Modern Lending Podcast | Dan Hanson

Alec has his Chief Retail Production Officer and father on the podcast to discuss the changes that are occurring in the industry and how to stay ahead of the tide when it comes to technology and your business. Dan also gives so great tips to different job levels in the industry.

Your snippet of this episode of the Modern Lending Podcast:

  • Technology equals change
  • The Taxi Driver didn't realize he was looking at the end of his business
  • Bad things happen to companies that don't make money
  • DO NOT leave your emails not responded to for three days

Episode Transcribe

Alec Hanson:
Hey, everybody.

Welcome to episode two of the Modern Lending Podcast.

It's Alec Hanson. Extremely excited to bring on a guest today because not many people get to bring on their dad, who actually is an industry icon. So, for those of you that don't know Dan Hanson or new to the industry, man, this guy has done it all. I'm really excited to bring his stories and his wisdom to you guys today. It's going to be a great episode.
As a reminder, please, please, please, subscribe, like, share, help a brother out. Come on. We got to spread the message. Without further ado, let's bring on Dan Hanson.
Hello, everyone, and welcome back to the Modern Lending Podcast. This is going to be a fun conversation. I knew it. The second this was set up, I knew this is going to be a fun conversation. So, for those of you that are tuning in or watching on YouTube, hello. We are back and we are sitting here with the legend Dan Hanson.

Dan Hanson:
Legend usually means the old guy.

Alec Hanson:
I'm really excited, guys. So, a lot of you know Dan from his mortgage career, and we'll give him a second to talk about what he's done and accomplished, and where he's at in his life, and what wisdom he has to impart on us. A lot of you don't know Dan got me into this business because he tricked me, because I was stupid and I asked my dad for a job when I was in college, and then I was shipping loan files in Oakland. So, thank you for that. I mean, I only got mugged twice. So, it was amazing. I learned a ton about mortgage.

Dan Hanson:
That's what you'll learn on it.

Alec Hanson:
So, as we get started here, Dan, share with everybody a little bit of your background because some people I know that are brand new to the industry, so they're still figuring out what mortgage is. They don't know what's happened and who you are in your career. So, give everybody a couple of minutes just on what you've done, what you've seen, and frame it up so people know who's talking.

Dan Hanson:
Okay. Well, first of all, it's a thrill to be here with the 100 podcast guy in 100 days.

Alec Hanson:
We're podcasting 100 days. Yeah.

Dan Hanson:
To be interviewed by that is a special treat. It's on my resume now.

Alec Hanson:
Congrats.

Dan Hanson:
I started out of college not sure like most people what they were going to do, and I was a tennis player at the time, believe it or not.

Alec Hanson:
Hold on a second, not just a tennis player. You didn't just play tennis.

Dan Hanson:
No.

Alec Hanson:
You were competitively competent.

Dan Hanson:
Yeah. We had a good run there when I actually had a body when we're storing ice. So, I got married right out of college, and my wife and I, we're trying to figure out what to do with ourselves. I said, "Well, I can play tennis and teach tennis and we can make some income, and you can finish your teaching credential and move on."
So, we did that for a few years and then-

Alec Hanson:
Hold on. Hold on. What was your highest achievement in tennis? You were all-American in college.

Dan Hanson:
Yeah, I was a two-time all-American.

Alec Hanson:
Oh, sorry. Whoa! Sorry. Don't miss the two-time.

Dan Hanson:
Yeah. Don't miss that.

Alec Hanson:
Then after, in your competitive career, where did you ascend to? What was the highest you got?

Dan Hanson:
Well, I played in a lot of the satellite tours and a lot of the European tours. You realize very quickly when you play Jimmy Connors that he plays a different game than you do. So, I realized very quickly I need to find a new sport. Thanks, Jimmy, for the lesson and helping me understand that I-

Alec Hanson:
He's listening. He tunes in.

Dan Hanson:
I know.

Alec Hanson:
He's a huge subscriber.

Dan Hanson:
He should because he showed me that the game I was playing had very little resemblance to the one he was playing. I did enjoy a lot of competitive career there. By the way, I think a competitive career, if you're in the mortgage industry especially, which is a very entrepreneurial business and a very relationship-driven business, if you're not a competitor, it's very hard to succeed in this business because it's a business that relies on you to hear a lot of nos and feel a lot of rejection, and get some disappointments, and be able to get off the mat and get back in the game. So, my number one thing when I ever hire anybody in our industry is I want to find out that they're a competitor.

Alec Hanson:
So, let's go there. You were competing in tennis.

Dan Hanson:
Yup.

Alec Hanson:
You were coaching in tennis.

Dan Hanson:
Yup.

Alec Hanson:
Then you said you needed a real job.

Dan Hanson:
I needed a real job. Didn't know what to do. Actually, I had a recruiting firm call me and introduced me to the title business.

Alec Hanson:
Nice.

Dan Hanson:
I had no idea what title was. I was living in Laguna Niguel, which is in Southern California, and this opportunity was in Riverside, which is inland California, a very different world.

Alec Hanson:
Yeah, hour and a half drive. You'd go toll road back then.

Dan Hanson:
No. It was a lot of fun. I went to work in title industry and really understood how real estate agents and home builders work with their vendors. I got to understand the relationship building skills that is endemic to the title industry. I got to learn a little bit about what real estate is. So, it was a great experience. I worked for a company called Safe go back in those days, which has long since been acquired by Chicago Title and others.
The reality is what I learned from that experience was how many individuals are involved in the real estate transaction.

Alec Hanson:
Oh, there's a lot.

Dan Hanson:
From termite to title-

Alec Hanson:
Inspector. Oh, yeah.

Dan Hanson:
... to escrow, obviously, mortgage is probably the biggest piece of that whole transaction because without capital, hard to do much.

Alec Hanson:
Start to buy a home.

Dan Hanson:
Yeah. So, mortgage, how did you get stuck in the mortgage?

Alec Hanson:
A friend of mine named Gary Anderson who was-

Dan Hanson:
Oh, a lot of people know Gary. He left a legacy on this industry.

