Episode Transcript
[00:00:00] Speaker A: Hello and welcome to another episode, season four of the Mic'd up show, where every mortgage has a story.
This is the ultimate hub where hidden stories behind the mortgage industry come to life. I am Michael Kelleher.
[00:00:14] Speaker B: Good morning. I am Michael Zhao.
[00:00:16] Speaker A: And in every episode together, we dive deep into the entrepreneurial spirit, the strategic insights and the breakthrough innovations that build.
[00:00:23] Speaker C: The world's greatest mortgage companies.
[00:00:26] Speaker A: So whether you're advancing your career or scouting for industry leaders like Dan, our guest today, or just exploring opportunities in fintech and prop tech, you're in the right place. Get ready to unlock the story behind every mortgage. Let's dive in today with Dan Richards, EVP of mortgage at Fly Homes, who fits in really well with the Mic'd up show narrative. The Mic'd up show guests, because he has a broad spectrum of technology knowledge, but also your distributed retail knowledge had been. He was at Academy Mortgage for almost a decade and as you know, that was one of the larger mortgage companies by volume, but also by loan officers and footprint. And he was in a strategic role also CTO there.
He also has a background pretty cool in SoFi where he helped acquire Wyndham Capital, who if you're in the industry, you know how good of a call center they are. And again, if you listen to our show we're really big on, especially after Stan Middleman talked about it, a great episode, we have the ability to call and sell. And also another person from the sofi tree past episode of ours, Michael Tenenbaum, where I was live from Atlanta Stadium at Eddie Perez's show, who's also been a guest on here. So let's segue into Deanne Richards, who's at Fly Home Mortgage, which is helping facilitate mortgage companies provide buying power to consumers which as we enter into a new world where you need to find.
[00:02:04] Speaker C: More ways to get people into homes.
[00:02:06] Speaker A: Fly Homes has put a lot of mortgage companies in a good position. And Dan, can you tell us a little bit about the excitement when you first got the, the call about coming on with this leadership position at Fly Homes and being able to work with multiple lenders now and provide your strategy to multiple channels even and help them grow?
[00:02:31] Speaker C: Absolutely, Michael. It's great to be on with you both.
Super excited to spend, spend the, the next hour with you.
The. You know, this has been a really, really fun last few years.
I, as you mentioned, I was leading home loans at SoFi.
We were, I think during my tenure we'd, we'd over 4x'd our market share there. Just, just a lot of Growth, a lot of.
A lot of hard work.
We had received our bank charter and we're originating loans in all 50 states and started to see just broad market level.
What are the true opportunities in this market, and where are things headed from here? What does the future of mortgage lending look like?
And one of the key themes that definitely popped up for me was just the inefficiencies around buying and selling and not. Not just the transaction itself. When we talk about inefficiencies, especially in conversations around AI and how they apply to mortgage lending, oftentimes we're talking about, hey, let's digitize, let's automate, let's try to streamline things like uploading docs and underwriting and so forth. That's not really what I'm referring to, although I think there's a. There's definitely a place for that. What I'm referring to is just the overall, like, how do I go from owning and living in this house to owning and living in a future house? For whatever reason, whether it's I'm upgrading, I'm downsizing, I'm moving for work, I'm relocating. Whatever the reason is, it's a pain, and it's really emotional.
And part of the pain is all of my equity's tied up in my current home.
I have a mortgage. I need to go qualify for a new mortgage. And by the way, I probably need to use that equity that I have as a down payment on my new home.
How do I do that? I have to go hire a listing agent, figure out how to sell my home first, and magically line up the sale of that home with the purchase of my new home. So I'm not moving twice. And, oh, by the way, I'm probably starting a new job and all of the other emotions and complications that come with that. Right.
And so that's kind of the world that we've lived in for obviously, decades and decades.
One of the things that I. That I saw pretty early on with Fly homes is as I was observing these trends in this market and this opportunity was Fly Homes had really stepped in as the leader in this product space that enabled buying before selling.
