'The VA CUT: Choice Service for Those Who Served"

[00:00:00] Speaker A: Sam. All right, ready to go, Jeff. [00:00:38] Speaker B: Keith, how are you, man? [00:00:41] Speaker A: Hey, Mortgage Me. We got a special guest today. Thank goodness my buddy Jeff was in town. So we're a little ill prepared like everything we do here. But we're going to drop some knowledge. We're going to have some fun. [00:00:51] Speaker B: Absolutely. [00:00:52] Speaker A: And in case you don't know, Mortgage Meat is marketing, education activities and tips for mortgage loan originators. But most importantly, your favorite steakhouse, Fleming's. [00:01:02] Speaker B: I mean, why wouldn't you go with Fleming's? [00:01:04] Speaker A: And you know what, they should start giving us some coupons because that's come up quite a few times. [00:01:08] Speaker B: I mean, there's Ruth Chris out there, but now you got to step it up to Fleming's. [00:01:12] Speaker A: Victoria Gardens around the corner. [00:01:13] Speaker B: There you go. [00:01:14] Speaker A: So what kind of cut are we. [00:01:15] Speaker B: Getting at Fleming's Ribeye? [00:01:17] Speaker A: You know, we were playing with names. [00:01:19] Speaker B: Or so inch and a half, thick, big one, Cooktown, medium rare. [00:01:26] Speaker A: Funny story, those of you that do know or may not know or we're going to tell you, we use chat GBT to come up with some, some show names to keep our theme. And one was called Red, White and Ribeye. And I said, well, that's pretty cool. [00:01:38] Speaker B: That works. [00:01:40] Speaker A: So you got a nice thick medium rare ribeye. What sides are we slamming down over it? [00:01:45] Speaker B: Just a simple baked potato and a side of, of broccoli. [00:01:50] Speaker A: Nice. Get some lobster back over there. [00:01:54] Speaker B: The baked potato. Just some butter. I don't like, you know that full blown. Throw all sorts of crap on your baked potato. Just don't a heavy salted baked potato. Slice it open, throw some, some butter down there, let it melt. [00:02:06] Speaker A: It's almost healthy. [00:02:07] Speaker B: Absolutely. Almost. [00:02:08] Speaker A: What, do you do it that way? Yeah. All right, well, again, thanks for joining us. And Fleming's is probably winning the review so far that in Keith's house, those are the most famous two we got. [00:02:21] Speaker B: Keith's house. Yeah. [00:02:23] Speaker A: So basically today we're going to talk about the VA Cut choice service for those who served. You know, if you're not doing VA loans today, you're definitely missing out an opportunity to grow your business and you're definitely missing out on serving those that have served us and allow us to have businesses. [00:02:39] Speaker B: Absolutely. [00:02:41] Speaker A: Introduction. In case you don't know, Jeff is a retired army major and here it is military May at the time of recording this. Thank you for your service. Thank you for joining us. He's also a retired loan guarantee officer. Those of you here in our region, the loan center that we deal with is in Arizona. This guy Knows many, many people there. He was there. He's also the vice president of VA Lending with three major companies over the years, which we actually started together one years ago. That's how we met. Also extremely involved with the national association of Mortgage Brokers. Currently he's education and counselor on VA Lending. And so if you're looking for any certification, definitely want to talk to him. He's also a VA consultant and expert on these matters, which actually we work together in our business as well. [00:03:32] Speaker B: Yeah. [00:03:32] Speaker A: If you need to get ahold of Jeff, in case we forget later, you can reach out to jeffousing educators.com and Jeff, what phone number they want to reach you? [00:03:42] Speaker B: 615-293-2775. [00:03:45] Speaker A: All right, cool. So into the meat and potatoes of the day. So, you know, I was going to ask you, I mean, we've been doing this a lot. I'm going to spend a lot of time with VA Rep, reaching out to, you know, advocacy veterans. Why is it you, you speak to a lot of people. What do you think is the number one reason that loan officers don't embrace VA financing and learning about it to share with their clients? [00:04:11] Speaker B: Really, Keith, it's all about education. It really is. And, and that's why I have that VA Housing educators and consulting, because it's, it all boils down to education. Most los, they, they got the meat and potatoes, they can do a Fannie and Freddie loan. Right. Somebody taught them that. Right? Somebody taught them this FHA stuff. They kind of know the FHA stuff. And then all of a sudden they just, somebody didn't know anything about VA lending and so they never taught them. I remember back in 1988, when I started in the mortgage industry, I, I. [00:04:41] Speaker A: Was just here for my grammar school. [00:04:45] Speaker B: Oh, 1980 sucked too, for mortgage Complex. Oh, my God. I mean, rates were. [00:04:52] Speaker A: What were rates? [00:04:52] Speaker B: Double digits, 11 12%. [00:04:55] Speaker A: So don't complain, guys, about today's rates. [00:04:57] Speaker B: 11 12% back then. And that was coming down off of the 17, 18, 19% rates. But, you know, if in 1988, my branch manager, when I got off active duty and I started with this thing, my branch manager says, you're a veteran. Start learning VA loans. Well, how. Here he hands me this book. I still have it to this day. VA lending. And that was pretty much it. [00:05:23] Speaker A: And who was the author? That was, I don't even remember. [00:05:26] Speaker B: It wasn't va. It was just some guy who decided to write a book about the landing. And surprisingly, it was actually fairly decent. I'm not gonna, you Know, plug the book in all these days, because that's what I do now, but, you know. [00:05:39] Speaker A: Plug your book later. [00:05:40] Speaker B: Yeah, but it's in. It's in. You know, so I'm working on it. But the, the point being, I had to learn VA lending. The very first loan I did was a VA loan. And like, lots of new LOS out there, I'm thinking, oh, great, I'm going to go out and sell VA loans. I know this product. I've learned it, and I go out and I talk. [00:06:01] Speaker A: I read a book by an unknown author, which wasn't by the VA Loan center or the guarantee department. [00:06:07] Speaker B: Absolutely. But it was actually very well written and it taught me. And I actually ended up knowing more than the damn underwriters. I mean, I could not believe underwriters didn't understand this program. Here I am, a brand new loan officer. I know this. And then Realtors, Realtors didn't understand the VA home loan program. Oh, we don't want to deal with that. VA home loan program. I got to go with that. Because back in those days, VA handled all the underwriting and most of the underwriting, and you still had to send stuff into them, even though your, your company underwriter may have underwritten the loan. [00:06:38] Speaker A: Yeah. [00:06:38] Speaker B: So it was a real pain. Right? So it was slow. [00:06:41] Speaker A: Well, I think a big part of it is there's this legacy of problems with VA