Latest / Chrisman Commentary - Daily Mortgage News / 7.2.26 Agency MBS Performance; First Lien Capital’s Bill Bymel on Distress Signals; June Payrolls Miss

Transcript

7.2.26 Agency MBS Performance; First Lien Capital’s Bill Bymel on Distress Signals; June Payrolls Miss · Chrisman Commentary - Daily Mortgage News

• 0:02
  SPEAKER_02: Welcome to the Crispin Commentary, Daily Mortgage News Podcast.
• 0:05
  SPEAKER_02: I'm your host, Robbie Crispin.
• 0:08
  SPEAKER_02: The topics on today's episode include the performance of first lien mortgages, it's payrolls Friday, and my interview with First Lane Capital's Bill Bimill on how insurance challenges, AI adoption and servicing, and key leading indicators are shaping the next potential cycle of market distress.
• 0:24
  SPEAKER_02: Here, take a listen to a little preview.
• 0:26
  SPEAKER_03: You yourself host a podcast on real estate and debt cycles.
• 0:32
  SPEAKER_03: When we look at real estate in aggregate, and when we look at debt cycles, where do you feel like we currently are in America?
• 0:42
  SPEAKER_00: That is a great question.
• 0:44
  SPEAKER_00: Where we are on the spectrum, I would say that we are in the seventh, we're just past uh the seventh inning stretch of the of the cycle.
• 0:57
  SPEAKER_00: Um, I would like to think that we uh we had woken up at some point to the realities of you know, cap rates are important um and debt loads are important, and that, you know, that it's time to kind of you know reset the clock.
• 1:15
  SPEAKER_00: Uh the federal government has given a lot of tools or has has a lot of tools that they have instituted in the industry to prevent a catastrophe, a huge buildup of debt levels.
• 1:30
  SPEAKER_00: But the reality is that they had to end that at some point.
• 1:33
  SPEAKER_00: So Fannie Mae, Freddie Mack, their servicing guidelines that basically allowed borrowers to call up with a cold and get a modification.
• 1:44
  SPEAKER_00: That rule that was put in post-COVID ended September 30th, 2025, just about whatever, eight months ago, right?
• 1:52
  SPEAKER_00: Nine months ago.
• 1:53
  SPEAKER_00: Since then, behind the scenes, we are seeing a significant increase in the number of foreclosure starts.
• 2:01
  SPEAKER_00: And so it now, with that guardrail down, uh, we're going to see a reality set in.
• 2:08
  SPEAKER_00: The 2% default rates that the media speaks about in residential mortgages, it's just not true.
• 2:15
  SPEAKER_00: We've I've seen multiple economists that basically say that the default rate of residential mortgages, even on the Fannie Freddie portfolio, is probably more like 5 to 6% because of the fact that the servicers have had this ability to kick the can down the road for so long.
• 2:34
  SPEAKER_00: And we're starting to see that those defaults increase, not just in like low-quality paper.
• 2:40
  SPEAKER_00: And that's the difference.
• 2:42
  SPEAKER_00: Um, my friend Melody Wright, she studies the the um GSC reports, and you're seeing an uptick in the low interest loans increase.
• 2:54
  SPEAKER_00: That means there's a true stress in the market.
• 2:57
  SPEAKER_00: So I really think we're at we're coming up on the eighth or ninth inning of a much longer cycle.
• 3:04
  SPEAKER_00: If anything, you could say we're in the 16th inning, and we're just, you know, we just keep waiting for someone to hit the ball out of the park or someone to steal home, and it'll really kind of end this long cycle of of inflated values.
• 3:23
  SPEAKER_03: Thanks to this week's podcast sponsor, Experian.
• 3:26
  SPEAKER_03: From lenders and landlords to employers and consumers, Xperian helps connect the housing ecosystem with the data and insights needed to make faster, confident decisions.
• 3:36
  SPEAKER_03: Lead a smarter housing journey with Experian.
• 3:39
  SPEAKER_02: To learn more, visit Xperian.com slash mortgage.
• 3:45
  SPEAKER_02: What do they call the Fourth of July in nursing homes?
• 3:48
  SPEAKER_02: In depends today.
• 3:52
  SPEAKER_02: Plenty of people are hitting the roads.
• 3:54
  SPEAKER_02: Hopefully, some of them are visiting elderly relatives, and what better conversation topic than the Office of the Comptroller of the Currency reporting on the performance of first-lean mortgages in the federal banking system during the first quarter of 2026.
• 4:06
  SPEAKER_02: The OCC mortgage metrics report showed the 97.7% of mortgages included in the report were current and performing at the end of the quarter, a slight increase from 97.6% in 2025.
