A home is typically one of the largest individual assets we must include in a retirement plan. However, it’s also one of the most illiquid ones. We’ve had several episodes exploring the role of home equity loans in solving the problem. Today, we look at a second option – selling part of the equity in your house to a third party. David Shapiro, Founder and CEO of EquiFi Corporation explains the new product and the benefits it potentially offers.
Also, do you want to get regular updates on news about guests of our show? Go to https://thatannuityshow.com and subscribe to our newsletter.
We hope you enjoy the show.
Links mentioned:
Equifi:
David on Linkedin:
https://www.linkedin.com/in/dshapiro1/
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Episode Transcript
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[paul_tyler]: hi this is paul tyler and
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[ramsey_d_smith]: oh
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[paul_tyler]: welcome to another episode of the annuity
show ramsey how are you
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[ramsey_d_smith]: fantastic
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[paul_tyler]: good i had a great trip with
the mark fitzgerald down to the medicarians conference
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[paul_tyler]: in las vegas
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[ramsey_d_smith]: m
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[paul_tyler]: last week and we had some great
conversations i think you heard a few of
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[paul_tyler]: them
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[ramsey_d_smith]: i
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[paul_tyler]: wow
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[ramsey_d_smith]: listened to all the ones you sent
me the really fantastic
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[paul_tyler]: yeah
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[ramsey_d_smith]: conversations and some real real hitters you
managed
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[paul_tyler]: oh
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[ramsey_d_smith]: to get on the get on the
podcast with you as fantastic
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[paul_tyler]: ah no great conversation and well
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[ramsey_d_smith]: m
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[paul_tyler]: we’ll release
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[ramsey_d_smith]: oh
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[paul_tyler]: them a little later the summer but
you now just a superb conference
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[ramsey_d_smith]: oh
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[paul_tyler]: that jane wine rub put on and
it was actually a really
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[ramsey_d_smith]: oh
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[paul_tyler]: good intersection ween you know companies in
the senior health care market startups um and
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[ramsey_d_smith]: at
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[paul_tyler]: traditional distribution and kind of that
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[ramsey_d_smith]: oh
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[paul_tyler]: actual is going to be kind of
a zone
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[ramsey_d_smith]: yeah
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[paul_tyler]: we’re talking about today um and i’ll
start with we’re gonna be talking about homes
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[paul_tyler]: homes are at such an important asset
class for for most retires you know for
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[paul_tyler]: typical people retiring social security and home
equity are probably the two biggest assets they’ve
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[paul_tyler]: got to to work with and and
use for
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[ramsey_d_smith]: oh
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[paul_tyler]: income in later years
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[ramsey_d_smith]: oh
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[paul_tyler]: now how do you convert that home
into
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[ramsey_d_smith]: yes
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[paul_tyler]: retirement income probably the most common strategy
is downside sell sell our house you know
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[paul_tyler]: they take the proceeds move somewhere smaller
cheaper tax rates are lower and you freed
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[paul_tyler]: up this equity i mean that’s an
expense i very disruptive way to solve that
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[paul_tyler]: problem we’ve had rams your friend don
on several times talking to us about hecham
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[paul_tyler]: loans reverse mortgages as a potential
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[ramsey_d_smith]: yeah
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[paul_tyler]: solution today
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[ramsey_d_smith]: oh
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[paul_tyler]: we have david chipero
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[ramsey_d_smith]: yeah
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[paul_tyler]: who is founder in c equify corpse
ration to talk about another approach to david
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[paul_tyler]: i’m going to say nondisruptively allow retires
the tap into their value of their home
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[paul_tyler]: to provide a stable
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[ramsey_d_smith]: oh
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[paul_tyler]: income and retirement so welcome to our
show david
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[david_shapiro]: well thank you it’s great to be
here
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[ramsey_d_smith]: oh
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[paul_tyler]: yes and
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[david_shapiro]: yeah
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[paul_tyler]: you actually
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[ramsey_d_smith]: yes
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[paul_tyler]: are this is actually start up company
that we’re going to talk about today correct
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[david_shapiro]: yeah yeah yeah
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[paul_tyler]: yeah
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[david_shapiro]: yeah we’re an aging start up because
we started in two thousand sixteen but because
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[david_shapiro]: of the way that we’re coming to
market the regulatory piece of the business
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[paul_tyler]: yeah
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[david_shapiro]: takes an exceedingly long or at a
time so
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[ramsey_d_smith]: oh
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[david_shapiro]: but
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[paul_tyler]: uh
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[david_shapiro]: yeah we launched in we launched in
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[paul_tyler]: h
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[david_shapiro]: late january early february but ye
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[paul_tyler]: yeah
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[david_shapiro]: yeah
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[paul_tyler]: interesting all right well
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[david_shapiro]: yeah
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[paul_tyler]: well tell tell us about your company
and tell us about the product that you’re
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[david_shapiro]: yeah
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[paul_tyler]: offering
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[david_shapiro]: sure
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[paul_tyler]: oh
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[david_shapiro]: so what led me to this was
you know
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[paul_tyler]: oh
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[david_shapiro]: a career in the annuity space basically
designing annuities for insurance
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[paul_tyler]: yah
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[david_shapiro]: companies train stockbrokers back in the old
days and
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[paul_tyler]: oh
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[david_shapiro]: financial planners on how important it is
to save for retirement
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[paul_tyler]: oh
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[david_shapiro]: and you know i i built a
company called in fo one with the fur
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[david_shapiro]: sas model
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[ramsey_d_smith]: ah
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[david_shapiro]: that had every variable annuity on our
platform it was all cloud based back in
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[paul_tyler]: oh
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[david_shapiro]: nineteen ninety seven nineteen ninety eight when
bill gates was talking about the internet and
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[david_shapiro]: so we built this eco system around
annuities and it allowed advisors to look at
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[david_shapiro]: all the annuities on the product illustrate
them you know screen scrape in their clients
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[david_shapiro]: data and trade it would go through
pershing or d t c or the whatever
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[david_shapiro]: firm the was the clearing firm and
equify is fundamentally using the exact same eco
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[david_shapiro]: system but
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[ramsey_d_smith]: oh
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[david_shapiro]: it’s focused you know you said paul
primarily
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[ramsey_d_smith]: m
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[david_shapiro]: on the baby boomers that want to
retire in place and
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[paul_tyler]: oh
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[david_shapiro]: as you said
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[ramsey_d_smith]: oh
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[david_shapiro]: the home
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[ramsey_d_smith]: yeah
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[david_shapiro]: is
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[ramsey_d_smith]: yeah
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[david_shapiro]: you know the average american has
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[paul_tyler]: oh
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[david_shapiro]: seventy to seventy five per cent of
their wealth is in their home um and
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[david_shapiro]: so being able to give people access
to that in a form that isn’t debt
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[david_shapiro]: that
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[paul_tyler]: yeah
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[david_shapiro]: doesn’t have a current interest rate doesn’t
have an crude interest
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[paul_tyler]: a
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[david_shapiro]: um provides them the flexibility to stay
in their home the rest of their lives
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[david_shapiro]: was
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[paul_tyler]: oh
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[david_shapiro]: the gating factor for me to create
equify which we did in two thousand sixteen
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[david_shapiro]: and we’re
