[David] Let’s get over to Alice Alvey. Alice, so good to have you here, and especially we pulled her out of the garden. She came in from out working on the garden to come in to be a part of the podcast. This is a retirement. I was talking to Beth Millstein it was so good to talk to her. We’re texting back and forth. I was giving her some feedback and she used to be at Fannie, ran the approval program there and I was talking to her and she’s retired now. You’re retired, Alice. So it’s good to have you join us. Thanks so much for coming in and continuing your participation in this podcast, even though you’re officially retired.
[Alice] I wouldn’t miss it. I learned so much from all of you, every single week and I really enjoy it and it helps me stay and keeps me motivated to keep reading things during the week and be ready for this. So, this week is talking about Fannie and Freddy’s announcements that came out May 7th. The good news is they match, so, sometimes you have a problem is they don’t match and you gotta try and find, all right, who can I do what with? But three big things out of this. The first one is the interested party contributions. So, whenever they use the word clarify, it’s an important word for everyone to understand that this means they believe that policy was already in place and this is just a clarification and so sometimes clarifications are news to lenders because they go, oh, that’s not how I understood it. You might have to go back and look at some loans. When you see a clarification, make sure you were following this. So in the interested party contributions, I think the thing that stuck out at me was clarifying that the realtor rebate not applied to the transaction, for example, it’s not gonna be used towards closing costs must be treated as a sales concession, a regardless of when the rebate is provided. So, I think this is a little bit of a sticky area where realtors have come up with different ways to negotiate the way realtor comp works today, and maybe rebates were occurring after closing and so people were looking at that the date of closing is really when I had to reconcile how the funds sat at that point in time. It’s what we’ve always worked with as lenders. So, to me that’s what really jumps out here is to go when you see, regardless of when the rebate is provided. Now I have to make sure I fully understand all the rebates, regardless of even if it’s a post-closing rebate. So just a heads up on that. Some of the other stuff under IPCs was pretty straightforward. What we were following already, there is a new section on lender incentives. So, this is definitely worth making sure as lenders, you understand this we’re back in times where lenders are giving gifts and doing different type of incentive programs to get borrowers in the door and so the lender incentive limit has been increased to 2,500. There’s a full section in the guide now that describes everything about what is allowed for these lender incentives. So make sure that your teams dissect that if you wanna come up with some bonus programs for consumers now it’s fully described and you’ll have some guidance within there. So that’s just a good new thing and then last but not least is the, tax prorations. So this has been, I was telling everybody on the show here before we go on, if I had to come up with one issue that was a real pain point every time we hired loan officers and every time I dealt with different companies throughout the years was everyone having different understanding of how tax prorations could be used. Either all on the loan estimate and then compared with the closing disclosure and how they would fit into determining the borrower’s minimum contribution and the agencies have come out with a little bit of a win for those of you who always took it very literally, that I could not apply that tax credit at the time of underwriting and so they did clarify that you can use that tax proration credit as long as you’re setting up an escrow because, then it makes sense. I’ve got, I’m collecting funds for escrow, but I’m having to over collect and overcharge the borrower and now I’ll get this tax credit. Of course, this is when property taxes are paid in arrears, and so now I have an offset for that. The challenge is always with all of the agencies, FHA in particular when that credit gets large and it starts cutting into the borrower’s minimum contribution requirements or even the borrowers getting cash back. Happy to talk tax probations offline. I’m the detailed one of the groups, sorry for all of you going, wait a minute is she at the line level on the cd on the program? What the heck’s going on? because it could cause loan officers to leave companies because they don’t, they now, their entire way of how they calculated funds to close is, changing. For those of you don’t live day to day with CDs, what is she talking about? But this can be a really big deal. It can change whether your borrower qualifies or not. That’s my two sets. Go check out those memos back to you Dave.
[David] Go check them out. Yeah. Thank you so much, Alice. We’re so glad that you’re so detailed. That’s why we get the listenership we have.
[Alice] Somebody’s gotta be in this group.
[Alice] Somebody’s gotta do the digging. You’re either, you’re digging in the garden. Little corner. Yeah, man. Maybe it’s metaphorical that you were out digging in the garden and then you’re digging into the guide, so you, you like digging. Anyway, that’s very good.
[Alice] Yeah, no, I know all of I value all the knowledge that’s out here with, especially Bill and Mark and Dave and David. But I had a question if I can on previous segment. My question was just from a layman’s perspective, who doesn’t do this every day? and you all were talking about, in Bill’s bullets, right? Bill your bullet, if the market does this, then you know, now I know where I might be this constant change and so as an average person how can they follow this? How does the average person or average loan officer follow this in the market? or should they be like your financial planners don’t pay attention to your 401k right now?
