Coffeez with Joe Shalaby - Mortgage Legend Willie Newman | Coffeez for Closers with Joe Shalaby Ep. 33

Episode Date: August 23, 2024

Willie Newman is the visionary owner of Willow Canyon Advisories. With over 25 years of experience in the mortgage industry, Willie is known for his innovative approach and leadership. He previously played a critical role in the growth of companies such as InterFirst and Home Point Capital, where he helped scale operations to become a top-25 non-bank originator and servicer. Additionally, during his tenure at ABN AMRO Mortgage Group, he was instrumental in developing the company into a top-five mortgage lender and top-10 mortgage servicer. Now, with Willow Canyon Advisories, Willie focuses on guiding businesses through the complex world of financial services. His deep expertise and strategic insights have made him a respected figure in the industry, helping countless businesses navigate challenges and achieve sustainable growth. For More Check Out our Playlist: https://music.youtube.com/playlist?list=PLgPwyhl8CkXiM0cBtuY8A_6JS60FueLz3&si=0_2dnoPkYV6jcSGw Check Us Out on all Platforms!Apple: https://podcasts.apple.com/us/podcast/coffeez-for-closers-with-joe-shalaby/id1726674707Spotify: https://open.spotify.com/show/2KkQWRqHSHcCK3TVfsRKUK?si=hjTnUOjFS5eTDxBjgf4RwQ&preview=noneAmazon: https://www.amazon.com/Coffeez-Closers-Joe-Shalaby/dp/B0CRYLQRW6 Coffeez and Closers Socials & WebsiteWebsite: https://coffeezforclosers.com/Instagram: https://www.instagram.com/coffeezpod/TikTok: https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqbnU0T3RrLXdPbC1BR2NLc2lWcExqWklQaHlQUXxBQ3Jtc0tudi1GV2Zod3hRYzRhTkhONFBuMlptblNGSlJ1QzhpV0tzbHh5YThNR0R3Y2RnNnU5NV9ER3E5ZUhxMjdUUWp1UWo4MVl6Q2szeXo1cFh1OHNkYkxDR1F0MXZtMTZ6QnZoakdzSnJpVl9PcWZBOU9zZw&q=https%3A%2F%2Fwww.tiktok.com%2F%40coffeezforclosers&v=uXvk6LY9lS8Facebook: https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqa2pLZ2pMaUxmSTh4dy1qazMtdlBjX2pVN1AxQXxBQ3Jtc0tua2RUTUNsRmJob0RKWlVqeDhNaUN4US1rdlRvUG9Fdm5SNk1jU1pQNzNLQnVmUmtGMGtMYUViZ2pLMXJkOVJUci1kMk9DN2poTThVV2NFd0tISWdDMzNwOEZ2c3pVb09lbEhjemJHblRsS1RKdHZqbw&q=https%3A%2F%2Fwww.facebook.com%2Fpeople%2FCoffeez-for-Closers-with-Joe-Shalaby%2F61556355642488%2F&v=uXvk6LY9lS8 Joe Shalaby SocialsInstagram: https://www.instagram.com/josephshalaby/TikTok: https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqa3p6VlRzR1BWMkJQM1ZIaUdVZHhYVTYyak43QXxBQ3Jtc0tuUXVBOE1oZUJYTmZIZnNENUgxQkhjamk4RXJHb09MWU9OczJhLWpnX0JwN2pENzRhaV9NajJROW5nek1tQ1VvVE40ZFJuUUI2cnI0ajNKLXE4d1VMUUpkTGFHR0tGY0o5NUhnWnZnaXJoZXdEM0piaw&q=https%3A%2F%2Fwww.tiktok.com%2F%40josephshalaby&v=uXvk6LY9lS8Facebook: https://www.facebook.com/josephshalaby E Mortgage Capital Socials & WebsiteInstagram: https://www.instagram.com/emortgagecapital/Website: https://www.emortgagecapital.com/Twitter: https://twitter.com/Emortgagecap #1 Mortgage Company on Social on 🌎#1 Non Delegated Lender in the Country🌟#1 Broker in CANMLS #1416824"Mortgages Are What We Do Not Who We Are"™https://finance.yahoo.com/news/learn-why-e-mortgage-capital-192000740.htmlAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

What's up, everybody. Welcome to another episode of coffees for closers. Today I'm sitting down with a very special guest. He is currently in, what's up everybody, welcome to another episode of coffees for closers. Today I'm sitting down with a very special guest. He's currently the chairman of the loan store. He is also a board member on Aveo and Soar. He is a legend in the mortgage industry. He was the founder. of Home Point, the founder of Interfirst Wholesale, someone who's absolutely changed the mortgage industry for the better, please welcome Mr. Willie Newman. Thank you, Joe.

I appreciate it. I don't know if the legend means I'm old. I think that's what it means, but I'll take it. It's fine. No, no, no, true legend, true legend. Thank you. And I appreciate you for coming on the show. Sure.

I know I threw it at you real quick. And I love how attentive and willing you were to just say, all right, let's do it. I'm excited. So thank you. So Willie, I know you're actually from Michigan, aren't you? I am, yeah. I live in Ann Arbor. Nice. I don't know if I should say that here, though. But I do anyway. So we'll talk about, I like to start the show with an icebreaker. Everybody I ask the same question. I know this is probably changed because after your exit from Home Point, you probably aren't as rigid with your schedule. Maybe you are. but what is your morning routine right now? I typically wake up, have two cups of coffee, and then I work out. And sometimes I read before that.

