[Music] Breaking news is we've just learned that There's an additional 27% more households that are currently Behind on their mortgage despite what Leading industry data providers are Suggesting like Black Knight so I have Our community expert and all things Mortgages and all things delinquencies Melody Wright here with us to help try To explain what the heck is going on and If you guys like what she has to say Do Not forget to go to her substack M3 Melody this is a I mean I'm really Jealous of your writing your writing is Absolutely exceptional value packed Newsletters you guys go here subscribe To that also don't forget she has her Own YouTube channel Melody Wright as Well as being a member on DNN first and Foremost Melody before we dig in and Before we go under the hood and we show The viewers what's going on how are you Today I'm doing well Travis how are you Doing we just got new home sales so that Was very interesting piece of data so I'm excited today Travis yeah good good it's important to Be excited so I'm gonna Jump Right In Melody to show the viewers uh Black Knight which is the leading data Provider here's black Knight's mortgage Monitor report September 2024 and again The bad thing about all this melody is
If people are using this like industry Professionals and they're using like Lies and fraudulent data then all They're doing is spreading the Misinformation now the first thing Though let's look at Black Knight again Rosy colored lenses even with these Rosy Colored lenses look at month-over-month Foreclosure starts are up according to This 32.3% so again even though they are Rosy Colored that's a pretty massive jump Month over month in addition to that I Wanted to show the viewers once again Foreclosure inventory and starts and I Highlighted 2010 and 2011 because that's Really when the Foreclosure inventory Started to hit the market we really Didn't get foreclosure inventory until After the recession and until after home Prices already started going down Remember we had massive price decline You know a little bit in 2007 but a lot Of it was in 2008 and into 2009 so the Price decline happened and recession Happened prior to the Foreclosure Inventory and you can see that here in This chart home affordability Melody Here's the national payment to income Ratio right now we're sitting at 34.3% that's as high as it's been since About 1986 and that's only counting ible And interest so it's actually higher Than that when we count taxes and
Insurance that have been absolutely Skyrocketing but I also wanted to take a Moment to pause real quick here even Though the payment is at 1986 levels the PE Ratio or the price to earnings ratio Is almost double so back during this Time the p ratio was about four and Right now it's close to eight so the Prices are parabolic when we compare What the prices were in the 70s and 80s Talking about home price decline fueling Foreclosures and delinquencies here's a Map that Black Knight made right here of The one month home price change and you Guys can see several Metro areas and These are just the top Metro areas are Experiencing a month-over-month price Decline and so I've highlighted here on The right side probably the Metro areas That are the biggest at risk of Additional delinquencies starting at Jacksonville Florida which is leading With month-over-month decline at 0 43% Uh and then the next is Tampa and then Orlando so Melody you the first three Top Metro areas of price decline are all In Florida and then we have a and then Another Florida which is Miami San Antonio Texas you're leading so far as Far as a month-over-month price decline So far so far yes Melody can you explain To the viewers and is it fair to say That generally at least based on our Experience with just a couple decades
Right is it fair to say that we really Don't get foreclosure inventory until After recession and until after price Decline is that fair to say why or why Not yeah I I think that's fair to say I Think that you know honestly though we Should Also it can be very confusing looking at That historical data because a lot of The banks went on hold uh they were di They were dictated to go on hold because Of their bad practices and so that you Know that time period when all that was Going on around 2010 2011 um you know it You don't really know how much of that Inventory was being counted uh because Because of that hold but to your point That's 2010 and 2011 and and so in Essence just like we don't see Unemployment claims really Peak until After recession has already started We're not going to see foreclosures um Start to take up until you know we see Continued pain in the economy which We're starting to see with accelerated Layoffs and Bankrupcy yeah and Melody I mean it's Fair to say that foreclosure is not a Good indicator of recession is that Correct no not at all I mean not at all I mean that's like you say Travis I mean To us I guess it's probably self-evident But foreclosures come after because what Happens you lose your job right you
