Podcast | Real Estate Investing
Dave Savage, Founder of Mortgage Coach, has over twenty-seven years of experience as a mortgage executive, business leader, and mobile technology pioneer. As the founder of SmartReply, Dave established a leading presence in mobile marketing. By launching Mortgage Coach, Dave has helped tens of thousands of loan officers and millions of homeowners make confident, informed mortgage decisions. Dave is passionate about leveraging mobile technology to reinvent the home buying experience. Dave is a recognized leader in the mortgage industry for his contributions to improve the professionalism and quality of advice that originators provide homeowners. As a mortgage industry leader, Dave has been a speaker at many major industry events, and before Mortgage Coach, Dave was one of the nation’s top loan originators and President of a national mortgage company.
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02:12 What is the Mortgage Coach and what technology does the company provide to mortgage brokers?
06:23 How free coaching has turned into a value-add service for the Mortgage Office
10:03 What is the current state of the mortgage market?
13:24 What percentage of the market is purchase money loans vs. refinances?
19:53 iBuyers like Opendoor and Zillow have made it clear mortgages are one of the services they will offer. Is the mortgage industry concerned?
21:53 Why is going beyond the transaction is so critical?
23:56 Who are the major players in the lending industry?
28:26 Going beyond the transaction and focusing on mortgage under management.
30:28 Hyperlocal to hyper-personalization and why it drives referral-based success.
36:17 Amazon and Google are getting into lending?!
38:34 Which category within the mortgage industry offers the most opportunities?
40:46 Sean’s prediction that we will see mortgage rates that start with a 1%. But when?
42:27 Will the FHA risk premium return and does it matter?
51:56 How being more data-driven can change everything.
Aaron Norris 00:02
Welcome back to the Data Driven Real Estate Podcast. This is Episode 16. And this week, we've got Dave Savage. He is founder of The Mortgage Coach, and he has over 27 years of experience as a mortgage mortgage executive, business leader and mobile technology pioneer. This week we talk about trends and disruption in the mortgage space. The prediction about mortgages starting with a 1%, which you definitely won't want to miss, moving beyond the transaction, and really working on building relationships, lifelong clients, and how that's possible in the mortgage space, which is increasingly important, and how mortgage pros are leveraging technology in their business. All on this week's show, you won't want to miss it. Hey, welcome to the Data Driven Real Estate Podcast, the podcast for real estate professionals dedicated to driving business using data. I'm Aaron Norris with co-host Sean O'Toole with PropertyRadar. And today, we have Dave Savage, founder of Mortgage Coach. Hey, Dave, how's it going?
Dave Savage 00:52
It's going good. Good to be here.
Aaron Norris 00:54
So tell us about your foray into the mortgage industry.
Dave Savage 00:58
God, I got in the mortgage business over 30 years ago and was a loan officer for many years. And, you know, just figured out a better way to deliver mortgage options to family, you know, turned borrower education into a competitive advantage and founded Mortgage Coach over 20 years ago. Back in 2000, I decided to be a full-time technology entrepreneur. And today I am the founder and CEO of Mortgage Coach that helps loan officers turn borrow education into a competitive advantage.
Sean O'Toole 01:30
And we've known each other for a while Dave, and you know, you're multiple entrepreneur as well. You've had mobile communications companies and other stuff. Other stuff, too. And you've always struck me as a data-driven guy. So thanks for joining us.
Dave Savage 01:47
No doubt Sean. So Sean, were entrepreneur buddies. And you and I were close during the Smart Reply days. That was a company I sold. I don't know, it's been over six years. Now. It's been a long time. And we've both seen each other go through building companies, selling companies, reinventing companies. So it's, it's good to be here with you, brother.
Sean O'Toole 02:10
Thanks for coming.
Aaron Norris 02:12
Tell us a little bit more about Mortgage Coach, what, what do you do? Who are your clients?
Dave Savage 02:18
So I am super proud to say that 34% of loan officers that do over 100 loans a year use Mortgage Coach, so we've got a lot of very high producing loan officers that use our product, we got a lot of brand new loan officers to use our product, we've got seven of the largest non bank lenders, they have our product built into their technology platform in their culture. So you know, we've got a got a lot of top producers using our product. But I think what I'm proud about is anytime a local referral-based mortgage professional is servicing a family, they're just delivering a higher quality of service value. When most people get into mortgage debt, the data that they get is, here's your rate, here's your payment. And here's your cash to close. And I call that the transactional triangle. Those are the three pieces of data that they get when they get into mortgage debt. And loan officers compete on that I've got lower rates, I've got lower cost, I've got no points, I've got no cost. And at the end of day, they're just selling money. And it's become a commodity and it Mortgage Coach, we believe that when someone gets into debt, we need a few more data points. Like I believe that when someone gets into debt, they need options. So don't just look at one mortgage program; look at multiple mortgage programs. So that's the data point. And then I believe in our whole business models built around, you need to look at those costs those options over time, like what's the total cost over time, if you're paying points, and you have this rate, and you're not paying points, if you have this rate, and you think you're going to be in the house for three years or seven years, what's the total cost over three to seven years. And so you're always you're just looking at things deeper, and over time. And then one last data point that's a foundation to the Mortgage Coach way of doing things is that when let's say you're refinancing your home, you should compare your current loan versus the refi. Over the time that you're likely to have it. And the time that you want to retire or the time that you ought to be debt free, then you should always look at strategies to build wealth with real estate. So what if you took those monthly savings you're getting in the refi? And you paid your mortgage? How much interest could you save in how many years faster? Could you pay it off? Or what if you took that that savings and you invest it with your financial planner? Based off of your return on investment? What would you look at so so our model is just taking a few more data points beyond the typical transaction experience? Transactional triangle rate payment cash to close, and then and then making that easy so like a loan officer can within a matter of a couple minutes, not 10 minutes, like two to three minutes. Build like a beautiful presentation, give it to a family. And then that family who has you know, they're not financial planners, they don't have any experience, they can consume that content, you know. So that's, that's what we do. We make it easy to deliver help families make confident decisions and with a little more data.