And it was a. It was a very niche space.
One of the benefits of being in a position like that with SoFi was you had really interesting insight into all of the players in the space and everything going on across the. Across the whole industry.
People would pick up your call either in the primary market, the secondary market, whatever.
And that was one of my favorite things to do, was just Learn and I saw with fly homes pretty early on and again this was a few years ago, they were killing it with their fly homes cash offer products. And this was back in 2021, the height of the pandemic super low inventory.
They were growing massively with their cash offer product which enabled the buyer to go buy with their quote unquote cash like a good as cash low loan that they would then refi into a long term product and they do it really cheaply, really inexpensively and, and and they were starting to apply that to buy before you sell where they could front the cash to go buy the new new property.
Once the departing home sold they, they'd then refi out the out the bridge loan. Right.
And there were some challenges. Their go to market was highly constrained. They were all direct to consumer only in a handful of markets, only licensed in a single digit states.
There was some inefficiencies with that one product even though it applied super well to the low inventory, high competitive multi offer situation that we were in then.
And so there was a lot to do which which for me is highly intriguing to, to, to be able to come in and apply some rigor to expanding footprint, updating and pivoting a go to market strategy, expanding a product suite and so forth. And so that, that was really appealing to me and that's kind of how I ended up here.
[00:07:29] Speaker B: Dan, did you happen to. Not everybody did I happen to. But did you happen to go and sell and buy a house during the pandemic period?
[00:07:38] Speaker C: No, I, it's funny, we, my wife and I talked about it quite a bit. We, we were window shopping for, for a while as I and I think the entire country was but, but honestly that friction that we were looking at of like we're never gonna, we're yeah, we could sell our home for a lot right now but we're never going to find a home that we want to go buy. Right.
And, and, and we weren't at the time super clued in and where we live fly homes wasn't even, wasn't, didn't even operate to, to this alternative approach and we frankly we probably would have if it had been been been an.
[00:08:19] Speaker B: Option for us I think so A lot of people really don't know my background. I'm, I'm fairly creative in the way I do finance. I actually obtained a bridge loan to bridge my own house to go buy another house and then upon the sale of the house that loan was paid off. I happen to have equity in my home just like A lot of people did in the early 2000s and it's interesting that you, that you bring that up. Do you mind if we go a little bit back in time to talk about your background?
[00:08:44] Speaker C: Absolutely.
[00:08:46] Speaker B: Okay. So initially we saw that if you go into your LinkedIn page, I saw that you started out over at BYU for your undergraduate.
And then while you were there, did you, I don't know if not everybody who goes to BIU adheres to the LDS faith. I don't know if you do or not, but I'm just curious, did it help you make a decision?
If you are lds, great. And if you are LDS also, that's fine. But in, in doing so, does that help you make a decision when making the transition for graduate school to Wharton business, which is on the east coast versus Marriott business, which is at BYU itself as well?
So how did your faith make you allow you to choose which school to go to?
[00:09:30] Speaker C: Great question. Answer is yes, I do subscribe to the LDS faith and it's a big part of who I am and how I operate.
One of the things it did early on was it helped me focus. I graduated, finished my undergrad in three years.
One of the opportunities I had prior to graduating was interning at a company, Late Stage Startup in Philadelphia.
And that got me out there for a summer, I mean, exposed to a lot of kind of unique opportunities outside of the west and was able to even sit in on classes at Penn at Wharton. And that kind of.
It was even before I graduated that I had that goal to get to Wharton full time.
I ended up going, after graduating at byu, I ended up going to work at this company for about two and a half years. It's called Traffic.com, ended up being acquired by NavTech, who was then acquired by Nokia, who was then acquired by Microsoft. And I happened to end up at Microsoft after Wharton, coincidentally. So very full circle moment. But that was a phenomenal experience for me. And I remember before graduating at BYU I even took the gmat. So I had that in my back pocket and I think the score was good for five years. And I'm like, hey, this is my, this is my roadmap.