It kind of depends on what time I wake up. But those are the three things that I do in the morning. Nice, nice. So what's it like now, you know, not having to grind as hard as you once did? It's hard to get used to, actually. And I think that, you know, you ask about routines. That's one of the things that I've tried to actually break a little bit is like I don't have to do things at a certain time and I don't have to like have to like have.

have an order to things. I can change it up and try different things and maybe sleep in once in a while. So it is different. It's definitely different. And I missed it for a little while, but I don't now, at least at this point. You know, someone who achieved such great heights of success like yourself, what was it like transitioning? That transition from being so incredibly busy, the grind, the compliance, all the, you know, all the different facets of the, of this demanding industry and then going into like, I'm going to be the chairman and just kind of get to bounce around. Yeah.

Yeah. I think in a lot of ways it's good and it's healthy. I think one of the things that takes a little while to get used to is you're not in control of things, right? So you may see something that you say, well, that's not right. It should be this way. Or I would do it differently and you can suggest that, but you aren't able to implement that. So you have to kind of learn how to work through influence and work through ensuring that you're supporting your whatever your thesis is you're supporting it with information of facts not

you know hey it's my idea we should do it whereas you know if you're the CEO of a company you can kind of say I want to do this so we're going to do this so it's it's been it's been interesting and I think it's healthy to do that yeah so what made you decide like after home point you're like I'm over it you know I'm done I'm not going to do it again I think like you said Joe it was just the grind right I mean I've been doing it pretty much for 30 years I had a little I'm off during the financial crisis, which was nice. But my kids are grown, and, you know, there's really, there's a lot of other things that I can do in other places I can be.

So I decided, you know, I'd like to do that as opposed to kind of going back in and diving in and, you know, working 12 hours a day. I just, I kind of like this routine versus that. This routine is much more, you know, in your pace right now. Yeah, well, it allows you to think, too, where, you know, I used to have to schedule time. I kind of learned this. I would schedule time in my schedule to actually not do something, right? Because they would be packed and I'd be like, I have to think.

I'm not going to be as good of a leader if I don't think and I don't process and I don't research and find information that is not intuitive to me. So now I can do all of that. Yeah, that's awesome. And I hope, and I can only dream to be in your position one day just to be the chairman on the board of a couple companies and not having, to worry about the grind as much, you know, you get to be out here at this event, you get to bounce around and kind of...

I know people ask, like, what are you doing here? Or I was like, well, one, I'm very interested, you know, especially interested in mortgage brokers in particular, because that's really how I built my career. But also, I'm interested, as we talked about, I'm interested in helping my friends. So, you know, I talked to Matt Isbia, you know, frequently. A lot of my friends are here, you're here, so it's really been fun to kind of re-engage with people but I don't see as often anymore. Yeah, it's a great environment, right?

It's a great social environment. You get to have a good time. Totally. So let's talk about your history. So I want to dive. We're going to go back. Whoa, way back. We're going to go back.

The way back machine. So let's start, let's go back into how, what year did you get started in the industry? So I guess technically it was 89. 89. Yeah. And what'd you do in college? What did you graduate? I graduated with finance.

I went to University of Michigan, got a bachelor's, a bachelor's, a bee. BBA and finance. And then straight into the mortgage industry. No, I worked for a savings loan for a couple of years. And I did learn elements of the mortgage business through that job, but it wasn't solely focused on mortgage. And then I met this gentleman that became my mentor, and he hired me, and he's like, I'm going to build a mortgage business in another savings loan.

And he said, I want you to be the head of secondary marketing. And I was like, I'm not sure exactly what that is, but that sounds like something I'd like to do. So he hired me and it kind of went from there. Nice. But you didn't get, like a lot of people go into. the mortgage industry through retail or through a broker. You went to the mortgage industry through savings and loans,

which candidly is like the most stable way to get into the mortgage industry. Well, there was a little thing called the savings and loan crisis and what was happening. Prior to the savings and loan crisis, you got in. Well, I was in it after the savings and loan crisis. So what happened was the gentleman that became my mentor saw that these traditional savings and loans were actually starting to fail. Or they were failing left and right by that time. And there were all these loan officers that were originating for these savings and loans that didn't have anywhere to go.

And there was this little kind of legal structure construct called a mortgage brokerage. But it wasn't really used as it is today for mainstream lending and obviously kind of more mass market. It was really a very nichey type of a segment in the industry. But my boss was like, why can't it be for everybody? because there's all these law officers that still know how to originate. There's this construct, and what we did is we facilitated their access to the secondary market. And back then, Freddie Mac and Fannie Mae were still, they were kind of in their infancy still. Yeah, they're part of company.

So he saw all of this, and he put it all together. And of course, you know, I was 24 years old, so what did I know? But I was like, this sounds pretty cool, so I'm going to try it. And, you know, it kind of went from there. I mean, he was a tremendous mentor to me. For the audience listening, can you explain the difference between, a savings and loan and a normal bank? Yeah, so I think now it's a little bit merged,

but back then a savings and loan primarily focused on home lending. So, where it's banks focused on more commercial lending. And there were actually guidelines, limits to, or minimums that savings and loans had to lend from a mortgage perspective. So it really kind of, you know, banks did do a lot of mortgages and the savings and loans did do a lot of commercial loans.

