Episode Transcript
[00:00:00] Speaker A: Hello and welcome to the Mic'd up show. Michael Zhao happily returning here. This is season four where every mortgage has a story. It's the ultimate hub where the hidden stories behind the mortgage industry come to life. I'm Michael Kelleher.
[00:00:15] Speaker B: I'm Michael Zao.
[00:00:17] Speaker A: And in every episode, we dive deep into the entrepreneurial spirit, the strategic insights and breakthrough innovations that build the world's greatest greatest mortgage companies.
So whether you're advancing your career, scouting for industry leaders, a little selfish in saying this one's a hard one for me to have out on the show because everybody's going to realize the secret I already know, which is for somebody so high up on the mountain, he is humble and treats this industry with such nobility that he really talks to everybody. And that's what our show is all about. To show you that big TAM which they talked about at the housing wire. Huge tam, not too many hundred million dollar companies yet, but everybody's approachable. So if you're exploring opportunities in fintech, prop tech, career growth, you're in the right place. Get ready to unlock the story behind every mortgage. Let's dive in. Today we have Justin Messer with us who is CEO of Prosperity Mortgage, which is wholly owned by Home Services of America, which is owned by Berkshire Hathaway Energy. So there's numerous brands around the country at this point. You're part of the third, maybe fourth largest Realtor based on different measurements within the country. You're an affiliate lender. You talk a lot about capture rate. I think what's beautiful is you've seen a gravestone of people trying to get to the capture rate that you have and you're honest about it, saying sometimes it's high as 25, sometimes as low as 19, but that's the magic number right now.
And your primary referral source is that massive network of agents. And as somebody in product, I think what I'm excited to get to on the other end is how many real estate agents you've actually spoken to. Because I've spoken to a lot of product people who make products for real estate agents that haven't spoken to any actual real estate agents. So go figure. I wanted to put you into that couch with your former employee player. Rocket Mortgage comes out with the commercial and you still talk, even though it's a competitor, about that fascinating moment because you knew even back when you were with them, 100 irons going into the fire. You say to come out with that push button, how easy it could be. And they're doing it in Your face on the super bowl, the magnitude of that. Can you just talk about that day and maybe the next day? Because I, I remember this too, where Twitter and compliance and everybody and Yahoo News Mortgage actually made a statement day.
[00:02:45] Speaker C: Yeah, I mean that's, that's a funny memory. I'm, I'm, I'm, I'm going back to it right now. You know, it was, you know, I think there are very few milestones where you realize that at least for a segment of people, like the game has changed, let's, let's, let's put it that way.
And you, you wake up and you realize that, you know, okay, what we were doing yesterday is not going to be enough to get us through to tomorrow. What does that look like? And what do we have to do? How far ahead are they actually?
And then you start kind of peeling back in. And for something, you know about Rocket, it's like they can take a 30 year fixed rate mortgage and name it something and all of a sudden make it sexy and cool and exciting. And you know, they, they, they branded a commodity. You know what I mean? It's like a, it's like a bottled water company. Right. It's fantastic at that, right. So you have to try to think about, okay, what's this is, what's the stake, what's behind it? Fortunately, like, I knew the building blocks that were behind it. I also knew that at that point in time, prosperity, for example, didn't have access to all of the building blocks required.
I would say, you know, when something like that happens and this moment will happen again, this moment will happen with AI, this moment will happen where we all take a step back and we go, oh gosh, there it is, right? I think, you know, when I talk about how I encountered that and what I did, I went, okay, how can I get to a close spot of parity, as close as I can get with what I have access to, and then how do I make that prosperity's version of that?
And I think that's always been the most important thing. So where prosperity has been, you know, I would say probably one of the very, very quiet industry leaders, you know, around kind of digital automation and digital verifications, you know, you don't hear about it much because we do not want to devalue what is so important in our opinion in the transaction. If you're leaning into a realtor transaction and a local mortgage consultant transaction, the human is what is so important.
[00:04:36] Speaker D: Right?
[00:04:37] Speaker C: So it's kind of like as we talk, this AI concept with like Human in the loop type stuff. We felt the same way about digital mortgage, right. Which is how do we make a, our, our mortgage consultants life so easy when they utilize these tools that there's going to be mass adoption.
[00:04:51] Speaker D: Right.
[00:04:51] Speaker C: How do we make it special and branded internally so that people know it's different and people get excited about it and people push towards this and they want to do this and in turn, you know, you can save a ton of money also as you do it just strictly on, on, you know, the amount. I mean say 1 in 5, maybe 1 in 4 depending on the month and depending on the refi purchase mix. You know, primarily in purchase of our purchase loans, you know, go through a, a fully, basically push button get mortgage process where they're fully approved in say 15 minutes.
But we don't really. It's, it's an interesting thing where we'll let them know that they're approved. But you know, and I've said this before, but one of the most interesting things that we certainly in the purchase environment, right. Because Rocket developed this for refi like, you know what I mean? Hey, it's a refi tool. That's really what it was about. I know the commercial was about people buying a home, but really it's a, it's a, it's an awesome refi product. In purchase. If you approve someone in 15 minutes but their purchase contract is in for 45 days, they actually get creeped out because there's like nothing to do for 40 days in the mortgage transaction and people just aren't used to that. Right. So, so I'd say, you know, something hits you in the face first, you take a deep breath in and I think you have to assess like how real is it, how much sizzle, how much steak, what's actually behind it. Is this a very small portion of, you know, something that's a very good marketing tool.
