce it?” There might be some categories where maybe a price drops a hair, but there were more that said they were going to raise prices of the remaining 20% than there were that said they were going to lower it.

Ryan Isaac:
This is a post-COVID survey of home builders?

Tim Peterson:
Yeah, this is a survey that is hot off the press a week ago.

Ryan Isaac:
As you’ve listened to our podcast, maybe there’s a question about your finances you’ve wanted to ask. It’s easy to get an answer. All you do is just pick up that phone, give us a call at (833) DDS-PLAN to set up a consultation, or if you don’t want to call us, you can just go to the website at dentistadvisers.com, click the Book Free Consultation button, and set it up. It’s free. Do it today.

Ryan Isaac:
Before, three months ago, when all the COVID stuff broke, where this was all leading, so you mentioned a lot of positive pent-up demand, really. They’re just waiting for new home and development to be done.

Tim Peterson:
Yep.

Ryan Isaac:
You want to talk a little bit about rates, availability of credit, how the lending standards have changed since ’08?

Tim Peterson:
Yeah, yeah.

Ryan Isaac:
How hard or easy is it for people to actually get loans compared to how it’s been?

Tim Peterson:
Well, it’s always been easier than people give it credit for, in the form of planning.

Ryan Isaac:
Yeah.

Tim Peterson:
That’s like all things. No matter what you’re doing, there’s always perceived notions that something might have a level of difficulty that it doesn’t, and it’s usually related to just either a lack of understanding or a lack of professional support. So all things, working with a professional is of the utmost importance.

Ryan Isaac:
Okay, cool.

Tim Peterson:
You don’t have to be the jack of all trades. I mean, it’s why I call you from an investment perspective. It’s why somebody calls someone like me from a house financing perspective. But, of course, credit tightened up, but what happened is secondary markets of financing started to reemerge post-2008. So these were loans that were not going to be securitized through Fannie Mae, Freddie Mac, or through government loans, Ginnie Mae Securities, which is FHA loans, VA loans, and USD rural housing loans. Sometimes they’ll call them non-qualified mortgage or non-QM loans. This is even applicable to the jumbo sector, because there’s lending limits from what you can get financing for Fannie Mae and Freddie Mac.

Tim Peterson:
So the market started to get created where debt, and call it whatever you want to, collateralized mortgage [inaudible 00:11:32] security of loans were starting to be recreated. That was providing liquidity to the market, and it came over more and more and more. That continued up to this point of COVID, actually. We had gradual price appreciation, which is very, of course, healthy in any market and especially for those that are giving or financing the housing product. Appreciation means, of course, there’s more equity that provides additional liquidity. The ability to sell properties is easier, and we saw that increase, increase, increased. So the process was getting simpler, and I think risk was being understood. More and more automation was taking place. The ability to verify data quicker was-

Ryan Isaac:
Efficiencies in the process.

Tim Peterson:
Yeah, just efficiencies across the board, and efficiencies that, from a technological basis, existed prior or at the time of the meltdown. But the sad part of the meltdown in ’08 was there was no investment in the technologies needed to facilitate-

Ryan Isaac:
Oh, okay.

Tim Peterson:
… to understand it easy. So the investment didn’t occur for a number of years post-meltdown. So that’s why everybody said, “Man, why is it such a pain in the butt to get a loan?” at the time. “I feel like they’re nitpicking me on asking me all these questions about it.” Part of that was just processes and technologies we’re not going to utilize, and that started to change significantly the last four or five years. It’s gotten better and better and better. But, unfortunately, and this is the big unfortunate part, this whole COVID crisis … We already saw the market kind of moving. There was already some pressures in the market. You guys I’m sure have talked about this on the show. Even prior to COVID, there were some fundamental pressures.

Ryan Isaac:
Sure. Yep.

Tim Peterson:
COVID just exasperated all of that to a certain degree, and we saw some of the products that I was talking about. We call them non-agency products, like these jumbo loans, et cetera. That market actually evaporated and went illiquid about five, six weeks ago, for the most part.