And super interesting that, like being able to map that out, follow that path almost exactly how I expected it to happen.
Getting to Wharton, I interned at Google between my two full time years at Wharton.
And then 2008 came.
That was in 2008. And super interestingly, at the end of that internship summer at Google, I was on the strategic partner development team, had an Offer coming.
We were looking for homes in the Bay Area, my wife and I, and, and the, the offer was going to the, at the time, every full time offer had to be approved by the executive, executive management team, Eric Schmidt, and the two founders, Larry and Sergei.
And literally the week before, all of these full time packets, conversion packets were going for their approval.
Lehman went bankrupt. This was September 2008.
Stearns went out like the whole market imploded. Right.
And so everything kind of got put on pause for a few weeks and then paused for a few months and then all of a sudden it didn't materialize. Unfortunately I was able to end up at Microsoft and lived in Seattle for a couple years. Loved it there.
[00:12:35] Speaker B: But we paused just for a moment.
[00:12:38] Speaker C: Yeah, absolutely.
[00:12:39] Speaker B: Great.
So during your time at BYU and your faith, did you happen to also serve during a mission?
[00:12:48] Speaker C: I did.
[00:12:49] Speaker B: Okay.
[00:12:49] Speaker C: I lived in Argentina for two years.
[00:12:51] Speaker B: That's, that's awesome. So I'm not lds, but I also served as a missionary in, in a different capacity.
And what I've noticed about those who go and serve in type of missionary work is if they go into either mortgage or sales or even into executive leadership, there's a type of gentlemanly, aggressive. Gentleman aggressiveness, as I'm going to lay, I'm going to phrase it for now, it's because the people who, if you never experience going door to door and trying to speak about faith to somebody else, there's a certain type of callousness or gentlemanly callousness that we build for people saying no thank you, no thank you, slam the door on you or whatever. And during 2008 there's a lot of people like I'm going through this housing issue, companies are closing down, so on and so forth. You're going through the same issue. It's not like Microsoft is going to be an easy company to work for. If you work for Microsoft, to Google or down here in San Diego, a Qualcomm or a large company, they pretty much own you.
Right. And so you need this type of callous aggressiveness, but yet you also need to be gentlemanly and, and, and, and, and have an expression toward this. A lot of people who are in sales don't really understand how that works and I've seen this in leadership in all of our podcasts. So can you, can you help explain to, to us what are the, what is the mindset that you go through when you were going from, from Wharton in, into then Microsoft and what is the type of mindset you go to? Like all this stuff is going on around you at Microsoft.
What does it take for you to go like, oh, we're in the frying pan of this, that and the other. I'm working as hard as I can, but it. There, there are literal business explosions going around me. What are the things that's going on in your head to say, I got to look for new positions, I got to pivot?
How do you, how do you mentally pivot? How do you emotionally pivot? Because there's a lot of that that's going on over the last two, three years.
[00:14:56] Speaker C: That's a great question.
So one of the things I learned on my mission and, and then later at Microsoft and that really, really helped is, is I think, actually best articulated by.
There's a professor at the University of Virginia, Sara, Sara Spoffi.
And she had. She teaches entrepreneurship at Virginia, at the Darden School of Business.
And she has essentially articulated the formula for entrepreneurial success through a really extensive study that she did across decades of successful entrepreneurs and, and what went into their success. And her goal was to kind of shift entrepreneurial success from an art to a science. Like, if we were to teach science in any other capacity, we'd have laws and formulas and things like that that can lead to a desired outcome. And how do we apply that to entrepreneurship?
One of the key principles that, that she talks about is, is this idea of a crazy quilt theory.
So as you're going through as an entrepreneur, you, you have obviously a million plates in the air. You're, you're, you're working through this, this, this goal to achieve some great thing that can be applied to a mission. It could be applied to integrating at a large company like Microsoft or really any other pursuit.
You want to patch together this crazy quilt of individuals that latch on to you and become stakeholders in your journey.