• 4:19
  SPEAKER_02: The foundation of U.S.
• 4:20
  SPEAKER_02: housing finance remains remarkably resilient.
• 4:23
  SPEAKER_02: Agency lending continues to provide liquidity, credit remains broadly available, and homeownership remains accessible by historical standards.
• 4:30
  SPEAKER_02: However, the economics of participation have changed.
• 4:44
  SPEAKER_02: Success increasingly depends on scale, capital, strength, and the ability to attract specialized talent across disciplines, ranging from capital markets and servicing to technology and risk management.
• 4:55
  SPEAKER_02: As a result, consolidation is no longer merely a cyclical response to difficult market conditions, but the logical outcome of an industry where operating complexity is now a competitive differentiator.
• 5:06
  SPEAKER_02: The lenders' best position for the future are those treating servicing, technology, and strategic investment as core business imperatives rather than operational enhancements.
• 5:15
  SPEAKER_02: Servicing has re-emerged as a stabilizing force, providing durable revenue streams and deeper borrower relationships at a time when refinance activity remains constrained.
• 5:24
  SPEAKER_02: Concurrently, rising costs from credit reporting to regulatory compliance are exposing inefficiencies that can only be addressed through automation, AI, and workflow redesign at scale.
• 5:34
  SPEAKER_02: Beyond just technology, sustainable growth requires thoughtful integration of talent, disciplined capital deployment, and regulatory frameworks that support housing finance rather than add complexity without measurable consumer benefit.
• 5:46
  SPEAKER_02: The defining challenge for mortgage lenders today is adapting their organizations to an industry where capital, talent, technology, and operational discipline have become the primary determinants of long-term competitiveness.
• 5:58
  SPEAKER_02: Agency mortgage-backed securities posted their first monthly loss in three months during June with excess returns of negative seven basis points.
• 6:05
  SPEAKER_02: The loss reflects historically weak seasonal trends, persistent inflation concerns, and expectations for a more hawkish Federal Reserve.
• 6:12
  SPEAKER_02: Although the sector remains solidly positive year to date.
• 6:16
  SPEAKER_02: Strong mortgage-backed ETF inflows, steady bank demand, and higher issuance helped support the market.
• 6:21
  SPEAKER_02: Performance was strongest in higher coupon 30-year securities, particularly 6% coupons.
• 6:27
  SPEAKER_02: Trading activity has remained subdued amid uncertainties surrounding the new Fed leadership and global events, both of which have been talked about ad nauseum.
• 6:35
  SPEAKER_02: Looking ahead, seasonally challenging summer months, elevated inflation expectations, and a cautious Fed are expected to keep pressure on long-term yields, supporting a defensive stance focused on capital preservation, shorter duration, and lower premium mortgage pools.
• 6:52
  SPEAKER_02: For today's interview, I wanted to welcome to the show First Lane Capital's Bill Bimel to talk about how insurance challenges, AI adoption and servicing, and key leading indicators are shaping the next potential cycle of market distress.
• 7:04
  SPEAKER_02: He's a speaker, advisor, and investor, as well as CEO of First Lane Capital, a privately owned investment platform specializing in distress debt and mortgage workout strategies on residential and commercial real estate.
• 7:17
  SPEAKER_02: Through First Lien Resolutions, he provides special assets expertise to banks and funds on portfolio risk, recovery strategies, and profitable arbitrage.
• 7:25
  SPEAKER_03: I'm going to start this interview in a pretty open-ended way.
• 7:28
  SPEAKER_03: What's been on your mind recently?
• 7:30
  SPEAKER_03: Obviously, there's a lot going on out there in terms of uncertainty or different competing forces on markets or things behaving in ways that are aren't traditional when it comes to asset classes.
• 7:45
  SPEAKER_03: Just what's what's been on your mind lately?
• 7:47
  SPEAKER_00: Well, uh, untraditional is definitely top of mind.
• 7:51
  SPEAKER_00: And you know, you really did hit the nail on the head when you say that like we are in an unusual time.
• 7:59
  SPEAKER_00: Um, I was inspired to write my book, the newest book, The Storm, about three years ago when I went to a think tank in DC, and I was sitting there with insurance professionals and the broad range of the political spectrum.
• 8:14
  SPEAKER_00: So you had private equity guys who, for the most part, lean more conservative.
• 8:20
  SPEAKER_00: You have climatologists who obviously lean more progressive.
• 8:24
  SPEAKER_00: Uh, you have government lifetime administrators who ironically are pretty apolitical people.
• 8:30
  SPEAKER_00: Most of the people that work inside the federal government for long periods of time are very moderate folks.
