- 7 weeks ago
In this conversation, Tyler Hodgson shares his journey into the mortgage industry and discusses the emerging role of cryptocurrency in mortgage lending. He details a unique case involving a $4 million crypto asset depletion loan, highlighting the challenges and opportunities presented by this niche market. The discussion covers the verification of cryptocurrency ownership, the volatility of crypto assets, and the future of crypto lending in the mortgage industry. Tyler emphasizes the importance of curiosity and continuous learning for loan officers to stay relevant in an evolving market.
Here's a glimpse of what you'll learn:
Tyler's journey into the mortgage industry began after serving in the Marine Corps.
How Tyler’s path from the Marine Corps to mortgages shaped his approach to lending
Why asset depletion loans matter for nontraditional borrowers
How cryptocurrency can be used to qualify for a mortgage
What “proof of Satoshi” means and why ownership verification is critical
How volatility changes risk calculations for both lenders and borrowers
Why crypto is slowly gaining recognition as a valid mortgage asset
The role curiosity plays in solving complex loan scenarios
Why loan officers must continuously learn to stay relevant
How edge-case loans often preview mainstream adoptionWhat the future may hold for crypto-backed mortgage lending
Related to this episode:
Tyler Hodgson LinkedIn
https://www.linkedin.com/in/tyler-hodgson-4816008b/
UMortgage
https://www.umortgage.com/
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.
Here's a glimpse of what you'll learn:
Tyler's journey into the mortgage industry began after serving in the Marine Corps.
How Tyler’s path from the Marine Corps to mortgages shaped his approach to lending
Why asset depletion loans matter for nontraditional borrowers
How cryptocurrency can be used to qualify for a mortgage
What “proof of Satoshi” means and why ownership verification is critical
How volatility changes risk calculations for both lenders and borrowers
Why crypto is slowly gaining recognition as a valid mortgage asset
The role curiosity plays in solving complex loan scenarios
Why loan officers must continuously learn to stay relevant
How edge-case loans often preview mainstream adoptionWhat the future may hold for crypto-backed mortgage lending
Related to this episode:
Tyler Hodgson LinkedIn
https://www.linkedin.com/in/tyler-hodgson-4816008b/
UMortgage
https://www.umortgage.com/
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
00:00Hello, this is Zeb Lowe, Senior Director of the Content Studio, filling in for Housing
00:04Wire President Diego Sanchez.
00:06Today, I'm speaking with Tyler Hodgson.
00:08Tyler is the EVP of Growth at YouMortgage.
00:11He recently wrote an op-ed titled, I Closed a $4 Million Crypto Asset Depletion Loan.
00:17The title piqued the interest of more than a few of our readers.
00:20Today, he joins us to walk through that deal and share his thoughts on a question that's
00:24been on more and more people's minds.
00:26What is the future of cryptocurrency and mortgage?
00:30All right, Tyler, thank you for joining us today.
00:40Yeah, glad to be here.
00:41Thanks, Zeb.
00:42Yeah, of course.
00:43So if you will, before we get rolling, can you please share a little bit about yourself,
00:47how you got into the industry and what you're doing now or where you're at now?
00:51Yeah, for sure.
00:52So kind of quick story, my background before mortgage.
00:56After high school, I joined the Marine Corps, served 4 years in the Marines and went to
01:02college for accounting.
01:03While I was in college, I was trying to use my VA loan for the first time and was applying
01:07to get pre-approved.
01:08And unfortunately, I got denied for that loan because I was working a part-time job.
01:13I had the GI Bill.
01:14I had a roommate who was paying rent but didn't meet the guidelines for qualifying, which is
01:19kind of frustrating because the amount I was paying for rent for an apartment was going
01:23to be the same as what the mortgage was.
01:25I've got perfect credit.
01:27But the company that I applied for the mortgage with, the owner there, she actually needed
01:31some help with some accounting and some admin stuff.
01:34So she offered me an accounting job and said,
01:38Hey, come work for me as you finish up college.
01:40We can get you full-time and you'll be able to qualify for a house once we get you full-time.