And then once you come to that reality, you say how do I make it my own version?
[00:06:07] Speaker D: Right.
[00:06:07] Speaker C: Because what works for Rocket, I'm going to give everybody a big in here is probably not going to work in your individual company, in your brand. It's not going to, not going to fit.
[00:06:17] Speaker D: Right.
[00:06:18] Speaker C: So, so how do you mold it down to really make it your own and you know, make it a, make it somehow a durable advantage for you as opposed to somebody else. And I think we deal with that, we're dealing with that a lot in our model, you know, as we, as we look at things.
[00:06:31] Speaker A: Yeah. And you are a, a massive company in, in terms of mortgage where you have now the power of scale. And there's great parts of scale, the ability to get tech that you it pencils there hard parts of scale which is managing the customer service. Yet you were JD Power number one this year in all of the country and in their highest, most admirable list of customer satisfaction.
To put in terms, you did close about 7.4 billion last year. Over 20,000 units. You're servicing or you're in the office or you're, you're showing face to about 40,000 real estate agents, give or take.
With that you come in with this mentality I've heard back in the day, iterate or die. The Twilio founder went to your college create a North Star.
Is that still your mantra? Or have you become so big that it's it iterate, light or die.
[00:07:29] Speaker C: Well, let's say this like, you know, I think iterate or die or build or die as you know, it's a great book by the way. Ask your developer.
You know and, and you know, I think it kind of form helped formulate my post rocket, you know, view of technology and what technology is and, and really thinking about a lot of, a lot of table stake stuff these days is well suited for vendor relationships. I think looking at your own model, thinking about it and focusing on it to say does it make sense for me to build anything? What is that secret sauce? What is the thing that I want to manage my own destiny on internally? And I think, you know, the amount of money spent in the vendor landscape, I think that build decision is becoming narrower and narrower. In all honesty, when I look at it right. So like when we started prosperity, we had a build versus die mentality.
I also brought with me, you know, our, our chief technologist also had a rocket background. So we came in build, build, build, you know, and, and we are going to build everything to have this very, very specific use case which is distributed retail. Realtor first. How do I service the realtor? What are the realtor's tools? How do we, how do we fit that? And I think today we are more in a posture. I'm just, that's kind of what the Iterator die concept is. I think now, you know, we're more in the posture of like micro apps and solving problems, localized problems, driving efficiencies that way as opposed to hey, we're going to go out and you know, build our own product and pricing engine, which is what we did off the bat.
You know, great thing about building technology is we had our product and pricing engine. And for years all that happened was our salespeople complained about our product and pricing engine and then immediately moved to a different product and pricing engine. They're like, that's the greatest thing that we ever had.
[00:09:16] Speaker D: Right.
[00:09:16] Speaker C: So like you don't realize when something's tailor made for you as an individual user and it can move quickly and it can adapt. Like it's so powerful there, but it's just a really tough decision to make. I think in this environment, when you look at, you know, the scale that, you know, a few big players have in a lot of these verticals and the amount of money that they're investing in it, you have to have a pretty darn good use case to keep kind of iterating down. And I mean, so I'd say iterate, you know, it used to be more of a technical philosophy for us and I think it just comes down to experience for us. So just a constant obsession on, on turning the levers on what we can do better, you know, in the customer journey.
[00:09:51] Speaker A: Yeah. And I like how you always say it doesn't have to be tech. We can iterate on, on people because we're not a tech company at the end of the day, we're, we're a mortgage company. Right.
[00:10:02] Speaker C: The sooner everyone comes to that realization, the better off they are. I'll tell you, it's a, it's a painful mistake to learn, but yeah, it's, it's the truth.
[00:10:10] Speaker A: There's still a company waiting to IPO for about eight years later that, you know, was trying to figure out how to become a tech company. It is difficult. You and I have a similar background. I like this cool part of it. We both went to college thinking had majors that would end up on Wall street. So thinking we'd be in Wall street all into the mortgage industry. But also I had a lot of athlete friends and so they ended up being five year, six year. Well, that's half of why, but. And so I stuck around, worked and stayed there. You did, which opened up an opportunity to work in the mortgage industry.
For people listening for career growth. I think we also share in common. I just like how your passion is, or your statement is you adopted a passion for this industry where if somebody didn't want to pick up a job, you raised your hand. If somebody needed help, you raised your hand and maybe took over. But after a while you were raising your hand so much you, you ended up where you are today. Can you speak about that for the new guard out there and why that age old strategy will work again and again.
[00:11:15] Speaker C: Yeah, I mean this is one of the things I struggle with about remote work versus in office, to be honest with you. Because if I think about my career path, I think my career path really was, was guided by the fact that I was in the office. Right. So I was around everybody at all times when I started at Rocket, like he, like you said, Mike, I mean, you know, I think we disparage the mortgage industry too much internally, right. And we talk down on it too much because it's a, I think it's a very, I think it's a very noble and awesome industry. And the nuance and the complexity of it is overwhelming when you get into it and the opportunities, you know, that you have out there, all different verticals of this business is, is absolutely fantastic. And I think that's what really happened to me is all of a sudden I, I, I'm out of college, I'm kind of listless, I'm not sure what I'm going to do. But um, and I get hired by, you know, Bill Banfield and Bob Walters at Rocket to go beyond the lock desk. Okay. I didn't know what a lock desk was. I had no idea what that meant.
