In this episode, David Lykken sits down with Justin Demola, President of Lenders One, for a timely and candid discussion on the biggest forces shaping independent mortgage bankers today. From credit pricing spikes and rising regulatory scrutiny to the rapid acceleration of AI on both the sales and loan manufacturing sides, Justin offers a behind-the-scenes look at what lenders are experiencing in real time and how the Lenders One cooperative is helping its members stay profitable, compliant, and strategically positioned for the next market cycle. He also shares updates on lender consolidation trends, the explosive growth of L1 Credit and L1 Insurance, and why peer-level collaboration is more valuable than ever. If you want clarity on where the IMB market is heading in 2026 and beyond, this conversation delivers it.
[David]: Folks, welcome back for another episode of Lykken on Lending. We’re honored to have as our guest today Justin Demola. He is the president of Lenders One Co-op, doing a great job, and the leadership is growing, the co-op is growing, and we’re going to get an update on all that’s happening because it’s important because he represents so many really active lenders that are doing well. And we’re getting his first hand perspective. Justin, good to have you back on the podcast.
[Justin]: Thanks, David. I truly appreciate being here.
[David]: What is the latest news from the Lenders One Co-op?
[Justin]: What’s not the latest news? Well, we’re sitting here on November 20th. Credit pricing is out. All the members are panicking, and the whole world is going, oh my God, you know, what happened with credit prices this year? And obviously there’s been increases. So that’s the challenge today, just getting through those conversations. And I think people are understanding, you know, where it’s coming from, how we’re how we got here and what and what needs to happen. But yeah, that’s what’s going on today.
[David]: Well, that and a lot of M&A. I mean, where mergers aggression is alive well. And how is it inside of Lenders One? Are you seeing a lot of the members starting to come together and saying, hey, let’s partner up?
[Justin]: Obviously there’s the big ones that that that we saw, right? over the past few months. And you know, where we’re where we’re seeing, you know, some of the smaller ones, you know, guys doing a billion dollars a year of originations. We have one right now that’s merging, three companies are essentially merging together. So that’ll get them to a three and a half, four billion dollar a year company, but people are talking about it, everyone’s a buyer until they’re not, right? So that’s always a good conversation. And I’m sure you see that a lot. It’s I want to buy, I want to buy, I want to buy, and then all of a sudden they’re being acquired, right? So, you know, obviously we’ve seen some consolidation within the cooperative. Most of most of the consolidation we’ve seen has been, you know, member to member. So that’s always good for us. We keep the volume in the cooperative. But yeah, I mean, people talk about it, uh, but people aren’t really talking about it as if they’re on the selling side.
[David]: Yeah, I think there’s a lot of activity. There’s gonna be more activity as we continue to go through these this rate. I’m gonna call it uncertainty, and we’re all hoping we have a lot of optimism about the future, let’s talk about that. And there seems to be optimism from the people that I’m talking to. What are you sensing within the co-op?
[Justin]: Yeah, a hundred percent. I think, a couple of years ago when rates spiked up and and origination slowed down significantly, people were overstaffed, wasting money, you know, we’re seeing numbers from the MBA that there’s more profitability per loan by quarter. You know, I think the you know the IMBs are getting through it. You know, they understand that this is the market that they’re in, and how do you succeed in the market that we’re in today? And you know, we just came back from Nashville with you know 25. Yeah, we were in Nashville last week for a roundtable, you know, 25 lenders were with us and all C-level executives, and they were all positive, right? They’re looking on how do I invest in my business today to become more efficient, to prepare myself for when the market gets busy again? And how do we use technology to create those efficiencies? And again, we all know that you know people adopt technology or purchase technology that don’t adopt technology the way they should, that’s was a big part of the conversation. You know, how can we as a group help our members really understand what the technology is that’s out there, what’s available, and how to make the best choices to adopt it and get your users within your organization to use it.
[David]: Yeah, you are doing a good job with bringing the members together and creating these conversations. I mean, that’s one of the benefits of being a part of the co-op. And I would like to get into that a little bit. Tell me about this meeting you just had and the value of it and why anyone listening to this podcast that’s not a member of the co-op, Lenders of One Co-op, that they should be talking about this event you just had and how what’s the purpose of it, how it comes together, kind of what goes on there.
[Justin]: Definitely. So we do three roundtables a year. So it’s capped out at 25 participants, generally C-level executives, maybe one level down, and it’s a two-day event. And the first day is literally starts at lunchtime, ends before dinner, then we all go to dinner. But it’s literally five hours of sitting around a U-shaped table talking about the challenges that our members are facing and how can we help them and what are they seeing? And it could the topic can go anywhere, we start out by you know going around the room, introducing ourselves if you don’t know each other. And you know, really you know, the question for the group is you know, what do you want to get out of today? Right? What do you want to learn? What do you need help with? And we spoke a lot about AI this past week, right?