01:46So I thought, Hey, I like real estate.
01:48I like finance.
01:49I'm obviously in college for accounting.
01:51I think this would be a good opportunity.
01:52Took that job.
01:54And that's how I landed in the mortgage industry.
01:56At that time, I was not doing sales.
01:58I was just doing accounting and admin work.
02:00But the owner kept convincing me like, Hey, you should get your license.
02:03I think you'd be good at this.
02:05And even though I never pictured myself as a salesperson, I pictured cold calling, door
02:12knocking, used car salesman.
02:13And she explained to me, it's more about building relationships and educating people.
02:18And she really thought that I would be good at it.
02:20So after a little bit of convincing, I ended up getting my license.
02:24And from there, the rest of history, started producing.
02:29I ended up leaving that company, starting my own mortgage brokerage called NXT Mortgage
02:34based in Texas.
02:36I grew that company for about six years independently.
02:40We were on the Inc. 5000 list, had my own personal production, plus growing a team of loan officers.
02:48And after that six-year period being independent, we joined a bigger company called YouMortgage.
02:54So now I operate the NXT branch or division of YouMortgage.
03:00And my focus is primarily here in the Texas market, but YouMortgage is nationwide.
03:07And I still lead the team.
03:09I still have my own personal production.
03:10And I'm pretty involved on the corporate side with just strategy and helping us get better
03:17every day, which is one of our core values.
03:19So at least you knew getting into the industry that it was a bit of a sales job.
03:24That was way ahead of me.
03:25I've told this story before, but I was recruited into the industry as an LO from a friend of
03:31mine that was a branch manager, and he needed some help.
03:34He needed someone.
03:34He wanted someone that could go talk to larger groups of people, educate realtors and first-time
03:39homebuyer seminars and things like that.
03:41So yeah, sure.
03:42It sounds like a great idea.
03:43And I was three days, I took my classes, got my license.
03:48I was three days into my career as a loan originator before I realized that there was a sales component
03:56to it at all.
03:57I just, and the early conversations getting into me agreeing to become a loan officer in
04:03the first place, being a salesman was not even on the radar, never came up.
04:07It was quite a shock.
04:09It's kind of funny.
04:10Any career, any job, any role, even moving to a new company, you really don't know what
04:16it is until you do it.
04:17There's no way to know in advance, this is what I'm getting into, because it's always
04:22way different than what you envision.
04:25Yeah.
04:25Well, funny you mentioned that topic, because I've been wanting, you've written some contributor
04:31pieces for us in the past, and I've been wanting to be able to interview for a while.
04:35But we got you on today to talk about the most recent op-ed you wrote, which was, the title
04:41is, I closed a $4 million crypto asset depletion loan.
04:46So I want to talk to you about that.
04:48But before we dive into the crypto mortgage part of it, let's define crypto for the purposes
04:55of this conversation.
04:56Because there's thousands of cryptocurrencies out there.
04:59There's quite a few that I'd probably get fired if I repeated the name of, you know?
05:04So like, are we talking about like the big three, like Bitcoin, Ethereum, XRP?
05:09Or are we just talking about Bitcoin specifically in reference to crypto mortgage?
05:15Yeah.
05:16So, you know, for this loan program specifically, I think they allow the big three.
05:20The one that I did this loan on, this particular borrower, all of his holdings were XRP.
05:26So Bitcoin, Ethereum, and XRP are kind of the big three.
05:33And yeah, for the purposes of cryptocurrency, we'll define it as those, you know, primary
05:38ones.
05:38You've got a million different altcoins that they're crazy.
05:42Right, right, right.
05:44So when you first heard that, you know, that there's a borrower that wanted to use crypto
05:48assets to qualify, what was your initial reaction?
05:52Did you see it as an opportunity or is it more of a red flag?
05:56I mean, I definitely saw it as an opportunity.
05:59And, you know, it's interesting.
06:00The first time you experience something, you don't know like what you don't know.
06:05And sometimes you kind of have to blindly say yes or like, okay, let me see if I can figure
06:12this out.
06:13And, you know, I received this referral from a good friend of mine who I've done some of
06:18his personal loans.
