Episode Transcript
[00:00:11] Speaker A: Hello and welcome to another episode of Mike Duff show. This is season three. It has been an amazing season. We've had some incredible guests. And James Hooper, no different in when you hear what he's doing, an absolute trailblazer. And if you want to hear guests like him, you have to tune in on Thursdays at 02:00 p.m. eastern and.
[00:00:34] Speaker B: Of course, 11:00 a.m. pacific in typically sunny San Diego.
[00:00:40] Speaker A: This episode is a little bit early because sometimes our guests are originating and are running regulated industry, and sometimes they have different items that pop up throughout the day. And we're flexible here on the show. We understand to get great guests, we have to have a great flexibility. And I think this one's an exciting one because oftentimes we have the typical IMB on the show, and I, Mike and I have been, and we'll talk about it throughout the show, but we've really been advocating on lenders being able to expand their credit box to meet the demand of the new buyer and of a shrinking inventory market. There are great houses out there, but they might be what was once considered difficult loans. So we call this closing difficult loans in difficult times. And James is on here to really tell us that for quantic banks, some of them aren't that difficult. Right. So can you tell us, um, a little bit about, well, yourself. Right. And, like, how you ended up at such a trailblazing bank in the sense of, uh, its model is different, but at the end of the day, you know, it's trying to do the same thing, which is help people buy homes.
[00:01:56] Speaker C: Yeah, Michael, thanks for having me. Both Michaels. I'm actually headed to San Diego tomorrow. I'm in. I'm in Sunny Phoenix, Arizona. We had just a quick backstory. We had fall last week. It was nice. And 85, 110 today, 114 next week. So we went from potential sweater weather to, like, back in the pool. So fun times, but just like the lending environment, it's always, always changing. So a little backstory about. About me. I've been in wholesale retail for 26 years now. So, you know, it's basically my first job out of college was a stock boy at, like, a Winn Dixie supermarket in Georgia. And then I went straight into cold calling into mortgages. So I've, like, you know, just been born into mortgages. So, you know, back in. Back when I got in the business, there was the word called subprime, right, which now is non QM.
A little bit more safer, a lot more sounder. But the borrowers, the makeup is relatively, relatively the same. So I've got whether that's subprime, whether that's. I was at freedom mortgage for many, many years and different institutions that did government lending as well, more challenge borrowers. But one of the things that I love about quantic, and I run all of production for quantic, whether that's retail wholesale, our direct to consumer channel is we are unique. We do a lot of challenging loans. I joke around with mortgage brokers across the country because I probably had five conversations with different brokers across the country that have had loans fall out at other national non QM lenders that just dont meet that credit box. So here at Quantic, we are a CDFI, which is a community development financial institution. So I won't get into what that is, that's a whole other podcast about what that does and what that serves. But we are the only digital bank with that CDFI certification. And I would say, and again, I don't have this number, so I don't want to post something that's not real. But I think we are the only non bank, the only bank that is in the TPO third party origination space that is a portfolio lender, right.
Doing what we do today. So that's exciting. So when you're a portfolio lender, you're not really, you have your own set of guidelines, right? You can do your own thing. So we make where a lot of lenders are making exceptions to their standard guidelines in the marketplace, that's just our standard guideline, right.
So one of the things that we do with the CDFI is we have what's called limited documentation, right. We call it, you'll hear me, hear me proportion promoting different things like Doc, so you know, just to throw some numbers at you, the, you know, the non QM market and that's just what we do in the wholesale space. If it was a pie of 100%, 80% of that is bank statement loans, right. And I would say of that 80%, 78% of that is for self employed borrowers, right? So most of that makeup is for self employed borrowers. Those are borrowers who can't go QM qualified mortgage, Penny, Freddie, Jenny, because they're writing off stuff, off their taxes. And then you. So you got the income component, then you got the property component. We're seeing a lot of properties come through with acreage, right? People are saying, hey, let me get out of the city and let me get into the farm life. I know my wife specifically, she wants a hobby farm. So we live in Scottsdale Arizona. You can't get a hobby farm in Scottsdale, Arizona. So she's like, let's move to Nashville. So, acreage, we see a lot of properties come through with acreage. Right here at Quanta, we go up to 20 acres. Where you're going to find in the marketplace is ten.
