Transcript Generated by AI 00:00 Hey, 00:00 Mark Parkinson back with Park Place, 00:02 and we're here for an October update on 00:05 HUD loans. 00:06 This segment is sponsored by Capital Funding Group 00:09 and we're super happy to have Eric Howard, 00:10 a principal of Capital funding here with us. 00:13 To give us some information because there have been 00:15 two major developments since the last update with Eric. 00:19 The first, 00:19 of course, 00:19 is that the government has shut down. 00:21 The second though is good news, 00:23 which is that rates are trending down, 00:25 which is terrific. 00:26 So, 00:26 let's start out, 00:27 Eric, 00:27 first of all, 00:28 welcome back. 00:28 We appreciate you being here with us. 00:30 Thanks, 00:30 Mark. 00:31 Appreciate it. 00:31 Uh, 00:31 excited about, 00:32 uh, 00:33 always being here with you and being able to share any of, 00:35 uh, 00:35 you know, 00:36 our expertise as we can. 00:37 Great. 00:38 So we've had this government shutdown. 00:40 It's hard to tell how long it will last. 00:42 Uh, 00:42 let's start out with that. 00:44 How, 00:45 what impact has the government shutdown had on the processing of HUD loans? 00:50 So the, 00:50 uh, 00:50 what I would refer to, 00:51 Mark, 00:51 is the front end, 00:52 if you will, 00:52 the actual processing of loans uh has stopped and has been impacted by the shutdown. 00:57 However, 00:57 HUD still continues to close loans 01:00 uh for, 01:01 for those applications that otherwise had a closing date 01:04 prior to the shutdown. 01:05 So, 01:06 uh, 01:06 we are seeing some limited impact with respect 01:09 to uh new loans moving through that system, 01:12 but, 01:12 uh, 01:12 we are still in active closing for, 01:14 uh, 01:15 for any applications again that we're teed up and ready to go prior to September 3. 01:20 Got it. 01:20 So if you had a date before the shutdown, 01:22 you're still closing. 01:23 If you didn't have a date, 01:24 you're a little bit in limbo. 01:26 Correct., 01:27 does that mean that folks should stop 01:29 applying and, 01:30 and stop their processing of HUDD applications? 01:32 No, 01:33 no, 01:33 what, 01:33 uh, 01:34 obviously what we would want our borrowers to be doing and, 01:37 and ours are, 01:37 are moving without the ball, 01:39 if you will, 01:39 uh, 01:39 you're continuing to move forward even if you've got, 01:42 say, 01:42 a commitment in hand, 01:43 you're working with attorneys to get any legal 01:44 documents prepared and and submitted as appropriate. 01:48 And if you're, 01:48 uh, 01:48 again, 01:49 working on a new loan, 01:49 you're working with your lender, 01:51 uh, 01:51 getting all your application exhibits together, 01:53 working with your third parties to finalize those, 01:55 and, 01:56 and you can still submit the applications. 01:57 They, 01:58 uh, 01:58 they'll sit in a queue, 01:59 but we would counsel borrowers obviously to, 02:01 to do that so that when the shutdown ends, 02:04 that, 02:05 that you hit the ground running and your application's ready to be processed. 02:08 I mean, 02:08 so if you Submit right now, 02:10 you're going to be further ahead of folks that 02:12 wait for the shutdown to end and then do, 02:14 right? 02:15 Yeah. 02:15 Yeah. 02:15 And so again, 02:17 that queue obviously is building for folks that we're 02:20 ready to submit applications prior to September 30th. 02:23 So, 02:23 but, 02:23 uh, 02:24 to your point, 02:24 on a relative basis, 02:26 keep moving, 02:26 uh, 02:26 keep getting the applications put together and 02:28 get them submitted as quickly as possible. 02:30 Now, 02:30 the good news since we talked last is that rates have gone down. 02:34 Let's talk, 02:35 tell us a little bit about what's happened in the last couple of months with rates. 