- 5 months ago
Last week, Guild Mortgage made headlines with its $1.3 billion acquisition by Bayview Asset Management. This week, Diego welcomes Terry Schmidt, the CEO of Guild Mortgage, to talk about how Guild plans to innovate, scale and deepen customer loyalty, without losing its retail identity.
Terry and Diego dive into the synergy between Guild’s distributed retail model and Bayview’s $700 billion servicing portfolio. They also talk about Guild’s investment in AI and tech, ongoing M&A ambitions, and how cultural alignment and local relationships will still be their secret weapon.
Here’s what you’ll learn:
Why Bayview’s acquisition of Guild was a strategic move, not just financial.
Guild’s "customers for life" strategy delivers strong recapture performance.
How Bayview’s capital unlocks new proprietary loan products for Guild.
Cultural alignment is central to Guild’s M&A and growth strategy.
AI and tech will play a major role in Guild’s next chapter.
Related to this episode:
Guild Mortgage
https://www.guildmortgage.com/
Bayview to buy Guild for $1.3B in cash, taking lender private | HousingWire
https://www.housingwire.com/articles/bayview-to-buy-guild-for-1-3b-in-cash-taking-lender-private/
Terry Schmidt | LinkedIn
https://www.linkedin.com/in/terry-schmidt20
The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire president Diego Sanchez every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.
Terry and Diego dive into the synergy between Guild’s distributed retail model and Bayview’s $700 billion servicing portfolio. They also talk about Guild’s investment in AI and tech, ongoing M&A ambitions, and how cultural alignment and local relationships will still be their secret weapon.
Here’s what you’ll learn:
Why Bayview’s acquisition of Guild was a strategic move, not just financial.
Guild’s "customers for life" strategy delivers strong recapture performance.
How Bayview’s capital unlocks new proprietary loan products for Guild.
Cultural alignment is central to Guild’s M&A and growth strategy.
AI and tech will play a major role in Guild’s next chapter.
Related to this episode:
Guild Mortgage
https://www.guildmortgage.com/
Bayview to buy Guild for $1.3B in cash, taking lender private | HousingWire
https://www.housingwire.com/articles/bayview-to-buy-guild-for-1-3b-in-cash-taking-lender-private/
Terry Schmidt | LinkedIn
https://www.linkedin.com/in/terry-schmidt20
The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire president Diego Sanchez every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.
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NewsTranscript
00:00This gives us an opportunity to be a large player, to get scale, advantages of scale
00:05that smaller lenders won't have, and additional access to getting more customers in the door.
00:20Welcome to Powerhouse, where we interview the biggest names in housing and ask them
00:25about their strategy for growth. I'm Diego Sanchez, president of HousingWire. My guest today is Terry
00:32Schmidt, CEO of Guild Mortgage. Terry, it's so great to have you on the show again.
00:38Thanks for inviting me. Appreciate it.
00:40Well, you had some pretty exciting news last week.
00:44We did.
00:44Congratulations.
00:46Could you walk us through the deal?
00:49Sure. Well, I know you know a little bit about Guild's history, right? I've been with Guild.
00:54This is my 41st year here, so I've seen a lot of change. And, you know, back in 2007,
01:01we did a management buyout with McCarthy Capital, private equity. They've been partners of ours
01:07for almost 18 years, fantastic partners along the way. And, you know, in 2020, we went public.
01:15So we've been in this growth mode for, you know, 20, almost 20 years. And it's been, you know,
01:22a fantastic ride. But we just really thought this opportunity really made sense for us to continue
01:29to grow as Guild and stay as Guild, just have a better capital, stronger capital partner behind
01:39us to continue our growth. So we ended up, you know, really looking at Bayview and think it's
01:47going to be a great, powerful partnership.
01:51And how long ago did you start talking with Bayview Asset Management?
01:56Well, you know, they've been a owner of Guild since the IPO. And so they owned, I think it was
02:03about 7% of our public stock. And they've always liked Guild. They've always, we've had a good
02:11relationship with them since the IPO. They've, you know, always wanted to have, you know, more stock,
02:18but the IPO made it a little bit more difficult to be able to do that. So they talked to us,
02:24it was about the third week of May, there's a public filing. And they thought, you know what,
02:29let's explore something different. Let's look at something that, you know, can be a little bit
02:34bigger in some way, shape or form. And so it ended up that they decided to take the company
02:41and buy the entire company. It was a cash offer. It was about 1.3 billion. And, you know, the whole
02:50idea is to keep the company in place, continue to do what we do best, and just be a backer for more
02:59capital so we can continue to invest and grow in our future. Yeah, I'm going to ask you a bunch
03:04of questions about how this strategy changes, if at all. But as the leader of the management team at
03:11Guild, why did Bayview make sense as a home for your company? Yeah, well, first of all, I think that
03:21they invest in companies, and they maintain their management team. And they like to keep everything
03:30the way it is, but take a supportive role. So, you know, they don't have a retail platform.
