Episode Transcript
[00:00:00] Speaker A: Hello and welcome to another episode of the Mic dub show. I believe this might even be episode 17, I want to say, of season three.
We are well on our way to our hundredth consecutive week minus Thanksgiving. I know we are eclipsing the 80 part, so that's pretty good. And for all those that listen, we want to thank you. Our intended audience is anybody that wants to get into loan origination, loan officer, processor, closer, whatever it may be. We hope that you download our podcasts on Spotify, Amazon, Google Play, Apple Podcast, which is where I do. I do love listening. And give us a like or subscribe. Right.
A comment would go a long way. So if you're listening, comment, we will send some swag and certainly a thank you and even a call out. And then speaking of callouts, we do try to get audience participation and be one of the unique ones in that area. So we do this every Thursday at 02:00 p.m.
eastern.
[00:01:06] Speaker B: And of course at 11:00 a.m. pacific out here in sunny San Diego.
[00:01:12] Speaker A: And if you do participate, you do come on. You do comment. We will, if it makes sense, put the comment at the bottom. So it's a great way to brand if you're in the industry and want to speak to some of these great leaders. And I would say on the live show, our audience typically is c level executives, you know, in the mortgage industry and enthusiasts, as well as some vendors that have a lot of large breadth of knowledge. I always say, because they are talking to multiple lenders, maybe a little siloed in what they sell, but at least they have something always profound to add, and we encourage that. So, on with the show. Today we have Nick Hibarkus, who is a longtime member of this mortgage community, whether he was originating or being an account executive and helping other originators, or actually being a servant to the industry and giving back through the NBA, a lot of it's thinking like when you're a CMB or you're an amp, I'm trying to think of what the appropriate word. What word would you call that? I don't want to call them titles. Yeah, yeah.
[00:02:20] Speaker C: The sort of the continuing ed and other denotations around that. Yeah. The mortgage bakers industry or the Mortgage Bakers association has been fantastic about promoting those items. Happy to chat about that as well. Yeah, yeah.
[00:02:38] Speaker A: We'll get into that. I think where we want to start is we have a lot of history on this show, and when somebody comes from a background of almost like an alumni, they are an alumni of the era before the financial crash, and they had some sort of loan that was not GSE that really helped them get into the industry or help, I guess, when credit boxes used to be credit boxes. And maybe we're going to learn today. Now with non QM, there's the ability to look at risk and lend in different areas. But back then, you want to just tell us, obviously, how you got into the industry, but what that world was like and how many of those peers you still see in the industry and what learned from there and what you've carried with you.
[00:03:25] Speaker C: Absolutely, Michael. And I was thinking about this as you guys asked about participation in the podcast, and Michael Zhao, I tried to put a date on when we first meth in the industry. It's, it's approaching like 25 years, I think, and ish, you know, so it, you know, it puts a date on you and I, you look the same. I used to have hair.
You know, I grew up on the mean streets of Pacific beach, right. So I definitely age worse. But yeah, you know. You know, Michael, I got into the business with a firm called Long Beach Mortgage, and this was prior to the Washington mutual acquisition about five years before that. At the time, it was arguably the leader in subprime paper and, you know, not knowing anything about really the mortgage industry or credit risk. But it was a great way to cut teeth from a credit perspective in that I'm putting a date on myself as well. This is before FICO scores. So as an account executive out in the field, id be sitting across the desk from like a Michael, and we would take 20 minutes to credit grade his borrower off of percentage of good accounts versus bad accounts. Right. And then the pricing component would be absorbed in there and any credit events, whether it be a bankruptcy or foreclosure or something along those lines.
And that obviously has evolved into a much more robust AUS opportunity and certainly other lenders that have popped in through there. I lived in that world for a bit of time and moved over to a countrywide and was with the combined countrywide bank of America organization for upwards of 1213 years, holding a bunch of different titles through that, from frontline sales in through a divisional leadership within the wholesale and the correspondence space.
That was through the financial crisis. And shortly after the financial crisis, bank of America at the time had exited both their TPO and correspondent channels. And I've gone over to stirs lending to go ahead and start the, the correspondent channel there and grew into running all of their TPO enterprise before the sale from Blackstone into a guaranteed rate. So spent about eleven years with that organization and then over to run the TPO channel at loan Loan Depot as well.
And I know that we'll get into this, but certainly happy to discuss my role here at Logan Finance in the non agency space and why this is a frothy environment ought to be in at this time. So short history and I hate kind of talking about myself with that.