loans. It's so old that literally the whole time I've been, the business really probably hasn't been a problem. But you had the real estate agent, maybe that was in the office, but been there a long, long time. New Realtor came in. Oh, va, you don't want to do it because they had a bad experience. I think that's part of what we want to clear today. [00:07:05] Speaker B: And we get to that because you get Realtors today who still don't know VA loans or they've heard that VA loans are a problem. They've gotten all sorts of problems. They got underwriting problems. They could take too long. They don't close. They veterans obviously don't have it, have any income because they don't have to put anything down. And even the worst one is the appraisals always come in low. [00:07:25] Speaker A: And because these appraisers, they only do VA loan, they don't know how to do anything else. [00:07:31] Speaker B: And it's such a fallacy. But then you start thinking back, well, where did they learn their stuff? Well, they learned their stuff from, from, from realtors who were in the early 2000s when nobody was doing VA loans. And so they just didn't know. Oh, you don't want to go there. And where'd they learn it from? From the realtors in the 90s. And where'd they learn it from? They learned it from the realtors in the 80s who really actually probably had something to complain about. Probably was a valid complaint, but they kept teaching this. Who's teaching you this? Who's teaching you this? And it's just this rolling negativism about the VA home loan program that you and I both know is absolutely false. There's not a single one of those that's true today. [00:08:08] Speaker A: Well, I'll tell you that one thing, too, is you mentioned that. Oh, the vlo, they don't have any money. I can tell you what's the best jumbo loan out there. [00:08:15] Speaker B: Va. Yeah. [00:08:17] Speaker A: You know, if someone's. There's hate to say that they're disabled, but if they have a service disability and they have no funding fee, good luck. [00:08:24] Speaker B: Yeah. There are $5 million plus VA loans out there. [00:08:27] Speaker A: Yeah. [00:08:27] Speaker B: There's at least two that I know of, and I haven't asked VA recently, but I know there's one in Hawaiian and one over in the Hamptons. Vietnam, $5 million. [00:08:36] Speaker A: Well, you know, there's folks, there's a gentleman that I know that is a doctor actually, on the hospital, but you know where he started his army doctor. [00:08:43] Speaker B: Yeah. [00:08:44] Speaker A: So anyways, so, you know, there's fallacies that have been passed down generationally. Kind of like the old stories of, you know, any folklore. Right. So what's the story today? [00:08:57] Speaker B: The story today, really, it hasn't changed much. It's all about the educational part of it, because you get realtors out there who have consistently had been told these bad things, wrong things, unimportant things, veterans, you know, just aren't good buyers. You have LOS who are working in companies that really don't know or understand or focus on VA lending. And so, as a result, they've never sat down and really looked at the program and learned it. On the contrary, you and I both know LOS who do almost nothing but VA loans. [00:09:32] Speaker A: Sure. [00:09:33] Speaker B: And they are making so much money, so much faster, so much easier than working on those same guys that are doing the FHA loans, because guess what? That's what they know. So they're fighting over these $250,000 loans. We're on the other side of it. The VA guy is getting 350, 400,000, $500,000 loans, and he's got way less work to do than the FHA guy getting a $250,000 loan portfolio. [00:09:57] Speaker A: You know, I can't remember the year this you'll know better than me because I never verify anything here mortgage me, but you actually will know the answer. A few years back, I believe it was with the Blue Water bill or something where they removed the limit. [00:10:11] Speaker B: Yeah, I wrote that. [00:10:12] Speaker A: Oh, well, that's a good point. Maybe you're familiar with it. [00:10:15] Speaker B: Yeah. [00:10:15] Speaker A: But, you know, here was the thing. It used to be okay, if I'm in, you know, San Bernardino county and back then the limit loan was $415,000. Then I could get a certain percentage of $415,000, but went over it. I need to bring some money in. What changed with your bill? [00:10:29] Speaker B: Well, you know, just, I don't, I don't really mean to pat my back. I wrote, I drafted, obviously Congress changed a few words, created some other paragraphs in it, but I drafted it originally because it was going to go and really emasculate the poll program. And we found out about it in 2018, changed it and so then it became the Veterans act in 2019 and became effective January 1, 2020. So the bottom line, what changed on that was we took away the limit for the guarantee. There used to always be a guarantee limit. VA loans have never had a dollar amount limit. You could get a VA loan as much as you wanted, but you had to put a down payment to make the difference between the, that's what I remember when I started. Yeah. And the purchase price or the loan amount. So there was always that, that, that gap. And what you ended up having is you get these higher ranking officers, higher ranking NCOs, and they're like, well, I don't need the VA loan because you know I'm going to have to put a down payment down anyway. So why don't I just get a conventional loan? And, and they weren't using the VA loan program and it was unfair to them because it doesn't matter what, whether you're got a star on your collar or you have a specialist insignia on your shoulder, you're all green. Everybody has the uniform. It might just be a little different. The difference is where's your decimal point? Right. And so we were finding when I worked at VA that there weren't senior officers getting a VA loan. [00:12:01] Speaker A: And let me just key on that. You know, most people learn from people around them. So if your senior officer hasn't taken advantage of this benefit, what is the likelihood of those in their command and below them to accept you, they wouldn't see the value. [00:12:17] Speaker B: No, they're not. [00:12:18] Speaker A: Huge value, huge opportunity on them. [00:12:20] Speaker B: And the other big problem is that, you know, something you never hear when you're in the military, you might be out at the firing range and you're not hearing your drill sergeant saying, hey, when we get done shooting here, we're going to go back to the barracks and. And I'm going to teach you about your VA home loan benefit. No, you don't. [00:12:35] Speaker A: Probably didn't come out. [00:12:36] Speaker B: No, never comes up. So these poor guys go through their whole career, you know, Y' all heard of the, you know, the, the, the coffee cup lawyers who are telling folks about how they can, you know, get through this and get through that? Well, it's the same thing with their mortgages. [00:12:54] Speaker A: Yeah. [00:12:55] Speaker B: If you're not teaching them about their VA benefit, who's teaching them? Well, people who really don't