The secret to cutting costs and winning more business

Strategies, but alternative technology and vendor partners, as we all know. And I'm not going to name names. I'm going to try really hard. But some of the big guys out there are really continuing to just see incremental, significant incremental cost year over year, and sometimes it feels like month over month. And so really looking at some of the alternative vendor partners that aren't just showing up with a lower cost, but also showing up to truly be partners in finding solutions to this global problem that we all have of increasing production costs. So, yeah, I thought you were going to ask us about our favorite sandwich. I was all ready for that. So that's.

What is your favorite sandwich?

That would be a meatball sandwich with jalapenos.

Ooh.

Yeah.

Wow. From out of left field.

Totally.

All right, James. I think I might have James Peg for a grilled cheese. But anyway, James, why don't you tell everyone about you?

Nah, it'd have to be the. The turkey original from Schlotsky's would be. Would be mine. But as far as who I am and why there's a marketing guy on a call like this, my name is James Duncan. I'm the director of marketing and engagement for Lower, now formerly Thriving. You still see some, some emblems of, of the Thrive brand behind me. And one correction, RO really purchased. It truly was a merger, and I apologize. No, no, no, you're good, you're good. But it's a common, common assumption. But everybody, what's great about this merger is that we had a. A really powerful brand with Thrive, and that was one of the things that was attractive to the folks over at Lower. And so there was like, yeah, Thrive ain't going anywhere. Like, we want that brand as well. So everybody who was Thrive previously, they're Thrive today. And now that the merger has been completed. But as far as my role, my role has now transitioned to being being in charge of all of marketing for all of Lower. And so it's. It's been a, obviously a very busy couple of months for me and Danielle and, and a whole bunch of us on both sides of this, this merger. But we couldn't be happier. It's. It's been a really great transition. And as far as my perspective being on the marketing side of things, I think this is something that I think should still matter to any level of leadership and any division of leadership within, whether you're an imb, a brokerage, or just running a wholesale lender or any. Anything like that. This would be something that's. That's kind of top of your list because acquisition cost is very huge to us in marketing as well. Because there's a lot, a lot of ways that we can play a factor in that, in. In how we market to our consumers and what spends we have in order to acquire the attention of those consumers who need housing. Housing financing.

So.

So when you say the. The Thrive brand isn't going anywhere. For the folks who tuned in looking for the 2, 2 for 1 specials on Thrive coffee mugs, they're going to be disappointed. You're still going through that inventory.

Yeah, there, there. There is no fire sale on Thrive Swag, unfortunately. So.

All right, I'm logging off.

Yeah, I got a hat I can send.

Thank you. And Richard, do you want to talk a little bit about your company?

Yeah, sure.

So I'm Richard Greaser, VP of Marketing at truv, and TRUV is helping lenders combat the increasing costs of verifications from the incumbent. I think you all know who the incumbent is. I don't even need to say it. And if you do know it, you can type it in the chat. But, you know, really my job is to. Is to make folks like Lower Thrive, lower. Just successful in general and do everything we can. That's what we're here for, and we're helping them combat those rising costs. So I want to give platform to actually share with others about how they've been successful doing it.

Very good.

Very good. I understand where Chrisman LLC came from. I understand where Thrive came from. I understand where the name Lower came from. Truve. Is that Swedish or something or what is that? It is not.

If I had to describe it, I'd say it's like seeking the truth. Seeking the truth. That's our name of our podcast. And, you know, we had some. We had a branding expert give us some feedback on that, and that was the one that everybody, everybody voted for. So that's where it came from.

Very good. All right, let's. Let's dive in here a little bit now that we've kind of established who we all are. And this, this statistic, I think is. Is out there. And every quarter, the Mortgage Bankers association comes up with a gain or loss per loan. And the figures used to be much, much better than they are now. You know, when I published this the other day in my commentary, I got several responses with people talking about, oh, well, you know, how are you going to make that up on volume? But the, the loss of 2100 per loan. On average. On average, by the way. And obviously, some Below and some above it. It does not reflect well on the cost structure of the industry. And as you point out, it's the seventh, seventh consecutive quarter of losses. I think it's important to keep things in perspective, and I'm a big fan of perspective. But the question comes up like, why would a warehouse bank, for example, or any counterparty do business with an IMB if they are losing money? And the answer of course is, or I shouldn't say, of course the answer is warehouse banks have a series of covenants, restrictions and so on, and they want a financially viable counterparty, in this case the independent mortgage bank. And if you are a warehouse bank, you have certain requirements that they're supposed to do. And obviously this segment of what they're supposed to do is not what they're doing. They're not making money. However, what warehouse banks instead are doing are tuning back into looking at the basic balance sheets of IMBs. And if you'll notice this graph, you'll notice, you know, the plunging profit down into a loss situation. But for companies who made as much as they did during 2020 and 2021, many of those companies have held on to their, their money, whether, you know, they, they invested back in or just held it in cash. And you'll notice the gains that companies had. The amount of production income that they saw during those years, couple years ago, three or four years ago at this point, is greater than the losses that they're experiencing now. And so what companies have done is A, eat into their servicing that many of them retained during that time period, and B, using those cash reserves from their balance sheets. So their balance sheets, yeah, they're dwindling. Everybody's balance sheets are dwindling, but they're using those to cover the current losses. And many companies have turned around those losses and show an improving picture. So warehouse banks like to see an improving picture. They like to see, you know, the company with plenty of cash reserves. But as Marina pointed out, you know, the fourth quarter of 2023 was dog meat. She didn't use that term. That was my term. But based on what I'm hearing about the first quarter of 2024, for many companies it's continues to be rocky. And so once again, the question is what, what do companies do? What does the industry do now? So, Richard, if we could go to that next slide, the, you know, it's a good time for a poll, you know, have your costs increased year over year by more, the same or less than two and a half percent? And I know it's you know, early in the, early in the year. Although we are, gee, another week or two, we'll be done with the first quarter entirely. It's amazing how fast, you know, how fast time goes by. But Danielle, I'm going to ask you, I want to get you involved without influencing the polars or the police in terms of their answers. Do you think lowers slash thrives costs of increased more or less or about two and a half percent.

And why, I mean, I would be shocked if somebody came out and said less, quite honestly because I think just with the rising costs that we've seen from credit from vendors from, you know, across the board, some of those big names that, you know, we're, we're not going to name those that shall not be named. You know, it's, it's just been impressed upon us. I mean, if we want to continue doing business and utilizing the same technology that we have previously that, you know, we were truly deploying and trying to deploy in addition to just more people in 20, 20, 21, those work waterfall workflows that we've had, you know, without changing those. Yeah, your cost is absolutely going to go up because just the cost of doing business with those same vendors, those same production is absolutely more. Okay, I want to know who are the three that said less?

Let's get them on the next show.

Let'S get them on the next call because they're. Yeah, I just inherently without doing anything, I mean, what is it? Our credit costs I think have gone up almost 400%, you know, year over year. And we get a little creative with it. Let's, you know, let's look at soft credit pools and then that cost increase as well. So you can stay ahead a little bit.

But so let's talk about that a little bit. I'm gonna, I'm gonna, I'm gonna keep, keep going with you here somewhat when you talk about credit costs, the, you know, there are certain people that, that I, I don't mind receiving emails from and there are certain people I get that get my attention. The ones that get my attention are things like general counsel. So when I get an email from somebody with general counsel, like I'm like, oh, what, you know, what did I do wrong? But when I get an email from something involving say the CEO of fico, then I also take note. And so FICO has come out, the CEO has come out with a blog saying our increases were only a couple dollars and fico's charges. When you look at the overall credit report bill, FICO Itself doesn't charge that much point. You know, the finger of blame is probably better pointed at one of the three bureaus or.

Oh, I was really enjoying that. Rob, Rob, you froze for a second. Can you come back and say the last 30 seconds?

Oh, the last 30 seconds.

15 seconds. Oh, you were talking about.

I wanted to ask.

Yeah.

Am I still frozen?

No, you're perfect now.

Okay, good. Danielle, you deal with the credit situation every day. And FICO is saying, hey, it's not us, it's the credit bureaus, it's the credit reporting agencies. Do you have a sense of where those cost increases have come from?

