Episode Transcript
[00:00:00] Speaker A: All right, welcome, everybody. It is June 27. It is a Thursday, 02:00 p.m. here on the east coast.
[00:00:07] Speaker B: It is 11:00 a.m. here on the west coast in sunny san diego.
[00:00:11] Speaker A: We want to thank all of our listeners on whether it's Spotify, apple, or google YouTube. We appreciate you listening, and if you ever want to participate, we just gave you those times. But every Thursday, we are live. If you're listening to this right now, we won't be live coming up here on Thursday because it is July 4. But any other Thursday, you will find us bringing on some of the biggest names in the industry, especially on a national level, and especially bringing advocacy. And one of those people is ryan black from black man and graham. Izejdeheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheheh I actually was introduced to them when the NBA annual was in nashville in 2015, 2014, and they had one of the most exquisite events.
It was on broadway, but you wouldn't know it outside of the classical country singers and instruments that they had walking throughout the room, if I recall. And actually, funny story. So the house wine at this place was so, like, house wine, right? Like, not like they said you. But the house wine happened to be, um.
Oh, you're gonna catch me on not being a wine person. I'll come back to that. But it was. It's the. The oak and the. The two very expensive ones. Or at least I didn't know that. But as I'm Dr. Picking a drink, somebody comes up to me and goes, hey, asked for the house wine here. It's so and so. It's like, it's like $80 a glass. And I was like, oh, so you asked for it? And they're like, no, you don't. You have to ask for the house wine. And then it comes like that. It's just kind of like a glitch in the system or whatever you want to call it. And so I remember, like, we were leaving, and I still had half a glass. And I just saying to myself, the power of branding, labeling cost. If it was a half a glass of anything else, I would have just left, right? Cause, like, we had to go. But I remember me and, like, three people being, like, having, like, wait and, like, finish it, even though there was no need to finish it. Cause you don't wanna, like, let.
But with that said, they've always been present at. And we can get into it later on throughout the industry. And that's why I don't look at this as a vendor more as a partner of the industry, Ryan. And I think you've been very helpful. But if you wanna explain to everybody, you know, what it is that your firm does or just how they should know about you and what you're going to bring to this next hour, give us a quick elevator pitch, and then we can get more into your involvement and your insight within the industry.
[00:02:53] Speaker C: Well, I appreciate you both having me on. I'm a fan of the show, and this is really cool. In fact, I told my daughters that I'm doing a podcast, and all they listen to are princess podcasts, so they were very confused about what I'd be talking about today. But this is really cool. So thank you. Yeah.
Black man and Graham, Texas based law firm. Whether you're a bank, credit union, mortgage company, if you're originating a loan in Texas, you have to have a law firm prepare the closing documents. And that's on every doc set. So that's what we do. We represent lenders, whether they're based in Texas or out of the state, on their originations here, here in, in Texas.
[00:03:37] Speaker A: Quick question, was that the case with every state, and then Texas was the last to do it, or was the opposite? No one had ever done it before, and then Texas was the first and only to do it.
[00:03:48] Speaker C: You know, it's funny, I don't know how many states were like that. We're similar to other attorney states like New York, South Carolina, Georgia, that kind of thing. But in those states, the attorneys involved throughout the process, including ad settlement. Right. They're the title company, too. For Texas, it's really just considered the practice of law to prepare documents. Some other jurisdictions have that requirement, but really, it's Texas that among. Among all the states is the one that a mortgage company needs a law firm like us to prepare the documents. Other states have party to the transaction exemption or something like that. But for the most part, it's just Texas on the preparing the documents piece.
[00:04:43] Speaker A: Is that why you're obviously very active? We can get into that in a bit. But does that mean you talked to the division of banks in Texas? Quite a frequently. They look at you guys as a gatekeeper of integrity, and really an easier way, rather than boil the ocean, they can go you as a conduit, because every loan does have to touch you or your competitive firms.
[00:05:06] Speaker C: Yeah, I think it puts us in a unique position to comment on consumer protection laws, federal regulations, and of course, state laws, and the Texas Department of Savings and Mortgage Lending, which, which regulates the non bank mortgage companies. In doing business in Texas, they'll put out rulemakings and for sure get our feedback, our competitor law firms feedback, we're all very engaged with the Texas Mortgage Bankers association as well. And so it's certainly a dialogue that I think helps create good, sound public policy that is easily.
How do you say it? Like a client or a law or a mortgage company can implement it. Easy, right? It's not just thrown at you and coming out of nowhere without perspective that you would otherwise get from a law firm like us.
[00:06:01] Speaker B: I got a question for you, Ryan, with that in what you're doing in producing mortgage loan documents, do you work with the Texas MBA in conjunction, for example, with the Texas association of Realtors on finding out what is not just beneficial for a lender and also what is beneficial for a borrower?
[00:06:25] Speaker C: That's a good question. You wouldn't think in Texas, we actually have one of, if not the strongest, consumer protection laws surrounding equity loans in the country. And whenever we try and amend the constitution, which is where those equity loan regulations reside, it's actually in our constitution, we have to partner with groups like the realtors, the builders, and consumer advocacy groups as well, and make sure that we can tailor the laws to allow borrowers to get access to credit they wouldn't otherwise have, access to equity that they wouldn't otherwise have, but also ensure that those protections are still there and maintaining the integrity of what they were intended to do and protect borrowers. Right.
