Episode Transcript
[00:00:00] Speaker A: Here we are for another episode of the Mic'd Up Show Season 3 and it is the end of the year. We started, Mike and I and we have journeyed to a radio type format where we would talk, introduce our guests. If you've been listening to these podcasts recently, we have adjusted to having guests speak the entire time and educating us on where the industry's going and having our thought provoking questions replace what was once cutting edge current event. What do you think of this topic? What do you think of that topic? And so having no guests today is an exciting week for Mike and I because we get to go back to our roots and really shake the trees on what is going on in the industry while showing some gratitude for our guests and recapping anybody that's a new listener on what they may have missed in the past season. We did this last year and a lot of people were very receptive to our what we called season recap. So we'll take this opportunity to recap it. At the same time, it took longer than we expected to recap the season so we will do it in a more brief, faster pace so that we can leave time to tell people about what we have seen in the market in 24 and you will get our raw, rare takes on road mapping for 2025 and what it would take to be successful in our opinion outside of the status quo.
We appreciate everybody listening and in fact even in this episode, if you are in the stands, you know you're where you are because you've listened to our show and you know that we do it every Thursday at 2:00pm Eastern and.
[00:01:48] Speaker B: Of course at 11:00am Pacific Time here in sunny San Diego.
[00:01:53] Speaker A: We want you to join us, we want you to comment on LinkedIn and there's times like today where we might even be able to send you a streamyard link and have you come up improv style. So we do want that interaction. At the very least we can post your comments up here and we invite you. So remind me Mike, to say it later in the show. People just joining to again post their comments so we can flash them for those watching visually. And a lot of people listen to us on the audio while they're out and about.
It has been and we've been leading with this so I should get the exact number.
But we're coming up close to our 100th episode where we have been a hundred straight weeks of doing this. We have an excellent newsletter with over 2,000 subscribers. We recently did the John Tuig newsletter that has been our number one video replay watched on LinkedIn with over 1100 people watching it in its LinkedIn organic views, which is almost double our, you know, our normal and double what I see out there in the industry. So that is exciting and a great show there. So we're coming off some really great shows. And the reason I said that was, that was a week I, I had a baby on the way, I couldn't make it and you were able to fill it in. So if you go back to another episode in season three where we talked about how we put together these podcasts and how we're able to get to 100, it is having accountability. So my first gratitude is, as I've said before, thank you for being such a great partner in this whole journey, Mike.
[00:03:27] Speaker B: Oh my goodness. I mean, we've learned so much in this last three seasons. And I'm also grateful very much, Mike, for, for our friendship and our business participation, especially in this show. And we got an email from John this week, you know, asking us for some feedback. And you know, the fact that you gave me that, you know, we had the most amount of views on that show gives. We should, we should tell him that because it was, that's, that's some incredible feedback. But I think for anybody who's listening right now that hasn't listened or seen the show, that particular podcast that we saw, as I talked to people in the whole loan trading space, not necessarily in the mortgage market, capital market space, but there's a space called whole loan trading. And what that means is you're going to be buying and selling the mortgages not as like they do agency, where they collateralize them as a collateralized mortgage backed security, but we're going to buy and sell the mortgages individually.
And as I talk to people in that space for what I do in the family office, that particular show has brought me the most amount of recognition because it turns out, and I pretty much already knew that. But the, whenever there's an elephant that walks into the room, everybody always seems to know the elephant that walks into the room. And respectfully, as humble as he is, if you go and watch it, he's very humble. John Tuig is always the elephant in the room. They have the most amount of capital, the most amount of power to make larger trades and even difficult trades because of the amount of money they have and the amount of risk they can take on as a result of the money, their losses become mitigated. Just the sheer fact of numbers, you know, if you have a 1% loss ratio in or 2% loss ratio and you're not doing very much business and you're doing a whole bunch of business. It's different than having a 6% loss ratio and you're doing a little bit of business. And so having that particular show for this season has been amazing traction. Not only bringing us some recognition in the whole loan space and also in hopefully we'll be able to bring that into the mortgage banker space as they understand and realize that.
[00:05:45] Speaker A: And that's what makes the world go around. And lenders are realizing that through margins, margin compression. Maybe you can talk about that to the layperson, Mike. But in the process of talking about it, we had a lot of lenders on our show. We had Mike Mills from Geneva Financial, Chuck Iverson, episode 5, President of Mason Mac. We've got Bobby Nicely, president of Alcova. We had on episode nine, George from City Lending. We've had Michael Brady from Leader 1 on episode 10. Both of those leaders in, in their companies. We had David Batney who runs capital markets for Guild, one of the largest blood news in the country. Episode 12, we've had Rick Rock at NFM as part of the group that joined us. On episode 13 we had Bill Loman who runs a American Pacific Mortgage, number 24 in the country in the top 10 IMB episode 14, Jay Promisco.
[00:06:48] Speaker B: Yeah, that was in season two, episode 11, actually.
