Mortgage experts, Josh Summerfield and David Pendley, join Lynne for a discussion on proactively managing mortgage payments.

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0:00:07.1 Lynne Jarman-Johnson: Hi, welcome in. I’m Lynne Jarman-Johnson with Consumers Credit Union. Money, I’m Home is your place to find finance, fitness and fun here at Consumers. But also, we like to talk about things that are very important and what’s kind of going on out there. We do know that right now, you know what? Interest rates have gone up. Life seems to crunch a little bit when that happens. Student loans started processing again. And so, when all of a sudden that happens, that also can crunch the things that are the big expenses in your life. And here to help us, talk us through, is Josh Summerfield and David Pendley. They are our mortgage experts here at Consumers Credit Union. Every month you guys join us. This isn’t a topic that’s easy to talk about. It’s about the fact that there are times in your life when all of a sudden you look and the month is very scary because you think you might not be able to make that mortgage payment, make that rent payment. It truly happens. And when that starts to happen, how can we help our members?

0:01:08.9 Josh Summerfield: Yeah, the first thing is having an open conversation. We want to talk to you early in that process. When you start to realize, hey, things are getting a little tight here. There’s a little more month at the end of the money. That whole song. But we want to talk to you early. Let’s see what options we have. So, connect with us before you get two, three months behind. By then, the ball’s maybe a little further down the way and things get a little more difficult.

0:01:34.4 LJJ: David, it’s hard to talk about failure. And sometimes, is that what people shy away from, about not opening up?

0:01:40.8 David Pendley: Yeah, I think there’s a personality type, and sometimes it’s me. It’s avoidance, and a day turns into a week and a week turns into a month, and you just don’t want to deal with it. And you just throw the … Finally, you’re just apathetic, and you’re just throwing the envelopes away and so forth. But your lender wants to work with you. They want to know what you’re going through. They want to help you through this. They don’t want your car, and they don’t want your house. They want you to succeed. And there’s all sorts of plans. What we learned from the last mortgage meltdown in 2007, ’08, ’09, are ways in which we can remedy it or get people through very difficult times.

0:02:16.9 LJJ: Talking about what happened then and what is happening now, as far as interest rates going up, do you see that as an issue where the bubble will burst, Josh? Or are you looking at it more that, okay, we’re going to maybe suffer a little, but we’re going to get through this?

0:02:33.1 JS: I think it’s much different. There’s totally different reasons why that happened back in 2008/2009 than what we have now. Now with the rates going up and prices going up a little bit higher. Things are tight, but I don’t see a bubble by any means from what I’m reading and listening to.

0:02:51.1 LJJ: David, what about you? You have so many national contacts, too. Do you look at it from the scope of national then bring it back down to home?

0:03:00.4 DP: Absolutely. Absolutely. And here’s the fundamental difference between 2008/’09. There were four million homes on the market in 2007, 2008, 2009, and roughly one million buyers. And the builders had just built a huge flow of homes that were not selling, so that compounded it. Right now, we have a lot less homes being built. We’ve got roughly a million, million and a half homes on the market. We’ve got 3-4 million buyers, so that’s kind of a good thing. We’ve got demand. The rate thing is going to be a bit painful, and I think that’s going to be a natural equilibrium that will balance things out.

0:03:35.1 LJJ: Have you found, Josh, that there are ways that our loan officers are really going out and trying to give that peace of mind in advance of buying a home?

0:03:45.2 JS: Yeah, it really starts with the planning, at that stage when you first talk about buying a new home or moving, to really start to prepare yourself and put yourself in a good position. So, you’re not going to get too tight every month on making your payment, where you’re not going to the mailbox and you’re freaking out about what bills are in there. So we’re having those conversations and really starting to dive into, what are the utilities and the taxes and all the other miscellaneous things that you need to plan for so you’re not getting in too far over your head.

0:04:16.5 LJJ: And David, sometimes you don’t want to hear, “Oh you can’t have that house. You shouldn’t have that house.” It’s not our responsibility at Consumers to tell you that, but it is good to do due diligence and have caution.

0:04:29.4 DP: Yeah, and that’s part of what we talk about always, is building your team. Have a little board of directors that you’ve developed for the process of buying a house. Maybe it’s a parent, maybe it’s a friend, an accountant, your attorney or whatever, your mortgage loan officer, and develop this plan to succeed, where it’s a successful venture. A year from now, you’re going, “I’m so glad I did that.”

0:04:51.1 LJJ: So, Josh, on the street right now, we are working with realtors continuously. Do you think that there is a little bit of a, the reason people are hesitating, is because we’re smarter now than we were in … We were just handing out houses back then.

0:05:08.2 JS: Yeah, I mean, programs have changed, guidelines are changed, there’s tighter guardrails, a lot of that stuff, which is all for the better, obviously. And I think as Consumers, we’re smarter. We don’t want to get ourselves in that position again. So, we are taking a little bit more time to think through some of those long-term effects.

0:05:27.7 LJJ: So, when someone does face this issue and maybe they aren’t sleeping at night, and if that is you, what’s the number one thing that we can do at Consumers to help, David?

0:05:38.9 DP: I think the number one thing the member can do is to reach out to your loan officer and tell them the situation. “This is what I’m up against.” And they’ll get you in touch with the right person to help you walk through a good plan to survive this and get through it. It was interesting in ’07/’08, when this happened, we saw some people, that it was like a violation of their integrity that they could not make the payment, and it was very serious on their emotional health. When they realize I’m not alone, and I’ve got somebody who’s willing to advocate and help me through this process, it gives you a tremendous peace.

0:06:14.0 LJJ: Josh, have you seen that? I know our members are so wonderful in the sense of we’re not saying that we have defaults. That’s not the case. But what we are saying is when there is trouble, have you found that, that it’s just a big lift off people’s shoulders?

0:06:29.8 JS: Yeah, I think for sure, when we’re willing to have those open conversations and say, “Hey, we’re here to help you,” you can see the tension go away. Like, “Okay, yeah, they’re in my corner. They’re trying to help me the best that they can and keep me in my house,” or, if heaven forbid, it comes to that. But yeah, we always want to help our members in any way we can.

0:06:49.1 LJJ: And if you’re listening in with another financial institution and you do have any stress, the most important thing is that open communication with your loan officer, with your financial institution, the people that you’re banking with. You guys, thank you so much. A difficult conversation, but one that is so needed.

0:07:05.5 JS: Yeah, glad to be here. Thanks as always.

0:07:07.2 DP: Thanks, Lynne.

0:07:07.7 LJJ: Hey, thank you for listening. We hope you’re having a great week, and we will talk to you next month. Money, I’m Home. I’m Lynne Jarman-Johnson with Consumers Credit Union.

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