Ask the Expert: Navigating the Mortgage Market with Eric Hoffner from StrongBox Home Loans

Intro: [00:00:07] Broadcasting live from the Business RadioX studios in Atlanta, Georgia. It’s time for Excel Radio’s Ask the Expert. Brought to you by Beckshot Photography and Video. It’s your story. Make it awesome! For more information, go to beckshot.com. Now here’s your host.

Randell Beck: [00:00:30] Well, it’s not beckshot.com anymore, uh, they’re Stone. It’s Studio Lensa and studiolensa.com. So we’re going to have to get that changed. And uh hi everybody. It’s Randy and Robert, the recidivist radio hosts here on Ask the Expert. Hey, Robert. How’s things going?

Robert Mason: [00:00:47] Good. I think our guests are trying to ascertain who is the actual expert. Who? Yeah. Really? Is their expert, or is there just one?

Randell Beck: [00:00:54] It’s actually up in the air right now. It’s a hard question to answer at the moment.

Robert Mason: [00:00:57] We’ll arm wrestle for it later. Yeah.

Randell Beck: [00:00:59] You know, there’s no expertise in evidence yet. Today.

Robert Mason: [00:01:03] Not yet. Nothing intelligent said yet.

Randell Beck: [00:01:06] So you invited a guest for us today. Tell us about your guest.

Robert Mason: [00:01:09] I did Eric Hoffner, uh, StrongBox Home Loans. Uh, Eric’s done a lot of good deals for me over the years. He’s a very smart guy in the mortgage and the money industry. Um, I lean on Eric pretty hard because I’ve got questions, obviously.

Randell Beck: [00:01:26] Well, you know, we talked the other day with Eric, and I got questions after that discussion, too.

Robert Mason: [00:01:30] Yeah. Uh, and he’s he’s way ahead of a lot of other mortgage guys in this industry. He, he, he knows what’s going on nationally. He knows what’s going on locally. Um, he does his homework. And when he talks to my clients, uh, they come away with a, a very good understanding of what it is that they need to do. What are the steps? And, uh, I can’t say enough good stuff about Eric, and, uh, he’s going to do a good job for me.

Randell Beck: [00:01:54] Cool. Welcome, Eric. Uh, glad to have you. Would you, uh, start by. Just tell us a little about yourself and Strongbox, you know, what are you what’s going on over there?

Eric Hoffner: [00:02:02] And thank you for those kind words, Robert. Um, I’ve been in the mortgage business since 1997. So close to or exceeding 25 years. Spent most of my career at at Chase before they was even a Chase Bank, um, top producer producing sales manager. Eventually, they asked me to step away from my production to manage the state of Georgia. And then in 2018, I opened my own company, uh, to be a mortgage broker. So I’ve seen both sides of the business, the most conservative of conservative banks, and then the mortgage broker world, which is the more liberal model in the mortgage industry. Um, I was a series seven licensed, was a financial planner at some point, went to school with a finance degree. I consider myself a little bit of an economist, geek and personal finance expert. Help people to improve their credit scores, maximize their credit scores, that kind of thing. And so I can kind of give people a different perspective other than just mortgage. Yeah.

Robert Mason: [00:03:00] So when he he’s helped out some of my clients, it’s not just fill out this piece of paper. He actually has an in-depth conversation with them, which is very nice. He guides them, gives them the steps that they need to make to get to the finish line to get that mortgage. And he can talk about, uh, a lot of different things. That is really helpful.

Randell Beck: [00:03:20] So if, uh, one of our listeners wants a $3 million house and their credit score is 247, you’re the man.

Robert Mason: [00:03:25] Yeah, probably not. But.

Eric Hoffner: [00:03:28] You know, in a lot of times they people come to you, uh, asking if they’re pre-qualified. And the truth is, um, it’s not always what you can buy, but but what your budget allows for. So you could be qualified for $1 million house, but your budget says 500,000. And so those are the types of conversations we have with people. Um, oftentimes mortgage people are order takers. The people dictate what exactly they’re looking for, um, where I listen to them and try to figure out what’s in their best interest and maybe can steer them in a slightly different direction to maximize their opportunity. Yeah.

Robert Mason: [00:04:04] I mean, people have questions, man. It’s it’s not an easy business. It’s not an easy conversation sometimes. And Eric has had to say to some of my folks in the past, look, now is not the time, but here’s what you need to do to set yourself up to be ready six months, nine months, 12 months down the road. And, uh, I really appreciate that aspect.

