Episode Transcript
[00:00:00] Speaker A: Hello and welcome to season four of the Mic'd up show, where we say, every mortgage has a story.
This is the ultimate hub where hidden stories behind the mortgage industry come to life. I am Michael Kelleher.
[00:00:13] Speaker B: Good morning. And I am Michael Zhao.
[00:00:16] Speaker A: In every episode together, we dive deep into the entrepreneurial spirit, the strategic insights and the breakthrough innovations that built the world's greatest mortgage companies. So whether you're advancing your career or scouting for industry leaders like we have today, or just exploring opportunities in fintech prop tech, how to get into mortgage, you are in the right place. So let's get ready to unlock the story behind every mortgage. Let's dive in today with a special guest, James Hetch. Thank you very much for joining us. Do you want to just tell our audience, especially those listening along, a brief introduction of yourself?
[00:00:51] Speaker C: You bet. Great to be here. Nice. My name is not Mike. I feel like you've ever had a guest named Mike. That would be great. But I really appreciate the invitation and being here today.
My name is James Hecht. I am the CEO of OneTrust Home Loans, coming to you from Texas and look forward to a great chat today. I love your podcast and look forward to actually honored to be here as a participant.
[00:01:16] Speaker B: Thanks, James. It's interesting you're broadcasting from Texas and I'm in San Diego where The headquarters for OneTrust is and we have some commonality from our roots in Texas.
My folks are out there and I spent the summer out there where we both happened to go to the same junior college actually for a period of time, didn't even know it.
Tell us a little bit about your history of how you ended up from Wisconsin to Texas and, and back to Wisconsin and into the mortgage industry itself.
[00:01:50] Speaker C: Yeah, no, great. Appreciate the chance to chat a little bit about that. It is a unique story.
It actually starts.
I tell this story quite a bit. My father was in the chewing gum business. He sold chewing gum. And back when you actually used to have to sell chewing gum. And so his entire career was in sales and sales management, but it was in chewing gum. And when I was in middle school, we moved out to a city called New Berlin in Wisconsin. And my neighbor next door was a gentleman who at the time ran correspondent lending for Fleet Mortgage. His name is Jim Loving and Jim was in the mortgage business and that was also sales. And so as a young influenceable individual, that seemed more interesting and cool than selling chewing gum. And that's how my, my first interest in the business came about.
Well, what happened is my, my dad got transferred. He Was with the Wrigley Chewing Gum Company. Got transferred down to Dallas in 89. I was a senior in high school and fortunately the Lovings had me move in to their house to finish my senior year.
And I asked Jim for some help on a paper where I wanted to write about selling mortgages and originating mortgages which really was just. I just strangely enough found it fascinating and Jim helped me. It was actually a typewriter back then for those. But in any case did that. And when I graduated I was trying to figure out what to do and decided that you know what, maybe a little homesick, maybe I'll go see stay with my folks down in Texas. So I moved.
Moved to Texas, graduated high school, moved to Texas, found out that I was a little late applying. I applied and was going to go to the University of Wisconsin at Milwaukee but instead moved to Texas, lived with my folks for the summer and that fall where you and I both were at the same school and decided this is. This is not for me. I'm ready to go back to Wisconsin. And packed up the car December of 90 and drove back to. To. To Milwaukee and needed that summer needed to start thinking about a job and asked Jim Loving for some help and lo and behold was offered an internship with MGIC starting in the the summer of 1991.
And that. That opportunity I can just tell you I had no idea what that would do for my career.
Big shout out to mgic, one of the best companies and. And some just great people still running the organization that I worked with back then. But really spent spent the summer believe it or not, pulling checks out of boxes and trying to help them with a sale they had made. I did did that for about a month and then finished it. And they didn't know what to do with me so they brought me down to.
To the corporate office in downtown Milwaukee, gave me a desk, told me to wear a tie and a suit and put me in the cash disbursements area.
I started processing expense reports and everything else as time I was 19 and just thought I was the coolest person around. I did that all summer long and fortunately for me they thought I was doing a decent job and had some great leaders down there and they asked me to stay on full time while I went to school. So I ended up interestingly enough working full time at NGIC and then moved my classes to be at night for college. And so the entire other than my freshman year, the entire college time I was working full time at MGIC and just having a ball while going to school.