Sean O'Toole 05:19
That's your core project. It's like an advice engine, like maybe...
Dave Savage 05:23
Oh, by the way, did you know that we call it the advice engine or did you just make that up?
Sean O'Toole 05:28
I, you know, it made sense. It would be..
Dave Savage 05:31
We call it... the borrower experience we call the Total Cost Analysis, although a lot of lenders will come up with their own names for it. And then what creates the total cost analysis, we call the Advice Engine.
Sean O'Toole 05:45
Advice engine. Great. So that's the is that the core product? Are there other products? Do? I mean, do you guys you still do coaching as well, you are very prolific in terms of the content you produce and stuff for your for your folks?
Dave Savage 05:59
Yeah, no doubt. Well, we have another app called Rate Watch. And rate watch monitors, mortgage-backed securities, puts context around it, it's an app, you go to the App Store, download it. To use it, you need to be a Mortgage Coach. Remember, we do have some partnerships where we make that available to everybody that uses OptimalBlue, for instance, if you have OptimalBlue in your loan officer, you could use Rate Watch app. In terms of coaching, I've, I think calling it a value-add is understating what it is. But you know, I learned back in the meltdown, you know, the 2007-2008 meltdown, which you and I both experienced firsthand. You kind of rode that wave. I mean, it was you built quite a model around that. So Sean, you took it and turned it into a positive. I, I lost a lot of my customers through that. And I found out who used our product. And so I mean, I was always a passionate educator, I mean, I named the company Mortgage Coach, because I'm turning loan officers into Mortgage Coaches, I'm turning them into Mortgage Coach. So there's always been a training element behind that. But coming out of that meltdown, and finding out who uses our product, who doesn't use our product, I started doing a coaching call every Tuesday at nine o'clock. And my vision on that was there's not a lot of sales meetings taking place in the industry, there's not a lot of leadership in training taking place. And I'm going to put on the best sales meeting. And the best training experienced every Tuesday at nine o'clock. So I started creating content. Back in the day, we weren't using Zoom, we were using GoToMeeting, GoToMeeting didn't evolve very much. And Zoom did so we switched to Zoom. But...with that?
Sean O'Toole 07:42
It's just like us, did the same, same thing.
Dave Savage 07:45
Yeah, you know, so we're on Zoom, you know, you're streaming this podcast, and other content.
Sean O'Toole 07:51
Those are free, those are open?
Dave Savage 07:54
They're free, they're on our YouTube channel, and I am super proud of our YouTube channel. Today, we've got over 11,000 subscribers. We get thousands of hundreds of thousands, actually over a million minutes, several million minutes a year of loan officers consuming content on that YouTube channel. So it's gone from Tuesday, every Tuesday at nine o'clock, which I still do today, you know, 10 or 12, later, 10 or 12 years later. As CEO of Mortgage Coach, I try to at least a couple times a week, do a one hour interview, or not one hour half-hour interview with loan officers. So I'm just staying close to the trenches. But I'm not like a coach, you know, I don't do fee coaching. I, you know, I turn you into a Mortgage Coach, our platform does. And then, we create content through our YouTube channel. And then we have a Facebook group too, that is free to the industry. If you're a mortgage or real estate professional, you can, you know, check out our YouTube channel and check out our Facebook group.
Sean O'Toole 08:54
Yeah, I mean, that was something we had in common because I think most people in this industry like tried to monetize the coaching, the training and that kind of thing. And I think both you and I have, you know, like to the foreclosure crisis, we trained thousands of people, you know, how to do short sales, how to buy foreclosures at auction, and how to buy free pre-foreclosures. But all that was free. And you took a very similar approach. I think that's, that's great.
Dave Savage 09:22
Yeah, I think we're gonna take the time to create that content, you want to just get as many eyeballs on it as much attention as much change. It's been it's served our business well. And so yeah, we're, we don't sell coaching, but we do. I mean, every single day of the week, if you're part of the Mortgage Coach, there's, there's live training, there's live content, and we're teaching and we're training and we in the sales process, when we have a company that we're trying to say hey, buy our technology for all your loan officers. You know, they look at it as Hey, I'm getting, I'm getting you know, like a VP of sales training in addition to a piece of technology. So it's just how we run our model.
Sean O'Toole 10:03
So what are your, what are your folks seeing out there in the market right now? But so what's going on for, you know, the independent mortgage broker? The, you know, all the folks that you help out there? What do they see in in the market today? What are their challenges?
Dave Savage 10:21
Just keep up. They're killing it. They're overwhelmed with production. The amount of volume that we can do this year as an industry is an amount of volume that we didn't even know that we do. I want an interesting trend I'm seeing is that the top producers that are good leaders that are using technology efficiently, they use their CRM, they use video, they use Mortgage Coach, they use Zoom. They're just killing it. I mean, they're they've already closed more loans this year. Right now, they did all of last year. So, so just breaking records by you know, significant margins. And the biggest challenge...
Sean O'Toole 11:04
None of them thought that was gonna be the case in March, April.
