Ask the Expert: The Future of Wholesale Lending

August 5, 2021

Dominic Fahey Welcome to Ask the Expert where we ask industry leaders about their unique perspectives on how to navigate the most difficult challenges faced by the broader real estate and financial services ecosystem and give you a chance to ask the expert some of the most pressing questions on your mind. My name is Dominic Fahey and am the Vice President of Strategy at Doma, formerly known as State’s Title. And today, I’m excited to welcome Michael Brenning, President of Wholesale AmeriSave Wholesale to talk about “The Future of Wholesale Lending.”

Michael is the president of AmeriSave’s relaunched wholesale lending platform AWMS, a technology-driven platform bringing new processes and tech to the broader marketplace. Prior to joining AmeriSave, Michael ran a Non-Qm securitized or Deephaven Mortgage, where he quadrupled production in the correspondant channel and built a wholesale channel from the ground up. Before Deephaven, he was co-founder and senior executive at QLMS, the third-party origination channel of Quicken Loans, where he helped the platform grow to over four billion a month in origination volume.

Welcome, Michael. And we’re really excited to have you on here today.

Michael Brenning Dominic, thanks for having me. And like you and I joked about right before we launched the webinar, I’ll just say to all the attendees, thanks for joining us.

Dominic Fahey Pleasure to have you.

Michael Brenning Hopefully, you find some value in today’s call. I always try and make sure that anybody listening to myself speak gets a nugget of knowledge or two. And I’ll just disclaim that I’m sitting in the corner of an airport in Bend, Oregon, probably the most unique place I’ve ever been as a part of a webinar. I’m sitting against a rock wall. So that’s not a background on zoom. That’s a real rock wall sitting behind me. And so I’ll apologize if I move here and there real quick or if I pause midsentence because there’s a really loud announcement in the background. I’m going to do the best I can in the circumstances I’m in. So thanks for being flexible. Thanks for having me.

Dominic Fahey Yeah, well, great avenue, Michael, and thanks for accommodating despite your travel woes. So a little over a year ago now, you joined AmeriSave to build out their wholesale division, which I’m really sure is a very exciting new challenge for you. For those watching who aren’t familiar, tell us about AmeriSave’s wholesale.

Michael Brenning Yeah, so, you know, a lot of wholesale lending choices out there for the broker community, why launch another one? There’s already several hundred choices and, you know, many, many, many great choices for the broker community. So I set out with a couple of gentlemen that run AmeriSave, the parent company, the mother ship to the AmeriSave Mortgage Corporation, set out with them in May of last year and 2020 middle of the pandemic to build something that they saw as a vision. They saw that, you know, they have a technology called AUSSIE, which is a decisioning engine, a processing engine, origination engine, kind of like an underwriter, processor, originator, compliance person all in one. And I’m not trying to overblow the technology, but I saw the technology. I saw the personalities and the owner and CEO and I saw their vision for launching a wholesale channel and what that could really mean for the broker community. Most importantly, how could this benefit the brokerage community. I just thought, you know what, let me build this from the ground up. Let me grab the team that I want to grab. So, fortunately, I was given a blank check and a white canvas to do this the right way to put the AUSSIE technology to work. It took us a solid year, Dominic, to go from, you know, first couple of hires on the executive team, June one of last year, working in my basement for a couple of months to getting into an office in July last year, building the team out. We are a couple of hundred people now. We launched on June 14th of this year, so just 45-50 short days ago.

