In this episode of Lykken on Lending, we’re joined by industry veteran and straight-shooting consultant Brian Hale for a deep-dive conversation on how mortgage professionals can win in today’s volatile market. With over four decades of experience, Brian breaks down the five key focus areas for 2025, from targeting the right referral partners and converting more leads, to mastering margin management and embracing granular data analysis. David and Brian also tackle hot topics like the Rocket-Redfin deal, changing commission models, and what it really takes to thrive when the market gets tough. If you’re ready for some tough love, practical wisdom, and a few laughs along the way—this episode delivers.
[David] Folks, I am really honored to have a bit of a legend on our podcast today, and I’m really excited to share this. His name is Brian Hale. He needs no introduction. He is well known throughout the industry as leading some of the top organizations, and now he, like me, is consulting. And I heard him speak at the Economic Summit that HousingWire had in Dallas, and he raised five points, five areas in 2025 to focus on, and we’re thrilled to be going through those five with Brian Hale. Brian, good to have you on the podcast, friend.
[Brian] Good morning, David. I’m appreciative of the invitation. You and I have crossed paths. We’ve known each other for a while. We haven’t done a ton of this kinda work together. I don’t, as we just talked about, I don’t know why we haven’t, but we should do more.
[David] We’re gonna do more.
[Brian] And I appreciate what you’re doing out there. And to your point, I think we work in slightly different areas in our consulting practice, and I’m glad to be here. I’m always challenged by the word legend to be honest. I think all that really means is I’m old.
[David] That’s right.
[Brian] I always tell new clients this, that. I say, look, if you ask around the industry. Probably half the industry would tell you that probably I have a clue what I’m talking about. And the other half of the industry wants to run over me in a parking lot if they got a clear shot.
[David] I remember that story you told me. That’d be a great story. I always say we’re old, but I’m not old enough to start wearing the pens yet. So I’m old enough to be, I’m considered old.
[Brian] But look I still feel young in my head. I’m still about 30. Yeah, but my body disagrees, let’s put it that way.
[David] My body reminds me regularly when I gotta go do…
[Brian] Yeah. I hurt myself playing golf two Sundays ago, so that’s what I know. I used to play a lot of contact sports in high school and college and always survive. I hurt myself playing golf. I’m embarrassed to say that in a public venue…
[David] But it was so embarrassing. I’ve hurt myself and the bad part is when I was putting, It’s not, when that hit that big, bad thing. Anyway, I’m joking,
[Brian] I hit a root with a wedge and pulled my back a little bit. I’m still kinda suffering from it so…
[David] That’ll do it. That’ll do it. It is an honor to have you here. You’ve had so much experience and I’d wanna start off by looking at the trends that are going on, the macro trends going on. We saw the recent acquisition of Redfin by Rocket. It seems like everyone’s trying to get to the top of the sales funnel, finding ways to do wanna get your perspective on that transaction.
[Brian] Okay.
[David] And any other trends or what you anticipate for the rest of this year? I know you’re really involved in M&A, you do a lot of M&A work.
[Brian] Yeah. Look, so let’s start with the Rocket Redfin. Look I was interviewed I think with Greg Sher and I.
[David] Yeah. Greg had you on, my good friend
[Brian] Interviewed right up, right as it was announced kind of thing and look, I saw people react on social media that day about, oh my god, the business is over. Rockets acquired Redfin. Everybody go home. We’re done now. And it’s not my view, first of all, I have a lot of respect for the folks at Rocket. I’ve known Bill Emerson for a lot of years, and
[David] Me too.
[Brian] I don’t know Karun, who’s the new CEO, never met him. But I know a lot of people in that organization. I have an immense amount of respect for the model they’ve built and the business that they’ve run. So let me just start there. Secondly, I think it’s a hell of a deal for Rocket. Think about it just about…
[David] If they if they execute. Key is, I think that’s a big qualifier. They’ve made a smart move. But a lot of smart moves. You get handed the ball and you drop it and that’s what I think the big key is they execute.
[Brian] I’m a New York Giants fan, so I’m familiar with, Hey, great snap of the ball and then it appears that all 11 players are called a different play.
[David] Exactly.
[Brian] so you gotta execute first, right? Yep. Giants fans, we win for two years, and then we wander in the desert for 20. That’s our sentence in life, right? So in any event I think you’re dead on subject execution, but let me just a couple pieces of math, right?. The killer piece of math and the whole equation is 50 million visits to the Redfin site a month, right? So think about that as a lead source, right? That’s killer. Anybody would give their for that kind of lead flow. That said, remember that Redfin didn’t really execute on it that well.
[David] That’s right. They had a mortgage company, they bought Bayview.
[Brian] Right? Just two years ago, that company’s market cap was 10.7 billion and Rocket just bought it for 1.7 billion or 1.75 whatever the final number was, just $500 million over what the previous day’s close was of the value of the company and so in many ways, my view, and this is just my opinion, I think they bailed Redfin out because they lost 157 million last year, 160 some odd million the year before that, and they just really didn’t execute. That said, they have some killer technology on their portal and they can attract leads. To your point. Now it’s on Rocket and Redfin to figure out how to execute. By the way, the Bay Equity guys actually had a reasonably good capture rate or tax rate for that kind of piece. But it wasn’t dominant by any stretch of the imagination. So, I don’t think the world’s over, but I do think, and I said this before in a couple of interviews. I do think this is a sign of a future of our business with these large, well-capitalized alliances where you take 50 million opportunities, hook it to an organization that’s pretty good at skinning leads. They’ve got a really nice machine. To your point now the onus is on Rocket to show execution and either will or they won’t. I think they’ll do a pretty good job, but I also don’t think
[David] They’ll figure it out. Yeah.
