Finance Talk - 2020 in the Rear View and Looking Forward to 2021

Script of the Interview

- Hi, it's Jeff Chubb with REN network and the Chubb Realty Group brokered by eXp Realty, we're here with Jason Bonarrigo of RMS Mortgage today, and ultimately, Jason, did you wanna say hi? But really we're gonna have a nice conversation in regards to what happened in this crazy year in 2020 and ultimately what we see for 2021. So lots happened I think in a year--

- It's been crazy, it's been crazy. It's been good, but it's been good but--

- It's been crazy good.

- So I think we're really lucky in the aspect that both of our industries from COVID, having, I mean I thought it was gonna go completely in the opposite direction, when COVID hit and the world shut down--

- Scary times.

- Yeah, I don't know about you, but I remember saying to my wife, like, hey, it's time to batten down the--

- Pack up camp and go back to school.

- Here we go to 2008 all over again, you know,

- There was a worry for all of us, I think, I mean, in all seriousness, I mean we were all concerned about what was going to happen and obviously still are in the bigger picture of things with everyone's health, but that being said, in our businesses, you know, very lucky and knock on wood, but we've survived and we've thrived really, you know, and interest rates have been low and people are buying homes and selling homes, and it's obviously been ironically one of the busiest years in our business.

- Who would have thought, it just took a world epidemic where the world shuts down, in order for--

- Total production.

- To make our real estate market completely change and one of the, you know, there's been a lot of changes in my world, not necessarily from, I mean, we're still selling a lot of houses, right? But it's weird in the sense of it's not the city anymore, the city used to actually be the hot place to be, and, you know, if you're sitting on a little piece of gold, if you had that, you know, multi-family in South Boston, as we're today, it's really turned out that, you know, the dynamic has really shifted in my world over into the suburbs and, you know, kind of the city is almost a dirty word nowadays, we're seeing that a lot too, I mean I think you and I have talked about that before on offline, but I mean, and we don't wanna go into that tangent, that could be a whole other show, but we talked about basically how there could be a shift over the next five to 10 years, and the commercial spaces are changing, the home value to the consumer has changed a lot, you know, if you're gonna spend that much time in your home with your children and educating your kids and working from home, do you want a 600-square foot condo in South Boston, which would be close to your job, which is great, don't get me wrong, no offense, but you know do you want a yard and a pool, nice weather, and it's, you know, so that whole dynamic is shifting and that's gonna take maybe five to 10 years to play out, but it's true, and I'm not just saying, it's, you know, some of the talks and the lectures that we've been to and kind of the people projecting out feel the same way, that there's going to be a little bit of a dynamic shift there with the urban communities out to the suburban communities, because again, my job is not a train ride away anymore because they're working from home too, so it's all gonna play out, but yes, it's an interesting thing and we've seen that dynamic

- I would just like to say that I truly personally believe that Boston as a city will actually be one of the cities that come out the strongest, just because we have such a diverse workforce, the economies that are there,

- The water, I mean, you can't take away the water.

- You're right, they are not making any more water. So that being, so I mean, there's a lot going on in the real estate world, but let's talk about specifically the mortgage world, so, you know, I mean, a year ago, the world was great, we were cruising along, you know, very low unemployment, I mean, boy, we were rock solid and everything was--

- Things are good, things are steady.

- So what was the climate like then versus the climate like today?

- Well, I mean, like I said, I'll just repeat myself, but it was steady, it was solid, as you know, the, you know, we've been doing business together for almost 15 years now, I have to give our age away but--

- Is it 10, 12.

- Okay, maybe, 13.

- Yeah, thanks for that.

- Post it up.

- Exactly! A little gray hair. But then, you know, it's been steady, it's been good, it's been solid, and then obviously a lot of things changed, but you know, again, we had that kind of fear in the spring of what was gonna happen and it really didn't miss a beat, maybe about 30 to 45 days of people with jobs and unemployment and layoffs, and obviously, you know, the infamous C word COVID, but it was just a solid kind of ramp up, a little bit of a pause and then into a kind of an exploding spring market, and then obviously you wouldn't have seen it but you know about it, obviously at the same time, maybe the consumers don't know, but obviously difference between a purchase and a refinance, but, you know, the refinance rates really dropped as well to help stimulate the economy and the markets were doing still pretty good, even though we were in sort of a kind of a weird recession, you know, because of the jobs and loss of employment, but it just basically stayed steady, and then again, as we talked about people who started buying homes, second homes, refinancing, doing work to their homes, because they were home, cleaning out the garbage, the garage and things like that, so it was just a kind of a steady climb.

