Episode Transcript
[00:00:00] Speaker A: Hello and welcome to season four of the Mic'd up show, where every mortgage has a story.
We are the ultimate hub of the hidden stories behind the mortgage industry. And we bring them to life every week. I'm Michael Kelleher.
[00:00:15] Speaker B: Merry Christmas. I am Michael Zhao.
[00:00:18] Speaker A: Hi, I'm Aaron D.
And in every episode, we dive deep into the entrepreneurial spirit, the strategic insights and the breakthrough innovations that build the world's greatest companies.
So whether you're advancing your career, scouting for industry leaders like Aaron D, or just exploring opportunities and fintech prop tech, you're in the right place. So let's get ready to unlock the story behind every mortgage. And today we are lucky enough to have with us Aaron D, who I've known for a long time. Way back in the early days of my mobile app, Aaron was at Legacy Mortgage and she was running any technology that came in. And really I, you know, I think at that time, if you knew how to navigate, encompass, and you also had jobs in other departments and leadership roles and you mixed it all together, you were in charge of a lot of the action that was happening in the 2010s, early 2010s.
So, Aaron, welcome. You're somebody who purposefully got into mortgage and did a bunch of roles before, you know, becoming coo. Can you introduce yourself to the audience and just tell us about that early journey into mortgage?
[00:01:32] Speaker C: Yeah, I would love to. Nice to see all of you. Thank you so much for having me.
Currently CEO at InterLink Mortgage and president of Texas Mortgage Bankers association. And I've been in the business since 2002. And you're right, I very intentionally got into mortgage, unlike 99% of the rest of the business.
I took at the University of Central Florida my senior year, took a real estate class, really liked it. There was just a lot going on, a lot of dynamics. And so when I graduated, there was a job offer or a job listing for option one Mortgage that might sound like a familiar name to a lot of you to hire and train people for underwriting. And so essentially what they would do is train us to be an underwriter, train us how to assess and understand risk, and then send us off into the real world to, to actually underwrite. And to me, that just was great. I was, you know, just coming off of my college journey and so the ability to, to learn from the head underwriter, the head appraiser, the head attorney, all of that, to me it was just super appealing. And so that was, that was kind of a no brainer for me. I mean, I, I only applied for that one job and one other job and, and I was like, I better, I better get one of them because otherwise I've wasted a lot of time. And fortunately I was lucky enough to secure the role at option one. And it was, it was a fantastic journey. I know that there's a lot of things, you know, a lot of, a lot of, you know, subprime can be a markup for some people, but I learned a lot, I worked with a lot of great people and I wouldn't be where I am today if it wasn't for that opportunity.
[00:03:03] Speaker B: Wow. You know, I think about those subprime days and there was a, there was actually a point in time where you would, people would actually have some kind of risk mitigation in that, in, in creating make sense deals. A lot of people don't really know what, what it meant to have like time on job reserve time and job time in house having on time mortgage payments. We take it for granted that there was actually some make sense.
A lot of people just think that oh, you had a hot breath and you made a mortgage loan happen.
And, and then, you know, when there was a criteria 25 years ago of saying these are make sense loans and this is how we make a make sense loan, then it creates some kind of stuff loans like, oh, wait a second, this is what they say today, that all you needed is a hot breath to do the, to do loans. But it actually is somewhat of a precursor to how business is done today when making underwriting exceptions.
[00:03:56] Speaker A: Right?
[00:03:56] Speaker C: Absolutely, absolutely. And I think that's why I, you know, why I've been able to, to grow in my career even not being in subprime is because I had that as my foundation of what is the common sense? What is this borrower's intent? It's basically we had no aus, there was no automated underwriting, every file was a manual underwrite. And so you really learned how to make that risk assessment on every single file.
[00:04:18] Speaker B: Well then, so based upon that, can you tell us about that part of the journey of understanding what, what it means for underwriting doing make sense, doing exceptions, things like that. How has that shaped how you currently lead in operations for, for Independent Mortgage Bank?
[00:04:35] Speaker C: Yeah, so I learned that you have that, that the gray is okay. We don't live in a black and white world. And in, and I think underwriters who have, who started in the business post gfc, they're so used to aus and they're so used to, hey, here's the rules at Fannie Freddie fha, you have some manual underwrite, but really the guidelines are the guidelines for the most part. And for a long time there was so much business that you kind of could stay operating in that, in that world. And so for me, one thing that I've really tried to instill in my people is it's is is not every borrower lives their life to get a mortgage loan. People don't make their day to day decisions living life, paying bills, saving money, doing all the things to get a mortgage loan. They don't understand guidelines and that's just not how you live life. Right. And not Everybody is at 7, 60, 50 ltv ton of money in the bank borrower as much as you would like them to be. And I think that's really helped me in the post Covid era because so the deals are so hard right now. I've, I've never worked in a harder vintage of lo than I have in the last two to three years. And so for me, what I appreciate is when I can dig into a tough file with my underwriters and kind of talk to them through, you know what? This is gray. The under the guidelines are a little gray. Here we have some room and as long as we do a good job detailing and explaining why we're making the decision, we're talking about compensating factors. We're saying, hey, the borrower may not fit this, but based on this, this and this, they're an acceptable risk. They've shown intent and willingness to repay.
That's been really great because I feel like I'm kind of able take what was so great about subprime and move it forward into today's world.
[00:06:20] Speaker A: What do you think specifically?
I know you were very proud of the fact that you helped unbanked people, we'll call them or at least turn downs into.
I heard this on another podcast you're on. But you, you help people get a home that wouldn't be able to get a home. And many of them ended up paying fine on, on that home and showing that they were able to pay it.
So you've been around a lot of this makes sense underwriting for a long time. What part of that journey do you think shapes you into what you tell Maybe some people that have only seen just, you know, press a Fannie Freddy button and try and get it through.