So you got that, and then you got probably the assets or the reserve components. So here at Quantic, we're pretty, pretty light on that.
Did I lose you guys or I just go full screen?
All right, so what we've done, since we're the bank, we are the portfolio lender. We really focus on making things easy, right? So we promote our lite doc product, which for those self employed borrowers is just a p and l form. We give you the p and l form.
We give you the P l form. You take it out to your CPA, your p ten. If you're doing. If you heard me in my earlier statement, eight out of eight out of ten loans in non QMS bank statement loans are self employed. What's the problem with bank statement loans? I do this webinar all the time. Never do a bank statement loan again. I can tell you, four years ago, I couldn't get an originator to do a bank statement loan to save their life. Now I'm on the opposite side of that. I'm like, hey, guys, stop doing the bank statement loans. You got large deposits, you got nsfs. Then you guys have been in this business. It's like the underwriter wants all 48 pages of the bank statement. That last page is blank. You're like, you got the calculation of it, large deposits. So with us with that p and l, we have a solution for you. It's our product. Go to the CPA, the p ten, the tax preparer, get this p and l done. Oh, no, by the way, only one year self employment. A lot of borrowers in today's marketplace have just went from a w two job to self employ. We just want that one year self employment here at Quantic. And we do that on all products. Primary second home investment properties. You know, the beauty of it is, as well as itend borrowers, so we're one of the few lenders out there that is still in the itin market. I mean, there's some out there, but, you know, itin borrowers, they don't have Social Security number, right? Those are great borrowers, by the way.
And then on the flip side of that, for those borrowers who challenge borrowers with that don't meet QM for, let's just say they're getting a large, you know, they got cash bonuses, less than two years overtime, commission. We've got a five question Voe. Right. Some of my competitors, if you're, if you're listening to this podcast, I hope that you are. They call it the Crayon Voe. They're like, ah, we can't do that. Crayon Voe. It's four questions, right? We send it out internally and we go out and ask four questions. We're really just, we just want to know that total income, all sources based off it annually. And we do that again on all of our products.
So when we talk about the uniqueness and the challenges of nine QM, it's really around the income. So what we try to do here at Quantic is really simplify that and make it less, less is more mantra and really just make it easy for the originator, for the borrower, too. I mean, I, you know, there's nothing more, nothing more frustrating than an originator just constantly having to go back to a borrower saying, oh, well, can you write me an loe for this deposit? Oh, I got to back out this deposit because of this.
And then you look at the other separation, the other big product that's in the marketplace today, and that's debt service coverage ratio loans, DSCR loans, as we call them.
And we're unique here at Quantic. Again, we're the only investor that I know that would do this combo of a borrower, first time homebuyer, and first time investors. People would do first time investors in the marketplace, but most everyone will say, I won't touch a first time homebuyer. Well, a lot of first time homebuyers, they don't want a primary residence, right. I can tell you my real life story. I've got a 22 year old daughter. She will live with me forever. But she's like, dad, I want to buy an investment property. Right? She's a first time investor, first time homebuyer. We welcome those here at Quantic. So really, what we deal with a lot here is we've got a lot of great business partners across the country because we're licensed in all 50 states. There's New York, you name it. We cover the whole us from that standpoint.
So it's exciting because the good thing is we help a lot of borrowers that traditionally can't get homes in the marketplace. So although I tell original natives across the country, I'm like, come to us first, and you wouldn't have to transfer that appraisal. You wouldn't have to go prolong that. But my operations team here does a phenomenal job. Right.
We got in, we'll call it 50 submissions yesterday on our, through a broker channel.
I would be safe to bet 80% of those were transferred appraisals. And what that means is those loans started somewhere else, and we're having to go across the finish line and our pull through once. That conditional approval is amazing at 85%. So, uh, we do a really good job of, you know, when the industry is probably around 60% in that. So, um, hopefully, you know, the audience gathers that, you know, we do some uniqueness. It's not uncommon. I'll call it common sense. Um, and we're able to do that because we're not out in the marketplace selling to, you know, when you look at the non QM market, there's really these people, you know, the, the big, the big boys sell to the same investors. There's hedge funds that own these companies across the country, and they put these things in mortgage backed securities.