Can't pay your mortgage for people like You and me you you might have some Things you can do you might have Something you can sell you might be able To go refinance your home uh and it will Buy you some more time but then you run Out of time and you and I'm seeing this In my client books right now Travis Overnight uh we we increased our Flor Closures by 30% as well and so what What's also happening in the background Is that you've had a lot of pain in the System you know like the FHA we see it All over the FHA but it just takes time With all of these programs V8 Foreclosures are still on hold they'll Be on hold till December and effectively Fanny and Freddy foreclosure are on hold Because they just launched this new loan Modification targeting a 20% payment Reduction but you know that's not Working for everybody in my books I saw A denial because when they ran the Calculations because of property taxes And insurance which you just mentioned They original payment the the new Payment for the loan mod was more than Their original payment because of taxes And insurance so foreclosures aren't Going to happen before a recession They're they're going they are a lag Indicator because that's when people run Out of options now the fact that we've Had so much investor
Speculation you know we might see more Initially but especially you know those Folks those investors that just decided To walk away you know they're they're Just going to walk away and we we're Seeing that number or the no contact Number go up in the FHA population and So those might that's probably a lot of What we're seeing right now and kind of Early uh middle and lower class folks That have just been completely crushed By inflation that's kind of the Population of default right now we have Not even begun uh sort of the Prime Borrower default wave which was the Default wave it wasn't subprime the Default wave that you know sort of Peaked in 2011 that was Prime borrowers It's hard for people to understand What's going on especially if the Industry professionals Melody are using Data from a data provider that is hiding 217% of the delinquencies and so now I Want to move on and I want to look at The HUD survey because basically we're Talking about the establishment versus The household and what have we learn From the job market well what we learned From the job market is we can't trust The establishment survey and that the Household survey is much more accurate How do we know that 88,000 job revisions so we know that the Establishment surveys are always wrong
And so I'm going to take you guys into HUD but before I do that let me take you Guys back into Black Knight so we can Remember how many households they're Reporting as behind I highlighted right Here and it's a little bit hard to see But Black Knight is saying as of July That there's 1.99 million households Behind so I want you guys to remember That and then I also highlighted Something up here I also want you guys To remember that the total amount of Homeowners that were behind in 2009 was 7.6 million because that's going to be Important to remember for later here's The HUD survey this is a housing market Indicator monthly update this is for August of 2024 and there's some very Revealing information in here I want to Show you guys how we calculated the math Because I don't do this for you we have To do this oursel again this is HUD this Is not the census when I show you guys The census you guys are going to you Minds are going to be blown Hut is Saying that they're taking estimates From approximately 82.5 million homes And for rental information they're doing Estimates based on 4.99 million so when We look at the actual delinquency rates Which is is 5.53% you guys see that Right here behind on mortgage 5.53% I Also highlighted rentals behind on Rental payments is 12.3% but again
Here's what this equals 5.53% of 82 Million that's 456 million households again Black Knight is saying 1.99 million this is Saying 4.56 million the difference is 128% that's just a survey the household Survey from Hut is saying a delinquency Rate of 5.53% with 4.56 million people Behind also just real quick I did the Math here there's also 5.65 million Renter households that are also behind So Melody the difference again is 2.56 Million households so a minimum and I'm Going to show the viewers something even Crazier in a minute but at minimum when We compare Black Knight to HUD again They're missing 2.56 million households That is 128% differ My question to you melody is do you Think that black knight is Intentionally holding back the data to Make the house market appear stronger Than what it actually Is I don't know if they're holding it Back Travis or if it's just they don't Have um you know certain servicers on Their platform like these uh they're Called specialty servicers that those Are the ones that do a lot of the Default a lot of your bigger companies Will actually sometimes subservice out To them so I'm not exactly sure that
They're I I don't know if they're Intentionally hiding it I do know that Either um they they don't understand the Space they they don't understand how This works um and whether that's Intentional or are they're actually Trying to mislead it's hard to say like If you look at an example today's um Headline from Bloomberg says that There's a refinancing wave they took That from the applications that have Ticked up for refinance However when you look in context that is Nothing it's not even as high as it was Um back during the GFC you have to go Back to the early 2000s and so you know That's very misleading in my opinion for Them to say this financing refinancing Wave as if it's already happened too Right and we know applications are not Closed loans we don't know what that Pull through rate is actually even going To be on those applications and so are They lying are they intentionally Misleading I don't know but but the Result is the same our community is not Informed by these Sources right I mean are you at least Suspicious I am suspicious because you Know ice owns uh black night ice owns The New York Stock Exchange I mean there Is just a lot of reasons that all of Their incentives are out there to keep Us unaware of what's actually going