And, you know, we’ve accrued a pretty significant pipeline and we were getting a lot of positive reads from the broker community. And that’s what we set out to do, is give brokers a clean, new, fresh choice that is powered by what I would call revolutionary technology. And I think that’s the thing that most wholesale lenders talk about all the time. Try my technology, look at my cool technology. But most of it is built on legacy platforms, right? Most of it’s built on, you know, DOS-based systems. There are a few big competitors out there still operating on DOS. They put shiny images over the top of it, but it’s still DOS. And, you know, there’s some legacy origination systems that most brokers are beholden to in those wholesale lenders have to work within. We’re not beholden to it. Everything that we run off of over here, at AWMS is wholly owned and created internally. AUSSIE’s created internally. CRM, another big system that we used to originate loans and process loans, is built internally. And our brand new AUSSIE broker portal was built internally. And that’s something I definitely want to spend a minute talking about. Just really quick, when we set out to build this thing, we set out to build something that was the apple of tech. Right. The target of service and the price of Walmart. So just think about that for a second. You want to be a price leader. You want to be a super clean, easy to use tech leader, and you want to be a service leader. And that’s not something that’s generally easily packaged together in any industry. Right, Dom. Like you can’t normally put price service and tech together and have it be affordable. Generally, if you’re Walmart, you’ve got a clear mission statement to your consumer base. I’m going to be a price leader. You’re going to come in. We may not love the experience, but you’re going to get the best deal on something you’ve got to target. You know, you’re going to get the same consistent repeated service, a smile on everybody’s face, you know, where everything is going to be. And it’s going to be in stock. When you buy an Apple iPhone or an Apple product, you know what you’re going to do. You’re going to unwrap the box, going to take the cellophane off. You’re going to open it. You’re going to power on. You’re going to pick the language. And that’s our AUSSIE broker portal.

You want to be a price leader. You want to be a super clean, easy to use tech leader, and you want to be a service leader. And that’s not something that’s generally easily packaged together in any industry.

We wanted to build the technology that was so damn easy for the broker community to use that they would fall in love with it because it’s just like turning on an iPhone. They don’t have to do 10 loans with us to learn how to use it. Their first loan, it’s going to self-guide them through the process. And so we’re here to offer brokers a fresh new choice. We’re here to offer them what we call the 777 commitment. That’s conditional approval within seven hours of submitting your initial underwriting documents, which I think is much faster than most in the industry. Seven days to have our stuff done. You know, I don’t want to say it’s going to be ready to close in seven days. It very often will be. But we’re going to control the things we can control as a lender, which is a very large part of things in the origination process. We’re going to control those and have those wrapped in seven days. And then once we have the CPC, clear to close, ready to be issued, we’re going to have a dock package and a CD out and the closing agent or title company hands to get the deal done and get the thing wrapped up. And generally, we’re putting closing packages on purchases out now fifteen, twenty days ahead of a contract date or targeted closing date. So, brokers, we’re going to move past the history of AWMS. We’re here to support. We’re here to offer service, great pricing, great technology. Our model is built low cost because we’re using AUSSIE. We’re using this cool technology we built. We can sustain being a very, very, very competitive price outlet for you whilst providing you kickass service. You are going to love the people you get to engage with on our team. We hire a very special, unique individual and I know you’re going to love our technology. So let’s get it. Let’s get on with this, Dom. Thanks for giving me a little shot to get going here.

Dominic Fahey Yeah. So that sounds really powerful. Could you tell us how you were able to achieve all those goals for AUSSIE being so easy to use and such a low-cost provider? Like, how is that possible?

Michael Brenning Yeah, so the model itself, you know, thankfully, the gentleman that I work with that built AUSSIE four years ahead of me joining, they started that perfection process. They realize that you can’t continue to throw people at the origination process. And that’s what the mortgage industry has done for how long the history of the mortgage industry and you look at boom cycles, mortgage hires, another hundred thousand hundred fifty thousand people into the industry. Bust cycles. And we’re kind of in-between a boom and bust cycle right now. Last year was clearly a boom. The years leading up to that were not quite bust, but pretty close. We’re kind of maybe heading towards a little bit of a bust cycle here in terms of interest rates eventually going up and things going way down. But generally, leaders at lenders have just staffed up. That’s how they’ve dealt with the booms.

Dominic Fahey Right, throw bodies at it.