But, you know, if you look at ten investors today that are doing nine QM, they're probably going to the same one or two investor, you know, or hedge fund behind the scenes there. So you'll see a lot of uniqueness as an originator across the country with people's DSCR coverage ratio, minimum Fico score, minimum loan amount, some of those things.
But what's been great about the non Q on space is we've seen a lot of, you know, people go into that space. Newer lenders, you know, the agency lenders. I will name names on this webinar, but that wouldn't touch it four years ago, are like, I need to touch it today. Because six out of ten loans, based on some data that came out a couple months, about six months ago, that'll change with rates going down, obviously. But we're nine QM loans. But nine QM also makes up jumbo home equity lines of credit. Right. Those are your non GSE loans.
Yeah. Yeah. So the HELOC to, in which you bring up a great point, we launched a proprietary P and L Boe only product for second mortgages. Right.
And it's funny, we launched the product, and then all of a sudden we see modification. We see various lenders coming out with a modified product of that in the marketplace, which is exciting. I mean, the more the merrier. Um, but, you know, those, those self employed borrowers couldn't go out and get a HELOC. Um, you know, a lot of people don't know this, but Chase bank won't even do a heloc. Right. If you're, if you're a customer of Chase bank, they don't even do home equity lines credit. Jamie Dimon's like, nope, don't want them. Right. But, uh, so there's, there's been a mass rush to the broker model for those helocs and there's a lot of great sources, but there's a lot of challenged income borrowers that couldn't, that were in a historically low rate on that first, that couldnt go into a second mortgage. And now theres options, which is great.
[00:12:43] Speaker B: James, theres a lot to unpack there in the last few minutes there. When you talk to a mortgage originator, theyre actually lost. It used to be that, lets go back 20 years ago when I entered the business, I went in and of course, there was a lot of products available 20 years ago.
The mantra we would go through is credit, collateral capacity to pay, and then character, because we, you know, when you have the credit, you know, and you had subprime products and then you have collateral. So you have all kinds of collateral. In this case, you're telling us, you know, you have properties with acreage, you have different types of unit mixes and, and with, and when I say unit mixes, I mean properties with Adus now. And you have lots of different types of unique types of properties, hobby farms, so on and so forth. And then you have capacity to pay, which you just literally went and described. You have bank statements which was nonexistent a few years ago, or it was very existent 20 years ago, and then it went away. And now it's coming back. What's old is what was new and then old and then new again. And then you have the itin, you have the non QMo, but, you know, you said the verification of employment space, and then you have what used to be in the subprime era, we would have what was like for four criteria to make a borrower better. They pay on time, quality of property that, you know, they have x amount of reserves, which is better, or what is it that causes them to be a better paying borrower so that the collateral package and the borrower package looks good, that it's always going to be a better performer to the fixed income markets. And so how does, and the reason I'm saying this is because when I go to like, like a trade show, like originator connect, or when I go to another trade show and I see the myriad of different types of opportunity that's out there. The one thing that I see, it's very consistent, and unfortunately, consistent is the lack of willingness by the retail or the broker originator to learn more about how to be creative. When they come across an issue or problem, they say, how do we do it? And then products that quantic put out, they go, well, don't ask yourself, how do you do? How do we do it? Just ask yourself, how do we make it a situation where we can do it?
[00:15:10] Speaker C: Yep. You bring up, you. You bring up a really, really good issue within the origination world. Right? Um, and it's also. It also filters within the lenders, right? These deals are not all cookie cutter. They're not, you know, hey, run an ause. Follow the Aus, right? They all. If you meet the income scenario, then you're going to have a title issue, then the collateral is going to be an issue, then it's a non mortal condo, and, you know, they got an insurance issue, blah, blah, blah.
[00:15:36] Speaker A: So there's.
