SHOW TRANSCRIPT

 

 

[00:00:01] Speaker 1 Welcome to another episode of the Go with John Show today we have Justin Messer, Chief Operating Officer of Prosperity Mortgage. Justin, thank you for coming in. Hey, thanks. So, Justin, I guess tell us a little bit about yourself. I know you’re a dad. I know you’re into college football. So tell us a little bit about your kids and what are they into and what are you into with them?

 

[00:00:21] Speaker 2 Yeah. Well, kids are six and four, so they’re not into much. I mean, it’s real simple stuff. You know, we did a Cub Scout hike last week, a little bit of basketball, right, trying to get out of the granny shots and into the overhand shots with my son, who’s six. Yeah, you know. You know, it was it was interesting having kids that age coming up through, like the last COVID stuff that happened, right? Trying to navigate it. And, you know, fortunately, there’s a mix between kind of in-person and virtual school. And, you know, my wonderful wife who who basically, you know, attends the house, you know, while I while I’m out doing whatever, you know, she did a great job navigating through that. And it’s just it’s just been wild, you know? So so dad, first, naturally and and fortunately, I just have a have a wonderfully supportive wife who really takes care of runs the show at home for me. And that includes, as you said, kind of Saturdays. But you know, I really wish I had more hobbies. Yeah, it’s kind of sad. I don’t write my hobbies. I like college football and wine, right? That’s about it. So.

 

[00:01:19] Speaker 1 So you read drinker or y

 

[00:01:20] Speaker 2 drinker, you know, I’m indiscriminate. Yeah, I you know, if you look at my cellar, it’s mostly red, OK? But I also spent some time like up in northern Michigan. And you know, you don’t drink much of the red up there. You focus on the whites and you know, that sort of thing. So I’ll hit some weights as well. But but that’s that’s about it.

 

[00:01:37] Speaker 1 Good. Well, it’s actually, you know, I’ve got I’ve got my kids just turned 13. I have twins and, you know, to have COVID with young kids and have to go through that, I think is a lot better than the folks that I’ve been working with. You know, my real estate practice that have kids that are like teenagers, right? Because it was absolute murder for them where their kids thought they were just getting ready to get out of the house and all of a sudden COVID hits and they’re back locked down with their parents. And was it good for the parents or the kids?

 

[00:02:06] Speaker 2 I can’t even imagine. Yeah, that would

 

[00:02:09] Speaker 1 be a disaster. Yeah, but yeah, six years, you know, from for me, from five years going forward was was a lot of fun once my kids got to five. So you’re I think you’re getting kind of right into the right, into the sweet spot.

 

[00:02:22] Speaker 2 Well, you know, one thing is it was like a very eye-opening thing, whereas I think until they got to be six to like when my son was five and my daughter was three. Like, I still had some control over my schedule and I already see it being, you know, I might as well just wake up on Saturday morning to get an itinerary. Yeah, you know, there’s there’s no real, there’s no real purpose in me planning anything. Yeah, you know, outside of outside of, you know, their activities, right?

 

[00:02:44] Speaker 1 It gets worse. Oh yeah, I know. I’m prepared. I’m prepared. Yeah. OK, so your chief operating officer at Prosperity Mortgage, so tell us a little bit about what you do at work.

 

[00:02:54] Speaker 2 Sure. So, you know, mortgage companies are have a lot of moving parts. You know, one of the most visible things, right? Are really your sales associates or people out in the field. So everything basically outside of that. And one way or another comes under my purview. So, you know, we talk about whether it’s setting interest rates, whether it’s managing profitability, whether it’s interest rate risk. So for example, if you approach your your loan officer and you’d say, I’d love to lock that interest rate of three point twenty five percent, right? You know, sometimes you lock it for 60 days, probably in your business. You might like it for 180 days and construction, right? Right. That sort of thing. Someone has to actually protect it and make sure that that three point twenty five percent is worth the same amount and 180 days that it was worth there. So you hedge that with interest rate risk management, right? So that piece of the business reports out.

 

[00:03:46] Speaker 1 So how do you do that?

 

[00:03:47] Speaker 2 Yes, it’s a yes. So generally what you do is you sell forward securities. So in other words, let’s say the easiest way to think of it. Let me let me think about this. Sure. Let’s say you’re locking a million dollar loan today for three point twenty five percent. So what I would do is I would take the underlying security that makes up the majority of the profitability of that loan. I would sell it forward to deliver to an investor in 120 days. So it’s a derivative contract. I sell that contract forward for delivery and 120 days the loan closes in 90. I get it, you know, ready to go. I then put it into that security and deliver it to the investor. And so then my risk is minimized because that otherwise if I just say, yup, I’m going to give you three point thirty five percent. And then when you close, if the prevailing rate is four percent, right, I’ve now lost every single dollar and actually lost some money, right?

