Ep 114: The Resurgence of the Independent Mortgage Broker

Anthony Casa is a mover and a shaker. He’s gone to bat against the big boys and won. He’s received lawsuit threats from the largest banks in the country and refused to back down, even though he was only 32 years old at the time, had four children at home, and had everything to lose.

Anthony got into the mortgage business at the tender age of 18 and founded Garden State Home Loans less than a decade later. He has since become a champion of the independent broker and loan originator and is paving the way for brokers to be prepared for the disruptions that will inevitably come to the industry.

He believes in embracing change to stay ahead of the curve and recognizes that to stay relevant and competitive, independent brokers need social support, tools to increase efficiency, and methods for retaining customer. Anthony has given a blueprint for all these in the form of BRAWL, AIME, and ARIVE.

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IN THIS EPISODE YOU’LL LEARN:

About Anthony’s work history
About AIME
About Garden State Home Loans’ record-setting month
About BRAWL

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TRANSCRIPT

Geoff: This week’s special guest…honored to have this gentleman here. There’s a movement afoot out there, people. I don’t know if you’ve heard it, seen it, felt it, but it’s happening. And that movement is coming back to the growth and resurgence of the mortgage broker community. I started my career, many of you don’t know, at a mortgage broker shop way back in 2003, I think it was. And so I have a pretty good sense of what the mortgage broker environment was, what it became, and more importantly what it’s now becoming anew in its new resurgence, if you will. And there’s some really cool things happening.

So Anthony Casa, who is he? He is the founder and chairman of the Association of Independent Mortgage Experts, otherwise known as AIME. He’s also the president of Garden State Home Loans, which is a mortgage broker based out of New Jersey that he founded in 2011 and developed into one of the top mortgage brokerages in the country based on annual closed volume. And you’ll be interested to hear Anthony’s story about the record month they had. I think you’ll be pretty blown away about the amount of volume they were doing with such a small operation.

But here’s the thing. What’s really put Anthony on the map of late is in 2017 he founded BRAWL. We’re going to talk about BRAHL. What is that? No, it’s not a bar brawl or a fight that you get into, although in some cases it has turned into that, unfortunately, a little bit on social media. But BRAHL, Brokers Rallying Against Whole-tail Lending. What the heck does that mean? Anthony is going to tell you about that.

And then, of course, Anthony’s latest vision is AIME, the Association for Independent Mortgage Executives, that champions the independent mortgage professionals in doing a lot of things that are consumer-focused and helping those that are considering transitioning their business into either working for a mortgage broker or becoming a mortgage broker. You’ve got to hear more about what Anthony is doing there because, let’s face it. The mortgage broker channel [inaudible 0:05:32] ecosystem called ARIVE. Anthony is going to tell us about that. It’s a fully integrated broker environment.

Imagine this. Those of you who have been in the broker world before, you can remember when you had all the fragmented different things you needed to engage with and try and stitch together different platforms and tools to actually put a loan on, to get pricing, to fund and all that stuff. Well, Anthony and his team have solved that with ARIVE. It is an LOS. It’s a point of sale. It’s a CRM powered by Salesforce, pricing engine, lender connectivity, digital document storage all in one place, including this great ecosystem of like-minded professionals, all focused on being the best professionals they can be and providing the best service and product to the end user, consumer. That’s what it’s all about and lots of things happening afoot with Arive, with AIME, with Anthony. Really amazing stuff there.

So I wanted to bring Anthony in today’s session to educate you, the listener, about mortgage brokerage, the difference between that and retail, what’s happening, what to be aware of… And this isn’t a big us-versus-them. There’s enough space in the world for everybody to get a piece of the pie. And so, as you know, I’m the chief truth teller here at Mortgage Marketing Radio, and I wanted to bring the truth to you guys. And so Anthony and I, I do believe we do a good job of unpacking the truth on this episode and helping provide you some context as to what’s happening in the mortgage broker space, what’s happening with AIME to hopefully take the high road in the conversations about different options for you and your career as a mortgage professional.

So I think you’re going to enjoy this episode, and we provide links to everything in the show notes. I will tell you Anthony’s got a couple of events coming up if you’re interested in attending. One of them is in Florida on the 17th of April. There’s links in the show notes. It’s an AIME workshop. They had about a thousand originators, mortgage professionals, attend the one in Irvine that I went to. This one’s in Florida on April 17th. And there’s links in the show notes.

And also, there’s another one coming up in October, which I highly encourage you to attend. And it is called Fuse, and it’s the second time they’re doing this. Two keynote speakers this year in October at the Bellagio in Las Vegas — Ryan Serhant and Gary Vaynerchuk. Have you heard of them? Get your tickets now. They’re available, and you can learn more by checking the show notes. Fuse.AIMEGroup.com is the website. And if you just want to go to AIME, there’s AIMEGroup.com. Remember, AIME is a-i-m-e. Go to AIMEGroup.com. Check it all out. Let’s get into this week’s show.

Anthony, welcome to the show.

Anthony: Hi, how are you? Thanks for having me. I appreciate it.

Geoff: You bet. For those that are listening, how about a brief introduction? Anthony Casa, how are you? What are you all about? I know you’re passionate about the mortgage business, but just give us the brief background — your journey in the mortgage space and what’s led you up to heading up AIME now.

Anthony: I started in the mortgage business in 2003. I’ve been in the mortgage business for now 15 years. Loan officer, sales manager, branch manager. I started my own mortgage brokerage in 2011, which was Garden State Home Loans, which became one of the top brokerages in the country. I recently sold my mortgage brokerage, but I started BRAHL, which was a grassroots call to action for mortgage brokers which a kind of was very provocative national campaign that got a ton of attention and, I guess, put me on the map of brokers on a national level. And then we started AIME just, literally, one year ago this month.

AIME is a trade association, but I think it’s a little bit more than that. It’s become sort of like the mortgage broker community place where we have a lot of calls to action. We do a lot of advocacy stuff. But more than that, we do events. We have social media groups. It’s really a place where brokers feel comfortable and treat it like it’s their company almost. It’s where they go to get information, share information, when they’re struggling to get motivated, all that good stuff. So that’s what we’re doing.