And then that all kind of got a little bit messy, and that's kind of what spawned the savings and loan. crisis. Yeah. And I think Wells Fargo was the first to add that like Wells Fargo, is it called like Wells Fargo? No, no, the home loans. Is it basically kind of like. Yeah, they formed, yeah, they were one of the few banks that formed a subsidiary that said, you know, and they, I mean, this is going way back, but there was, they were the product to several different mergers. And one of the mergers was Fleet, who had a pretty big mortgage company. So they kind of combined it up and said, let's do mortgage too. Now, okay, so you went from savings and loans to

working in the secondary market. Now, when did you start your own mortgage company? Oh, well, I started a mortgage business for a bank called Cole Taylor Bank in 2009, and then started Home Point. That was the first company that I started, DeNovo as an independent company, and that was 2014. DeNovo was the first company you started? Yeah.

So I built businesses for banks or financial institutions. And then the first, and then interfirst, you started in... That was the one I joined in 89. So we started, we basically started building the mortgage business in that savings and loan in 1989. Wow. Okay. And then they sold to...

We sold to another bank called Standard Federal Bank. It was actually here in Michigan. And then that got sold to AB and Amrow. And the good thing about that, Joe, is that every time we got bought, we were at about our limit from a lending standpoint because you need capital to lend. And, you know, we would kind of run up against our... limits because we were fortunately successful at growing and then we got bought and then we got more capital and then we grew again and then we hit the ceiling and then we got bought and abe and

amaro was the international bank that we felt like had limitless capital and we kind of tested their limits as well for it you know again a fortunate problem to have that's awesome so every time these are like more and you were you were CEO the whole time uh well I was one of the two top people yeah each time nice so I kind of ran the mortgage stuff of it. And then after that final exit with AB and Amro, you were like, you were able to retire again. I could have, yeah. And then you were crazy enough to start your own mortgage company after that.

Why did you do that? Well, so, you know, so we sold ABN in 2007 and obviously that was like really when the financial crisis was just starting to hit. And so I guess, you know, fortunately or unfortunately for at least a year or so, there was There's really no opportunity to do anything in mortgage. And so I was like, you know, maybe there's something else I could do with my life, right? And so I was looking around, you know, maybe I'll be this or I'll be that. And you know how it is?

Sure enough, it's like it just starts sucking you back in and, you know, the market started open up just a little bit and I had a bunch of people that I worked with previously that were suffering. And so I said, you know what? I think I'm going to give this another shot. And you know, in my experience, the best time to start. something is when the market's disrupted not when the market and when the market's at its peak everyone's doing well right yeah yeah it's kind of like the analogy of hiring loan officers as you

know yeah it's hard to hire them when they have 20 loans in our pipeline but when they have three or four it's a great opportunity right especially right now when they're suffering i mean we're having our best years of recruiting you know in the last couple years i mean totally makes sense so you kind of extend that analogy to kind of business generally it's like when the market's down it's a great time to start it's hard but it's a great time to start and you started home 0.09. No, Hope I was 14. 14. I started Cole Taylor mortgage for Cole Taylor Bank in 2009. Oh nine. Okay. And then you had an exit out of that one too. Yeah, I left it in 2014. Okay. Now 2014 home point and then I said I'm going to do it again one more time. Oh my gosh, man.

You you after multiple exits. I'm sticking to do that now only one more time. Yeah. I wonder if you're going to do it again. You know, like you've had so many. No news flash. It depends on, like, how bored you get. But I think this time you found, like, you're pretty busy. Yeah, I think so. So are you parent? Do you have kids? Four kids. Okay, so I have three.

And my kids are adults now. But I think part of, like, learning, you know, parent, like I was saying with off-camera was that you can tell your kids what do you for so long and they grow up and then they decide what they're going to do, but you can try to influence them. And I'm enjoying the influencing part of it now. So what I'm doing, and I'm working in different industries. I'm working with different CEOs, different personality types. So I'm getting a different type of enjoyment out of what I'm doing now

versus building or running something, or building something from scratch. Yeah, yeah. And that's awesome because you get to work with true innovators. Exactly. And get a different perspective and influence people who have influence on a younger society. Yeah, and it's interesting. that because most of the people that I'm working with are younger than I am, and a couple of them are materially younger than I am. And so they're, you know, they're helping me learn about kind of what motivates them, because it's not the same as a person who's my age or, you know, my generation, I guess.

Yeah. Did any of your kids go down the path of mortgage? Oh, God, no. You never condone that, huh? I try, again, I try not to influence them on what they did, and they just showed no interest. So I actually have, my oldest is actually a rocket scientist. She works for NASA. So I can't really complain about that. My middle daughter is, you know, works in education, and my youngest daughter is in grad school.

So they're all taking their own path, and they're doing great with it. And I'm going to dive into parenting, and especially parenting advice, me having four kids. How old are your kids? Ten, he's going to turn nine at the end of the month, so everything's going to change. Oh, you got a lot.

You got a lot of right. And then I have a four-year-old, and then a two-year-old, she'll be three in July, so the end of July. So I'm in the thick of it. My wife's a hero. She happened to, I experienced like being a dad when my wife went away for a Mother's Day trip. And I had all the kids by myself.

Oh, yeah. And it was like, they like the kids abused me. I was like, my wife is a champion. Well, I'm a divorce parent. And so when my kids were younger, it was like, I look around and no one's here. They're except me, right? So when they were with me, it was me and them. Yeah.