[00:07:17] Speaker B: Has the market changed, especially in the state of Texas, when it comes to the Texas Homestead act and cash out rules so recently just because of low interest rate environment that we went through? If I'm a Texas originator and I want to go and originate more helocs, for example, but I'm just like, okay, we got these rules in Texas and so on and so forth.
I just don't understand, you know, I mean, for me, I mean, I'm in California. I don't understand it. But my, you know, but I know a lot of people in Texas, and they're asking me, I'm like, oh.
[00:07:50] Speaker A: Tell.
[00:07:50] Speaker C: Them to call me. Yeah, we. So, so, just to back up, Texas has in our constitution, it protects the homestead, which is essentially the primary residence of the Texan here. And that's been in baked in our DNA since Texas broke away from Mexico. It was a public policy of the country of Texas before they joined the United States. And it was a way to get, encourage immigration from other states like Tennessee, Kentucky. You know, it was an interesting, interesting tactic. Cause you're essentially saying, hey, forget all your creditors out there chasing you out in Tennessee and Kentucky. Come to Texas. And that was the kind of, the kind of group where, you know, we're encouraging to come here, but fast forward to the late nineties. That's when equity, we adopted changes to the Texas constitution to allow equity loans. And so it wasn't until the late 1990s that you're allowed to do equity loans. And, yeah, the, the most common of them is the closed end credit, often referred to as an a six. That's the part of the constitution they're in. We've certainly seen in this rate environment, a huge proliferation of helocs.
People want to keep that first lien 3% rate that they've got and then just be able to draw equity out of their home and create a second lien, even though they're paying 7% plus on the deal.
[00:09:20] Speaker B: Is it better for an originator, and I'm taking Texas into consideration only, by the way, in this question, is it better for an originator to do a first trustee as far as borrower protection is concerned, rather than doing a heloc? Or does it even matter?
[00:09:36] Speaker C: You know, when they, when they do a equity loan, whether close end or, or open end on homestead property, all of those consumer protections pop in right away. And, you know, it, it can be a little daunting for, for some borrowers, because if they were to refinance out of that, they get this disclosure that essentially says, what are you doing? You've got all these protections you're about to lose because you're refinancing out of an equity loan.
But, of course, we're not seeing a ton of that right now with this rate environment. But, yeah, I think that for originators to understand the why behind these laws is really important for them so that they can then relay all that information to their borrowers, explain why they have to get the spouse's signature on the security instrument. Because it's getting voluntary consent is one of, if not the biggest things you have to do to create a valid lien on the property. And understanding the why behind that can make for an easier process. And explaining all that to your borrower.
[00:10:45] Speaker B: In the state of Texas, is it mandatory for the spouses? I mean, let's say, for example, you have a husband only who bought the property when they were single, and then they get married, and then now, you know, they want it. They. They incurred wedding debt, and then now they. But they now own this house. And, you know, they owe 150,000 against their $700,000 house in Plano, Texas, for example. Yeah, they want to pay off their $75,000 wedding debt.
[00:11:11] Speaker C: Yeah.
[00:11:11] Speaker B: Right. So does a spouse still need to sign? I mean, and is. And at that point, does it make sense to do a brand new first, even though they're going from a 2% loan into a 6% loan? And, you know, because you get. You get some issues as an originator. Cause you know that there's a lot of people that are younger moving to Texas, and these are gonna be.
[00:11:31] Speaker C: Yeah, the. Certainly, whether it's first or second lien, I would. I would probably recommend second lien if you can do it. We. We cap the fair market value of the. Of the loan to 80%. So there's a CLTV of 80% on the loan, which could be a problem. But, yeah, it's very prescriptive. There's a ton of consumer protections in place that oftentimes result in a consumer not being able to do the transaction. And, yeah, in your scenario, the spouse would have to sign, even though they're not on the note, they would still have to sign the deed of trust and probably a couple other documents.
But, yeah, it's very prescriptive being Texas. Nobody thinks that that's the case.
It's not insurmountable.
People come to us all the time, hey, I'm not going to Texas. It's just too crazy what you guys have going on over there. And trust me, we can help you navigate it. It's easy once you get a couple under your belt and putting the right guardrails in place. Right.
[00:12:36] Speaker A: Breaking that down, these document types, can we do sort of maybe channel and then, um, loan type. So broker, do they not have to deal with you? Or is it broker becoming and wanting to get into non Dell? And we had more talk mic'd up to crypt, where Rick Rock actually did a nice job explaining the difference between non delegate and delegate, as far as if you're doing your own underwriting or not, but that channel migration, somebody that wants to start their own mortgage company in Texas or in Oklahoma, and Texas is going to be their second state. What are some of the questions they should have for a company like yours? And what's the journey to get to a company like yours? Do you guys. Do they have to meet a certain criteria before they can get to you?
[00:13:26] Speaker C: Yeah, well, so we. We represent a lot of wholesale lenders, and so we work with brokers in that regard, in that when the broker goes to closing and the wholesale lender is preparing the documents on their system, we're the ones involved in meeting the practice of law requirement on behalf of the wholesale lender.
Years ago, the partners, around the time lo comp rules changed, the partners founded the Gold Dome warehouse line, which is now owned by independent bank who just got acquired by somebody too. It's changed hands a number of times. We don't own it anymore. But its sole focus was to convert brokers into bankers. Right. And so we propped up fulfillment departments here to help ensure that these loans weren't getting stuck on the warehouse lines. And that's exactly who we're working with. We're working with brokers who have high enough net worth that they qualify to work with a warehouse bank. They're really the gatekeepers of who can become a broker or not, in my opinion.