[00:06:51] Speaker A: John Hudland who founded a marrow home, episode 16. What I'm getting at is, and I will keep going into it, what was your perception of all of them going through in 24 and as we progressed, hearing here in 20, hearing here at the end of 2024, all of a sudden people are starting to say long overdue, calling out that the economists have been wrong and they've been following the economists, they have been echo chambering the economists. Most recent example, we're going to have six rate cuts, right? I'll let you tell the audience, but obviously not only are we not going to have all those six of those, but it's looking like it could stop or perhaps even a rate increase somehow. So what was your perception of all this leadership going through? Like, where is the mindset in your opinion in 2024 and can you have that same mindset in 2025, 2026, or do they, do they need to pivot or come to some reality from a macro view?
[00:07:51] Speaker B: It's interesting because actually this was before interest rates took off two years ago or two and a half years ago.
There was some, there was some opinion right that interest rates were actually going to be roller coastering, going up, going down and kind of teetering up and down. And I think, you know, we're in the middle of that. We saw the teetering in the first interest rate takeoff we saw in the last 90 days interest rates coming down. And I think we're going to be seeing a lot of this up and down. And people think that, you know, I, I saw in a LinkedIn post recently yesterday that NAR thinks that rates are going to be what, 5.7 people are like anywhere between what, five and a half all the way to six and a half, which is possible. I think we're gonna, I think we're gonna be anywhere between five and a half to seven percent in any given month. Eddie Perez mentioned this in, when he was on and he, you know, he said you need to have more of a global macroeconomic view, not just on what's going on regionally or locally, but a global economic group view of what exactly is happening. Because we shouldn't be so born to think that it's only about jobs and employment, although Logan Motosh will say so.
But I think one of the things we need to be looking at now, Kevin over at PRMG mentioned was talking about Bitcoin last week and we have to consider what is going on with the trade of what is going on with the overnight lending rate with China, with Japan, with the EU and there's a lot of global macroeconomic effects that are going on. That is. So Chairman Powell is not just looking at inflation and jobs, although that's going to dictate how economic policy will be done. But I think we, when Wall street makes those trades for mortgage backed securities and how they're going to be making investment, investment trades or into the, into the mortgage backed security market. We have to be looking on what is the power and strength of the dollar. And that is something that we're going to be looking forward to when making trades and fixed income. Fixed income is like bonds, right? This is, this is my space of, of when talking to these, when we talk to John Tuig about the whole loan space, it's really about trading the yield component of that. And if the retail mortgage originator is looking at this show and asking himself well where's where our mortgage rates going to be?
Don't time the market, it will. The market always wins. They always, the money always wins. The problem is that you're not the market. And so we have, you just have to think. And when the borrower was concerned, I Want to time the market. I want to get the best interest rate. The best interest rate is when you got the house.
And if you already own the house, great. You know, then refinance when rates come down or refinance when you need the cash out to do debt consolidation or refinance because you need the money to pay off taxes, or refinance because you need to do a home improvement. The best loan is not based upon interest rate. The best loan is based upon what is it that is going to satisfy the need. And we've talked about this several times as far as staying in your lane from the origination standpoint and the value proposition of heading into if you can survive into 25. What it means is that if you're the originator, you're looking at not just the interest rate component because that's been thrown out the window as interest rates were going up. Now you're looking at did you maintain your database of realtors? Did you build your database of RealTors? Financial advisors, CPAs, trust trust, attorneys general, contractors, flippers? The people that you decided to create the relationships with, those are the people that also are going to be carrying you into 2025 because you survived this far. And with what, Mike, what was the attrition rate of originators? Like 60%? Something like that?
[00:11:44] Speaker A: Yeah. We know the revenue went down 70% at its height and we know on the operation side they were cutting 30% at the point where it should have been somewhere closer to that same 70. Right.
Have companies been able to fully right size?
Their plan to right size is how do you not hire going into the next boom?
Not actually completely. I give them credit, they've done a great job of right sizing as much as they can without maybe making an emotional decision that it's not worth staying in business to be that lean. But we talk about roadmap and for 2025, I'm not saying lean, but I'm saying certainly exploring what lean looks like and having better lean conversations is a big gap I'm seeing in lenders. The biggest gap to me is not hiring a entrepreneur type, pioneer type with mortgage, basically describing myself, but to come in for three months, fractionally maybe every year and really write out a longer term plan on what future state is going to look like. Just like you said Eddie Perez said, you can't just look at home inventory, average age of home buyer, supply, demand. You got to, you have to look at macro.
The mortgage industry is ripe for disruption longer term. I'm talking maybe 10 years from now but if you follow Rick Rock for example, there's a lot of IMVs making a decision to stay or not to stay to get acquired. Earn out for those 10 years is going to come fast and maybe they could have taken their chips off the table at a higher point. Are they really ready for 10 years from now? And I could say, you know during this show where I think it's going but to not plan those 10 years now where it's going to come back to bite mortgage industry is it's never traditionally had a model around the lifetime value I think of a customer and never really had to challenge itself on how to build, you know, that long term connection because it would come next cycle, it would come next cycle, it would come next cycle. But macro there are a lot of outside forces just cost of how much easier it is for a broker to pick up certain technology or one of your top producers to spin off and start their own company. Right. There's just a lot of macro ish type ways that technology is making it easier and easier. Just be aware of it and roadmap for it.
Mobile is always my example but I'll give you, I'll give you a perfect one. When a consumer walks into a home nobody knows what the, what mortgage company the other consumers are using.