Michael Brenning Right. And this is not a single model, right? You hire thousands of people, you pay them one and a half to two times what you’re paying before service suffers, morale suffers, productivity suffers. And then when it goes bust, you’ve got to layoff thousands. And that’s not something my leadership team that I’m a part of wanted to do as a parent company or at the divisional level. So we said, hey, look at this. Look at this AUSSIE technology, it creates scale. It’s artificial intelligence, it’s optical character recognition. It is direct feeds that you’d expect with Fannie and Freddie and day one certainty in those types of things. It’s a DULPA connection, but it also has its own brain and engine to help make decisions so AUSSIE can set and clear conditions. So that creates skill for us. And the vision was, hey, it’s really working well in our mother ship and the consumer direct division. Let’s put that up to the brokerage community. Let them get the benefit of this crazy-ass technology, this crazy, consistent technology that’s at their fingertips 24/7. Like, again, AUSSIE is a technology. Right, Dom. She doesn’t take weekends off. She doesn’t go to bed at night. She doesn’t get sick. She doesn’t get covid, she just plows ahead. So if a broker working with us wants to submit a document to have it underwritten at 2:00 in the morning on a Saturday after a couple of coldies with their friends, they can do that. And AUSSIE he will review it. She will go, hmm, I think I know what this is. This is a W-2, this is a paystub, this is a tax return. This is an insurance check page. This is what she can understand these things. She can sign off on it and she can move the loan forward and you can literally watch things get approved or in our words are words turned green and the modules in a broker that’s working with us knows what that means because they see these 13 modules, these certain segments of a loan we call modules. We’ve broken the loan down into thirteen pieces. Basically, they can watch those things literally go green on their screen as they’re working with us, as are on the phone with one of our teammates. Pretty cool stuff.

Dominic Fahey That’s pretty cool. And it definitely resonates for us at Doma. We throw a similar technology and how to automate the title and escrow process. So looking at the future of wholesale lending, how does that align with AmeriSave’s long-term vision? Like what do you see for the future of wholesale lending?

Michael Brenning So wholesale continues to grow, and so if you go back precrisis not the most recent pandemic crisis, but the, you know, the crisis housing crisis. We’ll call it ’07, ’08, ’09, ’10 and into the recovery of ’10 through ’14. Brokers lost almost the entire industry. Right. Brokers that have been running 50 percent plus heading into that previous housing crisis, which was a great market share to have. And it had been there for quite a while. And the independent broker was, you know, was the market cheerleader. They were in a number one position. Banks, money center banks were number two and independent mortgage bankers were number three. And if you look at what happened postcrisis, banks backed away from government lending and backed away from lower score conventional lending, and they backed away from a lot of jumbo coming out of the initial housing crisis, the original housing crisis. And so independent mortgage bankers took over a lot of that share. We’ve read about this, right? We’ve watched videos. We’ve seen stories. We’ve seen articles written over the last five or six years that independent mortgage bankers have been growing share. Well now here in the last two or three years, with the help of AIME and NAM and some other great organizations out there. And frankly, some of the great top wholesale lenders that were aspiring to be and compete with, the broker segments beginning to heal and grow again. And so every number that I’ve seen, it’s gone from, you know, 13 to 14 to 16 to 17. I think we’ve crested over 20, maybe even 21 percent market share in the broker space.

So as I look out, I don’t see why that changes. As long as the wholesale lender community remains vibrant and continues to think with the mentality of how can I make my broker better, sharper, faster, more unique in the local marketplace? If lenders think that way and they build technology and they build processes and they help with marketing and they drive the brokers imagery in the local market, there’s no reason, you know, five years from now as we go up that far and call it 2026, that brokers couldn’t be back at 50 percent market share. That’s not music to an independent mortgage bankers ears. That’s not music to a to retail brick and mortar franchises. Or a money center banks years. But the reality is when done right and we are doing it right now, we have been since the housing crisis in terms of the Safe Act and all the regulations that come with being a broker now and being an originator, it’s being done right. The broker has the secret weapon, right? It is choice. Choice is the secret weapon. And I think the more consumers understand that and the more that wholesale lenders help consumers understand that and the more that brokers help consumers understand that the brokers secret weapon is choice and they can shop five, six, ten great lenders, kind of like their own mini lending tree to the benefit of the consumer. That’s what the future wholesale starts to really look like. So I’m excited about what we can do in that space because with our technology and our pension for putting unique things in the hands of our brokers, we think we can help them stand out. And I think that is going to lead us to a discussion here right now. You know, you and I talked about this in prep for this. You know, what is the biggest challenge or challenges that the broker faces in continuing to grow the share? I mean, they’ve done a great job going it from zero to 10, 10 to 20. Now, how do they get it to 30, 35, 40 percent? White touched on a little bit about a minute ago, but what they’re facing, it’s not going to be easy. They’re facing some very large lenders that went public both in the retail, wholesale and correspondant space and raised billions and billions and billions of dollars in war chest that they’re now putting to work. They’re now putting that money to work in new technology, new process, new branches, you know, new products. And so they’re not going to make it easy for the broker community to continue to expand and grab share. There’s new fintech entrants, right? You’re seeing names we’ve never heard of before, you know, Figure just bought or merged with or I think it was a merger. But I really think Figure’s, the one that brought the money to the table they just purchased or merged with HomeBridge was really unique play.

