[David] Good job, Matt. Thanks so much. A lot of data there. Interesting that there’s some alignment with some of the things Les is talking about. So, let’s get started. There’s so much. I can’t wait to get talking about the Rockets, a purchase of Redfin, but we’ll get into that in just a minute. Let’s stay focused on the market. Starting with you, Bill. You like you said, before we got started, your role in this podcast is to share your insights, but also be an interpreter for Les’s comments. I’ll bring it down, break it down for us. All right.
[Bill] Listening to what Les says, what Matt says, is always very insightful, but right now I think there’s only one person you have to listen to, and that’s the guy in Washington that’s saying, for my economic plan to work, there’s going to be some short term pain for long term gain. Short term pain equals lower rates, slowdown in the economy, et cetera which what what Les is talking about of rates moving from mid to high sixes right now down into the low sixes, it seems very plausible and because I know Alice always likes numbers and a time frame which I think Les skated around that. Maybe I’ll fill in for him. I think what you’re going to see is a continuation over the next four months in this summer. This steady drop in rates that we’ve been saying, I don’t think you’re going to see one big move down, but I think you’re going to see it slowly work its way down for the next three or four months.
[David] Great. Yeah. What Doug Duncan says is so well, and it’s a common statement. If you’re going to give a rate, don’t give a timeframe. If you’re going to give a timeframe, don’t give a rate. So Les did skate around that. But I think Matt starts giving us some insights. I agree with the slide down. So anyway, let’s start with Alice. You did such an awesome job of hosting last week. Thank you so much. What are your thoughts on what you heard today from our market segment?
[Alice] I agree with Bill. I do want to follow up with Les. Les did email me afterwards, after the show last week about the date thing. For June 30th, my June 21st date, he was ballparking what would the date be that he thought the rates would get into that range and He’s thinking more June 30th, but end of June, right? In this case, it’s not a specific date. It’s more watching that flow that by that time in the market, it’s expected as Bill said, we’ll start feeling some of the economic impacts of the various orders and policies being put in place. Yeah, It happens quick. So that feels fast. That does feel fast. How you guys feel to get that kind of quick impact I think is something that we weren’t planning.
[David] No, exactly. I don’t think the MBA is planning on it either. MBA is not exactly in step with what Les is saying because Joel and I respect the MBA so this is not a dissing of the MBA. It’s just. Pointing out when MBA is trying to be conservative, looking and creating expectations and it is so volatile, it’s changing so quickly, but they’re seeing, not quite the same drop at that plate pace. But like you said, Bill, it’s what the big guy is saying in Washington, DC. That’s the only voice and it’s going to drive down and the rate of change is happening fast. Very interesting stuff. Mr. Kittle, your thoughts.
[Kittle] Hey, how can you argue with bill and Alice? It’s so we’re going to fall a half a percent in rate over the next 90 days and if the actual consumer hears that or, the lenders, are they going to pull back and sit and wait for rates to go and is a half a percent in rates really that significant to your overall plan? for this year going forward. It is . That’s what it is. Is that mean a big refinance boom? No, but there are people who refinance for a quarter of a percent. So
[David] I’m thrilled about hearing this. I’m putting my house up for sale, going through a divorce. Unfortunately, I just announced it on Facebook so, it’s out there. And I’m wanting someone to be motivated to come in and a dip in rates anything is going to help to bring some buyers into the market and that’s what we can anticipate.
[Kittle] But I wouldn’t wait. Is all I’m going to say is waiting for the rates to come down and it always, it’s many times bite you in the fanny too. So a half a point’s great. But good Lord, that’s 90 days out and the whole world changing 90 days, 30 days
[David] And that’s the truth. Talk about a world changing Marc Helm, you’ve watched it change. You and I have been in this industry just within six months of each other. Same amount of time. I think it’s absolutely nuts. Your thoughts.