[Brian] I don’t think everybody else should go home. Secondly, I think there will be more Rocket Redfin deals.
[David] I think there was rumors flying right after that deal, Greg. In fact, Greg, my good buddy, Greg and I talked regularly and he says, Dave, have you heard the latest rumor about who Zillow’s gonna be buying now? and it was one of the major mortgage lenders out there and I got…
[Brian] Yeah I heard that rumor as well and, interestingly enough, I was talking to somebody, let’s just say you can’t get any higher up in that organization shortly after that rumor came out and it could happen. Look, I think where stock prices are, particularly in the public mortgage companies, and the challenge is, look, this CCP ruling coming out from NAR here shortly, could have a really detrimental impact on Zillow as an example, right? in the process. And so I just think, I think you’re gonna see more and more mergers. I have clients that are in the joint venture business, particularly with home builders, right? I put a lot of home builder joint ventures together in my career. I put the KB joint venture together that Rate has today and that’s a wildly success affiliation, right? For Rate.
[David] On that note, drive into that just a bit there, because it was wildly successful because they executed and were you involved in helping them execute or did they have a clear plan to that?
[Brian] No. Look, I’ll give Jeff Mezger, the CEO KB, a lot of credit. He runs a great builder business. He’s built it, it’s some immense business. He’s always had a smart idea. He had some folks working for him that I think understood how to run an affiliate, a vartiety of affiliates, mortgage titles. Then I’ll give my team some credit, and there’s a guy by the name of Louis Calatrano, who is the CEO of that JV. Louis used to work for me in a first evolution of the KB JV at Countrywide. A guy by the name of James Heck, who’s been in the news a little bit, was the CEO of that venture, and Louie was his CFO. So now Louie has stepped up into the CEO role and Louie is a brilliant finance guy. He used to run my margins. We’re gonna talk about revenues later. Louie is brilliant at that, right? And he’s a great operator, has a great team. They have unbelievable capture, they have unbelievable profitability. They support the builder in many ways. And it’s just worked because here’s the funny thing. People who work their ass off and know what they’re doing, generally are successful. There’s a shocking revelation for your podcast, right? So wait a minute. I gotta work hard, I gotta pay attention. I gotta be granular in my analysis. Louie happens to be a CPA by education or by background. So he is a financial guy that gets math and look, I think most of the answers in our business are in the math. They’re in the math.
[David] It’s a relationship business. But success is found in the math.
[Brian] In the math, right? And and a lot of people, I’m shocked as a consultant. Next month is my fifth year running my consultancy. So I’m coming up on my fifth year anniversary.
[David] Congratulations.
[Brian] And look, the tagline is for our company is granular analysis, strategic direction. And I’m a believer in granular, unbelievably granular. Detailed analysis.
[David] Love that. We’ve gotta do a whole podcast just on that one,
[Brian] Right? And I think, look, I walk into companies today, big, medium, and small, and I am shocked at the lack of granular analysis, that appears to me that in some cases the senior team is intentionally lying to themselves.
[David] I know that is if they lie to themselves, that start getting to the points, the five focus. So I’m gonna get into the five points.
[Brian] That’s my view. Look, I think it’s a trend. I think it’s a trend that’s gonna be with us. I think you’re gonna see other affiliate deals. I think the JV strategies that are going on in the industry are absolutely part of the future. I’m just not willing to say, okay, game over. It’s over now. Just see everything the Rocket.
[David] I agree. Yeah. It’s rocket. As good as rocket is. The market’s even so much bigger than them.
[Brian] And by the way, I’m anxious to see how it comes out because I think it’s gonna be absolutely a model of the future.
[David] I think so too. And I don’t think they spent that much money to buy entity intending to fail. I don’t think they’re being cavalier about it.
[Brian] Think about it. You’re getting 50 million leads a month divided by 1,000,000,007 on a per lead basis. It’s probably cheap.
[David] It’s a cheap deal. Exactly. I was gonna jokingly say, you know him that what’s a gentleman that used to work for you? I’m gonna say Brian, who didn’t work for you in this Industry. So we can joke on that.
[Brian] I have that with clients when I’m doing executive search. I have that with clients all the time. Do you ever bring anybody who didn’t use to work for you? And that’s a short list, so that’s a short list.
[David] I’m honored to have you here and I wanna get to these five areas. The five focuses for 25, the first one you talked about and when we were together in Dallas at the HousingWire Economic Summit, plugged the HousingWire, they did a great job on that. I thought they nailed it. It was a really good content. But you said for those of you in the mortgage business, in the mortgage sales business, do you know what your sale, who your salespeople are calling on, purchase leads more importantly, and then why are they calling on them? I dive into that point because I think that was a great start off.
[Brian] Yeah. So let me just give you a couple of pieces of data very quickly. And by the way, lemme just footnote this and say, the data I’m about to give you is for 2023, but I’ll guarantee you the 2024 data is either the same or more concentrated. The top 1 ½% of realtors and real estate teams in 23 accounted for 68% of all sales. The top 2%, 74%, the top 10%, 89%.
[David] So why are you calling? Not anybody else.
