Business Innovators Radio - Interview with Thomas Frank, President and CEO of New Capital Finance

Episode Date: May 19, 2023

Being born and raised in Denver is something I have always been very proud of. A common “ice breaker” used here in Colorado is; “Are you a native?” and I love being able to respond, “Yes”. So many people decide to relocate to “Colorful Colorado” from all over the country, and I don’t blame them. I enjoy time with my Fiancé hiking, cooking, and playing in the snow or water, passionate about golf but mortgages are my true calling. I just understand the products, numbers, process, etc. It’s truly fun to me.I started in the mortgage industry in 2005 as a mortgage loan originator. I quickly became a top producer, originating loans across the country. I started and ran a mortgage branch for several years but i was always in production. During that time, I was able to help so many borrowers and families improve their overall financial situation and help them achieve their dream of owning a home. The time spent helping them get into their dream home, is such a rewarding experience. The mortgage industry is where I was meant to be and I’m very fortunate to have taken the paths I’ve taken. In 2018 I started a broker shop and haven’t looked back.I am extremely passionate about being the best in my business, building a solid foundation within our housing market for generations to come and I am so thankful for the opportunity to help the community.NMLS# 14017Learn more:https://www.linkedin.com/in/thomas-frank-5bb37588https://newcapfinance.comColorado Real Estate Leaders https://businessinnovatorsradio.com/colorado-real-estate-leaders/Source: https://businessinnovatorsradio.com/interview-with-thomas-frank-president-and-ceo-of-new-capital-finance

Welcome to the Colorado Real Estate Leaders Podcast, brought to you by Trailstone Insurance Group, bringing you interviews with Colorado's best real estate and mortgage professionals, empowering you to understand the current trends in the housing market so you can make the American dream your reality. Enjoy today's episode. Well, it's a great day in Colorado and welcome to the Colorado Real Estate Leaders podcast. Today we have with us Thomas Frank, who's the president and CEO of New Capital, finance. Thomas, welcome to the program. Thanks, Mike, for having me. I'm really excited to be on. Yeah, you're welcome. I always love learning from everybody we have on. It's just fun conversations

and learning about backgrounds of what you do. But get it started with your story. How did you get into the mortgage industry in the first place? Well, probably like a lot of people, I just stumbled upon it. And once you dip your foot in the water, you find out the water is pretty warm most seasons. And so I've stayed in. I got into the business in 2005, uh, working for a mortgage company where we specialized in a lot of FHA loans. And we did a lot of online and excuse me, a lot of direct mail marketing. So I got my feet wet there, um, up until the crash and then got back in. Actually, I never really left. I went to a bank and was still kind of doing some originating activities during the crash and got back in in 2012-13 and just went full force.

I started my company about three or four coming up on four years now in October, but I started new capital finance and we grew to about 22 people and we've shrunk a little bit here over the past 14 months as there's been some margin compression and market compression and things like that. So it's been a wild ride, lots of ups and downs. And like I said, mainly treated me really good over the years, lots of ups. Yeah, starting in 2005, you've seen a couple ups and downs now. It gives you a great perspective, I'm sure. Talk about what are the conditions that you're seeing right now in the current conditions.

I hear they're improving, but what's your take? Yeah, definitely. So the past 14 months has been quite a wild ride to give some kind of perspective on that. we were funding anywhere from 10 to 15 loans a month, and we've funded eight this year. So we've seen a big impact. I'm connected with next level loan officers. They're a big coaching group with loan officers specifically. I'm not just plugging them.

But there's loan officers across the nation that aren't feeling quite the impact as much as Colorado and maybe some other higher cost areas. when those rates went up, affordability really just went down for Colorado in general. And so we really got hit hard here. But yes, things have picked up just this month alone. We're funding five loans. So things of, like I said, that's about almost what's the volume that we've done for the whole year. Yeah.

So things have definitely flipped around. Rates have come down a little bit. Hopefully with inflation cooling, hopefully that continues and we continue to see those drops. Coloradoans really just need that. with our affordability out here, it's just, it's tough. Yeah. And, you know, it seems like the consumers, the buyers and the refinancers, they're dialed into the rates and the market. So once they start, you know, feeling like things you're shifting, they start going and looking for that house and then that lender. So what is it that you guys do

to make sure you're visible in front of those potential borrowers to make sure that you can have that conversation and help them, help them out? What do you guys do for visibility? Yeah, we're specifically word of mouth, but something that we've done for the whole four years that we've been in business, but specifically over the past 14 months is we've lowered our margins. We've lowered our overhead. And we literally are like one of the cheapest people in town. So we're, when we're not dropping any service or anything like that, if you look up this up on any platforms, we're going to have all five stores services, reviews across all of the platforms. but we've lowered our compensation essentially and lowered our margins and lowered our everything. And it's just really to stay competitive and stay in this market.

