TIM: WELCOME BACK TO "SUCCESSFUL
LIVING."
WE ARE JOINED BY STEVE TETZNER,
VICE PRESIDENT OF HOME STORE
MORTGAGE.
WELCOME.
STEVE: THANK YOU.
ROB: WITH MORTGAGE RATES BEING
BETTER EVERY MONTH, I'M SURE YOU
WILL TELL US DIFFERENTLY, IT
SEEMS TO ME, CAN YOU TELL US
WHAT THE CURRENT MORTGAGE RATES
OR NOT EVEN THE RIGHTS, WHAT IS
GOING ON IN JANUARY OF 2020?
STEVE: WE STARTED THE YEAR WITH
A RATE DROP W
HICH WAS
SURPRISING BUT AS A RESULT OF
WORLD EVENTS THAT OCCURRED.
WE SAW THE 30 YEAR RATE COME TO
THE LOW 30'S LIKE THE FALL
OF
2019.
THE RATE IS NOW MID-THREES OR
AROUND 3.5%.
WE SEE THE 15 YEAR BACK DOWN
AROUND 3.0.
ROB: YOU MENTIONED THE FALL OF
2019.
IF WE TOOK THE LAST FIVE OR SIX
YEARS, WAS THERE ANY -- WAS THIS
THE LOWEST POINT OR WERE WE
PRETTY CLOSE?
STEVE: PRETTY CLOSE.
IN THE LAST FIVE YEARS, WE ARE
AT A 15 YEAR LOW OR EQUAL TO.
ROB: WHAT DO YOU SEE GOING
FORWARD FOR 2020?
I KNOW YOU CAN'T SEE INTO THE
FUTURE BUT I'M WONDERING YOUR
OPINION AND THOUGHTS ON WHAT'S
AHEAD.
STEVE: FOR THE REAL ESTATE
INDUSTRY AND MORTGAGE RATES, I
THINK THEY WILL BE GOOD GOING
INTO THE SPRING.
IF WE SEE MORE POSITIVE SIGNS
OUT OF THE ECONOMY, WE COULD SEE
RATES INCREASE A LITTLE BIT.
I'M REALLY
SKEPTICAL ABOUT
ELECTION.
GOING BACK TO 2008 WHEN WE MOVED
INTO THAT ELECTION CYCLE, THE
ECONOMY SHUT DOWN.
THERE, I WONDER HOW THAT MIGHT
AFFECT OUR BUSINESS THIS YEAR.
IN THE --
ROB: AND THAT IS WHEN THE FED
ST NO, I'M CONCERNED ABOUT
PEOPLE SAYING IN THE
PRESIDENTIAL ELECTION, LET'S
WAIT AND SEE.
WAIT AND SEE WHAT?
WHAT THE 2020
ELECTION BRINGS
BEFORE THEY MAKE A DECISION TO
BUY A BIG HOUSE OR DO SOMETHING
DRAMATIC.
ROB: I THINK THAT MAKE SENSE IN
ANY INDUSTRY WHEN YOU ARE GOING
TO MAKE A BIG MOVE.
WE WERE TALKING ABOUT PMI.
STEVE: EVERYONE HATES PMI.
[LAUGHTER]
ROB: I HAD IT AT ONE TIME, HATED
IT, FORGOT WHAT IT WAS, WE
TALKED EARLIER AND YOU REMINDED
ME.
WHAT IS IT, FIRST OF ALL?
STEVE: WHAT PMI DOES, IF
A
BORROWER IS NOT PUTTING 20%
DOWN, IT IS AN INSURANCE COMPANY
CHANGING THE RISK OF DEFAULT
WITH THE LENDER.
IN THE EVENT THE CUSTOMER
DEFAULTS ON THE MORTGAGE AND
THERE IS A LOSS IN CURRENT, THEY
WILL SHARE THAT RISK LOSS WITH
THIS PRIVATE COMPANY.
IT DOES NOT THE BENEFIT --
BENEFIT THE BORROWER AND ANY
OTHER WAY THAN WITHOUT IT THEY
WOULD NOT BE ABLE TO OBTAIN THE
LOAN.
