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.