Episode Transcript
[00:00:00] Speaker A: Hello and welcome to season four, where every mortgage has a story.
This is the Mike Dupp show, the ultimate hub where hidden stories behind the mortgage industry come to life. I'm Michael Kelleher.
[00:00:13] Speaker B: And I am Michael Zao.
[00:00:14] Speaker A: And in every episode we dive deep into the entrepreneurial spirit, which we will hear a lot about today as all salespeople in mortgage are entrepreneurs that go on to do greater things. In this case, owning and running one of the most prolific consumer direct models in the mortgage space. And we'll hear how I actually got to see the office and a lot of the strategic insights behind what goes into building that type of atmosphere. In fact, our show in general loves to focus on strategic insights and breakthrough innovations that build the world's core greatest mortgage companies.
So whether you're advancing your career, you're scouting industry leaders, you want to go to a conference, you haven't gotten to a conference yet. If you watch or listen to enough the shows, when you go, you'll feel like you know everybody and you'll find out they're really approachable. I think that's what we'll find out here at the end of the show.
So if you're exploring opportunities, especially in fintech and prop tech, you want an intro to the mortgage industry. This is a great place to start. You're in the right spot. So get ready to unlock the story behind every mortgage.
Today, let's dive in with Todd Feger, who runs a company called Haven Home Equity. It was originally Top Flight Financial, complete rebrand.
Well, we'll dive into it and find out why. But for me visiting the office, it seemed for two reasons. One, a fresh look, able to match a lot of the vision he has.
Two, he's noticed that our country right now has about $37 trillion of untapped equity. They're struggling to make payments, they're told not to touch their mortgage, and they're not running their home sometimes like a proper balance sheet. Todd is a co founder and in addition to that, he, he is focused on building and refining the best consumer direct mortgage model and team in the country. So that means everybody, all ores in the water at the same time. They speak the way that he believes is in the best interest of the consumer. And he's matched it with a great new social campaign or I don't know if we want to call it campaign, but a social presence online that is consumer facing so that it encourages them to understand that it's okay to tap your equity and you actually can do it without falling backwards. On the amount of years to pay off. So without any further ado, we sometimes like to ask kind of when and where. Todd, your partner spoke very, very highly of you. When, when I was down there, like you had this talent. Can you talk about that day or week or month where you decided that you would work like all great partners, Microsoft, Starbucks, that you guys would work together and you would go from, say, managing loan officers to actually running a company and all the, the pieces that go with it?
[00:03:19] Speaker C: Yeah, so I, I started in mortgage back in just 2001, and, you know, I was always in more of a consumer direct environment. Started went out on my own 2005, opened a net branch and didn't really know what I was doing, but it was kind of baptism by fire and learned a lot. And, you know, then eventually we had a big lender, consumer direct lender here in St. Louis that was really well known. We had connected. They just had a ton of resources, a great system.
And I took my small team, joined them, and that was a great company. And I still ran a team, but I was also originating at that point. And it was like 2015 is when, you know, that the company was having some challenges at the top. Some of the leadership was starting to have some friction. And I had gotten to know my current business partner, Dave Bray, as I had stepped into more of a management role and started to step out of production and started to kind of reshape. I got promoted really to run the St. Louis team. We had about a hundred or so folks on staff, and I ran teams, but not that large. And so Dave was in the Atlanta location of our company at the time.
One of the owners that I had a great relationship with that actually was responsible for promoting me, had called him up to St. Louis. I had some big plans for things I wanted to do with the operation and the model. And I had known Dave via email, but anybody that knows Dave, he's kind of the man behind the curtain in mortgage who wants like, no notoriety, no credit, but he's, you know, I quickly getting to know him, just over the course of a couple months was just really impressed. And I started to understand, like, although he's not, you know, an owner of the company, he's at. He's kind of the backbone of a lot of the decisions that are being made and a lot of the strategy. And we just really hit it off and so we spent time together. Fast forward the clock a year or so later, really started to just have some challenges with the, the leadership and the business model. And I had just had a brand new baby and so, and I just spent like a ton of money, cash out of my pocket to fix a house that my wife and I had bought an older home. And so it wasn't the best timing, but I just realized one morning I'm like, man, I just, I'm not happy here. You know, financially we're good. You know, the position is, you know, I'm making good money, but I just knew I wasn't going to be there forever. And you know, I always had this vision where I don't necessarily need to own a mortgage company, but I need, you know, for me to be happy, I, I need to be in a position where I can drive the strategy and really take control over how we do things to a certain degree. And so I called him up, man. I was like, dave, I think I'm going to resign this week.
And I want to go. I don't know exactly how we're going to do it, but I know what I want to build.
And I honestly, I, I, I, I want you to do this with me. I need you, but I need you to move to St. Louis permanently.