[00:15:36] Speaker C: There's multi layers, potentially, of these, of these loans. And if you, you know, I call you. Our folks are very seasoned. Our account executives are my underwriters. My average tenure of an underwriter here at Quantic is seven years, right? And we just do nine QM. They come up with some stuff that I'm like, oh, yeah, well, if we do x, y, and z, this deal will work that way. And I would say as an originator today, what the industry has done, lenders across the country, you can, Angel Oak, you name it, all of these guys, right, do a really good job of educating and saying, hey, get on. We're going to show you how to do this. This is what, you know, we do webinars here at Quantic, you know, on our item products, foreign national, you name it, our Lidoc product. But you got to put the time in. But as an originator, you have to be able to, you know, partner with a lender like Quantic or others that are out in the marketplace that really help you structure the deal and walk you through it. Um, and, uh, there's a lot of originators that spend that time and do it, and then there's just some that just. They don't know a deal. And what I tell originators is like, call me first, right? Call me first. If I can't help you do the deal, there's. There's potentially a solution. You know, the last solution is hard money, right? You could potentially go hard money, band aid it, get them back in for six months, a year, and then let's get them out of that hard money loan. So based on the marketplace, there's some options there. So, um, but you have to be willing to invest some time and spend it and structure that. And structure the deal.
[00:17:04] Speaker B: Absolutely. How does the originator learn to ask more questions to their account executives? I mean, that's almost, it almost sounds like, yeah, of course. But it's always, you know, you get, basically, James, you're get, your account executives are getting the phone call when there's the problem, not, instead of premeditating, hey, you know what? I'm going to educate you so you don't have to call me with, can get this done in the next seven days.
[00:17:29] Speaker C: Yeah, yeah. You bring up a good point. We'll get scenarios all the time and stuff. I'll get an email like yesterday. I give you an example. Can you land on this appraisal? Appraisal on surface looks good. I'm like, well, tell me what the issue is with the appraisal. So what I tell originators, whenever you're talking to either us here at Quantic or some of your partners out in the marketplace, just be honest. Like, this is what I have. Right. You'd rather know upfront and therefore you can alleviate any of those bombs or headaches prior to that going in and you can educate that.
You can potentially alleviate some of that as you go into underwriting.
But based on my earlier comment of where probably eight out of ten loans we got yesterday, there is unfortunately not a lot of that that goes on in the marketplace. So that originator will send that loan to someone else and something pops up.
They didnt meet the reserve requirements. They didnt calculate the DSCR. Right. Something didnt populate, the income didnt come back. Right.
And there it really is. No secret sauce. But I say, just coming into the conversation with your account executive of what, you know, put it on the table. You know, just put it on the table and a seasoned account executive will tell you how to structure that or give you guidance on how to structure that or be honest with you, just say, hey, I can't do that file. Maybe you need to go somewhere else. And we, you know, I train my salespeople to be as transparent. We're not all things to everybody. Right. You know, our, you know, we have a, you know, if you look at lenders across the country, we all have our, we all have our really narrowed down niches that we really, really do well, some lenders out there have what I call the cheesecake factory ratio. You can just do it all. But really, their chicken is really the best thing that's on the menu.
We don't specialize in fix and flips here. Bridge loans, you name it here at Quantic. But it's just a risk appetite that we have for the bank. But knowing that and dealing with a partner that's out in the marketplace, that will, will land that and not be scared to say, hey, go try this, go close the loan over here. Because at the end of the day, I want my originators to make money. Right? And that's it.
[00:19:41] Speaker A: Journeys that this show has taken me on is Michael Zhao is an underwriter at his family office, and they participate in fix and flips. And so through the show and some of the guests, we've actually been able to bring fix and flip to the, the IMB. So on a high level, it's, yeah, okay, new program. But Bill Loman was on our show last week. He talked about being transformational, not transactional. And to plug another show, we talk about how we will help loan officers. If you just listen to it, it's the blueprint at the lowest cost to start a podcast and why you should stay consistent. But what we found is typically, if you care about those vanity metrics and you're in this space when you start talking about the opportunity to grow, as through home ownership, but especially through investments, there is a large community of viewers out there on YouTube, on podcasts, that are that thirst for more information. When you take the fact that 10.7% of our workforce are self employed business owners, that means not only do they run a business, they fit the quantic well. We can start with they are looking for you to advise them on quantic programs, because that same entrepreneurial knack, they had to put it all on the line.
