Mortgage Connects an MGIC Podcast
On Mortgage Connects, we explore the minds and experiences of mortgage industry and lending innovators to bring our audience candid viewpoints on critical mortgage industry developments and influential insights about the unique challenges that lie ahead. Our hosts interview top mortgage professionals and thought leaders across the industry – from proven LOs to established CEOs – who have wide-ranging expertise to provide the best insights into market trends, best practices, marketing and referral strategies, training opportunities, and the future of the mortgage industry.
Mortgage Connects an MGIC Podcast
Surviving market flux: Kevin Peranio's guide to navigating the mortgage terrain in 2024
Special guest Kevin Peranio, chief lending officer at PRMG, reveals top strategies to thrive in the current interest rate environment amidst the challenges of the mortgage industry. He shares success stories and insights on how staying connected with clients, investing in personal development, and broadening knowledge about non-QM programs can pave the way for a successful career in the mortgage industry.
As we navigate the ups and downs of the market, we discuss his tips and tricks to stay motivated and engaged. Kevin breaks down the importance of staying at the forefront of clients' minds and how leadership can guide mortgage professionals through tough market periods.
Kevin also touches on the role of technology in the mortgage industry and shares his views on striking a balance between automation and the human touch in client interactions. He also covers how digital apps streamline processes and facilitate scalability and efficiency.
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Hi, kevin, thank you so much for being with us today on MortgageConnect, for really excited to chat with you today.
Speaker 2:Thank you, Stephanie. Happy to be here and work with the MGIC team.
Speaker 1:Yes, so I am not a stalker, but I see lots of your videos on LinkedIn, and so there's just so much that you offer there, and I wanted to just start off with something simple. Given some of the shifts in where we are today, can you share some success stories or best practices from the standpoint of your sales teams that's helped your organization thrive despite the current interest rate environment?
Speaker 2:Yeah, I've been trying to push three points to our origination base and even speak and openly about it out in the circuit you know, in the conventions and trade shows I've done a couple sales rallies for some other partner companies of ours as well and the wholesale correspondence side. I usually try and say three things. So probably the number one and most important thing I would talk about is mining your database, your existing database, going through and touching base with all your clients. You know, I know it sounds simple, but you would be shocked how many people don't do it. From an originator and rule for standpoint, yeah, someone might be in a three and a quarter rate and you think they're never moving. You know they bought their forever home, but you still need to call them and touch base with them and just say you know, hey, you know I'm your trusted advisor, your financial advisor. You know there are a lot of things that happened since the last time we spoke and you know, just want to touch base and see how things are going. You know, you never know where that could lead. It could lead to them having questions about their loan, about the economy in general, about the transaction that you had with them in the past. Or you know maybe their prospect. You know maybe some reasons why they're waiting. And you never know what could become of it. And you know, just play the long game with your clients. And so you know, it could be end up being a new loan. You never know Again. You know some kind of cash out deck consolidation tool. Maybe they have a referral to someone else. I heard this one guy he talked to a long time ago here in Southern California. He says he calls all of his clients a week after they close and he says, hey, why are you mad at me? And they're like what do you mean? He's like you're mad at me. They're like, no, we're not. We had a great, a great transaction. We love our home. He's like well, you haven't given me a referral. You must be mad at me, you know. And so it's kind of a nice way to like just use a disarm, a conversation and then, you know, maybe help someone else in the community. And so you just you got to do that. That's a basic thing.
Speaker 2:The next two topics that we've been telling originators and realtors is you know, make one incremental change, right. So just change. Change one thing, right, don't try and boil the ocean. You know, maybe take on a new technology partner, right? You know, social selling out there on social media. A lot of people do it because it's quote free, right, but I always find you get what you pay for. So if you're not trying to put the effort into standing out or being noticed to be different on your social media, then you know you might not, you know, be successful at it. So, you know, maybe spend 50 bucks a month on some tool out there, you know, like a social coach type tool that's out there to help you create some better social media, and what's great about that is it helps you create a bigger audience and that increases your database that you can then continue to make phone calls in mind later. So you know, whether it's a social media tool or a CRM tool or, you know, maybe it's something that has to do with you know, your, your approach and what you say or how you display these. Whatever it is, you know, just make one change and kind of invest in yourself.