[00:12:10] Speaker D: Right.
[00:12:10] Speaker C: I was like, I don't know, I guess there's a mortgage, I don't really know what it is.
And then just jumping into it and saying intellectual curiosity is really all it is. Right. So like, are you just curious enough to learn every single thing possible about not only the tasks that you're performing, but why you're performing them, how you're performing and what else you're impacting and if you just hyper focus on that and become obsessed with it. And I was like, you know what? I'm going to be, I'm going to be the best lock desk person in the country.
[00:12:40] Speaker D: Right?
[00:12:40] Speaker C: And that's how I came to work every morning. And I'm like, I am going to absolutely murder this job. Which I, you know, was, was so remiss to take off the bat because I thought for some reason it was below me or something and realizing quickly that there were people there that just ran circles around me and I'm super competitive. So I was like, no way. Like, I'm going to do this, I'm going to do this, I'm going to do that. And then slowly you start eeking out your way into some other areas and some other responsibilities and like you said, just raising your hand and, and I had nothing to do, so I would just work you Know, endless hours trying to understand it. And then I went, oh my gosh, I don't even know that capital markets existed in mortgage, right? Like who knew that there were bonds that were traded and they're, you know, like what, there's interest rate risk management. There's, you know, there's, there's hedging, like what is going on here? And then you see this other world and you look over and that's where I met one of my big mentors, a guy named Jason Lee, who's the president at the loan store now. And I, and, and you know, he's over there running interest rate risk management. I'm like, I have to learn everything about this. Like I what? Like you're on the phone with Morgan Stanley, like this is crazy, you know what I mean? So then you dive into that and even though it wasn't my job and I had nothing to do with it, I then learned every single nuance of that that I possibly could and shadowed when I could. I didn't take lunch breaks, I just sat over there and list and understood, understood the models and understood what it meant.
And then eventually, you know, luck has to factor in somewhere, right? So hey, you get an opportunity, you do something. So my opportunity was, you know, agency trading. So Fanny Freddy stuff, right? So like hey, the boring stuff in the business at that time because the exciting stuff was securitizing and trading al paper and everything you can imagine on that side of the business. So that was the quick, fast, aggressive side of the business. Agency business was ho hum, no big deal. Hey, we bulk traded it. Which was interesting because AOT was like the only way people were doing it back then. We started bulk trading loans and doing stuff. So we're like, hey, we can even try to come up with different ideas and stuff. That's stale and old. That's the rocket mentality. Hey, I don't care how it's done, just find a different way to do it and try it and either it'll work or it won't, who cares, right? So then you start that and then the crisis hits and guess what? There is no longer another side of the business like the Altay desk. All those things kind of blew up and our whole business became the agency desk. So I kind of just fell into, I would say running the trade desk just strictly because my product was the only one that was still being originated out there. And then that parlayed into, into running some other pieces and industry risk management. And then eventually, you know, valuation and servicing portfolio over There as well. So know that's, that's kind of the path. I would just say, you know, always being available, always be willing and just becoming the absolute expert on your individual area goes a long way and builds a tremendous amount of trust to leaders. But again, I think it's a challenge for the, for the up and coming generation if they're, if they're remote first.
I don't think it's a challenge in terms of like, hey, you know, job security or anything like that. But I think this growth, I mean, I don't know what I would have ever become if I wouldn't have had the Jason Lee's, the Bob Walters, the Bill Banfields in my life, you know what I mean? To build me up. I was just listening to a podcast this morning with Jeremy Potter and Bob Walters and Bob's not that out there too often anymore, but like listening to it, it just brought back so many memories to me. And I haven't worked for him for 15 years and it's just like, oh my gosh, like you don't realize the impact. I mean, he's saying stuff that are like, I would have thought those were my core views. And I'm like, oh, this is where I got this core view from. From just sitting osmosis, from someone so much smarter than me, so much more seasoned than me, you know, so visionary that, you know, it just kind of wore off on me and I just, I think that's something that's going to, that's going to be harder. I me, we'll figure it out and you know, the up and comers will figure it out, which is something that, you know, gave us, I think, a leg up versus that.
[00:16:36] Speaker B: Justin, it's amazing you, in listening to you, I would have thought that you would have been a former IBM guy. The mantra for IBM is think. I like to go if we can go into the past because you have a lot to unpack on what you just talked about.
What I'd ask you is how does someone become.
It's going to be two pronged question. First of all, how does someone go from being like a literature major into becoming finance bro?
And to go even before that, how do you. I'm talking about someone who said, who was a parent of three now college graduates and they're, you know, the different majors, different backgrounds, so on and so forth. But tell me a little bit about how, how you think when you, when you're looking for information to advance whatever. Cause it is because you didn't start in finance. You started in German languages and then you move into finance. So tell me about your thought process of how you ask questions if you can or, and, and the reasons why you want to move into that when it comes. Because when you ask why, it leads into greatness and it's, and it's been shown in the clues that you've left behind and the people that you've spoken to.