Alec Hanson:
Gary was a unique visionary person in the mortgage space. I could talk for a long time about Gary, but he knew me from the title industry, and he was running a company called Directors Mortgage out in Riverside and said, "Why don't you come and work with me in the mortgage space?"

Dan Hanson:
You know what's funny about Directors and I know you'll get into it in a second, but I ended up talking and recruiting a lot of people in this industry, and Directors has a place in people's hearts. If someone was a Directors' employee-

Alec Hanson:
Oh, yeah. Clearly.

Dan Hanson:
... it made an impact in their life.

Alec Hanson:
It's because Gary was that kind of person. Gary is the guy that would share anything. If he had something that was going that was successful and you ask him about it, he would just give every competitor, "Here's what I do, and it worked great."

Dan Hanson:
He's awesome. Just abundance.

Alec Hanson:
Exactly. He lived a life of abundance, and tragically left us early at 52 years old, but built a legacy at Directors, a foundation of Directors. When I first sat down with him because I didn't know anything about the mortgage company, mortgage business, really, I said, "Really, tell me, give me the basics."

Dan Hanson:
Yeah, "What is this mortgage business about?"

Alec Hanson:
I said, "How is it different than title?"

Dan Hanson:
Yeah. That's a good question.

Alec Hanson:
Yeah. He said, "Well, you have to know your products pretty well," because in those days when people who haven't been in the industry this long may not know that in the '80s, mortgage bankers didn't do conventional and jumbled on it.

Dan Hanson:
Right. People don't know that. We just did FHA and VA loans. That's what we were built for. We understood those products extremely well. Obviously, they fit a tremendous amount of the population that the banks didn't necessarily serve or want to serve. So, that's what gave birth to the mortgage banking group was this huge amount of first-time home buyers primarily, this huge amount of veterans that were coming back and wanted to use their entitlement. So, we became experts at that. The mortgage business was grown and built fundamentally on the government business model.

Alec Hanson:
Directors as a company had a unique career, a unique flow through the industry, right? What happened with Directors after Gary?

Dan Hanson:
We did. Well, when Gary died, which was, obviously, a tragic event in 1993, we needed to sell the company because of the estate taxes. Gary owned the entire company. So, Ray Crebs who was the president at the time and myself started looking for a company that would be strong enough to acquire a company like Directors, and we found a company, believe it or not, called Norwest.

Alec Hanson:
... which is bank, right?

Dan Hanson:
Yes.

Alec Hanson:
Was it a bank?

Dan Hanson:
Norwest was a bank out of Minnesota.

Alec Hanson:
There you go.

Dan Hanson:
Norwest was also the largest mortgage banker in the United States at that time. People forget about all that, but they were a big dog back in those days out of Des Moines, which was very interesting. So, they came out and they saw they wanted a better, stronger West Coast presence, which was where Directors was. So, they agreed to acquire Directors in 1994.
Many of us flowed over, obviously, into the new company. Some of them said, "Boy, this banking company is very different than an entrepreneurial company that Gary had run," and they went different places. Culturally, they just didn't feel the same vibe.

Alec Hanson:
... which happens in acquisitions.

Dan Hanson:
Yeah. Absolutely. It made some sense. So, we ended up with Norwest Mortgage, and we started to really understand what the differences were with the bank on mortgage company versus an entrepreneurial on mortgage company. There are big differences.

Alec Hanson:
What was your role during this time?

Dan Hanson:
Well, I ended up running the State of California, initially, and being the National Builder Manager for Norwest.

Alec Hanson:
There you go.

Dan Hanson:
So, they took my builder experience because I ran the national builder platform in the title industry, as well as the national builder platform for Directors. They brought me in and said, "We do a lot of builder business. Why don't you help the whole country learn how to do that?"
We did some very interesting things. We were the first company to come out with extended rate locks.

Alec Hanson:
Very cool, which now is a normal, I mean, well, some.

Dan Hanson:
For companies that are able to figure it out, still a hard process, but to give somebody a rate that says, "Hey, we're going to guarantee your interest rate now and in 12 months when your house is done, if the market is better, we'll float down, if it isn't, you're protected," takes a lot of experience in capital markets.

Alec Hanson:
Yeah.

Dan Hanson:
So, that was one of the first things we did. Then about three years into the acquisition where we were in Norwest Mortgage and things were moving along, and I ran the Western State Division for them along with the builder group, a little company called Wells Fargo Bank-

Alec Hanson:
Yeah, we heard of them.

Dan Hanson:
Yeah, they were acquired by Norwest.

Alec Hanson:
You see, people don't remember this that Norwest bought Wells Fargo.

Dan Hanson:
Correct.

Alec Hanson:
Because Wells Fargo is a behemoth now.

Dan Hanson:
Right. Everybody thought that Wells must have bought Norwest.

Alec Hanson:
Of course.

Dan Hanson:
The reality is the Minnesota Bank bought Wells Fargo.

Alec Hanson:
Kept the name.

Dan Hanson:
Yeah. I remember I got a phone call really early in the morning from Mark Oman, who was the chairman at the time of Norwest Mortgage and said, "Well, I got a little present for you for your stocking."
I go, "Wow. What is that?"
He goes, "Well, we've got a few more bank branches in California."
I go, "Oh, really?"
He goes, "Yeah. Wells Fargo."
I really thought he was joking. Then all of a sudden, we were merged with Wells Fargo. We bought the bank. Minnesota moved their headquarters from-

Alec Hanson:
That's wild.

Dan Hanson:
... St. Paul out to San Francisco. We now became Wells Fargo Mortgage because they took their name feeling it had a stronger national brand than Norwest.

Alec Hanson:
Fascinating.

Dan Hanson:
That's why it happened. So, now, we went from the number one mortgage company with Norwest to even a larger number one mortgage company with the combination of Wells Fargo and Norwest. Combining those two cultures was also very challenging.

Alec Hanson:
I bet.

