Lykken on Lending

Today’s heightened rate environment in the lending space will surely pass soon enough. But as long as it is here, you must know how to navigate through it in order to thrive and survive. Joining David Lykken to share valuable tips about this matter are Dan Catinella of Total Expert and Melissa Wright of American Pacific Mortgage. They discuss the importance of being data-driven in this particular lending climate, focusing more on customer retention and profiles. Dan and Melissa also share how they help originators engage with customers when it comes to repurchasing and refinancing, as well as the approach they take in addressing the low statistics of homeowners with mortgages.

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Navigating Through A Continued Heightened Rate Environment With Dan Catinella Of Total Expert And Melissa Wright Of American Pacific Mortgage

We have a real treat. Dan Catinella is joining us. He’s one of our partners on the show with Total Expert. I love these guys. I love what Total Expert does. Joining him is his guest whom he has invited to come on the show. Dan, let’s get started. Introduce yourself and then introduce who you have invited to come on the show.

Thank you, David. I am excited to be here again and even more excited. I’m the Chief Lending Officer here at Total Expert. My role within the organization is the general manager of our mortgage vertical. I am ultimately making sure that we’re doing the right things every day to provide as much value to our partners and customers.

I’m super excited to have Melissa Wright who’s the Chief Sales and Marketing Officer for American Pacific Mortgage. They are one of our really strategic and close partners that we work with day in and day out to make sure that ultimately, we’re supporting her and her organization and the originators that she’s there to support every day. Melissa, thank you so much for jumping on this show with us.

Thank you, Melissa.

You’re welcome.

Tell us a little bit about yourself and your background, Melissa, so our audience gets a chance to meet you and reconnect with you.

I’ve been at American Pacific Mortgage since 2015. I started out in production recruiting and growing branches in our retail channel. I then shifted over and I’m the chief sales and marketing officer. What that means is I run our marketing. I run all of our sales and marketing technology and all of our communication. The support for originators is what it boils down to. I am fueling them with the tools, the resources, the ideas, and the tactics to help them be successful in their tools. Total Expert has been a partner for a couple of years. They’ve been great. We have a really good partnership with them.

That’s really good. I’m so excited about that. I’m interested in starting out by getting a recap of the state of the industry and the opportunities that are being created here. American Pacific Mortgage is a leader in the marketplace. Wherever you guys are in, Melissa, you guys dominate. You’re strong. You have good leadership all the way around. I’d love your perspective. For our audience, there’s a lot of pain out there. I’d love to hear how you’re dealing with all of the market conditions.

There is pain, but there’s also business. We’re not doing the amount of business we would like to do, but our business is still pretty respectable with the volume that we’re doing. We’re close to $9 billion year to date in loan volume. We’re heavy purchase. It is a 93% purchase. We’re waiting for that great opportunity for refinance and getting ready for that. We know it is coming.

What we’re seeing is there are markets that are still thriving and doing pretty well. We’re fueling our originators with product and sales tactics. We’re trying to have innovative products that come to market that will help them really source and get buyers off the fence into the marketplace. We’re leaning into our technology. We’re having some great success that I’d love to share with Total Expert and some of the new things that are helping us stay engaged with our audience and our client base.

That’s good. Dan, add to that your perspective.

I break it down into four different buckets that we’re seeing. One is we’re seeing longer sales cycles due to limited inventory and the volatility of the market. You have a lot of buyers that fall out one day or the next day and vice versa. Ultimately, you have to create longer engagement strategies, which, historically, distributed retail people are not always fantastic at. How do you use the technology to help elevate the sales originators out there to have those longer engagement strategies so that they make sure that they keep in touch with those prospects over that life cycle?

We’re in a higher-rate environment. Melissa said we all know rates will fall in the future. Everybody is really optimistic about that. We would all hope that it would already have happened, but we’re building out some models for some of our customers to look at what that opportunity is going to look like. If I go back eighteen months for somebody like American Pacific, we can project like, “If rates do get down to the low sixes, this can have a massive amount of refi opportunity. Let’s make sure we’re operationalizing that, putting the right technology in place so that you can see that and ultimately increase your customer retention rates.”

Heightened Rate Environment: Lending rates will fall in the future, and everybody is optimistic about that.

