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Wednesday, May 25, 2022
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Once upon a time, as many fables begin, there lived a wicked Czar. His region became impoverished, and he devised a scheme to attack a neighboring community to divert their wealth to him. He was going to burn down a gigantic warehouse of goods, causing their inventory to vanish; he was planning to blockade transportation of produce so the grocers would fail, and he was preparing to imprison local businessmen with fabricated charges.

One honest stableman who worked for the Czar got wind of his plans. He didn’t know what to do with this information but knew that he had to do something to stop these calamities from happening. He knew that he couldn’t physically go to the neighboring town to warn anyone because the Czar would find out it was him. He couldn’t send a message through anyone because no one was to be trusted. He knew the attacks were seven days away, and he spent sleepless nights agonizing about how to save the community.

He finally came up with a plan. He would send a handwritten telegram written with his left hand, which would get secretly delivered without anyone knowing who the sender was. His instructions would need to be precise to relay the unique severity of the situation without divulging too many details, which could lead back to him. Finally, he was relieved about his thoughtful plan and able to go back to sleep. Six days later, his note of instruction arrived.

It read, “Quick, start panicking!”

I feel like we are starting to experience those “messages,” which are getting louder and louder each day. “Inflation is soaring,” “stocks are going to crash,” “the market is in a bubble,” – everyone yelling and screaming to start panicking - but no one giving factual information on what this means and how to position for safety.

People might be looking at the “equity” that they have accumulated over the past two, three, ten years and need to acknowledge that it might be the same in twelve months from now. Time to sell? Time to cash out? Time to invest in something else? How should one take advantage of this “gained” equity – if at all?

Homebuyers might have to recognize that mortgage rates are rising, which might not necessarily mean that home prices will crash. Home prices may not crash to the extent that some people think. Renters might have to come to terms with the fact that they might see 5-10% annual increases in what they are paying to their landlords. Time to buy? Time to lock in on a long-term lease? Is there a way to prevent the inevitable?

Homeowners with debt, such as home equity lines of credits, need to come to terms with the fact that they might see at least a 1% increase in their payments. Long gone are the days of government accommodation to keep rates low and artificially promote and reward borrowing. Is all mortgage debt terrible? What about auto loans and student loans – how will those be impacted?

Yes, there is reason to be nervous, but I would not say it’s time to start panicking. For starters, it is important to recognize that no one can predict the future. I would take it even one step further to say that one cannot rely on historical data and past examples to predict possible future outcomes in the marketplace. What worked pre and post-depression and pre and post-recession might not work today, even if it followed precisely.

What is critical is to focus on your unique circumstances and do a “stress test” to see how market changes might impact your situation. Most of the conversations I have today with people are to make sure that they are well-positioned for a best-case or worst-case economic “change.” Get the message?!

Shout out and happy birthday to Shimon Betesh, Mully Fein, Dr. Adena Goldman, Elliot Goldstein, Tamir Goodman, Ari Greene, Aaron Hoffer, Duvi Honig, Jessica Kahane, Ariella Lasky, Adina Lederer, Yossi Muszkat, Dr. Shulamis Juni-Pollak, Matthew Racer, Nikki Sausen, Avie Schreiber, Yael Schulhof, Dr. Steve Seidel, Linda Stamker and Kobi Zaken.


Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected] 

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