 

[00:04:36] Speaker 1 You’re paying them to finance their their home. You got

 

[00:04:39] Speaker 2 it. So so that’s. For example, when, you know, if anyone’s ever had a lock extension, right? So why do I possibly have to pay a company for 30 more days? And the reason is because technically I have to buy back that security that I sold for delivery and then sell a new one. Right. And there’s an entire cost in that because now people are getting it 30 days later than they thought they were. Getting it so, you know, cost a quarter, you know, 25 basis points, whatever it happens to be in order to do that. So that whole group comes up to me to rate cheats, et cetera. Yeah, products. So mortgage products, credit policy. And then, you know, loan manufacturing. So in other words, the whole process of how a loan comes in the door to how it goes out the door. And then cleaning it up afterwards as well. And you know, that has been a big area. You know where the focus has shifted really from what I would say, all elbow grease. You know, you’d have a loan file and it would actually be a minimal Manila envelope, right? It would move from desk to desk to desk, right? And there are companies that still operated like that just before the pandemic. So you can imagine what happened when desks disappeared. Yes, right? So, you know, the push for the last 15 years really has been, how do we digitize that transaction and make it much easier for for all of our customers? You know, from my perspective, right, whether it be the real tour, whether it be the borrower or even our team members inside who, you know, we also view as customers as well, how do we make it simpler? Right, right, right. So, you know, that kind of dovetails into the other group that comes up to me, which, you know, obviously in most companies, and I don’t just say this to sound cool, but technology ends up taking up the majority of the time now in focus, and it’s really tough to say what is technology and what isn’t. You know, I think you look at every problem that arises in your company. You take a step back. And a lot of times the best solution doesn’t necessarily involve a huge technology push. But it’s hard for people to understand that because immediately you go, well, technology should fix it. Right, right. And immediately you want to make an investment and say, Well, we should automate this or we should do this. And sometimes that’s the answer. You know, like we like to say, you know, we can do anything, but we can’t do everything. So it’s kind of picking and choosing where those where those kind of projects phase is really important.

 

[00:06:55] Speaker 1 Yeah, it’s amazing. You do everything electronically through the whole entire loan process and then you print it all out at the end so you can get it to the settlement table on paper.

 

[00:07:03] Speaker 2 It’s nauseating. It is.

 

[00:07:07] Speaker 1 But then you have to scan it all back in right after it’s signed.

 

[00:07:10] Speaker 2 No comment. Yes. Yes. And then you have to mail it back. Yeah. And let’s just be honest, I mean, you know, the UPS, FedEx, et cetera. I mean, they had the same disruptions that everyone else had getting a COVID. So it was chaos. I mean, there would be notes we were tracking down, you know, and it’s anything can disrupt that process, which is why it’s so broken, right? You talk about this when the ice storms hit in Texas. Right? All of a sudden ups lost 52 notes, right? And so we spent the next two weeks hunting down these footnotes and trying to tell, you know, homeowners who you know, you know, I don’t know. Probably half of them were first time homebuyers, but hey, by the way, we don’t have your note right now, but what does that mean? You take my house, you know, and you have to explain it. Well, no, it’s not a problem. We’ll either find them, shred them, you know, we have solutions for it, but it’s just that uneasiness that creates it. It’s like we have this very antiquated piece of the process. You hit dead on it. Yeah. You know, we’re moving light speed ahead in terms of full e close. I mean, you know, our company prosperity is, is that what we call hybrid e close, which means we really only have to print off, you know, five or six documents at closing in businesses? Yeah, yeah. I mean, you know, it’s not bad. It’s still. Why do you have to meet someone face to face and do all this and go through it?

 

[00:08:19] Speaker 1 Well, I think it probably helps prevent fraud, right? Because there’s a lot of fraud in the real estate industry.

 