[Brian] So, if your sales force is calling on the bottom 50%, let’s just start there. We’ll make it easy. Yeah. The bottom 50% of realtors in America, the only deals they have in my opinion, are either friends and family, right? I’m your uncle, so you’re giving me the deal kind of thing because you’re embarrassed to see me at Thanksgiving. If you don’t or kinda random acts of management, meaning, if you roam around, you’re bound to trip on a deal. But that’s not an annuitant repetitive business that you can build your business as an originator on, because that’s the blind squirrel found an occasional nut approach to getting a transaction. And by the way, this concentration to the top. Look, you look at Encompass, I think they have their challenges. Yep. But they got 20,000 agents. You look at place a company that I know well, they’re a tech enabled prop tech that supports top 1 ½% of real estate teams in the US with a tech enabled platform. Every one of their 4,000 agents that are part of their platform are in the top 1 ½%. So, if you’re calling on the bottom 50 and let’s just, I’m not throwing out some names. There’s a lot of services out there. I happen to know Jeff Walton at Ingenious really well, we worked together again, Jeff used to work for him in a previous life. Great guy. A great personal relationship. But there’s companies like Ingenious or Retr or others that are out there.
[David] Yeah, I love Retr.
[Brian] Where every day. Every day. You can know what real estate agents in your market are doing, volume, loan size, sale price size, where their deals are going, why their deals are going there without ever talking to the agent. Wouldn’t that be a better piece of intel? if you were going to battle, I had a mentor, my first mentor in the mortgage business in the early 80’s when I used to close a thousand loans a year. My early mentor told me, look, there’s two types of people in real estate that she should think about calling on. One are the people that are in real estate and the other are the people who actually sell real estate. And if you wanna be a success, call other people that actually sell real estate. That’s not just drink coffee and drive around and think about selling real estate and if you don’t know the difference, so if I was running a Salesforce today, and I’ve run 10,000 originators in Salesforce in the past 5,000 some big firms, right? I question the investment in middle management as much as I would have an army of financial analyst with one of those systems providing a profile of every one of my originators every month on where their business is coming from. What is that agent actually doing, and where’s the rest of that agent’s business going? Why is it going there? and create a profile to help my SalesForce. By the way, you should be calling on David Lykken. He’s selling 22 pieces of real estate a month. Okay? But he’s already got a relationship. So what? Go call on him. There’s business there and so my point being, I hear this from CEOs and heads of production all the time. As long as they’re doing a million a month, I don’t care. You should,
[David] It pains my heart to hear that, yes.
[Brian] In my opinion, the bottom 50 or 60% of agents, in my opinion, with the change in the commission rules the CCP thing coming out, which effectively today protects smaller agencies. You got a lot of change going on around you and if you’re impervious to change. I think that’s the definition of going outta business slowly and you don’t realize it and by the way, I think you’re being intellectually lazy. Whether it’s David Lykken or Brian Hale or somebody. If you’re not sure how to do this, call one of us.
[David] Call one of us. Yes, absolutely. What you’re really hitting on the point one is the business intelligence tools. We have business intelligence. I want to give a shout out to our three sponsors in this area, Retr being one of them. MMI,
[Brian] I didn’t even know Retr was a sponsor.
[David] So yeah, Retr was a great sponsor. Their one of our newer sponsors, they’re thrilled to have them here and also Jeff. Jeff Walton. Dear friend here, we’re involved in a mastermind together, and so Ingenious is wonderful. There many of, but the bottom line is, are you really using it? But the thing is people have these subscriptions, these business intelligent tools. Brian.
[Brian] You don’t use them,
[David] But they don’t use them, right?
[Brian] They have one seat That’s for the head of production. Who also doesn’t use it?
[David] Who doesn’t use it? I know. It’s just be, that’s just a whole another…
[Brian] I take $150,000 a year financial analyst and let him or her loose in that database and how them look around corners for me and tell me who in each market my people should be calling on, and let’s engage the salespeople. Why aren’t we, what do we need to do? Is it product? Is it marketing pieces. What is it? Let’s go there,
[David] Which goes into point number two. You talked on stage about closing leads you already have. That was, Joe Stump used to have, remember Joe Stump? You guys at Countrywide used them. Joe had, by referral only. He said, if you’re in the business for two years to have a reasonable amount of volume, you should never have to make another sales call because you should have so much referral business. Is that what you’re referring to here?
[Brian] That’s part of it. I would say if you were looking at the pie of leads. What you just described is a piece of a slice of that pie. What I’m actually talking about is, look I see this happening in companies all the time. Salesforces are banging on the company. Buy me more leads. Buy me more leads, right? Yes. The recruiting deal is we’ll give you leads, okay? First of all, if as a company you’re giving out leads free and you’re still paying a buck twenty five in commission, or buck forty or buck or whatever, I don’t get what you’re doing. It’s up to you. It’s your money. I got it. But I think it’s foolish. Because what I think you pay a commission for, I can teach a third grader to take an application. That’s not what we pay commissions for, in my opinion. You pay commissions to get deals, to get revenue you can’t otherwise get for yourself and so if you’ve already got the lead. But here’s the deal. I have a simple view and I actually, I gotta give others this credit for this saying, you wanna make more money faster in the mortgage business? close more of the leads you already have. Before you go looking for more leads.
[David] And then the word is one of the words you used there was convert. Convert more leads and so when you close more leads, convert it so the convert comes before the close. What are some tips on the converting that needs to happen?
[Brian] Number one, so I just had a couple of weeks ago I had Jeremy Forcier from Cross Country Mortgage up in Sonoma, California. Who has this down to a science. He does and it’s, look, as David, I run the Weekly Roadmap podcast every Friday at 9:00 AM Pacific, and we had Jeremy on there, and we keep all that in a community. So if you’re a subscriber, you can watch the same video of Jeremy 14 times in a row till you embed it and what Jeremy did in that video, 40 minutes. He showed you the bike, he showed you how to get on the bike. He showed you how to pedal the bike, and I tell you, you get on the bike and pedal that bike the way he describes it and use the phraseology he uses, you too can make another 600 grand in commissions. that’s the short version. Couple things that came down to it, number one, measuring your results. When I was on that podcast that day.