Yeah, it's, you'll learn. You learn pretty quick. Yeah, they're a handful at this age. Yeah, right. They know how to kind of play dad because I'm a sucker because when I'm there, like I grind all day long and then I see the kids, it's like I'm like Disneyland Dad. Well, plus you don't have to deal with the ramifications of that, right? Typically. It's like, yeah, I'll spoil them and then that's it.

Yeah, then I'm out. Back to work. Right, exactly. So you've managed to get through so many hard times. hardships, you know, throughout the mortgage crisis, any particular hardships that you can remember that really, you think, reshaped how you do business? Like, was it the financial crisis? I mean, you've been through multiple downturns in the market.

Any notable ones that you think? Well, I think probably one of the most influential periods of time was when we grew very rapidly at AB&A.MRO, and frankly, we grew too fast. And as a result, we ended up taking some losses. that we had not anticipated. Now, we had done really well financially the two years prior, but there was some unanticipated losses that happened subsequent.

And the lesson that it taught me was that, it's like no matter how strong you think your strategy is, because, again, it was my mentor and me who were running the company. You have to have the depth of knowledge around you in order to build to that next level. And so, yeah, it taught me, One, that, and then two, the importance of culture.

And I thought we had a strong culture, but it wasn't, it was a fun culture, but it wasn't a strong culture, if that makes sense. Because there were signs that these things were happening that were identified after we kind of, we took the hit, so to speak, that we should have known sooner if people would have raised their hand and said, hey, by the way, this is happening.

And that was, again, the culture was fun, but it wasn't strong enough for people to feel comfortable raising their hand and going, I'm not sure what we're doing here is exactly what we should be doing. So, you know, both those things really influenced me, you know, as I was fortunate enough to build two other businesses, they really influenced me in how I did those. How did you pivot to creating a strong culture after that? Well, one, I think you try to make people feel comfortable that there aren't going to be negative ramifications associated with raising your hand. So it's, As a matter of fact, there are more negative ramifications associated with not raising your hands.

So it's like you really should feel comfortable participating. You really should feel comfortable telling us what you see and what you believe. And then too is kind of related to that was like treat those people well and other people will see how they're treated and they'll kind of act accordingly. And I noticed that HomePoint had a great culture and everyone who worked at HomePoint and loved HomePoint. and they're like diehard home point you know fans basically and the thing i noticed that you know about home point like they're there to the very end and after we have like kind of home point 2.0 at the loan store and i talked about this with phil it's like he's developed an excellent company culture completely virtually kind of on on the same principles he actually mentioned right

You know, that there's a huge component of collaboration, and he used the term raised in their hand as well. Right. You know, people, you know, always speak up, just, you know, a suggestion box type of culture. Right. Yeah, and not feeling like that, their role is the only thing they can do for the company.

So, you know, if you need to pitch in, you pitch in. If you see something that, yeah, there's paper on the floor, you pick it up, right? So, and I, you know, I see that with Phil and how he's leading now, and I'd like to believe that's how we also had it at home point. I think the other thing that we really did well was, you know, during the pandemic, we did, we really listened to the stressors that our associates had outside of work. And we try to respond to those as well as we could.

As an example, the leadership of the company actually, we pulled our own money because we don't want to deal with the tax ramifications and all that. We actually pulled some of our own funds and we had this, it was, basically an emergency fund and we said we'll give you up to $500 and we don't we want you to tell us why only because we want to track the reason but we're not judging whether it's like an appropriate thing to give money to or not so literally if you know you or anybody else who worked at home point could say man I need I need $400 because I got this bill and I didn't expect it and we'd be like here's $400 so I think that engendered the culture that you're

referring to so you had just a slush fund for people who who needed it? Well, slush fund is not exactly how it would characterize it. Yeah, yeah, just, no, no. We had an emergency fund. That's awesome. Yeah, yeah. I've never even heard of something like that.

So just how much was the most you gave at one point? It was 500 was the max. And I think we ended up giving 30 to 35,000 dollars. And it was all leadership. Like I said, we didn't want to go, here's, here's $500, but you're going to get the, you know, we're going to take 100 out or you don't have to pay 100. We're just like, we'll fund us ourselves. So we just fund us.

it ourselves. I actually distributed the money. What was the name of that initiative? You know what? I don't remember now. Yeah, like, how did you frame that? Like, that sounds like cool. It's like, yeah, I think it was just like you need money. We'll give it to you, you know? But what we wanted, I mean, if you think about back back then, and even now, but I mean, especially back then, there are all these new stressors on people's lives. And we just wanted to kind of, and as you know, it was one of the busiest times ever in the business. So we just wanted people to not, it's like, we want to take as much of the worry that you have off as possible. And we can't prevent you from getting COVID. But we can help you be a little more comfortable

in, you know, the day-to-day life that you have now that's been disrupted by the pandemic. So, yeah, so that's a great idea. And that's actually a good idea just to keep as an initiative for the company. Yeah, yeah. And then was there a limit monthly that you would disperse? No, it was just, we dispersed it until the money was gone, basically. Yeah, I think we actually did two contributions. I think we had one pool and then we figured out more people needed money and I think we did another one. So I think it was like 25 and 10 or something like that.

