00:00We have been responding to policy, positive and negative,
00:04rates, positive, negative, an economic environment
00:08that has been all over the place.
00:09All over the place.
00:10And we have survived.
00:18Welcome to Powerhouse,
00:20where we talk to the biggest names in housing
00:23and ask them about their strategy for growth.
00:25I'm Diego Sanchez, president of HousingWire,
00:29and we are recording in person, which is great.
00:32Love in person from our Housing Economics Summit.
00:37And this person needs no introduction,
00:39but I'll introduce you.
00:40This is Dave Licken,
00:4250 plus year veteran in the mortgage industry.
00:46You've bought and sold several companies.
00:49You advise some of the biggest leaders,
00:52biggest names in the mortgage industry.
00:55I'm really honored to have you on the show today.
00:57Diego, it's good to be here.
00:58And I love this event that we're here around.
01:00This Economic Summit that you guys are putting on here
01:03is so rich in content,
01:06and the context of where we're living in right now,
01:08the times that we're in, this is just outstanding.
01:11Yeah.
01:12So what are your takeaways so far today?
01:15What are you thinking?
01:16Well, I think the stress on data,
01:19but it's so important that we get focused
01:21and everyone focusing on data.
01:22We get opinions.
01:24We hear a lot of things on podcasts.
01:26I do a podcast.
01:27And you can get caught up in rumors,
01:31which you think you've done your fact checking on.
01:33And then you find out when you come to an event like this,
01:36that maybe not so much.
01:38I mean, I'm going to be doubling down a lot more
01:40on the fact checking that I do,
01:42that I'll put on my podcast,
01:45because it's really coming down to data.
01:46And there's some data that came out of here
01:48that is encouraging for housing.
01:50I think for mortgage lenders
01:51and the housing market generally,
01:53we've got the potential for some good days ahead.
01:55Yeah, you know, it was interesting.
01:57The 6% sort of magic mortgage rate
02:02that Logan was talking about,
02:04that Mike Simonson was talking about,
02:06and Mike actually put up a pretty interesting chart
02:08about why 6% is maybe a magic rate.
02:12That really caught my attention
02:14and gave me a little bit of optimism as well,
02:18because I think we could head there.
02:19We could head in that direction.
02:21Yeah, I think it's very possible.
02:23And then the question that was poised,
02:25I think Brian did it.
02:29Brian Hale said, are you ready?
02:31Are you ready?
02:32And what does that mean?
02:33Because we are an industry
02:35that has been caught in boom-bust cycles.
02:38And the boom kills us
02:40because we're too slow on the cutting back,
02:42and we're not fast enough on the gearing up
02:45when the boom happens.
02:46So when the bust happens, we need to cut,
02:49and we don't cut fast enough.
02:50The boom happens, we're on our heels
02:53and we're trying to respond.
02:53Yeah, wouldn't it be great, though,
02:55if we could be less of an accordion?
02:57Yeah, it would be nice.
02:59I mean, in a perfect world, yeah.
03:00But it is what it is.
03:02But I think what some of the things
03:04that are going on right now,
03:05whether you agree with this administration or not,
03:07is setting the stage for, I think,
03:09what could play out to be less of the accordion effect.
03:13And I think that's important,
03:16that we realize if we could just even out
03:18some of those things.
03:19I look at the Fed policies
03:20and that I haven't always agreed with.
03:23And I like, for right now,
03:24holding rates as high as they are.
03:25I mean, I'd like to stimulate the economy.
03:27It's to help stimulate housing a bit more.
03:28I know they have their reasons for that.
03:30So a lot more is gonna be played out, Diego, in that.
03:33But yeah, how nice would it be to have that?
03:36But I'm not holding my breath.
03:37I've been in it for 51 years.
03:39I don't, I think we've been dealing
03:40with accordion effect for a long, long time.
03:42Not anticipating that changing.
03:44That's fair.
03:45And so you are a very prolific content creator
03:50You've got a podcast, you do a lot of television.