IT DOESN'T MEAN IF THEY ARE OUT
OF WORK THAT SOMEONE WILL PAY IT
FOR THEM OR IF THEY PASS AWAY
THE MORTGAGE WILL BE PAID OFF.
THAT'S NOT IT.
ROB: I'M THINKING IT THROUGH AS
YOU ARE TALKING ABOUT IT, THEY
DIDN'T HAVE ENOUGH MONEY TO PER
DOWN 20%, SO THE PERSON WHO
IS
THE ORIGINAL MORTGAGE COMPANY IS
SAYING I NEED HELP IF THEY
DEFAULT ON IT.
STEVE: YEAH.
EVEN ON THE GOVERNMENT SIDE, THE
GOVERNMENT FUNCTIONS AS A
PRIVATE MORTGAGE INSURER THROUGH
THE USDA AND FHA.
ALL OF THOSE ENTITIES ARE DOING
THE SAME THING AS THE PRIVATE
MORTGAGE INSURANCE COMPANY,
GUARANTEEING A PORTION OR IN
SOME CASES ALL OF THE LOAN TO
THE PRIVATE LENDER.
WHEN YOU ARE DEALING WITH THE
PRIVATE MORTGAGE INSURANCE
MARKET, THERE ARE WAYS TO
CIRCUMVENT IT TO MAKE IT LOWER.
THERE HAS BEEN A LOT OF
SIGNIFICANT CHANGES WITH PMI
OVER MY 25 YEARS.
ROB: WHAT IS A SIMPLE WAY WE CAN
TELL VIEWERS IT IS KIND OF
CALCULATED?
HOW DID THEY COME UP WITH THE
PREMIUM?
STEVE: IT IS BASED ON A
FACTOR, AND THE FACT OF THE
PERSON PAYS IS BASED ON THEIR
CREDIT SCORE, DOWN PAYMENT, 5%,
10%, 15%, AND IT COULD ALSO BE
PACED ON THE PROPERTY TYPE,
WHETHER IT IS A SINGLE-FAMILY OR
CONDOMINIUM.
IT COULD BE THE TERM OF THE
LOAN, SO ALL OF THESE FACTORS
ARE CONSIDERED.
ALL OF THE RISK IS COMPILED, AND
THE MORTGAGE INSURANCE COMPANY
SAYS "BASED ON ALL OF THIS
CRITERIA, THIS IS THE FACTOR WE
ARE GOING TO CHARGE."
THEN, THEY TAKE THAT FACTOR,
WHATEVER IT IS, SAY .4 IN THE
100,000 DOLLAR LOAN, SO MULTIPLY
IT OUT, $800, DIVIDE BY 12,
THERE IS YOUR MONTHLY PREMIUM.
ROB: CAN THE INDIVIDUAL
PURCHASER OF THE HOUSE CHOOSE
THE COMPANY THEY WANT FOR THAT,
OR IS THAT DONE THROUGH THE
LENDER ASSESS -- PROCESS?
STEVE: TYPICALLY, WHAT WOULD
THAT'S WHAT WE WILL DO BECAUSE
SOME MORTGAGE COMPANIES HAVE A
NICHE, WE
WILL, ELECTRONICALLY
WITH THE PRESS OF A BUTTON, I
CAN SHOP FOR THE LOWEST PREMIUM
FOR MY CUSTOMERS.
ROB: SO IF SOMEONE HAD LOWER
CREDIT, YOU CAN SAY THIS
COMPANY HERE IS GOING TO GIVE
YOU BETTER CREDIT.
.
STEVE: CORRECT.
ROB: WHEN DOES PMI GO AWAY?
STEVE: ONCE YOU HAVE 20% EQUITY
IN THE HOUSE.
IF YOU ARE COUNTING ON PMI GOING
AWAY BASED ON YOUR ORIGINAL
PURCHASE PRICE OR IF YOU
REFINANCED AND HAD PMI, WER
THE APPRAISED VALUE OF THE
PROPERTY WAS, YOU SHOULD MONITOR
THAT AS A CONSUMER.
YOU SHO KNOW IF MY PROPERTY
IS WORTH 200, IF MY PRINCIPAL
GOES TO 160, MY PMI SHOULD DROP
OFF.
YOU SHOULD MONITOR YOUR
PRINCIPAL BALANCE AT THAT POINT.