[00:06:55] Speaker C: Yeah, yeah. I mean, I think it's just spending. I spent years and years I was there when option one, shut the lights off. Right. Bob Dubrish. I was on a call with Bob Dubrish and 50 other people. And he said, Cerberus is no longer buying us. Right. So I spent a long time there. And so I think just my ability to, to dig into those files through it and also option one was really great about helping promote me. And so I was able to see things on the back end. And when investors, when we were selling, you know, securitization and investors were doing due diligence, I had to go back and see the questions they were, they were asking. And I've been a lot involved a lot in the capital market site too. And so I think not only seeing, hey, here's how I think we should structure on the front end, but also seeing the back end piece of it and the questions that are asked. I think that's helped me coach and teach up, which, which I think is ultimately just super, super helpful. And people who, who did not experience that, I don't think they fully understand it. I will say I think that underwriters who didn't experience the great financial crisis or the subprime market the last three years has probably given them as close of an approximation to what that's going to look like just because files are more difficult.
I also had the opportunity to spend two months in India and the last year of my, my time at option one training.
And that was a really, really great experience just because culturally, I think in that gray, that Indian, the Indian students had a harder time adjusting to that. So it really helped me dial in how I had to explain, here's the gray, here's where we can make sense of it. And I just love that I met the most amazing people. Still one of my favorite professional experiences, and I think so having to really figure out how to explain subprime underwriting and working in the gray helped me as a leader today.
[00:08:40] Speaker B: What led you to how you're doing things in operations the first place was it you started out at option one, but you didn't have to stay in that particular part of the mortgage industry. So is it by design right now you're saying this is how you want it to grow from college education to option one to your next step. To your next step. To your next step, or is it just like many people, by accident or by discovery?
[00:09:06] Speaker C: Yeah, both.
So I initially got into operations, obviously because it was that underwriting training program. And, and so I was a finance major. I was very much into like the, just for some reason, the thought of making a risk assessment was like the sexiest thing ever to me. I don't know if that makes me like the world's giant, most giant nerd. But like, I was literally like, it's so sexy. I get to like make a risk decision. I get to weigh these factors against these factors and make a decision. And something about it turned me on and I loved it.
But then when I had been at option one for a few years, I had the opportunity to go out in the field as an account executive.
So I did have the opportunity to go onto the sales side. And it was obviously very attractive. They were making, you know, they were making as much in one month as I would make in a year. And, and. But what I found is when my paycheck is dependent on commission, I become a monster. And hated who I was. Absolutely hated it. So I made a very, very conscious decision pretty early in my career that I was best suited being a sales friendly operator. I understood sales. I got it. I understand what they see out in the field.
And most importantly is I want to really make. Make it so that they can sell as best as possible. So I did make it. I got in as a happy accident and I stayed in by design because I'm a monster otherwise.
[00:10:30] Speaker A: Yeah. And I noticed you have this great trait and I didn't even notice it that, that somebody like pointed out something sometimes I'm.
I have. Which is you have the operational side of it or you have the ability to understand mortgage. We'll, we'll say. But you also have a very entrepreneurial side to yourself, it sounds like. And it probably was sharpened at your creating loan people from a scribble notes, you know, into what that was. That wasn't just starting a mortgage company. That was starting a company. And so that comes with benefit. Like, how are we gonna do benefits? How are we gonna run payroll?
[00:11:09] Speaker C: How?
[00:11:09] Speaker A: Yeah, how cfo are we gonna fractionalize or are we gonna just go full time?
Which part?
Your passion for mortgage and making the company better or your entrepreneurial ship. Which part do you think brought you to India? Because I think I know my what answer would bring me there. But what do you think brought you there for two months? Because not many people do that.
[00:11:29] Speaker C: Yeah, I love doing something new and different. I cannot stand doing the same task over and over and over again.
If I want a challenge, I want to do something different. I want to do something hard. Like if you ask me to do something that scares the crap out of me, I am going to say yes. And that is why. And so for me, the thought, thought of going to this foreign country to train my replacements. Right.
Was Just so appealing to me because it was a chance to learn, stretch, and grow. And I knew that even if my journey at option one ended because I trained these people at India, it was, you know, that's okay, because now I have something new to and something that makes me more valuable to my next employer and something that is now an experience that I can have. And so for me, it was like, I want to do something new and cool I've never done before. I don't want to sit and just check the same boxes every day. I would kill myself.
[00:12:22] Speaker A: And that's a long flight too, right?
[00:12:25] Speaker C: Oh, my God. It was 16 hours. It was the longest flight I'd ever. It was also the first time I'd ever been international outside of Canada and like the Bahamas. Right? And so it was complete culture shock. I only ate tomato soup and grilled cheese the first week I was there. And then I was like, erin, what are you doing? But this, the second I got that out of my head and hung out with the people and ate the food and did the things like, I love India, I love Indians. It was such a great time.
[00:12:52] Speaker B: Wow. How does we go off base here? How does being in a different culture and see living there for two months, right? So it's a very different environment living in a different country versus and it's not like living in Europe, where it feels like the United States.
So how does that give you a different perspective on how to treat co workers?
And do you have any opinions on how underwriting overseas is done versus internal, internal underwriting within continental United States?
[00:13:25] Speaker C: Absolutely, I do. So one, just. Just being the foreigner in a foreign country and having to be the one that is adapting to others, I mean, it's humbling, right? You don't. You don't understand all the mores and the customs and all of that. Right. And so I really, really love.
It was very humbling. And it taught me that, hey, I need to remember that I was in this position once too.
I think that there is definitely a cultural difference. And so I don't know that it's specific to just India or whatever, but what I found was that it's more rules based and more black and white. Like, yes. No, it's more prescriptive culture. And so training underwriters in that space was very, very difficult. Right? It was. It was when I was saying, hey, you could go this way or we could go this way. So let's break it down, I found that was a little more challenging just because they wanted things to be more Checklist prescriptive.