And by the way, by putting it all on the line, 7% of all business owners use the line of credit to start their company. So they put their house as collateral, almost one out of every ten. Using a mortgage product from a company like Quantic, thats really trying to make the american dream happen. And these people come to the show because they don't know where to go. And everybody, they go to the bank, which is usually where it all starts in most movies, right? You go down to the bank and get a loan. They are not like Quantic bank. They have these credit boxes. They're going to say, and you are feeding that system. When you take the fact that like 30%, well, 57 million people are part of the gig economy, that, again, is something that better favors. And I'm sure you have some success stories maybe on that. My point is, as a loan officer, these loans are transformational because they repeat for a purpose, whereas the repeating mortgages in the past have been more trending. Like, obviously you're going to get a 7% and don't down to a 6.875 to a 6.5. But if you can get somebody in a fix and flip or a hard money so that they can take. And I'm kind of stealing Zao's story here, but you could take mom's house that she was going to have to sell and it was going to come out of the family fix and flip it so that you could use that money to buy your new primary. Now you have it as an investor. You put the investor, you put the renter in there, you go to Quantic bank now you have a better rate, and you have empowered that family now to have two properties to grow transformational wealth. And if they did that over the last ten years, they'd be a million dollars richer than if they didn't have that right. And how are you going to tell that story?
You can get on your own podcasts because the listeners are going to come. They love the cute videos of showing how to save an 8th or a quarter, you know, on tick tock. But the content they really thirst for is, is lenders that understand that, that credit box. So I think, how would you help us tell these loan officers that they could stay in their lane of obviously being available for purchase and 30 year fixed, but it's about time they use some of this platforms to get out there and how would they digest? I guess it can't be as hard nowadays to offer that quantic package than it would have been ten years ago trying to learn it and using Scotsman, the back of Scotsman's guide, et cetera, to. To match it up, right?
[00:23:42] Speaker C: Yeah. Look, I'd say the first thing that originators have to do, and I follow many successful originators online, right. And they post, you know, the good ones are doing a really good job. And it's funny, as I talked to originators, I've talked to a few over the past couple weeks.
Yeah. I've got many good friends in this, in this business. And, you know, I was speaking to one yesterday here locally in Phoenix, and he's like, man, I need an l, I need a couple loas right now. I'm taking ten loan apps a day, right? Eight to ten loan apps a day. And this guy's got a radio. He's got, you know, he's got. He does radio online. He does every day. He's doing a video. He's doing some podcast stuff as well. And so I open up his brain, and I automatically know how he's getting his business. And it is truly from doing those things that are uncomfortable for us as salespeople. I mean, look, before COVID it was hard to get people to go on Zoom, right? You know, it was like, I don't want to go on video. And now, you know, your corporations, and then that was the only way of communicating. Now you got to go on camera, and we're all on camera today, but we don't even. I don't even think that. I didn't even look that I'm on camera, right. I just felt like I'm almost in person. So, you know, I think you have to get comfortable with that first and foremost. But you have to take that first step. You just have to go do it, um, and educate yourself and do some of those things. But, Michael, to your point, if you specialize with that in the mass community, you just mentioned 56 million gig. Gig people. Where are they at? They're on TikTok, they're on Instagram. Right? And if they see you specializing in some of that stuff, right, you're just going to organically grow with that, and they're going to. You're going to get questions on those things. So the successful originators are taking that plunge. I will call it into that world and being. Being very successful.
I was joking with my marketing team the other day. I'm like, we offer such a value add here at Quantic. We need to start doing a podcast. We need to start doing some of these things that educates not just the traditional, hey, we have a webinar. Come join our webinar because, yeah, that's nice. You can register, but having a podcast, that people can come on and do it.
We're doing something unique starting this month where my underwriter is my chief credit officer.
Not that this is unique, but we're opening up for originators to bring their scenarios to my chief credit officer in a live webinar where we can just talk roundtable about how to structure loans, bring your challenge deals, and have the credit expert just kind of talk to you on there. Whether or not that deal comes with quantic or not, it just. It's an educational thing. So those are some of the things that, you know, that we're doing here, but you just got to take that first punch. You just got to do it.