We have a lot of exciting things that we’re working on. I think brokers are, for the first time in a little while, not only relevant when it comes to the mortgage industry, but I think everybody has sort of got mortgage broker on the tip of their tongue these days.

Geoff: Let’s do this. Let’s tackle the acronyms for those listening. Let’s take BRAHL first. What does that stand for?

Anthony: BRAHL stands for Brokers Rallying Against Whole-tail Lending. The concept there is
whole-tail means that there are lenders that are wholesale lenders, but the reason why they’re in the wholesale channel is they ingest loans from mortgage broker, they close loans for those mortgage brokers, and the minute that they close those loans, their call centers are churning those loans, repurposing those loans for their own purposes.

Right now is a prime example of when whole-tail lenders do very well. Over the last 10 weeks, we’ve seen the 10-year treasury drop 60 basis points. And right now we’re at a very low point. In an opportunity like this, a company — and I won’t name names today — but one of them is out there in Detroit, big retail lender that we all know online. And what they’ll do is rates drop like this, the call center goes into action, and every single customer that closed in the last six to 18 months is going to get a call to potentially refi. And by the time the mortgage broker has the opportunity to call that customer — because they obviously don’t have a call center; they don’t have the technology that a company like that has — by the time they get in touch with them, it’s too late. They’ve already closed.

So whole-tail lending is a wholesale lender that is in it for retail purposes. And basically, the BRAHL was in action where we brought a lot of attention to the subject. And I would say that in the last two years, we’ve seen a very dynamic market shift in the wholesale channel that has led to national implications. But the whole-tail lenders, a lot of them have changed their business practices.

We worked just this week. John Gibson was on another podcast, and he was talking about how we work with Caliber Home Loans. They were a lender that, when we came out, we said, hey, these guys are a whole-tail lender, sat down with them, literally worked with their people that ran their call centers, the head of retention, the head of consumer direct redid their entire policies. And over the course of six months, we came up with the Reconnect Program so that every single past customer of a mortgage broker goes back to the mortgage broker. They’re very, very serious about it. And in 8 months since we rolled that program out — when I say “we,” we worked with them, but they rolled it out — they’ve generated 45,000 reconnect leads back to mortgage brokers in 8 months.

So you think about that. If that wasn’t going back to mortgage brokers, that was staying with the retail channel. So the implications of the economics are massive.

Geoff: What’s the motivation then for somebody like Caliber to do that, versus just take it direct?

Anthony: It’s a partnership play. To be honest with you, they make more money if they do it in their call center. So if they give it back to the broker… First of all, there’s no guarantee that broker is going to bring that loan back to them because he’s their broker, by nature. The second thing is that they make way less money on a wholesale transaction than they would make on a consumer-direct transaction. So the reason why they’re doing it is, with the awareness that we brought to the subject, basically, brokers have said, “We don’t care what your price is. We don’t care what you’re willing to do for us. If you’re not willing to keep our past customers in touch with us and you’re not willing to make a commitment not to solicit them, we won’t do business with you.”

As a result of broker taking that type of action and not doing business with hotel lenders, essentially what had happened is every lender that previously used to do these things has come back and said, “Whoa. We’re not going to do those things anymore. We’d rather have your business than no business at all.”

We’ve seen some of the biggest whole-tail lenders in the game have changed their business practices. Some of them have said they’ve changed their business practice but actually haven’t changed their business practices. But it’s still a relevant thing, and to me, this isn’t about 2019, even though currently rates are down. I think this is a long-term situation.

What happens is wholesale, for 10 years, had zero growth. Literally 8% flat for ten years. Over the last 18 months since we started BRAHL, all of a sudden we’ve seen almost a double of the wholesale channel. And the reason why is it’s not that these lenders aren’t soliciting your customer. It’s understanding that the pipeline of customers that they stop when they do that, because every customer will refer you to three or four more customers. So if they’re soliciting all your old customers and doing those deals, it’s not just those deals they’re getting. They’re also getting the referrals. So growth is back on the mend in the broker channel because, at its core, this is no longer a business practice that brokers are willing to accept.

Geoff: So you think the whole-tail lenders — I’ll use your language there — they’ve essentially kind of woken up to…the word that comes to mind for me is the brokers essentially boycotting the wholesale lenders. And these savvy wholesale lenders have said, “We’re in this for the long play. And we’d rather partner with the brokers, give up some profit for the bigger picture.” Is that what I’m hearing?

Anthony: No. I would not say “boycott,” because boycott is a bad word. I would say “accountability.” The thing is this. If you’re in a situation where a company is not doing the things that they say they do… At the end of the day, if they have a business practice that you weren’t necessarily aware of… I’ll compare it to this. This is drastic, but it does have plausibility… Cigarette companies, for years, said cigarettes don’t cause cancer. So people are standing their smoking cigarettes, yada-yada. Then all of a sudden, cigarettes do cause cancer, and it’s out there. Once that happened, this is a piece of information that for 30 years, cigarette companies said it didn’t cause cancer, so people kept smoking because they’re listening to these companies tell them it didn’t cause cancer.

Once they knew, even though they still should have known, they stopped doing it. So now you’re in a situation where it’s like for years brokers thought that these lenders sold their customers, but now it’s actually been identified, and it’s real. So it’s one of those things where it’s okay if you still want to work with those lenders. Just understand, I tell brokers all the time, if you want to work with those lenders, knock yourself out, because you’re making an important business decision where you know that they’re going to steal your customer. And if you’re okay with that, don’t complain about it, because you’re the one choosing to do business with them. You either hold them accountable, or you don’t hold them accountable. So it’s not boycott. It’s more about accountability.

Geoff: Two thoughts on this. Ultimately, and I’m sure you would agree with this, that’s been happening for years. Because I can even remember working at Countrywide back in the day. They would still be kind of doing that, calling my own customer base. So ultimately, it’s really the responsibility of the individual loan officer, broker, professional, whatever to build a fence around that customer. However, what you’re saying is it’s pretty hard to compete at that level because we don’t have the resources, if I’m hearing what said correctly.