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[paul_tyler]: oh
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[david_shapiro]: organized delaware public benefit corporation so our
intent
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[ramsey_d_smith]: m oh
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[david_shapiro]: is to help people create
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[ramsey_d_smith]: yeah
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[david_shapiro]: wealth and manage
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[ramsey_d_smith]: ye
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[david_shapiro]: the wealth that they have in the
most important asset that they own which is
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[david_shapiro]: their home
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[ramsey_d_smith]: ah
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[david_shapiro]: um and that’s that’s kind of what
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[ramsey_d_smith]: oh
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[david_shapiro]: led to to this journey and the
product is purely a trade between
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[ramsey_d_smith]: m
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[david_shapiro]: a home owner that has equity and
their home once to access that equity doesn’t
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[david_shapiro]: want have it in the form of
a loan and there’s an investor on the
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[david_shapiro]: other side that says hey you know
i’d love to get some exposure to home
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[david_shapiro]: price appreciation and if i can be
a silent investor with the home owner just
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[david_shapiro]: take the ride on the appreciated value
of the home
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[paul_tyler]: yeah
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[david_shapiro]: then that’s a great
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[paul_tyler]: yeah
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[david_shapiro]: deal for us so it’s it’s designed
to be
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[paul_tyler]: oh
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[david_shapiro]: a very fair trade between a home
owner and an investor allows both parties us
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[david_shapiro]: to feel that you know they’ve entered
to an agreement that they both can live
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[david_shapiro]: with and it provides the benefits to
both and and in the middle of that
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[david_shapiro]: is the distribution of product and we
exclusively provide the product through financial advisors insurance
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[david_shapiro]: agents mortgage mortgage brokers folks like that
that already
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[ramsey_d_smith]: m
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[david_shapiro]: have a trusted relation ship with the
consumer
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[ramsey_d_smith]: so can you talk a little bit
about
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[david_shapiro]: yeah
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[ramsey_d_smith]: what the actual transaction looks like what
is it you know so t zero starting
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[ramsey_d_smith]: point you know i’m i’m seventy
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[paul_tyler]: oh
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[ramsey_d_smith]: years old i owned my house
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[paul_tyler]: yeah
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[ramsey_d_smith]: and
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[david_shapiro]: hm
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[ramsey_d_smith]: then i
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[paul_tyler]: yeah
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[ramsey_d_smith]: enter into a you now transaction with
equify and you know t plus a week
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[ramsey_d_smith]: later or hover long it takes i’ve
now i’ve now entered into
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[paul_tyler]: oh
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[ramsey_d_smith]: an equifye contract
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[david_shapiro]: hm
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[ramsey_d_smith]: um what’s different what do i what
do i have i still own my house
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[david_shapiro]: you’re
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[ramsey_d_smith]: um
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[david_shapiro]: still in your house
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[ramsey_d_smith]: but and so how much of my
house would i typically what i typically own
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[ramsey_d_smith]: like how would you typically would equify
or
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[paul_tyler]: a
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[ramsey_d_smith]: equifys investors what percentage
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[paul_tyler]: oh
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[ramsey_d_smith]: of a house would you typically purchase
in one of the transactions
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[david_shapiro]: yeah
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[paul_tyler]: oh
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[david_shapiro]: we can go up to thirty five
per cent
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[paul_tyler]: yeah
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[david_shapiro]: of the value of the home sometimes
a little bit more than thirty five percent
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[david_shapiro]: um so let’s just take an example
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[ramsey_d_smith]: oh
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[david_shapiro]: let’s say you’ve got a million dollar
home and for purposes of this since thirty
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[david_shapiro]: seven per cent of the homes in
the country have no mortgage
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[paul_tyler]: oh
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[david_shapiro]: let’s assume that there’s no mortgage on
the home so we’ve got a million dollar
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[david_shapiro]: home let’s say the home owner wants
to get four hundred thousand dollars out of
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[david_shapiro]: their home let’s max it out and
say we can give him forty
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[ramsey_d_smith]: ah
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[david_shapiro]: per cent right so we basically
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[ramsey_d_smith]: hm
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[david_shapiro]: advance them forty per cent of the
value of their home and then since the
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[david_shapiro]: home is got a value of a
million dollars we
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[paul_tyler]: oh
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[david_shapiro]: put in three hundred thousand dollars of
what we call protected equity that sits on
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[david_shapiro]: top of the four hundred thousand that
we put in and then when the home
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[david_shapiro]: owner dies sells the property or chooses
to repay for that forty per cent they’re
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[david_shapiro]: going to give us you know half
of the value of the home above their
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[david_shapiro]: protected equity
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[ramsey_d_smith]: yeah
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[david_shapiro]: so the homes a million dollars we
put up for hundred thousand there’s three hundred
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[david_shapiro]: thousand that we don’t share in at
all and then anything above that plus the
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[david_shapiro]: appreciation in the home we would take
fifty percent and they would take fifty percent
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[david_shapiro]: if it was three hundred thousand dollar
instead of a four hundred thousand which is
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[david_shapiro]: thirty per cent we would probably take
thirty seven thirty eight per cent and they’d
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[david_shapiro]: have four hundred thousand in protected equity
that’s that’s in it plays out very nicely
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[david_shapiro]: in pictures
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[ramsey_d_smith]: i
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[david_shapiro]: it
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[ramsey_d_smith]: was going to say that
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[paul_tyler]: yeah
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[ramsey_d_smith]: that
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[david_shapiro]: yeah
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[ramsey_d_smith]: is that is that is
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[paul_tyler]: oh
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[ramsey_d_smith]: a transaction that that definitely would benefit
from a
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[paul_tyler]: oh
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[ramsey_d_smith]: would benefit from an illustration or
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[david_shapiro]: yes
227
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[ramsey_d_smith]: you know
228
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[david_shapiro]: yeah
229
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[ramsey_d_smith]: you know a picture so you can
understand so of what the parts are like
230
00:08:02,288 –> 00:08:06,054
[ramsey_d_smith]: what what exactly the terms are for
the protected equity etcetera but
231
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[david_shapiro]: yeah
232
00:08:06,515 –> 00:08:10,622
[ramsey_d_smith]: fundamentally so let’s maybe let’s just stick
with sort of like the general outcome so
233
00:08:11,583 –> 00:08:14,348
[ramsey_d_smith]: if i once i’ve engaged in this
transaction
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[paul_tyler]: yeah
235
00:08:14,388 –> 00:08:15,429
[ramsey_d_smith]: with you like how is
236
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[paul_tyler]: yeah
237
00:08:15,509 –> 00:08:20,595
[ramsey_d_smith]: it how is it you know how
is it different than a typical reverse mortgage
238
00:08:20,533 –> 00:08:20,815
[david_shapiro]: yeah
239
00:08:20,655 –> 00:08:23,698
[ramsey_d_smith]: why am i in a the consumer
why am i in a better position
240
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[david_shapiro]: yeah so i think the better question
is based on each individual right so we
241
00:08:32,887 –> 00:08:33,769
[david_shapiro]: don’t necessarily
242
00:08:33,509 –> 00:08:33,710
[ramsey_d_smith]: oh
243
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[david_shapiro]: believe that there is a right or
a wrong
244
00:08:35,819 –> 00:08:35,981
[ramsey_d_smith]: yeah
245
00:08:35,892 –> 00:08:38,957
[david_shapiro]: so think that if you’re an advisor
and you’re working
246
00:08:38,759 –> 00:08:38,981
[ramsey_d_smith]: oh
247
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[david_shapiro]: with you know
248
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[ramsey_d_smith]: oh
249
00:08:39,859 –> 00:08:40,720
[david_shapiro]: a client of yours
250
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[ramsey_d_smith]: yeah
251
00:08:40,920 –> 00:08:42,363
[david_shapiro]: that is in this position
252
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[paul_tyler]: oh
253
00:08:43,124 –> 00:08:46,510
[david_shapiro]: you should be presenting them a he
lock you can’t really
254
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[paul_tyler]: a
255
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[david_shapiro]: you know with
256
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[ramsey_d_smith]: oh
257