Eric Hoffner: [00:04:22] Well, you know, people will come to you and they, they’ll say, I want to put 5% down, but they might get better terms at 10% down. Or they come to me and say they want to put 50% down when it’s probably not in their best situation to do that. Um, do you pay points? Do you not pay points? Do you take an arm or do you take a fixed. Um, and so there’s more of a consulting point of view. I’d like to consider myself more of a consultant and less of a sales person.

Robert Mason: [00:04:48] Yeah, that I’d agree with that. That’s exactly the the description.

Randell Beck: [00:04:53] What would people need to know about strongbox? I mean, do you guys originate the loan? Do you warehouse the loan or are you a broker?

Eric Hoffner: [00:04:59] So there’s different models in the mortgage industry. I came from the largest of large banks, trillion dollar chase. Um, the banks have a purpose, but they’re the most conservative of all lenders. They have what’s called bank overlays. So when they underwrite a loan, it may make it just a little bit harder to get loans. For example, they might say minimum credit score is 620 when when that’s that’s self-imposed. Or they might say we’ll do less than 660 credit scores, but we will only lend a 43% back debt to income ratio. Um, a lot of lenders, mortgage companies, really anybody that underwrites their own loans adds guidelines to guidelines to make it just a little bit harder to get a mortgage. And especially for realtors, a person will say to you or a mortgage guy, I’ll be like, hey, this guy’s only got 619 scores. Let’s put him in credit counseling, call him in six months. Where that’s a loan we can do today. So what a mortgage broker does is, um, it’s just a little bit easier. The underwriting is they may. A slightly smaller reserve requirement. We have access to lots of different programs. No income verification. Um, it’s it’s less expensive. I’m a self-employed guy. Work out of my house. I have no commercial real estate. I have no layers of management. I have no compliance people. My cost to originate just less. And we pass those savings on to your to your borrowers. And so it’s it’s less expensive. Um, the technology we have is just easier. We don’t have the same infrastructure. The great thing about being a mortgage broker is I have access to 280 lenders nationwide, and these people have to earn my business every day. Right. So there’s a race to the bottom when it comes to interest rates. There’s a race to the bottom when it comes to underwriting. And if they don’t make us happy, we move on to the next one. So you don’t have to shop. We shop for you. Yeah.

Robert Mason: [00:06:51] So interest rates, let’s talk about the cost of money. Now where are we at in the marketplace? Tell me about an FHA loan. Tell me about a conventional loan.

Eric Hoffner: [00:06:59] Yeah. So of course interest rates are based on credit score, loan amount, loan to value. And, um, some of my borrowers are getting rates that start with a five right now. There’s a lot of people that are easily in the mid sixes. We have a lender right now that is trying to buy the market to refinance people. That’s offering below market interest rates for the next 60 days. And so we are seeing rates that start with a five easily in the mid 60s. Investors could be high sixes, low sevens, second home rates. And the trend seems to be downward. Um we see rates dropping just about every day. And where rates are today, there is no reason for anyone to put off purchasing a home, right?

Robert Mason: [00:07:43] I agree.

Randell Beck: [00:07:44] So last year, uh, the common wisdom out there is that low rates were fueling the real estate bubble, if you will. I don’t think it was a bubble, but they used that firm. And then, uh, rates went up for whatever reasons. And everybody expected the real estate industry to kind of slow down, crash, whatever. Apparently it did slowed.

Robert Mason: [00:08:06] Down kind of.

Randell Beck: [00:08:07] Yeah. And then, uh, we are now in a declining rate market again. So. How influential were the interest rates on that, really?

Eric Hoffner: [00:08:16] I mean, last year, from a volume standpoint, was one of the slowest years we’ve had since 2008. Demand is still ferocious. We’re still seeing multiple offers, um, in spite of what anyone thought the economy was doing or interest rates going up. Um, uh, you could list your house if it was priced right. It was selling in the first Sunday. Um, and as I’m not I’m not a real estate expert. I’m a mortgage expert. But I’m not seeing any foreclosure pressure. I’m not seeing, um, any values going down. All the statistics that are coming through the news is year over year. We’re exceeding expectations. And there are probably two years of people on the sidelines that keep saying, I’m waiting, I’m waiting, I’m waiting, and we’re going to have something similar to we did after Covid. In my opinion, we’re going to have three years of demand all happening in one year. We’re going to have fear of missing out as rates drop. Um, more inventory is going to pop up. And, um, I think we’re going to have a banner year.