Speaker 2:So that's the second thing we've been telling, and the third thing that we've been actually pushing is really learn non-QM. You know there are a lot of great programs there that. You know bank statement programs are about half of that non-QM base. And what I'm hearing I'm not trying to start any rumors here but Danny and Freddie they look at cash flow analysis. I would not be shocked in the next couple of years if bank statement programs get pulled into the A paper space and are backed by Danny and Freddie, which is great for, obviously, the MI world. You know cash flows, cash flows right.
Speaker 2:So if someone can afford to make the payment and there's an alternative way to document that not everyone's income sources lines up directly with you know I work W2 job and here's what I get and here's what I've left over.
Speaker 2:And let's, let's get a house.
Speaker 2:You know the side hustle side.
Speaker 2:You know the side gig economy is so huge I really think. You know our labor market is under recording the side gig economy, and so you know if someone gets an extra thousand bucks a month off of, you know, an Etsy website or something that's real money that can help them afford a house, and so cash flow matters. Maybe they're an Uber driver and they're writing the whole thing down, you know, and so, so. So learning non QM is a really great way to learn a new product that's helping borrowers get into homes, which, you know, down the road, every single purchase that we're doing nowadays, at least for the last year and a half, in the foreseeable future, is likely to be to rate to the refinance. You know, likely next year, on 2024, certainly by the second half of next year, if not sooner. So you know, you just set yourself up for a bigger year next year, not to mention widening your own personal credit box. So those are the three big things that I've been pushing with the originator of the real tool right now.
Speaker 1:I don't even know where to go with that. I loved all three of those. You know, from a standpoint of my personal experience from a re-engagement, my loan officer that I had used does frequently reach out to me and it's really nice because the first one we use never did and I was like, oh no, I wouldn't use them again. So just staying top of mind for when somebody may need something else. And I love that example that you gave about you know, calling and asking if they were mad from a referral.
Speaker 1:Some people don't recognize that. That's the best way you can thank somebody. And the small incremental change. I think that that's almost the setting stone for the year to come. You know, it's going back to the basics and making a small change. You don't have to re redo everything that you've ever done, but starting small I like that. And the next year, yeah, no, I mean, I think that that's that's so great to think about, because you, there is so many people with these side small things to just try to make, to make it or to make things their aspirations, possible, feasible and whatnot, and so it's interesting to think of that, because it's not the first thing you go to. You know where all of these changes have happened in the last few years that people are doing to stay afloat or to own a home someday.
Speaker 2:Are you, when you had that conversation with your, those conversations with your recent origin here, anything come out of it? Or just kind of? I mean, obviously it stuck out in your mind, right? So you said the top of mind, anything you know that was new and unique. You're like, oh my gosh, I just had a moment.
Speaker 1:Yeah, so some of them were just from a from a standpoint of what they were sending and their topics, and saying something about the money that I had and what to do with it, Continuously using tools like you had mentioned.
Speaker 1:They were using home bought and just like me being on top of knowing what my house was worth, so if we needed to or wanted to finish our basement, for example, like what that would do for us and what types of funds we would have built in equity, and so for me being in the industry and being able to be a lot more knowledgeable of the things that are sent them like, oh OK, I'm glad that he you know he's doing his job and at least staying relevant with me, because that means a lot.
Speaker 1:But I can't think of one thing in particular. I think what I see now more from a social standpoint is to like what you were referencing and what you what I've seen even you do on LinkedIn and benefiting and growing your networks. Those types of things are standing out a lot more and I think that we need to find more ways to do more of that, to be more top of mind. I only think that way because I used him previously, but now other things are starting to take that place because of how visible some others are.
Speaker 2:Yeah, well said, love it.
Speaker 1:Yeah, so within your role, you are responsible for multiple channels, so is there anything you know? You stated three of the best practices that you think that people could put in place but that they can do to stay engaged and motivated to meet targets that that you all have set for 2024 and beyond.
