Wall Street firms took $274 billion in taxpayer money when they Weren't doing well they paid $18 billion In bonuses but they couldn't pay the Taxpayers $3.2 billion of the amount Paid out the excessive amount paid out In Cash When the taxpayers are being hit Most urgent task upon taking office was To shore up the same banks that helped Caused this Crisis it was not easy to do and if There's one thing that has unified Democrats and Republicans and everybody In between is that we all hated the bank Bailout I hated It welcome back to real estate mindset Today's video is going to be absolutely Bonkers as we discuss how non-banks are Potentially creating a housing market Collapse and I have our community expert Melody Wright here with us today to help Us figure out what's going on underneath The hood as it pertains to homeowners The delinquencies what's going on with The banks things of that nature and what We're going to do today guys is we're Not going to use Black Knight we're not Going to use any of those people Directly we're actually going to use all Of Melody wri's data all of her Experience and I'll tell you guys why We're g to trust what she's saying here In a second but before I do let me just Quickly plug you melody if you guys want
Some more of her Brilliance oh my gosh The substack was so Good by the way go To her substack M3 subscribe or don't Subscribe there's some free versions as Well but you would be supporting an Independent journalist Melody I love Your writing uh I love supporting you She's always like Travis I'll give you The free account like no friends help Other friends when we can afford to Right and then also guys here's her YouTube Channel Melody wri great Channel Love the Forgotten American series want To see more of that I absolutely love Your cause and don't forget guys she's Also a member of the doomers news Network Melly right how are You I'm doing well Travis we've been a Little busy haven't We yes we have been a little busy we Have been a little busy trying to save The world it feels like that you know Trying to save the world trying to Spread awareness trying to figure out What's going on and you know what I'm Asking myself Melody is how deep do the Lies Go yeah I just want to say Travis I Think it's so great um the fact that That Mitch story is getting out there on The appraisal fraud and I just want to Congratulate you again it was because of You and your community that you guys Have been able to bring this forth and
It's it's getting traction all over so I'm just really Proud it's something that impacts every Single American and is literally Something that is in sight that not even A lot of us but just a few amount of us Need to step up and we will bankrupt the Cats which affects municipalities again You know we've been all watching the Wrong things and that's part of what Today's video is and Melody you know I Want to tell the viewers real quick so When Melody's answering these questions And we're presenting you the data as the Viewer here's what I want you to ask Yourself and here's what I going to lean Towards when I'm talking to melody was The price decline the home price decline During the GFC more a result of non-banks and Banks Needing bailout and Speculation versus the Foreclosure Crisis in other words you guys were we Sold a lie was the price declin again I Know it's many things Melody but was the Price decline really just from the Elites and remember you guys and I'm Asking this question is someone that has Lost everything I lost my family as well During that time I lost everything I had A foreclosure I watched our government The Federal Reserve bail out the bank That had my home loan and then they took My house so I think this is a fair
Question trying to figure things out Here Melody definitely appreciate your Time I think where I really want to Start is I want to start with the Beginning I want people to really Understand who you are I really want People to understand why should we trust You what's your experience that you feel Like you know people should be listening To now I already know those answers Melody but I want to start from the Beginning can you tell us what your Background is and can you take us Through tarp uh the companies that you Worked with uh threatening the FED with Bankruptcy can you take us all the way To Brookshire Hathaway okay right before A us and fed fannyy and Freddy Mack but Can you take us all the way there tell Us about your journey Melody Right sure and i' I've talked about this Before Travis so you know I always think People are going to get bored when I Tell this story but clearly that was not The case when I wrote the substack Because um the feedback I've gotten has Been very powerful so I'll tell it again I guess uh I fell into Mortgage in 2006 September of 2006 um my anniversary Would be this month um as a project Analyst at a mortgage company and I Remember I remember very clearly sitting Down for the interview and the guy asked Me what made you want to come to work
For a mortgage company and I just said This is a mortgage company I had no idea And honestly I knew better I that's not Something I'd normally do in an Interview but I think I wasn't quite That interested in that job anyway I I Got it and I got it I was in a corporate Financial Planning and anal analysis Group and and your corporate fpna groups Are always kind of the right hand to Your executive because essentially Anything you you're going to do or you g To buy something or you going to sell Something you really need that fpna Group to kind of model it out help you Understand what's going on in the Business and with in October I went to This crazy party where uh you know They'd rented out a huge space in Downtown Minneapolis balloons were Falling from the SE the ceiling there Was a life-size Lego model of a home That people are walking around and People were just kind of nuts the people On the stage were just going crazy and I Remember turning to my new colleague and Asking is this Enron I really asked that Question because that was the most you Know kind of recent memory of people Just acting completely nuts um me Melody Yeah I I knew you were going to do this You know I hate to interrupt you the Viewers absolutely hate it they want you To sing but she forgot to mention and I
Should have mentioned this you know to Everyone Melody also Studied research and journalism she is An college educated expert when it comes To research uh education I sorry Journalism uh international monetary Fund she's worked for the with the Wall Street Journal she's ran a uh political Campaign with a Senator not his campaign I did not okay Run his campaign but I did help With uh manyi campaigns and writing and Things that like That sorry for interrupting you no yeah Well so okay quick I'll just say I Started out as an academic but I never Really had enough money uh to not work Full-time and so I worked several jobs In my undergrad but then when I uh went To NYU um I got full-time jobs and my First one was at the Wall Street Journal D Jones and I started on the executive Flooor um and luckily I knew how to use Microsoft products and when I got to Dow Jones no one had ever used those before They had a legacy system called dor and So I kind of started as a temp on the Executive floor and then you know uh Stayed there fulltime for several years And I learned a a ton I was actually I Can remember very clearly um Paul stiger Who was the managing editor at the time Uh getting hats that said Dow 10,000 uh This was the runup of the the 2000 um