[David] Yeah. And I think what we’ve talked about, ’cause since I love getting everyone’s feedback on it, but I think there are those, I have a friend of mine over Alcova Mortgage is a is a client of mine and they have a guy there, we call him 10 year Tony, I gave him the name 10 year Tony because he’s an expert on the 10 year auction where things are at, what’s going on. So I call him 10 year Tony. I think there’s a balance there. If you have a general interest in the markets, you should do it. But if it takes your interest, so off the game where you’re stopping originating, that gets to be the problem. That’s what we talk about here all the time. What is your main deal? Your main deal is to go out and originate loans. If you’re a mortgage lender or if you’re a loan officer, get out and originate loans. Now there’s nothing wrong. In fact, I think it’s your response to be responsible to be good at what you’re doing. You need to have a basic understanding of the markets. But when does that basic understanding become an obsession? Bill, I’ll start with you and are you have any guidelines I would ever recommend everyone start reading Les Parker’s TM Spotlight newsletter would be one place to start and then subscribe to Matt Grahams. You’re gonna get the two perspectives that we bring to you each week and you get that moment day by day Bill.
[Bill] Yeah, so I think there’s totally agree first, David, with your, be careful that you don’t become obsessed with it and I have to pay attention to that with Matt’s site because in to all the consulting, my career is a secondary dump. I can get sucked into watching the numbers all day long. And I purposely have it set up at times where it’s not one click away for just that reason. But it is important as you’re hearing what’s happening, using glass as an example, as he’s talking more further in the future. At some levels, the why’s but also what’s gonna change near an in and that if it continues to move in a higher direction enough, then the underlying premises are gonna start changing and it’s just, you need some level of that knowledge, again, without becoming obsessed. But, and it’s thinking about why I brought it up, because, and it’s not picking on Les certainly, but he’s been talking about things directionally, but yet from the technical perspective, which is the pure data keys the market there is saying if in these case oil treasuries go up a certain amount in the underlying, and what you don’t want, as a loan officer, is to completely miss that the rules of the game changed.
[David] Exactly right. Yeah so spot on. And I think the, under the definition, there’s momentum. That’s what’s happening day to day, in and out, where we’re at within the tolerances, within the fundamental ranges that less establishes. So you have the technical trades and we’ll see that happen happening intraday throughout, even Intraweek. But then when you see us piercing at certain levels, that’s why I think it’s important. You should, as a loan originator. Alice, this is such a good question. I’m so glad you asked it, because I think it is something that as a good originator, you should know the fundamentals. What are the triggers like in this case we’re looking at west Texas intermediate oil prices and we’re looking at the treasury level. So those are two data points that, do you need to spend more than just a few seconds to go to an at a website on that and that’s it. Or do you wanna get into it? I have the respect Tony tenure, Tony over at Alcova because he does get into it and he’s very articulate. He uses that as an advantage. But is he obsessed about it? No. He’s one of their top producers in the company and you don’t get to be a top producer by obsessing on this stuff. Mr. Kittle let you add a couple notes to this and then Marc, you jump in here as well. You’re muted out Mr. Kittle.
[Kittle] I think Marc Helm infiltrated my laptop and put me on mute
[Marc] Probably.
[Kittle] You just think about the markets. So this may seem like a 90 degree tangent or turn. This morning the president announces how does this affect the markets? Announces that he did an executive order to lower all drug prices across the board. So we’re competitive with Europe and everybody else. Now if this comes off and it’s true, then this is gonna put hundreds of dollars back in consumers.
[David] A lot of people’s wallets.
[Kittle] Yeah, a lot of people’s wallet. What does that do to the economy? Does it heat up? You think you add another 5, 6, 700 bucks a month or up to a thousand Some people are spending
[David] Yeah, those of us on Ozempic. Yeah.
[Kittle] Then they have that to spend stock market’s up. It’s was at 44, it went down to 38. It’s back to 42.2 or something today. So the stock market climbing back up for all those naysayers who were panicking three or four weeks ago, stocks go up and down. You still have to go out and do loans. So I think we are in a position, oh, I do wanna say this. So gimme the opportunity to say this, Scott Besant. In testimony last week, yes. Had a democratic congresswoman just in his face, and he sat there very calmly. She goes, you put all these tariffs on and what’s gonna happen to the economy with this what’s the result? He goes if we were gonna have a bad result from the tariffs being put on, it would’ve happened almost immediately when we did it and he sat there very commonly. He says, I think we’re gonna be okay. They’re not panicking. They’re making the decisions, they’re going forward. Everything is to help the American consumer at this point. I think we’re in a good spot all the way through. I agree with you and I hope Les’s predictions are true, but if the economy heats up, rates won’t fall.
[David] That’s right. Yep. Yep. Marc, you wanna weigh in on this real quick?
