2021 EP0717 - PLANNING MATTERS RADIO - THE DEBBIE BLOYD INTERVIEW

Due to plan force planning matters radio and welcome into the program is is planning matters radio IMP sound founder of Rich on planning and I am joined today by Debbie Boyd who is CEO of BLB mortgage mortgage brokers broker specialist in real estate and risk management, and Debbie. We appreciate you taking time to join us on the program today me in particular Debbie I wanted to have you on because you have some perspective on the recent announcement from Wells Fargo. Basically telling its customers that it is shutting down personal lines of credit. Now how that impacts you in the mortgage world I want to get into that in in in a little bit as well. But what is your take on this announcement from from Wells Fargo any any other business here.

I have a business and we got lines of business that are not working that are not making this money working. I want to cut that out. There's no more time left. I think people wise over moneywise to have people doing things that are not financially successful for your business, home equity lines of credit lines of credit are not utilized by lots and lots of people and that preoccupies a lot of money to the banks have so if you get a line of credit for $100,000 and you're only using 10,000 of it on any given time. That means that there is 90,000 that has to stay on hold for you in case you want it and so that was a lot of money from Wells Fargo or any entity just have to keep it there and reserves.

I think the content that now we know that banks don't have to keep dollar for dollar reserves they can leverage it many times over, but this is still kind of restricting their their lending power in their capital share share their manpower so you know those lines of credit it takes someone to draw down the line of credit someone to keep up with all the paperwork that's a lot of paperwork for lot not a lot of money. Do you think that this speaks to Wells Fargo's concern were confidence level in their customer's ability or the American public's ability to eventually pay back these loans probably one used portion of the combination.

I think it's combination of really bad press in the last three years. They're not very well run. As you can tell, you know, they made up accounts for a long time. So how many are these home-equity lines really real. You know, I've never seen such a large company is supposed to be, you know, banks are supposed to be the strong that the honest guys yet. They're not that so I don't know how much of it is just cutting out the fat and then you know with the pandemic.

Last year we did business differently. I you and I still had to get money in the bank still had to cash checks still had to deposit things and we were using ATMs and doing in our phone dinosaur going in the bank. Not everybody does that anymore. I don't go in the bank. I have things wired in and and I move things through Benbow though.

I think America is finding other ways to do it. Banker of 40 years ago is not the guy anymore. Have a handshake deal with your neighborhood banker named Bob Bob not to give Elana credit just as he is a church with you. So it is different and banking is evolving, you have to qualify just like you do with me on a mortgage. There's rules. Now this this is something that is new per se because I remember back in the great recession, 2008 2009. A lot of banks actually cut customers personal lines of credit pretty significantly. Actually, it could have an impact on on credit scores as well.

A separate issue, but this this business move made by Wells Fargo is not a new phenomenon, but there have been other banks across the board in other difficult economic times that have made similar decisions and non-bad economic times, people change their line of business.

You know, a lot of companies go from having freestanding banks to doing everything online or or changing the way they do banking.

I bank at Chase since they changed over the years. I think the other problem that we have to think about is all of these forbearance loans. Wells Fargo has a huge mortgage department and maybe they see something coming down the pike. With that in the upcoming months that we can't foresee so that is a great question. I have heard kind of two different distinctly sides of opinion on what the coded extensions and reliefs meant for mortgage holders who were behind on payments. Though the term used forbearance was one that I was sort of debated doesn't mean deferment or does it mean that a lump sum has to be come up with and is due at the end of this kind of forgiveness. I so I had some clients going to forbearance and they took advantage and rightfully so. Of the situation because they are lenders like that so their servicer sent out a letter last year saying what you can make your payments for whatever reason it's covered related. We will let you skip your house payments for a while so they had to think and they came to me, unbeknownst to what they've done to themselves. They said no. I want to refinance rates are great. Well, we had to get them out of. They had to have three payments, not catch-up.