So they, they get approval from a warehouse bank. They also get approval with, with certain investors who are probably also in, in the wholesale space. And yeah, they work with us. We'll do the initial closing disclosure, the closing docs, we'll order the wire ship fund, everything, you know, all the way through the trailing docks, make sure it gets, make sure the loan gets sold to the investor on the secondary market.
[00:15:01] Speaker A: And is a lot of that handled through the los, like on the second half of that? I'm sure Mike has a question about warehouse. I saw his eyes light up the second half, I can say we take care of all the shipping. Is that how everything's really looked at? Like the lender, you're doing all the magic on the back end and integrating it, but they're just in there in their los, if you want to name.
[00:15:25] Speaker C: We're a law firm, so we're not too magical on the technology side of things, I'll admit to that. But what we did is we created a proprietary doc system. So that, and the tracking system that we built around it is what helps us ensure we get it out. Now, every investor has a portal, whether you're delegated or non delegated, that you work with, and it's super intuitive. And so our staff, they're in that portal on a daily basis, clearing stipulations and that kind of thing. Once we get beyond the closing phase.
[00:16:03] Speaker B: Of things, are the documents that your firm produces for your clients that you work with, are they different than what Fannie and Freddie produce as the general?
[00:16:15] Speaker C: No. Us and other doc providers, we use the content of the Fannie Freddie forms. That's essentially another, of course, FHA and Va, but we use promulgated forms on 99.9% of all transactions we do.
[00:16:30] Speaker A: Is this just for first mortgage? Like what about first and second homes, but not investment property, or is there certain units in investment that still.
[00:16:40] Speaker C: Yeah, we're. We're exclusively residential. Um, we will do some, you know, 23444 unit deals, but outside of that, we don't do a ton.
And, yeah, if it's an investment property, we'll still use the Fannie Freddie forms, but, you know, tailor them to not be relevant to, as if they're the primary residents. Right.
[00:17:05] Speaker A: So if I had, like, a water park with seven water slides and a one bedroom above the ticket window, that that would not apply.
[00:17:12] Speaker C: I got a good referral for you on that one.
[00:17:16] Speaker B: Do the same rules apply, Ryan, to, not only for agency loans, but the same rules apply across the board for all residential first and second trustees, whether they are private or whether they are agency or non QM or. I mean, is it the same rules and same documents? Similar documents, or are there changes that you've seen that create some significance that originators need to understand when it comes to the borrowing purpose or the usage purpose of funds?
What is different about that versus agency?
[00:17:53] Speaker C: Yeah, for sure. So once you get outside of conventional loans, we have a number of brokers that go into the hard money space. That's a bit outside of what we do, because you've got to tailor that specifically to the investor that you're working with, frankly.
And there's not a GSE to provide the promulgated forms for us to adopt. Right. It's different for everybody. The transactions based on what state they're in have varying customs, varying regulations that you have to navigate. So those can certainly be a lot trickier. Right. Even though you would think some of them being business purpose loans, have fewer regulations following them. They just. They don't have the uniformity that the industry's created around closing a, you know.
[00:18:45] Speaker B: A primary residence, leaving names, specific IMB names out there.
Has there ever been one set of non QM loan documents that you sought were better than others? And so as a result, it's like, you know what? We're going to use this XYZ IMb set because this one seems to be pretty good. So we're going to make this our general, general set of accepted documents. And if you want to use this other PDQ one, that's okay. But we like this one better.
[00:19:18] Speaker C: Yeah, I've seen some. I've certainly seen some that are a lot better than others. You know, especially for my clients, who tend to be two, three person shops, it's maybe all originators, right, for them to work with an investor who will underwrite the loan. But buy it just a couple of days after it closes.
The more handholding they can do in that space, the better.
That's training up the fulfillment provider, us. That's training up the client, the lender or originator, and I don't see a ton of that. I also think that the hard money lending and other similar products tend to be more coastal. We see them some here in Texas, but I think that they tend to be more concentrated in your California, Florida, and of course, northeast markets.
[00:20:18] Speaker B: So if I'm an originator and I'm a small person shop, but I'm still producing, let's say, twelve units a month. And I'm thinking, you know, I know we're, you know, we're only doing $5 million or $3 million a month, but you know what, I think it's possible we can actually turn into a small banker here, you know, and should they begin to seek counsel with you to say, you know what, I know we're not doing that much, but if we use your firm and we're doing this business, and I think we can grow, do they contact you and saying, this is how we go to expansion mode?
[00:20:49] Speaker C: Yeah, absolutely. And what I would do is I would connect them pretty quickly with a, with a warehouse bank because like I said, they tend to be the gatekeepers of who can qualify to be a banker or not. A lot of it depends on experience and net worth and that kind of thing. But, yeah, that's absolutely a good thing to do. And I'd be happy to talk to anybody about the ins and outs of it. The big benefit is that you get paid more on the deal. Right. And that's because the lo comp changes from 15 years ago prohibited brokers from getting both the front end and the back end compensation on deals. So if you're a banker, not a broker, you can still get the front end and the back end like you used to as a broker 15 plus years ago.
[00:21:38] Speaker B: I mean, that should sound good if you are an originator and does the same also hold true? Let's say, for example, you're brokering and you're like, well, this is the amount of business I should be doing. And you're a one person, but you want to join a banker. Should they be contacting you so that they can get a good idea? Should I be my own banker or should I just go join another banker? Should they be contacting you for counsel?