You know bubble and everybody would wear Those hats because everybody was so Excited that the Dow was uh reaching Those levels similar today except it was Dow 40,000 you know if we keep going It'll be D 45,000 so anyway was around Kind of that um that Mania early on in My career and could witness it qu I have Quick question I did think of something That came up and y'all just to reiterate What she's saying she has a very rare And unique behindth scenes perspective On what's going on with mortgages and Her journey starts out literally guys Right before total Annihilation total Collapse and that's what she's taking You through but I just I wanted to pause A second and this is the important part The government was not going to provide Any form of Assistance the other Wall Street said They were not about to rescue Leman but Paulson was standing firm there would be No bailout the stop [Music] Market Leman collapses and there shock Waves to the world financial system Working for the Wall Street Journal uh An executive assistant for a politician Melody be honest I I was victim of this Did you get hooked to that lifestyle to That rat race to that Deb prison did you Did that did you get hooked to That yeah I think I you know I didn't
Really have a choice because I had Education Loans Travis and so but Absolutely I think that um you know There as we know there's no Financial Education and uh in the US and I had no Idea what I was doing and you know you Go to college the first thing they do is Sh have a credit card in your hand you Know you get the application without Asking for it in the mail you get 10 of Them and I mean they get you started Early when you sign up for those loans You typically sign up for your first Credit card and so 100% I mean I had no Idea what I was doing and you know I Always felt a little bit other from that Lifestyle to be honest driving I mean I Was around the ultra Rich right and I Was living in a tiny little apartment on St Mark's Place uh you know less than Probably my bedroom was probably less Than 300 square feet it was like a loft That and I had a computer under my I was Tiny this was in New York New York City Yeah and so New York City I I kind of Always kept just kind of um I was always Suspicious of that kind of wealth susp And I also just saw the way they lived And I knew I did not want to live that Way um you know when you are that Wealthy it's very difficult to trust Anyone and there was reason people were Always sort of betraying you um telling Your secrets selling your secrets
Essentially and so living in that world Working in that world it really gave me An appreciation for um not wanting to Have that kind of life but I still spent Like an idiot you you know in in New York City you don't cook you go out to Eat every night you know and even with Student loans I had to have this really High-paying uh job and when I left New York City I took a a break from the rat race Uh Travis because it had consumed me I Remember getting calls in the middle of The night at 1 2 a.m. from whoever I was Working for you know needing something Um and I never had a life and so I went Off to Taiwan and taught English for six Months and tried to kind of reorient Myself your heart sounds like you know You I think maybe you have to give back I I have this I always in in many ways Whatever I do I just put a 100% into it And so I this is something you and I Talk about all the time that we have to Be careful and not burn ourselves out With what we're doing now because we Have burned ourselves out previously in Those types of jobs and kind of giving Our all to things that perhaps we should Not have been giving our all to I get it I mean it's hard not to come you know to That line of burnout especially when We've been robbed of our futures the Inflation but Melody I mean let's I want
To tell the viewers you know so you're Around these people you're around these Bankers you started as an analyst Highly Educated a little bit naive maybe not Understanding the full level and depth Of the corruption and the fraud yet I Want you to take the viewers to tarp Okay and I want you to to bring us to When you guys the company you're working For they were about to go bankrupt they Were about to publicly announce Bankruptcy but I believe and I don't Want to speak for you seconds before the Company you working for was going to Publicly announce bankruptcy The government bailed him out some History so the company that I worked for Actually was a subsidiary of General Motors um and General Motors was running Into trouble in 2006 we had been kind of The Prime uh the crown juwel of a GM we' Made them a lot of money uh but they They needed some cash and so they turned Around looked for a buyer for our a Majority owner for our company and that Happened to be cus uh which is private Equity and they came in they completed That P that purchase for a I think it Was like $4 billion it was a lot of Money but very quickly they could they Realized that the party like that party I was at in October 20 2006 was actually Over and they wanted a purchase price Adjustment and so one of the reasons
That I became so knowledgeable about the Space is that I basically went out and Learned this for them so I could come Back and report to them you know about What is the business how does it make Money and then what is it worth and so Like you say you know Travis we started We in in doing that we started our write Downs early we started them earlier than Chase and others and there was all this Trouble Brewing um and in fact we were Number one on the mortgage imp plotto Meter page as the most likely candidate Candidate to go bankruptcy and we held Off for a very long time but entally What happened is uh you know we were Sitting in the fall of 2008 in earnings Getting ready to do earnings I was in New York in the GM building and Travis You and I have a picture of me in front Of the GM building from when we went to Uh New York and I was there and we were Told not to talk to anyone we were Sitting in this tiny little room like This temporary office I was there with It uh the investor relations team and Basically the reason why we weren't Supposed to talk to anybody is the plan Was there was a high likelihood we would Announce the resat bankruptcy that that Next day in earnings or we wouldn't we Really didn't know but they want they Didn't want anybody talking to us so We're sitting in that room and I hear