Ryan Isaac:
What does that mean? What does that mean?

Tim Peterson:
Again, when the market started to move down, you guys, from a financial basis, understand what margins calls are, right?

Ryan Isaac:
Yep.

Tim Peterson:
It’s an agreement that you have if you’ve lent on margin or borrow on margin [inaudible 00:13:56] agreements that you’ve made with third parties that you’re going to have X dollars of let’s say cash reserves or if your position moves in a security too far, that the value of it goes too far, you might have to put in some more cash.

Ryan Isaac:
Pay back your loan, or … Yeah, [crosstalk 00:14:09].

Tim Peterson:
So what happened is we saw a lot of large institutions, whether they be hedge funds with agreements or REITs, real estate investment trusts, as that crash [inaudible 00:14:22], that market started to go down. It created a rush for … People needed to get more cash in their coffers really, really quick. So they started selling positions in some of these mortgage securities that they had purchased. So the value of those securities started to drop really quick, and it got to a point that you couldn’t even almost sell them anymore. No one was willing to purchase some of those. So the jumbo market in the United States really got hammered. We can still get a loan from banks, et cetera, but even their ability to transfer their loans amongst one another or to other entities, that’s what has changed significantly, the last six weeks.

Ryan Isaac:
So for the buyer a home buyer in the jumbo market, that just means that the process might move slower. It might be harder to find a bank or a broker to facilitate.

Tim Peterson:
Exactly, just fewer options. Is the credit available? Yes, the credit is available for qualified buyers. There’s no doubt about it on that.

Ryan Isaac:
Slower now.

Tim Peterson:
But it’s just going to be slower, it’s going to be tighter, and there’s just going to be fewer options. That’s continued to play out daily. We’re getting updates on that week after week after week. I’d imagine the next four or five weeks, we’ll have a clearer picture of where things sit there, but that positive secondary market that was re-emerging, which is a really, really good thing for … I mean, the Federal Housing Finance Agency, which oversees Fannie Mae, Freddie Mac, et cetera, they wanted to see as much of that occur as they could. They want to get those organizations out of conservatorship, and they want to see the market absorb as much of it as possible.

Ryan Isaac:
Right.

Tim Peterson:
Yeah, COVID definitely set it back. It definitely set it back.

Ryan Isaac:
That’s so interesting, man. Okay. So we’ll just kind of stick in this theme then. While we’re in the middle of all this, what else is different? What else changed during this time? What happened to rates? You started talking about that a little bit. For people who are wondering, “What happened to rates? Can I still get a loan?” You started seeing news stories come out of certain banks saying, “Look, moving forward, we’re only going to do 20% down payments and credit scores above 700.” I’ve seen a lot of people tweeting about that, worried that it’s just going to be harder for people to get loans. So anything else that’s changed, besides the jumbo liquidity and some of those?

Tim Peterson:
Oh, big time. Yeah, there’s a lot that’s going on. Kind of an interesting story to look at that side of it, but no, Ryan, what’s gone on with more of the conventional lending is we’re seeing it tightening across the board. Like all things, all lenders are not created equal.

Ryan Isaac:
Right.

Tim Peterson:
All banks aren’t. There are those banks that they will originate, process, underwrite, and then even deliver and securitize the loans and retain the servicing rights of that loan for the long run. The banks that have liquidity to do that and that was part of their standard practice are in a better position than those that would maybe do some of those steps I talked, so like brokers, wholesalers, and even correspondent lenders that would then sell the loan right after closing. The market for those wanting to purchase that paper has decreased. Because of that, that’s why you’ve seen a bit of a tightening in credit, where they’re saying, “Hey, you need a higher credit score.”