Anthony: I think this argument, it’s like a lot of retail loan officers that I talk to say this. “It’s your job to stay in front of your customer.”

A couple of things here. Number one, you’re saying that because you work for a company, and if you don’t stay in front of your customer and they sell the service thing — because you have no control over who they sell the servicing to — that they’re going to steal your customer. You have no control over that. You work for one lender. You don’t have options, so you’re stuck. I get that. That’s your situation.

But mortgage brokers don’t have that situation because what’s happened is we have options. So a company like UWM, the emergence of them over the last four years, since they’ve been the number one wholesale lender, they have a business practice. They said, “We’re in it for the broker. We’re going to give every lead back. We’re going to give every deal back. We’re going to do everything we can do to put the customer in front of the broker.” That leader has now made the rest of the other lenders, or most of the other lenders, have to respond to either do the same thing or not. But now that’s a competitive advantage or disadvantage for people.

So for me, yes, the broker does need to stay in front of their customer. But the thing that I look at is when you aggregate brokers and loan officers and you actually go to these companies and you say, “Listen, I understand that you’re going to solicit our customer.” If I’m one guy and I say, “I don’t want you to do that,” they’ll just roll over you. They’re say, “That’s just the way it is.”

But when 30– to 40,000 say, “We’re either going to do business with these good guys that are doing loans the way that they’re willing to commit to long-term,” or not, people do change.

The way I look at it is this is the way that business has always been done, but the reality is, once you actually aggregate, take a hard position, you go from being an employee or just accepting the way things are to actually you’re negotiating. Like this is truly a negotiation.

The way I talk to lenders, I say, “You need to change your economics.” That means that your pricing is slightly worse, if that means that you have to adjust your business model in some capacity, if that means that you have to actually invest in training the broker to stay in front of the customer better, adjust, adopt, adapt. That’s the way I look at it.

There is a fundamental thing in the mortgage business that I think is the reason why disruption is so scary to this business. It’s that the way things have been done is the way that they’re still done today. And if you try to challenge it, everybody says, “No, no, no. You can’t do that.” And I think with BRAHL, we challenged it very hard. And now, all of a sudden, the retail guys are saying, “Hey, we don’t even get our leads back. In our own company, we have a direct-to-consumer channel. They solicit our own customers.”

So it’s an interesting dynamic. But we’re influencing change by aggregating people.

Geoff: What I love about that is it proves today that people can create change and rise up. So the brokers got tired of that situation happening, and you created a platform and gave them a voice and then created the masses that actually could influence that change with BRAHL.

Anthony: Yeah. I think the biggest thing is no broker was going to step up and call out—

Geoff: Individually, yeah.

Anthony: Nobody is going to go up against Quicken. You’re just not going to do that. Even to be honest, when we started this call to action, I was still a mortgage broker, obviously. I was in my business. I was in my brokerage. And we put out the press release, and I made the call to action and everything. Within a week, I had the legal counsels for the biggest banks in the country saying, “Listen, dude, we’re going to sue the living daylights out of you, and you’re going to have nothing left.”

Me, at the time, I was 32 years old, four kids, a house, made good money, savings… So you’re like “Oh, man. I’m going to lose everything if these guys come after me.”

But the decision that you really have to make is either you’re going to be another person that gets intimidated and bullied and push into a corner and let this whole thing that’s going on continue, or you’re just going to go all in on it. And my decision was like, listen. I’m going put my blinders on, and if they sue me, they sue me. And if I lose everything, I lose everything. But I’m going to see this thing through.

So to me, eventually brokers saw how powerful that was. BRAHL is unbreakable right now.

Geoff: Yeah, and you’ve got people rallying behind your mvmt as well, and that’s what’s awesome. That’s really what you’ve created is a movement.

You ought to come up with another acronym for balls because you’ve got BRAWL, and you’ve got balls.

Anthony: We are working on it. There’s a couple of other acronyms we’re working on too.

Geoff: Good, good. That’s a good backstory on BRAHL, because I’ve talked to a number of people they weren’t aware of what that meant. So thank you for that.

Which now leads us to AIME. Bring us forward to AIME. What is that acronym? Tell us what’s the purpose of AIME.

AIME is the Association of Independent Mortgage Experts. Basically, what led to AIME was, when I started BRAWL, first of all, we didn’t expect the support that we got. We had such a large amount of support. Within 90 days of starting BRAWL, we had over 10,000 mortgage brokers following us, supporting us, basically telling lenders that they needed to change their business practices.

To me, it was great to have a grassroots movement, but you need an organization. You need to have something wrapped around it. So we started AIME. It’s a nonprofit trade association for independent mortgage brokers exclusively. And to me, at its core, I focus on the originator. I think the layers in the industry is what causes disruption. It’s also what causes market shifts.

Ten years ago, when Dodd Frank happened and the housing crisis and all that stuff, the reason why 80,000 loan officers left the broker channel and went to the retail banking channel is because, at that time, the broker channel was not a good option. Lenders had left the channel. They weren’t treated well. Their regulation was very scary. It wasn’t a good time to be a broker. Everybody went to be a retail banker.

At that time, that was a great platform for a loan originator, because there weren’t all these layers. Most of these companies were in their infancy stages or early stages, Movement Mortgage, Guaranteed Rate. Back then, they didn’t have regionals and divisionals and all these freaking layers where everyone is making all this money.

But over the course of 10 years, you add a layer, add a layer, add a layer. All these people come on board. And the problem is, at the end of the day, the person that has to sell that rate that covers all that margin is the loan officer. They’re the ones dealing with the consumer. And the reason why there’s margin compression right now is because, A, the market is contracted by 20%, 25%, and there’s less customers out there. There’s just as much competition. But also, these guys are… Consumers are smart enough to know that our rates are a point and a half higher than what the brokers are giving them. So now we’re having this big issue where all the… All these loan officers are coming back to Brokerage Show. We had over 3,000 loan officers come to the Brokerage Show last year. 8% growth over the number of loan officers in the channel in 2018, which, over the previous nine years being there, that was zero growth. Last year we had 8%. This first quarter so far, I haven’t gotten the official number — this is one of our things that we do is help support loan officers that are transitioning to the broker channel. We’ve had almost a thousand loan brokers that we’ve helped just this quarter.

