Victor Romero Sums Up the Mortgage Business


In this interview I speak with Victor Romero, a residential mortgage loan broker with 11 years of experience. They discuss Victor’s journey into the mortgage industry, the current state of the mortgage market, and the misconceptions people have about the loan process. Victor explains the difference between prequalification and preapproval, and emphasizes the importance of getting a thorough preapproval to avoid issues later on. He also discusses the factors that can make it difficult for people to get a loan, such as credit history and down payment requirements. Victor predicts that interest rates will continue to rise, but assures listeners that the current rates are still relatively low. He also advises potential homebuyers to consider the long-term benefits of homeownership and the potential risks of waiting for lower rates. Finally, Victor discusses the down payment assistance programs available to help buyers with their upfront costs.


Hey Victor, how are you doing? I’m doing pretty good. How are you? I’m alright. So Victor, I’d like you to start these things off by just having you tell us a little story, a little story, a little story. So I was thinking about this and I thought, well, a pretty good story of sharing how I even got into the business was when my first transaction, my first transaction, I was 12 years old, and so I was 12 years old and lived in the neighborhood and one of the neighbors was cleaning out his house. So it looked like he had had tenants I think before, from what I understand. And so he was cleaning it out. Parents said, Hey, why don’t you go and ask him what he’s going to do with the property? So I go out there not knowing anything about anything. You’re 12 years old.

I’m 12 years old. Rode my back over and said, Hey, I know that there was people renting, but what are you going to do with your property? He’s like, oh, I’m going to put it for sale in the next two weeks. And we’re like, okay, great. And so left at that. I didn’t give him any explanation. I don’t want to talk to the kid, go back home, says, Hey, mom, looks like he’s going to sell it. She’s like, oh great. Ask him how much he wants for it. And I said, real conventional. And my parents, I have to explain a little bit, I guess. So I come from an immigrant background. I’m first generation born here. Parents came from Mexico. They didn’t pick any English at all, right? So then when I go back and I go, I tell him, Hey, it’s me again. My parents would like to buy this house just like that.
And then he kind of chuckled and he’s like, well, but I was like, how much is it? And he said, well, I don’t really have a price. I have to talk to the realtor and we have to figure it out. I said, okay, that’s fine. He’s like, you want to bring your parents over? You can talk about it. So I said, okay, go back. Hey mom, he wants to talk to you. Alright. So we come, my mom and dad sit down with him actually standing in front of the front porch and they’re just kind of like, okay, well ask him how much he wants for it. He’s like, well, how much do you want? And he’s like, well, I mean, I don’t know. It’s probably worth about at the time. I know, maybe 2 20, 2 40 or something. But he’s like, I dunno, give me an offer.

And they’re like, well, tell him 180. I said, okay, how about 108,000? And he’s like, that’s too low, sorry. And then I told my parents, it’s too low, you have to come up. So now I’m not negotiating. So then it’s too low, whatever. So they’re like, well, how about 200? And I don’t know why I even said this. I said, why don’t you give ’em two oh, five’s kind of closer to what two 20 is or whatever. And so I said, sir, my parents want to know if you take 2 0 5. And he kind of looked at us and really young family, and he says, I’ll sell for your 2 0 5. So then he took out a piece of paper, got a pen, and just jotted down a one page agreement. That’s the first purchase contract, kind of the behind a napkin thing and put down the price deposit I think was like 500 bucks. Yeah. So we went through the process, went through the loan process. It must’ve taken a month and a half closed escrow. When we closed, I remember they gave me $200. They said, I guess for my troubles. And

The seller or your parents?

No, my parents. My first gave 200 bucks and I thought, Hey, I was rich back then. Right?

Looking back, I think it kind of got swindled there. So anyways, that was my first experience and ever since then I’ve really, it kind of blossomed from there. I’ve always kind of had in the back of my mind about real estate. My mother, her family, her family comes from a farming background, but a lot of her uncles ended up being, I’m sorry, brothers, no cousins, I’m sorry, ended up being in business. And so they did a lot of real estate in Mexico. So I think that’s how that was kind engraved in her, that real estate is a good thing. For some reason, that was my first experience of being like that. After that, that ended up turning into a rental and it was really profitable for them, was my first view of how that part of it worked. So

You guys didn’t even live in that house? That would just became, that was a rental. That became a rental for you guys.

Oh, wow. They had already bought their property, so they had gone through it before. Right.

Alright, right on. So that begs the question, where are you from? Where did this happen? Where’d you grow up?

Well, I was born in Los Angeles, actually, east Los Angeles and in the city of LA or City East, Los Angeles, Hispanic guy from Mexican, guy from East Los Angeles.

So where the Lobos is from, from,

So I think he’s from East LA. But anyways, so I’m not like, anyways, so yeah, east LA and right around when I was six years old, my parents decided they had lived there. Since they moved to the States, they decided that maybe that a big city was not a good place to raise their kids. So they had to both come from smaller towns. So they’re like, Hey, let’s move to a smaller town. They kind of heard of the central coast and jobs. They’re blue collar workers, so they had to find labor intensive jobs. One of the jobs that they ended up finding was in ag (agriculture). And in this area it was really prevalent to that kind of work. So then they moved up and they ended up settling down in Salinas, east side of Salinas, out of all places. And it was affordable. It was still nice. It’s not what you hear now, a lot more middle class in the area. And so

What year is this here? We’re

Talking probably, what is it, in the early eighties. Early eighties,

Back when Ronald Reagan was president.

And so we’re there and working. And so I grew up there. I went to high school there, graduated from there. I ended up going up to school to uc, Davis.

So you went to uc, Davis. Now uc, Davis is known as kind of the last I interviewed. He also went to uc, Davis to become a veterinarian. What did you study at uc? Davis?

Right. So

When I first went there, my goal was to be an actor. I wanted to be, that’s why


Weird, right? Weird. So I didn’t really have the concept of where you needed to be. I had done dramatic arts in high school and got awards and stuff, and it always kind of interesting to me. So I said, I just need to get out of town. And I had to go somewhere and I got accepted to three places, uc, San Diego, uc, Davis, and uc, Santa Cruz. And I thought San Diego’s too far because I’m still really attached to my family. Santa Cruz is too close. And Davis was kind of like the sweet spot. So I said, okay, let me go to Davis. I don’t know anything about this town. Never visited it. Once again, parents are immigrant parents, so they didn’t really understand the concept that you should go see where your kid’s going to end up. There was a college tour, there was no college tour for them. Its just like you just show up, right? So yeah, I went there and I did first year I did a lot of dramatic arts classes, but then my father being the traditional man that he is, sat me down one day and said, son, you need to dedicate your life to something that is a little more professional. That is an accountant, a doctor, something like this. Being that they’ve been blue collar work, they were concerned over the likelihood of my success and I appreciate their concern. And so what I ended up doing was I ended up shifting my major to a major called managerial economics. So a lot of really intense economics classes, management classes with an emphasis in accounting. So a lot of numbers. So with this, it gave me a foundation of how things work. I took a super advanced tax course, so we were doing corporate tax returns and things like that because I thought that at the time, Hey, maybe I could be an accountant. An accountant, you can do anything. You can go anywhere. You can do taxes, you could do whatever. So I said, yeah, maybe I’ll do that. That’s something that I could do and prosper and maybe become a middle manager or whatever. And so that’s what I dedicated myself in with. I ended up graduating and not liking that, actually didn’t, sitting in an office and not having,

So you actually got a job as an accountant out of college?

Out of college.

Where was that? Was that in Davis? In Sacramento?

In Sacramento, right.

I sat in an office, I brought my lunch, I ate my sandwich, I looked out the window. I said, this is not for me. That’s not for me. I enjoyed the numbers part of it, but it’s just the accountants are introverted in nature. So the dark, I don’t know. It just wasn’t for me. And then around that time when I graduated, my dad actually ended up passing away. Oh no. So he was 52 years old. He had a stroke. No one saw it coming. He was decent shape. And so he left my mother a widow, and my two sisters, the youngest being, I think she was 14 at the time. So with the background that I came and the responsibility that I came with, I ended up deciding to move back to this area and really take on the charge of a father figure. I took over my mother’s mortgage. I paid that for a while, and that’s when I actually decided around that time, I was trying to figure out what my next move was going to be, and someone told me about loan, being a loan officer and how great it was. That’s all I needed to know. Did

You know how great?


So that’s what brought you back to Salinas. And so you came back to Salinas, then what’d you do after? Were you an accountant again in Salinas or, so

I had to look.

How long did it take before you actually got into loan brokering?