And this is on the executive floor you Know this is the floor where the CEO is All of the executives in the GM building And I hear outside someone running down The hall like just boom boom boom Running screaming get On the phone right now and I believe I Was really the only person that had that Person's phone number but that's another Story but it was a CFO of a very small Bank that we had in Utah and this was The beginning of the plans of us Becoming a bank holding company you now Know this bank as Ally um but back then It was GMAC and that was the beginning And and we got our tar funds and so it Wasn't seconds to your point but it was You know hours before we were going to Announce we decided that we would not be Announcing our bankruptcy and sure Enough we got our tarp funds recently Wall Street companies that had received Tarp financing tarp of course being the Troubled asset relief program had just Paid out $18 billion in Bonuses once that news became public Everybody in government spoke out Against the bonuses everybody lined up In front of the television cameras to Say the bonuses were wrong everybody Said that it was outrageous and Unacceptable for these Wall Street Bonuses to have been paid out when these Institutions were receiving billions and
Billions of dollars let me make sure Everyone's on the same page so what Melody is discussing right now is Banks And non-banks they have a portfolio Which represents a whole bunch of money A whole bunch of mortgages this is very Important okay so she's witnessing and You know and I'm going to say this Carefully I hopefully it's not painful I Don't I don't want to be hurtful Melody But when I take into account what you said about Being a useful idiot I I still am a Useful idiot because I'm not fully awake Yet I'm starting to learn stuff every Single single day would you say that you Are a Pioneer at the you know and on the Forefront Of fraud Configuration was I on the Forefront of That I you know I think now I have to Understand that I was but that certainly Was not how I felt Travis um they we we Thought we were saving the world we were Working you know 20 hours a day to the Save the jobs of the people at our Company it felt like an important Mission but uh what I remember more than Anything is um or or I'm sorry what I Think now more than anything is that we Were really I mean they were using that Um they were using our youthful Ignorance um to really and who is they I Mean I don't sometimes you know is it
Ignorance is it ineptitude is it on Purpose but I think as I look back on This now now I understand that probably Most the folks like me had no idea we we Had no idea the scale of what was Happening but there were probably a few People that did that we interacted with Um and so at the time I I can say this Uh myself and our colleagues we thought We were doing the right thing we thought We were fighting for our our colleagues Fighting to keep jobs and in reality um That is not at all what actually ended Up happening and we in in essence Enriched a very few number of people um You Know through the efforts through what we Did and and then you could see it we Could go to The Feeding Frenzy that Became our auction now and Berkshire Hathway because um essentially this this Platform we were top five originator and Serer and we truly this this is the Other thing I've come to understand is We were truly a non-bank you know of Course we had this tiny bank but we were The only non-bank of the big five which Gives me a completely different Perspective of what's to come because Now the majority of your lending is done By the non-banks and not the banks and So we were the only one of the last Cycle the other big four were your Banks Like City Bank of America Wells Fargo
And Chase and Melody I want to make sure That the viewers understand what Non-bank is a non-bank is a bank that Ain't got no money a non-bank is just a Middleman that is sucking the money into Their own pockets in the form of fees uh And commission I think it's fair to say And I think that you and I would both Argue that it's a complete waste and When I say they Melody when I say they It's them that I'm talking about those Elites those people that are controlling The mechanisms like a puppet master of These non-banks they got no Capital the Capital is is is it's not even real so It's just borrowings it's borrowings Travis it's just debt I mean that's Right you know and then the minute that Uh so when you take out those huge loans Um you there are certain covenants that You have to keep like your tangible net Worth has to be a certain amount and if You trigger those um coven they can pull Your loan in which is what happened to Us um and we lost a lot of our funding Because we don't have we didn't have Deposits like they do at the banks Because that's how the banks can get Through things like this they can use Your deposits to lend out money whereas We were just borrowing money right I Mean it is a huge huge issue and again The question is is was that really the
Respon you know why we had price decline Because that was so much credit Tightening when all the banks are going Out of business especially those Non-banks that take the majority of Those risks are going out of business Then they shut the doors to the bank but I want the viewers to understand as well The points that you're trying to make And then I don't want to go to uh Brookshire Hathaway but we're talking About an extremely fragile banking System took me a long time to understand This the banking system has been broken For a long time the banking system is Like the Texas power grid all right it's Being held together by duct tape fraud Corruption and these non-banks she she Not number five serer meaning they're Servicing they're collecting the money On all of these mortgages number five in The nation you know it was so big and They understood their power so well and Understood the Fed so well and that was Just back then right now it's way worse So well that they actually threatened The FED if you don't bail us out we're Going to go bankrupt so you better bail Us out or I mean I mean to to threaten Something like that melie I can't even Not exactly Trav can you go to the to Like okay you guys are putting all this Effort in you're you you are a Pioneer You're trying to help all these people