[Marc] Yeah, I’ve got a couple and I think they go back to the years experience like you and I have and others on the call. Certainly we don’t have the most, after spending, I guess together you and I have right at a hundred years in the industry and spending 47 years in the industry individually myself, I’ve seen it come and go. I’ve experienced a 19% interest rates, a percent or a solid 3% interest rates. I saw demand in affordable housing triple and I saw it down the vine and I’m seeing a lot of those symptoms right now, living in affordable housing kind of market area right now. I really feel the pain to some people because people, small builders are going out of business because they can’t sell what they got and then the people that need to help are trying to find the right kind of financing and most mortgage companies, although they sing the tune, aren’t as good at affordable housing lending as they say they are and one of the pitches I’ve done recently, our company, we’re making a pitch to work with all the banks and credit unions so that they can get some affordable housing credits and have those kind of things on the books that they haven’t been getting to help out. But I want to go back on the interest rate thing. would have thought we’d have had a decreasing rate already, a pretty sizable one, but then again, I understand the uncertainty. But every day that goes along, unless I’m misreading what I’m seeing and hearing on TV and sorting out the newspapers to be real facts and all, I think we’re gonna see not only I’m predicting a good increase by June, but I’m predicting by the end of the year or some more. I really do. I don’t think it’s going to go back to 4% or 3%or anything like that, but I definitely think it’s going to get down to five or below. It’s solid and I think we need that in our country today and I think it’s going to happen. And I say that because you hear the optimism in everybody’s voice, but optimism don’t make a loan at a decent rate. So we’ve got to have people out there and advocate for it and we still got some problems in Washington DC. We got our Our Fed guy we can’t get rid of and all kind of other stuff to change the team But I think we’ll get there and it’s just gonna take a little time And i’m predicting the same thing that I heard in the June or so But I think in the fall we’ll see some pickup too.
[David] Yeah, it’s very Encouraging to see the macro trend. I don’t think anyone should be focusing in on it. Sell what you got now and get it going and if you’ve got a buyer that’s the case. Let’s get down to Allen, just perspective on rates. If you have any thoughts you want to add to this, I know you’re our tech guy, but you’re a mortgage guy and you’ve got lots of great ideas and perspective.
[Allen] I appreciate that. I can only just concur with what everyone else has said and David also said it don’t wait, right? You never know what’s going to happen in 30 days, forget 60 or 90. There’s always an opportunity to refinance, but the reality, if the rate drops a little bit, it’s actually not going to make that much of a dent in your monthly payment. There’s more long term type of things to be looking at in the acquisition of your next home.
[David] I think the bigger picture is there’s some good buys out there on homes right now. Homes are on sale. They’re for sale, but they’re on sale price. We’re seeing price drops consistently across the market and when this thing starts heating up, those price drops will stop and this will equal out and we’ll see this thing starts stabilizing and I think that’s another factor. So, it’s a motivation at least that’s the language I would be using if I was out there originating loans. Hey, look at all the price drops. This is an opportunity. And when rates do move lower, you’re not going to have that price that you could get it for today. Good perspective on all that. Thank you guys. Very good. Very good. Kittle. Let’s get talking to you just real quickly. You’ve got the TMC event coming up next week in Dallas. I was at the Lenders one event in Cancun again. Thank you, Alice, for hosting it while I was gone. But you got, no, we caught you with some food in your mouth too. You were taking a lunch break on us.
[Kittle] Hey, I gotta be ready.
[David] So anyway, what are you hearing from members out there? There was a lot of optimism for those who were there. And I was waiting a little more, the banks and credit unions, the financial institutions that were down in Cancun less of the IMB is they’re feeling the pinch right now, but what are you hearing from your membership and what do you anticipate we’ll hear about the direction of production next week at the TMC conference in Dallas.
[Kittle] I’ll answer your question this way and you and I were talking off earlier this morning, right? We’re very close to hitting as far as attendance, our largest conference ever. So attendance is way up way above 300 people. Hopefully we’ll get to somewhere around 340, which is nice. We have a great ratio, the best in the business, as I always say more lenders than preferred partners. And that’s what…
[David] I thank God for the preferred partners like me, who will be there. but when you go to other industry events, you do see an inordinate it’s flipped.
[Kittle] So hold on a minute. That’s not a diss to preferred partners. That’s simply saying more of our lenders coming in and that’s good for the preferred partners that are paid to be sponsored. So, you’re not finding that at many of them. So we’re really happy. So that’s a positive, as good. And they’re looking forward to the second and third quarter, first quarter is already done. The second quarter, basically for production, you’re in 30 days, you’re going to be done and so you got to be looking towards end of second quarter already. Think about that and into the third.