Dominic Fahey The press release did say merger, but it’s interesting.

Michael Brenning OK, there you go. Yeah. You know, that’s a firm that’s, you know, founded by some of the most brilliant people in the industry in Mike Cagney that founded SoFi, right. And they went from second mortgage lender, first mortgage. So anyway, my point is brokers are going to experience a lot of new competitors that they’ve never experienced before, not just independent mortgage banks, not just money center banks. And so we as a wholesale lending community, have to do a great job of staying one step ahead. We’ve got to help them compete against the cash offer. I mean, there are companies out there, not just well-heeled buyers that are cash offers, but there are now platforms and companies and names I’m not going to share, that are providing consumers with the ammunition to use this company’s money or these companies in the war chest to buy a home in cash and then do a mortgage after the fact, which really obviates the broker’s role in the entire transaction. Right. It puts it back into the originator arm of that, you know, fintech place. It’s offering the cash. So, you know, I see a lot of challenges ahead for the broker community. I also see a lot of wind at their back in terms of a really strong wholesale lender community pushing them forward and providing them new tech, providing the new ideas, and providing them their thoughts.

Dominic Fahey So I think it brings up a great point. Like as the broker community hopefully scales from 20 percent market share back up to close to 50 percent, given your experience, how do you scale a wholesale division to get to handle that volume? What are the key technology systems and partnerships you need to have in place?

Michael Brenning Now, that’s a great question. So, you know, we talked a little bit about a few minutes ago, but first of all, you have to have a scalable technological platform. You can’t. The answer is you can’t scale with that. You couldn’t go from 20 to even 30 percent. I mean, think about the size of our industry and the people that don’t know this. The US mortgage industry is literally the largest industry in the world. Crazy, right? We all live in a pretty small community. There are 300, 400 thousand of us, depending on whether you count banks and credit cards into the equation or not. So it’s a pretty small population of people that run or work in the largest industry in the world. So we’re talking trillions every year. Right. So if you talk about a 20 percent to 30 percent jump, let alone 20 percent to 50 percent, you’re talking hundreds of billions of dollars, maybe even a trillion dollars, depending on the size of the market in a given year in terms of growth. How do you handle that? Well, last year was a pretty good leading indicator of how different entities tackled that. It’s fortunate for me that I was building the company that I’m now running at a time when we went through and kind of tested AUSSIE to her greatest degree last year. My parent company, the mothership, as I call her, AmeriSave consumer direct, which is really, you know, the company that’s afforded us this opportunity to help the broker community with AUSSIE and the different funding that they put in place and the different resources they put in place. They grew from call it a billion and a half a month in production to three and a half to four billion a month in production. And we really didn’t add that much personnel. We didn’t go after with people we went out with it with AUSSIE. We went at it with more investments in AUSSIE. And so number one, to scale at a wholesale lender level or at a broker level, you have to be thinking technology. How do I scale my technology? Do I have the technology today? If I was fortunate enough to grow from 20 to 30 percent, could I somehow grab my requisite share of that right now without doing two thousand more people out? And I think the answer in most wholesale lending platforms and in most brokers shops is no. The only way most people can grow their share right now is to throw people and bodies at it. And that’s not I’m not hating on people. I love people. I love my teammates. And we’ve got to really value, of course. But what’s allowed us to grow as fast as we have and will allow us to grab our share and help brokers grab more share on their end is because of AUSSIE, when we grow ten thousand units in a month, I don’t need another one thousand people. I need another one hundred people, one-tenth of what it normally takes.