So can you give me a little bit of insight on your mindset of how you ask those questions or when you lead, when you, or all those whys that, that you, that lead you to ask questions so that you could advance every sector, whether it's college graduate into becoming the cap, best lock desk guy into now the CEO. There's a lot to unpack there. But could you help us go through the, the mindset of how you go into that?
[00:18:07] Speaker C: Yeah, let me, let me try. And then you guys can prod with questions as I, as I airball this.
So you know, first decision point I'll just say is yeah, I was a driven language and lit major and my sophomore year of college, going into my junior year, you know, my dad sat me down and said hey, you know, maybe, maybe we need to add a little extra something on there. So I immediately went to, I, I, I, I did spring and summer term between my, my sophomore and junior year and I actually picked up an econ as well, which I was passionate about.
And I really started off in German thinking I was going to go to the business school at Michigan. At that point you applied to the business school for your junior year.
Just a long list of my failures there, of not getting in there. And so then we pivoted to econ as kind of that. And so I think the one thing about college that I think is probably undervalued, at least for me and kind of my growth.
[00:19:01] Speaker D: Right.
[00:19:02] Speaker C: Yeah, of course it's not, I don't throw into deep calculus models of econometrics at all, nor would I have the ability to any longer. But it really does teach you how to think in a lot of ways.
[00:19:15] Speaker D: Right.
[00:19:15] Speaker C: And how to question and I think a lot of the things that were accepted as like, I understood this, you realize you don't really understand anything about it and you dive deeper into it. So I think, you know, just the pure things of like humbly approaching things, understanding, you know, nothing I think is highly, highly important to, to pretty much every question you walk into.
I think the other thing that I hold a lot is I say this to my team non stop and I Say it all, all the time, which is, I have strong opinions. Loosely held. It's a common phrase. But I think if you actually live by it, it becomes really, really important. Which is, you know, the luxury we have because we're not politicians is we're able to change our positions as frequently as we want.
[00:19:57] Speaker D: Right? We are.
[00:19:58] Speaker C: You know, just because I'm on the record saying something once does not mean that I am tied to that in eternity and it is somehow part of my identity. But instead, as, as new information comes in, I'm able to pivot pretty quickly. And the other thing is we always say yes before no. And that's probably been the hardest thing as I've, as I, as we've merged new companies in or acquired companies or done things. It just, it seems so pervasive. Probably in every industry, this is the only one I know, right, that people just freaking love to say no.
It's almost like this weird, like, I can't explain it, right, but it's like people enjoy flexing their worth or something by saying no to things before understanding that the most empowering thing to do is say yes and then arrive at the journey of no together with the person.
[00:20:44] Speaker D: Right?
[00:20:44] Speaker C: Because if you go through the steps together and you walk through it, everyone's going to be in agreement probably on no if the answer is no, and they'll understand it. And I think that, you know, way too often people just say, you know, this is, and this is the reason. And I think that's a big failing of why probably a lot of good ideas die. If somebody has really good ideas and you just tell them no two or three times, they're just going to stop bringing ideas. And the power of prosperity is in the 1200 team members and the ideas that they have, not in the ideas that I have. You know, they come up and I'm in the. I have the luxury of saying that's awesome or hey, that's great, but it needs to go lower on the priority list. I'm just a, I'm just a gatekeeper of priority more so than I am, you know, some font of wonderful ideas. You know, for the most part, our.
[00:21:32] Speaker A: Industry is lucky to have you, Justin. So is your 1200 employees that you're not yet BMW or Mercedes Benz or DHL or Aldi or some German company that I didn't mention being a yes man. But we do have some sponsors a little bit more relevant. So we're going to take a quick, a little over a minute to listen to some of the sponsors. And we are looking for more sponsors so that we can go out and get great guests and bring them to you. So if you have a brand that sells to mortgage companies, please reach out and be a part of the mic'd up show.
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[00:22:53] Speaker C: Also who they are.
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[00:23:22] Speaker G: Year where the company can do the configurability so we have no code on this so they can go in their settings, they can set it up all the way down to loan officer if they want to. We also have a customer support team that's assigned to each account.
If they want, they can overhaul everything if they wanted to. They have a new product, especially dynamic apps. With dynamic apps we can fit multiple, we can fit the Fannie Freddie loans, we can new construction, one time close HELOCs, you know, whatever those workflows are, they can design that workflow for each individual app. So it's not a static app. And plus two is as they're answering those questions, it'll ask them specifically what they need. So the borrower has everything at their fingertips right then and there. You know when a question gets answered, certain documents are required and we have that engine that handles that. So if it uploads directly into flow FI pushes it automatically into the los. If the loan officer they are able to set it up where it looks like if the processor needs something they can communicate as a team. So it looks like it's coming directly from the loan officer that they're already used and have that relationship with. So it's not somebody that they never talk to. Now what's going to take it to the next level is the AI and the OCR piece.
[00:24:35] Speaker A: Shout out there to our producer and Anch and his team in the studio putting that together for flow if I there. So if you're a vendor, you don't even have a commercial. Just reach out to us. We try to be a friend to everybody. What is it? Water, ocean lifts, all boats.