Robert Mason: [00:09:21] Yeah, I think so too.

Randell Beck: [00:09:22] And like a bond rates down, prices up.

Eric Hoffner: [00:09:24] That’s right.

Randell Beck: [00:09:25] So right right now is the time for the early.

Eric Hoffner: [00:09:27] Movers I mean it’s it’s it’s now and I think as rates I mean what do you think’s going to happen to prices when rates drop. You know are they’re going.

Robert Mason: [00:09:35] To go up I.

Eric Hoffner: [00:09:36] Mean there’s no choice. And and then please tell me where the foreclosures are coming from. They’re not coming. Please tell me how the real estate market could go down.

Robert Mason: [00:09:46] What we’re seeing I think people talking about foreclosures, as you see, a lot of layoffs, the Googles, you’re seeing some of the big companies out there that are laying off people, but people still have a lot of equity in their homes, and they’re certainly not going to foreclose on they’re not using their homes like an ATM, ATM, like they did back in, say, 2007, 2008 when the crash occurred. People are a lot more fluid in their in their equity levels on their homes. So they’re not going to give them up. They’re going to go borrow money from Peter or Paul or Mom and Dad or whatever the heck.

Eric Hoffner: [00:10:20] They have to do in the market, or.

Robert Mason: [00:10:21] Put it on the market and sell it and go rent until they get a new job or whatever it is. I had that conversation with a doctor today, okay. And and we’ll be talking about her later. But, um, she’s layoffs where she’s at and the city she’s at, she’s like, Rob, should I start buying now? Well, maybe. Let’s look at.

Randell Beck: [00:10:41] It. You know, another factor driving prices up besides the rate decline. We talked about this on a couple of other episodes, and that is, uh, you know, over 100,000 people a year moving into the Atlanta area.

Robert Mason: [00:10:53] Well, we only had 80 last year. Oh, only.

Randell Beck: [00:10:55] 80. Yeah. And in a good year, we might bring.

Robert Mason: [00:10:59] 120,000.

Randell Beck: [00:11:00] 10 or 12,000 housing units out of the ground. Right. Let’s just say we could do 45,000 half half of the people moving in, basically the town of the size of Woodstock, coming out of the ground every year.

Robert Mason: [00:11:11] You mean like Cartersville.

Randell Beck: [00:11:12] Which is physically impossible, as you know. So now what you’ve got is you’ve got this big pile of people moving in every year, and only a few of them get serviced with housing, and the rest of them are still looking. And then in comes the next, next pile. The next year. It’s a growing problem. Interest rates alone aren’t going to fix this.

Robert Mason: [00:11:28] So new construction that. That’s a good segue. New construction. Are you doing any new construction loans?

Eric Hoffner: [00:11:33] Yeah, sure.

Robert Mason: [00:11:34] Okay.

Eric Hoffner: [00:11:35] I mean, it seems like every builder I know, if they can get it out of the ground, they sell.

Robert Mason: [00:11:40] Are they still offering points?

Eric Hoffner: [00:11:42] Are they still are. So, um, you know, builders will build and build and build. And when the market softens up, rather than reduce the prices because they want to keep their comps high, they’ll offer buy downs, they’ll pay closing costs. That way the market recovers. Their comps are still high. Yeah. And so builders are offering incentives. They’re corporations. They don’t have emotions. And they got to keep they got to keep their product moving in order to make money.

Randell Beck: [00:12:08] Yeah. And I like the sound of that. Every builder that I know, I think I need to take you out and buy you a bourbon or two.

Robert Mason: [00:12:14] We’ve done that once or twice, have.

Randell Beck: [00:12:16] We I think I don’t remember. Well, it was your.

Robert Mason: [00:12:19] Birthday, old man. Last weekend. I think we celebrated over a few Bourbons. Did we not?

Randell Beck: [00:12:22] You know, 37 is a horrible age to 38.

Robert Mason: [00:12:25] I thought it was 38. No, no.

Randell Beck: [00:12:26] No, I’m going down now. I’m on the downhill slide. All right.

Robert Mason: [00:12:29] So the real estate market for 2024 in my opinion we’re going to see prices going up of houses values. We’re going to see we already are seeing interest rates coming down. So money’s getting cheaper. Do you see any cities that are stronger than other cities just based on money.