[David] A lot about it’s dominating all conversations, isn’t it?
[Justin]: 100%. And we were bifurcating it into you know AI on the sales side versus AI on the loan manufacturing side. And we had we had Ari Karen and Daniela were in the were in the group, they were actually the moderators for day one.
[David]: So they moderated this one. Okay, good.
[Justin]: Fannie Mae previously moderated them for us. Fannie Mae is not able to do that under their current arrangement right now, this very second. So Ari and Daniela came in and they made it.
[David]: I love those two. Those are great people.
[Justin]: They are, they are, and what’s nice about them is they’re not selling, right? So like I can’t I can’t just have any vendor come in and try to sell, sell for five hours, right? They’re truly moderating, and you know, the members are excited because they can get in front of them and not be charged, right? for some free advice.
[David]: Everyone’s looking for some free legal advice these days, that’s right.
[Justin]: Yeah, so we’re obviously we were talking a little bit about what’s going on in the world in terms of you know some of the some of the legal issues that that Ari and Danielle are seeing, but we’re really dug in deep on the AI, right? And on the sales front end of the AI, what are you know you know what are the legal regulatory compliance issues that that are potentially pitfalls for the adoption of AI? And you’re really talking about what’s a licensed activity versus a non-licensed activity, right? What are the rules around identifying if someone’s talking to some, you know, an AI chatbot or a voice bot, you know, how quickly do you have to notify the you know the consumer that you know I am a chatbot, right? That you’re that you’re working, that you’re working with, right? you have your TCPA issues. So there’s a lot of other issues outside of just you know the mortgage space. It’s you know, do not call TCPA, you have your licensed activities, right? You know, if you have someone who starts an application online and they have the ability to ask a chat bot or a or a or a live voice bot a question about a loan, many states are viewing that as licensed activity.
[David]: yeah, I’m in hearing this, and that is increasing.
[Justin]: It’s and it’s scary too, right? Because we’re in uncharted orders completely. How do we get around it? What do we do? You know, there needs to be new legislation that says yes, you can do this or no, you can’t do that. Um, you know, and if you are using these chatbots on the front end of your system, as soon as it gets itself into a situation that it can’t answer, that it that it can be crossing that line, it needs to say, hey, by the way, let me transfer you to a live individual or to someone that can or to someone that can help you. I can’t help you. I’m not, I’m not, you know, I don’t have the authority to answer that question or help you with that. Something around those lines. So there’s a lot of pickups. I do believe, you know, you look at look at some of the AI success stories out there. You know, uh, a publicly traded company in their earnings call was talking about, you know, 400,000 calls that they made and they generated this many loans for their TPO originators. I think you have an issue there too. So there’s a lot of issues with AI today.
[David]: Yeah, there’s a lot of people whistling by their graveyard in this one. There’s it’s a lot of it’s getting to be more and more complicated, and it’s very important. But this is one of the benefits of being a Lender One member. You are now getting a chance to talk to your peers, talking with a leader like Ari. I love Ari. Ari and Danielle, they’ve got great experience, and they have defended and worked as legal counsel for most of your clients, I believe most of your members at a point in time or not. What you mentioned earlier about credit lines and the credit news. You touched on it. What’s up with L1 credit and what’s happening generally in that space?
[Justin]: So it’s an exciting space for us, we are we are growing it very nicely. We just brought on a very a very large top lender, um, saving them well over a million dollars a year in expenses for 2025 costs, and we expect 2026 costs to be even more significant. A million dollars? A million dollars. We actually have one that’s a very top-level lender that we that we’ve made a proposal and we’re saving them over three and a half million dollars.
[David]: Wow. That’s a significant change in this tight in these tight margin markets.
[Justin]: It is, and again, we’re excited about it. We have you know a lot of members are adopting lenders one credit. You know, what we’re seeing is members that are joining um Lenders One today, most of them are joining signing up for what signing up for one of our services, we have over 60% of those people are signing up for credit and membership at the same time. And we obviously we haven’t had enough timing to check, you know, to scale how quickly they join credit for the 40% who’s not, as opposed to the legacy members, you know, where we have call it 25% of those members that are purchasing products and services from us, it’s a it’s a great time for us. We’re really excited about you know the opportunity to create savings and value for our members, but also give them different solutions and different product sets to save money. Maybe it’s not the base cost, maybe it’s work changing a workflow here or changing a workflow there. And our members are super appreciative, they love the consultative approach, they feel like they’re you know technically our members are owners of the cooperative, so they give back to their organization, which is great.