[David] That’s point number three. That’s point number three that you had on the stage.
[Brian] I know because it crosses. It’s actually point number one as well. When he was being interviewed by me, I asked him what his credit bureau poll to funding conversion rate. He glanced his eyes to the left to another screen and he told me to the decimal point.
[David] Wow. He studies it and he has it in front of his eyes all the time.
[Brian] He is accepted as a religion that he is the CEO of his origination business. Good. And that’s a critical piece in my view. You, a lot of people wanna rely my company doesn’t do this. My company doesn’t do my, you own your business as an originator. Yep. And so he measures everything. He measures the conversion rate of his team. He measures the conversion rate of, he has 17 originators working for him in his branch. He measures his own conversion rate and measures and shows the rest of his team. He measures theirs against his. He can tell you lead to Credit Bureau. Credit bureau to app to closing, repeat customer, so measurement, knowing what’s actually happening with your leads and holding yourself accountable or get an accountability partner that holds you accountable, that’s number one. Number two, his phraseology. Just a brilliant phrase that he has when he gets on the he, he meets with almost every customer personally, doesn’t have his team. He doesn’t, interject his team. He doesn’t send you a 1003 via link. He doesn’t do any of that bs. He gets you on a Zoom call like this and says, David, what’s your greatest fear in doing this transaction and buying your next home or in buying your first home? Depending on the client, right? Then shuts up and the customer just reveals everything. Everything. Yep. And if you’re a salesperson, if you don’t understand the science of selling, that what you’re looking for are targets in the course of the conversation and mirroring back to the client or to the customer what you just heard and giving them a solution, a solve for their fears. Especially first time home buyers. I remember when I bought my first house, and that’s how I got in the mortgage business. That’s how I got in. The guy that took my app ended up hiring me into the mortgage business. And so everybody’s fearful. I bought a lot of real estate in my life. You still don’t know until the deal’s approved. There’s still some level of anxiety or in my case, I was always moving my family to a different city. So there’s Yeah. You would all the places. Tons. Yeah. Tons of anxiety. In the whole family so I think. This concept of converting, having a process, he has a defined measurement. He has a defined set of scripts. He has a defined follow-up program for the leads. He doesn’t convert and he has a very regimented, what are we gonna do in two weeks? What are we gonna do in a month? What are we gonna do two months from now? and they stay in follow-up for forever. Number of leads. He gets out of that database that come back and create a mortgage app for him. It’s unbelievable. So, if you are gonna run a business. You gotta know who you’re chasing. You gotta know the leads that are coming in. How did you do? How are you measuring? Is your lead conversion dropping or improving? And then when he finds these phrases that work, he repeats it over. He doesn’t make it up. Each time I had Sean Ion on a month ago, you hear the exact same thing from him. You hear it from Shayla Gifford, you hear from all these folks. It’s the same. There’s a guy by the name of Joe Massey who works Castle Denver. Massey. Yeah. Killer guy. He came on my podcast. Same thing. Here’s the bike, here’s how you get on, here’s how you pedal the bike. You do that. There’s $600,000 worth of commissions in Joe Massey’s ideas.
[David] I. Yep. You’re just hitting on the point so much and I wanna get onto another point, but I did, I can’t underscore this. If you’ll send me a link of Jeremy’s interview that you did, we’ll put it in the show notes so people can go click on it, make it real easy. Listeners, so if you’re listening to this, go to our website, Lykken on Lending, and go to this interview, and you’ll see a link to that interview.
[Brian] By the way. I’m back to this magic secret sauce in the mortgage business. Gets up early, works out, works his ass off. Does the same thing over and over again. Wash, rinse, repeat.
[David] What’s so fun about you and I just, before we jumped out, we both were working out this morning before we got onto this interview. That’s what we do.
[Brian] Old guys have to.
[David] One of the things you talked about was point number four was most people are focused adequately or extensively on expense control during this downturn, but they have not focused sufficiently on revenue and margin management. Boy, when I heard you say that, I wanted to stand up a scream. Amen, brother.
[Bruce] You should have. So let me give you just a little, couple of more data points. Yeah. There’s 374 MSAs in the United States, right? The US Government Metropolitan Statistical Areas, right? Yep. If you start breaking them down by by census tracks or you start combining there’s four MSAs in the greater New York City area, right? Because of the defense population. Same thing with LA right? So there’s about 650 markets, distinct markets in the United States. Each one of those markets have a distinct competitor set. Each one of those markets has distinct demographics. Loan size, sales price size, the employment base, is it high tech with a lot of stock options kind of stuff, or is it manufacturing, machine tool industry in Milwaukee, Wisconsin, where I used to live and so, recognizing that each of those 650 markets are unique. Now, is G rate or Rate everywhere? Probably Wells Fargo, everywhere. Yep. Probably, there’s some letters that Rocket everywhere. Got it. Okay. But you go to Tulsa, Oklahoma, and the Bank of Oklahoma is pretty damn tough as a competitor. You go up to Oregon and the Nike Credit Union. Unbelievably tough competitor. Very tough, right in the space, right? They’re very low price. All good. So if you price one price nationwide, I will guarantee you as I’m sitting here, you are too high, too fat in about 48% of the markets, you’re too low, meaning you’re leaving revenue on the table and another 48% and in 2% you’re dead on. By sheer luck, sheer luck. And by the way.
[David] It’s so true. It’s closing your eyes and throwing the dart.