And typical Dave, typical Dave fashion, he was just like, he's like dead silent. We're on a phone call. And mind you, my wife hadn't met him at this point. So, you know, she's. And she got behind it. She was like, I'm super spoiler. Like, let's do it. If you want to do this, I got you. And so told her about Dave. Anyway, Dave said it was like a long pause and he's like, can I call you tomorrow at 8am and I was like, yes. And so hung up and kind of on pins and needles all night because to do something, I mean, you got a chance to see it. We had a big vision for this and I just knew that the strengths that I have and some of the things that maybe aren't my strengths, that we complement each other really well and just always worked great together. So the I remember, like it was, you were laying in bed, like talking all morning and the clock hit 8am and phone ring, like to the second and it was, I'm in. I'm gonna list my house, I'm gonna call my agent, get my house on the market. And then we just went into full fledged playing mode. And I resigned. And it was a process, but yeah, that's kind of where it started. And then the path from there was pretty brutal because we had a lot of people wanted to follow us. We had Some, you know, you run into like non compete situations and solicitation. So we were button up against that with, you know, not trying to do anything, you know, to kind of cause problems for the company, but also how do we go about how do we do this and, and how do we find the right partner? We hadn't really found that yet. So we had six, seven months of uncertainty because we couldn't find the right platform to plug into.
To the point where we were thinking about do we just try to build our own mortgage company from the ground up or do we try to purchase a lender that's maybe not having success that we could get a good deal on it? You know, we didn't know. And so fast forward six, seven months in we met Tim and Tracy Bayes, Matt Cornett with Top Flight Financial, which by the way are still our parent company. We are just a dba, a complete rebrand of the consumer direct division that we had built.
And they were awesome people. And Tim had a Consumer direct background. He was a retail company predominantly and kind of saw our vision and it just felt right. We flew out, had a phone call, flew out to Michigan, spent a couple days with them, felt really good about it.
And he looked at US Day 2 and was like, I like you guys and I want to do this well, you know, what do you guys think? And it was pretty much full steam ahead from there and to, you know, you know how those things go in mortgage and then in, in life you still are still getting to know someone, you know, you like what you hear, but you still got to see things play out. And it's been nine plus years now and it, everything they said they would do to support us and let us run, you know, our business within their business, they've done. And it's been huge and unique I think to, to, to allow us to do it at the level we wanted to and, and take control over most of the decisions.
[00:09:17] Speaker A: So he flies down to St. Louis.
[00:09:19] Speaker C: And we flew up, we flew up to Williamston, Michigan.
[00:09:23] Speaker A: Right, I'm sorry. Dave flies down to St. Louis after listing his house seven months prior. And so those seven months you're itching to originate alone, but you're instead putting on paper, I'm guessing, scripts, he's writing up balance sheet pieces. And then that's the goal is to find then the home that can plug in this model. Like are you pitching because the world's so different now. Were you pitching the lenders or what? Or like today, would you just put your flag up and then have 18 lenders pitching you.
[00:10:01] Speaker C: You know, this was 2016. You know, we started in late 2015 into early 2016 as we started to kind of really find. And you know, it took, it took us probably a solid month just to. We had it all up here, but we hadn't put it into an actual business plan. So we spent, you know, we were on the phone, you know, literally like all day, every day. It's my wife still jokes. We've got a spot in my kitchen where our hardwood floors there that for me pacing some a pacer when I talk that like rubbed the stain off the hardwood floors over the course of the six months.
And so we built the proforma. We had a binder that was, you know, we're getting them laminated. You know, we're like, all right, we got to walk in and give a proper presentation. Because I mean, to be fair to anybody that we were talking to Consumer Direct is still scary for most. Most don't understand it. You know, there's so many versions of what a Consumer Direct model can and look can look like.
It's expensive. And then, oh, by the way, we've got some trailing legal risk following us. Like, you know, it was, you know, you're not trying to oversell yourself, but, you know, so it was almost like it was a joint effort though. We had to interview them to make sure we felt like it was a good long term fit. But they're certainly interviewing us. And we went through 30, I think 37 different meetings where one of us either went to the bank or the credit union or the lender or the whatever, physically or both and met with the leadership and we had so many conversations and it got scary, man. I wasn't sure after the first a couple months of that that we were going to really find the right fit. You know, most companies have an existing Consumer Direct model or some version of it and we've always been like, man, we're not looking to like blend in with another philosophy or model. And I do think we saw a couple that we liked, but they wanted to have like competing models of Consumer Direct in the same organization and thought that was a really bad idea. So it was hard, man.
[00:11:55] Speaker D: It was.
[00:11:56] Speaker C: We were losing a little bit of, you know, we were feeling we were gonna have to go in a different direction of, you know, truly. And you guys get it to, to take it from, you know, from nothing. To stand up a mortgage company in and of itself is.
