The Legal Zone (S3:E5): What is a Certified Divorce Lending Professional and How Can They Help You?

Transcript

Host: Regina M. Campbell, Esq., The Campbell Law Group (TCLG)

Guest: John Marroni, Certified Divorce Lending Professional (CDLP)

Introduction

Regina Campbell: Hi everybody, good afternoon. I'm Regina Campbell, your host here at The Legal Zone. We want to welcome everybody back for our Season 3, Episode 5. We have a wonderful guest speaker today, Mr. John Marroni. We will introduce him in a moment and give you a little bit of information. But first we want to talk a little bit about our prior speaker.

Our last speaker, in case you missed it, was Mr. Jeffrey Landers. He was able to give us information and advice regarding whether to keep or sell a marital home. Please go ahead and check our last episode. There were some great tips on how to do so, and things that you should be giving consideration if you're going through a divorce, as to what to do with the marital home, which is often the biggest asset that the parties have. So there's a lot of great tips and information. If you missed it, by all means, go back and look at it on the podcast or any of the locations where you receive your podcasts.

But today I have the pleasure to introduce you to Mr. John Marroni. We're going to switch our conversation today, and the topic of today is what is a certified divorce lending professional and how they can help you. So just a little bit about Mr. Marroni before I bring him on. He's adept at helping family lawyers guide their divorcing clients in making informed decisions regarding mortgage equity solutions and mortgage planning options before, during and after the divorce, basically.

In 1995, Mr. Marroni left his career as an engineer to seek more flexibility in his life and become a mortgage broker. He built his career as a broker in Boston, and he basically started his brokerage company from the ground up, and his business grew very quickly. Mr. Marroni also has a technical background. He was amazed at how difficult the mortgage industry had become, with financing and all the different options and the complications surrounding the different mortgage options, and the industry in general. So he quickly achieved rapid success by simplifying the process for others, which is one of his gifts.

And I'm sure many of us would find that wonderful, because the process is difficult. It's great that someone can break it down for us to understand and learn. His main goal is to continue simplifying the mortgage process. He takes his time to understand his clients' situations and goals, and he creates streamlined plans to help others reach their objectives. His niche areas include complicated loans for first-time buyers, self-employed borrowers, and also developing home lending solutions for divorcing couples. We want to welcome Mr. Marroni.

John Marroni: Hi. Hello. Thanks for having me.

Regina Campbell: No, thank you for coming on to The Legal Zone. It's a pleasure, and I think you bring great insight to this topic and will probably be able to help a lot of our viewers out there. So let's start off by discussing what the importance is of having a certified divorce lending professional, for instance, during a high-net-worth divorce proceeding.

Why bring in a CDLP early

John Marroni: Yes. So let me just back up a little before we talk. You introduced me and you mentioned that I was an engineer prior to going into mortgages. So yes, I was in engineering. I actually worked on the Patriot missile system at Raytheon. And when I left and came into mortgages, I was totally amazed by the mortgage industry, how they took something so simple as lending money and complicated the heck out of it. I'm like, "Guys, this is not rocket science. You're just lending money."

Think about the next biggest purchase someone makes other than a home, and that's an automobile, and think about that financing process. I'm talking after they agree upon the price. The person walks into the business office and gives them all the information, and the business person says, "You are approved. It's 10 a.m. now. We'll have the car washed by 11, and at noon you're driving out." That simple. And I'm thinking, why can't buying a home be so simple?

And I have simplified the process, where when someone says, "How do I know what I qualify for?" I say, "Well, we have to break the ICE." It's an acronym I made up: income, credit, equity. If I know those three things, I know exactly what I can do for you. And over the years I've always worked with self-employed borrowers, first-time homebuyers and divorcing couples. Then over the last three years, I got my certification as a certified divorce lending professional, and what that does is take a deeper dive, looking at divorcing couples and different types of strategies.

So what I encourage is for me to get involved with the family law attorney, so I can help them regarding the divorcing couple's home equity solutions. I'll give you an example of what that means. Let's say the husband wants to move on. He's on the property. He's on the mortgage. They don't want to refinance because the rates are low right now. But he's worried about not being able to qualify because he's on the other mortgage.