But you asked the question.
[00:06:47] Speaker B: Well Nick, I want to go back in time for a little bit because something you mentioned that a lot of mortgage companies and originator salespeople dont really understand today is what that space was like. If you go back into the nineties with Long Beach, Long beach mortgage, Long beach bank back then, going back it was new century and the plethora of BC lenders and of course you are with countrywide BC at the time. But when you go back into actually that retail space, what people don't understand is if you were to go back into what they call the pricing engine, back into the nineties, an originator, and this is important, I think for younger originators who maybe didn't get that experience, you went back into that pricing engine and you said, oh yeah, well, because back then, in those days before Dodd Frank, it was like every loan is four and a half points a deal.
Right, right. And that price added alone at like 112, so. Right. Oh no. And this is like, and this is literally going back like 27, 28, 29 years ago. And people, and then to think now it's like a retailer originator thinking like, whoa. Like a company would price out a loan and be transparent, that there would be twelve points to be a gain on sale on a single transaction.
And I remember even talking to an old CIt guy, he was like, oh yeah, that would be like 16 points.
It would blow the conceptual idea.
And we have legislation that has now changed that points to the consumer customer. However, what did change is that when you see that much money that was on the table, the willingness at that point to learn about alternative products was greater. Yes, there was a financial incentive. Right. There was a financial incentive to learn about products. And I think that because when you're looking at ten points versus one point, it's a little bit different.
[00:08:53] Speaker C: Right.
[00:08:53] Speaker B: But taking it now to the present time into that non QM space, one thing that's different is that, hey, I, the independent mortgage banker or even the independent mortgage broker, they're looking at one point a deal or two points a deal by an a paper customer.
But there really hasn't been the incentive the financial incentive to say, hey, you know what? Let's go learn about that alternative product. Because why would I go and do all this extra, extra work for not much, very much incentive. So my question after that whole history of that, Nick, is how do you or your sales staff or even anybody in that non QM space, how do you educate the originator if to go from, hey, I've been doing VA FHa, Fannie and Freddie Loansenheid and get the lowest rate and the lowest points and fees and so on, how do you educate the originators? Say, you know what? This is a product that's actually supposed to make more money for the home investor, home owner.
It also has a potential of earning you more income as well, not just to you as the originator, but also to the independent mortgage banker as well. How do you educate someone to say, there actually is an incentive, and if you learn, you can, you can increase your, uh, the profit or loss in the buy box for that?
[00:10:26] Speaker C: Yeah, yeah. I think, I think a couple things to, to unpack there is that the, the only thing that is reminiscent about today's current non QM environment versus the alt A or subprime, um, uh, product line before the financial crisis is the manufacturing process. Right. So the manufacturing of that loan is a little bit different from the Aus conventional 30 year fixed. I run it through, I get my steps and im ready to go. The credit quality is extremely different.
And so for our book, the weighted average FICO is a bunch 760 weighted average LTV is about 68%.
Our average loan balance from a national perspective is around the 850,000 range, with loan amounts in the west as an example, being the 1.2 million range. So what youre dealing with with the product line is extremely high credit quality for borrowers that have challenges showing their income in a traditional way thats acceptable to Fannie Mae and Freddie Macdje. And so, Michael, I think the first hurdle that we have with the originator population is just convincing them that this product is something that you should have in your toolbox based upon the market conditions.
And I think that something you said really resonates, which is given the market conditions that we're seeing and the Fed cuts interest rates and mortgage rates go up. Interesting.
Everybody, I think, agrees that the escalator is going down as far as interest rates go. But I think we are going to see some pop ups as we head down. And the smartest guys in the room agree that you probably land in the high fives in 2025 at some point.
That will trigger a bit of a refi opportunity. But in the meantime, you have purchase business only really at the end of the day and youve got these alternative products which frankly, given the demographics of the United States and how borrowers are generating their income, one of the reasons why I'm very bullish on this product line is that we see historical highs of self employed and the gig income of the borrowers.
Now it's going to take Fannie Freddie, Fha Va USDA a long time to go ahead and catch up with their tech for that borrower type. And it really is an underserved marketplace.
And I think we can pull on the thread of how we segregate non QM into consumer loans versus the business purpose. And I think those are two very different marketing opportunities.
But overall, the manufacturing of the loan is similar to what you saw pre crisis. As far as look, each load is very different.
