July 2, 2024 • 20 mins
Through an engaging conversation with one of Fulcrum's partners, we explore the strategic maneuvers and adaptive strategies that not only helped them navigate the tumultuous COVID-19 era but also aided their expansion. This episode sheds light on the delicate balance of pricing and product mix when choosing wholesale lenders, highlighting the merits and limitations of United Wholesale Mortgage (UWM). Gain valuable insights into the decline of USDA loans and the lessons learned from rapid team growth.
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Speaker 1 (00:12):
This is the Kestrel Country Podcast, where we
discuss the people, places andevents all around Kestrel
Country.
A company yeah, well, actually,you know, what I don't think we
(00:43):
have done yet is really talk.
So so many people that I haveon I would say the majority of
people that come on the podcastare entrepreneurs to some degree
.
Sure, what did you do to startyour business?
How's it going?
All those kind of things aroundthis area.
(01:05):
And I don't think we've reallydone the Fulcrum story, so to
speak, a-team Fulcrum story.
Speaker 2 (01:14):
Would you be up for digging into?
Speaker 1 (01:15):
that let's do it.
Speaker 2 (01:18):
Good, bad and the ugly.
Speaker 1 (01:19):
Yeah, and that would segue into some of what you're
talking about, for sure.
Speaker 2 (01:35):
But yeah, just to talk a little bit about.
Speaker 1 (01:37):
I know we did do one at one point when you first,
when you made the switch kind offrom Synergy to Fulcrum, about
that difference between retaillending and brokerage.
But yeah, maybe you can jumpinto kind of how has how's that
transition gone to, kind of howhas how's that transition gone?
Maybe a little bit ofbackground about how Fulcrum
you're recent to it, but how howdid Fulcrum get started?
And those guys who you'repartnering with now.
Speaker 2 (01:53):
Yeah, absolutely.
Transition has gone really well.
So been with Fulcrum year andfive months now and the the the.
The most interesting part aboutfulcrum and what honestly
continued to have me dig deeperand deeper into the, the team
aspect, the ownership structureand and had me pursue ownership
(02:15):
in the corporation, was theuniqueness of having three, um,
like-minded people that all hadcomplementary strengths and and
weaknesses.
Uh, that wanted each other towin so badly.
Like each other not necessarilyme as an individual, but you
know the good of the other.
Speaker 1 (02:35):
yeah, that was really interesting and that was
something that you found whenyou started working with them.
What did, did the is Bryce andBrant.
Speaker 2 (02:47):
Bryce Brett and Brayden Bryce Brett and Brayden.
And Brandon, and Brandon.
Speaker 1 (02:53):
No, be ours.
Okay, how did the other threeguys?
Did they start it together?
Yeah, I guess how did that?
Speaker 2 (03:01):
Yeah, so Brayden Shaw was a college athlete athlete
brett stimpson is a 30-yearveteran in the mortgage industry
, the broker world, and brettwas working at another brokerage
down in utah.
Braden had just graduatedcollege and was looking for his
you know first kind of gig, um,and brett said to him hey, you
(03:22):
want to.
You know, come learn themortgage world with me.
This was right around 2019,going into 2020, a few months in
, brett said, hey, it doesn'tlook like this brokerage is
going to be the right fit for uslong-term with what was going
on.
So you want to go start our own?
And Braden said, yeah, sure, sothey started Fulcrum in in 2019
.
Okay, right before everythingwent nuts, right before
(03:46):
everything went crazy,especially in the lending real
estate world.
Yeah, and what was unique isthat they basically propelled
the external demands from COVIDinto what is now the largest
mortgage broker in Idaho, numberone producing Idaho broker.
We have 17% market share out ofall lenders in Idaho and it's
(04:08):
thriving.
That's huge.
Yeah, it's been prettyimpressive.
Speaker 1 (04:11):
Yeah, so they started it 2019.
And so Braden was new to thebusiness.
Then, I know, and was it justthe two of them?
It was Okay, every hire was andwas that, was that structure or
maybe not structure, but that,um, what you found, the
(04:32):
complimentary individuals wasthat kind of there from the
start with those two guys, andthen they've added from there.
Speaker 2 (04:38):
It.
Um, I would say that they'reboth visionaries.
They have the unique talent ofcasting a vision and running to
it and delegating if reallyeffectively along the way, um to
other people that are driven bypursuing a big vision.
And this is one of the mostunique transitions that we're
actually making in the businessright now is we're going into,
(04:59):
you know, your our fourth fullyear in operations, went from
zero to half a billion inproduction a year, based upon a
group of people coming togetherand all wearing 100 hats at once
pursuing that common vision.