And I said, "Not a problem. As long as we put in the settlement agreement the language that the wife is responsible for the mortgage from day one, I do not have to debt him for that mortgage payment, even though it shows up in the credit report." A lot of people don't realize that. So yes, it shows up in the credit report, but because it's in the settlement agreement, I don't have to debt him. If it was not in the settlement agreement, then we would have to show that the wife was making payments out of her own account for 12 months. At that point I wouldn't have to debt him.

So that's one example as to why you need to get a certified divorce lending professional early on in the process. Because when it comes to the divorce, in terms of the real estate piece, there are really four pieces to the divorce. There's the family law piece, which helps put together the settlement agreement so that it gets accepted by the courts. There's the financial plan and the tax implications. There's the real property itself, and then there's the mortgage plan, and you want to put all four of those together.

And you're asking a divorcing couple who's in the most emotionally charged state of their lives to put those pieces together, and they're probably not an expert in any of those areas. So the divorce mortgage professional, we take a holistic approach and we look at all those areas, and I'll get involved with the family law attorney and the financial planner.

I had a situation where right off the bat, the husband and wife said, "We're going to sell everything right now." And they happened to have a second home not too far away from where the husband and wife live. And I said, "Listen, if you sell that second home, your vacation home, if you sell it now, you're going to be paying all kinds of capital gains taxes. But if you live there for two years as your primary residence, commute to work, then sell it, the tax code says at that point that was your primary residence. You're going to save a lot more on capital gains tax."

And I think it comes down to those four pieces that I mentioned: the real estate person, myself and the lawyer, we're all looking at it, and we have different perspectives as to how we're looking at it. The family law attorney is looking at it in terms of the legal part. I'll look at the whole thing, and just be cognizant of things like tax implications, and also how to put together the agreement so that we can set them up post-divorce. Because it turns out that there is life after divorce, and we want to set the divorcing couple up in the best light possible. So that's a long-winded answer to your question.

Regina Campbell: No worries. It actually brought me to think of a couple of things, because as a divorce attorney, I've had conversations with other speakers and other parties and attorneys, and I deal a lot with the accountants. And the question, even when you're trying to write up a deal, is very stressful sometimes: "Well, if you keep the house, how can I get another home? It's not fair to me. I have to wait for you, maybe five years, to qualify yourself for a refinance, or wait for the kids to get out of school. Where do I live? I can't qualify for another mortgage. I can't get a house. I'm in limbo." So it becomes a source of stress.

So the fact that we can bring these potential solutions helps the lawyer, the accountant, the parties, the mortgage lender, everyone, to do a little bit of planning, if it's possible, with at least what the clients may have. So just to hear you say that: is it traditional banks that would take that into consideration? For instance, if we write into an MSA that the wife is responsible for the mortgage, is it traditional banks that accept that and take it off, for instance, the husband's debt-to-income ratio?

John Marroni: Yep, absolutely. That's the agency: Fannie Mae, Freddie Mac.

Regina Campbell: Okay. I was wondering if it was private lenders or something a little bit more difficult, more different, right? Or if it was mainstream lenders. That's interesting.

Creating qualifying income

John Marroni: No, it all comes down to this: all of us have the tools in the toolbox, and it's a matter of what you use for different strategies. It's kind of like you look at two carpenters. They both have the same tools. You have one that's a master finish carpenter and you've got one that's a rough carpenter, and you want to have your kitchen done. Who are you going to call? Probably the master carpenter, right?

Regina Campbell: Yeah.

John Marroni: So I'll give you another example, which is acceptable to the agencies, in terms of creating income. I had a situation where the wife wasn't working. She didn't have a job. She was a stay-at-home mom. But rather than the husband giving her alimony, he gave her like 500,000 in one lump sum. But she still didn't have a job.

And so we needed to create income. So I took that 500,000 and we created a revocable trust. As long as you can show that whatever distributions they're going to receive will last at least three years, we can use that as income. So in this case we used 9,000 a month. We had a letter from the trustee stating she was going to receive 9,000 a month, we showed one distribution received, and I was able to use that 9,000 for qualifying income, even though she didn't have a job, because I could show that it was going to last at least 36 months. And that was acceptable. That was not portfolio. That was actually Fannie Mae, Freddie Mac, and she got a rate just like everyone else.