Dan Hanson:
Three or four years into that, it just seemed like the bank culture had really taken over the mortgage business. That's not necessarily bad, it's just that banks view mortgage as an ancillary profit center, and their primary profit center is consumer acquisition and checking, savings, investment, and mortgage is a piece of that.

Alec Hanson:
Yeah. A lot of people know my story in spending a couple of years at a large bank. It's just a cultural difference. If you try to make it something they're not, you're going to have friction, but if you just accept that the bank is going to do what they do, and you're just a piece of that wheel and you can settle into that, you're great, but I found a lot of entrepreneurial salespeople they get too caged up. I mean, they can't live in that world.

Dan Hanson:
It's different. You have to really accept that kind of regulatory bureaucracy and that kind of positioning, where you're not number one in the mind of the CEO everyday. You're number four, which your fourth child is still good.

Alec Hanson:
We like them.

Dan Hanson:
If you only have one child, they're really good. So, that's just the way it is. So, after that, about 2000, I left the bank and I left the mortgage industry actually for a year. There were some family situations I had to attend to. I couldn't travel the amount of time-

Alec Hanson:
I'm very familiar with those.

Dan Hanson:
Yeah. I had a son that was a huge problem.

Alec Hanson:
Thank you.

Dan Hanson:
I had to deal with that. The reality was that year off and I really didn't take a year off because the chairman of the bank at the time of Wells Fargo called me up and said, "Really appreciate all you've done here. I understand you're leaving for some reasons that are personal, but I'd like your help on building a CRM product because we're behind in serving those that are underserved, and we need that credential checked by the regulators to buy more banks in Texas and buy more banks and grow."
So, he said, "You can work at home, but I need you to build a CRM product that would allow-"

Alec Hanson:
When you CRM, people think customer relationship management system.

Dan Hanson:
No.

Alec Hanson:
Yeah. So, break it down.

Dan Hanson:
CRM is basically what the banks are required to provide to serve those customers that are not necessarily in their wheelhouse.

Alec Hanson:
There you go.

Dan Hanson:
They're the underserved communities, and they get credit for those. They're obligated to provide that credit, and they get examined about it. So, I built a product that allowed much more affordable housing for folks that had challenging credit circumstances but still were credit worthy. The bank implemented those, and we were very successful in growing Wells' business in that regard and allowing them to have regulatory approval to continue to expand their banking organization.

Alec Hanson:
Very cool.

Dan Hanson:
So, that was a learning experience for me because I had never spent that much time on that segment of the business. I mean, I went to all the African-American churches in Los Angeles and up in the Central Valley, and visited with pastors who were working with people that were attempting to get into the housing market and learning the challenges that those individuals have, and how to differentiate between people that really had sustainable credibility to get a home and those that were just frankly not in a position to do it.

Alec Hanson:
Right.

Dan Hanson:
I really began to appreciate the barriers that those folks endured and how we needed to really reach out and educate them on how to manage credit, how to manage their life debt, how to create an environment where they were responsible in the way in which they manage their money.
It was very interesting. For me, it was enlightening because I had come from a background where that seemed to be understood, where they really were anxious to understand that and learn that. So, it was great for me.

Alec Hanson:
So, you got suck back in, then you took this year. You spent building some cool product, and then you got back into the high level game.

Dan Hanson:
I did, yeah. In 2001, I got a call to interview with a company called Countrywide. I didn't know much about Countrywide except for I'd heard that their branches had underwriters that were branch managers, which I thought was very innovative, but they only had about 300 salespeople, and they were basically running around out there, and mostly in California, but a guy named Angelo Mozilo had started this company with a the premise that everybody should have an opportunity to own a home.

Alec Hanson:
Right. I remember.

Dan Hanson:
That was his theme.

Alec Hanson:
Yeah. He's passionate about it.

Dan Hanson:
So, I went to Texas. Ironically, I went to Texas the day of 9/11, which was very strange because ominous, I should say. I was on the tarmac on my way to Dallas to interview for the job with a guy named Joe Anderson. All of a sudden, they came on and said, "We have to deplane. The President of the United States has grounded all domestic aircraft in the United States."

Alec Hanson:
That's so wild. That's wild.

Dan Hanson:
We were on a plane, so we had no TV. We had no-

Alec Hanson:
You don't know what happened.

Dan Hanson:
We didn't know what was going on. So, we're going, "That's probably not good."

Alec Hanson:
No.

Dan Hanson:
When we went into the terminal, we obviously saw the 9/11 horror of the planes hitting the towers. So, I was delayed for my interview for a few days, but I ultimately went to Dallas and interviewed, and joined Countrywide, and ran the Western States for Countrywide. We began to execute on a strategy to compete with the behemoth in the world. At that time, Countrywide was a big wholesaler. They were not a really huge retailer as they became. Brian Hale and I actually partnered up on this. Brian had worked with me at Wells Fargo for years, so we'd known each other.
Countrywide started with the premise, and it's very interesting because it's similar to LoanDepot's premise. Countrywide had a very strong technology platform. They were able to-

Alec Hanson:
Well, they're first to create automated underwriting.

Dan Hanson:
Exactly.

Alec Hanson:
I mean, it blew away the industry.

Dan Hanson:
Yeah. People don't realize that CLUES, which was their system of automated underwriting was the basis of DU. So, when all the rest of the industry saw DU and LP come out, we were the only company that they would accept CLUES' determination-

Alec Hanson:
Version, yeah.

Dan Hanson:
... along with DU and LP.

Alec Hanson:
That's fascinating.

Dan Hanson:
By the way, this is something to remember. We had a technological advantage over everyone else in the mortgage space at that point.

Alec Hanson:
It's a big thing.

Dan Hanson:
Right. Well, and I think we're seeing some of that at LoanDepot today.

Alec Hanson:
Well, it's coming back, right, after the crisis.

Dan Hanson:
Exactly. We'll talk about that crisis maybe at some point. The reality was we as originators didn't really understand the power of that right away. We just did what we always did and we went out and hired talent, and we changed the complexion of Countrywide to be a more retail-based franchise.