Dave Savage 11:07
No, absolutely not. Yeah, so it's been really good. I think, you know, the biggest challenge is just how do we get more hours a day? How do we be more efficient with our workflows? With our time, it's been a, it's been a boon for Mortgage Coach, because we're selling a virtual digital mortgage platform to deliver advice. So it's been a boon for us. And then I think they're, you know, like, how do we not burn out our team? You know, how do we not get burned out? You know, so I think it's been a very exciting time, there's been a lot of silver linings in this COVID times for Mortgage Coach. And for families. I mean, actually, that's the other thing, the mortgage industry is lowering people's payments, every refi is creating fiscal stimulus for a family. And, and also, you're seeing a lot of move ups, I want a really common strategy that you're seeing in the Mortgage Coach community right now is a refi versus move up where a family will like column A is my current loan, column B is refi, I could save $322 a month, column C is I could move up, get another room, a lot of people have equity. So like I there's a story, an interview I did with Amber Kovarik out of Chandler, Arizona. And you know, column two was refi. column three was move up, and they had equity. So they qualified for a 5% down loan, and they had equity. Column four was, hey, buy that new, move-up home non-contingent, and then take your equity, they had $125,000 equity, and recast your loan, and their payment would have gone down by $126,000. So and then what's the family doing is saying, you know what, I'm gonna do column three, where I do move up non-contingent. And when I sell my home, I take that money, I put it in the bank. And based off of my return on investment, they've literally increased their net worth by like 30%. And they've increased their liquidity, you know, in the bank by 50%. Because they got $125,000 in interest bearing account. So you're seeing a lot of refis, a lot of move-ups. You're seeing a lot of first-time homebuyers come into the market, too.
Sean O'Toole 11:13
Yeah. So is it is it pretty for the average mortgage? Is it pretty even between purchase and refi?
Dave Savage 13:32
No, I mean, the refis are, I don't, I could actually pull up some data while we're talking. I'm going to multitask a little bit and tell you what it is because I got my hands on some data, you might have this too. So if I'm stealing any thunder from your platform, feel free to share the stats. But I am, you know, there's definitely a lot of you know, call it a distributed retail model, referral-based, local mortgage professionals. They are, they're doing a lot of refinances right now. So let's see, we got here, total volume. By the way, do you have any of these numbers?
Sean O'Toole 14:11
Like number, we certainly track, you know, how many mortgages are are created and purchase versus cash out versus, you know, rate and term refi? That kind of stuff. So yeah, that's all available on our platform.
Dave Savage 14:23
Yeah, so I'm looking like it just top lenders. And, you know, Quicken is, you know, done 672,000 refis compared to 94,000. purchases. Loan Depot, one of our big platforms has done 31,000 purchases compared to 142,000 refis. Our biggest... what's that?
Sean O'Toole 14:49
It's about 5x refis.
Dave Savage 14:51
Yeah, well, your Fairway, our biggest client in Mortgage Coach has done 77,000 was that purchases and 85,000 refis and I think that is probably, you know, Guaranteed Rate is done 44,000 purchases compared to 77,000 refis. And I'm looking like a distributed retail model looks like definitely anywhere from 20 to 2X refis. And then when you get into like, what's called the household name, Wells, they've done 77,000 purchases compared to 169,000 refis. So, you know, there...
Sean O'Toole 15:33
Yeah. On their business model. Yeah. Aaron, are you back?
Aaron Norris 15:38
I don't think so.
Dave Savage 15:40
By the way, BofA is 30...
Sean O'Toole 15:42
Is your volume... seems, wow. Um, so the other one of the big stories like, when this the crisis kind of first occurred, and I don't know how much you know, about this or not, was the independent mortgage banks, and having a liquidity, you know, kind of crush. Did you follow that? Was that is, I mean, that's something that really kicked the whole crisis up another level, and like, lending disappearing, and that kind of stuff. So early on, it was scary.
Dave Savage 16:19
Yeah, there was some very tenuous weeks. Coming into, you're talking about when COVID first came in, and forbearance was announced, and, you know, the liquidity crisis to capital calls? That's what you're referring to. Right?
Sean O'Toole 16:33
Yeah. Cuz, you know, so the, I don't think a lot of people, everybody thinks like, the bank is the lender. Right? And, you know, so, you know, the loans made. And then but there's the servicing rights. And so there's a person who collects the payment, and then pass it along to the underlying security. That is actually the lender and you know, that might be that might be your retirement fund that's in that it could be..
Dave Savage 16:57
Yeah, it was, it was it was scary. I mean, you had two things happening, you had a devaluation of portfolios because rates went down. So like, the portfolios are gonna run off devaluation. You had four parents come out, you had an announcement from the President that, you know, there's this forbearance, but there was no like, Okay, how are we going to help these lenders, like, people aren't gonna be making their payments. So there was a period of time where they didn't know...
Sean O'Toole 17:23
Let me finish explaining it for folks at home. So the way the servicing works, is you send your payment to the servicer, and then the servicer takes their fee, and they pass that along to the underlying security, right? The whoever the lender is down below. The way those agreements work, because if you don't send your payment for any reason, that servicer still has to make the underlying payment. So when they announced forbearance, right, you could potentially have a huge number of folks stop making their payments to the servicers, but the servicers are still responsible for making the payment. Of course, they don't have the cash to do that. So at the time, it was like, all these independent mortgage banks, the servicers, they're gonna go they don't have the liquidity they're gonna go broke. That a good summary, Dave?
Dave Savage 18:11
That's absolutely a good summary. Yeah, there was. There was just capital calls, you know, regional, very successful big players were having to make capital calls, there was a lot of issues, there's a lot of fear. Fortunately, we made it to the other side of it, and now everybody has done a lot of volume, built-up balance sheets.
Sean O'Toole 18:31
Rates kind of went up because of that, right. And credit tightens and rates went up. That was kind of the initial reaction, right?
Dave Savage 18:38
Yeah. I mean, rates were going down. I mean, net net rates were going down. And that was part of what was causing, you know, the, you know, the capital calls, you know, people didn't have credit lines, but, but net-net rates are absolutely historic levels. I could pull up my rate watch app and see how close they are to the bottom as of today when we're doing this. But um, there was no doubt that was, it was a tenuous few weeks, where, you know, at first we were all going yeah, refis were killing it. You know, Mortgage Coach was, you know, well, well, COVID is scary from a health perspective. We were not getting put out of work. You know, we were super lucky that we had jobs. We thought we're going to be shielded from this financially and then there was a period where implodeometer, I mean, are we going to start seeing companies, you know, shut down and, and I'm gonna see companies, you know, important clients of mine, you know, not paying and then we made it through it. And it's, it's been good for the mortgage and real estate industry.