06:19He's referred me other people in the past.
06:21He's a real estate investor guy.
06:23He's well connected.
06:24So he connected me with this individual who I did the crypto loan for and was like, hey,
06:30can you do a loan?
06:30This guy's got cryptocurrency.
06:31I'm like, well, yeah, like, let me figure it out.
06:33I got to get, let me get the application.
06:34Let me get the story.
06:35Let me see what's going on.
06:36So I really didn't know at the time that I was going to be doing a crypto asset depletion
06:40loan because I didn't know anyone who was doing crypto asset depletion loans.
06:45But I thought, hey, maybe I can find some non-QM product.
06:47Maybe I can qualify him on, you know, something.
06:50And so kind of said yes and started uncovering or, you know, peeling back the layers to see
06:55what the options would be.
06:57This is a first time homebuyer, correct?
06:59Yeah.
06:59Yeah.
07:00Yeah.
07:00Okay.
07:00And first time homebuyer purchasing is an $8 million property.
07:03I mean, that's a pretty rare profile on top of the crypto aspect of it.
07:09And with all respect to the customer's privacy, what would they like to work with?
07:14Like I said, that's a unique borrower profile.
07:17Yeah.
07:17You know, it's interesting.
07:18Like, he's a very down-to-earth person.
07:22You know, it's like, sometimes you think, I don't know, high net worth people are going
07:27to be very, like, uptight and just, like, flaunting their money around or things like that.
07:32But this guy was very, very down-to-earth and, you know, easy to talk to, very understanding,
07:38quick and responsive with his documents, like anything I needed.
07:41Obviously, he was, like, tech and computer savvy.
07:43So, like, he's pulling these reports and uploading these things.
07:45And he was even explaining and teaching me things about some of the cryptocurrency stuff
07:49that I didn't quite know yet.
07:51So it was a learning experience for me.
07:53But once we, you know, as we got deeper in the transaction, it was kind of like a lot of
07:57first-time homebuyers.
07:58You could sense the pressure.
08:00He was getting a little stressed out on some things and, like, curious, like, hey, is this
08:03going to work out?
08:04And he had the added pressures of, like, he had been through the loan process with some
08:08different people where it didn't work out and he had been denied.
08:12So he's going through this thing probably with a level of skepticism the whole time and fear
08:17of, like, man, I could lose out on this house.
08:18I could lose out on my earnest money deposit, which was, like, $100,000.
08:22So it's a pretty big earnest money deposit.
08:26And so, yeah, it was similar to any other, you know, first-time homebuyer where there
08:31was that level of, you know, fear and I had to kind of talk him off the ledge a few times
08:37and reassure him that everything was going to be okay.
08:40Yeah, that's actually, you had mentioned something that was leading into my next question.
08:44They had gone through or they'd been either turned down or there were two failed attempts
08:50previously.
08:51One was from a major bank, I believe, and then there was another lender that just couldn't
08:57close.
08:58So why were you able to do it?
09:02Was it something that had to do with your company and your product suite or was it just
09:08more your mindset that I'm going to take on this challenge and I'm going to get it closed?
09:13Yeah, I mean, part of it was, I think, the mindset.
09:17Part of it was me vetting out and, like, ensuring that before I say yes, like, I know
09:22that it's a yes and I've got confirmation, I've got documentation, like, everything is
09:27legitimate.
09:28What I found is a lot of other companies and lenders and loan officers, they'll promise
09:33the world or they'll say yes and, like, all of a sudden, red flags start popping up
09:37and you're like, I don't think that's, that sounds too good to be true.
09:40I don't think that's going to happen.
09:41And then sure enough, a couple of weeks later, the bar is getting a denial letter and, you
09:46know, they're not getting the loan.
09:47So it turns out there were actually three different lenders.
09:50One, the big bank, he kind of did a pre-approval process like six months ago to try to get
09:55approved for a house.
09:55So this wasn't in the specific transaction, but he was trying to get pre-approved and they
09:59were putting them through their private client and, you know, high net worth.