[00:05:47] Speaker A: One of my favorite topics is just evolution in business. You think of post Covid would anybody eat bubble gum out of a baseball card package? But back then, you know, that was a thing has for our listeners. I guess maybe a quick lesson on what mortgage insurance is and has. Has MGIC evolved or was it really the same company back then as it, as it is today and it's what it offers.
[00:06:12] Speaker C: Sure, sure. So, so mortgage insurance is, you know, and some people don't know this. The gentleman who founded the idea, his name is Max Carl was actually part of the founding of mgic. So maybe that's my other MI companies that we use will throw things at me. But the reality of it is that company, what it did is he was trying to help with affordability. Right. If you think about back at the evolution you had, you had to have 20%, 30 big down payments. And he said there's got to be a better way. And so what decided to do is say listen, if we can provide the lender some insurance, if that customer who's going to put a lower down payment defaults, I bet they would make a loan to that individual at. With less down. Right. And so at the time initially I think it was moved to 10% and then eventually to 5%. And we know, you know, that continued to evolve. But the whole theory was finding a way to help make homeownership more affordable, help people get into homes with lower down payments and ensuring that lender against default. And so that's, that's how it evolved and today it's, it's the same concept.
Ironically, the other thing people don't really know about MGIC is the FHA program, the MIP program.
FHA didn't really know how to handle that back in the day. And one of my jobs at mgic actually I did premium reconciliation for FHA while working at MGIC because we had the contract as they launched that the MIP program. So long and short. It's a, it's a great concept and I think revolution MI and, and you know, obviously with FHA now revolutionize how people buy homes and affordability.
[00:08:02] Speaker B: James, did you happen while you're reconciling checks and doing things and learning about foreclosure mitigation by lenders to have losses. Did you learn about the actual mortgage loan process itself while you were there at the same time so you could say yeah, we're trying to lose things for lenders, but this is what we can do to improve the process across the board?
[00:08:23] Speaker C: Yes. And that's one of the great things, you know, back in. It's. It still happens, right? MGIC has a great sales team, as do the other mortgage, mortgage insurance companies.
But if you think of particularly then, but even still now, the niche that the MI companies bring to lenders is helping that lender improve their processes, making introductions for, you know, for talent, recruiting, things of that nature, you know. So the MI companies, much larger than just the core product, really do help lenders improve, get better, give ideas. And so back then, that was the case, and it's still, still is the case. And so internally at the company, what they wanted to do is really make sure, you know, whether you were in, you know, finance or accounting or you were actually on the front end of the sales cycle, that you knew the role that MI played in the industry, what lenders did, how they could get better. And a lot of time and attention was spent inward at MGIC teaching about that. So I felt very fortunate, really have that experience and understand, even though at the time wasn't originating loans, felt like I understood how it worked and, and could step into it. In fact, the, the funny part, I. I often get asked, well, why didn't you stay at mgic? I would have. I love that place, but I really wanted to get into sales. And gentleman at the time, his name's Kirk Culver.
He, he was running marketing sales at the time, and he said, james, you'd be great as a salesperson. Problem is, you got to learn to originate. So I would encourage you to go get a job. At the time, it was First Wisconsin or Star bank in Milwaukee. He goes, go over here, work for Mark Conrad over here for a little bit, and he'll teach you the business and then we'll hire you back as a salesperson.
Well, that seemed like a really great idea, except I. I had met Countrywide as an account at mgic, got to know some of the people there, and they happen to have just opened an office in Plano, Texas, where my folks lived and decided, okay, well, I'm going to originate. Maybe I'll do that in Texas. And I moved down there, got hired by Countrywide and never looked back.
[00:10:43] Speaker A: I see there's a lot of similarities of the teaching. When I first went from loan officer to selling nationally, so 2013, you had these emerging talents that were part of what Countrywide did, where they would have a. Almost an accelerator program where they would put people at six months in capital markets. Six months, sort of a gap. You don't really see that today, but I feel at one point, it was building some of the greatest generation of leaders. Now, they have to come to our show to learn. But can you just talk about the culture of Countrywide and how it really thrived on helping people innovate and sell?