- Well, and, you know, it's stuff that isn't really talked about, but it's true is that refinances in themselves is almost like a stimulus to the economy, when you refinance number one, there's banking fees, there's, you know, appraisers, so that helps stimulate the economy, but on number two, you know, when a homeowner saving $500 a month, generally speaking, Americans, we don't really save that $500, we go out and spend it in other places, you know? So I think that that's been a huge help.

- But to that, to your point Jeff, and even and obviously, even for the people who got affected the worst, maybe it's a restaurant owner who has $300,000, $400,000 equity in his home, and that's his saving grace, already he can tap into $50,000, $100,000 and survive or get through these next month, so not only are they saving money, but again, that's a lot of time, it's the American piggybank, our absolute position, we've all used it in the past, but again, that was another thing that we would like to say championed and fought so hard for, which was to become essential workers when everything kind of shut down last spring, so we'd be able, because again, remember we forget now but there was a fear that we couldn't record mortgages or we couldn't go on record of deeds and registries, were gonna close down and then you and I were talking almost daily on that stuff, because again, it would affect our jobs, it was just a no brainer, they had to do it, because the economy was already in terrible shape, and if they did that, it would literally come to a grinding halt and we couldn't do that, and I'd like to think that we, not we, but the industry itself has been a saving grace for a lot of folks who were able to tap into, exactly.

- Yeah, I mean, I know it was, I mean, you know, I look at my wife and I, and all of this and, you know, it was always good that we had that home equity line that we could always share in the back of our heads that if we need to tap it, it is here, right?

- Break glass if needed to.

- Yeah, exactly.

- It's true, it's true.

- And I think that goes a lot to how important, you know, a real estate investment, it's sometimes your home is just more than a home, I mean, ultimately it can be that thing that helps bridge you, done responsibly, it can help, let's not go back to 2007 and 2006. Done responsibly, it can be--

- We've talked about that a lot of times--

- That bridge that kind of gets you through that.

- Sure, sure, it's a great investment and I tell, I have a younger brother who's just kind of getting married and getting engaged, and I tell him, the first thing he needs to do is buy a property or buy a multifamily, or just get that little bit of wealth piece started and that major asset in your life, and you'll be shocked how much it appreciated.

- I remember you using the term is like, you get a free, not a free pass, but you get, when you're a first time home buyer, you kind of get like, hey, here's a card to go get a great deal.

- Yeah, I could sponsor a golden ticket

- Yeah, golden ticket,

- 3.5% down on a complete family, I mean, you can only kind of do that once, right? Because once you occupy it or you move on with your life and you buy that single, and you have, you know, potentially have a partner or wife and the kids, you know, it's, you just don't get to do that, so whenever you can put 3% down on a $700,000 three family, you know, it's not for everyone, but it's a pretty good stater.

- Right, I look at, that was one of the best decisions I saw when my first, as you very well know, one of my first properties that I bought was in 2008, that was my first home, it was a multi-family in East Boston. That was a piece of the gold that I was, you know, if you needed to pivot to--

- And even at the time, I remember, you know, you don't think that way when you buy it you just, you kind of say, just what I need to do, I'm out there, I'm working, I wanna buy my first property, I did the same thing as you and I used to talk about I bought a three family brick brownstone in Dorchester and you know, back in '02, and the same thing, you know, just got a little lucky, better lucky than good, but it worked out.

- I don't need to be good, if you can just give me all luck then I'm gonna take that.

- I'll take the luck in a good real estate market.

- Right, yeah.

- You know, Boston is solid to you.

- And I, for me personally, I mean, I bought it as a long-term play, I always looked at that, even when I was single with no kids, somebody had told my dad a long time ago and he kind of passed on that advice to me is like, hey, just buy a house, and, you know, as an investment property and when your first kid wants to go to college, you sell it.

- There it is.

- Right. For me, I look at it and I'm gonna revise that little piece of advice, you don't sell it, you could just refinance it,

- You could just refinance it,

- You know, cut that check and continue to allow--

- Tap a little bit of that equity and there's your college tuition. Right, and dad's gonna keep the rest 'cause dad wants to retire at some point.

- Someday, that is the goal in theory, so January, January of 2020,

- Yeah, a year ago.

- Yeah, where were interest rates? Where were we?

- I mean, it was still pretty good, it was still pretty good, they weren't obviously where they are now, which is, I'm not giving you a quote, but rates are obviously in the mid to high twos right now, anywhere from 2.5 to 2.875, depending on credit and down payment, all those things I won't get into, but they're really, really good, historically again--

- Historically some of the best.

