WARNING: Big Box Mortgage Brokers and Tech Brokers are Getting VERY Aggressive – Don’t Do BAD LOANS

Video Closed Captioning:

good morning good afternoon good evening

folks Michael zuber one written out of

time back with our wednesday guest matt

the mortgage guy how you doing sir i’m

doing great mike always a pleasure to be

here chat with you always always good

combo oh man i appreciate it so hey one

of the things that we talked about i

think it was two or three weeks ago as

we were saying that the uh

the mortgage industry as a whole is

going to go through some adjustments we

actually called out

what happened at better.com right they

they let go of 900 people because the

business has changed

uh i think we are starting to see

kind of the good and bad

as the adjustment occurs i think that

the mortgage brokers industry will be

smaller in a year than it is today

because again a lot of the lending will

be

just different less refi all of that but

you had some pretty good data

around cash out refis

and it looks like um we’re setting some

some record numbers again which

you know your house is an atm that

didn’t end very well last year yeah and

that’s the thing too it was like is it a

good thing is it a bad thing um i’ve got

a data guy that i get with and it’s

enjoyable for me because you know i’m in

the trenches i’m talking to

hundreds of consumers every single month

so i kind of have a feel without seeing

the data and then you look at the data

which concern like confirms what i’m

feeling right and you know from from a

mortgage originator standpoint

more and more

cash out refinances being done

and if you think about it with

you know home values at an all-time high

people have more equity so they have

more opportunity to cash out refinance

it makes sense right and so me and you

talked about this the shrinking pie

where there’s less and less people

some people describe it as you know

moneyness or net benefit where if if

tons of people are s are in 275 2875

2.99 there’s less benefit for them to do

a traditional cap like regular term refi

right but um

you know the the numbers on cash out

refinances have

gone past one third of all mortgage

originations oh wow somewhere in the 35

range so i want to say that again so

just for people that don’t realize so

that means

one-third of new originations or new

loans are are

essentially cash-out refunds right and

we’re talking conventional loans which

is like far and away like you know the

most the majority

and so we can look at that and you know

rough numbers 35 percent of the loans

being written are cash out refinance 25

percent are rate and term okay and the

other you know roughly 40 percent is

purchased okay and um

you know it’s uh

as rates go up you’ll see the total

refinance versus total purchase kind of

adjust

adjust and rotate back um

and for me

that’s interesting in itself

what concerns me from the standpoint of

you know a mortgage broker that has

you

know

a focus on serving consumers right focus

on helping people making

sure that people are set up for

long-term success

with their mortgage which translates to

their finances

it scares me a little bit because you

and i both know debt can be an amazing

tool and i talk to people every day that

are using this home equity

and and doing it correctly right they’re

paying off high credit card debt or

they’re taking out and they’re putting

it in a secure investment that

appreciates over time and

you know that’s

the good side of it the bad side the

chainsaw that can cut your arm off is

people

and i don’t think this is happening as

much but i’m warning against it right

now cash out refinance to buy a vote

cash out refinance to buy a 90 000 car

uh you know cash out refinance and blow

the money which is probably

even worse right

you don’t want to take it out for the

sake of taking out because you’re able

to right you want to put together a plan

and

you know i can see the data from a big

box lender

not to name any names but quicken

over 50

of their loan volume is cash out

refinance well i just want to talk about

that because again i have i did a loan

with them i don’t know three or four

years ago was one of my first refunds as

rates were coming down support me three

years ago

they are um

extremely aggressive

right they have blown up my phone

multiple times a day

for weeks

telling me hey you did this loans with

us before we can do better this time

right and really what they are is

they’re just a machine that’s hungry for

deals they got to feed the pipeline and

they’re they don’t have my best interest

in mind

they’re trying to keep their sales

machine going so my big warning for

folks is these big box lenders like

quicken in this example and again i can

say that as a consumer of it and knowing

what they’re doing

um

they’re not they’re not service oriented

they’re not looking at your situation

and saying no quicken is always going to

say yes of course you need that 25 or 40

or 80 grand get it now before it’s gone

you know

yeah i used this example it was funny

because i

um

i want to record some of these calls

i’ve got six personal mortgages and i

let these folks call me because i want

to hear what sales people are saying

yeah when when when my first objection

was like low rate don’t need to

refinance no thanks it immediately

turned two and it’s like part of a

script right from a big

sales center is all they are um he asked

me some like really vague question like

what do you have out back

and i was like what do i i said out back

is that where the rates are like what

what do you mean what do i have out back

well maybe you want to put in a pool

you know and and that was like i’m like

okay i see what you’re i got smart right

and and that’s what i’m afraid of

because you know

dealing with consumers i understand it

i’m a human being as well yeah emotion

sometimes can drive a decision if you

get excited about a kitchen remodel

putting in a pool then

the the reasoning part of your brain

shuts off and it’s you don’t even see

the fact that like oh they charged me 14

000 in fees oh i’m paying an extra three

eighths of a percent on 460 000 in

mortgage debt all the bad things that i

want you to avoid the call center loan

officer or assistant or you know they

might not be licensed

they could care less about that the

long-term picture i i want people to

hear that again one of the things that

i’ve learned after 20 years of selling

software

is you can you have a choice as a sales

rep you either go in with logic

you know savings hard dollars blah blah

blah blah or

you go and try to get their heart first

you get your heart by talking about a