And when you are an institutional investor doing agency loans, most of the best lenders have created a conveyor belt system where if it fits, it goes through, its wonderful, heres your postal worker at 800 FiCO at a 50% ltv, they can show you a w two. Anybody can do that loan. Its just a matter of the price execution on that loan. In our world we have a conveyor belt. Loans fall off of that conveyor belt all the time. About a third of the time, in fact theres some sort of an exception, whether it be a FICO LTV loan amount credit exception. And we are really doing more make sense lending thats outside of that ause, you know, of the bucket. So a long winded answer to a simple question.
[00:14:47] Speaker B: But yeah, there used to be in the, in those subprime days, um, I was a box and what they call it compensating factor was one points for time. Yeah, yeah, I'm in home, um, no mortgage lates, uh, more savings in the uh, more uh, now we call them reserves, uh, time on job, uh, compensating factors. And I think that, and I'm almost surprised to even say this, but it's only because I've spoken to so many main street originators at various conferences in this last year and a half that when there's two things that originators are not doing that we used to do in the old subprime days is the first thing is there's a cover letter in a submission process, even though everything electronically done. Right. And even now for agency loans, that might even help an underwriter as a cover letter. And then when we go down to the four c's of lending the credit, the collateral, the capacity to pay. Those actually are what used to be in that box as compensating factors. And for the originators or even some of the executives that need to reteach the originators that what that box is. Can you give me an idea of what an exception could be in that non QM space using, using that criteria and how to ask for those exceptions? Because it almost sounds like, well, yeah, you just asked for the exception, but really, if you're an originator, how do you go to the executive to ask for that and make it intelligent?
[00:16:20] Speaker C: 100%. Yeah. And you know, our firm, along with, you know, the lion's share of our primary competitors, have an exception, you know, at the desk that, that we staff with, with, you know, our best credit folks. And, and I think that you hit the nail on the head, Michael, that if we're out, we're out of program in a certain area, what compensating factors do we have to allow? Right. And it's all under the general header of capacity to repay the transaction. Right. So if I'm asking for, for a loan amount exception, let's say program will go to a million. I'm asking for like a million too. Am I below program from an LTV perspective? Am I above program from a reserves perspective? Is my DSCR ratio hide, which is a good thing, right. You know, so that I can cash flow or is my DTI on like a bank statement loan very low?
Painting that picture for our credit folks not only helps to guide us through that process, but frankly, it legitimizes the originator as a thought leader in that space where it's, hey, this originator is not sending us something that they're throwing up against the wall, that they don't care about the credit risk of the transaction. They understand it, they vetted it, and we're working with a partner versus a transactional sort of event.
[00:17:55] Speaker A: I think in addition is. And you, you touched on this a little bit, Mike. I almost feel psychologically, the Aus of Fannie and Freddie have trained the loan officer over the years, um, that you have this assurance that when you say you're going to do something, you know, you're going to be able to deliver it. Because if, if it didn't run through the, the Aus, then it wouldn't go, but if it ran it, I magically has to fund like this. That's how I've been trained now through this whole boom. Right. So when you go back to non QM fix and flip is, is picking up these type of loans with traditional. Let me take a quick look at it.
Some interpretation there. I think loan officers, and that's why I'm hoping they can hear this, this show. I think they're a little nervous to go back to the old sales techniques of getting out in the field and possibly having to explain to somebody that started to believe that they could get a loan. You told them how you're going to coach them into getting one. They weren't able to get one. Obviously, there was an exact reason why. I think they're just afraid of that, that rejection type scenario, which was totally normal when I was a broker back in 2007, 8910. You know, today I just feel Covid made everybody so comfortable with the Fannie Freddie. Submit it. What do they say? You almost submit it to get approved versus looking at the loan and telling them how to qualify and how to you as an originator are more playing against the DU. And how can I get this thing to just say approved eligible and I'll get the loan versus actually looking at the profile, which, which you guys encourage and totally agree if you see our shows, the gig economy, I think it's 32% now of Americans get some sort of gig economy. Over 10% are self employed. These people have been starving for an outlet. And I think the loan, some loan officers are afraid to extend it to them because they dont want to have that tough conversation if it doesnt go through Preston.
[00:20:02] Speaker C: Yeah it is. And I think that some of what exacerbates that, Michael, is the lack of inventory out there, the ability to execute quickly, especially with a product line that an originator knows well, like traditional GSC, the govye stuff, versus something that's a little bit more challenging, potentially it creates some apprehension, right. Because at the end of the day, there's a realtor at r word that are on the line, which is their referral sources.