You're trying to keep this serer Together um but eventually even with the Continuous bailout it still went under Can you take us to the point and can you Explain how the bailout just kicked the Can down the road yeah so we got the tar Funds but I think a lot of those funds Uh were probably used in our rebranding Campaign to Ally uh because the Servicing operation was was being Somewhat starved and so what you're Referring to to is something I write About um the consent order was about the Servicers what they were being accused Of was incorrectly foreclosing on Someone now we did this huge review all Of our cases and found that we had not Incorrectly foreclosed on anyone and at The time that had all the big Banks um Found the same thing but were they doing Uh bad things they were Robo signing Affidavits which you cannot do that it's Illegal and so we were put under Something called the consent order and This is when a lot of the your top five Had to put all of their foreclosures on Hold which is one of your points about The fact that the foreclosures didn't Necessarily um you know precipitate the Price declines it was really more around The consumer stress but essentially There was a civil money penalty related To that every every time you see a bank Get in trouble there's always some
Penalty but my CEO was from bear he was Very aggressive and basically what he Said to the fed and because we would sit On these daily phone calls where they Essentially made us break contract law That's what happened when we did the First loan modification is you were Breaking contracts um which had Significant impact on those Securitizations where they bundle up the Mortgages and things like that um and so Once and we'd have to sit on the on the Phone with the FED every day talking to Them and Guys these people don't know Anything about Finance Econ just the way the world works and so Ultimately um he did threaten them like Hey you know what we'll just go bankrupt Instead of paying your fine unless you Give us a lower fine so I think that's What you're referring to but there was So much going on and as I said so much Interest in our platform in our loans Because we were so large and a lot of The non-banks looked at this is their Opportunity to get a really big piece of The pie and Warren Buffett obviously saw The value you know we had been engaged With them and do diligence for a very Long time um you know I think at one Point they were actually thinking about Buying the platform but essentially Berkshire hathway ended up buying a a Big portfolio of our loans that I would
Then find later as I after I left my Company um but you know essentially too I think you probably want to talk about The fact so this the what happened in This when you go into an auction like This there's something called a stalking Horse bidder and we had one that was Actually Nation Star or Mr Cooper and we Did due diligence with them for months Because they really needed our Technology our servicing platform um Because they didn't have one they had an Old one but essentially we did all this Uh due diligence but then this company Ain did some back of the yeah and and Anybody in this industry Knows the name Aquin it's probably one Of the worst it's really like a Four-letter word um but they ENT they Basically just kind of did some math They took their portfolio which was very Small private and we're like oh we can Offer this much because we'll offshore Everything what they didn't really Realize is the politics that are around Agency servicing and that's uh you know Fanny May Freddy Mack um the politics Around Fhaa uh so they came in they upset the Auction uh they bid they completely Outbid Nationstar and you know all all we knew About them at the time is that they Offshored it was terrible customer
Service as well as they didn't pay their Vendors this is what we heard from Everybody and so none of us wanted them To win but they came in and and that Year the guy that was the head of that Bill BBY was featured on the front page Of Forbes uh not a year later it was so The feature was all about how he was so Smart he' amassed his fortune blah blah Blah a year later was how did he lose That fortune which we could have all Told him he was going to have a lot more We tried to tell them honestly over and Over uh that this game was very tricky And they didn't listen and you know they Kind of Imploded and so they lost and you know The birth perhaps of the next round of Acquisitions of loan Portfolios that's that toxic debt if you Will and so you know really what I'm Trying to paint the picture of is Melody Was the pioneer of interpreting the law On how to help people but a lot of those Elites from my interpretation a lot of Those Elites just used and abused her And just used her good heart and Comprehensions and education to just Profit them just a handful of people and So Melody actually traveled the nation This was towards the end she traveled The nation going uh several different States props to you melody holy smokes I I couldn't do I die right now and she's
You know one of her jobs during these Acquisitions and during you know this Time she was meeting with law firms she Was meeting with attorneys and she was Ex explaining to the attorney's loan Relief because she was a Pioneer and I Say all of that y'all because she has The experience that's what I'm trying to Explain and so when she talks at least I Believe Melody I think we should listen And so anyways you have all these Acquisitions no one understands what's Going on you're interpretating you know You're one person interpretating what Appears the whole industry and so now They bail out Fanny May they bail out Freddy Mack and then this whole Repurchase program settlement begins and Repurchase basically means usually Non-bank a lot of non-banks Banks they lend and they Break they commit fraud I'm just going To say they commit fraud And so that's a repurchase there's huge Fines can you now take us to you know Pass these acquis Acquisitions and During that time explain the power of Fanny May and Freddy Mack and how they Birthed repurchases which is they're Buying fraud they're not changing the Guidelines they're just buying fraud and How that also birthed a us which again To the viewers I always get knocked on This melody a US stands for automated
Underwriting system that allows Banks And non-banks to approve loans with Limited upfront due diligence and effort It's a literally a computer program you Input data you hit a couple buttons and IT issues you out an approval Melody the Mic is yours my friend yeah so I think Repurchase originally were to was about You know Finding errors so when you when You originate a loan you make that loan You close it you turn around you sell it Uh to May Freddy Mack uh you know you Might sell it into a jinny May Securitization um but if you didn't do Something right this is written in the Contract then that could trigger a Repurchase and one of the reasons could Be fraud Travis but honestly uh there Are a host of reasons they can turn Around uh to you to to make you Repurchase and so um and and they were Of I mean a lot of these things weren't Controllable uh it you know and and and But just responding to them could take So much work so I had an entire room of Uh writers that wrote chronologies What's a chronology basically is Everything that happened in a default Case because that you would have they Were very much about the timelines um And this is for something a little bit Differently called compensatory fees That if you don't follow certain Timelines they can charge you at the