know it. They just. Somebody got a VA loan, maybe, or somebody got, hey, I got this great FHA loan from this guy. Let's go get a va. An FHA loan for this for you. No, get the VA loan. [00:13:12] Speaker A: I think that's one of the things, too, is that, you know, I mean, I'm sure many realtors and loan officers that enjoy our fun times here on the podcast are going to resonate with. Everybody's an expert at the place of work the minute someone fills out a loan application with you. [00:13:29] Speaker B: Right? [00:13:29] Speaker A: Hey. Oh, yeah. Hey, I'm buying a house. Oh, dude, gotta use my cousin. [00:13:33] Speaker B: Oh. [00:13:33] Speaker A: Oh, man. Yeah. Oh, you. [00:13:35] Speaker B: Oh, what. [00:13:35] Speaker A: What rate did they quote you didn't ask your credit score didn't ask that you had a bankruptcy. It was my favorite one. I was like, well, what rate they give you? Oh, seven and a quarter. Oh, I got six and a half years ago. Call my guy. Did your guy know that you had a bankruptcy two years ago or that your credit scores.604 might make a difference? [00:13:53] Speaker B: Big. Yeah, Big difference. [00:13:55] Speaker A: Which, by the way, what is the lowest credit score on a VA loan? [00:14:00] Speaker B: They don't have one. [00:14:01] Speaker A: Oh, that's right. [00:14:02] Speaker B: VA doesn't underwrite to credit scores. VA underwrites to actual credit review. Yeah, that's the sad part. [00:14:09] Speaker A: Well, I say the thing is there are lenders that then will have some overlays. We do need the lenders that. To do the loans, but I know many, many lenders are going, you know, 580s or maybe a little lower. So. And when you look at conventional financing, let's say, on average, needing 620 plus where I think almost any lender I know out there is at 580, you know, ish mark, that's, that's a big opportunity in its own. [00:14:32] Speaker B: Yeah, it is. [00:14:32] Speaker A: 40, 40 points. [00:14:33] Speaker B: There's a 40 bit or a 40 point difference. And, and quite. We're thinking about, thinking about it's a 40 point difference. And you know that, that 40 points can make all the difference in the world sometimes. But I have seen some pretty darn decent 590 credit scores that I do that loan long before I do somebody at 620. [00:14:52] Speaker A: 640, yeah. Just depending what's on the file. [00:14:54] Speaker B: I had one the other day. I mean, I kid you not, the Guy had a592.592 credit score. He had one thing wrong with his credit. He had two credit cards, both were zero balanced. And he had a bankruptcy five and a half years ago. But because he only had two lines of credit weren't being used, he learned no utilization. No utilization and a really old bankruptcy that obviously he clearly got past all of that. Yeah, he got this crap credit score. So guess what? He got a crap rate. So unfair for a guy who basically since that bankruptcy, he learned he's got perfect credit. [00:15:36] Speaker A: He's not using credit. [00:15:37] Speaker B: He's not using too much of it. Well, he uses it occasionally. He'll, you know, he'll, he'll put some money on the credit card and he pays it back off again. It's, it's got some utilization, but he's got an average credit debt on that of like $300. [00:15:51] Speaker A: Yeah. [00:15:51] Speaker B: And so he's, he's basically getting screwed over from a price. Because how do, why do we really need a credit score so that optimal blue will give us a price? I mean really not. [00:16:02] Speaker A: No endorsement, by the way. [00:16:03] Speaker B: No endorsement. But it's so that we get a price. Seriously. Because an individual credit score is meaningless, really, from VA standpoint. [00:16:13] Speaker A: Yeah. Well, you know, here's the thing. Back in the day, you know, they didn't have credit reports. But here's the cool thing about today. We have automated underwriting systems which do rely someone on scores. But that's another flip side here. I mean, what have you seen in back end ratios on VA loans? [00:16:30] Speaker B: Oh, I've seen back end ratios on VA that run all the way up to 70. [00:16:34] Speaker A: Which is crazy. [00:16:34] Speaker B: Which is crazy. But you got to look at where the residual income is. The last one I saw that was 70, this dude had a residual income of $6,500 a month. [00:16:45] Speaker A: Well, here's the thing, in case you guys don't know what Jeff's talking about is if you made $10,000 a month and your bills were six, you got 4,000 left in residual income. Now the issue is typically the lower loan amount at a high residual because not that much income. Right. Usually the ones with these high residuals are the million or $2 million loan. [00:17:06] Speaker B: Oh absolutely. [00:17:07] Speaker A: Yeah. [00:17:07] Speaker B: I see 10 times more loans that are above $600,000 loan with the borrower making above 150, sitting with a 55 to 70% DTI. [00:17:20] Speaker A: Yeah. [00:17:21] Speaker B: Than I do the guy who's barely scraping it together to get a $250,000 loan and he's making about 48 to 50,000. [00:17:29] Speaker A: Your little takeaway on that is if you have a high ratio borrower and you know the ratios are going to be, you know, 60 or north, make sure. Well not make sure, but the likelihood of that getting approved is going to be on the higher loan amounts, not the lower ones. It's going to come down to the residual income. [00:17:45] Speaker B: It is. And that's one of the things I always teach people when they're, when they're trying to get their loan process together, when they're trying to do their pre quals, don't just go in and go oh well, he's got a 645 credit score, he's got a 42% DTI and he's got great W2 income. Well, did you actually look at the fact that he's got three kids and did you do the math on that? Did you actually pull and look at his credit to see how much he's got outstanding? Did you actually then recalculate his actual real live VA DTI back end ratio? VA doesn't, VA doesn't have a front end ratio. They've got one ratio and that's your back end ratio. I have seen more deals fall apart, Keith, because the LO didn't take into account child care, didn't take into account the fact that the guy's, you know, pushing the limit on DTI when he didn't see that because he didn't pull that. [00:18:47] Speaker A: And the part of that too is there's calculations based on the cost of maintaining the home. Right. That goes exactly. Yeah. You got a 9,000 square foot house in the middle of nowhere, wasn't real expensive, but your cost of maintenance is really high. [00:19:00] Speaker B: Prime example. I was looking at a loan that had the borrower wanted a 2,000 square foot house, but he was buying in Oklahoma. He thought he'd be spending about 450, which was putting him right at about 50% DTI in Oklahoma. That 450 was buying him a 4,000 square foot house. His housing went from 14 cents on 2,000 square feet or roughly 300 plus dollars. All of a sudden he's at $700 a month residual income. Oh, and then on top of it, he didn't actually say or find out until too late that he was buying a house in a subdivision that had a $450 a month HOA. That guy went from his close to 50% DTI. He bounced