Eric Hoffner: [00:12:50] You know. You know real estate’s not my area of expertise. Um, but it seems like it’s hot across the board. Um, second homes, beachfront properties. Um, Florida has softened up a little bit because they’re struggling getting insurance. So for the first time in a 25 year career, people are not getting insurance as easily. Yeah. Um, they have, uh, some companies will inspect your roof and they won’t insure a roof greater than 15 years. Um, some of them will.

Robert Mason: [00:13:21] That’ll make our next guest happy.

Randell Beck: [00:13:23] It will. As a matter of.

Robert Mason: [00:13:24] Fact, we have to bring that up.

Randell Beck: [00:13:25] Listen up for next time. We got Essex Roofing in next time.

Robert Mason: [00:13:28] Yeah, yeah, we’re gonna bring that up.

Eric Hoffner: [00:13:29] So it used to be that insurance was the last thing we did. We would shop it. And the final week of the purchase, it was a formality. Um, there’s nothing in the, uh, Georgia Association of Real Estate contract to protect people if they can’t get insurance unless they do it during due diligence period. We’ve had people clear to close, subject to insurance, and they can’t get insurance.

Robert Mason: [00:13:51] And you’re talking mortgage insurance? Not private.

Eric Hoffner: [00:13:53] I don’t know, I’m talking about hazard insurance. Okay. The kind of insurance that protects your house in case it burns down, um, Florida, especially, um, flood zones. Uh, there are people in Florida where the insurance has priced people out of the market that the insurance is so expensive or they can’t get it, um, that it makes the house unaffordable. But even in the state of Georgia, uh, insurance companies want to see the roof. Some of them won’t insure a house over 15 years old. Some of them take a look at the roof and say you have too many trees hanging over. And so now we’re encouraging people to shop their insurance at application. So if there’s a problem, they know during during the due diligence period and.

Robert Mason: [00:14:31] You know, that’s brand new to the marketplace, I mean, insurance companies were they never even come out and look at the house, you would just call your your representative. They would write the policy. Um, so that’s a change. And they saw.

Randell Beck: [00:14:43] Houses, you know, as fungible. But now, um, lost experience from all the hurricanes and all the different things that people have been talking about the last couple of years. I imagine they’re tightening up a bunch.

Robert Mason: [00:14:53] California, I think, had two large carriers move out. Um, and they cited some stuff. The reasons why, um, you’re seeing a little bit of that in Florida as well. Um, the, the, the difference in Florida and California is the expected income somebody’s going to, going to have in California is drastically higher than Florida. Yeah. And so when you have people working at Disney, working at surf shops, you know, you have more tourist jobs in Florida, it’s going to be a little bit harder for Floridians to be able to afford that and shop around.

Eric Hoffner: [00:15:25] Yeah. So so some areas close to the beach have softened up in Florida because insurance can be $20,000 a year. Yeah. You know.

Randell Beck: [00:15:33] Sure. So you ask Eric about, uh, areas a minute ago and, you know, he’s watching where the money goes, but you’re watching the sales activity. You’re the real estate expert here. What are you what are you thinking about? Areas especially for the investors.

Robert Mason: [00:15:46] So I’m an STR investor short tum rental uh investor as you are as well. Um, so I get this question all the time. Um, I know Georgia, I know the North Georgia mountains. I know the Georgia coast, I know South Carolina. I know a little bit about the North Carolina mountains, um, a little bit over in Alabama. So many lakes over there. There’s some hot spots. So that’s my expert. Uh, that’s my expertise. As far as STRs. Now, California is losing people by hundreds of thousands. I think I saw something that we’re going to lose 350,000 people. People who create jobs. They’re moving out of California now. California is going to penalize them through some type of taxation that I haven’t heard. Uh, if you move out, you still owe us taxes.

Randell Beck: [00:16:30] So I saw an article on that. And basically it’s a two year. Exit tax. So for two years, you’re supposed to report back to California. What you’re making now in Georgia. That’s crazy. And pay taxes on it to California. I don’t I don’t know how they’ll ever make that stick.

Robert Mason: [00:16:46] I don’t know how they’re going to enforce that.

Randell Beck: [00:16:48] It’s it’s not even a matter of enforcement. It’s a matter of you can’t pass a law like that, right?

Robert Mason: [00:16:53] They’ll try.

Randell Beck: [00:16:54] They’ll try, they’ll.

