Clayton Collins on mortgage lenders’ priorities

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spk_0 Welcome everyone.

spk_0 My guest today is HousingWare CEO Clayton Collins to talk about the state of mortgage lending.

spk_0 After we both have spent the last week at some pretty big industry events and ahead of our own mortgage banking summit.

spk_0 First I want to thank our sponsor Tristan Will for making this episode possible.

spk_0 Clayton, welcome back to the podcast.

spk_0 Well thanks for having me.

spk_0 Actually thanks letting me barge into the studio.

spk_0 And the studio is 14 feet from my office.

spk_0 Sometimes I'm going to join you on these shows.

spk_0 But thanks for letting me in.

spk_0 No, absolutely.

spk_0 You know, you and I kind of hit the road this week and got to go to some really interesting and exciting different events that lenders had.

spk_0 So we started out the week in Detroit at the rocket TPO pro event pro experience.

spk_0 I think it was called really interesting and especially to you and I who have long time observers of this and seeing how they've grown their wholesale channel and their whole approach.

spk_0 And so I think that's really interesting.

spk_0 So I'd love to ask you what stood out to you about that conference.

spk_0 And the biggest thing that stood out was the stage they set from the very beginning.

spk_0 So at the welcoming welcome reception.

spk_0 They've Barry Sanders come and speak and talk about excellence.

spk_0 And I think that theme of excellence resonated throughout our 24 hour time in Detroit.

spk_0 The excellent high producing mortgage brokeracy joined.

spk_0 The excellent executives who shared pretty impressive insights and strategies.

spk_0 Yeah, it was just a theme of excellence and that's signed through.

spk_0 I really like that.

spk_0 I think what stood out to me is it definitely was like we're making this experience for the brokers and treating them in a way that maybe is.

spk_0 Taking a playbook from one of their rivals there.

spk_0 It reminded me of what we used to see maybe and still do see with UWM or Ames fuse where it's really like we're focused on you.

spk_0 You are who we're trying to serve and really making that feel like a community.

spk_0 And I don't know that rockets always done that with with their brokers.

spk_0 Yeah, I'd say that.

spk_0 You know extends across a few events and conversations we've had this week.

spk_0 I feel like over the last few years particularly in this you know harder interest rate environment where volume is down.

spk_0 And even the years that preceded that during COVID we got casual.

spk_0 We showed up at conferences and in t-shirts.

spk_0 We didn't exactly you know present ourselves as the financial professionals that we are.

spk_0 And so when I talk about excellence I think that there's been an overarching theme this week of mortgage professionals showing up as professionals.

spk_0 The events we went to people had stepped up the entire a little bit the language the the messaging was stepped up the focus on building excellence as professionals whether that's technology or process or mindset motivation.

spk_0 Steped up the way we serve consumers stepped up we saw that a rocket you haven't talked about the event we were at yesterday we also saw that yesterday at nexa and there's a theme here as we approach this next leg of of the housing cycle.

spk_0 Now housing cycle that we've talked about is one with a theme of consolidation and there may be fewer loan originators and fewer real estate agents in the industry.

spk_0 But the ones that are here have survived the toughest stage of the market they are the pros that are in this industry cycle in cycle out they are the professionals they're not the pass or buys and I feel like that.

spk_0 That kind of cultural institution of being a pro is starting to shine through and you're just really seeing people show up differently than they did in the last five years that's how I feel about like this like cultural theme I'm seeing at the moment.

spk_0 I think that's actually a really good point and I think about some of the people that we met that they were not the speakers on the stage and yet these are people who you know they've been doing this for 20 years they've been through all the cycles already they're committed to this and maybe now you know brokers are.

spk_0 They're just getting more of their due as far as like it's not just about retail like I really thought rockets very specific focus on this was was interesting I really loved the marketing part so they they brought on their new CMO rocket.

spk_0 His name is Jonathan Milton Hall and I was so inspired by him because okay he comes from Airbnb he has like an incredible background in marketing and I think that you know he was friends with Varune.