[00:08:25] Speaker 2 Yeah. I mean, take a step back, though. How many things can you do online where you can verify identity effectively? You know, and I mean, I think that’s one of the things. Plus, you know, ideally you’ve gone through the transaction. And for us, at least since we’re primarily real realtor affiliate, right? What do we have? We have a realtor that we trust. Yeah. In the process, we have a loan consultant that we trust right in the process who all are kind of keeping their eyes and ears open for looking for flight. Yeah, yeah. And we have, you know, third parties all over the place, whether it be an appraiser, et cetera. So I think that the system’s a lot sounder today than it was historically at the closing table verifying identity. I think you can actually do a better job than just face to face. I mean, it’s like with all things digital, right? You know, people say, I don’t like to link, why would you underwrite a file with linked digital bank statements as opposed to bank statements that someone provides? Mm hmm. It’s impossible for someone, or, I would say, highly unlikely and difficult for someone to falsify digitally linked documents that are linked from your bank directly to your lender. Right, right. So we’re we’re increasing the the, you know, soundness of the transaction constantly as we move down the digital transaction route. It’s not a matter of, oh, we’re becoming loose. And I mean, I think that a big disservice happened in terms of mental ideas. When Rocket came out and I used to work for Rocket, let me let me be sure about that. But when Rocket came out with the Super Bowl commercial, that was like push button. Get Mortgage. Right, right. I loved it. And it was a jaw drop moment for me where I knew the game had changed, right? Because it was one of those things where, you know, you had. A million irons in the fire to get to that point. Someone beat you to the punch and they did it in the Super Bowl. Right, right. And you’re like, Oh no. Yeah, right. But that harkened back to everyone the ease of credit that occurred pre-crisis last time. Right? And really, that’s not what it was. Right, right. All of this document, like it’s only happening on, you know, let’s just let’s just make up a number here. One out of 10 to 20 transactions that are actually like that because it is the people who are provable W-2, you know them. You know where they work. You know, their bank account. You know exactly how much they can make. Not only that, these aren’t people who are pushing the threshold and affordability, right? These are, let’s call it, you know, people that are only paying a quarter of their of their gross income to all of their debts, right? For the most part. Right. So. So these are pretty vanilla people in terms of in terms of the transaction. It’s not someone that owns 22 companies in 10 properties. Yeah, it’s the most vanilla of the vanilla. Yeah, stuff out there. So from that standpoint, the push button get mortgage is not a bad risk. It’s not leading us down a bad credit path. It’s not leading us to a negative impact. Could it get there? Of course. Is it there today? Absolutely not.

 

[00:11:04] Speaker 1 Yeah. Well, I think I think really what got us into trouble in 07 08 was that whole stated income thing, right? Where you could just go to a bank and sign a statement that you made X.

 

[00:11:16] Speaker 2 That was a problem. Yeah, yeah. Yeah. I mean, you know, there is there is a lot of things that that led to that. And I mean, yeah, you know, when you take a step back in and I think people get nervous whenever housing gets hot.

 

[00:11:33] Speaker 1 Yeah, right. Yeah, yeah, for sure.

 

[00:11:34] Speaker 2 And they look back and they say, OK, is this a pending doom situation or is this all a board situation where we should be investing in rental properties? Right? And, you know, just just really quickly, you know, the economy is is in much better shape. And not only that, the individual American household is in much better shape financially, right? I mean, if you talk about the differences then versus now, I think the numbers are like in pre-crisis, people were like eight and a half percent of their disposable income was used on housing. And now it’s, you know, three percent, three and a half percent something like that, which is an all time low. Right. If you look at other factors like just housing, specifically vacancy rates, right? So they were up north of three percent, which means we were just building and building and building and people were buying without any idea of what to do with the houses, right? Upwards of three percent. Now we’re like some point nine percent, which is the lowest on record since, like the 60s, right? You know, if you look at the momentum, which is really the supply and demand issue we have with housing, like you have a tremendous amount of people that really, really want to buy a house in the next 12 months. And if you look, half of those people are first-time homebuyers, right? So it’s not people that are moving up or out. It’s their, you know, rents continue to get expensive. So the entire ecosystem seems pretty healthy, right?

 

[00:12:54] Speaker 1 It does. Now I would agree with you, absolutely. And I think there’s been a shortage of new homebuilding for the last decade. You know, and that and that’s going to take a long time for the industry to catch up on.

 

[00:13:07] Speaker 2 I mean, you know, when we look at sales, what, eight to 900000 units a year are new homes and 5.5 million are existing. So, you know, I don’t know, 10, 12 percent of the market is our new homes. And you know, that was an interesting thing when you connected the dots and led it from the last crisis. And right, we’re in an interesting inflection point with work in labor right now. But if you look back to that one, that Kraft construction, new construction, et cetera, it blew up. Mm hmm. Right. So you had all of these people that were skilled trades or whatever they had to go find new careers? Yup. You know, what happened is a lot of those people didn’t return to that industry. That’s correct. Right. So the weird thing that happened is it kind of distilled out a lot of the, you know, what we’d call affordable starter home track, home type, new builds and everything seemed to trend more. And there’s nothing wrong with this. I would do the same thing because everyone’s an entrepreneur, right? More custom homes, because if you only have so much labor, you’re going to use it to yield the highest result. Yeah. And so that had a lot to do with a lot of the custom home. So if you look at like, you know, the price of new home construction has gone up precipitously, absolutely. So you have a lot more of that and that labor is not necessarily coming back and never had come back, right? And now you hit this disruption. Not only do you have a labor disruption where people aren’t working and you know, not to get into the politics of that, whether that mattered or not, I have no idea. Right, right, right. But secondly, you had, of course, you have the supply constraints to labor, you

 

[00:14:31] Speaker 1 know, and we’re still going through it right now. You got yeah.

