Guest: Andrew Housser, co-CEO and co-founder of Bills.com
Transcript
Host: Hello and welcome to the third installment of the Bills.com Podcast Show. Today we have on the line Andrew Housser, co-CEO and co-founder of Bills.com. In this episode, we'll be talking about the housing crisis and some of the things homeowners and home buyers can do during this market correction. Andrew helped launch Bills.com back in 2006 and is also the co-founder of Freedom Financial Network, a leading debt resolution company based in Northern California. He has years of experience in the personal finance industry and received his undergraduate degree at Dartmouth College. He later went on to Stanford University's Graduate Business School, where he was an Arjay Miller Scholar. Along with his partner Brad Stroh, Andrew has just been named to the Silicon Valley, San Jose Business Journal"s 40 Under 40 list for 2008. Today, he joins us from his Bay Area office and weâre excited to have him on the line with us. Andrew, thanks for being on the program.
Andrew Housser: Thanks for having me.
Host: Before we get into todayâs topic, some of our listeners may not be aware that Entrepreneur Magazine has just recognized Bills.com as the 3rd fastest-growing company in the US for 2008. Can you briefly talk about this achievement and some of the things that have contributed to the growth of Bills.com since its launch?
Andrew Housser: Sure, yeah, you know, itâs something we were very excited about, recognized Brad and myself for the growth of our company in the past five years. But really, itâs more than just Brad and myself -- our company is about not just two entrepreneurs, but about 400 entrepreneurs, 400 people. Whatâs made us successful are our employees. From the very first hire 5 Â years ago, which set the framework for our company, the culture, and it is a truly entrepreneurial culture and you know, itâs something we take seriously, with or without this recognition. Weâre always going to be striving for excellence, and weâre always going to be striving to hire exceptional entrepreneurial people to keep that culture alive. That said, the recognition is certainly something that weâre all very happy about and have been celebrating about here at Bills.com.
Host: Ok, letâs move to todayâs topic which is the housing market -- as everyone knows, weâre currently in a pretty steep correction right now. Whatâs your take on this crisis, just wondering about that and also wondering if where going to be able to put it behind us soon or do we have more time to go yet before a recovery begins to take place?
Andrew Housser: Well, you know, I think we got a little more time before this thing is fully behind us. Actually, Standard and Poorâs just came out with a report in the past couple of days saying that the National Home Price Index fell by 14% in the first quarter compared to a year earlier, which is an amazing fall and the largest fall in decades that theyâve measured. And, you know, really, another thing thatâs holding back the housing market is the availability of capital. Itâs a lot harder to get a mortgage than it was 18 months ago. You have to have higher credit, thereâs more requirements, thereâs very few stated income loans available. And as long as thereâs not a wide availability of credit, it means thereâs not going to be a lot of people that can go out there and buy homes. So, I think the pendulum swung way too far to the loose-lending standard side of the spectrum back in the heyday and then, after the credit crisis, the pendulum swung back way the other way where lenders are being really really conservative about who theyâre choosing to lend money to and until that pendulum swings back into the middle and we have, you know, a reasonable availability of credit, youâre going to still see home prices depressed and the housing market a little bit depressed as well. If you looked 18 months ago at the peak of the mortgage boom when anyone could get 100% financing on a loan with a stated income, no documentation, people were getting loans, just to put numbers on it - FICO scores as low as the low 500âs. You know, nowadays, itâs going to take probably near 100 points more than that to be able to get a loan. So, I would say people with average credit can get loans if they have documentation, if they can put a down payment. But itâs really the people with below average credit that are gonna have a much more difficult time going about it today.
Host: Andrew, what are some things homeowners can do if theyâre struggling to make their mortgage payments? Are there any immediate steps that can be taken to reduce the chances of defaulting or going into foreclosure?
Andrew Housser: Well, the first step is, you gotta build a budget. If youâre not able to make your mortgage payment, then you have to find a way to get that additional money to make that payment and that money has to come from somewhere. Doing a budget, laying out all your income items, all of your expense items and then determining of your expenses, which are the essential expenses. Obviously, food, gas, making your house payment, making your car payment -- these are essential things. Then there are things that are non-essential. Eating out as opposed to eating in. Entertainment expenses, certain clothing is not essential. So if you can cut away those unessential expenses and see what youâre left with, then you get to the grey areas. If youâre still not able to make your payments, then you need to make some difficult decisions. Is it more important for me to pay my mortgage or my credit card debt? Well, you know, everyone is going to make that decision based on their own personal situation but the fact is, if you donât pay your credit card debt, youâre gonna get collection calls, youâre gonna have a credit rating suffer, but youâre not going to lose your home. So a lot of people faced with that dilemma, mortgage debt or credit card debt, are gonna choose to continue to pay their mortgage debt. If you look at your budget and say, "Hey now matter what I do thereâs just no way for me to trim anymore fat from my budget, to shift priorities around, thereâs just no way that I can make that mortgage payment,â then youâre gonna have to make some tough choices and face foreclosure as a potential option.
Host: And speaking of that, just so we can understand the process a little better, can you describe how a foreclosure works? What are the steps that lead up to a lender actually repossessing someoneâs property?
Andrew Housser: So, it varies state-by-state. Typically several months, typically youâll get a notice of default, youâll have a chance to cure. And if youâre not able to cure it within a few months, your house will ultimately wind up on the auction block, being sold at a foreclosure auction. Again, the time frame on whether there is a judicial or non-judicial process varies state-by-state. As soon as you are behind on your mortgage, that foreclosure clock starts ticking and you gotta figure out something fast to get that thing back on track.
Host: What about for those looking to buy a home? Is this a good time to be shopping or would it be better to wait things out a bit longer?
Andrew Housser: So, if you have good credit, you have enough money to put down a decent down payment, it actually could be a great buying opportunity. If you look at that statistic I quoted at the beginning of the show, 14% year-over-year price decline in the first quarter of â08 versus â07, thatâs just mind-boggling. And if you have the money, if you have good credit, and if youâre in the market for a home, it can be a real opportunity to get a good deal. Obviously, supply and demand drive prices and if the demand, i.e. the number of buyers is decreasing in part because of lack of availability of financing, and the supply of people selling their houses is increasing or even if itâs just staying steady, that balance gets out of whack and prices are falling. So if you have the availability, if you have the means to get capital and itâs a good time for you personally to buy, then it could be a great time to get a deal.
Host: And finally, Andrew, what are some available housing-related resources consumers can use if they need more information or assistance?
Andrew Housser: First of all, Iâd encourage everyone to visit Bills.com where we have loads of free information on mortgages, on credit cards, on all types of consumer finance. You know, we started Bills.com because of the lack of financial knowledge that we saw out there in the marketplace. We have a company called Freedom Financial Network whoâs goal is to get people out of debt once theyâre in trouble. But what we realized in Freedom Financial Network is that we were the cure and we wanted to create preventative medicine and the preventative medicine is Bills.com, where you can go on and read all sorts of articles, visits blogs, see what other people are saying about similar financial problems that you may be facing and learn to make smart decisions up-front before it becomes a problem.
Host: Ok, great. Today weâve been on the line with Andrew Housser, co-CEO and co-founder of Bills.com. Andrew, thanks for taking the time to speak with us and hopefully, you can contribute to the program again real soon.
Andrew Housser: Thanks, itâs been fun.