[Bruce] And so part of this comes down to competitive analysis and data intelligence. Intelligence backed data. Intelligence. One to know who your key top 10 competitors are in that market and how they’re pricing daily relative to you. People can disagree with me on this. I always took a position that I wanted to be the bottom of the top third. In terms of best price, right? But I also went over and looked at my fees and if my fees, my cash fees were $300 per loan lower than the mean in that market. I believed I could raise my cash fees and particularly if I look, as in some past lives, I’ve had some pretty dominant market share. You have huge dominant in certain markets, right? So if you have dominant market share, I believe you can price at 110% or 120% of the mean and still get your share and so who hates that? any originator listening to this podcast is gonna go, kill Brian Hale. That’s a bad idea, right? so my deal with originators has always been, look, David, you’re an originator working for me. I wanna raise my cash fees a dollar. Do you think that’s gonna screw you up? No. $2, no. Let me know when it hurts and so part of it is take the move, take the revenue, knowing you’re gonna discount some of it. So that maybe somebody waives a half a fee or the whole fee on some loan or whatever the case may be. But you still end up with 80% of the move. Yes. That drops right to the bottom line.
[David] Drops right into the bottom. Exactly right.
[Bruce] Same thing with your margins on your loans. So, it’s not just geographic. Loan size, fico, tranche product type. There was a day at Stearns when I first went to Stearns Lending in wholesale. We were two times the density of the GSEs on investor loans. I didn’t want to be two times the density of investor loans. We were like 20. Fannie was running like 11 nationally and 13% in the West coast. So, I added a hundred basis points of revenue. My sales force, wanted to kill me fire by my car. Whatever. We quickly brought it down to right in the slot because I tell you what, you want to get in trouble with the GSEs be an outlier on that kind of stuff. I woke up one day and we were the price king of six 20 FICO VA refis. I don’t think I want to be the price king of six 20 FICO VA refis, particularly now and so you have to know what’s going on at a granular level. You have to look at it daily. So Louie, who used to be my margin guy when I was there, then runs the KB JV now. He lives in Dallas. I live West Coast. Five o’clock in the morning, we’re on the phone talking about he’d recommend 40 different moves on a day and we were publishing hundreds of thousands of price points. Why we had retail, wholesale, consumer, direct correspondent, and joint venture. Every one of those business models is different. Every one of those correspondent lenders are different. Every broker is different. Every retail branch is living in a different geography, right? So how can you possibly think that one size fits all? Yeah. And there’s a very specific protocol and mechanic, I’m sure you could, I could help any company set that up. Look I have to say, and I’m not pitching, I don’t have a deal with these guys. Polly, as an example, has a piece of technology that’ll help a company do that in a heartbeat, right? The process and become much more granular. I can almost, and I’m not gonna say guarantee on a public podcast, I could almost guarantee anybody, I can certainly raise your revenue by 10 basis points. robably closer to 25 without changing your volume and to think about it, David, the average mortgage company in the fourth quarter, lost money, four basis points, right? Yep. In the third quarter, they made 18, right? According to the MBA data. So if you improve your bottom line by 10 basis points, that’s an 80% improvement in your profitability, right? and if you’re doing 7 billion or 1 billion or 20 billion, that’s like real money. And so people go that’s really hard and my, is it fair? Here’s the other piece, and I wanna put this admonition out. You also simultaneously have to have a very diligent, fair lending analysis process.
[David] That’s the biggest deal. That’s ’cause where many people get afraid.
[Brian] Disparate pricing.
[David] Yeah, disparate pricing, that’s the number one thing people…
[Bruce] Remember, disparate pricing is measured on similarly situated borrowers.
[David] Right? which goes back into details. Are you able to come up with an argument, put forth an argument on the details?
[Bruce] Are you able to monitor your own pricing so you can identify people who are pricing discriminately? and stop them. Fire them. Cut ’em off If they’re a broker. If you find, and I’ve had ’em, I’ve had ’em in my businesses before where we did our own internal analysis or we brought in Charles River to take a look, on a quarterly basis and we identified people who were clearly pricing based on race. Okay? So you get one strike. We’ll counsel you, we’ll change your comp. We’ll fix this. And by the way, if you keep doing it, bang. And I had a wall of scalps. So if a regulator came in and I went through three full blown CFPB audits, like 14 weeks with 15 auditors, right In the in, we never got it. We were fine because I could show whenever we identified a problem, we fixed it and some of that we fixed it by cutting off the broker or cutting off.
[David] Which goes to the scalps on the wall.
[Bruce] Exactly.
[David] There’s nothing more convincing. Yeah.
[Bruce] What we effectively were saying is we’ll forego revenue to be right, because I do believe that people have the right to be treated fairly. And oh, by the way, it’s a funny little thing. It’s the federal law.
[David] You’re hitting on so many good points. We can spend a whole podcast in each one of these. I want to get to the fifth one, which is, you’re talking about 2025 will continue to be a very difficult year. There’s a lot of optimism that we’re gonna see interest rates falling. We had some recent trends I’m looking at right now. We saw that reversal has happened here this week.
[Bruce] Yeah. We’re back up at 435 this morning. Yeah, we’re back up. So I’m looking at this, I’m going, okay, the, so your perspective and why. It’s gonna be, continue to be a difficult year this year.