[00:22:02] Speaker C: You know, one of the things I love most about mortgage is what we're doing right here and the conversations that you just have with folks. And I've connected prospects with clients.
I've connected people who are kind of testing the waters, seeing if going from what their current setup is to another.
Absolutely. I don't think it ever hurts to reach out. Just understand the model more, understand the ins and outs. It's not all roses once you go from broker to banker. Certainly there's definitely benefits to the broker model, and it all depends on your individual strategies and what you're able to execute. But certainly I'm always more than happy to chat with folks. We often go to the National association of Mortgage Professionals conference in Vegas, I think the September October timeframe, and that's a good place to have those conversations.
[00:23:04] Speaker A: Certainly as we're diving deeper into this season three where we're streaming it across multiple platforms, Facebook and LinkedIn being the two I'm starting to see in just what I'm doing with adopt the brand and connecting people.
I mean, there's not enough time in the day, but there's such a wonderful world on Facebook of mortgage brokers and mortgage employees, and they talk freely, they talk at the ground level. The problems with the software, the struggles to going from this company, like, how can I get a job here? Is anybody left here?
This is great. This is not. And then over in LinkedIn world, we have where I run into you, Ryan, a more organized, can't say anything too controversial because you never know where your next job is going to be. If you're on the lender side, if you're on the vendor side, you know, it could be a, you don't know what groups of cohorts they belong to. And so you keep it a little bit more in line. And so that's where now, I think the purpose of this is to try and dive in and connect those two worlds because they really are like water and oil or, you know, opposite magnets. And I think there's so much value. And I think another reason we did this is having been a broker on the Facebook side of the world, where you're just trying to get business right.
And the business is Tony Thompson goes around for Namba and anybody that doesn't know what they are, whether you're on both sides, that's something you should definitely be part of. And it's not just recognizing the minority movement within the mortgage industry, but they're really on the cutting edge of just recruiting through colleges, no matter who you are, and teaching the mortgage industry that rather than poaching from each other, you know, getting new hires in is the best way, especially since we talk about a lot in the show, but I talk about even more behind closed doors. It's so hard to teach an old dog new tricks, and a lot of the new behaviors needed to sell in this market are going to require just somebody with that's never been taught mortgage before that. But you also need to put them through education, and that's, you know, that's slowly what they're doing. With that said, he says, like, get off of LinkedIn, right? Like, if you're an originator, no one's. If they're on LinkedIn, they priority own a home. Like, they have the job, they have the whole get on to. He actually says YouTube, which we. If you're following us on YouTube, YouTube is our station. We're building it. If you're a vendor or a lender in the industry and you want some advice on building a YouTube station, Mike and I would be happy to do it at no charge. We're not a marketing agency. We're not gonna be able to boost it. But we'll tell you how to get to the stairwell before you climb it. But he said 93% of all people looking for a mortgage start on YouTube or looking for a home. Yeah, one of those two. Or mortgage.
[00:26:15] Speaker C: I. The work. The work Tony's doing is. Is of critical importance to this industry. And I'm a big fan of him and his group. And I remember attending a conference when he threw out that statistic. And it just shocked me because YouTube's about like, 15th thing on my list of websites to visit to learn how to do something. Right. And it probably should be number one. But, yeah, first time homebuyers, especially, are going right there, and that's where they're finding all this information. And I think that kind of goes back to what we were talking about earlier with educating the borrowers and being able to explain the why behind things. And that's where communities like with Facebook and stuff come into play.
I think of here in Houston, I was doing sales before I got stuck doing this legal stuff a few years ago, but I. I would frequently attend the local luncheons and that kind of thing. Right. And those.
Some groups that have been around for decades aren't around anymore. And it's like, well, where are those conversations happening that used to be occurring at these luncheons on a monthly basis, if not more often? Right. And I think you hit the nail on the head. I think that's exactly where it is. It's on the facebooks of the world. Orlando, hopefully in platforms like this where there can be an interaction and a conversation about, oh, I didn't realize that this group provided that service or I didn't realize that's why this law or regulation is there and that's why I've been doing my process built around that. It's really important the people that map.
[00:27:59] Speaker A: Out their life the longest, furthest out are actually end up being the most successful. Right. What's my plan for the next two years, three years, five years? Not what I want to be, but what's my plan to go be that. And I think this whole movement, from what I've noticed, and I've been a part of it too, is trying to scale with, not without knowing what scaling is. So rather than going to, like you mentioned it, I always bring up rotary, bring it up on the show. I love being part of Rotary. I'm always, I was the youngest back when I did it twelve years ago. When I come back, I'm still the youngest ten years later. Like, they haven't added anybody below me, uh, in age, in the, in the decade I was gone. And you mentioned this where, but that drove me a lot of business and it didn't in the first two years. Cause you're not supposed to mention mortgage, but one year I was able to get 18 out of the 24 people to use me. And it's that consistency of going, but we naturally join a Facebook group and go, oh, imagine if we just post on here, these 20,000 people are in the group. If we can just get 2%. That's false sense of scalability. That's not, there's no personalization. We could get into that. But I think a lot of people aren't replacing the production of those meetings, they're just replacing the endorphins that they are. They're reaching greater audiences.
[00:29:18] Speaker C: Absolutely. And I found that with a number of these circumstances, I run into the same person at this luncheon or conference month after month, year after year. But its not until the fifth time that I realized, oh, I had a client that just said they needed something out of you. And so heres the handoff or is that what you, I didnt realize youre in mortgage, that kind of thing. And I encourage folks to find that piece, whether its for originating or just, you know, furthering your career within mortgage. You got to find that and get that, that mentorship and the ability to, to refer people out.