[David]: Yeah, it’s really good. Uh we’ve seen the MBA come out with their position. I’m interested if you wouldn’t mind sharing your thoughts on the MBA position.
[Justin]: On which position? Single bureau?
[David]: Single bureau, but virtually the whole space of the credit, yeah.
[Justin]: So a single bureau. Well, let let’s start with status quo. Right status quo, the credit reporting space and the credit reports used to underwrite and close a mortgage loan have been working for 40 years, our markets love stability and predictability. And I’m not even talking about repayment right now, I’m talking about risk. And yes, we see FICO scores prices coming up, we’re seeing credit prices coming up. I will go out on a limb and say not only is it the foundation of every loan, probably the most important of the C’s, the credit collateral cash, right? That you need to close your loan. Right? Because if you don’t have credit, the waterfall doesn’t work. I don’t care how much money you make or how much cash you have in the rank, right? So I think when we look at the you know the credit report, it is invaluable to what we do today. Getting back to stability and predictability. I think we can get to a different model, whether it’s Vantage Score, and I think Vantage Score is much faster than Single Bureau or even buy merge. Yeah, but I think we need to get there in a calculated, measured way where we can actually see the progression from one to the other. You know, the ultimate decision maker in our space are the bond purchasers.
[David]: Yes.
[Justin]: And if they don’t know how to measure risk, we’re gonna save a borrower $100 on a credit report, but they’re gonna pay thousands of dollars more in interest or MI costs or whatever that is.
[David]: So, whatever the insurance is.
[Justin]: I support what’s best for the homeowner and home buyer overall. And again, upfront costs, yes, they’ve increased. There’s no question about it. But what does it look like? Yeah, significantly. What does it look like on the back end though, if you’re using an alternative method, whether it’s a single bureau, Vantage Score, you know, I think Vantage score is gonna be great. I think it’s gonna offer a lot of new homeowners ship it into the market. But again, I don’t think it should be used to offset today, offset the cost of FICO. I think you’re they both are gonna have their place. And I think over time you’re gonna see Vantage probably overtake FICO, but we need to get there first. We need to get it accepted, we need to be able to track it, watch it, monitor it. And you know, all the other lending industries, whether it’s auto, personal loans, credit cards, they’re all moving a bit. They’re all moving to Vantage, primarily, right? So I think we’re gonna get there. But my biggest concern today, if you ask me about any knee-jerk reactions or abrupt changes, is it’s gonna disrupt the markets and the markets aren’t gonna know how to price those loans, right? Whether it’s for duration, whether it’s for credit risk, you’re gonna have an issue.
[David] Yeah. Great point. Also, another successful area within Lenders One is L1 insurance, the homeowners insurance. You have helped so many lenders mitigate the rising costs. You saw the slide that the MBA put up, it’s the single biggest spike of any of the costs out there. How have you been able to mitigate that and keep help manage that for lenders?
[Justin] Yeah, that’s another fun one, it’s a project we started, you know, beginning of last year.
[David] How fortuitous to do that. I mean, you said think about it. Everyone said, oh, they’re just trying to make some extra money on that. It was fortuitous that you guys would do this because it’s created significant savings.
[Justin] Yeah, exactly, our Castle Line insurance group, and we were sitting in one of our, it was actually one of our advisory council meetings where people started talking about insurance and what type of insurance solutions can we provide to the cooperative. And we went out and made sure we had all of our property casualty licenses in all 50 states. And you know, we teamed up with an insure tech who will powers the back end for us, but we are fully licensed agent, etc. And you know, we are working with our members and we’ve established technology that we’re getting their borrowers whenever they want to send them to us, whether it’s a milestone or a status or what have you, but we’re getting their borrowers information, we’re you know, we’re connecting with the borrower, we’re showing them three, four, or five quotes, depending on you know that the region that they’re in. You know, we have 40 different underwriters that insurers that can that can issue and buy in policies. And you know, we’re really starting to hit our stride with that product right now. And it’s exciting and them and the members are happy because it’s seamless, they can control the transaction. It’s also giving their borrowers, you know, creating additional value for them because it’s giving their borrowers you know some you know reduced costs and it makes the lender look good.
[David] As far as AM Best ratings…
[Justin] We have all the all the major insurers.
[David] You got all the all of that.
[Justin] Yeah, whatever wherever you need, yeah, we have.