Alec Hanson:
This is where I want to land it. Fast forward, your last position with Countrywide was Managing Director of Retail, Distributed Retail.

Dan Hanson:
Correct.

Alec Hanson:
What did the scope look like?

Dan Hanson:
So, I had 980 offices and about almost 10,000 loan originators.

Alec Hanson:
That's just scale because after the crisis, that scale has not come back.

Dan Hanson:
No.

Alec Hanson:
We have not seen it ever again since then, which maybe we'll see in the future, but that's a massive organization.

Dan Hanson:
It became that, and it's funny because you look back at it and you go, "Wow! We went from this small company in retail to this," and the two catalyst were really the technology that enabled us to securitize product, have reporting that would give us really pinpoint accuracy on how we were doing across the whole country, which is very difficult to do if you don't have instantaneous reporting on an automated basis. Very hard to do. Then we were innovative, and then we acquired a bank.

Alec Hanson:
I remember that. Yeah.

Dan Hanson:
So, Countrywide acquired a bank, which was the first time in my understanding that a mortgage company was actually the parent of a bank. So, it gave us the ability now to compete in the jumbo environment and in the HELOC environment where the banks that was normally their space because we had a bank shelf.
So, it was challenging running two regulatory organizations, but the technology, the sales cultural change that I really think that Brian and I worked on very hard to get retail to be the preeminent retail in the organization, and then the banking platform gave us product availability and liquidity and pricing capability that enabled us to grow very rapidly.

Alec Hanson:
So, I mean, what a massive career, right? It's obviously not over. You've been running retail for iMortgage, and we could get into the neck-breaking story later, which is crazy. Those who don't know Dan, broke his neck, full recovery, insanity.

Dan Hanson:
I don't know about full recovery. There was a little mental drop, but other than that.

Alec Hanson:
Yeah. Maybe a little bit of God's help. I want you to talk a little bit about the two crises, the two industry crises that you have seen crash the mortgage space because you hear people that are doomed saying today there's a recession coming. I think World War III is trending on Twitter. We have an election. I mean, there's just tons of uncertainty.

Dan Hanson:
Sure.

Alec Hanson:
You've lived through some of the big cycle that devastated the mortgage industry.

Dan Hanson:
Yeah.

Alec Hanson:
So, what were those like in just a couple of seconds?

Dan Hanson:
Okay. Well, the first one is forgotten about because from 1985 to basically 1995, people forgot that the mortgage industry was really dominated by huge savings and loans.

Alec Hanson:
Yeah, right.

Dan Hanson:
States savings and loans, Great Western savings and loans, homes savings and loan, these were monsters back in those days. What happened when rates skyrocketed back in the early '80s with Jimmy Carter's administration went up to 16%-18%, it completely decimated the economic platform of the S&Ls. So, people forget that the S&L crisis. 747 S&Ls went under-

Alec Hanson:
That's such a massive number.

Dan Hanson:
... and $400 billion of assets was taken over by the Resolution Trust Corporation to dispose of these assets. So, we had a very large crisis back in those days. Now, compared to 2008, it doesn't seem as big, but it was a very big deal at the time. Tremendous consolidation took place in our industry. They were-

Alec Hanson:
... which seems to happen after every crisis. Massive consolidation comes to play.

Dan Hanson:
Well, the reality is, look, the mortgage industry much like the real estate industry and all financial services, there's not a lot of balance sheet in these things. So, they depend on liquidity. They depend on the access to that liquidity to run their business. So, when that liquidity tightens up or interest rates get to a point where people literally, I refinance people at 13% and they were thanking me.

Alec Hanson:
Yeah. The basket is just flowing, man.

Dan Hanson:
They were saying, "Gosh! Thank you so much. This is such a huge advantage."
I go, "Wow."
So, I look today at 3% and 4% and, historically, I'm amazed at the liquidity that's in our current system. All those crises had certain thing that hit them, but it all comes back to the liquidity of the platform. When 9/11 happened, and I mentioned earlier that really began in my opinion the crisis of 2008. When money is literally free, when the interest rates are down at zero, human beings tend to reach for a yield and do things that are risky and their credit box starts going.

Alec Hanson:
Yeah. That's what stretch themselves.

Dan Hanson:
Yeah. Then Wall Street decided that real estate was a good business that they'd get in to. It's all good-

Alec Hanson:
It's all good.

Dan Hanson:
... and created products that the mortgage industry had never seen before. Frankly, and I know that all my Republican friends are going to kill me on this, but the lack of effective regulation in that particular environment really was a problem. So, regulation is not always our enemy. Effective, intelligent regulation actually puts people on a good playing field and helps the consumer. So, I'm not against that.
Now, there's excess to everything. Usually, the pendulum goes that way, right? You had lack of regulatory control that really exacerbated the issue, and then all of a sudden, you swing the pendulum back and now you have so much control that you paralyze the industry, and people are disenfranchised for mortgage banking.
So, both those crises changed the complexion of the organization. We all adapt-

Alec Hanson:
It changed the entire industry dramatically.

Dan Hanson:
Now, it's all fragmented, except for refi.

Alec Hanson:
So, after crisis number two, there was a mass consolidation, right? Banks swooped everybody up. In fact, some of the banks were forced to swoop everybody up.

Dan Hanson:
Exactly.

Alec Hanson:
Now, arguably, 10-12 years later, the fragmentation has just started to trickle out right now. So, this is the stats I remember. In pre-crisis 2008, three companies controlled 60% market share, one of those being Countrywide, Wells Fargo. Three companies controlled 60% market share. Then the latest stat I heard today is that the top 20 mortgage companies, including banks, just 20 companies control about 20%, 20%. I mean, the fragmentation is real.

Dan Hanson:
It's very real.

Alec Hanson:
... which creates tons of consumer conflict, pressure, margin compression, I mean, all these things. It's just a fascinating environment we're in.

Dan Hanson:
It is. Yet, all that, if you really dig into it and you go when companies reformed, companies like Quicken and LoanDepot and others stared to shift the thinking because they recognized that the internet now had an amazing impact on the consumers' behavior.

