Sep. 14: Be careful with headline language; Letters on immigration, the broker model, and management; Saturday Spotlight: Moneythumb

Did you know that “boughten” is a word? I didn’t until I challenged someone about it and then looked it up. It is! When was the last grammar lesson that you had? For people in our business, grammar is important, and along with it, “modal” verbs such as may, might, and can. The economy can go into a recession. (It has the ability to go.) The economy may go into a recession. (It has permission to go.) The economy might go into a recession. (There is a possibility it will go.) How often do you hear a real economist use shall, will, or must? The economy shall go into a recession. The economy will go into a recession. The economy must go into a recession. “Could” is related to “can” but everyone should be wary of headlines containing words like may, might, or can. There is little certainty about the future. Unfortunately, there is plenty of certainty in the current auto loan sector as defaults and late payments have crept up, apparently due to higher rates. That won’t help anyone applying for a home loan. (We have car dealership related humor below.)

Saturday Spotlight: Moneythumb.com

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“Digitize documents and detect fraud in seconds.”

In 3-5 sentences, describe your company.

MoneyThumb provides easy-to-use financial file converting and analysis tools to help lenders streamline their loan analysis, speed up their underwriting, and enhance fraud prevention, helping them underwrite loan applications faster and more confidently.

We were founded in 2015 to address the lack of automation in reading PDF bank statements to generate intelligent data. The first products were for accountants and bookkeepers, and broadened to include business lenders, consumer lenders, mortgage lenders, and banks with the launch of our PDF Insights bank analysis tool in 2017 . Our powerful fraud detection tool, Thumbprint® was launched in 2020 to help clients combat loan application fraud, and to further enhance our data security, MoneyThumb achieved SOC 2 compliance approval in 2021.

We continuously enhance our products and features to ensure we are delivering the best product with the highest degree of security and accuracy for our clients.

What does your company do to help elevate your employees’ growth? Describe any mentoring programs, outside classes or training, in-house training. How does the company help people develop?

As a company in the technology sector, MoneyThumb is fully aware that technology is advancing more quickly than ever before, not just creating an opportunity for learning but making it a necessity. Whether it is a particular technology that is changing or an employee's job requirements that are evolving, MoneyThumb monitors individual growth and development needs and makes training available through outside classes and workshops.

Our culture is one that embraces innovation and encourages employees to, in turn, embrace new technologies, value experimentation, and seek opportunities for continuous development. In addition to company-mandated training, as part of our professional development program, employees are eligible to request reimbursement for any continuous learning opportunities they pursue on their own such as training programs, seminars, conferences, online classes, etc. Under our professional development policy, employees are encouraged to seek new learning opportunities while it is a manager’s responsibility to coach their team and identify employee development needs. Human Resources is responsible for overseeing all professional development needs, activities, and processes.

Tell us how your company maintains its culture in a work-from-home environment, or how you plan on bringing employees back into the office, if applicable.

MoneyThumb has a very robust Slack community where everyone greets each other every morning to start the day. We also have a channel for employees to share stories, random thoughts, wins, celebrations, and other information they wish to share with their team members. We are a remote company and have been able to maintain our close-knit culture through Slack and regular check-ins via Zoom.

We have a truly flexible schedule that allows our employees to work in different time zones and hours to maximize their personal time. In fact, it is not uncommon for our employees to take extended vacations out of the country. As long as they get their work done, we allow them to work their own schedules wherever they happen to be. Our culture is based on output, not time spent “in the office.” This philosophy is in part why we have such high employee engagement and tenure.

In addition, we make sure to celebrate and welcome every new hire with an interview conducted by our head of HR who has a knack for asking some very interesting questions that give the company a great picture of who their new co-worker is. 

Things you are most proud of that don’t have to do with sales.

We’ve bootstrapped our company from the ground up, from nothing to what it is now - a successful, client- and employee-centric, profitable company with 34K happy clients.

We make sure that our clients are taken care of and that we are responsive to their questions and ideas. When our clients ask for new features or enhancements, we prioritize those requests and implement them with remarkable speed. Our clients are happy with us because we listen to their feedback and do everything in our power to make our product better for them. Our employees and prospective employees love us because we treat them like adults and give them a lot of autonomy. Our vendors love us because we are easy to work with and we pay our invoices promptly.