Tim Peterson:
Every company’s acting very differently. Some are saying minimum of a 640 credit score. Some are saying 680. But it’s product-dependent as well. If you need to get cash out mortgage right now, we’re seeing more and more banks and investors increase the standard for which you need to qualify. You might need a lower debt to income ratio. You need a higher credit score. They might want to see some reserves. So I know I’m painting a picture where it might sound a little bleak, but, in the same exact breath, if you’re a good borrower, you’ve got some equity. Even if you don’t and you’re buying a home, I mean, you can still buy a home with 100% financing today. There’s housing products that exist for that. There’s the government loans that require little to no down payment. You can still get a conventional loan for 3% down.

Tim Peterson:
But we’ll see a continued tightening of credit as this all plays out, because information is coming in so quickly, and we haven’t even gotten into forbearance on loans yet. We haven’t even talked about that.

Ryan Isaac:
Yeah. Let’s hit that. Yeah. Great.

Tim Peterson:
But you’re just seeing a general tightening of people being a little more risk-adverse and to both preserve cash positions that they might have as well as ensure that they’re not taking on any potential bad loans. As you can imagine, you mentioned unemployment numbers. Right at the beginning of the program today, every lender scratched their head. They’re saying, “Hey, am I going to give a loan to a client that [crosstalk 00:19:18]-

Ryan Isaac:
Is currently unemployed.

Tim Peterson:
… job next week? So there’s more verification occurring, saying, “Is this person stable? Is their likelihood of continued employment good?” Then they’re attesting to it as well. We’re seeing new disclosures come out that say, at the time of closing, you attest that you are in good standing with your employer, the effects of COVID-19 have not had a negative impact on you, and you do not foresee a negative impact. That’s a pretty loaded question, right?

Ryan Isaac:
Yeah, it’s super loaded.

Tim Peterson:
This is all affecting us, and it’s going to catch up, but we still need to provide that financing, especially where rates are so low right now. So, like I said a little earlier, we saw decline of rates occurring, and then when all things COVID, we actually saw them start kind of coming up. But then, unfortunately, the fed stepped in and started buying the securities to create the demand to keep that those rates low. So we’re locking 30-year fixed rates in in the high twos. You’ve got 15-year rates in the twos.

Ryan Isaac:
That is bonkers.

Tim Peterson:
Yeah, it is bonkers. You have your average conventional rate in the lower threes. Of course, it’s credit-dependent. I’m throwing out these generalizations here. In short is if you are in a position to take advantage of a low rate, act. Act now.

Ryan Isaac:
Yeah. I agree.

Tim Peterson:
You’d be silly not to. We’re advising clients day in, day out, and we’re seeing them save thousands of dollars in interest a year by taking advantage of those lower rates. But just be prepared. I mean, when the lender asks for something, get it-

Ryan Isaac:
More underwriting. [crosstalk 00:21:03].

Tim Peterson:
… because we’re seeing demand as well. The market pre-COVID, so the end of last year, early this year, anticipated about $2.3 trillion of mortgages being originated in the US, and those rates went down. It got to a point where, of the $12 trillion in outstanding mortgages in the US, seven, eight trillion of those became eligible for a refinance or a lower rate.

Ryan Isaac:
Wow.

Tim Peterson:
So now that you have some tightening credit, you have some of the capacity issues of just the industry having enough people to fulfill the existing demand of all the loans coming in, which is very interesting as well. However, it can be done. I’ve seen underwriting times in a lot of companies still remain very low. I mean, like I said, there’s all these efficiencies that built up with these current low rates. Then everybody is working from home right now in the industry. People aren’t shopping as much. They’re not going to their sporting events, their kids’ events. They’re not occurring. So we’re actually seeing people get a lot done in a short period of time, actually.

Ryan Isaac:
Cool.

Tim Peterson:
So there’s some efficiencies that have been created in this as well as people have been working from home. So interesting bits of information.