And now what we're doing isactually having to bring some
structure a slow down to speedup.
(05:21):
Smooth is fast, high speed, lowdrag, whatever you want to call
it approach to internalorganizational structure and how
that allows you to then scalefurther.
That's what's happening as wespeak.
It's pretty amazing.
Speaker 1 (05:36):
Yeah, so you say that number again Half a billion.
Half a billion.
So how many lending officers?
Speaker 2 (05:47):
are there 37.
Loan officers?
Speaker 1 (05:50):
Mortgage brokers?
Yep, I guess, are you stillcalled a loan officer?
Loan officer is a technicalterm.
It is From the federal, whetheryou're in a brokerage or at a
bank or retail lender.
Okay, so how many lendingofficers, loan officers?
37.
37.
Speaker 2 (06:09):
37.
Yeah, how many total people inthe organization?
83.
Speaker 1 (06:12):
Okay, yeah, that's a lot of growth in four years.
A ton of growth, obviously, notjust the financial numbers, the
total production, but in peopletoo.
Absolutely.
Speaker 2 (06:22):
Yeah, we're in 13 or 14 states now, so it's it's
definitely multiplying on itself.
Speaker 1 (06:29):
You're lending in 13 or 14 states.
Yep, how many of those statesdo you have offices or people in
?
Eight?
Okay, wow, yeah, that's amazing, hats off to them.
And is that relatively recent?
Like how much of the?
I guess um?
What's the?
What are the growth trajectory?
(06:50):
Look like um in that businesshistoric number.
Speaker 2 (06:54):
I wish I had my numbers in front of me, but
historically we've doubled everyyear okay, so it's been a
fairly steady absolutely steadygrowth.
Steady growth, but that'sexplosive.
Speaker 1 (07:05):
Steady explosive, right yeah, consistently
explosive growth.
Yeah, this year it's not likeit was fairly flat and then went
crazy, but explosive.
Every year.
Speaker 2 (07:16):
Yeah, from an organizational level that's
unsustainable, but it imitates,it parallels, I should say, the
way that my team growth here onthe Palouse was A doubling of
every year and then kind of thisrefining period, which is where
we're at right now.
Last year 2023, we did a totalof 69 million.
(07:38):
The year prior we did 70.
So we're basically flat yearover year.
That happened because we werefocusing on the production of
systems and support andstructure, with consistent
expectations and execution,which every business, I think,
that grows rapidly has to gothrough this year of maturing,
(08:00):
where, if you don't do that,what you're setting yourself up
for is a foundation on sand.
Something's going to happen ashaking in the market, you know,
a rash of attrition within yourworkforce that'll take you out.
Speaker 1 (08:12):
Yeah, well, I mean, we did see a a major shaking in
the market, right I mean.
So for you to be flat overessentially flat over that
timeframe is pretty amazing whenwe've seen interest rates go up
and you know total sales godown for sure.
I'm sure refis are lower aswell.
(08:34):
What's a refi?
Speaker 2 (08:35):
Yeah, yeah, yeah exactly so that's pretty
impressive.
Thank you, it hats off to theteam here in Moscow Josiah
Rosendahl and David Schultz,denise Marissa without great
people you can't do that.
But yeah, as far as the journeythat Fulcrum's on and where
we're heading, we're notnecessarily chasing down to be
(08:56):
the biggest brokers in thenation.
Just anybody with a pulse and alicense, come and originate
here and we'll be satisfied.
What we're looking to do isreally set the bar of this next
generation of originatingmortgages, residential loans.
How are we leveraging tech?
How are our people sourcing thebusiness growing towards their
individual goals?
And because we're still nimble,we can make pivots really
(09:20):
quickly without massiveinvestment and potential points
of failure.
And so Brett is thebehind-the-scenes Wizard of Oz
guy that's making surecompliance, finance, hr is taken
care of.
Brayden is quite literally thevisionary working on that
cutting-edge stuff.
Bryce is an absolute unit,taking on a $250 million a year
(09:43):
team in production, and my roleas the COO is really you know,
sales operations, supportstructure, team, that stuff
Gotcha.
Speaker 1 (09:54):
Yeah, that's exciting man.
It's been fun.
Yeah, how is that, now thatyou've been in it a little while
?
I think last time we talkedabout it you were still fairly
fresh in the brokerage world.
Yeah, what kind of advantagedoes that give you and how's
that been working with?
You know, like UWM has got tobe by far your biggest.