03:39They've got a huge servicing book, a $700 billion servicing portfolio. And so really, it's super
03:46complimentary to the businesses that they already have. So it made sense for us to continue to grow
03:53the brand and the name and, and have, you know, more opportunities for us in the future.
03:59Is it your intention to remain CEO of the business moving forward after the deal?
04:05Yes, I'm still going to be here. And we still have our entire management team. So it's, it's pretty
04:11much business as usual right now. Although the last month was a little bit crazy.
04:19I would imagine it has been a little bit crazy. So you mentioned the servicing book. Bayview also
04:26owns Lakeview Loan Servicing, which is one of the biggest servicers in the US. How are you going to
04:34be collaborating with Lakeview if this deal ends up going through?
04:39Well, again, Lakeview has, you know, their investment in servicing rights and they've got
04:46their platform. They've got their management team that stays the same guild. We have this customers
04:53for life strategy. We have a strong retail platform that they don't have. And, you know, we've got a
05:00great servicing business as well, because we've got this, you know, customers for life. And really,
05:06I think more than anything, it's going to be, how can we learn from one another and become stronger,
05:14but we're, we're going to be sister companies within the Bayview platform. So we still, you know,
05:20we're still going to operate on a standalone basis, but I think just that the other opportunities that,
05:26you know, we see with being a part of the Bayview family, and, you know, they've got other
05:34fun families that are pretty much kind of coincide with the mortgage. They've got some, you know,
05:44personal credit type finance companies. They've got a life insurance company. So there's other
05:50verticals that I think will help drive more customers, you know, to guild. So we're really
05:56excited about that. But again, our brand stays the same, our management team's team stays the same.
06:03It's just getting more access to, you know, other opportunities. And I think the other thing
06:10that they've got is they've got proprietary products. So they have access to, they've got a
06:17HELOC program, they've got non-QM products. So there's other, you know, opportunities there for
06:23us that I think will also help us retain our customer going forward. So you'll potentially
06:29be able to bring those different products into your distributed retail operation. That's right.
06:37So we are, we spoke about your servicing strategy. Guild has been retaining a lot of the mortgages that
06:44you originate, and that's been your strategy for a while. Will partnering with Lakeview under this
06:51Bayview umbrella adjust that servicing strategy at all? Not at all. I mean, they love what we're
06:59doing. We have built this customers for life strategy where, you know, the whole idea is get
07:05that first time home buyer in the door. And then when they're ready for a refinance, or they're ready
07:11to move up into a larger home, that we have that connected connection at the local level. You know,
07:19we've built this brand where it's a grassroots brand and it's been built, you know, local,
07:25local fulfillment, local sales in, in communities across the country. And that's something that's
07:32very different to what they have. And so they're excited to be able to learn from that. And it's,
07:39you know, it's, it, the proof is in the pudding. I mean, it's worked. We have great recapture,
07:44you know, rates in purchase. And we've got like 30% of purchase we recapture. In a refi boom,
07:51we've recaptured up to 70% of our, you know, of our runoff on, on refinances. So we, it's work,
08:00it's worked over time. And I, so I think that's, you know, going to stay the same. And I think we'll
08:06both, again, learn from, you know, what we do best. You touched on this a little bit,
08:13but Guild is known as one of the great brands in distributed retail with very solid local
08:19relationships and businesses. Will being owned by Bayview change your channel strategy at all?
08:27You know, do you push into consumer direct or are you staying focused on distributed retail?
08:32Focused on distributing retail a hundred percent. I mean, we, we made that decision many years ago,
08:40probably 20 years ago to really focused on what we do best. And I feel like we've grown this brand
08:47and it's one of the strongest brands in the retail channel out there. And it's been clearly by design
08:55and doing the right things. And, and we're going to just continue to do that.