- Some of the best ever, I mean, probably the best that I've ever seen, again, I've been doing this for close to 20 years, and prior to this year, I had probably never given a 30-year fixed mortgage under 3%, you know, locking somewhere.

- That it's free money, I mean, it's been going well.

- I mean, you can try all you want, but you can not convince me that our inflation is below 3% right now, that is literally free money, actually no, that is them giving you on your, like, if you look at that on a monthly rate, that is them actually giving you money right there.

- Sure, it is, it's crazy, I mean, it's fantastic, and obviously again, where we live, you know, in the Northeast, you know, the price points are tough, so, you know, trying to buy a home at, you know, $400,000 or $500,000, $600,000, $700,000 at 5%, 6%, it just, it doesn't work, it doesn't work for your everyday consumer, and you have to be very, very well off to afford that, so, but going back to your question, I mean, they were solid, they were probably about a point higher, maybe a point, 1/4 point and 1/2, so like in mid threes, mid to high threes, again, depending on credits, so it still very good--

- So what does that mean to me? So interest rates this time last year were 1% higher, what does that do for my buying power?

- Well, it just what we talked about, I mean, you maybe can afford that house that you just didn't feel comfortable with, maybe your payment change is $300, $400 on something--

- So for my end, and you know, my back of the book calculation has always been 1% is equal to 10% more buying power, right? So, you know, if I could afford a $500,000 mortgage payment, you know, when interest rates were at,

- High threes

- This time last year, right? Today, I can go out and buy $550,000 mortgage house on, you know, with my mortgage payment staying the same.

- Sure, maybe a little bit more comfortable.

- Right, right, and so that's what changes, that's what helps the consumer, and it's obviously, again, as I always tell clients, hey maybe I can pre-approve you to $750,000 or a million but it's about your comfort level, your monthly budget, you know, do you have to sacrifice a little bit to be a homeowner, I always say, yeah, sure, maybe you don't get to take two or three vacations, maybe you can just take the one but you still wanna be able to order a pizza, go to a movie, you know, just do basic things, but yeah, sacrifice, 'cause it's cool to be a homeowner, it's fantastic as we just talked about and all the benefits that come with it.

- I like the tax benefit.

- The tax benefit that'd definitely helps it.

- That is my favorite, yeah.

- Come this time this year, as we get into the next season, but in all seriousness, I mean that just helps, it helps the consumer feel good about it or not, and I always say, hey, run the payments by me so I can give you that fee, okay, your total payment is x, it's--

- Why, I mean, I always say that--

- How does that make you feel, good, bad or indifferent, but how does it make you feel?

- Exactly and that's, and I always tell them, I'm like, look it's your job, it's the mortgage bankers job to figure out how much can you afford. It's your job as the person who's buying the house, you know, Mr. Buyer, to figure out how much you want to afford, and those are, can be two different numbers, right?

- Yeah, we had a client the other day, well, we won't mention his name, but you know, maybe there was some more buying power there, but he felt comfortable in a certain budget, and he didn't wanna go with that and that's fine, you have those instructions.

- And that's how you don't get in trouble by the way. Of course, oh, he's very smart.

- Talking about 2005, 2006, I mean, hey, I'm gonna buy this, I can't afford it, but I'm gonna buy this--

- Buy the Mercedes you could never afford anyway.

- You got people making $30,000 cars going in on stated income docs and buying a $700,000 house, I mean, hey look, you're responsible, so--

- It doesn't make sense, and if it doesn't make sense, it doesn't make sense. We all know that, right? I mean, you have to be very lucky to kind of come out of those situations, and I try to talk to my clients that way too, and luckily I don't have too many of them, but some get a little bigger as they say, and they want that American dream, they wanna get in the game, they wanna buy real estate, and there's nothing wrong with that, but you have to balance out, it's a big commitment and it's a big financial commitment over the next 30 years, and you wanna be sure that you can do it, and again, you have to, you don't wanna be so close that something like this, God forbid a COVID or anything that just changes the winds instantly can knock you out, I mean, it doesn't, it's always on a saving grace, but you wanna be able to at least have a couple of months in reserve, have some equity to fall back on and it's a tough game.

- Which equity, by the way, you build, I mean, when you start building it, I mean, I look at, you know, we've been in our house for five years and you know, there's more there, so that being said, I was reading an article the other day, and it was talking about how, you know, in the last week or so, interest rates have started ticking up.