I was gonna ask you, I'm gonna ask you a two, four here, Justin, for the sake of time. I, I am intrigued that when I first started in the industry in 2013, everybody was from Countrywide and they talked about this scholarship, great program you could get part of. They put you in five different departments over the course of two years and in whatever reason, whoever was in that went on to like boom, career boost. I'm seeing Rocket type stuff here. If you were in there in the 2000 and tens, I'm really starting to see it over the last 18 months. Career growth at different companies, at their competitors, etc.
You're one of those alumni. But can you also talk about you left there, you started this company before, I think it was called Prosperity and you had a mentor that you learned from. And I might get this name a little bit wrong, but close so you can correct me. Wes Foster. And he taught you a more wholesome way of looking at the transaction, it sounds like. And that's now in the DNA of the entire journey for a consumer. Probably part of the, the JD Power piece where the consumer and the real estate is the center.
[00:25:59] Speaker C: Yeah. So let me start with the, the Rocket point. And I, I started rocket in 05 and geez, I don't even know. Like Maybe we were 12, 13 people in CAP markets I, I including Lock Desk, you know, and, and, and post closing and everything.
There weren' to say the least. And, and you know, I'd say the, the Countrywide idea.
Absolutely. And a lot of that has to do with probably just the massive network that proliferated out from, from Countrywide. Right. So people landed and started amazing competitive shops that still exist today from there. And then a lot of those people brought people and they had a lot of expertise and, and what an awesome thing. I, if I were to think about Rocket like in the, you know, call it 2010 and previous. And after that, I mean, there was just an insatiable desire to win.
And, you know, we, we, we. I think we woke up every morning, you know, with a manufactured chip on our shoulder is the best way to put it, right? So you looked and you said, hey, why are these people better than us? Why are they beating us? And that came from the absolute top of Rocket, which is, why shouldn't we just be the best? Like, why not us, right? And. And that was always the question in the mantra. And it was not only that, but, like, everything.
Every day you woke up thinking, how am I materially going to change this company and this industry?
And when you're empowered with that view that, like, all of a sudden they tell you that's possible, like, Justin, you are 23, 24 years old. Guess what? You can change the mortgage industry tomorrow. The world is yours. And you're like, really? And then all of a sudden you start doing weird stuff and you start thinking about it and you're like, hey, I really got to just switch my. I gotta. I gotta have quiet time here to reflect and think about what I'm gonna do to change it. And this is just as like a bond trader. And you're like, what am I going to do?
[00:27:40] Speaker D: Right.
[00:27:40] Speaker C: Okay, I'm going to. I'm going to go odd settle dates. You know, we're going to go 99 loan amounts. Like, we're going to 99 note rates. Like, we're going to do all these things. We're going to react to people and do it better. We're going to just challenge things and constantly ask people what we're missing and what we're doing, which, what should we be doing differently and that sort of thing.
And then just, you know, Rocket has, you know, as much as people want to, you know, say, like, culture this or that, like, it really is a. At least when I was there, I can't speak to it. And you know, the last decade plus. But I mean, it was wonderful and it was all encapsulating and it was accountable. And I always say, like, culture creates accountability.
And it really did there. Meaning, you know, if someone. If you were interacting with someone, you never had to, like, you never had to say anything beyond one of the isms back to them. And yeah, it was kind of a jerk way to do it, but also it got the message across quickly. You know what I mean? Like, the one they would always use on me would be like, simplicity is genius, because I would try to be acting smart So I would write, like, really long emails with, like, a lot of technical stuff to be like, guys, check out how smart I am. And they'd be like, if you ever send that email to Bill Emerson again, you're fired. You know, And I'm like, oh, my bad. They're like, yeah, three bullet points, dude. Like, three bullet points. Like, okay, great. Nobody cares if you're smart, dude. Like, you know what I mean?
Or in my case, trying to act smart. You know what I mean? Like, don't protest too much type thing. Right? So, again, that was culturally. I think a lot of people were ingrained in that.
And then you get out there and you realize that that's not how all of corporate America works. I think a lot of people also came in there and that was their first positions or their first jobs or their kind of entrance into mortgage. And as you exit, you realize that you can have a huge impact on an organization culturally just by living exactly what you were doing before and emulating the people how you looked up to. So I think that's a big reason for it, and just size and scope of it at this point. I mean, the amount of people, they're obviously going to proliferate, you're obviously going to pull for it out.
All right, Keller, what was the second part of the question?
Oh, yeah, yeah, yeah. Well, there's, you know, I think there's a theme here which is like, you know, you stand on the shoulders of the people that came before you and who change your perspective on stuff. And when I left.
When I left prosperity, or when I left Rocket, rather, like, I thought I knew everything. Like, it was like, oh, this is easy, right? And I. I was just a capital markets guy, but, like, I had enough osmosis, and I was curious enough about the other parts of the business, and I spent so much time understanding it and learning it that I thought I had, you know, at least like a. At least like a 75% understanding of how most of the sausage was made there. And I thought I could go deliver that. I stepped out of that. And then an old Countrywide guy by the name of Jeff Detweiler, actually.