Not painful, but just three house payments and then we can refinance them so the forbearance was actually putting it on the rears and he'd be paid out later. Sometime they just had to make three separate payments and then we were consider them caught up. Even though that on the back into the loan. So now there was no lump sum of money, because if people can't pay their bills one month you let him not pay for three months and they come up with three times the amount of money not to work just to clarify these lenders that that did allow the forbearance and then I think that many were actually required to under the rules there but but they are taking those payments that were skipped and's simply stacking them on the back end of the loan right this wave of crashing housing markets because a lot of people can't come up with a lump sum for all of now there is no quote lump sum all the back so it you know so some people decided to sell their house and get out of there money in arrears just by selling the house and doing something else and then with code that you know we have always he ballooned around the country. So a lot of people are using this time to the markets hot so a lot of people's equity is risen. So even if they don't want to sell their doing a cash out refinance pain off some bills and they're just kind of hitting reset all it's doing is hitting reset, but there are problems like you can't refinance the house and forbearance right to have at least three payments and get caught up which a lot of us would love to take advantage of this low interest rate environment. It would make the financial situation better. But if we are already in forbearance can't do that now. Many kept up with their payments and are in a great position with a little bit of extra cash will will will say because of the covert stimulus to make those kind of proactive moves that could improve for further improve their financial situation so you know, depending on which side you are on would determine he can blame you know it getting any free money. I got business on her friends that got that got that stimulus checks for their businesses and necessarily yet I didn't necessarily needed, but they took it. It was free so you know I don't know. Many owners were going to turn down the opportunity for free money. Of course not.

And so, but is that there if you don't need it.

Is it fair to take it well. We've created society that that's okay so I think you know you and I are gonna pay for that in taxes over the next few coming years. You know we've got inflations on the rise and and and certainly money is not free. We did a pretty bunch of it and that just means were to pay triple and double for our bread in our gas in our cars but we are to see that in the economy like the monies not free. I'm on the financial retirement planning Sidon Hanford.

For years I've heard the term free money when it came to the 401(k) met and wow, maybe that's the closest thing that we can get money is not free and I always remind people that know you're working for that money is just you don't get it unless you put some skin in the game money. It probably is never for the right. Never operate talking with Debbie Boyd, CEO of DOB mortgage now you're the Dallas Dallas Fort Worth area house housing market over theirs were North Carolina is super busy is busy all over Texas.

We got people from the East Coast, moving people from the West Coast moved here and you know we are a tax-free states we have no state income tax. So coming from California 11 coming from New York, Chicago, some of the states. 11 so were very busy we have a shortage right now nationwide of lumber products Windows bricks did you even know that bricks were in short supply. So now because of the housing boom we can build fast enough and this is all over the state of Texas.

So a lot of the neighborhoods are having to only start two or three houses a month, which is unheard of to It when you could sell 10 or 20 but you've only got so many workers so much raw materials to use so were really happened to make the market slow down just because what happened last year were still trying to play catch-up driving from yes course corseted and so a lot of neighborhoods did not even see the contract they had in place so a lot of the home.

The big production builders the big national production builders said you know we can complete your home in a timely given you were going to give your earnest money back your house is now to be worth $60,000. You pay a $60,000 more because lumber is up Windows or and and you can re-sign if you want the house will that's really detrimental for some people because you know they don't have an extra 50 $50,000 they can qualify for to keep that house so they had to let that house go in and figure out another means that find a different house different price range again. Talking with Debbie Boyd, CEO of DOB mortgage circling back here to this decision announcement by Wells Fargo that they are cutting off personal lines of credit. I think they said for most borrowers between 3000 and hundred thousand dollars.

Other lending institutions.

Other banks have stepped forward and offered's customers kind of a place for a soft landing. If they chose to move accounts over Cheryl. I just like any other competition you know one car dealer outputs making a one car manufacture goods making one style car or small car, an SUV and somebody else picks it up. It's like grocery stores is like anything else, competition is going to win your you're not getting told that all across the nation were knocking have any lines of credit are just getting told is one place is not to give you any line of credit right now so that'll change people's banking but you know maybe that's what they wanted. Auto lending also potentially impacted here. Sure Wells Fargo has a lot of auto loans but so does Ally. And so does a lot of car companies every out.

Seems like every line of car has their own financial institution behind him so Mercedes has met Mercedes-Benz financial a lot of ways and then you know you got all these small credit unions and associations that lend money still so were not seen any of that. Go away were just seeing it get moved around little bit. Do you feel this is an isolated incident with Wells Fargo from your perspective, or is this potentially a tip of the iceberg and were going to see more announcements and moves like this I think to see more announcements and moods that people are gonna change the way we did credit you know monopoly used to be a game of money and now they have a monopoly with debit cards and credit cards. If the world is getting to go that direction, whether we like it or not and I Dave Ramsey wouldn't wouldn't approve know he would not like it at all that the debt snowball is not an alert on that. So yeah, I think.

I think part of it is teaching us how were going to run money you know you know with your clients. You should have 3 to 6 months worth of living expenses. I've got clients that I can't refinance or $700,000 house because they have no reserves. I have no money, is that as a lecturer, their living paycheck to paycheck. Now I've always encouraged my retiree or pre-retiree clients to establish a home equity line of credit not to use it but to have it there and available in case of worst case scenario.