We're running lean right now. And then it just comes down to word of mouth. So, you know, you do good work for people and they're going to refer. They're going to refer you their friends, their family, their coworkers. And so that's been huge for us always. It's just doing good work for people. And then, you know, and then asking them to, you know, refer you. you. I think that's a big thing that a lot of people drop the ball is they're not asking for

referrals. They're not asking for service. You know, I think I've heard the statistic from years past that, you know, a lot of people that bought a home were surveyed, you know, hey, would you work with that lender, that real estate agent again? And it was like 90% of the time, yes. And then they track those same people. And then when they did their next transaction, they used whoever else. And the reason was, well, I just never heard from them. I didn't stay in touch. So that keeping in touch is so important. You can keep in touch, but if you did a bad job, it doesn't matter. So they go hand in hand. So I would like to ask, what are you guys doing to make sure you're ensuring that that borrower,

client of yours, is experiencing that stellar job? What does that look like? Yeah, it's really just about, I like to use an acronym called ACE, and it's about delivering accurate information, communicating, and then executing on the things that you're going to deliver on. So, yeah, if you're going to drop your. your margins and things and your services or excuse me your fees you don't want to sacrifice on any service at all and that's something that we're not willing to compromise on so it's just about you know

like i said communicating with people and delivering on what you say you're going to do and that you know that helps you build your confidence as well if you keep true to your word you're just going to be more and more confident you know in the future yeah so that's been huge for us something I've really noticed as well as like, you know, borrowers are certainly willing to move and make moves in this market. It just has to make sense for them. So, you know, no one wants to ditch a 3% interest rate for a 6% interest rate. But if it makes sense or under certain circumstances, you may have to. And that's the case. And that's what I think what we're seeing, and that's why activities picked up is there's just a new norm in the market now. And so people were a

little scared. No one wanted to be the first person to take a six or a seven percent, but now that that's kind of lingering around and it's become the new norm. And not only that, the market's also seen some correction as far as housing prices as well. I mean, they're driving back up, which is crazy. But maybe they won't drive up at 15 percent. Maybe they'll drive up at a more healthy rate of, you know, that four to six percent or something like that. So I think everything that's happened over the last 14 months, it may be hard for some of us, but man, was it needed. It was very, very needed. Things were not sustainable.

Flushes out the bad players, bad actors in the market. That too. And just like, the market just wasn't sustainable. How often, you know, you can't keep doubling these $700,000 houses to, you know, 1.4 and then 2.8. It's just like, it's crazy. So, yeah. But it's great for homeowners.

So I think that's kind of like the end play. And that's like, well, a lot of what I preach to my clients and borrowers is like, get your foot in while you can before it becomes unattainable. Because I mean, simple just supply and demand. Like they always say like they're not building more land. Like there's only however much land that we have. So you might as well try to acquire what you can. And I think that prices will just continue to go up over years, over the years.

And it may become a time where it's unattainable. for certain people. So if you can afford the payment, I think that you should, you know, get in while you can, even if rates are up or if prices are up. I just don't foresee them coming down with supply and demand. So I don't know how you guys feel about that. You just make the best decision at the moment. You know, like if you relocated here and you know that buying real estate is a good investment, you're going to buy a place. Let's see what the rates are and make the best decision. You know, you're not going to wait around for six months to two years because now the market moved without you. So I think that's so huge. People get so used to those low, low,

low rates. But I remember back in the day, six percent was like a party. So, you know, it just all is relative. It's perspective. Yeah. And I think that there's never always, there's never like a perfect storm, right? There's always going to be something, whether it be a high interest rate or low inventory or, you know, people are overbidding or, you know, you're not asking for any inspection items. Like there's always going to be just a bunch of moving parts. There's never going to be a perfect storm. So I think there's a saying that goes like something along the lines of like the best time to buy real estate is either today or 20 years ago, you know. So I think that holds true. And really almost any market, I mean, even if you look at like the 2008 market, by 2012,

I believe in most states across the country, like things were back to where they were, if not higher. in just a couple of years. Yep. Well, you remember way back in the crash of 07, 8, 9, 10, 11, 12, and all that whole mess. You know, I remember that the Dow Jones Industrial Average was, you know, just took a hit. And I remember thinking it'll never get to 10,000 again. You know, I literally, whatever it was before and after, I remember thinking, it'll never get back to 10,000. And now we're at triple that.