[00:11:19] Speaker C: Yeah, yeah. No, it. It did. And. And I am proud of my time there.
It changed my. My life. Right. Bigger than my career. It changed my life and the people I met there.
But what. What the company did when I started, you know, it was. It was very small. I was 22 years old. And the company, for those who know the story, and that was 19, 1995.
It. It was not the top player that it ended up being years later. And so, fortunately, I was hired in. They had a great training program. And as an originator back in that model, Countrywide wasn't really known to have a lot of salespeople. We used to joke that we were kind of the first sales team.
And so what I would say is they quickly identified the need not just to hire great talent, but to develop talent. And the Countrywide University, for individuals that were recruited out of college and then trained, have really given a great start to careers all across the industry. And I fortunately, was able to work with something that happened after I was hired. And so I was able to meet a number of them as I helped train and teach some of those classes. But they also invested in existing leaders. I probably at least two weeks a year was in some type, of course, where they would hire professors from some of the best universities in the country and put you into, you know, situations where you learned about leadership and learned about, you know, how to manage the business better. And so they definitely invested both in hiring great talent right out of college, but then also developing the talent they had. And so I think by far, the what. What I learned at Countrywide is, if I look back on it, is, number one, they.
They understood the culture of the company, understood that if you're going to grow, if you're going to build a company at speed, you have to be able to develop the talent. And if you were, you know, had shown an ability to work hard and be willing to step up to the plate, they would give you a chance, whether it was a small team, a big team, and if you did well running that, you could move through the organization very fast. And what I look back on that now as a leader is you bring to the table hard work. You bring to the table the ability to learn and the willingness to learn. But I look back, what I learned more than anything is if it wasn't for some of the great executives that took the chance on me, that gave me a chance to say, you don't know anything about operation, but go over there and fix that, or you don't know anything about, you know, putting together this, this new sales system. But you know what? We think you'll figure it out and give you that trust that you will, but then mentor you. And sometimes that mentoring was a little loud if you don't do things the right way. But, but as we all know, you learn, you learn whether it's, it's, you know, mentoring doesn't just say, hey, you're doing a great job. It's, hey, you could do this better, and here's how to improve. So my, my time there, I look back, was really about the leaders that took the time to give me a shot. And I can tell you 100% today that I would not be sitting here if it weren't for, you know, four or five leaders at that time who just, you know, they didn't have to, but they took a chance on me, and I told them I'd never let them down.
[00:14:46] Speaker B: James, back in the 90s, I remember the retail model. If you were a larger organization, they were inside of strip malls and.
Right. And now it's a little bit, a lot different. We don't see mortgage companies inside of strip malls anymore. And the originators, they had to, we literally had to go out and pound the pavement, go out there and meeting people and so on. But you mentioned twice that you needed to have hard work.
Hard work back then was pounding the pavement and doing things. But what is your definition of hard work when it comes to, number one, being an originator, and number two, what is your definition of hard work as an executive for those aspiring loan officers who want to be an executive in the future?
[00:15:28] Speaker C: Yeah. I think, you know, you could define it a lot for, for me, I'll answer the originator first and then the leader, because they are, they are slightly different. I mean, the originator is, you know, as, you know it, it's, it's like any type of sales, you. You really have to be able to put in the time. Right. And because, you know, you have to be able to do what others aren't willing to do. Everyone knows that saying. But, but for me, it's, it's in, especially in our industry, the hard work comes in, in the time because you have to keep up with what's, what's happening in the broader industry. You have to keep up with your products. You have to keep up with technology. You have to keep up with all of the things that help you solve the needs of the consumer and more importantly, your referral partners. And so for me, the hard work is, is as the originator was putting in the time of, you know, knowing every new guideline, knowing every new product, you know, what were my technologically advances, which back then that was, you know, very different because you would dial up modem on credit and things when I originated. But, but it's the same as today, right? The original. The originators who are most successful are willing to put that extra time to study their craft and understand the industry, the products. And when and when I look at as an executive, it isn't that different. I think the time with the executive, the hard work is spending time with your team. Right. Develop, helping them, answering their questions, giving them guidance. When they've had some challenges, how do you pick them up? And so the hard work as an executive comes in in a variety of areas on focusing on the business, but most important is helping that team, putting your time in to help your team understand how to navigate difficult situations. And so I could probably give you a hundred different things on that of hard work. But for me it's, it's doing that extra bit of work that maybe just others aren't willing to do.
