Episode 35 - Interview With Rand Toulouse

welcome to this episode of the wolf and

the shepherd today i have with me

ran to loose from random associates

mortgage we're going to talk a little

bit about

home buying home mortgages renting

versus buying all that

good stuff rand it's good to have you

here hey thank you max

yeah so uh rand give us a little bit

about your background what what got you

into the mortgage business what

you know what what made you say you know

what i want to give

people thousands of dollars to be able

to buy a house

yeah i didn't get into the mortgage

business to give people thousands of

dollars i got in the business to uh

spend more time at home with my family

but i think that

happened in 1999 and

didn't really know what i was doing i

went into a at that point in 1999 i went

into the business with a subprime

mortgage company that

was not in the best interest of people

and i pretty much figured it out real

quick that it wasn't where i wanted to

be

right and uh decided within about six

months to go into the

wholesale mortgage broker side which is

uh

the side where you um you're not with a

bank you work

pretty much for yourself and uh

you have the ability to kind of get more

options and better choices and a lot

less cost for the average

average joe buying a house got you so

you've been

in the business 20 plus years so

you probably know a little bit what

you're talking about so that's good

that's good

so uh for somebody out there that's

let's say

renting i mean a lot of people just look

at

you know i'm renting a house i'm renting

an apartment i know what my rent's going

to be

you know maybe every year every two

years my lease comes up i know it gets a

little more expensive

and they're just they're really afraid

to just take that

jump into buying because they think oh

it's it's so much more expensive

uh there there's so much more that i'm

gonna have to do

i'm afraid of doing that so for

for that person out there that's renting

an apartment say renting a house

and especially right now in kind of the

age of covid that we're in right now a

lot of people are realizing they're

working from home

they need to kind of have that place of

their own what what's the big

message to tell somebody hey if you're

renting

here's why you should buy yeah that's a

good that's a really good question i

will tell you i get that

i get that call a lot um and i'll tell

you over the last five years i've

probably tried to

to really convince uh probably 50 people

quit renting get off the sidelines and

buy a house

and perfect example let's say

2017. you could buy a house in keller

texas

three bedroom two bath house for

probably 155 000

in certain parts of keller okay 2020

fast forward

and that same house is worth 260 000

sure so and if you bought that house in

2017

for a hundred and fifty thousand dollars

first-time homebuyer probably

to get in the home with a little bit of

help from the seller

costs a little bit more than the first

and last month's rent

with a deposit so 150 000 probably cost

you

4 500 to 5 000 to get in that house

first and last month's running a deposit

your payment on a three bedroom two bath

house

1300 bucks a month probably

less than what you would pay for a

three-bedroom two-bath house to rent

and keller at that same time frame

do that in 2017 and you decide in 2020

you want to sell it

you paid the same your taxes might have

gone on property taxes your payment

might have gone from 12 50 or 1300 to

1450 1500 in the four years only because

taxes on the house have gone up and now

you have a hundred thousand dollars in

equity in five four years

that's a significant amount of money

that as a renter you just gave to your

landlord

right and that i mean that more than

anything else

builds wealth it allows you to move up

now you can put a hundred thousand

dollars down

twenty percent down on a half million

dollar home let alone a three hundred

thousand dollar home

man that's the fastest way that a a

person new to the market can really

build

wealth and jump ahead in their life to

be able to move up without

being stuck in the rent trap so it let's

say

i'm a renter right and i'm living in an

apartment

uh never bought a house before you know

and i'm paying my

fifteen sixteen hundred dollars a month

in rent but but i've got good credit

uh i'm paying my bills on time and all

that and then i come and see you

and i say look rand i wanna buy a house

and i know i'm going to have to have

some some money down

or whatever what what steps do i need to

take to kind of

get myself prepared for that transition

taking out of account that you know

whenever my lease is up on my apartment

let's ignore that part

let's just say you know i'm coming to

you and i'm saying what do i need to do

to plan for that eventual closing i

picked my house i've done all that

you know i'm just talking about how am i

gonna fund this mortgage what what

do i need to do what do i need to have

in the bank what do i need to have

prepared to be able to buy that house

okay fair question there's a couple of

things you could pretty much plan on as

a first-time buyer

especially in the age of kovid there's

very little

down payment assistance out there

there's some but um

you can plan on about three to three and

a half percent down

depending on the type of mortgage

program now remember remember

i know you're in the mortgage business

so some of this kind of rolls off so

three three and a half percent of the

purchase price so the purchase price so

let's say a two hundred thousand dollar

home

three percent six thousand three and a

half percent uh

seven maybe seventy five hundred bucks

yeah something like that six

six thousand seventy five hundred bucks

down on a two hundred thousand dollar

home

um that money can be saved by you

it can be a gift from a family member or

it can be

borrowed from a 401k you can't go out

and borrow it on a credit card

sure but money that is rightfully yours

down checking or savings 401k

or a related r some type of father

brother sister cousin

some type of relative can also give you

down payment money

or if you have a really awesome employer

an employer can gift you the money

or an employer can let you be advance

the money for a down payment

to get into a house that's kind of what

you can

expect how often do you have people that

kind of go to their employers and say

hey can you advance me money because i'm

trying to buy a house

how would they go to that i mean are we

talking about i'm working for

i'm working for rand or i'm working for

some big company like google i mean it

do some companies have

programs that maybe their employees

don't know about that are trying to help

them buy a house and say hey

we're going to advance you the money

because yes we want you to be a

homeowner and

and do that have you found that in your

experience it's not

it's not prevalent okay it's not

prevalent but i would probably say it's

happened

in the last five years probably five

times i've had one

one employer that in north richmond

hills say hey

i have five or six guys that have been

with me for five years

i want you to come talk to them i want

you to kind of explain the process

and then i am willing to help them with

the down payment

it happens sure um i've had other i've

had other people say my employer

approached me they knew i was

looking to rent a house they were

willing to help me it does absolutely i

mean you never know unless you ask but

i would say some of the larger companies