So I had to look for a job and I said, this is a perfect, perfect place to start a new career. So I looked online and something similar to Craigslist, I don’t remember. It was around at the time. And so Monterey, I remember commercials right

On tv. On

Tv. They were all over the place. Anyways, I looked there and then ended up finding in admin job in Watsonville for a super high producing loan agent there in mortgage. I didn’t even know how to spell mortgage. So I was like, okay, I walk in here, I go on an interview and I’m dressed as my daddy used always say, you Overdress, doesn’t matter if you’re going to seven 11, you put on a three piece suit, you’re always overdressed. It’s better to be over than.

So I go in there, I didn’t know what to expect. And I met the hybrid uc loan agent, and he had dreadlock, and he was pretty interesting. I think at the time I was really influenceable. So he walked in nice Rolex, nice car. You could just feel it. Right.

So this Bill Clinton here now? Or is it early nineties? We’re talking here.

I think we’re talking. No, this was late Eighties. I graduated in 2002. Yeah, so I think we’re talking 2003, somewhere in that range.

This is early Obama years, is that right? No,

No, that was

Bush. Bush. Okay. Early bush years.

Early Bush years. So I met with him and I guess he saw something in me and he hired me for the admin job. So I answered phones for a year and pre-processed loans. And that was kind of my first taste of the industry, learning the terminology.

So you started basically doing loan processing essentially? Well,

Answering phones. Yeah, loan processing,


And really the fact that I started there was a good thing that was kind of, what would you call it? I guess offspring or whatever of my career. I started really from the beginning, from the base, right, terminology and then processing and the internal workings of a loan. He showed me a lot. But that was during a really weird time. The mortgage lending was very strange.

I think that would be every year in mortgage lending is a really weird time from my experience. Anyway. So are you living with your mom in Salinas at this time?

I am living in Salinas. I’m commuting to Watsonville. So the job was in Watsonville, Brian.

It’s a long drive, huh? Yeah,

Long drive. The rest is long drive

Through the farm field. Yeah. So what did you like best about it? I mean, because you could have gone anywhere, done anything, right? I mean, aside from your family, is there anything that really kept you here in the central coast or I mean, does this feel like this is where,

So originally it’s the family and then you build a purpose around it. So being that everyone’s kind of grounded here, yes, it brought me here, but I think I feel really fortunate of being here. I’ve had the ability to travel a lot of different places, so seeing a lot of things and how people live and we’re in a really, really, really nice spot. I mean, the weather’s great air quality. I know no one cares about that, but we don’t really see the bad air quality you see in big cities. And the housing is probably the biggest detriment here. It’s probably one of the least affordable places based on income, I would say, in the state of the country. I don’t know. But the people are great. A lot of, I think the farming aspect of it kind of brings humility to everybody. You can talk to someone that’s a multimillionaire that doesn’t look like one kind of the same way you would think of a Texan kind of really simple life. And what is it? There’s a saying that goes a big hat and no cattle the opposite of that.

So maybe a small hat, a lot of cattle. I’m not really sure. Right. So what’s been your biggest challenge of making a life for yourself here in the area? I mean, you talked about high cost of housing, but it must be other things besides that, right? I mean, what do you find to be the most difficult thing about raising a family and doing business here in the area? I

Think it’s just, well, it’s kind of hard. So because it’s so spread out and a little remote, it’s the lack of accessibility maybe to education, to a good education. So there’s a few spots where schools are great, and usually it’s where house prices are more expensive. I don’t know if it’s hand in hand or whether house prices are up and the education is up. But that’s been one of the ones, and I think I’m just thinking about it more because of my daughter. She’s three years old, so we’ve had to make a lot of decisions whether we’re going to do private or public school. That’s one. And then just the cost of living. I mean, you would think that doesn’t have a really big impact on anything, but it does. If you’re spending 45% of your income towards your house payment, I mean that leaves very little for extracurricular items. So taking your kids to classes, to whatever, even going out and heating and all that has an impact on life. That’s been the hardest one because it’s like, okay, well, firsthand, I’ve seen people as soon as they make one more dollar, they’re spending one more dollar.

I’ve seen it constantly with different clients. So it’s the same way when they buy a house, when somebody buys a house, they’re never going to buy the house they can afford. They’re always going to want to buy the house they can’t afford. They’re always trying to reaching

And it works across the board. So that’s really what pushes prices up, because everyone’s kind of always reaching for the next step, right? So because they’re tapped out at that point, it leaves very little money for them, for their quality of life.

I see that a lot. I see even where I am, there’s so many amazing things to do, and all of ’em cost money. It’s all very expensive for the life of me, I don’t know how anybody would survive on $4,000 a month in this town, which there’s a lot of money nationally, but in this town, I don’t know how anybody would do it. That is a really big challenge for so many people. So now, when did you actually go into the mortgage business proper yourself, where you weren’t anybody’s assistant where you said, I have my licenses, is that you need to sell, do mortgages to mortgages. Where did you get your license and what was the impetus for that?

So like I said, I mentioned I had to work with a super high-producing known officer, and then in 2007 came along, and 2007 was a really, really hard year. 2007, this loan officer decided that this was not for him anymore. And so I had been his assistant at the time. So when your boss doesn’t show up to work anymore,

He wasn’t show up to work, he just went one day, Didn’t come in. It was over for him.

Really? Wow. And that was true for a lot of mortgage brokers at the time.

So then I remember sitting at my desk going, where’s my boss? What am I going to do today? Right. Paycheck. And I had to be on a fixed salary because I had obligations with my mother and my sisters. I helped put my younger sister to school. That’s an example. Bought her a car. I did all the other things the parents were supposed. So I’m sitting there going, well now. And so I had to make a decision. So the first thing I did is survival mode is that you start trying to look for a stable job, which would be a county job or some government job. And

This is the middle of a financial collapse, essentially.

And so you are talking furlough, you’re talking people getting laid off. So that didn’t go well. So then I had to make a decision and I said, I kind of know what I’m doing. I’m kind of good at it. What if I just dedicate myself to this? I have a little bit of savings. I’ve always been a conservative person with my money, so why don’t I just try this? And so I did, and I put in the effort and I worked 12 to 14 hour days, seven days a week for years. And the first year that I was in business, I probably made $14,000. And then after that, it progressively increased. I was able to make a career. I think the hardest part for me was a mental challenge because I was basically this young kid that had, I had an education, but I was asking people to didn’t trust me with $500,000 with their life savings, with their home, with this process in myself, I had to first figure out, Hey, I know what I’m doing and I’m not going to do bad for people. In respect to the housing at that time, you don’t see it as much. Now you said a mortgage broker or a mortgage banker, mortgage anything,

And people would cringe. I started, basically, I started my business in 2007 at the crash. You got your license in 2007. And so at the end of the year, or beginning of 2007,

I think it was probably close to the end of the year, I decided to go on my own. That was a really scary time because the market was definitely in fast decline. And then in 2008, the whole thing just falls apart completely. Right? 2007, there was still a semblance of maybe this thing can be put back together again. But then 2008, by the beginning, 2008, it just went off a cliff. Completely

Went off a cliff. But I’ll tell you, if you can start a business in that market, you will survive. And that’s why we’ve been able to survive. So yeah, that can mean loan volumes. Plunged and loans were hard to come by. Lenders were whole entire companies were just,

I remember there was a website called, it was kind of like or something like that, and it kept track daily of which banks were going under,

Right? Yeah.

It was like, I don’t know, hundreds of banks,

Hundreds of banks. Well, a lot of ’em were just shut down by government too. And all of ’em just outright failed. And there were these other mortgage warehouses or whatever, warehouse lines of credit that were just vanishing. Bigger lenders were pulling them back. And so that’s amazing. So where did you end up? You ended up, who did you start working for in 2007?

So in 2007, I ended up getting a job at a local mortgage company here in town. And I had been with them during that, and I was actually, I was under the wing of one of my partners, actually his name’s Ty Patel.
He kind of took me in, kind of showed me the ropes, showed me the positivity, how you kind of look at a loan file. We had underwriter right there and a processor right there. So I basically just clinged onto them and tried to learn what was going on in the industry because the way you did a loan was a lot different at that time within pre 2007, and you just needed to be a little more educated as far as how you put it together. So that’s where I started. I was there up until last year when we opened up this place.

Did they have a help? Wanted sign out? It seems to me like you were probably the only person getting into the mortgage business in that time. So how does that even work? Because I think a lot of places were just shutting down, and

I think that the places that were shutting down were undercapitalized. They were taking risks. They didn’t need to be taken. And the owners at my prior company that I will forever respect as far as how they ran their business, were very conservative in their way of doing business in the way that they were able to make it through these tough times.
So I’m not really sure if they had already gone through something like this before, but they never really, the hard thing with the lender is that you’re walking down a path and then you see all your competitors doing these things, these alternative products, this pushing of the limits. And naturally as a business person, you want to maybe push that envelope. So I think that a true good mortgage company will walk on their own path and say, you know what? This is where we draw the line and we’re not going to do these kinds of loans because they’re not really beneficial to the client or because we see them turning around. So that was really what had happened. So help, one sign actually knew. So the way that it worked before is you used to work in a branch and you were kind of a broker, and then these reps would come in and they say, Hey, use us for the loan.