So what does that mean? It means you are literally talking to everybody about your why, about your vision, about, like, what drives you. And it's kind of like sales, but you're not actually pitching people. You're not trying to convince people. You're more articulating what drives you, your why.
And you're asking for feedback, and you're getting people kind of on board in different capacities. It could be as a client, if it's true sales, it could be as a partner. It could be as an investor. It could be as someone who is kind of becoming emotionally invested in what you're working on. And, oh, what if you did this and what if you did that?
And what I found over the last Couple of decades in doing that is you see these like little nuggets of insight and contribution from people in places that you never would have expected.
Right.
I remember at Microsoft like I had a goal to go have lunch with someone new every day and did that at Google as well.
And I didn't quite make it there. Every single day, you know, life gets busy but you set a goal and having those types of conversations over lunch, buying people lunch, oftentimes it was comp. Like it was. It's kind of nice, right? You're able to just get in front of people and have simple conversations.
Like so much benefit comes from that type of engagement. And that's what I tell our sales team today. It's, it's less about like selling or convincing. Like we actually don't do any convincing in our, in our conversations, but the activity like take, make that phone call. I had a, one of my account executives today call a loan officer who works with us, just closed a loan with us and he, the AE was, was following up the yellow to make sure that their, their borrower got a, got a refund on a credit report charge.
Really simple follow up. Probably didn't need to do that. But he knows that like those types of interactions will lead to long term gains. And Biello was so impressed that he called to follow up on this and, and he started singing his praises and said, oh, by the way, we've got, I've got someone else that I might want to run by you. Let's, let's talk about it.
Anyway, I think that's, that's one thing that's kind of stood out to me.
[00:19:21] Speaker A: The, the quilt story really stood out to me. But I as an entrepreneur love that. And also as one of the top podcasts in the mortgage industry, we couldn't do it obviously without our sponsors who are almost like a quilt of different offerings as they come together. So I think now is a great time to go into the commercial and then on the other end, dive into your leadership here at Fly Homes and how and elaborate on the story you just told.
So let's head to the commercial break.
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[00:22:58] Speaker B: And of course we're always grateful for all of our sponsors that are coming up onto the show. So we have Dan Richards over at Fly Home. So I was listening to Marriage and Family Counseling Seminar, and Esther Perlman goes and says, and this is regarding marriage life and how people grow.
You have five true loves in your life, and if you're lucky, they're the same person.
Meaning that as we grow in our life, right. We're going to go through changes and, and you know, we, we move with our spouse, but we have work partners and we have people that we work with in our life as well. And so I would, I would go and ask you, Dan, before we get into that growth of, of you as a person, are you more of a numbers guy or are you a dreamer when it comes to how you want to grow as a person?
[00:23:52] Speaker C: Definitely numbers guy.
[00:23:53] Speaker B: And so what then drives you then? If you're a numbers guy, what drives you to put people before profits?
But of course, maintaining your integrity in your company, what drives you then to put the people before profits? Especially for what I think is an aggressive product that Fly Home has put together.
[00:24:13] Speaker C: Yeah. Let me give you an example for my own personal life.
So back when I was at SoFi, actually for a good chunk of that time, given, you know, a combination of some things going on in life and the kind of the craziness of life, but also the lack of really good work life balance, I was not in a super healthy or fit place.
And I, I listened to a podcast at the time by Peter Attia who presented kind of the, the importance of this one metric on your longevity and your overall, what he calls health span. And it's your VO2 max.
And just out of curiosity, I had an Apple watch. So I, I pulled up my health app and, and looked up what my estimated V2 max is and it was horrendous.
It was like. And I, well, I didn't know I saw a number. I'm like, okay, I'm gonna go Google this. What is the equivalent like heart health or whatever age, heart age of with this VO2 Max? And it was that of a like 65 year old. So it was, you know, that number connected the dots for me. They're like, okay, I've gotta make some serious changes in my life.
