[David] Matt Graham. Thanks so much, appreciate that update. Be sure to check out Matt Graham’s mbslive.net. You can do so by going to that website. You can get updates to the nanosecond, and I encourage you to sign up, put in LOL for the signup code, and you’ll get an extended trial period. Recommend you just sign up and start using it. It’s so valuable. All right. This, as we do, as we each and every week. Corbet give us your insights to all that’s going on.
[Bill] I would be happy to, but first, since Mr. Helm is not here and in honor of Mr. Kid’s son-in-law and the Coast Guard, I’m gonna have a little bit of a Mark rant. How about instead of putting pictures in the news all the time of the PSA security lines out the door, how about they put a picture of a Coast Guard cutter out battling 50 foot waves, or a helicopter battling the same storm to rescue somebody And recognize that there are a lot of other employees that have nothing to do with ice other than they both worked for the federal government. Who are working hard and not getting paid. Yeah, very good point. PSA, okay, so they have problem and I get it, right? They have to take other jobs. They’re driving Uber, so they’re calling in sick. Fortunately for the boating community, I don’t think that same attitude has worked its way into the Coast Guard yet. But there’s a lot more on the line than just airport security delays. And, as you think about how Congress should be acting, regardless of which side you’re on, recognize the impact on people lives is a lot more than just the airport craft.
[David] Yeah. So good. Yeah.
[Kittle] And Bill, thanks for that comment. And what people don’t understand about the Coast Guard since you brought it up. They’re not just here in the United States. Gardening our coast, they’re guarding. Our ships as well overseas. Yeah. So it’s just not hanging around the United States. They put it on the line every day but thanks.
[David] That’s good. And happy birthday to you again, Mr. Kittle, and so glad to see. All right, Bill.
[Bill] And so now, so a bunch of different things, but first for that, the secondary folks and for the los that like to pretend they’re secondary folks, Les made a comment about not getting caught. Anybody that thinks that they can take pipeline risk right now, yeah. Not locking in loans, when you’ve got the vast majority of the events are taking place outside of US business hours you’re totally nuts. Now, My daughter’s a financial analyst living and working in London, and we were joking this morning that she gets to deal with the market turmoil over lunch while I’m dealing with it over coffee. That’s so true. Pay attention and don’t get exposed. And as we’re, as we’re seeing right now with everything going on with Iran it’s just anybody that thinks they know where rates are gonna go hour by hour, let alone week by week, month by month, is totally delusions. And, my opinion less, and I talked about this beforehand, that, there’s, first of all there’s a lot of chess games going on right now that we’re certainly not privy to why things are being done the way they are. But, my opinion, is there’s. Things going on and impact way beyond the Middle East. Think China, right? I think that’s a big part of it. And regardless of what Trump is saying, I think this thing ends when you hear a two word phrase, unconditional surrender.
[David] Yes. Yep. Until you hear that until you hear those two words, this is going on.
[Bill] And the big challenge now is who’s around to that phrase. And I think the fact that the other Gulf states have been brought into the mix takes it way beyond the realm of what people were thinking about a month ago. Us, Iran, Israel, that was a, in relative terms, that was a nice tight triangle. Now it’s grown way beyond that. And I would also, folks are looking at the longer term impact of this, and going back to the Fed and their comments, there’s a very significant difference between an oil blockade and infrastructure destruction, right? You’re talking about Qatar and their natural gas output being degraded by 20% for five years. That’s the impact that folks haven’t even started to think about. And also when they talk about oil, let’s not forget how many things are off of that. We’re hearing a lot of stories in Asia with fertilizer, right? Petroleum based, jet fuel. We focus on gas prices because like good or bad. The one price impact that everybody sees team times a day is the price of a gallon of gas. That’s only a small component of the impact of this us and worldwide. And to think over the next week or even months, we’re gonna, regardless of how it plays out, we’re gonna understand the long term impacts is being very shortsighted, so as we talked about last week, you gotta deal with the reality in front of you and rates are up. That’s a bummer. But they are what they are. Anybody that’s thinking rates, oh in two weeks this will get resolved and rates will drop. 50 basis points not gonna happen on that time cycle, So get out and advise customers honestly. Don’t let your dream influence what you’re telling folks. And, but life has to go on as well.