To me, the reason why they’re coming back is because here they’re in a position where they can control their margins. There’s a cap on how much they can make. There’s no layers. And the Association of Independent Mortgage Experts, to me, the role is how do we protect loan originators and mortgage brokers, and BRAWL is one of the things. How do you protect them? You make sure that the people that are doing business with them aren’t going to steal their customers. How do you support them, whether it’s compliance, whether it’s legislative relief, whether it’s technology, whether it’s advocacy, because consumers need to find out how do I find a mortgage broker.

Those are the things that we’re doing as an organization. But more than anything, what I really wanted to accomplish is, like why does somebody work for one of these retails bankers. And when I really peeled away at the layers, what I realized is I have that market leader or that regional guy that kicks me in the butt. It keeps me motivated. It keeps me getting after it. I have that motivation. They have events where we all get together, and we talk about best practices.

So when I went through the whole thing, it was like, so all the reason why have nothing to do with mortgages, have nothing to do with the day-to-day transaction piece. It was all about helping keep me motivated and focused. And I think that’s what we’re trying to do with AIME. How can this organization bring people together in an organic way where there’s not layers of financial repercussions to it. But we’re going to support each other. We’re going to motivate each other.

Last night I had a call at 9:00 at night. A broker had called me and said, “I’m really down. I’m having a tough month.” I got into work yesterday at 4 a.m. And I was like, the last thing I wanted to do was hope on a call. I felt bad. I needed somebody to motivate me at that point.

I called the guy, and we talked for a half hour. And that’s not sustainable. I can’t do that for 40,000 people. But we’re trying to create other people that can be part of that leadership to be there for people.

Geoff: I’ll use the word “ecosystem,” and we’ll talk about ARIVE in a few minutes. But you’re creating this ecosystem, if you will, or a community that’s a supportive environment where brokers can go for support, for education, for transition strategy, perhaps?

Anthony: We have mentoring, transition strategy. I also think more than anything, the biggest thing is like how you behave when you’re a consumer. I think one of the things that I’ve seen is like a year ago, I would have brokers in our Facebook groups say something to do with handling of the consumer. The broker community would go there and say, listen, no, no. They’re purchasing a house. They would kick in and tell them how to do it right. And you see behavior changes. And it’s not that there’s anybody that’s bad or good. It’s just that you became a broker. You were never a broker before. You don’t know what the good practices are. You don’t know how to best support your customers, what to build processes and systems, because you’re a salesperson most likely. So you were never an operations person.

The level of peer-to-peer support where nobody is actually making any money off of it. Everybody is helping as a volunteer and just doing a good deed. That’s what really drives this whole thing. Giving without the expectation of return, [inaudible 0:20:00] from UWM says this all the time, and Garden State Home Loans, we were one of their top brokers in the country, and I actually got to meet him and know him. And so I have a great deal of respect and just admiration for the way he runs his business. But he says that all the time. “Give without the expectation of everything in return.” he used to say that and I used to kind of roll my eyes. But now I firmly go through my life and just go do everything about because I look at it, and it’s like you know what? I’m going to help this person right now. And I’ll help them again tomorrow if they ask. And let’s hope that one day — not that they’re going to help me — but that they’re going to help somebody. So that’s one less person I have to help.

I started out. I had 45,000 people reaching out to me. That’s probably down to 25,000 because 15,000 are now getting help from other people that are part of this network. And I think that that’s what’s going to drive the ecosystem. And more than anything else, I think that’s how we get to a sustainable profession in not just mortgage brokerage, loan origination. To me, the biggest thing is like the 300 basis point to 800 basis point margin is not sustainable. Technology, whether it’s Amazon, whether it’s Quicken, whether it’s Better Mortgage, those companies will put a product or a technology on the street that will eliminate the loan originator if we’re trying to operate at those margins.

100 to 250 basis point margins, that can be sustainable. And I think it even needs to be under 200, because realistically, over time, you’re going to have to be more competitive.

But my big thing is that communication, collaboration, and nobody doing anything for… “Hey, I’m getting an overwrite. That’s why I’m helping you.” No, I’m helping you because it’s just the right thing to do.

Geoff: Back when we were doing… What the hell were those loans called? The coffee loans and all that. Remember those?

Anthony: Yeah.

Geoff: The three-year hard pay. I remember in my office, people were just making decisions based on the fact that they had a three-year hard pay and they’re getting the max points of that. I did one of those. It’s only because it was a REALTOR®, and he knew exactly what that loan was all about. But other than that, I couldn’t do that because I had the DNA of the long term.

Anthony: That’s a great point. I got in this in 2003 at 18 years old. I cut my teeth in that type of environment, in a call center, LendingTree, option arm, subprime. I didn’t learn the business from a relationship standpoint. I learned it from a call center standpoint. I was too young to know at the time, but by the time the housing crisis happened five years later, I got to learn the ramifications of bad practices and behavior and all that stuff.

So I had an awakening. I had a total epiphany where the first five years, it’s like, yeah, you’re making money, and economically for yourself, things are good. But if you aren’t being an advisor, if you’re not actually looking out for the best interests of the customer, A, people are going to get hurt. B, you’re not going to have a sustainable business. So there’s not referrals when you screw people over, where you don’t look out for people.

So post-housing crisis, that’s why I started Garden State Home Loans. I said, I’m never going to work for somebody again. I am going to… I went into that environment. The people I respected at the time, because they taught me the business, and they taught me how to make money, I lost all respect for because I realized how bad of leaders they were, how unfocused they were on customers.

So Garden State Home Loans, our whole model is like, A, only do what is right for the customer. Explain everything. Massive transparency. We had a thin-margin model. And our whole focus was it doesn’t matter if the customer is right or wrong, if the customer even thinks we did something wrong… Appraisal fee, if they thought we were going to cover it or give them a credit… The customer is always going to be right. We’re always going to do right by them. That’s why, as a company, we grew, and we’re successful. In the broker community, I definitely think that’s what we’re doing as a community right now.

