Housing’s Impossible Math: Why Traditional Lending Models Are Breaking Down

Alrighty then, uh, how do I put this? Well, as a loan officer, it's always drilled into our heads that we have to be aware of our own da data. That we must, I mean, we must serve our entire community. That includes the underserved, minority communities, and what are oftentimes otherwise identified as low-income communities. We have to lend to everybody, and I get it, it's a great idea. That's the mandate, though. It's a mandate. I'm here to tell you that if you want to stay in business as a loan officer, you gotta seek out the affluent. You do. Seek out those with a lot of money and lofty, high-paying jobs. Am I asking you to do this at the expense of the otherwise less fortunate? Well, let's put it this way. Our housing policies and the mess we're in has left the less fortunate completely out of the home buying process. It's no longer a game that they can play. It's no longer a game that they can afford. So if they can't participate, what's the point of creating expectations that you can't fulfill? Here's the reason why, and how in the hell did we get here? Home buyers now require an 86% income increase to afford rising home prices. On this graph, we are off the charts. Literally. Look at the top. We're off the charts. The green line is the income to afford a median home in the United States. That's what you need, not what you have. The gold line is what you make. So to put it plainly, we make $85,000 on average, and you need to make $158,000 if you want to buy a home. So the average family can't buy a home, which, logically speaking, means those below average are truly screwed. Via housing policy, the underserved communities should now simply be referred to as the unserved communities. Can't do anything about it, can we? So if you don't help them, and you can't, then you're in violation of the Fair Housing Act and ECO. Bam! You lose your license. You're excommunicated for lending. If you try to serve underserved communities, you simply go out of business. Now, is this inflammatory? Am I right? Am I wrong? And if I'm wrong, explain to me, dear legislature, how I'm supposed to proceed forward as a lender, because right now it appears you've put us in quite a pickle. So how do we fix it? And let me just say, if we can identify the problem, right, then why don't we fix it? So here's the problem. It's not too hard. Researchers from the Federal Reserve estimate that home construction would have needed to expand by nearly 300% to keep up with this surge in demand. It's a supply issue, just like the cost of gas, right? It's a supply issue. We need more homes. So why can't we build a bunch of homes? I mean, have you seen Canada lately? They've got a lot of trees and a crap economy. We can send a Tesla to Mars on the government dime, but we can't build homes. We can build a nine billion dollar telescope and send it a million miles away from Earth to take some really, really cool pictures. Homes? They should be a layup, right? Well, politics. Here's the problem. If we build a bunch of homes and pull prices down by diluting the high-priced inventory, that big equity will disappear faster than snow on lava. When that happens, every media outlet, both fake and real, will bemoan a horrible policy that cost our country a fortune and overlook the simple fact that that very act is the first in what should be a salvo to truly restore the middle class. It's really that easy. It's just we have the gumption to do it. Because you see, if that happens, law officers, lenders, realtors, brokers alike would rejoice. Our industry, our economy alike would regain its strength. It's interesting though, isn't it? Lenders and realtors are so often depicted as the enemy of consumers and housing. The truth is, we're the solution. So here's your choice, loan officers, in a nutshell. One, follow government mandates and go out of business. Two, go after people with money and find yourself in the middle of an eco-violation. That's kind of how it looks from this side of the desk. Tell me I'm wrong. The choice is yours. Well, the choice is ours. I hope this helps. Thank you. Hey, loan officers. Listen, if you want to get your files through underwriting super fast, you got to learn how to package that file. Well, Oaktree is going to teach you specifically on how to structure your non-QM deals. You're going to identify opportunities for exceptions, real-life examples of loan structure, develop flexible solutions, crafting custom, yes, custom solutions to fit your borrowers and maximize your loan approvals and so much more. It's going to be on the 10th of this month. It's free. And I'm telling you, you don't want to miss this because this will affect every single loan you write. Fill out the information down below.