may very well have a program out there

that would be i don't

i don't there's nothing official out

there yeah

but it's kind of one of those things

maybe you want to run over with your hr

department or something like that

because you never know until you ask 100

i've always said that i i fooled my kids

one day because i

went into a convenience store and said

hey will you give me two of these for a

dollar and they were 75 cents each it

was an independent

store i said look it never hurts to ask

you're not going to know the answer to

the question

if you don't ask the question you know

you can just blindly assume that

everything's supposed to be this way so

there could be some possible programs

out there or you know you're a good

employee right and

so your boss or your company or whatever

wants to help you out and say

yeah you know we want you to buy a house

so

uh so going going back because i kind of

interrupted you there

you know three three and a half percent

it you need to have a source

for that cash right so so if you're

looking to

shop for a house and you know you've got

your six grand in the bank

so that's your three percent down

payment you're going to buy a 200

000 house what's next uh just be aware

that that's not your only cost

um three to three and a half percent

down first time home buyer is great

but on average two to three hundred

thousand dollar

loan um you're probably looking at four

thousand to five thousand dollars in

closing costs

okay so you've got to be prepared and

tell everybody what closing cost

so closing costs are going to be

appraisal title survey

um and then setting up taxes and

insurance i

i because i'm a mortgage broker i have

very limited lender fees

of the origination points processing

fees underwriting

the advantage to using a mortgage broker

is you're probably not going to pay

those fees

that a that a larger bank that we all

know of

will be charging right so so the

difference between a

mortgage broker then and say

going down to your your bank and saying

hey

you know my checking accounts here my

savings accounts here maybe i have a

little

uh retirement account here so i do all

my banking here

and you have a sign up that says

mortgages

they should probably steer clear of that

because they can get a better deal at a

broker

yeah i find that a lot of people are

very loyal to where they keep their bank

i mean keep their money right so they're

gonna go talk to their bank first

thinking

i've been loyal to this bank they have

my money they're gonna treat me right

100 wrong they're gonna they're gonna

see you coming

and they're gonna be ready fifteen

hundred to eighteen hundred dollars in

cost

on top of the three to three and a half

percent

and appraisal and survey and taxes and

insurance that you wouldn't

probably pay with a mortgage broker so

you know that's a sign

that's a significant amount sure

absolutely is

so um the the good thing is anything

that's not down payment related

can be given to you from the seller

or the real estate agent or if the

mortgage broker there's ways that the

mortgage broker can help with those

closing costs

um that are allowed to be

contributed to you without

the money that you saved in your savings

a gift of from your employer or from

your family

or a 401k those funds are very

restricted on where they can come from

the closing costs can come from anywhere

right but

that's something that that local bank

that's had your checking

savings account even though you've been

direct depositing your money every two

weeks that they still charge you 14

bucks a month and you think oh well you

know they're still helping me out

because when i you know walk in there if

you actually have a bank now that

doesn't charge you a fee to talk to a

person right because we're

trying to be encouraged to use atm

machines online banking and everything

these guys that like you say

have been doing you all these favors are

still not going to do you

the same kind of favors that a mortgage

broker can do you right and i

and to add to that the major advantage

to a mortgage broker is

um we lend directly based on what

fannie mae or freddie mac or fha or va

or usda guidelines require so

fannie mae and freddie mac is

conventional financing where

typically five to twenty percent down is

typical

fha very much driven to a first time

home buyer program

three and a half percent down is their

requirement but they're

much more liberal on credit blemishes or

or bankruptcies or a lost job that

caused you maybe to have a 30 day later

on a credit card

veterans loans that they allow you to go

up much higher

on a home that you might not be able to

afford on a conventional loan that you

va will be very much more willing to

help you with they um

they have their certain guidelines that

they require

but then if you go to a bank a typical

bank institution

they're going to have requirements on

top of those requirements

that make it even more difficult to buy

a home like they may say

i know fannie mae or fha or va says you

can buy a

250 000 home but we think that's too

much for you so we're going to tell you

you can only buy a 220 000

home a mortgage broker is not going to

put those same restrictions on you

they're going to allow you to buy what

the va or the conventional institutions

allow

and not make those decisions on your

behalf so why can

fha do things like this let let's stick

with that one for a second that that's

more

geared towards the first time home buyer

but i'm guessing

you keep saying it's geared towards them

but you can get an fha loan

if you're not a first time home buyer so

how can fha

do this fha is 100

sponsored by hud housing and urban

development

those loans are underwritten by the

federal government okay and they

want to be able to help first-time

specifically first-time home buyers but

like you said

anyone can use fha there's some

there's there's a whole lot of awesome

things that fha provides i mean

rates are in the high twos they do a 15

year they do a 30 year they allow for

credit blemishes

they allow for very low down payments

but they come with a downside some fha

loans not some

all have mortgage insurance regardless

of your down payment

okay conventional loans don't have that

so mortgage insurance is

what that is is money that you have to

pay

to protect the bank from you foreclosing

it's insurance on yourself

to keep so if you foreclose they have

money

from an insurance pot to cover you in

case of foreclosure

gotcha so fha built in

gives them more ability to protect

themselves from that type of a buyer but

also allows that buyer

more access to home purchases well so

they've got a little bit of protection

back there so they can take a little bit

more risk

yeah is basically 100 now but with that

fha has i mean the rates are incredible

the mortgage insurance is a little bit

higher than

than a conventional loan but you can

also have a a much lower credit score

the other downside to an fha loan is

they charge you

upfront money to protect yourself from

closing two that's rolled on top of the

loan which is probably a different topic

but

there's massive upsides for a first-time

home buyer to be able to get into that

200 000

home that allows them to rapidly build

equity in a market

to where they're not stuck running right

and that's exactly why fha was

put in place yeah now shifting to va

obviously veterans loans you had to have

either been active or have served in the

military

so obviously not everybody qualifies for

that so what's that

benefit i mean if if a veteran comes to