There's really only branding at the real estate level and that branding usually is the pre qual. So they see, okay, this loan officer keeps popping up on pre quals. Real estate agent understands it, maybe that's the world you want to be in. But in your community there's not much physical branding for you to say, oh here come two more couples using why are they all using this company? And so I sometimes I question the three day not saying get rid of it but this is where you would have somebody come in. I question sometimes the difference between a five day close and a ten day close. And to me manufacturing just got to be careful. It's not yesterday's game but I don't know if the gain on reputation on that is always going to transfer into the amount of extra sales you think versus getting further up funnel, somehow interacting further up funnel and somehow staying with somebody after the close. And I think ice, and I know ICE realizes this too as much as they get the middle long term the manufacturing is going to become uniform again. And how did you know? That's what they're wondering too. How do we get further up funnel? That's really where the disruptors are.
[00:16:12] Speaker B: Well we've seen the employment workforce in the mortgage industry from just shine or 500,000 employees now to just around 300 and around 350,000. So we've dropped a significant amount of, we've got 30% of workforce in support.
And you know, when you talk about the mobile app, I also want to include AI. AI doesn't just replace or enhance the support staff. AI actually if you've seen it on TikTok or on Instagram, is actually also taking away the salesperson. AI can actually imitate a voice, make a phone call, set an appointment and even sell a deal. And if it listens to an objection, it'll just say, I'll get back to you. And I think that one of the things that the originator salesperson needs to learn how to change, number one, is to create the efficiency of replicating themselves in the AI salesforce to begin with anyway.
However, the change that needs to happen again is a reversal potential into the in person appointment, the in person meet and greet and the in person. Because we're, because if you, if the originator salesperson or even the recruiter salesperson doesn't learn to go back into pressing the flash, meeting someone in person and establishing that relationship and everybody's going to say relationships are that, that's the deal. And you have to be able to go and make telephone telemarketing calls and you have to be able to make the in person appointments and get to know the people and know them so they can know you like you, trust you. And without AI, the usage of AI and then to, and that's just an enhancement to the in person appointment for the salesperson that it's going to be harder in 2025 to make it into the rest of the decade. And if you're in operations and you don't know how to utilize AI, whether it's for, you know, nowadays, you know, I saw a compliance company, they were using AI for optical, I don't know what you call it like, but when they read the documents optically, that seems to be quite proficient. Now optical character recognition, you know that that's created a lot of efficiency, right? So you know, before, you know, 20 years ago, if you wanted to analyze 24 months of bank statements, it would literally, you know, you get out, you get out the bankers bankers box folder and you go through all the bank statements. Well, with ocr, you know, the underwrite for that, you've taken around an hour, hour away to that to actually analyze that. And so there's an efficiency in that. But the underwriter still needs to say, okay, this is what it says and. And if they don't know how to utilize that to its highest functionality. I just recently went through a review of a review and I'm finding out that the. Not that there's laziness, but you, you know, if someone is already doing the work, it's pretty easy to rely on somebody else doing the work.
[00:19:17] Speaker A: There's two types of AI. So the first part you were talking about generative AI, which is the ability to speak and email and text and type and put prompts in. It writes for you and yeah, that will be present in the salesforce. I think we're just a long ways away from loan officers taking the time to learn the prompts needed to go do that and not.
I subscribe to all these cold outbound emails that I'm trying to learn. I'm paying the subscription price. And that's where I get caught up is can I write the script? So for me too, it's not that I have hesitated on buying it, paying for it, knowing I need it, watching hundreds of hours of YouTube on clay. It's still at that prompt level that I have not been there. So I think you have years and years on the generative side on the applied AI, which is your compliance example, which is take something that already exists today, a workflow with requirements and can through UI solutions plus OCR solutions, which you said, plus rpa robotic process automation. And you duplicate that. And the answer is yes. And the answer is it's already here. And it's just how do you fit that into your mousetrap? Is more of the reason some of the lenders aren't doing it or the distraction of this 10 of them. You know, that's why lenders call me up because for free I can tell them the difference, really. But I think it just gets confusing and then it's delegated and it's just very. For me, roadmapping in 2025, you're either on the broker side, right, and figuring out how to work within that environment that is growing. When you look at the HMDA of Barrett Financial, nexa, the loan factory, Eagle Edge, all of those now are doing 10, 20, 30,000 units a year. Boom. Like sprouted the IMB model.
I think again, road mapping comes back to how are you going to handle distributed retail and how are you going to handle the Runway of planes coming in and planes leaving? And how can you really nail it by offering concierge service at those branch levels? And I think it's concierge service around like when James Dwiggins was on our show. Those real estate agents use software that. He's not knocking them as a top eight with I don't think what. He had like 8,000 agents. He's not knocking them to make it proprietary. He's using a generic software that you can go out today for 39, 99, be a user for floor plans. But they have trained their real estate agents so well on it that they know how to use it. They know how to tell their customers how to use it. They can go in and show floor plans. I think you're going to.
If I were to roadmap, it's. How do we handle that onboarding? How do we be. And this is why it has to be almost external. How do we say Cross country does great disclosures when they come over here? The reality is that branch, it's not like how they thought it was. And you're given a 50 page pack on how to do it. And it's just, how do you avoid a lot of that since you're recruiting from the same places? And.