You send us the loan. And so I met one of the reps that worked at that company that ended up turning into a processor. So then she’s the one that kind of talked me a little bit into it as far as like, Hey, you should check these guys out. They won’t require a minimum production, but I know that you’re good. She believed in me before I believed in you. So then I went and I interviewed, and it all kind of worked out that way that I was able to get my license. And there was a big shift in how you get your license. It’s become a cost, I dunno, between three and $5,000, and it’s not even guaranteed that you’re going to make money. So I slowly went through that process and was able to start originating loans with them.

So what was it like for your clients at this time? You didn’t even have any clients? I had one client. Yeah. You started business with one client? Yeah. What was it like for your clients? This is like 2007, 2008, which is just a really scary time. I mean, what was life like for your average client? Who were your clients who was buying houses and getting a loan? That time? When I started, it

Was really, you kind of had two parallels. So you had the seasoned buyer, this is somebody with 20% down the market was imploding. So they were not concerned over the implosion because they were going to keep these properties forever. This is the very, very kind of the wealth. So they buy whenever, when it goes up, when it goes down, it doesn’t matter because in 30 years it’s still going to be up for them. And then you have the first time home buyer. That was a little harder because they were looking at how the market was collapsing, but at the same time, they were really getting good. They felt they were getting a good deal. At the time houses were on sale at the time. So 20, it went from 10% on sale to 20 to 30 to 40 to 50% off, and that progressed over years. So in general, it was difficult. You had to think as a buyer and what would you tell a buyer if you hit hard times, turn around and rent this place. If you rent this place, at least you can cover your mortgage payment.

But it’s hard to say that if even the rents in themselves were dropping and there was no trust from landlords to tenants because the tenant can lose a job and suddenly they can’t pay their rent either. So I always tell my staff when things are good, they’re really good. When things are bad, they’re really bad because it all compounds on itself. So just because right now prices are high and rents are high. Well, the other side of that coin was when prices were low, rents were low. So stuff didn’t cashflow the same way. So there’s all that fear that was built into it. So a lot of the first time home buyers, I sometimes almost felt bad. I felt like I was kind of convincing them, they’re way up now. But at the time you’re like, it was a scary time. It took some really cuts for some people to jump in during that time,

Right? Yeah. Tremendous testicular, fortine, they say to buy. I mean, that’s why I tell my clients all the time, I said, A good time to buy is when no one else is buying. That’s the good time to buy. So do you see any parallels between today’s real estate mortgage market versus the mortgage market of say 2007 or maybe 2006, right before it became clear that everything was going to explode? I feel that there’s a lot of people who are drawing. I mean, you hear that word bubble a lot, right? I mean, do you think that the same thing could happen again,

That happened 12 years ago or 11 years ago? Or what’s your feeling? My

Feeling is that we got to face the reality that we’re a bubble economy. That’s how people make money in this economy. The really, really wealthy will make money when it goes up, and they’ll make money when it goes down. So yes, will prices turn at some point, but when nobody knows, right? No one has a crystal ball. So what are the parallels? If you just look at facts, then you go, okay, well house prices are higher than they were during the bubble, right?

But not in Salinas, not in Salinas. In Salinas, not in certain parts, but in other parts they

Are many, many parts. So the reasoning is lenders are more flexible with lending in regards to the money part of it, as long as you qualify. So what was happening before is they were doing signature loans. I think the joke was if you put a mirror in front of someone’s face and it fogs it up, then you get a loan. So now it’s not that way. But what they do is they say, give me all your information and we’re going to look at your pay stubs and your growth pay, and your pay has been going up. So we’re going to use the most aggressive pay you have, and then we’re going to allow you to use up to 55% of that or 50% of that towards a house payment of your gross income. So now you have a lot of families that are pushing the limit as far as what their payment’s going to be compared to their income.

But you got to think that these people are doing it at the maximum amount. They have not made this much money in a long time, and they’re borrowing at the maximum amount. So the parallel is are people maxed at what they’re buying? So then you think, okay, well if we are in a bubble, what would trigger the bubble? Because the loans are fixed rate loans. They’re highly documented loans. The quality of the loan right now compared to the quality of what it was, then the fact that they’re fixed, that they have taxes, insurance included, that all goes into the mix. So the industry in itself is healthy in what they’re doing, but the industry in itself is susceptible to other things that can happen, such as job loss. If you have two income borrowers and you’re maximized their qualifying and one of them loses their job, what happens in that circumstance? What happens? So these are the questions that we’ll have to face if there’s a downturn in the economy, if jobs go down. But this is a big what if right now? I think the last, I think it was yesterday, we are at the lowest point of, what was the statistic? The lowest point of unemployment we’ve been in. Who knows how long, right?

Right. A long time.

Long time. So that means that most of the working force is working. So now that they’re working, we can officially say that as far as losing value, because homes are based on income. So you don’t have the money, you can’t qualify. So unless that changes, which it doesn’t look like it’s going to change, I don’t foresee there being any problem. The second thing is the fact of the limited inventory. That’s the other variable. So right now, the reason the prices are high is because of the lack of inventory. There’s no such thing as a moveup buyer because it’s like a domino effect. So someone has to sell for you to buy and do all this, and people that are selling, they have to buy something else and they don’t want to buy so expensive. So it kind of freezes the market a little bit. Hopefully in summer it kind of loosens up. But going back to your original question, so what are the impacts? Well, if there’s a shift in the economy, that could be, but in itself, it’s a little different than what it was in 2017 when it comes to the lending standards.

I think that is a big difference that a lot of people don’t understand that last time there was this big crash, it was precipitated by shaky loans, and that brought the economy down. But normally it’s a loss of employment then because you lose your job, you have to sell your house, then supply opens up, and then it becomes more supply than demand because people are losing their jobs and they’re not buying houses. So I think a lot of people are expecting that the high prices in and of themselves will cause a collapse, but that’s not what’s going to cause it. No,

In our economy, I mean we’re really driven by housing. I mean, if you look at it, all the jobs, everything’s kind of revolving around that. I remember one of my old bosses used to say, whenever she saw one of her employees drive in with a car, she used to get super happy with a new car. That means they got a nice big car loan, which means that now they’re going to have to come to work. So if you globalize that though, if you globalize that, that’s what you do within the United States, what we want is for people to buy homes. The reason that we say that is because it’s a great vehicle. It’s an investment vehicle, it’s a home, it’s maybe an income in the future. One day they’ll own, they can retire and they can survive off social security. But the other part of it is if you can get someone to take on a four or $5,000 mortgage payment, guess what? Now they have to go to work. So what does that drive? That drives consumerism. So then they go to work, they have to go to lunch, they have to get to work where they have to buy a car, they have to put in gas, and all this is what feeds the industry. So it’s all hand in hand with it. So I think that if they’d ever adjust, it’ll be like what I said before, when it gets bad, it can get really bad,

Right? But that day is, who knows when that day could come. I mean, it’s probably no one really knows. Really.

Yeah. I advise people, when people ask me that, I said, you know what? You’re not buying a house for two years. You’re buying a house for 30 years. So you buy a house that you feel you can afford with your wages for 30 years, how long you’re going to be in this house.

If uou sell it in seven, great. And if you make money, great. But ultimately you have to think on the global part. So you’re 30 years old right now, and your mortgage is a 30 year fixed. So hypothetically, you’ll be done by the time you’re 60. Well, when would you like to retire? Okay. Do you know what the cost of living is going to be then if you don’t buy right now? Okay, so let’s just say that it takes you 30 years to pay off this mortgage that dips in the market or whatever, but you can make the mortgage payment at the end of the 30 years. The only payment you’ll have on the house is your taxes in your insurance. We’re talking a thousand dollars, maybe 800, 1,500 a month. Okay. So what’s social security going to be at that point? If you don’t buy, what are you going to be dealing with with rent payments? Rents go up 4% a year. In 30 years, you’re probably going to be looking at an average rent of $5,000. So you think you’re going to be able to survive off your social security at $5,000 in red. What are you going to do? So these are the questions that you really should be asking, not, oh, what is the current rate? Oh, what’s going to happen to the house prices? No, you buy something now so that you can utilize it in the future. Tech write off and all that stuff.