Speaker 2:Well at here on G, we're founded by two gentlemen, paul Rozo and Robert Holiday, and we have a saying built by a region for originators. And those two originated not not too long ago and then started a company over 22 years ago and I built them as a 13. Was this past 13 years? Yeah, it's been. It's been a fun ride. I moved to California about seven and a half years ago. March will be eight years as a partner in the company and it's very interesting.
Speaker 2:You know, as the chief leading officer, the common main role is to make sure all three channels wholesale, retail and correspondent. You know we've got some harmony between ops and sales and we're all kind of rolling in the right direction and serving the original base how they want to be served. And I got to tell you what I've discovered now more than ever, because this has been such a slow burn in this market here in 22 and 23 compared to. You know, oh seven, oh eight, everyone just went out of business. You know it was like a light switch, boom done, exclusive event. You know meter right hit the earth and you know all the dinosaurs died right. And so you know we were shmedeum at the time, so it was nice for our company to survive through. I was with the company. We do not make it through. It was pretty big.
Speaker 2:So what's interesting this time is because it's such a slow, long drawn out liquidity drawdown by the Fed. The rates are just an inching higher and higher. It is really testing the resolve of people in the industry and this is where leadership shines right. This is where leaders step up and they try and help, you know, shepherd the flock and get people through to the other side, because we know it's going to be better. We know the other side is coming. We don't know when, and that's okay, you know we just you know our people need to be led, especially those who have not been through this kind of cycle and honestly, like even being in the business since 01,. You know there's a little bit of a blip there in the summer of 03. We had a little, you know, obviously, the financial crisis what I just mentioned was pretty crazy. And then you know we had, after Brexit, a little slowdown. You know there was like a little mild recession there.
Speaker 2:But yeah, this has just been different and but yet the same. You know it's challenging, it's not easy and you know tough times are part of our business and so people are being made tough right now. Those that are surviving and you know there are still people thriving in this market. You know certain people that will thrive on the other side of it. So you know I would just, you know, try to stay positive. You know. You know you're.
Speaker 2:You know our CEO and founder likes to say you know this is someone I want in my foxhole right, so you're battling not to make light of. You know, war, which is a true life and death thing. We've got enough of that unfortunately going on in our world right now. You know, unfortunately, this conflict in Israel, you know, popping up again and this is very heartbreaking to watch.
Speaker 2:But you know, if you have somebody in your foxhole next year and you're fighting really for survival in business, you know you don't want the person next to you sulking or whining or crying or being negative. You know, like right, yeah, it's tough, but you know, remain focused. You know, be full of focus, engage and we'll fight through this and we'll get through and we'll push through, and we always have. And I think that's the message that a lot of leaders in this business are trying to send and that's what I've been seeing a lot of lately in my role and trying to encourage others. You know I do a lot of leads and content and I put I try to put in the sense of community out there where we're talking about these things, we're talking about these issues and you know there's a lot of negativity out there and I like to squash every chance I get.
Speaker 1:So you know Well good, keep doing it, please.
Speaker 2:It's unproductive, you know. So we don't want to poison the well. I mean, you know, if you're battling cancer, don't you want everyone around you go? Come on, let's fight. Let's go through this. Let's make the most of this. Let's enjoy this time. Let's push through, you know let's. I know it's hard, you know, let me help you. Let's start a meal train, let's. You know let's. Whatever it is, you know that's what you want, right. And so, again, not to compare what we're going through, but you know, to war or fighting cancer, but the reality is you have to be positive and you have to be forward focused in all cases. And, yeah, it's just time to step up as leaders in this business.
Speaker 1:Yeah, I mean perseverance just seems like a really key word that sticks out amongst all of that.
Speaker 2:Heck, yeah, that's a great one.
Speaker 1:So, you know, in the market we hear a lot of hesitancy with the rates going up and where they are, people thought they would be lower than they are now. So there's a lot of hesitant people that are, you know, not quite ready, or thinking that they're not ready, to go into the market due to the interest rate. What type of thing do you provide, or does your team provide, from an information or guidance standpoint that can maybe help ease their concerns that they might have? And whether that's keeping them along the ride and keeping them with you until they're ready, or if it's doing something now. What types of things and approaches are you doing with potential clients today?
