[David] Thanks Matt. A lot of good information in there, watching the markets open up lower today. Nice improvement down to opened up at the low of 4.2 pretty close to 4.20 and then it’s now climb backed up to the close on Friday. So again, overall lowering trend, but we are seeing already some correction in the market and what’s happening with repricing for the worst based on how the market opened. So let’s get started Mr. Kittle, I want to get your perspective. I’ve already gotten Bill. I get back to you Bill in just a minute, but market commentary.
[Kittle] Let’s see. I believe there was a mention of could we get gold to 4,000? Here we are stocks at, on back to 42 almost. We have $2 trillion deficits. Who to thank any of this, right? It’s incredible and then we’re putting, which I happen to agree with tariffs equaling what other countries are putting on us. If that slows the economy down a little bit, which there’s some predictions that happens. What will the Fed do if the economy slows? What’s Jay gonna do? Is he gonna have to lower rates to stimulate? There’s a lot going on there right now.
[David] We have a lot of moving pieces. Yes, Sir.
[Kittle] One comment, we were talking I think before we started today when we were talking about some other companies out there that I won’t mention and what was it? Funny Money. We were talking about when you mark things to market and I look at all these numbers right now from deficits, gold stocks, tariffs, and everything right now and it just looks like a monopoly game to me.
[David] It does. Yes. Bill.
[Bill] So, I’ll bring something into the mix especially FHA loans with DPI over 50, and the number late last year was 30% and so couple of the clients I work with, I have access to pipeline data. They’re not large, but they’re representative sample and sure enough, they had 28% of the FHA loans had DPIs over 50 and another 29% had DPIs between 43 and 50. Now, if you’re going into potential weakness and FHA delinquencies are already in the, 11, 12, 13%
[David] Yeah. Alice, remember the numbers. For you, look at these numbers of delinquencies and where they’re originating. You and I are both underwriters of the past. , I think most of us have underwritten or done some underwriting here. When we start looking at DTIs over 50%, it’s a recipe and an economic downturn for disaster. Your thoughts?
[Alice] Yeah, that report, that Bill’s talking about, the HUD publishes that right on the Mutual Mortgage insurance fund. So anybody who’s wondering where that data is, you can go get that so that you can compare your portfolio to what FHA is seeing. It’s a good step to take above and beyond just looking at your neighborhood watch numbers, which are difficult to understand, one month, one quarter to the next on, on what’s happening there. But yeah, delinquencies, I think we are gonna be a lot to remain to be seen. It’ll vary by lender. If you’re a lender that has some credit overlays on some of that to protect yourself against, being at those high end or those risk ends all by yourself out on the end of that teeter totter. So every shop’s gonna be a little different there. One thing I wanted to add on Matt’s report, he reported on, and you’ll see this in the news, that the federal housing finance agency’s house price index, which I encourage everybody, be familiar with that website. Make sure you’re checking that out. Obviously the data is just a Fannie Freddie comparison of house price changes, so keep that in mind. Cash sales are not in that number. Govey sales are not in that 4.7, 4.8 that Matt referenced, but that’s a national number and when you look at the regional breakdowns, you’ve got West, south, central, which I had to look up exactly which states those are because these are real small buckets. West that’s down up west, south Central. Okay. West, south, central is Arkansas, Louisiana, Oklahoma, and Texas. They’re only at 2.4%. That 4.8 is an average and the high end is sitting out in that Mid-Atlantic and those states are New Jersey, New York, and Philly. So really that 4.8 is just an average store. You should know your market and that it’s a wide range between all those markets on what they’re experiencing in house price values.
[David] Yeah. Whether it be your market or the markets that you’re in it’s all the markets you’re in. You need to know these things and know these numbers. Marc, there’s no one better talking about delinquencies than you. You were one of the top servicing managers for many decades. Your thoughts?
[Marc] I’m gonna sing like this as hum. Oh, hum. Gets off to work. I go anyway I’ll give you my 2 cents worth on this and I’m gonna approach it with the market first and end up on delinquency, but I hear everything that happens in the market every week and, wouldn’t understand maybe 10% of it really, because I’m not a economist, but I do understand enough to be dangerous and I listen to those things and it’s really funny when we live in a whirl, when a market is affected by so many small things that move the needle so much depending on how they’re looked at for a given week and so many large things that move the market so little depending on how they’re looked at for a given week. So, there’s no commonality. There’s, it’s all contrast doing it. So I’m gonna, I’m gonna educate y’all a little bit on delinquencies to speak to that for a minute. Because it’s really hard for me to comment on the market because I get frustrated every week on it. ’cause I expect things to look better. We’ve got three factors happening in this country right now. We’ve got depreciation of profit values in certain areas of the country. We’ve got a wave of unemployment going of high income folks and the thing that’s killing us right now, and you don’t even feel it yet, but it’s coming and I’m gonna tell you about it. What we have, we’re starting to see the bits and pieces of it on delinquency. When you have a market, it has been as stable as it has on interest rates like this. You have not given anybody a chance to refi and you did not want to know how many loans that don’t refi go into delinquency because people are creatures of habit. They get a loan and then they go buy a new car and they improve the house. The kids go to college and all these things happen to them, and they get debt ridden and they start being delinquent on the mortgage loan. Most people, if they got any equity at all in the house, are gonna refi, sometimes it’s plain cash outbreak, even a little bit just to get a lower rate and take advantage and lower their payment a little bit, not really get any cash out and we have not had that opportunity. How long it’s been so many months, I quit counting. So we haven’t had it. And that’s gonna drive delinquency too. So I’m gonna predict a delinquency rise probably one of the biggest ones we had in the last couple years. Over the next 12 to 18 months, it’s gonna be driven by those factors. We already are seeing it right now. Because people aren’t even putting their houses on the market because they can’t get the price out of them they want. And then in other areas is people are getting putting their houses on the market because people are begging for a house begging faster. People can’t afford and have that good credit and there’s nobody putting it out there because people wanna get their max value out the house. The supply and demand cycle’s not working exactly like it should be working in this country either. because usually when supply is low and or high, you have a director reflect on the housing values and I’m not seeing that in some areas, particularly the area in Houston I’m living in right now. It doesn’t matter right now how many houses sold are not sold. Houses in our subdivision are going up like crazy. Guess where I live in a Dell Webb Senior retirement community in Eastern and I just looked down at my house, appreciated right at 25% in just a couple years.
[David] Yeah, I’m moving into one of those communities here as soon as my house sells, you’re doing a good deal. But, yeah. I may be hitting right what you’re saying that’s really interesting about the delinquencies Marc, when you look at these some of these trends right now I think we’re gonna see an increase in delinquencies, no question how, especially when you hear the report at 50%, the number of loans, like Bill reports over 50% DTIs. It’s inevitability so much. We could talk about all of that, but we have so many headlines I want to get into. Anyone else wanna add any comment? Marc, Bill, Allen, do you wanna add anything to the market commentary?
[Allen] No. My opinion is shared with the great minds on this podcast, and I just think that if you haven’t listened to everybody, like if you joined late, please rewind and listen.
[David] Yeah. Yeah, it’s really good. And also I did an interview with, that’s on HousingWires website right now. Encourage you guys to go listen to it and it’s getting a lot of play and getting a lot of feedback. I talk about some of the trends that we’re noticing on there and I’m not gonna get into that. But we’ll put a link in the show notes to that interview, but also head over to the housing wire. I was really complimentary that Diego had beyond grateful for our partnership and what’s happening with HousingWire. Good good source of information as well.