Same time for instance the fed is saying You can't foreclose Fanny May is saying You have to foreclose like this is the Job of a servicer you sit in the middle Of all these crazy things but the Repurchases got out of hand they got Crazy they were coming back for all Kinds of things crossing a tea dotting An i and again I'm exaggerating but it Was essentially that we decided to try And settle our origination repurchases With them give them a lump some to say Let's be done with this nonsense so we Did that what happened they turned Around they came up with a new type of Repurchase called a servicing repurchase Um which a lot of those happen to be Title issues at time of origination but The point I think you're trying to make And what I'm trying to is that you know They will figure out any way to squeeze Those Originators and put back all the Risk on them and to us it looked as if Any loan that went into default so the Idea is it's supposed to be kind of a Sample when you are you're doing a QC Audit or quality control audit and You're supposed to be doing a sample uh But what we could tell is every single Loan that went into default they would Check to see did you dot that eye Because they didn't want the expense so They will always figure out a way to Push it back to The
Originators it is so intriguing to the Viewers hearing Melody talk about this Because my experience is as an Originator and so when she says QC Reviews she's making sure loan offices And Underwriters are doing their job Which means they're reviewing Documentation to prove that a borrower Can afford a mortgage and not go into Foreclosure and so you know a loan Officers and under are supposed to do That due diligence she's coming in Melody's coming in finding whoa just Like Allan Greenspan said when he was in Congress like they asked him what did You do wrong alen Greenspan well I Underestimated corruption I thought People were you know good people still Uh they weren't but let me ask Melody is It fair to say and you help me come to These conclusions and Concepts is Fanny May and Freddy Mack Just the long arm of the FED Travis it's Very difficult to say these uh these Regulatory or these government agencies You know Um I I sorry Travis I I don't know that I can Answer that question I don't I don't Think you know it's they're very large These organizations and there's a lot of Vested interests and you never quite Know exactly why they're doing what They're doing but I think that they're
Probably I mean you know we know about These bureaucrats that kind of outli Presidents that sit Within These Agencies so I I do think sometimes there There is um an agenda put it that Way I say that I mean I say that because It seems like Fanny man and Freddy Mack Is just the fed and I also say that Because you know looking back at history And then what we found out what happened In 2018 so 2018 the cfpb okay Consumer Financial Protection Bureau found that In during 2018 that 16% of the loans Total loans that were generated through Automated underwriting were in violation Of qm meaning that the debt to income Ratio exceed the allowable thresholds And the first thing I thought well why Would you even allow lenders to even Exceed that threshold told but the crazy Thing is instead of them getting Penalized like you would think and uh Shot across the bow instead of that Melody they just changed the guidelines So they didn't have to pay fines again Putting the consumer In Harm's Way and That's why I say I mean it seems like Fanny May and Freddy Mack are just long Of the law and look and then again when I was reading your substack I was like Man there was a settlement back during The GFC where again everyone's going Through these books you know everyone's Going through these books they're
Finding fraud fraud fraud or or Violation compliance compliance Compliance huge massive problem and so Fanny and Freddy Settle for I believe you said 462 Million to me that's the birth that's The birth of when we lost control Completely um and that's again when a US Was born everyone's trying to stay alive You know the oh my gosh don't send me to Prison so here's a us and a us do you Think that automated Underwriting I used to think it takes This I used to think it takes the human Element of error out of the equation Melody but then I just realized that Most humans that are loan officers are Horrible loan officers so now I'm Thinking if we can assume that we Properly train our loan officers and Educate our loan officers and hold our Loan officers Accountable isn't a us just actually you Know harming due diligence wouldn't it Be better that we required Underwriters To manually it's called manually Underwrite uh files and I say this last Thing because those automated Underwriting systems they're only as Accurate as the people that are Inputting the Data and you can learn how to play them I mean that's what everybody figured out
Is how do you play the a us how do you How can you just kind of rejigger this And then or do that little you know Income stream or whatever how can I make The changes to get approved it's like Any game you're going to learn how to Play it you're going to learn how to win It and I think that's exactly what Happened with a us why that million Loans probably occurred is because People figured out how to work the System they always do and so you know I I think that I think this is a big Misunderstanding is everybody's turning Around I'm still hear it on social media Media today it's like the banks the Banks and it's like no in actuality What's behind this is a government Sponsored Enterprise and I I have come To the conclusion like you Travis that I Really do believe credit can't be uh Automated that to truly make a decision About credit you you do have to sit down Talk to that person really understand um Because this is this is what happens and People at scale figured out how to play The system and to them they got that Approval back and and in actuality if You don't make a loan let's say because I've talked to some of my clients about This let's say they don't want to rely On a us right they want to do their own Manual underwriting and decide not to Originate Al loone they could get in
Trouble for doing that I mean that's Redlining they could call it any number Of things um and you see how much effort Is actually put in into uh Non-discrimination in the mortgage Industry but in reality I think a lot of That is uh covering up are taking away The agency from these Originators and Lenders and they they refus to Bear Responsibility you know they didn't bear Any responsibility the last time I think One of the things that really troubled Me about all of the uh the consent order In the AG settlement it was like well What about The Originators yes we were Both but it was the service offers who Were dealing with this nightmare because Of what happened during Origination that really got penalized And got into trouble and when in reality It should have been about uh the fraud That did occur at time of Origination yeah and I see that same Thing and I have to be very cautious Saying this but I see them like these Agencies use you know racism To change law almost use it uh to Manipulate the lie to to carry on the LIE now don't get me wrong if someone is Treated with racism that person that Unaccept with that that hate crime Should be locked up and sent to prison And learn the true value of life which Is to love and to serve and so stay in