We’re so focused on consumers that for the first time, it’s not like “How much are you making on this deal?” It’s all about, “What was the customer experience? What’s your strategy to get referrals or have them champion you on social media, get into their network?” It’s all about the long term now. It’s really fun to see the behavioral change.

Geoff: I love that. If you have somebody listening, and they’ve been at one of the banks for a while, who is right for possibly considering a broker and how is not?

Anthony: I think there’s a couple of things that into it. It’s not just everybody should be a broker. It’s a different model. I think there’s a couple of things. I think, number one, understanding that you can either start your own mortgage brokerage, just being a business operator which, that’s something different, or you can go work for a mortgage brokerage. And I think what it comes down to is if you work for a bank and your entire business is predicated on a jumbo product or a constructions loan product or some type of product that’s specific to that bank, if you want to be a broker because you want to expand your network or start a new network, you can. But just understand that any of that business that you’re focused on right now, all those customers and those REALTORS®, if you can’t do those products as a broker because it’s not a specific product that’s out there, that business isn’t going to come with you. Those are specific to the product that bank offers. That’s real.

The next thing is if you’re a loan officer for a non-bank retail lender, whether it’s a Guaranteed Rate or a Loan Depot or one of those companies that have a distributed network, I think what you have to evaluate is a couple of thing. I think, A, what you have to evaluate is what are you trying to accomplish. If your sole goal is “I want to be a relationship manager, and I want to not be in the weeds of my day-to-day. I need a lot of support. I need marketing. I need all these different things that these lenders do for you that creates that higher-margin environment,” or “I need MSAs or a need real estate relationships that are financially backed by a lender,” that’s probably where you have to stay because, realistically, as a broker, A, brokers have a cap on margin. So that’s one thing I love about our industry, and I hate that NAM is trying to advocate against raising the compensation, is because I think having a cap is a good thing. I think brokers can’t make more than 275 basis points. So with that said, it’s one of those things that, it’s a transparency thing. We have to disclose our compensation. We can’t make more than 275 basis points.

If you get the worst deal from a mortgage broker, it’s going to be at least 100 basis points better than the best deal that you get from a mortgage banker.

So I think if you’re coming into it, and you’re saying, “I’m all referral; I don’t do pay to play. I’m not paying REALTORS®. I’m not paying anybody for referrals. It’s just all organic relationship development, relationship business. I don’t need a marketing arm. I don’t need any type of crazy support outside of my transactional support…” then broker is going to be a really great model for you, because you’re going to beat out the lenders at this point. UWM is a prime example. Caliber is a great example. These lenders are doing fulfillment at a better-than-retail experience. So right now, UWM is closing $7 billion a month and been rising in loans, on average, 10 days or less. So you’re talking about retail. Nobody is that fast, and nobody is doing that kind of buying. $7 billion a month. You’re talking about $80 billion a year. That’s the number one lender in the country.

So to me, I just look at it and say that’s a good channel for you. But for the guys that should be concerned is if you’re at a point in your career where you’re coasting, you like the support, you’re not the customer, you’re not necessarily focused on giving your customer the best deal, then retail is probably a better mile for you. But I will say, one of the biggest arguments that out there right now, it really comes down to what I’ve been talking about on social media lately which is VA loans.

The model is broken fundamentally. It’s been an eye-opening experience to understand that the way that retail lenders do their economics — and I’ve learned this from the people that run the retail banks — is they essentially know that they have to be competitive on conventional. They have to be within a quarter to 3/8th percent in rate on a conventional loan from what a broker is at. The reason why it’s a doctor putting 20% down with a 740 credit score, it’s not going to take a rate that’s half a point to 100 basis points higher than what they can get on bank rate or Zillow or from a broker.

So with that said, they try to stay as competitive as possible. And then on the government loans, they make up that margin. So basically, what they do is they say, “We know on average, our loan officers do 20 to 30% government loans, and we know, on average, those people are putting 5% or less down. And we know that those customers aren’t going to be shopping around, so they really, really break up the margin huge there. So to me, I think that’s an eye-opening thing for a lot of these retail loan originators. When they see what a customer could get from a broker, that they could make the same or more being a broker but giving the customer a one point lower rate, that’s one of those things where you have a moral dilemma. It’s like, are you doing what is truly right for the consumer?

Geoff: And a lot of people working in the retail lending situation aren’t even aware of that though.

Anthony: They’re not aware. I actually look at it and say, I always tell people… People come to me like “Hey, why are you attacking me?”

I’m like “Dude, I’m not attacking you. I’m attacking the model. I think you’re awesome. I think your customers think you’re awesome. If you’re doing 10, 20, 30 million dollars a year in business, you’ve built a great business, and I have a lot of respect for you, and I know how hard it is to do what we do, loan originating. So I have all the respect in the world for you because you have to understand the model is what’s broken.” At the end of the day, your relators refer to you the customer. The customer trusts the REALTOR®. So they don’t shop around. They go to you. And when you do that loan for them and it turns out that you have a veteran that is buying their first home, and they’re buying a house for $250,000, basically the difference in that 1% interest rate or that ¾ percent interest rate higher that you’ve giving them versus what you could be giving them is the equivalent of them buying that house for 20% more. So they’re going to pay 20% more interest. So instead of it being a $250,000 house, now it’s really a $300,000 house. Just manufacture that into your thought process.

I’ve had people say, “Wow, I do well. I’m comfortable.” I’m like, I get it. I completely get it. But just understand, first of all, that model is not sustainable because eventually, consumers are going to find a better option. And more than anything, if you truly look at yourself as an advisor…

I’ll give you a prime example. Customers will come to Garden State Home Loans for jumbo loans. We were, at a minimum, from the big banks — and this is going back five, four years ago — but at that time, we were about half a percent higher in rate than the customer could get from JP Morgan or Bank of America, one of the big banks. So they would call in, and our policy was this — and it’s not that we’re these holy rollers or good people or whatever. We were a for-profit business. But it a half percent lower. And our whole thing was this. It’s like, “Hey, Mr. Customer. I could easily offer you this, and maybe you wouldn’t shop, and maybe we would make money on it. But we don’t want to take the chance. Here’s the five banks that we know, and these are the rates that they offer. We’re not a jumbo shop. Go there.”

