Lykken on Lending

In our Hot Topic this week we have Kimberly Nichols on the program to give us an update on Diversity and Inclusion in the mortgage industry workspace!!

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Moving The Wholesale Channel Forward…Homeownership For All!! With Kimberly Nichols

It is Monday, November 1, 2021. This show is created by mortgage professionals and we’re here for mortgage professionals, although we have a lot of real estate people read it, builders and the like, interested in those interests in the industry. We’re most grateful for you, our readers. We appreciate you being here. Our commitment is to bring you timely information that you can read anywhere and anytime. We appreciate much of the feedback.

We may have shared here the feedback we received at the MBA conference. It was much better attended than anticipated. It’s a great conference. I loved it. Kudos to the whole MBA team. Marcia Davies is responsible for so many of the things that happened behind the scenes. We’re pleased with it and it was outstanding. It’s good to have you here. Thank you for all the great comments from all of those who were at the conference and passed on the fact that you are a reader and you enjoyed the show.

As a Hot Topic guest, we got someone that I have respected in the industry as a leader for many years. She’s an amazing person. Kimberly Nichols, a Senior Managing Director at PennyMac. She’s going to be talking a little bit about giving an update on diversity and inclusion. We’re going to also talk about what’s going on in the wholesale channel that she heads up for PennyMac. She’s one of my favorite people because she’s not all that. She had triplets. There are working moms and then there are working moms of triplets. She’s amazing both at a personal level and a professional level. We’re blessed to have her joining us here in the Hot Topic segment. We put out some promotions on it and they put out promotions. I got so much feedback.

A lot of people are dialed in, reading and ready for the comments. I also give a shout-out to Ludwig because they’re the advertising agency. Barbara and the team are doing an amazing job. LudwigPlus, thank you for helping make this all happen. We are proud to be a part of the Industry Syndicate. Check out all the episodes at IndustrySyndicate.com.

We are also grateful for our sponsors. The Mortgage Bankers Association of America. I had a great interview with Michael Fratantoni. I got a lot of positive feedback. It’s the interview I recorded while I was using my cell phone, going back and forth like it was a microphone. The audio came out but the content was good. If you haven’t read it, go back and do so. Also, I caught up with our friends at Finastra. They’re doing a great job with their Mortgagebot Solution.

There are a lot of new innovations coming in with them. They’re the number one FinTech company in the world. When you look at a company and the leaders like PennyMac leader in the industry, you pay attention to what they have to say. Be sure to check out the interview that we did with Karen Jenkins on October 4, 2021, talking about the importance of the user experience and customer experience, the CX and UX. We could talk about that.

Check out that episode. I’m grateful for their sponsorship. As well as Lenders One and The Mortgage Collaborative. These two coops do a great job at helping lenders connect of their same size. Something that TMC or The Mortgage Collaborative has is the co-labs. They do a great job, as well as Lenders Ones does a similar thing but it’s important that we connect and hear about each other’s struggles and what goes on in there. Check that out to go on about both of these coops. We’re members of both of them. Pick one or both. That’s what we recommend. Get involved.

It does not replace the MBA with membership but does get a member of one of these coops. You’ll find that you’ll benefit from it, especially in these times where shrinky margins, what are others doing about it and how to respond to technology that’s coming out. These two coops will do a good job and help you with that.

Also, this community Mortgage Lenders of America Association. I’m grateful to be a part of them, CMLA, as well as Insellerate. Josh Friend does a great job. That interview from June 21, 2021, that we did with Josh Friend is still getting radically downloaded because of the radical things that they’re doing inside their company to connect you with borrowers. It is a great empowering engagement platform.

Also when you’re recruiting, you got to look at Mobility MMI or Mortgage Market Intelligence, as well as Modex. Both of these companies do a great job of bringing empirical data when you’re recruiting LOs. We got some great business intelligence BI out there. Everyone’s talking about BI and data. While both these companies have that going in a big way, what’s going on in the real estate market and the realtors that are doing well.

A special thank you to our sponsors, Snapdocs. I’m thrilled to have Amy Moses and the entire Snapdocs team with us on the show as a sponsor. Check out Snapdocs. They’re fast becoming the leader in eClosing. Check out eMortgage. Everything is Snapdocs. I Appreciate it. It’s one of the up-and-coming companies and you will want to get to know them. I want to say a special thank you to those that are regulars on the show. We have our beloved Alice, who’s been here since the beginning of the show. We also have Rob Van Raaphorst, Les Parker, Matt Graham and Allen. Thank you to all of the regulars for their contributions that make this show successful.