Prison Until you realize you should love People so I'm Not I I won't go there but but the thing That is so crazy to me you would figure With as many fees and middle men that we Have that we can count on the due Diligence but the fact fact is Melody we Can't and we see similar things that are That have happened in the past happening Now in essence you know these non-banks Are killing they're killing America I Mean they have less regulation and so That's why I keep asking and I keep Asking myself maybe that price decline And I'm specifying price decline I I Know it took like six seven eight years For the housing market to rebound but The strongest times of price decline was During 2008 and 2009 and foreclosure Inventory didn't even really start in Until 2010 and so I know late payments and Purchasing power all of that matters but When I overlay the price decline with The distress of the Banks it's like it freaking matches man And it's like maybe they lied to us Maybe it was maybe they just said it's About foreclosures because we were going Through that pain but they needed to Access the money uh to bail out their Buddies I don't know anymore Melody you Know I feel like everyone's lying to me So I want to move on I want you to
Comment on that and then I want to move On to the current state of the market But do you see why I'm asking that Question I see why you're asking it I Think it's incredibly complicated um and I think you Know at the time for sure uh I can look Back now and and what we knew absolutely And what I sorry because this is kind of Personal Travis because I I sacrificed a Huge part of my life um during all of This and my health to a big degree is What I've I've now realized that none of Those programs uh helped the borrowers Typically none of what the FED did Helped the borrowers like one thing they Wouldn't let us if anybody called in and Asked for a loan modification you would Have to re-review them even if nothing Changed now people caught on to that Well which people caught onto that well Your strategic defaulters you're Typically those are the people that Actually do understand Finance those are Typically your top 20% top 10% but your Regular forgotten American would never Even think about calling and saying give Me a loan modification numerous times Just to put their foreclosure on hold Your forgotten American wouldn't think About filing bankruptcy just to put Their foreclosure on hold and in reality A lot of those loan modifications and a Lot of the actions by the FED actually
Helped uh the people that didn't really Need help I remember very clearly my CEO Telling me a story about his buddy down At the shore who was living in a you Know like multiple million dollar home I Think a$ N9 million home and he called The CEO and said wait do I have to pay My mortgage now I don't want to pay it Can you tell me how not to pay It that those are the people that got Helped it was not you Travis it was not The regular Americans it were it was Again people that understood how to work The system or that had political capital And so it and it will be and it has been The same way uh if you look at SVP svb Who really benefited from that bank Bell Out um wasn't us it was not us it was a Bunch of millionaires that should have Never had all their money in One Bank Ridiculous when the FDIC only at that Time only insured $250,000 th svb should I mean and Probably I'm sure I'll get some hate but I don't see any reason why that bank was Saved and again it didn't help regular Americans it helped a a handful of very Wealthy individuals including foreign Wealthy Individuals you know Mel I think it's so Important to talk about this and to Really kind of go down that thought Process because if the reality is it was More about speculation and these lenders
Tightening up credit you know and being That fast forward to today the housing Market so bifurcated meaning that today Versus the GFC there are more people so Far right comparably that have equity And there are some people that have a 3% Rate and some people that have an 8% Rate and so it's important to understand That yes it is bifurcated but the math Isn't there uh the over a lot of these Markets are overheated but it all goes Back it all ties back into non-banks and Those non-banks are really leaning on The current state of households and that And that's why these things it's slow It's slow it's slow and then all of a Sudden it all comes falling down and so Melody can we quickly go through uh some Of your data I'll put up on the screen And hopefully you can see that okay but Can you walk us through some of the data That you shared in your substack Starting with the delinquency rate on Single family Residential Mortgages Booked in domestic offices all Commercial Banks yeah so this is uh the Fred schedule of the delinquency at the Banks and you can see that in Q3 2006 I Think we're at 1.74 delinquency Something like that um and you know what What I wanted everyone to understand is We are essentially where we are today so Q3 2006 when I started at rescap um we Have about the same delinquency as we
Did then looking at the Fred schedule Now why and we've talked about this on Your show Travis why this Fred schedule Is can't tell you the whole picture is It is just commercial Banks and we know That the majority of lending happens at The Non-banks um and so what I'm trying to Show is that Uh basically it doesn't matter that Delinquency is low right now based on What I'm seeing in my client books Borrowers and consumers are under stress And we saw a really big uptick in June Um the push and pull of delinquency Because of these massive programs people Are going to fall out of a program fall Into a program parents will help friends Will help they'll go in and out of Delinquency but we are at the point now Where it's becoming sticky and this is Very reminiscent in my opinion of Exactly where we were in Q3 of 2006 I'll say it Melody and in this data Is manipulated we know for sure that They've constantly changed stuff on us They've constantly manipulated The Narrative so that this is BS but it is In but I think it is very intriguing That you pointed out we're literally at The same delinquency rate as we were Right before we entered the great Financial crisis I mean and look at a Skyrocket and that skyrocketing