And a lot of people would say, “But no, you have to offer them the rate.” Yeah, but what my experience is eventually, the people do shop, and either they refi to get an early pay off, or halfway through the process, they find that rate, and they go with them anyway. So to me, it’s just massive transparency and just saying, hey, this is what’s best for the customer. Let me just refer them to that place. That’s not where I’m going to do my best work.

Geoff: That’s also knowing your lane too. If you weren’t a jumbo shop. Because I deal with that all the time. People are griping about how they can’t compete on jumbo. I’m like, then find a different product niche. Like you said earlier, if your company doesn’t have the jumbo product but somebody else in the market does… By the way, that’s really being an advisor and putting your customer’s interest ahead of yours. I’ve interviewed other people who have said that to customers. And that comes back to you indirectly in different ways.

Anthony: Every time. Every single person I’ve done that for in my market, in my history at Garden States Loans, it’s not that I lost that person’s referral. Literally the person admired it so much that they still referred me. No offense to any bank loan officer, but they don’t offer the same service that we do. Those guys are at 45 to 60-day closings. It’s not an efficient process. They don’t even try to pretend to be that. They know why the customers are coming to them. That’s the whole deal. They actually want the process to be longer so they have more time to get to get checking accounts and all this other stuff.

So just understand the service, you’re not going to lose that customer. But to me, it’s just knowing what you’re good at. But from a high level, even right now, when I have my priorities list and I talk to the team that’s at ARIVE, I tell me my number one goal for the mortgage broker channel is we have to get a competitive jumbo product to compete with those guys because brokers want that product. I’ve talked to a lot of banks. We’re working on it. It’s something that’s in the works. But, again, until that happens, financial advisor, he can do 5.9s, 401Ks, and do certain things, but you go to him and say, hey, I need a certain retirement product that he doesn’t specialize in, he’s going to send you to a specialist. Understand you can be a specialist and not do everything. You don’t have to be a jack of all trades.

Geoff: Absolutely. Great point. That’s actually a nice little good coaching session there. Let’s do this. Let’s transition and talk about ARIVE. Another acronym, I suppose?

Anthony: No. No acronym.

Geoff: Oh, tell us what ARIVE is all about, man. But there’s only one R in ARIVE, so it’s cool.

Anthony: It’s A-r-i-v-e. Everybody says, “You spelled ‘arrive’ wrong.”

Geoff: No, that’s a cool thing to do these days.

Anthony: Yeah. That’s the in thing. Like Uber… This was an idea that… At Garden State Home Loans, our whole thing was after we closed our record month in 2016… In August 2016, we had a record month. We closed 308 units for $110 million in volume. We’re a small company. We were a 38-person company, so we were doing, on a per-loan basis, that’s volume that is literally unheard of.

After that month, literally, I walked into the office on September 1st, and I walked around the office, and I looked at my processors. We just closed a record month. You would think people would be fist pounding, high fives, everybody is happy as hell. People looked beat up. People looked broken because it was exhausting to close it. It was hard. And I pushed everybody to the max so we could actually have a record month. People were broken up.

So what I realized is that the current broker model as of that time, we were one of the more efficient operations in the industry, in the broker channel. And unless you throw bodies at it, it wasn’t going to work. So what it really came down to was how do we connect the broker, at this time, it was broker with our wholesale lenders.

So at time, we worked with UWM. They offer a point of sale called Blank to all those brokers. And we took that application, and we integrated with our Saleforce. And that little bit of connectivity, that one little bit of connectivity created massive efficiency. I’m telling you, it took 25% of the data entry redundancy off of our shop. So when I say how a little bit of connectivity created all this efficiency and automation, I was like, man, brokers, if they actually had a connected experience from origination through closing, man… At that time, we had 8% market share in the broker channel. Just organically they could probably double their volume. And that’s kind of where ARIVE came into play.

It was like, what we need to do is we need to have a third-party decentralized system where, instead of the brokers logging into every one of the lenders’ portals and manually bringing their data into the lenders’ portals, if we had a broker portal with a broker… Let’s say [inaudible 0:36:35]. They have a cloud experience, which our experience is all going to be Salesforce driven. They have a cloud experience where all the lenders are building the piping to the broker portal, and now the data is coming back in live time. The pricing is coming back in live time. The document delivery, it’s not being manually uploaded. It can be shot over in live time.

That’s where the concept came from. Essentially, what I did is I went lender by lender, and I told them about the concept. I went over all the areas where, A, I believed it would help brokers from an efficiency, automation, business growth, CRM, staying in front of your customers, all those things it would create. And I went lender by lender. I started with UWM. UWM was the number one lender in the country, and without their support, honestly, I don’t think you could do really anything of large scale. So, again, going back to the do-what’s-right mentality, give without the expectation of return, I explained it to UWM, and Mat Ishbia was like “Brokers need that.” First thing, he was like “Brokers need that.”

The follow up stuff I got was a lot of people from other lenders were like “Wait. Why would UWM integrate with an external platform? They have the best technology in the business. Everybody uses them because their platform is so good.” So everybody else is like “Oh, this is great. UWM, they’re going to give away their competitive advantage by integrating with ARIVE.”

This is different in the mindset. To me, this is all about that mindset. One guy is saying, “I want to do what’s best for my customer.” Everybody else is looking at it like “Oh, this is how we beat our competitor.” It’s these things that make my eyes pop. I’m like, when I present to everybody, they should be like “This is what’s best for brokers.” I present to people, and they’re like “Oh, this is how we beat those guys.” Again, that’s just the false mentality.

At the end of the day, we got eight lenders to adopt and integrate with the platform. We had over 100 lenders actually inquire to be integrated with the platform. But one of the things you realize is when you’re building a decentralized platform of lenders and banks, this has never been done before. There’s a lot of security. There’s a lot of work. It’s very, very expensive to do. The cost to actually get a lender integrated to the platform is probably about a half a million dollars. So eight lenders, that’s $4 million right there. It’s something that has been being worked on for almost a year, and next Monday, on April 1st, we have our first large-scale group of brokers coming on. We’ll start bringing out brokers on a weekly basis.