10:03They just weren't able to get them approved because the cryptocurrency was all of his,
10:08you know, assets, all of his holdings.
10:10And then when he found this property and was getting pre-approved and going under contract
10:13on this property, he was working with another mortgage broker who was trying to work an angle
10:19with a non-QM product.
10:20They told him that they had him pre-approved for a loan amount at like 5.8 million, which
10:27is higher leverage.
10:28And he really wanted to have the maximum leverage he could based on, you know, the product I
10:35had available, the maximum loan amount was 4 million.
10:39So he couldn't go any higher.
10:40And so, you know, from his perspective, he's going to have to liquidate more crypto to come
10:43up with the down payment.
10:44He wants to hold as much crypto as possible and not have to, you know, liquidate it and
10:49have capital gains, but also miss out on, you know, future potential growth of it because
10:53he's, you know, bullish on the fact that XRP, he believes, is going to continue to go up.
10:59So that lender was in his ear saying, yeah, we're good to go.
11:04You know, I just need an exception on this.
11:05I'm just waiting on that.
11:06Okay.
11:07And for like weeks and weeks, it kind of dragged on with that other lender.
11:11And then ultimately they gave him the bad news.
11:15And right around the same time they gave him the bad news, apparently another lender
11:20stepped into the picture because he got introduced to someone else.
11:23And that lender was trying to do a non-QM loan and they were trying to get him approved
11:27using like trust income.
11:29And they had him, it's crazy.
11:31He told me after the fact, they had him go to an attorney and write up an attorney letter
11:36about his trust.
11:37And it cost him $10,000 and had him order two brand new appraisals because we had to do two
11:43appraisals on our end because of the loan amount.
11:46So he did two more appraisals that were $1,000 each, had this attorney letter written up.
11:51They were promising him, yeah, we can get you a $5 million loan amount.
11:54It's going to be all good.
11:55And then a week before closing, they tell him, no, hey, we can't get it done.
11:59And he had been working side by side with me and with that lender kind of through the
12:04whole process.
12:05And so that lender, you know, wasted $12,000 of this guy's money on that.
12:10And like, again, you think, oh, well, you know, he's super rich, like who cares?
12:14But like nobody listening to this call, if you lost $12,000 because somebody was telling
12:19you yes, and they didn't really have it vetted out and they ended up denying him, you would
12:23be pretty frustrated.
12:24How long did it take you to get the CDC, the clear close?
12:29Well, once we got the green light and submitted to underwriting, I want to say it was between
12:36like three to four weeks.
12:37I mean, it was less than 30 days.
12:40Part of that holdup was the borrower, you know, getting the process started with us and
12:46then like getting us kind of the final money for his down payment liquidated because he
12:51was holding out for this other loan option.
12:53Realistically, it could have been, you know, two or three weeks clear to close if we just
12:56had all those things quickly up front.
12:59Right.
12:59But nothing, you know, nothing crazy, like three to four weeks is not, you know, out of
13:03the norm.
13:03Yeah.
13:04How long had he been kicked around previously?
13:08Well, he was, he, the contract he went under on this house was like a little over 45 days.
13:13And so the first lender, he had burned like three weeks and, you know, he didn't, he didn't
13:19come to us and like start our process for financing until like the, his financing contingency
13:25period was like 21 days.
13:26And like, he gave me the thumbs up to move forward on the 20th day.
13:31So, so yeah, the previous lender had it for three weeks and kind of then turned them down.
13:37So can you get everyone caught up to speed on what asset depletion is in the, I guess
13:44a traditional sense and then how that varies with a crypto asset depletion method?
13:52Yeah.
13:52So, you know, Fannie Mae, Freddie Mac, conventional loans, there's some assets as income guidelines
13:58where borrowers, if they meet certain age requirements or the assets are certain, you
14:03know, employment related assets, funds that are in retirement accounts, brokerages, stocks,
14:09things like that, or cash savings, you can divide the total amount of assets by a certain
14:16period of months or a certain period of time and use that as the qualifying income to calculate
14:22your debt to income ratio for ability to repay.