- Yes, they're all the way up to 2.75%. No, but yeah, they have turned finally, because again, it was just kind of a slow and steady, as I always tell people, my rates go down, tick, tick, tick, tick, they go down very slowly and they go up very, very quickly, you know, we--

- Just like gas prices--

- And the stock market, I mean, most markets change on the dime, and they do, you know, so, but this is on and the fact that it really didn't go boom, they usually go from, you know, one day they're 2.5 and you wake up and it's, you know, it's 3.25, and you're just, what happened, literally in 24 to 48 hours, and it's like those movies--

- Which will get us all pulling our hair out and say, oh what happened, you know--

- And you have a point, that's 5% of your buying power.

- That's your buying power.

- Choose then if you will--

- And again, the people, they hear, and I joke about us, but you know, never had your markets and always lock your loans and fellow ellos, but the real people that suffer honestly is the consumer because they're out there with a pre-approval, they were talking to you last week with X buying power, they call me back, hey, I found the house, at 123 main street, and this is the price point, and now I have to tell them that their payment just went up $300. How does that feel, you know, and how do, so that's a major switch, now don't get me wrong, it had not happened that fast, I don't wanna lead anyone on, they have not changed but to your point, they have moved up a little bit--

- Which is ultimately something that--

- It's just markets doing their thing, we don't think that they're going to really really tick up, again over the next six to 12 months, that's all the indications that we have, but the new cycle can change on a dime,

- So let's talk about that, I mean, 12 months, I mean, can you tell me what's going to happen in 12 months? 'cause if so, I'm gonna gamble a lot.

- I was gonna say, I wouldn't be sitting here, I'd be under a tree in Hawaii, Jeff, if I could predict the future, but no, I mean, all indications are that the housing market is going to be, and I'm sure you know this too, but be pretty robust, based on all the things that we just talked about, I mean, you know, the pandemic honestly is as much damage as it has done, it's changed a lot of people's thinking, it's critical thinking on how businesses are run, the workforce from home, so all that's actually putting money back into the market as well, too, so, you know, that's, at the end of the day, the consumer and the home is even more of a focus than it ever, ever was, so home buying is gonna remain very, very strong, hopefully we'll have inventory, but that a whole,

- We're working on that.

- A whole other subject, but again, and especially in our market, more particularly, but yeah, the next 12 months, again everyone is saying that it's going to remain steady, rates should remain relatively steady, there's no guarantee they're gonna be at these historic lows, but again 3.5, still--

- They're not jumping up to 5%, which by the way, is still a great rate,

- Of course.

- I mean, 5% I mean, they have to stay under 4% I think, to just kind of keep everything, you know, pretty steady, and at the end of the day, we're still in a quasi recession, you know, and I don't mean to be light about it, but it's obviously a massive recession for a lot of folks and, you know, knock on wood for folks like you and me, it's not a recession, so it's not a global recession in that way, so the folks that have been affected, I mean my heart goes out in certain segments, self-employed folks which we can talk about as far as how that underwriting goes, but it's just--

- Well, I definitely wanna get into that.

- It's just been a different thing, so again, I think markets are gonna remain steady for the most part, and the housing market is gonna be robust, but we'll see what the next six to 12 months will bring.

- Yeah, I mean, I agree with you, I mean, you know, ultimately, I mean, again this could be another whole conversation, I just, housing prices aren't going down in my opinion, you know, and therefore the housing market isn't going down because you just pumped the economy with what, seven, eight, $9 trillion worth of liquidity? I mean, housing prices aren't going down just strictly off of inflation, that's what it comes down to.

- Do you think it will remain steady, you do?

- I think that we're going to continue to, I mean you're gonna have different markets, right now, Boston, it's really struggling, I mean, you have your suburbs.

- Struggling in the sense of inventory, not in home prices or what do you mean--

- Oh, home price is actually Boston, you're starting to see home prices dip, no inventory, heck if you wanna buy a house in Boston, you can--

- You learn something every day, kids.

- You can go, you have your choices in Boston, if you wanna buy a condo in Boston right now.

- So what we just talked about and what we're inferring is that already starting to happen a little bit? Kind of that flight out of the urban community?

- Oh yeah

- So it's happening?

- Yeah.

- I thought it would be a couple of years.

- I'm calling it the COVID fact, I'm calling it city flight and that's really what it is.

- I mean it happening, right, I mean--

- Yeah, no you're seeing it, oh yeah, no, absolutely. I just think you see it that fast, I mean--

- Wow, really?

- Well, 'cause I I think it's affecting the high, I've noticed it's affecting the high-end more.

- The high-end stuff.