I mean, I think we can play that finger pointing game till we get out of the business because nobody's going to own up to it. At least nobody that I've spoken to is going to actually own up to it. But you know, just rising cost of business, that's the rising cost of business for us to do business. And we pass that on. We pass it on to our clients, we pass it on to the borrowers. You know, I know I've seen a lot of things flying around, just even from the CFPB about junk fees and classifying that, you know, just the rising cost of credit into those junk fees, bottom line, not only is it driving up the cost of production, you know, to produce a closed loan, but then a lot of those fees do get passed on to the borrower. And so how do we continue to not only minimize our cost of production, but then also the cost of those junk fees that we're passing on to the borrowers in order to deliver a rate that makes sense and a margin that, you know, we can put back into the company. And so to answer your question, no. I mean, it's everybody, it's everybody and it's nobody all at the same time. And I don't expect that we will ever see anybody raise their hand and said, yeah, I'm, I'm interested in making a profit off of the back of the consumer at this moment in time. So I'm going to go ahead and raise our rates 400%. Yeah, that's cool.

Right? So since we're talking about credit, I wanted to ask you or James, there continues to be talk out there of charging borrowers upfront for credit reporting costs. And the pushback, of course, is the loan officer saying, oh, well, I'm going to lose my precious borrower if I ask them to pay for their credit report when we take the application. James or Danielle, have you, have you talked about that at Lower or have you heard companies talk about that as a viable potential solution to helping companies save money by passing those costs on the consumer up front?

Danielle, I'm going to let you take it first.

Okay. Yeah. I mean, yes, I know there are some companies that are doing it and they're even extending it to verification fees, appraisal fees, all of those types of things are absolutely not only being discussed, but there are some companies that are doing it. I think it is definitely a mentality shift. You know, I know back in the day when I was a loan officer, I absolutely collected that appraisal fee up front because I felt like it made that customer sticky to me. But when you're in an environment where you may submit, you know, three or four offer letters to purchase a home and they don't get accepted, you know, that, that can create a whole circle. And I can definitely understand the argument against it, of course, on the operations, you know, kind of leadership side. Yeah, I'd love to see that so that I know we're covering those costs and not eating them at a corporate. But it's a hit or miss and I think everybody kind of has to make that decision for themselves in terms of their company, their market that they're serving, and really the skill set of their loan officers as well.

Yeah, James, from my perspective, that last point that Danielle made right there, the skill set of the loan officer as a marketing guy that focuses more on the sales side of things rather than Danielle's expertise on the operations side, I, I tend to lean towards the, the camp of I don't want to charge my, my client up front for some of the reasons that that donya. I tend to gravitate towards that angle simply because of the building of a client relationship type of thing. I don't want my clients to feel like I'm nickel and diming them before we even really get into the meat of what our conversation is going to be about. And so it really comes down to, as Danielle pointed out, the, the individual decision making by the leadership of each individual organization of what, what's going to be palatable for you in terms of how you are allowing your salespeople to build those, those client relationships. If they have excellent conversion rates, an excellent pull through, and if they take an app, that loan is going to close, then I think it's, it's a much safer bet for, for an operations or a financial leader of a company to say, yeah, we can, we can let that slide for 30, 60, 90 days. But when it, when it comes down to just the kind of the, the kind of a mortgage advisor that, that your organization is, is set on being. It's, it's a little bit tougher thing to grapple with, but I tend to gravitate towards the. I'm not going to charge them up front for it.

Yeah, yeah, you have, you bring up a very good point. And that is what kind of conversion rate do you have if.

Right.

If you only, you know, fund 10% of the applications and for each one of those applications, you're spending, you know, $100 or two or whatever on a credit, on a credit report and then only, you know, one out of those 10 closes. Well, in effect, you're charging, you know, you're, you have to pay for nine other credit reports with that one funding. And it's a, you know, tough, tough economic situation. Richard, you want to bring up the next slide?

Yeah, I'll take, I'll take this one. So before I click go on the poll, one of the reasons we're on this webinar is to find out the secret, right? To combat rising costs and increased production. We're going to get to that and this is going to lead to that secret, right? And really that's the James and Danielle show. You're going to hear that from James and Danielle. I've been to a bunch of conferences recently, including ice, just very recently, yesterday, and every single lender I've met with, there are two topics on everyone's mind, credit and verifications. And the simple reason is the cost has gone up by over 100% for each of those. I think for you mentioned, FICO is 400% in a year increase, which is a lot. Right. Regardless of how much the percentage is cost for, for verifications. And you know, a lot of these companies have kind of monopoly share of the markets, right. And so you're kind of every, all the lenders are saying what's going on here? You know, like, I can't really control my cost. The president was just talking about insurance right. When he was talking about it. So, like, this is not just the lenders issue. This is the whole country. The whole borrower is facing. All the borrowers in the country are facing these issues. And so my qu. So really what, what we've been able to do working with, with Danielle, and she is the star here, is help her at least comb verifications. I'm not actually sure people are able to effectively combat credit, but I would love to hear you talk about how, you know, you've done that with soft and hard pulls. Danielle. So my question to you, first of all, Danielle, is let's just talk about credit to start with. Like what are some of the ways that you've been able to deal with those rising costs of credit?

So I think we got a little creative last year, right, with deploying the soft credit polls, you know, negotiating the price on that. It was dramatically different. And to James point, when you're looking at that pull through ratio, you know, it made sense. It makes sense. Even doing a three bureau credit, soft credit pull was significantly cheaper than a full tri merge pull. And so, you know, being able to kind of control the cost that way. Well, Q 2024 now the soft credit pools are just about as much as a full tri merge pool. And so, okay, let's scale it back down. Let's look at our markets, let's see where we can get the most accurate one bureau software pull and work through it that way. And then, I mean, you know, for us it even meant looking at different credit providers, seeing what we could offer. What can we, if we can deliver on production, you know, what can we build into that, that cost per loan or closed loan pricing, you know, really working together with our partners to ask those questions to get some creative solutions in place, whether that meant, you know, a UDN also thrown into it, utilizing some of those other services with a credit provider in order to provide better price, specifically up front because an application has to start with that credit pull, right? Making sure that we've even got a viable customer that we could fit into a product. And I did actually see a 350 credit score the other day. It does exist. So I know it's a real thing. We have to pull.

Let's not bring my application.

Rob. I wasn't mentioning names, I've said this several times, but throw yourself under the bus. That's okay.

Well, so I'm going to transition into verifications and that's where true is lower. And so before I ask you that question, I'm just going to launch this, this poll. And so this poll for everybody who's listening is, you know, have you thought about getting ahead of the rising cost of verifications and credit? Right. And so while people are answering, answering that, Danielle, we've come to work together, James, you know, we've got a good relationship and it's been a fantastic relationship with TRUV and lower. And so how are you combating the price increases specifically for verifications? And why'd you invest in truv? What have you seen as results those kind of things.

I think for us, it really, you know, we were looking at the bottom line and we spent about a million dollars in terms of verifications one way or another over the course of several months. And so, you know, we knew we needed to do something because a million dollars can go a long way in terms of just spending it on pulling data. So, yeah, there's a little bit of, of mindset change, behavior change that absolutely has to go back with it. But, you know, when you see your technology and your vendor providers change the data that they're actually providing you and you lose some of that control with what information you can get back. Couple that with the cost. Yeah, we needed a better way to get the information, be able to control it, and have more accurate data information coming back in for the cost that we're spending. And so that's been one of the great things that we're seeing with truv, is that we can really control what are we requesting. The borrower's giving us access into their world and into their employment history, especially with the verifications. But with truv, we know if we're placing an order, we know what we're getting back if it's there and it's available to get back. With some of our other former partners, we couldn't. It was just an order. And whatever came back, came back. And sometimes that would open up Pandora's box, because now all of a sudden, I've got a verification for an employer that we don't have on the 1003. We don't know where it's coming from. And now we've got to go down the rabbit hole of asking questions, is this an employee? Are you really over here? You know, and then that just starts to spin and that increases your loan manufacturing time. And in this environment, to Rob's initial point, rate is rate on the backside, secondary is what it is. So your differentiator's really got to be your service and your speed to close. And so being able to really control and validate that information that's coming in has been a huge leading indicator for us, in addition to cost, of course, but a really big push as to why we made the. The relationship with. With true, because it's been. It's just yielded much better strategic results for us.