(10:17):
Yeah, you home a partner lender, I don't know, wholesale lender
.
Speaker 2 (10:23):
Yeah, what a learning curve.
There was a detox period that Ihad to go through of the retail
model that I had grown up in,essentially how I produce a
mortgage, the assembly line thathad to be built around a retail
model.
Having to detox from some ofthat because wholesalers are
(10:47):
really good at a few things andevery different wholesaler can
be different, have differentstrengths, and so learning to
build an assembly line that isstill as efficient, if not
faster a lot faster in our caseso I can deliver the same
execution for my referralpartners and the clients that
are expecting us to get them inthe home.
Nobody's leaving, you know, ina moving trucks for a week.
But but even more so is how dowe make sure that we're doing
what's right for the consumer?
(11:17):
And UWM has by far hands downthe best systems, process,
operations, speed to close outof anybody that we use.
They carry about 60% of ourvolume every single month
because of that.
But it's just a different, it'svery entrepreneurial.
I'll say it that way.
I'm not selling, I'm not paidto sell a company's money, I'm
paid to source the best optionfor the client's goal, and
that's been a fun addition tothe skillset that was there.
Speaker 1 (11:38):
How many different lenders do you have that are as
options, and how different arethey?
Does that make?
Speaker 2 (11:43):
sense.
Does that make sense?
Yeah, so 70 plus differentwholesale lenders Okay, and to
get signed up with them is anapplication.
The owners have to fill out acredit app and do a background
check and you're basicallyeligible to use them.
Wholesale lending isessentially broken down like
this Rich guys or gals get a bigline of credit, they get a
(12:06):
license to originate or to sellloans directly to Fannie,
freddie and HUD, and then theygo out and produce a rate sheet
that is based upon theinvestor's goals of their
returns.
Some want to do a ton of volumewith very thin margins, meaning
low rates, and others want to bevery good at a few things and
make the biggest return theypossibly can.
(12:26):
But every single one of themhas to have an interface with
the broker underwriterscompliance.
You know process.
So it's really just a bigoperational house with a large
line of credit that they'refunding these loans off of.
So I would say that a lot ofthese wholesalers probably are
going to go away again andyou'll start to see what you're
(12:47):
seeing in the in regionalbanking spaces bigger, better
wholesale lenders with bettertechnology and a scalability
will start to absorb marketshare and push the bad
performers out, like you and Iright, we could probably go get
a line of credit for I don'tknow, 15, 20 million and just
start to sell that money tothese lenders, these brokers.
(13:09):
You and I would have tounderwrite the loans and do
compliance and all that stuff.
We could be good or not good atother things.
So I would say that there'sprobably 10 really, really solid
for conventional FHA, va, usda.
Speaker 1 (13:22):
And what I guess some of what I'm asking is what you
know.
It seems like one of theadvantages of working with a
broker is the optionality right.
That's at least kind of howit's marketed to a degree.
Sure, not necessarily that youguys market it that way.
It's mostly about speed,process, all that.
But how different are all thedifferent options that are out
(13:46):
there?
Are all the different optionsthat are out there?
I guess maybe one way to askthe question would be you said
you had about 60% of your volumemonth over month is UWM.
So the other 40%, what are someof the reasons why you might go
with another lender?
What are the differencesbetween what they're offering?
And then I guess the questionbehind that question too is how
(14:10):
has that been different fromretail or from a bank where
you're really at one lenderright?
How important is it to havethese other options and what
options are they giving you?
Speaker 2 (14:20):
Yeah, very, very good question.
A lot of it starts with pricingand product mix.
So one wholesaler, let's sayUWM, isn't the cheapest.
They know they're not thecheapest.
They've never.
Well, since they transitionedaway from a game on which is
basically we're going to buymarket share by lowering our
rates substantially, since theytransitioned away from that,
they have focused on technologyand delivery.
(14:42):
So I know exactly what toexpect every time.
But you'd use another wholesalelender for if you have a
borrower that's extremely pricesensitive and is looking for hey
, I'm coming to you as a brokerto get me the best interest rate
possible.
Okay, cool, I have 70 differentoptions.
Speaker 1 (14:57):
And that will, and those will probably change
Absolutely Like day to day.
Speaker 2 (15:01):
Even Yep One might be cheaper than another Okay, run
incentives and product mixes,the other one.
We're on incentives and productmixes the other one.
So in our market we'reprimarily a conventional market,
but we also have investors, wehave veterans, we have zero down
families that are looking forno down payment options, et
cetera.
And UWM isn't the best ateverything.