[Marc] I sure do. In my, a number of years in the industry, 47 and counting right now. I’ve learned something really unique that everybody should know, and I think everybody does know this in in their own way. There is right way in the wrong way, and there’s your way and I know that I can’t change a doggone thing that’s happening in the market today. I know personally I can’t do that. I know I have to be aware of it so I can communicate to bars, et cetera, while rates are where they are and what might happen to ’em in the future and what to look for and et cetera, et cetera. But what I’ve learned is how to deal with it. And I think what we as an industry don’t do, we don’t deal with it. So what I do is when rates are down, I’m out there. Doing things like training my employees to be more effective. I’m spending time with them to talk to the potential customers coming in and talk to them and pre-qualify them and see if they can handle the rates down, make sure they understand how soon do a refi and what it can mean to them if rates dramatically go down. I’m trying to figure out a way to get it done without regard to what’s happening around the environment. One of the things that kind of gets me when we look at these things I’ve learned already with Trump, I’ll give you example. Trump is gonna say what Trump’s going to say and sometimes I think it’s just an end to a means to get what he wants and he never really thinks Furation on that’s gonna happen. I think the tariffs, for example he and he got pushed back from everybody and he’s trying to do the right things, but he’s got his own way about doing them and all. So do I get upset when I hear he is put a tariff on? So I know, I figure it’ll all settle out down the road, but I do realize it’s gonna affect a bunch of people that can’t afford to buy things with the tariffs are up, but at the same time, those people have to make adjustments. Maybe they gotta go use the generic product now rather than using the name brand product. Maybe they gotta shop the 62 ounce containers rather than the 28 ounce containers. There’s always adjustments we can do in life, but if as I continue to journey through my life, if I didn’t make those adjustments, I’d go back crap crazy. Because things change so much on us and if we are always reactive to the change, rather than be reactive to ’em, we’re gonna get stuck in a trench we can’t get out of and we can’t really make something out of our lives and our careers and help the bars we have and all that get where they need to do without doing all those things extra to fill in the void during times when they’re rough. And that’s just my little thought for today.
[David] Yeah. Good. Is that your rant?
[Marc] No, that’s not a rant. That’s just good common sense. Good common sense. Okay. Yeah. Good. Good. All right. There’s a book in there, Mark’s common sense mark’s com. Yeah. There’s Chicken Soup for the Soul. Good idea. Good idea. Mark’s Common Sense.
[David] He is got, he’s become a prolific writer. I turned him onto my ghost writer a few years ago. Man. All of a sudden, that guy’s pumping out books right in the left. I haven’t got my first one published. He’s got four out, I think. Anyway, good job, mark. Appreciate it very much. The person that created a recorder made my life because I don’t have to sit at a typewriter or keyboard and type it and made my life so I can write like crazy.
[David] You’re doing a good job of it too. And one of them is a children’s book. I think every mortgage originator should Is it Bill? You had a thought?
[Bill] Yeah because when something Marc said triggered it with a lot of what’s going on right now with the tariffs and things like that it’s very clear that Scott Besant is the adult in the room. And I keep looking at it, thinking back and there was a story about a month ago where Peter Navarro had not only had Trump’s ear, but he had cornered Trump to keep everybody else away from, and there was a meeting, I think it was Wall Street Journal, talked about it, where Besant, and I forget who else, realized that Navarro had a meeting outside of the White House and they literally got up and ran to get in to the oval office to talk some sense into Trump, and that’s when the mindset changed where he became the guy, number one. Number two, listen to a lot of the details that he talks about. He made a comment this morning that puts a lot of what’s going on with China in perspective, and he said when we were at meetings in Geneva, he and the economic group were talking to their Chinese counterparts, but he made two other comments. He said, one in a separate room were the security guys that were talking about fentanyl and how to slow that down. So everybody’s talking about the economic group. That’s really the most important issue was being discussed by another group in another room. So the commentator said that, that’s great, how are you gonna know we’re making progress? And he’s look, he goes with Cent and all the tracking they have, he said, we know in hours whether the precursor chemical shipments are ramping up or ramping down.
[David] So interesting.
[Bill] So that to me was as big a story as the headline Power company.
[David] That’s so good. Yeah. Yeah. That’s really good. Yeah. And what’s so interesting about that is MBS Live that Matt puts out, he puts the news stories out. I clicked on that. So that was my obsession. I came in here, I was gonna go out to I have a gym in my right next to my office here. I was gonna go out to my workout and I got watching the Best at Interview that they featured on CNBC. And it was really interesting. So there’s so much stuff out there. We could go on and on about it.
Alice Alvey, Master CMB
She handles development of their World Class Training program designed to support UHM partners and organizational effectiveness.
Prior to UHM, Alice served as Senior Vice President at Indecomm leading the Indecomm-Mortgage U division, Internal QA and Compliance and SaaS technologies. Indecomm acquired Mortgage U in 2013, where Alice was President/Co-founder, providing training and consulting since 1996. Prior to MU she served as SVP of Operations at a national bank overseeing operations for wholesale, retail and correspondent from underwriting through servicing, and compliance.
She has been in the trenches of mortgage lending operations from application through servicing for over 30 years. Her authoring work in training content, policies and procedures and the FHA/VA Practical guides illustrates her ability to bridge regulatory requirements with day-to-day operations.
Alice has been a weekly contributor to the Lykken on Lending show since its beginning in April 2009 and has made her weekly contributions to 450+ episodes!