[00:17:27] Speaker A: Yeah, this industry has an abundance of experts and consultants and vendors who want to give you advice on cutting costs, lowering costs, being faster, on closing. And there are very few people out there that are giving advice on how to originate more loans and bring more loans in.
And I think of how you built one of the largest builder partnership JVs at Countrywide.
Could you give some advice to some originators out there on what you learned and how they could start building these partnerships, how they could build trust when they should start thinking about scale and not overthinking about starting.
[00:18:10] Speaker C: Yeah, no, that was, that was by far a great experience for me. I still remember the day at my boss at the time, many, many know him, Brian Hale came to me and said have I got a challenge for you.
And we had just had this opportunity with, with KB Home to acquire their mortgage company and then create a new mortgage company which was a joint venture. And, and really some of the fondest time of my career working on that, working with the Katie Home team. Those executives are still there and, and a great time. But what you quickly realized, and at the time I, I had originated loans, you know, for, for customers buying from home builders, but, but really didn't understand what it meant to be a lender to a home builder. And that, that was my, you know, quick learning on it. And, and I think what, what I learned then, Mike, still applies today. And, and you know, more, more importantly what what I immediately learned is you have especially at that size. But it really doesn't matter whether, whether a home builder is delivering 10,000 units or 10 units. You have to work with them on creating systems and workflows that are going to deliver a predictable experience for their buyer. Right? You've got to be able to understand that while the, the mortgage in and of itself allows affords that customer to buy the home, the reality is they're buying the home. The mortgage is a means to an end. And we all in our business know that. And so you've got to quickly understand that there's two important things that that builder needs from the lender. Right? We may think there's a lot, but there's two important things. Number one is lesson is when the home is ready, the loan must be ready. No exceptions, right? And you can, you can find every different excuse. But the reality of it is a home builder looks at it and says, I got to put a basement in, I got to do a slab, I got to put walls, plumbing, electrical, all permits, everything else, all you have to do, lender, is write a check or wire the money. And I say that as a joke. But the reality of it is home is ready, loan must be ready. That's rule number one. Number two is the most important thing a lender, whether you're an originator, running a company that's serving builders, a builder owned mortgage company, is you have to understand your role is to help that builder sell more houses. Right? How do you position your products? How do you position the service you provide? How do you position the transition from the builder salesperson to the originator so that they can use those strategies, tactics to drive and sell more homes. Those are the two things you learn. And so you put systems in place, you put workflows measure, but all are around really making sure that that's how you deliver for the builder.
[00:20:52] Speaker B: James, you've spoken to literally hundreds of loan officers and not thousands on a national stage. And every originator is going to have a different process, especially with your experience as an originator in that builder community.
However, what does the perfect loan process look like to you? And as a leader, how do you get operations aligned on a national basis when everyone has different opinions and every loan process varies from personality to personality?
[00:21:20] Speaker C: Yeah, I think, you know, as I, as I think about process, it does vary, right? And I think the best companies understand that while you, you have to have a core process that is, you know, delivers repeatable results, you also have to understand that that has to be adapted. In some cases, that's adapted for a referral partner, a certain builder or a real estate firm firm or financial planner. But it also has to be adapted on how an originator does their business. Right? We know some of the, the top best originators in this country, right. Have, you know, they are many companies within themselves and if you're providing operations to that, that company, you got to figure out how do you, how do you match your core operations to work with them. And, and what I've always found is a couple things. Number one is, is you got to build that base process and you've got to set it up with, with SLAs for every component of that process so that you agree and say, okay, if I'm going to deliver from origination to funding in this period of time, right? What are the SLA for every component within, whether it's the underwriting, the closing docs out now, you know, everything else we have to do, setting that with SLA and being able to manage that, right? So you start up the target SLAs, you have the data to be able to show where you are. And if you have that core piece in place to be able to move a loan through in an expeditious manner and tie it to those SLAs, you can then, whether it's a referral partner or a top originator, make the tweaks and adaptations to keep that core business to work for them, right? And so similar things that you might do is the most variable comes in, as we all know, is in the processing so side of it, right? And how some originators have great loan assistants that also process, some have loan assistants that market and need a full processor. So as we set up all those core SLAs, recognizing that how you use and move that processor to adapt, that's probably the easiest way to customize a core workflow. But then the second thing I say has nothing to do with workflows or anything else. The most important is I learned from a leader one time, an app is a liability until it funds, right? And so anybody who doesn't understand that everybody plays a role, whether you are the person pressing send on the wire or you're the person underwriting processing origin, everything in between is making sure that we foster that team environment, right? Everybody wins together. Recognizing the different players. And I think that has in cases where I've had some tough workflow issues to solve. Bringing the teams together, you know, is the glue that kind of fills in those, those rough areas.