(15:21):
They're the best at a fewthings.
So that's why most of the time,we do a few things, and that's
primarily with UWM.
But let's say you're lookingfor an investment loan where you
as a business owner, um, rightoff all your tax, all of your
deductions, you show very littleincome but you have a ton of
cashflow Great.
Well, we have a great lenderwith great pricing, with great
(15:43):
underwriting delivery that doesbank statement loans for
businesses.
Gotcha, that's another option.
A DSCR right when you're justlooking at the performance of
the property and not you andyour income at all.
Great, we have another optionfor that.
So product mix is the secondreason why you'd see that
delineation.
Speaker 1 (16:00):
Curious about one.
To hit on something you justsaid about in our market we are
conventional, conventional heavy.
Why is that, like?
What do you mean by that andwhat is the reason for that?
Is it the type of employment,the type of housing we have here
?
Speaker 2 (16:18):
Yeah, I'd say it's those two things.
It's the demographic startswith employment base two
universities, two hospitals, selI almost said Emsi, but
Lightcast right.
Primarily, we are awhite-collar, highly educated
area within a 20-minute radiusof Moscow.
Of course, you have bedroomcommunities that have different
(16:38):
employment mix, but that'sprobably that's primarily why
educated middle upper middleclass.
Speaker 1 (16:45):
That's, that's why, and not a lot.
There are veterans, of course,of course, but not a huge
veteran population that youmight have in near mountain home
or whatever.
Yeah, okay, that makes sense.
Yeah, what about as a rabbittrail?
But sure, usda.
I haven't heard usda loans.
That all of a sudden, just theemployment kind of what you're
(17:09):
talking about, the demographicshere made me think about it.
What's up?
Are usda loans gone?
I mean, essentially, is it whathappened?
Usda loan?
Speaker 2 (17:17):
usda kind of fell off the map.
Uh 20 in 2019.
They're still there.
Actually, at one point they didrun out of money for a little
bit, but then they came back.
But okay, the us department ofagriculture created a home loan
product that was designed toserve rural and agricultural
communities.
The problem is is that it's thedepartment of agriculture and
(17:38):
they still have to underwritethe loan.
So even in the retail worldwhere you have an underwriter
in-house, they still have tounderwrite the loan and then
send that package to the USDAfor the final stamp of approval.
Well, that imploded during COVID.
And USDA also is a bigchallenge because their
guidelines are the mostrestrictive on debt to income,
(18:00):
and so, when we see this growingdelta between average median
household income and home prices, to fit within a debt to income
ratio that is extremelyrestrictive is a non-starter.
So what you're seeing isespecially in Idaho, which, by
the way, shout out to IdahoHousing and Finance Association.
They are known as one of thepremier housing agencies in the
(18:20):
nation.
Other states model their downpayment assistance and closing
cost assistance programs fromwhat Idaho Housing has their
standards, which is phenomenal.
So you're seeing those agencies.
Speaker 1 (18:34):
There's also just other options for people that
have taken that away.
That's interesting.
Yeah, I feel like when I firstgot into real estate, we were
that away.
That's interesting.
Yeah, I feel like when I firstgot into real estate, we were
doing quite a few USDA loans andjust something that I hadn't
really heard about much lately.
Speaker 2 (18:45):
That's income.
Speaker 1 (18:46):
Interesting yeah, pretty unique.
So you guys have grown veryquickly.
You obviously did that withyour team before joining Fulcrum
.
What are some things youlearned about growing that
quickly, whether it's how tohire the right people or what
systems to put in place.
What are some lessons that youcan take away from the last
(19:08):
couple years?
Speaker 2 (19:10):
the laundry list of of, uh, humbling experiences
that have been here could takeup hours.
Um, I would say one you canhire the best people, but if you
don't have a great culture, ifyou don't have the pursuit, the
consistent pursuit of a commonvision and culture, um, you can
hire the best people with thebest wages and still fail.
(19:32):
So you have to know what you'reafter, how to communicate it
consistently, and that is evenit's most critical to do when
you're in the good times,because when the hard times come
, if there's not that foundationto fall back on, it's almost
like hard times come and thingsshake and you fall to the level
(19:52):
of your systems.
We hear that all the time, butreally what you're doing is
you're falling to the level ofthe trust that your people have
in the vision and the culturethat you've created.
So that's number one, um.
Number two is nobody can readyour mind, and if you think
you're a mind reader, you'rewrong.
Speaker 1 (20:09):
That's communicate, communicate communicate always
um.