• 8:37
  SPEAKER_00: And the rule of this was to leave your politics at the door and have a really serious conversation.
• 8:43
  SPEAKER_00: Loan servicers, they were there, insurance companies were there, and they were pointing to the facts of how the world had changed in 2020.
• 8:51
  SPEAKER_00: And I don't mean COVID, it's it just happens to be that in 2020, the earth started to act in different ways, that we started to see an increase in these storms.
• 9:05
  SPEAKER_00: You know, you'd see tornadoes covering a much broader swath of the US versus just Tornado Alley.
• 9:13
  SPEAKER_00: And so that was what kind of inspired me to do the book.
• 9:16
  SPEAKER_00: And then I spent a few years writing it and doing the research for it.
• 9:21
  SPEAKER_00: And what now, as I released it this May, what's on my mind more is the effects, the additional convergences.
• 9:30
  SPEAKER_00: The book's about the convergence of the rising cost of insurance, the fact that there's all this world like earth volatility that's destroying property and causing insurance rates to go through the roof, come right at a time when interest rates have gone up significantly in the last few years, and at a time where we are at the highest debt levels as a country, as a nation, and as individuals that we have ever been.
• 9:55
  SPEAKER_00: And I the storm is about that convergence and the potential dislocation that it will recreate.
• 10:03
  SPEAKER_00: Well, coming out recently to answer your question, um, there's additional factors.
• 10:10
  SPEAKER_00: Uh, I wrote this book, Knowing AI, but the experience of AI in the last 90 days, for instance, just since the beginning of the year, is a completely set, you know, is a whole different thing.
• 10:24
  SPEAKER_00: I probably should have written an entire chapter about AI, but then again, what do I know?
• 10:29
  SPEAKER_00: Right.
• 10:30
  SPEAKER_00: And then the global geo, the geopolitical in instability that we have on a global scale.
• 10:37
  SPEAKER_00: Um, what's on my mind this this month here in early summer is when this is is we haven't yet felt the effects of the tightening of oil supplies and the destruction of major uh byproduct chemicals like these um uh these chemical plants in the Middle East and the UAE that have were destroyed by Iran, um, they supply a lot of very important fluids to the production and manufacturing industry here in the US.
• 11:10
  SPEAKER_00: And we're gonna be on a shortage later this summer that we have yet to see.
• 11:14
  SPEAKER_00: So that's really it's like there's additional convergence points that have yet to be realized.
• 11:20
  SPEAKER_00: The the the effects of the oil shortage that exists now, uh, the effects of AI.
• 11:26
  SPEAKER_00: And I'm not a doom and gloomer about AI.
• 11:29
  SPEAKER_00: I do believe it's gonna take a ton of jobs.
• 11:32
  SPEAKER_00: I also think it's gonna create a lot of productivity and create new jobs, just like any industry, just like environmental and you know, energy efficient companies and the you know, the Teslas of the world created new jobs, AI will create that as well.
• 11:47
  SPEAKER_00: But that said, uh, we're still living in la la land economically.
• 11:52
  SPEAKER_00: You know, there's just the P price to earnings ratios of these companies in the stock market, the huge overvaluations of a few central companies and having a bulk of the of the um the the of the increase in the stock market value coming from you know a handful of companies and the mispricing of of a lot of real estate assets and other types of assets.
• 12:18
  SPEAKER_00: I think I think there's a reckoning, unfortunately, due to come.
• 12:22
  SPEAKER_00: And and that's what I'm I'm concerned about most right now.
• 12:25
  SPEAKER_03: Well, you at the end there, you mentioned the the mispricing of real estate assets.
• 12:28
  SPEAKER_03: And obviously, this is a podcast for mortgage professionals.
• 12:33
  SPEAKER_03: Thoughts on what you're seeing in the mortgage market?
• 12:34
  SPEAKER_03: And obviously, you have good background to discuss this because you've been a residential and CRE loan buyer for decades.
• 12:43
  SPEAKER_03: You've worked as a special servicer and fiduciary advisory, you've resolved to stress mortgage portfolios.
• 12:48
  SPEAKER_03: What are you seeing when it comes to the mortgage market or housing and real estate market in general?
• 12:53
  SPEAKER_03: You mentioned mispricing of assets, maybe some other things catching the eye.
• 12:56
  SPEAKER_00: Yeah, there's still a lot of dumb money out there looking to be deployed.
• 12:59
  SPEAKER_00: So, you know, the so much of the private equity and the institutional money management world, it's grown so significant, and there's a lot of money sloshing around.