So I think it's more Are you in a culture that is prescriptive or you are you in a culture that is a little more kind of open, willing to or are used to making those decisions?
That's kind of where I found was the biggest difference this industry.
[00:14:39] Speaker A: Speaking about that difference, this industry has humble. I should say this market has humbled a lot of people.
Yes, they've. I think the industry has faced a lot of like false peaks where you think you're at the top of the. And I say that where I remember the first one was Barry Abib was talking about how the trailing twelve month inflation month was going to drop off. I think this was July of 22, maybe July and so many people 22.
[00:15:05] Speaker C: Or may have 23 whatever. That was the. Yeah.
[00:15:08] Speaker A: And that was like it. And we're not gonna cut because it's gonna come back and then people cut too late and then obviously we've had the rate cuts and rates have gone up.
So you hear the President talk last night where he's just gonna do it himself and get mortgage rates lower. So we have more reason to be optimistic, you know that it's going to be a great year for mortgage. What do you think the most important operational discipline leaders should have or be doubling down on this coming year knowing all of that.
[00:15:39] Speaker C: So first of all, I'm not sure what the President can do about the long end of the curve. But cool. I'm here for it.
But cool.
I think it's all about as leaders we have to remember that we have to continue to roll up our sleeves and dig in and get the work done.
So if you like sitting in your office twiddling your thumbs or directing people from afar, this is not that environment anymore. We all as leaders we've got to roll up our sleeves. We've got to be in the dirt and in the trenches with our.
It's going to continue to be tough. 2026 I think will be it continue to be better. 25 was better than 24 but I think 26 is still going to be a bit of a, of a trudge and I think as leaders we have to be prepared for that because if our people see us letting off the gas or if our people see us, you know, being unmotivated and not willing to dig in, why would they. And we need them to work just as hard as ever to get us through this year.
[00:16:35] Speaker A: Yeah, I can see that. And you want to do it with a team that is authentic and I think maybe the IMBs got a little bit away from that. They were just trying to close loans during the COVID when rates went down. We had Gene on our show a couple weeks ago. We can tell what you are building there. We can tell it. It's a culture of people that are have been in the IMB space or we'll get into, you know, your Texas Mortgage Bankers association. Just people that care a culture loan officers should want to go to.
I think what you're hinting at though is, you know, rates are may fluctuate, but when you're able to build the builder relationships that you've built, you're able to sustain and kind of put your head down and not have to worry overall of wishing on something. So. So knowing that how do you balance like speed and quality and compliance in this market while preparing for that future market and is there some.
And I guess when you look at that, how do you look at it as the coo, but how do you bring back some of that loan people kind of founder mentality too knowing that you still need to fill the top of the funnel?
[00:17:48] Speaker C: Yeah, well, so speed is tricky because speed is different to everybody else and urgency is different to everybody else. I mean all of my loan officers is like every their problem is the most urgent, pressing problem to them.
It may be number five on my list. Right. But the way I look at that is I like to mitigate speed with communication so I can focus on quality and compliance. And what I mean by that is, you know, my loan officer Paul in Louisville, he's got something going on and he needs an answer. Now he sends me an email asking for help. He's in Louisville, I'm in Houston. He has no idea.
Am I looking at it? Do I care? Did I delete his email? Did I? So if I just quickly respond to him and say got it, working on it, got it. Get back to you this afternoon, whatever, just let him know at least I am acknowledging and receiving.
That typically tends to dampen the urgency. Right. Because the one thing as leaders we absolutely cannot do is allow the tail to wag the dog, especially from an urgency perspective. Because if you do, you'll just be constantly chasing your own tail. And that's a lot of dog references, but I mean them all. And, and, and so often you can easily mitigate the urgency and speed piece so that you can then focus on the compliance and quality piece. Because if you focus on speed all the time, it like you're not going to have any loans to do compliantly or you Know what I mean? You're going to be in a much bigger world of hurt. And so to me I think that's something is if you just acknowledge people who need something from you, you can, you can make it a lot easier and give yourself the time you need to do it. Make the right decision.
[00:19:22] Speaker B: What is the difference right now on what your day to day looks like versus how you how, how when you had your self employment at loan people but now you're running ops at Interlink. So what does your day to day look like today versus how your day to day was as an owner?
[00:19:36] Speaker C: Yeah, absolutely. And so you know, with loan people I was really lucky that, that you know the, the other owner of that, of that company was Max Lehman who is an incredible originator. He just monster producer, built an amazing business with, with himself. And so you know that was a really great dynamic because he had a lot of business to kind of help on the sales side, bring that in. His wife was an amazing marketer.
But with that, with that I kind of, I had a little bit of a, of a bigger role in the sense that I was also the de facto cfo. I was also the de facto head of capital markets. I was also this and that. And so you know, I kind of found myself doing a lot of different things and my days were, were, were a little bit more hectic in a way just because I had to deal with a lot more, a lot more potential fires coming up. Right. Which is great because I again get bored and I need to have that variability. And so I loved it.
What I have found moving over to Interlink, I still have a very wide kind of scope but we, I also have really amazing people in the CFO role, in the cap markets role and those other roles. And so I've really been able to focus on like refining my craft. And so that, that is my day here is they're, they're a little bit more I would say predictable, right. In the sense that I, I'm able to kind of really just focus on driving that operational excellence and, and really stay dug into those projects. And I know that that on the finance and cap market side we have an amazing team. So I'm really kind of able to dial in a little bit more and be a little bit more focused and organized every day.
[00:21:12] Speaker B: In sports you have a head coach, for example. In football you'll have an offensive coordinator, defensive coordinator, special teams, baseball you have a third base coach, a first base coach and you've gone from now CEO over now into operations.
Does it become, no pun intended, an operational challenge for you to stay in your lane?
[00:21:35] Speaker C: So yes and no. So lone people. I was the COO technically at loan people as well. Max was the CEO, so. But, but I definitely had a lot more of that, you know, kind of shared responsibility there. So.
