00:00Live from Colorado Springs, I'm Diego Sanchez, president of Housing Wire, and I have a very
00:13special guest today, Mark Trachtenberg, CEO of Silk Title. Mark, thank you so much for joining
00:19me. Thanks for having me, Diego. So what is your background and how did you end up owning a title
00:26company? My background spent 10 years in mortgage lending. About seven of them were those good years
00:32from 2002 to 2008. And that led into me opening my own mortgage company and failed miserably.
00:40Great recession. Yeah. 2008, 2010 was horrific. I was asked to come into the title industry.
00:47I started at a company called Linear. Linear sold to Solidify. And then I had an opportunity to go
00:52into Silk as a partner. I went into Silk as a partner, realized that the operation needed a
00:57whole overhaul. And that's when I realized, hey, we should stop looking at this as title. We should
01:01start looking at this as more of a tech company with a workflow and business process. And that's
01:06when the aha moment came on to me and said, okay, if we're going to do this and scale this and be
01:10ahead of everything, we had to change the mindset of what title was. And how are you changing that
01:16mindset? I think it's more of a looking at it of a manufacturing process. And how do you speed up
01:21the manufacturing process? How do you lower the cost of the manufacturing process? To me,
01:25it was more, we also looked at the experience. It's such a bad experience in the mortgage industry
01:30still today. And you look at it. And that was our goal is to figure out the better experience. And
01:35that led us into all these other things. We said, okay, how do we get to the borrower having the best
01:40experience? How do we get to our client who happened to be the processing LOs and mortgage company
01:45and started looking at, okay, when you start reverse engineering, we actually landed on this
01:49by default, right? And I think that really was the biggest key to focus on the end goal,
01:54which was a great consumer experience. Historically, too much paper, too much in-person.
02:00How are you solving those two problems? Paper-wise, it really depends on the lender.
02:04Some lenders have gone back to full paper. Some lenders are at that hybrid piece of it.
02:09Everything else we're doing now is digitally. So we even eliminated, if a lender wants,
02:13we eliminated our PDFs. Don't even, if they need it for investors, we can send it to them.
02:17Well, we stopped at the stare and compare. We did system-to-system. We integrated open API stuff
02:22and then started really working on machine learning, AI, and robotics. So during COVID,
02:26we just doubled down on that. So instead of just taking the money and going and having a free-for-all,
02:31we actually said, okay, this is a perfect time to take that and reinvest in the company to be where
02:35we thought we were needing to be. We never saw this three and a half years, right? We never saw how long
02:40it was going to be.
02:41So you've been a pretty active supporter of the Trump administration's housing policies,
02:47including GSE reform, and maybe even exiting conservatorship. How does GSE reform tie back
02:56to your leadership of silk title?
02:58I think when you look at it, like, it's a big unknown right now. There's a want,
03:03there's a potential desire. And if it happens, everybody's got to be prepared for what does
03:07that really mean, right? And I think the biggest thing for leadership of silk title is preparation.
03:10I can't control rates. I can't control economic conditions. I can't control what comes out of
03:14Trump's mouth tomorrow, and none of us can. So like, you know, the reality is, what can you plan
03:19for? And I looked at it and said, all right, you know, if it goes into an IPO status or goes out of
03:24conservatorship, you got to be prepared for that. Just because that means that everybody thinks,
03:28oh, rates are going to go down or this is going to happen. You got another piece that you got to
03:30understand, which is Wall Street's going to start turning out credit. It's not going to be because
03:34you're not funding it through the government now. Now you got Wall Street looking at it going, okay,
03:37now what's the inverse effect of that? So yes, could it lower rates? Potentially.
03:41So I've always thought this year that it's very unlikely that the GSEs will exit conservatorship
03:50for a number of reasons, but you've been adamant that it's happening. And so how are you preparing
03:58for it to happen? And what's sort of driving this push to take the GSEs out of conservatorship right
04:05now? I think when you start looking at it, everyone's so focused on the bond and you got
04:09to figure that out. I mean, what's backing the mortgage business right now? It's the bond, right?
04:15And we're leveraged to a hilt on that side of it. We've got so much foreign control sitting on that
04:20side of it right now. And there's that desire to break free of that, right? What that means chaos.
04:26Yeah. So if you're asking how I'm going to prepare for it, and you know, we're already been in three
04:30and a half years of chaotic rate environment. We're about ready to hit, even if they're, like I said,
04:34if the rates change, that's great, but you're going to be in another chaotic environment of how do you
04:38operate your business with new regulations and a transition. And how do you help your customers,
04:45which are primarily mortgage lenders, prepare for that chaos? I think it's more of a partnership.
04:52Like it's not, it's more of a, Hey, what can we do to make sure we have the best people,
04:56the most efficient processes so that we could focus on that chaos when it does occur and
05:00understanding and managing through it. We're not focusing on how to produce the business at that
05:03point in time. We're actually focusing on what changes that we have to work together on.
05:07How do you think the GSE is exiting? How does that going to impact mortgage rates in your mind?
05:15I think you'll see them go up first and then you'll see them go down.
05:17Yeah. So walk me through that a little bit. Like what's the, a little more detail there.