Regina Campbell: Well, I'm surprised, because I understand that with alimony, a lot of times I'll make sure whoever's receiving alimony gets it for at least three years, if it's suitable, right? If you're entitled to it in general. I keep that in mind when I'm structuring a deal for that same reason, right? The dependent spouse needs income to be able to qualify for either a mortgage or refinancing of the mortgage, or whatever it is that they might need. I didn't realize that, especially being a revocable trust. I've heard of some people using annuities and other instruments to do that too.

John Marroni: Yep. Absolutely.

Regina Campbell: And then with the revocable trust, I guess you just want to make sure that it has mandatory payments, so there's no discretion, I assume, right?

John Marroni: They can change the distributions after closing if they want. If they feel that nine grand is too much, they can choose to do that as well. It's in the guidelines. So again, it's strategizing based on what you see in the guidelines. If it's acceptable for the agencies, then you just work with it. If the agency is comfortable with it, then we're comfortable with it.

Regina Campbell: Oh yeah, of course. I'm just so surprised to hear that, especially being revocable. Right after you close, you could change the terms.

John Marroni: I know. You know what, I shake my head too, but I said, you know what, they set it up.

Regina Campbell: Yeah, if they approve it, if they permit it. That's very important information, because most of the time you think you have to get into an irrevocable situation, or a situation where you don't have control over it, right? That's usually what banks want. That's why it's hard. You can have $10 million in the bank and not actually have income, other than maybe investment income, and they don't even like to include that. You can have assets, but I've heard lenders say, "Well, you can go and spend it tomorrow in Vegas." So they really want to see income rather than assets, even though you can technically pay for the house with your own assets. So we run across these kinds of weird rules sometimes, right? They're kind of scary, and they push people into corners that maybe don't need to exist.

Lending cycles and the agency guidelines

John Marroni: Yes. It's like anything, right? The industry keeps going in cycles. Back in the '90s and early 2000s, we had the no-income-verification products, the no-doc products, and then 2008 happened and they got rid of them. Well, guess what? It's coming back. It's actually here. Wall Street can't help themselves. And as real estate prices go up, a lot of errors get kind of swept under the carpet. If someone's getting in trouble, they can just refinance before it even shows, and then that loan gets paid off, and the investor says, "Wow, these are great-performing loans." So we go in cycles.

Regina Campbell: You know, it's funny you said that, because I was getting that feeling, but I was like, "No, there's no way they're going back there," or in any direction there. But I guess they are.

John Marroni: Yeah. And that happened in the '70s too, where they had the no income verification, and then everything blew up and they said, "Never again." And it came back in the '90s and 2000s, and they said, "Never again." Well, it's here again.

Regina Campbell: Oh my goodness. It's kind of scary if you think about it. I know it worked out great, you know what I mean? It would be great for everyone to be able to have homes and be homeowners, but it becomes a problem, like what happened in 2008.

John Marroni: Exactly.

Regina Campbell: So that's interesting. But if they set the guidelines and you can get someone financed, it does help at the end of the day: your customers, my potential clients, anyone that's going through this. They set up the guidelines, and there's nothing wrong with it. They're doing it. You're not doing anything improper or illegal if you qualify under their guidelines.

John Marroni: Exactly.

Who a CDLP works with: credit and self-employed borrowers

Regina Campbell: So another question. What type of borrower do you work with as a certified divorce lending professional? I assume, of course, divorcing clients, but what do they do? All sorts of business owners? Talk to me a little bit about that demographic.

John Marroni: It's a wide range. I love working with the self-employed borrowers, because that's how I started when I got into it, and first-time homebuyers, not so much divorcing couples at first. But it's just a wide range, and it's a matter of how to get them to qualify. It's all about qualifying.

There are times when, let's say, I'm working with a woman, and she's been home, and the husband's been handling all the finances, and I might get to a point where she has no credit at all. So there's a nice website that I have people go to, to develop credit. It's called Credit Cards, with an S: creditcards.com. People can go on there, and no matter what your credit situation is, you can get a credit card. You could have been foreclosed on yesterday, and there'll be a secured credit card. So the whole idea is to reestablish yourself. Typically, you open up a couple of credit cards, use them like you would for groceries or whatever, but make sure you pay them off every month to get a credit history going. After about six months it'll start showing up on your credit report, and you can reestablish yourself that way.