For the other ones, we look at some of the metrics and what’s going on with homeowner’s rates locked into their home. If you have 80% of homeowners that have interest rates of 4% or below, you also couple that with skyrocketing consumer debt. I know we’re going to talk a little bit about that in more detail. We think that is also a massive opportunity that some of the capabilities that Total Expert is leaning into with using data. How do we seize those opportunities and help those homeowners unlock the massive amount of equity that they’ve gained in their homes to make them more financially stable and viable for the future?

There are also customer retention rates. It’s embarrassing. Our customer retention rate as a whole industry on average is still floating around 20%. We really think this is the time with how technology evolved and how data and intelligence have evolved for our industry as a whole to rewrite the baseline of retention rates in our industry. We think some of the things that we’re doing inside Total Expert can help facilitate that. We’re starting to see some great results with fantastic companies like American Pacific Mortgage.

There are a couple of things there you hit on, Dan, that I want to reinforce. It’s getting to be more about the data that we have. Technology is important, but data and the data set that we have accumulated in our years of business are really where the focus is. I love what TE or Total Expert is doing to help companies like American Pacific Mortgage use that data. Melissa, one thing I heard you say that I want to reinforce and especially highlight for our audience is you’re really focusing on enabling and empowering your loan officers with products and helping their mindset. Expand a little bit more on that if you wouldn’t mind because that’s something a lot of people are struggling with, Melissa. How are you doing that as a sales leader there?

It’s not easy to try and move forward in a tough market. I get that. I talk to originators every single day and there’s something that they have angst about. Also, if you can fuel them with something to talk to customers and their real estate agents about, there are some good things that help. We’re pushing out sales tips every single week to them with an idea for the week. We’re like, “Here’s your Monday tip. Here’s what you should be focusing on.” We were focusing on where you ask for referrals in the transaction. It feeds into some of this value of the customer.

I love talking about customer and customer retention. It’s such a miss sometimes from originators. If you think about one transaction, maybe one transaction might personally bring you $3,000 or $4,000 of earnings. If you can focus on repeating that customer, maybe they come back and we exceed the industry. How much is the value of that customer if they come back for another transaction? Triple that or something.

How about they give you a referral? If you can work a strategy where you’ve got monitoring, strategic marketing, and intentionality around your client retention in that one transaction or if you can grow to a 50% retention rate of that customer and get each customer to refer you 5 people, that 1 customer can change from being, let’s say, $4,000 worth of earnings to $250,000 worth of earnings. It is so critical of how you do that.

We lose sight of that so often because everyone is so intensely involved in the one transaction that’s right there in front of you. We miss the opportunity that’s surrounding that.

David, it’s even more challenging in a purchase market, too, when you’re constantly out cultivating referral partner relationships and trying to get the next purchase. Bill Dallas had this great saying that I still use. It is like, “You got to close the back door first.” You can’t let customers fall out the back door. The more customers you acquire, you’re letting them run out the back door as well as some of your past customers. You can’t do that. Data and intelligence is a key to some of that success. If you got 50% of the purchase market made up of first-time home buyers on a national scale, that is exactly what Melissa said. It’s the lifetime value of a first-time home buyer. You have to make sure that you’re ready to serve their next need.

That’s great. I love the journeys that you guys have created. When you’re talking about journeys, I’m talking about how Total Expert has gone in and really created some journeys. I picked up from what you were saying, Melissa. You were implying that’s some of the tools that you’re using as you’re talking to your loan officers. Is that correct?

Yes. We have every single customer client as well as our prospects, so we do both. Our entire database is on some type of journey. Sometimes, they switch the journey because maybe data tells us something that we need to be aware of, so we switch to a new journey. With our journeys, what’s really nice is it’s got throttling with it so we can do more of or less of. We can build tasks with it. We can do scripts with it. We can see videos and texts. There are all the options with it. It’s a nice way to leverage technology to help you stay relevant and stay in front of your client base or your database as a whole.

That’s so important. We know we need to continue to support the purchase business, but with consumer debt trends and massive home equity buildup, how do you find yourselves ensuring that you are helping originators engage customers to ensure that you’re serving them in the best way, whether it’s a refinance or purchase market?