spk_0 Yeah and Varune asked him hey you know I want you to come do this and and his first thing was like listen I believe in the company rocket rocket mortgage but I don't know that I believe in the branding and it was a really interesting conversation they had.

spk_0 He was like like just a perfect presenter perfect pro energy was was was so high but he wasn't afraid to come in with a little like one to punch at his own organization I'm like the approach they're taking the past like there was a there was a common

spk_0 to commentary in his his talk on stage was Katie Swini who was interviewing him right where he had said there's going to be a list celebrities in our super bowl commercials this year so there was a we're not here to entertain rocket commercials in the past may have garnered some some humor and a chuckle as you watched now we're going to focus on heart and community in the serious product that a more

spk_0 gage is and that that message you know certainly different than the Jason Momoa days yeah no I thought it was that was what was so striking they're using in all of their marketing whether it's commercial or TV or print or whatever it like they're going to use homes

spk_0 that were listed on redfin that that actual people bought and then actual L.O.s who sold those homes that's I forgot to mention that there's it so 100% of their marketing is going to include real

spk_0 loan originators so like you're in this room that's like pretty community focus and they run these commercials and it's got a dozen like a like 18 loan originators like like walking talking sitting

spk_0 with borrowers and they're real people in the room so you see these little like these lean a little groups of like people seeing their

spk_0 colleague on the screen and on the screen and they like hoot and holler and like there's a little very positive like client experience in that you know

spk_0 if you're a wholesale owner and you're client as the broker they're doing a great job engaging the people who drive business for them.

spk_0 Well I also think like from a consumer standpoint I mean like we all see more than we want the you know the ads for like the pharmaceuticals right and it's always like a real

spk_0 patient and that just brings you in because you're like oh that's you know they have this condition and I don't know it's kind of creepy but at the same time like the bottom

spk_0 it says paid actor may or may not have actual conditions that that's not the case of the like where we're going.

spk_0 No it's not but I think what what their new CMO said was like this is all about authenticity and in the in the past I feel like there was sort of this like almost you know internal like inside

spk_0 baseball with with brokers and now it's like we're being serious about what matters to the consumer and not worried about like this inter

spk_0 missing to inter-nice or how do you say that anyway inside baseball. So I thought that was great I think that carried through so we went to we were at next

spk_0 uh next a fast is the event next a fast but now they're they transitioned from next a mortgage to next a lending huge announcement and Mike

spk_0 Cortes had some work to do there to explain to the people sitting in the room that that did not mean they were pivoting to retail.

spk_0 Yeah that was a very well executed yet like interesting rebrand to to watch and like see how Mike handled it because the move from mortgage to lending is is not substantial

spk_0 but if you don't explain it properly it could lead to confusion like wait are they like wholesale going to retail are they like changing the whole model

spk_0 but I believe the point that that Mike drove home from stage is that they're fully committed to wholesale they're they're doing a large percentage of of their loans for their own warehouse line they're going to keep doing that but they're going to keep doing wholesale

spk_0 so the pivot to from mortgage to lending is meant to be more of a a cultural shift in the organization of stepping up the professionalization of the organization with a big emphasis on on recruiting.

spk_0 So Mike talked a lot about where the industry came from and the wholesale industry and like the the aim brokers are better is that brokers are better days where it was kind of a comfort was a very confrontational relationship between between brokers and retail all is now I think the broker channel recognizes that to grow the pie like to truly have channel growth

spk_0 you need to be able to recruit people from retail over to the wholesale side of the industry and if you want to do that effectively a 100% confrontational relationship is not the path to to channel growth

spk_0 and I think I'd argue that you know when a player gets as large as as nexa has the like I think Mike said they're at 3,300 brokers in the organization now you have to start thinking about growing the pie not just your slice of the pie and this seems to be a this seems to be one of those those moments and in the history of that organization where they're they're taking a shift away from battlefield mentality to grow the pie mentality which is probably good for the people there that the client

spk_0 and the organizational culture as a whole.