So every situation is different. It might be a situation where it depends on the time of year. If someone self-employed is about to file their taxes, I'll say, "Let me take a look at it first. I just want to see what you're doing for write-offs." I know I'm not a CPA, but I can tell them, "Check with your CPA. I think you're doing too many write-offs." When I say too many write-offs, I mean, "I don't think it's going to matter if you have an extra 20,000 or not. You're probably still going to pay the same tax. Just double-check with your CPA to see if it's even worth taking that write-off," because what you're doing is taking away your qualifying income.

So yes, there may be a case where they'll pay more taxes, but I say, "Just hold off on the write-offs this year if you want to be able to qualify." Because really, what I'm doing in these examples is pre-approving these people for whatever they want to do going forward. So it's helping them get ahead of it and strategize.

Regina Campbell: So speaking of that, self-employed individuals, depending on whether they're an S corporation, depending on whatever their tax situation is, do you work with them sometimes? Do banks look at distributions? Because typically it just depends on whether they may have basis in that; it's not always necessarily income. What do you do with that? Because you're talking about those different thought processes with businesses, which comes down to the self-employed individual and how that's going to look. What are banks going to look at?

John Marroni: They're going to look to see what notes payable are due in less than 12 months. And if there are, they're going to want to see that there are enough assets to cover that. Otherwise, they'll amortize the whole thing, and they may not qualify. I've also been in situations where notes are payable every 12 months, but that's something that happens every year, and we just get a letter from the CPA, or even the lending institution, explaining, "Yes, this is how we do it every year," and then we'd be able to overlook that.

Depreciation, we're able to add that back toward income. Net carryover losses: maybe a loss that happened a couple of years ago, but they can only write off so much per year. We're able to throw that back in. It's stuff like that. Or a one-time expense: maybe they decided to just pay cash, well, write a check, for a piece of machinery or something instead of financing it. That was a one-time expense, and we could throw that back in to get them income. See, the CPA's job is to hide as much income as possible. Mine's to bring it back.

Regina Campbell: Yeah, exactly. They sometimes could be conflicting interests, so to speak. Because of course they're like, "We want you to pay the least tax possible," and you're like, "Yeah, but I want you to show income. Otherwise you're not getting approved."

John Marroni: Yeah. Oftentimes I'll actually get on the phone with the CPA, and we'll just go through it, and he'll say, "Yeah, we can adjust this this way, we can do this." And CPAs can adjust it to still minimize the tax, with different categories and what have you. I had one where they were writing off all this expense, but there was no depreciation, and the CPA was like, "Oh, you know what, now that I think about it, yeah, we can depreciate some stuff this year, so we'll offset that." Things of that nature.

Regina Campbell: Interesting. Very interesting.

Co-signed loans and which account pays

John Marroni: So one thing I want to mention too, when I'm looking through, trying to pre-approve someone, and even if they're not getting divorced, this is a good strategy. Let's say someone co-signed for their child's auto loan or student loan. That's going to show up on their credit report, and we're going to debt them for it. But as long as the child is on the note with them, if the payments are coming out of the child's checking account, and no one else is on the checking account, for 12 months, then I no longer have to debt them for the student loan or auto loan.

So whether you're going through a divorce or not, I recommend having the payments come out of the child's account, so that 12 months from now you're covered. Because I've seen that happen a couple of times, even with someone trying to refinance. They couldn't qualify because the student loan payments were like 2,000 a month, and it was just putting them over the debt ratio. So I advised them to start making the payments out of the children's account.

And the other thing, now that we're talking about paying out of a checking account: business owners, I see it all the time. They don't really open up a business checking account. They open up a personal account. It's like, you've got to open up a business account, because if you're going to pay that auto loan out of the business, make sure it comes out of the business account. If we show it 12 months out of the business account, I don't have to debt you for that auto loan that shows up, as opposed to if it comes out of your personal account. I see it so many times, where someone says, "Oh, it's my business account." I say, "Yeah, but it's out of your personal account." So you didn't do yourself justice on that.