So, you know, take things, take that perspective. And I think that is so huge that you bring. that up. So thank you for that point. Yeah, I love what you said, Thomas. The best time to buy real estate was 20 years ago or today. And that's, you know, in the 80s, what was interest rates in the 14s? In the 90s, they were 8 and 9s. And that's part of, you know, owning a home. Yes, it factors into the cost of your budget. But it's also still, you know, those people that bought those homes in the 80s, 90s and so on, they're not regretting it because of the other side, the appreciation. And they have a home to live in them. Correct.

And I think, you know, just building that generational wealth for all of the baby boomers and all the different generations over the years. I mean, real estate is just, it's done. It's done so much for us as a whole. We had a special treat at 2 and 3%, you know, and that was special. I don't think we'll see those again. And so people just need to get back into the market and understand that. Exactly.

You know, I think the point that pins this conversation we're having right here is something that you guys have on your website. What if you could work with someone who, and there's a few bullet points, but I love this point, spoke plain English and pretty much acted like a good friend except with specialized set of skills, context, knowledge, and desire it to help you out. And I think that in the industry, sometimes that's lacking. You get people just spouting out acronyms and this and that. and you feel like what's happening. But you talk a little bit about how you teach and educate and make sure that people understand. And you just go, hey, if it makes sense, let's move forward. If not, I'm here to explain.

I think that's such a great position to be in. Yeah, I think we're in a unique position at New Capital Finance because we are, you know, we're a family model and we're a broker model. So we work with hundreds of banks to ensure that our clients get, you know, the lowest rates and fees. But you're not just a number. with us. And I know even during like the refi boom when things were going crazy, you know, that personal touch. I mean, we've never had under a four star or under a five star review. We've never even received a four star review. So that just, it just goes to show that we must be doing something right. And so just,

you know, not confusing people with those terms and some of the lingo and the jargon and doing what's right for the client always, you know, like at the end of the day, like, what's going to moat? I've been doing loans for since 2005. So I'm coming up on almost 20 years. And yeah, like my family, of course, motivates me and things like that. But, like money and things like that are all great. But really motivates me as like the end user, the person that's getting into the home. You know, that's what really, really motivates me and keeps me going like and not getting burned out. because I'll get text messages and I see pictures of them moving into their house. And when I see what I'm doing for these families,

that it really just takes me out of the equation and it's a big picture thing. And I found that, yeah, maybe at the beginning there was different motivations for me. But now that I've been in it so long, I still feel like extremely motivated, which is, I don't know, after 20 years, I guess I just didn't expect that. I thought I would feel a lot more burned out. but just love going through these different markets and these different challenges. It's always changing and nothing's ever the same. And so it's just,

it's exciting for me. And I think that just helping these families, getting them into their homes. And then on the refinanced side is like incredible too, because then I'm saving these people, you know, tens of hundreds of thousands of dollars over the life alone or, you know,

putting them into whatever the case may be. You know, it's just, it's incredible. And so that's what really keeps me motivated. And I think that's why the end user sees, like, such a good service and such good, what's the word I'm looking for, a process with us going through the low. They see your heart, which is the big picture, the transformation, the end result for them is the American dream and making sure that you have everything right. Yeah, yeah, yeah, we've got to do alone.

We've got to make sure all these things are in place. but I want to make sure that your dreams are achieved. And I think that's what's coming through really strongly. So talk a little bit about some of the people you're working with now. Are they typically buyers, first-time home buyers, to kind of break into that market? What should they be expecting and planning for when beginning their loan process? Yeah, I think that you just keep it really simple. So qualifying for a home loan over the years, you know, has had different layers of complexity.

but if you just keep it simple, that's what really stands out to these people. And so you can really just like, it's not too hard to qualify for a home loan. So you just need a credit score of maybe like, gosh man, I don't like to throw out numbers because there's so many different specific programs and things. But what I like to do is just say maybe like a 580 credit score and a two-year job history and a two-year residential history. Those are really the only things that I'm looking for to start. and yes, from there it will get deeper.