Well, thank you for saying that, Danielle. And I'll just say for anybody listening, what TRUV is, is employment and income verification. Right. And so it's fundamentally different than the incumbent where it's a data instant database. This is one or two seconds, the borrower logs into their payroll provider. All the same information goes directly to your POS and los and with a tremendous savings over your bill. Actually, you know, I think people would like to hear. Danielle, I was blown away when you told me about. You have to say the exact number, but if you just say, you know, let's just say it's M. It has an M in there and it's that big. Right. So what savings are we talking about? Right? Like, I mean it sounds to me like this is like several full time employees you can save. Right.

At least several. I mean multiple hands of employees that we can save. Plus, I mean it's just, you know, knowing what you're going to get back and not having to place the order, spend the money and then still have to go back to the borrower and ask for information. So that alone has been really a big savings. But yes, we, I'll say it, we spent a million bucks on just verifications. And so that was, you know, when you see that bottom line number on your P and L, it's a gut punch. I will say that it's a gut punch. It becomes more than just a cost of doing business. There's got to be a better way. And there is.

Yep. So I'll just say this. I think it was no surprise we every like 95% of the people listening right now said they're getting ahead of these costs. And so if everybody here is interested in doing that, and maybe they're, they don't, they don't hear us talk about one of the ways that has worked for you. I'd love to hear you share it in the chat. We will address it. We're watching the chat, so please go ahead. I'm going to jump to the, the next slide here. And it's the, it's really why everybody came here. What is the secret? And I think this is super interesting because it's not the true show. This is actually something totally separate to being successful with any initiative. And so, you know, that's that. Rob, I'm stealing your thumb thunder. This is actually you that should be asking the question, but you can take over after me. So the question, really simple, is to Danielle and James, what is the secret to cutting costs and winning more businesses?

I mean for us it's change management. So whether that's looking at your vendors or even working with your internal teams. And that's why for me, marketing has been such a huge ploy in getting the mindset shift change. James and I work very closely together on just even internal marketing. And you stop and you think internal marketing? Why do I need to spend time, energy and even thought on internal marketing? That is how you are going to see the lift and see the lift quickly. I mean, truly it is. And that's been a big one for us. And it's not just pushing it from the top down or somebody pushing it back up the chain, but really having your people that are using it, that are loving it, that are seeing the benefits not only in information and data coming in, but also the cost savings on there, whether it's a branch P and L or from a corporate level, you know, allowing them to be your leader within that internal marketing and having them kind of broadcast that out. But it has to start with change management. It has to start by ripping off the band aid and saying, we're going to do this. We're all committing to it and coming together as a team to really make an effort. Whether that's changing your workflows, your waterfall, your behaviors, there's got to be multiple arms wrapped around this change management. Especially if you're, you're changing vendors. That's a big one as well.

James, from my perspective, it, it all starts with are you even tracking what those costs are? Because if you're, if you have no idea which rabbit hole your money's going down or your, your revenue is going down in order to produce the, the volume of loans that you do, then you're, you're kind of, you're a little bit behind the curve. Right, right then and there. So once you figure that piece out, to Danielle's point, change management is absolutely the way to go. And then a third component of that I think is, is, is through innovation and automation. And that's something that's been that, that, that's been, that's been a part of Thrive's DNA for so long and lower has that exact same culture. So when the two sides kind of came together, it was like, oh my gosh, match made in heaven. We're like Siamese twins that were separated long ago. But I mean it's, it's one of those things where you have to have that kind of mentality of leveraging technology in such a way that it not only makes the job of the loan officer, processor, underwriter, closer, pointer, everybody on the chain makes their job more efficient and take gets rid of a lot of those traditionally manual processes, automates the heck out of them so that they can then do more, have greater capacity to do their job. Then that is that in and of itself is a huge timer time saver and all of that ties back to that kind of centralized hub of change management.

Love it.

Before we dive more deep into it and I give this to Rob to do the next question or poll I do want to address. Mark just through. He was one of the people who answered less. I don't know if you guys had a chance to read his comment, but it's the typical things that everybody, everybody did to try and combat the low volume, you know, that happened in 2022 that, you know, you know, basically consolidation of operations rules, eliminate eliminating vendors that aren't working out or you can save on and renegotiating the contracts. So that's, you know, and they're a smaller, they're not an IMB and they're smaller 10 or 10 or less. So you know, I think that kind of like helps understand how some folks are, are different than the majority. By far the majority that answered.

Can I jump in on Mark's comment real quick? Yeah, Mark, kudos because what Danielle and Rob and, and I are talking about is irrespective of the size of your organization and it's, it's more of a mindset than it is a, a hierarchy or a, a the, the horizontalness or the verticalness of your organization and having people, it's, it's more of a mindset and you guys have it nailed. So well done.

Yeah, yeah, I would, I'll jump in. The mindset is, you know, say what you will. I, I will say the mindset is, is the bulk of, of the success that I've seen from companies who are trying to cut costs because you can say oh, kind of woe is me or gee, I wish we, I wish we could do that or I wish we should do this or kind of wishy washy CEOs or owners and oh, let's, let's cut, you know, let's cut out the M&M's in the, in the lunchroom. That's how we're going to save money. We're going to cut out the, we're going to switch from peanut M and Ms. To plain M&Ms. Because they're less money in the lunchroom. I mean those aren't the changes that need to be made. Need to be made. Many companies out there need to make some massive changes and it's, it's easier changing when volume is flooding in the door and margins are fat and everybody's happy and so forth. It's, it's very, very difficult to make the decisions that many owners and managers have had to make in the last couple years. And it's a cont, it's really the managers and owners out there are really earning their stripes, as it were. So when you talk about mindset, it's really a, here's what we need to do. Here's, here's what we're competing against and here's what I expect out of my staff. And it's tough. It's tough. I mean, you know, you've got ops, to be, to be blunt here, to some extent, you've got ops folks who oftentimes will point at production. You know, los why are we paying the lo is a point and a half. And you've got production staff pointing, you know, they, they will point at the op staff saying, well, you should be more efficient or you should do this or you should do that. And to manage those sometimes divergent interests are. It's hard. It's hard. So I think the successful companies, yeah, to, to your point, it's, it's a mindset change. It's not a part time thing. It's, it's here. It has to be a concerted effort with everybody on the team. So.

So Rob, before we jump to the next poll, Danielle, I think you should address Carissa her point because this is your world. And she put it in the chat. She, you know, we have started doing softballs instead of hard pulls. And I'm by the way, the reason I'm doing this is people have come here to learn tactics that work, strategies that work right now. And if someone is getting something that works right now, I want everybody to know about it. Right. And so she says we have started doing soft pulls instead of hard pulls on all of our pre approvals. So that has saved us an average of $50 per pre approval. That does not end up going live with our vendor for online applications. We have started using their income verifications instead of ordering voes through places like True Work, the work number, etc. And that is at no cost if we need income verification can save us a few hundred dollars per file if a borrower has worked in multiple jobs, blah, blah, blah. Did you give it a read, Danielle? I think it'd be worth commenting on this because this is obviously someone who really knows what they're talking about.

No, I agree. I mean that is absolutely where you have to start and that's that, that waterfall workflow mindset shift that I think we've all seen because in 20, 20, 21, when we were all just running, running, running as we could. It was okay, I got the credit report. Now I'm going to order the work number. I'm going to order this, I'm going to order that. You know, just order, order, order. And I mean, I even still see it sometimes with our branches or even the VVoes at closing. That's also another great opportunity to look at, you know, what are your teams doing? Are they just relying on what they've always done, or are they getting creative? And it sounds like, I mean, as Chris is doing here, we're getting creative. We're making changes as the market changes. We're. We're changing how we're ordering it, we're asking for documentation. We're relying on a little less documentation up front, meaning we don't need a full try merge. I mean, if you get, like I said, a soft pullback from a one bureau that's got a 350 credit score. Yeah, we don't need to pull all of the work number and the full tri merge credit report. So making sure that not only are we educating our team to stop, look, watch, read, read's a big thing. You got to read your findings. I don't know how many times a day I say, but, you know, making sure that people are taking just a breath to really look through and stop and ask those questions, do we really need this, or is there alternative documentation that we can have, or is there an alternative that we can utilize to still present a full complete income asset credit file to an underwriter to make a decision on? But maybe it doesn't look the same as it did two years ago, three years ago. So, yeah, I agree that this is exactly on point with what we're talking about is, is continuing to challenge how you're doing business today, challenge that status quo and really kind of get back down to what do we absolutely need and how can we get it the most cost effective, efficient way and still produce?