It's a process and you know, but luckily, you know, it really it was, you know, we look back and just the way everything kind of came together, highs and lows of that process. But connecting with, with Tim and Tracy and Matt with Top Flight was huge.
[00:12:25] Speaker B: Todd, can we go back a little? You went through. That's a lot to unpack. Thank you for sharing that. Can we go back a little bit to your beginning as an originator, to today?
How did you start? Was there any mistakes that you had made at the very beginning as an originator that said, okay, I'm not going to do that, I'm going to teach my people.
[00:12:45] Speaker C: Well, I don't. We. I could go on about, I could write a book on that one.
[00:12:48] Speaker B: But I, because consumer correct is a different animal than, than actual retail and working on purchases and stuff like that. So can you, can you say what are the mistakes that you made as an originator? Said, okay, just a few bullet points if you may, that says that has led you to be a successful consumer direct leader.
[00:13:09] Speaker C: You know, I, I think, you know, we, we've kind of have this philosophy today and I didn't have it early in my career and, and you know, I was an ello, so I was kind of. You work what you have and you try to, you know, live and excel within the environment that you're in. So having lack of control, you're just forced to be a little bit more of a chameleon. But I think in terms of, you know, having the right mindset, whether you're in retail, consumer direct, broke, whatever it is, you know, you gotta be a competitor, you know, you gotta be someone that pays attention to what top producers around you are doing. I was always pretty good at that. Like I, you know, I think just with background in sports, with wrestling, things like that, growing up as a kid, I, I think that that sense of just owning it, you know, and what are the things I can control. I think those are attributes that, you know, I think are pretty common and you know, like certainly in our top. Those and successful people that I meet in life and, and so, you know, but I think being more intentional about building a system that I could create habits around and make it repetitive every day, you know, based around best practices. I was probably a lot more reactive early in my career. Some days I'm originating, other days I'm pro, you know, helping process and just, you know, I think that, and we still, it's probably one of the hardest things to teach and get people to truly buy into and, and have the discipline to adhere to is just that daily routine of doing the things you know, need to be done consistently to help you find success.
[00:14:37] Speaker A: That's the difference between Consumer Direct and distributed retail in, in some ways. And Stan Middleman, who now you can go back to our previous episode. Look him up. Freedom Mortgage, one of the most successful people in mortgage. But he lets out this simple tip he created really through Consumer Direct and through his ability to manage and script. And so Mike and I were talking, preparing. I was telling him how you, you were a wrestler. He was pointing out the intensity of, of the workouts and, you know, that sport in general, how it is very regime. And so with that, do you have a lesson you learned from maybe a coach or a wrestling experience that you kind of tap into when you need a little energy on how to, to get.
[00:15:32] Speaker B: Not you.
[00:15:32] Speaker A: Because it sounds like it's just beast mode for you and you, you know, it's kind of automatic. But that those say that new batch of seven hires, you're trying to get them to trust the process. Do you have a lesson you've learned along the way or a coach's quote?
[00:15:46] Speaker C: Yeah, the, you know, I don't know that I have a famous quote, but I, I would say, you know, I think you, I, I think first and foremost, as a, as a leader, you know, I was lucky growing up in that sport. In wrestling, I had examples of people that weren't just coaches, but they were in the room with us, they were practicing with us. You know, they were. And I just think, you know, in general, whether it's mortgage or not, I think, you know, if you want people to follow you and listen to you and buy into your vision and all those things, you know, you're gonna have a much easier time getting there. If they really see your passion for it, your investment, you know, in time, you're in the weeds with them. And I don't do that because I have to, like, I truly enjoy, like, build. Trying to build the machine and helping our people make more money and, you know, helping our clients, you know, find solutions and creative ways to present stuff. So I, I, you know, I think what I try to tell to every, you know, I say it.
We're doing a lot of hiring right now, and I think, I feel like I'm saying it every week, but I tell every new teammate we hire, like, look, we are going to pour into you. We're going to work really hard and we're going to give you everything we have to be successful.
We can't give you drive and determination and coachability and a good attitude. You Got to bring that. And if you give us that, it's a high probability you're going to find success here, you know, and so I think you got to be in the business. I think it's a challenge that some lenders face as the people trying to guide the decision making. You know, I, I would view it honestly and there's a lot more like me. But I think those leaders that are in the pit, that are in the, in the business with their team, I think they have an advantage, you know, I really do. And so that's part of the reason we're never going to try to get too big.
I really, I want to know my people, I want to listen to them, I want to hear kind of where their pain points are at. I want to be able to have a, you know, real direct conversation to try to snap them out of whatever funk they're in myself, you know, with our, our other leaders. So, you know, I, but yeah, I, I think, I think the sport itself, because it teaches you accountability, you know, I, I've got three young daughters, I've got them in jiu jiu jitsu now, which is really cool. But, um, you know, I think that individual sport teaches you how to lose and it teaches you how to, you know, take accountability and not point the finger.