• 13:11
  SPEAKER_00: In the hands of folks that are only thinking in one direction, there is, for instance, I see non-performing loans, both private lending loans as well as Freddie Mac, Fannie Mae loans, that are actually selling for more than the loan sold for when it was a performing loan.
• 13:32
  SPEAKER_00: And that is a that is a dislocation that makes no sense.
• 13:36
  SPEAKER_00: There is a certain amount of cost that goes into foreclosing a loan.
• 13:41
  SPEAKER_00: And no matter whether you're at a 60 LTV or not, you as a lender are going to uh lose money through additional expenses that aren't going to get charged back to the loan, not to mention the the cost of that capital as it sits non-performing on your book.
• 13:59
  SPEAKER_00: Uh so to see Freddie Mack and Fannie Mae be able to sell non-performing loans at 103 of UPB, it really doesn't make sense.
• 14:09
  SPEAKER_00: And the same is true in the RTL space.
• 14:11
  SPEAKER_00: Uh RTL being the residential translation loans, the the private money bridge loans, the industry that has grown significantly, the Kiavis and Renovos of the world, uh, as well as the same they have folks in the CRE space.
• 14:27
  SPEAKER_00: Um, they are still going on the assumption that real estate, you know, it was for I think people's memories are short.
• 14:38
  SPEAKER_00: Uh, there was a time when Alan Greenspan went before Congress.
• 14:43
  SPEAKER_03: Rest in peace.
• 14:44
  SPEAKER_03: Rest in peace, Alan Greenspan.
• 14:45
  SPEAKER_00: Alan Rest in Green, yeah, we love Alan Greenspan.
• 14:47
  SPEAKER_00: Rest in R I P Allen, but you know, he went in front of Congress in 2005.
• 14:53
  SPEAKER_00: And when the markets were starting to be feel frothy back then, before the financial crisis, before real estate stalled in 07 and crash started crashing in 08.
• 15:04
  SPEAKER_00: Alan Greenspan, which is, you know, most would say is the you know the smart, one of the smartest guys in the room uh in finance, went before Congress and said that while there may be areas of the country that were seeing some some slowdown, there's no reason to believe that real estate, residential real estate uh can ever really decline on a national level.
• 15:28
  SPEAKER_00: And this was two and a half years before the great financial crisis, where we saw prices drop as much as 40% across the board.
• 15:36
  SPEAKER_00: So memories are short.
• 15:38
  SPEAKER_00: And then since then, since 2008, we've now been on an 18-year streak of upward valuations.
• 15:45
  SPEAKER_00: There's many reasons for why I think that we've fueled the flames of asset values with low cost of capital.
• 15:54
  SPEAKER_00: But that is really where I'm seeing a misunderstanding right now.
• 15:59
  SPEAKER_00: And as far as CRE is concerned, you're starting to see some shakeout.
• 16:03
  SPEAKER_00: But CRE is just an investor real estate game.
• 16:06
  SPEAKER_00: And when you have, and most landlords, whether you're a residential landlord or a commercial landlord, most landlords operate under a gross lease or a limited net lease uh theory.
• 16:21
  SPEAKER_00: Meaning you are charging one amount for rent to your tenant.
• 16:26
  SPEAKER_00: And then out of that, you've got to pay your mortgage, you've got to pay the taxes, you've got to pay the common area, and you've got to pay insurance.
• 16:34
  SPEAKER_00: And there are cases for where you can have increases in common area expenses.
• 16:38
  SPEAKER_00: That's common in commercial real estate, but not really a lot of triple net.
• 16:43
  SPEAKER_00: There are triple net leases out there, the 1031 space, different story.
• 16:47
  SPEAKER_00: The bottom line is the majority of landlords have to absorb the additional costs of rising property taxes because their property is worth more.
• 16:57
  SPEAKER_00: The additional cost of insurance increases.
• 17:01
  SPEAKER_00: And if you're a landlord that got yourself a 5% mortgage on a 12-unit apartment complex seven years ago, chances are you're coming up on a maturity wall uh that where you have to refinance that loan.
• 17:14
  SPEAKER_00: And there's just no way for you to get a standard 5% bank loan anymore.
• 17:18
  SPEAKER_00: So now you're getting squeezed by another factor.
• 17:21
  SPEAKER_00: And um, that's really where I think the misunderstanding about real estate is right now.
• 17:26
  SPEAKER_03: So this industry is known for having four-year, five-year memories, and seven-year market cycles.
• 17:32
  SPEAKER_03: Maybe that has done people some good over the course of time, but it certainly could be troubling.