Regina Campbell: Yeah, and I see that a lot with cars for children. A lot of times parents might put the first car for a child under their name, because they have credit. They finance it, but either the other party is paying for it or, like you're saying, a child's account is paying for it, right? It's good to show that.

The other thing you do want to be a little bit careful with, just from a legal point of view, and you can do some planning with this: you do want to be careful if you're making some of these payments from UTMAs, or whatever kind of account it is, for expenses, because not all expenses are permitted by UTMAs on behalf of the child. So you have to make sure you're also not crossing those potential lines that could get you in trouble. Most of the time it's not an issue. Most children are not going to sue you for doing so, especially if they receive the benefit of it. But if you get a contentious situation, you can actually get the other party potentially suing you for misuse of the funds.

So think ahead, maybe even putting this in an agreement: "The parties agree that this account will be used for this and this," ahead of time, so that it can't be a source of potential litigation or problems down the road. Just from a purely legal point of view, I have seen that it's better in writing, so that neither party can say, "Well, why are you doing that? You're taking the kids' money. You promised to pay for the car, and Johnny's paying for the car." So that can be an issue. I know it's kind of two steps down the road, thinking far ahead, but it actually happens in litigation, especially in family law cases.

John Marroni: No, you've got to think of all that. Absolutely. Just put it all out there. The what-ifs.

Equity buyouts when rates are high

Regina Campbell: Yes. So that's very interesting. So what other kinds of tips do you have when you're doing initial divorce mortgage planning? I think we talked a little bit about how you should do some pre-approval, some planning, in the sense of trying to write an MSA, a marital settlement agreement, in a manner which is favorable for one party, or the other party, to be able to be financed in the future. Thinking about their credit, establishing credit. Is there anything else that you can think of as a tip to help people in their initial planning?

John Marroni: Yeah, something that comes up a lot is, let's say someone wants to do an equity buyout. Say the husband's moving out, and he wants 200,000. And their initial reaction is, "Well, geez, the interest rate is so much higher, and we don't want to do this until the rates come down." And I said, "Okay, well, let's talk about this. You say the rate's so much higher, so what does this mean? You're going to take out 200,000, and naturally the mortgage payment will go up just because now you have a $200,000 larger mortgage balance. But also, because the rate's higher, let's say the payment above and beyond that is another $500 a month." They're like, "Yeah, that's a lot of money."

I said, "Right, let's keep talking. So what does that mean? Wife, how long are you going to be in the house for? Five years. So $500 a month, that's 6,000 a year. That's 30,000 over five years." I looked at the husband and said, "You're going to take 200,000, right?" He's like, "Yeah." I go, "How about 170, to subsidize that $500 a month?"

And he said, "But you know, the 200,000..." I said, "Look, you do realize the only reason why you're getting 200,000 is because the interest rates were so low. The interest rates being so low is what helped the values of these houses go crazy. If the interest rates were not so low, you'd probably only be getting 150,000. And now you're going to get 170." He goes, "Well, 30,000 is a lot of money." And I said, "So is 170, right now, today. Think about this. You want to wait for the rates to drop. Let's say it takes two years. What happens if your wife is in a situation where she's unable to refinance two years from now? Let's say within those two years you need that 170,000. You're self-employed. This 170,000 is going to be consuming you. Your productivity is going to drop like a rock, and that 30,000 is going to be like nothing."

"You take the 170. I understand CDs are paying pretty good these days, four or 5%. Five years from now, there's your $30,000." And then it goes back to your vision, your goal. He said that he wanted to dissolve this marriage and move on at all costs. This is the cost. With this 170 in your pocket and in your lap right now, you're going to be able to just move on and not have to worry, because your name will still be on the mortgage. And so you've got a clean slate. You don't have to worry about the mortgage not being paid on time, and you want to move on.

So you just kind of present that option to them. I know if it was me, if I was in that husband's shoes, I would take the 170. And again, that 200,000 is just because you're lucky, the way the market is. I don't think the housing market will drop in these higher areas, but if it does, and two years from now you've got to redo that, maybe you're not going to get the 200,000.