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spk_0 Well, and he's like the poster boy he even said he's like listen nobody was more of a pit bull than me for saying brokers are better and like sticking their face and being super aggressive and he was like this is this is nexa growing up and this is me growing up.

spk_0 I thought that was really interesting because to your point earlier like we're seeing this growth of like professionalism and like if if you want to what what got you here is not going to get you there.

spk_0 And and that's the point he made is that that you know brokers are better and and the whole brawl mentality was very necessary at the time and it brought people over who really like that he's like but all those people are now over so if you want to get the next round of people that's not the message that's going to get him because it just is.

spk_0 It's a very adversarial message and it really denigrates what they do and so I thought it was a great way for him to go on stage and be like listen i'm taking i'm doing this personally he even was trying not to cast I believe.

spk_0 Apparently is a difficulty for another speaker drop the bomb from the stage and they're new.

spk_0 Jerry the chief strategy.

spk_0 Yes i think so cut it out from the audience and said no more of that it's a new it's a new moment but I think it's unique here we don't usually have these conversations Sarah and just talk about like the culture of mortgage lending right I think we're at a moment where the culture of mortgage lending.

spk_0 I think the people how they act how they carry themselves how they interact with the consumer like we're at a moment where we're seeing positive change in the culture of mortgage lending I think it's something we're talking about and a pretty exciting moment for me.

spk_0 I do too and I also think you know it like you say it's the growth I mean in both of these cases it's growth and it's like okay you're no longer the opposition party you're you're like you're it you're the big show so like you you got to now maybe operate a different way I think it was well received yesterday too and I you know it's a very important thing.

spk_0 You know the rocket event was very well attended and we got to talk to people who really felt supported so it feels like these changes are positive okay we have so much news how many how many breaking news things did my did my newsroom send out on Wednesday was it it was for not to the whole audience there's some real state broker some lender stuff but it like like mercy there's some important stuff and impacts the whole industry one of the one of the big ones is the announcement that came out of out of FICO and their new.

spk_0 You know I think initially I had some confusion in the industry like how is this going to impact everybody and there's still some some uncertainty and some mixed messages from from lenders about their their reactions to this new program but

spk_0 no matter if you think it's a smart idea or not a smart idea or the way the program was was meant to be designed or what the trade organizations or lenders or bill polity asked for it's going to have an impact and that that's what I think is is is fascinating on this one so Sarah can you like give us a quick hit on like what we've covered and how the program is supposed to work.

spk_0 Yeah so you know the original was just like hey here's what it is and then we got some quick reaction so there's there's now a way to basically that our headline was you know FICO's offering a way to bypass the credit bureaus basically with a going straight to the consumer.

spk_0 Yeah I mean it's so the credit bureaus are so important right there's still the provider of data but we have this this old world where credits control by the credit bureaus and and resellers we have this this new world that's a little bit more focused on direct source apis and like we've seen that like direct direct source api business expansion happen in verification of employment verification of assets like as we move to a world where like

spk_0 direct source is the is the preferred path because technology in terms of LOS underwriting and and now we're at how AI improves processes like this this this makes complete sense.

spk_0 So I think that's what I think is the right way to do that is to get what has had me like just reading and talking to people is the response from the trade organizations so like I feel that like NBA's message like that that Bob shared was kind of like hey let's let's see let's see how this plays out so Bob Brooks said that it remains to be seen at this

spk_0 result materially lower cost NBA will monitor the implementation of this new program while continuing to call for reforms that support a better credit reporting system that promotes more competition efficiency and lower cost for consumers.

spk_0 Brooks said in a statement, our article that Flavia wrote goes on to share perspective from the CHLA said it is concerned that in a head-to-head matchup their Isaac might ultimately squeeze out vans score and the credit bureau model altogether.