And then with that, that branch comes over. We know cross country isn't teaching them how to use clay or Smart Lead or giving them an app and how to scrape some emails or look at emails on MMI and load them in and have something. All of those, like I said, with my prompts, can I have somebody help me do that? And none of that is things that are happening in the mortgage industry in 2024. So that's why you have to reimagine it a little bit. But none of that. I also said costs much implementation fee or monthly payment fee. And therefore, you got to figure it out, I think. And you got to wrap it in distributed retail, because that's where it all is right now. And so make it work in that model and ask for some help outside because everybody inside is seeing everybody. Like we said, we had Leora, another episode. Somebody with a CMB look at Open for Work. Open for Work. We're seeing a lot of cmbs out there, green circles Open for Work. If they're looking for work. You know, your own employees are a little bit. They're seeing that too. They're a little nervous. They're not gonna throw out any grand ideas right now. Not until the market comes back. How do you want to unpack all of that, Mike? Or pivot to another episode?
[00:23:56] Speaker B: Okay. Oh, boy. Um, I. Okay, let's. Let's start with the broker versus banker model. Okay. So first of all, if you. For our friends who are at the Mortgage Bankers association and who actually have a retail presence, there is not enough emphasis on how much value that the MBA can promote. And I, because I don't know, I don't know how much in marketing they're doing. But if we're going to compare what mortgage originators in that space do compared to the Realtor at nar.
[00:24:37] Speaker A: What a.
[00:24:38] Speaker B: Disservice our own industry is at the moment. Not just the MBA but our entire industry in collectively working in concert with each other so that the industry gets a better name or recognition of providing value to the consumer.
Because when you have the largest wirehouses promoting financial services, I'm going to use it because mortgage originations is a financial services. We're not, you know, Morgan Stanley doesn't promote mortgages unless they're at the retail level or Chase does, but really at the banking level or Wells does at the bank. But we don't, as a mortgage industry we don't promote the value we provide as much as the national association of Realtors. And so we're a distant second in recognition of value that we're providing to the buying public. The public buys money, they're borrowing from it, but they're paying fees for that. So they're buying money.
So if that's the case, then what can we do to collect and say okay, this is the type of value because if not the industry is going to 100% be left to selling interest rate.
[00:25:50] Speaker A: Do you think they should take out money?
So if you have your animals, should you be required on every W2 close loan type pay stub, a certain contribution do you believe should go back sort of how NARD doesn't require it, but makes it so that most brokerages sign themselves up which then contributes out of the paycheck of every realtor?
[00:26:14] Speaker B: I don't think that the originators are, I think originators are too selfish to think like that right now. If you, if you have I don't know how many of, of tens of thousands of mortgage licensed nmls mortgage originators that are out there right now. I don't, I don't. I think they're all too selfish, every single one of them.
[00:26:32] Speaker A: On the real estate side though, it's your brokerage doing it on behalf of you, but you certainly pay for it because it comes out of your paid stub. Right. If the lenders were to all do that, do you think what happens in the mortgage industry is then someone come goes around and says I offer it without the mba, I'll beat your pricing and Then everybody else has to take it back.
[00:26:53] Speaker B: We don't have, yeah, we don't have to pay this. We don't have to pay the MBA fee, we don't have to pay the MORPAC fee or we don't have to pay the, you know, you won't have to pay this. It's just going to be like, oh my gosh. I mean, like I said, all it does is support, support. My theory is that originators are just being selfish about it. Right. And realtors, they haven't had room to be selfish about it because just, because now it's just part of the deal. So when you say that the realtors are doing that, well, it's just part of the deal. And if you're gonna make, if you're gonna promote something like this, you just gotta make it part of the deal. In other words, it's always good until it's not. And right now it's not even good until it's not. It's just not good. And so how do you, how do you change? If it's not good, then you just got to change it. And if it means saying, okay, on every wholesale transaction there's a fee that's going to be going to go pay into this to support the industry. And for every retail transaction, there's going to be a fee either out of the commission or by the borrower. And I'm not sure how that's going to fly. I think the leaders will be able to decide how to collectively work together on that one and say, then they'll go into it. Because if it's $35 per transaction and there's more refinances and purchases combined versus versus sale transactions by a single Realtor, then now you can generate some marketing income to actually develop a better recognition and a better namesake for the mortgage originator. Because right now, if you're reaching into the candy jar mortgage originators, you're not sure if you're pulling out jujubes, M&Ms, or plastic. Or plastic marbles.
[00:28:35] Speaker A: Yeah. And there's two examples for the, for the originator wondering like, what does the MBA do? One is HUD recently came out with a rule that said any servicer that was charging to collect money, and if you've ever called your electric company and you want to pay by check, by phones, $3, if a servicer was saying, we'll take money by phone rather than mail, it was $15, let's say HUD came out and said, we're coming after and collecting all of that back on behalf of the consumer.
I don't even know if they're actually going to give it back to the consumer. That's just, you're fine retroactively. So anything you've ever done while we've been busy with COVID MBA stepped in, writes a letter, responds pushing for it to the originator Mike Servicers even thinking that's a possibility, they immediately raise the price that they're or lessen the price they're going to pay for mortgages. And that's probably one of those days where you're like, how did the 10 year go down and rates didn't go down? And that's right there, you know, an example.