And it helped to spark this vision of who I needed to be and what I needed to change. And fast forward a few years.
I ran a marathon last year. I've got a second one coming up in four weeks and I've doubled my VO2 max. So now I have the heart Health of basically a 33 year old or something like that.
And it's those types of like, okay, I can connect with the numbers behind it and what is actually going to make a difference to achieve this like North Star vision.
And I think that's how I operate as well here. With fly homes we have seen so much benefit to being able to expand our footprint on our go to market and be able to put this product in front of way more people, people than before.
And it started with basic KPIs indicators and metrics that we, we track on a daily basis that indicate help us understand that we're actually achieving that goal and, and you know, got a long way to go, but I think we can get there. When I think of fly homes, I.
[00:27:01] Speaker A: Think how interesting buying a house is.
Like you have to get lucky that in that cycle there's an actual house that you fall in love with. And if you don't, then you have to I guess in Mike's five loves you have to settle for one that you're not completely in love with, but.
[00:27:20] Speaker C: It'S the best available.
[00:27:22] Speaker A: And fly homes has a chance to maybe change that paradigm shift where you have more time to see inventory come on the market.
Do you think there's any other industry like a home when it comes to buying in that process? And if not, do you have any cool stories where somebody had more time to buy a better home?
[00:27:43] Speaker C: Oh, that's a great question.
I mean I think about the things that really matter to people.
Marriage is certainly one.
Children who you spend your time with.
Every family looks a little different.
Home where you live, the neighborhood and community you're in. The. The only other one I can think of that's like close to that is your career, how you spend your time. And I suppose that finding those opportunities, applying for jobs, kind of building your education, your career, things like that is, is probably somewhat similar.
And you're probably not going to want to move, you're probably not going to want to quit your job until you know you've got a signed offer to go somewhere and exactly what that looks like. You're super confident that you're going to end up there in two weeks or whatever. Then you give your notice and then you hand over the keys. Essentially we do the opposite with homes traditionally, right? We kind of say, hey, I'm going to go try to find a new job and so I'm going to give my notice and quit.
It's not super smart, right?
If we can flip the script, which is what we're trying to do here at fly Homes where you go find the home, the home you love, right?
The home that's best for you, take your time and then actually buy it. Because we know that going under contract only helps or only actually ends up closing what, 70% of the time those things happen, right? The inspection, financing, whatever.
And so actually buy the home, then list your home, then give your notice.
And yes, there's a, there's a, there's a added cost there and happy to get into the specifics of how we price and things like that, but the overall benefit that we're providing in addition to the lack of other costs like moving twice and, and maybe selling for less because you're selling with all your furniture in your home and it's just not quite as appealing and you know, things like that absolutely pay you back in spades.
[00:29:57] Speaker B: I was working with former governor Jim Ryan who happened to set the first high school world record for the first high schooler to run the sub 4 minute mile back in the 50s. And he worked with Dr. Jack Daniels up in New York State on the VO2 Max on creating momentum and increasing capacity.
And a lot of times in originations we become as a, if, if you're a retail original or even a broker for that matter, we become old and slow. Meaning that we know agency mortgage loans and then non qm, even though it's been around in, in the past as a stated income or bank statement loans or so on and so forth is still challenging. And there needs to be some kind of education with fly homes. It's another new product and now there needs to be a greater amount of efficiency. How does the originator on a retail scale through fly homes education create more efficiency of learning so they're able to sell a product that, that is really, I would say it's a little challenging to understand initially.
And so how can you lead somebody to the water to say this is actually really easy. Just let me show you how. What is that? What does that, what does the thought process look like so that he can actually be open to that.
[00:31:14] Speaker C: Yeah, great question.
And to, to follow on with your, your analogy and the analogy we've started with this VO2 max.
What got me off the couch, what got me started was not trying to run the four minute mile.
It was literally so same concept from or sorry, the same source of, of this concept of Peter. Peter Axia. He pushes zone two training. Which zone two is your heart rate is just slightly above your zone one, your kind of normal resting rate.