spk_0 I'm excited that we have speakers from both of these organizations on stage at the mortgage banking summit next week because I don't know if I maybe they have more context that I have that I don't know if I entirely agree with with

spk_0 these statements like particularly the CHLA one and I'd love to talk to Scott and Taylor and like that team about this because I think that in a world where you shift from the the old world model of credit bureaus and resellers to a new world model of direct API's you actually open the box for alternative credit and that

spk_0 advantage score stands to be a winner in this move in the crazy part of that is you know who owns vans score epifax experience in a trans union so like there's a unique situation here I don't know if everybody watched the stock prices on these organizations last week but there was moments where fair Isaac FICO was trading up close to 25% I think it was an arrange of 17 to 25 I don't know exactly where it closed on Thursday the day after the announcement the credit bureau is all traded down

spk_0 3 4 5 5% which I feel like represents like what this news is like this news is a win per FICO it is a it's it's a battle punch for for the credit bureaus it's not a death blow and then there's like the rest of the vendor and technology system so like the credit resellers

spk_0 fortunately not many of the credit resellers are just credit resellers like the players in our industry have a deeper deeper product suites than that so the credit reselling part of their business is not the entire business so yeah this might be like a little gut punch to a revenue line or division inside of some of the businesses that sell that sell credit reports and the old world model

spk_0 but now we get to see if they can pivot to you know the alternative credit like in and and direct data feeds and in other parts of the the credit approval process for me this is a signal that we're we're crossing the chasm into a new world of more direct data direct API and and a world with more competition which arguably is a good thing so CHLA makes a point that I'm going to use that

spk_0 because there were words to be exact here the concern that head to head match up there as a fair Isaac might ultimately squeeze out manage score and the credit bureau model all together I think and I think this is the point that Bill Pulty made is that competition is a is a good thing and while ultimately it does not appear that this move by FICO by itself will substantially lower costs for all lenders though it may lower cost substantially for some lenders particularly lenders who do a lot more

spk_0 pre-approvals than they do closings and their attach rate or their close rates not as high overall it might not be that impactful on pricing and like a price for reporting go down substantially when you look at the performance based model but that doesn't mean this is where we land in the long run this is this is step one and I I really feel like you know we all try to read the tea leaves of director Bill Pulty's Twitter post X post I feel like I'm looking I'm bouncing back and forth to X and Twitter

spk_0 reading through Bill Pulty's tea leaves but I the tea leaves I read said all right thanks for making a move but this wasn't the move we asked for an entirety we'll see where we go

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spk_0 I think this is so important because obviously the reason that FICO is in the position that is is because of the government putting their thumb on the scale for

spk_0 FICO for how many years now it's not like I mean there's always been alternative scoring there's always been these other options even within FICO itself they could they could do it so

spk_0 really it's a in my opinion it's a government created problem and in some ways as far as like what they require and then what what they're you know it's it's not like there's a government mandate there but if fanny and

spk_0 fanny are only going to take one thing that it's the same thing I mean I mean I don't I government did give FICO air cover like a pretty positive business decision for for FICO's business model so like that's another element of this like it's like if I'm the CEO of FICO I'm not I'm not unhappy right now no right for sure it's an interesting one so we don't know how it's going to play out yet it's going to impact different lenders differently as it stands today but we're going to go deeper with lenders as well as some of the

spk_0 the trade association and executives and lobbyists next week at the mortgage banking summit here here in Dallas so I'm up for that one the time and couldn't be more optimal really people should look at the at the dates of our summits and be like okay what is going to happen the week

spk_0 before because so far that's been the housing economic summit the AI summit this one it's pretty crazy I think this is really good timing so we're going to have I'm going to be the moderator on a panel with Pete Mills from MBA and Rob Zimmer from C.