• 17:37
  SPEAKER_03: And not to use too many avian analogies here or phrases, but I'm I'm wondering if you feel like we've seen the canary in the coal mine at this point, if it's there or if things I mean, it's kind of this new normal of well, things that would have triggered warning signs back then.
• 17:51
  SPEAKER_03: It's we kind of plow through them now.
• 17:53
  SPEAKER_03: Or excuse my second avian analogy, phrase when the chickens will come home to roost on some of this troubling background noise and storm clouds that are out there.
• 18:04
  SPEAKER_00: Yeah, that is a great question.
• 18:07
  SPEAKER_00: I think both are true.
• 18:08
  SPEAKER_00: Uh, both, I mean, both we've seen a canary in the coal mine, some of us are paying attention to, and the chickens have yet to come home to roost because obviously we're still the majority of the industry is still headed thinking in one direction.
• 18:24
  SPEAKER_00: And part of that is just a lack of experience.
• 18:28
  SPEAKER_00: If you're a 35-year-old managing director at Blackstone today, you were like a teenager.
• 18:34
  SPEAKER_00: You were in high school when the GFC hit.
• 18:36
  SPEAKER_00: You may have known somebody who lost their home, or you know, maybe you you even had to move yourself, but you didn't really understand the implications of that.
• 18:45
  SPEAKER_00: So there is a real lack of perspective just because of a lack of experience by a large portion of the industry, people in their 20s and 30s that just haven't lived through multi any type of downward cycle.
• 18:59
  SPEAKER_00: The canary in the coal mine, you could point to, are a couple of things.
• 19:04
  SPEAKER_00: Uh, we have seen some huge devaluations in large real estate deals.
• 19:11
  SPEAKER_00: Brookfield walked away from office buildings in downtown LA two years ago, uh, handed the keys back to the lender.
• 19:19
  SPEAKER_00: Uh, I think that they have yet to actually find a new buyer for that deal still.
• 19:24
  SPEAKER_00: You saw the failures of a couple of banks, Signature Bank Republic, you saw Silicon Valley Bank.
• 19:32
  SPEAKER_00: That was three years ago.
• 19:33
  SPEAKER_00: Fed stepped in and somehow calmed the nerves.
• 19:36
  SPEAKER_00: You've seen some valuation declines in parts of the country already.
• 19:42
  SPEAKER_00: Places like Austin and Boise that saw huge that were already like Austin, for instance, was already an inflated market.
• 19:50
  SPEAKER_00: And then when COVID hit, everyone from California, Tech World, and LA said, well, I want to go move to Austin.
• 19:58
  SPEAKER_00: And so it just fueled the fire of overvaluation.
• 20:03
  SPEAKER_00: And I've got friends in Austin now that can't sell their property for 20% less than they thought it was worth two years ago.
• 20:10
  SPEAKER_00: So you are seeing that.
• 20:12
  SPEAKER_00: But the chickens have not come home to roost.
• 20:14
  SPEAKER_00: You've seen some private equity firms like the UK MFS firm that went down uh for mortgage stuff.
• 20:21
  SPEAKER_00: You've seen a family office in California that was more fraud related.
• 20:25
  SPEAKER_00: Uh, you're starting to see some fraudulent, a lot of fraudulent mortgages come out, especially in the private lending space.
• 20:32
  SPEAKER_00: There was a whole case in Baltimore.
• 20:34
  SPEAKER_00: But I think that what will ultimately be the inciting incident will be maybe not even something in real estate.
• 20:44
  SPEAKER_00: Because if anything, real estate is the one asset class that actually is something, right?
• 20:50
  SPEAKER_01: Yeah.
• 20:51
  SPEAKER_00: It's different than owning a security, even on real estate.
• 20:54
  SPEAKER_00: It's you know, owning a loan or owning the title to real estate is much different than owning a participation in a in a loan or you know, and stuff that is unsecured, um, you know, a loan on a loan, you know, against you know, you use a loan on private equity.
• 21:12
  SPEAKER_00: That's risen up that there's all these people that are borrowing against their private equity investments.
• 21:18
  SPEAKER_03: So I think that the let alone my my NFT of an ape as part of the ape club or whatever.
• 21:25
  SPEAKER_00: That's right.
• 21:26
  SPEAKER_00: That's right.
• 21:27
  SPEAKER_00: Do you have the gold phone too and stuff like that?
• 21:29
  SPEAKER_00: I mean, like, you know, who knows?
• 21:31
  SPEAKER_00: Who knows where to put your money these days?
• 21:33
  SPEAKER_00: But I would say, if anything, hard assets, right?
• 21:35
  SPEAKER_00: So real estate is a hard asset.
• 21:37
  SPEAKER_00: What I think we're gonna see is um private credit, uh, which is really private equity, right?