Speaker 2:Yeah, I'll say right now, I would have never thought we'd get above 8%, Never would think that Fed would let it go this long. And in the face of inflation coming down like significantly, going from basically 9% headlight numbers to something like 3.7%, I mean we are beating inflation. So, but you know, there every regulator fights the last war right, and the last real inflation war we had, you know, they felt like they let off the gas too soon and then inflation wore back and then they had to get really nasty. So I would have never thought we'd be there. But so when I'm talking to borrowers or I'm explaining you know why don't person talk to borrowers anymore? He's too, I do, just not from an originator standpoint. But my advice today, say, is that you know, a year ago okay, this time last year we actually saw home prices coming down from June of 22 all the way to November 10th of 22. And what happened on November 10th was the market turned and rates started to improve because we had our first real inflation number. That was like all right, we're winning this inflation war, Okay, so it's almost a year now where inflation has continued to come down.
Speaker 2:And what I said a year ago to people I said this is your last good chance to get a good price at your home. Now, that was November of 22, because seasonally, you know, purchase activity kind of slows down between September and let's call it middle of February every year in a normal year for purchase activity, and that's what happened last year. But as rates come down, there are more borrowers that can afford to get a house. That means there's more demand, more competition for less homes, by the way, Right. So when it comes to price of your home, that's really the one thing. You only get one chance to negotiate. So now here we are, a year later, and rates have crept up a little higher than they were last year, and prices have gone up in the last year, Like I said last year, and so they're gonna go up again in a 12 month period. They will go up again, and so this is what I'm gonna say this year.
Speaker 2:What I've been saying is this is your second to last best good chance to get a good deal on a home, Because I got news for you Home prices are going to go up again next year and they're certainly gonna go up when rates go down, and so you could always renegotiate your interest rate. You could always do a two one buy down today. With the rates 8%, you can get a 6% house loan today and then next year you can rate finance at. If it's in the sixes and you do a two one buy down, then you'd be in the fourth right. Maybe rates get into the fives and you wanna lock it in. But a two one buy down is a great way to get into it and so you can renegotiate your interest rate anytime in the market.
Speaker 2:And there's. You cannot renegotiate that initial price that you pay for it, because you pay for it once and again. Prices are only going up. They've been going up. You don't have enough homes for sale in this country and as soon as rates start coming down if you're waiting for that, well so is everybody else, and they're gonna jump in and prices will go up again and it'll be paying more and it won't make sense and you will miss your second to last best good chance. So don't wait. Get in your house as soon as you can.
Speaker 1:That's great advice. I really like that. I know way too many people that are hesitant right now, and so that's a really nice way of positioning it to maybe ease some of that tension. Of course, From a production standpoint, as we look at how things continue to evolve. How do you balance the use of automation and technology? You spoke a little bit about how it's important to invest in some of those things, but still maintaining a personal and human touch with client interaction.
Speaker 2:Well, so for me, technology does three things. I say it reduces friction, compresses time and allows you to scale your business. And so when you get that time back, what do you do with it? Right, and so we don't use automation at PRMG to eliminate people. We want to give more time back for our people to do the harder stuff the exception process, the relationship building, and that applies for every position.
Speaker 2:I mean, there are still originaries out there that refuse to use a digital app, and I think I'm building this relationship by asking every single question over the phone of my borrower. And so just a quick example. Now let's say you're on the phone and you say are you a co-endorser? On a note, are you a first-time home bar? These are things that you don't need to spend time asking. You just send them a link, fill out the app the best you can. Let's schedule consultation time and I'll get back to you. And then, as an originator, you can review the app before you get on the phone. So here's another example.
Speaker 2:Let's say you know I'm a hey, mr Perennial. How many dependents do you have? I have four. What are their ages? They are four, six, eight and 10. Oh, okay, wow, you have four kids. Now imagine that same amount of time. I'm on the phone with that originator and they already I've already filled that out and they get it back and they go wow, mr Perennial, you have four kids, and they're four, six, eight and 10.