you are you immediately going to lean

towards that va

what's the benefit for the veteran of

going through the va loan process

yes va loans are by far

hands down the best loan on the market

regardless of conventional or fha

eligibility

the main reason is you can do a hundred

percent financing

with no mortgage insurance so let's

hypothetically say and and by the way

uh i i said that i want to make sure

that

that's what qualifies it's a person in

the military

or was in the military yeah there's some

qualification just because you're in the

military you may have been a

reservist and didn't serve enough time

in the military to be eligible for a va

loan

but also surviving spouses so you had of

a veteran you were married to that died

so a veteran's spouse

is eligible um or a veteran

or a reservist who's had enough time

there's

there's many ways to be eligible for a

va loan but you're gonna have to be tied

to the military and some

i think man i'm not right off the top

sure but i think it's 91 days

okay you have to have been in the

military

gotcha okay but yeah but it's a

massive benefit the rates are i mean i

i'm not gonna spat off exactly what the

rates were but in the low twos on a

30-year rate for va purchases and

refinances recently

where conventional 30-year rates and fha

rates

were in the mid to high twos i mean va

rates are

smoking and they don't have mortgage

insurance involved

so it look outsider looking in not

knowing anything about the mortgage

business do you see any reason

why a veteran or in

let's go back do you have to be out of

the military

okay okay so active service or veteran

is there any reason why they should be

renting no

no no especially in this really in the i

mean

i'm very familiar with dallas fort worth

area but in

20 years even through 2007 2008-2009

housing crisis

we were very fortunate to not have

declining home values so

even in the height of 2008

when it was the it was a horrible market

you weren't losing money in

mortgages you in your house you were

maybe flat

one or two years and then it just took

off again so yeah but

but not losing money is still making

money well it's a lot better than

renting because you're losing every

month renting

exactly yeah no that that's totally true

totally true so you know we here we are

we're doing a podcast right

and so we we talk a lot about you know

the advent of the internet

and normally you would have to

have a radio station behind you to

be able to transmit over the airwaves so

to speak

so anytime we talk about a traditional

business

i mean mortgages have been around for

years banking's been around for years

right but now you have the internet

and so you you always hear about you

know rocket mortgage

you know almost like geico with

insurance you know

give us 15 minutes we'll save you 15

everything's about

you know going online or quicken loans

what what sets

you apart as being you know this

traditional

mortgage broker versus me filling out

some kind of little app and saying oh

okay well you know quicken loans or

rocket mortgage or

or any of those what's going to be the

big difference there

i think the biggest difference and i

mean i'm not going to slam

my competitor by oh no and and that's

not what i'm looking for

not a not a slam by any means yeah but i

will tell you

first off a mortgage broker

is available almost any time you need

them

i mean saturday sunday they are scrappy

because they have to make a living

sure you know the phone rings and you

don't answer somebody else

is going to answer later on right now so

um

the biggest thing is quality of service

okay i mean i i think

quality of service second cost

is probably if my biggest thing i mean

you're going to get a high quality

service with a mortgage broker second

you're probably hypothetically going to

save

anywhere from a thousand to two thousand

there's been times when i've been up

against those same competitors you

mentioned where i was five

thousand eight thousand dollars less at

the same rate

with a much higher knowledge and a much

higher

quality of service a much higher

expectation of

meeting the customers and the real

estate agents and the sellers demands to

close on time

than any bank in a box

right bank in a box that no that's a

good way to put it and

and and not to put you on the spot uh we

did talk a little bit before we hit the

record button on the podcast but

there's got to be somebody

in all the loans that you've closed over

the years that

probably started out and said you know i

i saw this commercial on tv and i went

on rocket mortgage

or you know in i don't know why i keep

saying rocket mortgage i'm not trying to

down them

if they want to be a sponsor and pay us

a million dollars then we're going to

say how great rocket mortgage is but

if there's got to be somebody that's

started out with one of those online

kind of sites and kind of went the wrong

way

for them or whatever do you have a story

that maybe you could share about how you

know somebody started out

with one of those sites and then

got maybe not jerked around but it just

wasn't working out for him

and you kind of scooped him up and

rescued him and said

you know not only did i rescue you you

you closed on your house you moved in

you put swing set in the trampoline in

the backyard and

and you invited me over for a hamburger

and a hot dog but at the same time

i was able to save you a little bit of

money yeah

that's not just every now and then

really no no it's um

i think every mortgage broker you talk

to probably if they're worth their salt

has two or three of those stories

a month wow a month and what's sad

is they don't respond

a lot of times you'll call an 800 number

and whoever picks up the phone is who's

gonna now work on your file and

satisfy you you may have somebody who is

dedicated to your file but

they may work nine to four on one day

and then ten to five

on the next day and if like most people

they have

you know most buyers have a job until 5

pm right so to try and catch that person

while that other loan officer is on the

clock is not an easy

it's not an easy task yeah so you're

going to deal with the time constraints

of

i have to talk to this guy after hours

or this lady after hours and now i can't

get a hold of them

or this person's knowledge

has steered me in a direction to where

when the underwriter gets it

i have just spent money with an earnest

money for a real estate agent to

to tie up a contract of not cheap

usually it's one percent of the purchase

price

so a 200 000 loan to get a contract you

paid two thousand dollars two hundred

thousand

price two thousand dollars in earnest

money you might have paid three or four

hundred dollars for an inspection and

maybe a pest inspection of 100 bucks

and then your loan officer said oh yeah

we're good we're good we're good we're

good

and then now you've cleared the contract

issues you've cleared the inspection

issues and now your loan officer's time

to step up

they pull your stuff together like oh

i'm sorry

i didn't realize that you only had been

on your job six months

and eight months ago you got laid off

from covid

and now i can't do this loan anymore

i get that call weekly and there's

nothing

and so that as you call it bank in the

box which i kind of like

uh they're basically saying your sol

with them no with them that that's what

they're saying but they'll give you the

input they'll give you

they'll imply to you that you're screwed

everywhere but you're not

right not screwed everywhere because