[Brian] Yeah. One, because I don’t believe hardly any of the forecast. I think some of the forecasts that I see, particularly coming outta the GSEs, I think are politically motivated. You can’t be owned by the government and not be tinged by whatever the administration, whichever administration is saying. And it’s all blue sky. It’s gonna be great. I heard somewhere that, we thought we’d get back to, over 2 trillion in originations, over 5 million in home sales. Bullshit. Forgive me. For your audience. No, that’s true. I think we’re gonna struggle to get back to 4 million in sales, right? In a more normalized year. Is five and a half or 5.7 million in sales? Just show me what the underlying argument is. Yes, listings are up, but mortgage rates are not down sufficient. I believe, for the market to begin to normalize. We need a five handle on the front end of a 30 year fixed rate mortgage. Whether it’s five and three quarters or five and seven eights or five and a half, we need to five. We’ll move. We’ll actually we need a five to really push buyers off the market. Now that said, I think buyers are beginning to normalize to current interest rates. You see it already, right? The home builders, if you just look at the home builders, they’re all offering 499 five and a quarter. 599 kind of forward commitment money and there’s they sell everything they put in the air. They could build a lean to with a five gallon pail for a bathroom, and they could sell it, right? And so you look at that and what you know is the demand is there. Millennials, I have two millennial sons. They’re getting married. They’re starting a family, they all delayed that generation delayed getting married. They delayed having kids, right? A lot of fun. Let’s have some experiences. Do all I’m all in. They delayed getting married. But once they get married and have a family, they’re the exact same as the boomers like us. I want a nice house in a good neighborhood with a good school. And by the way, there’s a tsunami of millennials who are gonna do the exact same thing. So the future is unbelievably bright. I just think 25 will look a lot like 23 with one caveat and that’s some existential event, right? A significant recession. Which I believe the admin, and I’m not taking a political view here. I think the administration is trying to push us in that direction because I think the administration knows they cannot bend Chair Powell. They’re not gonna make him do anything, but if it goes into a recession, he’s gonna have to react. So it’s a ricochet shot to make the action happen, right? Secondly, I think there’s a sense that if you can lower oil prices, you bring inflation down good for rates. I believe that to be true, and I think the administration, if you just look at West Texas intermediate crude trading at $66 a barrel or whatever, they’ve got the Saudis to pump more, and Opec and if you bring Russian oil back on the market. If you solve the Ukraine thing, I think all of those things can be net positive for rates in the second half. But you know this David, because you’ve been doing this a long time, loan apps that you take in the third quarter or the beginning of the fourth quarter, the cash doesn’t actually show up on your P&L until the first quarter of 26. You gotta close process it. Close it. Fix it, ship it, get it bought, right? There’s a, there’s an after for Q1 action, right? So I think my own 2 cents is that I think the second half likely we’ll see lower rates, but that’s not terribly different than 24, right? Remember from like July through until the Fed cut the rates, the first time we saw declining rates in anticipation of the Fed cut, and then we lost a hundred basis points because the market began to think, wait a minute, the Fed overreacted and the Fed can control the short end, but they can’t do anything about the long end. The only thing you can do there is make unemployment worse and bring inflation down. The Fed will act and you’ll see bond prices settle if inflation, big number on Friday. This coming Friday is big number, right? The personal consumption expenditure index. That’s the Fed’s favorite number. Will it be interesting to see what happens there? The worst thing that can happen is stagflation. You and I lived through that back in the seventies, where you have a recession and inflation simultaneously, right? That’s a nightmare. I hope that doesn’t happen, but I think there’s a chance, and I also think there’s a 20% to 30% chance that rates go up in the second half. For one, one simple reason. You have unprecedented deficits that have to be funded and so whenever the Fed pushes treasury bonds into the market, it crowds out MBS at some level, right in the process. So there’s a [00:36:00] consumption issue of treasury bonds and mortgage backed securities. If you have a world, any kind of war, if you have any kind of, we saw it with the pandemic. If you had some existential world event, you could see rates drop in a hurry. But that we saw it in 20 and 21. It’s a short term phenomenon. That eventually snaps back and so I think we could see, look, there’s one last piece, and I know you, you tracked this as well. You know that the spread between 10 year treasuries and 30 or fixed mortgage rates historically has been 150 to 175 basis points, right? Up and down. But pretty consistent. It got up north of 300 just a couple months ago. I know it’s now down in the mid twos and that I believe is a function of two things. Bond buyers are not sure inflation’s dead yet. So they’re hedging. They wanna get paid now. Secondly, they believe that these mortgage backs if you’re buying a 7% mortgage today and a security and rates drop into the mid fives, what’s gonna happen to that loan? It’s re refund. That’s refin. Yeah. So you shorten up the cash flow calculation. So now they want to get paid more on the front end with a bigger yield now as a hedge to that. So we have to get to normalized rates before that spread collapses back to normal. If the spread was normal today, you’d be about 6%, 30 or fixed rate mortgages today without the tenure improving a lick, right? and so I think, we have to take uncertainty and look, there’s a lot of uncertainty. And again, I’m not being political here. Nobody knows what April 2 is gonna hold with the tariffs. We saw different news yesterday compared to a week ago. Yep. So whether this is strategy or not, the short version is nobody knows the outcome. Mass deportation could raise labor cost across the country, could also spike the cost of food. I can tell you that 40% of what you guys eat in you live in Texas, 40% of what you eat doesn’t come from Texas. It comes from the Central Valley of California or Mexico. You start cutting that off or tariffing it, your cost of food’s going up. I don’t care who you are. And oh, by the way, all you guys in Texas can drive out here and pick your own strawberries. There’s not gonna be anybody left to do it.
[David] There’s no one left to do it. Exactly.