And from an investor's perspective, in the, in the secondary markets, in the capital markets, what are the, what are the investors going to be okay with?

Right.

And if you can once again approve, you know, the. Approve the ability to repay and manufacture a loan that can be sold in the secondary markets for full price, you know, that's the, that's. That's very important. So, yeah, companies are coming up with different ways to accomplish that task.

So I think I'll just throw one thing in with what Carissa said. True only charges for successful verifications, and we don't charge for re verifications, you get five for every file, which is usually more than enough.

For what you've ordered. I think that's the critical piece. Not just general anything that comes back, but truly that that critical piece of this is what I'm requesting. That's huge.

So, Richard, if the loan doesn't fund, they don't.

It's for a successful verification. The borrower logged in and actually verified. And then usually 10 days before close, you got to verify again. And that's with the incumbent and with other providers. Usually you have to pay for that and we don't. Yeah, you don't have to with true. So nice. That's why it's tremendous savings. That's why we're really helping a lot of lenders out. So, Rob, I'm going to give this to you for this next poll. Go for it.

Yeah. This is a question that companies ask themselves. And I need to shift my seat here a little bit. I'll show you somebody who doesn't care about cutting costs, who's been in my lap since we, since we started this. Myrtle the session. Myrtle the turtle. So get her out of there. So, yeah, top down, bottom up. And it's interesting to me, once again, keeping things in perspective. When you look at a company making changes, do those changes come from the bottom? And I by bottom, you could be anywhere in the bottom, whether it's a, you know, processor, a loan officer's assistant, the secretary, you know, whatever the, the night janitor, whatever, or is it the CEO or top senior management coming back from a conference, say, and saying we need to do this and buying off the rest of the staff. Whether it comes from the bottom up or the top down. It's an interesting question and I'd like to flash up the poll, you know, whether whether change should come from the bottom or the top. I'll kind of share my opinion after about 10 seconds because I don't want to influence anybody. Right. But the, in my opinion, my opinion, I've seen, I've seen it work both ways. Obviously it depends on the question. But what I, what I don't like to see happening, and this used to happen to me all the time, is the recruiter in the company would come to me and say, hey, you know, we're going to hire this branch or we're going to, we're going to hire this loan officer. If we can offer them, if we, if we can offer them this bond program or if we can offer them this. Some kind of secondary market execution or if we can Offer them, you know, this pricing engine. And I'm thinking, you know, we're doing pretty good with what we have. I understand that you really want to recruit this person or this branch. And it's almost as if the tail is wagging the dog in those cases, because then more often than not, say, that loan officer, that branch comes on board and we spent tens of thousands of dollars in the approval process at some, through some, you know, to get up and going with an investor or bond HFA program, and then a couple loans come through and then it fizzles out. So I didn't like seeing that. But meaningful change I think I've seen come from the top and the bottom. So, Richard, what are the, what is the poll results say, then? We'll ask Danielle or James what, you know, what their thoughts are. Hybrid. Yeah. James, Danielle.

Those poll results are not surprising at all because I think everybody kind of innately knows that when you have change coming from the top down, that's known as leadership. When you have change coming from the bottom up, that's empowerment. And what you have at the middle of all of that is, and I'm hopefully going to make Rene Rodriguez very proud by saying this is you have that, that influence zone. And when you have that kind of a culture where it's coming from the top down, but not in a dictatorial kind of manner, it's more in a, in, in an effort to actually, to truly lead and say, that's the hill we're going to take. Let's go take it and, and let's do it together. And when you have that kind of a spirit and a culture in your company, it makes it so much more, the message is so much better received by those you're delivering that message to as the leader. Conversely, if you are a part of the front line, let's call it, and you are the one that is, and you feel empowered to bubble up ideas and, and bubble up solutions, then not only is that opportunity for you professionally, but it's an opportunity for everybody else in the organized organization to benefit from somebody who's actually boots on the ground getting stuff done and making that implementation. And anytime that you're able to create a culture that champions both of those initiatives or both of those efforts coming from it, from both sides, then you've got a winner.

For sure.

Danielle, I would agree. I think we've received definitely some of our best ideas. And as I always tell our team, you don't have to know the solution, but, but kind of like TSA says If you see something, say something. So if you keep running into, as a closer, that same brick wall, why do I have to do this? Say something. You don't have to know what the answer is, but that's a jumping off point. Feel empowered to bring that up, bubble it up. But feel empowered to know that you can make changes. And to James, point your boots on the ground. You're living it, breathing it every day, bring it forward. Let's fix it. Let's be more efficient. It's probably just something that hasn't, you know, been brought to light yet. Same thing, too. I mean, from the top down, yes, there's always going to be those leadership opportunities that we can spot, whether it's through P and L, whether it's through conferences, you know, that most leaders get to go to versus, you know, to your point, rob a process or an underwriter because we need them in the queue. They're so critical to our production. You know, getting ideas, sharing, building those relationships outside of your four walls, within your company, those are things that you bring back is new ideas. I mean, arguably that's how we found true. So it's got to come from both. Both places.

Yeah, I think so. You know, if you think about, you can think of all kinds of analogies. If you're playing, you know, in the super bowl and you go into the locker room at halftime, you're not, you're not asking the players, hey, what's going on out there? Should we be doing anything different? You know, the coach steps up and speaks. But in the day to day, you know, throughout the season, you know, the players are the ones oftentimes saying, hey, you know, if we, if we did this, if you block that way, if, if we shifted, you know, if we switched on defense, whatever it might be, that's, that's invaluable. So I like the, I like the hybrid answer. Richard, what's, what's the next slide, please?

This one's for James. Go ahead. Good.

James, you want to take that?

Sure. So overcoming it kind of goes back to the answer that I gave about come from the top, come from top down or bottom up, and, and goes and speaks to the culture that you have. So if you are, if you are in leadership and you see change, like that's coming or that is going to be implemented like what we're talking about here, cost saving measures, the delivery and your, the delivery of your message, the context within which you deliver that message, the frame with which you deliver that message is going to be of utmost importance. For the audience that you're talking to. And the way that I picture this, anytime that Danielle mentioned that she and I work, work together a lot on pushing messages, certain messages out company wide. And one of the things that we're always taking into consideration is, is the audience. And that's true with, with any messaging that, that you need to deliver. You have to take into consideration your, your audience. And doesn't matter if you're in a big organization or a small one, if you treat, if you treat your audience of who you're delivering that message to.

Yeah, I'm, I'm interested in making a profit off of the back of the consumer at this moment in time. So I'm going to go ahead and raise our rates 400%. Yeah, that's cool.

Right? So since we're talking about credit, I wanted to ask you or James, there continues to be talk out there of charging borrowers upfront for credit reporting costs. And the pushback, of course, is the loan officer saying, oh, well, I'm going to lose my precious borrower if I ask them to pay for their credit report when we take the application. James or Danielle, have you, have you talked about that at lower. Or have you heard companies talk about that as a, as a viable potential solution to helping companies save money by passing those costs on the consumer up front?

Danielle, I'm gonna let you take it first.

Okay. Yeah. I mean, yes, I know there are some companies that are doing it and they're even extending it to verification fees, appraisal fees. All of those types of things are absolutely not only being discussed, but there are some companies that are doing it. I think it is definitely a mentality shift. I know back in the day when I was a loan officer, I absolutely collected that appraisal fee up front because I felt like it made that customer sticky to me. But when you're in an environment where you may submit three or four offer letters to purchase a home and they don't get accepted, that can create a whole circle. And I can definitely understand the argument against it, of course, on the operations kind of leadership side. Yeah, I'd love to see that so that I know we're covering those costs and not eating them at a corporate level. But it's a hit or miss. And I think everybody kind of has to make that decision for themselves in terms of their company, their market that they're serving and, and really the skill set of their loan officers as well.