14:25On the non-QM side, assets, asset depletion is more common because a lot of times
14:33you know, if, if someone's not of retirement age for Fannie and Freddie Mac, I'm pretty sure
14:41those guidelines, you have to be a retirement age to have unrestricted access to those funds
14:46in the retirement accounts.
14:47So you don't see it as often there, but at non-QM traditional kind of asset depletion
14:53loan, you can use a hundred percent of any checking savings, cash amount, obviously not
14:59like physical cash because you got to source that, uh, 80% typically of stocks and brokerage
15:07accounts, uh, 70% of retirement accounts because of 10% penalty.
15:12Um, and then in this case, cryptocurrency balances, we were able to use 50% of the cryptocurrency
15:18balance and we take the lump sum of their net assets, which is the balance they have in
15:24all of these accounts right now, minus their down payment money and the money they need
15:28for closing.
15:29Cause obviously they won't have that money after they close on the house and you divide
15:33that remaining net asset amount by the factor and, uh, typically 60 months or 120 months, depending
15:40on the investor's guideline that gives you the qualifying income.
15:44Um, so it helps someone qualify if they write off all their stuff on tax terms or they don't
15:49have regular qualifying income, but they've got a large amount of assets and liquidity.
15:53Obviously someone with $20 million in the bank could pay back a million dollar mortgage and
15:59they can make a $10,000 a month payment.
16:01And it's not a problem because they can just draw on that money they have in their account.
16:05So it makes sense, you know, from logical perspective, I think anyone listening, you know, at this
16:09point can kind of agree that that makes sense.
16:12Um, yeah, and that's, that's that depletion in a nutshell.
16:16Okay.
16:16So in the article, you had mentioned, uh, that you verify ownership through proof of Satoshi,
16:23which I thought was kind of, is that, was that actually, uh, is that a technical term?
16:28Cause I mean, I think most people listen to know, uh, Satoshi Nakamoto's the, the mythical
16:33creator of, of Bitcoin, but it also seemed like this kind of like memification of, of language,
16:40uh, kind of creeping into, I don't know, guidelines or underwriting decisioning.
16:45Uh, so is that one, is that a technical term as proof of Satoshi, like a, a term that's
16:50on documents and, uh, and to walk us through what that is.
16:55Well, the, the borrower is the one.
16:57When I first heard this term from the borrower, once I found out that, Hey, I've got a product
17:01with a non-QM investor that allows for asset depletion of cryptocurrency.
17:06I go back to the bar and I'm like, Hey, yes, we can do this kind of, here's the terms of
17:09the loan.
17:10Here's what the calculations look like.
17:11We can make this happen.
17:13You know, now I got to prove you have this cryptocurrency.
17:16Um, and, and, you know, what we'll have to do is liquidate your money for the down payment.
17:21And you'll just need to show that you'll need to show your balances, you know, through these
17:24different crypto wallets.
17:27And at the, uh, you know, in that conversation, he's like, okay, you know, for the, would we
17:32be able to do proof of Satoshi?
17:34And so he mentioned this term.
17:35I was like, I don't know what that is.
17:37Uh, and I get like, you know, I was like, I know who Satoshi is like, that's, that's
17:43the Bitcoin, you know, kind of founder or whatever.
17:45Um, so I was like, you know, explain to me what that is.
17:47And he's like, well, there's a thing called proof of Satoshi, where if you've got a large
17:50balance or a large wallet account and you send little small transactions to and from,
17:57you know, to your, another account of yours that you verifies yours, that's how you can
18:01prove that you own the bigger wallet or the bigger account, which to me made total sense.
18:07It's just like when you link up two of your, you know, regular bank accounts, Bank of America
18:12and Chase or your Zelle account, and they send the little test deposits of like two cents
18:16and eight cents.
18:17And then you got to type into the other account, what was sent.
18:19And then they take it back.
18:21Uh, it's kind of the same concept there.
18:23So I, based on his, the borrower's request, I proposed that question to the account executive,
18:30you know, and to the underwriter of like, Hey, can we do this to prove that this is his
18:35wallet that's off exchange because it wasn't on a exchange like Coinbase.