03:55Why?
03:56Why do you love it and how does it impact your business?
04:00If you would have told me in high school
04:02that I would be doing this,
04:04I'd have said, there is no way.
04:06I had a phobia of speaking in front of people.
04:09And there was a particular event that happened
04:12where I got asked to speak at an event
04:14and they didn't tell me in advance.
04:16So you're sitting in an audience at a conference
04:18with 500 people there.
04:20And they start introducing me,
04:21but they didn't start with my name.
04:23They said, there's a guy here that,
04:25and they described me, kind of gave a bad bio.
04:27And then they said, I'm going,
04:28I can't wait to hear the speaker.
04:30It sounds a lot like me.
04:31I want to hear what this guy had to say.
04:32And they said, Dave Licken, would you come up?
04:36So you got put on the spot.
04:37I got put on the spot.
04:38And when you're around 500 people,
04:40you being a compliant person,
04:43I went up there and did my best.
04:45And then something, I stepped over a fear,
04:49because I'd had some events happen.
04:51And I think this is something I do a lot of coaching on,
04:54executive coaching.
04:55How many people are being held back from their destiny
04:58because of an event that happened earlier in their life
05:00that causes them pain and recoiling from doing something
05:05that I'm now getting more and more suspect
05:07when I work with people, Diego, that I ask them,
05:11what is it that's your greatest fear?
05:13And what was the event that brought that about?
05:16And in that can oftentimes be the thing
05:19that's keeping them from their destiny.
05:21So I like talking about destiny.
05:23I like talking about where, especially as a coach,
05:25executive coach, which I do consulting in,
05:27executive coaching, it's that.
05:30So for me, it was being able to now communicate stories.
05:36Data is so good, but it's when you package the data
05:39in a meaningful story and can relate it well to people,
05:43you find out how it can move people to take action,
05:46the right action.
05:47So it's really, it's taking data
05:50and then putting it in a context of a story
05:52because people will not remember data as well
05:55unless it is connected to a really meaningful story.
05:57Within the context of the story.
05:59That makes a lot of sense.
06:01You mentioned coaching.
06:03You coach some pretty prominent people
06:05in the religion industry.
06:07And it has not been the easiest time.
06:10No, it hasn't.
06:11A couple of years now.
06:13How are you helping them stay on top of their game,
06:18stay motivated, and stay motivating their own team?
06:23Because they've got to be motivating for their team
06:25even when times are tough.
06:27How are you doing that?
06:28Well, first of all, I get people back to their passion.
06:31One of my favorite stories is an executive I was coaching
06:34and he called me one day and says,
06:35man, this is really getting hard.
06:37I'm done.
06:37I am just getting out of this industry.
06:40And I said, what is the reason you got into this
06:43in the first place?
06:45And I think I can use his name.
06:46He's authorized me to do it.
06:47It's Michael Powell.
06:48He's now at Bank of OZK.
06:50And this is back when he was at a previous institution.
06:54He's done getting out of it because it's difficult.
06:56There's no more fun.
06:57I said, why did you get into it?
06:58And he says, ah, that's a great story.
07:00And he told me the story,
07:01what motivated me to get into housing finance,
07:04mortgage specific, was because his parents
07:06who had made decisions that had kept them
07:09out of owning a home,
07:10they got with a mortgage person that worked with them
07:13and got him into a home.
07:14And see, he and his brother,
07:16I think it was he and his brother,
07:17hopefully I remember the siblings, right?
07:19They found out that they were buying a home
07:22by his parents saying, we're going to a closing.
07:24I said, that's a great story.
07:26So you watching your parents get a house motivated into,
07:30what's changed?
07:32He says, it's getting worse.
07:33It's really, I mean, he was going through some difficulties
07:36with both the company that he was with at the time
07:38and then also circumstances of the market.
07:40And I said, okay, I'll let you quit.
07:43I'll go along with you quitting on one condition.
07:47You need to go out and go to at least one or two,
07:51I said, I prefer you go to three closings
07:54and ask them, what is it that we just,
07:57and it would have to be first time home buyers.