Yeah.

James, from my perspective, that last point that Danielle made right there, the skill set of the loan officer as a marketing guy that focuses more on the sales side of things rather than Danielle's expertise on the operations side. I tend to lean towards the camp of I don't want to charge my client up front for some of the reasons that Daniel. I tend to gravitate towards that angle simply because of the building of a client relationship type of thing. I don't want my clients to feel like I'm nickel and diming them before we even really get into the meat of what our conversation is going to be about. And so it really comes down to, as Danielle pointed out, the, the individual decision making by the leadership of each individual organization of what, what's going to be palatable for you in terms of how you are allowing your salespeople to build those, those client relationships. If they have excellent conversion rates, an excellent pull through, and if they take an app, that loan is going to close, then I think it's, it's a much safer bet for, for an operations or a financial leader of a company to say, yeah, we can, we can let that slide for 30, 60, 90 days. But when it, when it comes down to just the kind of the, the kind of mortgage advisor that, that your organization is set on being, it's, it's a little bit a tougher thing to grapple with. But I tend to gravitate towards the, I'm not going to charge them up front for it.

Yeah, yeah, you have, you bring up a very good point. And that is what kind of conversion rate do you have if.

Right.

If you only, you know, fund 10% of the applications and for each one of those applications, you're spending, you know, a hundred dollars or two hundred whatever on a credit, on a credit report. And then only, you know, one out of those 10 closes. Well, in effect, you're charging, you know, you're, you have to pay for nine other credit reports with that one funding. And it's a, you know, tough, tough economic situation. Richard, you want to bring up the next slide?

Yeah, I'll take, I'll take this one. So before I click go on the poll, one of the reasons we're on this webinar is to find out the secret right to combat rising costs and increase production. We're going to get to that and this is going to lead to that secret, right? And really that's the James and Danielle Show. You're going to hear that from James and Danielle. I've been to a bunch of conferences recently, including ice just very recently, yesterday, and every single lender I've met with there are two topics on everyone's mind, credit and verifications. And the simple reason is the cost has gone up by over 100% for each of those. I think for you mentioned FICO is 400 in a year increase, which is a lot, right? Regardless of how much the percentage is cost for for verifications. And you know a lot of these companies have kind of monopoly share of the markets, right? And so you're kind of every, all the lenders are saying what's going on here? You know, like I can't really control my cost. The president was just talking about insurance right when he was talking about it. So like this is not just the lenders issue, this is the whole country, the whole borrower is facing. All the borrowers in the country are facing these issues. And so my question, so really what, what we've been able to do working with with Danielle and she is the star here is help her at least combat verifications. I'm not actually sure people are able to effectively combat credit, but I would love to hear you talk about how you know, you've done that with soft and hard pulls Danielle. So my question to you, first of all Danielle is the, so let's just talk about credit to start with. Like what are some of the ways that you've been able to deal with those rising costs of credit?

So I think we got a little creative last year, right with deploying the soft credit pools, you know, negotiating the price on that. It was dramatically different. And to James point, when you're looking at that pull through ratio, you know it made sense, it makes sense. Even doing a three bureau credit, soft credit pull was significantly cheaper than a full tri merge pool. And so you know, being able to kind of control the cost that way. Well Q 2024 now the soft credit pools are just about as much as a full tri merge pool. And so okay, let's scale it back down, let's look at our markets, let's see where we can get the most accurate 1 bureau soft pull and work through it that way. And then I mean, you know, for us it even meant looking at different credit providers, seeing what we could offer. What can we, if we can deliver on production, you know, what can we build into that, that cost per loan or closed loan pricing, you know, really working together with our partners to ask those questions to get some creative solutions in place, whether that meant, you know, a UDN also thrown into it, utilizing some of those other services with a credit provider in order to provide better pricing specifically up front because an application has to start with that credit pull. Right. Making sure that we've even got a viable customer that we could fit into a product. And I did actually see a 350 credit score the other day. It does exist. So I know it's, it's a real thing. We have to pull.

Let's not bring my application.

Rob, I wasn't mentioning names. I've said this several times, but throw yourself under the bus. That's okay.

Well, so I'm going to transition into verifications, and that's where true is. Work with lower. And so before I ask you that question, I'm just going to launch this, this poll. And so this poll for everybody who's listening is, you know, have you thought about getting ahead of the rising cost of verifications and credit? Right. And so while people are answering, answering that, Danielle, we've come to work together. James, you know, we've got a good relationship and it's been a fantastic relationship with TRUV and Lower. And so how are you combating the price increases specifically for verifications? And, and why'd you invest in true? What have you seen as results, those kind of things?

I think for us, it really, you know, we were looking at the bottom line and we spent about a million dollars in terms of verifications one way or another over the course of several months. And so, you know, we knew we needed to do something because a million dollars can go a long way in terms of just spending it on pulling data. So, yeah, there's, there's a little bit of mindset change, behavior change that absolutely has to go back with it. But, you know, when you see your technology and your vendor providers change the data that they're actually providing you and you lose some of that control with what information you can get back. Couple that with the cost. Yeah, we needed a better way to get the information, be able to control it and have more accurate data information coming back in for the cost that we're spending. And so that's been one of the great things that we're seeing with truv is that we can really control what are we requesting. The borrower is giving us access into their world and into their employment history, especially with the verifications. But with truv, we know if we're placing an order, we know what we're getting back. If it's there and it's available to get back. With some of our other former partners, we couldn't. It was just an order. And whatever came back came back. And sometimes that would Open up Pandora's box because now all of a sudden I've got a verification for an employer that we don't have on the 1,300. We don't know where it's coming from. And now we've got to go down the rabbit hole of asking questions is this an employer? Are you really over here? You know, and then that just starts to spin and that increases your loan manufacturing time. And in this environment, to Rob's initial point, rate is rate on the backside. Secondary is what it is. So your differentiator's really got to be your service and your speed to close. And so being able to really control and validate that information that's coming in has been a huge leading indicator for us. In addition to cost, of course, but a really big push as to why we made the, the relationship with, with true because it's been, it's just yielded much better strategic results for us.

Well, thank you for saying that, Danielle. And I'll just say for anybody listening, what true is, is employment and income verification. Right. And so it's fundamentally different than the incumbent where it's a data instant database. This is one or two seconds. The borrower logs into their payroll provider. All the same information goes directly to your POS and los and with a tremendous savings over your bill. Actually, you know, I think people would like to hear. Danielle, I was blown away when you told me about. You don't to say the exact number but if you just say, you know, let's just say it's M. It has an M in there and it's that big. Right. So what savings are we talking about? But right, like, I mean it sounds to me like this is like several full time employees you can save. Right.

At least several. I mean multiple hands of employees that we can save. Plus I mean it's just, you know, knowing what you're going to get back and not having to place the order, spend the money and then still have to go back to the borrower and ask for information. So that alone has been really a big savings. But yes, we, I'll say it, we spent a million bucks on just verification. And so that was, you know, when you see that bottom line number on your P. L. It's a gut punch. I will say that it's a gut punch. It becomes more than just the cost of doing business. There's got to be a better way. And there is.

Yep. So I'll just say this. I think it was no surprise we every like 95% of the people listening right. Now said they're getting ahead of these costs. And so if everybody here is interested in doing that, and maybe they're, they don't, they don't hear us talk about one of the ways that has worked for you. I'd love to hear you share it in the chat. We will address it. We're watching the chat, so please go ahead. I'm going to jump to the, the next slide here. And it's the, it's really why everybody came here. What is the secret? And I think this is super interesting because it's not the true show. This is actually something totally separate to being successful with any initiative. And so, you know, that's that. Rob, I'm stealing your thumb thunder. This is actually you that should be asking the question, but you can take over after me. So the question, really simple, is to Danielle and James, what is the secret to cutting costs and winning more business?