09:00Does this new ownership change your recruitment strategy at all in terms of, you know, what
09:09geos you'd like to recruit LOs and branch managers in or the kind of LO or branch manager that you
09:15recruit, or does that stay the same as well? Our recruiting strategy, I think is, is going to
09:22stay, it is going to stay the same, but I think it's going to get even stronger because now we have
09:27a broad, we'll have a broader breadth of products and we've got this capital backing to invest more
09:36in technology and, you know, other opportunities. So I think it's only going to be a value add to,
09:45to the recruiting efforts, whether it's, you know, on, on the loan officer side or, you know, M&A,
09:51we still, you know, today we're, we've still got some, you know, potential transactions that we're
09:57looking at and, and that is business as usual as well. We, we had a couple of this last week,
10:04a couple of our, you know, potentials out there call and like, are, are you still interested? Are you,
10:10you still, you know, actively going to pursue this? And, and the answer is absolutely yes.
10:16So you, you've been very acquisitive over the past few years. It sounds like that continues to be the
10:24strategy, but only maybe more so because you have a fresh capital infusion. Yeah, absolutely. I mean,
10:30we've, we've always looked at is, is it the right fit culture first? And then does the model,
10:38you know, kind of, will it work in, under our platform? So we always say one plus, you know,
10:45one has to equal three. So it has to be right for both of us. Similar to this Bayview transaction.
10:50It's got to, it's got to have value on both sides, which it, it certainly has. And same with the M&A,
10:58when we're looking at, you know, other, other companies, it has to make sense for them. It has
11:04to make sense for us and we have to add value and that's not going to change.
11:09You've talked about culture before as a big part of what you look at when you're looking at potential
11:17acquisitions. Are there other aspects of companies that are important to you right now in terms of
11:24your M&A pipeline? You know, I mentioned geography before. It sounds like you have some new products
11:29to play with, with this, with this Bayview deal, but what, what kinds of things are you looking at
11:34beyond culture when you're looking at M&A targets? Oh, I think we, we look at, you know, what does
11:40the product mix look like? Are they a hundred percent focused on, on the retail, you know,
11:45platform? What's their leadership look like? Is their leadership, do they want to stay and continue
11:50to grow the business as partners with us? Those are important aspects. And we like areas that we
11:58don't have as big a presence in, you know, the Midwest, the South, the Southeast, all those areas
12:05are very, you know, meaningful to us. But you know, again, it always goes back to culture. And it's funny
12:12that we talk about culture because even though Bayview is this large organization, the last month
12:19that we've spent with them and getting to know them, their, their culture is so similar to Guild.
12:25You know, they, they, they want a good real business relationship. They want to have a trusted
12:30relationship and they want to grow together. And, you know, so all those, those pieces that are so
12:38important for us when we are looking at M&A targets, kind of, we looked at the same thing as far as this
12:45transaction with Bayview and, and they all check the boxes. Yeah, that's great. You mentioned technology
12:53before and, you know, having a fresh capital infusion to maybe work on some, some projects. Do you have
13:00projects lined up that you're, that you're thinking a lot about that this will help kickstart or, or
13:05invest more in? I mean, more of it is just really expanding the foundation that we already have.
13:14And of course, a lot of work around AI. There's so much capabilities there. And, you know, we rolled out
13:24a, an AI engine that was really related to all of our products and underwriting guidelines, a big
13:32library. It's been extremely successful, saved a lot of our ops teams and sales teams, a lot of time
13:39and effort, you know, making sure that they get the borrower and the right product. And so there's
13:44just so much more there. And that's really the area that we're putting a lot of emphasis in right now.
13:50One of the things I've noticed in my conversations with other CEOs of IMBs is there's an emphasis right
13:59now on building out your own tech platform, as opposed to being, or as opposed to relying on,
14:05you know, vendors out there for POS, LOS, CRM, you know, the pricing and packaging engine.
14:15How do you look at that, that, that buy versus build in-house decision?
14:21Well, first of all, we've built a proprietary platform and our proprietary platform is in servicing
14:29and loan origination and they're combined. So we've, we've gone way back. I mean, since I've been
14:37here, we've been building upon that foundation. So we've got this great synergy between those,
14:46those two channels and it's really served us well. And I think that's a big part of why our customer
14:54experience is so good because we don't have to onboard a customer to, you know, a servicing
15:00platform. Everything's very, very well integrated. And, you know, now we've got our CRM that's extreme
15:06Salesforce backed by Salesforce, but extremely integrated into our production platform and
15:12servicing as well. So all those have, have come together really well. And, and now it's more,
15:19if there's certain areas where, um, small pieces of technology that we could connect into our,
15:28our main proprietary system, you know, we look at doing that and, and, and if there's opportunity
15:35there, but, um, yeah, we've had a proprietary system for many, many years.
