In episode 22 of The Real Talk, Raquel Ramirez is joined by special guest, Michael Lux, a financing expert and branch manager at Alterra Home Loans. With over 39 years of experience in the mortgage and real estate business in South Florida, Michael shares his insights and expertise on housing and mortgage strategies. He also discusses his role as a certified divorce lending professional and the importance of educating realtors and fellow bankers in the industry.
Tune in for an insightful conversation about real estate, divorce, financing, and navigating difficult transactions.
TIMESTAMPS
[00:02:14] The Lending Process.
[00:04:17] Cash Overflow in Coral Gables.
[00:08:43] Financial Considerations in Divorce.
[00:13:04] Assumable Loans and Divorce Settlements.
[00:16:37] The Garn-Sait-Germain Act.
[00:21:16] Cooperative Approach in Divorce.
[00:23:16] Co-representation in Divorce Cases.
[00:27:30] Financing Options in Divorce.
[00:32:08] Affordability of Mortgages.
[00:40:03] Pulling Money from Retirement Accounts.
[00:43:26] Finding Solutions in Divorce Cases.
[00:48:29] Dissolution of Marriage and Assets.
[00:51:02] Scams and Solicitations.
[00:56:07] Misinformation in Mortgage Rates.
[00:57:37] Value of Real Estate Services.
In this episode, Raquel Ramirez and guest, Michael Lux, mention that realtors have a multifaceted role in the real estate industry, going beyond paperwork and contracts to provide comprehensive services. They engage in analysis, build relationships, vet people, organize details, coordinate, negotiate, and have extensive knowledge of laws and boundaries in the industry. Raquel and Michael also emphasize that realtors have an ethical responsibility to prioritize their client's needs and provide valuable information.
Moreover, Raquel and Michael highlight that each real estate transaction is unique due to the uniqueness of each household and person involved. Even if two households are identical, there will still be at least one difference in the transaction. Real estate professionals who specialize in handling complicated transactions are acknowledged as they provide the right value and real viable solutions to their client's unique situations. With their knowledge, expertise, and skills, these professionals navigate the complexities of each transaction and ensure their clients' needs are met.
QUOTES
SOCIAL MEDIA LINKS
Raquel Ramirez
Instagram: https://www.instagram.com/featured_properties_intl/
Facebook: https://www.facebook.com/featuredre
LinkedIn: https://www.linkedin.com/in/raquel-ramirez/
Michael Lux
Facebook: https://www.facebook.com/profile.php?id=100084942236741
LinkedIn: https://www.linkedin.com/in/michael-lux/
WEBSITES:
The Real Talk: https://www.therealtalkpodcast.net/
Featured Properties International: https://msha.ke/featuredre
Raquel Ramirez00:04 - 00:28
Welcome to The Real Talk. I'm Raquel Ramirez, your host and real estate professional here to bring you insightful conversations, expert advice, and powerful stories about what really goes on in life, love, divorce, and real estate. Are you ready? Let's get real. Hello and welcome to The Real Talk podcast. How are you, my friend?
Michael Lux00:29 - 00:30
I am doing wonderful yourself.
Raquel Ramirez00:30 - 02:14
I'm doing very well. Thank you. Today, I'm bringing to you a very special guest. His name is Michael Lux. He's with Alterra Homes and he is, let's call him a financing expert because you've been in the real estate and financing world for quite a bit of time. Tell us actually I was I was actually getting ready to read your bio and I can do that. Michael Lux has been in the mortgage real estate business for over 39 years in South Florida. You were born in Miami and you've never left very much like me, sir. You're very familiar with our diverse real estate market and you earned the privilege of being the preferred lender with many longstanding realtors, teams, and brokers. You are indeed a genuine relationship banker, I can attest to that. Your specialties include housing and mortgage strategies that help realtors attract more buyers and sellers and avoiding buyer fallout. You are also an educator, which I do love, educating realtors and fellow bankers for several years on real estate and financing from lead generation to closing the transaction. negotiating difficult real estate transactions, and of course, my favorite, because I am biased, certified divorce lending professional. You and I, of course, we sit as members of the National Association of Divorce Professionals and Coral Gables. In fact, that's where I met you. And I'm very, very proud to call you a friend and you're a valuable member of our chapter. So thank you for that. And of course, we both of us, we work very closely with other professionals, including attorneys when it comes to the divorce niche. And I think I would love to get into that today. But before we do, tell us a little bit more about you. Expand as much as you want. Let us know where you're coming from and and what you want us to know about the lending process from your perspective.
Michael Lux02:14 - 02:19
Thank you, Raquel. Thank you for allowing me to be on your podcast.
Raquel Ramirez02:20 - 02:21
It's my privilege.
Michael Lux02:21 - 04:05
I'm excited. So I've been I started doing this as a banker in Coral Gables in 1982. Oh, wow. And at that time, I started from the ground up. I had a great mentor. And Carol said to you, you have to learn everything about banking and real estate to find your path. So I started sweeping floors because that's what they needed at the time. I was a bookkeeper. I ran an antiquated proof machine. I verified signatures on checks. I opened accounts and I became the face of startup banks and Coral Gables because I was young and pretty at the time. So whenever there was a call made in any of the banks that I either worked for, the main ones, the Bank of Coral Gables and Metro and a couple other banks, So whenever there was ever a problem with anybody's bank account and whether it had to do with checking, savings, loans, mortgages, they all got a note in the mail with my picture on it that said, oops, I goofed. Exactly what it said. I wish I have one around here somewhere. And they sent my picture to everybody. So I was the board in which they vented on. Wow. No matter who made the mistake, I owned it for them, and then they would call me, and then I was the one who would fix it. And that was one of the greatest things that could ever happen to me, not only for my career, but also for my personal life. Of course. Because it really taught me the value of listening to people.
Raquel Ramirez04:05 - 04:17
Yes. I was just about to say you were literally in the trenches and not to mention you were in finance during the 80s, which is is a very interesting time to have been in the real estate and financing industries.