Ryan Isaac:
Yeah. It seems like such a wild combination of different good news and bad news. So a couple things you brought up that affected a lot of people I’ve talked to, one would be clients, dentists, and a lot of staff … I’ve talked to a lot of clients who have staff who were in the middle of a home purchase. They were in the middle of underwriting, about to close. They got laid off so that they could collect unemployment. They’re going to come back. Dentists’ offices are going to open back up. But they were in the middle of this underwriting thing, where now they’ve got no job in the middle of underwriting. Any advice, or do you know how banks are going to handle … especially when there is a job that will reopen that they will go back to? It’s not like they lost it and they have to go job search from scratch. They’re going to go back, but it’s just been a little bit-

Tim Peterson:
Yeah.

Ryan Isaac:
It’s so crazy.

Tim Peterson:
But it’s hitting the pause button, end of story. Everybody’s got to have [inaudible 00:23:27] and work together. If I’m a builder and I’ve got a home under contract, I’m going to understand I’m going to be working with the right lender that can advise correctly on what the status of that client is, because can you close on that loan when that happens? No, absolutely not. There’s not a lender or underwriter in the world that’s going to say, “I want that risk.” We know they’re going to go back. But the question is if and when, which is why seeing the news that continually comes out that’s saying 31 states are going to begin to open, I’m kind of breathing, personally, a little sigh of relief, because we’re seeing those exact clients right now that are mid-transaction that are losing jobs. We’re either taking a look at the global picture and saying, “Hey, can we still make this still work for them?”

Ryan Isaac:
Yeah.

Tim Peterson:
There are situations that that does work, where maybe one of the spouses could qualify on their own, even though [inaudible 00:24:14], et cetera. But what we’re going to see is most of those, a lot of those deals won’t close, and we’ll have to see them back at work.

Ryan Isaac:
Yeah.

Tim Peterson:
But once they’re back at work, we can go. So hopefully that happens somewhat quickly here.

Ryan Isaac:
Yeah. So a little bit of a pause, but we can get back to that.

Tim Peterson:
A little pause, but level heads prevail, and just everybody needs to keep working together [crosstalk 00:24:39] those transactions.

Ryan Isaac:
Yeah. Well, and you said before that’s going to be one of the advantages of choosing the right professional and a professional to do this job for you-

Tim Peterson:
Right.

Ryan Isaac:
… because this isn’t such an easy cakewalk. What about … You mentioned forbearance, a lot of people that had their mortgage payments put on forbearance, paused for a little bit.

Tim Peterson:
Yep.

Ryan Isaac:
How’s that going to affect banks and people? Some of the terms of those were, “Sure, but you paid the three month lump sum when it”-

Tim Peterson:
Yeah, and they’re still working on the detail of-

Ryan Isaac:
Okay.

Tim Peterson:
… other options, because forbearance, by definition, all it meant is skipping payments for a short period of time. Again, by definition, then you would enter into agreement where you’d pay all those payments at another certain point in time, whether that be 3 months, 6 months, 12 months, et cetera.

Ryan Isaac:
Sure.

Tim Peterson:
There was a massive misinformation train and still information coming out right now that because … What started to happen is the advisor says, “We’re going to release this forbearance program,” but with no details.

Ryan Isaac:
Yeah. It seems like everything was released with no details.

Tim Peterson:
Yeah, yeah. I mean, and it was really-

Ryan Isaac:
Hard. It was hard.

Tim Peterson:
It was hard, and it was very reactionary. I’m not one to … I mean, there’s no need to point fingers at this point in time. We all can get very, very critical, but it was a key moment where a lot of information was coming out saying, “Hey, forbearance. Do it.” But we’re talking about the implications, because the implications were if you go into forbearance, you’re not going to be eligible for financing for at least a year after you’re out of forbearance.

Ryan Isaac:
That’s a credit report item?

Tim Peterson:
It’s an actual credit event. What happened in the CARES Act, though, the CARES Act amended FCRA, the Fair Credit Reporting Act, and said that these were not to be reported as a late. All right?

Ryan Isaac:
Oh, okay.