[00:24:16] Speaker A: I do want to ask you a question about changing of the Guard.
A great example of changing of the guard is one of our sponsors, Polly, where there's a lot of migration right now to their PPE and their ability to build a world class software. People want to go to you talk about SLAs. You can't meet those SLAs without having vendors and technology that are also able to meet those SLAs. Some examples of those are our great sponsors here at the show. We're going to listen to them real quick. And on the other side, I have a question for you about Changing of the Guard.
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[00:26:36] Speaker A: All right, one of my questions was changing of the guards. You were COO of Stearns Lending Who I think was one of the original companies to just make it simple and easy in the Internet world. And the rewards were obviously plentiful. You were EVP, I believe @ Caliber, where really one of the first models that really supported branches all across the country.
Those names are no longer, they might be different companies now, but the names themselves are no longer top 10, top 20.
Our industry seems to have this bias right now in the media that the top names have been there for a while, they're going to stay there forever. Can you just talk about maybe the, how mortgage is cyclical and how you see maybe companies like your own in the future just naturally going to be new names in the, in the top 10, top 20, whether it's a year down the road or 10 years. But it, it is inevitable, I think.
[00:27:35] Speaker C: Yeah, it's a fascinating part of our industry. And, and if you think you could go back, pick any 10 year period, even 5 year at some point and who were the top companies and then look at it, you know, that period later and it changes, right? I mean we talked about is now Countrywide. I mean back then the whole world thought, well, there's no room for anybody else because it's Countrywide. Wamu, Wells Fargo, you know, and we all know that story, right? And then even just a few years ago, Stearns is a great example, number one in wholesale. And you know, then ultimately, you know, brought, came down to wholesale at the time when uwm, you know, recreated the business and started again. Same thing in retail, right. And so I think what it really tells it, it's kind of a great story for anybody who's thinking about how do I, you take what I have today and build it up. And I think the, the two lessons that I always take away from that, number one is, is our, our industry, the, the American entrepreneurial spirit, it's such a fantastic part of our industry, right? Whether it's, you know, you can go broader either than lending, right? Real estate, home building, etc. And you know, in this country you can, you can take your company, you can find your niche, you can build that niche up, you can do it better than your competitor and, and grow and grow fast. Right? And, and you've seen that, you know, with, with some of the companies you've named. The other thing that I think is important, whether you're an originator or a company owner in our business, the old saying, if you're not growing, you're shrinking, couldn't be more true. And I think what happens in, in a lot of these cycles is, you know, these companies continue, you get to a size and you, you take the eye off of growth, you take the eye off of risk mitigation, you take the eye off of technology evolution and somebody right behind there, you know, can swoop up and, and gain share fast. And so it is a, it's a great point, but also an important lesson. Whether it's, it's your local book, you know, book as an originator in a market or your company being able to think strategically, continue to evolve, continue to focus on growth.
Because, because it, it is possible that you, you change out quickly.
[00:29:53] Speaker B: So I, I define the mortgage, the retail mortgage industry. In the four cycles, it's like bad market purchase loans, rising market purchase loans and push for some refis. The pinnacle of the market's a free for all, which is what we experienced three years ago. And then we have a falling market which everybody panics, which is what kind of going on right now.
And you've seen every cycle multiple times since the 90s.
As a retail leader, how do you create more consistency instead of a roller coaster pattern that we have seen from a piano. I mean P and ls, you can't really help, but you can create consistencies in the origination patterns. So as a leader, how do you do that and on a, on a larger scale.