Robert Mason: [00:16:54] Try, um, New York there are people are fleeing New York. People are fleeing Illinois. People are fleeing new Jersey. Now, there’s some spots in new Jersey and upstate New York and some spots in California that are growing. But as a state as a whole, those 4 or 5 states are the ones where they’re purging the most people. People are coming south, people going to Texas. And there’s a variety of reasons why, from weather to taxation to politics, it runs the gamut. So it’s going to be if you’re investing in the South in Georgia, Atlanta or in the greater Atlanta area, you’re going to do well. I mean, we’ve got plenty of space. We see the construction. I just said Cartersville a couple minutes ago. Yeah, we see what’s going on up there. And you and I are looking at.

Randell Beck: [00:17:37] Massive amounts of construction.

Eric Hoffner: [00:17:39] Going on out there. I think it’s fair to say, generally speaking, the North is losing population and the South is gaining population.

Robert Mason: [00:17:45] Nobody retires to New York. Nobody even tires retires to Michigan or Minnesota. They’re the young people are starting to come out of there.

Eric Hoffner: [00:17:52] Nobody moves there. I think you’re born there.

Robert Mason: [00:17:54] Yeah. And like my wife, you move, you get out of there because it’s cold. I’m from Wisconsin, I moved, I was cold, I was small, I got lost in a, uh, you know, a snowdrift. I said, dad, take me south.

Randell Beck: [00:18:05] Well, I moved off out of there because of traffic and and taxes and lifestyle. And I moved to Atlanta. So I gained on lifestyle and taxes. Anyway, two out of three ain’t bad.

Robert Mason: [00:18:16] Yeah, he lost a little hair, though. Yeah.

Eric Hoffner: [00:18:18] So what do you do in Atlanta?

Randell Beck: [00:18:19] Traffic.

Robert Mason: [00:18:20] Yeah.

Eric Hoffner: [00:18:20] So I know that the whole, uh, telecommuting thing is changing and evolving as we speak. You know, Covid allowed people to work from home. So you see areas like Cumming and Dahlonega and Dawsonville, Cartersville getting more popular. It’s more affordable to live because you don’t have to drive to work. Yeah, they’re asking some of those people to come home, but are you seeing any trends like that?

Robert Mason: [00:18:41] You know, that’s a really good question. And so my wife, she works for a fortune 500 company financial services. Well Covid hit, they all worked out of their houses and everybody got used to working out of the houses. And now these corporations are looking at their their sheets, their spreadsheets. They’re like, wait a minute, we’re losing money. Well, they’re losing on the commercial real estate assets. So the wisdom is let’s bring all these people back. I don’t know, it’s not really wisdom. I don’t know how that’s you’re going to recover, you know, capital monies.

Randell Beck: [00:19:12] A bunch of them are, are just demanding that they come back, which is not wisdom.

Robert Mason: [00:19:16] And a lot of those employees are like, no, when I took this job or, you know, you said, we’re going to be able to work remote. You know, I didn’t think this was going to be a one year deal, you know, so people are living in big canoe, people are living in the mountains and their their job is in New York or Ohio or something. And they don’t care. It doesn’t matter.

Randell Beck: [00:19:35] Well, our, our producer and I stone. Hey, Stone, say hi to everybody.

Speaker5: [00:19:40] Say hello everybody.

Randell Beck: [00:19:41] We were in a meeting this morning with the Cherokee Economic Development people. Yeah, there’s a program they have about the workforce.

Robert Mason: [00:19:49] Darren, were you with Darren’s group?

Randell Beck: [00:19:52] No. Somebody else. This was a guy from the county. Okay.

Speaker5: [00:19:55] Cherokee County. Tell him I think we should brag. That is, the young professionals of.

Randell Beck: [00:20:00] Young professionals of Woodstock. Yeah. Okay. And because we’re only 37, we fit.

Robert Mason: [00:20:05] Yeah.

Randell Beck: [00:20:06] And yeah, we’re accepted by by the millennials and Gen Z.

Robert Mason: [00:20:10] I could see this group of gray hair. Yeah, yeah, yeah.

Randell Beck: [00:20:13] So the one of the themes that came out, you know, uh, Cherokee. Cherokee County Office of, uh, Workforce Development was there and talking, you know, as an open conversation, kind of meeting, talking about problems in the workforce. And one of the things that came out was this work from home revolution that has occurred. And I choose those words carefully because it has. Yeah, it’s real thing, and it’s changing the power dynamic between employee and the corporate environment. Yeah, right. And so you don’t have the power to demand that somebody come back to the office anymore, uh, or, you know, be be big authoritarian, daddy, about how you’re going to work.