So you're doing a brisk walk or you're doing a slow jog or something that's, that's getting your heart rate going and doing that consistently for 45 minutes a day or whatever. The, the current recommendation is that is the best kind of way to, to increase your VO2 max and get, get healthy again. Uh, and so it wasn't trying to go break any kind of record or, or completely exhaust yourself at the end of every exercise.
So that's what I would say for loan originators who, for our product or any other product, it's take it slow, take a little bit at a time, identify one based on maybe opportunities you're seeing in your market with referral partners, what they're asking for, things like that. It could be a 2:1 buy down, it could be a down payment assistance program, it could be, could be a bridge loan, could be construction. Like there, there's so many different areas to kind of start learning and growing, but it's that consistency of just putting in a little bit of time to learn it. And then we all know, saw this at Academy, sofi, herefi, I saw this everywhere that it's one thing to sit in a training, it's one thing to look at a job aid, watch some videos, and it's another entirely to actually work on a live file.
Right. And so that's how we've structured our team with our account executives. They're super hands on, way more so than any other wholesale lender typically operates.
So we encourage them to contact us with, with actual live scenarios. We'll spend a ton of time. We have really good tools and data behind it, but we spend a lot of manual time, a lot of personal time and walking them through. Not just the numbers, but here's how I would position this with your borrower or with your referral partner.
Here are the benefits here. Three options and one recommendation.
You know, things like that to kind of help them see, okay, you've sat through the training, you attended the webinar, whatever, it's great, awesome. It's kind of foundational knowledge. But not until you see the live scenario do you see, oh, it's kind of starting to click now on how this works and what the value proposition is for the borrower and how I pitch it and things like that.
[00:34:08] Speaker A: When someone has a product like yours and sort of piggybacking on what you just said and you've had both areas with SoFi and Academy, so I'll hit them both. Typically, Consumer Direct is easier to distribute because it's following more scripts and they're not in the neighborhoods so there's less fear of a non GSE loan that might not work. And so they, they don't even bring it up. Whereas distributed retail you're running into how do you overcome it and get in there bigger? Tam so everybody wants to be part of distributed retail.
Do you find that more like do you have a lane between both of those? How do you navigate that? Or have you attacked consumer direct and now you're graduating onto distributed retail?
[00:34:57] Speaker C: Definitely the latter. We were all consumer direct for, for the first several years of, of offering this product only in a handful of markets. The biggest challenge we ran into was establishing trust and educating the borrower themselves.
I mean imagine you know your question Michael, on, on educating loan officers who are professionals and do this every day is this is a challenge. Think about the homeowner who's a, they don't, don't have a strong relationship with a local advisor.
They're coming to an online brand and, and wait, what are you selling me and what are the, where's the fine print? What's you know.
Yeah.
So that's why we have, we have completely pivoted our business over the last couple of years to operate as a traditional wholesale vendor. We work directly with third party originators, almost entirely distributed retail, a mix of IMBs and brokers.
We, we are, even though we're a wholesale lender, we don't exclusively work with brokers.
Half our business comes from IMBs.
It's a 100% complementary. Our product is to the purchase transaction they're already working on. So they're going to end up with a long term mortgage of their choice with a different lender or going to a different investor.
We don't plan that arena so we've, we've like very consciously designed our product and our go to market to be complimentary to work with distributed retail Then our focus then is to train the trainers. It's to train those who are taking this to the borrower themselves.
They do have that trusted relationship already locally and they're able to with, with enough kind of coaching and we, we've got awesome marketing materials and all of that stuff.
They can actually take this, feel confident taking it to a borrower, taking it to a lunch and learn with their referral partners whatever it may be.
And you know we'll even get on the phone with them and do a three way call if needed but usually like they feel super confident and able to take this to their borrowers and that's where we've seen kind of the real traction.