- And if you think about it--

- All this stuff is right, I mean, why would I spend a million dollars when I don't know if my job's gonna be there, a million dollars in the high end in Boston, you know, but yeah just your kind of average place, average million bucks, I love how we just kind of casually say that.

- There's somebody in, like Virginia right now who's just--

- Very big charges hit the floor now.

- No, but like you have these properties where it might've been a three-bedroom and you know, a family of three might've been living in it, and you know, the parents were trying to be close to work.

- That's what I mean.

- Why stay there? and ultimately it's the people with means that they're the ones that are able to move the fastest, so that's really what you've seen, I mean, it's not a free fall or anything, but you've definitely seen a lot of softness in the market.

- And that market was never like that really.

- South East was down at, average price point in South East--

- South Boston?

- 1.9%, year over year, and sales, which has been great, sales of, they were down a little bit, I think it was like 8% or 9%, not bad. You know, at the end of the day, I look at the dynamics of that market, it's still not going anywhere because if you're a 23-year-old, even if the city is not as fun as it used to be, it will come back, right it's just gonna go through reimaging, you know, the city is gonna go through a new identity, it's gonna figure out its new identity--

- Prime real estate is still prime real estate for the most part.

- Exactly, and, you know, I'm not, let's put it this way again, I bought for the long-term, I'm not running out to sell my two family in East Boston right now. Right, but I think that you're gonna see the city being even more of a younger dynamic, you know, where necessary, we were starting to see a lot of the empty nesters moved back, I don't think you're going to really see that, I think the breaks have really kind of hit hard on that.

- For the places that we stayed, but it does not impact the cultures that--

- But a 23 year old, they're not moving into the suburbs, into a three bedroom, four bedroom house to live by themselves

- They still don't want the backyard and the fence and they don't need it.

- Where else are they gonna go?

- They still want the restaurants and the bars and no matter what that looks like, they still want that.

- To be a block away from all your friends, and maybe they're not going to the bar, but maybe they'll head there so, see, the city isn't dead, it's just gonna be a different--

- But it has dipped and that's interesting, and I know we segued a bit, but that's really interesting that I've, you know, what, not my theory, but kind of the overall theory that you've already seen it, I mean, we've already seen it and kind of--

- There are "bargains" out there like you saw back in 2008 in the city or anything, but--

- You think we could get there?

- The word is, hey if you want a house, it's pretty easy to get one in the city.

- You think there might be some opportunities?

- We had somebody, we had a client who wrote on a, the house was listed for $880,000, there was a condo in the South end, and the property she bought for $900,000 back in 2017, and our clients wrote an offer for $830,000, which by the way, was the second offer that those people had received for $830,000, so it kind of tells you where the fixed price is, $830,000. Right, you know, and that's again, she bought it for $900,000 back in 2017. Now look, I'm thinking everywhere.

- That's very rare.

- It's very specific.

- To lose money in the South end, but I know what you, I mean, it's a niche.

- It would be interesting to see, so to that point, you know, that was today, we'll talk a little bit tomorrow, so ultimately you kind of see that rates will stay steady for these year, they are not going up.

- I think your point is the future, I mean yeah, 2021 is again, it remains, looks to remain stable overall.

- What we just commented on, you know, I mean niche markets here and there on a national, because again, I always kind of answer your questions with, in regards to the housing market, but that's what drives my business, our business.

- It's kind of important for you to know what's going on there

- Sure, just a little bit, just a little bit. And obviously it makes you better--

- It's important for us to know what I wanna talk about next, which is mortgage standards, are there easier or harder, what's going on, and that's because that affects my merch, if you actually--

- Well, we can talk about that, that said, we have the projections for 21, it was just pretty much stable, but I mean, mortgage standards have changed, I mean, again, not dramatically, almost kind of to the point where you said nichey and almost the way you just described the Boston market in the sense that, has it changed for your 20% down, W2, salaried, you know, rock solid salary, high FICO score guy, no, not really. No, it should, right, 'cause he's your kind of A plus buyer. Unfortunately, the self-employed bar and who's the person who's probably been affected most, unfortunately since COVID, the pandemic, maybe he's a well-to-do restaurant owner, but guess what, you know, winds change and all of a sudden now it's very difficult, so unfortunately we can't ignore that, when he comes to buy a house, we have to ask him about his business and how that was affected, so the self-employed business owner, or 100%, you know, small business owner, unfortunately has been affected the most as far as, kind of a negative connotation tied to it, again, not picking on them, the facts are the facts.

- There's more risk there.

- There's just more risk there and so we're really kind of going through with the--

- Your getting 3/4 of a million dollars, you kind of want to do your due diligence and know your, know who you are giving it to.