And I would bet, I know a lot of leaders in consumer direct and just in business, like a common human reaction to not achieving success or not having the level of success that they want is to point the finger and look for all the external reasons as to why not.
And I think that's the point here, that we just, that is a non negotiable, like, I can't promise you success. I can just promise you I'm going to put you in the same position as every other loan officer on our staff, work really hard to keep making it better for you. And then you got to own your outcome and your effort and your attitude and, you know, and I think you got to build a team that's disciplined enough to, you know, from the top to say, and if you don't give me that, you can't work here.
And we try to stay true to that.
[00:18:54] Speaker B: Two, two aspects of wrestling. If you start when you're younger to a young adult, the first aspect is that it doesn't matter what your weight class is. You could be, you could be a hundred pounds or you could be £250. And I think that in, you know, if you're in the mortgage industry is, they go, do I have to be a finance major in college or can I just come out of school with no experience? And you know, those are very similar situations and circumstances. The other aspect that I find interesting in mortgage compared to wrestling is that the other sports in high school, whether it's football or baseball or even basketball, there's a major league for that. And I, and, and I haven't really seen a major league in wrestling yet.
[00:19:37] Speaker C: Right.
[00:19:37] Speaker B: So the end in mind of like, oh, I'm going to be this professional is, is like, I don't really know. So whether. How does someone start in the mortgage industry, in consumer direct and have this mindset of I'm, this is the. And I know you talked about mindset just right now, but can you, can you take me through the. Be the beginning part when someone starts in consumer direct and say, these are the things I need to accomplish professionally and personally and then to take it to that next step is this is how I'm going to be that professional in consumer direct?
[00:20:12] Speaker C: Yeah, I mean, I think, I think you've got to be, you know, I've seen over the years where we've met folks that we were just getting to know for the first time and you know, we're kind of, we always view the interview process as, you know, you should be as curious about us as we are you. And I'm not trying to trick you or, you know, persuade over. Persuade you to want to be a part of this.
Our approach and all of our leaders who now who have kind of taken over the hiring process is like, we want to be overly transparent and we want to have numerous conversations so that, you know, you see this for all of its imperfections, you know, consumer direct channel mortgage in general, it's not for everybody. And that doesn't mean these are bad people, but they just may not be a fit for what, you know, you need them to be able to do and enjoy at a high level. So I think the mistake some make is it's too persuasive. You know, it's not as transparent as it needs to be. If you have holes, it's going to get exposed and they're going to find out really quickly what they are. You might as well, you know, pull back the curtain and just, you know, really let them dive in. So, you know, I think I, I think you got to be overly transparent, you know, and I think you got to be very honest about what it is you expect from them, how you're going to manage them and hold them accountable, you know, and set really clear expectations, you know, We've got this kind of this phrase where it's, you know, know, set clear expectations, manage to them measure and incent, disincent. And we try to build a lot of our frameworks, principle based frameworks for decision making and management and leadership around that. And it's really helped us, I think a find the right people, flush out those that maybe felt right. But then we went deeper and it wasn't a fit for them or us. And we've gotten better. We're not perfect. We've made some mistakes.
We've also made some mistakes and took too long to probably address it and we've gotten better at that too. So it's, you know, I think you guys probably get it, but I think you gotta be very clear on what it is you're looking for, what your standards are and then manage to those standards. Because I, I heard, I did hear a quote, you asked me for a quote that I love and we use this a lot is the best way to lose a great employee is to tolerate a bad one.
And you know, for us, most of our people are here under a roof together in a big square box in St. Louis or up in Pittsburgh. And you put one toxic person in that environment and it can start to, it will have a ripple contagious effect that is probably much greater than what you realize. So we're very intentional. As we grow and as we grow and keep that at bay, that's some powerful feedback.
[00:23:01] Speaker A: I two takeaways as I heard. That one is I'll give a shout out to Mark Drakenberg over at Silk Title. He's taking me out to dinner tonight with Wade Boggs. And so I was listening to a POD podcast to try and figure out, you know, just to get to know him. He was on Fanatics the other day and they asked him who, who his favorite player was and he said one of them was Pete Rose. And he said when you look at a player, the Pete Rose type, it takes no ability to hustle, takes zero ability to hustle. So that, that stood out as far as when you wake up in the morning, you know, to get on the phones and get over that call. Reluctance, that part doesn't take. Ability then to actually put together the scripts and execute them. Obviously that's where skill comes in. The other one was Robert. No, Roger Federer spoke the other day at a college graduation.