 

[00:14:33] Speaker 2 So so there’s actually right now there is more new home single-family homes under construction. Mm. It actually is exactly the same as it was in 06, 07 or five or six. Mm hmm. Right. So the number of homes under construction, you look at that and you say fantastic. But there’s like a counterargument, I think, which is like because we can’t deliver them, right?

 

[00:14:53] Speaker 1 Right. It’s like they’re and they’re taking a lot longer to build. So I’m saying, right? So if if it took, you know, two years ago. You could build a new home in four months. Now it’s taking sometimes seven, eight, nine 10 months, right? So your stats are skewed because your delivery time is longer 100 percent.

 

[00:15:12] Speaker 2 I mean, the most obvious thing for people to think about is like, I think that it’s probably enough in the news around like autos. If you looked at the number of automobiles under construction right now, it would be wild because they’re all sitting in parking lots waiting for microchips, right? And I ordered an electric Ford Mustang. Yeah, the marquee, right? Yeah, I already like, I don’t know. I always like order number 4000. I got it. Two weeks ago, I took like two years to get this thing right. I don’t know

 

[00:15:37] Speaker 1 that exactly, but you know, it was just for

 

[00:15:39] Speaker 2 two years. Well, yeah. And I mean, it was it was done the beginning of the year sitting there. Yeah. And you know, it took six months. It took six months to get on free to to get it delivered. It was wild. So it’s every industry. Yeah. And it’s an interesting thing. And I mean, you know, actually, if you want, I can even dovetail that into mortgage rates because it’s all related.

 

[00:15:58] Speaker 1 Yeah. Well, let’s do that. We’re going to take a quick break. We’re here with Justin Messer, chief operating officer of Prosperity Mortgage, and we’ll be right back. All right, we are back with Justin Masser, chief operating officer of Prosperity Mortgage, so. So tell us about you. So you ordered your Mustang. How long did you order it? You said it was two years, but I know it felt like to you.

 

[00:16:22] Speaker 2 I don’t even remember. You know, it didn’t even register on me. I remember when I did it in terms of the moment because it was like I was watching the release on TV and I was right outside. Detroit’s affords a big deal. Yeah, I like growing up. I thought Ford was the biggest auto company. I didn’t know General Motors was bigger. Yeah, because it was like Ford Country where I grew up. Yeah. So I was watching it and I said to my wife, You know, I’m just going to order this thing and see what happens. But, you know, just about a year and a half, I mean, it was huge whatever release was to two weeks ago. So yeah,

 

[00:16:49] Speaker 1 whatever that was. So how do you like the car?

 

[00:16:52] Speaker 2 It’s fantastic. I mean, it’s the first electric car I’ve ever driven. I actually did my first like charging yesterday in the wild. It was very easy. It was not. It was not crazy, but it’s really fast. So. So it’s it’s a little like too fast for someone like me. I’m not a great driver. So like the good thing is, you know, on on freeways around metro D.C., you kind of get a dart in and out every now and again. So it’s really useful, but it’s it’s a beautiful car. The interior is fantastic. It’s a it’s a GT version, so it’s really nice, right? Wheels are fantastic. Sharp looking car

 

[00:17:25] Speaker 1 would expect nothing less. Yeah, there you go.

 

[00:17:28] Speaker 2 But but you know, it’s the speed of it. And you know, I know everyone talks about the torque. Yeah, and everything. And it’s just it’s something. I mean, you hit your pedal on it on a gas and you at 50 miles per hour and you know, two seconds. Wow, it’s remarkable. And you know, one cool thing is I didn’t know how much of like club electric vehicles were until I got it. And then all of a sudden people in my neighborhood who never talked to me started talking to me because they have Teslas, right? And they’re like, you know, we made the decision that we’re going to accept you into our group, even though you have a Ford because you’re part of the momentum, you know you have it. So yeah, but it’s been a great experience so far. I couldn’t recommended enough. Yeah, you know, and yeah, that’s

 

[00:18:06] Speaker 1 all I got. So it’s four seater. It is. Yeah, you got it. So you got to have room for the kids. It’s like a little hatchback.

 

[00:18:11] Speaker 2 Yeah, you know, it’s it’s I mean, it’s an SUV technically, but it’s a compact SUV. I mean, you could fit two sets of golf clubs in the back if you really, really worked around. Yeah, yeah. But it’s not. It’s not. It’s not huge. My my Taurus actually had more trunk space right than this guy, right?