Speaker 2 (20:16):
And lastly, especially in our industry where
we see a phone call as apotential commission check,
right Like at times that's thething that gets you through
being absolutely inundated.
There's a need for emotionalmaturity in the lending and real
(20:38):
estate world, where things arevery fast and other people are
at high emotion, a highemotional state with a lot.
This is the Kestrel Country Podcast, where we
discuss the people, places andevents all around Kestrel
Country.
A company yeah, well, actually,you know, what I don't think we
(00:43):
have done yet is really talk.
So so many people that I haveon I would say the majority of
people that come on the podcastare entrepreneurs to some degree
.
Sure, what did you do to startyour business?
How's it going?
All those kind of things aroundthis area.
(01:05):
And I don't think we've reallydone the Fulcrum story, so to
speak, a-team Fulcrum story.
Speaker 2 (01:14):
Would you be up for digging into?
Speaker 1 (01:15):
that let's do it.
Speaker 2 (01:18):
Good, bad and the ugly.
Speaker 1 (01:19):
Yeah, and that would segue into some of what you're
talking about, for sure.
Speaker 2 (01:35):
But yeah, just to talk a little bit about.
Speaker 1 (01:37):
I know we did do one at one point when you first,
when you made the switch kind offrom Synergy to Fulcrum, about
that difference between retaillending and brokerage.
But yeah, maybe you can jumpinto kind of how has how's that
transition gone to, kind of howhas how's that transition gone?
Maybe a little bit ofbackground about how Fulcrum
you're recent to it, but how howdid Fulcrum get started?
And those guys who you'repartnering with now.
Speaker 2 (01:53):
Yeah, absolutely.
Transition has gone really well.
So been with Fulcrum year andfive months now and the the the.
The most interesting part aboutfulcrum and what honestly
continued to have me dig deeperand deeper into the, the team
aspect, the ownership structureand and had me pursue ownership
(02:15):
in the corporation, was theuniqueness of having three, um,
like-minded people that all hadcomplementary strengths and and
weaknesses.
Uh, that wanted each other towin so badly.
Like each other not necessarilyme as an individual, but you
know the good of the other.
Speaker 1 (02:35):
yeah, that was really interesting and that was
something that you found whenyou started working with them.
What did, did the is Bryce andBrant.
Speaker 2 (02:47):
Bryce Brett and Brayden Bryce Brett and Brayden.
And Brandon, and Brandon.
Speaker 1 (02:53):
No, be ours.
Okay, how did the other threeguys?
Did they start it together?
Yeah, I guess how did that?
Speaker 2 (03:01):
Yeah, so Brayden Shaw was a college athlete athlete
brett stimpson is a 30-yearveteran in the mortgage industry
, the broker world, and brettwas working at another brokerage
down in utah.
Braden had just graduatedcollege and was looking for his
you know first kind of gig, um,and brett said to him hey, you
(03:22):
want to.
You know, come learn themortgage world with me.
This was right around 2019,going into 2020, a few months in
, brett said, hey, it doesn'tlook like this brokerage is
going to be the right fit for uslong-term with what was going
on.
So you want to go start our own?
And Braden said, yeah, sure, sothey started Fulcrum in in 2019
.
Okay, right before everythingwent nuts, right before
(03:46):
everything went crazy,especially in the lending real
estate world.
Yeah, and what was unique isthat they basically propelled
the external demands from COVIDinto what is now the largest
mortgage broker in Idaho, numberone producing Idaho broker.
We have 17% market share out ofall lenders in Idaho and it's
(04:08):
thriving.
That's huge.
Yeah, it's been prettyimpressive.
Speaker 1 (04:11):
Yeah, so they started it 2019.
And so Braden was new to thebusiness.
Then, I know, and was it justthe two of them?
It was Okay, every hire was andwas that, was that structure or
maybe not structure, but that,um, what you found, the
(04:32):
complimentary individuals wasthat kind of there from the
start with those two guys, andthen they've added from there.
Speaker 2 (04:38):
It.
Um, I would say that they'reboth visionaries.
They have the unique talent ofcasting a vision and running to
it and delegating if reallyeffectively along the way, um to
other people that are driven bypursuing a big vision.
And this is one of the mostunique transitions that we're
actually making in the businessright now is we're going into,
(04:59):
you know, your our fourth fullyear in operations, went from
zero to half a billion inproduction a year, based upon a
group of people coming togetherand all wearing 100 hats at once
pursuing that common vision.
And now what we're doing isactually having to bring some
structure a slow down to speedup.
(05:21):
Smooth is fast, high speed, lowdrag, whatever you want to call
it approach to internalorganizational structure and how
that allows you to then scalefurther.