[00:29:46] Speaker B: The only way to make noise is to cause disruption. So if you're, if you're serving, let's say you're servicing a mortgage loan and whether it's a Mr. Cooper or whoever and any service for that matter, and you're promoting refinance solicitation, fact solicitations. Right. What was it that we just read? That's a big issue right now? National Mortgage News, they're talking about when, when you pull a credit report and then you get, and then it goes out to the marketing agencies.
[00:30:14] Speaker A: The trigger leads that did not go through.
[00:30:16] Speaker B: Let's talk about trigger leads just for a moment here and go and talk about trigger leads into 20, 25 and talk about. And I'm going to regress back to what we were talking about for that purpose. Right. It's about if are we marketing ourselves, for example, for the people that, that, that are selling trigger leads in order for that to be a market, you have buyers for it. And so I mean, if we complain about trigger leads, we should be complaining. Okay, well then, oh yeah, these people are selling the leads, but then who's buying those leads? There can't be a market, you can't have a marketplace without buyers and sellers together. If you just have, you know, if we want to go back and just buy a whole bunch of t tulip bulbs and we go, oh, you know, here's a whole bunch of tulip bulbs. Oh, we already learned that from a few hundred years ago. Just like, you know, so we're not going to buy any more tulip bulbs. Well then why are, why are companies bought. Why are there companies buying trigger leads? And the only reason it's an issue is not because there are sellers, it's because there are buyers.
[00:31:10] Speaker A: And the consumer doesn't know the difference between channels of mortgage companies and designations, et cetera. So the M The Mortgage Bankers association is truly in Michael Kelleher's opinion, not how they advertise around for the boots on the ground, retail loan officer, mortgage banker and somewhat the broker. But the broker should be very involved because long term if you're going to be in this industry, it's made for the people that are face to face with consumers and have to answer to consumers. The people that buy the trigger leads are out in a call center in Des Moines, Iowa. Right. And, and, and they can come and they can go and they ramp up when rates go down and they leave when the rates go back up. If you're going to be there, if your name's on a face is on a bench, your face is on a little league field.
There's another rule that came out proposal in July of 2023 and NBA is there for comments recently where it said if any third party that works for you does something nefarious, you can lose your FHFA seller and servicing rights. Now MBA said they wanted to just add two words and obviously you're paying not just for the mortgage bank associations like networking going down there. You're paying for them to have lawyers on payroll. Even at the state level we have one of the better lobbyists here. But nationally they have the lobbyists on payroll and so they know just tweak these two words knowingly like put knowingly in front. And that's the proposal from the NBA. And here's where it comes back. Say you have five of your, say you have two family members and three parents of the kids you coach locally locked in a rate and rates go up here in December and now it's 3.375% higher than when you lock them.
And then you get word that your company can't close FHFA deals anymore. So you can't close those. If they go somewhere else now, they're going to pay a higher rate and blame you for at least the next three to five years. You probably can't go to a new go. You can't go to a new company because you're out of the market on those rates. I mean you're going to have to go to a new company. The MBA is stopping that all because some third party, uh, they use the example like a secretary did something without anybody really knowing and now all of a sudden it's a blanket rule. The MBA is really there to prevent these not thought out blanket rules. And they ultimately affect career people. And the problem is they're, they're more vitamins than they are aspirin.
Once you need it, it's too late.
But the fact that you can sleep every night and know this is a good career.
The one thing that keeps all these big picture talks that I love having. Right. But don't forget I, I've been to nine out of last 10 advocacy conferences. I'm very aware the best friend of the industry is the regulation because it keeps, it keeps Zillow on their toes. It keeps, it makes it difficult for Amazon to think they want to come in. It's just keeps the noise out of there so the units can stay consistent so that you can roadmap for 2025 and not have to handle some huge disruption like Amazon just came out with a mortgage program and we're going to, we project 25% of our clients are going to go over there. That's not going to happen.
[00:34:45] Speaker B: In personal development there's a saying, give me boundaries so that I can be free.
Yeah. And what that means is that the more boundaries that you have, the more that you can notice the box that you can stay in. And if you can stay in that box, you know what kind of freedom you have, you know, you're not, you're not going to go out outside the box. And so you stay in that box. And you and I are kind of different. Right. Because we can't help it. We are always thinking outside of that box. But that's our freedom point. And there's. And there, but there are more people that need the box so they can have the freedom of staying in it. Because if you, it's like going to a buffet. If you have a million choices when you're hungry, you're not sure what you're going to do because you're going to get full on one thing and they're like, oh, I should have done that. Or versus the, versus the other people are just like, just give me an in and out menu. I want a hamburger, cheeseburger, shake and fries and oh yeah. And that's it. And I'm okay with that box. And I think that for our industry we just need that box. You know, if you're going to be, if you're going to be a trigger lead person, if you're going to be a door knocker, if you're going to be a telemarketer, if you're going to be. And it doesn't matter whether you are cold door knocking realtors or door knocking the consumer on a B2C or if you're going to be door knocking or cold Calling the businesses that, like the accountants, the financial advisors, the realtors and whoever, you know, there's got to be a box. And without that box, we don't have the freedom of actually knowing what it is that's going to actually help our industry and trigger leads actually does not help our box.