all the way to 68%. So that was a. That was a zero. No, not getting it. [00:20:00] Speaker A: Recapping so far. Higher dti. More credit scores. [00:20:05] Speaker B: Right. [00:20:06] Speaker A: Great jumbo loan. The myths of legends past sharing down. Why you shouldn't do a VA loan. Where do you see if you were to start today you were a new loan officer. Right. Where would you go to connect with veterans and maybe market to veterans? What would be a tip that maybe people could use in that arena? [00:20:30] Speaker B: I think one of the biggest things. [00:20:31] Speaker A: That Reenlist for four years. [00:20:34] Speaker B: Yeah. Re enlist for four years. One of the biggest things that new LOS try to figure out is how do I get to talk to all these realtors? How can I get Realtor partners to help me, you know, bring me their loans, give me your loan. And let's be. Let's face it, every Realtor out there who's doing at least one transaction a month is getting hammered by every ello in the freaking area. Everyone. They want that Realtor because they're get 10 or 12 loans a year potentially. Right. And they want five of those because if they can do that, they're millionaires. The problem is is that everybody's trying to get to them. [00:21:15] Speaker A: Quick note, that's in their mind. They're millionaires. Mathematically. That math would have added but from. [00:21:21] Speaker B: What they've been used to. So when you actually look at the process, you don't want to talk to the realtors. I mean, yes, eventually you will build those relationships with those realtors. You want to find out how you can get in front of the veteran. Yeah, because you want the veteran before they've gotten to the Realtor. Because if you get the veteran or if you're trying to get the veteran after they've already got to a Realtor, that Realtor's already given them their favorite lo. You've got to go out and try and get to the veteran before they get to the Realtor. So you've got to be out hustling some. Some seminars. You got to be out marketing yourself in, you know, the military magazines. You got to be out marketing yourself to. I've even seen guys put their faces and names up on a billboard outside of a military base, and all of a sudden they're getting phone calls. You know, those are phone calls from people who are actually looking to buy a house. [00:22:16] Speaker A: Well, here's the point, too, from what I've seen, which obviously you've done in your business as well. Lead with value, lead with education. If you, if you go into this, and I was talking to, I think, Tim Kale a couple weeks ago, we had another podcast and he was talking about, you know, if you're leading, I'm going to mix up what he said. Left foot back. Bottom line is, if you're only thinking about the money you've already lost. Right. If you're thinking about how you can serve and help somebody, you're going to win and that's going to come through. And then that person, when you refer them to a realtor, who, you know is going to take care of the veteran, not just because they're a successful Realtor. [00:22:56] Speaker B: Right. [00:22:56] Speaker A: But because maybe they're a veteran themselves or, you know, they've experienced that. Now this relationship in the circle begins. [00:23:02] Speaker B: That's where you start building the relationship with the realtor. Because if you can bring up, if you can get that veteran and get them pre qual, and you're like, okay, eeny, meeny, miny, moe, which realtor do I want you to know? And you find that relationship. That realtor now all of a sudden is your best buddy because you just made them a few thousand dollars on their next transaction that they didn't have to go out and fight for. [00:23:27] Speaker A: Yeah. [00:23:28] Speaker B: And realtors, it's difficult for us as los to sometimes get the deal ahead of time. [00:23:34] Speaker A: Sure. [00:23:35] Speaker B: And then refer to the realtor. And you talk to realtors out there and ask them, when was the last time an ELO gave you a referral? Most of them will say, I'm still waiting. [00:23:45] Speaker A: Probably not very often. You know, and that's, I think, just in all fairness. Right. It should be reciprocated. Right. You come in. I almost. I won't. I've been in this industry a long time. I've worked in different aspects of it. Sometimes we go to offices and we'd go knock in the office and we'd go in there and it's like we were panhandling for Deals I did. Right? Yeah. You know what I mean? And then it was like, well, what if I could come in with value a little bit first and earn the right to be your partner? [00:24:14] Speaker B: Exactly. [00:24:15] Speaker A: Not look for something. And I'll tell you now, 28 years later, we're still trying to lead by value. You're speaking to some friends of ours tomorrow. [00:24:21] Speaker B: Right, Exactly. Because what you see happening then is, is that if you can go into the agent's office and say, hey, this is my background. This is what I want to do. I want to do it for you guys. I want to give you a presentation, if you're going. And you've already made the relationship with that one agent. And that agent says, well, this guy got this VA loan done for me. Yeah, he knows what he's talking about, hopefully. And you just didn't stumble across it. [00:24:46] Speaker A: And actually got lucky on that one. [00:24:48] Speaker B: Got lucky on that one, though. So if you can, then go back to that real estate office and say, hey, why don't I teach all of you about how this VA loan works and have the seminar set up in the. In the realtor's office. Well, now, okay, you don't go in and ask for all their business. You just go and ask for that one VA loan that they've got coming through the door. Because, let's face it, VA loans are still only, you know, somewhere between 15 and 20% of the market, right? [00:25:14] Speaker A: Yeah. [00:25:14] Speaker B: So two out of every 20 out of every hundred, right? Maybe 15 somewhere in there. So if you've got an office with 100 realtors in it, which is a big, obvious office, there might be two loans in there. [00:25:27] Speaker A: Well, I think one of the things we're touching on. I was just checking on my notes too. So the outreach one on ones educating, these are the places that you will develop these relationships. And if you can do the training for veterans. And one of the things, you know, we were involved with VA Rep for a long time. Great, Loved, loved working with the veterans association. Real estate professionals. Go to their events, support them. One of the things that we noticed was that people used to deter borrowers from getting a VA home loan. And they'd be crazy. Right? [00:26:00] Speaker B: They still do. [00:26:00] Speaker A: They still do. [00:26:01] Speaker B: Right. [00:26:01] Speaker A: But I would sit on the soapbox, like, look, let them decide if you offer it to the veteran and they don't want it. Wonderful. But at least offered if we've identified them. Right. So I think the part is the educating the consumer and, and letting them know about their benefit is where a lot of this starts. Get that advice out there. One of the things, I guess where