But yeah, I, because again, my personality, I like to know what's going on and to be involved in that.
Earlier on in my career I was a bit of a bull in a china shop and would often kind of insert myself maybe where I necessarily wasn't wanted or that, you know, I didn't, I didn't ask for permission the right way because that's just my personality. And I'm like, let me just jump in and help. But in my mind I'm jumping in and helping, but I didn't always do it the right way. And so the great thing about here at Interlink is, is I, I have built relationships with the other leaders, executive leaders to where we really collaborate. We work together, we regularly have our teams meet together to make sure that we're running the boat, we're rowing the boat in the same direction. Right. I mean operations and cap markets are two completely different areas, but really like we have to be in alignment with each other. Right? So what are we seeing in loan sales, what issues with investors are we having?
You know, are we rolling out a new product in the, in the most organized manner, that kind of thing. And so I've kind of grown and now I, I still get to dabble in those other areas but it's with the confidence knowing I have great leaders and we've built more of a partnership than a me imposing myself upon them.
[00:22:55] Speaker A: And you, you said it best. It's a trillion dollar industry, but it's also a very, very small industry.
[00:23:01] Speaker B: Right.
[00:23:01] Speaker A: Like everybody knows each other at your, at different levels as you level up.
[00:23:06] Speaker C: So.
[00:23:07] Speaker A: And I don't think as many people know the technology scene like you.
So I, I think you probably know some of these, but I'm using this as a segue and I'm not sure if we have the video but Poly is a major sponsor of us and they are a pricing, product and eligibility engine where big wave of IMBs are moving over to for their new lightning.
Well, I guess that's my word. I don't want to commercialize for them but their technology is great and people are moving over to it and we'll hear from of our other sponsors real quick and then we'll talk with Aaron on the other side just about culture change. The industry outlook and maybe give her a couple rapid fire questions.
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[00:24:27] Speaker E: Can do the configurability. So we have no code on this so they can go in their settings, they can set it up all the way down to loan officer if they want to. We also have a customer support team that's assigned to each account if they want. They can overhaul everything if they wanted to. They have a new product especially dynamic apps. With dynamic apps we can fit multiple, we can fit the Fanny Freddy loans, we can new construction one time close HELOCs, you know whatever those workflows are they can design that workflow for each individual app. Now what's going to take it to the next level is the AI and the OCRPs.
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[00:25:33] Speaker A: I think what I'm most fascinated about you Aaron is your ability to kind of be a big part of the national like the conference scene. Obviously be a sales first operator. So you, you're kind of a woman of the people, right? Because it you need sales to, to run.
I'd love to dive a little bit into like the Texas Mortgage Bankers Association. I think when you have in your DNA and that's what our show is about. So it's for like people that don't go to the conferences to see the same people that would go in hopes that they see conferences is a great way to if you have enough patience advance your career and just being there and being present and it's hard to go to a national conference and so sometimes the best pathway is through the state and practice through the state and being on the board member of Massachusetts for like five years now you wouldn't know it, but you should know it. We're always looking for volunteers in different ways and different committees. So can you talk about the Texas Mortgage Bankers association and why it's so important for different mortgage, you know, employees in Texas?
[00:26:41] Speaker C: Yeah, absolutely. So we are the oldest state association and it's is probably the, one of the single biggest contributors to my recent career success, to your point. It's the going, showing up, meeting people and learning things. And so, and it's really easy to get started, right? Go, go to a conference, volunteer for a committee. And committees can be conference committees. It can be doing webinar committees, things like that. And, and, but one of the things that, you know, we do two things. We do a lot of things really well in Texas, but two things that I think we do really, really well. One is education.
And so we try to provide a variety of free, all the way to paid opportunities to learn and grow your career. So we have monthly webinars that are free.
Our conferences are all kind of designed to be educational to the attendees so you can come and see the leaders of Fannie, Freddie, Ginny come talk to you and you can hear what they're, what they're saying. We have tech providers that are showing what are the cool solutions they're coming up with. We have really great people on the legal and regulatory side talking about, hey, here's what's happening in D.C. but here's how you need to bring it to your business.
So that educational piece is great. Our secondary conference is coming up in February and we're doing something new called School of Lock. And it's basically like a four hour day where, where if you're interested in secondary markets or capital marketing, for 200 bucks you can come in and learn from professionals the basics and some of the really great fundamentals of capital markets. And so it's also a really good and affordable way for Texas employers who have employees they're trying to find ways to, to bring up and to reward.
It's a really good way to do that, right? I mean we, it's a hard, it's been a hard year and, and lenders don't have a ton of money to spend on these things, but 200 bucks to send somebody who's up and coming to learn about hedging is a great investment.
And then another thing that we do super well in Texas that, that I'm really, really proud of is advocacy.
We know even, you know, in Austin, we're a staple in Austin. We've helped, we Help, as I like to say, we help kill the bad bills, we help promote the good bills and we help the ones, the bad bills we can't kill. We make them a lot better. Like our AI bill that was passed this year was pretty tough. And we, through the help of our general counsel and the other building trades, were able to get it to be something way more palatable. And so we're not just happy hours and conferences, right? We're not just, just, just out there partying. Like what we do in and it and at many, many, many other state associations around the country is we are at the capitol talking to legislators and letting them know, hey, this bill, you don't understand, like you don't know mortgage. And we get that. We're here to be your advisor. Here's the negative way this bill is going to hurt consumers in your district, is going to hurt homeowners in your district. Here's a better way to approach it. And I think that that is one of the absolute most important things that state associations can do.
MBA does an amazing job at the national level, but at the state level, and I think we're seeing this especially now in this regulatory environment, what happens at the state level is incredibly important. And those associations that are involved in actually shaping that advocacy are the best ones out there.