One of the ways we’re doing it is through some of the monitoring. We have at our fingertips at all times what is the equity that we have. You can pull up a client record and the data is there showing what’s their estimated mortgage, what’s the value of their property, and how much equity they have. We’re monitoring their credit, what’s their current interest rate, and listings. Anytime that any of those happen, we know about it. Immediately, a journey, a task, and an action from a loan officer are triggered. That’s one way that we can lean into the data but then trigger some strategic marketing to talk about equity.

It’s amazing that everyone is enjoying their properties. Yet, no one knows what to do with it because no one wants interest rates. I get asked all the time. People are trying to get advice. When I go to a family event, they’re like, “I have a first and a second. My second is higher than my first. What am I supposed to do? I have credit cards, but I don’t want to do anything.” I always try and advise them on it but everyone is waiting like, “I want to tap my equity, but when should I tap my equity?”

Heightened Rate Environment: It is amazing the equity everyone is enjoying right now and their properties. And yet, no one knows what to do with it because no one wants today’s interest rates.

That’s such a good point. When you’re looking at this, it comes back to the customer intelligence that you and Total Expert bring to customers like American Pacific Mortgage. Talk a little bit about that. I love it.

Total Expert is on a quest to build the most comprehensive profile of every customer that sits in any of our partner’s databases. We’ve historically always had good integrations with point-of-sale systems, loan origination systems, and transactional systems. We even have customers bringing in some servicing data if they do service their own portfolio.

I don’t want to look at a customer in what they did three years ago when I transacted with them, but how do we make sure we’re keeping that customer’s profile updated with real-time data? What is their equity position? How much is their home increased in value? What does their credit profile look like? We’re then looking at certain intent signals. Did somebody go to another competitor and get their credit pulled? Did they list their home on the market?

Heightened Rate Environment: Instead of looking at what a customer did years ago when you transacted with them, make sure to keep their profile and update it with real-time data.

We’re also looking at life events. We think life events are going to be a key indicator of a move up or a buy down potentially. We think the more data we can start bringing into this customer profile record giving you a holistic view of that customer, their financial status, and some of their intent signals, we believe that starts to unlock more opportunities to surface to originators. Marketing teams can start to automatically segment and deliver personalized offers at scale for what the next best opportunity is to serve every single customer in their database.

You’re really speaking to the partnership with your customers. The partnership aspect of this is looking at what their needs are and doing your best to try to bring products and services that are relevant to the market.

I’ll give you a perfect example. Our latest innovation is what we call equity enrichment, which is a lot of what Melissa touched on. We’re bringing all that equity data into the customer profile. One of the key indicators of why we made that investment is we saw a lot of lenders investing in things like HELOCs to expand their portfolios. Nobody wants to touch their 2% interest rate on their first mortgage, so a lot of lenders have added HELOC opportunities to their sales teams. Everybody, at some point, needs to unlock that equity. We’re starting to see some cash-out refinances start to ramp up.

One of the troubles in the past was that originators didn’t know how to identify those consumers with all that equity in their homes. We start to bring in that data to the platform, so originators have full visibility to everybody that is equity-rich in their database. Maybe they have a 62 and older customer in their database and they have 50% or more equity in their home. That consumer should be on a reverse mortgage journey all day long. Let’s educate a segment of my database and automate a reverse mortgage journey.

For the ones that don’t qualify for reverse mortgages, maybe you put them on a HELOC. You could be like, “Are you having credit problems and debt problems? Let us talk about monthly cashflow versus what the interest rate is now and what the payment is on how to reduce your monthly payment out the door by consolidating debt and some of those things.” The data really starts to enable organizations to be able to come alongside the originators and provide these marketing engagement strategies to all their consumers at scale to ultimately increase deal flow for their organizations.

That’s such a good point. You both hit on this earlier. I want to go back to this point. It’s 80% of existing homeowners have a mortgage already with rates less than 5%. It seems like a real barrier to anyone wanting to take action. You’ve talked about life events. You’ve talked about reasons people get forced to the point where they have to do something. I want to get your perspective on what it means for future lending. When you look at that extraordinary population, 80% with rates as low as they are out there, what are you guys doing about it?