 

[00:18:27] Speaker 1 Right. Cool. So you said you were going to work the chip shortage into interest rates? Did I catch that right at the end of the last segment, like the

 

[00:18:35] Speaker 2 grand chip shortage? So the concept of of everything and you know, it has it has something to do with with with all of that. Mm hmm. So including labor and not having the labor supply, right? So so let’s think of the best way to do this. Here we go. Sure. You know, we wouldn’t even had that break, John. I was I was on fire. It’s so, so, so, so so, you know, if we think about simple supply and demand. Mm hmm. Right. You know, if I have if I have this cell phone in my hand and you really want it. Yes. And this is the only cell phone on the market, right? You’re willing to pay more than if there are five people behind you with the same cell phone willing to sell. Correct. Right. Therefore, if there is a scarcity of something meaning a limited supply, I can demand more prices. So when we talk about something like used cars is a great example, right? So the chip shortage means there aren’t many new cars available, right? So if people need a car because that’s something that you need, it’s a life necessity. Yes, right? If you have to have a car, you therefore have to go into the used car market in most cases. Yeah. Therefore, the used car market, right, as we’ve heard, reported, that’s why that is going so crazy. And you know, prices are $5000, $10000 more than you would normally anticipate. Right. It’s not only in cars, though, right? It’s in a lot of things because it’s hard to get anything right now. It’s hard to get furniture. It’s hard to get laptops. So the people that need it immediately are willing to pay more money just like a house, right? Houses are the number one thing that you know. It’s really funny if we go to the grocery store and we’re buying the thing as strawberries, and it was $4 last week and it’s four dollars and 40 cents this week were irritated. Yeah. If we look at our house and it was worth $400 and now it’s worth 440000, we are the happiest people in the world, right? It’s like one of the areas where we root for inflation in the country, right? Yes. And so that’s that’s one example, right? So. So that’s like a supply demand issue, right? The second thing we were talking about was labor, OK. And so when people are either unwilling, unmotivated to go to work or there are just more jobs than people need. What happens? People shift jobs. They go back only if they demand more income, etc. So, you know, let’s just take it in the in the simplest level, which is, you know, I think, you know, McDonald’s jobs were probably like $13 an hour and a lot of markets. And now I’ve seen stuff that’s like $20, right?

 

[00:20:51] Speaker 1 Or eight to 13 crazy, right? Whatever the numbers are,

 

[00:20:55] Speaker 2 whenever the numbers are right, they increase dramatically and there’s no way that cost doesn’t get passed through to your Big

 

[00:21:01] Speaker 1 Macs, right? They’ve gone up like a buck. Yeah.

 

[00:21:03] Speaker 2 Right, exactly. It’s hurt me. So, so so all of those things are inflation, which means it. Costs more tomorrow than it did yesterday right here than it does today. So the question is why is inflation a big deal? Let me try to let me try this one, so I have a cup of coffee in front me, right? OK. And I went to Dunkin Donuts this morning and I bought this, and let’s say I spent a dollar on it, right? OK, so my option today was to take that dollar and buy that cup of coffee. Yeah. Or John, I could have lent it to you. Sure. Right. And the reason I lend it to you is because when you pay me back, I want you to have made more money on that. So I want to have better. I want to be able to buy my cup of coffee and have some change left in my pocket. Right. So let’s keep it simple, and let’s keep rolling down this analogy, right? Okay. So today, instead of buying that cup of coffee, I came in with my dollar and I decided to lend it to you. Sure, I said, John, you know, I’m going to charge you five percent. So next year, when we meet each other at the same spot, you’re going to give me a dollar and five cents. Mm-Hmm. OK, so fast forward to a year you pay me back that dollar and five cents, just like we were saying with McDonald’s or with anything else. If I walk into the Dunkin Donuts in, the coffee is now a dollar and seven cents. Mm hmm. I don’t even have enough money to buy that cup.

 

[00:22:15] Speaker 1 You’ve lost two cents.

 

[00:22:16] Speaker 2 I’ve lost two cents, even though in my head I said I made five percent on that right? I really didn’t. I lost two cents.

 

[00:22:21] Speaker 1 Right, exactly. Right. Yeah, I’m sorry.

 

[00:22:23] Speaker 2 So, so the entire world is based on this idea of how much stuff is going to cost tomorrow because at the end of the day, interest rates, whether they be what we call the United States, ten year, that’s just the interest rate people charge to lend the United States money. Right. Mortgage rates are just the interest rate that people charge you to finance your house. They’re all just

 

[00:22:42] Speaker 1 loans. Yeah, right? Yeah.