Aaron Norris 19:42
Can you hear me now?
Sean O'Toole 19:44
We can, hey, welcome back.
Dave Savage 19:46
Welcome back, my friend.
Aaron Norris 19:47
It's strange, nothing changed on my end that just decided to stop working through the connection. So there you go. Opendoor is about to do its IPO. And it's very clear that a lot of these ibuyers are incorporating mortgages is a key piece to the linchpin so they don't have to make money in one particular area, they're making money in an ecosystem that they're creating. Is that a big conversation inside the mortgage industry and a concern?
Dave Savage 20:13
What was it? It's not a big conversation today, because we're overwhelmed. We have more business, and we know what to do with, but pre called this COVID crisis and this low-interest rate tidal wave. And I think it will be a big topic coming soon, which was the disruption of the mortgage space and the fear, like when I was I spoke at the digital mortgage conference, not too sure, but last year, and it was a massive topic. You know, it was a question of if Amazon's getting the mortgage pace. It was how and when is Amazon getting in the mortgage space? It wasn't a question of is Opendoor and Zillow. And these disruptors gonna complete, you know, completely disrupt the mortgage space is a question of when and how. And I saw I think it's, it's not at all a conversation phase market. But I think as rates start to tip up, and we get into a more normal market, it's gonna be a big deal. Like right now, you know, Quicken went public. A number of other companies have put it out there that they're gonna go public. So you're starting to see large mortgage platforms go public. You're seeing disruptors like Opendoor, you know, we have the consumer, how do we make everything around it? You know, Zillow is definitely expanding their mortgage services. And, so yeah, there's, it's a big topic, and it's gonna reshape the industry in the coming years without question.
Aaron Norris 21:39
I think what I like about what you said, though, is that you're sort of providing a bridge between mortgage and financial help, where it doesn't seem a lot, like a lot of these lenders are going to be very focused on that kind of customer service. Do you think that will be the case?
Dave Savage 21:53
No, no, I mean, there's, there's some, you know, every lender that is investing in the Mortgage Coach, and building this into their tech stack and building their culture, they're doing that because they get it, their loan officers need to provide value beyond the transaction, you know, that rate payment cash to close the submitting of an app, but if it's auto-approved, you know, they get it that like, if it can be automated, will be automated. And that type of transaction is going to become commoditized. If your referral-based local mortgage professional, they, they know their loan officers need to become advisors to deliver value beyond the transaction. So now, that is not the majority of the business while we're picking up market share. And we have, you know, seven of the top 10 nonbank lenders investing in Mortgage Coach. But but but a lot of them get it, they need to turn their loan officers into advisors. And that's a combination of Technology and Training. They need to go from transaction salespeople to solution salespeople. But a lot of people are doing it. I mean, it's it's a big movement. people that aren't Yeah, I think that are in for a rude awakening, as we get on the other side of this mortgage revolution that's taking place.
Sean O'Toole 23:11
Because you work with all these groups, like one of the things that's always like, I don't know, I find an interesting question like, what is the you know, you've got the independent yet the more you got the brokers, right, like that could be even independent, could be one guy just hanging out a shingle, right? And then you..
Dave Savage 23:28
Which is picking up steam, I mean, that model is thriving.
Sean O'Toole 23:32
And then you've got like, regional players, then you get the independent mortgage banks, you've got the larger like, Quickens, the online, break us break the industry down for us, what are the key groups and maybe the pluses and minuses of each of those, you know, styles, entities, organizations, whatever the right way to put that as like, because it's just never been clear to me.
Dave Savage 23:56
Yeah, no problem. So big banks. I don't think I need to describe that a lot. Well, then, you know, maybe the benefit is that it's my bank. I know them, I trust them. And it's a big bank. So there's some security and trust built into the brand there. You know, there's online lenders, Quicken is the biggest name in online lenders. That just, they're great marketers. And they run consistent processes, and they train their people. And they deliver a great model. It's great, but they delivered a great what no, Quicken delivers a great customer experience.
Sean O'Toole 24:31
Big factory, right? I mean, it's a factory floor, big call centers, that kind of thing.
Dave Savage 24:36
Yeah, yeah. But they deliver, you know, they're delivering a consistent consumer experience. You've got credit unions, you know, community lenders, which, you know, credit unions are nonprofit, you know, they're not for profit, they're for their members. But they don't have the technology. But you, you know, you have the relationship you know, and you have someone that you can trust and actually don't know what percentage of the market they are. But they're, you know, there's still a real portion of the market. You have brokers,
Sean O'Toole 25:06
They play a lot on the commercial side, too.
Dave Savage 25:10
Yeah, no doubt. No doubt.
Sean O'Toole 25:12
Do they play much in the housing side/ A little?
Dave Savage 25:15
Yeah, yeah, no, we've we've got a couple of the largest credit unions in the country as clients of ours FIRST Tech is our biggest credit union client. And they're, they're killing it. You know, they're, they're low price leaders. And, you know, they're their community players, you know, they're, they have a brand loyalty if you're part of that credit union, I think there's a type of consumer that is attracted to that. You've got brokers, which are scaling and growing, were just independent loan officers. Could be a one man shop could be a 10-man shop, you're starting to see some kind of mega brokers coming up. The second largest one is a client of ours. But that model is scaling. You know, distributed retail, though, you know, the Fairways, the Calibers, the LoanDepots, you know, Prime Lending some of our biggest clients Finance of America, Guild Mortgage is the list goes on, it's still I think, the biggest
Sean O'Toole 26:17
What did you call them again, distributed?