18:39So if a borrower has cryptocurrency on an exchange like Coinbase, they can print pretty decent
18:46PDF statements at this point.
18:47Like, because those requests come through so often, I think finally the big exchanges can
18:52print a PDF and it's got your name on it.
18:54Like a normal bank statement shows your balance and your activity history.
18:58But if it's off exchange, cold storage wallet, there isn't, you know, statements and proof
19:03of ownership for those things.
19:05So the proof of Satoshi was the way that the investor, the underwriter was comfortable with
19:11proving ownership of these assets.
19:13Um, I think part of the argument there on this one was like, if somebody has got, you
19:18know, $40 million in a crypto wallet and they, he transferred four, you know, four and a
19:24half million of it for down payment and funds, like that's kind of pretty strong validation
19:29that all that 40 million, he owns it.
19:31Uh, cause I mean, I've got some good friends and people I know, but I don't know anyone who
19:36would like transfer that kind of money for me to try to like disqualify for a mortgage
19:40and then knowing that they may never get it back.
19:42Yeah.
19:43Right.
19:44So, um, yeah, super interesting concept, but the, you know, the investor, the underwriter,
19:48I don't know if this was the first time they had experienced that.
19:51I don't know if, you know, that was kind of an exception in the process, uh, but they
19:56were comfortable with it.
19:57And now it seems like going forward, you know, something like that sets precedence.
20:01So now going forward, they've been through that process and I have too.
20:04So I know like, okay, we could do that.
20:08One of the biggest, uh, barriers with crypto in general, but I particularly crypto lending
20:13is, uh, uh, volatility, right?
20:17I mean, I think in the, in the past two or three months, uh, Bitcoin has dropped like
20:23$20,000, like a high of 126.
20:25And now it's still 102, 103.
20:28Uh, it was at 119 when it dropped to where it currently is now.
20:33So how are those, uh, risks, you know, addressed and processed on the lending side?
20:41Yeah.
20:41I mean, obviously they're able to validate the balances up, up until closing.
20:47Um, they're doing the calculations pretty conservatively with the 50% haircut of the
20:52balance where a traditional, you know, stock portfolio, they're doing 80%.
20:56So you've got another 30% haircut there.
20:59Um, you know, in this case, I think the big three, Bitcoin, Ethereum, and XRP have a little
21:05more stability.
21:07Uh, you know, I don't think people are expecting 70, 80, 90% drops in the value of those three
21:14coins going forward.
21:16Um, I mean, it's still possible, obviously, but like anything, I mean, uh, investors got
21:21a risk, right?
21:22Like, uh, you work a W2 job, like you can lose that job tomorrow.
21:27You see layoffs across the country, right?
21:2820% of people are getting laid off.
21:30That's like cryptocurrency losing 20% of its value for this guy.
21:34You know, that's the risk.
21:35Um, what, what's interesting about it though, is from a servicing perspective, and I think
21:41we mentioned this a little bit in the article, you can track the, uh, track the value of that
21:47wallet, even through the servicing, like it's, it's all public ledger.
21:51So the underwriter, the servicer could go in after the fact and just kind of continue to
21:56monitor the value of this person's wallet and see if he's moving more money out, moving
22:00more money in.
22:01Obviously they know the price of the coins, they can convert that.
22:05Um, but you could also, you could almost, you know, as a servicer know the risk of your
22:11portfolio based on now, you don't know if he liquidates it and moves it to cash or gold
22:16or stocks.
22:17So like you don't see it anymore, but if you saw his balance all of a sudden getting really
22:20low, then maybe you start to have concern for the performance of that loan.
22:25Um, so I think that's an interesting thing in crypto, whereas with the traditional mortgage,
22:29if I did asset depletion with my stock account after the day of closing, you have no visibility
22:34into the balance of my stock account.
22:36I could lose all that money trading, or I could liquidate all that money tomorrow.
22:40And you, you wouldn't know.
22:42Do you think that visibility, uh, into their, their, their digital wallet or their account,
22:49that transparency, I'm trying to say how to, what I'm correctly express what I'm thinking
22:56here, uh, incentivizes more of this, uh, in, in, in the future because you have that visibility
23:02that you don't have on other, you know, asset depletion loans?