And it was an anonymous thing? No, we actually tracked it. Like I said, we tracked it only because we wanted to know what the stressors were. So if there were things we could do more systematically with the stressors. So one of the things that we did from that was, you know, I mean, we wanted to, you know, I mean, You're constantly working with, we're hiring pretty rapidly, we're constantly working with technology providers. So we ended up having all these laptops,

some of which we'd replace out and kind of get the new version and all that. So we started giving laptops to the kids of our associates because, again, they were worked school remotely. They may or may not have access to technology. So we'd give them laptops. So we did it several hundred laptops to children of our associates. That's awesome. Listen, all of that contributes to developing excellent company culture and kind of hearing how some of the little nuggets that you established early on to encourage that company culture.

I mean, it's not like it's it paid 10x. It's paying dividends forever. Right. You know, like you were able to create like a spin off of HomePoint because everyone was diehard home point. Right. So what's the vision now with the other company you're doing? chairman of? Like, do you have lofty goals like you had? Well, you know, now they're Phil's goals. So yeah, I'll let him. And he already told us

his goals. Oh, did he? What he said? I better check. I think for me, the reason that I'm involved is other than there are a lot of people there that I care about is that if you look at kind of the broker segment, you know, as we've talked about here at UWM Live, it's growing, it's healthy, but there's one really large advocate slash lender. There's another one who's not quite as big, but there's divergent perspectives on who they are. And then there's a bunch of really small lenders. And by small, like the loan store doing $600 million last month,

that's not small. I know, we're getting there. The loan store is getting there. But I think, you know, in my opinion, I'm saying this now as a direct, you know, I'm directly involved with the loan store, but I believe that there needs to be two or three other companies, not of the size of UWM, but that are of the size that people can look at them and say, okay, they're significant players

in the industry. So we hope that the loan store will be one of those, and I think there are several other companies out there that have the opportunity to do that. And, you know, frankly, I talked to a couple of them, and, you know, I try to help them, just like I try to help UWM because I think, you know, the broker segment is only going to be as strong as UWM is at the end of the day. I mean, they have 45, 50% market share. Yeah, right now, Matt just, he recently announced that the broker segment is up to 24.2% market share.

Now, in your days, you've seen the broker market share up to, what was the highest you've seen in? Yeah, reports differ, but, you know, 50%, 60%, broker market share. Yeah, somewhere in that range. Yeah, and this is the highest we've seen broker market share in 15 months. Definitely post-crisis, yeah, post-crisis. So, you know, broker market share is starting to increase. What is it about the broker that attracts you so much to this environment, to the broker? Yeah, so, I mean, so like, you know, we talked about it.

So I've done this three different times. I built three different mortgage businesses. And every time I looked at, okay, where was the best opportunity to build and grow? And what was the best opportunity for the consumer? and every time it was the broker segment. And, you know, frankly, it's because I think the broker's superpower is choice, which kind of leads to having more strong lenders in the segment, I think, is a good thing. So, you know, again, that's kind of part of the motivation behind helping the loan store out.

But if the broker's superpower is choice, they have the opportunity to really help the consumer get the best deal possible. And so, you know, and that's a series of factors, not just price, right? convenience, speed, the ability to execute on a timely basis. So every time I've looked at it, it's been that. And if you look at retail as an example, there are a number of really strong retail companies. So I'm not here to say that everyone should use a broker all the time. But if you look at a lot of retail companies,

you know, they basically their loan officers have one choice. So it's hard to be competitive all the time when you really only have one option as a loan officer. Yeah, and it was great, you know, always, because we were number, like you guys, HomePoint was our number two. Now, I think the loan stores, like our number six or seven, they're climbing up the ranks as well. Good. And that's big for a company with 900 loan officers for us to have.

But our number one, you know, takes up 90% of our market share. Sure. And then, you know, the other seven get 10%, which is still significant considering the amount of volume that we do. but it is great to have a good reliable partner. Right. It was disheartening to lose home point, obviously. What do you think some of the biggest issues

that caused the fall of such a massive partner, home point? Oh, so what were the challenges that we had? Yeah, yeah, some of the challenges. So we built the business. We really grew when COVID hit, you know, when the market grew. We saw an opportunity to really grow. And we took advantage of that opportunity, but at the same time, you know,

it would have been helpful to build a little more infrastructure behind it, such that it would be more sustainable. Like I said, I tried to learn lessons from the past. And we did do a lot of that, but things got tougher really quick. And for us, that was just a big challenge for us to overcome. And I think the other thing is, like, you know, we went public. and the cost, an overhead associated with being a public company, that wasn't like the cause of a, you know,

that didn't result in us having to sell, you know, deciding to sell the business, but it's just something that layers on that you spend less time focused on the core business and you spend more time focused on other, I call it extraneous factors. So, you know, I think there's a number of variables. But primarily it was that the market got more difficult, and it was difficult for us to adapt. 10 times more difficult. Yeah. It's still difficult, right?

Two and a half percent to seven half percent. Right. So a lot of companies weren't equipped. Now, I want to actually dive into that. Like, when a company goes public, I didn't realize all of the extra costs, right? Would you, if you were to look back, would you have, would you guys have went public? Well, I think everybody would say that that was involved. So we had a private equity sponsor, Stone Point Capital.

great people to work with. They were extremely supportive of the business and kind of you know, good times and bad, so to speak. But I think all of us, you know, private equity requires some sort of liquidity event at some point and that we felt like that was the opportunity to start creating that. But at the end of the day, the public market itself kind of, it opened and closed very quickly so we didn't take much of the company public. We only sold about 5% of the company through the public offering. And as a result, we were, we had all the kind of know the overhead associated with being public without actually being all that public, so to speak. Yeah.