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[david_shapiro]: finn registered rep can’t recommend a key
lock because of the fender restrictions on utilizing
258
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[david_shapiro]: home equity particularly if you’re going to
be utilizing that toby security
259
00:08:58,650 –> 00:09:00,151
[paul_tyler]: m oh
260
00:09:00,533 –> 00:09:03,518
[david_shapiro]: so but they should make them aware
of their options one would be a key
261
00:09:03,598 –> 00:09:07,905
[david_shapiro]: lock you know paul you started that
with they could sell their home right and
262
00:09:08,306 –> 00:09:14,156
[david_shapiro]: re locate and you know get a
smaller place there verse mortgage presents a
263
00:09:14,370 –> 00:09:15,600
[paul_tyler]: yeah
264
00:09:14,476 –> 00:09:16,319
[david_shapiro]: different opportunity because
265
00:09:15,779 –> 00:09:16,086
[ramsey_d_smith]: oh
266
00:09:16,961 –> 00:09:19,044
[david_shapiro]: it doesn’t have a current interest rate
it has
267
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[ramsey_d_smith]: oh
268
00:09:19,104 –> 00:09:20,206
[david_shapiro]: an accruived interest rate
269
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[ramsey_d_smith]: oh
270
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[david_shapiro]: and
271
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[ramsey_d_smith]: yeah
272
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[david_shapiro]: you can’t
273
00:09:22,110 –> 00:09:22,313
[paul_tyler]: oh
274
00:09:22,370 –> 00:09:26,256
[david_shapiro]: be on a heem heck mortgage which
is the most popular
275
00:09:25,830 –> 00:09:27,330
[paul_tyler]: oh
276
00:09:26,496 –> 00:09:32,647
[david_shapiro]: government guaranteed reverse mortgage you can’t have
a first mortgage so one differential
277
00:09:32,670 –> 00:09:33,015
[paul_tyler]: yeah
278
00:09:32,807 –> 00:09:37,294
[david_shapiro]: between us and reverse mortgage is if
somebody has a mortgage on their home and
279
00:09:37,555 –> 00:09:38,677
[david_shapiro]: it’s at a four per
280
00:09:38,610 –> 00:09:40,230
[paul_tyler]: yeah
281
00:09:38,797 –> 00:09:42,864
[david_shapiro]: cent or three percent you know they
may not want to pay that off just
282
00:09:42,904 –> 00:09:47,191
[david_shapiro]: to get the reverse mortgage which today
is going to be starting at probably a
283
00:09:47,311 –> 00:09:52,219
[david_shapiro]: six and a half per and you
know adjustable rate interest so that that’s one
284
00:09:52,259 –> 00:09:55,665
[david_shapiro]: of the things that they need to
consider and then the thing i think that
285
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[david_shapiro]: that
286
00:09:56,369 –> 00:09:56,389
[ramsey_d_smith]: m
287
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[david_shapiro]: most differentiates us is that
288
00:09:58,499 –> 00:09:58,519
[ramsey_d_smith]: m
289
00:09:59,451 –> 00:10:01,274
[david_shapiro]: our market with aging
290
00:10:01,200 –> 00:10:01,220
[paul_tyler]: m
291
00:10:01,355 –> 00:10:05,822
[david_shapiro]: baby boomers the older people get they
don’t want to mortgage they don’t want to
292
00:10:05,882 –> 00:10:12,513
[david_shapiro]: have you know a current payment they
don’t want to see a accruing inter rate
293
00:10:12,573 –> 00:10:17,241
[david_shapiro]: where every statement that they get pay
the balance is going up
294
00:10:17,309 –> 00:10:18,029
[ramsey_d_smith]: yeah
295
00:10:17,321 –> 00:10:20,627
[david_shapiro]: and up and up it’s not going
to ever go down so i think that
296
00:10:20,437 –> 00:10:20,579
[ramsey_d_smith]: yeah
297
00:10:21,047 –> 00:10:27,138
[david_shapiro]: you know that’s real limitation end frankly
the other issue with reversed mortgages is that
298
00:10:27,598 –> 00:10:30,864
[david_shapiro]: you know there’s a cost to our
product there’s a cost to reverse mortgage there’s
299
00:10:30,904 –> 00:10:31,324
[david_shapiro]: a cost to
300
00:10:31,349 –> 00:10:31,752
[ramsey_d_smith]: yeah
301
00:10:31,385 –> 00:10:33,909
[david_shapiro]: a hey lock with reversed mortgages
302
00:10:33,407 –> 00:10:33,548
[ramsey_d_smith]: yeah
303
00:10:34,229 –> 00:10:34,430
[david_shapiro]: and
304
00:10:34,590 –> 00:10:35,220
[paul_tyler]: yeah
305
00:10:34,610 –> 00:10:36,814
[david_shapiro]: with he locks a lot of that
call t is
306
00:10:36,749 –> 00:10:36,931
[ramsey_d_smith]: oh
307
00:10:37,314 –> 00:10:39,638
[david_shapiro]: you know is built into the spread
on the interest
308
00:10:39,434 –> 00:10:39,454
[paul_tyler]: i
309
00:10:39,739 –> 00:10:40,580
[david_shapiro]: rate but
310
00:10:40,649 –> 00:10:40,890
[ramsey_d_smith]: oh
311
00:10:40,660 –> 00:10:43,124
[david_shapiro]: just the up front cost we were
looking at
312
00:10:42,987 –> 00:10:43,148
[ramsey_d_smith]: yeah
313
00:10:43,665 –> 00:10:48,052
[david_shapiro]: a comparison one of our financial planters
r i s and sacramento has a client
314
00:10:48,193 –> 00:10:48,393
[david_shapiro]: that
315
00:10:48,690 –> 00:10:48,710
[paul_tyler]: m
316
00:10:48,974 –> 00:10:53,041
[david_shapiro]: wants to use our product and the
apples apples comparison to get
317
00:10:53,430 –> 00:10:53,651
[paul_tyler]: oh
318
00:10:53,481 –> 00:10:56,186
[david_shapiro]: you know four hundred thousand dollars out
of their home
319
00:10:57,210 –> 00:10:57,472
[paul_tyler]: oh
320
00:10:57,248 –> 00:10:59,151
[david_shapiro]: the reverse mortgage just the cost
321
00:10:58,919 –> 00:10:59,226
[ramsey_d_smith]: oh
322
00:10:59,211 –> 00:11:05,361
[david_shapiro]: to originate it with twenty eight thousand
dollars our product was twelve thousand dollars
323
00:11:05,138 –> 00:11:05,159
[ramsey_d_smith]: m
324
00:11:05,501 –> 00:11:10,430
[david_shapiro]: so much more expensive up front and
then the other issue with reversed mortgages is
325
00:11:10,570 –> 00:11:13,314
[david_shapiro]: that you don’t know what the lie
of bill ty to the estate is going
326
00:11:13,355 –> 00:11:17,802
[david_shapiro]: to be so with our product you
know exactly if we’re putting up that you
327
00:11:17,842 –> 00:11:20,827
[david_shapiro]: know forty per cent which is a
lot right and we’re going to take half
328
00:11:20,927 –> 00:11:24,293
[david_shapiro]: of the of the net equity in
the home you know upon their death or
329
00:11:24,393 –> 00:11:29,982
[david_shapiro]: sale whatever they know that fifty percent
of their home can be managed in the
330
00:11:30,042 –> 00:11:34,510
[david_shapiro]: estate where with the reverse mortgage you
just don’t know what that balance is going
331
00:11:34,550 –> 00:11:40,660
[david_shapiro]: to be you know in until there
are so for financial planning purposes it’s it’s
332
00:11:40,720 –> 00:11:41,401
[david_shapiro]: a difference that we
333
00:11:41,400 –> 00:11:41,664
[paul_tyler]: oh
334
00:11:41,461 –> 00:11:43,264
[david_shapiro]: think you know helps helps our
335
00:11:43,620 –> 00:11:43,901
[paul_tyler]: oh
336
00:11:43,685 –> 00:11:46,109
[david_shapiro]: cause in you know setting that comparison
up
337
00:11:46,320 –> 00:11:46,626
[paul_tyler]: oh
338
00:11:46,550 –> 00:11:47,772
[david_shapiro]: and then reputationally
339
00:11:47,999 –> 00:11:48,260
[ramsey_d_smith]: oh
340
00:11:48,233 –> 00:11:51,017
[david_shapiro]: oh you know i don’t want to
341
00:11:51,479 –> 00:11:51,680
[ramsey_d_smith]: oh
342
00:11:51,698 –> 00:11:53,742
[david_shapiro]: malign the reverse mortgage industry but
343
00:11:54,060 –> 00:11:54,301
[paul_tyler]: oh
344
00:11:54,363 –> 00:11:55,565
[david_shapiro]: there is a historical
345
00:11:55,765 –> 00:11:55,949
[ramsey_d_smith]: yeah
346
00:11:56,747 –> 00:12:00,874
[david_shapiro]: a legacy fear of reverse mortgages that
built there early in the
347
00:12:00,869 –> 00:12:01,153
[ramsey_d_smith]: oh
348
00:12:01,114 –> 00:12:01,775
[david_shapiro]: in the industry
349
00:12:02,026 –> 00:12:02,189
[ramsey_d_smith]: yeah
350
00:12:02,436 –> 00:12:02,877
[david_shapiro]: um
351
00:12:03,330 –> 00:12:03,350
[paul_tyler]: m
352
00:12:03,398 –> 00:12:06,543
[david_shapiro]: and so you know you have to
deal with that general generation
353
00:12:06,360 –> 00:12:06,601
[paul_tyler]: oh
354
00:12:06,603 –> 00:12:08,386
[david_shapiro]: ally as well because a lot of
the
355
00:12:08,849 –> 00:12:09,179
[ramsey_d_smith]: oh
356
00:12:08,927 –> 00:12:10,069
[david_shapiro]: baby boomers had
357
00:12:10,020 –> 00:12:10,324
[paul_tyler]: oh
358
00:12:10,350 –> 00:12:13,374
[david_shapiro]: parents of theirs that you know looked
at a reverse
359
00:12:13,230 –> 00:12:13,511
[paul_tyler]: oh
360
00:12:13,434 –> 00:12:18,298
[david_shapiro]: mortgage and felt that it was not
not appropriate for them so the reverse mortgage
361
00:12:18,338 –> 00:12:19,479
[david_shapiro]: industry has some baggage
362
00:12:19,530 –> 00:12:19,772
[paul_tyler]: oh
363
00:12:19,560 –> 00:12:22,122
[david_shapiro]: that that they have to deal with
historically
364
00:12:22,829 –> 00:12:23,130
[ramsey_d_smith]: yah
365
00:12:23,101 –> 00:12:25,067
[paul_tyler]: well well and you kind of you
366
00:12:25,098 –> 00:12:25,238
[ramsey_d_smith]: yah
367
00:12:25,107 –> 00:12:25,549
[paul_tyler]: know alluded
368
00:12:25,483 –> 00:12:25,744
[david_shapiro]: oh
369
00:12:25,589 –> 00:12:25,649
[paul_tyler]: to
370
00:12:25,619 –> 00:12:25,905
[ramsey_d_smith]: oh
371
00:12:25,689 –> 00:12:29,390
[paul_tyler]: this earlier which is when people
372
00:12:29,443 –> 00:12:30,011
[david_shapiro]: yeah
373
00:12:29,470 –> 00:12:31,093
[paul_tyler]: say is this good product or bad
product well
374
00:12:31,418 –> 00:12:31,439
[ramsey_d_smith]: m
375
00:12:31,434 –> 00:12:32,816
[paul_tyler]: it always starts with
376
00:12:32,819 –> 00:12:33,749
[ramsey_d_smith]: yeah
377
00:12:33,777 –> 00:12:34,819
[paul_tyler]: two words it depends
378
00:12:35,493 –> 00:12:35,635
[david_shapiro]: yeah
379
00:12:35,961 –> 00:12:39,126
[paul_tyler]: now now if my goal you know
ramsey
380
00:12:39,043 –> 00:12:39,325
[david_shapiro]: oh
381
00:12:39,587 –> 00:12:41,691
[paul_tyler]: i’m thinking if i’m goin to do
one of these things i think there are
382
00:12:41,731 –> 00:12:45,477
[paul_tyler]: two goals i have tell me challenging
me on the question because maybe i’m not
383
00:12:45,577 –> 00:12:46,579
[paul_tyler]: thinking of this way one is
384
00:12:46,829 –> 00:12:48,239
[ramsey_d_smith]: yeah
385
00:12:47,240 –> 00:12:55,033
[paul_tyler]: i want to maximize my income available
for my house two leaves something probably you
386
00:12:55,093 –> 00:12:58,819
[paul_tyler]: know as much as i possibly can
to my my survivor so think i have
387
00:12:58,879 –> 00:13:02,405
[paul_tyler]: two goals now david i can see
two different scenarios taking place here
388
00:13:02,369 –> 00:13:02,531
[ramsey_d_smith]: yeah
389
00:13:02,565 –> 00:13:06,132
[paul_tyler]: one is let’s say t zero ramsey
390
00:13:06,523 –> 00:13:06,543
[david_shapiro]: m
391
00:13:06,934 –> 00:13:07,656
[paul_tyler]: housing market
392
00:13:07,402 –> 00:13:07,423
[david_shapiro]: m
393
00:13:07,796 –> 00:13:12,306
[paul_tyler]: is it’s index to a hundred you
know by the time i pass on it’s
394
00:13:12,406 –> 00:13:12,587
[paul_tyler]: now
395
00:13:14,189 –> 00:13:14,435
[ramsey_d_smith]: yeah
396
00:13:14,650 –> 00:13:19,257
[paul_tyler]: two thirty five yu know what it
was you know prior huge
397
00:13:19,499 –> 00:13:19,702
[ramsey_d_smith]: yeah
398
00:13:19,618 –> 00:13:20,339
[paul_tyler]: appreciation
399
00:13:20,806 –> 00:13:21,373
[david_shapiro]: hm
400
00:13:21,201 –> 00:13:25,668
[paul_tyler]: one scenario other scenarios you know is
pretty flat market you know only we only
401
00:13:25,708 –> 00:13:31,358
[paul_tyler]: had i appreciate david how do those
each of those how would these instruments perform
402
00:13:32,019 –> 00:13:32,219
[paul_tyler]: you know
403
00:13:32,939 –> 00:13:33,689
[ramsey_d_smith]: yeah
404
00:13:33,040 –> 00:13:36,586
[paul_tyler]: reverse mortgage versus what you’re doing those
are my two goals
405
00:13:37,093 –> 00:13:37,215
[david_shapiro]: yeah
406
00:13:37,127 –> 00:13:37,608
[paul_tyler]: max mis
407
00:13:37,539 –> 00:13:37,661
[david_shapiro]: yeah
408
00:13:37,708 –> 00:13:39,356
[paul_tyler]: income max that’s what i’m leaving
409
00:13:39,803 –> 00:13:41,125
[david_shapiro]: yeah well and
410
00:13:41,359 –> 00:13:41,479
[ramsey_d_smith]: we
411
00:13:41,405 –> 00:13:45,132
[david_shapiro]: the two factors that you have to
take into account are what’s the
412
00:13:45,779 –> 00:13:46,769
[ramsey_d_smith]: oh
413
00:13:46,170 –> 00:13:46,312
[paul_tyler]: ye
414
00:13:46,233 –> 00:13:47,235
[david_shapiro]: forward looking
415
00:13:47,150 –> 00:13:47,352
[ramsey_d_smith]: yes
416
00:13:47,816 –> 00:13:48,537
[david_shapiro]: interest rate
417
00:13:48,691 –> 00:13:48,855
[ramsey_d_smith]: yes
418
00:13:48,958 –> 00:13:49,579
[david_shapiro]: over time
419
00:13:49,690 –> 00:13:49,913
[paul_tyler]: yes
420
00:13:49,829 –> 00:13:50,193
[ramsey_d_smith]: oh
421
00:13:49,860 –> 00:13:51,482
[david_shapiro]: versus what’s the home appreciation
422
00:13:51,450 –> 00:13:52,620
[paul_tyler]: oh
423
00:13:51,743 –> 00:13:55,569
[david_shapiro]: our time and i mean that’s you