 

[00:22:44] Speaker 2 So if we think prices are going to get way more expensive in the future? Interest rates have to go up because, you know, the people lending the money needed to feel like or know that they have more money when they get it back right than they did when they originally lent it. So all of this stuff, whether it be labor, whether it be supply constraints, whatever it happens to be, you know, or a wage price spiral that we’re in today where people get paid more money so they’re willing to pay more for all that stuff is all related. And it all comes down to why interest rates. It’s odd that they haven’t increased much more quickly, right? Because everyone thinks this inflation thing might be temporary.

 

[00:23:16] Speaker 1 Yeah. Well, what do you think? Do you think it’s temporary?

 

[00:23:19] Speaker 2 I think we’re starting to see cracks that it’s not.

 

[00:23:20] Speaker 1 Yeah, I think I agree with you.

 

[00:23:22] Speaker 2 Yeah, it’s hard to it’s hard to see through to see why it would be temporary. I mean, here’s the thing. There are areas you can look at, just like with anything like today, right now, I could probably tell you two or three areas that I think are bubbles. I can tell you two or three areas that I think are temporary and inflation. Lumber was the classic example of something that skyrocketed quickly. Yeah, the world, kind of. All the buzzers went off. Oh yeah. And then it kind of reset back. Yeah. So so from that standpoint, there are areas that are like that. But this phenomenon that we’re talking about, do we think that all of a sudden we’re going to tell everyone that’s making, you know, thirteen dollars or twenty dollars an hour at McDonald’s and now they’re going to make 10?

 

[00:23:55] Speaker 1 Yeah, it’s not going happen. You don’t put that genie back in the bottle. Right, right. It’s not. It’s not only that all the all of the, you know, just in my world with new home building, the subcontractors, you know, their their employees are all demanding more money because they’re hearing on the news, all the money that the homebuilders are making and blah blah blah. So, you know, all these people that have gotten raises, you’re exactly right. They’re not they’re not coming back down the grocery store workers that are getting paid more to come to work, right? It’s it’s it’s really amazing. And I think really the crux of it is a lot of it. And again, you know, we don’t do politics on this show, but there’s been a lot of government money that’s encouraged people to. I don’t know if it encouraged him to stay home, but that was a byproduct of the of the of the of the programs. We we spend about $500 a month on ads every month. And we’ve had literally nobody applying for our jobs for the last 18 months. And just in the last few weeks, we’ve started to get more and more people applying for jobs because the government money is running out. Coincidence? Maybe, right? But I’m not sure

 

[00:25:01] Speaker 2 it’s you know, there’s it’s interesting. You know, there is there’s a lot of studying going on right now about that, and a lot of a lot of people are looking at the states that remove benefits early versus the states that cap a mine. And I think the original data push that there was definitely a correlation. And now we’re seeing it kind of loosen up a little bit, right? To not necessarily be as strong. Yeah. Whether again, it’s tough to know who’s presenting the numbers is the key to look at.

 

[00:25:24] Speaker 1 Yeah, it doesn’t matter how we got here, really, because we’re here because everybody’s had to pay more money to get people to come to work, whether it’s because people didn’t want to be in the grocery store because there was they were on the front line with COVID, right? So people needed to be paid more money to be encouraged to come in and do the job. But that drives grocery prices, among other things. Yeah.

 

[00:25:44] Speaker 2 To be candid, I mean, most of this wage growth was seen in the lower portion of earners, which is very, very important. Yes. Right. And I think that’s a very positive trend. The three yeah, I think that’s unfortunate is that it seems we have a lockstep inflation move along with it. Yes. So once again, you know, inflation moving grocery prices, I mean, that’s essentially a tax that impacts every people, but people with less income, the more.

 

[00:26:07] Speaker 1 Exactly right.

 

[00:26:07] Speaker 2 Yeah, because if you have $100 in your. And you lose a dollar of it, it’s a lot less impactful if you have $5 in your pocket. Right, exactly. So even though wages have increased, you know the hope is that this inflation does tamp down and then the wage growth continues. Because I mean, wage growth is also one of the key factors to be able to support home price appreciation absolute if we don’t have economic growth and wage growth. How the heck can we continue to support, you know, four to five, let alone 10 percent growth in homeownership, you know, or or home price appreciation, rather just it’s impossible. So you have to root for it. You have to root for the American story and that sort of thing. So so there are positives as long as that inflation remains remains. I would say not out of control.

 

[00:26:50] Speaker 1 How about that, right? Well, exactly, exactly. But it is. Yeah, I mean, I think you hit the nail on the head. You know, they’re getting more money, but they’re spending more money to to buy what they need. So hopefully there’s some transitory inflation that. Yeah, that’ll settle down. Great. All right. Well, we’re going to take one more quick break and we’re going to come back for our final segment with Justin Mazur, Chief Operating Officer of Prosperity Mortgage. Thanks, Justin. So we’re back with Justin messer, chief operating officer of Prosperity Mortgage, so tell us a little bit about your college days. Where did you go to college?