Represents what it represents that you Cannot trust the market it represents That there is a narrative and that the Market is always ahead of you if you Keep your head in the sand and so let me Move on to the next one Melody I'm sorry Um this one's good I really like this One because to me this takes out you Know a lot more of people's opinion Because here we can ask who's going Behind on their mortgage when you know What c when did you purchase your house How are you doing and this data clearly Shows that the people that purchased at The peak and I know that was when we had The highest volume of transactions but The people that purchased at the peak it It's a fact that they have the highest Rate of current delinquencies will you Go over this data please Melody yeah and Just to be clear to everybody that so This isn't showing their delinquency Rate they're showing this is showing the Percentage that that vintage year is of Overall the delinquent loans and so the Number in 21 is much larger than any Other cohort and so when you think about Vintage just think about that's the year It originated and so we should not be Seeing that Travis not with the GFC Style intervention we've already had From the government but importantly and And this was on another schedule we Don't have to bring it up 2022 does have
The highest delinquency rate and again That should not be happening either uh Anytime you see newer originations going To delinquent you know that there is an Issue in the System well yeah yeah we can clearly see That there is the problem that's brewing And we clearly know from what's going on Right now and what's going on in past And even i w even go into ancient Civilization but my God you can't trust The people in charge and that sucks that Really sucks but I'll move on to the Next data set and again just to Reiterate this is like how many pieces Of piie right this represents pieces of Pie this whole thing is the total pie Total loans um those property taxes home Owners insurance are brutal a lot of People didn't prepare for that but Here's the delinquency for the first Seven months by vintage year Melody can You talk about this please yeah I think It's this schedule is actually really Important because you can see 2021 in Its first seven months did just fine Right it there was no issues and I think That's because PPP money was floating Around the ERC tax credits you know you Still maybe had some stimulus in your Bank account Um and so it just it did fine this is The first seven months but since then You can tell that it they have not been
Doing fine meaning that these loans Likely should never have been or a large Portion of them should not have been Originated and these loans that are Delinquent definitely should not have Been originated and we will start to see Um more repurchase requests for early Payoffs early payment delinquencies and Things like that that really represents The bifurcation as well you know it Really shows that gap of when it just it Got spired out of control and I just Want to reassure people that are down on Themselves like oh I missed out or if Anyone's bullying you oh you missed out On the best time to buy in history no it Wasn't that was one of the worst times To buy because in order to get those two 3% interest rates you had to literally Forfeit what you wanted in a house don't Forget the bidding wars the lack of Inventory people were waving Contingencies it was absurd and so don't Get down on yourself we we have it in The data now now we're seeing what Happened to people that made a decision To purchase a house and now honestly and This is bad but I may be able to buy the House that I wanted via Foreclosure that's messed up I don't Want to buy my dream home from someone Else's turmoil so the more people that Pay attention the sooner that we can Correct and stop the system here's
Another one Melody this is overall Delinquency percentage by vintage year What can this tell us about about what's Going on today behind the scenes tells Us you look at 2022 it just kind of Tells me everything I need to know Travis like uh that we we really it was Not a good time to buy it was a terrible Terrible time to buy if you were going To take out leverage um because as these Folks were getting into these loans they Didn't realize their property taxes were Skyrocketing they didn't realize their Insurance was doubling tripling and some And some cases if you're in California And Florida you don't have any coverage At all or you have to use in California You have to use the fire State it's Called the state fair plan and so Essentially you have government Subsidizing insurance uh because people Can't afford it and then in Florida you Have citizens which is the Government-backed um insur of Last Resort there and so you you can argue as Well that another thing that's propping Up home prices are the facts that we do Have these subsidized Insurance programs Um you know and so it it's as if all of The incentives have gotten completely Messed up and you know the the Speculation someone had described California to me especially in some of Those more expensive locations as people
Were just trading cards it was like tra And you know they weren't these aren't Homes that people were living in they Were Investments that people were Trading and a lot of that was being done By Foreign owners and so I think what That chart showed to me Travis is you Know there are a lot of things um that Were going very wrong during 2022 in the Housing market let's end us out Melody By let's take a look at the 90-day Delinquencies let me throw that on the Screen real quick right here um let me Get our let me get my face out of the Way okay there that way we can see the Bottom here and I just you know before I Let you go here I just wanted for the Viewers this column right here that says Reduction of income I think is a Especially important because this is Explaining why the delinquencies 90-day Delinquencies your purchasing power is Dead for years I mean people like yeah No the government's going to bail me out But if the government bails you out your Purching power is dead in the water for Maybe even a decade it just depends what You do after you know you lose Everything so Melody can you please Explain you know what we're looking at Here yeah this is one of the most Important schedules I think that we can Look at this cycle it tells us so much And this is found in the Hud loan
Performance report some you know and What this schedule is is the reason for Delinquency so when you call into your Servicer they'll say what why are you Behind and you give a reason for default Um and that gets coded into a system and You need those reasons um and so what This is showing us is that people are Falling behind because of unemployment Reduction in income but the other thing That this schedule is very important to Look at is around is thinking about Fraud thinking about investor Participation thinking about that Philly Fed paper that talked about non-owner Occupancy fraud and when you are Investing um when there is investment in Homes like this uh that 30% of them are Likely fraud so that reason for that uh Reason for default for no contact what Does this mean it means your servicer is Trying to reach out to you and you're Not responding I mean this thing just uh You know month over month this jump is Huge and this is what happens uh Investors walk away they don't have any Skin in the game they will just hand the Keys back they'll never contact you Again you'll never see or hear from them And the serer will then spend years Likely litigating to take back uh Ownership of that property but looking At that no contact tell tells us that You know kind of the the stripper in The