Michael Lux04:17 - 06:14
We had so much cash in Coral Gables that there were nights where the Fed and Doral was full. We couldn't put any more money there. Our vaults were full of cash. We couldn't put any money there. And since these banks are all closed now, we had cash literally in our desk drawers. Oh, my gosh. Little bitty locks. Oh, my goodness. So much money running around. And it was a free for all for a while. And that was one of the things that, you know, I was also told that I either needed to get into the lending aspect of it or the international part of banking in order to make a difference. In other words, in order to make more money. So that's the path I chose and I loved it. And, um, you know, I've always, we were the first mortgage brokerage business on the radio. Uh, I'm a banker now. So I had my old company was a Atlantic coast mortgage. And, um, I did loans for all the guys in sports and all of the, uh, the radio announcers. Most of that is all, uh, podcast now. Well, there are several of them that are doing podcasts now. A lot of them are simulated or simulcasted. So when there were local disc jockeys here, I would do their loans, and then I would be on their shows. And that's what truly launched the mortgage business. And then everybody kind of followed. I still do the same thing. I prefer meeting with people individually. I know with the influx of blockchain technology and internet and everything like that, about 70% of my consumers now do apply online. But there's still 30% of them who I take a hand application on. And I still, if it were up to me, I would meet with every one of my applicants because you can really serve your clients best when you get that authentic feel for them.
Raquel Ramirez06:15 - 06:17
Oh, absolutely. I agree with that.
Michael Lux06:17 - 06:36
Whether it's a divorcing couple or first time home buyers, it's a very stressful and emotional situation. So I think I make it easier on them when I'm there in person. So I don't mind getting in my truck and I don't mind them coming here.
Raquel Ramirez06:39 - 08:43
Yeah, that's key. I think that's key. And we talk about that a lot when we meet for NADP luncheons. You know, we toss those topics out on the table for discussion. And I think the grand majority of us agree that it's such a sensitive, it's such a delicate transaction. And I'm going to refer to it as a transaction when we're talking about divorce cases, because in our respective industries, the lending and the real estate aspect of it, there is a transaction that's on the way. But It's different when you get to meet with people in person and gauge where they're coming from and kind of help them come down from an emotional high, let's say, and also ensuring cooperation and collaboration amongst the parties. Because at least in my case, you know, when we are selling, I do need to have both parties agree to cooperate, agree to be available, agree to show the home, agree to provide certain information and feedback. And I'm assuming in your case, and this is a perfect segue really, when you are When you are trying to collect information, let's say, because on the lending side, obviously, when we're selling a property, we don't need a lender. But when they are purchasing a new property, let's say as an exit strategy, a lot of times you have to consider certain financial information that may or may not be, let's say, may or may not be already part of an MSA. Let's say maybe the soon-to-be ex-spouse has not yet agreed to give certain amount of alimony or the parental agreement hasn't been established so we don't really know what the child support is going to be like or if they're even going to be able to buy a property instead of renting on their way out. You need people to cooperate with that sort of information. They need to provide you some of those details in order for you to be able to determine their financial ability to purchase, say, on their way out and for their new chapter in their life.
Michael Lux08:43 - 14:04
With, especially in a divorce transaction, We as a certified divorce lending professional, I mean, we do get trained. And first thing we get trained to do is, you know, I'm not a lawyer. I'm not a realtor. Was even though I may review and negotiate countless contracts, it is not in my lane legally to give those people that advice. Right. However, we have to be trained in all of those aspects in order to get proper guidance. So and I know you mentioned an MSA, a marketing, you know, marital settlement agreement. So in a perfect world, I mean, you really have four phases in divorce planning, you know, and the first phase would be, of course, vetting the house, you know, who really owns it, what is it worth, valuation, etc. The next stage would be qualifying income. I'll get into that in a second. And then we have to analyze their debts and that's both the departing and the one who's staying if that's the case. Sometimes both departing and then of course giving them their home equity solutions. So in a perfect world we're going to get involved you as the divorce realtor, real estate professional, me as the lending divorce professional. Usually there's a CFP or their financial planner involved and then sometimes counsel. ideally. If we could work as a team and make this more of a collaborative approach where we all get together and work together before the MSA is put together, before there's financial discovery, and just let them know that, you know, we're here because as with any negotiation, unless everybody's happy, nobody's happy. You know, and that's the way it works. So again, to listen, figure out what everybody's wants are, what their needs are. And a lot of times if we're there from the beginning, we could save people a ton of money, a ton of hardship, a ton of failure. For example, a couple of things that people, you know, they'll call me in right away and we're at the early stages and they're thinking refinance. because one of the spouses wants to stay in the property. You really don't want to refinance unless you have to. I love it because of course that's how I feed my family. But when they've got an existing 3% mortgage on the property, in order for me to refinance them, if it's possible and all the numbers are right, they're gonna go in today's day and age to 8% roughly. You know, we're talking a hardship for the family. We're talking hardship potentially for the children, because it's trickle down economics in its truest point when it comes to family. Because if mama has it tough or daddy has it tough, eventually that'll trickle down to the children. It's normal. Yeah. So in some cases, when we put that together, oftentimes the exiting spouse will agree to sign the property over to the wife or the husband, whoever may be staying in the property. And usually you'll hear, I want my name taken off the note in the mortgage. Which requires a refinance. Right. Because of liability reasons. Correct. Two, because of credit reasons. Right. Three, because they just hate their exiting spouse. They want to make life miserable for them. But oftentimes when I come up with a solution that says, you know, wait a second, a lot of times, I'm sorry, a lot of times council will, you know, say what we have to refund. And I'm going to point out that if we A, go to, possibly if the mortgage has some sort of a sort of a assumability feature to it, Which a lot of them do. FHA loans do, VA loans do, and some private lender loans do. That may not be that three, but a little higher. In the last several years, we've done a lot of those. A lot of times I can give instruction on the spouse that's going to remain with the property to contact that servicer and allow them to assume it. with qualifying. Right. They have to qualify. Right. But I'll say, hey, why do you want me to do a whole new loan for you? Right. When you can balance their possibly of equities, that has to be and that's for the attorneys and for the parties to decide. Right. But however, a lot of times I can offer them advice and say, hey, take that balance and put it into a different distribution, put it into a different pile. So in other words, they can create some sort of trust. So therefore, she can assume that fully he gets his name off or she gets his name off. They keep their mortgage. It's cheap. It's effective. And the difference can be settled in other ways via some sort of support or maintenance schedule.