So he was the CEO of. Of a real estate company called Long and Foster, Wes Foster being the founder of that. And then another gentleman by the name of Tim Wilson, who's World Savings Wachovia, that kind of background. I stepped into that. And I had never been in the purchase business. I'd never been in the realtor facing business, and I had never been in the.
I basically report to and work for my MCs as opposed to my. Or my mortgage consultants as opposed to my mortgage consultants working for me, like at Rocket, you know, that was more the mentality of that. And then here I'm like all of a sudden and, oh, I went from kind of like feeling like I. I could direct things and have influence on things to realizing that I know I now work for a much broader group of shareholders and interesting and interested parties that I need to please and placate and understand.
And Wes is. Wes built, you know, the largest privately held real estate company in the country called Long and Foster. And he was just. Everything was agent centric. So it was, how can you make the agent's life better? And I think what that really formulated for us was our core definition of customer, right? In our organization, we beat down who the customer is. And yes, it's the borrower. And the borrower always needs to be a centerpiece of the transaction. And they have to have a, you know, a seamless experience as possible, as pleasant as you can make mortgage lending to be. But then when you take a step back and you say, hey, the realtor is also. Or my real estate partner is also my customer.
When you start to think of that, it's a very, very different thought process. And it raises the stakes of the transaction because a realtor is going to be your customer, but they're also going to be a repeat customer 10, 12, 14, 15 times a year. Whereas a consumer, they have a sphere and they have influence. So they may, you know, bring some transactions to you, but they're going to transact with you once every three, four, five years, if they even do, right? So. So again, the stakes of the transaction, you know, materially change. And I think Wes really helped me understand that as well as, you know, Tim Wilson and people like to. To kind of reprogram my brain again. And just another one of those touch points where if I would have walked in a little bit more humbly and a little bit less feeling like I really had the answers and I had the playbook, because I had a playbook. It just wasn't the playbook for this game. It's an entirely different game.
[00:32:42] Speaker D: Right?
[00:32:42] Speaker C: I came in with a. With a series of basketball plays and we were playing football, you know what I mean? So it was like, wait, okay, I guess pick and roll doesn't work here. Like, let's try rub route. It's the same concept, but it's a little bit different. You know what I mean? So it's like that kind of stuff where, you know, again, approaching with that attitude, having the right people around you to help you understand that and to help fulfill and color in the vision, I think was also just, just super important to me.
[00:33:07] Speaker B: It's interesting, Justin, because it sounds like that. Or I'm going to use a football example. You have a. You have a running offense, but all of a sudden you're short on time. You got to move to west coast so you can pass the ball a little bit more. Right. And for you with a capital markets background, you know, you're number one. You're asking tons of questions. You're going from point A to point Z in like on a dimes notice. And all of a sudden now you're in a position of I got to lead this. I don't have. I. I'm not used to selling to realtors on the street because we were only doing refis in the past before. So tell me, how do you, how do you go through leading that? Because you didn't do that in the past before. So how do you lead a retail group of originators that basically you were running, you know, a ground attack before, but now you got to move to west coast, which is reef, you know, going into. I got it. I got to throw it to the receivers because they're always passing from the realtor, the loan officer.
[00:33:56] Speaker C: Yeah, well, you know, it was luck for me because I was given a Runway. So we were.
The real estate company had a joint venture with Wells Fargo and that joint venture was breaking up. So I got hired two years, two and a half years before we ever had to actually flip the lights on and was able to build it from the ground up. So I really took that building experience as a learning experience, really leaning in, listening to all the stakeholders, understanding it.
And again, you know, it didn't take me long to realize I needed to rip up my playbook, save it for later and think of something different.
[00:34:26] Speaker D: Right.
[00:34:27] Speaker C: Because the conveyor belt mentality, you know, where hey, if something gets spoiled, it falls off the conveyor belt. That's okay. Next, next thing up, that wasn't going to work in this model.
[00:34:35] Speaker D: Right.
[00:34:36] Speaker C: So thinking about what was important.
[00:34:38] Speaker D: Right.
[00:34:38] Speaker C: And like, I'll just use a simple example of, you know, you step back and.
And like appraisals, right. So our appraisals very important in refi. Right. But also like you can kind of navigate around a low appraisal, rework a deal, do some things, that sort of thing, you know, sure, there's some arguments, but it's A much more emotional process in a home purchase. And the, you know, the, the listing agent, the buyer's agent, they all are, are just 100% invested in this one outcome.
So you take a step back and you go, I'm not going to necessarily meet their expectations on the value.
[00:35:15] Speaker D: Right.
[00:35:15] Speaker C: I can't do that.
[00:35:16] Speaker D: Right.
[00:35:16] Speaker C: But how do I make sure that everyone trusts the process and the outcome?
[00:35:21] Speaker D: Right.
[00:35:21] Speaker C: So for us, that was building our own panel as opposed to having an amc, right? We said we're going to make this, this is a friction point. How can we be different? How would we be different if realtors built us? And here's what it is. Have highly skilled hyper local appraisers, for example, so that, you know, when the listing agent or the buyer's agent sees who the appraiser is, they're both happy, they're both satisfied. No one likes this.
[00:35:45] Speaker D: Right?