 

[00:27:31] Speaker 2 I went to the University of Michigan in Ann Arbor.

 

[00:27:34] Speaker 1 What a great town.

 

[00:27:35] Speaker 2 It’s, you know, it’s one of those rare towns. I think there are several in throughout the country where the campus is really part of the town. It’s not a small city, it’s got 100 plus thousand people in it. It’s nice size. But you know, the campus is just all over the place in the city. So you really feel like you’re part of the city. And it’s not like, you know, it’s like NYU in Manhattan, right? It’s instead it’s just this great Midwest town. And actually, so I lived there for eight years, but I realized that when I told people I was in Ann Arbor for eight years, they thought I had like a messer’s degree or something, and I was like, Oh, no, no, no. I was there for four years and I lived above a bar for four years. Yeah, it was. It wasn’t anything like that, you know?

 

[00:28:14] Speaker 1 But so after college, you just stayed.

 

[00:28:16] Speaker 2 I did.

 

[00:28:16] Speaker 1 So why don’t people do that? Actually, I think. I mean, it’s a magnet when you get there, some people just stay.

 

[00:28:22] Speaker 2 It is. And you know, I had a lot of friends on the six and seven year plan for undergrad, so, you know, they still stuck around. So it was nice. And yeah, I had a I got a job just at well, now it’s called Rocket Mortgage, and it wasn’t always in downtown Detroit. It used to be in the in the suburbs a little bit. So it was a decent commute from Ann Arbor for me there.

 

[00:28:42] Speaker 1 Yeah. So so how you know, so I spent a little time there, obviously not much, but I made I made a comment during the break that it’s cold up up there. I was there in the wrong time of year. I’ve been there in summer and winter. But yeah, it’s it would be hard for me to handle that, that winter, I think. But I guess it helps you focus on your studies. I’m not sure know it makes

 

[00:29:01] Speaker 2 you stay in your room or your house and not go to class. It’s terrible. No. Yeah, the winters can. The winters can be brutal. And you know, I would just say growing up in the Upper Midwest, as we call it, in Michigan, right? The difference is it’s not only the cold, it’s that it’s gray. Yeah. So you have you have. It’s like, you know, in Russia or something like you have like two two months of gray sky, right? Very rarely do you have a beautifully crisp blue sky day, right? Maybe it has something to do with the lakes. I don’t really know, but you know, the whole until I moved to northern Virginia or D.C. actually, like ten years ago, right? The winter was beautiful and there were blue skies. Although it is cold, it was wonderful.

 

[00:29:40] Speaker 1 And then the further south you go it. Actually, you get more blue. Yeah, there you go. Yeah. So so how did you get? So did you go right from college to Rocket Mortgage? Yeah, OK.

 

[00:29:49] Speaker 2 Yeah. So I started right. There is kind of a traitor. So a bond trader, interest rate, risk management, kind of that scope of trading mortgages, that sort of thing. So I came right out of school. Did that? Yeah, I did that for, you know, almost six years ago and then came down to to D.C.. Cool.

 

[00:30:06] Speaker 1 So what do you through you? Kind of a curveball here. So what do you what do you think? Because you’re obviously a very successful. What are some of the keys to your success that you would potentially share with with a youngster that’s going to Michigan right now?

 

[00:30:21] Speaker 2 So, so here’s why I’m stopping. Yeah, I don’t know what the world looks like now. Mm hmm. So when when I was coming up, we were in the office, and that might seem like a weird thing for people five years from now, right? I’m not sure. Right. So this is a big quandary I have around, you know, in a problem that that I’m trying to struggle with with our organization, which is how do we identify talent, right? How do we identify people who are grabbing stuff? Because here’s here’s how I came up. I came up just having a voracious curiosity. So my curiosity drove. I wanted to not offend people, but put my nose in everyone’s business to understand how they did it, to understand their methods, to understand what happened. What did that mean? That meant a lot of late hours at the office. That meant sitting there and figuring stuff out. That meant just grabbing onto projects and taking them off of people’s plate. When I saw them working out and say, Hey, I’ll run with this to the goal line, right? And I’ll finish it right. And that’s kind of how I establish myself and what I did, which is I just worked really, really hard, right? I didn’t. I really was passionate about it. I didn’t think no matter what you do, I mean, I didn’t leave college being passionate about mortgages, you know, I mean, you know, you took a step back. I mean, when you go your whole college life thinking you’re going to work on Wall Street and you end up in a suburb of Detroit, you know, you immediately have to reset things and go, Is this where I want to be? Little did I know that was the absolute best path I ever happened for me. You write that the blessing in disguise in my life, so so when we take a step back, I mean, how do you do that? How do you see what people are working on when everyone’s working on their, on their own, on their own, in their own areas? I just I’m concerned about that. It’s it’s something that keeps me up at night to be candid with you.