Raquel Ramirez14:04 - 16:28
OK, so let me interrupt you there just to clarify what you're saying is in the event that a party in which one of the spouses wants to keep the property and the other spouse agrees to relinquish the property in their settlement, okay? Assuming there is equity, you would suggest to work that equity, let's say, let's talk a little numbers here. Let's say the property is worth 500,000. Let's say they have a $300,000 balance in their mortgage. In a typical scenario where the parties are fighting and they say, well, we need to split the equity, right? There's $200,000 in equity. I want $100,000 of that money. In those typical situations, the party that wants to stay, and let's say in this case, it's the wife, just for sake of conversation. She wants to keep the property. Now she would have to refinance, not $300,000, $400,000 because she needs to be able to pay him his $100,000 equity, his half of the equity. That's typical, right? Now, of course, she probably has a 3% interest rate, let's say, because they bought it, I don't know, three, four years ago. And now the interest rates are 8%. Something she needs to remember is that when she goes to refinance, she's now refinancing under A, her income only, B, at a larger amount, because she's not refinancing 300, she's refinancing 400, and C, at an 8% interest rate. So her payments are going to go up. And naturally, that's where you come in to determine that she can support that debt service as she has the ability to repay that, you know, she qualifies, etc, etc. What you're saying, however, is that there are instances in which you can get creative and assuming that that loan has an assumable option, you can, without having to go through the refinance process, have one of the two parties who's already on the loan, the note and mortgage, assume solely the balance of that mortgage, assuming, of course, they qualify in their single income, and then find another way to make up, say, the $100,000 that she would owe him in this case. And I don't know, maybe do a payment schedule, or there are many other ways in which they can probably divvy up those funds if they have accounts or other properties or a trust or something. But There are other options in this case that don't require them to have to refinance as an only solution, correct?
Michael Lux16:28 - 18:35
That is correct. And there's another. If the exiting spouse does not mind. That they still have a contingent liability on the existing note or liability, then there's a little act called the Garn-Sait-Germain Act. And that act gives an exclusion to the due on sale or transfer clause. Because let's say, for example, a separating couple, once they transfer that title to the other party's name, that clause becomes active and the loan becomes due and payable. Due upon sale or transfer. That's right. However, because of this act, if the counsel for one of the parties writes a letter, and I have copies of the letter that I give to my counsel, to the servicing agent, and just references the act, and says the exiting spouse is going to be signing the property over to her entirely, but please do not exercise the due on sale or transfer clause, now he's still going to remain liable for it. But a lot of times, you know, when I go in there and I say, you know, unless he just flat out wants to make her or his life miserable, if he's going to qualify or he already has another piece of property and we could, you know, do that for now, maybe put into the MSA that, okay, we're going to allow that to happen. He's going to maintain the liability for it. She's going to retain ownership to it. So it is still going to be on his credit. However, the due on sale clause will not be activated. And then within a period of X years, once the rates come down a little bit, then she can refinance. She can refinance. And if there's children involved, again, the less expenses that she has, the more she has. And in the long run, it's better for all parties. So we have to look at everybody differently.
Raquel Ramirez18:35 - 22:37
Agreed. And this is a very cooperative approach, right? Because I don't think you were part of the NADP when I gave my very first presentation. That was about six or seven years ago. And that presentation, we used to actually give 40-minute educational talks. And that educational talk, I opened up with a very unique story. It's actually a true story of a couple that tried to do everything right In other words, they had every right intention of helping each other, except they made all the wrong decisions, which ultimately cost them their credit, their finances, it even cost them their physical health, not to mention their safety and security, mental health, you name it. I mean, they stepped on every landmine humanly possible around the divorce process. And part of that, of course, was that he decided to quit claim deed I'm sorry, quick claim the deed over to his soon-to-be ex-spouse, thinking that he was removing himself from further obligation to the property. Of course, you and I know that just quick claiming the property over means absolutely nothing. He still, in other words, he gives up his rights. while maintaining full obligation to the note in mortgage. Now, the bank didn't find out luckily, so they did not enforce the due on sale clause, which basically means for the audience who's listening, which means if there is a transfer, if there is a sale, the bank has the right to exercise their payoff. In other words, they have the right to say, you owe us this by such and such date. right? They accelerate their payment, their payoff. And in this case, they didn't find out. But of course, what happened was that his credit was still attached to this property. She let the property go. They tried to short sale it. I don't know how or why that didn't work during the timeframe that this happened. And of course, the bank eventually foreclosed. So His credit obviously suffered because they stopped. She stopped paying, I don't know, like six or seven months before the bank even realized that something was going on. And then they eventually foreclosed. But because he simply quick claimed that over and didn't do the refinance. Right. They. his credit was damaged along, you know, with the process. So I always tell people, if you don't want to be responsible and you don't have this relationship where you are going to cooperate with your soon-to-be ex-spouse to make sure that they have, you know, that your kids have a roof over their head and that your, let's say your ex-wife is financially secure and stable and you don't want to be a part of that and you don't want to run the risk of your credit ever being ruined, then you need to refinance. You need to remove yourself completely. And a quick claim is not going to do that. You have to refinance. But in the event, as you said, that you want to be a cooperative ex-spouse and you want to look out for the best interests of your family, which just because you're divorced, it doesn't mean that your kids stop being your family. You can say, I'm going to remove myself from the property, but I wanna make sure that the bank knows not to accelerate the due on sale clause. So we're gonna send them this notice to let them know we are splitting, there is a divorce, there's a hardship. However, I'm still going to be responsible for the payments should something happen, right? So this is definitely a very cooperative approach. There are different options. to highlight that because I think people don't know how many options actually exist. I think the majority of people think it's just A or B, and that's all there is to it. No, there's a lot of negotiating that can go on. There are a lot of options. You can get creative, a lot of different strategies. But when you work with people such as you, let's say, who are so experienced in the financing world, who has plenty of experience working with these delicate situations, these complicated transactions, then you come to realize that, yeah, there's more to it than meets the eye. And there are more solutions that can be tailor made to your specific situation.