Right, exactly. Very good points. So what are the biggest misconceptions that you find people have about the mortgage loan process? There must be hundreds. What are the biggest things people don’t understand about getting a loan? I

Guess what is the difference between a prequalification and a preapproval? That’s probably the biggest one. There’s several companies that do what we do and what makes you stand out from the rest? That’s kind of the question. And really what we try to do is we try to advise clients as well as walk ’em down as far down the road as we can to assure them that we’ve done as much research as we can for their pre-approval. A lot of times they’ll go into a big bank and get a prequalification letter by a conversation, and this does not do justice to their situation because then they get into contract and then the requests start and then the headaches start. And if you’ve ever heard of someone having a bad experience in the loan process, it’s really the fault of the lender, in my opinion. And the reason is that you don’t instill what it’s going to take to get them to the finish line. It’s not easy to buy a house. It’s hard. But if you prepare a client and say it’s a difficult situation, but these are the steps that you can do so that it’s a smooth transaction, then you prepare them more for that process, and then they’re more equipped to go through this little war that we’re going to go through trying to get this property.

So people use those term pre-approval and prequalification sort of interchangeably, but they’re really very different things, right? Right. I think most people, they get a pre-qualifications. That’s basically what you just said. So a lender, a borrower comes in and says, Hey, can I get a loan? And the lender says, how much money do you make? How much money do you make? What do you think your credit is? And then they say, based on what you’ve told me here today, you, I might been qualifying you, I’m you to get a loan for $800,000 and a pre-approval. So what is a pre-approval then? What’s the difference

Then? So you got to think about what a bank looks at when you’re going to get a loan. They really look at four things. They’re the four things of four Cs of lending. They have all these different names, but really it’s in the mortgage industry. It’s your income, your assets, your credit, and the property. So if it’s your income, so they look at your pay stubs, they look at your history of pay, what you do for a living, do you get paid overtime, things like that. Your assets. So how much of a down payment do you have? How long has it been there? Alright, do you have a sense of what it takes to save? Right? And your credit. So they look not only at your credit score, but they look at the depth of the credit. So if you have one credit card for $500 and your credit score seven 40 is a TA bit different than someone who has 10 accounts, has history for 20 years, and the credit is seven 20, right?

Little more depth there. And then the asset, which is the property that would be make sure that it qualifies for the loan. So what we try to do on the prequalification, they ask you the generic questions to get an idea on a pre-approval. The reason the pre-approvals takes so long at certain times is because they’re going to ask you for your income taxes. They’re going to ask you for your pay stubs. We’re going to ask you for your authorization to pay your credit report for your bank statements. We’re going to ask you for pretty much anything, everything except your birth certificate. And then we take this information and we put it in the system, and then we run it to the bank. We order verifications of employment, we order your credit report. We analyze both your tax returns and your bank statements. And then a true type of preapproval would have at least some questions asked for an underwriter, Hey, I’m dealing with this situation.

There’s this thing on the income. This is something we should be worried about. And then once we get all the information in, it gets run through a system. All loans are going digital, whether we like it or not, the internet’s going to take over. So because they’re all digital, all the loans have to go through, or I would say 90% of loans have to go through this system called automated underwriting. So automated underwriting is a system where you feed it information and it tells you what the results are and what you should be required to be asking for from your clients. So this is almost like an underwriter is a person that approves the loans, but it’s almost like a physical person went through your paperwork and said, you should be getting a month of pay stubs, a month of bank statements, two years of taxes, whatever.

And then if you meet those requirements, then in a way that is in itself in a pre-approval letter, a pre-approval in itself. So after having done all this, then we come back to the client and go, Hey, this is what you qualify for because in essence, this is all the information the bank is going to ask for again when you get into contract. So I would tell people, how many times do you build a house? You build a house twice, you build it when you plan it, and when you build it, when you build it. So that’s what you’re doing. You’re getting two loans, you’re getting the loan, and then you’re going to get the loan when you actually find the property. So why do we do all that? Because it’s a justice to the client. It’s an injustice when you don’t do that,


Because why do people ask time and money, right? Stress. So you get into contract, you find the perfect house, you got your prequalification letter because he didn’t get a preapproval because the lender down the street just handed hands out the prequalification letters. They come to our here, he runs around town showing them properties, puts down a nice fat deposit of $5,000 orders, an appraisal, orders a home inspection, a termite inspection of roof inspection. You’re into that property two grand already, and then you get the horrible phone call, Hey, we just checked tax returns and we noticed there was something weird on here. We may have a problem from the lender. And then all of a sudden distress starts in that, and it’s really, really unfair. The first time home buyers to season buyers, it doesn’t matter. It’s just really unfair not doing your job as best as you can do it.

And I’ve experienced that many times being a listing agent and having that awkward conversation with the buyers agents saying, oh, sorry, something came up right? I’m sure it’s because they were not pre-approved. And it must be challenging for you because you do the pre-approvals and so many other lenders don’t do that, right? It’s like, Hey, I’m going to give you a number first. We’re going to do a very thorough examination of every aspect of your finances course before I do anything else with you. Or so many other letters are like, oh yeah, sure, that’s easy. Oh, I’ll get you a letter in no time. That must be really hard to deal with from a client’s relationship point of view, especially when you’re just meeting with the client the first time because you require all the stuff up front, but then you’re on easy street, whereas everyone else just schmoozes you in there with a easy,

And I think that the way that I see it is when you go to the gym, do you want to get strong or not? The trainer that will tell you, this is what you have to do to get strong. If you want to go to the other guy and go lift 10 pound weights and hopefully feel better, then that’s what they’re going to do. At the end of the day, for me, it really doesn’t matter what anybody else does. It doesn’t matter because my reputation still is going to stand.

Right. Right.

Got it. What kind of things make it difficult for people to get a loan? What’s the typical thing that stands in the way other than income, obviously,

What makes it difficult? Well, I think it goes back to the original fees. It’s either the credit or the down payment. Down payment is becoming, I guess, less of a problem as lenders are allowing more flexibility with the down payment, where

The down payment can come from,

Where it can come from and all that. So yeah, I would probably say credit people don’t know how much credit of an impact it has. I was looking at a is

Credit score or is it incidents? Late charges? Yeah,

They don’t understand that because you’re late on your credit card. Why wouldn’t a bank lend you 500,000 or a million dollars? Right? So it’s because you don’t know how to pay your $20 bill Macy’s, right, with a responsibility. So

You could have a seven 50 score, but because you have one late on a Macy’s charge.

No, I think it’s a history.

It’s a history. Yeah,

It’s a history. So

There’s no formula that’s really going to tell you that there is a formula, but they don’t share it with you.

So the credit agencies don’t share their formula and how they get your credit score. Right. The banking industry kind of does the same thing, but with landing. So remember I told you about the automated underwriting? So we feed it all the information that tells us the results, so they don’t tell us how they get the result or what the thresholds are. They give us ideas just like the credit gives us ideas, but really you’re feeding it information and it’s deciding computer automation is deciding what you’re going to qualify for. So that’s kind of the same way with the credit and the lending.

Right now, I talk to a lot of people and I refer them to you mostly, pretty much always. And they don’t end up calling you or I go one step further and I get their phone number, I gave it to you, and I say, Hey, Victor, could you call ’em? And then you call them and then you never hear back from them. Why are people so afraid to talk to a mortgage lender, do you think?

Well, there’s two reasons. One is I think people are just afraid of people sometimes. I think that that’s why Facebook is so great. You don’t have to talk to anybody. So I think one of it is just kind of they’re scared to talk to somebody. They’re scared about their credit. They’re scared about if I’m going to judge them about how they run their lives and we’re private in our lives, so we don’t want to share that. Or the second thing is I’ve noticed a lot of people will exaggerate their situations. So when it comes down to being honest and truthful about what you want to do, it’s not really what they told you said. So they feel embarrassed

About it.

Yeah, I think that a lot of that happens.

That’s interesting. I hadn’t considered that. The judging thing is definitely something that I think people don’t like to be judged. And when you go to get a loan and you say, sorry, I judge you only worthy of a $600,000 loan, not a $700,000 loan. People don’t like that and they want to shy away from that, but it’s nothing personal. It’s like, Hey, what can I do? I’m not personally loaning the money. So what’s up with interest rates? Interest rates are, I want to say they’re very high, but they’re not very high, but it seems like they’re high. What’s going on with interest rates these days?

Well, they are going up and they’re going to continue to go up. We will see 5% rates, and we’re already kind of seeing them on some products by the end of the year.


We are going to see them

Really across the board. You think 30 year fix is 30

Year fix is going to give you very close to 5%.