being

without a job from march of 2020

to may of 2020 because you're a

furloughed that's probably 30 percent of

our

yeah it's not the end of the world it's

not and it's very co i mean and then you

just me you know june came around you

got a new job you got a couple paychecks

yeah but what if they put it on writing

on the internet because if you put it on

writing on the internet it's true right

oh yeah maybe but i will tell you this

it's not the kiss of death in the

mortgage industry and nor should it be

and if you've been able to maintain

paying your bills

even on unemployment or you borrowed

your money from your parents or

whatever the case was but you were able

to keep it together in that time frame

you can buy this house and you can still

close and you don't have to have two

years job history of making the exact

same amount of money

there's lots of programs out there that

can help somebody buy a house

right and and even if you did have a 30

day late in may and you're trying to be

a house in

november because of covid but there's

underwriters out there that go hey

my husband was laid off and we're doing

it we'll

we'll take a risk on you yeah in in kind

of a alluding to the fact

of you know the bank in the box i'm

guessing

you know you're you're skipping that uh

phase that you have somebody there to

kind of guide you through the process

and that bank in the box you're filling

everything out yourself saying this is

what i want

yeah you got to tell me whether or not

i'm qualified for this oh i'm not

qualified right

versus coming to somebody like you and

saying look

rand here's my story you tell me what i

need to do to be able to

buy a house get into a house and you're

going to lead me through that

oh 100 so i i would probably say it's

very similar to going to

a fast food menu and saying i want

a number one with cheese and that bank

loan officer

is gonna say i can do that or

sorry you had a bankruptcy chapter 13

14 months ago and we don't do that

versus going to a mortgage broker who is

a chef

at a gourmet restaurant and says hey

wait a minute you know what

what if we do you like worcestershire

sauce on your

cheeseburger right we can do that for

you or

you know what that chapter 13 isn't a

deal killer let me shape this for you

and make this work for you and you still

get a rate in the twos how's that sound

and the the bank in the box may say we

don't do that under any circumstances

where a mortgage broker goes you know

what

i got an investor who is perfect for you

that doesn't care if you had a

bankruptcy especially since you've

re-established your credit

you've got a new job yeah so what you

lost your job and you but

here's what happened is you recouped and

you've reestablished

credit and you've changed your spending

habits or you've changed your life and

you've

you've made it let's take a chance on

you i don't care if you had chapter 13

that's what a mortgage broker is going

to do for you right so

we've talked about you know the

blemishes on the credit the the

bankruptcies

the all that what about that

sparkly clean client you know

no job problems nice income got

money in the bank good credit score

probably your dream come true

right because you're not going to have

to jump through all these hoops how can

a mortgage broker do

good for them versus one of these bank

in the boxes

yeah it's funny you say that today i

took a ironically i took a

a loan application from a loan officer

who um

she lives in oregon and um she said hey

i need to do i need a loan application i

mean i need a pre-qualification letter

for a builder who's building my house

and well was she sure about that because

now oregon

has like legal cocaine so this could be

a joke

no you realize that yeah oh okay so she

says i need him

i need a prequal letter and i need your

help and i said yeah we can we can help

you out she says i've got 800 credit

score i'm buying a

450 000 house i'm i just sold my house

in oregon i got 300 grand

i'm putting down on it so i'm gonna be

borrowing 150

grand and i'm like man this is this is

too good to be true

but but you did get her the texas test

right wait we got plenty of people

coming from the west coast here to the

lone star state

we don't need too many that you told me

to not go political

but but she's solid i mean she's a solid

buyer

she's in the loan industry and she says

hey you know my house is going to

probably take five months

i know with our company mortgage bank in

a box it's going to take us 60 days to

close

and i said you have got to be kidding me

well i mean we can start 60 days and

make sure we get all the

boogeymen shaked out of the tree in case

something happens but

i took a loan app on monday with a very

similar a week ago monday

not to get into too many details but we

didn't get an appraisal we didn't need

documentation that typical loans need

from a bank in the box

we're clear to close probably tomorrow

so 11 days

she said her typical refinance is 60

days

wow there's va loans refinances on

conventional that i'm closing in 12

with a high level of service and not

stringing you out for 60 days

worrying about late lock expirations

there's there's something to be said for

that so

a perfect aces and eights credit score

really it doesn't matter if you're aces

and eights or not but

since you brought it up large down

payment great credit

w-2 wage earner who just never

has any blemishes phenomenal credit

we're going to we're going to kill it

we're going to kill it on rate we're

going to not charge you in fees

but we're going to give you a phenomenal

turn time your realtor is going to love

it

i know it sounds too good to be doing

i'm not kidding it really is that way

right and and the accountability is

there

because we don't get our 40 000 a year

paycheck whether you close or not

we only get paid if max billington is in

his house

by christmas right and that's what we're

going to make happen gotcha

yeah so so talking about credit scores

uh

such an interesting topic everybody

loves to talk about credit scores and

you know you've got apps out there like

credit karma and

i have a a loan on my car and when i log

into my

app on my loan on my car it's like oh

you don't click here and here's your

fico score

but then you always get this talk about

oh well you can't pay attention to those

those aren't the real

credit scores and you're

you're giggling right because you know

where this is going right so

i i know you don't want to you know talk

bad about credit karma

i think it's kind of good but those

numbers on there doesn't necessarily

correlate what can you tell people about

looking at those numbers and looking at

what's going on

so they're not surprised when you say oh

well credit karma told me my credit

score is 740

but rand you're telling me my credit

score is 680. what

what's going on with that that

conversation

happens every day um

credit bureaus most people don't know

this but they have a lot of

different types of credit scenarios

based on who's lending you the money

so they're they're called credit modules

so you

you might go to a car dealer and you

have

wells fargo or whatever pull in your

credit for a car

they have a risk-based scenario for your

credit score based on just buying a car

or you go to capital one or you go to

chase and get a credit card

there's a scoring model just for credit

cards

so um i know i've got a credit

a capital one credit card and they've

got a credit-wise scenario and i can

click on it tell me my credit score is

770.

