WARNING AirBnB Loans About To Get ALOT MORE EXPENSIVE. FHFA Has Identified an Issue & Raising Prices.

Video Closed Captioning:

good morning good afternoon good evening

folks michael zuber one ritz line of

time back with his wednesday guest matt

the mortgage guy how are you doing buddy

i’m doing great mike how you doing oh i

love the fact that we get together every

week we get to share our multiple

decades of experience and really what i

like is when we can put together the

little pieces that are going on in the

business

and call out something early so i think

we’ve got one today but before we do

that how can people follow you both on

youtube how can they reach out to all of

that first because i almost forgot last

time yeah no worries we’re we’re happy

to help so if you’d like to reach out to

me and the team go to

greatmortgagebroker.com fill out a quick

form tell us where you’re at how we can

help we’ll be in contact very shortly

matt the mortgage guy on youtube gosh i

must be approaching 600 videos i think

we’re 560 something um dude come on you

got to do five a day come on what’s up i

know i looked the other day i was

looking for something on your channel

and it was like 5.6 000 videos like 5600

i’m like man this guy’s an absolute

animal well i haven’t i haven’t edited i

have never edited one it’s just

just go publish yeah

but check out the youtube channel and do

me a favor i got this feedback i’d love

to hear people’s comments um about my

sound they said matt we really enjoy

watching you on mike’s channel but you

got to get a better microphone so i

think since i

can move this microphone i think it was

too far away from me yeah i think it was

echoey last time yeah and so i think if

it’s closer let me know on this video

specifically sounds good how is the

sound i want folks to be able to hear me

clearly when i tell them if you like it

lock it we’re not waiting for rates to

come down like you got to hear it and

it’s got to be clear yeah well hey one

of the things that i want to put

together kind of tying things together

right

so let’s just have this kind of let me

just i’m going to walk people down how i

see the dominoes and you you tell me

what what’s going on so um

one of the things that a lot of people

do

over the last three or four years is

they come to a guy like you and they get

a second home loan right it’s a vacation

or a second home

the reason they do that is it’s cheaper

financing right because it’s a second

home

is that technically considered owner

occupant like a second home it’s it’s

not really it’s not a primary but it’s a

second right but the terms are

relatively similar right yes pricing

wise it’s not an investment you don’t

need 25 right right you can put 10

percent down so so the so that you know

it behaves like a right and a rate right

you might have a half a point or or more

in rate difference between primary and

investment

the second home is almost identical to

primary yeah a little up but not much

it’s it’s within a and the reason this

is important is the next step so one of

the things that i’ve seen a lot i’m sure

you’ve seen a lot over the last three or

four years is people are going to but

we’re buying a second home

frankly with the intention whether they

declared it or not i’d be interesting to

know i bet you a lot of people didn’t

but the real thing that they were trying

to do is they were trying to game the

system and create an airbnb yeah and

truth be told lenders weren’t

necessarily

poo-pooing it right if it was a true

second home where you said listen i plan

on spending two three four six weeks a

year here yeah the other 48 weeks i

planned to airbnb it like it wasn’t a

disqualifier right and so like they

weren’t they’re they’re still playing

within the rules of the game but it was

one of those things where like this

thing’s primary function was a was a

rental right it was a cash flow and

asset and they were getting great terms

on it yeah and that’s that’s the wrinkle

right so they were getting terms quasi

owner occupied which is the reason this

is important because that’s the least

risky right

but they were really treating it like an

investment because again 48 out of the

52 weeks it was going to be available

for rent for other produce income all of

that so i what i’m thinking is coming

is that the masses went that direction

i’m going to guess that fhfa at some

point cries uncle and goes hey

suddenly we have too many second home

loans

and really they’re not second homes

they’re investments we need to treat

these things

differently you see something like that

coming down the pipeline well yeah i

mean it was actually announced today no

[Laughter]