But here’s what I tell people. ARIVE is going to be a digital mortgage broker platform. It’s your CRM. It’s your LOS. It’s your pricing engine. But over time, what we hope it’s going to turning into be is it’s going to be a fully open sourced system. ARIVE is not meant to sit there and be the technology of the broker community. It’s not going to be…encompasses we’re it; this is all there is to it. And the probably with that is when the technology gets bad or gets outdated, you get lost. You fall behind.

So my whole thing is we just want to be the connection. We want to be bring connectivity from consumer to broker to lender and then open source and start bringing in best-in-class technology.

If Total Expert, if Volocify, if somebody has a better piece they could integrate to help brokers be better transaction agents, then great. We’re going to be open source. Let’s allow this to be completely open. Best-in-class technology will win. So it’s really more of a marketplace than anything. But it’s been challenging. I’ll be straight with you. It’s one of those things where getting the lenders on board, these are huge financial commitments that they had to make. It was a challenge. From a training, brokers have been using the same technology for almost 25 years. They’ve all been using Kalex. So getting the proper training, getting the support in place to help them transition but also support them when they get on the platform. That’s been a challenge.

There’s a lot of things that go on behind the scenes. But to me, everybody that is on the inside, all of our data users, our pilot users, everybody says the same thing. It’s not only what it is today, it’s what it’s going to be a year from now, two years from now. They see where the roadmap is going. And it’s exciting. The way I truly do look at ARIVE, what it’s going to do is it takes away the last barrier for a retail originator to become a broker. It really does, because if you’re a retail originator today and you work for a company that has connected technology, LOS, underwriting the whole thing, you look at a broker model, and you’re like, “Hey, I know I can make more money over there. I know I can get better rates to my customers, but I’ve got to manually export a three-two and then import it there? And then I have to manually bring my conditions over and manually…”

They’re like, dude, I’m not doing that. I’ll sell the higher rates. I’ll do the extra work. I’m not going to that model.

So when people see ARIVE, they’re like, okay, you’ve just essentially crated a mechanism where you can be an independent one-man loan originator working from your home, and it’s like the same thing as being a retail loan originator working for Guaranteed Rate or something like that.

Geoff: Back to the balls thing, man, you’ve definitely got them. This is a huge undertaking to create this unbelievable platform. I’m looking at all the elements of ARIVE, just to recap for anybody listening. That’s a Saleforce-integrated CRM, point of sale experience for your borrowers, LOS software that interfaces with underwriters, processors, funder, closers, what you would expect with an LOS, bringing all these lenders all under one roof to make it easy to look at pricing and offers and stuff.

Anthony: Pricing engine. That’s a big one.

Geoff: Right. That’s huge. That’s so huge, because I can remember that from the broker days. And then, of course, community, which is a huge element of that as well, because of the networking, brainstorming, and ultimately, like you said, man, for those the broker model might be something right for them — and it’s not right for everybody, like we said — now you’re powered and you’re equipped to actually have, perhaps, your own business or to make that shift, if you’re looking for that different model and not leave…

Anthony: All that support behind.

Geoff: Exactly. The security of the big bank.

Anthony: And the one thing I do say, if you think about Airbnb, if you know how many landlords have been created by Airbnb…

Geoff: Hell, yeah.

Anthony: Airbnb, it is where people go to list property and to find properties direct. So to me, I look at it and say five years ago, there was no Airbnb. That didn’t exist. The only way to be a landlord was to buy properties, have a REALTOR® list it, have a management company. That’s what you did. That’s a marketplace now, and that’s changed the entire economics of the way things are done.

Individuals, one of our video production persons, Nicole [inaudible 0:43:34], she’s in the process of listing her property for sale. She said, “What should I do? Should I get a REALTOR® and list it? Should I put it on Airbnb?” Just the fact that she, as a first time person that’s going to list her property, that Airbnb… It was just one option. Now there’s two options. It just shows you how first things can change. So I look at ARIVE, and I say, I get the way that it’s done. A lot of retail guys are like, I don’t know if it’s that big of a deal. Yes, it’s going to be that big of a deal. And the reason why it’s going to be such a big deal is that you only compete with brokers right now on X amount of business. But the minute that all those efficiencies are made, and they no longer have to sit there and babysit the loans, do all that manual work, and all of a sudden, people are growing and scaling their businesses instead of just trying to maintain it, it changes the economics. They’re going to be in your REALTOR®’s office. They’re going to be looking for those deals. And when they’re able to sit there and tell their REALTOR®s, “Listen, me and your other guy here that’s in the office, we’re half a point lower,” “We’re ¾ percent lower,” or, “We’re giving that customer a bigger credit.” Whatever it is.

Once that value proposition is made, you have to understand that’s going to force you to do something else. Whether you become a broker or you leave the business, that’s going to force you to do something. So to me, it’s going to be a big game changer. I would say five years from now… Again, other people might steal the idea. Again, once it came out, everybody said the same thing. “Why hasn’t this ever been done? This is the most brilliant thing in the world.” Guess what? ARIVE might be one that brings it to market. Some other company might come along and build a better mousetrap with connectivity. And that’s fine. At the end of the day, I personally, I only care about driving down what the consumer is getting, the interest rate and the fees, driving down the cost to originate a mortgage and creating an empowered originator.

So to me, if you put the originator in a position where they don’t need all this infrastructure, and they can give the consumer the best deal, guess what? Mortgage loan and origination profession will be around in 50 years. At least now you’re in a position where a loan originator has a fixed-cost model with all the efficiencies that they need to be able to do loans at the thinnest of thin margins. So if they’re competing against an Amazon mortgage or a Zillow mortgage that’s only making a thousand dollars on a loan, hey, I’ll do a loan for a thousand, or I’ll do a loan for $2,000 because if you don’t have to do any work past application because you have that connectivity, well, now you’re at this rate, you could do 50 applications a month. So to me, it’s understand not what the environment is today, it’s understanding that ten years from now when Zillow, when Amazon are our competitors, that you’re going to have to operate at a thinner margin level, and you’re going to have to change the economics of the way your business model is run today. It’s going to be more volume based, and in that environment, you’re going to need best-in-class technology. And that’s exactly what we’re trying to accomplish.