100 guaranteed when you go to a mortgage

company

your score is not going to be 7.70

fannie mae freddie mac fha a couple of

years ago is probably 15 years ago said

loan officers are required to use our

residential

mortgage scoring model it's much

stricter it's much more difficult

i say much more difficult but it's a lot

different than more stringent

it's well they're going to put more

weight on mortgage lates

collections bankruptcies maybe if you're

perfect credit you've never paid a late

bill in your entire life

but two months ago you maxed out your

credit card

and now you're struggling you're not

struggling but you may be still maxed

yeah you're making the minimum payment

yeah but your capital might be

no they may say hey your credit score's

too high it's hurting your score by ten

points well mortgage bureau may hurt

your score by

40 points so i would tell you on average

whatever your credit score is through

credit sesame or credit karma

or credit wise through capital one for

instance

probably deduct 20 25 points is what the

average

mortgage credit score is going to be i

mean just that's just the way it is and

there's no rhyme or reason to it

very rarely but it does happen i'll pull

a mortgage credit scoring will be higher

than credit

karma or credit sesame it doesn't happen

all the time but

if your expectation is i've got a 820 on

credit karma

you're probably gonna have a 750 on a

mortgage bureau wow

that's 70 points difference but here's

the thing

i will tell you the vast majority of the

time

a 740 or higher is going to call you for

the qualify you for the very best

interest rate in the country at a 7 40

or higher so if you're an 810

and your mortgage broker pulls a 770

don't fret

right you're solid and you're gonna you

if you're not getting the best deal

you need to find another mortgage broker

because somebody's trying to

yeah yeah they're trying to take

advantage of you so

you know let's go back to that guy you

know

renting an apartment or whatever and he

downloaded the credit karma app

and he he's looking at this and and

saying well i got to get my credit score

up on credit karma because this is free

for me

what number should he be looking at uh

all other things aside you know what

what's kind of that magic number when he

needs to call you and say look i i think

my credit's good enough

and there's no huge blemishes but

at least you're to a certain number what

what's kind of that magic number

where not necessarily he's going to get

approved but where he needs to

start talking to you and say hey i'm

looking to start buying a house

what's that magic number or actually is

there a magic number i think the magic

number right now

um we live in a very strange environment

with covid

if you'd asked me this in march of last

year i would probably say

580 to 600. in postcovid or

current code yeah we're probably 640 or

higher

is really the magic number to know an

fha

or probably an fha va loan is

a slam pro not a slam dunk but you're in

really solid footing

at 640. you go below 640

the interest rate's going to be higher

the underwriting is going to be more

difficult

and there's a very good chance you're

not going to have a

pleasant experience so a very good

chance but

what you're saying though is a mortgage

broker

versus bank in the box which uh i'm

going to wear that term out i like that

uh you're going to be able to tell

somebody look i

i see what's going on on your credit but

here's some options

yeah bank in the box isn't going to do

that right they're just going to say no

yep but but that doesn't mean game over

no

100 no so i guess about mid april

i was watching the news which i watch a

lot because i'm responsible for carrying

a lot of

people are building houses and watching

rates and making sure i get them the

best deal

and one of the big bank in the boxes and

shortly after they posted this

mini bank in the boxes said look if you

don't have 20

equity either down payment or in

refinancing

we're temporarily suspending all loans

and we're just not gonna

fund any loans that don't have twenty

percent equity

so you know we have a lot of people out

there that are building houses

that had five percent down that now

they're banging the box just told them

middle fingers yeah you know so what are

they supposed to do what are they

well they're supposed to call mortgage

broker but

really and truly they're in big trouble

because they don't they may not know to

do that

right but those big banks

have these like i said earlier they have

overlays they have layers of

risk that they don't aren't willing to

go below that fannie mae freddie mac and

fha have stayed very constant through

covid

right that the people who underwrite

just to that which are

mortgage brokers do that you're much

more likely to have a

an experience that's not going to be

panicville midway through it because 640

is going to be

okay today tomorrow the next day i don't

see that changing but

i do know that in that same april or may

not only did you have to have 20

but they went from 600 score to 680.