LENDERS ARE REQUIRED TO DROP IT
UNDER FEDERAL LAW ONCE IT DROPS
BELOW 80% OF THE LOAN'S VALUE.
ROB: HOW DID THEY KNOW THE VALUE
OF THE HOUSE OF IT TOOK --
STEVE: BASED ON THE ORIGINAL
PURCHASE PRICE OR VALUE.
ROB: SO ONCE AGAINST A 78%,
THAT
2% YOU COULD CATCH MUCH EARLIER
I'M ASSUMING.
STEVE: CORRECT.
ROB: WHAT IF HOUSE VALUES GO UP?
STEVE: YOU CAN TRY TO PETITION
TO CHALLENGE THE VALUE OF YOUR
HOME, AND NEED FOR PMI.
IT IS MUCH MORE DIFFICULT TO
ELIMINATE THE PMI THAT WAY
BECAUSE THE LENDER WILL SAY "YOU
NEED TO USE OUR APPRAISAL
COMPANY."
THEY WILL PROBABLY BE A LITTLE
ON THE CONSERVATIVE SIDE AND
WILL BE LOOKING FOR A STRONG
VALUE TO DROP PMI.
THEY GOT BURNED BACK IN THE
HEYDAY WHEN VALUES WERE
ESCALATING SO QUICKLY THEY WERE
LETTING EVERYBODY DROP THE PMI.
ALL OF A SUDDEN, PROPERTY VALUES
SLID AND EVERYONE WAS UNDERWATER
WITH NO MORTGAGE INSURANCE.
ROB: GOT IT.
AS A CLIENT, AND THIS WAS A
CLOISTER IN -- A QUESTION I HAD,
I WENT AND
[INDISCERNIBLE]
AS SOON AS WE GOT TO THE 80% OF
WHAT I THOUGHT THE VALUE WAS, WE
HAD THE APPRAISER COME OUT AND
WE DID THAT -- THEY HAD THE
APPRAISER COME OUT AND WE DID
THAT.
WHEN THE MARKET IS DOING REALLY
WELL AND IT'S AT 78%, AND IT IS
AUTOMATICALLY TERMINATED, IS
THERE ANY WAY TO GET WHAT THEY
PAY DURING THAT 2% TIME, THAT
MONEY BACK, OR NO?
STEVE: THEY COULD PETITION FOR
IT IF IT IS A SMALL AMOUNT OF
MONEY.
THE GOVERNMENT DOES GIVE THE
LENDER A LITTLE LEEWAY IN BEING
ABLE TO EXECUTE THE ELIMINATION
OF THE PMI.
THEY CALL THEIR SERVICER AND SAY
WHEN I MAKE THIS MORTGAGE
PAYMENTS, I'M BELOW 80, AND THEN
IT HAS TO DROP.
ROB: LET'S SAY I TOOK MY
MORTGAGE OUT AND TOOK 30% DOWN,
EVERYTHING IS FINE, AND I TAKE
OUT A HOME EQUITY LINE WHICH
THROWS ME OVER, AND NOW I HAVE
82% I HAVE LOANED OUT, ARE THEY
GOING TO THROW PMI ON THE WHOLE
THING OR HOME EQUITY L3
CREDIT?
STEVE: NEITHER.
THEY ARE TOTALLY DIFFERENT
SUPPLIESC13
THE FIRST MORTGAGES BASED ON THE
VALUE, AND THE LOAN-TO-VALUE
POSITION OF THAT LOAN.
BACK IN THE HEYDAY, WAYS WE USE
TO ELIMINTE PMI WAS WITH SECOND
MORTGAGES.
SOMEONE COULD PUT 10% DOWN, WE
CALLED IT AN 80/10/10.
80% WITH NO PMI, 10% HOME EQUITY
PRODUCT LIKE A OR LOAN, AND 10%
DOWN AND THEY NEVER PAY PMI.
THAT WAS A WAY TO AVOID PMI
YEARS AGO.
IN RECENT
YEARS, THE HOME-EQUITY
PRODUCT COME BACK WHERE WE
CAN LEND 80%, UP TO
90% -- 95%
OF THE VALUE.