Tim Peterson:
They’re not reported as a late. I’ve personally seen some that still have showed up by lates already. I’ve already seen it. What’s going to happen from there is even if they don’t report the late, there’s going to be this note at the bottom that says forbearance. Forbearance is a credit event. It’s not a get out of jail free card. So what we’re going to see is we’re going to see what our … Credit bulletins is what they’re called, where Fannie Mae and Freddie Mac and FHA, they release these bulletins and say this is how they’re going to amend and work with people that were in forbearance to try to understand the risk around it and then their ability to have credit extended and the risk that they’re taking on, doing that. So we’re getting the information out daily.

Tim Peterson:
So every client that has come in to ask me a question regarding forbearance, I’m saying, “If you don’t have to do it, don’t do it. Don’t even mess with it at all. If you do, just stick with the program. It is what it is.” You can ask those questions directly to the servicer, and all the services are interpreting the data and the information that they’re getting from those that govern them. There’s still a lot of information coming out on it. We’ve had several calls in this, and so we’re waiting for a little bit more data to be released on it. That’s creating a significant issue. So, again, if I’m talking from a consumer basis, if you don’t have to forbear, don’t. I’m just going to simply say it that way.

Ryan Isaac:
Okay.

Tim Peterson:
If you can make it work, don’t do it. If you can’t, just follow the guides of the program and follow the date as best you can to get caught up when you can. Then, as we see credit options open up where they might allow some of that financing to either be delayed, those interest payments further, there’s more information that’s coming, but there’s going to be a lot of devil in the details there, because it will have an impact on credit. When I keep hearing that there’s going to be no impact, that’s not true to date.

Ryan Isaac:
Okay.

Tim Peterson:
They may release more guidance that makes that so, but we haven’t seen it all quite yet. This is not some get out of jail free card. We even dealt with a client that was going to buy a home in three months, and it was actually a doctor. The doctor was like, “Well, there’s a little bit of a cash crunch going on with my business right now while I’m not working. It’d be kind of nice to forebear for three months. I’m going to pay them anyway”-

Ryan Isaac:
Yeah, totally.

Tim Peterson:
… “three months. I’m going to buy this other place.” I was so grateful that they reached out to say a resounding, “Do not do that. That could have jeopardized your entire transaction”-

Ryan Isaac:
They didn’t know.

Tim Peterson:
… “just three months down the road.” But they had received the absolute misinformation from the market.

Ryan Isaac:
Hey, Matt, what do you like to drink or snack on when we do our webinars every month?

Matt Mulcock:
Yeah. That’s a good question. I’m usually hitting a Red Bull, but it’s hard, because it’s an evening webinar.

Ryan Isaac:
Yeah.

Matt Mulcock:
These evening webinars taking place 6:30 PM Mountain Standard Time-

Ryan Isaac:
Mountain Time.

Matt Mulcock:
… once a month, where do you find it?

Ryan Isaac:
Well, if you’d like to find the webinar or you’d like to register for it, you go to dentistadvisors.com/webinar, or just go to the website and click on Webinars under the Education tab.

Matt Mulcock:
It’s a good time.

Ryan Isaac:
It’s a great time. What kind of things do we cover in our webinar, Matt?

Matt Mulcock:
So each month, we’re going to hit an element, right? So it’s going to be some component of your financial life. We’re going to dive a little bit deeper than we would on the Dentist Money Show, right? We get to draw pictures. There’s live polls. You can ask questions.

Ryan Isaac:
Yeah, it’s a great time.

Matt Mulcock:
Yeah, it’s a good time.

Ryan Isaac:
Well, we’d love to see you in attendance at one of our fantastic webinars. Just go to dentistadvisers.com. Sign up today for the next one. Thank you very much.

Ryan Isaac:
Last segment would be moving forward, as we come out of this, well, whatever that means … I mean, I don’t even know. Like you were saying, a bunch of states are going to open. I don’t think people know what this is supposed to mean, to just get back to it. But as we do attempt to get back to it, what kind of advice would you give for people who want to refinance, moving forward, or buy, moving forward? Or a lot of people are just worried about, “Can I sell a house? Are there going to be buyers in the market?”