23:06Um, I think it's a benefit.
23:08I don't, I don't know that like, you know, underwriters are going to be jump, jumping over
23:13each other to like, uh, think that it's the most, you know, extra like beneficial thing
23:20to the performance of the loan.
23:23But, you know, the extra visibility definitely doesn't hurt and it's a potential benefit compared
23:27to other loan types.
23:28And, you know, uh, we, we may see this in our lifetimes where more and more things become
23:35tokenized and, you know, kind of public ledger type things.
23:40And, you know, now you skirt the lines of like privacy versus, uh, you know, transparency,
23:46which, uh, yeah, it'll be interesting to see how some of those things shake out and like,
23:51yeah, do underwriters, do investors, do servicers actually care to see that future balance and
23:58transparency.
23:59Do you think crypto lending, um, could be eventually standardized across like non-QM or
24:06conventional products or, you know, what, what do you see the timeline just anecdotal,
24:12just your opinion on it being a niche?
24:16Yeah.
24:16I mean, I think it's a niche right now.
24:17It's a growing niche.
24:18I know that like, uh, figure lending is, is coming out with, uh, kind of crypto backed
24:24loans where the crypto is the security, um, or the collateral.
24:30And, you know, there are other lenders out there that allow people to borrow against their
24:34cryptocurrency.
24:35This, you know, is different because it's an asset depletion based income qualifying, but
24:42the, you know, the home is still the collateral, uh, you know, it's cause it's a mortgage on,
24:47on the actual property.
24:49Um, you know, there were announcements this summer.
24:53Uh, I think Bill Pulte for, you know, FHFA announced that a directive for Fannie Mae and
25:00Freddie Mac to explore accepting cryptocurrency as assets for qualifying.
25:07And for, um, that would be for down payment funds and reserves and sourcing borrowers down
25:13payments because more and more borrowers these days have some sort of funds or assets in
25:18cryptocurrency.
25:19And when they go to buy a house, just like they're going to, you know, draw money from
25:22their stock account.
25:23They're going to do that from their cryptocurrency account.
25:25So you're already seeing steps and, you know, the more, more and more adoption from
25:31corporate companies holding Bitcoin and cryptocurrencies and their balance sheets more and more
25:37you know, things coming down from the federal government, the SEC.
25:41So the more mainstream it becomes, uh, the more of that will also trickle down into our mortgage
25:47guidelines to be more favorable and, you know, figuring out what, um, what opportunities
25:55there are there to, you know, qualify borrowers who previously weren't qualified and, you know,
26:02certainly as understanding the levels of risk equally, like a borrower with a 10 million
26:07dollars in Bitcoin versus a borrower with $10 million in Apple stock.
26:11Like, are they comparable?
26:13Should they, you know, are they equitable?
26:16So how do you think that LOs or how do you recommend LOs begin to approach this space?
26:22Um, well, obviously if you're an LO and you've got access to like non-QM lenders, non-QM products,
26:27uh, talking to your account executives there, learning those underwriting guidelines, you know,
26:32what kind of niche products they offer, keep, keep your, you know, eyes on your inbox to see
26:38when someone announces a new product about cryptocurrency, go learn about them, uh, you
26:43know, stay plugged into housing wire and, you know, news outlets.
26:46So if you see, you know, posts or information, if you're interested in the cryptocurrency space
26:51and servicing that niche, then, you know, continue to educate yourself about that and, and be
26:57informed and up to date with the new things that are coming out.
27:01Because at the end of the day, like in any business or industry, the people who innovate
27:06are the ones who are going to have, you know, success in the future.
27:09So this is just another way that a loan officer can innovate and, um, have a unique product that
27:16a lot of people don't know a lot about.
27:18They're not comfortable doing it.
27:19They don't have access to do it.
27:21So, you know, for me, it's already resulted in more referrals for the same product because,
27:27you know, these people, they're in small groups, right?
27:30Like this person knows this person who knows that person.