On yeah honestly I'll say it Melody I 100% think they they are doing that on Purpose because if they're if they're Missing 128% of the data and the real Delinquency rate is almost 2% higher Than what they're saying then yeah They're manipulating the data to make it Appear that the house market is stronger Than it actually is because that suits Their narrative and that narrative Benefits their bottom line and that's What I think but I want to take us to Something else that's very interesting I Mean there's all these data manipulation Games multiple data providers I'm going To stick with HUD I'm going to look at Another thing from HUD that's going to Go into the FHA stats so all we're going To do is we're going to look at FHA uh Because I think what you guys are going To see here is extremely revealing take A look FHA single family loan Performance Trends because there's a few Things that are you know pretty Revealing here that I think it's really Good to look at to tie into the Qualified mortgage failur or really the Industry changing the guidelines first Of all as of right now this is saying That the delin rate for FHA is 12.29% I believe Melody during the GFC And 2009 and correct me if I'm wrong Wasn't it more like 13% in 2009 yeah 13 To 14% FHA is is very close very very
Close to 2019 levels but what I also Want you guys to see is I want to show You something that I found here uh which Is basically 2018 in 2019 now what you Guys are looking at here is a total Cohort of loans which basically means It's categorizing what year the loan was Originated compared to that delinquency And so I've highlighted 2018 and 2019 Because what's very interesting is the Delinquency rate on those loans even Though it's only accounting for about 10% the delinquency rate is 19% melody in 2019 delinquency rate is 19% in 2018 it was 17.86% so it's fair to say That that year so far has a higher Delinquency than what we have right now So right before Lockdowns FHA at least and I it's very Difficult to find conventional mortgage Data had a worse delinquency crisis Brewing than the GFC and I'm wondering Melody do you think that these numbers The 2018 and 2019 numbers have anything To do with this report from the cfpb This is a Bureau of Consumer Financial Protection Bureau here's the docket Number if anyone wants to see this is About an 85 page legal document and I've Highlighted a couple things here that I Think are pretty important okay so based On 2018 data remember 2018 has the Highest rate of delinquency
Guys highest rate of delinquency let's See what this says based on 2018 data The bureau estimates that as a result of General qualified mortgage loan Definitions 43% DTI limit which by the Way they raised that it's supposed to be 36 but they raised it and even though They raised it to 43 there was still Violations approximately 957 th000 loans or 16% of loans closed In 2018 were in violation guys violation Of debt to income ratio now instead of The bureau and government agencies Finding these companies they just Changed the rules so they just passed That on to the consumers I just want you Guys to think about that for a minute They protected the banks they put that On you and now those bar and we just saw The data are suffering based on 2018 Data the bureau estimates in the general Qm proposal that 943 th000 high debt to Income ratio most of this was actually Good credit conventional loans would Fall Outside of the qm definitions if there Is no change to the general qm loan Definition so again they just changed The definition Melody and completely Devastated those uh borrowers Melody What are your thoughts on all of That well two points I really want to Make one is a lot of people don't Understand that FHA has really doubled
Since the GFC um it was pretty ugly out There after the GFC in terms of mortgage Lending and so they really had to push These government programs because your Banks pulled back they didn't want to do Private loans and they didn't want to do Government because they know when you do Those government loans that claim payout Rate is is is not good and so those Government loans are very risky and so The banks figured that out and they're Like nope we're done so the non-banks Came in but of course they don't have Deposits um but the non-banks came in to Do those FHA Loans because the bank said No and so that product got pushed and so It really took the place of that that Kind of private speculation that Happened last time um and that's why we Say it is subprime so that's very Important the other thing that I can Tell you is that I saw this in all my Mortgage books you saw delinquency Ticking up of Fromm loans originated 2018 we have borrowers still in my Client books that uh should have never Gotten a loan in 2018 never never they Have been in some form of delinquency Since then always and every month They're trying to catch up they get Behind three months they go so I Absolutely agree with you that things Were starting to really deteriorate in The housing market and if it hadn't been