Tim Peterson:
Yep.

Ryan Isaac:
“Is it going to be tough?” Or a lot of people are wondering if there’s going to be huge deals. Is everything going to get cheap all of a sudden?

Tim Peterson:
Yeah, and I’ll have to get you with a real estate professional that I really enjoy talking to. He can advise a little more on the house side of the equation.

Ryan Isaac:
Cool. Oh, yeah, for sure.

Tim Peterson:
The long and short is take advantage of these rates, end of story. I mean, take advantage of them. Are they going to stick around? Who knows? No one knows, right? I keep hearing people say, “Well, I think they’re going to go lower.” If you’re at a 4.5% or 4.75, it doesn’t matter where it is, and you can go down to a 3.25, take advantage of those interest savings. Just take advantage of them. We see it as cost refinance, and there’s a fine … I mean, you’ve got to finely balance out that equation, but, again, working with a good mortgage professional that has your best interests in mind, they will do that for you.

Ryan Isaac:
They can do the math for you. Yeah.

Tim Peterson:
Or [inaudible 00:31:27]. So the advice, first off, is take advantage of these historically, truly historically low rates. Take advantage of them 100%. If your home is supported by the median income or just over median income of the county in which you live, your home will sell, and it will sell quickly. I continue to see multiple offer situations today for homes that more of a first-time or just kind of a second-time home buyer, may be upgrading a little bit the home. We still see that happening.

Ryan Isaac:
First-time, mid-range homes.

Tim Peterson:
Unmet demand.

Ryan Isaac:
So you’re saying a house that’s priced for the median income that they could qualify for, then that’s still going to be [crosstalk 00:32:12] liquid.

Tim Peterson:
Yeah, the homes.

Ryan Isaac:
Okay.

Tim Peterson:
Yeah. We’re seeing a good market still. Right now, we’re seeing that there’s been a decline. There’s been a decline in showings and foot traffic, but that goes without saying, related to [crosstalk 00:32:24], right?

Ryan Isaac:
Yeah. Yep.

Tim Peterson:
I mean, it just absolutely goes without saying, and digital platforms these days are coming in really handy. But now let’s talk about higher end homes, luxury, more considered luxury or jumbo real estate. Yeah, I think that market’s going to be a little tougher.

Ryan Isaac:
Yeah. It’ll be hard to move a house. It’ll be hard to sell it [crosstalk 00:32:46] longer.

Tim Peterson:
Well, like all things, it might take longer, a little longer. It’s going to be more price-sensitive, right? I mean, we’ve already seen that. We’ve already seen some higher end listings come into the market a little more aggressively than they would have three months … and I say a little more. Significantly more aggressively than, potentially, three months ago. There’s just a smaller buyer pool there. But, like all things, every one of our situations are specific, right?

Ryan Isaac:
Yep.

Tim Peterson:
None of it is created equal or in jest, and so I’d recommend to talk with somebody who you have some rapport and trust with to analyze that situation and help you make the best decision, moving forward. But I still see a fair amount of options, and I’m very hopeful. In general, I am as well that, yeah, we’re going to see ramifications from this for the long run, but I hope to see a flow continue back. I think a lot of people are itching to get back to work that aren’t and return to some level of normalcy, if you will.

Ryan Isaac:
Or just totally itching for that, man. Okay. A couple rapid-fire questions. Do you have any predictions on the nature of work in the mortgage or real estate industry, how it might change, just the logistics of doing work in those industries in the future, because of all this?

Tim Peterson:
Okay. Well, we’ve learned two things. You can accomplish a lot without being [crosstalk 00:34:22].

Ryan Isaac:
Specifically being there? Yeah.

Tim Peterson:
Yeah, and I’m going to talk strictly mortgage banking. We were talking a little about this. I’ve seen efficiencies that never existed before, ever.