07:59What is it that we did here that is,
08:03how meaningful is it to you?
08:04The first closing, Diego, he went to,
08:07he was a little late, drove up
08:08and they were finishing up the paperwork
08:09his loan officer there and he didn't notice
08:11that the guy was sitting in a wheelchair.
08:14And he's sitting there and he walked in and goes,
08:16so I'm Michael, I'm here just to,
08:19my coach has said I want to get out and get to know
08:22and reconnect with our consumers that are buying homes.
08:24He says, so can I ask you a question?
08:26What does this, buying this home
08:28and us doing what we've done here for you
08:30mean to you today?
08:32And the guy looked at his wife
08:34and an emotion started coming over him.
08:37He pushed back from the table
08:38and that's when he noticed he's in a wheelchair.
08:41He was, had his legs blown off in Afghanistan.
08:45And he says, why would I,
08:48why would my wife want to stay with him half a man?
08:51His identity was his athleticism,
08:54his ability to function and he got into drugs
08:57and depressed, PTSD set in.
09:00And it was because his wife never gave up
09:03the vision of believing in him and tried to convince him.
09:06She says, I believe if we can get him into house, Diego,
09:10and she says, and I found,
09:13and points to Michael's loan officer,
09:16we worked through some difficult,
09:17two years this person worked with me
09:19to overcome circumstances that,
09:22and she said we, it was actually he,
09:24that had buried them,
09:25worth just keeping them out of home ownership.
09:27And now he's getting emotional.
09:28He says, by me buying this home,
09:31I feel like I have become a man again.
09:34I can reenter society.
09:36And the motion that was in that moment,
09:38Michael started crying, the loan officer,
09:40everyone there, because when we connect
09:43with what we are doing with,
09:46in the mortgage industry,
09:47the mission, helping people get into homes.
09:50It is so transformative of what it can do, Diego.
09:53What great advice to just go
09:55and see people get into their house.
09:57Yeah, I think, I mean, one thing I love,
09:59I saw some of the airlines, love that story,
10:01Herb Keller, he used to go work the counter.
10:04He goes to work and sluck,
10:06sluck luggage in the belly of the airplane.
10:08I think executives today need to get out
10:11and connect with the consumer,
10:13the people they're doing business with,
10:14and their employees at every level in organization.
10:17And you see how dedicated they are.
10:18You see why they're doing it,
10:20which comes to the why, I mean, our purpose.
10:22Why are we doing what we're doing?
10:24And you will get a new motivation
10:27in these difficult times.
10:29I love that.
10:30I love that a lot.
10:32Again, we're here at the Housing Economic Summit,
10:35and I think we're both feeling a little bit of optimism
10:38after this morning.
10:40What do you see as some of the biggest obstacles
10:43and challenges to 2025 being a growth year
10:47for mortgage origination?
10:48Well, I think there's an overall fear or anxiety
10:53or concern about what's going on in DC.
10:57Love them or hate them,
10:59this administration is shaking things up.
11:03You look at Doge,
11:04and you look at how many people are being laid off,
11:05and what does this mean to the services
11:08that we've become accustomed to?
11:09You look at what Scott Turner's gonna be doing at HUD
11:13as the director of HUD.
11:17Secretary of HUD, excuse me.
11:18He is going to be talking about cutting jobs.
11:22What does that mean for our housing finance?
11:24So there's optimism in that we have reason to believe
11:28that interest rates could actually come back down,
11:31and we cross over that threshold
11:32where people are still gonna wanna start buying.
11:34But what are we doing to the stability
11:36of our housing finance system?
11:37And that's an angst that's there.
11:40I have a confidence that no matter where we're at,
11:44that we are resourceful as an industry.
11:47You look at what mortgage industry has gone through.
11:50I started the industry in 1973.
11:53I had rates my first bunch of years in the industry.
11:56We went to 18, 19, 20%.
11:59I remember doing a loan at 20% at the time back in 1980.