So I guess in hindsight, you know, if we knew now or knew that what we know now, we probably would not have gone public. Would you advise other big mortgage companies to make the decision to, you know, Penny Mac is public? Yeah. Well, again, I think it really depends on what's driving the decision. to go public. So I think there are multiple ways in which you can create liquidity. It doesn't have to be going public as an example, but it may involve selling a controlling share of your business. So I think it really depends on kind of the motivation. But I will say that it's really

difficult to go, you know, like a technology companies, a lot of them go public to raise money. It's really difficult to raise money in the public markets as a mortgage company. Yeah. And we're not just that we're not attractive. We don't have a multiple. It's really too cyclical. If you look at the ones that have been public for a while, now, UWM's a little bit different animal because it's the leader in the origination segment. So if you look at the stock, it's performed, you know, since the beginning it's down, but it's performed pretty well over the last year or so. Yeah. But Penny Mac and Mr. Cooper are the two.

And if you look at their business models, both of them are balanced such that they don't have wide, you know, big fluctuations when the market changes because they have so much servicing as part of the. their business model. Yeah, because that servicing book is just stable, and that's how they make all their money. Especially these days with rates being where they are. Yeah. Now, do you think there's any specific skills or a mindset that someone has to have right now to survive in the mortgage industry? I think that you have to be very diligent.

So I think it's pretty easy to go home every day and kick the dog. say, wow, you know, this is really hard, but I think you have to kind of stick to, you know, what made you successful in the past or what makes people successful, you know, I think that diligence and perseverance is really kind of characteristics that as much as anything I think will carry people through. Now, you're kind of looking at the industry now from a bird's eye, you know, being the chairman, being on multiple board seats, getting to collaborate with so many different visionaries. Now, from your bird's eye view, what do you think the mortgage industry has in store for the future?

I think it's getting close to what I would call equilibrium. So I still think there's too many people in the business. Sorry, for those who they're watching. Some of you need to go. I agree with you, by the way. We have 900 loan officers and 200 do business. Yeah. I think there's a certain amount of inefficiency that's still in the business.

I think that has to continue to be wrung out. I mean, if you look at as an example, if you look at the MBA, the performance index, I mean, companies have, independent mortgage bankers have lost substantial amounts of money in the last two quarters, which does not indicate a market at equilibrium. So I think there's still some kind of written there. And I think, I also think that I kind of, I've been kind of thinking about how to characterize this. If you think about kind of the cycle that we talked about, Joe, where.

Mortgage brokers kind of reached their apex in the early to mid-2000s, right? Yeah. And then there was this huge decline. You had the financial crisis, you had mortgage brokers having a target on their backs. You know, you're the cause of it, right? So he had this regulation come down and market share just plummeted, right? I think retail ends, being from Detroit, I look at retail lenders kind of like the auto companies in the 50s and 60s, where there was no competition other than the domestic competition, right?

So what'd they do? They started building these huge cars with tail fins and all kinds of features and stuff on it that people really didn't especially want. But it's how they could differentiate themselves. And they didn't really focus on efficiency and cost per loan and how's that interact with customer satisfaction, like that whole kind of picture. And what happened? Japanese companies came in, brought all those things in, ate their lunch, and the share

is diffused all over the place now. I kind of look at retail owners like that. Like they didn't have that scrappy, entrepreneurial, very focused competition. And now what you're seeing is you're starting to see that competition build up, right, of the last several years. To the point where, as you said, brokers are now taking more share and many retail owners are looking at it saying, I got to be as efficient as them with the model that I have or maybe some newer version of the model that I have. So I don't know if that analogy, like, resonance. No, that makes sense. That makes sense. Now, Willie, you've had multiple exits. You could have retired so many times. After all this success, and you totally have the financial freedom to retire. Like, what drives your motivation to continue to grind?

Yeah, well, I like solving problems, and I find the mortgage business. I think I was fortunate in that when I came into the business, like you said, a lot of folks come in at the front, right? They're pretty. production people, they grow their companies, they become more kind of like generalists, right? I came in through the back. I came in through secondary marketing. So I understood, like, from day one, you know, how many, how you make money and how many is, or how many is made and how you make money. I understood how to make money. And so, but part of that was like, okay, there's this problem to solve here that I have to,

I have to make sure I can cycle money through so that we can actually do more loans. And so I just found it fascinating. And so, like I told you, Joe, I'm not really interested in the day-to-day grind, but helping my friends solve problems in the business is still very interesting to me. That's awesome to hear. Now, I've noticed you've mentored some of the most brilliant minds in the mortgage space, like, you know, you got guys like Phil Shoemaker, Brian Decker. How do you foster this talent?

How did you get to build these guys up so well? Well, I mean, it starts with the fact that they're talented. So, you know, it's like Michael Jordan, right? Yeah, you're like, you found the talent. Yeah, it's like, you had to put something around it. But I think what, I think the people that, I don't know, my mentorship resonates with, have typically run into issues in their career that they haven't been able to solve on their own or, you know, have impacted them negatively.

And so like when I met Phil, he was in a corporate culture that he did not like. And so right away when I, you know, I didn't really talk about the business. I talked about culture or the importance of culture, and that resonated with him very quickly because that's the reason he was even talking to me. Because I'm like, why, you know, we were small then and I was like, why are you even talking to me? It's like you work at a much bigger company,

you have done all the work to get it to a certain place. It's like, well, why are you talking to me? And it turned out he was not enamored with the culture. And I'm like, well, one thing you'll get from me is a culture. And if you're not aligned with how I think about it, then you shouldn't consider joining. So, I guess, long story, short, Sure, I find that.