I mean, for us, it's change management. So whether that's looking at your vendors or even working with your internal teams. And that's why for me, marketing has been such a huge ploy in getting the mindset shift, change. James and I work very closely together on just even internal marketing and you stop and you think internal marketing. Why do I need to spend time, energy and even thought on internal marketing? That is how you are going to see the lift and see the lift quickly. I mean, truly it is. And that's been a big one for us. And it's not just pushing it from the top down or somebody pushing it back up the chain, but really having your people that are using it, that are loving it, that are seeing the benefits not only in information, information and data coming in, but also the cost savings on there, whether it's a branch P and L or from a corporate level, you know, allowing them to be your leader within that internal marketing and having them kind of broadcast that out. But it has to start with change management. It has to start by ripping off the band aid and saying, we're going to do this. We're all committing to it and coming together as a team to really make an effort. Whether that's changing your workflows, your waterfall, your behaviors. There's got to be multiple arms wrapped around this change management. Especially if you're, you're changing vendors. That's a big one as well.

James, from my perspective, it, it all starts with are you even tracking what those costs are? Because if you're, if you have no idea which rabbit hole your money's going down or your, your revenue is going down in order to produce the, the volume of loans that you do, then you're, you're kind of, you're a little bit behind the curve. Right, right then and there. So once you figure that piece out, to Danielle's point, change management is absolutely the way to go. And then a third component of that I think is, is, is through innovation and automation. And that's something that's been that, that, that's, that's been a part of Thrive's DNA for so long and Lower has that exact same culture. So when the two sides kind of came together it was like, oh my gosh, match made in heaven. We're like Siamese twins that were separated long ago. But I mean it's, it's one of those things where you have to have that kind of mentality of leveraging technology in such a way that it not only makes the job of the loan officer, processor, underwriter, closer, funder, everybody on the chain makes their job more efficient and take gets rid of a lot of those traditionally manual processes, automates the heck out of them so that they can then do more, have greater capacity to do their job then that is that in and of itself is a huge timer time saver. And all of that ties back to that kind of centralized hub of change management.

Love it.

Before we dive more deep into it and I give this to Rob to do the next question or poll I do want to address. Mark just through. He was one of the people who answered less. I don't know if you guys had a chance to read his comment, but it's the typical things that everybody, everybody did to try and combat the low volume, you know, that happened in 2022 that you know, you know, basically consolidation of operations rules, eliminate, eliminating vendors that aren't working out or you can save on and renegotiating the contracts. So that's, you know, and they're a smaller, they're not an IMB and they're smaller 10 or 10 or less. So you know, I think that kind of like helps understand how some folks are, are different than the majority. By far the majority. That answer.

Can I jump in on Mark's comment real quick? Yeah, Mark, kudos. Because what Danielle and Rob and, and I are talking about is irrespective of the size of your organization and it's, it's more of a mindset than it is a, a hierarchy or the, the horizontalness or the verticalness of your organization and having people. It's, it's more of a mindset and you Guys have it nailed. So well done.

Yeah, yeah, I would, I'll jump in. The mindset is, you know, say what you will. I will say the mindset is the bulk of the success that I've seen from companies who are trying to cut costs because you can say, oh, kind of woe is me or gee, I wish we, I wish we could do that or I wish we should do this or kind of wishy washy CEOs or owners and oh, let's, let's cut, you know, let's cut out the M&M's in the, in the lunchroom. That's how we're going to save money. We're going to cut out the, we're going to switch from peanut M M's to plain M M's because they're less money in the lunchroom. I mean those aren't the changes that need to be made. Need to be made. Many companies out there need to make some massive changes and it's, it's easier are changing when volume is flooding in the door and margins are fat and everybody's happy and so forth. It's, it's very, very difficult to make the decisions that many owners and managers have had to make in the last couple years. And it's a cont, it's really the managers and owners out there are really earning their stripes, as it were. So when you talk about mindset, it's really a. Here's what we need to do. Here's, here's what we're competing against and here's what I expect out of my staff. And it's tough, it's tough. I mean, you know, you've got ops, to be, to be blunt here to some extent. You've got ops folks who oftentimes will point at got production, you know, los why are we paying the lo is a point and a half and you've got production staff pointing, you know, they, they will point at the op staff saying, well you should be more efficient or you should do this or you should do that. And to manage those sometimes divergent interests are. It's hard. It's hard. So I think the successful companies just, yeah, to, to your point, it's, it's a mindset change. It's not a part time thing. It's, it's here. It has to be a concerted effort with everybody on the team. So.

So Rob, before we jump to the next poll, Danielle, I think you should address Carissa her point because this is your world and she put it in the chat. She you know, we have started doing softballs instead of hard pulls. And I'm by the way, the reason I'm doing this is people have come here to learn tactics that work, strategies that work right now. And if someone is getting something that works right now, I want everybody to know about it. Right. And so she says, we have started doing soft pulls instead of hard pulls on all of our pre approvals. So that has saved us an average of $50 per pre approval. That does not end up going live with our vendor for online applications. We have started using their income verifications instead of ordering voes through places like True Work, the work number, et cetera. And that is at no cost if we need income verification can save us a few hundred dollars per file if a borrower has worked in multiple jobs, blah, blah, blah. Did you give it a read, Danielle? I think it'd be worth commenting on this because this is obviously someone who really knows what they're talking about.

No, I agree. I mean, that is absolutely where you have to start. And that's that, that waterfall workflow mindset shift that I think we've all seen. Because in 20, 20, 21, when we were all just running, running, run as we could, it was, okay, I got the credit report, now I'm going to order the work number, I'm going to order this, I'm going to order that. You know, just order, order, order. And I mean, I even still see it sometimes with our branches or even the VVoes at closing. That's also another great opportunity to look at, you know, what are your teams doing? Are they just relying on what they've always done or are they getting creative? And it sounds like, I mean, as Chris is doing here, we're getting creative. We're making changes as the market changes, we're changing how we're ordering it, we're asking for documentation, we're relying on a little less documentation up front, meaning we don't need a full tri merge. I mean, if you get, like I said, a soft pullback from a one bureau that's got a 350 credit score. Yeah, we don't need to pull all of the work number and the full tri merge credit report. So making sure that not only are we educating our team to stop, look, watch, read, read's a big thing. You got to read your findings. I don't know how many times a day I say, but, you know, making sure that people are taking just a breath to really look through and stop and ask those questions, do we really need this or Is there alternative documentation that we can have or is there an alternative that we can utilize to still present a full complete income asset credit file to an underwriter to make a decision on, but maybe it doesn't look the same as it did two years ago, three years ago. So, yeah, I agree that this is exactly on point with what we're talking about is, is continuing to challenge how you're doing business today, challenge that status quo and really kind of get back down to what do we absolutely need and how can we get it the most cost effective, efficient way and still produce?

And from an investor's perspective, in the, in the secondary markets, in the capital markets, what are the, what are the investors going to be okay with?

Right.

And if you can once again approve, you know, the. Prove the ability to repay and manufacture a loan that can be sold in the secondary markets for full price, you know, that's the, that's, that's very important. So, yeah, companies are coming up with different ways to accomplish that task.

So I think I'll just throw one thing in with what Carissa said. True only charges for successful verifications, and we don't charge for re verifications. You get five for every file, which is usually more than enough.

For what you ordered. I think that's the critical piece. Not just general anything that comes back, but truly that, that critical piece of this is what I'm requesting. That's huge.

So, Richard, if the loan doesn't fund, they don't.

It's for a successful verification. The borrower logged in and actually verified. And then usually 10 days before close, you got to verify again. And that's with the incumbent and with other providers. Usually you have to pay for that and we don't. Yeah, you don't have to with True. So.

Nice.

That's why it's tremendous savings. That's why we're really helping a lot of lenders out. So, Rob, I'm going to give this to you for this next poll. Go for it.