know that’s an unknown that you know each
424
00:13:55,629 –> 00:14:00,297
[david_shapiro]: person is going to have to answer
for for themselves so i think it becomes
425
00:14:01,078 –> 00:14:02,741
[david_shapiro]: it is it is a financial decision
426
00:14:02,759 –> 00:14:02,964
[ramsey_d_smith]: yah
427
00:14:03,883 –> 00:14:06,808
[david_shapiro]: but there are other elements you know
like just not wanting
428
00:14:06,629 –> 00:14:06,830
[ramsey_d_smith]: yah
429
00:14:06,868 –> 00:14:11,195
[david_shapiro]: to have a mortgage or the whole
estate thing but
430
00:14:11,190 –> 00:14:11,391
[paul_tyler]: yeah
431
00:14:11,275 –> 00:14:15,342
[david_shapiro]: it is it is a financial equation
that is not
432
00:14:15,809 –> 00:14:16,619
[ramsey_d_smith]: yah
433
00:14:15,883 –> 00:14:19,809
[david_shapiro]: it’s not perfect because we can’t you
know we can we can’t see that far
434
00:14:19,870 –> 00:14:20,010
[david_shapiro]: into
435
00:14:19,919 –> 00:14:20,123
[ramsey_d_smith]: yeah
436
00:14:20,050 –> 00:14:20,531
[david_shapiro]: the future
437
00:14:20,280 –> 00:14:21,000
[paul_tyler]: yeah
438
00:14:21,569 –> 00:14:21,877
[ramsey_d_smith]: oh
439
00:14:21,813 –> 00:14:21,973
[david_shapiro]: and
440
00:14:22,140 –> 00:14:22,421
[paul_tyler]: yah
441
00:14:22,233 –> 00:14:22,634
[david_shapiro]: that’s one
442
00:14:22,559 –> 00:14:22,741
[ramsey_d_smith]: oh
443
00:14:22,674 –> 00:14:23,496
[david_shapiro]: of the reasons that
444
00:14:23,908 –> 00:14:24,109
[paul_tyler]: yah
445
00:14:24,357 –> 00:14:28,724
[david_shapiro]: that i think that reverse mortgages you
know most of them are on an adjustable
446
00:14:28,824 –> 00:14:34,494
[david_shapiro]: rate because the way that their structure
you know with heckhams you really can’t get
447
00:14:34,554 –> 00:14:37,679
[david_shapiro]: a lot out if you’re doing a
lump sum in a fixed interest rate you
448
00:14:37,719 –> 00:14:41,265
[david_shapiro]: can get very little out of your
home so to the reverse mortgages are variable
449
00:14:41,325 –> 00:14:46,834
[david_shapiro]: rate and that adds a unknown that
you know that’s hard to quantify ours is
450
00:14:47,095 –> 00:14:48,918
[david_shapiro]: fully quantified but you’re right paul
451
00:14:48,839 –> 00:14:49,140
[ramsey_d_smith]: oh
452
00:14:49,078 –> 00:14:49,158
[david_shapiro]: if
453
00:14:49,560 –> 00:14:49,862
[paul_tyler]: oh
454
00:14:49,799 –> 00:14:52,804
[david_shapiro]: if home price is appreciated higher than
455
00:14:52,650 –> 00:14:52,994
[ramsey_d_smith]: i like
456
00:14:53,045 –> 00:14:55,249
[david_shapiro]: we assume in our you
457
00:14:55,238 –> 00:14:55,259
[ramsey_d_smith]: m
458
00:14:55,289 –> 00:15:00,517
[david_shapiro]: know illustrations than you know the investor
but but they’re but they’re in lock step
459
00:15:00,678 –> 00:15:05,446
[david_shapiro]: right the you know the investor in
the home one are sharing that in lock
460
00:15:05,506 –> 00:15:11,976
[david_shapiro]: step so um i think that’s probably
the the safest way to look at it
461
00:15:12,059 –> 00:15:12,283
[ramsey_d_smith]: oh
462
00:15:12,377 –> 00:15:15,142
[david_shapiro]: without being able to know what the
future is going to be
463
00:15:15,150 –> 00:15:15,395
[paul_tyler]: yeah
464
00:15:15,182 –> 00:15:15,342
[david_shapiro]: like
465
00:15:15,929 –> 00:15:17,692
[ramsey_d_smith]: i mean it just highlights you know
there’s their
466
00:15:18,420 –> 00:15:18,722
[paul_tyler]: oh
467
00:15:18,794 –> 00:15:23,521
[ramsey_d_smith]: there the are different complexities for each
of these solutions i mean they just fundamentally
468
00:15:23,541 –> 00:15:24,864
[ramsey_d_smith]: they have very different risk profiles
469
00:15:25,225 –> 00:15:25,407
[david_shapiro]: yes
470
00:15:25,284 –> 00:15:27,428
[ramsey_d_smith]: and that’s at the heart of your
your your
471
00:15:27,399 –> 00:15:27,420
[paul_tyler]: m
472
00:15:27,628 –> 00:15:28,433
[ramsey_d_smith]: your question paul
473
00:15:28,813 –> 00:15:29,533
[david_shapiro]: oh
474
00:15:29,903 –> 00:15:36,638
[ramsey_d_smith]: is yeah i in an environment where
home prices are flat to down and interest
475
00:15:36,698 –> 00:15:40,745
[ramsey_d_smith]: rates are spiking then the hakim loan
is kind of a tough call right
476
00:15:41,040 –> 00:15:41,242
[paul_tyler]: right
477
00:15:41,226 –> 00:15:41,833
[david_shapiro]: hm
478
00:15:42,448 –> 00:15:47,837
[ramsey_d_smith]: and an en iron ment where home
prices are expanding dramatically and interest rates are
479
00:15:47,917 –> 00:15:53,676
[ramsey_d_smith]: low then then he may be the
better one in some sense you got to
480
00:15:53,716 –> 00:15:53,756
[ramsey_d_smith]: do
481
00:15:54,750 –> 00:15:54,971
[paul_tyler]: yeah
482
00:15:54,958 –> 00:15:56,641
[ramsey_d_smith]: if you do a monte carlo analysis
but
483
00:15:56,643 –> 00:15:56,784
[david_shapiro]: yeah
484
00:15:57,162 –> 00:15:57,262
[ramsey_d_smith]: as
485
00:15:57,592 –> 00:15:58,320
[paul_tyler]: oh
486
00:15:57,803 –> 00:16:02,691
[ramsey_d_smith]: it seems to me like a fiduciary
advisor is they’re thinking about um providing
487
00:16:02,543 –> 00:16:02,563
[paul_tyler]: i
488
00:16:02,751 –> 00:16:05,316
[ramsey_d_smith]: a menu to their to their customers
489
00:16:05,160 –> 00:16:06,300
[paul_tyler]: oh
490
00:16:06,277 –> 00:16:09,943
[ramsey_d_smith]: in addition to sort of factoring in
those preferences that you were talking about david
491
00:16:09,960 –> 00:16:09,980
[paul_tyler]: m
492
00:16:10,003 –> 00:16:10,644
[ramsey_d_smith]: which is i
493
00:16:10,680 –> 00:16:11,820
[paul_tyler]: oh
494
00:16:10,745 –> 00:16:14,371
[ramsey_d_smith]: want to i want something that’s alone
versus now an equity share like that
495
00:16:14,463 –> 00:16:15,313
[david_shapiro]: yeah
496
00:16:14,591 –> 00:16:17,015
[ramsey_d_smith]: that decision which may be is much
sort of
497
00:16:17,040 –> 00:16:17,383
[paul_tyler]: oh
498
00:16:17,055 –> 00:16:18,117
[ramsey_d_smith]: a personal preference thing
499
00:16:18,420 –> 00:16:18,684
[paul_tyler]: oh
500
00:16:19,709 –> 00:16:23,956
[ramsey_d_smith]: addition to this notion of well what
is the risk propel i want to have
501
00:16:24,036 –> 00:16:26,981
[ramsey_d_smith]: vcvfthis house you know over the course
of the next ten or fifteen twenty years
502
00:16:27,061 –> 00:16:30,547
[ramsey_d_smith]: so it’s look i think there need
to be more answers like i think i
503
00:16:30,567 –> 00:16:31,388
[ramsey_d_smith]: think you need to have more
504
00:16:31,410 –> 00:16:31,430
[paul_tyler]: m
505
00:16:31,729 –> 00:16:36,633
[ramsey_d_smith]: ways to sort of peel this onion
effectively so i think it’s you know you’re
506
00:16:36,673 –> 00:16:40,697
[ramsey_d_smith]: bringing another practical solution which is very
interesting now i had
507
00:16:40,674 –> 00:16:40,716
[paul_tyler]: a
508
00:16:40,737 –> 00:16:44,031
[ramsey_d_smith]: a question about i had a question
about costs
509
00:16:43,890 –> 00:16:44,071
[paul_tyler]: oh
510
00:16:44,512 –> 00:16:47,937
[ramsey_d_smith]: about maintenance cost so one of the
other things that often seems that sort of
511
00:16:48,037 –> 00:16:51,884
[ramsey_d_smith]: not get discussed enough and where i
think sometimes people get into trouble you know
512
00:16:51,964 –> 00:16:55,790
[ramsey_d_smith]: with with their homes is that you
know when they get a reverse mortgage as
513
00:16:55,870 –> 00:16:57,974
[ramsey_d_smith]: they take money out right which is
great
514
00:16:57,715 –> 00:16:58,303
[david_shapiro]: hm
515
00:16:59,076 –> 00:17:03,463
[ramsey_d_smith]: but sometimes they get sometimes property taxes
and other sort of maintenance costs end up
516
00:17:03,523 –> 00:17:10,316
[ramsey_d_smith]: being the problem that comes up so
under your under your construct dohomoners still bear
517
00:17:10,436 –> 00:17:14,585
[ramsey_d_smith]: all of those all of those maintenance
of property tax costs et cetera or is
518
00:17:14,605 –> 00:17:15,647
[ramsey_d_smith]: there any sharing of that
519
00:17:16,033 –> 00:17:18,277
[david_shapiro]: no because we don’t go on title
we’re
520
00:17:18,120 –> 00:17:18,140
[paul_tyler]: m
521
00:17:18,317 –> 00:17:18,858
[david_shapiro]: not owners of
522
00:17:18,889 –> 00:17:19,012
[ramsey_d_smith]: yeah
523
00:17:18,918 –> 00:17:22,724
[david_shapiro]: the home so they pay the property
taxes you know they pay their insurance
524
00:17:23,399 –> 00:17:23,682
[ramsey_d_smith]: oh
525
00:17:23,786 –> 00:17:25,709
[david_shapiro]: you know we do have provisions
526
00:17:26,040 –> 00:17:26,385
[paul_tyler]: oh
527
00:17:26,949 –> 00:17:27,131
[ramsey_d_smith]: yeah
528
00:17:27,192 –> 00:17:32,481
[david_shapiro]: where e can step in and if
they fall behind we can make what we
529
00:17:32,489 –> 00:17:32,509
[ramsey_d_smith]: m
530
00:17:32,541 –> 00:17:35,846
[david_shapiro]: call preservation payments and then we just
tack those on to
531
00:17:35,918 –> 00:17:35,939
[ramsey_d_smith]: m
532
00:17:35,926 –> 00:17:39,873
[david_shapiro]: the back end and you know they
are you know they are required to just
533
00:17:39,973 –> 00:17:44,501
[david_shapiro]: maintain the home it doesn’t require them
to improve the home um so if if
534
00:17:44,581 –> 00:17:47,786
[david_shapiro]: the home is in disrepair and they
haven’t improved it then there
535
00:17:47,802 –> 00:17:48,869
[ramsey_d_smith]: hm
536
00:17:47,846 –> 00:17:49,028
[david_shapiro]: is an adjustment at the
537
00:17:48,989 –> 00:17:49,232
[ramsey_d_smith]: oh
538
00:17:49,068 –> 00:17:53,996
[david_shapiro]: back end you know to take into
account the cost of you know making
539
00:17:53,880 –> 00:17:54,101
[paul_tyler]: oh
540
00:17:54,056 –> 00:17:57,983
[david_shapiro]: that home you know up dating whatever
maintenance that needs to be done
541
00:17:58,269 –> 00:17:58,290
[paul_tyler]: m
542
00:17:58,424 –> 00:18:00,447
[david_shapiro]: that gets factored in but you
543
00:18:00,480 –> 00:18:00,722
[paul_tyler]: oh
544
00:18:00,487 –> 00:18:01,689
[david_shapiro]: know that that’s kind of the only
545
00:18:01,528 –> 00:18:01,650
[paul_tyler]: yeah
546
00:18:01,729 –> 00:18:03,152
[david_shapiro]: way that we can attack that
547
00:18:04,993 –> 00:18:05,113
[ramsey_d_smith]: so
548
00:18:05,180 –> 00:18:05,261
[paul_tyler]: ah
549
00:18:05,694 –> 00:18:10,622
[ramsey_d_smith]: another another another item that we talked
about of leading up to this conversation
550
00:18:10,537 –> 00:18:10,558
[david_shapiro]: m
551
00:18:10,743 –> 00:18:14,529
[ramsey_d_smith]: was who you’re going to de fund
this so the tire
552
00:18:14,522 –> 00:18:14,542
[paul_tyler]: i
553
00:18:14,629 –> 00:18:15,971
[ramsey_d_smith]: mortgage industry or also of
554
00:18:15,960 –> 00:18:16,224
[paul_tyler]: oh
555
00:18:16,011 –> 00:18:17,314
[ramsey_d_smith]: like ll call it the mortgage
556
00:18:17,323 –> 00:18:17,624
[david_shapiro]: oh
557
00:18:17,354 –> 00:18:21,761
[ramsey_d_smith]: of mortgage equivalent industry ultimately is funded
by pools of assets that can be insurance
558
00:18:21,801 –> 00:18:22,142
[ramsey_d_smith]: companies
559
00:18:22,132 –> 00:18:22,153
[david_shapiro]: m
560
00:18:22,182 –> 00:18:24,505
[ramsey_d_smith]: that can be institutional investors in some
cases it’s
561
00:18:24,420 –> 00:18:24,664
[paul_tyler]: oh
562
00:18:24,853 –> 00:18:24,873
[david_shapiro]: m
563
00:18:25,187 –> 00:18:31,497
[ramsey_d_smith]: venture capitalists it’s pension funds sovereign wealth
funds and now you are
564
00:18:31,440 –> 00:18:31,702
[paul_tyler]: oh
565
00:18:31,818 –> 00:18:35,063
[ramsey_d_smith]: you would mention that you’re building a
product that you think is
566
00:18:34,980 –> 00:18:35,242
[paul_tyler]: oh
567
00:18:35,604 –> 00:18:38,550
[ramsey_d_smith]: particularly interesting to sort of one set
of investors so tell
568
00:18:38,483 –> 00:18:38,603
[david_shapiro]: yeah
569
00:18:38,591 –> 00:18:39,054
[ramsey_d_smith]: us about that
570
00:18:39,011 –> 00:18:39,780
[paul_tyler]: yeah
571
00:18:39,244 –> 00:18:44,272
[david_shapiro]: yeah our product is specifically designed to
meet the needs of both the investor and
572
00:18:44,352 –> 00:18:49,681
[david_shapiro]: the home owner and our targeted investor
long term our insurance companies to hold this
573
00:18:49,741 –> 00:18:53,608
[david_shapiro]: on their balance and he rated security
so when we designed our product
574
00:18:53,249 –> 00:18:54,089
[ramsey_d_smith]: yeah
575
00:18:53,708 –> 00:18:58,756
[david_shapiro]: and you’ll note that in the example
there’s thirty percent equity on top right that
576
00:18:58,937 –> 00:19:00,860
[david_shapiro]: there’s thirty percent equity in the home
577
00:19:01,959 –> 00:19:01,980
[paul_tyler]: m
578
00:19:02,463 –> 00:19:08,112
[david_shapiro]: we needed to have that thirty per
cent cushion because when the rating agencies stress
579
00:19:08,272 –> 00:19:10,336
[david_shapiro]: this asset the asset back security
580
00:19:10,500 –> 00:19:10,721
[paul_tyler]: yah
581
00:19:10,917 –> 00:19:12,139
[david_shapiro]: the first thing they do is
582
00:19:12,089 –> 00:19:12,210
[paul_tyler]: yah
583
00:19:12,279 –> 00:19:14,883
[david_shapiro]: take an overnight drop in home prices
thirty
584
00:19:14,648 –> 00:19:14,669
[ramsey_d_smith]: m