[00:30:01] Speaker A: You don't use YouTube like, I had to, I have had bad luck. I have gotten so I got a bad bike for my daughter. Like, the brakes were off, but before I realized it, I went from directions to just YouTube and. And because they had a good section of all the bikes of. See, that's the difference. They didn't just tell me how to put the. They have, like, 18 different models, and each model had a YouTube video on how to put it together.
That's what I'm talking about. I think that's what Tony said, is CNBC had an article on this yesterday where companies are now nationally, like, big ones, are deciding what to do about YouTube because YouTube now has reached an amount watched so high that they, like, even, like, Microsoft. Do we have our teams and slack tutorials on YouTube? Or, like, it's now getting to the point, or is YouTube gonna. We're gonna wake up in three to three years and they're gonna Kirkland model us on Costco with everything. So, yeah, I'm just surprised, you know, I'm guessing those Princess YouTube videos are on YouTube, right? Those podcasts?
[00:31:04] Speaker C: Well, I guess I'm gonna have to look now. But, yeah, I'm, you know, and on the bike example, my. My wife's the one that would be fixing the bike, not me. But that's. That's probably right. I mean, other than old clips of football or hockey games, that's. YouTube's just not the place I go to. And maybe I'm just the world's worst millennial, which could very well be the case. But, yeah, it makes sense when you think about it. That's got to be where everybody's going for this information.
[00:31:37] Speaker B: But since you're not a YouTube watcher like everybody else is, I guess. So.
Is there any plans for you? Or would you advise whether someone is a broker originator, a bank originator, or an independent mortgage banker originator? Other questions that you get, like, frequently asked questions that you're just like, man, I've answered this a million times. I don't mind giving this one away for free or having someone find this for free, because I'm not going to get paid for this one because I don't like working for free. I mean, are there those types of questions that they can find you, whether it's in the written form or a video form, so that you can help them?
[00:32:21] Speaker C: Absolutely.
We have a ton of. We're lawyers, right? So we got a ton of memos out there that are good sleep aids if you're having problems sleeping. But we also did a couple videos. We've got one that will train you on the ins and outs of Texas cash outlaws. We password protect it so that only clients can get it. But if you're a client, you know, feel free to reach out. There's a, the free one that you're talking about is our welcome to Texas video. And that one I go through. What, what makes Texas different? You know, everything from having our own title commitment to touching on the cash out laws. There's just a few things you need to know, who our regulators are and, and that was pretty neat in that. And I'm going to sound like I don't know what I'm talking about because I don't here. But we could link to other videos within it. Right. So I could say if you're interested in more on this topic, click on this link now on the screen and you can dive into it more. Right. And YouTube's really, really good at that, as I understand it.
[00:33:28] Speaker A: On that note, we did have a title. The three items you would need to know to get into Texas. Right. That's a YouTube 101. You got to give a number and a hook.
What would you say are the three biggest, like, when you're at these conferences? Right? Yeah, I guess a lot like you're talking to everybody. I would say you are up there on the, whether it's your decorum or your, what you as a firm and as a family do. On the warpack side, I think that is certainly one that if you know, you know, like there's a hierarchy there. But then when you're just talking to them, are you under the strategy of talking everything but business and then you'll get business, or are there like three things you do try to bring up to kind of just, they should keep you in mind or, or at least show your, you bring in something.
[00:34:19] Speaker C: I wish I was one of these people who had a plan five years out. I don't even know what I'm doing this weekend. So I'll admit that, you know, when I go to these conferences, it's a lot of touching base. I think that especially for the larger lenders, you're either using us or you're not, and you've probably got a reason for it. Right. And so I'm not going to convince somebody at a bar to switch over to us at NBA annual, but when you continue those relationships and when there's an opportunity that pops up, maybe I'm the first one standing there in front of them and they're like, okay, you guys get the business, right? In terms of what lenders need to know, certainly we've been talking about it, the Texas cash outlaws, they're very prescriptive, they're huge consumer protection. They apply on your homestead property, your primary residence here in Texas. That's the big scary elephant in the room that can keep people from coming into Texas. I've seen some lenders try and come into Texas, but not offer the cash out product. And I don't see that work out very often. Obviously your los are going to be scrambling for that, especially when you hit a rate environment like what we're in right now.
I mentioned the title commitment. We've like California, we've got our own, we don't use the alta commitment.
And then of course there's the need for a law firm to meet the practice of law requirement when preparing documents. Right. But outside of that, Texas is fairly uniform. The way we set up our business is we want you to be able to treat originations in Texas the same way you treat them in Tennessee, Kentucky and the other states. We want you to be able to have us work in the background, do our thing, and then get out of your way, not being noticed. And so that's a critical piece of what we do to try and help lenders navigate their way to Texas, but not treat it any more differently than they need to.
[00:36:33] Speaker B: You've had a, I mean, I'm sure you've had smaller brokers as clients, and I'm not asking to give away the farm as far as who your client base is. But you know, there are, there are larger servicers and lenders, caliber and Mister Cooper and Prime supreme is a broker out there in the Dallas area.
I mean, do you think that.
[00:36:58] Speaker A: Do.
[00:36:58] Speaker B: You also have experience in working with larger brokers, larger imbs and larger servicers, as well as the smaller originating shop, so that you can have a wider spectrum of professional advice for them saying these are what my smaller clients do and this is what my larger clients do.