Robert Mason: [00:20:52] Some of them are trying now.

Randell Beck: [00:20:54] They’re trying the employees now they got options, right.

Eric Hoffner: [00:20:59] Well, as long as the job market is strong, then the employees in control. Well, that’s.

Randell Beck: [00:21:02] Part of it too. But part of it is the fact that they can sit there at their nice little apartment or home with their computer and do, I don’t know, social media management. Yeah. And, you know, knock down 80 or $90,000 a year if they’re if they’re good and smart and they can do that, you know, without being 50 hours of work a week down in the traffic and the big office. Well, you know, one of the things so you don’t have the power to demand things from them anymore. Not as much. Right, because they got options.

Robert Mason: [00:21:28] And one of the things they found, like at my wife’s company, was people weren’t spending two hours in traffic going there, going home. They weren’t taking an hour for lunch. You know, they’re eating at their desk at their house. They were actually getting more work done by the employees working out of their homes than coming into the office and spending all that time on the road.

Eric Hoffner: [00:21:48] More productivity.

Robert Mason: [00:21:49] The money, my understanding.

Randell Beck: [00:21:51] Is productivity is off the charts in the companies that have have embraced this idea of people working from home.

Robert Mason: [00:21:56] Well, people want to work for for corporations for the most part.

Randell Beck: [00:21:59] Not every not every industry, not every company.

Robert Mason: [00:22:01] But yeah, you just said it, man. They’ve got choices. People have choices.

Eric Hoffner: [00:22:04] They fill in the gaps with conference calls and zoom calls.

Randell Beck: [00:22:06] And and you’re familiar with the brand with Patagonia. So they’ve always been sort of a cutting edge thing. They’ve never gone public. It’s always been owned by the one guy, etc., etc. and he’s been kind of a leader in that. Their thing now is work from anywhere you want to work from. Yeah. Why not unlimited time off. You know, something else that was unlimited PTO this morning? Yeah, right. Uh, they do a lot of things there. Uh. Surf’s up. They take a midday work break and go surf and come back and work. You know, that’s you’re free to do your job the way you feel like you need to do your job. As long as you get.

Eric Hoffner: [00:22:38] A cool environment.

Randell Beck: [00:22:39] And of course, they’re.

Eric Hoffner: [00:22:40] Getting ping pong. They get them bicycles, they have dance parties.

Robert Mason: [00:22:43] If you’re getting your job done, why not?

Randell Beck: [00:22:44] And they’ve been a highly profitable company. They’ve been a leader in all these areas for as long as they’ve been around, you know, since the 70s.

Robert Mason: [00:22:49] The one negative that I see out of this work at home, uh, scenario is I see more people walking around Kroger’s in their pajamas. Why are people walking around the mall in their pajamas? When did it become acceptable to walk around in your pajamas? Covid are we going to be showing real estate in our pajamas? I hope not, it’s not going to be me.

Randell Beck: [00:23:09] You won’t be making much money then?

Robert Mason: [00:23:11] No, but I see it. The dressing down of our office started a long.

Randell Beck: [00:23:16] Time before Covid casual.

Robert Mason: [00:23:18] Friday in the 90s, IBM before.

Randell Beck: [00:23:20] Covid and work from home. That standard’s been slipping for a while.

Robert Mason: [00:23:25] It has. So you go to the airport, you get on a plane and you get you’re sitting next to a guy with a tank top and flip flops on. You know, it’s just disgusting.

Eric Hoffner: [00:23:31] And his blanket and his teddy bear. Yeah.

Robert Mason: [00:23:33] He’s like a 400 pounds and you’re just like, oh my God, get out of here.

Randell Beck: [00:23:37] Are you going to Disneyland or go into the showers?

Robert Mason: [00:23:39] Or do you have any concept of what you look like? Did you look in the mirror? Apparently not. Yeah. Did you look in the mirror? No.

Eric Hoffner: [00:23:46] Well, there’s no doubt. I remember, um, growing up and, uh, having some success early on in my 30s and finally getting up to the custom suits and the custom shirts and the the big the big ties and the the pocket square. And then by the time I got there, everyone started losing the tie and losing the shirt. You know, they’re wearing golf shirts and slacks and now it’s jeans and a polo.