- Of course,

- And we are happy to lend the money, and you have to go through all the underwriting procedures.

- And is it you actually giving me the 3/4 of a million or--

- Me personally?

- Yeah?

- Oh, I have a truck outside,

- That's what I thought.

- I do it, so it's actually hiding right out by the window there. Oh they kind of joke like that. "Now will you be at the closing with the money?" and I'm like, yeah I come with the big bag with the dollar sign on it.

- That would be a crazy, that would be actually pretty fun.

- That'd be good.

- That'd be fun.

- I probably would put it disappeared with that truck a long time ago.

- But you know, those Brooks trucks, they just don't disappear--

- That's true, and they are bullet proof.

- But yeah, the mortgage stuff.

- It's been tough on those guys, and honestly, Jeff, those are the folks that I, it's just every time someone calls me and they're like, you know, unfortunately the first, one of the first questions out of my mouth is, you know, okay, that sounds great, you're interested in buying a home, but you know, but how has COVID effected your business? I mean, it's just one of those starters that you have to say and it feels weird, but, 'cause again, unfortunately sometimes people don't know that they have to bring that up, so many times I'll speak, not so many times, but a lot of times I'll talk to a client and I'll say, oh, you know, great, we're having a good conversation about five minutes in and I'll say, okay, I bought your employment, you know, how has COVID effected it, and when I was out of work from March until August, and it's like, is that gonna be a problem, and sometimes it's not as long as they're back to work and we can show that it was pure COVID, and then we just--

- We saw a lot of furloughs, I mean we had that one client who was a janitor for a school, I mean, school bus driver.

- School bus driver.

- I mean, school bus driver, no kids going to school, so, you know, but we waited, and it worked out, he went back to work and thank goodness, he got the house, and a lovely couple--

- That's a pretty secure job. In most historical parts--

- They've been there for 26 years, you know, union guy, rock solid, but he was furloughed, and unfortunately I could not close the loan until he went back to work or showed some solid means of--

- So you need a job in order to buy a house.

- You need a job to buy a house, you know, and it was tough, we're joking, but we're not, because it was frustrating

- You do the same every day, you need a job in order to buy a house.

- You need a job and good credit, the big three, good credit, a job and a down payment, as I always say to clients.

- So has anything, so of the big three, so we talked about needing a job and you know, for us self-employed people, I mean, it's been tougher for us since they got rid of the stated loan, I miss the stated loan, I miss it so much.

- Good credit, that's all. I just drop by, I just swing by with my window open, and I throw the bag out.

- I want those days again.

- Those were, well, yeah.

- Anyway, so, but to the point, you know, okay, so we talked about the mortgage standards in regards to, okay, you having a job, what about credit? Have you seen any changes in credit? And then also I wanna ask in regards to the down payment, what's happened to the PMI, mortgage insurance, PMI is Private Mortgage Insurance, you know, is it still anything, you know, what's happened to number one, those rates, number two, you know, have you seen some piggyback seconds, stuff like that, long question, ready for your long answer.

- Longer answer, yeah, first part of that question is credit scores, no, not really, I mean, they have a dramatic shift, at the height of COVID, I hate talking about it so much, but it's truly impacted the business.

- What about the world today?

- It is, and when you get into lending and risk modules, you know, it helps us if your credit score is good and you have a job, it's just two major things, but--

- So things never changed?

- But the credit score essentially remained the same in the fact that you need $600,000 to $620,000 at a bottom of the barrel, all the way up obviously do a $740,000, $780,000. And then obviously your credit rating--

- And as your credit rating goes higher, your rates get better.

- You're gonna get better terms, it just makes sense obviously. I won't get into the minutia that maybe we'll do another, one another show on the details with FHA and conforming and all that stuff. but overall, no, the credit score didn't change a little bit, some people got a little bit tighter in the height of it, we know really in the spring when the lockdown was happening and they just kind of went, ooh I don't know if I wanna lend money.

- We didn't know what was going on?