That's what's happening as wespeak.
It's pretty amazing.
Speaker 1 (05:36):
Yeah, so you say that number again Half a billion.
Half a billion.
So how many lending officers?
Speaker 2 (05:47):
are there 37.
Loan officers?
Speaker 1 (05:50):
Mortgage brokers?
Yep, I guess, are you stillcalled a loan officer?
Loan officer is a technicalterm.
It is From the federal, whetheryou're in a brokerage or at a
bank or retail lender.
Okay, so how many lendingofficers, loan officers?
37.
37.
Speaker 2 (06:09):
37.
Yeah, how many total people inthe organization?
83.
Speaker 1 (06:12):
Okay, yeah, that's a lot of growth in four years.
A ton of growth, obviously, notjust the financial numbers, the
total production, but in peopletoo.
Absolutely.
Speaker 2 (06:22):
Yeah, we're in 13 or 14 states now, so it's it's
definitely multiplying on itself.
Speaker 1 (06:29):
You're lending in 13 or 14 states.
Yep, how many of those statesdo you have offices or people in
?
Eight?
Okay, wow, yeah, that's amazing, hats off to them.
And is that relatively recent?
Like how much of the?
I guess um?
What's the?
What are the growth trajectory?
(06:50):
Look like um in that businesshistoric number.
Speaker 2 (06:54):
I wish I had my numbers in front of me, but
historically we've doubled everyyear okay, so it's been a
fairly steady absolutely steadygrowth.
Steady growth, but that'sexplosive.
Speaker 1 (07:05):
Steady explosive, right yeah, consistently
explosive growth.
Yeah, this year it's not likeit was fairly flat and then went
crazy, but explosive.
Every year.
Speaker 2 (07:16):
Yeah, from an organizational level that's
unsustainable, but it imitates,it parallels, I should say, the
way that my team growth here onthe Palouse was A doubling of
every year and then kind of thisrefining period, which is where
we're at right now.
Last year 2023, we did a totalof 69 million.
(07:38):
The year prior we did 70.
So we're basically flat yearover year.
That happened because we werefocusing on the production of
systems and support andstructure, with consistent
expectations and execution,which every business, I think,
that grows rapidly has to gothrough this year of maturing,
(08:00):
where, if you don't do that,what you're setting yourself up
for is a foundation on sand.
Something's going to happen ashaking in the market, you know,
a rash of attrition within yourworkforce that'll take you out.
Speaker 1 (08:12):
Yeah, well, I mean, we did see a a major shaking in
the market, right I mean.
So for you to be flat overessentially flat over that
timeframe is pretty amazing whenwe've seen interest rates go up
and you know total sales godown for sure.
I'm sure refis are lower aswell.
(08:34):
What's a refi?
Speaker 2 (08:35):
Yeah, yeah, yeah exactly so that's pretty
impressive.
Thank you, it hats off to theteam here in Moscow Josiah
Rosendahl and David Schultz,denise Marissa without great
people you can't do that.
But yeah, as far as the journeythat Fulcrum's on and where
we're heading, we're notnecessarily chasing down to be
(08:56):
the biggest brokers in thenation.
Just anybody with a pulse and alicense, come and originate
here and we'll be satisfied.
What we're looking to do isreally set the bar of this next
generation of originatingmortgages, residential loans.
How are we leveraging tech?
How are our people sourcing thebusiness growing towards their
individual goals?
And because we're still nimble,we can make pivots really
(09:20):
quickly without massiveinvestment and potential points
of failure.
And so Brett is thebehind-the-scenes Wizard of Oz
guy that's making surecompliance, finance, hr is taken
care of.
Brayden is quite literally thevisionary working on that
cutting-edge stuff.
Bryce is an absolute unit,taking on a $250 million a year
(09:43):
team in production, and my roleas the COO is really you know,
sales operations, supportstructure, team, that stuff
Gotcha.
Speaker 1 (09:54):
Yeah, that's exciting man.
It's been fun.
Yeah, how is that, now thatyou've been in it a little while
?
I think last time we talkedabout it you were still fairly
fresh in the brokerage world.
Yeah, what kind of advantagedoes that give you and how's
that been working with?
You know, like UWM has got tobe by far your biggest.
(10:17):
Yeah, you home a partner lender, I don't know, wholesale lender
.
Speaker 2 (10:23):
Yeah, what a learning curve.
There was a detox period that Ihad to go through of the retail
model that I had grown up in,essentially how I produce a
mortgage, the assembly line thathad to be built around a retail
model.