I mean you've got 100% mortgage free paid off house whose money is that it's yours, which is the bank and you ask for some of it and their first question is how do you plan on paying us back so right having that home-equity line of credit established was always something that I said was a good safeguard. Not to be used just because, but in case of serious emergencies.

This is obviously you know this move by Wells Fargo and if we continue to see this as a larger growing trend going to impact potentially retiree's ability or or anybody's ability to affect the capital they got within their their own home lady call yesterday. She owns two houses free and clear.

She lives mostly in cash. She's got really bad credit she can get along with me so you know she's enervated yeah collateral is not yet the collaterals are probably going to sell one just like I don't want to know Michael you don't get to do evidently do what you want to with your credit all this time.

That's right so crappy. So there are rules and a lot of people don't like you know that they don't want to play by the rules.

A lot of my retirees that I see in business. Come to me and we do reverse mortgages. Now I know that's not at a good thing for some people, it depends on who's in your household and if you want to leave the house to your heirs free and clear, but a lot of people you know there's a line of credit out with a reverse mortgage that earns you 5% that can be used in, and in the case of a home-equity line not being able to be had anymore so they're going to be alternatives always come up when one door closes, somebody always opens another one with different interest rates.

It just changes the way we borrow money. A lot of the loans from that the fallout of 2008 are coming back and no you're not on here that we got a lot of no verification loans of loans loans no income.

All you have to do is a little bit higher interest rate and that allows investors to buy more properties because as that the government and the reserve Haida client down so hard on some of these lenders and thing you got have 25% or else there's somebody get a crop up with another way for you to buy that property and there you have different rules. So I think we just have to be doing our due diligence now maybe look a little harder. If you need that money. I wish people would anticipate and you know this being a financial advisor in a long-term care cost money. Life insurance. A lot of people wait to their two older said to get either one of those start planning plan ahead for the bad stuff you know that's that's common so quick thinking that it's not happening because it is I can't see how many I got a call yesterday from a lady. She is 67 and she and her husband decided to get a divorce now and she's I would like to do like work just can appear that you're gonna sell your house and take that money and invest some things for you and you know things happen. People die. People get divorced and you just have to be ready for that. Don't get can't happen you because it can always happen.

Murphy's Law mod my job is as a planner to make the bad things happen on paper to be prepared for them. If there are real life people don't like that know they don't but it's it's it's going to make you better prepared for. If and when those bad things happen. We can always plan for the worst and hope for the best and I think that's the attitude that after the planning process is over you can carry out for your life as you are living not working much about the earth and share some of this line of credit.

I don't think I think someone else not pop up and haven't even look at your credit unions there so the land they have. What I learned about the financial world is everybody has a different set of rules that lenders have a different set of rules on broker I got different set of rules that bank been vice president the bank and you know you don't have to have a mortgage license instead of the bank and do loan. The bank umbrella covers you will. They're not licensed so you come to someone like me, and I license I should be able to pitch in a better position to buy more products to serve. I think we just have to tell everybody to start looking and and go to the professionals to help you because there are many many ways to accomplish the same thing. You know this from your business as well. Again, Debbie Boyd, CEO of DOB mortgage and what's the website or contact information Debbie one of her yeah as many strategies with Debbie.com or DL being mortgage services.com I'm all over the place.

Instagram Facebook come find me, I'll be happy to help in the Dallas-Fort Worth area. If you are looking for any kind of guidance and in the housing market. Certainly a great resource for you so I Debbie appreciate you being on the program. Any any closing thoughts on this move this announcement by Wells Fargo any any impacts potentially that we did not cover that you think are important to note, I think this is the writing on the wall that things are changing, and I think people need to get their financial house in order. I think taxes are going to go out you know that taxes were to go up. You can't print all this money given away to Allie's families and businesses in and cost us anything. So I think people just need to get ready and be prepared for inflation. Prices are going to go up so that now might be a great time to figure out if you want to downsize or move around the country and start taking control of your finances rather than just wait for things to happen and this is not going to be indicative of all the financial banks are not shutting down.

There's there's no sky is not falling. It's just shifting so it might be rainy for a while but the sun will come back out and I think we just need to take better care of our own families. Like I said this impact may not impact you. It doesn't impact me. I don't have an home-equity line to start with, so it's not impact everybody is not a across-the-board deal. Thanks for your guidance, your input perspective on this announcement what it means for American consumers, borrowers, lenders, and in our financial financial outlook in the future.

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