dude 680

it's not i mean it's nothing to sneeze

at that's a decent score

but you're still not i mean there's a

lot of people out there 640s

that absolutely deserve to buy a house

that now those big bank in the boxes are

not gonna do yeah

i mean maybe they're like my wife who

forgets to pay a bill every now and then

and has a couple of dings on there

because they weren't paying attention to

the mail or

something like that so they got a couple

of 30-day lates on there

and it it was just because they just

made a mistake it wasn't like they

didn't have the money to pay for it but

we all screw up right yeah they're not a

foreclosure risk

yeah exactly right so uh you talked a

lot about the

you know this age covid that we're in

let's pretend

tomorrow covet solved

what do you think's gonna change one

once all this coveted stuff goes away

what what's what do you foresee kind of

change in

in mortgage is it gonna be back the way

it was pre-coveted

do you think we would learn some lessons

during covid

that uh might carry on and and might

change pre-covered

i mean i i know i'm i'm asking you

crystal ball question

not holding you to any of this but you

know if you had control of the mortgage

world

covid's gone what do you think's gonna

happen

i don't think that covet has really

changed what i do

in helping people buy houses that much

what it has done is

as you're going through the mortgage

process lenders have become more aware

of

um people going on furlough which is a

serious problem

sure because you don't know when they're

not going to be on furlough so

furlough's a cuss word in the mortgage

business

the underwriter is like oh you're on

furlough you can't you don't know you're

not making what you're making so

right furlough's a problem forbearance a

lot of people went into forbearance

on their motivations so um i guess maybe

mid april the government came out and

said look if you are

um if you're late on your payment

because of uh affected by

coven yeah you can make a phone call to

your mortgage company fha va

conventional whatever

we're going to allow you as a government

and we're going to tell your lender that

you don't have to make your payment

for the next 90 days

well just because the government says it

doesn't mean that the lenders who are

now servicing your loan aren't taking

major hickeys

right and and by the way i'm guessing

the credit bureaus are still

putting that on there oh yeah even

though i said they were every day i deal

with people saying i went on to

i went into forbearance and it's not

supposed to affect my credit i'm going

to tell you 100

anybody who went into forbearance it's

showing up on their credit gotcha

especially a mortgage credit report

and that lender wants to know because if

they

fund your loan and it says forbearance

on there

the ability of them to have somebody

service your loan behind it

dramatically drops right so

so in essence i own a home

and i have a two thousand dollar a month

mortgage and then i find out

i can do this for barons and just not

pay my home for 90 days and now i'm

gonna pocket

two grand a month yeah that hurts me in

the long run

one hundred percent yeah yeah but

nobody's telling you that no

quite the contrary you know i was almost

when i was watching this unfold in april

may june

not only me but a lot of my other

friends that are in the mortgage

business a lot of real estate agents

recognize the writing on the wall and a

lot of people

a lot of people went into forbearance

skipped their mortgage payments

pocketed five or six grand without

realizing

the detrimental effects it had and when

you come out of forbearance

you're gonna have to write a check for

all the payments you missed

or they're gonna put it on the back of

your loan for eight or nine grand

and when you forbearance meant when you

agreed to forbearance that you were

gonna

pay it current when you came out of

forbearance

or you're gonna have 30 day late

on your credit and let's say over 90

days you didn't make any payments

you had a 30 day late the first month

now you've got a 30 day and a 60 day the

second month and now you've got

30 60 90 on the next month and you

didn't pay it those are going on your

credit

and they're probably going to take the

money you owed and put it on the back of

your loan

so you're still going to pay for it you

didn't do yourself any favors you did

yourself no favors yeah yeah i know

you really have kicked yourself right

square in the tail but

they didn't tell you that right you know

and i've talked to multiple people

that the bank almost encouraged it they

almost said

this is an option for you you should

consider without really explaining to

them or even understanding what their

repercussions were long term right

so yeah which uh once again kind of bank

in the box

yeah a little bit a little bit a little

bit bank in the box

benefits them it's not it's the

servicers in general i mean even

the bank in the box you may have a you

may not have gone to a bank in the box

but

your malone got picked up by some

servicer who's encouraging you to take

forbearance when you called because

there's no downside but there always is

a downside when you're not paying what

you're supposed to pay

there's no magic pill to make that goal

right so uh

going back to that whole bank in the box

and and this brings up something i don't

have

written down in my uh very detailed out

research that

of course we always do on the wolf and

the shepherd because we research

everything

beyond maybe the fifth line on google

but most of the time you go to a

mortgage broker or even a bank in the

box

you get a mortgage maybe maybe it's not

your bank bank

right but you go to the bank in the box