Robert Mason: [00:24:11] Ibm was the first one to go casual Friday and then NAFTA, which all the apparel business got taken offshore out of the big cities and everybody just undressed. And then we haven’t gone back to it. Not that we.

Randell Beck: [00:24:25] Bond. Bond always wears a tie.

Robert Mason: [00:24:27] And bond looks good. Yeah. Yeah. So what else can you tell us, Mr. Hoffner? You know.

Eric Hoffner: [00:24:33] One of the things I want to tell everybody is, um, for self-employed and investors. And so we, I emphasize we do all the easy loans just like everybody else. You know, all the cherry W-2 pay stub, 20% down, 800 credit scores. We we do those, but we do a lot of the hard stuff too. And so there there was a time where self-employed people, to this day, they take advantage of the tax code. They make a lot of money. They have a good CPA and they write off all their taxable income. It’s it’s common. And there was a time where those people couldn’t buy houses because Fannie, Freddie all they care about is taxable income. And so now if you’re self-employed we have no income verification products. We got about a half a dozen of them. And it’s not like the old stated stated from yesteryear where the teacher was buying a $600,000 house. Um, there is a a law part of Dodd-Frank says it’s the lender’s burden to provide evidence of the borrower’s ability to repay. It’s called ATR. If the lender does not do their due diligence and they put somebody in a loan that they shouldn’t be in and they foreclose, that borrower can sue the lender. And if successful, if they can provide evidence that the lender did not. Provide evidence of ability to repay, they get a severe penalty.

Robert Mason: [00:25:44] So give me some examples of you. You have to verify ability to pay.

Eric Hoffner: [00:25:48] Yeah. So for example, um, uh, one of the most popular programs is a bank statement loan. So we’ll take uh, I’ll give you an example. I have a, a client that had 11 Amazon trucks. He had $5 million in revenue, but he only had $100,000 in taxable income. He wanted to buy $1 million house. He was making money. He just had a really good CPA. And the depreciation on all the trucks and everything and the depletion. And so what we do is we take, uh, that $5 million, we assume a 50% expense ratio and we give him 50% credit for income. So for that borrower, we gave them $2.5 million in qualifying income. And now he’s able to buy a house. Now today’s rate for that borrower, if he could document his income could be five and a half, 6%. So he might pay seven, 7.5%. So he’s going to pay about a point or two above market.

Robert Mason: [00:26:38] For a little bit of the.

Eric Hoffner: [00:26:38] Risk. Yeah. Because it’s a it’s a more risky loan for the, for the lender because they don’t really know.

Randell Beck: [00:26:44] That a guy with money like that can buy the rate down a little bit.

Eric Hoffner: [00:26:46] Too, right? Yeah. And then they also require a decent reserve requirement. So he’s got to have money in the bank. He’s got to be self-employed for a certain amount of time. But we know those people are making money. Uh, another program we have, which is similar to you and I, is a 1099 program. Same deal. For example, truck drivers today are making a lot of money. I had a truck driver. He made $175,000, 1099 income. He only had $40,000 in taxable income. Under normal circumstances, he doesn’t qualify. We take 175 and divide it by two. Now he was able to afford a $500,000 house. We have something called asset depletion. You take maybe someone who recently retired. Their IRA hasn’t kicked in yet. They’re sitting on a bunch of money, but they have no income coming in the door. Uh, if they have enough money to cover the loan, they could have. Cash 150% of the loan amount. That’s enough for the lender to be satisfied. That’s a good loan. Yeah. And then we we do have a true no dock, which doesn’t really fit the ability to repay laws, but no income, no employment. You can buy a house. All these loans have a slightly higher down payment starting at 15% down. The rates are higher. But these people can buy a house when they normally can’t. And then we have one more program for investors only where you take an investor, he’s a gunslinger. He’s buying, selling, flipping, keeping short terme, long terme. And he doesn’t have any income, but he has a down payment. Well, we take the property, we do an appraisal. They do what’s called a rental analysis to determine what the long Terme rent is for that property. And if the rent covers the mortgage, you’re approved.

Robert Mason: [00:28:25] Dsc our loan.

Eric Hoffner: [00:28:26] Dsc our loan. So we we have a lot of different loans for people out there. We like.

Randell Beck: [00:28:31] Those deals. Yeah. Um, are there any is there any such thing anymore as a non-recourse commercial loan. No no no they’re gone.