[00:30:38] Speaker C: Yeah, it's a great point. And, and you know, it's one of the, as we know, one of the biggest challenges in our industry is, is you think about it, we don't, we don't really control the price, right? We don't, we don't control the size of the market. The economy plays in that. What we really control is our ability to gain share. Right. Whether that's as an originator, as a company, I will say one part is I've been through a lot of cycles. They never get easier, right.
I still always would take a bigger market than the smaller market, but they never get easier.
But what, what I, I think the most, it's, it's the same actually. Whether it was back when I was getting rolling in the early 90s or today. The same principles of what you need to do, whether you're an originator on your book of business or you're running the company, you have to make sure that you're consistently growing your referral sources, right? Because you keep, you know, just about the time you think, great, I've got, you know, this many referral sources as a, or as a company, I've got this many originators or I have this many joint ventures or this many builder partners, just about the time you think you have it dialed in, something happens, acquisitions, resignations, et cetera, that can wipe out a portion of that. Right. And so my best advice to originators, company owners such you've got to continue to keep your foot on the focus of growing of growth whether that's you know, referral partners, whether that's a company on business sources. It's soon as you let that off goes the other way and, and that's the I don't know that it necessarily Michael smooths the the slopes but if you're running and you're continuously adding and growing and finding those opportunities, that that does it. The second area as a leader, what I try to bring is is education of what's happening in the broader market. Right. So as soon as you start to see we as we've seen in this post covet cycle, as soon as rates come down into the low sixes high fives, right. You watch the NBA index refis start shooting up. Right?
Everybody says you build your business on purchase. We get that. I do that. Everybody should do that. But you can't ignore the refi opportunity from your past customers and what's out there. So what I try to do is as those cycles hit, reminding the team, hey, get this campaign going, make sure you've got a technology that's keeping you in the loop. Here's how to take you know, one of the things that we all know is important in this world is how do you take a combination of consumer debt and your mortgage and put it together and reduce the customer's overall, you know, payment. But reminding them of hey, this happened in the broader industry. This is what others are doing. This is, this is what the app pace looks like. Do you have your strategy to take advantage? So that's kind of the immediate. And then the other is again coaching to keep growing your core referral sources. That's, that's what I find is, is really the, the, the best way to continue to work through these cycles.
[00:33:43] Speaker A: I love those last couple answers. My mind was drifting off to like my father used to say growing up, you know, there's some, there's some kid out in Indiana doing the mike and drill right now or kid, you know, one of your competitors probably running hills right now if you want to get out there.
So people do want to grow. They want to build. One of your podcasts on housing Wire, you mentioned how OneTrust has the foundation that rivals some of the largest lenders. Could you unpack what that means for the loan officers what systems tools you're excited about to help them grow and you grow as well.
[00:34:17] Speaker C: Yeah, I appreciate the opportunity to get into that. This has been a great, I've been here almost two years now as a CEO, great company, founded again, entrepreneurial. Two brothers, Josh and Shane Erskine out of San Diego and great originators found, said hey we can do this ourselves and built the company and, and what they built is, you know, like a lot of great independent mortgage companies that are out there is, is a great place for originators providing them tools to grow the business. And you know, I think when, when we look at whether it's because there's, there's multiple phases or I should say targets for growth that we look at, the first one is obviously in the case of, of growing our builder partners which in turn generate opportunities for originators. And then the second part is growing our core originator base and, and bringing the tools to them. The tools that we bring for both of those constituents are really, really similar. And so what I get most excited about for, for helping them is we sit back and we look at it and say, you know, similar to our whole discussion today, the best thing we can do as a company to help our partners is help them grow their business. So helping an originator do more loans, helping a referral partner, realtor builder, sell more homes and do the same. So what we've come and I think our by far our number one value proposition is a product suite that is extremely broad and, and being able to adapt, move quickly to the market, bring new part products to the market. And so you know, some things we're, we're the largest non bank construction lender in the country and we do it all in house, right. One and two, time close and, and being able to bring those products to many originators who you know, are out there working for competitors and they don't have access to it. Right.