my brain was going with the Europe thing was we were talking about how much financial literacy education, which I know is something that Sondland working on for years. How much financial literacy training did you get when you stepped out? [00:26:39] Speaker B: When I was in service, yeah. I was in service for 21 years. Not once did anybody give me any financial literacy. [00:26:46] Speaker A: 21 years. [00:26:47] Speaker B: 21 years in the military. [00:26:48] Speaker A: Hit the bricks. Thank you. [00:26:50] Speaker B: Yep. Good. Now, I will tell you, that's changed a little bit today. I think it was six, eight years ago, Congress wrote a law that said that the services, the five, now six services, DoD must begin a program of financial literacy for military members, which is huge. Huge. So they're teaching them how to balance a dang checkbook. Because let's face it, a lot of these young studs coming into the military, they don't know anything about how to balance a checkbook. You know, they barely got a checkbook. You know, dad set them up with a bank account. You know, on their way out the door, said, here, kid, you know, goodbye, 30. This is where your checks got to go. Because the army wants direct deposit, your check, right. And they. They really don't know how to balance a checking account, much less how to manage a credit card. And with today's service, you know, these guys got to maintain a clear security clearance. Everybody in the military has to have at least a nac, which is the lowest level security clearance you can get, or invest background investigation you can get. But if they fail in their financial field and end up with poor credit, that becomes a method for somebody to manipulate and potentially turn them into somebody who they can get data from or information from. And so the military basically says, if you can't keep a clear credit, we don't need you because you become a liability. And so today's guys are forced to maintain a higher credit standard. They're forced to maintain better financial security, which is why VA loans, by the way, have. Have an average credit score of around 720. [00:28:35] Speaker A: Because one of the myths debunked, you. [00:28:37] Speaker B: Have bad credit, no money, no bad credit, no money. Guess what? They have more money in the bank than people ever realize. Because, let's face it, on a VA loan, you don't have to provide all the bank statements you don't have. All you got to do is show what you're going to do for maybe your closing costs if you have them. And so, bottom line, you're not getting all their bank accounts because they don't have to come up with large down payments. And quite frankly, the vast majority of them have this thing called TSP that they're putting money into every month. They have, they have savings accounts that you don't ever see many of them. You take the average E6, E7 who's been in the military now for 12 years, they've probably got 50, $60,000 sitting in the TSP account because every month they're pumping money in there and every month Department of Defense is matching that up to 5%. Who wouldn't put 5% of their income into there? What's 5% on their, you know, few thousand dollars a month that they're making? It's not much. [00:29:37] Speaker A: The one thing that they're not doing, to my knowledge, is giving them the kind of education that a loan officer could when it comes to find the right house, understanding the different loan programs. And like we said, the VA loan may not be for everyone. There are funding fees that maybe if you are putting 20% down, wouldn't make sense, but. [00:29:55] Speaker B: Right. [00:29:55] Speaker A: But let the vet choose is there. [00:29:57] Speaker B: And, and the ones that are putting 20% down, those are usually the ones that have been out of the military for several years. They're in a really good occupation, they've got great money and, and they're like, well, maybe put 20% down and, and then I break their bubble and I show them what that 20% down, saving them in their mortgage payment. Are you kidding me? No. That's all you're going to save? Okay, I'm going zero down. I'm going to keep that money because mom's going to want a new, you know, kitchen and probably, you know, some window coverings. And let's face it, that carpet was kind of worn out. We'll get new carpet too. [00:30:32] Speaker A: Well, that's one of the things that even, you know, we've talked about down payment assistance programs in general. Right. They aren't for people that don't have any. I mean, they're not only for field time. Well, I mean, maybe you're buying the house and you want to do some upgrades, right? You know, I don't know. Every time I bought a house, even when I was blessed years ago, before the collapse to buy a brand new house, I still was at Home Depot buying stuff every weekend. Like I thought it was a brand new house. What do you got to buy? No, you got to get paid. So yeah, there's always something. Let me ask you this. How do you think overall the industry could do a better job helping Those who serve. What do you think that we could share with industry? Okay, what's one thing, one, what's one thing that we, we could do as an industry to better serve veterans today? [00:31:18] Speaker B: I think. [00:31:19] Speaker A: Rephrased question. [00:31:20] Speaker B: Rephrased question. I think the biggest thing we could do in both the mortgage industry and the real estate side is do man mandated specific classes that have been vetted by VA on VA lending. VA is not really in the market right now to teach. They want to get there. Their goal is to be able to start providing training to the industry. They're just not there yet. Which means we have to do that, we have to teach that. And so one of the biggest things that I've seen, and I have to say this, my wife's a Realtor. She's actually licensed as a Realtor and broker. She doesn't get anything in her training, her 60 hours of training that are required about VA lending or VA loans. [00:32:10] Speaker A: So you're saying, you're suggesting, if I'm. [00:32:12] Speaker B: Reading through it, our NMLS classes. [00:32:14] Speaker A: Yeah, Class. Or for the DRE continuing education. Where's the VA module? [00:32:18] Speaker B: Where's the VA modules? [00:32:20] Speaker A: Where do they actually question, guys, where is the VA module for continuing education on VA landing? That doesn't seem that hard. [00:32:28] Speaker B: It's not that hard. But who does continuing education for real estate? The 50 different states, because they all have their own requirements. And nar. Not to say bad about nar, but nar. I'm serious, you need to step up your game on requiring a VA module. Yes, they have a left an elective VA module, but that's not required. And so as a result, if you get an agent who is not interested in veterans or veteran lending, they're not taking that class. The MRP is not being done. [00:33:04] Speaker A: You know, it's funny because I know that there are some changes to the VA loan application a few years ago. Really strong, right? As in have you served? [00:33:13] Speaker B: Yes. [00:33:13] Speaker A: Right. Really awesome change. [00:33:16] Speaker