• 21:44
  SPEAKER_00: So private credit, private equity, same thing.
• 21:47
  SPEAKER_00: We're gonna see more of that intertwined dislocation.
• 21:52
  SPEAKER_00: And we're gonna see words coming out now that the UK failure of the mortgage company.
• 22:00
  SPEAKER_00: Now, a new report came out on Bloomberg just over the weekend.
• 22:03
  SPEAKER_00: About 300 million of the loans were never recorded in the public registry.
• 22:08
  SPEAKER_00: So they literally don't have collateral.
• 22:10
  SPEAKER_00: And the people that lent against this are supposedly the smartest guys in the room.
• 22:16
  SPEAKER_00: People like Atlas SP, owned by Apollo.
• 22:18
  SPEAKER_00: You know, and you see the chairman of Apollo get on TV a couple of weeks ago after the Milk Institute saying, well, we're worried about private credit.
• 22:29
  SPEAKER_00: We're worried because we we think people aren't making as you know good, they don't make as good a decision.
• 22:34
  SPEAKER_00: Other people in the industry don't make as many good decisions as we do.
• 22:38
  SPEAKER_00: But the reality is they've all they're all intertwined.
• 22:41
  SPEAKER_00: They've all they're everyone's a lemming.
• 22:44
  SPEAKER_00: And these organ, these private equity groups are so large that they don't know what they have and they don't know what they don't know.
• 22:51
  SPEAKER_00: So I think the inciting incident will be either a stock market realization.
• 22:56
  SPEAKER_00: We wake up and the people just chase liquidity and the machines just go berserk, or a major private equity firm that you know will go down and it'll cause kind of a cascade within financial markets.
• 23:11
  SPEAKER_03: Real estate's interesting because for all the the talk of the lock-in effect with rates, I'm almost thinking the new lock-in effect is people not willing to list their house because they can't get what they think it's worth.
• 23:24
  SPEAKER_03: If I live in Austin, I my house is a million-dollar house.
• 23:26
  SPEAKER_03: Well, if I can only get 700 grand, I'm not gonna sell it because I don't want to realize I don't want to realize anything with that transaction.
• 23:32
  SPEAKER_00: Talk about holding on to a sinking ship, right?
• 23:34
  SPEAKER_03: Yeah, yeah.
• 23:36
  SPEAKER_03: As an owner of real estate in Austin, don't don't talk to me over that.
• 23:42
  SPEAKER_03: No, no, you're good.
• 23:43
  SPEAKER_03: So I I do want to be maybe a little more positive here as as we as we wind toward the end.
• 23:49
  SPEAKER_03: And and I'll talk about your time in in loss mitigation, because when when things start to become troubled, kind of what I don't know how you are positive about loss mitigation, but but when it comes to helping institutions or investors navigate uh troubling times or troubled assets, thought thoughts on best practices or things you've learned there?
• 24:11
  SPEAKER_00: Wonderful question.
• 24:12
  SPEAKER_00: Um, my first book that I wrote in 2017 called Win-Win Revolution.
• 24:16
  SPEAKER_00: It's like my big short story.
• 24:18
  SPEAKER_00: I fell into buying mortgages in the summer of 2008, three months before the fall of Lehman Brothers.
• 24:24
  SPEAKER_00: I was a real estate investor and a commercial real estate broker in South Florida.
• 24:29
  SPEAKER_00: I get a call from a fund manager saying, I can buy these mortgages from the FTIC for 28 cents on the dollar.
• 24:36
  SPEAKER_00: I don't know if that's a good deal.
• 24:38
  SPEAKER_00: And that was like my light bulb moment because I didn't know what the secondary mortgage market was.
• 24:43
  SPEAKER_00: I also did not, in my wildest dreams, ever want to collect debt or be a debt collector.
• 24:49
  SPEAKER_00: So then all of a sudden in 2009, I'm managing thousands of mortgages for a private equity firm.
• 24:55
  SPEAKER_00: And it was very, and it was like, okay, so how do we do this?
• 24:59
  SPEAKER_00: How do we create a new paradigm for managing these distressed loans in such a way that you create this win-win effect?
• 25:07
  SPEAKER_00: So we created a paradigm that uh basically set the groundwork for a lot of the rules that the CFPB created in 2033, 2014, making sure that a borrower actually gets listened to, that you don't just send them a default notice and send them to foreclosure and not talk to them.
• 25:27
  SPEAKER_00: So, like when we would buy a pool of mortgages post-GFC, the first 30 first thing we would do is see who could retain, who could actually afford the loan because of maybe maybe there was a misprice.