Number one, to scale at a wholesale lender level or at a broker level, you have to be thinking technology. How do I scale my technology? Do I have the technology today?

And so when I talked earlier about the target of service, I can continue to offer the target of service type of we can because we’re not hiring everybody. We’re hiring people were very selective about. You know, with people we’ve worked with in the past or people that have worked with people we’ve worked within the past. So that culture stays committed and it stays super high talent. So people are a key part of how you grow and how you scale. But people have to be the added addition to the recipe, not the core recipe. Like flour is the core recipe and making bread. Right, you put some water in and some other things. Our core flour is AUSSIE and then we feather in our people. So I mean, that’s how you do it. And so brokers, the same message for you. You need to do an audit every year of the technology that you’re using. You need to look at your LOS. Are you using a loan origination system that is, you know, a month-to-month subscription per seat? Is it an annual contract? Is it flexing with regulatory changes? Is it adaptive? Is it full of bugs every time something changes? Is it Web-based? Is it an installation you have to go through? Does it go down often? Does it fit within your budget? Could you grow with it? If you wanted to go from a small broker to a mid-sized broker to a large broker, to a maybe a quasi broker, you know, many correspondant, non delegated originator, could the technology using today take you down that path? And Dominic, I think the answer ninety-nine times out of one hundred right now would be, no, it can’t and it doesn’t. And it’s legacy and it’s outdated. And so brokers need to be doing those audits not just on their LOS, but also on their wholesale lenders and saying, hey, do my wholesale lenders have what it takes to help me maybe with my LOS situation, but also do they have the LOS in the processing engines to scale and grow with me? Because it doesn’t it’s not going to do them any good if they can grow rapidly and they’ve set themselves up really well at the broker level and then their wholesale lender can’t support them. Right. So it’s got to be kind of this symbiotic exchange and review. The other thing, brokers need to always be taking a look at annually is, do you have a CRM? A customer relationship management system, a marketing system? Are you following up with your customers?

Our marketing team did a really cool study about two months ago with Hamline University, which is a local school university in Minnesota. It’s the oldest university in Minnesota. And we challenged some professors, two professors, and three data science majors, and three marketing majors to come together, this eight-person team for a few months. And they did a really broad survey of America. They surveyed seventy five thousand one hundred thousand recent mortgage buyers, people that had gotten a mortgage, and asked them a series of questions. And they even did some funny videos, or they went to people that had closed the loan a month or two ago and asked them, you know, hey, if I give you a Starbucks card, will you spend five minutes with me? Sure. Do you remember the name of the mortgage company that got your mortgage from? I was probably like a one out of 10. When is got to the question of ” do you remember the name of your loan officer?” It was real bad. It was like, you know, one of the 30 remember the name of the loan officer and maybe got it wrong when they guessed and that’s not a shot at anybody that’s across any segment. My point is broker’s, CRM is a huge part of your tech strategy. And needs to be a huge part of your origination strategy. You need to stay in front of our customers or we lose that share to a community bank, to a credit union, to a brick and mortar operation. You know, don’t want to put all this work into a building, a customer relationship and then just let it walk each time. So I think the retention rate that we saw through all these studies is about seven percent of respondents remember the name of their mortgage broker or mortgage company, and then three and a half to four percent remember the loan officer. We’ve got to do a better job of doing that together. And that’s something that we plan on helping our brokers do through some systems and some processes we’re creating right now, Dominic, to reroute customers that come into our servicing portfolio from a broker. They’ve originated a loan with us, to reroute those opportunities back to them to be looking at multiple listing services leads as somebody goes to list their house. Can we get ahead of that for the broker and give them that lead and things like that that help the brokers stay in front of their customer and hopefully help the brokers, help the broker community be a much higher percentage holder of a follow on business and repeat business from their customer base that remembers their name because you’re following up with them.

Dominic Fahey I think if they asked respondents in that survey, how often do they remember their title and escrow for provider, it would be very low. And we’re working hard at Doma to change that and provide the next generation that experience.