So it's a solution to the idea of, "We can't do it because the rate's so high." But then it's a matter of going back and saying, "We discussed your vision and goal. This accomplishes it." We never really talked about 170 versus 200. We talked about what life's going to be like after divorce, and you have this nice plan going in, and this $30,000 is stopping you. So those are the conversations that are happening, and I have no problem having that conversation with my clients. People say, "You have clients, not customers?" I say, "Yeah, I have clients." They say, "What's the difference between a customer and a client?" I say, "Well, a customer is always right. A client is someone you save from themselves."

Mediation, the cost of fighting, and the children

Regina Campbell: Yes, correct. And I've had that conversation with my clients on various occasions, even when we're sitting in mediation and we're kind of stuck. And I say, "Okay. If you don't want to necessarily agree, I understand, and there's not anything else I can give you." Maybe there's a small boat you guys have, and we're giving you a little bit more that way. "Okay, no, we're stuck. We're stuck on this 30,000," for instance, to use your example.

And I'm like, "Okay. How much money are you going to spend not settling, continuing to fight to try to force the sale of the house? You're going to be splitting the equity after closing costs, after commission, after you fix it up a little. Let's talk about that cost and how much you're going to end up with. Does that 30 look so big now?" And it's sort of like, "No, you know what, I'll take it. Thank you very much." Because they'd probably lose a lot more than that if they have to force the sale.

Even assuming you agree, and you sell the house and that's part of the agreement, you're going to get less anyway. And so it becomes, "If you're not going to agree, then we have to go to court and tell the court why the wife should be able to stay there. You're going to spend more money on attorney's fees, you have no stability, it could take a year, a year and a half, someone can appeal. That 30,000 looks really good right now, doesn't it?" So it just depends on what the number is.

John Marroni: Yeah. Absolutely.

Regina Campbell: If you put it in those terms, because you're right, ultimately it's like, "I just want this over with." Well, I say, is it at all costs, or at what cost? Where's your break-even? Where's your "I'm done, I can't go past this point"? And I always tell my clients, consider even going past that point, because when you're sitting in a room in mediation, you start thinking about how a judge is going to perceive this evidence and these testimonies. You're running a lot of risk. You really want to look at this from a dynamic point of view, and I think someone like you helps someone do that. The key is you give solutions to our clients, as a family law attorney, on how to do this. "This is doable. This is another solution. It may not be perfect, but it's an option to get what you want." Especially, like you said, if it ends up in front of a judge, you might not like what the judge has to say.

John Marroni: Yeah. It's like you think you have something going. You've got a nice plan, and the judge looks at things totally differently than you did, and you're like, "Why did I even come in here?"

Regina Campbell: Right, exactly. Or even appraisals: "Well, my appraiser said it's worth 210." "Yours said it's worth 180." Okay, so you're going to litigate it. There's a 30,000 difference right there, and a judge might just split the difference. And you're already starting from a premise of half, so it's 15,000 instead of 30, off the top-end value of it. I understand clients are not in the thick of this, not seeing this every day, to see those other angles. You don't get divorced every day. But then they kind of go, "Oh, okay." It's hard. It's an emotional time, like you pointed out, a difficult time, and we try to bring a little bit of sanity to it also.

John Marroni: Yeah, absolutely. On our end, we just try to set the divorcing clients up in the best light possible, because there is life after divorce. And we haven't talked about the children part. At least get this part buttoned down, and then you can enjoy your children as much as you can post-divorce.

Regina Campbell: Right, and potentially you can provide them with a solution, maybe for the children to stay in the house for those five extra years while they finish school.

John Marroni: Exactly. That has value in and of itself, rather than just scorched earth, burn everything down if we have to. When you can present that the kids can stay, here's a solution: "Oh great, Jimmy can finish high school. Susie's in middle school; in five years she'll be done with school."

Regina Campbell: That does hopefully matter to a lot of parents. And it's scary when they go to get divorced. They think to themselves, "Oh, now what do we do? I can't afford this house if you do this, and if you want to do this." But being creative, I think, offers those types of solutions and helps the family overall, hopefully.

John Marroni: Yeah, definitely. Especially since children are watching both parents like a hawk, their behavior and everything, so they're just going to behave accordingly.