It starts a little bit with their mindsets. Maybe the customer is locked into, “I’m below 3%,” or, “I’m around 3%. I won’t do anything.” I had this conversation at a family party and they were complaining about their home equity rate. It was close to 10% at this time and they’re on a 3% or whatever first. I said, “Here’s the reality. You’ve got to blend those two. You don’t have a 3% interest rate. When you have 3% and you have 10%, at minimum, depending on the balance, you may be at 7%.” You have to present that data in a presentation that they understand.

Don’t be so locked in with, “What’s my rate?” It should be, “What’s my total debt? What am I paying on my total debt?” We have tools within the system to do that for you. This is where really great consultations from loan advisors come in. They can show that and present it correctly. I truly believe that even though we’re 80% under a certain rate because consumer debt is so high and a lot of home equities or lines of credit are high, there is going to be an opportunity. We have to get the information in front of the consumer to stop thinking about interest rates and start thinking about their entire financial picture.

That gets into us being financial advisors rather than, “We’re selling a mortgage right now.” I want to get into a partnership that’s really unique. I want to get into the partnership between the two companies. I know those that are using it. I’ve been to several of the Total Expert user conferences and I love them. You really get the partnership that came out. I’m going to go there if we’re both comfortable going to that.

Talk about how you depend on the partner that you have with Total Expert and how you’re listing. Is there anything you can talk about that feedback loop, Melissa? It’s like we’re going to them and saying, “We would like to see this type of thing.” Dan, you’re listing. If we could get more dialogue around that because that’s a compelling part of this thing.

Melissa, we can maybe talk about the customer advisory board and some of the stuff we’re doing with the customer advisory board as well. Melissa is a part of the customer advisory board.

We could talk about our weekly meetings. I got Joe on speed dial.

That’s good. Let’s get into that. There are some things I picked up, Dan, at the Total Expert user conference, which everybody needs to go to. If there’s one conference you need to go to, it’s that one. This one we had in San Diego was the best conference I’ve attended in a while. There was such a sense of partnership between the users and Total Expert. There was a real listing going on by the TE partners that were there. There was an open dialogue between you, Melissa, and others who were there. I want to get into that because this is the magic that happens with Total Expert and their customers. Could you get into that?

I love talking about it because they really are the best at doing that, connecting with us, and listening to us. There are so many things that can validate that. First of all, they have the conference. Let’s talk about that. How many of your partners have a conference where they cater the agenda, the topics, and the involvement with their customers like us? They show that we’re a partner and put on an amazing conference.

They also do advisory board meetings where I sit on their advisory board. We not only talk about what’s coming and get input on that, but we pause and talk about what we want to see advance, change, and meet the needs. We’ll peel off and have smaller meetings. We’ll have one-on-one meetings with the executive team where I get to go in and give some feedback on what we’re looking for or what the technology looks like. We have weekly meetings. It is incredible how they make me feel like I’m part of their organization. We invite them to our events as well. They’re our friends. We feel like we’re in the business together.

That’s so good. First of all, let’s start with Joe. Joe is such an open guy. He really cares about the customer. You get that when you meet his parents. His parents have been at both the conferences I’ve been at. I love that it’s a family there. You guys care.

It’s beyond care. It is a passion for Joe, and it trickles down through our entire organization. For anybody that doesn’t know, I was a customer of Total Expert for six years as well. Like how Melissa is part of the customer advisory board that Total Expert has, we built a friendship through that board as well. It’s a passion that starts with Joe and trickles down our entire leadership team.

At the end of the day, it’s about understanding the strategies that all of our lender partners have, how we help them solve the challenges in the market, and the opportunities that they want to run after. As we pivot through these different market cycles, we need to pivot as an organization as well and make sure, ultimately, we’re working on the right things so that we’re skating to where the puck is going, not necessarily where it is now.

The more we truly believe we can get with our customers, help solve their problems, and help them seize and maximize the opportunities that they see in the market now and in the future, it’s a win-win. There is nothing more pleasurable for Total Expert than seeing our customers win every day. The amount of high-fives and energy that gives us when we see customers like American Pacific setting off ROI metrics off the charts because of customer intelligence and some of the things that we’re helping them provide gives us so much joy and energy to keep going and doing the best work we can.