585
00:19:14,923 –> 00:19:15,264
[david_shapiro]: per cent
586
00:19:15,210 –> 00:19:15,472
[paul_tyler]: oh
587
00:19:15,925 –> 00:19:16,326
[david_shapiro]: and then they
588
00:19:16,278 –> 00:19:16,419
[paul_tyler]: yeah
589
00:19:16,386 –> 00:19:18,349
[david_shapiro]: look at eight to twelve year recovery
590
00:19:17,910 –> 00:19:19,050
[paul_tyler]: oh yeah
591
00:19:18,950 –> 00:19:19,050
[david_shapiro]: so
592
00:19:19,740 –> 00:19:19,981
[paul_tyler]: oh
593
00:19:19,751 –> 00:19:22,095
[david_shapiro]: for us to get a rated security
we needed to have that
594
00:19:22,149 –> 00:19:22,170
[paul_tyler]: m
595
00:19:22,155 –> 00:19:25,621
[david_shapiro]: thirty per cent and that’s one of
the reasons that we have that piece
596
00:19:25,479 –> 00:19:25,500
[paul_tyler]: m
597
00:19:25,681 –> 00:19:31,531
[david_shapiro]: of the equity rum and you know
eventually you know when we create these asset
598
00:19:31,571 –> 00:19:35,838
[david_shapiro]: back securities insurance companies will be able
to hold those in you know the kinds
599
00:19:35,918 –> 00:19:40,105
[david_shapiro]: of volumes that we need to be
able to meet the demand from the consumer
600
00:19:40,346 –> 00:19:40,546
[david_shapiro]: i mean
601
00:19:41,078 –> 00:19:41,099
[ramsey_d_smith]: m
602
00:19:41,448 –> 00:19:42,209
[david_shapiro]: the residential
603
00:19:42,270 –> 00:19:43,440
[paul_tyler]: oh
604
00:19:42,589 –> 00:19:43,371
[david_shapiro]: residential homes
605
00:19:43,289 –> 00:19:43,612
[ramsey_d_smith]: yeah
606
00:19:43,431 –> 00:19:45,134
[david_shapiro]: in the country or what closing in
on
607
00:19:45,147 –> 00:19:45,308
[ramsey_d_smith]: right
608
00:19:45,935 –> 00:19:51,685
[david_shapiro]: forty trillion dollars thirty seven thirty eight
trillion dollars there’s twenty trillion dollars of twenty
609
00:19:52,005 –> 00:19:58,175
[david_shapiro]: twenty six trillion dollars now of equity
in homes so the massive scale of this
610
00:19:58,356 –> 00:20:03,044
[david_shapiro]: and and you consider the fact that
we’re only working through financial advice ers and
611
00:20:03,444 –> 00:20:07,731
[david_shapiro]: folks that have a trusted relationship and
they’re integrating the home into the
612
00:20:07,709 –> 00:20:07,953
[ramsey_d_smith]: oh
613
00:20:07,771 –> 00:20:11,578
[david_shapiro]: financial planning process you know there’s we
have to have significant
614
00:20:11,549 –> 00:20:11,856
[ramsey_d_smith]: yeah
615
00:20:12,139 –> 00:20:15,965
[david_shapiro]: capital to come into the market and
the security ation s the only way to
616
00:20:16,025 –> 00:20:19,271
[david_shapiro]: do that and and that you guys
know that that takes a long time you
617
00:20:19,291 –> 00:20:20,933
[david_shapiro]: know i was fortunate enough back
618
00:20:20,888 –> 00:20:20,909
[ramsey_d_smith]: m
619
00:20:21,054 –> 00:20:23,237
[david_shapiro]: in two thousand and seventeen
620
00:20:23,558 –> 00:20:23,579
[ramsey_d_smith]: m
621
00:20:23,878 –> 00:20:23,978
[david_shapiro]: to
622
00:20:24,090 –> 00:20:24,352
[paul_tyler]: oh
623
00:20:24,119 –> 00:20:28,706
[david_shapiro]: spend an hour and a half with
luraneri you know who created the mortgage back
624
00:20:28,766 –> 00:20:30,089
[david_shapiro]: securities and
625
00:20:31,080 –> 00:20:31,710
[paul_tyler]: yeah
626
00:20:31,491 –> 00:20:35,417
[david_shapiro]: you know i have to admit that
when i designed this product initially i designed
627
00:20:35,458 –> 00:20:40,125
[david_shapiro]: it in two thousand and five so
i had my first year witty company back
628
00:20:40,185 –> 00:20:44,753
[david_shapiro]: in two thousand five which was you
know well before the housing crisis then nate
629
00:20:45,033 –> 00:20:48,059
[david_shapiro]: adventures was an investor oppenheim and bernhimerphones
630
00:20:47,969 –> 00:20:48,113
[ramsey_d_smith]: ye
631
00:20:48,199 –> 00:20:48,339
[david_shapiro]: were
632
00:20:48,360 –> 00:20:48,723
[paul_tyler]: yes
633
00:20:48,399 –> 00:20:49,721
[david_shapiro]: investors and
634
00:20:50,288 –> 00:20:50,309
[ramsey_d_smith]: m
635
00:20:50,543 –> 00:20:52,145
[david_shapiro]: you know then we morgan stanley
636
00:20:52,049 –> 00:20:53,639
[ramsey_d_smith]: oh
637
00:20:52,205 –> 00:20:52,326
[david_shapiro]: was
638
00:20:52,230 –> 00:20:53,100
[paul_tyler]: oh
639
00:20:52,366 –> 00:20:53,808
[david_shapiro]: gonna securitize
640
00:20:53,849 –> 00:20:53,990
[ramsey_d_smith]: ye
641
00:20:53,888 –> 00:20:56,753
[david_shapiro]: the asset and then the housing crisis
came so i’m sitting
642
00:20:56,641 –> 00:20:56,802
[paul_tyler]: yeah
643
00:20:56,833 –> 00:20:57,254
[david_shapiro]: with lou
644
00:20:57,173 –> 00:20:57,194
[ramsey_d_smith]: a
645
00:20:57,454 –> 00:20:59,878
[david_shapiro]: in two thousand seventeen and i said
i’m just curious how
646
00:20:59,939 –> 00:21:00,202
[ramsey_d_smith]: yeah
647
00:20:59,958 –> 00:21:02,342
[david_shapiro]: long did it take before the first
mortgage
648
00:21:02,379 –> 00:21:02,400
[paul_tyler]: m
649
00:21:02,663 –> 00:21:06,549
[david_shapiro]: security you know how long did it
take you to get from concept to the
650
00:21:06,609 –> 00:21:08,192
[david_shapiro]: security and he said twelve years
651
00:21:08,648 –> 00:21:08,669
[ramsey_d_smith]: m
652
00:21:08,713 –> 00:21:09,174
[david_shapiro]: and i said so
653
00:21:09,141 –> 00:21:09,264
[paul_tyler]: wow
654
00:21:09,254 –> 00:21:11,377
[david_shapiro]: i said okay well i’m about in
that fall part
655
00:21:11,639 –> 00:21:11,659
[ramsey_d_smith]: m
656
00:21:12,539 –> 00:21:12,639
[david_shapiro]: so
657
00:21:13,500 –> 00:21:13,722
[paul_tyler]: yeah
658
00:21:14,062 –> 00:21:14,583
[david_shapiro]: i don’t know i’m
659
00:21:14,508 –> 00:21:14,729
[ramsey_d_smith]: right
660
00:21:14,603 –> 00:21:15,224
[david_shapiro]: going to feel bad
661
00:21:15,238 –> 00:21:15,360
[paul_tyler]: yeah
662
00:21:15,304 –> 00:21:18,069
[david_shapiro]: about that it does take time but
you know i think now
663
00:21:17,999 –> 00:21:18,323
[ramsey_d_smith]: oh
664
00:21:18,209 –> 00:21:18,890
[david_shapiro]: we are within
665
00:21:19,417 –> 00:21:19,538
[ramsey_d_smith]: yeah
666
00:21:19,531 –> 00:21:24,820
[david_shapiro]: within a year maybe a little less
than that three quarters of a year to
667
00:21:24,880 –> 00:21:31,371
[david_shapiro]: get a rated security out and there
have been three securitizations of our competitors products
668
00:21:31,992 –> 00:21:36,259
[david_shapiro]: they haven’t been rated nor can they
be rated the design of our competitors products
669
00:21:36,339 –> 00:21:41,965
[david_shapiro]: don’t allow for securities tion um either
either they have a ten year term on
670
00:21:42,026 –> 00:21:44,147
[david_shapiro]: them that’s problematic to the rating agencies
671
00:21:44,069 –> 00:21:44,229
[ramsey_d_smith]: yeah
672
00:21:44,408 –> 00:21:46,509
[david_shapiro]: or they’re based on home price
673
00:21:46,409 –> 00:21:46,592
[ramsey_d_smith]: yeah
674
00:21:46,589 –> 00:21:48,451
[david_shapiro]: appreciation and a shock loss you
675
00:21:48,402 –> 00:21:48,959
[ramsey_d_smith]: yeah
676
00:21:48,511 –> 00:21:53,307
[david_shapiro]: know would blow it out so we
feel that we’re perfectly positioned to be the
677
00:21:53,348 –> 00:21:58,656
[david_shapiro]: leaders in a rated security and that’s
why we’re working you know primarily with insurance
678
00:21:58,696 –> 00:21:59,498
[david_shapiro]: companies and
679
00:21:59,610 –> 00:21:59,893
[paul_tyler]: oh
680
00:21:59,738 –> 00:22:03,665
[david_shapiro]: with the hedge fund the private equity
fun that own insurance
681
00:22:03,540 –> 00:22:03,560
[paul_tyler]: m
682
00:22:03,725 –> 00:22:07,191
[david_shapiro]: companies because they’re the best partners for
us to achieve that
683
00:22:08,540 –> 00:22:13,509
[paul_tyler]: yeah well capital charges are can be
very consequential as you know we
684
00:22:13,889 –> 00:22:14,172
[ramsey_d_smith]: oh
685
00:22:14,170 –> 00:22:18,657
[paul_tyler]: at a prior company we we put
a lot of effort into trying to partner
686
00:22:18,697 –> 00:22:23,746
[paul_tyler]: with a company down you know so
stepping in and providing jumbo
687
00:22:23,498 –> 00:22:23,519
[ramsey_d_smith]: m
688
00:22:24,006 –> 00:22:24,787
[paul_tyler]: reverse mortgages
689
00:22:24,613 –> 00:22:24,633
[david_shapiro]: m
690
00:22:24,968 –> 00:22:25,789
[paul_tyler]: right on hecham
691
00:22:25,563 –> 00:22:25,684
[david_shapiro]: yeah
692
00:22:26,871 –> 00:22:32,180
[paul_tyler]: loans and the yell look right now
compared to rams investing in a
693
00:22:32,219 –> 00:22:32,482
[ramsey_d_smith]: oh
694
00:22:32,520 –> 00:22:34,444
[paul_tyler]: corporate bonds the challenge
695
00:22:34,242 –> 00:22:34,445
[ramsey_d_smith]: like
696
00:22:34,484 –> 00:22:35,365
[paul_tyler]: though david was the
697
00:22:35,669 –> 00:22:36,117
[ramsey_d_smith]: oh
698
00:22:36,126 –> 00:22:38,190
[paul_tyler]: was a capital charge and i can’t
remember what the rating
699
00:22:38,699 –> 00:22:38,960
[ramsey_d_smith]: oh
700
00:22:39,071 –> 00:22:41,996
[paul_tyler]: you know was hat were determined but
it was enough to sort of take the
701
00:22:42,036 –> 00:22:43,619
[paul_tyler]: yield down like below
702
00:22:44,288 –> 00:22:44,309
[ramsey_d_smith]: m
703
00:22:44,323 –> 00:22:44,833
[david_shapiro]: oh
704
00:22:44,500 –> 00:22:51,612
[paul_tyler]: quickly below corporate bonds do you have
any indication that you’ll end up um you’ll
705
00:22:51,652 –> 00:22:56,019
[paul_tyler]: be rated higher on the n c
scale and sort
706
00:22:56,129 –> 00:22:56,469
[ramsey_d_smith]: yeah
707
00:22:57,064 –> 00:23:00,417
[paul_tyler]: a reverse mortgage sitting on a insurance
balance sheet
708
00:23:00,733 –> 00:23:01,875
[david_shapiro]: well are you talking about
709
00:23:02,175 –> 00:23:02,195
[ramsey_d_smith]: a
710
00:23:02,296 –> 00:23:05,761
[david_shapiro]: scenario where the insurance company so that’s
a jumbo
711
00:23:05,559 –> 00:23:05,580
[paul_tyler]: m
712
00:23:05,861 –> 00:23:07,664
[david_shapiro]: so they would be holding those on
their balance seat
713
00:23:07,590 –> 00:23:08,550
[paul_tyler]: oh
714
00:23:07,684 –> 00:23:09,147
[david_shapiro]: those aren’t securitized right they were
715
00:23:09,150 –> 00:23:09,210
[paul_tyler]: no
716
00:23:09,167 –> 00:23:09,528
[david_shapiro]: just holding
717
00:23:09,391 –> 00:23:09,571
[paul_tyler]: not
718
00:23:09,568 –> 00:23:09,688
[david_shapiro]: him on
719
00:23:09,692 –> 00:23:09,832
[paul_tyler]: not
720
00:23:09,728 –> 00:23:10,109
[david_shapiro]: their balance
721
00:23:09,933 –> 00:23:10,736
[paul_tyler]: securitized
722
00:23:10,149 –> 00:23:10,269
[david_shapiro]: sheet
723
00:23:10,418 –> 00:23:10,439
[ramsey_d_smith]: m
724
00:23:10,930 –> 00:23:11,090
[david_shapiro]: yeah
725
00:23:10,997 –> 00:23:11,198
[paul_tyler]: right
726
00:23:11,250 –> 00:23:11,351
[david_shapiro]: so
727
00:23:11,459 –> 00:23:11,640
[paul_tyler]: hold
728
00:23:11,571 –> 00:23:11,831
[david_shapiro]: so the
729
00:23:11,800 –> 00:23:12,041
[paul_tyler]: holding
730
00:23:11,912 –> 00:23:12,252
[david_shapiro]: surplus
731
00:23:12,082 –> 00:23:12,262
[paul_tyler]: these
732
00:23:12,292 –> 00:23:12,493
[david_shapiro]: strain
733
00:23:12,463 –> 00:23:12,624
[paul_tyler]: yeah
734
00:23:12,573 –> 00:23:15,277
[david_shapiro]: for that was probably fifteen percent right
735
00:23:15,080 –> 00:23:16,069
[paul_tyler]: ah that sounds
736
00:23:15,878 –> 00:23:16,199
[david_shapiro]: um
737
00:23:16,129 –> 00:23:16,634
[paul_tyler]: about right
738
00:23:17,080 –> 00:23:17,240
[david_shapiro]: yeah
739
00:23:17,520 –> 00:23:17,761
[paul_tyler]: oh
740
00:23:17,738 –> 00:23:17,759
[ramsey_d_smith]: m
741
00:23:18,282 –> 00:23:22,249
[david_shapiro]: and so that and that’s problematic with
the asset back
742
00:23:22,230 –> 00:23:22,394
[paul_tyler]: yes
743
00:23:22,329 –> 00:23:24,212
[david_shapiro]: security we think that we’re going to
get
744
00:23:24,570 –> 00:23:24,936
[paul_tyler]: oh
745
00:23:25,379 –> 00:23:25,664
[ramsey_d_smith]: oh
746
00:23:25,695 –> 00:23:26,175
[david_shapiro]: senior
747
00:23:27,209 –> 00:23:28,019
[ramsey_d_smith]: oh
748
00:23:27,898 –> 00:23:29,561
[david_shapiro]: a senior a at
749
00:23:30,719 –> 00:23:30,962
[ramsey_d_smith]: oh
750
00:23:31,043 –> 00:23:32,245
[david_shapiro]: single a or a triple
751
00:23:32,197 –> 00:23:32,318
[ramsey_d_smith]: yeah
752
00:23:32,306 –> 00:23:33,728
[david_shapiro]: b at the worst so
753
00:23:33,719 –> 00:23:33,980
[ramsey_d_smith]: oh
754
00:23:33,870 –> 00:23:34,132
[paul_tyler]: oh
755
00:23:33,888 –> 00:23:35,972
[david_shapiro]: it’s a whole different you know it’s
in an
756
00:23:35,948 –> 00:23:36,090
[paul_tyler]: yeah
757
00:23:36,089 –> 00:23:36,109
[ramsey_d_smith]: m
758
00:23:36,112 –> 00:23:40,101
[david_shapiro]: ice it’s an ice to it’s the
surplus trains going to be a lot less
759
00:23:41,379 –> 00:23:44,545
[ramsey_d_smith]: who holds the rest of it so
you’ve got right the senior
760
00:23:44,370 –> 00:23:46,009
[paul_tyler]: yeah
761
00:23:44,665 –> 00:23:45,266
[ramsey_d_smith]: trunch is what
762
00:23:45,303 –> 00:23:45,445
[david_shapiro]: yeah
763
00:23:45,326 –> 00:23:46,768