Geoff: That’s a very interesting conversation perhaps for another session about technology-based, volume-based business, going up against those big boys.

Let’s do this for the time we have left. There’s a couple of events coming up for you that I want to make sure our listeners are aware of. The first one is in Fort Lauderdale. You do these awesome workshops across the country. I was at the one at Irvine. There was what? 8— 900 originators in the room?

Anthony: A thousand.

Geoff: Who could tell, right? That’s awesome. So the one in Florida. It’s coming up… When is that? 17th of April, I believe.

Anthony: Yeah. April 17th we’re in Fort Lauderdale at the Diplomat Hotel. We haven’t done any events on the East Coast yet. This will be our first one. We’re really excited about it. It’s a smaller venue. We’re only expecting probably like 6— to 700 people, but we’re excited. We have a huge number of brokers that are in Florida. We have a huge number of retail loan originators that are you transition to brokerages in Florida right now. So we’re really excited about the event.

Geoff: And then the next event you’ve got coming up which is later in the year in October… Is this your big coming out party or what? You’re calling this Fuse. Is that the name of the event?

Anthony: Yeah. Last year was our first Fuse event. That’s where we announced ARIVE. This year we have Gary V. We have Ryan Serhant [inaudible 0:47:47] listings. They’re both going to be key speakers at the event. It’s going to be a big event. Last year we had 1300 people come to the event. We’re hoping to have over 2500 this year. It’s at the Bellagio Hotel on October 12th, and we expect there to be a lot of technology announcements. We expect a lot of the lenders that we work with are planning on making their big announcement. So it’s actually kind of transitioning from an industry conference to more of all the lenders right now are sitting there saying, “Hey, we’re going to bring our big offering for the following year,” whether it’s a new product that they’re doing, whether it’s a service offering that they’re going to offer brokers or technology… Everybody is competing on this is where we present to the broker community what our new value prop is next year. And we’re ready to offer it. So it’s actually really exciting.

Geoff: I want to make it clear for everybody listening, we’ll put links to all these events in the show notes because the registration for the Fuse event and Vegas in October is open now. And I’m pretty confident you’re going to sell out. So I would advise you to go in and get there. Get your ticket now. I’m definitely going to be there because it’s only like 20 minutes from my house, so why not? But any time you get a chance to see those two keynotes speakers, get around this incredible community you’re building of loan officers and what’s happening, this movement that’s taking place, man, that’s awesome.

Anthony: A lot of people, like, hey listen, the way I look at it, if you’re a retail loan originator right now and you’re curious, you’re like “I see this model. I’m curious.” But you don’t want to put yourself in a position where if I reach out to somebody, I spend time with them, you feel bad saying no. Come to an event. Just be an observer. You’re going to get six hours of content. At the event in Florida, we’re doing a two hour training on ARIVE. You’re going to hear from Mat Ishbia, CEO of UWM. You’re going to hear from Phil Shumaker, the head of Home Point Financial. You’re going to hear from me. So you’re going to be able to hear from all these broker channel industry leaders. You’re going to hear from CR product offering from a technology standpoint and kind of get a vibe from all of the brokers because it’s very peer-to-peer focused on what’s going on, what issues are we dealing with, how are we tackling them. And just experience it.

Your nametag is just going to say your name on it. It’s not going to say John Doe from This Mortgage Company. Come observe. Because in Irvine at our last event, we had over 200 retail loan originators come to the event, and every single one of them, I’m telling you every single one of them, throughout the day as I shook hands and talked to them — “What do you think? How do you feel about the event?” — everybody said the same thing. “Geez, this has been eye-opening.” Am I going to go be a broker tomorrow? No. But this was a thing that was just like, hey, I just want to scratch the surface of it. This is a real model. This is a great platform, and I’m genuinely looking to take the next step.

So I suggest you come out. It costs nothing to come and be an attendee and just experience it.

Geoff: 100%. And I have to concur with that, by the way, when I was in the room in Irvine. I had a short stint at a brokerage, and then I left and went to Countrywide and other banks for most of my ten years. But it was eye-opening, educational. It’s none of those us-versus-them thing. It’s this total welcoming community that everybody just wants everybody to do well and take the path that’s going to get us there that ultimately serves the customer. You’ve got a good vibe going with these events, man.

Anthony: Absolutely. Thank you.

Geoff: Awesome. As I said, we’re going to put links in the show notes. Any other means of connection if people want to reach out to you? Any suggestions of how they should contact you?

Anthony: I would say the only other thing is AIMEGroup.com. You have it on your shirt there. I appreciate you wearing it.

Geoff: That’s right, baby. Let me get the mic out of the way.

Anthony: I was hoping you’d wear it.

Geoff: Yes, sir.

Anthony: AIMEGroup.com is our website if you just want to kind of take a look at what’s going on there. If you are a loan originator looking to become a broker, one of the things I recommend is there’s a BeAMortgageBroker.com, a website. It’s a platform that UWM rolled out. Basically, they created a group within their organization. They’re not sales people. They’re strictly support people. And all they do is if you just want to call and understand compliance, licensing — anything about becoming a broker — they answer your questions. 100% confidentiality. They won’t like your post on social media. They won’t friend request you. They’re very discreet. But that’s a way where if you might be intimidated by reaching out to AIME or you might be intimidated about reaching out to another mortgage broker, you can do it very discreetly.

Again, at the end of the day, our whole goal is for people to know about their options, whether that’s consumers, mortgage brokers, or real estate agents. Optionality is very important.

Geoff: Absolutely. 100%. Listen, man, I know you are super busy, and I appreciate you carving out time for today. And I think the listeners, this has been eye-opening for to, educational. Dig into the show links and everything so you can further your investigation, your engagement with the whole AIME community that’s happening. Anthony, thank you so much.

Anthony: I appreciate it. Thank you very much. Look forward to seeing you at the next event.

Geoff: For sure, man. Listeners, as always, we thank you for tuning in. If you like this episode, let us know. You know how to do it. Give us love out on the socials. And we’ll see you on the next one. Bye for now.