[David] Yeah. And that really, I want to springboard off of that with the announcement this morning. That Rocket is buying a Redfin. What’s really interesting. Their price going in at the opening of the day was 5.88 cents. It jumped to 10.36 cents. Very quickly. It’s coming back a little bit. I think it’s right now trading at about. 9.76 cents. But man, wouldn’t you have liked to head that news to people by the head of that jump. That’s a nice piece of it. it was really fun getting your perspective all the way around Alice. I want to start with you because you just retired out of a market leader, someone that I have tremendous respect for. We all like and know Bill Cosgrove and the executive team there and love to get your perspective on what you see this to be and this is the beginning of a continued trend of consolidation at an accelerated rate.
[Alice] I think it really is. I called it Rocket fuel when we were talking before the show, right? Rocket bought fuel by buying Redfin. So they now, the merger of that data and their ability with the technology on both sides is I think, going to drive a lot of change in the industry and to the consumer’s benefit. Now, for those of you who are looking on at it, and you’re going, okay, they just got to the top of the funnel. We would talk about this at Union Home quite a bit. The idea that if you pictured your lead sources as this giant list of people and then at the transaction level, I’m at the top of the funnel to try and get to somebody before they actually get into the purchase transaction itself. I’m trying to reach that customer before they’re actually in the process. This gives Rocket a major leg up in being out there in front, especially if you think even though there’s the renter component with Redfin first time homebuyers are going to be coming out of that or return homebuyers. The data and the technology play here is tremendous. I think for those of you looking on thinking, all right, how do I compete with this? Just from my experiences in talking to folks, pricing, right? You still look at the fees. Sometimes the fees are an issue. But Rocket’s also very vanilla products. They don’t do USDA, they don’t do non-QM. They’ve not been a purchase shops, right? They’re refi shop. They’ve been remote and so this is trying from a process standpoint going to be a big change, I think, internally for them. Those of you like Union Home who are amazing at purchases don’t have a lot to be afraid of on that front, I think it’ll be trying to compete with being at the top of that funnel with them.
[David] Yeah. I think it’s a great perspective on that. And I think this is a data play as much as anything else reposition. What’s interesting is at the in Cancun at the Lenders One conference, I sat next to the head of operations for Bay equity. Which was acquired by Redfin sometime, I’m not sure when it was. It seems like a couple of years ago, but that did not produce phenomenal results for them. But now here, because of the technology, some aspects of, or I think it’s more of, it’s not so much technology. I think it’s more of Rocket’s ability to go after the consumer with their marketing prowess and ability. I think they’ll be significantly more successful than what was Bay Equity. And I’m not saying that in a disparaging way about Bay equity. I think they performed well inside of Redfin. It was fine. They were happy with it. Bay Equity is certainly happy to be inside of that, Redfin, but again, Rocket’s ability and prowess as a marketing firm to be able to take care of this data and do this is I think something Alice you hit on very much. Bill, your thoughts?
[Bill] So my thoughts in going through the presentation that came out this morning, I keep going back to slide nine, Which talks about the total cost of buying a home, getting a mortgage today is 40,000 and their vision of the future is 20,000 and it just a layering difference is taking the real estate commission out of it and as much as we’re focusing on it from the mortgage side. This seems like a massive change in the whole realtor landscape, and while a lot of folks have been watching the real estate commissions grind down slowly, this is the seismic sea change that smart folks were probably afraid of, but everyday folks not really paying a lot of attention to changes literally in, are we going to go a quarter percent lower that whole argument to be just got completely obliterated by this.
[David] Yeah. It’s so good. So good. Such good perspective on that. Mr. Kittle, thoughts?
[Kittle] Yeah, I have a couple of points here. as you say, a data ploy. It’s never about the data. It’s always about the data and every company out there has their own data. So there has to be ways to monetize that. We’re still looking for ways to do that inside, TMC. And with all the lenses that we have together collectively. So that’s the first thing. To be a purchase market, I think, even though rates are going to drop. I think people have said that. The elephant in the room here, playing on top of what Bill just said, all right? They want to take the real estate commission out of it. Sooner or later in the industry, we have to address that low cost and because that’s a huge cost in every transaction and somebody eventually will have to step up and really address that from a mid-size to a large lender for it to happen.