Michael Brenning We’re in such a transactional industry. And we were such we’re such a transactional ecosystem. Right. Mortgage and title and insurance that we’ve got to get less transactional, more relational. And so there’s a kind of a parting statement, not an answer. You know, we need to get more relational, less transactional and technology can help with that.

We’re in such a transactional industry. And we were such we’re such a transactional ecosystem. Right. Mortgage and title and insurance that we’ve got to get less transactional, more relational.

Dominic Fahey So we wanted to leave time for audience questions. We had a few come in. Here’s one question from an audience member that goes back to AUSSIE, what you were talking about before. Can you give a high-level overview of the benefits of artificial intelligence underwriting, maybe for the broker community and also for AmeriSave?

Michael Brenning Yeah, absolutely, so think of it this way, I think most systems we’ve ever used as consumers, whether applying for a mortgage or getting a credit card or buying something online, you go through this data entry process. Everything is data entry. So all of these fields using big data, when a broker starts to put stuff into our system, it starts to fill stuff out for him. It kind of knows, hey, is this you know, hey, Phil Rosenbloom, do you still live at this address? You’re using data that’s available behind the scenes called IBM Watson or the Azure platform, all these different technologies that have all the data from all these different transactions and consumers in it. We’re just pulling from that and trying to fill in blanks for people. USPS validations form free and account check OCR technology. You send a document in, it scans it. It says, hey, I think I know what this is, but I’m going to use big data behind the scenes and some artificial intelligence to run millions of algorithms and scenarios to say, yes, this absolutely is this borrower’s W-2. These numbers do appear to be correct because I pinged it against, you know, the work number and got validation on the earnings. And now AUSSIE can sign off on it. So it’s an ecosystem that creates the ability for AUSSIE to function like a human being. And I know that’s been overdone. And we’ve watched movies like iRobot. So far over five years of having AUSSIE as an organization and one year for us kind of testing it and running it. Now, almost two months of operations. It’s not going to say she’s error-free because it’d be ridiculous to say no technology or processes error-free, but she certainly executes at a near error-free rate, which is a significant improvement over, you know, what humans do. Right. And so that’s a huge benefit to brokers creating throughput and speed for them and for our own teammates as well.

Dominic Fahey So from a broker experience today, would I expect faster turnaround times on submissions that are processed through AUSSIE the platform? Is that right?

Michael Brenning I want our brokers to think hours, not days and weeks. That’s what we should be thinking with AmeriSave Wholesale. Hours. Minutes to get an answer. If you call us or chat with us or e-mail us hours to have stuff get cleared, reviewed, and dealt with. That’s the pace that we get to play out because of AUSSIE and because of some rules we’ve created. We’ve created what we call a junior underwriter role, which is essentially a college graduate with a cool degree in statistics, finance, economics, communications, things where they can think on their feet and really critically with numbers. We’re we’ve broken the mortgage process again down to those 13 modules. And then we take college graduates instead of trying to teach somebody the mortgage industry or the title industry, which, you know, can take years and years and years and years and years to get them up to speed. Like, can we get them up to speed in about four or five weeks because we just slice one little piece of one module? Hey, you’re going to learn how to become a W-2 salaried underwriter, junior underwriter. So they do the review, they feed AUSSIE she double checks it. She ping’s big data and runs some of the algorithms and artificial intelligence scenarios that she needs to run. And she comes back and validates. And then at the end of the process, we have an underwriter, you know, to make sure we’re doing all the appropriate things we need to do from a compliance and end reps and warrants standpoint. We have a human being at the end. Very quickly, do a double check of four or five key things on a file.

I want our brokers to think hours, not days and weeks.

Dominic Fahey That definitely resonates with me, Michael, on our vision of how we want to bring the instant experience to the title and escrow process. Another audience question that came in is, how long do you see the market sustaining this volume that we see today?