[00:26:24] Speaker A: There's real quick comment on that before we lose it. When you look at vanity metrics, what Mike and I do, the 300 views we had on one show, you know, on pace with Greg Scher show, that's a lot of views for the type of audience that we're looking for, meaning, transactionally speaking, if Quantic is going to do a show and you have 2100 loan officers watching it, there's enough business in there that it's all worth it. And for these loan officers, what I'm saying is the vanity metrics is the tough. And if you go back and listen to our episode, the vanity metrics is the toughest part, really, to get from episode ten to episode 40, because you don't you see that plateau just like working out and the type of loans that Quantic has. I guess I'm saying if you have a podcast at a local level as a loan officer, people will show up out of the woodworks, because that is the american dream, and that is what they have a thirst for. And then over time, they'll start to realize that they could be that person that can put that p and l from their landscaping business. And why not buy that home with that place to put the bobcat? And I'm telling you, like, that's the only thing keeping sometimes the mic'd up show holding us back is if we had more how to be rich using real estate, how to invest. Yeah, that's a ops on those shows. So I think theres a lot of incentive to double down. Or if youre a branch manager, take your most charismatic person that maybe isnt producing and say, hey, lets come up with a business plan here. Ill support you, you support me, and lets be the local people to tell people these loans exist. Theres a lot of people trapped right now.
[00:28:07] Speaker B: Jeff, I want to add to that, Jay. I think that what youre doing is something that is actually really needed at the moment. There's that saying, you're the sum of the ten people that you hang around the most.
And if one of the things that the origination community is missing is education in the non QM space or the creative mortgage loan space, however anybody would decide to define it, then what you've created right now is you're saying, okay, you know what? I'm talking to XYZ successful originators. I'm also talking to my underwriter who can help you with your deals.
If two of the ten people that you get to hang around the most are gonna be the successful lender, and the underwriter that's going to be looking at with the successful lender at your deals, then putting out that podcast and putting that out on social media, you're accomplishing two things. Number one, you're accomplishing the fact that you're getting the name random person for self serving purposes. That's very beneficial for you. Number two, though, you're educating the community on how to work inside of the business. Everybody's working on their business by originating, originating you loans and doing that. And that's great because that's part of the deal and they have to do that. But working on the business, meaning that how do you educate the originator on how to learn more about the non QM space? How do you educate the originator how to work on the HELOC space? How do you work on them so they can educate their clients in the financial services space by using the non QM products?
I think that bringing that out and saying, oh yeah, well, everybody has a meet the underwriter at their company. And I would say that's partially true because it does happen. However, when you actually have the willingness to go live and bring that out in the podcast space, you're bringing a dynamic that I think that obviously you already see it, but you're bringing that out to the community now. Now you get to be part of the ten people that people get to hang around the most. You're saying, I want us as quantic to be part of that ten people so that you can get educated, so you can originate more business, and as a result, you can be more productive, not just for yourself, but for your community and, and to your other originators and say, and you know, because we all network inside of the these trade shows and conventions. So for the fact that you guys have that willingness down to say, we're going to bring the talk through the underwriter live in a podcast, whether on LinkedIn or whether some other format Zoom onto camera with the cameras on, that is a step in the right direction. I applaud you guys for telling originators to work inside of the business and on the business at the same time with Quantic.
[00:30:49] Speaker A: I'll bring it all together as a question for you too, then. So role playing into that role, you're a loan officer on a local podcast. Do you have a success story that you remember that Quantic bank was able to do for somebody that you think really kind of set them off in a different direction? Wasn't like a primary residence, I'm saying.
[00:31:10] Speaker C: Yeah, so this is real live. Yesterday one of our broker partners out of Florida called me. The account executive was out, called me, had an itin borrower, and it was an itin borrower. They wanted to do a cash outland, right? They wanted to cash out on an itin loan already on the property, which is great.
Loan amount was pretty large. But the borrowers, he didn't have enough income to qualify, so he wanted to put the daughter on the loan, which was fine. She was another itin. The situation was, once we. Once you uncover those questions, what's the primary borrower's FICO score? Um, his FICO score was substantially lower. When I say lower, it was 564. So, yeah, once you get below 640 in the nine killing space, you're pretty much all bets are off. Right. You know, there. There is that sound lending, you know, versus what we had with the old subprime days. So as I start having the conversation, just with a conversation with him. Well, the daughter, what we did was we basically set it up where the daughter, the bar was not in any form of default, right? So he wasn't in any form of default current on his payments. But the daughter, we set it up for the daughter to actually buy the property from father. She had a 780 FiCo score, right? Did a gift of equity, got father cashed out, right. So she basically bought the property from him. So we did a gift of equity, family member. And then he was like, well, she works for me, right? She works for the borrower. That's fine. Boe, self employed. We get this. We get the CPA who does their. Their taxes to do the Voe for the borrower. It's easy. He could. He had called eight different lenders a. Obviously, the FICO score was the issue. Um, and I found a way to structure that deal for him. Now, we still got to get it across the finish line. But the reality was, is there was a solution based on how you structure that loan to meet the end borrowers, uh, goal. Right. Um, you know, sometimes you got. You know, this is my. My southern slang coming out, but you got to go over shoulder or scratch your ass. Well, that was one of those situations where you have to do it. But, you know. But back to your point, Michael. The borrower, the primary borrower, the father needed the cash in order to go open up another branch of his business to expand his business. Um, you know, so it. You know, and he was struggling with that. And there's a lot of business owners that, you know, are Rob and Peter to pay Paul. They've got the means to do it. They just, they don't have the wherewithal to do it. So real life scenario happened yesterday at about 334 Pacific standard time. Because I remember I was on the phone for an hour.