[David] Yeah, great point. Marc Helm.
[Marc] I got a lot of comments here, but I’ll make it brief because I know we’re still into the podcast, not the beginning, but the Rocket was fascinating and I tell you, it’s going to make a, I think it’s going to put a position out there that people strive for it to make their business better and grow, et cetera, the Redfin group basically charges very familiar with and charges a 1% real estate commission kind of deal and they’ve been doing really well with that. But the most important thing, if you do a little research on them, which I’ve done before they are so multifaceted in the things they do, because I can just see some of the things that they’re going to do, but having the relationships that they have after the things they do. and that’s the power of Rocket Mortgage and the connections it has are going to be a national footprint which Redfin already has and Rocket already has and those together, building on other things that are out there. Everything from an insurance platform to help people out, a credit correction platform to help people get their credit cleaned up so they can qualify. and also pre qualifying everybody. The idea that if you interface the origination and the realtor systems together, you can run a pre qualification thing when it comes in front door as a potential application and know what they can afford to buy and focus them in the right way and show the reporting that shows your system. You go down to Rockets website, excuse me, website, you go down to it and you pick on the states are in and they also handle properties on rentals for people. They’re just unbelievable organization. And I think putting those two together, it’s going to be crazy. So beware other mortgage bankers. You’re seeing companies now doing things to make themselves very popular in the marketplace, very growth oriented and everything. So you can’t stand by and wait, you need to join the task of getting where these people are going so you can be competitive or sit back and watch it pass you by. And that’s my biggest fear having right now. There’s a lot of real estate companies and this continues to trend with a big lender and a real estate magnate like originally it is out there. It’s going to put a lot of small businesses out of shape to be in real competition to stay in the market.
[David] I’m getting a chance to talk to Marco at Compass Realty and who’s a publicly traded company growing like crazy. They already own a mortgage company. We’re going to be talking more about that. I’ll be interviewing him and getting his perspective on it. So we’re going to be talking more about it, but I encourage everyone to read the article that’s in Detroit Free Press, Dan Gilbert transforming Detroit and he’s transforming the mortgage industry. That’s back in your old stomping grounds, Alice. Detroit. I have been a big fan of Dan Gilbert for many decades and I have I just think he’s a visionary, both he and your good friend, Bill Emerson, Mr. Kittle and I think that they have a perspective. Like one of the things I heard Bill talk one time, do you remember this kid when he talked about how they changed the chairs or the seats in the stadium? and they going it seems so ridiculous. but they saw this as an opportunity of how the perception arts talk about that real briefly. If you, I know, Emerson real well.
[Kittle] Yeah, look, Bill’s a visionary, he’s moved on and above into all the companies that Gilbert owns, so he’s not totally just involved in Rocket anymore. I’ve had the opportunity to tour their facilities up there with Bill, and it’s amazing how they are internally, and they are usually two, three steps ahead of everybody else. But with that and all that volume, when you think about it, I think it was you that said it earlier, and you’re absolutely right. They’re a refinance company, not a purchase company and what do they do with the borrower and the borrower information once they close the loan? I’m not sure they do. It’s just my thought. Don’t know for sure that they do the best job of retaining that information and continuing to touch that customer for the next refinance or the purchase, which is what everybody should do, right? and that’s your data. That’s your data.
[David] It’s back to data. It is all about it. And I think this is, Dan’s focus on where they need to go positioning themselves. I suspect I don’t have that chance to talk to Dan yet. I’d love to get him on the podcast. I have the privilege of knowing him and Bill, and I’d love to get their perspective. I doubt they’re going to talk much about it, but they’ve been working on something of this for a while. It’s been rumored for a while that they’ve been working on something big like this.
[Kittle] They got the cash to do it.
[David] So they have the cash that is, they certainly do have the cash and we saw them take a big write down third quarter of last year was a big write down. But that was just position for the available to do this.
[David] Allen, any thoughts on this, especially from a technology standpoint?