And so we, along with speaking for some of the other firms out there that do a great job in this, we do a lot of loan officer education.
There are slews of webinars out there, individual training sessions.
We'll train an individual loan officer on this particular product line to give you an example of, like the book, the demographics that you'll see.
And I don't think that ours is very dissimilar than most, but 75% to 80% of what we do is a combination of either bank statement loans or the DSCR. Okay. And peeling away some of the, some of the mystery around it, bank statement the loan is very simple right? I mean, I mean its a FICO LTV loan amount based transaction and wed got AI at this point that will process other bank statements. Pretty simple right? I mean you know it is what it is there those loans. Obviously theres certain scenarios that can complicate it but for the most part very easy on, on a DSCR transaction you're really talking about, you know, other rent that you can, that you can receive for that property versus, versus the payment on the transaction. You take the income completely out. And this is a business and this is a business, a purpose loan.
One of the big opportunities that I think is nothing. Common knowledge for most loan officers is that on business purpose loans you don't necessarily require a license in that particular state. If you go onto our website and many others out there, we have a state map that'll show you the states that do have a brick and mortar, a requirement, a Nevada, Hawaii. But there are a slew of states where if you have referral sources, borrowers in those states, you're licensed in California. You're not limited to just doing those business purpose loans in California which is outside of the trid requirements. So we give education on that as far as how to market that referral sources with tax professionals, financial planners.
The number one occupation for DSCR borrower is a real estate agent. Ironic right? And so, and so those are, those are fantastic opportunities to go ahead and arm the loan officers with. Most of the product is very simple. And then that other 25% to 20% of what we do is a spattering of asset qualification.
P and l loans, five to eight unit properties, foreign nationals, all those carry a little bit of a different complexity to them. But again, Fico Ltv loan amount based. And then you're talking about a different way to calculate the income when you're.
[00:24:03] Speaker A: Figuring out how to lender world works as somebody that refers vendors in, you have to understand how the IMB functions, specifically how they work with their loan officers. And I just think it fascinating that three months ago cross country mortgage goes out there and announces 25% of their business was non QM loans. And if you peel back the onion a little bit more, how do they recruit? They allow these groups to come in and run your own p and lithe. And after you pay your loan officers, obviously the GSE loans just don't have much yield. That goes back to the actual p and l that come out as dividends at the end of the year. Whereas you start to look at this QM. The easiest way to learn is seeing it. Probably also the easiest way to learn is when you see money go into your pocket. And so as we're coming up to the end of the year and all of these P L groups that are using non QMD, I think when they actually see this dividend split come here at the right time, at the holiday time, right next year, they're the ones that are going to be doubling down. But I think, more importantly, if we know how this world works, you want to recruit these groups if you're in that p and l model. And I think a big part of it is training them, that a p and l of zero is not as valuable as a p and L. And I think that's what cross country leads in a lot of ways. I think that article, and I think they want it to be a little bit below the, you know, not tell everybody.
[00:25:29] Speaker C: They don't want to give away the secret sauce. Yeah.
[00:25:31] Speaker A: This episode is for loan officers. So I guess that is what I want you guys to know. Loan officers. Listening to this, you're going to start to see this. Whether it's you or you, whoever runs your p and l in that branch, the sooner you realize the non QM, the experts are doing it, the faster you need to. To go on. I'll let you comment that. Mike, I know you had a question.
[00:25:49] Speaker B: This I want to go back to. One of the first things you talked about is the AI that Logan has in order to analyze bank statements, because it used to be in the old days, you had to individually pull out a stack of bank statements. Okay? And you look all the deposits, right? As an originator, you're just, you know, 24 months, and, you know, you get your spreadsheet out or your. Your yellow pad, you're writing down all the deposits, right? Every, you know, and you're. All you're doing is looking at the page one, and then the underwriter goes through it and says, oh, yeah, bounce check from your tenant. You have this. What is this extraordinary deposit? What is this extraordinary withdrawal?
Does the AI help calculate things that are kind of out of the ordinary? Well. Or is it all only going just through the deposits?
[00:26:39] Speaker C: It does, yeah. Yeah. It'll strip out the large other deposits and. Look, I'm a huge fan of, of tech. I really think it's making us more efficient. But there's a human element that goes into everything, whether that be a GSE trade or on our side. So we have a human on the backend who is checking any of those flags that our AI will go ahead and push out so that we can make a real time decision on that and then go ahead and come back to our originator and say, this is the income that we calculated at. And there are certainly times where our originator has a great point that our AI or our human auditor didn't get it right, you know, and they can go ahead and create, we should have taken this deposit because this made sense and this is why. And we are certainly open to those opportunities 100%. And I think that most of the players in the non QM space that do it exclusively have to be right. It's such a specialized trade and we sort of pride ourselves on being, for lack of a better term, a one trick pony. This is what we do.