Michael Lux22:37 - 24:19
Well, certainly, you know, when it comes and there's nothing worse than when I get somebody after the MSA has been done. Oh, God. And they think that, you know, in here, you know, most people in the real estate and banking community see the divorce process as a money making opportunity. I hate that. And unfortunately, that's how people see. Oh, how do I get involved with this? You know, buy a house, you know, because every time we divorce people, you know, we're going to have. You know, we're going to sell one house and then we're going to have two buyers. Well, that's like hitting the powerball. Yeah. It doesn't happen, not to mention it. really is a disservice to the parties because it's really tough. Even if the two exiting parties are best friends, in my opinion, it's a disservice to represent them both. If that were to happen, purchasing subsequent properties after they decide to, let's say, relinquish the existing marital home. Right. And they still got kids going to the same school. And I don't I think you're aware of what our inventory looks like. So now we have a mom and a dad or mom and a mom or dad and a dad now. Both looking for properties We've got two guys that left amicably, now making offers on one house in the same neighborhood, which is not easy to do as it is.
Raquel Ramirez24:19 - 24:23
That's a recipe for disaster. Yeah, there's a conflict there.
Michael Lux24:23 - 26:31
It is, and there's a right way to do it. Like I said, if we put our people first, solutions, eventually it will work out to us all being remembered when they really do need our services. That's right. And what we really do on the regs, as we say. Right. When we're buying and selling houses or buying and financing or refinancing houses. So I'll get a lot of times in the in the distribution of the largest marital asset, which is usually their home. i'll get an msa that will say okay the not only is one spouse going to be keeping the marital existing marital residence but she's also going to be getting a disbursement of some sort at the final dissolution of marriage so let's say she's going to get the marital home The caveat is she does have to refinance it because both parties are on there. Let's say in this particular case it's a husband and wife. Husband is leaving, wife is keeping the house. There's a $500,000 underlying mortgage on it and he's exiting the property. She is getting the property. She has to refinance it. She is also getting a lump settlement of, let's say for example purposes, $500,000. Plus, there may be some alimony and other disbursements involved as well. Oftentimes when that happens, though, in the mindset with most of these people and a lot of the counsel that's involved because they don't know finance, should they? It's not their cup of tea. They're going to go ahead and think everything's OK. She's going to think everything's okay because she's got a half a million bucks in her pocket. Doesn't matter. She'll qualify even though she's turning in a four to an eight percent. We're good. She's got a half a million bucks in the bank. Problem is, if her alimony arrangement is not to the point where it could be counted, and our guidelines have certain caveats on what can be counted, what can't be counted.
Raquel Ramirez26:31 - 26:32
And those laws have changed too.
Michael Lux26:32 - 30:06
Yes, and they change frequently. especially now, you know, the market's a little different right now. So bankers are tightening things up, Fannie and Freddie. A matter of fact, just what I'm gonna tell you right now has changed with Fannie Mae, but not Freddie Mac yet. So for example, that particular situation, yet the mother, the wife that is retaining the property, let's say she has a, let's say she's a realtor. Average realtor in the state of Florida, Let's say she's making, as an average realtor, average realtors don't do that many transactions. Let's say she's making 60 grand a year. Well, man, 60 grand a year, even though you got a half a million dollars, it doesn't qualify you. I mean, average income to qualify in our area is about $130,000 a year for an average home, which is somewhere around $500,000. So if I'm involved early enough, then what I'm gonna do is recommend to counsel, hey, instead of possibly, and again, I'm just giving recommendations on the financing end. Instead of possibly you giving her that $500,000 up front, you could still give it to her. When I say up front, I mean at the dissolution of marriage. Instead, maybe an option would be to form some sort of a revocable trust. And in that trust, the trust will be paying the spouse that'll be residing in the property X amount of dollars per month. Right. So she has income. That's right. And the income comes from the trust, not the soon to be X or the X. So that works, can possibly work as a benefit in both areas. For one, for the lady, maintaining the property and it's gonna be keeping the property, Fannie Mae just changes, but Freddie Mac and FHA still says, as long as we can see it happening, let's say to be safe, one to, it's usually three months, and it will continue for at least 36 months, we could count that as qualifying income. Well, that's, so now instead of her, she's still getting her, 500,000. Right. They're doing it in the form of a trust, which she is the trustee. And again, I'm not an attorney, but the attorneys will have a way of doing this. Right. Be a trust attorney or your divorce attorney or family lawyer. Either way, they can refer you to the right party or the proper trust where I can use it. And since it is revocable, after the transaction is done, if that fits their needs, both parties, and I'll get into that in a second, then maybe they can revoke the trust. She could get all the cash, or as a trustee, make an alteration and get the rest of the money. Now she's able to qualify. How that also can benefit him is, let's say he wants to go qualify for something else. Now, instead of him having to pay alimony every month, guess what? He doesn't. He's paying the alimony through the trust. Right. Don't count it against him. So now she shows it as trust income. He doesn't show it as as income as as expense. So it allows him to qualify for her new home and her to go ahead and dispose of the existing mortgage.