[ramsey_d_smith]: the insurance companies are going to buy
764
00:23:47,183 –> 00:23:47,325
[david_shapiro]: yeah
765
00:23:47,449 –> 00:23:48,772
[ramsey_d_smith]: and then you’re going to have you
know
766
00:23:49,020 –> 00:23:49,243
[paul_tyler]: oh
767
00:23:49,312 –> 00:23:52,578
[ramsey_d_smith]: lower trenches and i guess maybe like
an equity trunch or something equivalent
768
00:23:52,483 –> 00:23:52,584
[david_shapiro]: oh
769
00:23:52,980 –> 00:23:53,242
[paul_tyler]: oh
770
00:23:53,079 –> 00:23:56,645
[ramsey_d_smith]: sort of thinking of it in the
framework of a like a collateral ized dead
771
00:23:56,673 –> 00:23:56,813
[david_shapiro]: yeah
772
00:23:56,745 –> 00:23:57,266
[ramsey_d_smith]: obligation
773
00:23:57,456 –> 00:23:58,379
[david_shapiro]: yeah yeah exactly
774
00:23:59,269 –> 00:24:03,656
[ramsey_d_smith]: who are the who’s going to retain
the know all the risk all the risky
775
00:24:03,696 –> 00:24:04,598
[ramsey_d_smith]: or trenches do you think
776
00:24:04,719 –> 00:24:04,740
[paul_tyler]: m
777
00:24:04,999 –> 00:24:06,734
[ramsey_d_smith]: do you see his target audience for
those
778
00:24:06,743 –> 00:24:06,883
[david_shapiro]: well
779
00:24:07,020 –> 00:24:07,261
[paul_tyler]: oh
780
00:24:07,063 –> 00:24:10,128
[david_shapiro]: that’s where i think the hedge funds
come in the you know the hedge
781
00:24:10,092 –> 00:24:10,619
[ramsey_d_smith]: hm
782
00:24:10,168 –> 00:24:11,691
[david_shapiro]: funds come in insurance
783
00:24:11,550 –> 00:24:11,791
[paul_tyler]: oh
784
00:24:11,751 –> 00:24:13,514
[david_shapiro]: companies that have other arms
785
00:24:13,470 –> 00:24:13,691
[paul_tyler]: oh
786
00:24:13,955 –> 00:24:17,000
[david_shapiro]: that you know a lot of insurance
companies want to buy the a b vertical
787
00:24:16,829 –> 00:24:17,133
[ramsey_d_smith]: oh
788
00:24:18,422 –> 00:24:18,662
[david_shapiro]: and then
789
00:24:18,728 –> 00:24:18,749
[ramsey_d_smith]: m
790
00:24:18,863 –> 00:24:20,944
[david_shapiro]: got you now then you’ve got the
equity trench which is
791
00:24:20,909 –> 00:24:21,539
[ramsey_d_smith]: yeah
792
00:24:21,085 –> 00:24:23,847
[david_shapiro]: you know when we do them you
know we’ll be we’ll be holding the equity
793
00:24:24,027 –> 00:24:26,189
[david_shapiro]: trench so but
794
00:24:26,372 –> 00:24:26,575
[ramsey_d_smith]: got
795
00:24:26,409 –> 00:24:26,609
[david_shapiro]: you know
796
00:24:26,635 –> 00:24:26,696
[ramsey_d_smith]: it
797
00:24:26,690 –> 00:24:29,252
[david_shapiro]: lots of interest in the a and
the b
798
00:24:30,000 –> 00:24:30,263
[paul_tyler]: yeah
799
00:24:31,141 –> 00:24:31,262
[ramsey_d_smith]: yeah
800
00:24:31,981 –> 00:24:32,485
[paul_tyler]: interesting
801
00:24:32,329 –> 00:24:36,636
[ramsey_d_smith]: so by the way i think i’m
just want to make a circle back to
802
00:24:37,337 –> 00:24:41,344
[ramsey_d_smith]: your description of this structure earlier on
because now i think took me a while
803
00:24:41,364 –> 00:24:42,746
[ramsey_d_smith]: but i think i got it right
so
804
00:24:43,008 –> 00:24:43,573
[david_shapiro]: hm
805
00:24:43,527 –> 00:24:45,811
[ramsey_d_smith]: let’s go back to example of the
806
00:24:45,789 –> 00:24:45,810
[paul_tyler]: m
807
00:24:47,013 –> 00:24:48,676
[ramsey_d_smith]: it’s a it’s a it’s a million
dollar loan
808
00:24:49,325 –> 00:24:49,345
[david_shapiro]: h
809
00:24:49,437 –> 00:24:50,098
[ramsey_d_smith]: right and
810
00:24:50,032 –> 00:24:50,893
[david_shapiro]: m yeah
811
00:24:50,439 –> 00:24:51,521
[ramsey_d_smith]: you you your
812
00:24:51,510 –> 00:24:51,712
[paul_tyler]: oh
813
00:24:51,581 –> 00:24:54,606
[ramsey_d_smith]: organization puts up forty per cent so
you you give
814
00:24:54,510 –> 00:24:54,652
[paul_tyler]: oh
815
00:24:54,726 –> 00:24:57,210
[ramsey_d_smith]: four hundred thousand dollars to the participant
816
00:24:57,566 –> 00:24:58,153
[david_shapiro]: hm
817
00:24:57,750 –> 00:24:58,032
[paul_tyler]: oh
818
00:24:57,911 –> 00:25:03,361
[ramsey_d_smith]: right so if the let’s let’s use
two scenarios one scenario is the value of
819
00:25:03,381 –> 00:25:04,042
[ramsey_d_smith]: the house doubles
820
00:25:04,050 –> 00:25:04,354
[paul_tyler]: oh
821
00:25:04,663 –> 00:25:06,105
[ramsey_d_smith]: over the course of the ensuing years
822
00:25:06,688 –> 00:25:07,243
[david_shapiro]: hm
823
00:25:06,826 –> 00:25:07,047
[ramsey_d_smith]: so it
824
00:25:07,050 –> 00:25:07,311
[paul_tyler]: oh
825
00:25:07,107 –> 00:25:08,790
[ramsey_d_smith]: goes to two million dollars so then
826
00:25:09,090 –> 00:25:09,313
[paul_tyler]: oh
827
00:25:09,230 –> 00:25:10,292
[ramsey_d_smith]: you will you will then
828
00:25:10,162 –> 00:25:10,183
[david_shapiro]: m
829
00:25:10,352 –> 00:25:16,122
[ramsey_d_smith]: get back if i’m correct you’ll get
back you’ll get back
830
00:25:15,960 –> 00:25:16,122
[paul_tyler]: yeah
831
00:25:16,522 –> 00:25:19,988
[ramsey_d_smith]: your original four hundred thousand dollars plus
fifty per
832
00:25:20,010 –> 00:25:20,237
[paul_tyler]: oh
833
00:25:20,028 –> 00:25:21,651
[ramsey_d_smith]: cent the price appreciation so
834
00:25:22,260 –> 00:25:22,521
[paul_tyler]: oh
835
00:25:22,272 –> 00:25:25,416
[ramsey_d_smith]: equify would get nine hundred thousand dollars
back in that scenario is that
836
00:25:25,815 –> 00:25:26,015
[david_shapiro]: well
837
00:25:25,857 –> 00:25:26,257
[ramsey_d_smith]: is that right
838
00:25:26,115 –> 00:25:26,416
[david_shapiro]: now so
839
00:25:26,340 –> 00:25:26,440
[paul_tyler]: ye
840
00:25:26,656 –> 00:25:26,756
[david_shapiro]: so
841
00:25:26,999 –> 00:25:27,019
[ramsey_d_smith]: m
842
00:25:27,037 –> 00:25:29,240
[david_shapiro]: think of it think of it the
house sells
843
00:25:29,150 –> 00:25:29,230
[ramsey_d_smith]: no
844
00:25:29,441 –> 00:25:31,604
[david_shapiro]: right so we know with the ending
value of the houses
845
00:25:31,720 –> 00:25:31,881
[ramsey_d_smith]: yeah
846
00:25:32,105 –> 00:25:34,649
[david_shapiro]: and then the closing statements the easiest
way to look at that so
847
00:25:34,659 –> 00:25:34,680
[paul_tyler]: m
848
00:25:34,750 –> 00:25:35,210
[david_shapiro]: the closing
849
00:25:34,958 –> 00:25:35,389
[ramsey_d_smith]: m yeah
850
00:25:35,270 –> 00:25:37,094
[david_shapiro]: statement we get back r four
851
00:25:38,116 –> 00:25:38,236
[ramsey_d_smith]: yeah
852
00:25:38,396 –> 00:25:39,679
[david_shapiro]: the home owner gets
853
00:25:39,630 –> 00:25:40,429
[paul_tyler]: yea
854
00:25:39,920 –> 00:25:43,617
[david_shapiro]: three hundred right because they’re protected
855
00:25:43,481 –> 00:25:43,665
[ramsey_d_smith]: right
856
00:25:43,718 –> 00:25:47,631
[david_shapiro]: equity we don’t share in and anything
above that is split fifty fifty
857
00:25:50,379 –> 00:25:56,547
[ramsey_d_smith]: okay so even though it was a
million dollar was a million dollar house but
858
00:25:56,687 –> 00:26:02,811
[ramsey_d_smith]: you’re of the original principle amount you
will have a claim on on seven hundred
859
00:26:02,851 –> 00:26:04,416
[ramsey_d_smith]: thousand dollars worth then
860
00:26:06,103 –> 00:26:07,451
[david_shapiro]: um nope
861
00:26:07,620 –> 00:26:07,781
[paul_tyler]: well
862
00:26:07,712 –> 00:26:07,853
[david_shapiro]: the
863
00:26:07,861 –> 00:26:07,921
[paul_tyler]: no
864
00:26:08,074 –> 00:26:08,295
[david_shapiro]: home
865
00:26:08,161 –> 00:26:10,265
[paul_tyler]: no ud be the appreciation right so
866
00:26:10,559 –> 00:26:10,781
[ramsey_d_smith]: yeah
867
00:26:10,565 –> 00:26:10,686
[paul_tyler]: tell
868
00:26:10,623 –> 00:26:11,533
[david_shapiro]: yeah
869
00:26:10,746 –> 00:26:11,747
[paul_tyler]: me if i’m getting it right so
870
00:26:12,003 –> 00:26:12,763
[david_shapiro]: yeah
871
00:26:12,288 –> 00:26:16,275
[paul_tyler]: the million dollar house goes to two
million ramsey see if i understand this
872
00:26:16,252 –> 00:26:16,413
[ramsey_d_smith]: yeah
873
00:26:16,335 –> 00:26:22,445
[paul_tyler]: so so you keep three hundred i
was in david you get you split fifty
874
00:26:22,545 –> 00:26:25,771
[paul_tyler]: fifty of the hundred the million that
went up is that right so you
875
00:26:25,741 –> 00:26:25,821
[ramsey_d_smith]: oh
876
00:26:25,791 –> 00:26:27,073
[paul_tyler]: would get half a million is that
877
00:26:27,029 –> 00:26:27,869
[ramsey_d_smith]: yeah
878
00:26:27,133 –> 00:26:30,018
[paul_tyler]: right or am i wrong here see
how i understood
879
00:26:30,069 –> 00:26:30,229
[ramsey_d_smith]: that’s
880
00:26:30,078 –> 00:26:30,218
[paul_tyler]: this
881
00:26:30,249 –> 00:26:30,349
[ramsey_d_smith]: what
882
00:26:30,373 –> 00:26:30,656
[david_shapiro]: oh
883
00:26:30,710 –> 00:26:32,151
[ramsey_d_smith]: that was my original version so that’s
884
00:26:32,070 –> 00:26:32,312
[paul_tyler]: okay
885
00:26:32,211 –> 00:26:35,735
[ramsey_d_smith]: like that’s nine hundred thousand bucks on
the up side in the upside scenario
886
00:26:36,514 –> 00:26:36,655
[david_shapiro]: yeah
887
00:26:36,736 –> 00:26:38,498
[ramsey_d_smith]: but it sounds like it’s more complicated
than that
888
00:26:38,743 –> 00:26:40,354
[david_shapiro]: yeah no it’s it’s
889
00:26:41,044 –> 00:26:41,206
[ramsey_d_smith]: yeah
890
00:26:41,436 –> 00:26:43,038
[david_shapiro]: now so all right so the
891
00:26:43,200 –> 00:26:43,489
[paul_tyler]: oh
892
00:26:43,539 –> 00:26:44,441
[david_shapiro]: math isn’t you know
893
00:26:45,809 –> 00:26:46,416
[ramsey_d_smith]: oh
894
00:26:45,930 –> 00:26:46,233
[paul_tyler]: oh
895
00:26:45,963 –> 00:26:47,225
[david_shapiro]: i’ll turn it over in my c
896
00:26:47,348 –> 00:26:47,369
[ramsey_d_smith]: h
897
00:26:47,405 –> 00:26:48,668
[david_shapiro]: i o at some point in time
898
00:26:48,540 –> 00:26:48,560
[paul_tyler]: m
899
00:26:48,748 –> 00:26:48,868
[david_shapiro]: he’s
900
00:26:48,759 –> 00:26:48,840
[ramsey_d_smith]: no
901
00:26:48,908 –> 00:26:48,928
[david_shapiro]: a
902
00:26:48,921 –> 00:26:49,162
[ramsey_d_smith]: worries
903
00:26:48,968 –> 00:26:49,489
[david_shapiro]: lot better at
904
00:26:49,500 –> 00:26:50,430
[paul_tyler]: yah
905
00:26:49,529 –> 00:26:50,230
[david_shapiro]: that so
906
00:26:51,179 –> 00:26:51,504
[ramsey_d_smith]: yah
907
00:26:51,794 –> 00:26:53,768
[david_shapiro]: so it went from what one million
to two million
908
00:26:53,670 –> 00:26:54,676
[paul_tyler]: one million to two million
909
00:26:54,449 –> 00:26:54,910
[ramsey_d_smith]: one million to
910
00:26:54,963 –> 00:26:55,124
[david_shapiro]: yeah
911
00:26:54,970 –> 00:26:55,450
[ramsey_d_smith]: two million
912
00:26:55,400 –> 00:26:55,541
[paul_tyler]: yeah
913
00:26:55,445 –> 00:26:56,188
[david_shapiro]: okay all right
914
00:26:56,072 –> 00:26:57,854
[ramsey_d_smith]: they got four hundred thousand dollars up
front
915
00:26:58,204 –> 00:26:58,348
[david_shapiro]: yep
916
00:26:58,536 –> 00:26:59,097
[ramsey_d_smith]: and now there’s
917
00:26:59,113 –> 00:27:00,343
[david_shapiro]: oh
918
00:26:59,277 –> 00:27:02,602
[ramsey_d_smith]: there’s a there’s a one million dollar
gain so in my view
919
00:27:02,743 –> 00:27:03,167
[david_shapiro]: oh
920
00:27:02,823 –> 00:27:05,888
[ramsey_d_smith]: as i understand it the one million
dollar game is split fifty fifty between you
921
00:27:05,948 –> 00:27:06,733
[ramsey_d_smith]: and the home on a right
922
00:27:06,973 –> 00:27:13,372
[david_shapiro]: yeah so the two millions now down
to one six after we get our money
923
00:27:13,472 –> 00:27:13,692
[david_shapiro]: back
924
00:27:13,590 –> 00:27:13,772
[ramsey_d_smith]: yeah
925
00:27:14,033 –> 00:27:14,233
[david_shapiro]: right
926
00:27:14,679 –> 00:27:14,901
[ramsey_d_smith]: okay
927
00:27:15,235 –> 00:27:15,335
[david_shapiro]: and
928
00:27:15,312 –> 00:27:15,536
[paul_tyler]: okay
929
00:27:15,535 –> 00:27:19,002
[david_shapiro]: then three hundred goes to the home
owners down to one one
930
00:27:20,015 –> 00:27:20,258
[ramsey_d_smith]: okay
931
00:27:20,713 –> 00:27:21,718
[david_shapiro]: and that’s what’s split
932
00:27:22,440 –> 00:27:25,367
[paul_tyler]: okay all right so we’re close we
were
933
00:27:25,353 –> 00:27:25,474
[david_shapiro]: yeah
934
00:27:25,427 –> 00:27:25,708
[paul_tyler]: close
935
00:27:26,653 –> 00:27:26,915
[david_shapiro]: oh
936
00:27:26,800 –> 00:27:35,655
[paul_tyler]: so that is potentially right this is
where potentially rising super rising home environment ramsey
937
00:27:35,773 –> 00:27:35,976
[david_shapiro]: oh
938
00:27:36,456 –> 00:27:37,357
[paul_tyler]: maybe i go with a home
939
00:27:37,589 –> 00:27:37,930
[ramsey_d_smith]: yeah
940
00:27:37,858 –> 00:27:38,580
[paul_tyler]: the hecham right
941
00:27:39,238 –> 00:27:39,378
[ramsey_d_smith]: yeah
942
00:27:39,741 –> 00:27:40,122
[paul_tyler]: it feels
943
00:27:39,949 –> 00:27:40,111
[ramsey_d_smith]: yeah
944
00:27:40,643 –> 00:27:40,764
[david_shapiro]: yeah
945
00:27:40,663 –> 00:27:43,828
[paul_tyler]: if my goal is to leave money
that i will never see
946
00:27:45,009 –> 00:27:45,132
[ramsey_d_smith]: yeah
947
00:27:45,374 –> 00:27:45,841
[paul_tyler]: my kids
948
00:27:46,193 –> 00:27:50,199
[david_shapiro]: yeah i think that the way we
look at it is we just look at
949
00:27:50,240 –> 00:27:50,841
[david_shapiro]: historical
950
00:27:50,460 –> 00:27:50,480
[paul_tyler]: m
951