you go to a mortgage broker you get your

mortgage

a month later they sell that mortgage

and they sell it to some other bank so i

i go through

rand and i get my mortgage and next

thing you know

a month later i'm serviced by some other

bank

same thing with bank in the box oh 100

okay so

right right but now i went through a

bank in the box and now i've got this

issue coming up

i don't really have anybody to call to

say hey is this forbearance thing a good

idea but if i went through rand

i could pick up the phone and say hey

randy you wrote me this mortgage

two years ago and it got picked up by x

bank

and they're telling me this you're going

to tell me this information where the

bank in the box isn't going to tell me

you know i don't yes that's a 100

percent true and

even if you didn't go through me and you

called me but no you're a 100

you're 100 right i think most

most of the loan officers i say most

because there are some really good loan

officers at those bank in the boxes but

a lot of those people

one two years maybe in the business

they don't really understand maybe they

you're not

well but you're not creating a

relationship no and not only that but

they haven't

they don't they don't there's no there's

no offense to them but they don't

understand that there's a lot of

responsibility that goes into helping

somebody with a mortgage long term i

mean i am in

i want to be somebody's loan officer for

life i really

and i mean we you and i have been been

in this really i mean not only are we

friends but

we've been in the loan officer business

relationship now for

well over a decade maybe almost two yeah

so

it's important that you find somebody

you trust if it's not a loan officer

it's a real estate agent because most of

these real estate agents

were very aware of what was happening so

find somebody you trust and make sure

you get information before you jump into

a forbearance situation well and i think

a lot of people struggle with that

because they'd and i don't want to bag

on realtors but

man there's a lot of realtors out there

it seems to

be an easy gig to get into and

people struggle with you know do they

have my best

interests in mind and everything but

when it comes down to it there's a lot

more realtors

than there are mortgage people yeah but

there's a lot of mortgage

people who are the same sure they really

are but no it makes

but um i can't make a living

on doing one loan and

never seeing them again right that's

just not first off that's not the

cloth that i'm cut from second off

that's a horrible business model

yeah my job is to not only help you buy

your house

but then you love it so much that you're

at the water cooler at work and you tell

all your friends

right and then you try to convince your

realtor to quit using their loan officer

because this guy's so great

because i want them to have the most

unbelievable experience they've ever had

and they feel like they're my brother or

sister right and i'm not kidding that's

well no that's how i feel but you know

that that's what you've got to have and

there's only so many

you know cute commercials that you can

see or

you know the the 15 minutes can save you

15

or or whatever until you realize you get

what you pay for

and ironically in your business

you get what you didn't pay for because

what better is that yeah

you you save money and you get better

service i mean

that's that's a very rarity so you can

you can imagine why people would say

well i must be dealing with some kind of

discount shop or

or something like here i'm i'm not gonna

get the same thing if i'm saving all

this money

you know you get what you pay for and

and all that so

so you can see why people might say uh

there's got to be something wrong here

but it kind of goes back to that old

school way of doing business and there

are

some things that we actually need to do

the old-school way

and it's very hard for people to kind of

wrap their head around that and say yeah

i got to do this old school

yeah you said something that i i get

this question a lot is

has rand how do you get paid you don't

charge anything

you answer the phone at 10 pm well i had

to pay you a thousand dollars

to show up here yeah that's one way just

kidding

but um and also like like we have a

thousand dollars here at our podcast to

pay a guess and by the way if you want

to be a guest on here we're not paying

you a thousand dollars yeah well he told

me he's made 11 bucks in a year so yeah

i don't even

know whatever hey that's that's a secret

but anyway so

um i do get that call how do you not

have origination fees how do you not

have

processing fees all these things that

all these big banks have how are you

making how are you making a living

and uh but that's a legit question how

do you how do you get paid

right and i will tell you how i get paid

i get paid by fannie mae or freddie mac

or fha or va to deliver your loan

without fraud effectively inside the

rate lock period on time

they fund the loan and in that they pay

me a commission

to deliver your loan usually at eight to

a quarter point lower than the banks

however the big difference is the banks

do the exact same thing they get the

same

commission from fannie mae freddie mac

or fha and they charge you fifteen to

eighteen hundred dollars or two thousand

or five thousand dollars

on top of that which to me is borderline

greed but that's what happens

sure and that's how i get paid so

it's not like i'm doing this for free i

can't do it for free oh no

but but banks do i mean the fannie mae

freddie mac they pay for the right to

service that loan which is worth a lot

of money

and they pay me a very small percentage

of that so that i can

make a living right that's how i make my