Eric Hoffner: [00:28:38] Well there’s definitely nothing in the residential world that’s non recourse.

Randell Beck: [00:28:45] For.

Eric Hoffner: [00:28:45] Investors. We do business loans. We can do loans titled in an LLC but always on the residential side. You have to guarantee personally on the commercial side there are non recourse loans out there. But they’re predominantly reserved for the best of the best people that have tons of money, large down payments, huge track records, relationship with a bank. Normally you have to do a personal guarantee. So it’s not that there’s no non recourse, but there’s not a lot of them. Yeah.

Randell Beck: [00:29:17] So let’s say Eric. I’m out there in Woodstock and I’m looking to buy another property, and I have a really good mortgage agent right down here on the street in downtown that I like a lot. But you come to my attention and I’m considering doing business with you, and I’m not really sure how to make that decision. What would you say to me? About why I should work with you.

Eric Hoffner: [00:29:39] Yeah, well, first of all, this is your sales pitch. I encourage everyone to shop. Question. And what I find is that 80 over 20 rule, there’s no barriers to entry to get into my business. And both of our businesses and 80, over 20, 80% of the business people in our business, they really just don’t know what they’re doing. They’re weekend warriors. They have a full time job. Uh, you can usually tell by talking to somebody, uh, what kind of credibility they have. Now for me, you could look at my LinkedIn. I’m in the business 25 years. You can see my career. You can go look at my Google reviews. Five star. Um, you can see I have no complaints for MLS or Georgia banking and finance. Um, and then it comes down to who’s got the best terms. The one thing I would caution people when they’re shopping is there are some people out there that are not honest, and they use smoke and mirrors and, um, they do different things to make their situations look more attractive. In fact, sometimes the harder people shop, the more they outsmart themselves. And I can tell the public, this is how you shop a mortgage, its rate, its points and its junk fees. Nothing else matters. The closing attorney’s, the closing attorney, the taxes, the tax. The recording is recording. Taxes and insurance are no different. None of those are competitive items. But if you’re dealing with someone who’s dishonest, they’re going to make their attorney fee look just a little bit lower. And what consumers, the biggest mistake they make is looking right at the bottom line. Um, that’s not how you shop. There’s three things rate points and junk fees, and then maybe private mortgage insurance on occasion that could be different.

Robert Mason: [00:31:24] That’s a good question. That was a good question. Good answer. Well, you.

Randell Beck: [00:31:26] Know, everybody needs to get their sales pitch out there, you know, because somebody we’re listening to is in that situation right now. Right. And like, you know, who do I really want to work with. And it might just be that you’d be the right fit.

Robert Mason: [00:31:36] You know the reason why. Mhm. So other states do you do business in other states. I do.

Eric Hoffner: [00:31:42] Business in Georgia and Florida.

Robert Mason: [00:31:44] Okay. But you have if somebody we needed a recommendation for, say, New York. Could you help me with that?

Eric Hoffner: [00:31:51] Oh of course. Yeah. So, um, I there’s a couple of things you can do. You can come to me and I can go to my number one lender. They know who’s good. Um, they know who’s credible, uh, who has a good track record, does good clean business that’s reliable and trustworthy, and I can get a referral. The other thing you can do is go to a website called find a mortgage broker.com. So let’s find a mortgage broker.com. And my number one lender, who’s the largest lender in the country puts together a list of mortgage brokers per zip code. But they stack rank them based on productivity based on file quality, uh, based on turn times. And so the people on the first page are are the are the really good people that you want to work with?

Robert Mason: [00:32:37] Yeah. That’s good information.

Randell Beck: [00:32:39] Yeah. That is good information. Yeah.

Robert Mason: [00:32:40] Because we’ve got people that listen to us and ask us questions from all over the United States. So this is not just a local. This is a national audience sometimes as well. So we’ll get that. Yep.

Randell Beck: [00:32:53] Eric, thank you for coming in and spending time with us today.

Eric Hoffner: [00:32:55] My pleasure. Thank you for having me.

Robert Mason: [00:32:57] Great interview, great stuff. Eric is a tough guy. He’s he knows what he’s doing. He can answer all the questions. And you’re going to walk away with a good feeling about what he’s told you.

Randell Beck: [00:33:08] Watch for the next episode where we’ll have Adam Humphries from SW roofing. Thank you. Enjoyed it guys. See you next time.

Robert Mason: [00:33:15] Right on.