Regina Campbell: Oh yeah. And they do. They watch for good and for bad, because they go, "Okay, all right, I see who mom is, I see who dad is." "Mom doesn't like it when I do this, but dad says yes to me." They also learn, for bad, to manipulate as well. They're like, "Oh, but dad doesn't like it when I say this, and mom does." And before you know it, they're getting away with it.

The current mortgage and real estate market

Regina Campbell: So I wanted to ask you: I think we talked a little bit about the current face of the mortgage finance and real estate market. We talked about some lending easing, but at the same time we're in an environment with high interest rates, compared to at least the last five years, seven years, 10 years, pretty much. So what are we doing? How does this change things? Is this due to the general market? What is your view?

John Marroni: I find that the people that can still afford the houses are in a much better situation, because there are fewer people making offers on the home. I have clients say, "Jeez, the interest rates are so high now, I'm going to hold off." I said, "No, no, no, now's your time," because the values of homes are not going down, definitely not in the metropolitan areas. The demand is there. A lot of good jobs.

And plus, the first-time homebuyer, that's a different profile than 20 years ago. Twenty years ago it was someone who was really just starting out in their career and didn't have much saved, income-wise just barely making it. Now it's two professionals in their early 30s doing quite well. They're paying rent of 3,500, 4,000 a month, right? So there's no payment shock for them. Even though the rates are around 7%, the total monthly payment is going to be around what they're paying for rent, so today it's not a big deal.

Where it is a big deal: the folks that were looking for homes two years ago and still haven't found one. When they were looking, the interest rates were below 3%. Now they've seen their purchasing power dwindle by 100,000, based on the monthly mortgage payment. Those people are very upset. The ones just entering the market within the last six months to a year don't know any different, because they were always figuring their monthly payment based on today's rate.

And the demand is there. You have a young couple, they have a baby, the second one's on the way, and they're in a one- or two-bedroom apartment. They have a need. They're going to buy something. It's kind of like if you have a tooth that needs fixing, you go to the dentist. You're not going to say, "How much do you charge?" You're going to say, "Fix my stuff."

Regina Campbell: Yeah, you're like, "Ah, whatever you want."

John Marroni: That's right. And that's what's happening with these first-time homebuyers. They have a need. They need to have a roof over their heads and have a nice house where they can start creating good memories as a family. That's what they're looking at right now. And they understand that the rates could drop a year or two from now and give them an opportunity to refinance to lower their monthly payment.

I'm going to be bold and say that values are not dropping, and I tell you, it's because it's all about the jobs, more importantly how people feel about their jobs, and they're still feeling pretty good about their jobs. As long as that happens, people will buy. I've been in situations where someone can barely afford the house, and he said, "You know what? I'm going to be working overtime. I'm going to be doing this. I'm going for it." And then I've had other people, a vice president of a division making all kinds of money, saying, "You know what, I think they might wipe out my division next month. I'm not buying anything." So it's all about how people feel about their jobs. If they feel good, they will spend. And right now they're feeling good. Maybe not as good as last year, but they're still feeling confident, and the demand is most certainly there.

Regina Campbell: Yeah, the job market is still so strong. So you're right, that makes sense why they still have a sense that they can pay these higher prices, and they feel comfortable doing so. And it's better than paying rent, where you're not going anywhere, so to speak, right?

John Marroni: Yeah. I remember around 2008, when 2008 happened, Lehman Brothers and all that. I remember these realtors thought it was a curse to have a listing. They were begging for buyers. There were all these houses for sale, and no one was stepping up at all. And then two or three years later, the market just switched real fast, all of a sudden, to a seller's market. And it's been a seller's market for the longest time because of the shortage.

Regina Campbell: Yeah, demand is still there.

John Marroni: So I think people still need a place to live, and the values are not really going to drop, unless there's a particular area or something. Maybe in some of these towns, one company all of a sudden decides to pack up and leave, and you have 20,000 people unemployed all of a sudden. Maybe something like that would drop the value. But for the most part, especially up here in Boston, we have sub-economies within sub-economies. There are so many different industries up here. It's not going anywhere.