[Brian] Either been deported or they’re fearful to go to work, right? Because somebody in their family may not be legal and so there’s a lot of uncertainty. The Fed has immense funding to get done, so there’s a chance rates go up. We saw it, we were 421, right? 10 days ago. We’re 435 today on the tenure. So it’s not gonna be flat. I don’t believe 5 million home sales happen. I don’t believe there’s a big refi. Boom. And if there is, it’s a boomlet like you and I have lived through many times in our life that last five, six months, and then dissipates. It’s not gonna be 20 and 21, and those who are hoping for it are gonna be disappointed. I do think 26 and the next five or 10 years in the mortgage and real estate business. Once we get all this change sorted out. I think the future’s unbelievably bright. I’m bullish on the business, and oh, by the way, there’s a hundred thousand fewer originators competing with you. I know that have gone away.
[David] The macro version of this story is very positive, very bullish. Yes, we have 2025. I was really encouraged by you saying, I’m sharing that because I’m saying I was encouraged, never encouraged by difficulty, but difficulty makes us stronger and difficulty puts us in a position we’re not taking for granted. Making stupid moves on hypothetical optimism and we gotta stick with the facts. This goes back to some of your points, Brian. You bring out excellent points,
[Brian] data, you did not say data analysis, understanding whether you’re the CEO of a mortgage company, a head of production, or a rep. Manage your business as if you’re the CEO. Know what your data, almost all of the answers in the mortgage business are in the math. And if you don’t know your math, you are shooting in the dark, you’re wandering in the desert, you’re a blind squirrel looking for an occasional nut and you’re lucky and when people’s businesses, I had a guy one time, a long time ago, David, and this is boy, back in the 80’s when I first started running Texas as part of my oversight, I had a guy drive me around Houston and show me all the places that mortgage companies and savings and loans used to be and some of those guys think of just go back to 1990, oh, go back to 2000 and realize all the top 10 names that no longer exist.
[David] I remember I ran a mortgage company in San Antonio back in 86, 87. And you could hear the mailman coming because everyone mailing their keys into their condos that they bought in Midland or the homes they bought in the oil patches, right? Because they were all they’re foreclosed. They said, don’t bother. Just, we could literally hear the keys.
[Brian] Look if my 43 years of being in the mortgage business, by the way, I have a simple view on that. I told an interviewer the other day this quick story, my wife has often said to me, why don’t you do something else? because this mortgage business a little crazy. And I was like, what else? That’s all I know. I’m a social criminologist by education, so it’s not like I’m gonna go out. I was born and raised to be a prison guard in the state of New York and that doesn’t provide me…
[David] same managing production you maybe have been.
[Brian] Exactly. I always tell people, that doesn’t sound like the right education for the mortgage business. Go you may not fully understand the mortgage business. I might have exactly the right education, but that said. Look, I believe I, I don’t know if I believe in reincarnation or not, but here’s what I think happened in my life. In a previous life, I must have wiped out one or two civilizations and the gods came together and said, what are the penance for wiping out two civilizations? I know. Let’s sentence him to be a mortgage banker for 40 plus years. That’s a penance, right? That’s a penance. And so I have, by the way, a little humor on the side. The mortgage business has been remarkably good to Brian Hale and his family for 40 plus years. And I’m a bullish.
[David] It’s because you’ve done these things. You’ve operated by principles. Just solid business principles, Brian. Yeah, and I applaud you for it, and I’m just so grateful to have you on here. We could talk couple old guys like us, get on here, talk about the mortgage business. We could go literally all day. We have the story.
[Brian] By the way, I think there’s a bunch of young folks who listen to your podcast. I think yes. Who go, why the hell should I listen to a couple of gray hairs? Talk about the old days. This isn’t the old days. No, there are these basic principles that were true. Then the tools are different. I think AI is gonna have a huge impact on our business. I think a lot of things. Here’s my one piece I’ll leave you with this last metaphor. I use it all the time. I use it in my podcast every Friday. I’m a big fan of the metaphor about Tyrannosaurus Rex. If you think about T-Rex for 300 million years. T-Rex ruled the world. They were the top of the food chain, right? They ate what they wanted to eat. They made little T-Rexes. Life was pretty good. Somebody from corporate headquarters showed up. They ate them. It was a good deal, right? Have you seen one lately? No. And the answer of course is no. ’cause they went extinct and most paleontologists will tell you some existential event happened in the world. They think of meteor created like a nuclear winner, which killed off all the animals that T-Rex used to eat because there was no leafy matter for those animals to eat. Those were the leaf eaters, right? And T-Rex ate the leaf eaters. So T-Rex had one problem. One besides the fact short arms had a brain the size of a walnut and really wasn’t very adaptable to change. Does that sound familiar?
[David] Oh boy. Yes. That’s so true.
[Brian] So if you are not adaptable to change, if you don’t recognize that change is everywhere, just look at the last two years. Look at the last four months. CFPB’s kind of gone away. Pulte just wiped out the entire senior team at Freddy wiped out the boards of directors, killed a couple of programs, right? If you don’t think change is around you, and secondly that it’s going to accelerate going forward. You’re kidding yourself. And so my question always is when I finish a speech to a bunch of salespeople is, are you adapting to change? are you embracing the change around you or are you stuck with this? I’m just gonna keep doing what I’ve been doing for the last 20 years and hope it works out. And if you’re not, I think you’re T-Rex in search of a tar pit.
[David] Yep, that’s exactly right. A T-Rex in search for tar pit.
[Brian] Don’t be that guy.
[David] And you don’t have to that guy. The reality is you don’t have to be. It is coming. Change is coming. We go, man, I gotta have you back, Brian. This is such a fun.
[Brian] Be glad to do it anytime, David, and I’m gonna extend the invite to you the other way as well.
[David] Oh, good. I’m looking forward to that. I always enjoy sitting around, I love talking with intelligent people that have a good analysis, that challenge the heck and boldly speak out.