And Michael, on the road that you were going down on the p and lithe quite a bit of opportunity there, and I can give a little bit of color on the frothiness of this market. Weve never seen it this exciting for this asset.
And so the non QM firms that are out there today are having trouble satisfying the demand of the secondary market. And those exits are in multiple ways. So you have a very energized and engaged securitization market. And for those originators that'll read the trades, whether it be national mortgage news or mortgage news daily or housing wire, every so often you're going to see new non QM securitization comes out from Amla or from Apollo or from Newburger Berman.
You're seeing this quite a bit and that's one exit for that. The other exit is a captive insurance who loves this asset, especially at the yield that the market's calling for. The one thing I would educate the loan officer community on is that this asset doesnt necessarily follow agency pricing. So a couple of things to note there is that you can almost set your watch by youre conforming fixed 30 popping up and popping down with your ten year treasury.
The only x factor is what margin is the lender taking based upon their ops, cost and potentially capacity or whatever it is.
The non agency market trades off of more off of the five year and the two year along with what the current securitization of the bids are. So I like to say there's a bit more art than science to it because everyone has a little bit different way of approaching their price model. The reason that non agency will utilize the shorter duration on the bond is their benchmark is that the duration on these loans is short. Okay, so if you take a normal, you know, mortgage market, I want to say your, your normal amortization, meaning when that loan will pay off on a conforming fixed 30 going to Fannie Mae like seven and a half years ish. Right. Ours is far shorter. Okay. And so that's actually the reason why we don't follow the ten year versus reverses, the average stuff.
[00:30:50] Speaker A: Very interesting. So Logan called it the dance. Right? Like the ten year and the mortgage. I've been dancing in 67 or something.
[00:30:58] Speaker C: Yeah, well yeah, absolutely. And the, you know, and some of what frustrates originators at times and we try to do a good job of the communication of this, is that you'll see non QM rates like a rate sheet, like not move for like a month and then originators get into a place where they're like, okay, well prices never change. Okay great. And then of course it's Murphy's law, they'll have a loan in and they're floating it and prices will change. And so I'm always of the advocate. I don't have a crystal ball. I'm not the smartest guy in the room. And anybody who says that they are is either on an island with one of those little you know, other umbrella drinks.
They don't know when mortgage prices are going to change. So if you like it, make sure that you lock it. Okay. And so that can certainly happen.
And then that would be the advice that I would give you. Rich.
[00:32:02] Speaker B: Nick, I want to transition our conversation a little bit into growth, your vocational growth from sales into leadership and then from leadership into not just on a corporate level but then on an industry wide level. And so well the question is what were you thinking? This is really what was going on in my head. But what caused you to go from, okay, the natural progression to go from sales rep into leadership is it seems like if you're producing and youre doing a good job then of course youre going to get promoted into leadership. But what were you thinking actually when joining the Mortgage Bankers association?
Its three prong, its going to lead into the first part going into leadership into the California MBA and then also into teaching part of their certified mortgage banking certification for the MBA. So can you help us understand? And this is also for those who are at the origination level, that or sales or ops level that want to go into leadership in the future to represent the trade. So what thinking to first like to go, oh well I want to be a teacher or I want to be a leader. So can you start on one of those paths and then we can go down that direction and maybe to.
[00:33:28] Speaker A: I find it amazing. And almost this aurora of energy that attracts me every year, the, the future leader group and the fact they come in a day early and, you know, they compete in teams and it almost becomes a fraternity. You hear them talking years later. They remember who they were. It was in the same class who was on the same team will meet, you know, that the day of, there is a camaraderie there. And I don't know if there's an order nowadays that makes more sense. And back then, there it was not that obvious order of future leaders would be before CMB, but just if you could touch on that too. I think the industry needs to hear what an entry point that is. Yeah.
[00:34:07] Speaker C: Gosh, fellows, we could chat on this for hours and hours for sure. But two, two quick jokes to start is that, is that, you know, as I got into leadership at countrywide to start with Michael, I joked around that I wasn't the best, I was just the best that was available at the time.