[00:35:45] Speaker C: But I mean if you have to have surgery, you want the best surgeon, right? So you know, and, and if he, and if he or she can't fix your shoulder, it maybe the shoulder couldn't be fixed. Right. So it's the same thing with the value. And, and so just a small example of kind of that sort of thing. So, you know, I, I started to understand what the pain points were, what the important things in the business were. And then I got to, I got to, for eight years I got to be kind of the COO slash, choose my own adventure. Focus a little bit more on back of the house plumbing, getting everything, you know, I would say weaponized and ready for, ready for scaling and with a focus on sales. But again, a focus on sales from a capital markets tilt. So, so again, the capital markets angle in sales is very interesting because twofold, it allows you to be ultra transparent with what is going on behind the scenes. And I think again, demystifying some of this and the fact that there's a lot of next level capital market stuff that happens in our industry, by and large though the majority of it is explainable in pretty darn easy ways for people to understand.
[00:36:49] Speaker D: Right.
[00:36:49] Speaker C: So without having to go to the PhD level stuff that's going on that nobody really cares about anyways, I think people want to focus on there to kind of validate themselves that this is a very difficult business. But in reality, if you look down to it, I can explain the nuts and bolts of capital markets to a salesforce in 15 minutes. I could say this is how you price a loan. It's really not that difficult. Like here are the components, here's how it breaks down. Here's what I do. And then I just deduct off a margin. Like, it's that easy. Like, what can I sell it for?
What am I going to buy it for? It's the. It's one of the core, easiest things that can be demystified by people. And when you lean with that transparency, I think the fortunate thing for me, and I hope that this is true or rings true still, is that it creates a lot of trust between myself and our team members. Right. On the sales side. So they know that there's no, you know, there's no one behind the curtain. There's nothing kind of, you know, secretive back there. There's nothing there. And also they know that we have the expertise in it, that we're not going to get lapped by someone else either. And something kind of innovative coming out, you know, specifically in the product or capital markets end.
[00:37:53] Speaker A: Just leaning further into what you're saying, it's almost like you've gone full circle where you come in and you're ready to tell everybody what to do. Because even if, you know, 75% of the number one lender telling, you know, a lower one, then you get into the. It sounds like you are in the trenches every day, jumping on grenades. If they need you, you're. You're on the line, blocking and tackling, willing to get dirty.
Then you become CEO of a company where you almost can't always be in the trenches. I mean, that's just kind of inherent with a CEO. You have to have some level of above. For example, I think, you know, there were some incorrect news articles in the past year, and you have to handle things that you shouldn't have to handle because they ended up not being true anyway.
What's that life like? Like going back to not always maybe being able to. To be in the trenches with them. Sometimes you got to lead in different ways.
[00:38:53] Speaker C: Yeah, I mean, I think the majority of people on my team would say, want me out of the trenches more.
I'm just, that's. That's my nature. And I don't think. I mean, you have to lead from the front of the best way you can. And, you know, the one thing I say is, like, I'm not. I'm not going to be a better salesperson than our. Than any of our salespeople.
[00:39:14] Speaker D: Right.
[00:39:14] Speaker C: But I can be empathetic with what they deal with every day, and I can get into it and I can go talk to thousands of realtors and I can talk to, you know, A bunch of brand leaders and I can talk to thought leaders in real estate, the same as mortgage, and just broaden it and try to make it a holistic, you know, industry together and those sorts of things. So, yeah, I mean, I think, you know, it's interesting, you know, I think in the last five years or so you've seen it where, you know, you kind of have to get out there and talk a little bit more and talk about your company a little bit more and help people understand it because, you know, recruiting has been such, become such a difficult thing. And it's not even about like what value you're adding or what you're doing, but if someone says, I've never heard of you, it's just a tough thing to then have that first, you know, you know, you know, conversation.
So I think, you know, the, the, the kind of public facing aspect of the position is certainly a little bit trickier than it probably has been in the past, I would say. I think only the top, you know, four or five lenders had access to CNBC or something, right. That would actually be out there. And now, hey, it's become, it's become flat. And the amount of personalities in this industry is amazing. I mean, you guys know it. You guys talk to him all the time. And it is absolutely fascinating and awesome to get to know everyone, you know, through this and, and, and in person, you know, when we have the ability. It's been really neat.
But yeah, I don't think I've left the trenches, unfortunately or fortunately. I mean, for me at least, I don't know how, I don't know what value I would be adding to my people if I weren't every single day in there and understanding it and understanding kind of the nuance of the challenges that everybody faces. Because at the end of the day, my job is just to REM roadblocks for people, to get people into houses and to, to make it like the easiest process possible. And if, you know, I think there's a tendency where, you know, I've seen it and I've been guilty of it, right? Where if you have a CEO or any type of leader that's up there, right there, people aren't necessarily always 100% transparent with them about bad news.
And when you build trust with, you know, whether it be your operations, you know, a few layers down, or any other part of your business or your salespeople a few levels down and they have the ability where they can reach out to you, and as long as it's constructive and it's not just complaining, right. But it's, hey, here's my problem and here's why. It's a material roadblock and here's what it's costing me. I think that's just such an important thing to do. And when you get too distracted from that, I think people have a tendency to try to handle issues for you, thinking that they're helping. When in reality, I always say, like, if I find out about an issue and it's not from you, that's a problem.