Dave Savage 26:20
Well, I think they're called independent Mortgage Bankers. So I think that would be the
Sean O'Toole 26:23
Dave Savage 26:24
I call them distributed retail but independent Mortgage Bankers. That, I have to think is the biggest volume, other big banks do so much business, you know, I really don't know the breakdown between the categories. But these are the categories in the models. And then I think there's a new model called the disruptors, you know, the Opendoors. I haven't done this slide for a while. But when I spoke at Digital Mortgage Conference, I actually broke down the industry, in all the different categories to actually have a slide on that if you want to, you can put it in and I'll forward you a slide down the industry. Because when I did the presentation, I went like, hey, last year, this was what it looked like. This year. This is what it looks like. Because it used to be pretty much I was done. But now you have, you know, Keller Williams, is it the business in a big way. You have real estate on mortgage companies in a big way. You have disruptors which are the Opendoors, in the space, you have the lead aggregators, Zillow is in the space. You have the threat, the platforms, like Amazon is in the space. So the the number of categories in the mortgage space, and it's all been enabled, through technology, it's all been able because now it's push a button, you know, you apply for a loan with a link family fills out that link, data comes from, you know, countless sources, aggregates it, intelligence, you know, qualifies them, approves them. And, and that's why you have all these new categories competing in the mortgage base, and it's, it's quite disruptive.
Sean O'Toole 28:26
I get my NMLS, maybe I'm working for my local bank or something, right? I'm a salaried position. And, but I really like this business, and I want to grow personally, and, you know, grow my business and grow my income. Like, what's the path that I take from being like a junior loan person to like being, you know, a guy making seven figures a year doing loans?
Dave Savage 28:59
What I would tell someone is, it's all about your, your, the quality of your service, you have to go beyond the transaction and deliver value beyond I've got a competitive interest rate. I'll close your loan on time. And I keep my promises. So what that's table stakes, and you need to deliver value beyond the transaction, and you need to build a database. And that database needs to go beyond being data in a CRM, it needs to be I call it mortgages under management, people where you're saying, hey, and close your loan on time with a competitive interest rate. But I'm going to help you build wealth with real estate, because I'm going to give you a better level of value. And I'm going to manage that mortgage every month just like you know, you have financial planner and you get a report every month, tell you how your assets are returning. I'm going to do that with your real estate was your mortgage, a very hot tech company. I think we're one of the hottest tech companies in the mortgage space but other ones called home bought and they do a great job because you put in a claim It's data and it's providing a lot of value, we integrate with them. But that type of value where I'm gonna manage your mortgage, I'm gonna manage your real estate got to provide value beyond the transaction. That's one of the reasons I'm excited about being on your, your podcast and learning more about your next-gen product. Because I have a feeling that you're you're going to be one of those hot platforms that anybody in housing is going to benefit from.
Sean O'Toole 30:28
You've long talked about how important being hyperlocal is for the, for the mortgage folks. And that's it. It's not a term, it's a term we've used, and we like a lot. Because it's something we believe in, and we think public records helps people do. But, tell us what hyperlocal means to you, and why you know why that kind of stood out for you and why you think it's important for mortgage folks?
Dave Savage 30:52
Well, I have taken my heartburn, my hyperlocal rant and really focused on hyper-personalization. So when I do a lot of my coaching calls and training I talk about, hey, there's there's this content that's generic, it's global, it's macro. And there's a lot of data sources, a lot of news. And so I used to always talk about. Hey, your job as a loan officer is to make that localized. And Realtors crush it at that. I mean, that's what they do is they're like, Hey, I know this neighborhood, better than anybody. Hyperlocal expert, and it still works. But what works best is when you hyperlocal, and you hyper personalize. And so I do a lot of teaching on that, you know, just like that, that move up analysis, you could take some, hey, here's the macroeconomic stats in America, on equity. We all know that rates are at historical low, we know equity as historical high. We know consumer debt is historically high, macro. So I would teach a loan officer will know what that means in your city. You know, what's the equity? What's the debt? Rates are the same nationally? And that What's that mean? Personally, like, come to a realtor who says, hey, you've got these hundreds of families that you've sold homes to? Now how do we do a personalized move up analysis for them, and we'll personalize it. So it's hyperlocal, hyper-personal. And I do think that is how both real estate and mortgage professionals who want to be referral-based professionals how they will exist in the future world, like without real tangible, hyper-local content, hyper-personal value, you're going to get disrupted by the machine.
Sean O'Toole 32:41
Yeah, we that's definitely our primary thesis to our customers, right? Like, the good news about being local, right is you can do things that don't scale. And you can take that next step that the big boys just, you know, can't do at a large scale. You know, even like the Realtor who has that, you know, they know their subdivision. But not everybody in that subdivision is the same. Some have equity, some don't, some are older, some younger, some have lived there a long time, some have only lived there a little bit. And you can tailor that message to each of those, those groups, but you need a tool for separating them out. That's definitely what we've brought to markets are excited about that.
Dave Savage 33:23
Can't wait to see it, can't wait to hear about it and fired up. I forgive me if I'm looking over here on my screen, I was looking for that a slide that I have that shows the different markets. I just found it. And I just wanted to make sure that I wasn't missing any, any categories, but it looks like I got them. I'm digging into that what FinTech I actually i did i miss two categories. Fintech, you know, so you're looking at Mosaic, Sofi, GreenSky. And then you're also seeing the investment bankers and wealth managers like Sachs and Merrill Lynch, go direct. So, you know, like, I've got one slide that shows 1, 2, 3, 4, 5 categories. And I got another slide that shows, you know, I'm not going to count on that. It's over 15. And it happened in a single year, actually happened in about six months. You know, when you when you think of when Keller Williams went direct and Zillow went direct and an Opendoor and Offerpad started going it just like the world changed.