Raquel Ramirez30:07 - 34:19
That's perfect. Those are things that, yeah, like you're saying, they have to be discussed early on. So, A, they have those options to consider before they agree to it and before they sign it on a marital settlement agreement and before it's signed, sealed and delivered by the judge, because by then it could be too late. I say the same thing when it comes to the attorneys making decisions as to how they're going to dispose the asset. It may seem very simple, but the truth is that like, you know, the same way I cannot give legal advice, I would assume that an attorney wouldn't give real estate advice because the way the market behaves is very differently and can change. I've seen it a lot in these MSAs where they put this very standard generic language that if a property doesn't sell within 30 days, they're going to reduce the list price by 10%. Well, number one, what is the list price? And where did you get the recommendation to list it at X price? Is it fair? Is it going to move? Is a 10% reduction in line with the way the market is behaving with the neighborhood, with the condition of the home? 30 days, I gotta be honest with you, Unless it's a very unique home or we're talking about a luxury property because luxury moves in its own pace. If we're talking about just a typical home, say under a million dollars, I don't care what type of market you're in, a fairly priced property should sell within 30 days. Again, it doesn't matter the market because if you price it according to the market, then it should move with few exceptions, of course. Even standard language like that can be hurtful to the parties and could tie their hands behind their back and not allow me, let's say, once I come into the process after this has been settled, to be able to do my job in a way that will yield them the most return in the shortest amount of time. And it's the same with you. If you don't get to talk to them beforehand and get to meet with the attorneys and with all the parties involved, you're unable to provide them with solutions that could be could serve as better options. to the ones that anyone else might be able to offer them. So you make a really, really good point about that. And a lot of people just don't understand that. And I mean, I think I told you before we got on, I was talking to somebody who was like, yeah, yeah, I should have no problem qualifying. And I said, well, how do you know that? How do you know that? You're a retiree. You have income, but you think that because you can afford, let's say, a $2,000 rent, that you can afford or be eligible for a $2,000 mortgage. That may not be the case. Nobody who's renting to you is going to care how much income you're making unless you can just show them you have a bank statement that you can pay the rent. But the way that lenders look at that is very different. They have to consider your expenses. They have to consider your credit score. They have to consider you know, if your income is steady or not, where that income is coming from. And there's a slew of other information that an underwriter will take into consideration before agreeing to lend you money. And this is a perfect example of that. As you said, I mean, yeah, $60,000, even if they made $90,000, which is a decent salary, let's say for a realtor who's working, let's say full-time, great, they made $100,000. That does not mean that they can afford a $500,000 mortgage. especially on a commission-based job where that $100,000 could be $60,000 the following year or $200,000 the year after that. It's very hit or miss when you're working a commission-based job. So yeah, it's crazy important for us in the lending and the real estate industries to get involved with these divorce cases as early on as possible. A, to build rapport also amongst the parties. I'm sure you find that is exceedingly helpful when you're able to communicate with the parties, show them what the facts are, show them what those options are and build rapport with both husband and wife. And of course, to be able to analyze their situation, financial, real estate, and be able to put those options on the table for them to consider and make a more appropriate decision based on their needs that they can, you know, then include in their MSA or that they can mediate.
Michael Lux34:19 - 41:23
Everybody's different. I had one this morning, just the initial interview, and she's trying to figure out a way because she again, like you just said, she said, I'm going to have no problem qualifying. I'm saying, stop listening to Tio Pepe because he hasn't bought a house in 75 years. You know, back then, you know, everybody went in the backyard, they shook hands, they walked through the tree. I owned from the oak tree to the, you know, it doesn't work like that. So in her particular case, the property is in, it's actually in Hialeah. she's got a lot of room and her intentions to get extra money in and this is just at the beginning because I handled their financing when they were married okay now this is starting in there they're they're getting along good now but we all know how that goes so um she's saying well and I said based on your incoming cancel I'm giving her some ideas and they're trying to do this without counsel and you know I'm trying to recommend to them I don't care how nice you guys are you know get like we talked about last week at our meeting, get one collaborative attorney to represent both of you. You know, that's a possibility. In her particular case, I said, you know, this can work out because one of the recent changes with one of the agencies or actually one of the gov agencies with FHA recently within the last couple of weeks is now they will allow us to use rental income from an ADU. So an adjoining Oh, gosh, mental block. That's what happens with age. But let's say, for example, in this particular case, she converts one of her bedrooms or one of her baths, not her baths, or her garage to an efficiency, to a rentable room. FHA now says, and this is the current administration's effort to increase homeownership, because they know rights rates are raising, insurance is raising, taxes raising. We need to help folks qualify a little more. And a lot of times there's things that we can't use to qualify that you know are there. Income from ancillary sources that can't be proven, family members that live in the house. Well, let's say in this particular case now with the new guidelines, I could say, hey, let's do this. Do it legally. You pop a door through one of those bedrooms because the guidelines say it has to have a separate entrance to the property. And we do that with the garage. Now, if the appraiser can give it value on the 2505, and there has to be a specific form done, which is basically just saying the rentals for this area, this type of unit is X amount of dollars. Now, her sister that really is living there, that may be paying her the rent in cash, or just buying all the Bustelo coffee every month, you know whatever agreement they have exactly say wait a second spend a little money get a permit get the door put in there now you have a separate room and i can use 75 of the income from that room now to help you qualify right and it's something that's already there right or her garage i can do it as well now You say the other effect is, well, how will that affect A, the marketability of my home, or B, the appraised value of the home? Well, if it's done properly, and I'm not an appraiser, but let's say for the garage situation, if you convert a garage, typically you will have two options in an appraiser's view. One is he's going to appraise it saying, you know what? It is worth what it's worth. However, we're gonna actually hit you $2,000 on value. In other words, downgraded $2,000 because that's what it would cost to bring it back to a normal garage. So it's really not a big impact on A, either the marketability, sometimes it even makes it more marketable. But those types of strategies can often make or break a deal. And I've known these people for a while. And I want them both to be happy. So it's not a favorite thing. Do I like one more than the other? You'll never know, because I can never tell you that. But my job is to represent them both equally. And to make sure that they're both given a fair shake. And this way, she can refinance in her name. I could get him a loan on his new house and everything will work out hunky-dory like that. But it's just because of that little guideline change that will allow me to do this because she's only short about $500 a month in qualifying. Wow. Yeah, it's really not a lot. So there are, as they say, more than one way to skin a cat sometimes. That's right. and you know if if we do ask the right questions professionally and respectfully as as like with any transaction just to let everybody know look we just want to make it good for everybody because that council's good i mean if there's a financial planner involved in the situation a lot of times they're allowed for certain there are certain tax um laws that allow them to pull money out of their uh like a quattro, pull money out of their retirement account, their qualifying retirement account, without paying any tax consequences. They'll have to pay ordinary income tax. So for example, if part of the MSA has a large retirement account tagged to it, one party or the other, they may be able to draw some of that so we can have more time to prepare the MSA. So the attorneys can have more time for discovery, more time to make a proper plan, And the IRS will allow one of the parties, if not both the parties to pull from this retirement account, not tax free, but penalty free in order to pay for bills as this process is going on. So we don't rush anybody because, you know, the old expression, haste makes waste. You know, it's emotional enough. I don't care how people good it goes. It's always emotional. Yeah. And quite frankly, as much as I say I try to keep my emotions out of it, I'm a big baby and I, you know, I get emotional about it too, you know? So I want to make it, I feel better when we know at the end, unless one guy or one lady is just, I'm not here to judge anybody as just being unreasonable, let's put it like that. But you know, I do believe in the end, You know, what do they say? Karma is going to get you. So, you know, eventually everything's going to get a world beyond an even playing field.
SPEAKER_0241:23 - 41:24
Yeah.