For the FED buying those mortgage box Securities and lowering those interest Rates so much that everybody could refy I think we would have already been in a Kind of GFC style crisis that's exactly The point I was trying to make I mean do You think that you know based on those Numbers we just looked at I mean TW 20% Roughly 20% delinquency in in 2018 2019 I mean do you think that that you know Delinquency crisis was potentially worse Than the GFC I mean you you talked about The total number of loans like it's Double but I mean I mean come on Melody I mean oh I think I think this is much Worse Travis this is much worse because Credit scores are inflated you know we Didn't look at instead of looking at What students owed we looked at a $250 a Month payment I mean we really stopped Looking at true ability to repay and Just what they could afford as a payment But what when you're looking at just Payment what do you you're assuming They're always going to have a job and And that's not how that works and and we Are absolutely you know people may say That you know unemployment is still low The fact is though it's been going up And so the Assumption out there that Everybody can pay that payment um is a Faulty assumption even if the numbers Are Small yeah I mean and and again they're
Hiding the data and I want to show the Viewers now Melody the census okay so we Showed you guys Black Knight we we Showed you HUD the households HUD survey But I'm going to show you the sensus Survey now because we found an extra 4.3 Million households behind again we found An extra from what Black Knight is Saying an extra 4.3 million households behind take a Look this is an Excel again this is from The Census Bureau Melody actually sent This to me and my mind was blown but you Guys can see right now households Currently caught up on mortgage we have 6355 million you guys see that right Here okay this is a household survey 6355 million not people people Households are behind on their mortgage That 2.35 million represents an increase Over Black Knight of 217% so we just found 217% more households more Data that shows people are behind on Their mortgage and so let me ask you This next question Melody who Should who should we lean on more to to Figure out what's going on should we Trust the establishment Black Knight Or do we just do we trust actual Households do we trust Main Street do we Trust the people who do we trust Melody yeah I think it's you know There's not a lot of people to trust out
There uh but black we're not going to Trust the industry insiders when it Comes to what's the true picture of the American Consumer and you know we also Know that some of these some of the Older establishment surveys from you Know the BLS and others have a very low Response rate what I found very Interesting about this survey Travis is Its response rate is going up now I Wonder is that because when you're in Trouble you want to tell somebody about It maybe uh if it's the government Because maybe you want some help so in Cont contrary to all of our other Surveys out there that people are have Stopped responding to this one is Growing this is a newer series and so I Think we have to look at this survey Because this very much you know you guys Know that I talk about the silent Depression that was a term Emil Kinowski Came up with but we have been in a Depression it's just the media refuses To acknowledge it and they've done all Kinds of fancy math and fancy uh you Know statistical tricks and I remember When I took college stats or statistics What you realize when you walk out of That class is you could find a St Statistic to support just about anything And so you know they do some fancy Footwork and they really try to convince Us that we are living in a much better
Economy because they know our Expectations about the economy are what Drive consumption because if you think That the econom is going into the you Know what you're not going to be Spending on your credit card as much as If you think everything's this Goldilocks out There and and just to recap for the Viewers okay we showed you Black Knight Black Knight has let's just round up We'll do them a favor even though They're not doing us a favor Black Knight has two million households behind HUD Housing and Urban Development also a Government agency right has 4.5 million The Census Bureau has 6.3 Million massive massive massive Discrepancies and Melody let me ask you This I mean honestly and I know you Don't like putting anyone down I I Really admire that about you if let's Just say you know let's just assume that The households are right uh Americans Know what's going on with themselves Let's just assume that um and let's Assume 6.3 really are behind and black Knight really is only using two million Isn't it fair to say that if you're an Industry professional and all you're Using is Black Knight data to explain to People what's going on with Delinquencies isn't it fair to say that
If you're doing that all you're doing is Spreading Misinformation you're you're making the Best of the information you have and let Me just tell you something really funny When you look at those black knight Schedules they do a little line for Delinquency of I think Pre2 uh six they don't show the whole Historical series and I think what's Funny about everybody talking about how Historically low foreclosures are right Now you can go back using Black Knight Data and pull it and essentially it is Exactly the same level as August of 2006 Because we are in early Innings just Like you started this video off Foreclosures don't lead they lag and so You know I do think they're trying to Present the rosiest picture out there And and I'll give you an anecdote I was Talking to one of my clients and I was Presenting that delinquency by vintage Year that I shared with you kind of Similar to that cohort schedule um and What that was showing is that 23 and 24 In terms of uh had the largest share of Delinquency and you don't want to see Early delinquency that is signs of Trouble and my client said to me why I Haven't seen this data anywhere why Isn't anyone talking about this well I Have that data because I have access to The backend database it's not they're