[00:37:16] Speaker C: Yeah. And certainly the legal advice, it kicks a couple steps up the bigger they get. Right. And there's a lot more things they have to keep in mind. Not that providing legal advice to a broker is inconsequential, it's just there's more moving parts there. Right. And yeah, we represent lenders who have huge servicing portfolios and so during a dropping rate environment, their origination volume just shoots up. Right. And so that's, we run the gambit. Community banks, credit unions, you know, these non bank lenders of varying sizes. Certainly the interesting dynamic I think is in the community bank and credit union space, you get a lot of people who, maybe a credit union decides to prop up a mortgage division and they move people over from the consumer credit side to start running the mortgage division. And so some of the conversations are like, hey, this is who you need to talk to.
This is the mortgage parlance. Here's the lay of the land on the regulatory side. This is how you get set up and get your Fannie and Freddie ticket, all that kind of stuff.
And those are just very different conversations than what you have with the large lenders who have the big servicing portfolio.
[00:38:44] Speaker B: Have you ever asked a credit union after they contact you and they're like, hey, we'd like to start a mortgage division. This is our members and this is our current liabilities under management and so on and so forth. And then you just looked at me and said, you know what, based upon the people I've spoken to in your company, you should partner with XYZ, either IMV or larger bank or other person. Have you ever given that advice to a credit union?
[00:39:09] Speaker C: Yeah, there's a lot of, we were talking about the non delegated space. There's a lot of investors that focus on that. Some of them will call it even a mini core line of business where the investor not only does the underwriting, but they'll also do the, the closing docs for you and maybe you do the upfront disclosures or get them from the investor. And so that's a space where I think a lot of community banks and credit unions get a taste for this and maybe decide, hey, we should do this on our own.
[00:39:44] Speaker B: At what point do you tell someone to stay in their lane?
[00:39:49] Speaker C: Depends on how comfortable I am with them. Right? Yeah.
It's an important conversation to have with some of these lenders.
They have an obligation to. Credit unions have an obligation to their members, and they're very driven to get results for what their members are demanding. Same with community banks and their clients. And so sometimes it can be a hard discussion of, hey, here's what I see the pitfalls being here if you were to move forward and go down this path. Not that they always listen to me, but I'm always also quick to refer them out to compliance groups, mostly non attorney firms that focus on that space in particular. And I think that's critical, getting a group like that in place, somebody who's seen the strategy implemented and able to provide feedback about, all right, here are the hurdles you're going to have to overcome over the next whatever time period, and we'll help you get there.
[00:40:54] Speaker A: It's supposed to be the bottom of the hour. Going a little bit past that here and just give a quick sponsorship or right now when we're always looking for sponsors. Really low bar set there if anybody in the mortgage industry wants to be part of this. But until then, we get to do all of this because of the partners that work with Mike and I. So on the adopt the brand side, I connect different vendors that pass a certain level of questions that I have with the lender. One of them is silverwork solutions. Happy to say I have two knock on wood closed deals coming up here in having been a client the full month. If you are an encompass user with over 500 units, if you're less, let's talk. I can help you out, but if you're over, I will say 80% of all my discovery calls, actually, 90% of all my discovery calls have gone to demo, and 80% are still in the pipeline and we're closing in a market. I also Velix valuations, which maybe we can talk about valuations in a couple of minutes here. But they are an appraisal firm. I get more objections before I actually get a meeting for them. And then in the meeting, they go, great, because they are not. Many companies work with an appraisal firm. They either work with an AMC or they run their own desk and they go out and find their own appraisers. If you work with an appraisal firm, you get to deal directly with the appraisers, whether you're an AMC or not. The only difference is there's some management there, and the appraisers are happy because they live that w two benefit life. So the appraisers going out to the place are happy, you know, the middle people taking a lot of that cash. Not saying they do, um, or that that part might not be part of Velex words, just mine. And then, um, the, uh, I just picked up imergent. So I will be diving into more humda data and data in general. And I picked them up because I think, uh, Laird's background in the mortgage industry and her father, um, and her relationship is one that needs to be told more. And so I picked that up to tell that story more. And finally, Sapiens, if you are a top 20 lender and you don't know what sapiens is, they actually touch 65% of all decisioning in mortgage. So that's kind of a mouthful because we are growing here, and I didn't mention anybody that isn't part of our retainer group, because we do get calls all the time. Hey, Mike, I'll wet your beak if you can close this.
You could try, but that's there. And I do help Mike a lot, because what he does is very exciting. We're having some very exciting conversations. Mike, you want to just touch on that real quick?
[00:43:32] Speaker B: I'm in the private credit space with family offices and working with other family offices who actually don't understand or know the real estate or mortgage space as wells, and. But yet they're still trying to create income ladders and returns for either their family. Sometimes you. We may deal with a firm that has a multifamily office structure where they're consulting with multiple family offices, laddering their income and so introducing them into this mortgage backed space and having conversations with Ryan or people like Ryan, so that we can say that we have professional relationships. If they want some legal counsel, for example, in the state of Texas or in other states, we have these types of connections on how to help them with mortgage loan documentation. They don't necessarily, and they don't have servicing already in place, so we're able to counsel them on purchases and on if they need legal counsel on the right types of referrals. You know, Ryan was talking about how he would talk to other compliance groups without naming any specifically. But he has those types of relationships where he's able to refer out and as well as we do in working with the family office space. So, you know, feel free to talk to anybody who wants to talk to people in that private credit space or wants to talk to another family office. If you're an IMB and would like to open up that possibility and either talking to Ryan and trying to produce the mortgage loan documents and then having someone buy that paper, we can create some conversation with you and Mike's foot.