It is an industry and it is a product and people are buying it. Otherwise it wouldn't, you know, it's always good till it's not. That's one of those. It's not. It's just not good. The consumers don't like it. They don't like their information being traded. And someone created that as an industry. And really who's to blame? Is it the people that are buying is the chicken or the egg? And who's going to stop that? Who's going to regulate that?
[00:36:40] Speaker A: Well, the servicers aren't going to stop it because even if that rule had passed, they still have the right to reach out. It's built into how much they're paying you. But I totally agree with you, Mike, on building a roadmap for 2025. Let's talk about that.
You obviously have your personal goals, you have your career goals and then you have your mortgage specific goals. What would you recommend? People?
Are you a big goal setter? I'll admit I'm aware goals not written down are just dreams, but I don't think I'm in any authority to tell people to set goals. But I'm also not somebody that pushes against it. If you want to have a goal workshop, I'm in. I'll write them down.
[00:37:25] Speaker B: I think that if you're going to have goals, it needs to be three components. Number one, you needs to be. What is your, what is your long term goal going to have? Like if you, for those who like, what do they call vision boards? Right. You're going to, you're going to put down whatever those goals are supposed to be, whether it's of course of the short term vision or the long term vision. Right. And then, but just like any road map, you don't just put down the roadmap and say, you know, these are the goals that we want to commit. You also need a compass and a key. Okay. And so in a compass and a key, if you look at a map, north, south, east, west, and then you're going to have how many miles it is. You need to know what are the activities. So, right. You need a specific measurable actions that are going to be tracked or results that are going to be tracked. So smart, smart Goals and smart, smart reactions. So whether you know, if you are in sales and you're going to measure how many, how many phone calls, how many emails, how many text messages and then how many hours does it take and what is your most efficiency and how do you measure and track those things? How much time do you actually want to spend in the business versus out of the business? How much time do you want to spend on when you're out of the business, on actually doing the things that you enjoy doing versus the things that you don't enjoy doing so that you can figure out those are the highest and best uses of your time and energy and how are you going to invest that energy so that you can achieve those measurable, measurable results.
Then you gotta take, take some stock and inventory on the people that you're hanging around. I think that Todd Duncan talked. Well, not just Todd Duncan, but like a lot of people would say, you are the sum of the five people that you're going to hang around the most. So the first thing you have is you're going to figure out who are the, who, what's the roadmap that you want to have for your goals and then who are the five people that you want to hang around that are going to not only hold you accountable, but also they're going to be acting in concert with. Maybe they don't have the same skill sets as you do, but they are going to be working just as smart in order to work on those results. Everybody has a different measure and a different gift, whether it's speaking, whether it's research or whether it's efficiencies. And I think that if you can figure that out, then you can, then you can also be with those five people, whether they're on your team or off of your team. I think that when the MBA has their classes for the certified, for the CMB or the AM amb, you are part of a cohort of people in taking those classes and then having those, those people as a part of your cohort can help you. And I think that for the people that are currently unemployed, you know, go back into your cohort and really dive deep into the smart measure of tracking how many calls are you making? What is it that you actually want? And if you're in sales, going into the people that you work with, whether they're working at the, at your company or not, and figure out the five originators that you want to be around. Because not all the time top producers may be around each other because of Duncan or whatever or some or what other coaching program there is. But I think that, you know, figuring that out, figuring out the people you're hanging around and then the goals that you're doing and then the accountability and then what you actually want to do are all going to be part of tracking the type of business in the origination space and then having the leadership level at, in either the broker or the banker space working with you and achieving those goals.
[00:40:56] Speaker A: And it's at a local level. So it's not like you're trying to find a celebrity. It's the five people that you believe will take your business to the next level and you should know somewhat about them within the industry. I believe differentiating is so important in 2025, 2026.
I think roadmapping, the months of which you're going to commit as well as somebody that's been doing this for a long time in the industry. I think when you're in the weeds, you underestimate how predictable sometimes the on months and the off months really are. And so January you're going to come out blazing. Typically you have your goals, you have your New Year's resolutions, you're probably going to the gym and doing the behaviors you need. How are you going to harness that by mid February where others maybe cool off? You have that spring market that's usually beginning now about second, third week of February. In a lot of areas where it's getting a little warmer, that's going to carry you through to June, let's say around June, things typically slow down. I get vacations, but while you're on vacation, that's where you can really decide to take the time to fine tune what you're going to differentiate. It'll pick back up. People say August, but it's really going to be right after Labor Day, right up till about sometime in November. You'll know when you know and then it's obviously people can be telling you finish out the year strong, but if you, if you calculate it correctly, finishing out the year strong might not be doing in December what you're doing in January. It could be what you plan to do in December back in January, knowing this cyclical piece. So I would make it around this is the year, next year is around differentiating. There's so much new AI software out there. I would actually get away from the generative AI on how I can use a chatbot to be better, blah, blah, blah. I would try and figure out what AI real estate agents should be doing. What's the hot software like we saw raise even understand how to use it better than them because they're busy and they're distracted and they didn't do their goals and become their expert. And in turn they will at least be attracted to coming for that advice. And then when they come, have mortgage advice ready to go along with it, whether it's conventional loans or start to get involved in some non qm, impress them with some non qm and then make sure you have the fix and flip in your bag. Because we now that we're doing fix and flip, Mike and I together, Mike's leading bonds.