- No one knows and obviously banks don't wanna continue to put $300,000 and $400,000 and $500,000 out there, it makes sense, I mean, it was a little over`reaction, but that's banks, we have to be cautious because obviously if it goes out, they can't pull it back. But in regards to PMI, actually the PMI, I have to give credit to that industry, the PMI companies were great, they were helping people, they were still insuring loans, and again, for the layman out there, it's, you know, basically if you don't have 20%, and you need PMI, Private Mortgage Insurance to help you put maybe just that 5% or 10% down, or even a 3.5%, so PMI has been stable, their rates have remained steady, they basically just essentially piggybacked off of what Fannie Mae and Freddie Mac were doing with the policy changes on COVID a little bit, and then the last part of that was yeah, in the sense of a piggyback loan or a first and a second as we call it or an 80 10 10, actually closing one next week, and we haven't done a ton of them, but they have become a little bit more attractive, because again, don't want to go into a huge segue, but the jumbo market was affected by COVID ironically too, which is your higher end stuff, eight, nine, a million dollar loans, so--

- $800,000, $900,000 to--

- $800,000, $900,000 loans, that market is intact.

- 8 to 9 million loans are jumbo jumbos.

- Super, super, super jumbos, yeah, and that's a whole different category, but that million dollar mark, that jumbo that, you know, nonconforming as we called it was definitely impacted, ironically, it was kind of like the first time home buyer programs and the jumbo market was hit the hardest, that sweet spot was just kind of that Fannie Mae $300,000 to $400,000 market, so that was good, but overall, everyone remained committed to lending money and helping the American consumer, they just obviously had to factor in some of the risks with it.

- So here's my biggest question. I got a lot of big questions, but here's one that, you know, you talk about the future, right?

- So from your world and your banking world, a lot of homeowners still aren't paying their mortgage, they're getting COVID forbearance, right? And do you have a lot of tenants that aren't actually paying their rent, and they still can't even be evicted, and if people don't know, banks can't still even foreclose on properties, so we're going into a year, so we're pretty much at a year now where nobody, not a house has been foreclosed on, and you know, if there's been a tenant, they haven't been paying rent, which means if landlords not getting rent, they might not be able to pay their mortgage. So obviously if you had the crystal ball, you wouldn't be here today, but how does that affect us going forward?

- That's a loaded question.

- I told you, it's a big question.

- And I think you know the answer again, we've been friends for a long time, but I mean it's obviously a lot of good with that, right? the intention was to help people, and it's helped a ton of people. I think what you're getting at is when that kind of goes through the wash and the cycle, how does that play out? Because with every good intention, there's people that take advantage of that system, there's people that probably could have paid their mortgage that haven't, and then obviously the landlords and how they get to, so that, I can't answer that overall, I think your question is, do I think there's going to be some downside? I do.

- Because if there's a surge in foreclosures, it could increase your mortgage insurance rates. I mean there's the overwhelming surge of foreclosures could affect your home values, which again, I don't think we're going to see a surge, I know we're not going to see anything like 2008.

- I was just gonna say that, so the good part about it is I don't think it's gonna be massive in the fact that, you know, again, I was, you know, I'd like to think a young pup back in '08 when we were doing that, but people literally, I worked for a bigger bank at the time and people would come in literally into the branch, you know, like, what do I do? What do I do? What can I do in my mortgage? And, you know, forbearance and all this stuff, so that was kind of a pandemic of its own really in a weird way with financial crisis, and that was like, we said, that wasn't nichey, that was everyone, we were all in that lumped in together, and that was a whole different story, but my point is here, it's a little bit contained, I think now that we hopefully see an end to this meeting with the vaccine, yes, things are changing, but it's a short window, so to the point, I mean, just in a perfect example, I've had three or four clients, I probably had more, but three or four clients, even in the past couple of months that have called me and said, I panicked, I'm on forbearance, I took my three month option to kind of skip my mortgage payments, I've realized I'm okay, I wanna just make that whole and I wanna refinance, I'm back to work, or I never was out of work, I panicked.

- Can they refinance?

- Yeah, they're sure they can.

- Absolutely, so you can refinance--

- At first, we're weren't doing that, if it said forbearance, because again, everyone was just kind of overreacting.

- You just have to pay off the forbearance.

- You just have to come make it whole, you just have to be back on, and that was another rule, that again cooler heads prevailed, 'cause we weren't doing that, but it just was like, well, why are we not doing that? It was a service that was provided, it was a legal option given to the consumer, and now we're gonna to punish them, because they took advantage of it, you know, meanwhile--

- Meanwhile they had great credit history,

- They paid all the mortgage payments, they were offered something, they got nervous, they took it, and then now they've realized, okay, my husband's not losing his job, well, I'm not losing my job and we're okay. And I mean, I had one poor woman who went Christmas shopping in July because she was so nervous, of having, you know, gifts for kids because she was gonna lose her job or her husband's gonna, you know, and all that stuff is pervasive through the consumers, and, you know, you feel for them. So it's worked out, I think the overall thing is, will there'll be some trickle on the downside? Yes, when we kind of come out of that, there will be some foreclosures, there will be people who just, I hate to use the word swindle, but got misinformation from some of the other banks--

- Which there's a lot out there.