I am excited to have to join me, Kimberly Nichols. Kim is the Senior Managing Director at PennyMac Loan Services LLC. She’s going to give us an update on diversity and inclusion, something that she has been involved in, as well as talk about what they’re doing in this space. Kim, it’s good to have you on the show. I’m excited to have you. I appreciate you.

I’m excited to be here. I have followed your show for many years. I feel like I know everybody and to get to talk to Alice live at the pre-show is so much fun. I appreciated the content that you’ve put out there. It’s technically so rich. I learned something every single time I listen in. Kudos to you and your regulars. It’s always informative and helpful.

A big part of the success of the show is the Hot Topic segment. It’s because we have guests like you coming on. I respect you on many levels. People that know you know what I’m talking about. You have managed the work-life balance like a few others. You’ve got a great marriage and triplets of all things. I don’t know how in the world you do that and you maintain such a positive upbeat approach to business and your relationship. I was excited when your PR firm, LudwigPlus, reach out to us. Kudos to Barbara and the whole team there. They do an awesome job.

We’ve got Ashley to make sure I stay inside the guide rails. Ashley, thank you so much. She and I are texting back and forth in the background. You got a great team you surrounded yourself with. That’s one of the things we want to talk about. Before we go there, for those that do not know who Kim Nichols is, give us a little bit of your journey in the mortgage industry.

I’d love to tell this story because I did start in the industry as a teenager and it all started in a closet. I was fresh out of high school and was going to college. I was looking for a part-time temp job. I have previously done some work. My dad owned a small trucking company when I was growing up. I did some invoicing and dispatch work for him along the way. I put on my resume the shipping experience, this temp agency not knowing anything about a mortgage. It puts me in this temp position with a shipping department at a mortgage company. I spent all day long in a closet that was converted to a copy room, no windows, eight hours in there every day.

I photocopied loan files. I kept seeing these were all being delivered to this person named Fannie Mae who lived in Beverly Hills. I thought this Fannie Mae must be something. As I was doing my photocopying, the executive would come in and I talked to them and ask them questions. I started learning more. The more they shared with me, the more I wanted to know and then I’m hooked. I could see that the business was truly a fascinating dynamic and that’s how it all started.

What a great place to start in the industry because when you start there, you’re looking at the total of everything that’s happened in the business. It’s a great way to get in and understand it. You have done such an amazing job in the industry. It’s been many decades and you’re one of the professionals in this industry that we love for many reasons. How have you managed a growing career, not just a career that has done well but you’re a celebrated executive? You’re a thought leader in the marketplace. How did you manage that? This person is a female and has at least 1 at home, possibly 2.

In a lot of ways, being in the mortgage industry prepared me for that kind of parenthood and then that prepared me for the role that I have. It’s been this little cycle. It feeds off of each other. I can tell you the reason why I’ve had career success while raising a family. It wasn’t easy at all times. It becomes very challenging and women can be a little bit more open about how stressful it can be. I try to listen to that with my team.

It was having supportive leadership, mentors and being in the right culture every step of the way that makes such a difference in how we balance that and how supported we feel in our workplace. The differentiator was the support and leadership that I had. I have been very fortunate with that and a great partner with my husband. We are sharing the load and that kind of thing.

Homeownership For All: It was having supportive leadership, supportive mentors, and being in the right culture every step of the way that makes such a difference in how we balance and feel supported in our workplace.

Let’s talk about something near and dear to your heart, diversity and inclusion. You have been a leader in the marketplace when it comes to diversity and inclusion. Talk about what your experience and journey have been and why you’re passionate about diversity and inclusion.

What Marcia Davies and MBA are doing with Empower is such a great movement. I had such FOMO. I couldn’t make it to the Empower event. I was seeing all my friends on LinkedIn. The power of that whole experience that’s being built is truly a gift what these companies are doing to send women and men for that matter to this event and participate in it. It seems to get stronger every single year. Shout-out to Marcia Davies, MBA and the Empower Movement.

Mentorship culture and leadership support have all been factors in my ability to have a great career. As I sit, I am in a position to give back and bring those elements that have contributed to my success into the workplace here at PennyMac and our industry to foster that in women who could be future leaders in our industry and bring more women into leadership positions.

NAMMBA, Tony Thompson and his group are doing some great things to drive not only gender diversity but ethnic diversity, a more diverse workforce into this industry. PennyMac became a diamond sponsor of NAMMBA. We are looking forward to engaging there and realizing some of the benefits of that membership. PennyMac is doing some cool things to drive diversity and inclusion here.