02:38 So, 02:39 um, 02:39 as, 02:40 as we've always talked about, 02:41 you know, 02:41 the macro environment really drives HUD rates. 02:44 Uh, 02:44 they are generally pegged to some spread over the uh the 10-year treasury. 02:49 Uh, 02:49 when we spoke last, 02:50 the tetaner was around 420, 02:52 425, 02:53 somewhere in that area. 02:55 Uh, 02:55 as of this morning, 02:56 we're, 02:56 we're just about at 4%. 02:58 Uh, 02:58 number of factors driving that downward, 03:01 uh, 03:01 as we've seen throughout history, 03:03 when there are potential macro or global events, 03:06 uh, 03:07 we do see what we refer to as a flight to quality, 03:10 where, 03:10 where investors will, 03:12 will buy US securities. 03:13 And treasuries 03:15 because they're a safe haven and when prices go up, 03:18 yields go down. 03:19 So clearly in the news, 03:21 one is the shutdown, 03:22 but also the, 03:23 uh, 03:23 the trade discussions 03:25 between China and the US tariffs back in focus. 03:29 Um, 03:30 you know, 03:31 maybe we live in interesting times, 03:32 as we know. 03:33 So, 03:33 uh, 03:33 we've got a shutdown going on. 03:35 We've got a potential trade war 03:37 with China with 100%. 03:38 Tariffs. 03:39 Secretary Besent, 03:40 I just saw is scheduled to talk with, 03:43 with, 03:44 I believe his correspondent colleague, 03:46 if you will, 03:46 in China today. 03:48 So that will move, 03:49 but also with the shutdown, 03:50 it's been interesting. 03:51 There's been no real governmental data coming out 03:54 to be able to help the market on direction. 03:56 We've got a Fed meeting on October 29th. 03:59 That'll impact the short end of the curve, 04:00 as we've talked about in the past and borrowing rates. 04:03 bridge loans, 04:04 but uh rates are down. 04:06 uh HUD loan, 04:07 HUD rates are down, 04:08 so good time to continue to get those applications in and, 04:11 and keep moving forward. 04:12 So I think you told us back in August that HUD rates 04:15 were closing in the sixes and now it looks like the rate, 04:18 the, 04:18 the closings would be more like in the 5s, 04:20 is that right? 04:21 They are. 04:21 They've continued to trend downmark since then and uh and, 04:24 and we're locking rates now sub 550. 04:27 Uh again, 04:28 Relatively volatile here as we've been down just in the last handful of days on 04:32 the 10 year for a couple of the macro factors that we've talked about. 04:35 But again, 04:36 uh, 04:37 50 basis point plus pickup from deals that we're 04:39 closing in August to where we are today. 04:42 Uh, 04:42 as we talked about last time, 04:43 you know, 04:43 550 is a great rate, 04:44 525, 04:45 wherever that may be. 04:47 And I did try and use the program and uh you know, 04:50 HUUD will be open for business when the shutdown is over and 04:53 uh and they've done some great things over the last year. 04:55 I mean, 04:55 if you can have permanent financing with no recourse 04:59 in the middle 5s, 05:00 I mean, 05:01 that's, 05:01 that's a, 05:01 that's a great situation. 05:02 So Eric, 05:03 thanks, 05:03 thanks so much for the update. 05:04 Of course. 05:05 Thanks to all of you for joining us. 05:07 Uh, 05:07 we'll continue to come back to Eric on a, 05:09 on a monthly basis. 05:10 with, 05:10 with an update. 05:12 Um, 05:12 but as I've said before, 05:14 you can lock rates in in the fives, 05:15 you gotta, 05:16 you gotta go out there and do it. 05:17 And, 05:18 uh, 05:18 Eric, 05:18 thanks, 05:19 thanks so much for your support and thanks for all the 05:21 folks that are watching and your support of Park Place. 05:23 Absolutely. 05:24 Thank you, 05:24 Mark. 05:24 Thanks for having us.