Yeah, that. This is a, this is a question that companies ask themselves. And I need to shift my seat here a little bit. I'll show you somebody who doesn't care about cutting costs, who's been in my lap since we, since we started this Myrtle session. Myrtle the turtle. So get her out of there. So, yeah, top down, bottom up. And it's interesting to me, once again, keeping things in perspective. When you look at a company making changes, do those changes come from the bottom? And I by bottom, you could be anywhere in the bottom, whether it's A, you know, processor, a loan officer's assistant, the secretary, you know, whatever, the night janitor, whatever. Or is it the CEO or top senior management coming back from a conference, say, and saying we need to do this and buying off the rest of the staff, whether it comes from the bottom up or the top down. It's an interesting question, and I'd like to flash up the poll, you know, whether, whether change should come from the bottom or the top. I'll kind of share my opinion after about 10 seconds because I don't want to influence anybody. Right. But the, in my opinion, my opinion, I've seen, I've seen it work both ways. Obviously, it depends on the question. But what I, what I don't like to see happening, and this used to happen to me all the time, is the recruiter in the company would come to me and say, hey, you know, we're going to hire this branch or we're going to, we're going to hire this loan officer if we can offer them, if we, if we can offer them this bond program or if we can offer them this some kind of secondary market execution or if we can offer them, you know, this pricing engine. And I'm thinking, you know, we're doing pretty good with what we have. I understand that you really want to recruit this person or this branch. And it's almost as if the tail is wagging the dog in those cases because then more often than not, say, that loan officer, that branch comes on board and we spent tens of thousands of dollars in the approval process at some, through some, you know, to get up and going with an investor or bond HFA program, and then a couple loans come through and then it fizzles out. So I didn't like seeing that. But meaningful change I think I've seen come from the top and the bottom. So, Richard, what are the, what is the poll results say? Then we'll ask Danielle or James what, you know, what their thoughts are. Hybrid. Yeah. James, Danielle.

Those poll results are not surprising at all because I think everybody kind of innately knows that when you have change coming from the top down, that's known as leadership. When you have change coming from the bottom up, that's empowerment. And what you have at the middle of all of that is, and I'm hopefully going to make Rene Rodriguez very proud by saying this, this is, you have that, that influence zone. And when you have that kind of a culture where it's coming from the top down, but not in a dictatorial kind of manner, it's More in a, in, in an effort to actually, to truly lead and say, that's the hill we're going to take. Let's go take it and, and let's do it together. And when you have that kind of a spirit and a culture in your company, it makes it so much more, the message is so much better received by those you're delivering that message to as the leader. Conversely, if you are a part of the front line, let's call it, and you are the one that is, and you feel empowered to bubble up ideas and, and bubble up solutions, then not only is that opportunity for you professionally, but it's an opportunity for everybody else in the organized organization to benefit from somebody who's actually boots on the ground getting stuff done and making that implementation. And anytime that you're able to create a culture that champions both of those initiatives or both of those efforts coming from it, from both sides, then you've got a winner.

For sure.

Danielle, I would agree. I think we've received definitely some of our best ideas. And as I always tell our team, you don't have to know the solution, but kind of like TSA says, if you see something, say something. So if you keep running into, as a closer, that same brick wall, why do I have to do this? Say something. You don't have to know what the answer is, but that's a jumping off point. Feel empowered to bring that up, bubble it up, but feel empowered to know that you can make changes. And to James, point your boots on the ground. You're living it, breathing it every day, Bring it forward. Let's, let's fix it. Let's be more efficient. It's probably just something that hasn't been brought to light yet. Same thing too. I mean, from the top down, yes, there's always going to be those leadership opportunities that we can spot, whether it's through P and L, whether it's through conferences that most leaders get to go to, versus, to your point, rob a process or an underwriter because we need them in the queue. They're so critical to our production. Getting ideas, sharing, building those relationships outside of your four walls, within your company, those are things that can bring back as new ideas. I mean, arguably that's how we found true. So it's got to come from both. Both places.

Yeah, I think so. You know, if you think about, you think of all kinds of analogies. If you're playing, you know, in the super bowl and you go into the locker room at halftime, you're not, you're not asking the players, hey, what's going on out there? Should we be doing anything different? You know, the coach steps up, up and speaks. But in the dayto day, you know, throughout the season, you know, the players are the ones oftentimes saying, hey, you know, if we, if we did this, if you block that way, if, if we shifted, you know, if we switched on defense, whatever it might be, that's, that's invaluable. So I like the, I like the hybrid answer. Richard, what's, what's the next slide please?

This one's for James. Go ahead. Good.

James, you want to take that?

Sure. So overcoming it kind of goes back to the answer that I gave about come from the top, come from top down or bottom up and, and goes and speaks to the culture that you have. So if you are, if you are in leadership and you see change, like that's coming or that is going to be implemented like, like what we're talking about here, cost saving measures. The, the delivery and your, the delivery of your message, the context within which you deliver that message, the frame with which you deliver that message is going to be of utmost importance for the audience that you're talking to. And the way that I picture this, anytime that Danielle mentioned that she and I work, work together a lot on pushing message, certain messages out company wide. And so one of the things that we're always taking into consideration is, is the audience. And that's true with, with any messaging that, that you need to deliver. You have to take into consideration your, your audience. And doesn't matter if you're in a big organization or a small one, if you treat, if you treat your audience of who you're delivering that message to as the same way that you would treat them if, if you're addressing consumers and, and you're the, the head of marketing and putting together some kind of drip campaign or something, something, how would you structure that message so that it resonated the best with, with that audience? And if you're, if you're coming in here heavy handed and saying we got to cut costs, we got slash, slash, slash, well, that's not going to be really well received because people are going to get a little antsy about their job security. But if you come and deliver what the change is in, in terms of offering solutions and saying this is how, this is how your life is going to improve, we're trying to make your job easier. Here's how we're going to do it. This is the process we want to present to you. What do you Think and note, by the way, this is not democracy. You don't get a vote, but you do have a say. But this is, this is what we're pushing out. And tell us, tell us what you think of this. Does this resonate with you asking the, asking those kinds of questions and seeking that kind of feedback? Because if you deliver messages that way, the, the latter way of seeking, seeking to have that sounding board from them, getting their, their buy in on it then gets received a lot better than if you're just being real, as I mentioned before, dictatorial and saying this is how it's going to be. Because then your audience is looking at you like, oh really? Okay, we'll see. But instead you just got to establish that kind of a cooperative mindset and, and heartset and, and the messaging gets, gets received a lot easier.

James, I do quick follow on question for the loudest los. And maybe the ones that are like the top producers in the company. Those aren't obvious. Sometimes the same people. Right. How do you, how do you like, what's the approach for them? You know what I mean?

Maybe it's a situation where you kind of take one size fits one type of approach with how you communicate to that loan officer. But, but there have been situations where, to your point, the loudest loan officer may not be the top producer, or maybe the top producer is the loudest. And there have been situations where sometimes that created kind of a toxic environment and you really have to be open to the idea of addition by subtraction and, and getting and removing that toxicity from your culture in order to take, take five steps forward. So that, that's something that, that's a tough decision for leaders to make, especially in this environment. So it's. I, I don't take that little nugget of advice lightly when I say it, but I've seen it. And sometimes you, you got to remove the cancer in order to say save the body. So that would be my suggestion. But again, that's kind of a dramatic example. Most of the time they're just human beings who just want to vent and, and be validated that their concerns have been heard. And sometimes that's all you need to give them. So it just depends.

Can too use it sometimes to your advantage. You know, we, we have some of our, strategically, we'll have some of our, our loudest loan officers be our beta testers. Yeah. For different things. Get their feedback, try to build it, you know, address their concerns and then we let them go shout it from the mountaintops. Hey, y'. All this is saving money. This has given us better data and results. And so, you know, really, you know who they are within your company. I mean, everybody knows who they are within their company, so it's not going to be any surprise. But if you work with them kind of right off the bat, again, giving them the empowerment and the voice to, hey, yes, this is what we're doing, but help us build it, help us design it, help us if it's going to fit for your business. You know, how do you see this working across multiple states, multiple communities? And then, you know, what do you need and what are you looking for within this new product, this process, this waterfall, whatever it may be? You know, let's build this out and then use them for that internal marketing ploy as well. And piece.

I'm pretty sure that you and I were thinking of the exact same loan officer when you were saying that.

No, not at all. James.