12:04And I was seven years into this industry.
12:06I started at an upward climb as an industry.
12:09I didn't know what falling rates felt like.
12:12So we came out of that.
12:14We were making loans at 18 and 19%, Diego.
12:18And then we come back,
12:19and then Clinton comes in, and we see a recovery,
12:22and we see all the things that were done
12:25with the housing policy that really spurred on.
12:28And it was really Carter that came in
12:29and created the programs that took out what was redlining.
12:35That really started opening up the markets.
12:36Clinton expanded those programs.
12:38And we have been responding to policy,
12:42positive and negative, rates, positive, negative,
12:46an economic environment that has been all over the place,
12:49and we have survived.
12:51And I think it's made our industry stronger.
12:53It's made executives stronger.
12:54Now, what we've just gone through,
12:55we heard, who was it that said it up there?
12:57Brian, I think, again, Brian Hale said, I love Brian.
13:01I had a privilege of knowing him in his countrywide days,
13:03and he is such a brilliant guy.
13:05Straight shooter.
13:06Straight shooter, and he says it like it is,
13:07and that's what I love.
13:10I think sometimes I try to find the right way to say it.
13:12Brian doesn't give a crap.
13:13He says, this is the way it is.
13:14He just says it.
13:15I've got to take more, Brian.
13:17So kudos to you, Brian, the way you say it.
13:17He said, of all the years I've been in this industry,
13:20and I've been through some difficult years,
13:22he said, and I have, too.
13:23Of course, I've been in it a little bit longer.
13:25He said, the last three have been the most difficult.
13:28And he was at Countrywide during some very difficult years.
13:32So that's a big statement.
13:34It is a big statement.
13:35So I think this is testing us like no other time
13:40in my history of 51 years in the industry.
13:42Brian's 43 years.
13:44Nothing has tested us quite like the last three years.
13:47But what we're finding is the companies
13:49that are emerging out of this are stronger,
13:53are more focused, and have a higher survivability rate
13:58than a lot of the predecessors before.
14:01Yeah, that's really encouraging.
14:02So you are a coach.
14:04You're also a consultant to the industry.
14:07What issues and areas are you consulting most on right now?
14:13Well, cost reduction has been a drum
14:16I've been beating for some time.
14:18Unless we focus, I've always been concerned
14:20about a lot of clients.
14:21I have clients for coast to coast,
14:22big or small, some of the biggest ones,
14:23some of the smallest ones.
14:25And I've been concerned about their cost to originate,
14:27because I'm seeing innovation.
14:28One of the things I had when I was a loan originator,
14:32I had a Boeing engineer.
14:32I was up in Seattle at the time.
14:34A Boeing engineer gave me a Heathcote computer.
14:36It was the first microcomputer.
14:37It was a thing he built.
14:39But out of that, I started playing with it,
14:41and I got a software spec,
14:42and I created it for one of the first
14:44loan origination systems.
14:46At the time, it was called the loan originator,
14:48and then it became interlinked software
14:49that went public and went on, did really well.
14:51That was my creation of my garage.
14:55So I have an appreciation of what automation can do for us.
14:59And now with AI coming into this,
15:01we have got so many tools that we can use.
15:05AI is coming in all over the map.
15:08And AI is not the end-all, be-all, because there's a lot.
15:12We have LLM models, the Large Language Models,
15:16and we have non-Large Language Models.
15:19If you're gonna get in and start using AI,
15:21you better understand the difference,
15:23because Large Language Models can get you in trouble.
15:27Because when Fannie and Freddie looked at
15:29trying to make some underwriting decisions,
15:31the bias that came in through the training of LLMs
15:35got put into the systems,
15:37where I think we need to look at, intelligently look at AI.
15:41One of the books I'm recommending everyone to read,
15:43and anyone watching this,
15:45read the book by Mustafa Suleyman, The Coming Wave.
15:49It's sobering, it's exciting,
15:52and it will get you in a mindset.