00:27:51,201 –> 00:27:55,248
[david_shapiro]: you know we look at you know
look back on twenty years of home price
952
00:27:55,328 –> 00:27:56,029
[david_shapiro]: appreciation
953
00:27:55,548 –> 00:27:55,629
[paul_tyler]: what
954
00:27:56,209 –> 00:27:57,692
[david_shapiro]: you know the last
955
00:27:57,700 –> 00:27:57,760
[paul_tyler]: it
956
00:27:57,772 –> 00:27:57,992
[david_shapiro]: five
957
00:27:57,840 –> 00:27:57,981
[paul_tyler]: was
958
00:27:58,033 –> 00:28:01,458
[david_shapiro]: years are going to level out and
who knows what’s going to happen
959
00:28:01,409 –> 00:28:01,589
[ramsey_d_smith]: yeah
960
00:28:01,518 –> 00:28:05,184
[david_shapiro]: in the future but i mean that’s
the best way for us to analyze anything
961
00:28:05,245 –> 00:28:05,745
[david_shapiro]: is look at where
962
00:28:05,640 –> 00:28:05,863
[paul_tyler]: oh
963
00:28:05,805 –> 00:28:10,153
[david_shapiro]: interest rates have been look at where
home price appreciation has been and then o
964
00:28:10,294 –> 00:28:13,249
[david_shapiro]: make our own view of take our
own view of what the forward looking is
965
00:28:14,211 –> 00:28:14,591
[paul_tyler]: okay well
966
00:28:14,793 –> 00:28:14,914
[david_shapiro]: yeah
967
00:28:14,852 –> 00:28:16,394
[paul_tyler]: maybe let’s just stick there in the
last couple
968
00:28:16,263 –> 00:28:17,173
[david_shapiro]: yeah
969
00:28:16,454 –> 00:28:17,797
[paul_tyler]: few minutes we have about a
970
00:28:17,894 –> 00:28:18,077
[david_shapiro]: yeah
971
00:28:17,937 –> 00:28:22,965
[paul_tyler]: forward looking view of housing now i
don’t judge me on the source but
972
00:28:22,903 –> 00:28:22,923
[david_shapiro]: m
973
00:28:23,005 –> 00:28:23,626
[paul_tyler]: i’m really looking
974
00:28:23,553 –> 00:28:24,103
[david_shapiro]: hm
975
00:28:23,687 –> 00:28:23,747
[paul_tyler]: at
976
00:28:24,119 –> 00:28:24,380
[ramsey_d_smith]: yah
977
00:28:25,289 –> 00:28:25,690
[paul_tyler]: head lind
978
00:28:25,668 –> 00:28:25,808
[ramsey_d_smith]: yah
979
00:28:25,770 –> 00:28:28,254
[paul_tyler]: is rams can pick you can tell
me what new source this is
980
00:28:28,160 –> 00:28:28,180
[ramsey_d_smith]: m
981
00:28:29,055 –> 00:28:34,444
[paul_tyler]: property prices plunge up to twenty percent
across parts of uses buyers
982
00:28:34,123 –> 00:28:34,143
[ramsey_d_smith]: a
983
00:28:34,505 –> 00:28:40,735
[paul_tyler]: shun the market amid buy inflation and
spiking interest rats okay ramsey that was tailing
984
00:28:40,682 –> 00:28:41,219
[ramsey_d_smith]: okay
985
00:28:40,795 –> 00:28:46,204
[paul_tyler]: mail caseshiyeah
986
00:28:42,429 –> 00:28:42,570
[ramsey_d_smith]: gainst
987
00:28:42,523 –> 00:28:42,543
[david_shapiro]: m
988
00:28:42,631 –> 00:28:43,778
[ramsey_d_smith]: that clearly a conservative
989
00:28:43,515 –> 00:28:44,083
[david_shapiro]: hm
990
00:28:43,838 –> 00:28:44,321
[ramsey_d_smith]: new source
991
00:28:45,046 –> 00:28:45,889
[david_shapiro]: yeah yeah
992
00:28:46,545 –> 00:28:48,488
[paul_tyler]: but so david you know what’s the
outlook is
993
00:28:48,523 –> 00:28:49,243
[david_shapiro]: yeah
994
00:28:48,528 –> 00:28:54,196
[paul_tyler]: this you know this rise off of
you pandemic everything low interest rates everybody moving
995
00:28:54,216 –> 00:28:59,465
[paul_tyler]: out of te city now flation comes
up what’s the you if we are going
996
00:28:59,485 –> 00:29:03,734
[paul_tyler]: to invest in your enterprise how do
you how do you look at the housing
997
00:29:03,774 –> 00:29:04,515
[paul_tyler]: market over the next
998
00:29:04,619 –> 00:29:04,880
[ramsey_d_smith]: oh
999
00:29:05,057 –> 00:29:05,758
[paul_tyler]: ten twenty years
1000
00:29:06,043 –> 00:29:06,523
[david_shapiro]: sure and
1001
00:29:06,659 –> 00:29:06,860
[ramsey_d_smith]: oh
1002
00:29:06,904 –> 00:29:11,131
[david_shapiro]: you know for our investors you know
they don’t really care about the next three
1003
00:29:11,191 –> 00:29:12,193
[david_shapiro]: years they’re looking
1004
00:29:12,180 –> 00:29:12,544
[paul_tyler]: oh
1005
00:29:12,313 –> 00:29:17,321
[david_shapiro]: out you know that we expect that
the average duration on any one is going
1006
00:29:17,381 –> 00:29:18,624
[david_shapiro]: to be you know
1007
00:29:18,660 –> 00:29:18,882
[paul_tyler]: oh
1008
00:29:19,505 –> 00:29:20,707
[david_shapiro]: eight to twelve years
1009
00:29:20,400 –> 00:29:20,705
[paul_tyler]: oh
1010
00:29:20,827 –> 00:29:24,594
[david_shapiro]: something like that right so and that’s
why it’s good for insurance companies it’s a
1011
00:29:24,654 –> 00:29:25,575
[david_shapiro]: great long asset
1012
00:29:25,470 –> 00:29:25,673
[paul_tyler]: yes
1013
00:29:25,715 –> 00:29:27,238
[david_shapiro]: to put on their balance sheets to
match up
1014
00:29:27,210 –> 00:29:27,960
[paul_tyler]: oh
1015
00:29:27,318 –> 00:29:29,301
[david_shapiro]: against annuity liabilities life
1016
00:29:29,130 –> 00:29:30,720
[paul_tyler]: yeah
1017
00:29:29,381 –> 00:29:33,929
[david_shapiro]: liability it’s perfect for them so when
you look out i don’t think
1018
00:29:33,929 –> 00:29:35,099
[ramsey_d_smith]: my
1019
00:29:33,989 –> 00:29:37,315
[david_shapiro]: that there’s going to be this huge
bubble that’s going to burst i think that
1020
00:29:37,816 –> 00:29:38,957
[david_shapiro]: we’re going to go from
1021
00:29:38,610 –> 00:29:38,895
[paul_tyler]: yeah
1022
00:29:39,639 –> 00:29:44,346
[david_shapiro]: you know eighteen and twenty percent crazy
home price appreciation
1023
00:29:43,830 –> 00:29:44,134
[paul_tyler]: oh
1024
00:29:44,887 –> 00:29:46,069
[david_shapiro]: down to you know
1025
00:29:46,799 –> 00:29:47,413
[ramsey_d_smith]: ye
1026
00:29:47,412 –> 00:29:48,513
[david_shapiro]: two three four
1027
00:29:48,270 –> 00:29:48,571
[paul_tyler]: oh
1028
00:29:48,894 –> 00:29:50,056
[david_shapiro]: i mean you know we
1029
00:29:50,099 –> 00:29:50,662
[ramsey_d_smith]: oh
1030
00:29:50,176 –> 00:29:51,178
[david_shapiro]: track that data
1031
00:29:51,870 –> 00:29:52,323
[paul_tyler]: my
1032
00:29:52,039 –> 00:29:54,363
[david_shapiro]: every quarter we get up dated forward
1033
00:29:54,360 –> 00:29:55,440
[paul_tyler]: oh
1034
00:29:54,423 –> 00:29:55,365
[david_shapiro]: looking views on
1035
00:29:55,319 –> 00:29:55,583
[ramsey_d_smith]: oh
1036
00:29:55,665 –> 00:29:56,807
[david_shapiro]: on home price appreciation
1037
00:29:56,941 –> 00:29:57,022
[ramsey_d_smith]: no
1038
00:29:57,609 –> 00:30:02,657
[david_shapiro]: and what we’ve seen the trend over
the last two quarters is that the urban
1039
00:30:02,917 –> 00:30:09,228
[david_shapiro]: areas are still holding at very loud
forward looking h p s like we we
1040
00:30:09,368 –> 00:30:12,273
[david_shapiro]: cap our assumption at four per cent
but but
1041
00:30:12,232 –> 00:30:12,435
[ramsey_d_smith]: yes
1042
00:30:12,553 –> 00:30:13,735
[david_shapiro]: what we’re finding is there’s
1043
00:30:13,678 –> 00:30:13,779
[paul_tyler]: it
1044
00:30:13,796 –> 00:30:19,405
[david_shapiro]: still areas that are six eight you
know whatever the rural areas are the areas
1045
00:30:19,505 –> 00:30:20,326
[david_shapiro]: that have softened
1046
00:30:20,370 –> 00:30:21,060
[paul_tyler]: oh
1047
00:30:20,647 –> 00:30:26,637
[david_shapiro]: and they’ve dropped you know anywhere from
you know half a per cent to one
1048
00:30:26,677 –> 00:30:27,038
[david_shapiro]: and a half
1049
00:30:26,910 –> 00:30:27,131
[paul_tyler]: yes
1050
00:30:27,118 –> 00:30:30,904
[david_shapiro]: per cent and we’re just seeing the
flight that pandemic led
1051
00:30:30,810 –> 00:30:31,052
[paul_tyler]: oh
1052
00:30:31,004 –> 00:30:34,089
[david_shapiro]: to people getting out of the city
you know most
1053
00:30:34,050 –> 00:30:34,273
[paul_tyler]: oh
1054
00:30:34,149 –> 00:30:34,210
[david_shapiro]: of
1055
00:30:34,199 –> 00:30:34,504
[ramsey_d_smith]: oh
1056
00:30:34,250 –> 00:30:39,078
[david_shapiro]: those people are gone and you know
the rural areas are the ones that are
1057
00:30:39,639 –> 00:30:45,749
[david_shapiro]: suffering right now but now long term
i think it’s going to normalize and investors
1058
00:30:45,809 –> 00:30:45,989
[david_shapiro]: in our
1059
00:30:46,049 –> 00:30:46,919
[ramsey_d_smith]: yeah
1060
00:30:46,069 –> 00:30:49,775
[david_shapiro]: product i don’t think are are you
know they care a little bit about the
1061
00:30:49,836 –> 00:30:50,316
[david_shapiro]: short term
1062
00:30:50,219 –> 00:30:50,319
[ramsey_d_smith]: ye
1063
00:30:50,376 –> 00:30:53,502
[david_shapiro]: but they really are looking for long
term return long term investments
1064
00:30:53,669 –> 00:30:53,932
[ramsey_d_smith]: oh
1065
00:30:55,800 –> 00:30:56,610
[paul_tyler]: yeah
1066
00:30:56,804 –> 00:30:56,947
[david_shapiro]: yep
1067
00:30:56,870 –> 00:30:58,372
[paul_tyler]: interest now here’s a curve
1068
00:30:58,180 –> 00:30:58,200
[ramsey_d_smith]: m
1069
00:30:58,412 –> 00:30:59,314
[paul_tyler]: ball so our
1070
00:30:59,288 –> 00:30:59,309
[ramsey_d_smith]: m
1071
00:30:59,354 –> 00:31:03,621
[paul_tyler]: mutual acquaintance kinjjqoyis going o come up
to a form we have next week in
1072
00:31:03,661 –> 00:31:05,724
[paul_tyler]: one of the panels is discussion is
on
1073
00:31:05,669 –> 00:31:05,930
[ramsey_d_smith]: yeah
1074
00:31:05,985 –> 00:31:09,591
[paul_tyler]: climate and what that means for retirement
so climate housing
1075
00:31:09,388 –> 00:31:09,509
[ramsey_d_smith]: yeah
1076
00:31:09,631 –> 00:31:11,995
[paul_tyler]: i just watched this house get washed
away in
1077
00:31:11,943 –> 00:31:11,984
[ramsey_d_smith]: he
1078
00:31:12,055 –> 00:31:12,936
[paul_tyler]: yellowstone right
1079
00:31:13,673 –> 00:31:13,796
[david_shapiro]: yeah
1080
00:31:14,078 –> 00:31:19,527
[paul_tyler]: you know with a flooding um what’s
what’s how do you how are you goin
1081
00:31:19,567 –> 00:31:25,536
[paul_tyler]: approach and look at values of homes
in areas that may be impacted by climate
1082
00:31:25,576 –> 00:31:25,956
[paul_tyler]: may not just
1083
00:31:26,012 –> 00:31:26,177
[ramsey_d_smith]: yes
1084
00:31:26,016 –> 00:31:27,018
[paul_tyler]: be coast hilarious right
1085
00:31:27,083 –> 00:31:27,926
[david_shapiro]: yeah yeah yeah yeah
1086
00:31:28,470 –> 00:31:28,670
[paul_tyler]: middle
1087
00:31:28,589 –> 00:31:28,730
[david_shapiro]: yeah
1088
00:31:28,731 –> 00:31:32,103
[paul_tyler]: mountains rybrok new york where i am
right it’s a
1089
00:31:32,103 –> 00:31:32,784
[david_shapiro]: yeah yeah
1090
00:31:32,806 –> 00:31:32,968
[ramsey_d_smith]: yes
1091
00:31:33,247 –> 00:31:33,408
[paul_tyler]: yeah
1092
00:31:33,645 –> 00:31:36,189
[david_shapiro]: yeah you know the answer is
1093
00:31:36,638 –> 00:31:36,659
[ramsey_d_smith]: m
1094
00:31:37,712 –> 00:31:43,802
[david_shapiro]: the question is not one that we’re
going to answer because it’s the investor right
1095
00:31:44,363 –> 00:31:47,809
[david_shapiro]: so you know when we talk to
investors and you know
1096
00:31:47,849 –> 00:31:48,899
[ramsey_d_smith]: yeah
1097
00:31:48,129 –> 00:31:51,715
[david_shapiro]: to finance our product you know we
can’t use warehouse financing
1098
00:31:51,293 –> 00:31:51,313
[ramsey_d_smith]: i
1099
00:31:51,755 –> 00:31:54,981
[david_shapiro]: because there’s no interest rate on our
product right there’s no cash flows on the
1100
00:31:55,021 –> 00:31:55,341
[david_shapiro]: product
1101
00:31:55,529 –> 00:31:55,870
[ramsey_d_smith]: yes
1102
00:31:55,722 –> 00:31:57,886
[david_shapiro]: so we we what’s forward flow agreements
which is
1103
00:31:57,940 –> 00:31:58,041
[ramsey_d_smith]: ah
1104
00:31:59,248 –> 00:32:00,770
[david_shapiro]: financing where an
1105
00:32:00,840 –> 00:32:00,963
[paul_tyler]: ye
1106
00:32:00,850 –> 00:32:01,331
[david_shapiro]: investor
1107
00:32:01,079 –> 00:32:01,829
[ramsey_d_smith]: yeah
1108
00:32:01,451 –> 00:32:04,877
[david_shapiro]: advances us the money to fund the
equity
1109
00:32:04,830 –> 00:32:06,579
[paul_tyler]: oh
1110
00:32:05,358 –> 00:32:09,505
[david_shapiro]: and then we sell that asset back
to them so you know we can provide
1111
00:32:09,525 –> 00:32:10,967
[david_shapiro]: them guidance but they’re the
1112
00:32:10,950 –> 00:32:11,030
[paul_tyler]: and
1113
00:32:11,067 –> 00:32:16,537
[david_shapiro]: ones like there’s one insurance company that
you know just is scared to death that
1114
00:32:16,737 –> 00:32:22,286
[david_shapiro]: california is going to burn and doesn’t
want more then like a ten percent exposure
1115
00:32:22,346 –> 00:32:22,947
[david_shapiro]: to california
1116
00:32:22,769 –> 00:32:23,849
[ramsey_d_smith]: yeah
1117
00:32:23,007 –> 00:32:27,435
[david_shapiro]: real estate so we just have to
fill you know if we were to take
1118
00:32:27,515 –> 00:32:32,944
[david_shapiro]: capital from them we’d have a much
smaller box to fill so it’s clearly a
1119
00:32:32,984 –> 00:32:33,405
[david_shapiro]: problem
1120
00:32:33,540 –> 00:32:34,920
[paul_tyler]: yeah
1121
00:32:34,387 –> 00:32:39,036
[david_shapiro]: and the investors are the ones that
are going to define you know very specifically
1122
00:32:39,337 –> 00:32:41,200
[david_shapiro]: how how much of a concern that
1123
00:32:41,159 –> 00:32:41,382
[ramsey_d_smith]: oh
1124
00:32:41,261 –> 00:32:41,721