Very interesting. He told everybody, you know, one of the most winningest. You think, like how many, like what did tennis teach you? Another individual sport that he won all these matches but you know, it's, it goes like 5, 4, 5, 3, 15 love 30. He actually only in his career only won 54% of each, you know, back and forth and so tennis taught him that. That's almost a 1 and 2 fail rate. Another point you were sort of making there, Todd is it just taught him to get over it and on to the next one quickly. So two things to think about. We're going to take a quick commercial break and on the other end we are going to dive into the the journey of closer to where we are present day with your company, Todd.
[00:24:50] Speaker B: Want.
[00:24:50] Speaker A: To take your business to the next level As a longtime trusted mortgage service provider, Mortgage Connect works with some of the largest lenders, servicers and institutional investors providing cutting edge solutions for everything from title, closing, escrow and default to capital markets and risk solutions.
Mortgage Connect brings it all to the table.
Redefining mortgage lending with innovative digital solutions that can elevate your bottom line.
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[00:26:08] Speaker D: Where the company can do the configurability so we have no code on this so they can go in their settings, they can set it up all the way down to loan officer if they want to. We also have a customer support team that's assigned to each account.
If they want they can overhaul everything if they wanted to. They have a new product especially dynamic apps. With dynamic apps we can fit multiple, we can fit the Fannie Freddie loans, we can new construction one time close HELOCs, you know whatever those workflows are, they can design that workflow for each individual app.
So it's not a static app and plus two is as they're answering those questions. It'll ask them specifically what they need. So the borrower has everything at their fingertips right then and there. You know, when a question gets answered, certain documents are required and we have that engine that handles that. So if uploads directly into flow FI pushes it automatically into the los. If the loan officer they are able to set it up where it looks like if the processor needs something they can communicate as a team. So it looks like it's coming directly from the loan officer that they're already used and have that relationship with. So it's not somebody that they never talk to. Now what's going to take it to the next level is the AI and the OCR piece.
[00:27:21] Speaker A: Another great person to quote another great coach was my father. I was a small baseball player and so I wasn't very good. And so we used to get ready to go out before we left the house. He'd always say yeah, be a ball player, Mike least look like one. So what I looked like I asked that I came to your office.
It is the ideal office of the future, the pinnacle. Give it a 9.6 like Dave Port and I would give some room for a 10, but I don't think there's anything close to it. Can you talk about just your whole life but recently, you know, there's obviously some risk going in there and a little bit if you could segue as well into lead spend, you know, in that moment where you are today and even when you were first pitching, I guess why you can't find a match automatically is you probably had a lead spend you wanted some commitment to.
Can you bootstrap into, into all this or is this is consumer direct something where you need, you need to invest up front.
[00:28:22] Speaker C: You absolutely have to invest up front. There's no question about it. It's, it's expensive. You know, if you're going to live in a world where you're gonna, you know, really the way you're gonna drive the majority of your business is through leads that are not referral based. You've gotta be able to spend money and refine your strategy over and over. So it's part of the, the barrier to entry. To do it right is difficult because it's so expensive. There's, you know, are there others that probably, you know, I've done it a little different and didn't probably go to the level we did. Absolutely. But I, I do, I'd be dishonest if I said that you, you're gonna have to and you'll probably underestimate how long it's going to take to get to the land of profitability and, and, and maybe sell yourself short on what's possible if you get it right. We certainly did.
You know, so, yeah, the, the, the path there is, is definitely a chat, you know, is definitely a challenge. And, and we get it. We knew that coming into this whole thing.
But, you know, I think you've gotta, if you've got the right approach and you really know what you're looking to do and, and you commit to that vision and that strategy, assuming it's the right one, it's like anything else, you know, you, you can, you can find success with it.
[00:29:45] Speaker B: I found that there's, there's like two schools of thought in financial literacy and I'm going to lead into the consumer direct leads question in a moment.
One is like, hey, I want to, I want to pay off my mortgage as quick as possible, but I was stupid enough to go into consumer debt, right? And then they, and then they call someone like Dave Ramsey and they go, oh no, you always want to pay off your mortgage and da, da, da, da. And then someone will say, oh no, I just read Rich Ted, Poor dad, and Robert Kiyosaki says, you know, have as much debt as possible. And you know, and all these, I mean, like, I'm sure that with the, the type of information that's on the Internet, you get all kinds of people. However, you guys have a certain type of strategy and, and whether it's, it's one school of thought or another school of thought, where do you guys stand as far as that's concerned and speaking to the general consumer, how do you, do you speak to both, Both sides? One side, I have no idea. So how, how do you speak to the, especially in your, with your originators, how do, how do they respond based upon your training that you.
[00:30:45] Speaker C: Well, those are two really smart people that I would not challenge to a debate. But I, I would say, I, I would say, you know, for us, the way I think about it is it depends who you are. It depends on what your scenario is. You know, I think you go a layer deeper versus should I have a mortgage? Should I not have a mortgage? Should I have debt? Should I not have that? It depends. You know, if you're super wealthy and you're leveraging debt the right way to, you know, enhance your financial picture, great, I agree with that.