Not putting that in their report now um You know I don't know is that because They're trying to paint a Rosie picture Or they truly just don't understand the Mortgage Market because you know my Expertise came from learning it in times Of Crisis and I think a lot of those People have left the industry and so you Know I do believe there is definitely Some um strong arming and and to kind of Lead people to certain certain trough of Water uh but yeah and it but it's not Here's the ultimate thing that we want To say to everybody is stop looking at It it's not telling you the real picture Of what's going on and maybe they Themselves are also just Delusional I mean look at all the Digging that we had to do I mean I'm Been digging for two two and a half Years and I just now found the census Survey and I'm going to show the we're From within the industry Right you and I of all people would know Better how to find this stuff than your Regular person on the street and we're From the industry and it's taken us all This time to find these things it has I Mean it's crazy I just wanted to recap Remember at the beginning of the video I Told you guys to remember in 2009 According to Black night they had a Total of 7.6 million households behind Okay I told you guys remember 7.6
Million According to the Census Bureau we have 6.3 instead of like yeah good job guys Like you guys dug deep you found all This stuff right with the S state in HUD Instead of that from our own colleagues And from our own peers are like doomers You've been talking about this for two Years ain't nothing happened everything Is fine and I'm like well it's not 2018 Anymore you crazy Psychopaths we have a Very toxic housing market not only is The housing market toxic so is the data Reporting agencies I mean the toxicity And the manipulation and the and not Only that I mean the apathy as well I Mean more people should care about this Melody how can we end this video with Everything that we just uncovered Black Knight HUD sensus Bureau progressively Worse and worse and worse as we get away From the industries Right take all of the stuff that we Learned in this video and dice that up And and how do you take all of that and Condense that into some type of Hope or Ability to hedge against Challenges awareness I mean awareness is So important Travis if you're not aware Of what's really going on how can you Prepare for it and and you know look Like you and I two years ago three years Ago we started making very different Decisions about our lives because we
Could see what was coming that's why We've been talking about it for so long Is because we wanted to give people Awareness so they could prepare so they Could do things they could consolidate Households you know they could you know Figure out save more money you know all Of those spend less pay down their debt Because those credit credit card rates Are crushing people and because we know And that's why we've been saying it and That's if you have awareness if you you First have to understand a problem Before you can start to solve it and so Now you have more information now you Understand the true picture of consumer Health out there now is when you have to Start making different decisions that Are going to protect you D what what's Going to be a really kind of not great Time guys but in that we can you know we Can come together as a community and Help one another and that you know my Message of Hope though is that on the Other side of this I believe that we're Going to have affordability for shelter Again and and we're going to have to go Through some pain to get there and and None of us want that pain like I don't Want anyone I don't care how big of a Jerk they are I gotta be honest with you I don't want them to lose everything That's not you know um because typically Those bigger jerks you know what they do
They typically they end their lives I Mean that's the unfortunate thing about You know what we saw during the GFC were A ton of suicides we've already seen you Know deaths of Despair increase that's Another reason why I think we've been in A silent depression so a lot of times What happens and you know it's not Necessarily that person it's their Family that's left behind it's young Children that are left behind um having To fend for themselves and so you know There is hope because there's hope in Our community um and the awareness gives Us a weapon or Tool uh to really protect Ourselves with as these things start to Unfold 100% step one awareness step two Action and I tell people all the time Melody I've told you this multiple times In case you guys don't know I mean I Lost everything right during the GFC I Lost everything out of foreclosure Bankruptcy repo a six digigit tax lean That followed me around for nine years I Had to run out the statue limitations at The IRS because they got to extend uh The time that they could collect for me Because the bankruptcy extended that for Them but needless to say if I would have Just changed my life six months before I Lost everything I I really believe I Would be a Millionaire right now but Instead I lost big and what we're saying Is is hey it's okay to lose small right