We’re going to put that today. What taste today? 5% by the end of the year. Yeah, I’m hearing that for years. Not from you, but


Many years now since at least 2014 I’ve been seeing this. Interest rates will be 5% by the end of the year. And

Really the reasoning behind that is, well, there’s a lot of different reasons why it is. One is monetary policy. So we’ve been in an industry

Where the

Government has subsidized rates for a long, long time. So then you got a government, what they do is they’ve been buying mortgage bonds and reinvesting, and so they’ve been artificially keeping rates down. Well, why did they want to do that? Why would they want to do that? Well, we just went through the worst, maybe the worst, second worst crash we’ve ever been in. So they wanted to shore up, they want us to support because like I said, housing and economy kind of go together. So they started buying these. So now as of last year, they decided we’re not going to do that anymore. Instead of buying, now we’re thinking of we’re going to sell these guys. So it’s like anything. So now that they’re selling these bonds and bonds and rates kind of go hand in hand, there’s going to be a lot more supply of these bonds, these kind of packaged loans out in the industry, which is going to push up the price. So people are going to be like, okay, well now it’s more favorable to get a 5% bond than it is to get a 4%. So that’s going to push up the supply of the bonds into the industry and increase the prices where they’re not artificially keeping them low. The other thing is fiscal policy. We’re highly in debt, so that has some impact. We impact

To trillion dollar deficits again.

And so I think the other one is technicals. It’s just like the bond market is supp supply demand. So whatever people are buying, selling on the market. And then the final thing is globalization. So we are very interdependent now. So if China, for whatever reason decided to dump their whatever trillion dollars, I don’t know, whatever it is right now, that they owe of our debt onto our economy, talking about a, what do they call a trade war? You’ve heard of the trade war. Why is that such a big deal? This is a big deal. It’s a huge deal because if they decide to dump all of their holdings of what they have for us, they’ve essentially claimed war on us. What that would cause is race to immediately spike because there’s not enough demand to acquire all this debt. So rates would shoot up to 8%. That’s just example. And now a mortgage payment overnight would go from 4,000 to 55, 6 grand. What would happen with the real estate economy?

Well, I would guess that it would cause prices to immediately decline sharply would be my guess,

Right? It’s going to take time. So immediately nobody would buy a house,


It’s too expensive, right? So supply demand, the prices would’ve to come down, do all that, but you have to go through the pain first. So all that would crash first. And then remember, real estate and jobs. So what happen to jobs? Everything would look, so we’d be back essentially in what we were at before.


So that’s why it’s called the trade war because they kind of know that we’re kind of interdependent of each other. So that in itself is kind of the variable that you don’t know. But yeah, we’re heavily 70 45%, and it’s fine, but it’s fine. That’s


It’s fine. Why is it fine? Because historically, over the last 45 years with the average rate is what I think saw the statistical eight and a half, 9%.


The fact that we went from 3.875 to 4.87, five is not the end of the world. We’re in a strong economy, the prices still makes sense because the rents are so high, you’re still going to buy for 30 years, all that. The fundamentals are still,

Well back in 2008, the rate for six and a quarter, that was back in 2008, even as prices were dropping precipitously. Also, the thing that people don’t understand is people say, okay, well if mortgage rates rise, then prices will have to be lower because affordability is going to low decrease. But really prices, the interest rates rise to reflect the demand for money, right? So if there’s more demand for money, it’s because people have more jobs, they can qualify to get bigger loans, and there’s more people trying to get loans that rise, that raises the price up. But people can afford to pay that because they’re now employed. They got a raise. So that’s why,

Well, the Fed is smart. They know that right now is the time for them to start

To raise rates.

They know. They know because, okay, you’re talking, you got the lowest unemployment rate, so now you got everyone employed, the rents are high, people are going to have to live somewhere. So a marginal increase of 1% on the mortgage rates is maybe 400 bucks, 300 bucks. That’s a car payment. I’m going to stop buying a house because of a car payment. Not necessarily.


This is a perfect timing for relaxation of what had happened in 2008.

And it’s interesting, I read all these trade magazines or articles on Inman or whatever, they talk about rising rates, pushing buyers into the market. A lot of buyers are saying, gee, well if I better get now before they hit 5%, because it is better to get a house at four point a half than 5% for the same cost of a house. I mean, that’s a no-brainer. So how much money do people need to buy a 600,000? I almost laugh. If there were a house for $600,000, how much money do you actually need for a down payment to get into a $600,000 house? 600,000? Well,

I guess it depends on the down payment and all these factors, but I think that I have kind of a rule of thumb for people if they want to know, what they qualify for is you take your income and you multiply it by five, and that’s your loan amount.

Really? That’s your loan amount.

Not necessarily dollar for dollar, but it’s kind of a nice little cheap shop,

Right? So you make hundred grand, you multiply that times five,

That’s 500,000,

Not big. Your loan can be






Good. That’s a good

Me use. And then if you have, most people have a

Car payment,

Right? So you have a car payment. You always, if you want to know, Hey, I make a hundred thousand and I have a car payment and I still owe 25,000 in my car payment on my car. So then what you do is like, okay, well I make a hundred thousand times five, it’s 500,000, but I have a car payment. So what doesn’t car payment impact you? That 25,000 is going to impact you three times that amount.


$75,000. So now you went from qualifying for a loan for 500,000 to qualifying for a loan for 4 25. For

4 25 because of your car payment.

That’s why they always say buy the house, then buy the car.

Right. Interesting. Yeah, I know I’ve seen this with people who they buy the car and it’s so funny too because how many times have we done a loan where you say, okay, pay off your car first, pay off your car first, then you can get a nice big loan. Right? Nice

Big loan. And then really that’s the kind of the way you want to do it. If you car paid off, all your debt goes to your housing, Hey, you know what? We choose to live here, right? A

Car is a completely depreciable asset that quickly fades to no value and you don’t need to be driving a Mercedes. You could drive a Honda.

Honda. What’s wrong with Honda? Honda

Honda’s fine car. Right, exactly. Alright, so speaking about down payment, and I know you’re kind of an expert in this, what down payment assistance is there these days for people? Is there anything? Is there?

Yeah, there’s still stuff out there. I think that it’s getting harder and harder to utilize it. That’s really the hard part. And the reason is because, for example, there’s a program called Cal, H f a. Cal h f A will lend you the down payment where they’ll lend you the cost for the closing costs and then the cost for their loan too. So you’re essentially walking into a property that you owe more on the property than what you paid for. And the reason that it’s a little limiting is because of two reasons. One is sellers are not very APTT to working with those kind of programs. Not that it’s a bad program, but you’re getting two, maybe three approvals. You’re getting the bank approval and get into program approval and they prove it a different ways. So the likelihood of something going wrong with that situation is higher than someone’s coming in with 20% and has plenty of money in the bank in case something goes sideways. And the other part is payment. So these programs are not cheap. So if a regular F H A loan charges you 4.5% on the F H A, just because you’re utilizing this program, it’s going to charge you maybe five and a quarter percent
Or even higher sometimes. So that’s the problem is that they’re available, but you’re going to pay for it in the end. So is that tradeoff worth it to you or is it better for you to just save your own down payment and get a more streamlined product that might actually get you into the property? So I can qualify. You get you qualified with the college f a and you zero down in all this, but if you can’t find a house, what use is that? Right.


I always try to educate people going, okay, this is what’s available, but this is really what’ll get you in the door. And a lot of it they go like, oh, but people tell me, okay, well your name is known, well-known, good reputation. Well, doesn’t that help? Yes, it does, but it’s still, the reality is the reality. We still have to go get two different approvals to even utilize this

Program. Well, plus the reality is there are probably other offers on that same property that you want cash offers, right? Cash offers are even 10% down or 20% down, and that looks like a lot better offer all things being equal. They go, okay, well your agent’s wonderful,

And then you deal with multiple offers. And so let’s say the property in your example, let’s say the property was originally five 50 and you’re qualified to 600 and there’s multiple offers and you go to 600. Well, what you did is, I mean I guess is how the realtor prices the property, but you kind of artificially increase the price to whatever the market dictates for it. Well, if you offered 600,000 and you’re using the down payment assistance program and the appraisal comes in at five 90, are you going to have money to bridge any gap there? You can’t get the money for that. So will the person that’s putting down 10% go to a 5% down program and use the difference? So I can see how the sellers think that way and especially being in the seller’s market where they get to make the rules.

Are there any other down payment assistance programs besides Cal H f a, like Watsonville or Capital? That’s San Jose. Does anybody have any money? Any municipalities that you know of? Everyone

Has money, but they all have their rules. So for example, Watsonville has a $58,000 second loan, but when you run the math on how to qualify for that, you’re going to be maxed out at about four 20 to four 40 purchase price to use that program because of the requirements that they put into that program. So you tell me how many properties in Watsonville there are under 500 these days.

They’re actually in good enough shape to get a loan on

And the city is going to do their own requirements.

The city comes through and right inspects it as

Well. Okay. So yes, there is money. Yes, there is free money or low interest money, they still charge interest, but whether it’s reasonable or not to be able to obtain it and access it and then it’s very reasonable enough of someone accepting it. And Capitola has a program, county of Santa Cruz just revamped their program. So now they go, I think for a three bedroom they go to two 50 and change and two

50 what? It will give you 203,000

And it’s at a low interest rate for 45 years, I think 3%, 45 years, no payment needed. And the purchase price is 4 83 max in Santa Cruz County.