[David] Yeah. And it is going on with a certain level of optimism. I’m happy to be aware my Alcova mortgage shirt which they sent me some swag that they sent me. And their company, their pipelines are, having some of the best originations because they have a team that’s focused on helping consumers. And there is as much as there is disruption in there. Now this, my word’s not theirs as much as there’s disruption in oil and the rippling effect as you brilliantly bring out bill, the reality is there’s an optimism that there’s a positive outcome from all of this. This is not us ending into a endless wars that have no consequences, but there’s a general optimism, and I think that’s bringing people to the housing market. In other words, we better get in before this takes off again. And so many are still reporting, growing pipelines, growing locks.
[Bill] Yeah. And it’s also, as you look at how this is playing out in a lot of other parts of the world, there are already countries that are going to back to COVID, right? Mandatory work from home, four day work weeks, putting in very specific measures because they know that they’re not getting another oil shipping, they know in their system how many days of how many weeks of supply, and they’re getting ahead up, The US is in a different position and while folks to your point have to be judicious, that doesn’t mean you curl up into a hole either.
[David] That’s right. Yeah. Yes, is exactly right. All right. Mr. Kittle comments? I know we all, we love Bill’s commentary, but I’m sure you have some thoughts on this,
[Kittle] What Bill said.
[David] Okay. Yes. I know you could be you’re in safe territory. Say that, but we’d like a little more of your reflection.
[Kittle] Yeah. Look I’m talking to friends both in and outside, inside and outside of TMC and, do they want more production? Absolutely. But as the overall consensus that the market is really good or getting better and still can get better regardless of what’s going on the ran. Yes. So there’s a great sense of optimism out there. Yeah. Not a lot of internal hiring, but there shouldn’t be at this point. Yeah. And pipelines are good overall. You’re gonna have the areas where they’re not. But attitudes are great right now, I think, to your point. Yeah.
[David] And it is I think there’s reason for hope this is very disconcerting. Yeah. The ts ais you look at who’s not getting paid way beyond TSA raise that you raised a really good point on that Bill. Thank you to all of our men and women that are serving our country. Whether it be TSA lines, I’m about ready to be flying again on a more regular basis, and I’m grateful for all of them. But also to your son that’s serving the Coast Guard and so many others across so many branches of the government that unfortunately because of politics, stupid, absolutely asinine politics they’re putting Americans in harm’s way because of this. So anyway, Alice, you always have good thoughts on Bill’s commentary and Rose Wells, what you heard.
[Kittle] One last thing that point is that it’s really, it’s a shame. Politics is in this. But I’m really wondering how this is gonna pan out as it keeps going. Who’s gonna get, not that it matters, but it does in the midterms. You can say it doesn’t matter all wrong, but somebody’s gonna get blamed for more than the other on this. And it has long-term effect for everything coming up.
[David] Yep. Yep. Alice, your thoughts?
[Alice] I have a question for Bill actually, ’cause one of the words that you mentioned today you said pipeline risk today, which is a big thing to, I think, talk about with los. And, we’ve had the Safe Act and Tela now for over 10 years, lo comp restricted. Do you really see that many loan officers are floating and managing their own interest rate risk? Even if they had an agreement with their company, would they still, maybe they have the occasional deal they. weigh a day or something. But in today’s environment it’s been 10 years that we’ve had these laws that have really clamped down on that, and we’ve had so much messaging out there. Do you see a lot of that? Do you see Los today? A lot of them trying to hedge their own individual loans and say to a customer, yes, you’re locked, but then they’re not really locked with somebody in the los playing the game behind the scenes.
[Bill] I think it’s way less than it ever was. I think it’s now a small chunk and some of it may be almost floppiness driven where, because rates, especially recently, were in such a small range for so long. Yeah. That the discipline of Once you get a rate commitment from the customer getting. It locked in with your company starts to slide a little bit. And that’s, I think a lot of times where it starts and then it’s one of those, will it happen? So now let me wait till tomorrow and see if rates come back down. And I don’t have to admit my mistake. I think it probably more in that being than a conscious playing the market
[Alice] That I would’ve thought that, I, companies certainly end up having to hear that story as they crawl to secondary for forgiveness. And keeping track on how many of that happens with particular loan officers. Yeah. But okay. Thank you for that. Because you know a message for any of the yellows who are doing it, you are in the minority. That is not a common practice.
[David] Yeah, but you bring up a really good, intentionally. Yeah. This, narrow trading range that we get in, we get sloppy, we get, we get lazy. Oh yeah, I’ll put it in tomorrow. We, there’s not a lot of volatility to your point, for anyone who is play thinking that we’re vol. It’s all happening after hours. And that was a point, probably most insignificant points you made earlier. Yeah.