[00:33:57] Speaker A: Yeah. At 7.3% of all businesses start. I actually saw Casey Crawford post that on social media. So that is where social media obviously does have a ripple effect. Hits our show now and goes further out there. But what a story where able to expand the business for the family and keep the house they probably grew up in. Not to mention there's a great homestead act down in Florida. So, like, you guys are just really in the best interest of the customer there. And I think that story, if it succeeds as such a ripple effect, you know, in that community, because they all probably know the name of that business and they know that family. That's the type of lending that's going to attract podcasts and transformational advancements because you might get all of their employees. These type of loans, I feel like are so unique in building businesses now.
[00:34:50] Speaker C: So one of the things I want to touch on, what Michael was saying was the education portion in the marketplace. So one of the things that's happened with NAr now, that's a whole other podcast that we could do with the whole other thing. But one of the things that I've done here at Quantic is we've kind of capitalized on that. Right. We're at FDIC bank. So we are actually actively hiring real estate agents to become part of originators. Now, you can do that. You're licensed in all 50 states. You don't have to pass the test. You're under the federal charter, which is a great segue into that. But here's what I found. As I talked to originators, to real estate agents across the country, and I explained our portfolio products, their mind is blown. They're like, no, no loan officers ever come to me and tell, you know, told me that, you know, products like this exist. So if you're an originator and you're listening to this today, there's a likelihood that your real estate partner, your, your agent partners out in the marketplace don't even. Cause it starts with them and the baseline, a lot of times with like whether or not that they can qualify that borrower just based on that conversation. But I would say you have to educate your real estate agents specifically. You're very valuable partner ones that like, hey, theres loans that we can structure out in the marketplace to do that. So just kind of, I wanted to piggyback off what you said, michael, earlier, is just about the educational portion. And im grassroots talking to real estate agents out in the marketplace, and these guys are like, you can do a one year self employment with P and L. You can just do a Voe and they can have overtime. All that other stuff, their mind is blown. So you got, I always tell people from a salesperson, from one salesperson to another, if my mouth isn't moving, I'm not making money. So, yeah, go move your mouth.
[00:36:35] Speaker B: So does that mean that lenders and realtors can collectively work together so they can leverage quantic wholesale? Or is it quantic retail, or how does this work together?
[00:36:45] Speaker C: So the retail side, we've kind of expanded it. Right. You've probably seen in multiple people across the country, mortgage bankers, again, out in the marketplace, they've got, you know, capitalizing on it. They're like, hey, come join such and such brokerage or bank Ridge. If you're a licensed real estate agent, add a different vertical. Right. The challenge with that as a real estate agent is you got to get licensed in the state. You got to get blinded. You got to go pass the test. The value add that we have here at the bank is you just get an MMLS license. You're now licensed in all 50 states. There is no test, and you kind of plug into that. But that's on a real estate side. But that's a whole other conversation as it relates to it. The back end to that was, as I speak to real estate agents on a daily basis, and when I tell them the value at a quantic, right, their mind is blown in the sense of they didn't know that products like this existed.
[00:37:37] Speaker A: So they also didn't have the historic bias that this is the way it has to be, because this is the way it's always been. And I always love that quote of the people that got you here are not going to be the ones that get you out.
That's a statement about mindset. So they're coming in saying, let me educate. And we have to have empathy for them because the seller's agents are running everything right now, and they're slowly testing how. And I'm seeing this in posts. They're starting at two, then 175. How low can they go on the buyer side. Right. And so these buyer's agents really need to migrate. And when they come there, they're not predetermined, like, has to be GSE, has to be FHA. They can come in and go a different angle with it.