05:21Uncertainty. You're still going to have uncertainty. You're still going to have,
05:24if Wall Street does come into, into the mix, they're going to not know everything at first,
05:27right? They're going to think it's a great idea and make money because they saw it in the past
05:30potentially. But then you're going to say, okay, there's still going to be a risk built into that
05:33factor until it really flushes itself out. And it's okay. Now we really understand this.
05:38And that could, or it could go in the exact opposite effect. Wall Street goes, okay,
05:41we're going to do this to try and move the business and sweep the business. So it's the same thing I said
05:45earlier. I don't have that crystal ball inside. I know exactly where it's going to go. Those are
05:48the two scenarios and you've got to plan either way. Do you think it's a good idea that they exit?
05:53I do think overall it's a good idea. I'm a little bit nervous about that strategy of how you would
05:57do it. Yeah. I think, I think that's the key. I don't think if you look at the reason why they
06:01want, want to exit, it makes a lot of sense. I think everyone's question is how are they going to do it?
06:06Yeah. And how do we avoid a repeat of what happened when your last mortgage company didn't do so well,
06:14right? During the great recession. How do we avoid a repeat of that?
06:18I think that's the million dollar question. Now a billion dollar question. How do we,
06:21and I think it's going to have to, it's going to go down to leadership sitting in Washington.
06:25I don't think, I mean, if you really look at it, that chaos or lack of chaos, whatever your side
06:30you're on on that is going to really matter. Right. And then you got to decipher whatever's coming
06:34from Washington and decipher that down to your team, right? You can't control what they're going
06:38to do. We've seen that in the last 12 years, but what we can do is try and understand and make the
06:43best decisions for our companies and our partners. And how are you adjusting your operational strategies
06:49and how are you counseling your customers to adjust their operational strategies for any of the
06:56potential changes that are coming down right now? I think a lot of it is this, this notion around
07:00costs too, right? Like, so that's becoming a big player, even without that, without that topic of
07:05GSEs, I think you're starting to look and say, okay, how do you drive this cost down? Right.
07:09Everyone's focused on appraisal waiver, title waiver, all this other stuff. Like that's really
07:13not the bigger issue. The bigger issue is the technology costs. That's about that. That's
07:16incrementally rising at a rapid speed. The credit costs rising at a rapid speed. Like those are,
07:22those are things that are really serious stuff that if you're not working together to figure out how you
07:26lower that cost, you're really going to be behind the eight ball because then you're going to have not a
07:30rate issue, you're going to have a cost issue. How are you working to lower costs?
07:35We're double downing on more of the AI stuff and technology and true AI stuff. We're not just
07:38talking about it. That's why I don't even, I'm not releasing any of it right now. We're,
07:42we're really figuring it out. Right. And understanding what it really means. Where is it
07:45applicable within our business? Where is it applicable within our partners? Right. And where,
07:49and from a client standpoint, like it's not that easy to say, I got AI, here you go.
07:53Yeah. All right. Crystal ball it for me. A year from now, let's say Fannie and Freddie
08:00exit conservatorship in the next couple of months. It won't happen that fast, but let's just say it
08:05does. The idea. A year later, what do you think a successful housing finance system connected to
08:13title looks like if we've done things right? I think you're going to see a shift in the people.
08:21I think you're going to see a shift in the mindset of the people. I think you got to get your people
08:23ready for that. Right. There's going to be a fear sitting there in some of the technology and the AI.
08:28Everybody's got this thing. Okay. Job security. People are worried about the job security in this
08:31rate environment. Imagine what they're going to be like when you say, okay, like, and they start
08:35seeing any types of shifts and everything else. It's more of a understanding and explanation.
08:40What a lot of people aren't doing very well right now is they aren't explaining to even their,
08:44their, their overall organization, why you're doing these things. Like, and I think the why is very
08:48important because you still are going to have people, ain't going to some zero of no, no, no employees.
08:53Right. And I think you got to really educate and have them understand because you need them
08:56helping you with that initiative. You don't need them fighting your initiative. You need them
09:00helping you with that initiative. So, uh, we'll close with this one late last year. Um, you and
09:06I made a little bet and your side of the bet was rates were going to be, rates are going to have a
09:12five handle by the end of this year. Uh, and I, I, I think that's crazy. Uh, I think rates are going
09:18to stay around seven. Um, are you getting a little nervous? We're halfway through the year and we're
09:23still at 7%. No, ask me that in December. No, you know what? I love that, the, the notion of it,
09:30because again, at the end of the day, friendly banter, friendly competition on it and looking at
09:34it going, you know, I, I think if you really are honest with yourselves over the last three years,
09:38no one's been predicting anything pretty right. Um, I think we, there's, there's indications of why
09:43things can happen and there's indications why things can happen in a different direction. And I think
09:46those that are really understanding those, those indicators are starting to see success, not worrying about
09:51certain indicators that we've all been always used to watching. I mean, again, am I nervous about it?
09:57No. Could it go any other direction? Yep. Could it stay where it is? Very, very likely. Yeah. Can't
10:02control rates, but at least we get a good dinner. We will have a good dinner regardless. Mark, thank you
10:07so much. Thank you, Diego. Pleasure.
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