[00:37:23] Speaker B: How is the, you know, we have inventory issues right now still, by the way, in the United States, even though we've had longer marketing times, not that many people are really selling, by and large. How does it, how does what you do help create a better lockstep dance for the originator and the realtor to work together so they can help create not just another buyer, but another seller for either better inventory or better marketing. How does, how does the originator go and do that?
[00:37:53] Speaker C: Well, first of all, our products will remove contingencies on an offer.
So either removing a home sale contingency or removing a home sale contingency and a financing contingency and even an appraisal contingency, depending on the product you're using of ours.
So that's one buyer's agents love this listing. Agents appreciate it because it's, it's a cleaner offer.
There's more of a guarantee behind it.
And that's, that's, that's number one. Number two is just that, you know, we've talked about this already, but this, the overall kind of process improvement of identifying your new home, buying that first without any, any real pressure other than, you know, maybe there are multiple offers and maybe you need to show that, hey, we can actually close this one in 10 days and, and get on title. We can do that. We can do that. No, we do that every day.
And so. And then you end up with a listing opportunity the agent does on a home that doesn't necessarily need to also sell in 10 days or 30 days. And you can price it accordingly. You can price it to move in 60 if you need.
You can take your time to let the homeowner move everything out, stage the home and make that a part of your marketing strategy. So there's a lot of kind of benefit in this environment.
And frankly, um, you know, there are other benefits in other, other cycle, other parts of the cycle.
Um, but that's typically what we see. There's a lot of value for, for everyone involved. Both the homeowner yellow and, and both agents.
[00:39:36] Speaker A: As you're branding into the community, do you find there's any data on, or gut instinct that the momentum begins from the consumers that have not used fly homes, lost out on an offer that they should have got to a cash offer or a bidding war and then say, okay, tell me about this program. I'm going to use it on my next offer. And then that gets the branding within the community and then people don't need to get rejected to, to use it.
[00:40:05] Speaker C: Yeah. We see three main entry points for our products. One is exactly what you just talked about a second is they may have a new home under contract is contingent on the sale of the home, but that sale is not coming together right. And they're going to lose on the purchase. And so they come to us and what we internally call a rescue scenario. They come to us and say, hey, we're 20 days out from closing on the purchase. There's no way we're going to get this home sold in time. Can you help?
That's like right in our wheelhouse.
The third is our LOS now in our network are starting to get more and more proactive. So they're talking with their referral partners up front. They're starting to understand, just like any kind of down payment assistance program or other unique product, they're understanding the value of this and they're including it in their buyer or listing presentations when they go talk with prospective buyers.
And if it's not presented there when they're referred to or the buyer comes to ELO for preapproval, that allo is often asking them, oh Abe, looks like you have a home to sell, you got a lot of equity in it. Why don't we extract that now? Buy first and then, and then sell later.
And here, here's exactly what you, what it will cost you.
That's a really compelling kind of value prop to, to, to provide to a borrower.
And anecdotally we're absolutely seeing a higher pull through from, from pre approval to close when they do that.
[00:41:42] Speaker B: It sounds like a bridge loan that's owner occupied but it's really not a bridge loan because you guys are making the actual purchase.
[00:41:50] Speaker C: So there's a good question. There's two products from two essentially two loan products from flyhomes. One is we can either provide a bridge loan on the sell side, we can, we provide an equity bridge where the third party originator is doing a purchase. Mortgage call, let's call it 80% LTV. They need another 20% down. We can pull the 20% from their departing residence.
We also put that departing residence under a backup contract which is a non contingent contract that allows them per Fannie and Freddie guidelines to remove and disregard the trailing debt from their DTI calculation so they can close on the purchase. Conventional mortgage underwriting, all of that, they have this bridge and all of that is paid off when the home departing home is sold. So that's, that's product number one.
Number two is like I mentioned with Flyhomes cash offer. We can actually do the purchase mortgage on the new home. We can go up to 95% LTV on that.
They will then refi us out with a rate and term refi after they've sold the departing home.