Alec Hanson:
I feel like it's late compared to other industries because we were wrapping a little bit before the podcast, and I want to get into it. I want to hear your thoughts on it about how the internet and access to information has changed the mortgage industry. I feel like we're late. I feel like other industries like Uber and Amazon have already been, and Netflix, have already been radically transformed by the internet and the information there.
I feel like mortgage is actually on the edge of finally getting into it. I think I want to hear your thoughts on what did it do. What is it doing?

Dan Hanson:
Well, I think you're making a good point. I thought about why that's the case. Why are we so far behind that? We now see an escalation of that with Quicken and LoanDepot, Zillow.

Alec Hanson:
That's coming fast.

Dan Hanson:
There's a lot of companies now that are starting to realize it, but when you sell most of your product to the government, you are then restricted in being innovative because you have these incredibly rigid ways in which you have to sell your product. So, it slowed down a lot of our technological advance in this area.
Now, if you look at refinance, for example, honestly, we have a Coke and Pepsi in refinance, which people sometimes don't really recognize, but the reality is Quicken and LoanDepot dominate that space much like the statistics you talked about earlier, the 20%, 30%.

Alec Hanson:
Yeah, pre-crisis.

Dan Hanson:
One out of six refinances or one out of seven, you pick your number, it's very close, are dominated in the refinance space by those two technological platforms who go directly to the consumer, who are using the internet to drive their business.
So, I think as we continue to evolve and we realize that the consumer now has access to information on searching for properties where in the past the MLS was basically only accessible-

Alec Hanson:
Behind the curtain.

Dan Hanson:
... only accessible by real estate agents. So, you started your journey when you wanted to buy a house by going to a real estate agent because that's where we start. Today, that's not where they start. They start in their pajamas on their laptop looking for a property that they think is interesting in the community they want to live in. Now, they're, in many more cases, pre-qualifying themselves first so that when they finally get to the active search for a property, they're much more educated on the process, they're much more educated on the property values in the area that they're working in, they're much more sophisticated in where rates are. They see these posted all the time on the internet.
They share with their friends on the social media channels, "Hey, I'm buying a house. What experiences have you had?" So, we're dealing with a much more engaged, savvy consumer.

Alec Hanson:
Educated.

Dan Hanson:
Right, which means our loan officers have to move in the same direction.

Alec Hanson:
Well, so this is where I want to get into some really cool questions here. So, now that everybody understands the scale you've managed and the influence you've had on the industry, I think there's some wisdom that we need to impart on the current professionals today. So, I'd love to start with loan officers because you've managed loan officers at scale, 10,000 of them. You've managed loan officers at a branch level. You've done your own work in mortgage originating deals.
In 2020, right now, what do they need to be focusing on. What should they be paying attention to? What should they be learning or leaning into? How would you guide them?

Dan Hanson:
Well, obviously, everybody has their opinion about it. My perspective on most of this is that it's the companies that really understand consumer behavior, that know where the puck is going. That's what I think our loan officers have to really understand. I think in the past, believe it or not, loan officers were so focused on the strategies and tactics to have referral partners want to work with them. So, they devise strategies and all the marketing. In fact, all the sales organizations typically would give you 46,000 ways to make friends with a real estate agent, which is nothing wrong with that, by the way.
The reality is there's more to it than a transaction. The consumer is the customer. The referral partner and you are both vendors. You have to understand that when you build a relationship with a consumer, that's really the ticket. I think loan officers are beginning to see now in social media, in the internet how the consumer is really the primary customer, and we're going to have to work with our real estate partners and our builder partners to help them also understand the different kind of savviness of the borrowers we work with.

Alec Hanson:
I think that's true, and I want to echo it because when you look at what Uber did to the industry, you have to remember the customer chooses what they want to do. If they have no choice, they're just going to do that because there's no choice, "I have to do this. I have to go to a Yellow Cab. I call the 800 number because there's no other option."
The second another option came in that was better in their mind that gave them more flexibility, ease of use, et cetera. It was a light switch moment. It is moved.

Dan Hanson:
Right. Well, everybody argues about the chicken or the egg. Does technology cause change or does technology react to change? It does both. So, when the iPhone came out, I'm sure the guy running Yellow Cab thought it was really cool.

Alec Hanson:
Yeah. He probably bought one.

Dan Hanson:
"Oh, I got a new iPhone. This is amazing. I could talk to all my cab drivers. This is going to be great," blah, blah, blah. He didn't realize he was looking at the end of his business, okay? HE didn't realize that without the iPhone, Uber doesn't do this.

Alec Hanson:
Looking at the end of his business.

Dan Hanson:
Exactly-

Alec Hanson:
Great line.

Dan Hanson:
... but he was smiling. He was going, "This is a great phone. I love this phone."

Alec Hanson:
Oh, my God!

Dan Hanson:
"I'm now dead." So, I look at that and I go, "Wow. Okay." So, technology enabled the consumer to have a better experience in getting transportation. Without the iPhone, Uber was restricted from existing, but the minute that that happened, somebody goes, "I can use this iPhone for something different than just talking to my mom and sending photos to my kids."
So, to me, technology is really the mover because it enables the consumer and it also creates the consumer the ability to do different things. Businesses are created. That's where it gets into the mortgage space. I really believe leadership and management in the mortgage space is now more important than it has been in our history.

Alec Hanson:
Okay. I want to get to that because you have a lot of wisdom for leaders and managers. I want to get there, but I want to put a nail on the loan officer position here. So, we talked a lot about technology and leaning into it, a lot about social media was underlying everything, leaning into it, direct to consumer efforts, partnering with our referral partners differently to continue to evolve that strategy to get to consumers. So, what's a final to loan officers in a couple of sentences of like, "Hey, Dan. Tell me what to do"?

Dan Hanson:
Well, what I tell people is your ability to aggregate and convert leads from consumers is more important than your product knowledge.

Alec Hanson:
That's a paradigm shift.