15:42That's really interesting. And, you know, you talked about recapture earlier and Guild being good
15:49at it. Um, I imagine you've built technology to, to help your, uh, Salesforce get after those
15:58recapture opportunities when rates fall or for whatever other reason. Um, is that, has that been
16:04an area of, of building and technology focus for you? Huge area of focus. And, you know, this last in
16:112020 and 21, when that refi boom during COVID happened, we captured 70% of the, of the runoff.
16:19And it was really because of our sales, our sales teams and our CRM being so connected to our servicing
16:27book and the, the loan officers, you know, we not only have, um, agents in servicing that are
16:35directly connected to regions of the country. They get to know those, those, um, originators out in
16:42the field, but they also get certain information about their customers. So if their customer doesn't
16:48call servicing and it calls the loan officer directly, they have some basic information just
16:53to, you know, help answer some questions, which, you know, so we've got this connection all the way
17:00through that life cycle with the client. And that's been extremely strong. And then again,
17:06we took Salesforce and kind of connected it into our servicing platform and our loan origination
17:13platform so that we can drive, you know, leads. If, if, if there's a loan that's in the money
17:20that goes to the originating loan officer, they connect to their client. And, you know, that's just,
17:27you have a lot more stickiness with that. And as an example, when, when last year, I think it was the
17:34fourth, third or fourth quarter where there was a couple little quick refinance opportunities,
17:40we were on it immediately and our recapture went up to 60% for two months. So that's,
17:49that's, yeah, it's really cool. Two of your competitors, uh, have bought, basically bought leads
17:56and lead platforms. Rocket bought Redfin, uh, lower bought Movoto. Uh, and so, you know,
18:05and a big part of those deals, um, you know, and, and their executives have talked about this on the
18:10show, you know, is, is controlling that, that lead flow. Um, as you see these transactions happen,
18:17do you have any concerns about Guild, uh, being able to get access to lead flow?
18:24You know, we've been really with, with the way we built our platform, we've really been working on
18:32that life cycle, client life cycle for years and getting that, you know, getting that customer
18:39earlier on in the process is something we've been focused on for years. We, with this local
18:46fulfillment, we've got, you know, reach, we've got, um, lots of relationships with realtors that we've
18:54had. I think we have the strongest relationships with realtor bases across the country than probably
19:00anyone. And then we've got an, also a, um, search engine through home bot that we've had forever.
19:07So the customers are getting information out there with their, with the, uh, uh, with connecting
19:15our realtors and Guild to the customer. And that's been really successful for us. So we feel like we're
19:22pretty far along the way, just, uh, we just took a different approach, right? We took a local
19:27fulfillment approach with real estate, with realtor relationships as well, but it's, you know,
19:33it, it works. Our recapture is great. And our customer service, our customer SAT scores are
19:41fantastic. If, if you go to Zillow, we have the, the most five-star ratings of any other lender with
19:48Zillow. So it's working. It sounds like it. So how many, uh, LOs are you up to across the
19:57company now? Oh, I think we're about 2,300 loan officers. Okay. Yeah.
20:03Um, so continuing to grow and you'll keep growing that post post transaction. Yeah. I mean, we feel
20:10like there's so much opportunity for us and just with this connection and merger with Bayview,
20:17it's just going to get better. Do you see 2025 continuing to be a year of consolidation where,
20:27you know, a lot of lenders are, are looking at scaling up? I mean, I, I do see there's going to
20:34be more consolidation. I think there's going to be, you know, a group of larger players and
20:41smaller, very small players, and there's not going to be as much in the middle.
20:47And so that, again, if this gives us an opportunity to be a large player, to get scale
20:53advantages of scale that smaller lenders won't have and, you know, additional access to, you know,
21:01getting more customers in the door. Um, so it sounds like it's mostly business as usual
21:08with this deal, which is, is great. Um, what does the approval and integration timeline look like?
21:17Is it pretty fast because it's a going private transaction? The approval process is really the
21:23key. And, you know, I, we, we think this is going to close probably because of all the, the, the
21:29approvals that we have to go through, probably going to close in the fourth quarter. And, um, as far as
21:36the integration, I mean, we're going to be standalone doing what we do. So the integration is going to be
21:42pretty seamless. So that'll go by fast, but we've got, you know, probably 120 days on the approval
21:49process. That just, it's just something that we have to go through. Well, Terry, I really appreciate
21:55you coming on the show to talk about this deal. I know you've been really busy for the past several
22:01weeks. I appreciate you taking the time. Oh, thank you. And we're super excited. We're super excited for
22:07our future.
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