[Brian] Look I would tell you, if you ask my wife Pamela, she’s a therapist here in Orange, California, right? So we only have one rule, no therapy at home. But if you asked her she would tell you that all of my filters broke about five, six years ago, and I have an endeavor to fix them. The reason…
[David] I think that it’s interesting you’ve gotten into consulting five or six years ago, so that’s…
[Brian] It’s the same business. But what I always tell people ask me all the time, why are you still working? First of all, I do what I want to do. I fly fish and my wife and I are going to to Tuscany to celebrate our 40th wedding anniversary. And we’re going to Africa later in the year, If I have a you know this, if you have a cell phone and a laptop or an iPad, you’re in business anywhere in the world. And so that’s part of it. But really what I enjoy more than anything is working on really complicated things. Why I like to do M&A. I never set up my practice to do M&A by the way. I fell into it. I closed four deals in the fourth quarter last year. I’m working on a couple more right now and by the way, if you’re thinking about having a strategic conversation about your company, call me, right? Yeah. With that said, I like working on complicated things with people I like. And that’s my filter for client acquisition and I have a little clause in my consulting agreement that I refer to as the asshole clause, which is that if, and it’s mutual, by the way. Yeah. But if at any point, you and I, if we’re clients together, we believe the other guy is an ass, we’re done. Because life,
[David] I put that, I put all my client, all my contracts are month to month. Yeah, for that very reason.
[Brian] I don’t do that, but I would just say this, that I’ve only ever taken out one client. And two, I just want the other thing I always ask new clients is when we’re working together for these next several months would you like me to tell you the truth or would you prefer I lie to you? and people go, of course, we want the truth. You sure? Sure. Are you sure? Can you send me an email to that effect? Would you please? Yeah. So that, four months from now when I tell you your sister-in-law should be terminated. Because they can’t handle that role anymore, or your brother-in-law, or your first cousin, or your best friend from high school or, whatever the hell it is. Look, and you can tell me to go to hell. I’m just the outside third party guy, right? So feel free to deny my advice to you at the same time, I’m gonna tell you as I see it, and it’s how I ended up in the executive placement side of my practice because in about 80% of the situations, the problem I’m brought in for is diagnosable, resolvable, a plan can be built, but oftentimes the person running that particular function or unit or division or whatever is in fact the problem, not because they’re a bad person. Generally, they’re good people, but the function may have outgrown them. Maybe now they’re two chair or a three chair, but they’re no longer a one chair, and you’re not gonna fix your problem until you fix the one chair. You talked about right at the beginning you talked about Rocket. You have to execute. If you can’t execute, everything else. There’s Todd Duncan…
[David] One question on that. I heard one person say they have a rule that I move you up or I move you out. Is it possible you talk 1, 2, 3 chairs? Do you see it successful where people can step down to a third chair?
[Brian] I’ve seen it work, but seldom. Here’s how it works. I can tell you because I, look, I did this at Stearns. I brought in a lot of outside talent. There was this kind of a derisive term that you became a FOB friend of Brian. Here’s the funny part, I don’t have any friends. I’m not a particularly social guy. What I brought in were really competent people who could deliver who had been to the top of the mountain several times, they knew the path and I’m not looking for a guide that’s got a shiny new compass and a brand new map. I’m looking for somebody who’s, the map is worn out. The compass is demoed up from having made the trek several times and the way it works is that the, you have to be very thoughtful on this selection because if the person you bring in over the top. Demonstrates competency, knowledge, sensitivity to the person who got stepped down does treats them like a human, doesn’t, come in with some arrogant, asshole type attitude. It’ll work, not always, but it has a far better chance of working if the person you taught them with is incompetent or looks like some kind of special friendship deal. Then you piss off the whole world and nothing works. But you know this again, the shocking revelation on the Lykken show this morning. Competent leadership improves your business, and when you work your ass off, write that down. Because there’s a revelation that you’ve never heard before, right? or never recognized it.
[David] Brian, thanks so much for being here. What a treat. Can’t wait to have you back.
[Brian] David, I can’t thank you enough for the invitation. I look forward to talking to you again soon and if I can help anytime, don’t hesitate to ask.
[David] I’ll be asking. Thank you.
[Brian] Thank you.
Jeremy Forcier interview with Brian Hale
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Brian Hale is a seasoned mortgage industry veteran with 40 years of experience in virtually all areas of the mortgage business.
Over the course of his long tenured career, he has grown several organizations into top 5 originators and, in some cases, the industry’s largest originators by channel.
He brings his wealth of knowledge and leadership talent to his current role as Founder and CEO of Mortgage Advisory Partners (MAP), a consulting services company that specializes in helping mortgage banking clients successfully navigate the challenges of operating and growing their businesses.
Over the last 12 months, Brian and his partners have engaged with a top 5 publicly traded lender, large and mid-sized independent mortgage bankers, and smaller independents in joint venture channel assessment and development, talent assessment, C-suite mentoring, strategic planning, M&A (buyside), monetization strategies, consumer direct channel optimization, compensation design, regulatory compliance, offshoring, managerial reporting development, and strategic plan development. MAP has also placed six senior executives in engaged companies to fill key roles, leveraging the firm’s broad contacts in the industry.
During his long tenure in the industry, Brian has held numerous C-Suite level positions for some of the most respected companies in the industry including ClosingMark Financial Group – the financing arm of William Lyon Homes, Stearns Lending, MetLife Home Loans, Countrywide, Wells Fargo, and Fleet Mortgage. This combined broad expertise enables Brian and his partners to provide clients with granular analyses and implementable solutions that optimize organizational performance and profits. He is regularly called upon by industry trade associations and media outlets to share his perspectives and serve as an author, interviewee, panelist, and speaker.