Having to detox from some ofthat because wholesalers are
(10:47):
really good at a few things andevery different wholesaler can
be different, have differentstrengths, and so learning to
build an assembly line that isstill as efficient, if not
faster a lot faster in our caseso I can deliver the same
execution for my referralpartners and the clients that
are expecting us to get them inthe home.
Nobody's leaving, you know, ina moving trucks for a week.
But but even more so is how dowe make sure that we're doing
what's right for the consumer?
(11:17):
And UWM has by far hands downthe best systems, process,
operations, speed to close outof anybody that we use.
They carry about 60% of ourvolume every single month
because of that.
But it's just a different, it'svery entrepreneurial.
I'll say it that way.
I'm not selling, I'm not paidto sell a company's money, I'm
paid to source the best optionfor the client's goal, and
that's been a fun addition tothe skillset that was there.
Speaker 1 (11:38):
How many different lenders do you have that are as
options, and how different arethey?
Does that make?
Speaker 2 (11:43):
sense.
Does that make sense?
Yeah, so 70 plus differentwholesale lenders Okay, and to
get signed up with them is anapplication.
The owners have to fill out acredit app and do a background
check and you're basicallyeligible to use them.
Wholesale lending isessentially broken down like
this Rich guys or gals get a bigline of credit, they get a
(12:06):
license to originate or to sellloans directly to Fannie,
freddie and HUD, and then theygo out and produce a rate sheet
that is based upon theinvestor's goals of their
returns.
Some want to do a ton of volumewith very thin margins, meaning
low rates, and others want to bevery good at a few things and
make the biggest return theypossibly can.
(12:26):
But every single one of themhas to have an interface with
the broker underwriterscompliance.
You know process.
So it's really just a bigoperational house with a large
line of credit that they'refunding these loans off of.
So I would say that a lot ofthese wholesalers probably are
going to go away again andyou'll start to see what you're
(12:47):
seeing in the in regionalbanking spaces bigger, better
wholesale lenders with bettertechnology and a scalability
will start to absorb marketshare and push the bad
performers out, like you and Iright, we could probably go get
a line of credit for I don'tknow, 15, 20 million and just
start to sell that money tothese lenders, these brokers.
(13:09):
You and I would have tounderwrite the loans and do
compliance and all that stuff.
We could be good or not good atother things.
So I would say that there'sprobably 10 really, really solid
for conventional FHA, va, usda.
Speaker 1 (13:22):
And what I guess some of what I'm asking is what you
know.
It seems like one of theadvantages of working with a
broker is the optionality right.
That's at least kind of howit's marketed to a degree.
Sure, not necessarily that youguys market it that way.
It's mostly about speed,process, all that.
But how different are all thedifferent options that are out
(13:46):
there?
Are all the different optionsthat are out there?
I guess maybe one way to askthe question would be you said
you had about 60% of your volumemonth over month is UWM.
So the other 40%, what are someof the reasons why you might go
with another lender?
What are the differencesbetween what they're offering?
And then I guess the questionbehind that question too is how
(14:10):
has that been different fromretail or from a bank where
you're really at one lenderright?
How important is it to havethese other options and what
options are they giving you?
Speaker 2 (14:20):
Yeah, very, very good question.
A lot of it starts with pricingand product mix.
So one wholesaler, let's sayUWM, isn't the cheapest.
They know they're not thecheapest.
They've never.
Well, since they transitionedaway from a game on which is
basically we're going to buymarket share by lowering our
rates substantially, since theytransitioned away from that,
they have focused on technologyand delivery.
(14:42):
So I know exactly what toexpect every time.
But you'd use another wholesalelender for if you have a
borrower that's extremely pricesensitive and is looking for hey
, I'm coming to you as a brokerto get me the best interest rate
possible.
Okay, cool, I have 70 differentoptions.
Speaker 1 (14:57):
And that will, and those will probably change
Absolutely Like day to day.
Speaker 2 (15:01):
Even Yep One might be cheaper than another Okay, run
incentives and product mixes,the other one.
We're on incentives and productmixes the other one.
So in our market we'reprimarily a conventional market,
but we also have investors, wehave veterans, we have zero down
families that are looking forno down payment options, et
cetera.
And UWM isn't the best ateverything.
(15:21):
They're the best at a fewthings.
So that's why most of the time,we do a few things, and that's
primarily with UWM.
But let's say you're lookingfor an investment loan where you
as a business owner, um, rightoff all your tax, all of your
deductions, you show very littleincome but you have a ton of
cashflow Great.