[00:43:43] Speaker B: We're not flipping houses.
[00:43:45] Speaker A: No, we're offering lenders the ability to offer fix and flips and giving them the whole get started package. If you've listened this long. Thank you. You should definitely be part of it. But the fascinating piece is that all the real estate agents are the ones that are fix and flipping. So it's a differentiating way to build a relationship with top realtors that no one else is doing. You can get ahead of it. It's also a lesson. You could be doing everything right and some competitor comes along with this fix and flip and becomes their best friend through having the money. And you can't compete with the coffee pieces you used to do. So yes, I think going forward you get your icp, which is your ideal customer profile. One for real estate agents, one for consumers. You figure out attribute, where do they go pick up on the five people like Michael said, come up with lead magnets. Lead magnets can be difficult. The easiest one is to start a podcast. We have material on it for free. We have a episode on it. Please reach out, get them as guests. But how people interact with it are your attributes. So the attributes could be like what type of tech they use, what type of company they work for, who likes your posts, who likes their posts, who likes posts. Just have plans throughout the year when that occurs, how you're going to interact. And then I would map out each month and have an idea on how you're going to start to learn these differentiating AI tools. Not that make you better, but that would make realtors better so that you could become their resource and have their attention.
[00:45:21] Speaker B: I got a question for you, Mike. It's toward the end of the show. If you've been listening this long, then you deserve to listen to this answer because it's a tough one for Mike.
Out of the five people that you hang around, or at least either professional or business wise are one of those people. I don't want you to name it, in case it.
But are one of those people someone that actually annoys you enough because they always tell you the truth, meaning that they're always grinding on you, but they tell you the truth and you don't want to hear it, but then you reflect and you go, yeah, I need to change. And I. I don't like hearing it, but I appreciate that because there needs to be some change to happen.
[00:46:03] Speaker A: I would say a lot of the people that I associate with these days are in. Are in the industry, at least they're typically older and they have almost that coach mentality. I would. There's something about me where people enjoy giving the tough love and the. The. The truth to. So, no, it probably comes from my father.
Constructive criticism, we'll call it in the nicest forms I've seen. But even just actual constructive criticism has been constant in my life by many people. So I don't think that person who. Anybody who's willing to do that never bothers me. And I think I have that personality where I set up that I. I can roll with it and welcome it. And maybe it comes with a characteristic of sounding like you're all over the place a lot. You open the door for easy advice for somebody to start with and say, mike, you got to get. You got to drive down. And then once they realize I'm open to listen to that, they'll keep going. So that's actually, I don't know, a strength of my peers or a strength of mine. I don't know which one you want to call it. That wouldn't be the gotcha on the five. Maybe for another app, you know, I could.
[00:47:17] Speaker B: We could talk about another episode, but I think that if you're going to say that.
No, not if you're going to say that. As you say that, I will. I will add that there's a type of humbleness that comes with that, because with.
For me, I. I've got, you know, for the background that I have, there's a lot of pride that. So when I get constructive criticism, I take it. But I take all constructive criticism with a grain of salt.
And salt hurts when you put it on a wound.
[00:47:47] Speaker A: Yeah, there's different. Everybody has different strengths. Right. And so mine probably is getting tough on others. And so if you had asked me, is there one that I feel is dragging me down more than the other four, that would be a more uncomfortable answer for me to come up with, because I probably know what it is, who it is, but don't enjoy the uncomfortableness that would come with having that conversation versus people I'd rather it put on me than put on others sometimes. And neither of those technically is the correct answer. You're supposed to get rid of that and always build up your core five.
[00:48:28] Speaker B: From what I've been told. Yeah, we had a guest, uh, in our previous season, season two, um, Chrissy Rhea and she who since passed away. But one of the things I really appreciate about that show, um, as long as she had, has had been in the business, uh, we had Bill Dallas on that show as well. She was very open to coaching, very open to, to change, open to feedback and open just. But also very narrow in knowing how to stay in her lane at the same time. So the type of focus and the type of openness is something that I don't see a lot of. If you're under the age of 40, 35ish, I would say. But above that, there's a lot more focus and intention. I think that if we can recognize that as an industry and then coach around to say it's okay to be coachable, it's okay to get a little bit of salt in your wounds and it's okay to heal because there's too much snowflake generation in the under 30 crowd.
Is that okay for me to say?
[00:49:38] Speaker A: Yeah. The way you get away from being. What is it? Steel, Sharpened steel.
[00:49:44] Speaker B: Yeah.
[00:49:46] Speaker A: You need some tough times or some, some tough love. And it's been, if you're under 30, it's been a different, a different 20s than coming out of the financial crisis. Right. It's. Or wherever you were, there was obviously Covid froze everything, so everything was cool. And then there was like the great resign resignation where you could just quit your job and somehow land another job. And I think what were they saying? You know, this generation, I'll say our Generation expected like 65,000 out of college and the real entry level was paying about 45,000 in 2007.