[00:29:52] Speaker B: Aaron, what is it like at the ground level for the, you know, for the originator in other, in order for them to know more about their zip code, their region, not only for marketing, but to educate consumers so that they can be fully informed on how to be better borrowers, owners and, and even so, and then at the original originator level, how can the, how can they be a better informed and educated originator maybe for compliance purposes and not just for marketing. And how do they utilize the Texas MBA to do that? Because not ever, because there's probably not that many originators that are in the national mba. So how do they utilize the localized Texas Mortgage Bankers association purpose?
[00:30:37] Speaker C: Yeah, so there's, there's a few different ways. One is, you know, you originators are especially hard to get away for three days to go to a conference. Right? I mean, they're not walking away from their, most of them are not going to walk away from their business. That's just who they are and why they're so great at what they do. And so in Texas we have some really great local associations. So Houston, Dallas, Fort Worth, Austin, we've, I think there's eight all in total. And what those are, is, is in those areas in, and, and the state association we partner with them closely is they do lunch, monthly luncheons where you're having the general counsel of Texas MBA come in and talk about hey, here's the issues legislative we were working on and here's how they can impact you. Here's how you can help us lobby with your local legislators.
They have top producer panels that come in and say hey, here are the people that are executing at the highest level. Here's what they do. Realtors Houston MBA has done a lot around the insurance crisis and how we can help originators educate their consumers more about up front when they're going and looking for house that they need to also understand, hey, what are the insurance costs going to be? Because that is such a big deal. Right. And so that's one way is, is there's great local associations that do that, that two hours a month where they get great, great information.
And then again, you know, we do all of our, our online webinars, things like that that I, I think are hugely valuable. So if I'm in a rig and we also send out, we send out general counsel updates, we send out newsletters. And so for the originator who is there and, and isn't able to take, take three days to go to a conference or two days to go to a conference. There is a ton of in person and you know, online resources that if they just read and ingest they're able to fully understand what's going on in their market.
And that's something we at MBA really or TME really try to focus on is like getting that education out there so that when you're talking to your realtors, you're the expert.
[00:32:30] Speaker B: So then I started at the loan officer level, now we're at the Texas MBA level. Do you. And I'm in California and we recently had a leadership change in the California Mortgage Bankers Association. Do you also communicate with the other leaders in the other states? Maybe Texas, Washington state, New York, I don't know. But how does that communication work and how do you, and how does that coordinate with the national MBA for advocacy purposes?
[00:32:55] Speaker C: Yeah, so we absolutely do coordinate with the other state associations and we do that in a variety of manner. One, we love California mba. You guys just do great things out there.
You know, you, you had great leadership for a long time and you've got great leadership coming in. So I'm really excited, I'm really excited to see and so we make it a point to reach out and talk to all of the different, we have relationship with New York With Ohio, we actually have, we have had some funny, great gentlemen vets with Rich Svarbinski and from Ohio and Louisiana. We love Louisiana. They're doing great things there. So we were actually very intentional about not only talking with them, but we bring them into our board meetings. So we had our summer board meeting in Oregon. We brought and represented is Oregon mba. We just had Louisiana MBA come to our last board meeting. And so we really try to share best practices talk, help them as much as we can. But we can also glean from them. Right. I mean we're the oldest state association. Louisiana just did a complete revamp. I know they've learned things from us, but we've learned just as much from them. And that kind of best practice sharing is fantastic. And one of the ways we can do that is through mba state and local workshop.
They do that right ahead of national advocacy in April in D.C. and so all of the state association leaders get together and share best practices. And so that's another great way that I really encourage anybody who's, who works or is involved in their state association get to that meeting. Because it's just like this great confab of brains and who's a good speaker and what are really great best practices. I met Deb from Massachusetts there last year. Fantastic. Like that's really, really great. And then, you know, with mba, they're a massively important partner. I mean what they do at the national level is huge, but they also, we also collaborate at the local level. Right. Because Ms. @ state. There are things that happen at the state that affect Texas lenders and national lenders who aren't based in Texas but lend here and vice versa. Trigger leads having to work with them on. Trigger leads working on getting information out about the single file credit pool that NBA just promoted. And so we have a very good relationship. We make it a point once a year at least to go and break visit MBA in D.C. we just did that last week actually, because Adam, that is very, very important. And so we want to help their efforts in D.C. and they do a lot to help our efforts in.
[00:35:09] Speaker A: Austin.
Yeah, it's. I mean, I think sometimes people forget how much of a trade group these associations are and how every loan that closes could have had legislation that negatively impacted the ability to give that loan. Not just for the consumer, but you as a employee in the industry.
In order to thrive in it, you need to make sure that it continues to have laws that are not made by people that don't understand as a lot of it isn't the actual direct law, it's the unintended consequences of putting some pork there on on something that happens a lot. So we'll, we'll give you a question from our audience here.
[00:35:52] Speaker C: Sorry. Oh, I love.
[00:35:53] Speaker A: This. Yeah.
But I guess it is relevant and I'm sure, you know, popping up everywhere and if it oh, since we are an audio podcast, find us on Spotify, Apple Podcast, Google Play, anywhere you can find a a podcast. But Aaron, given your this is from Joe Ding out there on the West Coast. Aaron, given your experience on both the production and capital market side, what needs to happen for lenders to really adopt FICO 10 or Vantage Score in a way that moves the needle in origination and secondary.
Do you want to say real quick for the the average audience member? What, like a little maybe what Joe's actually talking.
[00:36:35] Speaker C: About?
Yeah, absolutely, absolutely. So, right. We've been using the classic FICO model for years and years and years in this business.
So FICO 10T and VantageScore are basically a new way to do to derive credit scores. Looking more at trended data, how do borrowers pay versus hey, this is your exact spotlight. Kind of the best way it was described to me that I like to describe is when you pull my credit today, if I pay, I use my Amex for everything.