[00:45:11] Speaker A: In the door just so people can kind of get an idea of what we do is his family office has a unique program that specializes in reverse 1031. So if you're an lay person like me or you're in our audience and you're in. You're anybody, you don't need to be a mortgage company. If you own an investment property, you typically sell it, and then you have x amount of days, which we can save for another show, and you got to go claim a couple to not pay the taxes. The reverse is to push back the taxes.
[00:45:39] Speaker B: I should say we should push back.
[00:45:41] Speaker A: Thank you. Full disclosure. We are not accountants or anything. I like that. Um, but in this environment, if you're following people like Jake Sharp and the world's falling apart in certain cluster areas, and you just look at your return rate on that investment versus a new one. You can do the reverse and go out and find that property and then sell yours. The problem is capital, and Mike's is unique there, but it gets really unique. And we found a lot of private money will require you to stay in a certain amount of months. So they. Their equations work. Mike doesn't care if you're in it for two weeks, two days, or two months. So it becomes a great opportunity for you to work with real estate agents because there's two deals in there, right? Like, and let's get it going. Plus, you're. You. You get a better, uh, investment property really out of it. But the reason I say that for our audience is that's been a foot in the door. And now some of these IMB owners have started to tell us that, oh, by the way, on the side we do, we actually have this private money piece here. Would you be able to find liquidity? And because Mike's not a salesperson, he's the head underwriter at a family office, and he's able to work those magic excel sheets to make it fit into other boxes and find out which ones will help, as he says, ladder up. It is super cool to be part of. So if you're in the private money space and you have a portfolio, but you're also an IMB, so you're part of our world.
Yeah, those are some exciting conversations we're having.
[00:47:07] Speaker B: A. IMBs don't necessarily, they want to stay in their lane, and they're advised to stay in their lane, but we've seen some independent mortgage bankers begin to enter into that space, and they would like to, and I'm pretty sure they would like to try and get some outside counsel, especially when it comes to cross collateralizing. And can someone do a cash out to cross collateralize and buy another investment property? If someone's selling a. A single family, for example, in Plano, and they want to go buy two properties in Houston, not to say that Houston valued less, but if they wanted to do a cash on investment and then cross collateralize it to do a 1031 exchange or reverse 1031 exchange, and across collateralization, then we would probably seek counsel with Ryan and his firm to figure out how to do the loan documents for something like that.
[00:48:00] Speaker A: Let's use this as a segue, then. Let's get a little bit futuristic here. Well, we can go two routes. Ryan, do you want to talk about working in. Are you second generation or third generation.
[00:48:11] Speaker C: Now, in this firm, I'm second generation.
[00:48:14] Speaker A: Okay?
[00:48:14] Speaker C: Yeah. So my dad, I grew up in mortgage. My dad ran production for some wholesale lenders from the mid eighties to the mid nineties. And he must not have been very good at it because we lived in, like, five different states by the time I was seven. And my mom finally said, that's enough.
Let's do something a little bit more stable. That's when he came back to Texas. He was already a licensed attorney in New York, but we came to Texas and he got a job working at a doc prep firm, like what we do now. And then a couple of years, he started his own firm.
[00:48:54] Speaker A: And did you get acclimated as the playing with your GI Joe guys in the desk? Or did you start more like summer internship, you know, later on in, like, high school?
[00:49:05] Speaker C: So I do remember going to, he used to teach school of mortgage banking, and I do remember going to a course with him and sitting in the back of the room and listening to his, you know, couple hour spiel out there.
But I. So I knew of Fannie and Freddie, but I didn't know what, what the heck they did. And then after I went to college, not knowing what I wanted to do, but I knew I didn't want to get in a mortgage. Same with law school. Went straight to law school, and so I went into politics, and little did I know that was the one industry that would cause me to come crawling back to mortgage. Right. And so after about four years in DC, I had enough of it, and it was time to come back here. And at the time, I was able to work in the Houston office where I'm at now. My dad was up in the Dallas area, and so it was enough distance to make it work. And we've got a great relationship and being able to learn from him. And Calvin Mann, who also co founded the firm, has been quite the upbringing, for sure.
[00:50:19] Speaker A: Yeah, I always thought it would be cool for any family member, but, like, specifically just my dad, to see me in action at one of these conferences nowadays. And I'm sure same with bro. I mean, they don't need to go far, but if anybody saw you, they would certainly be admired by it. What was that moment? Or do you have a moment where you started to go to, like, a conference and saw that your father's firm is a national firm and not just, you know, working with the local real estate?
[00:50:48] Speaker C: Yeah, actually, I think it was really when I was working in DC that I started realizing it, because my office I was working for started working with the NBA on several issues. We were going through trade implementation, and then, of course, the prospect of GSE reform. And Brad Cheney was the lobbyist for NBA at the time. And he would talk a little bit about my dad being a member and what that was like. And I thought that was kind of surprising, kind of neat. And once I got into mortgage and then really started understanding the ecosystem, I've started appreciating it more and more, especially since how niche we are and yet how a lot of folks, at least have heard of us, if not know what we do.
[00:51:45] Speaker A: And you definitely go out of your way to be present at the advocacy conferences. How many do you know how many your dad have, how many you have, and how many you guys overlap on? You know, do you have a streak going, either of you or both of you?