Michael Brenning Not long, and I don’t mean to rain on anybody’s parade. We’ve been very fortunate to go through a massive refi boom, probably the largest most of us have ever seen in our career and probably will ever see because of a very artificial thing, in the pandemic and covid. Then we started to see things kind of settle down and we saw masks go away and you saw the economy start to rebound a little bit. And then we saw a couple of things working in contrast against each other that normally go in constant. You start to see core inflation creep in, but you still saw a sluggish economy, which those two things don’t normally go hand in hand, like core inflation was going up because there was such pent up demand for certain things. Yet people aren’t going back to work at the levels that generally create core inflation like that. Right. We saw huge levels of unemployment and these things will ultimately center off against each other. They’ll balance each other out. And so you’re going to have higher inflation and you’re going to have high unemployment, which is going to feed higher inflation. And at some point, the government’s going to have to tamp that down. It’s what the Federal Reserve does and the Treasury does in tangent together. They’re going to manage monetary supply. They’re going to manage interest rates. And so at some point and again, this is where the crystal ball conversations worth nothing, like you can ask me and then a thousand people behind me, hey, when are interest rates going to go up?

They’re going to go up this year at some point. Right. They’re going to slowly rise, you know unless and here’s the thing to say, unless about right. Unless this pandemic round two comes around and the delta variant isn’t controlled, not enough people got their vaccination and we’re sharing it with you. Even when we are vaccinated, we’re sharing with each other, like if that becomes a problem or offices get shut down again. The only response that federal governments and Treasury departments have across the world is to increase monetary supply, stimulate economies through lower interest rates or negative interest rates if you’re in Japan and in trying to restimulate things. So we’re in an interesting spot right now where we’re not in a boom. Definitely haven’t seen a bust yet. We’re getting this little burst because of the adverse market be going away and a little prop down in interest rates. I think a little drop in interest rates here recently because of fears of the delta variant. And I’ll be honest with you, lenders have absolutely taken their margins down to the bare bones, some of the lowest numbers I’ve ever seen in wholesale, if not the lowest over the last four months to kind of artificially prop rates down, prop them down. And then we say prop up, prop down rates are lower right now than they technically should be because wholesale lenders have taken their margins down to unsustainable levels in my mind and my eyes. So interesting times. It should be good rest of the year. But, you know, we do need to plan and have business models, brokers and competitors and everybody in this ecosystem that are resilient to interest rate increases. That means product diversification, new marketing strategies. And you’re just going to have to grab some share from your competition.

Dominic Fahey We have time for one more question from the audience. What is your biggest piece of advice to new and veteran brokers to be successful in the industry?

Michael Brenning Well, that’s a great question, and I’m going to say it’s the same thing for both people and I think veterans will go, heck yeah, that makes sense, but they’ll probably look themselves in the mirror and say, I haven’t been doing it. It’s very careful, conscientious, wholesale lender selection. And I’m not just saying primary wholesale lender selection, not just like your UWMs and you AWMS’s and your Rocket Pro’s and your Homepoint’s for your mainstream business. But brokers need to be thinking veteran and new. Do I have the right complementary lenders on my panel? Think of your lenders as a panel. Do you have a very strong panel that can offer the community the products that they need, not just conventional, but some of the nuance conventional products? Not just FHA, but some of the nuanced FHA products. Not just VA, but all the elements of the jumbo, non-QM, maybe a second mortgage product. And a HELOC product, maybe a personal loan product, maybe a small business product. If you want to really be resilient to ups and downs and changes in the market and really be thinking forward in your business, whether you’re a veteran or a new entrant, round out your panel of wholesale lenders and have one or two that are really good at each one of those segments I just described. You’ll appreciate yourself for it. It’s a lot of extra work to do all those applications. But you should do this annually. You should do it once a year. Are the folks I’m working with, do I perceived them to still be the best? And be open to listening to a pitch from a new entrant into the wholesale lending community or somebody that’s invested and says, hey, I’ve changed, give me a second shot. I think you want to do those reviews every year.

Dominic Fahey Michael, I think that’s great advice. Thank you for taking the time today. I’m glad we were able to work it out despite the travel woes. Your insights and experience are extremely valuable, and I really appreciate you taking the time.

Michael Brenning Dominic, thanks for having me, sir. Thanks for having me and I hope we get to do this again. Very much appreciate the invitation.

Dominic Fahey Thanks so much.

Michael Brenning Take care.

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