There's different benefits to it, different cost structure and so forth. The second, the flyhomes cash offer is usually slightly, slightly more because you're borrowing more, you're going up to 95% on a purchase.
But it's, it's also more powerful. You're able to remove a finance contingency on an offer and you're able to take your time on finding, you know, maybe you want to kind of float rates and find the best fit long term on your long term mortgage.
[00:43:24] Speaker B: So then when you're making that purchase on that next on the, on the up lake property then is the, is it cost prohibitive? Because in doing so you can actually you're kind of circumventing reg Z by saying if you can charge more or do these different types of things. So are you, are you legally circumventing it and fee is it cost prohibitive in that manner?
[00:43:47] Speaker C: Great question. So we, we, we, we absolutely don't circumvent it. We, we are very cognizant of all things RESPA from disclosures to high price thresholds, high cost thresholds to kickbacks. All of it like we are. Even though technically you're, you're spot on bridge loans less than 12 month term are, are absolutely exempt from RESPA. We have taken the opposite position.
So we, we operate these just like any other long term mortgage.
It's done a couple of things for us. One is our state regulators love it and they appreciate the effort that we put into treating these like any other, any other mortgage loan. The second is it actually allows us to get lower cost of capital.
So our third party los there are other alternatives out there and we encourage them to look at any other shop around. We always, well almost always, never say always.
We very rarely lose on price because our cost of capital is so low.
And so that's been really beneficial be able to and it's been a key part of the strategy is to follow rest broken to the T.
There's a.
[00:45:16] Speaker A: View of the world right now where there could be a place where real estate agents are also originators if that were the case. This seems like an even better product if real estate agents actually were educated on it and use it as almost every deal is cash and then we'll take care of the mortgage later because people are buying a home, not a mortgage.
Is it the loan officers in their W2 versus 1099? Are they just easier for you to get the brand out and because the money comes from the originator or is there actually a lot of real estate education involved with buy homes to the agents?
[00:45:59] Speaker C: There is and we, we love, we love our realtor partners as well.
We, we work most closely with Yellow but at the top of the funnel or at the point of kind of awareness, both are perfect for us.
And to your point, when they're the same person, even better.
But because of how we're structured as a wholesale lender working with that TPO who's brokering the loan to us, that's where we're able to operate really efficiently.
But yeah, it's been a lot of fun.
You may have seen a couple months ago we sold our tech company assets, our AI powered real estate search portal to real brokerage and we've been working closely with them to disseminate our products to their agents and it's gone really well so far. So yeah, it's been a lot of fun.
[00:46:50] Speaker B: What do you think is the takeaway that you've experienced so far over the course of this last year in productivity quarter after quarter? I've noticed that you guys have ra a few, you raised a new series of additional capital last month according to the post of your, of your, of your, of your co founder of the company.
So what type of expected growth do you see as a TPO wholesale originator of this product over the course of this next year? Give, you know, what does your performer look like in growth?
[00:47:22] Speaker C: Yeah, we see without sharing specific numbers. I can, I can share. We are very much in, right in the middle of this hurricane. We, we grew our August was 26% month over month over July and we anticipate growing that obviously probably stagnate a little bit in, in the winter months and then, and then see just massive adoption again next year in the purchase season.
So for us it's, it's all about driving awareness, educating our los, helping them understand the value prop and giving them the tools they need to take this to their, their borrowers. Because it, it really does.
You know, the rising tide raises all boats for sure. LOS agents and obviously the homeowner and.
[00:48:14] Speaker A: Every mortgage has a story. So this allows you to personalize your story a little bit more by having better selection and being more pragmatic about how you're going to buy your next home.
Thank you Dan very much. Thank you for joining us on this journey into the heart of mortgage innovation.
Remember, every mortgage has a story, and we're here to help you write yours. If you enjoyed today's insights, please subscribe, share with your network and connect with us on social media.
Until next time, keep pushing the boundaries and uncovering the stories that drive our industry forward.
[00:48:55] Speaker C: Sam.