pool a swing set a adu whatever it is

and then the logic shuts off you’re

absolutely right so

watch that be careful for that watch

them fishing for that that person will

ask you what’s out back that’s a genius

move

but we’ll set some people up for failure

because then they’re going to start hey

honey did you know that they just talked

about a pool what do you think of pool

costs 40 50 grand oh we can get that in

our house wouldn’t you like to do that

at our house instead of going to the

neighborhood

oh next thing you know you signed up for

400 extra a month and that’s the thing

is is is that any any business knows

that we live in a society where

consumers are like that sounds

affordable on a monthly basis that

sounds like it makes sense if you’re

financing something over 30 years for

486 dollars a month

you’re signing a big check that’s a big

check yeah yeah

so folks what we’re saying here is it

again i think what i’m saying i i don’t

want to put matt’s words in his mouth

but my what i’m saying is be very

careful

mortgage brokers these big box stores

they’ve always been aggressive but

frankly it made sense is right

broker b next to mortgage brokers yeah

independent mortgage brokers that are

the good guy yeah and then there’s big

fintech and there’s and there’s big you

know retail operations that are the bad

guy uh talk to a person not a machine

right right and that that’s the thing

too is is is consumers in my opinion a

lot of times are focused on the wrong

stuff they’re focused on only interest

rate they’re not looking at total cost

they’re focused on you know cheapest

when the the cheapest is usually not the

best like you might find the cheapest

financial advisor in the world and you

lose 22

right or you find a financial advisor

that’s a little bit more expensive

and and you see 30 gains right in the

mortgage it can be similar where like

yeah maybe if you try hard enough you

could find somebody that’s cheaper than

me in my group but i’m telling you by

structuring the deal correctly

by putting your you know best interest

in mind and having the conversation you

know

extracting out of you what your goals

are and then say based on your goals

here’s what i see as a good mortgage

solution

it’s not always going to be a deal

there’s going to be plenty of times

where i go

listen you’ve got this much

locked in at 2.75

you only have enough equity to pull out

17 000 and cash out you would never do

that raise the interest rate on all that

debt for this 17 000 just leave it alone

right

one stat i’ll throw at you that’s that’s

amazed me yesterday as i’m talking

through stats

they have stats for

like

the payoff rate or the turnover rate

for specific pools of mortgages and

there’s a pool of mortgages that are

like

2875

that should be paying off like six to

eight percent because this payoff is

within 12 months okay right

that pool is paying off at a 20 rate

what does that mean

basically means that like all these pool

of loans that were written

at two point eight seven five

are being refinanced out of oh my

goodness

oh a one in five

oh my god why would they do that

that’s my point is like you get somebody

and and i know this you know i i i don’t

expect every consumer to be a financial

expert right but don’t get yourself in a

position where somebody is able to

you know i i’ve seen the the number

gymnastics and that well

i mean i even have the phone calls too i

remember talking to a guy about like why

would i refinance and he tried to he

tried to he was talking to the wrong

freaking guy but he was like well your

rate will go up but it’ll be this and

that and this is why it’s better and i’m

like what you’re saying makes no sense

the unfortunate part is like

somebody who

just to a random consumer it’s not you

know they’re they’re great at their day

job they’re not a financial person right

talks them from 2.875 to three and eight

or three and a quarter

minimal cash out or whatever the reason

is

people are doing it and like the data

shows it you know one in five people

maybe some of those made sense yeah

maybe

maybe but i would guess that the the

rate where they should be getting paid

off like six to eight percent are the

ones that made sense and then two-thirds

of them didn’t make sense they got sold

yeah they got sold that’s what’s

happening a lot now i just saw i think

yeah black knight reported it this

morning 24 of loans originated have a

less than three percent mortgage rate i

really think this is going to slow down

the real estate market because you’re

not going to get the move up buyers but

folks if you keep refining your 2.875 at

a one in five clip stop that that is too

much right yeah and i mean here’s the

thing

greatmortgagebroker.com reach out to me

and my team i love it when i when i when

i hear stuff from my team that aligns

with like how we’re doing business

because we had somebody yesterday who

came back to us was like hey i really

want to do this i want to remove

mortgage insurance and my team comes to

me and says

deal doesn’t make sense i know if

they’re saying that

they’ve done the work right they’ve

looked at it and said

this person is going to remove mortgage

insurance but their rate’s going to go

up

we’re going to tell them to stay yeah

it’s going to be a net net loss just

because you got yeah yeah i mean

like here here’s the thing too

and and to be completely transparent and

honest with people there’s going to be

mortgages written where

it’s it’s it’s a net wash all this costs

for this minimal savings and it’s going

to take five or seven years to recoup it

or more

the only winner

is the company that writes the loan and

gets the commission yeah i don’t want to

be that company i don’t want that person

to do that right so

greatmortgagebroker.com great advice

2022 is going to be the year of the cash

out refinance i want to do all the good

ones i want to do the ones where it

helps people win i want to help people

avoid or it doesn’t make sense i love it

one more time matt how can they find you

because my channel my folks need to

reach out and just see if their

situation makes sense because you will

tell them no right if it doesn’t make

sense and they’ve been reaching out i

want to thank everybody who’s reached

out uh to the team you know on monday’s

youtube live i had a couple people

thanks matt i get connected with brandon

he’s great hey thanks matt we just

closed him with bo he was great um

greatmortgagebroker.com you fill out a

quick form where you’re at what you’re

looking to do we’ll be in touch uh

within a day and put you on the right

path very cool thanks matt

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