Dan Hanson:
It is.

Alec Hanson:
That's a big deal because there are many professionals out there traditional, I call them traditional, but they've built their business off of referral partners in the local community who outstructure people, who are very proud of the fact that they can outstructure anybody. They know every guideline, when their tax return, lalalala. They can do it all.

Dan Hanson:
Right. By the way, that is an amazingly good skill to have. There's nothing wrong with that skill. What I would call it is it's a compensating factor. It's another reason you would use me, but if you don't have a lead, your skills don't matter.

Alec Hanson:
By the way, you know why laughing? Because I'm dying on the inside because I actually know a tremendous amount of originators who are really talented, but today with the evolving world, they're not able to get to the lead, to the customers the way they want. In fact, when they're getting to the customer, the customer has already got three pre-quals and an approval from Quicken, and then realtor finally kicks over the fence, and they're like, "What's your rate?" My guru structure loan officer who's amazing is like, "Uh."

Dan Hanson:
Well, I don't have a chance to give them the distinction between me and somebody else.

Alec Hanson:
Yeah. It's done.

Dan Hanson:
So, I've become a commodity of right now-

Alec Hanson:
It's a bad place.

Dan Hanson:
... which we have to fight, and we have to work with our referral partners both to incubate those customers, work with those customers, educate those customers, build relationship. To me, the loan officer now is a stronger partner, needs to be a stronger partner with their realtor and their home builders than they were in the past because in the past, they did that work, and you were just given the task of, "Hey, please filet the fish."

Alec Hanson:
Yeah, please.

Dan Hanson:
You go, "Okay. I don't know how to filet the fish because I'm an expert at fileting the fish."

Alec Hanson:
So, to sum up the loan officer comment, the aggregation and lead conversation have to be the top of your activity list on how you grow your business-

Dan Hanson:
Yes. Absolutely.

Alec Hanson:
... or else, it's going to be over.

Dan Hanson:
Right. I think that in the past, once we close a transaction with a consumer and we gave them a nice closing gift, and we thank them, we went on to the next transaction.

Alec Hanson:
No. It happens. Loan officers become very transactional.

Dan Hanson:
Right. That's where we have to fight. We have to realize that we need to engage in the customer's life forever. We have to be a part of their financial future to know where they want to go, to help them get there.

Alec Hanson:
100%.

Dan Hanson:
We cannot just be transactional to mortgage.

Alec Hanson:
100%.

Dan Hanson:
So, I think that's a big challenge for some of our folks that have been very, for years done a certain way, but the future of our business, and by the way, the big edge there is that if you're 25 years old and you're not an expert on every product in mortgage but you're incredible at marketing and bringing leads to the table, you can be successful in our business now.

Alec Hanson:
Oh, absolutely.

Dan Hanson:
You can be amazing because you're going to bring that marketing skill. By the way, fulfillment is going to continue to get stronger and stronger, and I was laughing with Tammy Richards saying, "Someday, the borrower is going to put his thumbprint in the machine and you're going to approve the loan."

Alec Hanson:
So, the loan structure guy, "Ah."

Dan Hanson:
As an analogy, I tried to change a tire on a flat tire on my car.

Alec Hanson:
Oh, no.

Dan Hanson:
Yeah, I haven't done a flat tire for, I don't know, 30 years. So, I used to know how to do that. Open the trunk, pop up-

Alec Hanson:
There was another tire in there.

Dan Hanson:
Pop out a tire, get out the jack. I was amazing, right? Flat tire, I think, "Okay. Us old guys know how to do this stuff. Give me some duct tape and a hammer and I've got it all together."
So, I get out, I open the trunk. There's no spare in the trunk. I never looked. There's no spare in the trunk. I go, "Oh, my gosh!" They have an air compressor in there, and it basically says, "Hey."

Alec Hanson:
"Put this in your mouth."

Dan Hanson:
Yeah. Exactly, and blow. So, bottom line it goes, "Put this in your tire. Inflate it enough so you can limp to the nearest place where we can get your car fixed."

Alec Hanson:
Oh, my gosh!

Dan Hanson:
I go, "Oh, no." So, of course, I am mechanical expert as many people know.

Alec Hanson:
Yes, they know this. You're incredible

Dan Hanson:
I plug that in and all the air just rolls out. Tire doesn't go anywhere. I go, "This is not going to work." So, I look at how we did things in the past, and not even looking in the trunk to see there wasn't a spare was, and maybe it's just me. It could just be me.

Alec Hanson:
No.

Dan Hanson:
The reality was I learned a lesson about that, which is look in the trunk, make sure you understand what happens when there's a problem.

Alec Hanson:
Good lesson.

Dan Hanson:
It's a good lesson.

Alec Hanson:
So, let's unpack some leadership stuff. You've led a lot of people across our industry for a lot of years. People look up to you. They admire your wisdom. They want insight, and I feel like while loan officers are looking at this evolving landscape going, "Where's my solid ground? What do I do next?" There's a lot of uncertainty.
I know that our leadership and leaders out there who are hungry and looking to grow and learn are having the same conversations, which is, "What do I do? This world is moving really fast. I have a team behind me."
So, I love this analogy and I love if you could share with everybody. So, let's unpack certain levels of leadership because I think there's messaging for each one that you could deliver that's really cool. So, let's look at the branch managers today. Like I said before, if you're going to write a letter to the branch managers of the industry who are out there leading their local people, loving on them, looking at this crazy change going on, looking at the change in technology that's coming in mortgage, what's your letter to them? What's your message? What's your inspiration? What's your wisdom to that group of leaders?

Dan Hanson:
Well, that's a big order. I got a few tips, okay? So, I think being a branch manager, at least in my career and I think in everybody's career in our industry is the best job in the business. It's also the hardest job in the business because you have to be a leader, which means you have to inspire, you have to be passionate, you have to bring value to your people, which challenges you. It makes you do things you don't necessarily want to do. You have to know what your competitor's pricing is. You have to know who's doing business in the market. You have to know who the talent is in your market. You have to understand where things are going by listening and reading and talking to your regionals and your company executives and looking at your technology platform. So, you got to be continually growing yourself.