If the mortgage is a small part of your, you know, your, your expenses, you know, having a mortgage, sure, there's, there's benefits. But the reality is there's millions and millions of homeowners that have a cash flow problem.
They don't have a mortgage interest rate problem.
You know, they, the, you know that they have, they do have a debt problem.
And more than anything they, they have the way it's structured can easily be fine tuned to take because the pain is coming from the cash flow. It's the person, the average person that wakes up in the morning and they're looking at the money they have coming in after taxes, the money going out. Not just their debt that's on the credit report but their everyday expenses and their, it's tight.
And so to us that's always been, forget rates, forget all the other stuff. Just that's the problem we need to try to help people solve.
And when you really think about mortgage, we live in this world where, you know, the 30 year mortgage is a great product and I'm super thankful, we all are that we have it.
But you know, we talk a lot about, you know, on the purchase side we want to help people get into homes and there's a ton of gratification in that and I'm all for that. We have a fantastic retail team at Toplight, but we also have a responsibility I think as lenders is once they're in that home, how do we help them try to outrun the debt before they retire? Because people's income typically drops, so it drops when they're going to. So that's the way we try to look at mortgage. Like if you buy your first house when you're 25, let's try to own the last house by the time you're 62, you know, you know, 55, you know, and I think that's a missed opportunity. We saw that as a, as an opportunity for us. We thought, you know, let's, let's train our people. Let's, let's really dig into attacking the compound interest on a mortgage that works against you compared to an investment. And let's start to show people like, hey, I, I don't, I understand you have a low mortgage rate, but what's your blended debt rate look like?
You know, you're, you're real concerned about closing costs but you know, what are the, what's the total cost of your debt right now?
You know, there's your current lenders trying to take you backwards every time to another 30 year. Every time they reach out to you when rates drop, what's that costing you? You know, maybe, you know, maybe their closing costs are less but you know, there's a lot more on the back end that you're going to pay if you don't start to think about how do I start to drive my debt, my total cost down? So, you know, blended debt rates, total cost versus closing costs, you know, and then I think the missing link, like we refer to this, and you and I talked about this a couple times, Michael, but like a trifecta. And I think if every loan officer thought about it this way, regardless of the rate environment they're in, and you look at how can I get someone some cash out of their home to put them in a better position right now, more reserves, maybe solving some problems that they have that they need actual cash for. Can I lower their total debt payments? Maybe not the mortgage, but can I lower their debt payments to improve their cash flow? And then the missing link, you know, really for most in mortgages, you start to take some of that savings and show them what happens if they apply it back to the mortgage. Because then you start to drive down term. You start to drive down the, you know, the overall amount of interest they pay back. And that's where you can flip the script on. And that's, that's the right way, in my opinion, that we should be the right conversation we should be having with folks. And that's the way mortgage loan officers should think. Think the problem is getting mortgage loan officers to truly believe that themselves. And then B, it, it's, it challenges the status quo. So getting the consumer to be educated enough to, to, to hear that and listen and buy into it.
Yeah.
[00:34:59] Speaker A: I think you hit what I see is the biggest problem right now in the mortgage industry for the people that I cheer for, or at least the people we have on this show, who they're leading. It is the distributed loan officer has focused so much on the what and the number crunching, and they don't get into what your trifecta really is about, which is what's the pain?
And the pain is not an analytical financial forecast over the next five years.
[00:35:36] Speaker C: What the influence.
[00:35:37] Speaker A: So the loan officers are telling them what the right move is in a perfect vacuum, as if pain doesn't exist.
Like Eden before the serpent came, you know, in. Before chaos comes in. But the reality is there's chaos just right around the corner in everybody's life. That's what life is. And it's not a vacuum. Like equity is going up. Yes. What does that also mean? Taxes are going up, insurance is going up. And so it's okay to ask the customer what they're going through and then make a determination, not come in with your already determination based on math. Can you talk about how that trifecta either has always done that or how you've tweaked it a little bit in a raising rate environment.
You just tell us about your philosophy.
[00:36:25] Speaker C: Yeah, you know, I be understand we've refined our approach dozens of times over the years. Like, you know, we don't really have, we don't have scripts or anything like that, but we have a sales strategy like a series of steps and bullet points that we really believe in and that we teach our people on. And, and honestly it's evolved that, you know, you asked me earlier about mentors, like I've been a, a huge fan earlier in my career of Dale Vermilion and his team at Mortgage Champions and then over the last, you know, several years become friends and, and involved him in our model. He's been teaching these strategies for decades, you know, so, you know, that would have big influence on me and really getting me to think early on about mortgage and you know, you think of purchase and rate and terms, I mean those are becoming more and more commoditized. You start thinking about debt consolidation, cash out strategies, you become much more of a financial advisor type of role, you know, and depending on the advice you get as a consumer from the lender you're working with, it can be all over the map on, on debt consolidation and is, you know, so I think you gotta, sometimes loan officers are real quick to judge if a loan makes sense before they understand the consumer's financial picture. I think that's a big mistake. We are certainly always trying to guard against that with, with our team, especially newer ellos that join us.