Regina Campbell: You know, ironically, everybody was counting out New York's market. "That's it. They're done. They're doomed. Everyone's moving out of New York." And they had their issues. They've had some slowdown, and a lot of people leaving, and a lot of them came down to us, mostly to Florida. But you watch, it's bouncing back. It's bouncing back and doing well. They're having to get a little creative with some of the commercial space, which is becoming an issue. But I think everyone just thought, "That's it. Here we go. Here's finally the end of New York." And I say you never count out New York. I feel the same thing about Boston and certain cities: you just never count them out. They have such strong, mature economies and industries. I'm like, "No, don't ever do that. I wouldn't put money on that one."

John Marroni: Yeah. You know what happens too, you think about the political climate, and it's not so much the climate but what gets hopped on in the news. There was something one of the senators said. He goes, "Republicans and Democrats, we get along a lot better than you think. It just doesn't get reported."

Regina Campbell: I know, I was shocked to hear that too. Trust me. I don't know if they're just jumping in front of the cameras, or the news doesn't want to hear that, or they want to look like they're divided. Or you're right, I don't know if it's just what the news is capturing. It does look like they just can't get along at all. They can't agree on the color of the sky nowadays. I know they do say that a lot of times, off the record, there are other conversations happening. But at the end of the day, if they can't come on the record and work together, it just doesn't help.

John Marroni: No. What's the point of being there?

Life after divorce

Regina Campbell: Yeah. So, well, I think we've covered quite a few points today. I think it's been a pretty exciting and helpful conversation. It's a good time to have these types of conversations. There are still, of course, divorces, and there are financial difficulties, and it's really difficult. There are people actually thinking about getting divorced, but they just don't know if they can afford to do so, right? So I think these types of podcasts help so much, to say this is not hopeless. There are other ways to look at this, creative ways to look at this. It's not black or white. It's not hopeless. There are solutions that you can potentially find to help you.

John Marroni: There really are, definitely. People don't see it. They're walking in a storm, and they don't really realize that there is, I'll say it again, life after divorce.

Regina Campbell: Yes.

John Marroni: You've just got to start by saying to yourself, "We're going to write it down. What do you want it to look like?" And just keep your eye on that.

Regina Campbell: Yes. It'll help you get through it and not be irrational or too emotional about it. I know these are very difficult times, and it's hard sometimes to be rational, depending on what the other party is doing, or if you're scared, or things are happening. But a lot of times people spend so much time trying to get out of the divorce, killing each other, scorched earth, all these problems. And they don't realize that all the damage they have done, all the scarring during that divorce, gets carried over to that post-divorce life, one way or another. They spent too much money, and they could have saved money and their assets, and had other solutions, or potentially a better life after divorce.

But you're just so angry that you're just not seeing that. And really, you still have a life. You're still a human being that's going to go on and have new experiences and beautiful experiences. But it's hard to see that. So being able to lean on professionals such as yourself, a mortgage lending professional, attorneys, accountants, to help us kind of see through these times, I think really helps a lot and makes it manageable and possible.

John Marroni: Absolutely. I agree.

Regina Campbell: Well, this is wonderful. Do you have any other points or pointers for us, anything you can think of? I think we covered everything I had in the questions. We kind of did it in a different way, just in conversation, going through examples.

John Marroni: Yeah, no. As I just said, I would just say really figure out what you want your life to look like when it's all done, and just look at that. That's the prize. That's the most important thing. You just have to keep reminding yourself of your vision. It's that simple.

Regina Campbell: That's it. If you don't have the vision, it's tough to set a goal. You don't know where the goal is.

John Marroni: No, you don't know where the goalpost is.

Regina Campbell: That's right, to be happy. You want to know which way to start running, which way the end zone is for you.

John Marroni: And you don't want to be heading to the other side either.

Regina Campbell: No, that's not good. So, well, this is wonderful, and I want to thank you so much, Mr. Marroni, for coming and being with us here today, talking and giving us some wonderful tips. I hope the audience will enjoy it and that it's helpful.

John Marroni: Oh, you're welcome. Glad to be here.

Regina Campbell: Yes, thank you so very much. So everybody, thank you for tuning in. If you missed this podcast, it'll be listed on Apple Podcasts, where you can see it again. We ask everyone, if you enjoyed this, to follow us on our social media accounts, and stay tuned for more hopefully fun and informative podcasts. Take care, everyone.