I pay it once a month. If you pulled my credit report the day before I pay that bill, it's going to look like I have this massive balance on my amex. But if you pull it the day after, it's a zero balance and that affects what my credit looks like. My credit score. Right. Looking at trended data, it's actually going to take into consideration the fact that I pay that balance off every single month. Right. And so, so to answer the question is what is going to really get lenders to really adopt? Well, number one, we have to be able to actually originate and sell a loan to it to the GSEs. Right. VA, you can already do VA loans. I think there's already been securitization on VA using Vantage Score because they don't dictate it.
The big deal is with the GSEs. Right. And so one, I need to be able to ingest it in my los. I need to be able to price it with my investors.
And so it's a bit of a chicken and the egg thing. But unfortunately the lenders in this particular scenario are kind of the last link in the chain. We need know how are these loans being priced out? What are my LLPAs, what mortgage insurance companies are taking Them in at what pricing?
You know my, from a technology perspective, how am I ingesting and creating these credit reports right? And so, and is there are, is there there, there is going to be a difference especially when you're talking about the FICO and the Vantage score bringing people who are currently in the dark maybe who, who don't have credit right now you're able to bring in your rent history, utility history. So that's another thing is besides the trended is being able to bring in these alternative forms of credit where maybe back in the day or today on a manual we could get like a you know, a VOR on a handwritten form.
Now moving forward these, these, you know, landlords will be able to actually report report like an actual trade line on the credit report. So we need all of that to really fall into place before we can do it. I think there's lenders that are, are eager to at least try it and see what it looks like and, and, and see how it fits into our, our strategy. But there's a lot that has to take place before we can do that. I know we're just test, there's they just signed with fico10t so I'm really interested to see how that performance data looks and compares to what the Vantage score, how that performance data looks. So there's just a lot that has to happen and unfortunately I think lenders are kind of one of the last pieces of the.
[00:39:22] Speaker B: Puzzle. Following up to that question. Since you like fear so much, is there any part, is there any part that provides you with any credit fear when trying to move to adopting FICO 10 or Vantage Score or another credit scoring venue? Because even what we have today seems to work, but it seems to be that there are other options that could be better performing for Wall Street. So what part of that maybe scares you to say okay, maybe we are being serious about.
[00:39:59] Speaker C: This?
Yeah. Yeah. Well you know, from a credit perspective it's just more you know, is somebody you know, you can have a credit trade line for a month rated and you'll get a credit score under the new models, but now you think it's six months you have to have. Right. And so just is, is there enough is the score that generates truly going to be representative of of how they're going to perform?
That is I think really the, the biggest issue we can, we can work around everything else but it's just really truly understanding like how predictive really are these of those consumers who are you know, potentially unblendable.
I don't know if that answered your question, but that's kind of what I think.
[00:40:38] Speaker B: About. I was just more thinking of does it make more, does it make loans less saleable by moving the, by moving it to a different credit reporting agency.
[00:40:47] Speaker C: System? Well, it might, but only because, like it, it. What is Wall street, how is Wall street going to look at these? So it's only going to make them less salable if there's less of an appetite for it? Or is there going to be a risk premium? Because we don't have, you know, your traditional MBS based on classic fico, you've got years and years and years worth of performance.
They're able to, to do analytical models and predict how those are going to perform.
You don't necessarily, you're not going to have that certainty. And so to me, it's more, you know, how is Wall street going to price that additional risk? Is there going to be a premium on that or what is the. I think there will be. What is that premium going to be? And I can tell you, I know for a fact that Wall Street's still trying to figure it out. I mean, there's, there's hedge funds all over the place trying to fight, trying to, to understand this and figure out how they're going to price.
[00:41:33] Speaker B: These.
Do you think that AI is going to. I don't know if you're going to ask that question or not, but do you think that AI is going to have any effect on creating some kind of operational, not only influence, but efficiency? And how do you see AI affecting your role in managing the people so that you can create the same operational efficiencies potentially and risk mitigation on future defaults, whether it's first payment or future defaults in the first 12 months of the mortgage.
[00:42:06] Speaker C: Loan? Yeah, I mean, I think if the answer to that question is no, I don't think it's going to affect that I should be fired on the spot at this point in time.
I had an employee recently come to me with a completed project and he was like, hey, I hope it's all right. I kind of use AI to help me with this. And I'm like, well, if you didn't, I would be concerned because why would you not use a tool that can help make this better? My question is the finished product, is it tested? Is it vetted? Is it, is this like, truly like something that you, you thought through and that you have, have proven this out? Right? Basically. Can you defend it or is it just some gobbledygook the chat spit out. That makes zero sense whatsoever. Right. And so, so to me, I think absolutely, AI is helping, will help. I use it on the regular. I use three different AI systems every single day of, of my job. Right.
It absolutely is going to help. But I, I think that we as lenders, I think we also just need to be rational and reasonable about how and where it's going to help. I think I, I spend a ton of time talking to AI vendors, AI systems, all of that and where there is an area, there is definitely room there, there, there is efficiency being, being gained. It's. I don't think we've hit, we have yet to hit like the massive, massive stop. Right. Or massive change. But we're so close to it. But to me where I see a ton of value in it is in the little things here and there where it just, it's. I was able to do a presentation in 15 minutes instead of three hours the other day. Well, what, what is my hourly rate? And my company just got 2 hours and 45 minutes back. Right. So that kind of thing in the, in the default space it is absolutely, I mean you're now able to get data in and run models so quick.
I absolutely think it's, it's, it's going to help. The issue is, is just you gotta have enough data to run the models and have a reliable model or you know, model that spits out reliable data. And so what is, what, what is that kind of point of point where you've got enough data, where you feel confident in the.
[00:44:06] Speaker B: Model? How do you control?
We, we're, we're in an environment now where the average OP person is getting older.
So how do you encourage AI so that we can mitigate employee burnout and reduce the turnover ratios and either embrace AI or utilize the functionality of it to make lives easier for.
[00:44:32] Speaker C: Everybody?