B: Now, I'm very critical of that. [00:33:18] Speaker A: Just tell you now, I will tell you if the next step I believe and not like anybody wants new forms, regulations and lending. But you know, if you offer someone an FHA home loan, you're required to show them a conventional loan side by side. And I know there's talks about this. I don't know where it's fallen at this point. I'm sure you know where I'm going. But if we're offering someone a VA home loan. [00:33:43] Speaker B: Yeah. [00:33:44] Speaker A: Or more to the contrary. My point is if they've been identified as A veteran and you're giving them an fhe, or conventional home loan, you should be required to show them the VA home loan. Just required. And if you're not a LO who is authorized to do VA loans or doesn't have the experience, you might not be the best person to help that veteran. [00:34:06] Speaker B: Sad to say. Right. [00:34:07] Speaker A: But if they incorporated the VA certifications and trainings with the nmls, then I think all the LOS would at least have some experience. Yeah. [00:34:17] Speaker B: And, you know, and to belabor that point just a little bit, originally when that change in the 1003 was coming out, the VA question was supposed to be up in the very beginning of the application in the demographics information. And somebody took it out of that, put it in section seven, which technically is after the signature and really isn't an obligated fill. You're not obligated to fill out section seven of the. Of the 1,300. And so when the veteran gets down to that and they check the box, yeah, I've served. And that's a huge problem because they took it out of section one, dropped it in section seven. And we fought that tooth and nail at namm. I mean, at VA Rep, we fought that tooth and nail. And then once we get down to the point now of, okay, it's down there, there's that issue of, well, if. If you do an fha, as you said, you got to show them what a conventional loan might look. [00:35:18] Speaker A: Yeah. [00:35:20] Speaker B: But how hard is it to, oh, this guy served as. This guy served in the military. Okay. We have the disclosure now we had a third column says here's what the VA loan would cost you. [00:35:31] Speaker A: Yeah. [00:35:32] Speaker B: And. And the problem you get at is somebody, we won't say who didn't want to do that. And the. What we found out through a couple of organizations I belong to is that they didn't want to do it because they don't offer VA lending, and they have a very big standing in the industry. So they didn't want to do VA lending or they don't do VA lending. So that causes them to advertise something that they don't know how to do or don't want to do. And all of a sudden they find out that that VA loan is going to cost their borrower less. I don't want them to see that because I don't do that loan. That's really horrible. So that was in a bill and got yanked out. [00:36:16] Speaker A: I think that the bottom line is the one thing that we can do is talk to people every day Every day, talk to loan officers, talk to realtors, share what we can. You share what you learned. [00:36:29] Speaker B: If you happen to have a friend who happens to be a congressperson or. [00:36:33] Speaker A: A senator, wouldn't be bad. [00:36:35] Speaker B: Discuss that with them. Say, hey, this wouldn't hurt if we got a veteran to actually have a disclosure when somebody's pointing them down a different path that might cost them more money. I have yet to see an FHA loan that cost a veteran more money or less money than a VA loan. And there are so few conventional loans. I mean, to get to a conventional loan that's less expensive to a VA, you've got to go to a 15 year mortgage. [00:37:03] Speaker A: But you know, the one with 20 down. One thing too, I want to highlight that I don't think people see as a reality. Right. I not a political person. Not like when I, when I grew up. No, not, that's the point. But when I first got introduced to being able to go to Washington D.C. we could go, yeah. And we could talk to people. [00:37:29] Speaker B: You could stand up in front of senators and congressmen and these are the. [00:37:34] Speaker A: People that we're in their districts and they represent us and they'll actually take the time and list us. I encourage you. I've been seven times to dc, multiple times, the state of California, to Sacramento. If you have never gone, you owe it to yourself and you owe it to your country, you owe it to the veterans to go and at least visit D.C. and meet with your son. [00:37:57] Speaker B: And let's think about this. So I'm a, I work with, with VA Rep. I also work with namm, our, you know, parent company, if you will. So NAMM really is for brokers. Right. The thing about NAMM is that they're very much into lobbying Congress just as VA Rep. NAMM goes in and every year they go on their, their Hill conference. And I just spent just a month, month or so ago, yeah. In Washington lobbying Congress on a couple of nam's bills. One of them is trigger leads. Folks, y' all hate trigger leads, except those who are actually getting the leads. [00:38:38] Speaker A: But the ones buying the trigger leads. [00:38:41] Speaker B: Don'T seem to hate to hate them. The rest of us hate them because here you go as soon as you pull a credit report. And I've literally had people on the phone phone, pulled the credit report, talking to them on the credit report and their phone's ringing, somebody else is trying to sell them a new loan. And so last fall, it was in the bill, it was in the budget bill. And at the last minute, some congressman and he actually was a sponsor on the bill. He yanked it out because, and not to be political, but they wanted a clean funding bill for, for, for the, for the government. They didn't want all the add ons, you know, because the funding bill ended up close to 6,000 pages with all the crap on it. They dropped it down less than a thousand pages. When it got right down to it, I think it was only a couple hundred pages of funding. Right. And they left everything else out and they took out the trigger leads bill. Well, it's going back in. It has new sponsors. [00:39:37] Speaker A: You know, the build number we could share offhand, we could be posting the comments. [00:39:41] Speaker B: Got it in an email. I can probably posted later. So if you know your congressman, if you know your senators, lobby them, tell them, look, this is a good thing. Let's get this done. [00:39:51] Speaker A: Well, I'll tell you some of the, the advertising too, I know was, has been insane. The advertising that, that veterans would get. Right. Looks like it's from va. Yeah. And it's like, yes, hey, where it's important you respond today about your VA home loan and that. Where are we at with that, the advertising? Because I know last time I was in D.C. we had some conversations and there's been a pretty heated topic. [00:40:21] Speaker B: There's a lot of issues with UDAP right now. Most good sized lenders now are starting. [00:40:28] Speaker A: To fear UDAP because what's the, what is the acronym? Unfair deceptive advertising. [00:40:36] Speaker B: Yeah. And so you basically. [00:40:39] Speaker A: If you're sending. [00:40:40] Speaker B: Yeah. [00:40:41] Speaker A: To try to trick somebody. [00:40:42] Speaker B: Exactly. [00:40:42] Speaker A: You probably shouldn't do it. [00:40:43] Speaker B: And, and you're, you're. Get it, you're gonna, if you're not doing things following 10. 