So how do you get those loans? That sounds great.

That sounds great, right? Well first of all, no, that sounds great. They revamped their program, a program that used to have really, really tight requirements. You have to make 60 grand or whatever. They’ve revamped it, they’ve kind of given a little more cushion. It is only maximized to 4 83 purchase price. So there’s

Not shack in the woods for

Which is what people are doing. So what they do is they go, okay, let’s just say for simplicity you say 4 50, 400 just for the math. And they say, we’ll lend you half of the price of the house. They


$200,000 at no payments for 45 years. At the end of the 45 years you owe them, you owe them all the money and you owe them the interest that you should have been paying all that time. So you probably owe instead of 200, you probably owe 3 25. But the idea is that eventually you’ll refinance that or sell that property and pay back the pay back the county of their money in 45

Years. So do you need to be a first time buyer who can get that money?

Yes. That is a first time home buyer. They have their requirements. So the first time home buyer, the property has to meet the requirements.

They live in it. You can’t

Property, you have to live in it, have to be under a certain income threshold and you have some of the money has to come from your pocket 3%. And so there’s all these requirements. It’s tough.

It’s tough to qualify for any

Of these. Yeah, it’s not impossible, but it’s definitely challenge.

What percent of the loans you do you think, I know you work with a lot of first time home buyers, what percent of the first time buyers that you work with actually use one of these government down payment assistance programs? I’m sure most of them probably ask you about it. How many, what percent do people actually end up using it? Well,

Not very many of these. Not very many anymore because of the prices and the competition. If I go to a seller, I actually almost went to one this time, but it didn’t work out. But go to a seller and tell ’em, Hey, guess what? We’re using the first and the second and we’re using this other program and the client only have 10,000 in the bank. It’s not like you’re not putting your best foot forward here. So it definitely has to be a property that’s been in the market a while that they’re willing to wait for you. So that’s the challenging part. But I mean I think in the last 12 months I probably have done four of them


Through Santa Cruz County or through Watsonville

Or one of the other. Well, that’s actually pretty amazing because that’s four more than almost anybody else.

And its a good thing. I mean, we work really hard on this that I work hard

And each one of those loans is 10 times harder than 10

Times harder. But the good thing, I never look at a situation like that and say, Hey, what can you learn from it? So I mean there is a wealth of knowledge and it makes you almost better at what you do. And the other added part is that people from the county program or from the city program, they know you. I know the girl from the city program in Watsonville, I call and she answers my question,


Nice. Now, if you’re an off lender from out of the area, maybe not as much because she knows that not only do I kind of know what I’m doing, but I’m also really out there for the client. So that does help when you’re actually in that process.

So if people are not getting money from Cal H f a or municipalities, where do people get down payments these days? Are they coming from their 4 0 1 ks or where’s someone getting all this money from?


Parents. And that’s interesting too because I have a conversation with this frequently with, not that I work with that many buyers, but when I do, there seems to be a lot of shame and reluctance to ask their parents for money. But I’m pretty sure it’s always been this way. I don’t think this is a phenomenon of our times. No, I think that people have been getting money from their parents for forever.

Sometimes I do see it as a disservice from the parents when they don’t help because you really wanted to set up your kids for the future. You want them to offend for themselves, and if they need whatever they need to get there, then whether it’s 10,000, 2050 to 20% down, whatever the number is that they feel that they need to get there, you are doing justice to them for their future, for the kids’ future. And you have been as maybe baby boomers or I don’t know who we’re really referring to, but you’ve had the ability to be able to buy a little less expensive than what they did and made really good choices. And I think that this generation is really harder. And it’s harder because the world has changed, the types of jobs have changed. People aren’t at their job for 30 years anymore. So I don’t think there’s shame to that, but I don’t think there should be a shame to that.

I don’t think it should be either.

But there is a shame to that. Like, oh, I am 35 years old and I’m asking for money for my parents, then pay them back and pay them back.

It’s one thing if your parents are broke, right? Obviously, and you know that you’re not going to ask me for any money, but there are a lot of parents out there who probably could gift some funds to people.

But other places that people are pulling their money are definitely retirement accounts. That’s the second most. A lot of these programs like F H A or even conventional are now allowing you to come in with three and a half to 5% down. So it’s not a ton of money that you would need in this area. It is kind of hard in Santa Cruz to buy, but you’re talking outskirts and things like that. Maybe you can get away with a loan amount under 700,000 or whatever. It’s not a ton of money. So a lot of people are doing what they need to do to get it. So whether it’s selling the third car that they don’t really need, whether it’s cashing out a retirement, and a lot of people that come to talk to me, sometimes they don’t have any money and they don’t even know what they should be shooting for. So that’s when I sit ’em down and go like, Hey, really this is the number that you should be shooting for.

Right. So how long does that pre-approval process take? Generally speaking, is it something you can do on your lunch break? How long does it,

Do? You mean getting the paperwork

Together? Preapproval for me? For turnaround for somebody to you or if someone listening to this wants to get along with Victor, how long should they expect it’s going to be before they’re going to get that

As long I would like it to be these days, but I think right now, so normally it averages between two to four days.

Two to four days.

Two to four days, yeah. Average,

Right? Average. And that’s assuming they get you all the paperwork

From the day that they get me

Everything. I find that a lot of times people take some months to get all the paperwork

Together. They take a couple, they

Might file attack returns.

But the hard part is going back to your original question, two to four days. These days I think the timeframes have doubled. So you’re talking to four to eight days and it’s just because of the amount of volume that we have. So we’re getting a bunch of people that need to get pre-approved, but they’re only going to be pre-approved for 400,000. So what ends up happening is I still have to go through the process of telling you what you qualify for. I can’t just go, you’re not going to buy anything. Go ahead do those to exit. I still want to give you the service. So


The reason that it is basically taking longer. And if you have a client that needs a quick turnaround time, we’re very open to helping with that if they found the property that they want. But you have to know that as soon as you start shrinking that, then the quality of the warehouse.

Yes, exactly



Yeah. And now how long do they take? I don’t know mean, it just kind of depends on how motivated they are to make it. I’m usually pretty good about explaining to them how crucial it is that they get it as soon as possible and then following up with them. And for the most part, maybe 70% of the time they’ll get their things together.

Well, four to eight days is not that much time to get documentation for $700,000. This is kind of off the wall question, but this is right now, April taxes were due on April 15th. Let’s just say I filed an extension for my taxes. Can I get a loan with using my 2017 income or 2016 I guess income? Will they need to see that before I can apply for a loan?

Yeah, they’ve built a threshold there about three months. So

The first quarter?

Yeah, first quarter, yeah. You can get it. You can get away with it. They’ll probably want to see the, not probably, they will want to see the extension and they’ll want to see the cash check of your whatever amount paycheck, right? Well, no, the check, you have to send a check in with your extension.

Oh, right, right.

They want to see


You actually did.


Yeah. So you can get away with April, may, June, July. So July.

So what if someone’s self-employed there, a lot of self-employed people around here. Does that make it harder to get a loan?

Being self-employed in itself does not. But there’s an inherent problem with self-employed people that they don’t tend to report everything or they tend to write

Well, that’s the name of the



Yes, the unintended consequences that Uncle Sam and the mortgage market are very much tied in together these days. So if you say that, if you tell the government you made $50,000 last year when you on your books show that you made $250,000 last year, they’re only going to use the 50,000. And there’s things that we can do to help that along, but not very much. I think finally

Refile your tax return

Actually. Yeah, it’s funny because they bring that up. So actually that’s kind of considered fraud


If I talk to someone and I tell them, Hey, this is what you need to file or this is what you need to amend because it should have been done the right the first time.


So then that’s part of the liability. But anyways, that’s beside the point. So the mortgage industry has been trying to cater to these people. So there are alternative programs coming out, 12 month bank statement program, profit and loss statement program. But any time, oh, are they really?

And these are conventional loans.

Anytime that anything like this pops up, it’s not going to be held by the majority of the banks, but by individual investors. So guess what? More expensive and the rate more expensive on the cost. And I always tell seven employed people, you’re either going to pay on taxes or you’re going to going to pay on your interest rate and your cost.


Is going to be free. But

You can do that though. There are programs. So what’s the rate on that today? Rates are four and a half. Is it five and a half or seven or what’s it?

You’re probably between six and a half and seven and a half. And the cost of the loan, if a regular cost of a loan is 12 grand, you’re probably talking 20,000.

And so basically they just sort of audit your bank statements and they say,

Yeah, they say, Hey,

You have this much free cash flow.

Well, let’s say you did the deposits of 200,000. And they go like, okay, we’ll let you use 60% of the 200,000 as your income.