[David] That’s really good. Let’s talk about the benefits of membership. It is a great organization. I mean the conferences, we’re gonna talk about that in just a minute. Fort Lauderdale is coming up in March 1st through the 4th in 2026. Really looking forward to that event. But there are so many benefits of the membership, but there’s just nothing like the camaraderie. And these what you’re doing with the roundtables, what you’re doing in the ability to bring people together and hear and share each other’s issues. That is in my mind the biggest benefit. But talk about it from what you’re seeing. And then are you looking at adding additional benefits?
[Justin] Yeah. So we have again, we’re always looking to, when I look at the strategy going into every year, it’s more members, more products, more penetration of the products, and then the flywheel just keeps going back. The more value we create, the more members we get. And thankfully, I’m empowered to create whatever products that are gonna make sense for the membership, our CEO at AltiSource is very supportive of everything that I do, obviously, we’ve got to present to make sure it’s economically feasible, etc. But you know, anything that we that we believe is gonna be a value to the membership to meet our mission of you know helping our members save money, earn additional revenue, have best insights, be more efficient, etc., I have full support of, you know, I get why I get full supported. When we look at everything that we do, I say it all the time, and people kind of laugh at me until they until they live it. Like I was a member, we were engaged members a long time ago, and we were an engaged member. And the more you’re engaged in in anything that we do, the better your return on investment is gonna be, and whatever value you’re seeking, we look at all the different things that we offer, and it’s not a one size fits all for every member, right? It’s not like I’m gonna come in and this is what I’m gonna use. Yes, credit, we’ve kind of found a really nice, stable product that every member can find value in, but there’s plenty of other products that some members find value in that some members don’t find value in. Like, and one of the things that we do, as you know, is you know, and I think it’s a perfect example, is we give free continuing education to all of our state licensed independent mortgage bankers.
[David]: And you need to stress that because that is such a value.
[Justin]: Yeah, and we did over 6,000 individuals last year, individual MLOs, something like 2018, 19, 20,000 individual state classes. That was fully free, cost us a significant amount of dollars to be able to offer that to our membership. But that’s a value to IMBs, not all IMBs, but it’s a value to IMBs, but it’s not a value to our bank and our credit union customers, right? Because they don’t need the state licensing.
[David] Right.
[Justin] So they don’t need a continuing education. So, you know, that’s one of the things we look at. But you know, having the ability to sit in a room with our members and our members say, Hey, can you develop XYZ? or what can you offer? Can you go find this for us? Can you go find that for us? It’s great. I mean, we have we’ve had health insurance for years, right? we have, you know, we look at our national programs providers, right? Our products and services that we work, that we team up with third parties to offer savings discounts or contractual relief to our members. You know, we have 75 different companies there, right? From technology companies to compliance companies to you guys, right? It’s just it all depends. Then we have our direct solutions. So I run our title, our valuations, our outsourcing group, our essentially our vendor management group, our insurance group and LendersOne, right? And obviously, title and valuations I share P&L with our operator on that. But again, when we look at all the products and services, those are things that we can give direct to our to our members, right? We have you know our granite construction management, we have our renovation group. So we have plenty of things at the AltiSource level that creates direct value for our members. And that’s why we started Lenders One Credit. Then you know, we have our capital markets, we have our preferred investors.
[David] Talk about your capital markets, because that’s been such an important one for some. That has really helped some lenders.
[Justin] Yeah, you know, our members get dividends, right? So our preferred investors are on the platform, you know, lenders close loans or sell loans, close loans to them. We get paid dividends, we split that back with the member, you know, we have our subservices, our warehouse lenders. You know, we pretty much have anything and everything that a lender needs to operate and operate more efficiently and more profitably. So, you know, there’s a ton of ton of tangible ROI, right? So I kind of break it down, you know, tangible. We look at our direct services, our reseller services, our capital markets, our national programs, and then we have our networking and events. And you know, that is something that really builds the culture of our organization. I like to think that we are the highest level as it comes to professionalism out there. Our members respect each other, they share a ton of data, they want what’s best for each other. And it’s always fun to watch the first time someone comes to a round table or sits at a networking group, whether it’s our monthly calls or bi-monthly calls or our summits. But it’s always great when a newbie comes into a roundtable situation or a networking group, and everyone is talking so freely and they and they look just look around and like this is my competition, but they’re telling me all their inside secrets. And it’s something that we really work hard with.
[David] Well, I’ve witnessed it firsthand. You guys they really do open up, and there’s several of them call me and said, Dave, I couldn’t believe it. I’m dealing with so-and-so, and he’s like a cross-town rival, and I’m they’re just opening up and sharing. It has created a bond between us that I can’t begin to describe the value of it. And we share things, we are now more respectful when it comes to recruiting you out of each other’s shops.