26.24. 1024.26. You know, A, B and C, those first three paragraphs. Folks, get this, look it up. 1024 or. Yeah. 10. 24.26. A, B and C. And I gotta check my brain. It might be 10.26.24, but it's one of those. Right. A, B and C, those cover advertising requirements. You know, A, I think is about providing contents, providing an advertisement to an app, to a loan you couldn't possibly get. Number two for B is something about. Oh, font size. [00:41:30] Speaker A: Oh yeah, that's a good one. Is it like, hey, this rate. [00:41:33] Speaker B: That's right. [00:41:33] Speaker A: If you do this. [00:41:35] Speaker B: Yeah. At the bottom. And then C is all about APR or trigger. Trigger words. And if you're not following A, B and C, you're at a minimum. At a minimum, you're subject to some serious utap, UDAT violations and FTC and cfpb. And if you're with a bank, fdic, every one of those, those agencies is starting to really come after people for udap. And these are expensive fines. These aren't fines. Well, oh, you sent out an ad to, you know, all these people and we're gonna hammer you for, you know, a thousand dollars. No, it's like $10,000 per ad. [00:42:13] Speaker A: Yeah, I think I saw something. Yeah, it's like, like if you sent a thousand letters, it's like for every letter, for every. [00:42:19] Speaker B: Even if they didn't, every letter you sent. It's not every letter that you, that you got a response on or that that was, it's every letter you sent. And there are some states, you know, you. Washington is a huge one. Nothing wrong with Washington, it's a great state. But they have one of the most ruthless oversight committee. [00:42:40] Speaker A: We love Washington oversight. Beautiful. [00:42:43] Speaker B: But man, I'll tell you, we're not picking on you. They're their actual oversight group in the state is ruthless and they should be. I mean, let's face it, if you're out telling somebody, I'm going to give you a 5%. And I'm telling you this because I saw one of these recently. Somebody showed me one. Oh, we can get you a 5% earl on your $700,000 loan. And, and even though we're not affiliated with your current servicer and we're not affiliated with va, well, obviously the very first lead off, it was in like 14 font and down at the bottom it said this is an example of a 5% 30 year mortgage. What's it missing? Number one, they're offering a 5% loan. There's no way in heck somebody's getting a 5% loan today without paying. In this case, I did the math, this would have been like a $45,000 buy down. Seriously, if you can even get pricing on that, that's like a 45,000 buy down. And then on top of that, when I did the math, it won't recoup. Yeah, it, I mean, even if you. [00:43:53] Speaker A: Touch on that real quick, so if someone's watching. So if you're doing a refinance and let's say there's two types of refinances, right? What are the. [00:44:01] Speaker B: There's an earl, okay. Interest rate reduction, rate reduction, refinance loan and every. Anything that's not an earl is what VA calls a cash out refi. So you have an earl or a cash out refi. Could be the cash out Refi is just rate and term. You're not really taking anything. [00:44:16] Speaker A: But it's still. [00:44:16] Speaker B: If it's not an earl, it's called cash out. That's what VA calls it. Right. So it's just. It's VA's name for it. But you can do a no cash out refi, which is just a rate and term. So that's your difference. Well, if you're doing an earl, it's got requirements. It's got a recoup in 36 months or less. So. [00:44:31] Speaker A: 36 months. Every fee associated with that. [00:44:34] Speaker B: Well, you can. You can pull out the funding fee and you can pull out your deposits for escrow, you know, and taxes and insurance. Pull those out. [00:44:43] Speaker A: So section eight charges primarily. [00:44:45] Speaker B: So section A charges some, Section B charges everything else. If it doesn't recoup from that in 36 months, you can't do the loan. [00:44:55] Speaker A: Gotcha. Okay. [00:44:56] Speaker B: Obviously, it's got to be season. Got a half point rate reduction, all that kind of stuff. Right? But the big one is this loan example at 5% will not recoup. In fact, in my calculator, in 12. [00:45:07] Speaker A: Short years, sir, you'll be this. [00:45:10] Speaker B: This step, the very best was recouping in 97 months. Seriously, that's the best it could do is 97 months. [00:45:18] Speaker A: I remember when I used to originate years ago, I go toward the door, you know, my dad and I would go knock on doors and, you know, he's on real estate. I did loans, and I remember you said that you need a deal, right. You gotta eat. Like, I'm doing the math, you know, like doing the rate. And what you'll see here, sir, is you saving about 37amonth. So I'd say in about eight, nine years, you'll be funny ahead. Kind of a tough sell. [00:45:42] Speaker B: Yeah. [00:45:43] Speaker A: You know, so. [00:45:44] Speaker B: So this advertisement, just to finish the story real quick, it failed on that. So BL paragraph A, total failure, paragraph B, really tiny, like 7 or 8. [00:45:57] Speaker A: Font, which, by the way, everyone makes fun of me because my phone is so big now that you can see it from the future, you know? [00:46:05] Speaker B: Yeah. [00:46:05] Speaker A: The font on it. So I can only imagine. I wouldn't even. I would think it was just a line. I don't even think there was anything written. [00:46:12] Speaker B: It was so small, I actually pulled my glasses out to read it. It was such a small font. And then the third thing was the fact that they didn't put an apr, they showed the rate. [00:46:23] Speaker A: That's like the number one thing. And the APR needs to be the same font. [00:46:26] Speaker B: As the rate and they showed this 5% rate. And I ran the APR on this thing because of the discount that they'd have to Pay. It was 6.4. They're really getting a 6.4 loan, not 5 because they're draw and I'm like, oh my God, they failed in everything they could on udap. [00:46:44] Speaker A: Well, you know the funny thing about that is that the one that will usually turn them in, it's not the government, it's the competitor. So if you're the person who is exaggerating your claims, trust that that will land in the hands of another. Hello. Who will carry you to death. [00:47:01] Speaker B: Yeah. [00:47:02] Speaker A: And will turn it in. It might sound good at first, but you'll probably get caught up. [00:47:06] Speaker B: You get caught up in that and they're going to turn it to a regulator now hopefully if they know, find out about if, if, if you're not running your stuff through your company's legal. [00:47:15] Speaker A: Yes, you're wrong. [00:47:16] Speaker B: I mean just flat. I'm just going to say that. So always, always, always, no matter what you're putting out in your marketing, it must go through legal because it's too