Oh, wow. Interesting. Qualify. I did not know that. And

The programs are not fixed because they want these programs to turn around. Well,

These are arms.

These are all arms. So they’re all variable programs. So three to five years they want to turn them around.

Arm is adjustable rate mortgage for those of us who don’t know

Disclaim it,

What that means. Right. Okay. Now how about multiple borrowers? This comes up a lot. It’s like, well, I can buy a house with my daughter and my son. Does that happen a lot? Or I want to buy it with my girlfriend or boyfriend or whatever. Or can my girlfriend, boyfriend and their uncle?



That is possible. Living in this area, a lot of people have to cohabitate if you want to stay in this area. So you’ll see a lot of parents with their kids. You’ll see a dad with the daughter and the husband. So you see a lot of that. The mortgage industry has recognized some of this. So what they actually allow you to do is, let’s say you have a parent that’s really well off, pretty wealthy, big income stream, but doesn’t live in the area but wants to help the kids out. They will allow the parent to sign onto the loan with the child, even if the child, or I shouldn’t call her child, but the son or daughter, even if the son or daughter has zero income,


So you can have someone that has zero income and the parents have more than enough income and they could qualify for the loan for them and they would still be a somewhat first time home buyer loan in a way. And they will still get the more aggressive rate of being an occupant on the dump,

Really. So this is very interesting. So it sounds like lenders are really coming out with a lot of interesting solutions. The short of no doc fog, a mirror loans to get people into the properties.

And it’s funny because I was just reading a statistic the other day, this was kind of scary, but the industry has been slowly loosening up the guidelines. So they are just auditing the most current two quarters of loans. Majority of lenders have closed in the US and they’re seeing a slight uptick in the default rate. Default rate. So they’re not sure if that’s because they’ve loosened the guidelines or because of the way the prices are these days. But it’s interesting that as soon as they started loosening, the guidelines defaults have just marginally gone up.

Could be because the guy they have running the C F P B now wants to destroy the CCF pb that might have something. Oh my goodness. Consumer Financial Protection Bureau, by the way, for all you listeners out there. Okay, so now you’ve been pretty successful, Victor. I mean, you just talked about how you started getting in this business in 2007, I guess, which that’s when I first started seeing printable letters with your name on it. And I had no idea who you were, but I don’t know who most people are when I mean most people because a lot of lenders out there. So I see your name pop up in 2007, and I don’t know if I had no idea you were brand new,


Wouldn’t have mattered, but anyway, but you’ve been very successful as a mortgage broker in these last 11 years. How was that? How have you been so successful? What’s the secret?

Hard work.

Hard work,

Actually, you know what? I was thinking about that the other day and I actually broke down the top three things. It said hard work, persistence and optimism.


So if you ask, so I have my own process with my own assistant.

If you

Ask him who the most optimistic person in this team is, they’re going to say Victor’s like no cheerleader. If you tell him what the problem is, he will find why it’s actually not that big of a problem. So it’s hard work. Like I said, I worked back then 12 hour to 14 hour days for seven days a week for a long time. Now I have my family, I have my daughter, but it doesn’t mean that I work any less. I’m very committed to my clients. I think I was looking at some of my numbers and for the last two years, if I would have been ranked within the nationally, I’d be within the top 1% of all people that do what I do,


1% of production, I don’t care.


I care about is a client happy? Did they have a positive experience? Did we make an impact in their life?
So because my belief is that if you help that client, that will only prosper your business. And it’s almost like I have to step away and go like, okay, why am I doing this? What is the point? Philoso questions or whatever. But what is the point? And the conclusion for Matt is I have pillars. I have things that I have to meet in my life, and they could be as simple as I want to be the best father, I can be the best husband, I can be the best coworker. I’m going to call myself a coworker, even though they call me the boss, the best that I can be in those faucets. And I think that the main one was I want to be able to help people. And I have a goal. I mean, we all have goals. So I could say I want to be able to help a hundred people or 150 people into their homes.
And that really is what drives me. It says these people would not, for example, I had a client who bought with an affordable housing program in Watsonville is a gentleman. He was, I don’t know, maybe 73 years old. He had a lot of assets, but very little income. He was coming from the Bay Area, he was on rent control. And I put him in a property in Watsonville where his effective rent stayed. The same with the program, with the city, with an additional program. And I had to fight for this guy and he said, thank you so much. I’m going to die in this property because of 55 and over property.
This is a person that would have otherwise nobody would’ve been paid attention to him. And I said, I made that impact. So it’s like that’s really what drives me. That’s really what kind of wake me up in the morning says, it’s almost like I have a message to give or do. You’re on a mission, on the mission and if it’s a hundred people, if it’s 200 families, if it’s 300 families, as many families as I can help, that’s what I’m going to want to do. But it’s just I’m one person. So sometimes it’s challenging to be able to do that. And the other thing is I surround myself with amazing people. I surround myself with amazing agents who are amazing and


Staff is nothing short but the best in the business. And they’re not going to say it because they’re humble, but I will say it,

They are

The best in the business. So being able to surround yourself with that. And the team here, the four partners that we have in our company, we’re all been in the business for a long time. So we bounce ideas. We don’t really look at each other as competition. We’re just like, Hey, we’re one big unit, so how can we make this work for the betterment? So that’s part of the,

Well, it’s interesting that you mentioned that you would be so highly ranked because you never do any kind of marketing or advertising whatsoever. I mean, once in a while, once a great blue moon, I’ll see you through a Facebook post, not about you. It’s always about something else. Something. Yeah, I am so guilty. But you were the top secret mortgage broker, right? I mean, I’m even

Concerned saying this right now, Sam,

I’ve never seen you ever anywhere. The only place I see your name is the top of pre-approval letter. That’s

Funny. Well, that is

Plus basically my

Plus and minus I guess. So if I started advertising, I would not be able, we’re in a different everything right now. So you have to be out on Facebook, you have to be out on Twitter and Instagram, and you have to do that how you’re not,
Because I’m honestly, I’m too busy. I’m too busy to be, the girls are going to kill me. But they always, I think right now we’re already running high capacity and I have a message to get out as far as like, okay, I want to help people, but I think that that’s still the part of me that needs to grow. So I’m a believer that we were never going to be perfect. It’s okay, but you always have room to grow. And that’s the one thing this year that I would like to focus on is actually getting a presence out there and not so much, Hey, come use me. I’m a gray, but more like, Hey, this is the message. Hey, this is what I did with these clients. Hey, for people just to know, I don’t know. Well,

That would be a wonderful thing to have on Facebook or wherever. I mean your client success stories. Because whenever I refer people to you, I refer any kind of people to you appreciate lowest income earners to whoever else. And it’s because you give that same level of commitment and quality to, if it’s just some guy who’s barely scraping by to someone who’s like a Google executive, I mean, it’s just amazing to me. I can barely understand it. I mean I do understand it, but I could barely understand it that you’re so dedicated to all your clients, right?

Yeah. I



Amazing to me because


Are such a heavy hitter, but even people of modest means you treat ’em like they’re the most important client in the world.

But see, that’s just it. That’s who you are. So I’m not going to pretend like I am all good and great and behind the scenes I’m doing stuff, right.


This is who, I mean, I just presented how it is. So for me it’s like that’s how it should be. You should treat everybody the same because this is the right thing to do. And even although the, what is that saying, people over profits. I agree and I disagree sometimes because you need profits to run a business. But I agree because everyone deserves the decency of their message to be heard and whether or not they buy, sometimes they just need to know if there’s even a possibility and I will put ’em on the track and do that. Yeah,

Right. So Victor, I’ve told you this a couple of times and I tell anybody, I tell this probably several hundred times a year, which is that back when I became a realtor back 15 years ago, I barely even knew what a mortgage broker was. If I had to do it all over again, I probably would’ve become a mortgage broker because it’s such a wonderful job. I didn’t know it was a comedy podcast. Okay. But what advice would you give to somebody who wanted to get into mortgage? Actually, I had a conversation just last weekend with somebody. He was saying, I’m thinking about getting a real estate. And I said, you should become a mortgage broker. And he said, I should become a mortgage broker. And I said, definitely. And so what advice would you give to somebody who’s thinking that they should become a mortgage broker? Any advice for him? You

Must really not like him.

I’m just kidding. I’m just kidding. I’m just kidding.