Ryan Isaac:
That’s great.

Tim Peterson:
[inaudible 00:34:34] operate more efficiently than they ever have, technically working from home. So you ask yourself this question: So if I’m a mortgage owner, I own a mortgage company, and I see these efficiencies occur and I’m looking at all my leases nationwide, what’s going through my head? Do I need to pay for all those?

Ryan Isaac:
Yep.

Tim Peterson:
Could I still accomplish what I need to with less? I know that question is going through a lot of people’s minds to a lot of industries right now. Some have already answered that question ahead. So, I mean, if we had a commercial real estate specialist with us on the call right now, I’d love to be hitting them with that question to get their feedback. But I can see a world where people are going to look for more efficiencies, and if it’s a combination of work from home and have office space, but maybe not as much, I think we’re going to see that for the foreseeable future-

Ryan Isaac:
Totally.

Tim Peterson:
… in mortgage banking, in real estate, in a lot of these ancillary services, even potentially tied all the way into banking, potentially. So I think we’ve learned that we can be more efficient across the board.

Ryan Isaac:
Yeah. I think it’s cool. I mean, being highly sensitive to the situation, all the obvious problems aside, it is kind of cool when systems get broken a little bit, because that’s how new innovation and human ingenuity are born.

Tim Peterson:
Yep, yep.

Ryan Isaac:
We get complacent, and we just do the thing we’ve done traditionally for a long time until it gets broken. Then we’re forced to do something different, and then we invent new stuff.

Tim Peterson:
Yep, and that is happening. That’s happening in your world. That’s happening in mine. We’re learning about what an appraiser needs to do, what he doesn’t need to do, related to entering a home and not entering a home.

Ryan Isaac:
So, finally, do you do work outside of Utah? If so, what are the areas that your company does work in?

Tim Peterson:
Yep.

Ryan Isaac:
[crosstalk 00:36:39], that’s fine, and how do people get in touch with you and find you guys?

Tim Peterson:
Awesome. Yeah, we do work in about 40 states nationwide. The group I work with is focused more in the Mountain West states. So that’s Colorado, Utah, Idaho, Arizona, New Mexico. Even in California, Nevada, Idaho, et cetera, is where our focus is, and the best thing to do is just reach out via text. Number is (801) 699-6077, or you can reach me at tpeterson@houseloan.com.

Ryan Isaac:
Man, no one’s ever given out their cell phone on the show today. So that’s going to be a fun experiment. I hope you get blown up a little bit on your cell phone.

Tim Peterson:
Yeah, I will. Then I’ll [inaudible 00:37:25]. No, no, I’m happy to. I mean, I think people need good advice. One of the things that I always do is get out of my own way, and I’ll hand them off to the person that can help them best.

Ryan Isaac:
That’s awesome. Well, you heard it here. Tim will answer your texts directly. So, Tim, thanks for taking time. That was a really fascinating conversation. I think it was really helpful, some good information, and gives some optimism and some hope for people moving forward out of this. So thanks for your time.

Tim Peterson:
Yeah.

Ryan Isaac:
I appreciate it, man. Thanks for being with us, and best of luck to you.

Tim Peterson:
Okay. Thanks, Ryan. Appreciate it.

Ryan Isaac:
All right. Thanks, everybody.

Tim Peterson:
Hey, take care.

Ryan Isaac:
Thanks to Tim for joining me on the show today. That was a really important conversation to have. There’s a lot of things going on during this time that we just don’t know about, and it’s important to keep in mind, especially moving forward, and we have to make big decisions in our housing and our lending and our refinancing. If you have any questions about this and you want to chat with an advisor, just go to dentistadvisers.com, click on the Book Free Consultation button, or go to our Facebook group. Post a question there. We’ll get right back to you. It’s dentistadvisers.com/group. Thanks for joining us. We appreciate all the support, and we’re wishing everyone the best out there in getting back to work soon. Let us know if we can help. Thanks again. Until next time.

Debt & Financing