Fun fact about your company.

The original concept of reading PDF statements came from a customer suggestion. Our founder thought it was a great idea, and he went to work bringing the idea to reality.

Another fun fact is that we have exceptional employee retention which is over 95 percent. We do everything we can to make sure that our employees are happy and thrive in their jobs.

(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.) 

The broker model loses some momentum

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After increasing for many quarters, the broker share of originations declined from 19.1% in the first quarter to 18.2% in the second quarter according to a new ranking and analysis by Inside Mortgage Finance. “Brokers originated an estimated $79 billion of mortgages, a 27.4% increase from the first quarter. Meanwhile, retail production increased by 35.7% to an estimated $232.0 billion in the second quarter, giving the retail channel a market share of 53.3%.

“Rocket Mortgage was the top retail lender with an estimated $14.32 billion of originations through the channel, up 22.3% from the first quarter. Brian Brown, Rocket’s chief financial officer, conjectured, “If rates drop a little bit, and the [Federal Reserve] does what everyone thinks the Fed will do, it’ll be interesting to see if those other players that had a big footprint in direct-to-consumer can really come back and capture share,” he said. “Because we know they’ve shrunk their head count, we know they’ve shrunk their cost structure and we’re kind of just sitting and waiting.”

But the brokers, and wholesalers, believe that the broker model is the way to go. One wholesaler wrote to me saying, “We are doing good things for brokers and the industry. People send us a majority of their business because we are the best at what we do. We give great rates, make the brokers look good, close loans fast, help the real estate agents be successful, and make the process simple for consumers. It is normal for people to send all their business to the best.”

The recent Polygon Research study (“United Wholesale Mortgage and Willow Canyon Advisors asked Polygon Research to analyze mortgage lending outcomes…”) attracted some attention when it found that consumers save an average of $10,662 when using brokers instead of lenders.

NFM’s Greg Sher pointed out some issues in the funded study deserving of a closer look. “For starters, the study used an average loan amount of $400,000, when according to Mortgage Bankers Association Chief Economist Michael Fratantoni, the average loan across the country last year was $348,000. That's a difference of nearly 9%.

“The more significant question around the study/savings centers around its assumption that the consumer would keep the loan for all 30 years, which almost never happens. According to the MBA, the average loan the expected weighted average life on the mortgage index (outstanding agency loans) is 7.2 years. On new production it’s 2.9 years. If we blend the 2, that's a loan expectancy of 5 years, or 60 months. In the real world, that cuts 25 years from their analysis and brings the savings number way down from the original $10,662 to $1545, which is nearly 86% less than the attention-grabbing headline number.”

Greg’s piece went on. “This is not the first time UWM has made such claims. This is one of its calling cards. ‘As we’ve been saying for over a decade, the wholesale channel continues to showcase time and time again that it is the best place for a consumer to get a loan,” said its CEO & Chairman Mat Ishbia.

“It's very much up for debate just how much these studies even help to drive business to the channel. According to HMDA data (this too provided by the MBA via the CFPB), broker wholesale accounted for about 11.5% of loans, 12% of dollars in 2023). Much like the ‘Brokers Are Better’ rally cry, which has seen its better days, it feels like it may be time to sunset these studies. I wonder if Ishbia Ishbia will ever retire the ‘us versus them’ playbook in favor of an hashtag#allofus playbook?

“Let me be clear, for all his haters, he has tons of admirers. I am one of them. What he has done with his company and to assure brokers are cemented into the lending ecosystem forever, is the stuff legends are made of. He is the most powerful person in mortgage.

“A pivot to support lenders and brokers on behalf of all consumers would not only seal his legacy as the most impactful mortgage executive of our generation, or any. I truly believe it would lead to considerably more momentum for brokers, and that's his #1 mission, after all.”

Home construction workers & immigration

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Earlier this week the Commentary noted that, “What do you think the odds are that every home builder out there employs immigrants… I’d say 100 percent. Hate to be the bearer of bad news, but every construction company uses immigrants to build America. Some will claim that they literally have built America.”