You know, they've typically run into some issues in their career. They haven't been able to solve on their own, so they're willing to listen to somebody who, you know, maybe's kind of been through the ringer a few times. I want to ask you this because you've built so many businesses and, you know, I think they've all had good exits, but with the exception of HomePoint, which you wound down. They actually sold HomePoint.

Oh, you sold it. So there was still, it wasn't a loss. That's right. Yeah, it was still a, so it was still a, an exit. Yes. And you could have kept it going. We could. Man, I wish you would have kept it. But no, no, because they were our number two. Like, right. We haven't found a number two. Well, hopefully the loan store will build up to that point. That's my shameless plug for the, for Phil. Yeah. But seriously, like I said, it's like, it, I'm talking to a couple other

people about their business and the opportunity specifically in wholesale with Phil's full. knowledge. I talk to Matt Ishby about it regularly because I feel like there needs to be more, you know, if a loan store can get twice as big, I think that would be healthy. You know, if there are going to be three or four loan stores like that, I think that would be healthy. I don't think there should be 20 and, you know, Matt would never let anybody get to his level because that's, you know, they just do such a great job at EWM, but I think. No, no, Matt wants there to be competition. Right. He does. He doesn't want just to be just to be. He and I talk about it frequently. He doesn't want to be the only guy in town.

He wants there to be healthy competition. It's good for the environment. It's good for the marketplace. It's good for mortgage brokers in general. Now, how important do you think it was taking risk to build HomePoint, taking risk to build Interfirst, taking risk to build any mega organization? Well, so I think, you know, it's better and harder to build from scratch. So as much as you can build from scratch because you don't have to deal with the,

kind of the sins of the past, so to speak. And so I think, you know, if anyone has the, you know, has fortitude to do it, I recommend it. I think it to be of a certain personality type. So to give you an idea, when we started Home Point, I had this leadership group, all of whom had tremendous amount of experience and, you know, very, very talented people,

but they had never, they hadn't done work for, what I would call work for a long time. In other words, they were more administrators and not kind of on the ground. And one thing you learned in the startup is like, no one's coming to empty the garbage cans or change the toner. You're doing it yourself, right?

It's like you just do what you need to do. And unfortunately, I had kind of overhired for what we were. And so I really had to realign the leadership. I had to get people who were actually, you know, not just thinkers, but doers at the same time. So like I said, I think it's probably optimal to try to build it.

I mean, look at what UWM did, right? Matt pretty much built the wholesale side scratch. So you can kind of build it in your image, so to speak, but it's really hard. So, but you have to, you have to be willing to take that, like you said, that level of risk or, you know, have that fortitude to do it. Now, I'm going to pivot a little bit in the conversation and just kind of to talk about your family. Now, we talked about your kids and you've managed to raise some very successful kids, thank God. And one of them being, you know, a rocket scientist, People joke like, I'm not a rocket scientist,

but he literally raised a rocket scientist. She's going to get mad because she's not technically a rocket scientist. But she actually drives one of the Mars rovers, which, by the way, so she's what they call them rover pilots. By the way, they don't have a steering wheel, right? So she, but she graduated in computer science. Yeah, so you've raised great kids. And one thing I've noticed, like, you know, raising kids when they're born into like abundance,

is not easy. How did you manage to raise your kids so that they sustained that same level of grit that you had? Yeah, they, we, it's funny, because I kind of relates to what you were saying earlier about spoiling your kids a little bit. It's like, we did a lot of things that, I'd say a number of things that their peers probably

couldn't, you know, in school couldn't do. But they always had a level of appreciation for it. And I tried to instill that. It's like, we're doing this because you're privileged. But, you know, don't take advantage of that privilege. Enjoy the fact that we're privileged and that you have this privilege. And I think my kids were always very respectful of that. So, you know, they didn't, you know, we bought a car, I bought a car for my oldest daughter.

She handed it down to each of the other two. It was a Ford CMAX. You know, it wasn't a Mercedes and it wasn't a big Jeep or anything like that. it was a basic, small, you know, commuter type of a car. So, you know, like I said, there was a certain amount of privilege that they had, but I always tried to help them understand to be respectful of that and be respectful to others who may not have that same privilege. And, you know, fortunately it took.

And, you know, again, I'm a divorced parent, but my ex-wife is an excellent parent as well. And so, you know, I think the kids had, they had some balance in their life, even though they had privileged as they were growing up. Excellent. Now, I like to close out the podcast

with a couple of questions. One of them is, you know, about goals. Now, it's a three-prong question. So what's a personal goal that you have for yourself, Willey? What's a goal that you have for the companies that you're a chairman of, the ones that you sit on the board of? And what's a goal that you have for the family?

Oh, God. So for myself, I'm actually doing pretty good. job of this right now, but reading more. So, you know, I actually read a lot. I've always read a lot, but, you know, when you're working, it tends to tilt towards things that are focused on the business that you're, you know, a part of. Whereas now, I mean, I read fiction, I read nonfiction. I'm reading a book about the transition between Roosevelt and Truman, like that short period, shorter period of time, not, you know, there's a massive amount of books, obviously on Roosevelt and and Truman, World War II, and all that. But.