ROB: WITHOUT PMI?
STEVE: YOU CAN DO IT BUT FANNIE
MAE MADE IT SO THEY DID A
PLACING ADJUSTMENT TO THE LOAN.
ROB: YOU WOULD PAY FOR IT, IN A
SENSE.
STEVE: RIGHT.
IT'S NOT WORTH DOING, BUT IN THE
EVENT SOMEBET'S SAY,
WOULD BE LOOKING TO PURCHASE A
HOME FOR 700 FOR THE THOUSAND
DOLLARS, AND THEY HAD A HOME TO
SELL -- $750,000, AND THEY HAD A
HOME TO SELL, SO WE CAN DO
BRIDGE FINANCING, BRIDGE THE
EQUITY IN THEIR CURRENT HOME
INTO THE NEW HOME UNTIL THEIR
HOUSE SELLS.
WHEN THEY SELL THEIR HOUSE, THEY
PAY OUT THE EQUITY PRODUCT AND
THEY ARE SITTING PRETTY, BUT
THEY NEVER HAD PMI.
ROB: THAT'S A LOT OF GREAT
INFORMATION.
I KNEW NOTHING ABOUT IT
AND
THERE'S A LOT OF DETAIL IN
THERE.
ON THE SCREEN, FOR OUR VIEWERS,
THEY COULD CERTAINLY GET MORE
INFORMATION FROM YOU DIRECTLY.
STEVE: I HAVE AN EXCELLENT
BROCHURE PUT OUT BY ONE OF THE
MAJOR PRIVATE MORTGAGE COMPANIES
THAT I HAVE ACCESS TO.
IF ANYONE WANTS TO GET
INFORMATION ABOUT PMI AND
ELIMINATE IT OR HOW TO CHALLENGE
IT, THIS IS AN EXCELLENT PIECE.
I CAN SEND THIS TO THEM AS A PDF
OR THEY WANT TO CALL MY OFFICE,
CONTACT ME OR US THROUGH
FACEBOOK THROUGH EMAIL.
I WOULD BE HAPPY TO GIVE IT TO
THEM, FREE OF CHARGE.
ROB: SO THE INFORMATION IS FOR
OUR VIEWERS.
I LIKE TO BRING US FULL CIRCLE
AND WE TALK ABOUT TEAMWORK.
I WANT TO KNOW HOW IT HELPS YOU
FROM THE PERSPECTIVE OF YOUR
BUSINESS HERE IN RHODE ISLAND,
HAVING A GOOD TEAM AROUND YOU.
HOW DOES THAT -- YOU ARE A IN
CHARGE OF THE OFFICE IN THE
SENSE BUT THE TIM WORK --
TEAMWORK IN THE OFFICE, HOW DOES
IT GIVE YOU AN ADVANTAGE?
STEVE: IT'S A TREMENDOUS
ADVANTAGE.
EVERY PERSON IN MY INDUSTRY THAT
DOES WHAT I DO HAS A TEAM THEY
WORK WITH, AN INTERNAL
OPERATIONS TEAM THEY WORK WITH
TO HELP THE PROCESS ALONG.
AN ASSISTANT, A MORTGAGE
PROCESSOR, MORTGAGE UNDERWRITER,
MORTGAGE CLOSER, WE ALL WORK
TOGETHER AS A TEAM.
WHEN ONE OF THE PEOPLE IN THE
TEAM IS NOT PERFORMING WELL, IT
AFFECTS EVERYBODY.
ONE OF THE MAIN ADVANTAGES WE
HAVE IS WE HAVE LONG-TERM
EMPLOYEES THAT DON'T LEAVE
BECAUSE WE HAVE A GREAT
ATMOSPHERE, SO WE HAVE A
WONDERFUL TEAM.
ROB: THAT'S GREAT.
IT'S VERY IMPORTANT IN EVERY
INDUSTRY, AND WHEN I WAS ALONE,
I CAN SEE THE COMPARISON.
YOU GET SO MUCH MORE DONE AND IT
IS MORE ENJOYABLE TO GO TO WORK.
WHEN WE RETURN, WE WILL TALK
ABOUT YOUR PORTFOLIO AND THE
EXPENSES ASSOCIATED WITHIN IT,