Aaron Norris 34:30
Can we explore inside that and look at the demographics. Are there any of these categories? Are they specializing in specific demographics? Especially for millennials and the Gen Z who early data shows that they want to get into real estate earlier? Are you seeing any players win? Out of these?
Dave Savage 34:49
Sorry for that? I didn't. I didn't ask you permission to share my desktop. Oh, that's fine. That's great, but beg for forgiveness
Aaron Norris 34:55
Saves me editing.
Dave Savage 34:56
Yeah, right. But like so this is what it used to look like. You know, less than two years ago, probably 18 months ago, and this is, this is what it looks like today, you know, the battlefield for the consumers mind has changed. And, and so I already kind of described this in detail. But ya know, there's definitely, I think, different factors like when you look at the wealth management crew that's getting in here. Yeah, they're going after the affluent. They're going direct, but they have a customer base. So the commonality is, I have a customer base, now that I have automation, how can I quickly and easily do a mortgage with that customer base? You look at Zillow, you know, they're coming in or saying, Hey, we got a customer base, and we have a consumer share. How do we do a mortgage for that, folks? So so you're seeing that across the board in terms of like, you know, retail mortgage lenders, you know, they're still like, it's all about having an army of referral-based local professionals, which are the majority of our clients, I mean, we, we, we empower them, we turn them into, taken from a loan officer, and turn them into a mortgage advisor. But yeah, I think that's the common theme. When you look at all of these, you know, you look at the credit unions, they've got mindshare and a consumer, and mortgage is just another spoke on the wheel,
Aaron Norris 36:17
You have a very interesting category. Now, Amazon, I think it was a little bit over a year ago announced their Turnkey program partnership with Realogy. And we haven't heard about it, because rumor is that it hasn't gone well. If you use one of the Reology brands, you get so many dollars worth of free stuff from Amazon. And the problem was that their home services sector wasn't being able to install and perform. So any thoughts on the Googles and Amazons of the world if they're going to be able to compete with the people already in the space?
Dave Savage 36:48
Yeah, they'll figure it out. They'll figure it out. I think it's women how and, and it's not as easy as they think, you know, everybody that comes in the mortgage space, it's never as easy as they think. But you know, with data and artificial intelligence, and the way the world is evolving, they will figure it out. But I, I personally believe forever, right? Yeah, no, it'll try. So there's a lot of mistakes ahead. But it will be figured out. But I just think if you're a local referral-based professional, and you're a local expert, and you know how to deliver personal value beyond the transaction? I don't know. I mean, maybe forever, you've got a you've got a good job. So I kind of coming back and wrap it a bone on that question on what do you what advice do I give to new loan officers, it's all about like, 1000 should be your goal. 1000 families, where you manage their mortgage, and you have tangible advice, to help them save money more effectively, it helps make them more better mortgage and financial decisions more effectively. Most people retire with less than $100,000 in the bank. But because most people when it comes to making liability and debt decisions, they must consume several hundred thousand dollars in debt over the course of a lifetime. So I think, I think if you can be that advisor, and it's tools, and it's knowledge, and it's also just caring about people beyond the transaction...
Sean O'Toole 38:13
Dave Savage 38:13
For sure, you got 20 years ahead. But I don't know if you'll ever lose that. Because I think as long as we're humans, we like humans, and we like stories. And we like people that can add value. So I don't know, I think maybe you'll always be good, but you just can't be a transaction coordinator and an app taker, that's not going to cut it in the world ahead.
Sean O'Toole 38:33
Right? In which of these, you know, different groups, like if you're an individual, like, he probably going to end up being a mortgage broker, right? Because you're not, you're not gonna make you're gonna make a salary yet inside of a Quicken or inside of a Zillow or one of those, you know, most of those places, right. Like there is there. Where is there? Is it really only going independent that you get good?
Dave Savage 38:56
No, no, I mean, the distributed retail does incredibly well, you know, most of the top producers are in the distributor retail. And I, you know, I think that model is solid, because, you know, when you're a broker, you have to manage more than just, I'm a loan officer. And in scale now, I'm, again, I think the broker model is great. And I know, I know, so big brokers do a lot of loans. And the in the companies that service them have improved their automation. So the ability for a broker to execute both great price options, and execute. I mean, it's incredible now. So I mean, the broker model is going to thrive, and it's going to grow. But I think the distributed retail model is to, you know, like, hey, I want to wear a uniform and be part of a team. And I just want to focus on, you know, doing volume. I mean, that's the other day, there is this movement in the mortgage space brokers are better and, you know, by the way, that's the brokers that are saying that. I'm like, Guys, they're all great models. Were a lot of different human beings. You know, for some people credit unions are better. For some people, big banks are better. For some people Quicken is better, like it's, it's, it's you, what I tell new loan officers is pick a strategy. But yeah, you personally need to be a local expert, you need to be a personalization expert, you need to be a Mortgage Coach and, and then just take care of your families. And it doesn't matter what model you're gonna you're gonna make a great living, you're gonna kill it. And this business is I think mortgage industry is the best industry, one of the best industries in America to get into right now. Because you got a lot of independence, and they're doing a lot of business. And it's not gonna slow down in the next couple years, in my opinion.
Sean O'Toole 40:46
Let's talk about rates earlier you said it when rates start going back up. My personal thesis is we have so much debt rates can never go up. They can really only go down from here, I think five years from now, five, you know, what was it four years ago, four or five years ago, Aaron's Dad, Bruce Norris and I both about the same time predicted we'd have a mortgage rates in the twos at the next crisis, which appears to have played out. And, I am now going to go on record as to saying we will have mortgage rates in the ones at the next crisis because there's always the next crisis.