15:56And you talked about earlier about, what am I doing?
15:57I'm helping executives change their mindset in the coaching.
16:00That's what I really work on.
16:01But cost is the biggest thing I'm thumping on.
16:04But as a result of this today,
16:06conference, which has been so good,
16:09focus on the data, and how to go get the business,
16:13and it's focusing and targeting
16:16the realtors that are doing the business.
16:18So I look at the business intelligence tools,
16:21MMI, Modex, now Ratter,
16:25is a new one that I'm really caught my attention.
16:28These are business intelligence tools
16:30that can zero in exactly who we need to be calling on.
16:34Are you seeing your coaching and consulting clients
16:38thinking a lot about M&A right now?
16:40Oh yeah, there's a lot.
16:41I mean, my good buddy, Bill Cosgrove,
16:45just bought NRL out of Houston.
16:48That's a big news, that happened last Friday,
16:49it got announced.
16:50There's a lot of that,
16:51there's gonna be a lot of consolidation.
16:53We're becoming a bigger balance sheet.
16:56What was said by the banks that,
16:58those independent mortgage bankers,
16:59they just don't have the strong balance sheets,
17:01they're like grass.
17:03The sun comes out and they're gonna fade away.
17:06So there is a place for an entrepreneurial,
17:09thinly capitalized company that's aggressive in marketing,
17:12that can survive and grow.
17:13But you're gonna come up against some constraints,
17:16and that's where a well-capitalized,
17:18independent mortgage banking company,
17:20such as Union Home and Bill Cosgrove's company,
17:22is gonna have a real advantage.
17:24So there's gonna be continued consolidation,
17:28both tech and in the independent mortgage space.
17:32Is that a good thing?
17:34Well, Bill would say it's a good thing,
17:36because he's growing his business.
17:37So obviously, if you're the one that's acquire or,
17:40it's creating an exit strategy
17:42for those that are struggling.
17:44So it gives them a payout of some sorts at various levels.
17:49I've done a lot of that,
17:50so I'm always saying for an undisclosed sum of money,
17:53that means it went for a real low price
17:56that I don't want us to talk about
17:57at the price that it went to.
17:59It's not always the case,
18:01but I mean, so that's not a general rule of thumb.
18:03But there is a lot of deals that are getting done for,
18:06hey, just, can we just, would you, I just want out.
18:08I just want out.
18:09Let me take my cash off the table,
18:11and let me put my organization, and I'll do an earn out.
18:14So if I do well, my organization does well on you,
18:16then I'll get paid more.
18:17And I think we're seeing more of those deals.
18:19That's the nature of it.
18:20And so on the real estate side,
18:23we have been seeing a real flight to quality
18:27ever since the NARA settlement happened.
18:30And good listing agents are getting better,
18:33and they're doing more business.
18:35Do you see that having an impact on LOs
18:38and the lending side?
18:39Yes, it's causing LOs to have to elevate their game.
18:43Because when you find a listing agent
18:45who is becoming much more of a professional now
18:47because of this lawsuit,
18:49they're going, I don't see you as serious
18:53about your profession as I am as a listing agent.
18:56So I think it's really critical that,
19:00that this is going to have,
19:01that the critical factor it's going to have
19:03is going to raise the game.
19:05Those that do not raise their game.
19:06I'm looking, I'm sitting next to loan officers
19:09here at the Economic Summit that paid the fee to be here.
19:13And if you're watching this,
19:14and you're not at this Economic Summit,
19:17you're already behind that loan officer
19:19that's sitting next to me.
19:20It's crazy, I had lunch with a realtor from Wisconsin.
19:24And she's just taking it all in, she's learning,
19:26and she's getting better.
19:27And getting better.
19:28I think it is because we need to be reading,
19:31become more professional.
19:32We gotta look at the data.
19:34We gotta quit parroting what you're hearing
19:36on the last podcast.
19:38Listen to a good podcast, they're good.
19:39If you're listening to the right one,
19:40you get good information.