[Bill] Yeah. And I’ve seen it come up with a little bit where for quite a while if a loan wasn’t gonna close and fund within the rate lock, it was like I’ll let it expire and then I’ll relock, right they don’t want to pay the extension cost. So the market’s better. So they let it lock, let it expire. Relock their worst case pricing. And I’m listening to somebody talk about that. Okay. You understand that the rate today is 50 basis points higher than when the customer locked in. And it was that startle look like, okay, now I need to go back and pay attention to what the extension policy is because the easy game doesn’t work anymore. Yeah. Those kind of things. Where as the market shifts. There’s so many little things that you have to get, and here’s the bigger picture. Your mindset changes
[David] And here’s the bigger picture. I think anyone listening to this who’s a business owner, you may say, okay, I’ve got some stupid loan officers. They might be playing the game, but guess who ends up getting sued? It’s the company. And the company has to make a decision. Am I going to back what my loan officer says or I’m gonna fire them? I you could fire ’em. At the end of the day, that’s an employee of your company who made your company at risk. And I think there’s a bigger issue here, and a lot of business owners need to do a better job of policing this and looking at this, we’re raising it. Granted, it’s a maybe a smaller population. But because of the volatility, that smaller population is still creating an inordinate right, financial risk for your company. Kittle.
[Kittle] Hey, I fired my top producer 22 years ago because she intentionally and got caught in my underwriter, caught her. It doesn’t have anything to do with Edge in a pipeline, but it is taking a stand. And my underwriter shows me a picture of the appraisal with this piece of metal going across the top of a bush. Alright? And Paula thought this is might be a for sale sign. This was a cash out refi. And so I was heading to the MBA convention. I was actually gonna drive to Chicago, drove by the house. House was for sale. So my underwriter caught this. And when I got back, I sat down with this person. She goes, yeah, so what? I said I’ve got a servicing release premium out here and if that sells and. Pays off the loan in six weeks or whatever it is. And her response to me was, that’s your problem, because I, whoa, ouch. Wrong Byebye, she been with me. Bye-bye. For 18 years. And I said no, not anymore because we’re not gonna do loan and you’re not working here anymore. It was horrible to have an attitude. And I think, and that put a shutter through the company. I have to tell you, when you lose somebody big like that, yeah. You gotta take a stand on it.
[David] There’s so many lessons. Why do we have to get to that point? It’s making solid statement. I think the best defense is a strong offense. It’s telling these stories. Sometimes you don’t have to fire, but just tell a story like that way we just heard and don’t run the risk. I think preventive. Warnings can preventative managing in this, even though to the point, I think it’s really made due to the volatility that Bill brought out that we could have, when you’re asleep, even as a small population loan officers, it can come back and cost you business owner or a business executive, a lot of money. And someone’s saying, were you aware of this? And I think those are the things that I think has said to the C-suite and to the owners out there need to be paying attention to this. Maybe a smaller population, but the consequences can still yield big penalties. Good comments, good commentary all the way around. There is a sense of optimism kettle out there in the marketplace right now. And I think because of what’s going on, there’s a general sense that after all the dust clears and things settle down, we’re gonna see ourselves as a nation in a better place, and that’s gonna help our economy. And that’s all good. But it goes to say, we don’t know how long this is gonna last, if this is a short term deal. There’s a lot of chips to fall yet and pieces to fall. So we’ll pay attention to that. Very good. Mr. Kittle, anything else you have from talking to some of the TMC members and others out there?
[Kittle] No, it’s tongue in cheek, but it’s true. There, a lot of my friends own their own companies and they’re still playing golf. So it life is good is my point. They’re originating fine. They’re taking the time of that. Nobody’s in a panic mode about anything.
[David] I think to the point where I’m trying to drive home is it’s time not, that’s all good, but we gotta be ever vigilant on these kind of things when it comes to Right. Locks and things like that. So it’s good. Everyone’s good.
[Kittle] Yeah. I don’t think anybody has a pro, I’d be surprised if there was anybody into the conversation. I just didn’t really want to go there. I don’t know anybody that’s out there trying to hedge their own stuff like that. Yeah.
[David] Or tolerate people playing the game. Playing the market
[Kittle] in this day, in this market. So think this through and go back to Alice for a second. How do you get that loan registered within your company, or how do you register that loan outside your company? Then you’d be violating all kinds of policies. There’s really no way to hedge your pipeline other than committing to a borrower, something you haven’t locked, and then hoping it goes the other way. Hell and that you’d only do that once and 99% of the people I know out there would, can that person.
[David] It should. Yeah. Absolutely. Yeah. Good reminder. Good discussion folks.