[00:51:59] Speaker C: We've got a streak. Covid tried to disrupt us. I remember doing some Zoom meetings, but certainly since I was, I was living there, I think he probably hit those four in a row, and he probably hit, hit a couple of those beforehand, too, especially as Dodd Frank was being debated. But, yeah, he always had the political bug. I inherited a little bit of it, not quite as much as he did. And once I got a taste for working within policy and seeing how politics interact with it, it was really interesting, and I learned a ton. And once I came back here around late 16, so I think 2017 was probably my first advocacy conference, I started going. And for anybody that's never been, I mean, I encourage you to go. Right, Mike? You love it. I know. I don't want to speak for you, but it's an amazing, amazing experience, not just to be part of the democratic process, but to, you know, really engage with industry participants. Right. And understand their passion for, for the industry. It's. It's just a conference unlike any other.
[00:53:13] Speaker A: I think only conference where you're not on your own. Right. Like, you're with your state. Like, that's almost like the jersey on the front throughout.
[00:53:22] Speaker B: Yeah.
[00:53:22] Speaker A: Every other conference you could find yourself, whether you're at the bar, you're in the lobby during the day, or you can find yourself turning left, turning right, and saying, I don't know anybody, and being literally on an island. Right. And that conference, if it's your first one, it's really easy. Um, you're like, with the Massachusetts table, you're with this, the other state table. There are people whose first time there, there's just a comfort zone. I have a quick political question before Mike jumps in here.
So I have a birdie in DC, thanks to my last client. Very cool person. That just gives me insight. And therefore, I don't say who it is. Also don't want other people knowing about him. So golden goose of information. But he was talking about how this whole nar settlement. Right. He thinks he has not a theory. Like, I've seen the receipts, but there are bigger pieces at play now. And this is one of those shakeups that whether it was intentional or it wasn't, it's part of the end game, which is really getting to the top of the funnel digitally, possibly portal war and then exchange. Right. Well, and I. So it goes back to Gnar. So I was talking about this, but I'll get you a theory on this. Like being in DC, not, not the, but just from your four years of. And the way he talks about it. Like, if I'm on Instagram, I see people pushing that new group instead of Nar. They're very marketing. They're saying, you know, they're wasting $28 million on this ad. Are you kidding me? By the way? They're not wrong. But then when I hear this person, he's like, regardless of what you say of Nar, they understand the realtor.com piece value. They're better than you think as far as an asset goes in the MLS. But all of that money, all those years, all those clout, they are at the table with these other players. We'll call them, whether it's the owner of Ice or the owner of Chase or the, you know, at least in the mortgage side or whoever's making these, these higher decisions will say someday, or costar or zillow or. And if almost like the worst thing that could happen for the realtors is to start this new group. And they don't, like, you can't just start from zero and lobbying. Get into those rooms, I guess, is what I'm saying. Right. And there is a little bit that I think the people on the ground don't realize that Bob broke Smith talks about, but you read the Washington Times, you or whatever it's called, you're in there and you're really isolated and live a whole different mindset. And if you don't escape it, you are, you kind of a distorted view, but you also lock out the people that are. The opposite effect can happen, too. If you don't go into that world, you don't realize how out of it you are.
[00:56:13] Speaker C: Absolutely. I mean, from my experience, the NAr lobbying was one of the strongest lobby groups. And it's not just money. It's their ability to have realtors come in town.
Every joke. Every congressional district has a car dealer and a realtor.
[00:56:34] Speaker A: Right.
[00:56:34] Speaker C: And so your representative probably knows who you are and has, you've got their ear if you're a realtor. And so they've always had a very strong voice in Capitol Hill in terms of how to treat them legislatively and even on a regulatory side. And so major changes are coming for them. But I don't think this is the end all be all for them either.
[00:57:03] Speaker A: I agree. You're still going to need a real estate agent, I think.
And everybody thinks in six months, but five years down the line, it will be a battle with the portals anyways, whether you want to call it the buyer's agent commission is almost like the look over here on the left hand and on the right hand, it's 100% of people now go to an online portal before they purchase.
You know, before they've even signed a buyer's agent agreement. They're somewhere now. They haven't figured out how to trap them and hypnotize them, but that could be legal in five years for all we know, too.
[00:57:37] Speaker C: Yeah. And it's interesting. I mean, it's so regional, too. Here at Houston, the Har website is more prevalent than zillow and others. Right. So it's, it's a yemenite. It's not a one size fits all kind of, kind of solution that can replace realtors. They're going to be around for a while.
[00:57:58] Speaker A: That's an amazing. That geographic, because I'm in Boston where it's very low inventory.
[00:58:05] Speaker C: Yeah.
[00:58:07] Speaker A: Got to know that in certain areas it's not all like that.
Well, thank you for coming on the show. I mean, this was an awesome show. The hour flew by. Absolutely. Mike, any final thoughts here?
And if not, or why don't you give a final thought, maybe a final question, and then take us home.
[00:58:26] Speaker B: Actually, this was actually, not only was it informative, it was. We really enjoyed having you on our show and you investing this time with us. So thank you very much for all of this. I can't wait for us to be able to get on, on camera for mic'd up. Coming up so we can do a snippet of what we just talked about.
[00:58:43] Speaker A: And there will be fireworks next week, literally, though, so we will not be on a show. July 4 is a Thursday. We will see you a week from Thursday.
Subscribe to our station. That's all we ask so that you get notified when we have another show. When these podcasts drop. And they always drop on Sundays. And our mic drops drop on Monday. Thank you, guys.