risky nowadays that. [00:47:28] Speaker A: Oh, and it could be something. I mean I've seen it where didn't have an NMLS number. Not that they didn't have one for. Forgot to put it out. Whatever. [00:47:38] Speaker B: Shame on you. [00:47:38] Speaker A: Yeah. Problem is you put that out there. Including like social media posts now Facebook posts I've heard's got to be on there. So talk to your legal. We offer zero legal advice at Mortgage B. Yeah. [00:47:49] Speaker B: But everything we do in the companies I'm with, it gets an NMLS number on it. It gets disclosures on it. If we're putting anything out that has anything to do with a trigger word, there's an APR there. Yeah, you have got to do that. Oh, heaven forbid you don't because the UDAP violations is to get back to where we started on all this are huge and there's no forgiveness. [00:48:14] Speaker A: There's a point. They could put a company out of business. [00:48:16] Speaker B: Absolutely. [00:48:16] Speaker A: For sure. [00:48:17] Speaker B: They could find you millions of dollars because oh gee, I sent out 5,000 advertisements. Oh, there's a million dollar charge right there. You know and then on top of that you can lose licensing. You know, you as the lo could lose your license but the company that you work for is quite easily could lose their license. [00:48:39] Speaker A: So do your homework. Talk to legal. Follow the ABCs. We'll try to. Not try bad word. We'll look up the actual section that Jeff's talking about and we'll, we'll share that out. Wherever you see this video, we'll put post something in the comments. Yeah, absolutely. With that, Jeff, what's a, what's a final thought to leave everybody with today? Little maybe final knowledge drop from your decades of serving veterans? [00:49:07] Speaker B: I think the biggest point you need to think about when you're serving veterans is that you're not. It's not a true mortgage program per se. It is, but it's a benefits program. You're serving the veteran. While on the, on the one hand it's a VA loan. Virginia is not the lender. VA is not the customer. They're just the guys who wrote the rules so that you can go out and make money. But don't look at it like you're making money. You're helping a veteran, you're helping that family who has served you so that you can serve them. And that's the biggest thing. This is a service program. [00:49:48] Speaker A: All the other loans out there, the one thing that, that reminds me before I lose it is that the spouse of a veteran, this is a benefit that was earned by that veteran, should they pass away. What is the eligibility for a spouse? Because that not everybody's aware of it and I'm not 100% clear. [00:50:08] Speaker B: To me, a surviving spouse. There's two types of surviving spouse. There's a spouse who had a veteran who was a service member who died. Then there's the spouse of a veteran who died from a service connected or related death. Okay difference there. That is a surviving spouse with two capital S's. And to me that's the most deserving spouse. And because of that, that spouse is going to be remembering that, you know, they've got rug rumplers running around all day long that are going to remind them of their deceased spouse. So they are the most, to me, most important. How do you tell that that's a surviving spouse? They're receiving dic, dependency indemnity compensation because their veteran spouse died as a result of service or from a service connected disability. And there are rules. If they're receiving DIC, 99.9% of the time they're going to be receiving DIC. There's a couple of instances where they would be considered that without it, but it's so minor. [00:51:11] Speaker A: But that's something to look out for. So if you're qualifying a borrower and this is one of their sources, she. [00:51:16] Speaker B: Has income from VA and you can see it on their bank statement. You can ask, you know, when you're Getting your, when you're getting your income from them, you can see that they're getting something from VA. Now, spouse is going to be getting somewhere between 1700 and 1850, something like that. No, and if they're getting that, they are a surviving spouse, they have their own VA eligibility. That's not their service members eligibility, it's their own eligibility. They're defined in the law as a veteran. [00:51:45] Speaker A: Yeah. [00:51:45] Speaker B: So they have their own paragraph. Plus they're receiving compensation from VA. So under 3729, they're exempt from the funding fee. [00:51:54] Speaker A: Got it. That's a huge thing because, you know, horrible situation, right. You lose your loved one who's serving. And to your point, and you have get to your point, they are eligible for that VA benefit. So that's like a huge takeaway if you didn't know it. It's, you know, over time and if you know it, great, good for you. But there's these little things that come up over time. [00:52:16] Speaker B: Right. [00:52:17] Speaker A: And the other thing was that, you know, a lot of veterans didn't know they were eligible if they didn't serve in active. In. Well, there's different conflict term. Yes. [00:52:29] Speaker B: Well. And so many times you'll talk to a veteran and you'll ask them, are you a veteran? Well, if they're my age, Cold War quite often they didn't actually serve in combat. They might have done their four years and got out. They don't have any. They're not getting disability compensation. They didn't do use their education benefits, anything like that. So in their mind they served, but they aren't a veteran, they didn't retire. So they also, they often think, oh, I gotta, I didn't get, I wasn't, you know, in a war, so I had to retire. No. [00:53:08] Speaker A: Yeah. [00:53:09] Speaker B: It only takes two years of service and an honor and a less than a better than dishonorable. [00:53:15] Speaker A: Yeah, the, the double negative. [00:53:16] Speaker B: Yeah, the better the better than the dishonorable discharge. So, you know, you don't ask him, are you a veteran? Ask them if they served. Which is why the question on the 1003 says did you serve? It doesn't say are you a veteran? It says did you serve? Yeah. Because that's a different context to a lot of veterans my age and older. [00:53:34] Speaker A: I think that that verbiage was great because it used to be, you know, obviously Vietnam era. Like, you know, like when my father, you know what I mean? And you look at and they think, well, that's a veteran. You know, like they were there, they were fighting an injured river. But I think that's really important to make that notation that they're eligible for this benefit. Look, they wrote the check, whether it needed to get cashed. At that time, they were there and willing to go to any means to protect our country. So, for military may. Thank you, guys. Thank you, Jeff. And I'll tell you what. We'll have to go to Dabble Steakhouse soon, okay? Thank you for your time, brother. [00:54:10] Speaker B: You're welcome. Thank you, man. [00:54:11] Speaker A: Mortgage me. Marketing, education activities and tips for mortgage loan originators. And, hey, you know, go lobby, stand up for veterans. Close those deals. Thanks.