Well, we have a great lenderwith great pricing, with great
(15:43):
underwriting delivery that doesbank statement loans for
businesses.
Gotcha, that's another option.
A DSCR right when you're justlooking at the performance of
the property and not you andyour income at all.
Great, we have another optionfor that.
So product mix is the secondreason why you'd see that
delineation.
Speaker 1 (16:00):
Curious about one.
To hit on something you justsaid about in our market we are
conventional, conventional heavy.
Why is that, like?
What do you mean by that andwhat is the reason for that?
Is it the type of employment,the type of housing we have here
?
Speaker 2 (16:18):
Yeah, I'd say it's those two things.
It's the demographic startswith employment base two
universities, two hospitals, selI almost said Emsi, but
Lightcast right.
Primarily, we are awhite-collar, highly educated
area within a 20-minute radiusof Moscow.
Of course, you have bedroomcommunities that have different
(16:38):
employment mix, but that'sprobably that's primarily why
educated middle upper middleclass.
Speaker 1 (16:45):
That's, that's why, and not a lot.
There are veterans, of course,of course, but not a huge
veteran population that youmight have in near mountain home
or whatever.
Yeah, okay, that makes sense.
Yeah, what about as a rabbittrail?
But sure, usda.
I haven't heard usda loans.
That all of a sudden, just theemployment kind of what you're
(17:09):
talking about, the demographicshere made me think about it.
What's up?
Are usda loans gone?
I mean, essentially, is it whathappened?
Usda loan?
Speaker 2 (17:17):
usda kind of fell off the map.
Uh 20 in 2019.
They're still there.
Actually, at one point they didrun out of money for a little
bit, but then they came back.
But okay, the us department ofagriculture created a home loan
product that was designed toserve rural and agricultural
communities.
The problem is is that it's thedepartment of agriculture and
(17:38):
they still have to underwritethe loan.
So even in the retail worldwhere you have an underwriter
in-house, they still have tounderwrite the loan and then
send that package to the USDAfor the final stamp of approval.
Well, that imploded during COVID.
And USDA also is a bigchallenge because their
guidelines are the mostrestrictive on debt to income,
(18:00):
and so, when we see this growingdelta between average median
household income and home prices, to fit within a debt to income
ratio that is extremelyrestrictive is a non-starter.
So what you're seeing isespecially in Idaho, which, by
the way, shout out to IdahoHousing and Finance Association.
They are known as one of thepremier housing agencies in the
(18:20):
nation.
Other states model their downpayment assistance and closing
cost assistance programs fromwhat Idaho Housing has their
standards, which is phenomenal.
So you're seeing those agencies.
Speaker 1 (18:34):
There's also just other options for people that
have taken that away.
That's interesting.
Yeah, I feel like when I firstgot into real estate, we were
that away.
That's interesting.
Yeah, I feel like when I firstgot into real estate, we were
doing quite a few USDA loans andjust something that I hadn't
really heard about much lately.
Speaker 2 (18:45):
That's income.
Speaker 1 (18:46):
Interesting yeah, pretty unique.
So you guys have grown veryquickly.
You obviously did that withyour team before joining Fulcrum
.
What are some things youlearned about growing that
quickly, whether it's how tohire the right people or what
systems to put in place.
What are some lessons that youcan take away from the last
(19:08):
couple years?
Speaker 2 (19:10):
the laundry list of of, uh, humbling experiences
that have been here could takeup hours.
Um, I would say one you canhire the best people, but if you
don't have a great culture, ifyou don't have the pursuit, the
consistent pursuit of a commonvision and culture, um, you can
hire the best people with thebest wages and still fail.
(19:32):
So you have to know what you'reafter, how to communicate it
consistently, and that is evenit's most critical to do when
you're in the good times,because when the hard times come
, if there's not that foundationto fall back on, it's almost
like hard times come and thingsshake and you fall to the level
(19:52):
of your systems.
We hear that all the time, butreally what you're doing is
you're falling to the level ofthe trust that your people have
in the vision and the culturethat you've created.
So that's number one, um.
Number two is nobody can readyour mind, and if you think
you're a mind reader, you'rewrong.
Speaker 1 (20:09):
That's communicate, communicate communicate always
um.
Speaker 2 (20:16):
And lastly, especially in our industry where
we see a phone call as apotential commission check,
right Like at times that's thething that gets you through
being absolutely inundated.
There's a need for emotionalmaturity in the lending and real
(20:38):
estate world, where things arevery fast and other people are
at high emotion, a highemotional state with a lot.
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