Michael Lux41:24 - 42:26
My job is to just given that information and with the other people involved and you do it up front, it saves them a lot of legal fees. Yeah. Some a lot of heartache. That's right. Some a lot of fighting. That's right. I mean, if everybody does it at the beginning and sometimes They don't want to sit together. I get it. You know, and it's, it's, I've been in situations where the departing spouses just don't even want to be in the same room with one. And sometimes I'm lucky enough to meet with both sets of counsel nowadays via zoom. You can easily and everybody's faces and just let them know where I'm coming from. I'm here to help. And, um, I'm here to help in the transaction and I, to provide value for that, not only for the council involved, the CFP involved, for the realtor involved, but the bottom line, I can provide help value for the party homeowners.
Raquel Ramirez42:26 - 46:45
So you have the right intention. And it's really what distinguishes professionals like you and some of the other professionals we have in the NDP. which is what I mentioned in one of our previous meetings about having a vocation, having a general interest, a genuine, excuse me, a genuine interest in the clients that we serve. Because as you mentioned earlier on, there are people who try to take advantage of the situation. They think divorce, and they think exactly that. They think dollar signs. They think, how am I going to gain from someone else's misfortune? that's wrong on multiple levels, that is wrong. Now, on the flip side, I hear people tell me when they see my designation and they find out that I specialize in divorce cases, they say, wow, that's gotta be horrible. I mean, do you ever get tired of people who argue or do you ever get tired of such heavy situations? And I said, yeah, it can be a little draining, but it is rewarding because when you're able to work directly with all these parties and you're able to find a solution that is going to help this family thrive, even after such a big challenge. That is where you get the most joy in thinking I was part of that process. I was able to save this family from, let's say, bankruptcy or making horrible decisions or, you know, was able to place them in a new place, in a new location, a new area of town, whatever, where their kids are going to be closer to school or they're going to be closer to their grandparents, despite whatever the situation may be. you were part of that process and helping them get to the next chapter of their life. And I think that to me is, it's great. And it's like you said, I like to sleep at night. I cannot sleep at night or wouldn't be able to sleep at night rather if I knew I had made a mistake or I knew that I did wrong by someone. I just can't. It's not in my nature. And I think I speak for most of us, at least in these organizations that we participate in and the people we network with, the professionals we align ourselves with, that they are, on the same page. They genuinely want to help. They want to make sure that they can provide the most value to their clients so that they can make informed decisions and move on with their lives. Because I think that's the ultimate goal. By the same token, I've run into people who have told me horror stories of their attorneys and their financiers dipping their hands in their pockets, so to speak, by misguiding them, knowingly, because I don't put it past certain people to knowingly misguide their clients for the purpose of billing them extra hours or for the purpose of ensuring that they make a higher commission. And I've gotten into arguments with certain people in the past for that same reason, because They can't look past their own interests. And if you are that kind of person or that kind of professional, you have no business in working in an industry as delicate as this one, which is the divorce industry. And I can't thank you enough for what you do and for the experience and the value that you bring, say, to the NADP, because that's the kind of professional we want. In fact, I'll tell you a short story. I don't even know if I've told you this before, But I'll share it with you now that we've had a couple of people, you know, apply for membership at the NADP and they are vetted through the national organization, right? So they're not vetted at the chapter level, they're vetted by corporate. And, you know, once they're vetted, they've They've determined that this professional has at least five years of experience in their field and that they meet all this other criteria. And then they reach out to us and say, hey, by the way, this person has been vetted. Do you have any qualms? Do you have a yes or no? Are you willing to accept them in your chapter? And we've had to turn away some applicants because I've had serious conversations, say, with who used to be our director. And I said, I have a feeling this is a big conflict of interest. And I prefer to have a smaller quality-driven chapter than a larger chapter full of members who are not seeing eye to eye with the other members because they have, say, a conflicting spirit about them, or there may be some shady business there. I cannot stand for that, and I don't think any of our other members would too. So yeah, it happens. We live in South Florida.
Michael Lux46:46 - 50:50
We do, and I think that's a little biased of us to say, but me and you both are natives. Yeah, we can say it. We both own data. It's not, you know, we are the fraud capital of the world. That's right. You know, if you ask either me or you, and even though we may say, no, we're doing it out of the goodness of our heart, we want to see, you know, an end result that pleases everybody. We do still have an agenda. Our agenda may be like me. I love giving things to people. And that is my agenda because I like my pay, my payoff is how I feel for doing it. That's my pay. Right. Now, if I can do that and make a few thousand dollars, it's a bonus. So on top of the ice cream. Sure. But, you know, you know, we have to we have an ethical responsibility, not only because of our licenses, not only because of our organization, You know, if you look at my, it used to be my tagline on everything, everything was about, it's all about the people. And, you know, at the end, that's who we got to think of because they're relying on us and they don't know any better. Yeah. And we have a responsibility. I can't fault them for thinking that, oh, this is the way it's supposed to be done. And this is what I've heard. And my last divorce, you know, he just signed the house over to me. You know, he went in the backyard, peed on the mango tree and it was a done deal. You know, now, you know, Not every transaction is like that. So we have to, unfortunately, I advise everybody to seek counsel when it comes to anything regarding distribution of an asset. And especially when there's a dissolution of marriage. And a lot of times it's not just a dissolution of marriage. I mean, we're not a community property state. I believe that's the terminology used. But still there are things that are considered joint assets. when you have counsel involved, you know, how you take ownership to property, whether you're married or not. And again, I'm not an attorney that has a difference. You know, and like you mentioned your example before, when I get it all the time, I want to buy a new house before I'm divorced. It's like, hold on there, cowboy. You need to talk to your attorney. Well, we don't have an attorney. Well, are you still married? your existing spouse may have an interest in what you're purchasing. There it is. Are you aware that when you file for divorce in at least in our state, it's it's a list to the community that there's a lawsuit being filed. You cannot sell your other. Well, we don't live in that house. Well, I'm not an attorney, but even though you may three other houses on three other houses before you even met your existing spouse, you understand that there's basically a restraining order on you. Yes. And because that's basically what it is. That's what it is. Not that you can't do it, but you better get the judge's consent or counsel's consent. That's right. Becomes a marital asset. To liquidate that property or to do which may be in the best interest of the family. You know, you may need money to pay, you know, your expenses, your wife's expenses. Like I said, everybody's different. So and that's the main thing I try to get across. Great, well, you know, maybe you have $6 million over at Chase and you did asset-based lending. Yeah, I'd give it to them at 2% too. But, you know, unfortunately, there's a lot of people out there who speak and who have other than genuine motives. I got, today, one of my realtor partners sent me something. It's an ad in New York from Manhattan. Moved to Florida. $3,000 up front and $250 a month, own your own home. Picture of a home, you know, the kids playing, the dog wagging the tail, the little kid.