[Justin] I will tell you, I’ve been here for almost seven years now. I think there’s only one legal dispute between the cooperative members that I could remember, and it had to do with stealing pipelines. But you know, that’s more loan officers than C-level executives.
But you know what? They figured it out, they worked it out together, and it was great. But yeah, I mean, everyone is very respectful of each other, and you know, they have conversations and they communicate, and I think that’s the most important thing.
[David] Yeah, it that’s what it’s all about. We get together, we communicate. Talk about the size of the membership. Again, under your leadership, this has grown nicely, in spite of the M&A.
[Justin] Yeah, it’s always a fun battle, right? We’re always just like the homeowner’s insurance business, right? You gotta know, renewals come and you gotta fight attrition. And you know, we’re you know, we’re we’re controlling, you know, 17, 18, 19 of the U.S. mortgage market at this point. So we’re so somewhere around 240 members. And you know, I will tell you that you know, every year we’re adding positive net members. You know, we were down, in 2021-ish. I think our membership was probably the lowest it was in a long time, but you know, we’re growing it back. And again, we have a lot of people that are interested, we’re also selective on who we bring in, it’s not you apply and pay a fee and you’re in, and you’re in, we do have some requirements, and the members, the members also have to vet you, right? We send out a no a notice to all the members like, hey, David Lykken wants to join Lenders One. Do you guys have any dirt on them? And sometimes we get that too. Like it’s like, oh yeah, he’s horrible or they’re horrible, and you don’t want to bring them on, and it’s not good for the cooperative. So um, you know, when we look at it, and then you know, we’re when we look we’re tracking attrition, and when we track attrition, 95% of it is mergers, acquisitions, or companies went out of business, or we’ve even had companies that that that scale back to mortgage brokers. And once you’re a mortgage broker, you can’t be a member as well.
[David]: So we’re seeing a surprising amount of that, actually. I mean, it’s that’s kind of surprising to me.
[Justin]: It’s a cycle, it’s always been a cycle.
[David]: Every time we go through one of these cycles, it is that’s a cyclical business. Yeah, so great point. Let’s talk about L1 Summit coming 2026. It’s in Fort Lauderdale, great place to be. Wonderful town. I love the place. We’ve been there before. I love this place. Talk about it.
[Justin] So This is a brand new hotel. It’s actually open.
[David] Oh, it’s a new hotel.
[Justin] Brand new hotel. It actually opens December 18th. So we did a site, the team did a site visit a couple weeks ago, said it’s absolutely stunning, it’s gorgeous. It’s an Omni hotel right next to the cruise. Right next to the cruise ship pier in Fort Lauderdale. We have some really cool night events that are that are going on. obviously for those of you who don’t know, Letters One Summit is definitely interesting. Uh there’s no lobby rats that I like to call them. Everyone that’s there is registered from Sunday night to essentially Wednesday morning. Corral everyone, free drink, free, free alcohol, free food, and the events are very memorable. So it’s all about building culture for our providers and our members together. And it’s super exciting and you know, looking forward to the nice warm weather as it’s as it’s 30 degrees outside today.
[David] Yeah, yeah. I just came off of a British Virgin Islands cruise. So…
[Justin] Rub it in.
[David] Yeah, I know, I know. What can I say? Justin, it is just so guys. First of all, congratulations on the leadership you’ve brought. You’re doing a great job there. And so many members are just have commented about the job you’ve done there. You moved, you came out as a member, then you went into sales, and then which I was an advocate for, and then I was an advocate for you to get into the role you’re in. I was really I’m really pleased to see how it’s gone.
[Justin] Yeah, I made I made the move out of the origination space, then you know with leading sales here, and you know, right opportunities opened up, and like I said, I earned it as well. But uh yeah, everything worked out the way it’s supposed to, and uh having some fun.
[David] Yeah, good job. It’s good to have you back.
[Justin] Good to have you again. Yeah, great seeing you. I’m happy everything’s going well in your world. You’re going on British Virgin Island cruises wherever you’re going. You know how it is. Fancy ginners.
[David] Yeah, there’s been a few changes in my life, so it allows me to be freed up to be able to do some things I’ve always longed to do, and I’m doing them, man. I’m taking full advantage of it and doing it.
[Justin] I love it, I love it. I love it. Enjoy, enjoy, my friend.
[David] Great to have you here, Justin. Thank you so much. Appreciate you, brother.
[Justin] Thanks, sir.
[David] You bet.
Important Links
For more than two decades, Chris Lemons has helped clients navigate the financial landscape through expertise in conventional, investment, and commercial lending. A 14-year employee at ALCOVA Mortgage, he also heads Creative Financing Solutions, the company’s private-money division dedicated to innovative funding strategies.