I think that what advice? Well, I think that anybody who’s in this business, it’s a love hate relationship. Anybody who’s in the business can find meaning in helping people, but it is very frustrating business. It requires a lot of patience and understanding of why you’re anxious. So I’ll tell my staff, Hey, remember that we may like each other and we’re helping people, but it doesn’t take away from how stressful it is and how your frustration about a certain situation that didn’t turn out the way you wanted it to is specific to that situation. So it’s a technical field in a way to get into because one is technical and two is sales. So that’s the hard mesh for people. So when people, I think that I haven’t really heard any statistics of the influx of loan officers, but I really haven’t seen very many people getting into the business.
And the people that are in the business, maybe 70% of them are going to be retiring in the next 20 years. So it’s going to leave people like me in the business to figure out what we’re going to do in the future with this and how are we going to possibly be able to keep up with all the demand. So for the new people that want to come in, I think that you need to be prepared. One of the first people I spoke to is be prepared not to get a paycheck for six months. I mean, you’re going to spend near $5,000 for no guarantee that you’re going to get a paycheck. But if you can have your savings in line, if you can be humble and drive your little Honda around, it will work out. If you’re dedicated, you going to be a lot of hard work.
It’s going to be stressful, but you’re going to have to have the belief that you’re going to make it in this business. And it does take mental grit to make it through. So you have to be tough. You have to be able to differentiate the fact that it’s not the end of the world. If these people don’t get this house, it really is not really cool. It’s going to hang over your head, but you need to be able to separate that because if you don’t, I mean you’ve probably heard it like I have, but there’s people in our industry that are golfing and get a heart attack or how heights divorce rate or it just goes on and on because it’ll eat you up. It’s a hard business, but I think it’s a very rewarding business. It pays well and in the way you’re kind of self-employed, so you can do whatever you want, but not really. There’s certain benefits and drawbacks to it, and it does take a specific type of personality to make it. And then you have to think how big you want to be. You can do one loan a month and be completely content and make your salary and you’re fine. Or are you super driven and you want to really take over the market and what’s really the driving force behind that. So those are the questions that I would probably have to answer. Well,

That’s a very serious questions there. Make it sound like it’s not a lot of fun and a lot of hard work being

We have a great time here.


Yeah, I think that I inserted another Sam Sains guy. So I inserted another sayings that there was two things that you didn’t want to see be made. One of them was policies, and the second was a sausage. I think loans is really a close third. You don’t want to see how the loan is made because it’s super pressured, anxiety filled bubble.

Right? Right. So also I think it must be a very emotional, emotional business too. I mean because you have highs and lows and maybe you didn’t get the loan or maybe some weird technicality means that you’re not going to get the loan ever. And it’s just dealing with that with your clients.

This isn’t really a financial


This is an emotional

Transaction. Right, exactly. It’s

Emotional. So you have to be there for them for the clients and be supportive of that. You have to be able to be endlessly optimistic, and you have to be okay with going all the way to the end


It not to work

Out and then get nothing.



If you’ve done your job,

That doesn’t happen very often.

Not very often. I think I was just talking to some of my agents and I was looking back in my 11 years. My 11 years, you put a deposit down in the house and then eventually you have to release your a contingency that my whole career have never lost a deposit, meaning that we’ve never gotten to the end and not been able to fix it.

That just did happen to me last year. Last year I saw some loser deposit. I couldn’t believe it. And I was like, well, the agent was really horrible. I won’t name any names, but that’s interesting though. I want to highlight that really. And that is basically to be successful as a mortgage broker today, you have to be prepared to work really hard

For no guarantee. For

No guarantee. So for all you people who think that maybe all the people like me, mortgage broker would be a good job, just be prepared to work really hard at it. So you mentioned 20 years, 70% of the people are going to be out of the business. Where do you see yourself in the next five or 10 years? You see yourself right here in the same office five or 10 years from now, or we definitely going to branch.

No, I think we’re going to be in a different spot. There’s two ways you can go in this industry. If you’re going to do a lot of volume. There’s the option A, which is you keep doing the work yourself. You keep meeting your clients, you keep being involved in your files, and you’re going to be limited on your production because there’s only so much of you to go around. It

Only had 24 hours a day,

Only 24 hours a day. Or the second way is you become a manager. So you manage your team, so you get people to work under you and they do all the processing, just kind of run around and try to keep everything, everyone informed and marketing and all this. I think that it’s slowly gravitating to that. We have seen an influx in internet banks, the quickens of the world or whatever, loan depots I think, or whatever. And I think that that will become more impactful over the years. So what they’re doing in their model is you pay minimum wage jobs somewhere in the east to have someone just process the loan. And really they were going to be designed for the individual who would use something like TurboTax. You have the individual who thinks or who their situation is pretty straightforward and they can do their taxes easily online, are now going to do their loans,

Cookie cutter loans, cookie cutter buyers.

But the problem is when that appraisal comes in wrong
Or when all of a sudden you have a late payment because you’re not going to have the support that you should be having. You’re just hoping that nothing like that would happen. So for my industry, it is going to become a divide. It’s going to be between the internet and the mom and pop shops or the brick and mortar, whatever you want to call it. And we’re going to become more specialized, more like a C P A, like, oh, maybe you should go talk to this guy and there will be a disparity in the cost of the loan. I’m sure that there’s going to be because you’re paying some minimum wage. And right here, I mean all of our people here are local, are locals, so we try to pay fair wages and things like that. So that part of it, the economics of that is going to change.
But moving into the future, I mean, I suppose that we’re all going to have to gravitate to managers at some point. I don’t know, we might be acquired by a big internet bank that wants to take over the pipeline and then I’d just become a manager of the whole thing. You don’t know what it’s going to be. And they’re going to need people like me and us because we’re the professionals. We know how it works. Tech companies are just tech companies. They know how to do a self-driving car, but they still need to know how the inner workings of the system works. So that’s where we would, and eventually we’ll phase out and we can retire and go into glory or whatever



Does that mean that you are actively recruiting people now to manage or, I mean, if there’s a young Victor Romero of the 2006 era who’s looking to get a job with a top producing mortgage broker who doesn’t wear a Rolex, I noticed, but yeah.

Alright. Drive a Honda too actually, not a Honda accurate, but

Whatever. Same thing.

Yeah. Well, I think that we’re always kind of looking for the right fit. Our company was built on just having that group of people that really like to be around each other. So it’s almost like having a group of people work together, but we all like each other. We all happen to be in this business.

So it’s more like if the right person happened to come along, there might be room for them here, but there’s no openings available

And I’m not really a headbanger. There’s some guys in head bangers just with somebody that kind of grinds it. There’s people in this market that are just that way and they’re just very going to be very aggressive. But we all have a style and there’s plenty of clients to go around and we’re going to match whatever we match. So yeah, if someone’s listening and it’s interested, they can always feel free to call me and pick my brain.

Right. Very good. So what is the best way for people to get ahold of you, by the way, if they want to get ahold of you, how should they find you?

Email, text or phone,

Which is, what’s your email address,

[email protected] or my phone number? (831) 214-2172. And I try to return phone calls within the same day, emails within the same day. I would like to say I’m pretty accessible. Kind of depends on what’s going on.

You have a family obviously, so you don’t want to be like,

I’m sorry, step. I may not answer your call at eight o’clock at night.

Right? I’m

Putting down my daughter at that time, but I don’t blame. I

Don’t blame. But

You will get a call at eight o’clock in the morning.

You’ll call at eight o’clock in the morning the next


So as you wrap things up here, is there anything that I should have asked you that I somehow neglected to ask


I dunno what I like for lunch. I don’t know. I think you got it all. I think the industry is good. I think. Yeah, I think you got it all.

Alright, so is there any parting advice for our listeners before we sign off here?

Do your homework, find out who you’re working with, make sure that you like them. I know it sounds kind of weird, but ultimately we’re on this journey together and if you get a good person and they’re likable, it will make the process a lot better for you. Ask questions. It’s okay to ask questions. If someone gets tense about answering them, then there’s probably something wrong. And I would be happy to help anyone who you send me said or whoever listens to this. And even if it doesn’t go anywhere, it’s okay. I give advice freely. I don’t charge for any service of that. That’s just part of the package.

Right. I tell that people all the time too, it doesn’t matter what lender you’re using, I mean in terms of is it Bank of America? Well, not Bank of America, don’t ever do a loan Bank of America, but like Wells Fargo or Comerica or anybody or Santa Cruz lending, what matters is the quality of the individual that you’re working with, right? That’s really, and if you’re working with a top flight professional, regardless of where the money’s coming from, then you’re going to have a good experience. Then if you, you’re the best lender, but working with the worst person at the company, then it’s going to be bad experience.

Doesn’t really matter. And I will work on my social media, so hopefully you guys can find me online somehow.

Well, you forgot to mention this thing called Yes. Or

Right. Victor, Victor name Romero Redirects I noticed. But that’s a very good Easy to remember. So Victor, thank you so much for the time here today. It actually kind of went way over our normal time. Sorry.

Having time. Thank you so much for having me. It’s


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Seb Frey helps long-time Bay Area homeowners make their next move easily the next one yet. If you're looking for a minimum of hassle, maximum net cash on sale, and certain results, contact Seb today.