Dave Savage 41:22
Yeah, well, I'm not a an interest rate predictor. But I have a chief economist, at Mortgage Coach, his name is Dan Rawitch, which, Dan is it amazing. You know, he's got a platform called Market Mentors. He's for over 10 years, he has done a daily video on the Mortgage Coach, gentlemen, and he agrees with you. He thinks rates are going in the ones. And he he was saying rates were going in the twos. And he was right. And, and so but I'm not, I'm all I'm doing is parodying Dan, my guy. And what he says the right watch, and I am not the CNN watcher. I'm not the one that studies those numbers. I was once upon a time. But I'm so ADD, I've got to pick what I study. And in studying numbers, but Dan, Dan Rawitch agrees with you. And I, I believe whatever Dan says, You guys should you guys should have Dan on his show, he would be incredible. He is he's just an oracle of data and insight. He'd be a really good guest for you guys.
Aaron Norris 42:28
FHA surprised us with this risk premium that they put on hold, but it's supposed to go back into play later this year. I have a feeling that's not going to come back because you brought up earlier, when somebody gets to refi at a lower rate, that's money, they actually get the pocket? Are you hearing anything on the streets, that that's going to come back for short?
Dave Savage 42:46
You know, I hear lots of different stuff that again, not an area of my expertise, so I'm really going to just not even comment on that. Because I don't, I don't, I don't have the insider information. Everything I hear, it's just people I follow in. And I hear a lot of mixed messages on that. I do know, our industry doesn't like it. So I know.
Sean O'Toole 43:06
Dave Savage 43:07
If I owned a mortgage company, or I was a loan officer, I don't want it. And they're my customers. So I don't want it either. But if you know...
Sean O'Toole 43:16
Well, if Dan and I are right about rate set into the ones, like the outlook for the mortgage business, really is pretty darn good. Right? Like because as rates go up people refi it's just...
Dave Savage 43:27
Yeah, cuz that's only gonna raise the rate by, you know, at eight to three, eight, you know, or quarter, whatever. So, I don't know, I'm not going to comment, because I just I just don't know enough about it.
Sean O'Toole 43:40
I was just going back more to the trend of rates overall, if the trend towards the ones that's incredibly bullish to the mortgage industry.
Dave Savage 43:51
You think? Yeah, I mean, it improves affordability, you know, rents have gone up. So first time homebuyers, you know, between COVID, you know, it's, it's I, you know, makes renting even less desirable. appreciation rates with homes going to go up. So yeah, the fundamentals for housing are incredibly good. It just, it's hard to come up with a scenario that says that mortgage real estate housing is one gonna lead us out of this recession and two, has three great years ahead. Again, I am not an economist, I am not studying that. That is not of my opinion. That is the opinion of people that I listen to and we'll leave it.
Sean O'Toole 44:36
Let's talk about, so right, it'd be good to have because there's a national license, but there's also state licensing, right? So mortgage brokers are licensed in their state. We're seeing more people move and change states. So that thousand families right now you're starting to see some of those families leave and go to another state. You really can't serve them anymore. Right? Is that kind of churn a problem for folks that go after those families?
Dave Savage 45:08
Well, no, I think I think the mobility, I'm finding loan officers that are moving, you know, they've got a lot of, you know, huge business making a fortune, living in one city that say, you know, what, for lifestyle reasons for family where I live, I'm moving to a different state, and there's still able to keep that business. So you're, you're seeing lenders have multiple states. Yeah, you've seen lenders have multiple states that can move, I've got one of the top producers in the city of Chicago is a customer. And part of her model is, yeah, she kills it. And she's one of the iconic lenders, if you're buying a house in Chicago, but a lot of her clients were moving out of Chicago. And so she, you know, was the lender that lives in all states. And she follows up so I think a lender's ability to follow the customer. And then a lender's ability to work with it wherever they want from a lifestyle perspective. It's, it's scaling, it's a movement. It's not, you know, the migration is not hurting the opportunity for lenders.
Sean O'Toole 46:15
Yeah, and I guess, you know, with with COVID, right, like this whole thing of like, come into the office and fill out the paper or come in a notary, all that's gone. So they like, you can do this business from anywhere.
Dave Savage 46:28
Yeah, do I interview the best loan officers in America, and it was surprising pre-COVID, how many top producers still met a good percentage of their clients in person, like, you know, iconic loan officers doing the most volume video for the country, 30%, 50%, 60% of clients are coming in, I've interviewed those people post COVID. People aren't coming in, and they're saying, I like it better, my conversion is still great. The amount of time that I have to spend with the family is less, I'm getting just as deep in less time. And I do think post-COVID times, there will be this kind of like preference management, you know, as as text, you know, text, email, video. And now we have virtual, or Zoom. And now it's just gonna be like, hey, how do you want do you want come to my office to jump on Zoom, and you want to take care of some of the phone call? preference management, and, Zoom slash virtual connection is, is not going away. It's it's going to be just a, you know, depending on what the interaction is, how much advices their personalities, how close we are convenience. But a virtual is here to stay. In my opinion, grandma knows what Zoom is now. Grandma likes Zoom. So it's not going away.
Aaron Norris 47:50
We talk a little bit about marketing. The finance industry spends a lot of money on marketing. Has any of that changed in the last five years, say on what mortgage brokers are spending their money on how to get clients?
Dave Savage 48:03
You know, it's all over the place. I mean, I mean, obviously, marketing works Quicken has proven that out, you know, and it's a numbers game. You know, so, you, you we're seeing a lot of Facebook marketing, I should say where we are seeing a lot of social media, spinning out from what I've heard over the past couple of months. Seems like Facebook is harder to do to do than it was a year ago, per se. But yeah, social media spending, you know, big platforms like Lending Tree and Bank Rate, their thing. Zillow is still generating the majority of their money through advertising and people buying online. Yeah, so those models aren't going away? I don't I don't know exactly. Like, how does it compare today pre-COVID versus post-COVID? I don't know, a bet that it's gone up just because transactions have gone up. But in terms of Yeah, I don't I don't, I don't know how it's trending other than macro. Like over the past five years, it's growing. You know, like, that's pretty obvious. marketing works. Spending money for leads, it works. It's a thing.