If I jump in for 30 seconds, and I know we've only got a few minutes. Minutes. A few minutes left. But the. What I've noticed, I mean, we're talking more social mindset kind of things, but when it comes time to actually make decisions, and, you know, James, you. You put it very politically correctly, however you put it about, you know, trimming trim to grow or whatever, you know, management now has the ability to really dive down and mathematically, quantitatively look at some of these decisions that in the past have just been kind of a. Oh, geez, you know, I, I want to get, you know, Susie's always grousing about something, and now the company up the street is offering her a job. Let Susie go, or we really need to keep Susie because she's a top producer now. I've seen more and more and more CEOs and managers turn to actually looking at the data to make that. Help them make that decision. So when we talk about somebody letting Susie go, should we let Susie go to that branch? Because they're going to offer a signing bonus. And you look at the numbers of Susie's production, and maybe every loan was a concession or an extension, renegotiation of whatever it was or not originating profitable products. Let Susie go. On the other hand, Susie may not be the highest producer, but when you look at her numbers, you think, holy smoke. She only, you know, does FHA loans with big profit margins. And she never complains and she never asks for price concessions. Maybe that's somebody that they need, people need to keep. So when you talk, I know this is a session about costs and Cutting costs. But one of the ways to cut cost is to look at the data. And the data is so important, and I think that's become apparent in the Reese in recent years is to be able to look at the data in order to cut costs, figure out where the costs are to begin with and figure out how to cut them. And I think it's very, very important.

Data doesn't lie.

Excellent. So I'm going to get, we only have a couple minutes left, but we're going to try and get through these last two questions. Go ahead, Rob.

So, yeah, Danielle, I mean, this is, this is your, this is your sweet spot. Did you know? How do you go about changing things like that?

It's, I mean, it's not an overnight thing most of the time, you know, you, we kind of approach it from a committee type basis. We'll start with a small team to really do the beta work, like I said, empowering those that are working through it. You know, what, what are you running up against? What are your, your issues? Where are your hard stops? What do we need to change? And then truly when we roll it out to the company, you know, it's, it's monitoring that, it's holding people accountable. It's, I like to call it prescriptive coaching. So, you know, going back in and inspecting what you expect, that's, that's a famous tagline, I think more than one person has heard me say. But, you know, making sure that, are you really following the waterfall that we've put into place with this new process, with this new vendor, with this new, you know, whatever it may be. But to your point, Rob, making sure that we have the data to support it. So when we see those outliers, it's not just feeling like, well, Susie never follows the process the first six months and she waits till everybody else gets on board. I need to focus all my attention on Susie when actually maybe the data is showing. She liked this one, she jumped on board real fast. And we need to look at these other 15 loan officers or teams. And so it really is monitoring that data to look at. Are we getting the lift that we expect? Who's not actually following the process and procedure and then getting kind of as much as you can in this virtual world that we live in now, kneecap to kneecap to go through and ask those questions. And it's got to start with questions. What is happening? What's preventing you from doing this? What are you not getting that you need, you know, again, if you go in just with that Dictatorial mindset of this is what you have to do because it's what we're doing, you're not going to get the results ever. And so making sure you're always leading with those questions of what's preventing you from being successful in this new waterfall or this new workflow. It's the mindset shift too. You know, we see a lot of folks, whether they were new in the business, we brought them in Green in 2020, trained them to a checklist and maybe we haven't followed up with anybody to say, okay, do you really know why these items are on your checklist? And explaining the why to them so that way they can start invoking that decision making ability of okay, I'm looking at this file and no, I don't need two years of tax returns, I don't have commission based income, so I don't need a full verification of employment. I can just use a paycheck stub. You know, making sure that they really understand the why behind what we're asking for, what we're conditioning for. And then, you know, I mean people are human underwriters, make mistakes too. So giving them again the empowerment to have those conversations with their peers within the loan manufacturing monitoring process. But it's a lot of talking, it's a lot of monitoring data, pulling up prescriptive coaching and really again, just making sure that you're inspecting what you're expecting and if you don't see it, immediately addressing it. Having those conversations, asking the why and making sure that there's understanding there of not only what we're trying to accomplish, but why we're trying to accomplish it and how it impacts their day to day.

Great answer, thorough answer.

It is a great answer. I just want to make sure we get to this last one. Look, for everybody who stayed on and I'm going to say this is fantastic because the majority have stayed on. And so that's a huge win, right? That means everybody's really into what. And there's been some great questions and great comments. So everybody, thank you so much.

There was, I thought you were going to say for everybody, state who stayed on. I'm going to send you a gift certificate to true verification of like a hundred dollars. But apparently not.

I mean, I have an opening. You want to take my role. I feel like that's perfect marketing for truth.

I don't know what I'm doing.

Like Rob, you've been in this business, you know how to do it.

I'm gonna, I'm gonna, I'm Gonna answer this one very bluntly. What's the reward? How about as my. I'm put, I'm channeling my dad here, you know, chief petty officer in the Navy for 20 years. What's the reward? The reward is you get to keep your job. You know, the company. Company continues in business.

Stay in business.

Yeah, business, you know, it's not, you know, it's not. It's pretty basic. That's very important.

Well, I'll give you. Just before I give this to Danielle and James, I am going to give just a quick nugget for everybody, a little more reward. Two days ago, we were conditionally approved by Fannie Mae for D1C. So everybody should be pretty happy with that. We're already Freddie Mac approved, AIM approved back in December. So, you know, just a little bit more that you can get reps and warrants now with.

That's a big reward. Not many people can say that right now.

Yeah, I think. Yeah, exactly. But Danielle, please, I mean, this change is hard, you know, like, what is the reward?

It is, I think, you know, again, kind of looking at where we are in the industry, the market and the continuation of the market that we all kind of expect. You know, the reward is a differentiator. So not only being able to deliver, you know, yes, margins cost, all of that back to our teams and to the company, but speed to close, you know, quality, those are two really big things. And especially in my world and operations that we drive home every day. So the more that we can get pulled in and you know, to your point, Richard, of getting that D1C validation, getting that AIM validation, that takes a huge chunk off of our underwriters and our production teams to really know. Okay, I feel good and secure. Not only do I not need more data, I don't need more documentation from the borrowers. I'm not spending more money trying to get this and that from other vendors. We've got it. We know what we have. We're good to go. We, you know, especially, we know we're not seeing a plus plus paper these days. So the less that we can put in the file, the better, the cleaner, the more sure foot that story is that we're presenting forward to not only our underwriters, but our investors on the backside. And the faster we can do it, it the better service levels that we're delivering to the communities that we're serving.

Awesome. James, got anything you want to say?

Well, I mean, I, I kind of want to piggyback on what Rob said and, and that Change is hard. And instead of, you could also ask the question, what's the reward? Instead of that question, you could also ask what's the alternative? I, I mean if you really, if we're going to really put, put the screws to this. But the, the thing that I've noticed about, about my experience in the mortgage industry is that the, the companies that make it and that exist after the downturns in the industry, that they're the ones who took a look at what their situation was like and adapted to those changes that were necessary and saw the, the way that they were able to maybe lower cost, but, but above, even above that, gain some efficiency in their workflows. And as long as you have an open eye and an open ear to looking for those lessons that history can teach you as well as the current situation that you're going through and make those and find creative ways to solve old problems, I think then that is going to lead your organization into being one of the ones that survives and indeed thrives lives in, in this industry. So I think it's, it's just having a knack for, for understanding where you can gain those efficiencies, where you can, where you can save on those costs. Is there something that you've been doing that you can stop doing that has very little impact on the workflow or automate it somehow? But I think finding that is, is, is definitely a huge reward.

I love it. Hey, I want to just thank everybody for, for joining right now. Let me just check and make sure nobody's got any other questions. I think everybody's pro other meetings, but I want to say thank you everybody for staying and listening. I hope you had great value here. Thank you. James and Danielle, it's obvious how passionate you both are about what you do and, and you really just dropped a lot of nuggets for the audience. So thank you so much for doing this. And, and Rob, of course, you're a living, living legend, my man. I was listening to you in the beginning going through the, you know, just listening you talk about the rising cost of originations and showing the trends through Q4 last year. And I mean, I don't, I'm definitely never going to be able to do what you did there on, in that earlier slide. So thank you so much for, for jumping on and particularly, you know, keep sharing your wisdom.

You're welcome. But I don't know about all that.

All right, everybody, thank you so much.

Richard, thank you.

Thank you. Thanks for having us.

This was fun.

Bye.