spk_0 H. L. A. and the topic is like the latest on the G. S. but really we've talked about is like what's happening in Washington that lenders need to know and even though we've met and I'm

spk_0 formulating questions we also said like listen we might be in the green room and going no no we got to talk about this because things change fast or 100% I mean I call Brenna last night way too late to be

spk_0 calling for the only way with like six ideas of things that need to be on the agenda for next week and we're not going to change the speakers but we are

spk_0 going to change the question flow to to hit the topics that are most important to our audience members because no one's no one's come to these events to learn about last

spk_0 months news or come about what's coming up. Well and luckily we are a news organization this is what we can do we can pivot and the focus of this event is always when Brenna and you when we talk about how we're

spk_0 going to do this it's always the focus on what is working who is winning what are the things people need to know to actually make their business better and go home and like make a real

spk_0 difference and so we're doing that with you know we just had the I summit but definitely some of that AI and tech stuff's coming through with maximizing profitability and AI. One thing I wanted to talk to you about was servicing so we talked about the you know the

spk_0 wholesale channel the other thing that we see is just the importance of servicing right now. Can we like pause for a second on the other big breaking this week J.

spk_0 Bray named CEO of a rocket mortgage like you want to talk about the importance of servicing rocket just buys Mr Cooper the deals substantially larger than initially announced and on close J

spk_0 becomes CEO of the whole part of the mortgage organization reporting to to ruin as CEO of rocket companies like all right J's got

spk_0 origination chops but he's the smartest guy in the room on servicing and like this if this doesn't signal something that I don't know what does you know it's funny that you brought that up because it's been such a crazy

spk_0 week of news I was like oh yeah that was just this week that was announced at that I get still the future article on our own page but it's an important one so like we're yeah we're doing the executive servicing

spk_0 round table here at the office the day before I'm sure some of that conversation and knowledgeable leakin onto the stage at the mortgage banking summit but yeah it's a signal of of where we're going and what people are

spk_0 interested in I'm about for it boy and I just think it's it just shows like you know I've been I've been watching this industry you've you've been

spk_0 watching this industry and and bought this company like we've seen a lot of cycles this is a really interesting one.

spk_0 Yep yeah so I know we're running tight on time here Sarah so there's one more thing I want to hit and it's you know it's kind of ties in the event travel we had this week with what we're doing next week and it's a it's something that came up in a conversation with my friend Renee Rodriguez yesterday is proximity is power proximity is powerful that's a message that's in support of how we take our often digital relationships from from email and zoom to shaking hands and then we're going to do it.

spk_0 Something that you know obviously I don't want this to sound self-serving supports the reason we go we go to events it's also the reason we go visit our clients and we go meet our colleagues and clients for for lunch and coffee the way people can relate to each other and talk to each other when they're face to face is entirely different than the way they relate to each other through social media through zoom call even on the phone and I think that

spk_0 if I you know if I want to get up on my like CEO soap box for a second I'm gonna you know sing the praises of proximity I'm feeling the power proximity as we have more of our team members here at it hw hq I'm feeling the power of proximity when you know been to you know two mortgage events this week I have two more events next week

spk_0 the relationships develop faster the learning happens faster the collaboration happens faster and at housing wire if we're going to win it's going to it's going to be through proximity and I think there's something to learn there for our audience I want to see our audience win I want to see the folks who invest their time and energy to learning from our from our newsroom and their peers and our events I want to see them win and I have a coaching message to our whole audience is proximity is power.

spk_0 I love that that's a great thing to end on I would just say it it mirrors what our audience is finding like what's valuable in their business is the relationship they have with their clients and it's the relationship that's going to build everything for going on and now you know we're seeing it like even within the industry is the relationships that are going to make the difference so love that I'm going to be at our event and then going to Nermla the National Risk Mortgage Lenders Association next week so we're living this out and I couldn't agree with you more huge so thank you for joining me.

spk_0 It's been so fun.

spk_0 Cheers. It's for having me.

spk_0 Thanks for listening to Housing Wire Daily. If you haven't already we'd love for you to take a minute to rate the show and leave a comment and make sure to tune in tomorrow for more news and insight.

spk_0 You

Clayton Collins on mortgage lenders’ priorities

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