Sean O'Toole 49:15
It's getting more competitive, though, I imagine right like that, that cost to reach that customer acquire that customer is probably going up to every year as you have all these new players.
Dave Savage 49:27
Absolutely, absolutely. But you're seeing new things. You know, I when you look at the social media platforms. I don't follow Gary Vee a lot. But every once a while, he put something out that I see and I like it. He said that. LinkedIn today is like Facebook in 2012. And I use LinkedIn to communicate, engage my audience of mortgage professionals to grow my business and it's very effective. It's very efficient. So you're just seeing platform come and go. But you know, I think Instagram has massively grown as a as a legit platform of influence, value, ROI, and marketing for Realtors. They're killing it. I know realtors that are doing hundreds of millions of dollars, some of the best Realtors of the country. And they're killing it with Instagram. So you're just seeing these different channels come and go. And you know, TikTok is still a teenage thing. But you can see how quick they could go to, you know? President says we're gonna turn out TikTok and, boom. But I do think platforms, that itself isn't going anywhere, we're gonna see platforms as the, you know, the marketing way going forward.
Aaron Norris 50:47
Direct Mail, I said, I have to say a large portion, to this day, of my mailbox is filled with lenders, marketing to me via direct mail, I get a lot.
Dave Savage 50:58
Yeah, it probably works. I actually don't think I've seen mail in, like three years, my wife gets the mail, and she goes for it. But I actually have not seen the mail in five years. And so mail is not a thing for me. But good marketing is just it's a numbers game. You know, and so everything works, telemarketing works, direct mail works, email marketing works. Platform marketing works. It's a numbers game. And I don't think it's been like that for a long time here in America. And I don't think that's ever going to change.
Sean O'Toole 51:30
Yeah. I just I'm thinking we're getting close to...
Aaron Norris 51:36
We're getting close to the hour.
Sean O'Toole 51:38
Yeah, this has been pretty awesome. And I think we've covered a lot any other things that you want to touch base on or share with the audience. Again, investors, you know, mortgage folks obviously. Realtor's, Home Services companies, any other thoughts that you have on that you'd like to share?
Dave Savage 51:56
Well, I'll just close out with the Mortgage Coach mission, you know, when I when I came out of the meltdown, while I am a SaaS entrepreneur, software, as a service entrepreneur, make money from loan officers or companies, buyer software, I changed my core metric to not how many members I have, which by the way, it's important, it drives our P&L. It's an important metric. But I said, you know what my number one metric is how many families when they get in debt, do they click on a total cost analysis. And they make their decision with a few more data points, go beyond rate, cost, the monthly payment, and go options, over time, with strategies to pay off their debt, and a little more data, easy to read, and coming out of the meltdown, I had less than 25,000 families a year that we're getting, well, first of all, coming out the meltdown, I didn't even didn't have a SaaS platform, I couldn't even count how many times a family clicked on it. But we became a link. And we live in this link economy. Now, you know, we're I hit a link to get here, we apply for a loan with a link, you know, we deliver a video with a link, we deliver advice with the link, we're gonna do over 2 million families this year are gonna you know, make it. So my mission is to change how people get into debt. So whether you're a loan officer, a Realtor, you can still apply those principles like when you get into debt, what's the cost of the time, you're likely to have it? Compare that to your options, and look for strategies to get out of that faster? You know, and I do think, like, my legacy was Mortgage Coaches and entrepreneur, I'm for profit. So hopefully, we make a lot of money. But I hope we also changed how people get into debt in America. So I would just encourage you some closing thoughts for me, you know, write that down. Few more data points. It could be life-changing, like all the time, a Mortgage Coach, loan officer will show family how to pay off their house 10 years earlier. What's that worth to you? It saves you hundreds and equity, hundreds in interest costs, and it creates financial freedom. So a little bit of data can change your life. And so that would be my closing thought, you know, make better decisions with more data.
Sean O'Toole 54:12
Aaron Norris 54:12
Go ahead. What's the best way that they can follow your work? And what platforms, especially on social, should they be following?
Dave Savage 54:19
Well, you can follow me on all social media. I mean, LinkedIn is called the professional. You're a mortgage loan officer, I try to do quality posts. Follow me on Facebook. I think I started using Instagram two weeks after it was founded. And I was jealous that I didn't come up with that idea. Because I was a photography minor and I love photos. But I mean, that's just personal stuff. If you are a loan officer and you're not in our Facebook group, Mortgage Coach Productivity Mastermind, you're losing money. And if you're a loan officer, you're not watching our YouTube channel, you know, you should be replacing some of your Netflix with our Mortgage Coach YouTube channel on our website.
Aaron Norris 54:58
Okay, I'll make sure to link all of those on the site and on our YouTube, this goes up on YouTube. And I'll make sure to tag you they just updated something that makes that a lot easier right in the headlines, so I can't wait to check it out. I'll make it very easy. Well, thank you so much for your time, Dave. Really appreciate it.
Sean O'Toole 55:13
I really appreciate you coming.
Dave Savage 55:15
And I'm looking forward to seeing your new innovation.
Aaron Norris 55:18
All right, thank you for listening to the Data Driven Real Estate Podcast. You can find show notes and links to some of the resources mentioned in the show at datadrivenrealestate.com. Click that join the community, and you'll be forwarded to the PropertyRadar community where you can ask questions about the current show and even see upcoming guests and ask questions there. We'd love to engage with you in the community. So check it out. Please don't forget to like, favorite, subscribe, and share on your favorite platform where you're listening to the show. It helps us out a great deal. Thanks for listening, and we'll see you next week.