I love what you were talking about Joe, too. He’ll check in with me, too. It’s not just his passion and it goes through the organization. He also reaches out. He wants to align with me and find out what we’re looking for and what feedback we have. He takes it. He’s a really good listener and advocate. I want to validate what you are observing with Joe. That is a real thing. It’s unique and wonderful.

I’m from Minnesota originally. I grew up in Minnesota. I’d like to say it’s those Minnesota roots and the people up there. The Midwesterners care. They’re good people all the way around. That’s true everywhere. I lived in California and found that to be true there, too. A little bit different flavors probably, but there is such a sense within the Total Expert family that it is, number one, a family and it’s a family that cares. It cares about you, Melissa. It cares about what you think.

Dan, you were so moved by that that you jumped over to the other side and joined him. That’s a real testimony to the company. I want to give a major kudos to Joe and to what he’s built because it really starts with the leadership at the top. You talked about Bill Dallas. How many big great companies did he build over the years, Dan? He is another one of those great leaders. We don’t pay enough attention to leadership. Melissa, you’re clearly a leader there in your organization as the leadership and in the markets you serve. Do you have any final words of advice for your peers in the marketplace, Melissa, as we get ready to wrap this up?

I would say hang in there. This is still an industry that we love. Don’t lose the joy. Sometimes, I wonder, “Did we all lose the joy?” It’s been so difficult, but don’t lose the joy. This is an amazing industry. It is a tough season, but it is just a season. There’s plenty of opportunity to retain your clients, work on your database, and bring value add to your real estate agents. I truly do believe that.

I truly agree with you. Dan, last words?

I would say collaborate with your partners. Lean into them during these challenging times. They will sometimes surprise you with some of the strategies that they may be able to offer you because they’re talking to a lot of different organizations. They get a chance to see what’s working and what’s not in the market. Lean into your partners. Bring them in as close to your team as possible. Clearly, that breeds some success for your organization. It’s a small industry. Let’s all stick together. There is light at the end of the tunnel.

I’ve been doing some studies about demographics. You look at the demographics of those who don’t own a home. I believe we’re going to have another peak that’s going to exceed the last peak. We’re in a peak and a cyclical business, but we have some really good days ahead. It is like the guy in the woods putting on tennis shoes in Bear Country. His partner says, “You can’t outrun a bear.” He says, “I don’t need to outrun a bear. I need to outrun you.”

That’s the way we need to be looking at it because we are in a game of who is going to outrun and who’s going to outlast. Melissa, thank you so much for joining us. I really appreciate it. I appreciate your words of wisdom. Dan, thank you so much for inviting her on. What a delightful person, and what a delightful episode and interview. Great wisdom you guys both have shared. Thank you both.

Thank you. It was such a pleasure.

Thanks again, Melissa.

Important Links

• Total Expert
• American Pacific Mortgage
• https://www.LinkedIn.com/in/Melissa-Wright-b70bb58/
• https://www.LinkedIn.com/in/Dan-Catinella-06b0027/

About Dan Catinella

With 20 years of experience in mortgage technology, Dan Catinella is a seasoned technology executive focused on driving digital transformation through all channels of lending. In an ever-changing digital landscape, Dan keeps a constant pulse on the next innovation that could change the way business is conducted. As Chief Lending Officer for Total Expert, Catinella identifies and develops high-impact innovation strategies that align with the company’s business goals and growth priorities. He works with Total Expert’s customers to dig into the problems they’re looking to solve and aligns Total Expert’s innovation strategy with their business goals.

About Melissa Wright

Melissa Wright is a nationally ranked executive leader, Chief Sales & Marketing Officer of American Pacific Mortgage, and a true expert in strategic design. With more than 20 years in C-Suite Leadership Melissa has built companies from the ground up to multi-million-dollar acquisitions, led organizations from last place to #1 in their industry, and grown sales by over 500%. She has been ranked as a Top Marketing Leader, Top 50 Women in Finance, a 7-time winner best of state, and nationally recognized as one of the Elite Women in Mortgage.

As a self-proclaimed entrepredoer, she currently leads the areas of sales technology, marketing, communication, innovation & support, and business development. She sits on 3 advisory boards for advancing tech companies and works with and speaks to executives, leaders, and emerging leaders on how to transform their leadership style through radical generosity, purpose-driven work, and living to make a difference.