Alec Hanson:
... which is hard, very hard.

Dan Hanson:
Then number two, then you have to be the manager. So, you have to know what does it cost me to produce loan? How do I explain that to my people so they know. Hey, the number one objective is the company has to make money because bad things happen to companies that don't make money.

Alec Hanson:
That's a good line.

Dan Hanson:
Exactly. So, here's what we have to do. We're paid to do this. This is what our cost of manufacturing is. This is what our product mix is. This is what the market's product mix is, and who our competitors are. Where are we in this mix? What is our identity?

Alec Hanson:
You described it really elegantly with the train analogy, which is they have to be driving the train to the right destination. They have to have the leadership vision, to have their head up and go, "We're going here." They got to turn around and be able to shovel coal in and make sure the actual engine works.

Dan Hanson:
It's so true.

Alec Hanson:
It's both because if they're just managing with no leadership and vision, then who knows where they're going? We're going off a cliff.

Dan Hanson:
That's right.

Alec Hanson:
If they're just telling everybody to go this way, and they're not willing to get in the trenches and work, their team looks at them and goes, "You're not with me."

Dan Hanson:
Right. I guess my biggest thing to all the branch managers is take a breath. You are not going to be everything you want to be all of a sudden. It takes a team to help you get there. At a company like our, for example, LoanDepot, you might be going from a car where you've been driving this same car for a long time, which is a bank model or another mortgage banking model, and all of a sudden, you step into more technology-driven model and there's some buttons, you don't even know what they do.

Alec Hanson:
Yeah. You're in the Tesla now.

Dan Hanson:
Exactly. So, when I turned it on, I didn't hear anything. I didn't even know it was on. So, I want them to just breathe and go, "Okay. I didn't know it was on," but it goes really fast once I figured out how to drive it. So, get help in driving the car. That will help you.

Alec Hanson:
That's a good message, though. I mean, get help. Raise your hand. There's a team here.

Dan Hanson:
Yeah. The people who don't raise their hand generally end up crashing. Raising your hand means you acknowledge vulnerability, you acknowledge an area that you need support. That's strength. That's not weakness. That's strength. The people who don't raise their hand are the weaker people. So, I tell branch managers, reach out, use the resources you've got, enjoy your job. It is so rewarding to see people that you work with succeed.
For me, it's the reason I've been in the business 35 years. It's basically my personal excitement when I watch people go up on stage at CE and get an award for an incredible amount of work that they've dedicated themselves to and our opportunity to recognize that. That to me is the reason I'm still here.

Alec Hanson:
So, summarizing the message to managers on the street level, be vulnerable, ask for help, you're not alone.

Dan Hanson:
Yup.

Alec Hanson:
Breathe. You got a great job, and you're actually changing people's lives. That perspective, I think, can help in a lot of the stress they carry.

Dan Hanson:
I give them one more thing. Don't hire defensively. Don't hire someone because-

Alec Hanson:
Unpack that. Unpack that a little bit.

Dan Hanson:
Look. You're a branch manager, there's immense pressure to hire on originators because-

Alec Hanson:
Mainly from you.

Dan Hanson:
From everybody.

Alec Hanson:
Yeah, I know. That's their job. Their job is to grow.

Dan Hanson:
That's right. So, that pressure is just really huge. You're going to hire 14 originators in the next 15 months. So, they're out, "I got to hire. I got to hire. I got to hire." The reality is we hire defensively. Someone tells us they do five loans a month and we go, "That's great. What do you need to get here?"

Alec Hanson:
Exactly.

Dan Hanson:
We don't ask them how they originate those loans. We don't understand if they're going to fit in our organization in a way that's going to be-

Alec Hanson:
Culturally.

Dan Hanson:
... culturally fit. We're focused on what they've done in the past at some other company and we need that over here. Now, that assumption is a bad assumption.

Alec Hanson:
Smart.

Dan Hanson:
So, you want to interview offensively. You should never hire someone who you're not going to improve their business with your model, honestly.

Alec Hanson:
That's a great comment.

Dan Hanson:
Never do that. That's a mistake.

Alec Hanson:
That's awesome. That's true.

Dan Hanson:
So, don't let the pressure of hiring four-shoe into filling an empty chair. I used to call it the tyranny of the empty chair. You look over there and you see an empty chair and you go, "I got to fill that."

Alec Hanson:
You're panicking.

Dan Hanson:
Right? Do not do that. When you interview people, interview with the sole objective of you should come here because we can improve your business either from a quality of life or quantity of business, and that's why you should be here. That's compelling. Don't be a hook, be a magnet. That's the key.

Alec Hanson:
So, don't hire defensively.

Dan Hanson:
No.

Alec Hanson:
Be a magnet.

Dan Hanson:
Yeah.

Alec Hanson:
That's powerful.

Dan Hanson:
You know what? Your people will start to get pride around that because you'll hire people that are going to fit. You're going to hire people that succeed. By the way, retention doesn't happen with people that are succeeding. It happens with people who aren't succeeding.
So, whenever I hire someone, I'm going, "Is their life going to be better in our organization than it is today?" Forget about how much basis points more we're going to give them. It doesn't matter about comp. It's, "Is their life going to be better?" If it is, this is going to win. I'm going to get this candidate because they're going to feel it, and they're going to know it. Then by the way, I'm going to deliver it. It's going to be shocking.
The primary reason people leave our organization on exit interviews or any organization, by the way, in my entire career, has been I was told this and when I got here, I got this. That should never happen for a manager hiring someone that they're going to be part of the team.

Alec Hanson:
That was awesome. So, let's go up a level. There are senior leaders who are looking around the industry, who are leading other leaders, and who are looking at this industry right now and trying to figure out perspective, trying to figure out trajectory, trying to figure out where to point the train. What's your message to those group of men and women?

Dan Hanson:
Well, we got to get in the weeds. We tend to end up in meetings talking to ourselves, which is always amazing.