[Allen] Yeah. And actually I asked GPT for its opinion and I watched these videos of people talking to GPT and ways to treat it like it’s like your first cousin and really get into a deep conversation and so I did that the other day. It was very interesting, but I took that same tone and I said, I’d like for you to think about the market. Go do research. Give me a short analysis of why you think they did this and what’s expected for the future. I also said, by the way, I’m reading this because a lot of people struggle sometimes writing prompts for GPT. So I wanted you folks to hear what I said, verse what I got. Yeah. I said, what are they trying to do? Please don’t gimme a general response. I want you to think, use your mind. Pretend you’re someone that people come to for analysis and maybe even ideas for fun and forecasting to those people that ask what they’re trying to do in the long term. Gimme something a person would say, use your brain as if you were a human. What do you have? and I said a couple other things in there. So anyways, it came back and it said:
Rocket Companies X Redfin, The Bigger Play: And I won’t read it all, but I’m going to give you the highlights. You’re going to be impressed. By the way, Rocket didn’t just wake up 1 day and decide to spend $1.75 billion for Redfin for fun. It’s a calculated long term move to control more of the home buying funnel and push deeper into purchase mortgages. Which is the battleground for survival as refinance volume stays depressed. You just said that, right? What’s the strategy? and GPT said home buying is fragmented. It’s a mess. Buyers go to Zillow or Redfin to look at homes, talk to agents, get that whole process. Rocket wants to control the entire journey. Declining margins on mortgages. Redfin means Rocket can feed its loan business directly without paying for leads. Big Tech is moving in. So, what it’s saying is Rocket does not want to be left behind in a market that’s consolidating. This is GPT’s opinion. Long term vision. It said, if we zoom out, Rocket is not just buying a real estate site, they’re buying a true end to end home ownership platform. Think of it as You need a mortgage? We do it fast online. Past Rocket, the new one. Think of it as this. You want a home? We’ll help you find it, finance it, insure it, and maybe even resell it all without leaving your ecosystem. That’s pretty bold. Now a couple more quick little things that GPT came up with. It said the acquisition accelerates their evolution to be a real estate and mortgage hybrid model similar to what Zillow tried by buying with iBuying, but a more sustainable approach. And it goes, Hey, what happens next? It said there’s gonna be a massive Redfin overhaul. This is GPT’s opinion again, folks, more direct lending, less lead buying, because now they will own the traffic competitive response from Zillow and others and further expansion into home services. Rocket already offers title escrow and insurance and with Redfin now they can start buying more services and even experiment with seller incentives and other stuff. So, the final take that GPT said, you ready? This force moves other players to rethink their strategies and I wouldn’t be surprised if we see a Zillow plus SoFi or Zillow plus United Wholesale Mortgage partnership. Next. And you’re ready? The last thing that GPT said? Rockets gamble? Question mark? They have to execute flawlessly. If they can’t seamlessly integrate Redfin into their mortgage machine, they just spent $1.75 billion on a fancy lead generator. But if they pull it off, they just rewrote the future of how Americans buy homes.
[David] Wow. Kudos to GPT. Allen. Thank you so much. Yeah. Alice, your thoughts. I should say, listen to that. I saw you writing notes and I’m going like, that is really insightful. Really well said. Marc Helm.
[Marc] I’m a really big believer in artificial intelligence and that’s just a perfect example. That can work wonders for us, but also I agree with the comment artificial intelligence said. Sometimes they’re smarter than the people. Most of the time when they say things, they’re madly said. You could have a busted chip real quick if you don’t do, simulate things the right way. If they do it the right way. It’s just going to be unbelievable in this country. What’s going to happen after.
[Allen] Imagine the time when GPT is invited to have a seat in a boardroom and really clears the air and says what’s going on and what people need to do next.
[Marc] I like that already. I want to tell you, I’ve made no secret about it. Every time I communicate a new program that I put together for the business or communicating thought, the process to get people, I put it together and then I dropped everything that I do through Chat GPT to have it look at it to see if I miss something so simple that six months from now, I’ll slap myself in the head why I didn’t think about it or not to listen to something that’s really fabulous that can add to it. You got to remember, you don’t get a hundred percent true facts, which had GPT out there. They sell off a little bit. But if you’re not using it as a work tool together and saving, I would be sinking right now if I didn’t have that to save the hours I spend in things because I can put it together, send to it, give me extra comments, cleans it up, gets it out and makes me the most productive person I can be and I’m still behind. So it’s helped. I don’t know where I’d be without it.