The passage garnered some emails, primarily regarding illegal versus legal immigrants. “What do I think the odds are that every home builder out there employs immigrants? I’d say 100 percent. From the front lines, this is correct. If it is unlicensed/non-formally trained work (primarily electrical and plumbing the exceptions), for example, grading, framing, siding, drywall, paint, and landscaping, here on the Atlantic Coast, it is at least 80% Mexican or Latin American labor… Every job site, every builder, every time.

“In my opinion, the scarcity of supply side of ‘labor’ is an under-reported driver for some of overall housing supply shortage. In the mid/late teens, there was a significant drain/exodus of core crews. Literally some entire crews (often familial) picked up shop and moved back home or to more ‘immigrant friendly’ locales. These are the crews that worked 7AM to 7PM, Monday through Saturday, one day off. I dare you to find a stateside crew with that work ethic.

“Even to this day, it is nearly impossible to find younger folk that know how to pop a straight line or cut an angle on a piece of wood, and if they can, their grandma dies, and their car battery is dead way too many times a year. None of the smaller general contractors I know build on spec anymore. It is pre-orders only, and don’t expect it to be fast. We simply cannot find enough skilled and reliable subcontractors to run more than a couple at a time. The larger builders have an extreme advantage in this regard, and are simply not going to be the ones that build us out of the shortage.

“The next generation should learn a trade, immediate and lifetime employment. Think: Our best and most reliable ‘punch man’ commands $50 an hour (per hour, often paid in cash, no benefits of course, but ‘un-skilled’ / no-degree needed, just carpentry chops, a truck, and a decent set of tools).”

Ang Gil L. writes, “Illegal immigration has obviously been a hot topic over the past several years, as many would say it's on the scale of an invasion, with as many as 20 million having entered our country illegally over the past 3 years. Cities and states are really struggling to pay for all the services being consumed.

“I don't believe anyone argues, except a very small few, that (legal) immigration is a part of the very fabric of our country. We have always relied on migrant workers. I don't know why I bring this up today. Being of Spanish & Mexican descent, I speak from a slightly different perspective and whole heartedly believe it is important that immigrants follow the legal process and laws of our country for a pathway to citizenship.”

How’s your manager?

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NFM’s Greg Sher recently had some sage observations about leadership style. “When toxicity rules the day in an organization, nobody wins. In fact, it's a loser 100 percent of the time. I'm talking about people in management who abuse their influence and power, and use it to intimidate, demean and belittle others. They are master manipulators. Those managers are two different people all the time. Charming on the surface, and to many employees, but monsters that lie in wait at all times. Always calculating, they rarely leave fingerprints and almost always have an alibi.

“Are you familiar with this kind of manager? Why do so many organizations allow these bad actors to remain in positions of influence, even after the whispers of dissention turn into a deafening chorus? Because it's easier to look the other way, than to deal with the cleanup and questions. Who will replace them? Will all that responsibility fall on me in the short-term? How will we explain it to the team? Could there be additional fallout?

“Those questions are driven by a fearful mindset. It's a duct tape approach that fails 10 times out of 10. But it gets worse. When you leave these types of people in positions of influence, it rips the fuel from the tanks of those working the hardest (those doing the good work), and in many cases it's how companies eventually lose their best people. Afterward the leaders wonder, ‘Why did they leave?’

“They left because you sold them a culture rock, and that rock disintegrated over time as you allowed the waves of poor behavior to continually crash down on it. Culture should not be a noun; it should be a verb. It should only be appraised when put in motion. It's then, and only then, you find out what kind of culture you really have.” Thank you, Greg.

Nearly no one knows that today is Clayton Moore’s birthday. Trivia buffs know that Clayton Moore played the Lone Ranger in the 1950s. But you don’t have to be an expert in anything to be entertained by this tale told by Jay Thomas on David Letterman.

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you're interested, visit my periodic blog at the STRATMOR Group web site. The current blog is titled, “Hiring: Do You Remember How to Do That?” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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