Yeah, I mean I think especially from an operator perspective, they're always going to be cautious because they operators are always going to see this as this is just the next thing that's going to take my job. Right. But I think, and I, I apologize, I forget whose quote this was, but it's still, it, still it makes so much sense to me is like AI is not going to steal your job. A person who knows how to use AI is right. And so what I try to do is show bits and pieces of value, but it's one of those things where I tell like people like an easy button. And so even for, even for your, the older people or people who have been here A long time. Once they see that they can have this output and it looks a lot better, it looks a lot cleaner, and it took them half the time, I find that they tend to see the value and there's always going to be exceptions. But once they see, like, hey, this actually does make my life a little bit easier, they seem to be pretty good at adopting it. Now, I think as we get more and more into, hey, in underwriting this file, this is going to do your underwrite for you. That's where we're definitely seeing more pushback, which is understandable, but you just have to kind of set up your system to reinforce that we are not going back and, and rewriting this file like this is. This is what the job entails and this is the job description today and, and what we need from it. So you know where you can. You just got to show where this actually makes your life a little bit.
[00:45:54] Speaker A: Easier.
Yeah, it does. If you know how to use it.
Now, do you think AI will replace podcast hosts? No, I'm just kidding. So you, you've.
[00:46:04] Speaker C: Been. I hope.
[00:46:04] Speaker A: Not.
You've been described as, I am.
[00:46:08] Speaker C: AI. You didn't realize you're talking to my.
[00:46:10] Speaker A: Avatar.
Yes. That wouldn't be. Or be somebody using your avatar. Right? I'm not.
[00:46:15] Speaker C: Really. I'm off closing loans right now. I don't, I don't. I'm being, I'm being. I'm. Yeah, I'm sorry. I'm getting work done. This is just, just my.
[00:46:21] Speaker A: AI.
Yeah, it probably will happen, but luckily we're talking to the authentic RMD right now, described often by people as a culture fit or a culture driver in high demand at all times because of that. Because this is a small industry and people want to Aaron D. To be, whether it's the state association or obviously be driving that company. So with knowing that, like what brought you to InterLink, we got to experience just Gene and, and how magnetic he is. And so if you haven't listened to that episode, please go back and, and listen to that next.
But what brought you to Interlink and why are you so proud when you hear another branch comes to Interlink or why should another one, you know, certainly think give you last look if they're out there.
[00:47:10] Speaker C: Looking.
Absolutely. I love it here for many, many reasons. I think you can, you can tell from the conversation that we've had. I'm somebody that really likes to dig in, be involved, you know, grow an organization. I love to know. Know all of the people that I work with and what really Turned me on to Interlink is, is. We've got all the things that a big boy has. We have every, we have everything that CNG across country, a Rocket, a Cooper, all like the big boys. We've got all of that from a product, from an execution, all of that. But we keep it small and it's more of a boutique type company. And that's what I like because I want to build a relationship with my, with my originators. You can scale, we can absolutely do that and use technology to scale. But when it's all about delivering an exceptional customer service to my originators and then therefore buy the transitive property to the, to, to homeowners in their communities, that's what it's all about. So I was not interested in, in working for an organization where we look at net recruiting numbers and it's all, it's all on spreadsheets and there's no relationships. It's get it then get it. Not like I want to dig in and I want to, I want to, I want to help our communities. I want to build relationships and I want to be able to do it without sacrificing any of the tools and any of the products and do and to me Interlink just hit that sweet spot, you know, so, so you know, we definitely want to grow. We've got room to grow. We have room to scale for sure.
But we're coming at it from a basis of building relationships and giving originators what they need to execute out in the field every single day consistently versus they're just a mere tool. They're just here to feed the machine. We're there to help them. And that's really the perspective that I, I love about it.
[00:48:52] Speaker B: Here.
I'm going to go back in time and bring it and bring it forward.
When I was originating mortgage loans back in the early 2000s, I remember I physically walked over into a, to a cubicle at New Century, hovered over and looked, period. I said when are you going to finish underwriting my mortgage loan? Right. And if you remember those days, and I don't know if that, I don't know if option would ever allowed that to happen. But yeah, but we're in a different environment where underwriters are no longer centrally, they're not all in Houston, I don't think. Right.
They may be spread out into different parts of the continental United States, maybe even in India, I don't even know yet. But how do you think that the origination, as an origination platform, the originator can now speak more Transparently. And how do underwriters speak more transparently to the originator since they're not hovering over the desk?
How can they be more effective in using either teams Slack chat, some, some other chat function? I don't know. But how can they be more efficient as an originator and in ops so that it can have better flow.
[00:50:02] Speaker C: Through? Yeah, I mean honestly, I think having under, I think underwriting is one of those jobs that makes sense to be remote in all honesty, because you may have been able to come look over the desk, but the guy in two states away doesn't have that opportunity. And so basically right now my originators have equal opportunity at being able communicate with the underwriter and talk through a file. Right. And so for me, when you're talking about keeping organ underwriters organized and efficient, it's about having a clear structure to your day. Right? So our underwriters, they've got their quiet time and that's when they're going to go knock out their new files. Because if you haven't underwritten trying to underwrite a file and getting distracted by 10 different phone calls and 10 different emails, all of which are the most urgent. Right. And so to me it's all about how are you time blocking and organizing your day and holding yourself to that origin. The one thing about originators is they're going to take whatever you let them take. And so, you know, you've, you actually are far more efficient if you say, hey, I'm going to just take this time and then I will work on getting back to you. Originators. For them to be more efficient in dealing with their operators is they just have to be clear and concise in their, in their communication. If you send an email to an underwriter saying, hey, give me a call so we can chat, you're not going to get priority. And that, that's, that's not a great way to communicate with somebody in operation. So if you're out there in the field like you need to very direct, I need to talk on this file. I have a question on this condition. Let me know when we can chat.