and and

in in my circles of you know mortgage

folks and i get these masterminds where

i talk to mortgage

brokers that are producing at a high

level right and so like but you could

you could be in a room where you’ve got

you know a billion dollars a year

in mortgage production amongst 10 guys

you know even the ones that don’t work

with as many investors as i do we’re

seeing the same thing right if if if

everybody i talk to in the mortgage

industry is writing more of these i’m

writing more of these i know it’s a

thing across the board right fhfa

my guess 20 and 21 said oh my gosh we’ve

got a lot of these on the books yeah and

again let’s say a lot so i um i just

want to i want to get the scale like if

if you were doing you know if your book

of business was a hundred

you might do in a normal year like 18 or

19 like seven second homes right some

people do it the rich would do it but

it’s not for everyone and what i’m gonna

guess here as we said in 2022 now which

still hurts my head to say it went from

seven to like 37 it’s just like it’s a

way for people to make money now versus

have a place to vacation

right yeah and i think that you know the

numbers for the average loan originator

might have been closer to two or three

percent you know

pre-2021 and then you know

there was could you try again my watch

is talking to me

siri yes i’m not sure i understand it’s

okay siri we’ll talk about

more stuff later i’ll educate you later

yeah yeah i’ll fill you in on fhfa stuff

later um

you know and so it at least

tripled or quadrupled right and and

folks especially

you know the pandemic change things

right where people could work remotely

and and like

probably you know a lot of it was was

true second home where it’s like hey i

want to live in this area for eight

weeks or 12 weeks out of the year i’m

going to buy a house there i can work

remote

you know part of it was airbnb as well

so it’s probably multiple different

things that were happening to cause this

huge uptick and so you know today fhfa

announces and here’s the the wrinkle um

they announce and people should be aware

of this that come april 1st 2022

is when

they’re going to start implementing

price increases right when they see too

many of something or they’re trying to

adjust due to risk that’s interesting

all they do is adjust pricing and so

they say um and this is actually in the

announcement it was

um upfront fees for high balance loans

okay so that would be like 90 ltvs well

no no no no no that’s the ballot stuff

just

just general like you know if i’m doing

a loan in in the bay area for 900 000

it’s not conventional but it’s high

balance got it um for owner rock stuff

and for second homes

me reading it

the hit to high balance is 25 to 75

basis points not a big deal for me

when i see the hit for second homes

we’re talking about 112

to 387 basis points and just to clear it

up for people when they say upfront fees

and i say 112 to 387 basis points

we’re talking about

um

you know to get this rate it’s going to

cost you

an extra point to four points

or

you’re going to get

you know an eighth to

probably

three-fourths of a percent higher at

that same cost right and

everybody buys investment homes not 10

down everybody yeah yeah

when when rates are this cheap you don’t

put a bigger down payment than you have

to most of the time especially investors

yeah of course capital was yes capital

is the thing right yeah but go out and

buy two before they put 20 down on one

yeah and so

so when i look at this and i see that at

the highest ltvs the the 90 the 10 down

it’s gonna be a 387 basis point

difference

that’s like okay you could get it 3.375

today

if and when this goes into effect

it’s now four and eight like

that changes the game right that changes

the equation yeah and here’s the thing

when they come out with this

announcement they say the new pricing

framework will take effect april 1st

um and this is this is their line to

minimize market and pipeline disruption

um

first thing to think about is that april

1st for them means that lenders right

now that are writing these loans and

know that they’re selling them in the

future

might adjust in my opinion like

immediately yeah that’s where i was

going to go with this right fhfa is

giving you a heads up that this is

coming it goes into effect april 1st

people that are again creating loans now

to box them up and sell them to them as

an in-buyer if they don’t think they can

close the loan by april 1st they’re

going to adjust today right so they may

do the loans by the 15th of january but

after that they’re like nope we’re gonna

they’re gonna change the fees early

right at least get halfway there right

and and i don’t know

what’s gonna happen so i won’t speak on

it if there’s a little bit of a

of a period then it’s gonna be like hey

you want to buy an airbnb close it by

february 15th because this lender says

they’re going to accept them until that

date yeah but know that like you’ve got

a close date and then you’ve got a

package sell on secondary date for the

lender so they’re going to you know

probably do it at least 30 days in

advance maybe even have it immediately

um hit the the pricing and again the

fhfa again you got to think about them

right they’re up here being this uber

kind of puppet master and they’re like

why the hell are we getting so many

second homes

they’ve probably dug into that going

holy cow this airbnb thing has taken off

and again i invested through the last

crash and i remember them looking at all

these adjustable rate mortgages there

was a time pre-crash where adjustable

rate mortgages were like 90 10 right 90

percent fixed 10 adjustables what

happened right around 06 is they got to

50 50. and i remember fha going

something’s wrong

and lo and behold

something was really wrong but yeah so

so they have a lot of data and sometimes

they put it out there early this is

interesting that they’re pointing at

second homes which you and i know as

investors for a lot of people is airbnb

money so yeah well i mean and it’s like

as i read this this housing wire article

you know it it allows enterprise to

better achieve their mission of

facilitating equitable and sustainable

access to home ownership

if they’re going to charge somebody more

they’re going to look at investors and

say listen you guys are the rich folks

right yeah we’re going to charge you

we’re gonna make it more affordable for

for first time home buyers for for

people buying a primary residence which

on a certain level makes sense right and

um

uh it’s it’s something that you know

mortgage industry is always changing we

keep our eyes open well that’s why you

and i talk every wednesday and if you

are on one rental at a time you need to

reach out to matt the mortgage guy have

a discussion don’t fall for these slick

high pressure big box online mortgage

folks they do not have your best

interests in mind please reach out to

matt the mortgage guy how do you want

them to do that go to

greatmortgagebroker.com quick and easy

form let us know where you’re at and how

we can help and we’ll be in touch very

shortly and i know just in the last 48

hours he’s looked at your statements

from other people one you said oh seems

right the other one’s like dude they’re

screwing you you didn’t use that word

that’s my word right so you really do

you really are just evaluating other

stuff so thank you for being great to

the channel the service and helping

people all this time for sure happy to

help thanks bud yeah

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