And so it was at the time when the mortgage industry was in its go go environment, they saw something in need that they thought that I could help the organization. And the second joke is, every promotion that I've gotten since has been a pay cut. Okay? So if you're an originator out there and you're a good originator, it is a wonderful place to be in this environment. My personality type was always that. I felt like I was a race car driver that needed to understand how the engine worked, and that's what compelled me to do it.
When I would jump into that race car and go 100 miles an hour, I wanted to know if something broke or if something didn't function right, how to fix it.
That really led me on my first of all, the management and then into the executive ranks of the journey, and then from there into trying to broaden my swath as far as a mortgage banking goes. And so there's a lot of different ways to go ahead and go about that as you get onto the lender side, and I'm sure within a retail originations as well, you're a little siloed, especially as you get into bigger organizations. You're really good at what you do. But I don't know what servicing does. I don't know what cap markets does, right. I don't know what credit risk is doing.
The Mortgage Bankers association has got several different designations and programs to go through. First, which is the accredited of the mortgage professional, which is going through the schools of mortgage banking.
Itll bring everything from cradle to grave on origination into servicing, into pricing, in capital markets, into edging and how to hedge, its a wonderful program. I actually teach capital markets in that program and the reason why I do that is ive never worked at capital markets, but I've worked, I've worked as a correspondent, a buyer and the leader of a correspondent channel. And the first thing I tell the class is that I'm here because I can decipher their code that they speak in. Right. So these cap markets guys create language so that they think that they're really smart. And no offense to any cap markets folks on the line, but it's nothing rocket science overall. And if you understand other mechanics of that and you understand what a buy up and buy down schedule is, how a TBA works, how general hedging principles are, we can teach that. And I think that as an originator going through that, it would really help them understand difficult decisions that a company has to make when they have to increase their pricing, when they have a servicing issue, when they go through that. From my opinion, it really helped me to understand almost Monday morning quarterbacking. That's why they did that when they did it. I get it now.
Going through that program, the next step traditionally would be the certified, the mortgage banker on the designation.
[00:38:06] Speaker A: As you go into that, I'll let you know. A couple of our fans, originators loved your race car analogy and they're looking for some more f one analogies around, maybe pit stops or quick turns.
[00:38:20] Speaker C: But I'm getting old enough. Getting old red, joke around. I've got the wheel at ten and two and my daughter will yell at me if I'm trying to text as I'm doing it. So I'm not, I don't drive fits. But yeah, yeah.
[00:38:33] Speaker A: The joke is you're like, I used to hit rear end cars all the time till I had the daughter in the car telling me when I was 3 miles away from it. Right?
[00:38:42] Speaker C: Absolutely. Absolutely.
And we get mad at them for telling us when we're about to hit something.
[00:38:49] Speaker A: I always saw it's actually one of my biggest fears of uber when I go to like Texas because the, I'm almost like, I went to the housing wire conference and I actually went and got an su, I don't like being a low car and they're just tailgating the pickup truck. They can't see past it.
[00:39:08] Speaker C: All the big trucks there because you.
[00:39:09] Speaker A: Don'T have the brakes.
Can you just tell people real quick how many schools of banking there are and then, and then move on to the CMB and how that one works. Yes.
[00:39:20] Speaker C: So it's three schools. The first one is relatively basic. It goes through the origination process. Probably something that a seasoned originator would certainly understand. The second school is much more engaging from a capital markets perspective. So it goes through different price modeling, hedging, servicing, that end of the operation, and then school three, you are actually running a hedge.
And so there's a computer simulation around. Okay, so you have $100 million hedge pipeline of oil prices. Shoot to this. This happens here. How do you take your hedge on and off? What does that mean? How do I do it? It's actually, look, I'm a bit of a nerd with this stuff. It's actually pretty fun.
I'd be able to do. And it gives you credibility within your own organization to go ahead and be able to have those intelligent conversations and understand the general principles of it. So on the CMB side, a little bit more all encompassing, there's a great prep course for it, but it's probably not for the faint hearted to ultimately get your CMB certification. It's a six hour examined. Broke it into six 1 hour parts. And I had done this probably 10, 12, 13 years ago.
I hadn't sat for an exam like that since the SAT. Right.
So it's a test in time management just as much as it is of the content.
And then there is an oral portion of the examined. That, frankly, is for the mortgage Bankers association to be confident that if I put somebody in with this designation and they are sitting on an airplane with a congressman or a senator, could they intelligently articulate the positions of the mortgage bankers association and speak with intelligence on housing?
And that's a pretty exclusive group overall, so, yeah. Yeah.