I’ll talk to you about one that I’ve been involved with and it’s called WeMerge. It’s a business resource group for females in our company. My colleague Abbie Tidmore, Tracie Hunter and I create female executives here at PennyMac. We founded that in an informal structure many years ago saying, “We have some great women here at PennyMac. We should get them all together. Let’s have a networking event.” We started this little networking event organically. Our Chairman Stan Kurland at the time and David Spector, our CEO said, “We want this to go enterprise-wide. We love this. Let’s formalize it. Let’s take an enterprise level.” It took off from there. That was the formation of our first business resource group.

I love that especially when it’s being supported. I knew Stan from his previous ventures that he was involved in. He’s such a leader in the industry. It’s nice to see that it’s being braced through on that. I want to get Alice in on this because this is a topic near and dear to Alice as well. Alice, I’d love to get your thoughts on any questions you have with you.

It’s wonderful having you on the show. I’m glad somebody already asked about how did you manage with triplets because that was going to be my question. I had 2 kids and they were 9 years apart. That was overwhelming. Congratulations to you. Sticking on the diversity and inclusion part and the women’s group, how do you keep that going? It was wonderful that you had the foundation. What are some of the core principles you think are to keep that going at a company? People say, “I want to get together. Let’s make sure we’re sharing ideas.” How do you do it?

It’s been an evolution. We drew from experiences of other companies as well because you would try some things like, “That event wasn’t the best. Let’s go in this direction.” It’s listening to the core of the female workforce here and what their needs are. It’s iterative. What we’ve done is transitioned from executives having the committee posts in running the organization to we had members raise their hand and say, “Here are the 4 or 5 positions you can take on as leaders of Wemerge.”

You bring the membership in. They have an opportunity to foster their leadership skills by taking a leadership position in the resource group. They’re coming forth with even more ideas that serve the female community even more than I’m sitting here as an executive thinking, “What do I think they need,” but then the membership is coming forth, all these amazing ideas.

Mentorship is a big theme. We hear it all the time. I would like some mentorship opportunities. We see that across all of our different BRGs here at PennyMac. We have a number of them. We have a Black BRG, veterans, LGBTQ+, Hispanic and Latin, Asian and Pacific Islander. We have established that construct of having our BRG members. Be the leaders of these organizations then see these future leaders emerge from the membership of the BRGs. It’s fantastic to watch.

What I was thinking about is the comment that I commented on when Malcolm Gladwell talked about why we need to get back to work. It’s about mentorship. He picked up when he sat next to Bob Woodward, the famous journalist and he sat there as a new journalist, studying and watching him. We pick up so much of that while in the workplace. I can’t wait to get more of your perspective on that.

There’s much we could talk about with you here as a guest. One of the things I want to talk about is some of the growth that PennyMac is experiencing and your commitment to wholesale. We could consult mostly mortgage bankers. Some of which are in the retail and some of which are in the wholesale business. Most of the PennyMac says, “We know them as our correspondent lender and a good one.” Talk about your commitment to the wholesale channel.

We’re excited about our growth in the wholesale channel. We launched the wholesale channel initially in the non-delegated space. In parallel, we were building out the broker channel and getting our technology ready to enter that space. We’re many years into wholesale in the broker sense and had tremendous growth. We sit here as a top-six lender in the wholesale channel. We’re continuing to innovate around tech and even closely examining the broker experience and the channel.

What we’re seeking to do is bring all of the capabilities of a large-scale tech-enabled lender into the office of the single LO broker owner and equip them with all of the capabilities that these scale lenders have. That’s what’s exciting about tech. We do have the power to do that. Our commitment to the broker channel is to bring in all those capabilities so that the brokers can compete with large-scale lenders, whether they’re call centers or distributed retail. We want to give them all the tools to do that.

Homeownership For All: Our commitment to the broker channel is to bring in all those capabilities so that the brokers can compete with large scale lenders.

You have some great technology that you have developed over the years. Allen’s commented about that and I’ve sat in meetings. Allen was previously involved with LoanLogics. I consulted LoanLogics. I did a lot of work and sit right in the middle of the room and in the middle of every discussion with some of the PennyMac executives and what they are doing. I see your commitment to technology. How have you balanced technology? There are so many technology choices out there. Have you created your own? Have you gone out and acquired this platform?