• 25:40
  SPEAKER_00: Like back then it was a lot of strategic defaults because they people had$300,000 mortgages on houses that were now worth$150.
• 25:49
  SPEAKER_00: So we would find these people, we would say, if you can afford the loan, the mortgage at the property value,$150, we'll tell you what, we're gonna put you in a payment plan.
• 26:00
  SPEAKER_00: And if you make six payments, while not only are we going to put you on a permanent modification at a lower interest rate, but we're also going to forgive the 155 above the 145.
• 26:14
  SPEAKER_00: We're gonna put you back in an equity position.
• 26:17
  SPEAKER_00: Uh so we save thousands of homes this way.
• 26:20
  SPEAKER_00: For the middle 50% that couldn't afford to stay, allow people to exit with dignity.
• 26:26
  SPEAKER_00: They they they really create work with borrowers as the lender.
• 26:31
  SPEAKER_00: Uh, and by the way, we were private equity, you know, my uh thank God I had good partners that didn't want to be vultures, allowing people to exit with dignity.
• 26:40
  SPEAKER_00: Take some of that savings we got from the purchase of the loan, from buying the loan at a discount to the ultimate real estate value and pass that back to the troubled borrower and then foreclose when necessary.
• 26:52
  SPEAKER_00: So this is what win-win revolution was about was about creating a paradigm for how, you know, really in the world of loss mitigation, when a borrower has trouble, they need conversation.
• 27:03
  SPEAKER_00: And they need someone who isn't just going to read a Miranda about everything they say will be recorded and used against them.
• 27:11
  SPEAKER_00: They need someone that isn't going to just say, you owe us$40,000.
• 27:15
  SPEAKER_00: When are you making the payment?
• 27:17
  SPEAKER_00: They need someone to listen to what their scenario is and find a resolution that works for them.
• 27:23
  SPEAKER_00: And so that's really what my company has embodied for six, 18 years since the GFC is taking the discount I'm getting by buying that these loans from banks or private equity firms or the FDIC, and then passing some of that through and working with borrowers.
• 27:41
  SPEAKER_00: Now, the same can apply to a lender who has given a regular loan, same can apply to banks.
• 27:48
  SPEAKER_00: What often there's this attitude amongst lenders, amongst the banking world that you can't, you if you somehow communicate that you're willing to work with the borrowers, that somehow the whole industry is going to fail.
• 28:02
  SPEAKER_00: And that's just not the case.
• 28:04
  SPEAKER_00: The reality is that yes, you want to, you always have enforcement as a tool.
• 28:10
  SPEAKER_00: Um, but call but the old methods of collecting and bugging borrowers and scaring them with credit reports and and and not or worse, just not talking to them and sending the lawyers after them, that just doesn't work.
• 28:25
  SPEAKER_00: So we have really kind of we have really tried to teach the industry how we do it and how you can treat borrowers with dignity, listen to what they're saying, as long as they have a you have a cooperative borrower that's not hiding in there with their head in the sand, you can come up with a solution that works for everyone.
• 28:46
  SPEAKER_00: And that's what First Lean Resolutions now does.
• 28:49
  SPEAKER_03: Ton of really good stuff today.
• 28:50
  SPEAKER_03: Bill, I really appreciate you making the time.
• 28:52
  SPEAKER_03: And uh, like I like I said at the start, his newest book is The Storm Markets Meet, Mother Nature.
• 29:01
  SPEAKER_03: Thank you very much for the time, sir.
• 29:02
  SPEAKER_00: My my pleasure.
• 29:03
  SPEAKER_00: Great to be with you, Robbie.
• 29:07
  SPEAKER_02: MBS and U.S.
• 29:08
  SPEAKER_02: Treasuries extended the recent losses to begin July, but recovered slightly after Federal Reserve Chair Warsh reiterated a data-dependent policy approach and noted that inflation risks have eased, even though inflation remains above target.
• 29:20
  SPEAKER_02: Markets faced a volatile mix of risks this week, lingering geopolitical tensions, a closely watched jobs report, more on that in one second, and thin holiday trading conditions, all increasing the potential for outsized moves and interest rates.
• 29:34
  SPEAKER_02: While investors are currently assuming Middle East tensions will remain contained, any renewed spike in oil prices could quickly push treasury yields higher.
• 29:42
  SPEAKER_02: With many market participants on the sidelines ahead of the July 4th holiday, reduced liquidity could amplify market reactions, making even routine news a catalyst for larger than normal swings in rates.
• 29:52
  SPEAKER_02: On the data front, the May Jolts report showed the labor market remained resilient, with job openings rising to a two-year high while hiring quits and layoffs stayed largely stable, reinforcing evidence of continued labor market strength.