Raquel Ramirez50:50 - 50:52
Telling them the lifestyle.
Michael Lux50:52 - 50:59
And she sent this to me and she says, do you know anything about this program? I'm saying, I don't know anything about that program, but I can.
Raquel Ramirez50:59 - 51:01
Is this the Florida and the US?
Michael Lux51:02 - 51:29
Yeah, maybe there's another Florida. Exactly. But I can tell you right now, not in South Florida anywhere, no part of Florida. Can you obtain ownership to a property with 3000 a front and 250 a month? Yeah. So that's the type of thing that we've all heard about, the scams. And those scams are not just for 80-year-old single ladies that are living on Social Security.
Raquel Ramirez51:29 - 51:31
Those bait and switches are all across the board.
Michael Lux51:31 - 51:34
Everything. I mean, just look at your phone every day.
Raquel Ramirez51:34 - 52:21
Oh, my gosh. I got to be honest with you. And this is for everybody out there. If you're looking to get a hold of me, please send me a text message because I'm I try not to answer my phone anymore because nine out of 10 calls are solicitations or some form of scam. The IRS is after you. Your Amazon account has been suspended. Your Netflix is in need of your credit card. It's all BS. It's all BS. So I screen my calls very carefully because otherwise I'd spend the entire day just dismissing those calls. And it's partly because I take the time to say, hey, listen, I appreciate your time. I'm really not interested. I even get people trying to help get me to sell the business or get me to jump and transfer my license to another real estate company. It's just, it's constant. It's constant.
Michael Lux52:22 - 53:08
It is. And you know, you know, when I do it because look, I am in sales and I am in the service business. I'm faculty for the state of Florida. So, you know, I kind of have a higher authority to answer to. But when they call me from these crazy numbers, I got to get home. Yeah. So, yeah, I answer those calls a lot of times. But they say spam often. They're not with me. And folks in our business say, well, if they don't answer their phone, Yeah. Maybe that's not the right person I should be dealing with, which is not the right mindset. Right. I try to answer my calls, even with somebody just to say, hey, Raquel, it would be a disservice to you and the person I'm on the phone with. Right. Handle you both at the same time.
Raquel Ramirez53:08 - 53:09
Right. Let me call you back. Right.
Michael Lux53:09 - 53:41
Some of my customers or clients, customers, someone who I haven't converted yet, clients, someone who I've worked with in the past. understand and they say, no problem, call me back. Yeah. Yeah. Other people you say that to and they'll say, well, I got one question for you. And of course, I only need a minute. Right. That goes into two or three minutes because it is a disservice for us as a professional to give them that Reader's Digest Clip Note version of their question.
SPEAKER_0253:41 - 53:42
Yeah. Yeah.
Michael Lux53:42 - 53:51
Other than call me later or let me seek someone who knows this better than me. So, you know, it is a disservice to handle.
Raquel Ramirez53:51 - 53:53
Multiple calls at once.
Michael Lux53:53 - 54:15
Yeah. Even if I'm on the computer working on something and you call me up and I finally got my mojo going to work with all these crazy guidelines and I'm at a pace where I'm structuring something. I'm going to say, Raquel, I got to go. Yeah. Give me 15 minutes because juices are flowing right now and I got everything just right. And I'll call you back.
Raquel Ramirez54:16 - 55:28
Well, this makes sense, especially to us who are relationship driven. And by that, I mean that we have relationships not just with our clients, but also with our colleagues and our colleagues. In my case, for instance, I'm in real estate. My colleagues could be lenders, say, such as you, other attorneys, even inspectors. I mean, anybody who's working in your sphere is technically a colleague and we owe them, you know, a certain amount of time and attention in order to get certain things done and to develop those relationships so that we can call on them when we need them. And obviously it suffices to say that when our clients call, of course, they're going to want your undivided attention. And that's how we build trust. And that's how we build relationships that in the end give us and where we can give back. I think everybody really enjoys that when someone has the time and devotes the time and attention to them that they deserve. So yeah, it's tough. Let me tell you too. to navigate and to juggle, let's say, a lot of calls and emails and text messages and meetings and things like that, because you try to divide your time equally throughout the day. And then you gotta get work done too at some point. Yeah, but it does, it happens.
Michael Lux55:28 - 55:46
You know, I kind of gauge it, you know, it used to be, I was on the phone, cause I still like to talk to every client, even though I have a team, I talk to everybody up front. It used to be my average phone call with my upfront conversation was about 12 minutes. You get a direction.
SPEAKER_0255:46 - 55:47
Yeah.
Michael Lux55:47 - 56:07
I'm telling you right now, initially, whether they don't qualify, do qualify, have no chance, have tons of chance, I'm on the phone of an average on that initial call for 40 minutes now. Yeah, I believe it. there's so much that have changed and there's so much more information and so much disinformation.
Raquel Ramirez56:07 - 56:09
Yes, thank you for saying that.
Michael Lux56:09 - 57:42
That's the thing, you know, Mike, I saw on the internet, I saw today on Facebook from a realtor, call me so I can show you how to get a 3.5% mortgage rate. First of all, that's a violation of Reg Z, a violation of Reg B. Yes. You just don't do that. But here it is. There will be people, I guarantee you that will call him. And you know that that was a flat out violation. I mean, it's a total no, no. But yet you see it every day or you see the Internet still preaching four and five percent interest rates. And even if they're giving him the best as of this morning, MBA average rate in the United States for 30 year mortgage with 25 percent down. a 740 credit score and an owner-occupied home of less of one unit, the average rate was roughly 8% with one discount point. That's as of 10 a.m. this morning. That's not me, that's not Altera, that's not, that's your conforming rate. And yet people call me and say, and I send them this, I send them the other people's rates. Mike, I got an offer at 6%. We can't buy it at 6%. It's not available. So why are they gonna say, Raquel, I like your haircut, you're gonna get 6% and everybody else gets eight. And I deal with that all the time and I don't blame the consumer.