Big Short is is kind of saying oh no I I Can't really afford all these loans I I Don't want to talk to anybody I'm Done oh my gosh you know I didn't Realize that until we just started the Segment of this video and and that's why I was getting excited I was like oh my Gosh because I was looking at the bottom 2024 Q4 and I was like just trying to See if there's any irre you know things That were irregular and obviously Reduction of income but when I got over Here to no contact I was like oh my gosh No contact is seven has a delinquency Rate of 17.8% and then I went to the previous Quarters and I'm like it's there's not Even double digits on here I mean it's Smoking that and then I was thinking Melody I was like I wonder if it's those Sub two guys right I wonder if like the No contact because that doesn't make Sense that jump like that so I bet you With Those I don't think that's the Delinquency rate I think that's the Percentage of 90 plus that is delinquent And the reason for defa yeah I just Wanted yeah so okay okay yeah that's Very interesting it seems like the no Contact has been that way for a while And look at how low it got you know in 2022 Q3 and Q4 I bet you if we go back To Q2 and three of
2020 um I bet you that's when that sub Two had the biggest growth look at that I mean there's no 1.3 1.4 I mean there's No it's it's I'm surprised they even Have that as a category it's so low same Thing with death and illness and look at The other thing Melody holy smokes what I don't understand that death and Illness um skyrocketing as Well uh this this is this is Revealing yeah and I think you know Death and illness we know we had covid But also you know something Unfortunately that I saw during the Default crisis is uh this really takes a Toll on people's health I mean this is Really stressful going through a Foreclosure um you know getting those Notices getting those phone calls Thinking you're going to be thrown out Of your house you know I think it's Really interesting that since this poll Survey that both you and I look at Travis when they ask okay are you Current on your mortgage and the amount Of people that say no is now up to six Million and there's also a question on There are you afraid of being foreclosed On the next 30 days and so many people Resp respond yes and I think why would They respond yes you can't even refer Anyone to foreclosure for 120 days and Then on top of that like you know Basically they're going to do everything
In their power to keep you from going to Foreclosure so the fact is that like That just tells you how stressful this Is for these homeowners that are sitting You know that have this delinquency I Hope we provided to the viewers a few Things I hope that they could answer for Themselves is the Federal Reserve good Is Fanny May and Freddy Mack just the Long arm of the FED are they just really Supporting fraud because again you we Didn't cover this too much you know when We have reports from the cfpb saying That 16% of the total loans in 2018 were In violation of qualified mortgage debt To income Ratio and then their action instead of Fining them and warning them is to Change the law and allow it to continue To happen it makes me feel like The price decline was always a result of The speculation it was always a result Of the elites it was it it was a little Bit of the foreclosure and consumer Purchasing power but this runs deep and So Mel let's end here let's end maybe You know with all your experience with With all the things that you've been Through and your overwhelming love for Normal People what kind of Hope can we end with We don't want to end with people being Scared and stuff like that how should People leave this video
Feeling I think they should just be more Aware Travis like that's all we're Trying to do is educate this is a very Complicated system that no one Understands and when you make that home Purchase um you think you're just buying A home for you to live in for the next You know however many years but in Reality you're you're you're buying Entrance into a very complicated system Where the folks behind it regardless if They come from the government might not Have your best interest at heart this is A money game this is you know I think Back to um Freddy Mack wanting to do That closed in second program after the Just the Devastation that we saw back during the GFC as people's Equity got completely Destroyed because of price declines and So for Freddy Mack to come out with a Straight face uh to you know kind of Talk about this program just to me that Was it that was the nail in the coffin Because if they could do that then um They don't they don't care about the Consumer at all all they care about is Keeping that engine that securitization Machine going um so you know I just Think it's so important to be aware of Of what Club you're you're asking for Access to when you buy a home because They don't really care if you're a Member or
Not I think we really need to to Redefine currently I know this for sure Actually redefine our definition of home Ownership redefine our definition of What success means what life is about And I'm not saying rent and be happy I'm Not saying that at all I'm saying right Now in the market and in the economy the Fed and the elites and the corruption Has just spiraled so far out of control We've been so manipulated that it's okay Not to buy right now especially if You're choosing not to buy and in the Meantime you're learning about these Things you're empowering yourself if you Don't want to listen to Melody and I That's okay I hope that's the thing I Hope right once you buy you're done at Least if you're on the sideline you can Still make a decision when you've Purchased you've already made the Decision and so if you want to buy so be It try to do it with some principles try To do it with some fundamentals not Emotion not at all use math and you know I think most people that are using math To purchase real estate we'll see that There's there's not a lot of math that Works and so in that it's okay to rent You know find find a place in a nice Area in a nice area that's way cheaper To rent versus Z love your family love Your life Melody I appreciate your time As always I will see you on DNN I'm sure
Absolutely thank you so much Travis of course now guys if you're out There investing in real estate you guys Already know we wish you luck and we Hope you win