When Allen said, “Squirrel,” there is so much out there. It’s a matter of finding the right technology that fits your tech stack that solves a particular business challenge. It is easy to get caught up in that shiny object syndrome. What we are committed to is looking at various pieces or tech applications that will truly drive value for our customers. You can look at something like, “It seems cool. I want that,” then you step back and go, “How is this going to drive value for the customer?” We talked about that a lot and maintain a lot of discipline around that. Silicon Valley has woken up to the mortgage industry. They see us. We’ve had a couple of great years.

Everybody is investing in technology. You’re ready to move away maybe from some of the legacy systems or applications that you have. You feel FinTech popping up. There are a lot of things that are popping up. Some of them will be transformative technologies that will help our industry. Some of them are going to be not so much. It’s our job to try to distinguish which are going to be the transformative technologies to integrate.

One of the things around technology is when I say, “Silicon Valley is woken up to our industry,” that’s not just with FinTechs and new application technologies coming in. We’re seeing talent being attracted to our industry. What’s been exciting for PennyMac is to take that Silicon Valley-level tech talent, marry them up with a business person who has a great mortgage IQ or tremendous operating experience and put them in the trenches together and see them collaborate. It is like magic. That’s been a great thing that’s starting to take hold here at PennyMac. We’re seeing some cool things happen in that realm.

You are such leaders in thought leadership. Another thing when we were talking about this is you talked about PennyMac having data scientists. They’ve done a lot of work and predicted the FHFA’s new loan limits in a narrow range in the past years. This has given you a significant advantage in the marketplace. How did PennyMac get to market with the increased conventional loan balances?

We have a data science team that looks for many applications to leverage our data into decisioning, workflows and numerous applications for that. Sometimes it’s using our internal data and sometimes external data. It’s been like a sport for our data science team. Every year, they write it down like, “We think that the FHFA loan limit’s going to be here.” Sure enough, they’ve been almost spot-on within a very narrow range for the past years.

In 2021, we’ve heard Case-Shiller, FHFA Home Price Index, almost 20% year over year. We wanted to step in as soon as we could and give the market some relief, especially in some areas that didn’t have high value before down in your world in Texas, which was in need of appreciation down there, especially in Austin and some of those markets. We wanted to step in and give our customers on the correspondent side and the broker channel some advantage to go out to their referral partners and say, “I can help you now.”

They had something to a position that was unique to them as well. We were excited to do that and help you with more consumers who are lining up trying to buy properties and having to wait on jumbo financing to come through. We got some relief from that. We were happy to bring that to the markets. The expansion of the highball here at PennyMac to 9375 was another thing for other folks here in California. In particular, were pretty happy about that as well. There are many applications for using data in this industry.

That came out clearly when we were at the conference walking through the booze. There’s always been some level of data. If we analyze data, there’s business intelligence that massages existing data internally but your data scientists are looking at both internal and external. What’s the mix of internal data versus external data that you look at?

It depends on what you’re trying to accomplish. We have the internal data for driving business rules, workflows and communication. The important thing about data is you think about it at the end of the day on a mortgage after closing and everything, the fungible product is a dataset and a note. You have the process data that you can take to refine workflows. You can look for anomalies or use them for risk management. We could spend a couple of hours on that. I’ll quickly get out of my league here and want to see the Chief Information Officer or CIO Lior because he’s much fun to talk to about all of this, as well as we’ve got our data scientists here who go into a lot more detail.

I’ll give you one example of how we’re using data in the broker channel. We look at various metrics to say, “Is this broker’s business driving efficiencies for PennyMac?” We’ll look at various data points and then we bring that data back to our brokers. It’s the same data that’s going to drive efficiencies in our workflow and keep custom. If you look at those KPIs and we help our brokers focus on those KPIs, it helps them improve and enhance the client experience.

Not only is using data great for PennyMac in our workflow but it’s also great for influencing the client experience. The brokers appreciate that. One of the things we look at is complete submission. The consumer doesn’t want to be nickeled and dimes for different times for various documentation. They want to go to their files once, grab everything they need, give it to their loan officer and have it come through. Everything all at once is going to create a much cleaner approval and faster time to close versus, “Here’s another thing.” Our brokers dream, love that and they eat that up.

There’s the concept of homeownership for all. I believe you have been advocates for that but where are the boundaries on that? How are you managing that balance? We were very encouraged by what we heard Sandra Thompson say, as well as what we heard from Secretary Fudge of HUD. How are you guys looking at that? How do you balance the risk factor with the growth opportunity?

We did sign the Homeownership Pledge with the MBA on all three tracks. We think that this initiative is important. Owning a home is such a big part of building wealth and generational wealth. This is our opportunity to do our part in addressing not only the racial homeownership gap but also making a difference in racial inequality in this country and thinking of the roles that we all have.