27:33And so I've got two other clients pre-approved right now who are shopping and same thing
27:38about, you know, $2 million loan amount, $2 and a half million loan amount, and we're
27:43qualifying them based on their crypto asset depletion.
27:46So it's a really cool niche.
27:47I'm definitely going to lean into it more, you know, going into next year as well.
27:53Have, are those the only two that you've done, uh, after this one, or have you done more
27:57in between those two, just the referrals?
28:00Uh, just the one that closed.
28:01And now I've got the two others that are, that are pre-approved.
28:04Uh, one of them's like been negotiating offers.
28:07So I'm hoping that one, you know, ends up under contract very shortly.
28:09Uh, those are, yeah, that's what I got in the pipeline right now.
28:13And the higher loan amounts is with them as well, right?
28:15Yeah.
28:15Yeah.
28:16And both of those, like one's 2 million, the other's two and a half million loan amounts.
28:20Do you think that this is one of those, uh, like I said, it's a niche now, but it is something
28:26that if an LO wants to remain, you know, relevant in 10 years, we'll have to, uh, we'll have
28:32to know how to do or have to be comfortable, uh, executing.
28:37Yeah.
28:37I mean, you just look at it as another way borrowers are qualifying, um, assets that more and more
28:43people are going to have.
28:44So, um, depending on what, you know, especially the, the agencies, what they come roll out
28:51as, as guidelines and new improvements in this space, a loan officer is going to have
28:57to learn those things or they're just not going to be experienced.
29:00You know, it's like, it would be like saying, Hey, I don't, I don't deal with self-employed
29:05borrowers because I don't know tax returns.
29:07Like, great.
29:08I don't deal with cryptocurrency borrowers because I don't know anything about cryptocurrency.
29:11I mean, you, could you be a successful loan officer and not deal with any self-employed
29:15clients?
29:16Yeah, probably.
29:17Um, but also if, you know, the more areas you're experiencing, or if you focus on some
29:21of those niches, uh, that gives you more opportunities and, you know, kind of future proofs you against,
29:27uh, AI taking all of our jobs.
29:29Right.
29:30Right.
29:31Right.
29:32Uh, you, you ended, this is my last question I have for you.
29:34You ended your article with a challenge to the LOs to get curious about niches you have
29:40and explored.
29:42So beyond the crypto aspect, what's the biggest lesson that you took from this deal that other
29:47originators do you feel could benefit from or could learn from?
29:50Um, yeah, I think it's, uh, I think one of my strengths has always been problem solving
29:55and finding solutions.
29:57And, you know, hopefully the loan officers listening that resonates with you as well.
30:02I think that that's what sets apart, you know, high performing and high producing loan
30:07officers from those who don't make it is we, we are curious and we, we find a, you know,
30:13we get a problem and we help find a solution.
30:15And, um, you know, there's a, I think it's atomic habits is the book that has this concept
30:21of like explore and exploit.
30:23So, uh, you know, you got to test different things and figure out what works for you.
30:28And so you're exploring or exploring, if you're exploring, when you find something that works
30:31really well, you exploit that and you kind of go all in on that niche about 80%.
30:37So it kind of falls back to the 80, 20 rule, but 80% is exploit and continue to explore.
30:42So 20% here, 20% there.
30:44I'm going to learn a little bit about this.
30:46I'm going to, you know, try different prospecting strategies.
30:50I'm going to try a little social media videos.
30:52I'm going to try some cold calling.
30:53I'm going to try some open houses and, you know, my main thing is doing this, but I'm
30:57going to test all these different things because, you know, over time I may find other opportunities
31:02in different areas or find that something serves me better by constantly being curious
31:07and constantly exploring.
31:09So my loan officers listen to this.
31:11I mean, that, that challenge from the end of the article there still holds true, like be
31:14curious and, you know, never stop learning.
31:18Taylor, thank you so much for, uh, for speaking with us.
31:20I appreciate you taking the time and, uh, this is a really, really interesting conversation.
31:23I look forward to our next one.
31:24Yeah.
31:24Thanks, Deb.
31:25Appreciate you having me on.
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