Similarly, we have for a non bank to say we also have a balance sheet or a portfolio suite of portfolio products, which we do. And so whether you want to call that, you know, some type of short term stay in your home, you know, buy before you sell type financing, we do a lot of that, I really call it products that help solve problems.
[00:36:33] Speaker B: Right.
[00:36:33] Speaker C: We know in our business, the vanilla stuff everybody's got, right? It's commodity, you have to have it, it's table stakes, you have to be able to offer all that stuff. But if you can bring things to your originators, to your referral partners that others don't have or do it with a twist that gives them that chance to get one or two more loans. Right. And solve one or two more problems for, for a referral partner. That's really where we put a lot of our focus. So whether it's the construction lending, whether it's our short term bridge and, or you know, you know, media term financing, stay in your home before you sell. Could be second homes, could be our proprietary arms, could even bring, you know we, we bring very unique products to builders, right? That forward commitment helping them acquire lots. So by far that is the, the niche or the, the tools that we bring to originators and referral partners is that product knowledge and suite of products.
[00:37:31] Speaker B: James, in the private equity and private money space, those Bridge types of products actually have been much more profitable from a P and L standpoint. Not only from retail but you know, if you, if you, for the, for the leaders that I've personally spoken to at the IMBs across the nation, those who actually entered into that bridge loan space, those weren't like losing thousands and thousands of dollars like when the interest rates went up. Those are actually much more profitable for the leaders and the CEOs that don't necessarily understand.
What kind of advice would you give to a CEO of an IMB who's looking at that type of product? The bridge loan, you're not at 2 to 8,000 on the low end, but maybe it's a little bit higher profit margin.
But they don't understand how to deliver it to the originator because retail originators are creatures of habit and, and it's hard to a new product. I mean you could be rolling out usda, it's the greatest thing on the east coast. And all of a sudden your originators go I have no idea how do you bring a loan like Bridge or even non QM to so that it could be a profitable, not only profitable to the IMV and also to the origination salesforce so they can use it to be profitable on behalf of the organization as well as themselves.
[00:38:49] Speaker C: Right. I'll start with the latter and then we can go back. I think the most important thing you're right with, with our product we control the underwriting. We actually make decisions in hours.
And yet we still have many originators who struggle with how to position that out with their referral partners and the customers. And so what we try to do to me it, you know I'm, I'm on this type of thing really simple view is use live examples, right? Everybody like, like you can show Guideline sheets you could show, rate sheets, you could put all that together. The reality of it is, is you have to show examples. How did you help Tom and Sue? How did you help Bob? How did you help Mary? What was their need?
What did you do? And then, and then how did you make it work? And I think what's, what's really important too is to help with those examples, being able to show an originator. Here's the customers, you know, here's where they were from, from a credit, here's what they were trying to accomplish. We like to call it what's your story? What's the customer story? Share that story.
But most importantly, recognize that these products are really the reason to do it. Is the, is the, no pun intended, but the bridge to get the, the, the final loan right? These are transition products to solve problems. We still want to use them to get that end loan. So being able to go to an originator and say, you're not just selling. If you're out there going, hey, we sell bridge loans, great, you know what? That's not going to work. What you have to do is we sell solutions, we have financing solutions. Tell us what your challenge is. Let us roll up our sleeves, come up with a solution. And ultimately that solution is a bridge to either the end loan with that consumer, but more importantly is likely five, six or many, many more from that referral partner, because you were unique in that approach. So back to the point where we do a lot of time on, on sharing the stories, webinars with our teams. We do them also for our builder, our real estate partner. Same thing is showing them examples that they can at least grab some nuggets and say, okay, the next time I see something like that, I need to raise my hand and call my one trust team who I can, you know, depend on to get an answer. So that's, that's how we train it. In terms of bringing the product in, that's a little bit more complex because it does require capital. It does require, you know, bank partners to make it a reality. And if you, if you do it the right way, you have to be able to control your decisions. Right? You have to be fast. You can't, it can't be a scenario. Well, hey, we'll let you know next Tuesday if we can solve that. It's got to be literally within, within minutes and, and with which is, you know, the platform. I, I like to say we, Josh and Shane had built this way long before I got here. I just looked at it and said, this is, this is something that we have a story to tell and can grow.