So I've really been trying to read more and read more broadly, and I've been doing a pretty good job of that because I have a little more time with my hands. A goal for the businesses, I think it's really just to reach their potential. And, you know, it's, like, I'm really proud of how Phil's led the loan store as an example. And I think there's more room to run with the loan store. but if it doesn't get to the size of what home point was, I think that's fine. If it does, that's great too. But I think it's helping him kind of realize his full potential. As you know, he's very talented and as is the team.

And then for my family, it's like, well, I'd like my youngest daughter to get out of school because it seems like my kids tend to collect college degrees. I think my oldest is going to go back at her Ph.D. So it's like they tend to collect them. But I'd like for her to get out of school. She's got one more year, my youngest. She's grad school. Yeah, she's in grad school at DePaul in Chicago.

But I think it's always been just very basic. Just be a productive member society. You know, like financial success, it's like get you identified. We're fortunate enough as a family to have some means financially. So I've always encouraged them to do what you want to do. Don't do what you think you need to do to make money. don't think you what you think I want you to do or your mom wants you to do. It's like do what you're passionate about.

It's taken a little while sometimes for them to find their way. Not the oldest one. She kind of had to figure it out right away. But the two younger ones are navigating to that. And it's just like be a productive member of society. Like add to what's out there. Because I think, you know, I'll admit, probably maybe sound like an old guy. But I just think there's so many people that don't really focus on that these days.

they just focus on themselves. Like, how much more can I get? Yeah. How much more pleasure can I have? And, you know, I'd like for my kids kind of be looking out. Because they're going to, they're going to, you know, they have, again, they have a certain level of financial success that they can depend on. So it's like, go help other people. Go do things for others.

And, again, be a productive member of society. Don't be someone who kind of takes from society. So if that sounds altruistic. No, no. Excellent advice to your children. Excellent advice for me as a parent just to kind of keep in my mind, because as a father... Yeah, what do you do with your kids? They're young now. Do they realize the privilege that they have? You know, we're in Newport Beach, and every kid around them is, like, ridiculously privileged. So they don't even understand poverty. Right. And when I take them to, like, to go feed the poor or something,

they're like in another world. Right. What is this place? You know, like, because they don't understand. Like, we have, like, their friends that are on baseball teams, their parents won Super Bowl championships. You know, they're like four years ago. Right.

You know, so they're playing with the kids of, like, Super Bowl champions. They don't even understand what they're. Yeah, right. It's like, everybody does this. It's like, no, almost nobody. I never met a Super Bowl champion in my life. You're just like on a baseball team with their son, you know? Right.

So it's like a very weird world where we live. But it sounds like you try to expose them to the wider. But I try to expose them to poverty as much as I can. I try to let them realize that, you know, they got to serve and do God's work. And, you know, it's an ongoing struggle. And as I sit on this show and I bring on many privileged parents and it's a discussion always. like, you know, Glenn Stearns did a great job raising his kids. Right.

And they always find ways to get their kids to serve. And they always found ways to get their kids to, you know, work for everything they got. And I remember going to a party at his house. And his son was the valet driver. And he's got a nice house, too. He's got a, you know, $75 million house. His kids, you know, parking everybody's car. Nice.

You know, so he managed to kind of instill that grit mentality in these, incredibly privileged kids. So, you know, it's just, you know, I talked to Mindy about that, and she was on the show, too, his wife. Like, you know, they're all about instilling that in their kids because they understand, you know, they're billionaires. Like, how do you, you're a billionaire, how do you instill that great? Actually, I talked to Matt about that, too, yesterday. Right. So, so it's just something that's always a topic of discussion because grit is something that, you know, especially in this time, in this abundance, when we talk to people who have abundance and they have incredible grit, like, we need to pass that on to our kids.

Right. You manage to pass it on. And, you know, some parents don't. You know, some parents, unfortunately, fail at it. So it's just, you know, something I'm learning. I'm sure people who are watching the show, like, are like, yeah, like they're getting great parenting advice. They're getting great entrepreneurial advice, you know?

Yeah, well, like you say, I mean, you know, that's the thing is, like, kids are out there, they're on their own at some level, right? Yeah. Or no matter how much you try to coddle them and helicopter them and privilege them, eventually they're out there every day. You know, two of my kids live in Chicago, they live in the city, right? It's like I feel very comfortable with them living there. They've been there a bunch of times.

Their mom's from there. They understand how to navigate. You know, it's like my old star lives in Pasadena. It's a little fancier there. It's like, it's all good. You know, she has two roommates and they rent a house. So it's like, I think my kids got, they have a good amount of balance. Yeah.

I'm glad to hear that others you talk to are focused on her. as well. Yeah, every parent is, I mean, Matt's incredibly focused on making sure his kids just grind all the time. He's with them, and coaching all their games and every sport that they play. And, you know, Glenn did a great job too, and Pavon as well, from Sun West. So these are like, you know, some of the biggest leaders in the space. Right. Now, I like to close the podcast with a question that... I thought you already asked me a bunch of questions.

The last question. All right, all right. Every podcast guest gets this question. It's a very important question to all of us because we're all going to deal with this. When you're in front of the pearly gates, what do you think God's going to tell you? I think he's going to say I was a good man. I think that's what he's going to say.

That's awesome. Willie, thank you so much. Thanks for being on the show. It's a lot of fun. Willie Newman, Legend of the Industry, Chairman of the Loan Store, board member Anaveo, board member of SOAR, absolute stud. God bless them.

God bless your journey. I hope you hit all of your goals. Thank you. And we'll see you soon. You too, Joe. Thanks. Thanks, Willie. All right.