Just don't lose big and I lost big Because I kept my head in the sand and Again if I would have redone my whole Life I would have lost small it would Have been painful but it would have been Small and instead Melody 11 years of Depression I don't even know how I made It out of that I mean it was so bad but You know I think what we're doing here Is really giving people additional Perspective and all we're saying is just Pump your brakes save your money that's It I mean are we really that bad at People I mean save your money I mean oh Shame on you Melody I like what we're Doing here I think what we're doing is Is again the perspective that I didn't Have when I lost everything like I Didn't know back then that there were Hiding information and lying to me and I Didn't think that we couldn't trust the Federal Reserve well I know now that we Can't right so again awareness your Awareness helps your actions it helps Govern your actions and I think that Again though you know when we look at at Apathy you know I think step two is just As important you know step one awareness But that's step two man I think that may Be a bigger problem Melody I think that Apathy how how big a problem do you Think the lack of initiative is for Consumers to Change it's huge and it it's not until
Pain and and I can tell you amongst my Friends and family I've been warning I Have been you know I most of them think I'm crazy you know like the the rest of The world uh but you know I've been Warning them warning warning warning and And they've been coming to me recently Uh one who had done a lot of like you Know jobs that where people have a lot Of money they're going to pay for you Know private yoga coach da d d da social Media manager uh all that has and Airbnb Host well Airbnb host uh that ran dry Over a year and a half ago for this Person all those other clients have Disappeared And now this person is going to have to Go back and get a like a service job and They made a ton of money a ton of money Off of Airbnb during the boom and I kept Telling them please please please change A little bit of your behavior save some Of this don't go to Starbucks every day And I would just send little Annoying Annoying messages like one Starbucks a Day that's $1,800 a month that's the Morage payment you know all of this to Say that it it those little decisions Can truly save you a ton of heartache And but there is it's you know it's Recency bias we believe what has been Will be unless you're just wired Differently like either through Experience like you or just wired
Differently you know and so yeah Travis It is the action is so important and the Apathy is is massive when apathy gets Met with reality and that's that Unfortunately for a lot of people it's Going to take that hit in the face that Reality before they change their action And hopefully though our community is Much smarter than that I believe it is Every fiber in my being tells me that Our listeners are stronger and I want to Give you know I've been battling Inflation myself I'm not a rich person I Mean I'm struggling saving in fact I Haven't been able to save I've been Living paycheck to paycheck um because I Can't save if you can't save you're Living paycheck to paycheck and so some Of the things that I've done to cut down On my budget has been obviously going Out to eat that's a huge one obviously Subscriptions that's a huge one I just Canceled one yesterday saved another $60 But also what I'm learning is medical I've actually rearranged my medical I Won't go there with you guys but maybe You should look into some things uh and Another thing that I'm I'm combating Right now Melody electricity if I got a Solar I got a solar generator and some Panels so now I understand how much Electricity I'm wasting and I got to Tell you I probably if I wasn't well I Have you know obviously three children
So it's not just me but I honestly think I could cut my electric bill in half if I was just conserving my electricity Literally if I was just a responsible Adult and I and I and I made sure my Children were doing the same right I Think that we could I Honestly I think that a lot of us can Save half maybe on our electric bills if We just remembered how we used to live Back in the 80s oh yeah when in 90s when Our parents were like turn that light Off you don't live Inn door you remember That now it's like just keep the lights On and it's LED I remember in the fourth Grade I won a prize for coming up uh With a slogan I said be like Irv erve Wasn't very clever but I want to but That's everybody was about it be like Irv and conserve Conserve I wanted to say you know to the Viewers real quick that Melody and the I Have set up if you're interested in Helping us I hate to say this because I Was not raised this way but a GoFundMe Account for our trips abroad that we'll Be doing all the accounting for so if You guys want to help us travel around The nation to report back to you guys You guys know how much we love doing the Cinema the drum and all that type of Stuff but I got about $30,000 wrapped up Into those trips that I have lost on Those trips so I cannot afford it we
Have done that GoFundMe thank you for Doing that by the way Melody the link is In the description if you guys want to Help us if not that's okay we understand It's hard times right now trust me we Wouldn't even be setting up a GoFundMe But if you are interested in helping the Link is below and other than that if you Guys are out there investing in real Estate you guys already know we wish you Luck and we hope you win