that's how i make my living no that that

that's good to know so last question for

you

if you were elected the czar

of mortgages for the united states of

america

what would you change about the mortgage

business

oh my goodness hmm

elected czar of the mortgage business

you have

complete control over the way mortgages

are done

everything what what what is one of

those those

big things that you would say hey you

know

you were running on some kind of

election platform right and you said i

want to be the czar of mortgages in the

united states and you got to talk like

that by the way

and then you deliver on that election

promise

what is the what is one thing that you

see that's going on

in the mortgage world that you you would

like to see changed wow i

you know i think the thing that bothers

me the most is there's a

there's a lot of people out there a lot

of lenders out there

that don't follow through with what they

say okay and

and there's accountability 100 and i

think that the problem is

even though there's there's there's

police

in place for this i mean sure mortgage

the mortgage there is some there is some

accountability yes

but the problem is it's a slap on the

wrist

or it's these people just shrugged it

off they got to closing

the loan officer said you're coming to

the table with five thousand dollars

but hey you're coming to table with nine

thousand

that's not okay right and so those

people are like i'll just pay the nine

thousand

i'll borrow from my mom i'll try and

figure it out and then they close and

that person gets away with it

because probably because the buyer is

just happy to get in their house and

they're like oh it was a last-minute

problem but i still have my house that i

really want

yeah and i get away with it yeah and

what bothers me is that person had

called me

four weeks earlier and i said there's no

way you're getting in for four thousand

dollars

this person is hosing you the old bait

and switch

yes and now they're getting to closing

they're like rand you are right can you

fix this real quick

and i'm like not real quick i can fix

this in about 12 days they're like but

my contract's

done and i'm out of my house so if i

were a czar

however you said it you know in the

funky word but if i were the czar i

would say look

turn that person in and we're gonna do

whatever we can to where they don't do

that to anybody else

sure you know that bothers me because it

happens

weekly and monthly in my business where

i lose a loan

that i know is gonna in 30 days get

their clock cleaned

and i'm just going to watch it like a

slow train wreck is there anything

anybody can do about that

i think there is but the problem is the

damage is done by the time they realize

it

so they they either buy the house and

fall on the sword

right or they just don't buy and they're

out

three thousand dollars in earnest money

and option fees because

when you get to the point where your

closing documents are at the table

there's rules out there that hold you

accountable because that seller has now

moved out of their home

you can be sued for what's called

specific performance

even though you were you're wrongly

defrauded out of your

money but you're your host you're in a

real pickle

and you have no recourse yeah and if i

were zara i was like fine

you're going to do that to that person

you just forfeited your ability to make

a living in the mortgage industry but

i'm not a czar yeah that is what no no

that's

that's a that's a scary thing to think

about i mean

it really is and it happens every day

but i'll tell you

that that's not the norm sure it's not

the norm but you just need to know

whoever you pick

it's it's not just a bank in a box

versus a broker and they're both going

to do the same thing

there's a lot of good bank in the boxes

out there but you better make sure

that you vetted them enough that you

know that what they tell you at the day

you get your estimate is the same that

you do

when you close absolutely so so with

with all that said if uh somebody's

interested in talking to you about a

mortgage

how do they get a hold of you yeah pick

up the phone

you can call me i'll give you my phone

is okay to get my phone number

absolutely my phone number is

817-528-7559

i've got a business facebook page i

think if you put it in the search

in facebook it's my man rand

m-y-m-a-n-r-a-n-d

and it should pull up it's not uh

it's not randa paul not rand paul that

might pull up because he did have a my

man rant

for a while in the early 2000s but my

man ran

you can go to my uh you can go to uh um

email and shoot me an email

rand mymanran.com um

man phone text email whatever man i'll

jump right on it

if all i do is just keep somebody else

honest i don't care if i do your loan or

not

all i ask is when you're happy you send

your next best friend to me when you

when they buy a house

absolutely and and we'll of course put

that information in the description so

if

you know you're listening in the car

don't don't worry about trying to write

that down it'll be in the description

well thanks rand for joining us today we

hope

if uh you're out there looking for a

home and oh by the way one last question

it's only texas texas right now yeah

okay

yeah yeah because because we do have

people that listen outside of texas so

so as far as uh you know if you're

looking to buy a house

in texas yeah you can call rand or carl

but

uh exactly if you're outside of texas

and you got questions

i'm sure rand can probably find you

somebody outside the state of texas

uh that that can help you so well thanks

for tuning in to this episode of the

wolf and the shepherd we appreciate your

support and everything and we'll catch

you on the next one