Speaker 2:Holy smokes, you must be trying to find a new house in, like a good school district, or maybe you're trying to move so you can get a bigger. You know room count so you can handle it. Is that what you're trying to do? Yeah, I am actually. Yeah, let's talk about that. See, like that is so much more impactful use of your time because you use the digital app.
Speaker 2:It's still so many originators don't, do you know? And it just it compresses time and allows you to be, you know, more human with that person. Like you know, have a, have a conversation. That's more bonding. You know, if everyone's just, you know, going through the checkboxes and answering the questions and taking up a ton of time, I mean I could call you know an online lender and do that. You know I want someone to say you know why, know the neighborhood you're looking for for those four kids? I've got a great realtor that's going to find you the school you want. You know, that's what I want to hear on the other side of it, and that's why leveraging technology as an original and using just a digital app, you know, a point of sale, something that you know again compresses time.
Speaker 1:Well, and it allows you to be the trusted advisor before they even knew they needed one, because you are taking the time to whether it's. You know, make an assumption if they can still set you straight, but it's allowing you to care about them as a person and not just a number.
Speaker 2:And you know underwriting. I mean, your team has underwriters, we have underwriters number one. You know desktop underwriter. The automated underwriting system came out, all the underwriters were like oh my God, we're going to be automated right out of existence. Man, we've never, they've never been more expensive. You know same thing with appraisers, you know it's like. You know, this technology helps us do more and it doesn't necessarily, you know, automate your people out of the business. It just helps us do more with the people we have.
Speaker 1:I think that is a good way of looking at it. To look, I mean, that is scary, right? You know, automation does streamline a lot of processes, so it makes people feel worried for themselves and others because we like things so simple. But I like the way that you positioned that to reduce friction. I think that that's a nice way of looking at it.
Speaker 2:I heard someone talking about AI, like is AI going to eliminate my job? And I think the response I heard that was very analogous to what we're saying here is that AI will eliminate jobs where people don't learn how to do their job. With AI, you have to incorporate it into how you operate. What does it do to allow yourself to be more effective, to not be replaced by AI? And so I went to the coffee bean at the airport when I landed LAX and there's this menu up there. I didn't put in my profile or anything, so I didn't know who I was. So I guess this is an AI example. But it was like this menu. It's like I just wanted to order peach, jazz and tea in a double espresso. That's how I set it.
Speaker 2:And so I'm up there and there's one guy. He's behind the counter. He's taken all the orders and making everything, which is totally like I don't know if they're on strike or something, but totally understaffed for an airport. But this guy was knocking out orders and he comes to me and before I could even figure out how to find the tea, I thought I had to start over. The person in front of me gave up and then I started the menu and then I'm trying to go through it and then he gets there, he goes. Just tell me which one I'm like double espresso and a peach jazz and tea. He's like what size I'm like well, ok, double done. So he was better than the technology, so so.
Speaker 2:So there are. It's not like it's just, it's a big wife out of it for human workers, right. So it's just, how do they work together? You know, ordering ahead at Starbucks and like ordering online. I mean, that is, that's a machine right there with Chipotle. You know the fast Chipotle. I mean, you know those are, those are ways to use technology.
Speaker 2:But then, since you have so many more orders coming through, you need more people to make it right, you know, and so you know. But but everyone wins. I get my stuff in a frictionless manner, it's fast. Starbucks makes more revenue and they get to hire more people who you know. You know maybe have like an extra five seconds to write. You know, have a great Monday on top of the cup, which I love to see, that you know. And so, anyway, it's just I do. I do think there's a lot of fear out there, and just like there is in our business, you know at the moment, but at the end of the day, there's still a lot of business getting done, especially with technology and working in tandem with our people.
Speaker 1:I couldn't echo that any better if I tried. I mean even chat, gpt and what's that? What that's done is allowed just so much more efficiencies and to not stress your time on something that'll still get the point across the way that it was meant to be, but it allows you to move on it and be more present in other places. So I, I like it. So we talked about perseverance being a theme, and I this is the last question I kind of want to close out with you but in 2024, as people and lenders continue to adapt, innovate, focus on all the things that we've talked about already today providing values in a challenging interest rate environment, staying proactive and responsible to the market dynamics will be key to long term success and getting on the other side. And so, of the following areas of potential focus, which one do you think will be the most important, and why so? Would it be a for the affordability solutions, customer education, diversification of offerings or partnership and collaboration? That's a tough one.