 

[00:31:57] Speaker 1 Yeah, no, no. I mean, we struggle with that too. And I think my entire team and I, we talk about, you know, bringing new people into our into our world. You know, Nick and I have worked together in Nick’s, our producer here in the room with us today and we we work together in the office before we went virtual, right? So we already know what each other’s work ethic is. And, you know, same with some other folks on the on. A team at the new folks coming in, I think, have a real, you know, challenge for us both for us and for them to fit into the team. You know, it’s you don’t you don’t have the water cooler conversations and you really can’t see the work ethic. You don’t know if people are exactly getting to work on time. And you know the things that are that you usually look to measure people. So it’s it’s it is a

 

[00:32:42] Speaker 2 struggle and something some some rules are easier to measure in terms of numbers and productivity and widget making right? Right. Even that, like you say, OK, you a team member a makes more widgets than team member B. Does that mean you put team member A. into a leadership position, right? Well, no, because they have no ability to manage people because their personality is in that or they don’t want to do that. We know that right. It’s almost impossible to tell that now. I mean, a lot of these, a lot of team members and fortunately, because, you know, like all companies, we expanded dramatically during the pandemic. I mean, I know them more through a very brief interaction on a Zoom or teams call versus stopping by and making rounds and really getting to know them or even traveling into market and getting to know them because we’ve always been kind of a spread out company. Yeah, yeah. But you know, I’d be in market all the time talking to people sitting down, having, you know, lunches or dinners or whatever happens to me. And even that’s a little bit a little bit different now. Right?

 

[00:33:33] Speaker 1 Yeah, you got to sit further apart, right?

 

[00:33:35] Speaker 2 So sorry to answer your question with a with a big no,

 

[00:33:38] Speaker 1 no, no, no, no, no. And that’s why I knew it was a curveball because, you know, we hadn’t really we really hadn’t gone there. So let’s. So what inspires you? What drives you, what gets you out of bed every day?

 

[00:33:51] Speaker 2 So, you know, there’s there’s a mantra that that I like to use, which is iterate or die. Mm hmm. And it’s kind of a I stole it from a from a multitude of places. But there’s a great book called Ask a developer written by the guy who who founded Twilio. Coincidence that he went to the University of Michigan. But you know, it’s yeah, but but but you know, you know, and really, it’s kind of like this the survival of the fittest mentality that Darwin grow or die. Exactly. So. So you need to keep iterating. And so, you know, it’s the whole idea of find your core. And you know, for me and I think any company that I’m ever going to be a part of, whether it’s I die here or whether I find somewhere else. The bottom line is find your North Star. For us, it is being the absolute best purchase mortgage lender in the United States. The customer first, right? Right. It’s an easy Northstar to do. But then when you think of every project through that vein, so everything that comes through the door, you say, How does it impact my customer, right? And your customer can be the real turner. Our sense, it can be the borrower. It can be our own internal team members. How does it impact them and if it’s not going to impact them, right? I’m not going to waste custom development or amazing amount of time on it. Instead, I’m just going to find a solution that works right? Right. And so and so that’s what keeps me passionate is this constant iteration. You know, we build stuff and it’s never stops, right? So I wake up every single day with with whiteboard galore in my in my home office now, I used to be my office. You know, that’s that’s just constant like vomiting of thoughts. Yeah, of which I throw away, you know, 15 out of 16. And so so that’s what keeps us going. I mean, we have a we have a definite drive. We’re the largest affiliate purchase lender in the country right now where we’re a top 20 purchase lender in the country, but we have a drive in our drivers to be in the top five. And so it keeps me up and knowing that we have 500 team members and they all look to us to make sure their livelihood is there and that we continue to grow and we don’t get stale. Yeah, you know, we don’t get become irrelevant. Yeah, that’s that’s that’s really the passion from a work perspective,

 

[00:35:48] Speaker 1 at least, right? Right. Sounds good. And you know, I can tell you, being in the room with you and being in the room with Tim Wilson, both of you guys have an enormous amount of energy. You’re just radiate energy, you know, and happiness and positive the better you do. Yeah.

 

[00:36:05] Speaker 2 You know, we try. We try. Yeah.

 

[00:36:07] Speaker 1 I can feel it in the air. Yeah, yeah. So fantastic. So listen. Justin Messer, Chief Operating Officer of Prosperity Mortgage Thanks so much for coming in and really enjoyed the chat. It was. It was awesome. Hey, thanks for having me. Thank you. All right.