What I've read online, the expectation is like $300,000 and the real starting salary is, you know, 80. So. And it's probably not even like. But that, that, that disconnect is very far off. And so if that's the world you live in, then it's going to be hard for you to not feel like you're the. One of the smarter people in the, in the room. Right. I mean that's who usually makes 300 grand.
[00:51:03] Speaker B: So I don't know. I mean with the, with the average home price and the median prices that are out there, I don't know where you're, I don't know that many starting out people that are in the 80 range, even with my kids as college graduates. And they're pretty smart, pretty smart kids. They didn't start at $80,000 living in Southern California. And I think that now that they've been working for a while, then, yeah, hitting 100 grand is fine. But I think that, you know, it's the affordability. You know, we're going to be talking about the two biggest issues in mortgage lending on the consumer level are interest rates and inventory. And then number three, distant behind is affordability or employment. I think we need to be able to figure out. Well, the problem is not interest rates, the problem is affordability.
And interest rates is just, you know, affordability is a function of interest rates. And I think that you either earn more or spend less or a combination of the two. And that became that, that takes away the objection of affordability in that way because interest rates are going to be what they be. And you cannot control the external global circumstances of how Wall street trades bonds either in the, in the QM market or the non QM market. But you can control affordability to some extent.
[00:52:25] Speaker A: When the real estate crash happens, who knows when it happens? Right. But maybe another 10 years.
[00:52:31] Speaker B: I think it's six years from now, but go ahead.
[00:52:34] Speaker A: What percentage do you think it has to go down to be called a real crash?
Like will it go back to 2019 days or could it go worse?
[00:52:45] Speaker B: I think this is going to sound a little far fetched, but I think that in order for it to be a real crash, it's going to have to come down to 2024, 2025 prices.
Okay. Which means that we're nowhere near a craft right now, is what is my point.
[00:53:04] Speaker A: Oh, so like in 2032 it would have to come down to 25 prices, right?
[00:53:08] Speaker B: 20 or like, or even 2028 or even? Yeah, or 2029 or 2030. Right. We, we're going to have to come down to 2024 and 2025 prices. My point being is that there's still demand, enough demand in inventory right now that we're still going to see an increase in price. And because, I mean, we talked about this up and down type of situation roller coaster that we've got five or six years of this that we're going to see this upward roller coaster. And so because of that, I think that we're going to go back and say, well, what do we got to see? Well, we're going to have to see 2024 and 25 prices. And so we're going to, you know, for the next four to six years we're going to see upward momentum. It's not going to be sexy because it's going to be so slow. And then when the market crashes in 2024, 2025, come back to me in five years and say, oh my gosh, wow.
Then we're going to, that's what it's going to have to come down to 2022. That's not going to happen. 2021, 2020 prices. That's talking. We're going to. In order for that to happen, we're going to have to see a 75% decrease and our wages going to drop 75% to do that. I don't think our savings going to drop in conjunction with wages plus irresponsible lending.
I don't think so. And so we're going to have to see some major economic and major underwriting changes and that's going to have about six to 10 years to really shake out, shake the trees on that.
[00:54:28] Speaker A: I like that's, I'm how I'm telling you, that's going to be the right answer. So next week we have Eddie Perez.
[00:54:34] Speaker B: Excited about that.
[00:54:35] Speaker A: Me too. He's doing incredible, if you didn't realize. He's doing incredible over at epm. What they're doing on the wholesale side, what how he was able to build it and how he has warriors that roll with him because of his ability and his investment in himself. And we're going to put it on full display the week after that'll be the day after Christmas. And I think if we don't have a guest, you'll hear another year in review or like we did last year, we probably will try and find people in the industry doing some special things for the world and for their communities and have them jump on and maybe talk about it briefly. That was a cool episode last year, Jane. In the first week of January we have to figure out who's gonna have us come out of the gates with some momentum and some rah rah around, knocking down barriers in front of you and getting rolling and getting on the phones.
Then we have Terry Aiken, head of sales and higher over at mgic, former mortgage cadence person. Now we have Timothy Lee the following week from Lending API or Lend API AI, who really built the first rocket point of sale and has a new product he's bringing to the market and also very high in the VC world, raised a lot of money. So just a really interesting guy. So looking forward to that, Mike.
You know, hope you're doing well on your holiday shopping and looking forward to we talk anyway quite a bit here with this Fix and Flip program.
[00:56:18] Speaker B: So I'm excited about Fix and Flip. I know we had our we actually had that show what, three or four weeks? I don't remember, a while ago, maybe a month ago. Yeah, I'm excited about what what's going to start with that. I'm hoping that we're going to have a show next year talking about cryptocurrency and what and its effect on the blockchain in mortgage lending. There's a few servicers around the blockchain and I'm be and I would like to figure out not cryptocurrency necessarily as an investment. So I'm not promoting that, but talking about the blockchain technology that is out there and how lenders and servicers are utilizing that in order to create efficiencies inside of the mortgage lending space.
[00:57:03] Speaker A: Well, please give us a like or subscribe. We waited the whole hour to tell you that and look for notifications on season four. We can't thank the people back in our studio enough. Anch and his entire team that is able to put it together and we'll be whiteboarding with him to bring you guys an amazing Season four here in the new year. Thank you everybody for listening. Give us a like and subscribe for those listening and see you next week.