And, and that's what, how you're going to have the best luck? Not luck, but you're, you're going to have the best success rate. Because an operator doesn't want to go into a call blind. An operator does not want to go into a call unprepared. They want to be able to have the conversation, know why you're calling. Right. And so even if it's just two sentences or two bullet points.
That's going to go a long way in making sure that you have a quick, quick, fast communication with an underwriter. Because an underwriter is not going to want to just say oh yeah, we can do it. They're going to want to go look at the file, understand it. That's how an, an operator thinks and that's how originators can really increase success when communicating with.
[00:51:57] Speaker A: Us. We have a couple rapid fire questions here.
So you had one beer left to drink. Would, would it be at Wackadoos in the student union or over on Rainey Street? No, I'm just, I'm just kidding with.
[00:52:08] Speaker C: You. It would be tequila.
[00:52:10] Speaker A: Obviously.
Can you talk, tell us about like that's kind of a culture because you got where you went to college in, in Austin itself. But can you talk to us about the culture of running a company that has a lot around the builder mentality? And I love this because it's like why, if we can create our own inventory, why not? And, and so it seems like that's where InterLink is, is building a sustainable model regardless of the rates and why. I guess loan officers should be excited if they don't have build their business right now. Why interlink might be.
[00:52:42] Speaker C: Something.
Yeah, I mean, you know, working, working with, with a lot of builder business, it is definitely high pressure because they want those loans closed when they want them closed. You know, we're closing, you know, 20 million more than we had budgeted this month because our builder wants to get this in by year end. And guess what? We're going to figure out and we're going to do it. And so I think it allows us to be far more adaptable, far more flexible and far more able to be constantly tweaking and adjusting and adapting to those demands because we need to make sure that we're getting these loans closed. But we're doing it in a way that makes have loans sold that we're getting, getting the documentation, getting the information that we need. And so it allows us to be far more flexible and far more creative when trying to, to figure out how we're going to, we're going to close out each month. It's.
[00:53:28] Speaker B: Fun.
What do you think is the most underrated skill in mortgage leadership.
[00:53:32] Speaker C: Today? I think it is leadership training. So I've seen in this business so often people are promoted and then their company gives them zero training on how to be a leader, how to have tough conversations, how to do a write up, how to, how to, how to praise people, how to build People up, things like that. We don't, we don't do that. We just expect you to manage. And then when you can't manage, well, we, we think it's your.
[00:53:56] Speaker A: Fault. Why do you think after the loan closes, the industry still has not figured out a way to come up with something for the first 90 days? Like someone's in a home and be like the home.
[00:54:07] Speaker C: Buddy.
The home buddy. I don't know. You have to rephrase the.
[00:54:11] Speaker A: Question.
Well, I just, I just feel like a lot and I was a loan officer, but you see it all the time. They seem to be the most connected person in their area. Right. And they do it a lot for pro. I did a lot for prospecting new loans.
And when somebody closes, it's like, I wish you would just call me because I could, I could kind of help you in your first 90 days in this home. Whether it's getting used to the community. Like this is where you should get pizza or something. Like, you know, there's a funny smell. Oh, you need like a, A radon person. I'll, I'll help you with that. Like my, we're panicking because of mold. You know, I'll help you figure that out. Don't put it on the record yet. We just did the house. Like that is impossible. Can't be in there. But somebody has so many questions. And it's not like they go to a dentist or even back to the realtor usually it's like, I guess I'm not blaming loan officers because nobody's been able to figure it out, but it's kind of sitting there in front of our. This was supposed to be a rapid question, but why, why do you think no industry then, to be fair to all of us, why do you think no industry has figured out how to, to be the person they call in the first 90 days, especially if you're willing to kind of offer it for free for.
[00:55:15] Speaker C: Branding.
Yeah, I mean I've seen some originators here and there do it as a one off. But to be to your point, it's not done at scale. And I think there's a couple of reasons for that. Is one, the originator wants to move on to the next one. And we're operating in an environment where we are at razor thin margins. And so who has the time to do that when you're trying to bring in new loans? Right? And so to me, I think that's where, hey, can technology, can technology satisfy this? Where you've got your, on your website, your AI like Post close, budding, whatever. Right. So I think if you, if you can find a way to make technology leverage that where they think they're talking to you, but they're not because otherwise how are you going to manage that and how are you going to bring bodies in for that, especially in this cost constrained environment. So to me that feels like a really good solution for technology to assist.
[00:55:56] Speaker A: With. Yeah. Or like loan office could like trade in their ties for like a tape measure. So if they were wearing like a tape measure all the time, I feel like that, that is a signal like you can be very.
[00:56:06] Speaker C: Helpful.
Have you, have you had your last beer, Michael?
[00:56:09] Speaker A: Cool.
Yes. For the. I have not had one today. I just, just been doing enough of these weekly. Weekly. The. Towards the end of the, we, we try to bring some light to it so that we differentiate a little bit from the other podcasts and, and give a.
[00:56:23] Speaker C: Little. I love it. It's awesome. I love.
[00:56:25] Speaker B: It. That's right. I got one last question then Michael, Michael will, will tail us off.
[00:56:31] Speaker A: Here. And on that note too, you can include your. Thank you for coming on, Aaron, because I'll, I'll go right into the outro after, after.
[00:56:40] Speaker B: The. So what, what is one single piece of advice that you would give somebody who wants to step into a leadership role during this time when the industry kind of feels.
[00:56:51] Speaker C: Uncertain?
I would say leaders are not built during the good times. This is the perfect time to come in and be a leader. If you can come in, be a problem solver, roll up your sleeves and figure out how to get it done and be a resource, you are going to be the leader that all of your people look up to for the rest of their.
[00:57:08] Speaker A: Lives.
Wow. Well, thank you for coming on. Thank you for hitting us with that powerful.
[00:57:13] Speaker C: Reminder. Thank you. This was great. I had so much.
[00:57:16] Speaker A: Fun.
Thank you for joining us on this journey into the heart of mortgage innovation.
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