In this industry, we can drive true social impact but we have to do it right. We’ll be looking to FHFA and Fannie, Freddie and the MBA to help drive some of these initiatives to go down this path. What’s important as we do this is that we’re not stretching affordability. We need to put people in homes and have them succeed in home ownership. Everything that we do has got to be sustainable. In reading some of the comments that came out of the MBA convention, as an industry, we are all focused on sustainable homeownership.

If we maintain that focus, these initiatives will be very successful. You’ve got industry, mortgage bankers, banks and credit unions and you’ve got to bring government and regulation all to align around these initiatives. We rely on liquidity secondary market. All of these products need to be fungible in the secondary market. It is exciting. I love the focus coming out of the MBA and the way the industry’s rallying around this. It’s great.

The social impact is powerful that we could have and we’re fortunate to be involved in the industry that can make such a difference in the lives of individuals and society. It’s awesome and PennyMac is doing an awesome job. You’re doing an awesome job in the wholesale channel. Congratulations. Let’s wrap it up with this one last question. What is the most important thing you want our readers to know about the wholesale channel and PennyMac?

At PennyMac, what I keep hearing and what’s resonating in the broker community are we have a great tech experience. We’re this large-scale lender but we’ve maintained a true sense of connectedness with our customers, listening to customers and their needs. When we take that feedback, we have a very strong feedback loop to make changes in our process and technology. That’s something that as we grow is truly important to me and this whole team at PennyMac, maintaining that sense of connectedness to our brokers, small community mortgage bankers and then the non-Dell channel to make sure that their voice is heard and that we’re changing to align with their needs.

I’m glad that you are doing that and that you have the commitment to this important initiative throughout. We created as much home ownership for all as possible. I’m pleased with what the MBA’s doing and what we’re hearing out of FHFA and even Secretary Fudge of HUD. It’s all very encouraging when you bring in data science and all the technology that you have. It’s partnering with the right leadership. You bring so much leadership to PennyMac and the industry. I’m delighted to finally get you on the show.

It is so much fun. I’ve followed you for many years. To get to be here and be a part of it is such a treat for me. Thank you so much.

You’re surrounded by a great team. Ashley and I’ve been texting back and forth as we’re doing this. She’s doing a good job. You’ve done an awesome job being here the first time. We got to have you back. We’ve got many questions we got to ask you. Also a shout-out to LudwigPlus, specifically Barbara, for also making this happen. It’s a great PR firm and all that they do. You work with the best and that’s not surprising that’s why you are the best in the space. Thank you for being here. It is so much appreciated it. We’ve had Kimberly Nichols as our special guest with us. She is working in the wholesale channel and doing amazing. She’s a true professional.

If you are someone who’s like, “Who should I follow,” get around people like Kim. Get to know her and understand what she’s doing and what she’s about. Your career will be better for it. You’ll be better for it as an individual personally and professionally. It’s good to have you with us. Next episode, we’ve got some exciting topics coming up. We are very excited about continuing the topic of how you connect with people.

Important Links

• PennyMac
• Ludwig
• IndustrySyndicate.com
• Mortgage Bankers Association of America
• Michael Fratantoni – Past Episode
• Mortgagebot Solution
• Karen Jenkins – Past Episode
• The Mortgage Collaborative
• Mortgage Lenders of America Association
• CMLA
• Insellerate
• Josh Friend – Past Episode
• Mobility MMI
• Modex
• Snapdocs
• NAMMBA

About Kim Nichols

Kim Nichols is currently leading the team that is driving growth in the wholesale channel for PennyMac, which includes both broker and non-delegated correspondent production. Under Nichols’ leadership, PennyMac has quickly become #6 in the wholesale lender. She joined PennyMac in 2011 as part of the core leadership team charged with building the foundation for what is now the largest correspondent investor in the country. Nichols spent the early days of her career in secondary marketing and capital markets, which she followed up with 10 years at PMI Mortgage Insurance and later became an industry leader in the correspondent space including positions at GMAC RFC and Bank of America.

Beyond leading her team and the business channels she supports, Nichols was recognized by HousingWire as a Woman of Influence in 2020, in part due to her role as co-founder and committee member of wEMRG–a business resource group with the purpose of empowering, mentoring and promoting the success of high potential females within PennyMac. wEMRG provides an informal professional forum for women in PennyMac by offering access and interactions with senior leaders. The forum also assists participants in growing their careers through sharing experiences, building knowledge, skills and relationships.