• 30:04
  SPEAKER_02: Consumer confidence, however, painted a more mixed picture as households reported weaker perceptions of current labor market conditions, despite easing inflation expectations and modest improvement in future outlooks.
• 30:15
  SPEAKER_02: Weaker than expected, June manufacturing data, including declines in both the ISM Manufacturing Index and SP Global U.S.
• 30:22
  SPEAKER_02: manufacturing PMI, reinforced signs of moderating economic growth.
• 30:26
  SPEAKER_02: Your takeaway?
• 30:27
  SPEAKER_02: Competing forces of labor market resilience and softer consumer sentiment support expectations that the Fed will remain a patient, data-dependent approach to monetary policy this summer.
• 30:37
  SPEAKER_02: Today's economic calendar brought June employment data.
• 30:40
  SPEAKER_02: Non-farm payrolls, which were expected at 115,000, were only 57,000 with some backward or downward backward revisions.
• 30:48
  SPEAKER_02: The unemployment rate, expected to remain at 4.3%, was 4.2%, and hourly earnings were up 0.3% as expected, and up 3.5% year over year.
• 30:57
  SPEAKER_02: The expectation was for a labor market that remains stable but not inflationary, with wage growth remaining modest and few signs of overheating.
• 31:05
  SPEAKER_02: Due to the holiday tomorrow and early bond market close at 2 p.m.
• 31:08
  SPEAKER_02: Eastern today, there will be no podcast tomorrow.
• 31:11
  SPEAKER_02: We've also received weekly jobless claims in at 215,000.
• 31:15
  SPEAKER_02: Later today brings May factory orders and weekly natural gas inventories.
• 31:19
  SPEAKER_02: After the payroll's release, we begin Friday with agency MPS prices slightly better than Wednesday's close, the two-year yielding 4.13, and the 10-year yielding 4.46, after closing yesterday at 4.48%.
• 31:34
  SPEAKER_02: Let's wrap up with a joke and some housekeeping.
• 31:37
  SPEAKER_01: Here's how to sing the blues, a primer.
• 31:41
  SPEAKER_01: If death occurs in a cheap motel or a shotgun shack, it's a blues death.
• 31:45
  SPEAKER_01: Stabbed in the back by a jealous lover is another blues way to die.
• 31:49
  SPEAKER_01: So are the electric chair, substance abuse, and dying lonely on a broken down cot.
• 31:54
  SPEAKER_01: You can't have a blues death if you die during a tennis match or while getting liposuction.
• 31:59
  SPEAKER_01: Some blues names for women.
• 32:01
  SPEAKER_01: Sadie, Big Mama, Bessie, Fat River Dumpling, Caledonia.
• 32:06
  SPEAKER_01: Some blues names for men.
• 32:08
  SPEAKER_01: Joe.
• 32:08
  SPEAKER_01: Willie.
• 32:09
  SPEAKER_01: Little Willy.
• 32:10
  SPEAKER_01: Big Willy.
• 32:11
  SPEAKER_01: Leroy.
• 32:12
  SPEAKER_01: Ramblin' Jack.
• 32:14
  SPEAKER_01: Persons with names like Franny, Amber, Jennifer, Tiffany, Brooke, Brittany, Heather, can't sing the blues no matter how many men they shoot in Memphis.
• 32:22
  SPEAKER_01: To make your own blues name.
• 32:24
  SPEAKER_01: Think of physical infirmity.
• 32:26
  SPEAKER_01: Blind, deaf, cripple, lame.
• 32:29
  SPEAKER_01: Then go with a first name, plus the name of a fruit.
• 32:32
  SPEAKER_01: Lemon, Lamb, Kiwi.
• 32:35
  SPEAKER_01: Last name.
• 32:35
  SPEAKER_01: President Jefferson.
• 32:40
  SPEAKER_01: Jake Leg Lemon Johnson.
• 32:42
  SPEAKER_01: Cripple Kiwi Filmore.
• 32:44
  SPEAKER_01: Well, maybe not Kiwi.
• 32:46
  SPEAKER_01: Oh, by the way, I don't care how tragic your life is, if you own a computer, you cannot sing the blues.
• 32:55
  SPEAKER_03: Thanks again to Xperian for sponsoring today's podcast.
• 32:58
  SPEAKER_03: From lenders and landlords to employers and consumers, Xperian helps connect the housing ecosystem with the data and insights needed to make faster, confident decisions.
• 33:08
  SPEAKER_03: To learn more, visit Xperian.com/slash mortgage and lead a smarter housing journey with Experian.