[00:41:40] Speaker B: Do you think that there are enough cmbs or enough people who apply to be a CMB that are on a national level? Because what I've noticed is that those who has a. Has a, you know, Mike mentioned earlier, there is a, you know, you may be a part of a certain class of people, not like a wealth class, but like that. That class of like a graduating class, as I'm gonna say. And so with that designation, you know, we just went through a fairly traumatic time as far as employment was concerned with throughout the industry. Does having designations like that outside of the networking, does it help someone with employment or, you know, and. And do you think that independent mortgage bankers do enough, uh, encouragement for their ops staff or even sales staff get designated like that?
[00:42:31] Speaker C: Yeah, I think the answer to the first part is 1000% yes.
And I sponsored, I want to say six candidates ranging from a mortgage sales to operations to cap markets. And I think that what you get by really going through that is that for an operational employee, you would really understand the cap markets, the sales aspect, the origination piece, and on the other side, they would understand the ops, the counterparty risk, the credit risk aspect.
Michael, I can speak for myself where I get engaged by vendors probably ten times a day, and if there is a vendor that comes to me with a CMB behind their name, I look at it, I look at it a bit closer. Um, I know that that's probably superficial and if I don't, you know, but, but, but at the end of the day, it tells me that they have enough passion for their craft to go through what is a very challenging and rigorous, um, uh, you know, program to go ahead and get that, the designation.
[00:43:44] Speaker A: Oh, that makes sense. There's a rumor about warpack to the different levels that you contribute.
[00:43:49] Speaker C: Absolutely. And you know, Michael, you had touched on the future leaders piece. That was how I got engaged with the mortgage Bankers association.
Probably the best program that I've ever been through from a mortgage, a leadership and a mentoring perspective.
You had mentioned that theres a camaraderie within other classes.
In my particular class as an example, and I joke around about this to a degree within the school of mortgage banking. Im like, get to know the people in your class. And the reason being is that I have probably half a dozen contacts that I might have a question that I might be too embarrassed to admit that I dont know the answer to, and ask somebody at my firm, I might want to ask somebody without any giving away anything proprietary from somebody else that say, hey, I know this is a stupid question, but I know that you know the answer. Can you help me out on this? And ive got, I have on my speed dial about a half dozen of those people, several of them were in my future leaders class. And it was a great class.
Eddie Perez from, from Equity prime, he's been a guest. Amber.
[00:45:15] Speaker A: Love him.
[00:45:16] Speaker C: Great guy. Awesome guy.
Amber.
And her maiden name was Ewell, and I forget her married name, the CFO over a guild was in my class. And so I don't think that it's coincidence that folks who really pride themselves on mastering their craft have landed in very good positions overall. So.
And to expand on that, I took what the NBA had and what the California Mortgage Bakers association had, and I married those together along with a lot of help with Susan, Susan Milazo and several of our other board members to craft our own future a leaders program. And I want to really sing the praises of that because we have so much institutional knowledge within the California MBA of the leadership that what we do is in each functional area of mortgage, whether it be capital markets or servicing or sales leadership, we bring in one of those board members to talk on that. Mike Fontaine at Plaza today, Bill Loman is giving a presentation to future leaders on leadership from American Pacific. There's so many amazing folks that if I'm a young professional having access to those people, and it's not just that presentation, it's the after other mentoring as well. They have a question. They can call Mike, they can call Bill. You know, I don't put myself into that group, but they're welcome to call. Call me as well.
[00:47:08] Speaker A: Yeah. And that's where the being on the board of Massachusetts, we constantly talk about how do we drive new membership. And I think the obvious piece that we talk about, but hate to talk about is, but it's always been a problem is the apprehension to send your best loan officers or best people to a industry sponsored, state sponsored industry that has a reputation for competing to recruit. Right. And rather than building. And it's. There's no fingers to be pointed because there's no mortgage major in college. Right. You don't come out. So anytime there's a profession where there's no feeder system, it's just easier and more natural to just keep taking from each other. And that's through Dietz talks about it. That is actually one of the reasons the cost to originate is so high is all the extra money spent legal and non legal, but getting them back and forth. But I think any great.
If you play sports.
I used to drive around and my dad made it very clear early on that sports is like a pyramid, like many things in life. And as you get up, the competition is going to get tougher.
[00:48:23] Speaker C: Right.