19:41But even sometimes we can get it wrong.
19:43That's why I'm saying, I'm stepping up the game
19:44on making sure the data we're putting out on our podcast
19:47is backed.
19:48So I'm checking with the MBA a lot more
19:49than I have in the past.
19:50Is this really, what do you see?
19:51You're getting the different perspectives on it.
19:53But the most important part is get out
19:55and grow as a professional.
19:57If you don't, you're gonna find yourself
19:59at a real disadvantage,
20:00and probably should get out of the business.
20:02Yeah, yeah, yeah.
20:03I don't view flight to quality
20:06and professionalization as a bad thing.
20:07No, no.
20:09I think it helps everybody.
20:10It helps the consumer, right?
20:11It helps the consumer.
20:12They get better advice.
20:13So we'll wrap up with this question.
20:16What do you think the housing executive
20:21that is still in the game,
20:23still wants to be in the game, wants to grow,
20:26what do you think they should be paying
20:27the closest attention to right now?
20:30Well, as I said earlier, cost.
20:31If you're not getting your cost down,
20:33I'll give you a dollar amount
20:35of someone that I mentioned to you last night,
20:38is Pavan at Angel AI.
20:41Has got his cost to originate a funded closed loan
20:45on a wholesale basis down to $150.
20:50Wow, yeah.
20:51Think about that.
20:52That's serious.
20:53That is serious, and he's been doing it.
20:54I met him when he was 11 years old.
20:56I used to sell loans to his dad.
20:58And in comes Pavan, and he was a computer savant.
21:01He started doing calculation.
21:03I didn't stay in touch with him.
21:04I didn't until he, Angel AI, started coming to the surface.
21:08And there's many great systems out there,
21:09but I really believe in that one,
21:11because it's not an LLM.
21:13It's doing it the way he's approaching it,
21:15I think is a good way to go about it, number one.
21:18Number two is, I think it is a tool that reduces cost.
21:23So when that's a real competitive advantage.
21:25Oh, man.
21:26Your costs are that low?
21:27Yeah, well, you think about it.
21:28If I'm spending $3,000 versus a guy that's out there at 150,
21:33he can make money at 150.
21:35He's gonna put that into his pricing.
21:37When you put this in a pricing,
21:38you have a real significant price advantage.
21:41He says he can't do business at those low margins.
21:43Well, actually, he's got pretty healthy margins,
21:46and his prices are lower
21:47than a lot of the competition out there.
21:49So I think number one is a cost.
21:51The other thing is, I'm telling everybody,
21:54focus in on data as it relates to realtors.
21:57And RealTrends, which you guys have,
21:59the data that HousingWire's putting out now,
22:02have the privilege of having
22:03a really great friendship with Clayton.
22:05And you guys are focusing in on data.
22:07And what lenders need to do is start focusing in
22:10and train their loan officers to start,
22:12instead of just shotgunning and going all out,
22:15we need to zero in on the realtor
22:18that is doing the business and those percentages.
22:23I think, again, it was in Brian's session that came out.
22:27Yeah, I think it's gonna be 5% of agents
22:29do 95% of business this year.
22:31Exactly right.
22:32And it's the agents that are getting,
22:34when it comes to real estate agents,
22:36I've seen those that are being really skillful
22:38in how to market that home.
22:40I'm putting my house on the market right now.
22:42We interviewed four realtors.
22:43What a stark contrast.
22:45I went with two millennial, new in the industry
22:48because they have a real good reputation
22:50at social media marketing.
22:52I went with two veterans.
22:54We went with one of the veterans
22:55because they don't do social media marketing,
22:57I'm sure you're currently well,
22:58but they hired someone that is really, really good at it.
23:01So just because you're a veteran,
23:03it's most important to get really good
23:06at the new world of marketing and social media.
23:09That's the way it's gonna be.
23:10Well, Dave, incredible to catch up with you, as always.
23:14Really a pleasure for me to have this conversation with you.
23:17Thank you so much.
23:18You bet, appreciate being here.
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