[00:41:46] Speaker A: And I think you kind of answered this question because you do have a great story. One loan officers need, which is more opportunities and their customers need. What is your future view of culture with all this AI phone talk and, and technology?
Do you see technology as an opportunity to change culture or do you see it as an opportunity to differentiate yourself with your culture from technology, robots?
[00:42:13] Speaker C: That's a great question.
You know, I, and what I like to think about is a company's, you know, your culture as an organization.
Technology, whether you want it to or not, is going to make that culture more of what it is.
Right? And so as you, as you start to think about, you know, whether, regardless of the technology that you're implementing. I'll talk about AI here in just a second.
You, you need to think about what, what do you already, what do you, what does your team need? Well, how do you deliver what is the culture of the company and then be able to take these technology tools so that you make that even better and improve it. So for example, one of the things AI is the big talk, right? And I will be the first one.
I've been doing this a long time and I still probably call my kids two or three times a week and they're in college and ask them, hey, tell me about this new AI thing. And they're my educators on it a little bit. But what we've done as a company, one of our co founders, she Shane, went out and really decided that he was going to learn this, partnered with the University of Miami and came, came up with a strategy. And the core of that strategy for organization I absolutely love it, is before you get down the path of how we're going to use AI to underwrite loans or in post closing and all those practical matters, how about we teach our team what AI is, right? Because if they can learn what AI is and you get them thinking about how AI can help them with their daily duties, whether they're in post closing or secondary or originating loans, if you get them thinking about that, that's going to help us. We can still work on AI bots and tools to improve and bring productivity to, but get them thinking. So what we actually went out and did early this year, we're not alone now, but we deployed a proprietary AI tool. It's our own version of whatever strange AI name that's out there in the marketplace. But every employee in the company has access to it and you can use it whether you want to know the calories in 14 different foods and things that you're trying to strategize on your diet. I say that kiddingly, but it'll do that too. Or you can use it to write your emails. You can use it to improve the productivity in your business, in your channel. And along with it, we've done, whether it's webinars, daily emails, to teach the team not to be afraid of it, to embrace it, to learn it. And so for us, I will say I use that as example in culture because people are sitting here looking at it going, hey, my company, they're not, they're not just talking about how AI is going to make things better or more productive. They're teaching me so that I understand it and then can in turn use it in the organization. So I'm pretty proud of that and I'm really thankful that, that Shane really drove us in that direction and it's, it's really starting to pay off.
Yeah.
[00:45:31] Speaker A: And we appreciate you, you coming on the show. I have a piggyback question on it to end the, the show and give you a chance to talk about whatever you might want to talk to close this out. But piggybacking on 2030 and the struggle in our industry, always on, nothing's really going to change or everything's going to change with technology. For the young loan officer or processor listening right now who's quietly learning the business and wondering if they'll ever be CEO material, would you advise them to emulate what you're doing today or would you tell them to pick up a new technique in software and lead with that tomorrow?
[00:46:13] Speaker C: I think it's one of the greatest things that we've seen. But to your question earlier or comment earlier about companies and the changing of the guard, if you will, is think forward, think about, you know, you have to understand what's being done today and how, how our core business works. Right. But then think about, you know, with, with the consumer, the referral partner, top of mind, what do they want? Right? What, what is what? Because when we, at the end of the day, when you think about 2030, 2040, whatever it is, back in 2001 when we talked about 2025, it's what we have to be careful to not say. What do we in the industry think is going to happen? And more importantly, what does the consumer need? What is the consumer going to want? And so I, I would, hands down, encourage them to be that young person, find a way to, to, to add another, you know, transformation to what we do because that's what's going to differentiate you. Not to say you can't make small tweaks and grow and launch a great company, but those who really think about the business different, and we all know in our industry, there's some great ones, right. That have done that time and time again. Be that person, right? Be that person that that goes out with that vision and work towards it. That for sure is my advice to that young person.
[00:47:40] Speaker A: Well, thank you. You're speaking directly to our audience. We appreciate you coming on. And thank you for joining us on this journey into the heart of mortgage innovation.
Remember, every mortgage has a story, and we're here to help you write yours. If you enjoyed today's insights, please subscribe, share with your network and connect with us on social media.
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