Raquel Ramirez57:42 - 57:45
Yeah, you're looking to get the best you can.
Michael Lux57:45 - 57:51
I don't sell rates. That's not my thing. I sell a competitive rate with service.
Raquel Ramirez57:51 - 57:55
And yeah, most other lenders and institutions do too. Yeah, that's my value.
Michael Lux57:55 - 58:14
You as a realtor, you don't go out and say, well, I'll find you your house. Well, they can go to Zillow, they can go to realtor.com. Your value isn't to find a house. Your value is to get them into the house. Right, right. Good point. Yeah, because that's where either the negotiation takes place.
Raquel Ramirez58:14 - 58:18
Oh yeah, and all kinds of things, yeah. Oh yeah.
Michael Lux58:18 - 59:16
You're right. She just sold a $10 million house, biggest home she ever sold. She was so happy. And she's a gem. And this happened to be down in the Golden Isles area in Miami Beach. And she had a buyer who no one would expect this buyer had this amount of cash. And he said, I want it to live in this particular area. I want it to be a dry lot. I want to buy two properties. Well, there's nothing for sale. She said, I'll find it. And she went. And she went to every door in there and she found an investor who had bought several months earlier and he decided he wanted to put a quick $600,000 in his pocket. The buyer that she brought to the table got exactly what he wanted because to be honest, money wasn't an issue with him. So again, You had a winning seller, a winning buyer, and a realtor who everybody said they couldn't do it, that he had spoken to before.
Raquel Ramirez59:16 - 59:17
Was dedicated.
Michael Lux59:17 - 59:22
Mm-hmm. And there were only maybe, because he wanted a coin, there were only maybe a hundred people that she could approach.
Raquel Ramirez59:22 - 59:25
Yeah. I did something like that once.
Michael Lux59:25 - 59:36
And, you know, she sold a $10 million house. So again, that's where your guy's value is. And, you know, where our value is, to be firm to the right people.
Raquel Ramirez59:37 - 01:03:12
There's a lot more to what we do, a lot more to what we do. And like you said, I wanted to go back to that point that you were making how your calls have increased from 12 minutes to practically 40 minutes because of the amount of disinformation. We have to spend an exorbitant amount of time dispelling myths and correcting people and explaining why what they saw really isn't a fact. or really isn't available or isn't really the truth or the way that things work. And then you have to rebuild from there because of course, while you're dispelling those myths and giving them all this bad news, you're losing your rapport. So you have to rebuild that rapport some way, somehow and show that you actually know what you're talking about and that you're providing them valuable information. And yeah, we do a lot more than just, you touched on a sore subject there for me because I'm constantly trying to remind people that, especially in my industry, there used to be some prestige about real estate, and that has long, long, long been gone. And some people tend to think that we get a commission for pushing paper around, and that's not the case. There are people, sure, that get away with that and who can be lucky. And in many cases, the people on the other end of that paper, the people who are actually pressing ink to paper are getting hurt somewhere along the line. But the reality is that we do a lot more than just send contracts around and circulate them for signature. We do a lot of analysis. We have to build relationships. We have to vet people along the way. We organize details. We coordinate. We work on logistics. We negotiate, which is a big one that most people fail to acknowledge. A lot of realtors don't do it. And we have to know, we have to be knowledgeable, we have to know the laws, we have to know the boundaries, we have to know how to cooperate with other agents in the industry. And we have to do all of that while minding our clients' schedules, while minding their situations, including divorce and other hardships, and all the other details that fall into line. And I can go on and on and on, because like you mentioned earlier, things can be very different. And I try to tell that to people, every transaction is different because every household is different because everyone is different. So there is never two, even if you're, even if your twin who married another twin, right, lived in a cookie cutter house in the same neighborhood, right, let's say. Yeah, twin homes, the transaction is bound to have at least one difference. At least. So there's never two identical transactions because there are never two identical households and never two identical people. So, you know, I thank you for sharing all of this and for bringing up very key points about what we do and how we do it and why we do it, because I think it's important for people to understand that. and to know that there are professionals out there who really do specialize in some of these complicated transactions for the purpose of providing the right value and real viable solutions to their situations. Thank you, thank you, thank you so much for joining me. I look forward to seeing you at our next luncheon. If you have any parting words, we'd love to hear them now. And if not, then I'll see you. I'll probably bring you back for another episode whenever you're ready.
Michael Lux01:03:12 - 01:04:01
I was born ready, Eloise. Oh, I know it. I thank you so much. And you know me by now that I am sincere. Yes. I am very transparent. I don't go to any more networking events. I don't belong to any more BNIs, BGIs. Not that I'm talking bad about them. Because the unique thing about the organization that you are Napoleon for. I find that, you know, the people in there, A, are sincere about what they do. Yeah. It always, even if it doesn't help me, I can tell you it's helped many people that I know.
01:04:01 - 01:04:02
Oh, yeah.
Michael Lux01:04:02 - 01:04:55
Just by forwarding some of the tidbits that I get from there. And like you said, it's a smaller organization. And, you know, I truly enjoy it from a learning aspect and for the company that I keep. And it does make it unique than the others. So, yeah. And I'm not just saying that to be on this world renowned podcast. I'm saying that. Because, you know, I'm, you know, I'm a fan of yours. I'm a fan of the group's fan of the system when it works together. Yeah. And, you know, you know, we are our only competition. So and that's the attitude which all of us has to have in not only the real estate and banking profession, but in all professions. If we can just worry about the end user, I think it'll make our lives a lot easier.
Raquel Ramirez01:04:55 - 01:05:04
I agree. I agree with that. Thank you, Michael. I bid you adieu. I bid you adieu till next time.
Michael Lux01:05:04 - 01:05:04
Yes.
Raquel Ramirez01:05:04 - 01:05:27
Have a great weekend, OK? You too. See ya. Thank you for tuning in to this episode of The Real Talk. We sure do appreciate it. If you haven't already done so, be sure to subscribe to the show wherever you consume podcasts. This way you'll get updates as new episodes become available. And if you found value in today's show, we'd appreciate it if you would help others discover this podcast. Until next time.