But those are the only things that we need to start. So if we just keep it simple and we don't overcomplicate it, then I'll know where to take the borrower into what specific programs and things like that. There's so many different first-time homebuyer programs and grants that are available through the state. So what I like to do as a broker is just take a look at their loan application. Like I said, I keep it simple. Maybe a 580 credit score. There's cases where we can go lower than that.

so I don't like to put a number on it. But a 580 credit score in a two-year job history. And then from there, you know, maybe get a little bit of background to figure out if they have any military experience. But that's really it. And then, you know, even if they do have assets, seeing what resources are out there from the state level, from the government, there's just a lot of different bond programs. So you don't have to put your assets into these programs always. ways. So I don't know. I just like to educate these people and show them what's available and then consult them into the correct programs.

Yeah, I love it. I think, well, I think that a lot of times, you know, the Kiss K-I-S concept is so vital. Keep it simple, stupid, right? Keep it simple and explain, you know, you're not going to get into the weeds of all of the things that go into getting into and qualifying for them because there's many, many, many, but if they know that you've got your best, their best interest at heart and, you know, you mentioned 580, 6, 20, those kind of numbers, I think a lot of people have the mis conception that I better have an 800 FICO perfect, never had any ding. But in reality, if you can go down that low and there's possibility for getting that loan approved, that's a huge aha for people. Sure, absolutely. And it's just having those options available and especially like for all of my different referral partners that I just like to know that, you know, they can send me someone and I'm going to have a good look at it and let them know, you know, up front if we're going to be able

to get it done or not. So I think that's just important to have that confidence, especially when you're dealing with some lower credit type stuff. We have all kinds of resources as well for people that maybe do need some credit repair. We do some free credit repair for people to get them up to where they need to be, especially with all these new, and this is where it kind of gets a little more complicated, but all these new LLPAs, loan level price adjustments that everyone's talking about. and how, you know, there's certain, if you put a certain amount of money down, you're getting, you know, a low level price adjustment. Or if you have a certain credit score, you know, you're going to have a certain low level price adjustment. And it's just there's certain ways that you can avoid all of these things.

And I just think that right now it's just there's a lot of information that's going to be out there. They can be confusing to the borrower for sure. So if you can just let them know that you have somebody, you know, that has their back that's been through this stuff. and they trust you, then they don't have to worry about all the stuff that they're seeing on the news and social media and things like that. Have you guys heard a lot about these loan level price adjustments lately? It's kind of been a hot topic. For me, I know I have not. Okay. Well, you're in the insurance world, so probably not. But yeah, if you guys, they've been putting it on the news. And they're saying, like, well, if I have a higher credit score, why am I being penalized? And if you

look at these heat maps, which is what essentially, they're putting out to the public, that is what they're doing. They're penalizing higher credit scores for these low-level price adjustments. And it's kind of a, I guess, assonine would be the only word that I- Wouldn't that be opposite? Shouldn't you, if you have a high credit score, shouldn't you get a little bit of a break and a benefit? And that's, yeah, and what they're trying to do is they're trying to help out the people

with lower credit scores, but in turn it is kind of, you know, penalizing people who have good credit. But in the long term, like, or in the long run, when you look at all of these final adjustments, it still is going to be cheaper to have good credit. So it doesn't make sense for you to go run your credit down into the ground. Because the thing is, is these are just low level price adjustments. So the interest rates will be a lot lower on a higher credit score and you'll still have those low level price adjustments. But if you have a low credit score and you're dealing with those adjustments. Like a low credit score on conventional,

you're going to have a very high interest rate anyways. So it all just, like I said, it all gets very complex. And so you just want to keep it simple for the consumer. And they just want to know that they have someone that they trust behind them. That's huge. And Thomas,

I think that's what we're hearing throughout this conversation is. Just talk to me like a human, explain things so I understand it, so that I trust you. And here's what I need to accomplish. And man, if you can guide me through the maze of getting in and qualifying for a loan and all that, that's huge.

So I think that's what you're just articulating so well. So if someone is listening and interested in reaching out and learning more about what you guys are doing and connecting with you, what's the best way that they can do that? The best way to reach us is on our website, which I know that you're going to post, but you can also contact me at T. Frank at newcapfinance.com or on my cell phone, 303, 341. 6558. So that's the best way to reach us. Excellent. Well, thank you so much for coming on. Today, it's been a real pleasure talking

with you. Thanks for having me, Mike. Thank you for listening to the Colorado Real Estate Leaders podcast, brought to you by Trailstone Insurance Group. To learn more about the topics mentioned on today's show or listen to past episodes, visit www.com.com.