Speaker 2:I might my.
Speaker 2:LinkedIn you know, community is all about collaboration and partnerships and I think you know that's really really important. That's really really crucial for me personally, but honestly I think, just in the broader scope of things, I think it's education. You know, the first time home buyer is where the rubber meets the road for wealth creation and getting out in communities and speaking to potential borrowers. About just educating, just speaking about the home buying process. That is so critical and no matter how much automation and chat to the team answering a question. There is online. You can go to Google and it will spit out all the responses and stuff, but a first time home buyer wants to talk to a person. They want to touch the person on the phone. It's a massive financial decision. For most Americans it's the largest financial purchase to make in their entire life and I think that requires a little bit of hand holding, especially for the first time home buyer. So you know, I say this in the room with the regulators all the time and these closed door meetings. You know whether it's the FHFA director, sandra Thompson, or FHA Commissioner Billy Gordon and people from the CFPB I'm the new name and I'm in these rooms, these closed door window rooms, all these trade groups. I'm with lobbyists in DC, california. I mean go on and on and on, and what I love to tell them is that originators teach financial literacy at scale and I think originator, the loan officer, that when they get on the phone with that borrower they're teaching them. People don't know about the credit report and you know what's that. You know what a collection means to the credit report with the balances versus. You know the limit does the score, what scores credit scores are made of and how the impact, your interest rates that you pay, what's loan to value. You know all these acronyms. You know you'll have to put 20% down, save your cash. You know finance it. You know use that cash for other things. You know there's so many things you know about your debts that you know. Originators teach at scale in the community, helping people get into a home, and so for me, teaching that financial literacy at scale is such a such a powerful thing that the origination teams do every day and that's how we put people in homes, that's how we get them prepared to buy, and so you know it really goes hand in hand with the really goes hand in hand with all the topics that you brought up. You know what. You know what I want to focus on.
Speaker 2:I mean, if you want to talk about diversifying, you know your, your client base or your programs or serving the underserved. I mean that's all teaching financial literacy at scale. I mean you have a lot of hiring managers that are listening to this podcast. You know hire people of color. You know hire someone you know like we've got branch managers in Atlanta, for example, that work in communities where they have consumers that want to work with people. They know likely trust. You know people that look like them. You know and and have been through the same struggle and you know, understand the same fears they might have. And so you know that's how you diversify your client base.
Speaker 2:You're hiring, you're hiring with, you know intent and again, that helps teach financial literacy at scale and educate and, at the end of the day, serves a lot of really common goals because it's because you know having a homeowner in the community is such, it's such a difference maker. I mean not only for well creation, for generations to come, for that particular person or family, but for the community. You know someone that takes care of the house in a different manner, the more likely to graduate high school and go to college and vote and there's less crime. There's so many benefits for home ownership and for individual and the community. You know locally and you know writ large it's just put. It all starts with education, so that's where I like to put it out there. That's why you know I'll put that link in my bio for taking talks, dollars and cents. I'll do some content out there and I don't know where my editor puts it Spotify, youtube channel.
Speaker 1:All the channels.
Speaker 2:It's all out there. Yeah, it's probably. You know, it's just whoever makes a difference to one person and makes a difference to me, and so, yeah, that's it. It's teach financial literacy and continue to educate.
Speaker 1:Hey, pete, that was awesome. Thank you so much for your time today. We really appreciate the insights that you've provided. I think it's a great piece in helping guide individuals and where they're thinking and how to continue to move forward, no matter where we are today.
Speaker 2:Well, I appreciate that I you know here to serve the broader community and obviously love our partnership with your team, and thank you so much for a great conversation today, stephanie.
Speaker 1:Absolutely. Thank you so much. Thank you for listening to mortgage connects. For all the latest insights on the mortgage industry, tune in to mortgage connectscom on Apple, stitcher, spotify or Google Podcasts.