But I think you got to be very intentional, you know, and listen and really understand someone's actual scenario before you can jump to conclusions. I suppose, like so many do, I've.
[00:37:59] Speaker B: Noticed that one of the things you start at the, not only at the very beginning of your career, throughout your journey is that you've been able to and you haven't mentioned this word, but I'm going to say invest. You've been able to not only invest in yourself, but you've made investments in your decisions.
And you've effectively also asked your originators to ask their clients, hey, I'm investing in myself.
My company invested in themselves. They invested in me. I invested in me. I'm now asking that you invest in you. And the part of financial literacy that people don't understand, they think it's always Just about the numbers. But money's not emotional, people are.
And, and I think that when instead of saying I'm going to buy into this, we're going to invest in, we're going to invest into ourselves.
And I think that that's one of the things I appreciate that you've been able to show by example in, throughout this. How can we tell the general consumer how to invest in themselves? Because that's actually in financial literacy. It's actually talked about but not really addressed. Do you use specific software?
Do you use outside of general motivation and media? But do you, I mean, what, what are some of the tools that you can, that you have used and continue to use to tell the general consumer?
[00:39:23] Speaker C: Yeah, it's a great question. You know, one of the, one of the moves we, we made about almost six years ago now and remind you we're relatively pretty small compared to most lenders was we started to, to do what we want to do and to be able to provide these tools. We felt like we needed to integrate them, we needed to get them into the los. For example, we use Encompass, so we felt like we needed to build some of this stuff ourself. I couldn't find these out of the box solutions that would really help us do what we do. So we. Our own Full Stack developer that I have a morning call with every day we've been building a proprietary application. We've spent a lot of money honestly over the years on custom Encompass dev work. We built really robust benefits calculators inside of Encompass to help tell a different story and help. Help conser, you know, help the lo easily translate like cash flow opportunities and what happens with equity acceleration. All those things that are some pretty complicated math.
You know, I, I think you need those. You know, that would be the, the. The me today would tell me the, you know, the, the. The. The year one Todd, that soon as you have some money, hire a developer and start, you know, connecting your systems and building some of your own solutions, you know, or so we've been able to do some really cool stuff with that to make it just, just to kind of slow it down and simplify it for the lo because until that lo a believes in your, you know, your messaging and your approach starts to think different than the traditional loan officer about, you know, prejudging leads until they understand the financial picture and deals and then, and then has the tools to just, you know, put them at ease a little bit, you know, that they're giving the right information to the consumer.
It's hard to implement, you know, that, you know, and I would say it would be, to be very honest, it would be hard to take a shop full of loan officers that don't already think this way to some degree and completely change them all over. Like, that's a. I, I don't envy that challenge. I, I think that's part of the reason we hire pretty heavily, you know, outside the industry.
But the counter argument is I, you know, and you didn't ask me this question, but I'll just kind of tell you, I'll kind of segue into it.
We used to think that the only way and the way that we were completely sold out on is that we are only going to hire people outside the mortgage business, train them our way.
We still believe in that. That's a great strategy. And we are doing it. You know, we really just started hiring this year. Terms of consistently or with intention.
But I think the right answer based off what I know today is it's a balance, I think, because what we've seen over the years, if, if your entire team only knows your system, they don't have perspective on what it is anywhere else. And, and, and they, you know, to their credit, why should they? They. They don't have. Without that perspective, how do you really appreciate some of the things that you have at your disposal? You know, and so what we found is this balance of new talent. We love bringing in folks, just high achievers that are great personalities, great people.
There's, you know, that new blood on your sales floor is so critical. You got to keep bringing that in because it does keep the, you know, I think that phrase that Dale uses, actually the new blood gets the old blood pumping. I believe in that wholeheartedly. But at the same time, we've been fortunate enough to bring in folks from other consumer direct models or even recently we've had a couple of really like rock stars from the retail space that were used to hustling like they had the pace, they had the hunting mentality that have come in and them having some perspective to be like, hey guys, like, man, this is it just it, it feels good. If you're in my chair and Dave's chair because you're like, we don't get to see all the time either. So hearing that from them and then, but then saying those things to maybe people on your staff that don't have the perspective, I really think that's the balance like that, you know, for sustainable growth, for a sustainable great culture. I think having a mix of that as your strategy to Grow and you know, and consumer direct that I think at this point I'm sold on. That's the right approach.