[david_shapiro]: is to them
1125
00:32:43,439 –> 00:32:47,085
[ramsey_d_smith]: so i mean as i listened to
you it’s i mean it’s remarkable you you’re
1126
00:32:47,145 –> 00:32:49,469
[ramsey_d_smith]: serving many masters here right you’ve got
1127
00:32:49,274 –> 00:32:49,417
[david_shapiro]: yeah
1128
00:32:50,110 –> 00:32:55,849
[ramsey_d_smith]: you’ve got the consumer you have you’re
certainly going to have regulators and
1129
00:32:56,229 –> 00:32:56,250
[paul_tyler]: m
1130
00:32:56,593 –> 00:32:56,854
[david_shapiro]: oh
1131
00:32:56,819 –> 00:33:02,168
[ramsey_d_smith]: and you have you have investors and
you have lots of different types of investors
1132
00:33:02,508 –> 00:33:07,476
[ramsey_d_smith]: the person that’s going to buy the
top conches the insurance company and be very
1133
00:33:07,516 –> 00:33:09,940
[ramsey_d_smith]: differ than the people that buy by
the risk of your trenches
1134
00:33:10,446 –> 00:33:10,993
[david_shapiro]: hm
1135
00:33:10,521 –> 00:33:15,009
[ramsey_d_smith]: when you talk about what you just
said there that that some some of those
1136
00:33:15,209 –> 00:33:18,835
[ramsey_d_smith]: some of those investors are going to
want to kind of pass out certain certain
1137
00:33:18,895 –> 00:33:19,957
[ramsey_d_smith]: regions and things like that
1138
00:33:20,093 –> 00:33:20,215
[david_shapiro]: yeah
1139
00:33:20,340 –> 00:33:20,645
[paul_tyler]: oh
1140
00:33:20,418 –> 00:33:20,438
[ramsey_d_smith]: i
1141
00:33:20,479 –> 00:33:20,601
[david_shapiro]: yeah
1142
00:33:20,498 –> 00:33:23,643
[ramsey_d_smith]: mean it becomes a you know in
some sense it becomes a very
1143
00:33:23,608 –> 00:33:23,629
[paul_tyler]: a
1144
00:33:23,723 –> 00:33:25,526
[ramsey_d_smith]: sort of complicated puzzle it’s
1145
00:33:25,574 –> 00:33:26,083
[david_shapiro]: define
1146
00:33:25,587 –> 00:33:26,789
[ramsey_d_smith]: definitely a complicated puzzle
1147
00:33:27,003 –> 00:33:27,144
[david_shapiro]: yeah
1148
00:33:27,650 –> 00:33:29,934
[ramsey_d_smith]: but you know sometimes complexity there’s a
situation you know
1149
00:33:29,940 –> 00:33:30,241
[paul_tyler]: oh
1150
00:33:29,974 –> 00:33:32,698
[ramsey_d_smith]: if you know with that kind of
value add you may
1151
00:33:32,730 –> 00:33:32,977
[paul_tyler]: yes
1152
00:33:32,819 –> 00:33:33,880
[ramsey_d_smith]: you know you may ultimately
1153
00:33:33,750 –> 00:33:33,770
[paul_tyler]: m
1154
00:33:34,121 –> 00:33:36,665
[ramsey_d_smith]: be you know well compensated for that
i know if you can talk about it
1155
00:33:36,725 –> 00:33:42,996
[ramsey_d_smith]: but what as you talk to investors
what kinds of return bogies are they looking
1156
00:33:43,076 –> 00:33:47,144
[ramsey_d_smith]: for in what are you are you
giving them as a range is that
1157
00:33:47,183 –> 00:33:47,363
[david_shapiro]: well
1158
00:33:47,184 –> 00:33:47,686
[ramsey_d_smith]: something you can
1159
00:33:48,044 –> 00:33:48,204
[david_shapiro]: yeah
1160
00:33:48,348 –> 00:33:48,730
[ramsey_d_smith]: discuss
1161
00:33:48,425 –> 00:33:49,727
[david_shapiro]: yeah it’s interesting
1162
00:33:49,312 –> 00:33:50,295
[ramsey_d_smith]: or is that the secret sauce
1163
00:33:50,088 –> 00:33:51,390
[david_shapiro]: no no it’s interesting
1164
00:33:51,469 –> 00:33:51,614
[ramsey_d_smith]: yeah
1165
00:33:51,650 –> 00:33:58,281
[david_shapiro]: and i personally think that there’s a
lot of gold in the in the complexity
1166
00:33:58,421 –> 00:34:02,789
[david_shapiro]: because people that don’t you know this
is a huge market right it’s probably the
1167
00:34:02,829 –> 00:34:04,812
[david_shapiro]: largest asset class out there right
1168
00:34:05,100 –> 00:34:05,241
[paul_tyler]: yeah
1169
00:34:05,313 –> 00:34:10,281
[david_shapiro]: so coming up with a complex solution
in an asset class that is in the
1170
00:34:10,662 –> 00:34:16,411
[david_shapiro]: you know trillions and trillions of dollars
is worth the work associated with it so
1171
00:34:16,530 –> 00:34:16,796
[paul_tyler]: oh
1172
00:34:16,972 –> 00:34:17,453
[david_shapiro]: i don’t mind
1173
00:34:17,460 –> 00:34:17,701
[paul_tyler]: oh
1174
00:34:17,533 –> 00:34:22,602
[david_shapiro]: complexity doesn’t bother me at all i
mean it does not fare well for us
1175
00:34:22,862 –> 00:34:28,872
[david_shapiro]: right trying to raise capital from a
venture investor it is too complicated for venture
1176
00:34:28,772 –> 00:34:28,854
[paul_tyler]: ah
1177
00:34:28,932 –> 00:34:29,373
[david_shapiro]: investors
1178
00:34:29,490 –> 00:34:29,731
[paul_tyler]: yes
1179
00:34:29,553 –> 00:34:29,654
[david_shapiro]: and
1180
00:34:29,639 –> 00:34:30,329
[ramsey_d_smith]: yeah
1181
00:34:29,774 –> 00:34:31,777
[david_shapiro]: i’m too old for adventure investors anyway
1182
00:34:31,829 –> 00:34:32,489
[ramsey_d_smith]: yeah
1183
00:34:32,138 –> 00:34:33,720
[david_shapiro]: so but the
1184
00:34:33,741 –> 00:34:33,881
[paul_tyler]: yeah
1185
00:34:33,780 –> 00:34:39,630
[david_shapiro]: strategic investors that see the value of
this particularly those that have distribution you know
1186
00:34:39,750 –> 00:34:47,223
[david_shapiro]: the insurance companies um you know it’s
fine now the really important question is the
1187
00:34:47,303 –> 00:34:51,350
[david_shapiro]: pricing on the product and with interest
rates moving up the cost of equity is
1188
00:34:51,390 –> 00:34:56,198
[david_shapiro]: going to move up so it’s not
dollar for dollar you have to look at
1189
00:34:56,558 –> 00:35:00,545
[david_shapiro]: other you can’t just look at the
now two hundred and fifty or three hundred
1190
00:35:00,605 –> 00:35:05,894
[david_shapiro]: basis point rise in interest rates as
a guide to how much the equity cost
1191
00:35:05,994 –> 00:35:10,321
[david_shapiro]: should be because that really needs to
be a function of h p a credit
1192
00:35:10,381 –> 00:35:15,590
[david_shapiro]: risk stuff that right so we do
think that there will be a relationship in
1193
00:35:15,650 –> 00:35:22,101
[david_shapiro]: the cost of equity to to that
that right now it’s much more narrow than
1194
00:35:22,161 –> 00:35:26,809
[david_shapiro]: it’s ever been because we haven’t had
any pricing impact but we’re going to in
1195
00:35:26,829 –> 00:35:28,832
[david_shapiro]: the next few months and we think
that
1196
00:35:29,072 –> 00:35:29,153
[paul_tyler]: ah
1197
00:35:29,253 –> 00:35:33,460
[david_shapiro]: you know we’ll probably go from a
nine percent i r r to the investor
1198
00:35:33,560 –> 00:35:34,902
[david_shapiro]: to probably something closer to a
1199
00:35:34,919 –> 00:35:34,939
[ramsey_d_smith]: m
1200
00:35:35,163 –> 00:35:37,086
[david_shapiro]: per cent i r r but
1201
00:35:37,166 –> 00:35:37,829
[ramsey_d_smith]: hm
1202
00:35:37,286 –> 00:35:40,031
[david_shapiro]: it’s not going to be it’s not
going to be two or three hundred bass
1203
00:35:40,071 –> 00:35:40,972
[david_shapiro]: points and
1204
00:35:41,001 –> 00:35:41,505
[ramsey_d_smith]: sure i just
1205
00:35:41,493 –> 00:35:41,573
[david_shapiro]: and
1206
00:35:41,546 –> 00:35:42,575
[ramsey_d_smith]: for right
1207
00:35:42,435 –> 00:35:46,602
[david_shapiro]: it’s the same the same the same
problem that anyone is going to have interest
1208
00:35:46,662 –> 00:35:48,326
[david_shapiro]: rates ye entirely you’re going
1209
00:35:48,139 –> 00:35:48,283
[ramsey_d_smith]: yeah
1210
00:35:48,386 –> 00:35:49,510
[david_shapiro]: up so i don’t think we get
singled
1211
00:35:49,411 –> 00:35:49,512
[ramsey_d_smith]: ah
1212
00:35:49,570 –> 00:35:49,670
[david_shapiro]: out
1213
00:35:50,890 –> 00:35:50,970
[ramsey_d_smith]: so
1214
00:35:51,060 –> 00:35:51,181
[paul_tyler]: uh
1215
00:35:51,271 –> 00:35:54,724
[ramsey_d_smith]: for the benefit of our our audience
when you say h pa that’s home price
1216
00:35:54,754 –> 00:35:54,915
[david_shapiro]: price
1217
00:35:54,785 –> 00:35:55,327
[ramsey_d_smith]: appreciation
1218
00:35:54,996 –> 00:35:56,708
[david_shapiro]: appreciation yeah yeah
1219
00:35:57,020 –> 00:35:57,241
[ramsey_d_smith]: okay
1220
00:35:57,220 –> 00:35:57,460
[paul_tyler]: okay
1221
00:35:57,462 –> 00:35:57,763
[ramsey_d_smith]: all right
1222
00:35:57,845 –> 00:35:58,810
[david_shapiro]: yeah exactly
1223
00:35:58,783 –> 00:35:58,963
[paul_tyler]: well
1224
00:35:59,168 –> 00:35:59,309
[ramsey_d_smith]: eh
1225
00:35:59,364 –> 00:36:00,566
[paul_tyler]: well this is a great conversation
1226
00:36:00,308 –> 00:36:01,269
[ramsey_d_smith]: m yeah
1227
00:36:01,087 –> 00:36:06,697
[paul_tyler]: ramsey any other thoughts or questions this
is a very different take on a common
1228
00:36:06,777 –> 00:36:07,658
[paul_tyler]: problem people have
1229
00:36:08,459 –> 00:36:11,884
[ramsey_d_smith]: like i i grew up in a
world of financial
1230
00:36:11,842 –> 00:36:11,863
[david_shapiro]: m
1231
00:36:11,945 –> 00:36:17,213
[ramsey_d_smith]: complexity so i always find these things
you know very interesting at the same time
1232
00:36:17,354 –> 00:36:22,823
[ramsey_d_smith]: you know i always now and my
my post complex career i also focus on
1233
00:36:22,863 –> 00:36:23,063
[ramsey_d_smith]: and well
1234
00:36:22,980 –> 00:36:23,940
[paul_tyler]: oh
1235
00:36:23,083 –> 00:36:24,205
[ramsey_d_smith]: how do we how do you make
1236
00:36:24,120 –> 00:36:24,812
[paul_tyler]: oh
1237
00:36:24,245 –> 00:36:25,748
[ramsey_d_smith]: it sort of palatable for the consumer
1238
00:36:25,890 –> 00:36:26,760
[paul_tyler]: oh
1239
00:36:26,068 –> 00:36:29,854
[ramsey_d_smith]: and and i thought it was very
interesting that you were very clear from the
1240
00:36:29,894 –> 00:36:34,121
[ramsey_d_smith]: beginning that the distribution here is though
someone like a financial advisor that
1241
00:36:34,043 –> 00:36:34,184
[david_shapiro]: yeah
1242
00:36:34,162 –> 00:36:38,769
[ramsey_d_smith]: can can put it make it part
of a menu and help a help a
1243
00:36:38,829 –> 00:36:43,517
[ramsey_d_smith]: consumer get to the get to the
right place i think i agree with you
1244
00:36:43,798 –> 00:36:44,723
[ramsey_d_smith]: that fun mentally
1245
00:36:44,383 –> 00:36:44,486
[paul_tyler]: met
1246
00:36:44,865 –> 00:36:50,806
[ramsey_d_smith]: that that that the house value being
house poor is like a big problem especially
1247
00:36:50,826 –> 00:36:53,050
[ramsey_d_smith]: in places like california where you know
where you live
1248
00:36:53,359 –> 00:36:53,893
[david_shapiro]: hm
1249
00:36:54,060 –> 00:36:54,282
[paul_tyler]: yeah
1250
00:36:54,192 –> 00:36:59,140
[ramsey_d_smith]: and so people need solutions people need
solutions there and so new and creative ones
1251
00:36:59,200 –> 00:37:01,603
[ramsey_d_smith]: i think are are great to have
1252
00:37:01,650 –> 00:37:03,060
[paul_tyler]: oh
1253
00:37:01,663 –> 00:37:05,547
[ramsey_d_smith]: and again i keep on going through
the formula in my head i’ve got it
1254
00:37:05,608 –> 00:37:07,230
[ramsey_d_smith]: now sure i got it now
1255
00:37:07,230 –> 00:37:08,670
[paul_tyler]: oh
1256
00:37:08,091 –> 00:37:08,292
[ramsey_d_smith]: um
1257
00:37:08,212 –> 00:37:08,750
[david_shapiro]: m ah
1258
00:37:09,013 –> 00:37:13,300
[ramsey_d_smith]: and and anyway good luck with good
luck with your journey it sounds like you’ve
1259
00:37:13,320 –> 00:37:18,228
[ramsey_d_smith]: been at it for a while and
and you’re bring you know another another solution
1260
00:37:18,470 –> 00:37:19,220
[ramsey_d_smith]: market which is great
1261
00:37:19,293 –> 00:37:21,066
[david_shapiro]: yeah exactly well thanks for having
1262
00:37:21,020 –> 00:37:21,180
[paul_tyler]: yeah
1263
00:37:21,086 –> 00:37:21,328
[david_shapiro]: me guys
1264
00:37:22,082 –> 00:37:25,070
[paul_tyler]: hey well david thanks so much and
and if people want to get in touch
1265
00:37:25,110 –> 00:37:28,098
[paul_tyler]: with you or learn more about the
company where should they go
1266
00:37:28,903 –> 00:37:30,185
[david_shapiro]: uhequifi dot com
1267
00:37:30,030 –> 00:37:30,485
[paul_tyler]: oh
1268
00:37:30,586 –> 00:37:31,908
[david_shapiro]: is the easiest just
1269
00:37:32,549 –> 00:37:32,792
[ramsey_d_smith]: my
1270
00:37:32,549 –> 00:37:34,032
[david_shapiro]: it’s a contraction of equity
1271
00:37:33,927 –> 00:37:34,049
[ramsey_d_smith]: right
1272
00:37:34,072 –> 00:37:34,573
[david_shapiro]: in finance
1273
00:37:34,649 –> 00:37:34,890
[ramsey_d_smith]: oh
1274
00:37:34,993 –> 00:37:40,122
[david_shapiro]: q u i f i dot com
we’re on linked in were on facebook so
1275
00:37:40,262 –> 00:37:40,727
[david_shapiro]: easy in
1276
00:37:41,510 –> 00:37:41,830
[paul_tyler]: okay good
1277
00:37:41,849 –> 00:37:41,990
[ramsey_d_smith]: yeah
1278
00:37:41,910 –> 00:37:42,070
[paul_tyler]: we’ll
1279
00:37:42,043 –> 00:37:42,166
[david_shapiro]: yeah
1280
00:37:42,090 –> 00:37:43,772
[paul_tyler]: put that in show so listen david
thanks
1282
00:37:43,832 –> 00:37:46,654
[paul_tyler]: so much ramsey it was great and
for all the listeners to keep the
1283
00:37:46,619 –> 00:37:47,369
[ramsey_d_smith]: yeah
1284
00:37:46,674 –> 00:37:51,919
[paul_tyler]: feedback coming and join us again next
week for another episode of that annuity show
The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.
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