- They don't make their mortgage payments or they think they don't ever kind of have to make them mortgage payments, next thing you know, they're four months behind, their credit rating went down the Kabui so people watch your mortgage payments, always talk to your lender, nothing is for free in life, they're never trying to do you a favor, and I'm not saying that they're evil, but just be mindful of the payments, don't ignore it.

- They're a business.

- They're a business, and at the end of the day, if you miss a payment, that's the deal, right? It's very hard to go back and fix it.

- So if you're in forbearance, so there's a very big difference, if you're a forbearance right now, you can refinance, but if you miss a payment, if you're in forbearance, the forbearance ends and then you miss a payment, you're in tough waters.

- You're in tough waters but you're just like anyone else, if it was two years ago, when you had a mortgage late, it's very hard to get you, you know, can I get you with a student loan late? Can I get you with maybe one car loan late?

- So this is something people need to really be ahead of the curve on if they were kind of seeing it, you know, this is something you need to be proactive.

- Again, the forbearance stuff gets dangerous, because what we've also heard is that there's other banks saying, oh, well your first section of forbearance just ended, three months, do you want to do another three months? Almost like it's, you know, and I'm like, well, no I'm working, my credit's fine, I think everything's good, like, why would I want to do that? You know, and you might say, well, why would the bank do that? Well, they get to dump all those fees and those extras and those payments, through the end of the mortgage, and that starts to pile up, again I don't think that, they're twisting that mustache out there, but they are making it easy for the consume to make a wring decision.

- There's different types of decision, right? and that's my hope is that a lot of these banks and I know it's easier said than done because a bank doesn't necessarily own the loan, investors on the loan, and there is a lot of, I used to trade residential mortgage backed securities, I know there's a lot of behind the scenes stuff where it's like, hey, I can't just take these six payments and move them to your back, but--

- Luckily that's what they've been doing is taking the three months, no penalty and they're putting to the back.

- 'Cause that was the fear. You need to come up, on month four, you owe us the three, because originally before all this COVID stuff was you owe us three months plus the fourth month that we're just starting, and it's gotta be all lump one sum, and that was, to me that was just asking for a foreclosure or a surge.

- So you're cash poor, you're worried about paying your mortgage, but oh by the way you owe us nine grand, yeah, that's a good plan. It's just, again, it's Peter to pay Paul, so just be careful and that's my only advice, and I'm with all seriousness, it's just, you just don't wanna get caught with your proverbial finance you can't solve

- Well I had somebody who was in this aspect and they were relatively younger and they asked me about a reverse mortgage and I'm like, nope, oh please don't do that. You sign on the dotted line, you lose $35,000 or the equity right all the way.

- Especially in a market where we don't know, I'm like, you know, if your market's going--

- You're 55 years old, it is reverse mortgage,

- No, not the time--

- But it was just like, you're not ready, you're still working.

- But again, some people get the information. These things sound, they can sound pretty, you know, pretty if they're being pushed hard.

- Well that being said, I look forward to having these continued conversations, so to let everybody know, so your contact, how can people get ahold of you? And I think that, I mean, you seem to be pretty nice guy to me in the last 13 and 14 years, but I mean, if somebody in forbearance, or something like that, I mean, are they able to reach out and talk to you about that refinance?

- Even if they just wanted to chat and get some advice I'm happy to help. So it's Jason.Bonarrigo, B-O-N-A-R-R-I-G-O @RMSMortgage.com, that's my email, or you could hit me up on the web @RMSMortgage.com. My cell is 413-5038. I'm happy to happy to chat some folks.

- Great, I'm Jeff Chubb, my team, the Chubb Realty Group, we're brokered by eXp Realty should you ever have any questions in regards to the real estate market?--

- He's stuff.

- He's the finance guy, he's the money guy with the money truck, but if you have questions about the market, kind of how all this is affecting, maybe your home value or thinking about upgrading, upsizing, which right now, by the way is a great time to do it, because you can borrow the money for 30 years at 3%, 2.5%, 3%, two points, we'll just go 2.65%.

- Yes, I like it, official quote.

- Really, really, really, yeah for sure, really, really, really great time to do it, so you can always reach me at [email protected], visit our website at Boston 2, that's the number 2.com by the way, or you can call our number at 480-2600. So thanks for watching, we look forward to hearing from you should you have any questions then then great, and you know, we can talk about those on our next meeting, but otherwise, yeah, be well.