[Allen] I’ll give up the rest of my segment if I can just say this one last piece because this is really interesting. I said Hey, do you think Rocket could become the Amazon of mortgages? Are they making that play? and this is what GPT said. It’s pretty quick. So we’re to answer. They want to, but can they, it’s a different game. Rocket’s acquisition of Redfin is a clear power move towards owning the full home buying experience, but calling themselves the Amazon of mortgages is a huge claim and there are major roadblocks and then it said this, Rocket is an elite marketing machine, the best in the business at branding and customer acquisition, but Amazon didn’t win because of branding. They won because they owned infrastructure and supply chains. And it said for Rocket to become a dominant home ownership platform, they need to control or deeply influenced home search mortgage and origination title and escrow insurance servicing and the last one, which they don’t own and they can’t own is going to be secondary market influence, which Ice, Fannie and Freddie all have.
[David] Yep. There are some really good points in that Allen, There’s some really deep content that I want to go back and read and analyze and work on. That is really good. I’m very excited. Let’s run around Allen. We didn’t want to cut your segment short, but man, you rocked us with that, but you.
[Allen] I also asked GPT. I said, just give me something funny because my segments on nex because GPT knows that I have a segment and she helps me a lot with my content. So she said tell everyone that whiteboards are really remarkable. So, I’ll leave it at that and she also said, yeah, if you run in place, you’ll get no less fast.
[David] Yeah, there you go. Really re remarkable.
[Kittle] That was a less Parker moment.
[Allen] Yeah, that was a Parker moment. If we want to talk about acquisitions, we could just ask Les Parker to sing another one bites the dust because I think that’s coming soon on his playlist.
[Kittle] There’s a line of the day Allen, way to go.
[David] Yeah. Good way to wrap it up. Thank you so much. You guys are being here. I’m each one of our regulars. I’m so grateful for your contribution, your thought. And as we go into this let’s wrap it up. Marc, anything you want to say as we wrap it up?
[Marc]Yeah, I apologize. It’s cut off a little bit. Yeah, I want to say one thing. Yeah, I want to say one thing about artificial intelligence, because the last thing I heard was Mr. Kittle talking about that and how much it’s on the podcast. I don’t think we have too much about artificial intelligence. I’m going to tell you this last few minutes while I was listening to everybody, how can I make my marriage succeed for another 50 years? The second question I ask, how can I embody something in my grandchildren so they’ll maximize things that they want to do in life and succeed everything? and last, how can I be the best husband and father? work officer, manager, entrepreneur, creator, and savior for companies and helping them in their business and all. And all those questions are being processed right now by ChatGPT. Let’s know what next week, what I got.
[David] Yeah. Again, turn us out what you got. Yeah. I should have asked you use that before going through a divorce. Maybe it’s a, they saved it anyway. It is.
[Allen] David my, yeah, I just read this in my new AI video company that we’re in the middle of launching in the mortgage industry. Why don’t we turn one of us on the program into an avatar and we can have it join us every week or once in a while, let’s say as a guest. It can be a 15 minute little thing, and it could be any one of our voices or faces.
[David] It’s so interesting. You say that I am flying out on Thursday of this week to be with Angel AI with Pavan in Las Vegas as they’re launching the Angel Twin, and I will have my own avatar created while I’m there. So I’ll be one of the first ones out there doing it. I’d love to do that in collaboration with you as well. Love to do that. I think that’s a great idea. I think we could go on and on. I had a podcast created by someone of me trying to impress me with what it was. The podcast that the AI did was better than me doing the podcast. I’m going, that’s great. That’s it. I’m over and out. We’re going to get replaced by automation. Thank you so much, you guys, for being here. Any final parting thoughts, anyone?
[Alice] Ask AI if those bills were going to pass and pretty much I got a similar answer. It’s uncertain if these bills will pass and will likely result in affecting consumer protection, blah, blah, blah. So this is similar. will do an AI check for everything now going forward. We’ll do it. Yeah, I know.
[David] Alan, you rocked our world today with that analysis. That was really good. You were obviously learning how to make it work. You and Marc are the head of the class on that. Got to get caught up with you.