[00:43:44] Speaker A: My grandfather used to say it's so simple. But everybody loves a winner. And the culture that you have and the environment, I mean I have to go back to this place you built is an environment where it seems young, hungry winners can come in and they can be themselves. Obviously you empower them with your systems, but they could be themselves and start winning again. Maybe in a. In a. And I like your balance and mix can. As we come up here, this will be my final question and I've taken this whole interview different than most in just pure curiosity.
It is. We've even not got to some questions we've asked our own. This is just an energy in mortgage that's not really there and should be.
I was going to talk about the younger generation. So you're hiring more younger generation. You're watching them in the wild.
You also know that when you take Gen X plus Millennial plus Gen Z, that's two and a half times the, the, the size of baby boomer. So it is going to be the future working with you.
Can you educate our, the leaders that Watch this on LinkedIn and then the loan officers that tune in on our YouTube station and, and podcast on Apple and if they're listening, please give us subscribe. That's the one thing that helps us.
Can you maybe just tell us what you're learning about this younger generation and how they are going to be as homeowners picking up the phone, how they work, any, anything along those lines?
[00:45:20] Speaker C: Yeah, it's a, it's a great question.
You know, it is a different time. There's no question about it.
But I would say there's, you know, you're still, we're people hiring people, you know, and I think, you know, the way kids are brought up today might be a little different than the way we were brought up and we get all those things. But I, I think again there we still consistently are talking to really motivated, hungry folks.
I think when you go, you know, fresh out of college, there's a lot of uncertainty about what am I, what do I want with my life. Like, you know, there's a lot of that, like in this discovery phase. So we tend to like to stay right on the other side of that. Like a little bit of real world experience, you know, like a little more, you know, like one of the questions that you probably heard some really smart people say before me is we just like to ask people like Tell us your story.
And you're looking for, like, I want to understand, like, what is your background? You know, have you ever really excelled and pushed through. Through difficult things? And, you know, those are, those are attributes that I think, you know, translate. But, you know, you mentioned our office earlier. We were right across the street from here for the first five years in business. And the typical like 23 story building with the elevator shafts up the middle. We started with like Amazon folding tables and a $15,000 a month leap budget and extension cords like it was boiler room, you know, and we just had to grind, you know, but we were, you know, we built the office up and expanded it and we've always made it nice. I'm kind of OCD about the aesthetics and the stuff. Like, and so I would look out my window and went down here in this like, kind of strip mall type thing. I was like, man, wouldn't it? I hadn't seen a mortgage office that was just like an almost like a retail type setting. And I was a man. If we could just have this gigantic box with, you know, my, my leadership and operations people kind of around the perimeter and a big, huge sales, you know, and so when we went down that path during COVID we went overboard. But it wasn't just for no reason. Like, we, you know, I've been in so many locations where. And I. You just walk in and it's just flat, you know, it's like everybody's in a cubicle that's six feet tall. You don't even know who's working. It's like the energy in the place just sucks.
[00:47:29] Speaker A: And before you tell them the new energy, because I, I do want you to.
It's not a strip mall. It's. I don't know what you call those places, but they're everywhere. They're here in Massachusetts now. It's like what the malls have become where they're. It's not like a side thing with like, it. It's got the restaurant, it's got the, the clothing store, it's got the walking pavilion. Everybody has them. They know what they are. But I would call them like outside galas or whatever. But yes, it reminded me of walking into an Apple store. Go ahead.
[00:48:00] Speaker C: Yeah. So, you know, we just had that. I just remember looking out my window. I was like, man, if we get to that point, like, a big milestone would be, I want to build a really cool space. I mean, I'm in this thing all day, every day.
I've always felt like I've been in certain environments where I walked in and it just kind of sparks you a little bit. The energy's good. You know, it's laid out the right way where it contributes to that. So, you know, that's what we did, man, we went overboard. We spent a little more money on things, but we didn't. We did it because we felt like. And it's never going to be something we can ROI or measure, probably, per se, but if we can create this environment, which I think a lot of people probably don't put enough emphasis on, that is, it's nice, it's exciting, it's energetic, it attracts top people that it's going to pay dividends by, you know, being a space that people want to come to, want to work in, enjoy being a part of. And that was. That was at least for anything, if we did waste some money. I tell myself that story to make. Make myself feel better about all of my.
[00:48:56] Speaker A: No, not a waste of money.
And thank you, Todd, for joining us on the show today. We really appreciate it and thank you for joining us on this journey into the heart of mortgage innovation.
Remember, every mortgage has a story, and we're here to help you write yours. If you enjoyed today's insights, please subscribe, share with your network and connect with us on social media.
Until next time, keep pushing the boundaries and uncovering the stories that drive our industry forward.