So we certainly appreciate that. Where do you see quantic wholesale in the next five years? And when we hear wholesale we think brokers. But are there imbs that are brokering out deals they can't do? How is quantic going to help everybody rise to the top?
[00:38:45] Speaker C: So one big thing is my biggest clients in wholesale are IMBs. They're I won't name names but they're, they're not your traditional mortgage brokers because we, we cover that. But it's the IMBs that either a don't want the risk. The risk putting it through their own warehouse lines or doing it non Dell and they broker those loans to us.
I the foreseeable future for the non Q on space, you know, with projections is it's going to continue to explode. It's double than what it was in 2020.
I think 16% of all borrowers in the marketplace today are self employed. Right. Eligible borrowers are self employed and that's projected to go up as people want to expand and get away from corporate America. Great for those guys.
So the non QM space is going to continue to expand. We're going to continue to evolve and be risk avert with products. We constantly look at our product base and what the market demand need is, you know, and where can we play in that space. We've got some enhancements to our products that are coming out. Whether that's allowing for investment on itins, launching a five to eight with a five to eight DSCR with a mixed use component.
Some of those things that are, they're not very prevalent in the marketplace. And where can we really help the market from that standpoint? I don't see the non QM space expanding the credit box. Right. I think we got some economic factors. Again im no economist maybe I should be, but I think when you look at credit card debt at an all time high, you look at lets just use our common sense as a consumer.
[00:40:22] Speaker A: Savings at an all time low.
[00:40:23] Speaker C: Again savings. You got that? Auto loan delinquencies are up. So what do people stop paying? First their credit cards, then their auto loans and then last but not least their mortgage.
Now knock on wood, mortgage delinquencies stayed down. What I love about the non kilo space versus post the pandemic, the financial crisis is nikum is sound lending. Now most of these borrowers have 20 30% down and they've gained equity. They're not going to walk away. It's not like we did an 80 21 day out of BK back in 2008 and they just, they don't do it. So I think the 9 km space will be a little bit protected of some of the foreclosures and stuff, just due to the equity position. I think if we see any runoff there, it'll be, you know, it'll be in the agency, in the government space. But I think the non kill space, yes, they won't be protected because they will do some of that. That will happen. But I think the non killed space is here to stay and here to grow. And I know on our side of the house, we have aspirations of also getting into the true delegated correspondence space and helping those IMBs and giving them another blanket where they don't have to broker out so they could correspond that, that loan to us as well.
[00:41:36] Speaker A: So if you're self employed and you're listening to our podcast, act quick, tell your loan officer to call Quantic. Um, Michael Zhao, any final thoughts here on, uh, on the show, as we, uh, we do have to.
[00:41:50] Speaker B: Yeah, I was, yeah, I was going to ask the question, what is your one industry secret sauce? We're, we're limited on time, but what I will say is that one of the things that I'm taking away from this show is that what Quantic has to offer through their account executives is the willingness by them to educate the origination community on the various types of products that could be more available to them when they have the willingness to invest their time to get educated on these types of products. Quantic may not offer all of them. They will offer most of them, and maybe some of the other non QM lenders in this space will be able to offer some kind of unique underwriting space that maybe Quantic hasn't seen yet. What I will say is that the types of opportunities that are available are still limitless at this moment. And the leaders of the origination community can still take advantage of educating their originators. Right now, there's too many originators still in that agency box. And in order for us to be able to generate more and new originations, we need to be able to get open the box and create more and create more opportunities, not only for us as originators, but also more opportunities for the buying community that's out there. We may still have an inventory issue, but part of the inventory issue is currently being released. With lower interest rates and with the type of opportunity that's available through quantic, I think that there is greater opportunity to get that inventory off the shelves.
[00:43:23] Speaker C: Amen.
[00:43:25] Speaker A: Well, thank you for coming on here, James. We appreciate it. Tune in, everybody. If you've been listening. We waited way too long to say this. Please give us a, like, a comment. We'll send you some swag and a subscribe would actually be the coolest. So any of those you can do on whatever channel you're listening. And always tune in for the live show at 02:00 p.m. eastern, 11:00 a.m. pacific.