[00:41:41] Speaker D: Right.
[00:41:42] Speaker C: And that helps people really just surface things. I think to me, a lot more often so that I can try to help. Not that I always can, but, you know, that's the goal.
[00:41:50] Speaker A: What if they write you a long, long email and act too smart? Do you let them? Do you go back to your old ways and tell them three bullet points?
[00:41:56] Speaker C: I promote them, I go. Way to go. That's beast. No, that's. Yeah.
[00:42:04] Speaker B: Handling salespeople. I mean, like the loan officers say handling realtors is like herding cats, but when you, when you run a mortgage origination company with all these sales people, you have 1500 people, and I don't know how many of them are actual originators, but that's also like herding cats. They're all add. They're all going a million miles an hour trying to produce as much as they can, especially in the challenging environment we have right now. How do you, with your thoughtful mind, lead 1500 individuals with different mindsets, different speeds of thought, and then sit there and go, okay, this is the transparency of how I lead.
You probably have written out in a million ways how you want to lead and which direction prosperity is going to create more prosperity for the originators. How do you lead 1500 with the one thought, the one thing that says, okay, this is how we created the purchase business. You need to stay focused on this to be prosperous in prosperity.
[00:42:58] Speaker C: So it's kind of like a. It's an interesting twofold question because one of them, it's more human, and then one of them is more strategic, you know, strategically. Everyone likes to have a goal. Everyone likes to be hunting for something.
So, you know, I think, you know, our core ideas are really, it focuses around opportunity. So what, how do we get opportunity? And opportunity just means an app bad at something. So whether it be inside agents or outside agents, about 50% of our business, like 49 of our business, you know, is not Realtor affiliate. About 34% of our purchase business is not from someone that's related to us. Right. So how do we become the absolute best at, you know, a no brainer to give us an opportunity at something. So that's kind of like our, our mantra and our focus. We measure internal opportunity rates in addition to capture and success rates, which is kind of like a really, it's a trailing metric.
[00:43:44] Speaker D: Right.
[00:43:45] Speaker C: As opposed to opportunity and upfront, top of funnel type stuff. So I think you have to have some kind of mantra. Everyone's got to be working towards something.
And also, I mean, you know, we do invest, you know, a little bit in, in kind of localized leadership as well. Because, you know, I think having a leader locally to be there, it's not for everybody. Right? So our model is not for everybody. If you want to be, you know, 100% on your own out there without any touch points and running, we can, I can, I can have that for you. But generally when we're in the Realtor affiliate, hand to hand combat mode, you know, we want a local leader as well who's going to drive that mission as well, which takes a little bit of the burden off of me about specifically what they want to do.
From a cultural perspective, I can tell you the, the thing that's worked out best for me is kind of, I would say like filling the gap with positive assumptions. Okay, Two things. So like understanding that two people come to a conversation, someone probably does not have ill intent, someone is probably not trying to get something over on you, someone is probably not trying to do something negative. And hey, if I'm wrong on that, then I will go ahead and pay the consequences for coming in with that, with that feeling on the conversation. And I'd rather get burned five times by coming into it with that open mind as opposed to anything else. And I think, you know, having people have that trust in you that that's how you're going to deal with interactions with them is a super important way to lead all these disparate personalities. Right? Because you have to look at it and every person like you're going, this is, I have bigger things to worry about. Like this isn't the biggest deal, but guess what? That is the biggest deal in that moment to that human being.
Right? And whether it could be, you don't know. I mean, is that how they, is that how they, you know, are they worried about supporting their family? Are they worried about X, Y or Z? You don't know. You just have to listen and lead that way.
[00:45:25] Speaker D: Right.
[00:45:25] Speaker C: And that comes from an operations perspective, that comes from a sales perspective. So I think humanly that's the way I would suggest, you know, interacting with, with your salesforce specifically.
[00:45:35] Speaker A: And I will say you were on a prominent podcast that other CEOs are on. And I remember, and this wasn't in my preparation, but I actually remember in the moment you saying without sales people, you know, the rest of us wouldn't have jobs or something along those lines.
[00:45:52] Speaker C: Oh, I know that one. That's a quick. No, that's, that's interest rate risk management. I learned that. Yeah, it was like I was just complaining because, you know, the market was selling off and they were locking us to death. And I'm like, these loan officers, you know what I mean, they're just all, they're terrible. And the guy just looks at me and he'd been in the industry a really long time and he just goes, justin, no loans, no jobs. And I go, oh, yeah, you know what? Like that. Again, that's one of those perspective changing moments that you have that you realize, like, you know, people don't understand who they're, who they're working for and who they're working to, to prop up and what they're doing. And without that, none of this matters. Yeah. Yeah.
[00:46:28] Speaker A: And I can tell you that's why out on the, the conference circuit, Justin is constantly gaining brand awareness and momentum, which is his, his job. But I think a lot of loan officers can appreciate that, and hopefully the ones that are searching, that are just obsessed with our show are understanding it now. So thank you again, Justin, for joining us.
[00:46:50] Speaker E: Thank you for joining us on this journey into the heart of mortgage innovation.
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