[00:48:23] Speaker A: And less people are going to be able to go up and they'll. You'll always meet somebody better than you. Like no matter how good you are, you'll run into someone better. And I think the leaders understand that there's always that chance that, that great, there could be somebody else that could inspire your worker better than your off day. Right? Like on their on day. And you're afraid to let that go. And that's. That's something there's no real true answer for, I think. So the really only answer is just like every other soap piece that social media has broken the barrier with how much it would cost to have a television commercial now you can sponsor on a local Amazon to your client for $30, you can be on an NFL show. Right? This has broken down so many eyeball barriers that it's really just on the loan officer, the processor who's watching this show here today, to come out with this message and say, if you go directly to the NBA website, there are ways to get scholarships to this. And don't wait for your boss to tell you that you're perfect for this. If you have any passion in this industry, you are perfect for this. And it is a marathon. Take your time, be part of it. Because when you get to the other side, Nick said it. I've run into many people that say it and in my time spending it. And like no one says, it isn't worth it. So it's definitely worth it. And use this show as a catalyst, I think, to reach out on your own. Dont wait for somebody to tap on your shoulder and tell you that youre the right fit.
[00:49:46] Speaker B: Trey, I think to rehash this show as we begin to close it out, I appreciate, Nick, you coming on, especially to explain and educate as youre already doing in our industry. The first part about how to expand the knowledge base for non QM, going into the history of how we were able to originate in the past and then how to bring that type of education of now, educating originators to bank statement loans, the SCR loans, those types of loans so that they can originate more. And those are profitable loans, more profitable actually than agency loans, not only for the independent mortgage banker or broker, but also for the originator potentially as well.
And then segue into your history with the MBA or your into leadership, and then the MBA and the California MBA and the education pieces that go along with it, not only for the networking, I mean, your stories of how you network within your own class actually is powerful enough for someone to go, you know what? If that it was possible, if it was powerful for Nick, what would it do? If I were to be able to network and get that designation? Would it have created more opportunity in that downturn so that you could network and say, what could it, what could be done differently either in hiring, firing, creating a product mix expansion, because non QM was still available during that time period and doing, you know, 20% more made, would have made a more profitable organization. And so having the type of network so that you can create better profitability. Bless you, Mike.
Taking out more profitability is a powerful, powerful, powerful asset in any toolbox just.
[00:51:32] Speaker A: To bring it full circle to loan officers. Came on here for the title. Dick, as a walkaway, what would you recommend?
Picking an order. Obviously theyre all winners of going out there and building your non QM business. Would it be from looking at the inventory thats available and finding good fits like DSR and working your way back? Referral partners, going back out into the community and re engaging in the b and eyes of the world and use this as a catalyst or your database and just going back in there and trying to find ones that would fit. Where are you seeing the most success?
[00:52:09] Speaker C: I've always subscribed to cast a wide net.
So if I'm an originator, I'm really talking this up with my referral partners to start. If I can have somebody working for me out, out in the field to drive borrowers to me, I think that that is obviously, obviously the low hanging fruit. You know, engage your referral partners, make sure that they're, that they're aware of what you do and then, you know, you know, going back in, hopefully these originators are kept to CRM and can go ahead and pick out. These are the folks who, who have capital for investment in real estate, who have done non owner or second home products before.
Great way to go in and go any.
These are some products that have come online.
Theyre more mainstream and getting more commoditized now than they were three years ago when I did your last transaction.
Great way to differentiate yourself from, hey, interest rates have dropped down, I can save you a couple bucks. Right. That's a great way to go and just create value for your customer in that way.
And for both of the michaels, we're certainly happy to go ahead and help with any of those training aspects. If you're unclear on how to do that, we've got a fully decked up marketing and training support group. So I'm sure that a lot of my competitors have the same thing, but, you know, we're all here to support you, so.
[00:53:49] Speaker A: And us at miked up show, if you go back in season 13, we give you some key takeaways to start your own podcast. We actually have a document that a couple of our guests have been amazed about. If you listen to the one with Brian Vue and Jeremy Potter and Brock and, and Rick Rock, they were shocked, you know, at, and how low we can go on, you know, just covering the cost for us to get in there. But the viewers that what drives a view on YouTube is the fix and flip, the DSCR, the turt, the, the how you can help a real estate agent, how you can help an accountant, how you can help this, how you can help that. So reach out to us, too. We'd be happy to help you start a show to distribute a product that Logan financial has. Thank you for coming on the show. Any final thoughts?
[00:54:38] Speaker B: Mike, thanks, Nick, for coming up. We appreciate it. Looking forward to seeing so much more in this non QM space.