Alec Hanson:
So, what's the gut check moment? You look around and you go, "Oh, no. We're just talking to ourselves."

Dan Hanson:
Yeah. Anyone who's originated a loan, would you raise your hand in the last 10 years and nobody raises their hand. That's a problem. So, engaging at the street level with your top people talking to your managers, understanding what the competitive environment is really doing gives you a much better perspective because we're here to figure out where the train is going. You're not going to find out where the train is going unless you're talking to people at that level.
So, they got to get in the weeds, number one. Lastly, I would just tell them all that people really want to believe in a hopeful and successful future. They want to believe that when you call, you pick up the phone, that bureaucracy is not your new middle name, that you-

Alec Hanson:
There's a lot of fear on big companies for that.

Dan Hanson:
That's right. When somebody calls you or when somebody emails you and there's no response for three days, you should not be in the leadership role. Period. I'm sorry. I don't care how talented you are.

Alec Hanson:
You got to cut that clip out. That's the one right there. That's the clip. That's the one. That's the one. I think that's powerful. That's the truth.

Dan Hanson:
Well, because it shows respect. It shows respect. People today want at a minimum that kind of respect. I know that you're busy. I'm busy. I got a lot of people, too. I really work incredibly hard at making sure that nobody feels like they don't get responded to. I mean, they may not get the response they want.

Alec Hanson:
They may not like it, right? I understand.

Dan Hanson:
They're going to hear it, right? I think leaders, the more you do that, the more it reinforces who you are as a culture and the more confidence you give the frontline because they believe the top-

Alec Hanson:
They know it.

Dan Hanson:
... top lines got their back. That's the key. So, I've always felt that way.

Alec Hanson:
I think that's so important to wrap down our conversation on this topic because there's going to be, in my opinion, another great consolidation. You look at the history of our industry and ebbs and flows, and maybe not. Maybe I'm wrong, but you look at the ebbs and flows, you look at the fragmentation of the industry today. You look at what crises have done, where everything comes together, and you look at the top 20 mortgage companies including banks have 20% market share.
I go, I think we are ripe for disruption. I think that technologies could play a huge role in that. I fully believe it. I think how we change behaviors is going to play a huge role in it as consumer, as we adapt to consumer change. I think that leadership has to change with it, and has to stay connected to the people.

Dan Hanson:
It does. It also has to see where the consumer is going and move their organization to that area because leaders have to cope with change. They have to learn how to move an organization to change. That's really a critical aspect of any leader. If you can't educate the organization to move the change, you're going to be behind the ball every time. Managers have to deal with and cope with complexity because I can say, "Hey, we got to be there," and they leave the room and everybody goes, "Well, that's great-"

Alec Hanson:
"Thanks, Dan."

Dan Hanson:
"... but we don't have any tracks."
I go, "Yeah."
So, you go to technology. You have all this ... It's like trying to change a tire on a car now or trying to fix a car. You used to be able to fix a car. Now, you open it up and it's all computer in there. You go, "Ooh!"

Alec Hanson:
Oh, my God! I took my Tesla in to buy it, and I took it in for service because I was like, "I'm going to buy it." I was leasing as a test. So, I took it in. I'm like, "I'm going to get it serviced and checked because if I'm going to buy it, I want to tell me if there's anything wrong."
I drove it up there. Waited in line for an hour. Got up to the guy. I go, "Yeah. I'm thinking about buying this Tesla. Can you please run a service on it. Tell if anything's broken, needs repair, needs fixing."
He looks at me and he goes, "Does the screen say anything is broken?"
I go-

Dan Hanson:
That must be fine.

Alec Hanson:
"What do you mean?"
They go, "Well, if the screen says something's broken, otherwise, everything's working perfectly."
I go, "Can you check?"
He goes, "I can look at the screen for you."
The world is changing fast.

Dan Hanson:
I know.

Alec Hanson:
Mortgage is going to change really fast because we haven't for a long time. So, it's built up.

Dan Hanson:
It's the old Robin Williams' joke, which I love, "What's the weather like? Open the window." I mean, at the end of the day, we have to just roll with change, and we have to enjoy it. If we hate it and our life is miserable because there's change, frankly, all of us as human beings no matter whether you're in the mortgage space or whatever business you're in or in life, you're going to be challenged. So, we got to roll with it, and then we got to help our people get there and we've got to be a part of that.
So, the mortgage industry is a great industry. We enable people to do things that they've dreamed of doing. We enable them to have liquidity. We make life-changing decisions about whether they should get a loan or not and raise their family in a community they want to, and we are blessed to have this incredible opportunity and we should not take that for granted and we should be on top of it.

Alec Hanson:
So, final statement, final message to the mortgage professionals out there that are paying attention here listening in. What's your final comment to them as they look at 2020? It's a big year. Roaring Twenties is back. There's going to be a lot of change, lot of uncertainty. Like I said earlier, election year, the craziness happening right now. What's your final comment to these people to send them out to enjoy their day?

Dan Hanson:
Guys, we are in a country and we're in an industry where it's very hard not to just be overwhelmingly happy every day. There are millions of people around the world and millions of people even in America that are not given the kind of opportunities we have in this industry. So, keep some perspective. Keep your head on. Have self-control. Have a laugh once in a while. Enjoy the victories and the world will not end if this loan doesn't close today.
Yes, we want it to close, and we're going to do everything we can, but you know what? It's probably not a visit to the oncology ward. It is just a loan and it's somebody's life, and we got to do what we can to make it happen, but I think people just get so tied up in the minutia of the success of the moment that they miss the broader grace that is in our industry. So, I really hope that they enjoy their life in this business and they share that with others, and they'll be very successful.

Alec Hanson:
Awesome. Dan, thanks for being here. I know we'll probably have you back because there's some stories that we got to unleash on the podcast.

Dan Hanson:
Most of those stories can no longer be unleashed on any broadcast, but thank you very much.

Alec Hanson:
All right. Everybody, have a wonderful day. This is the Modern Lending Podcast signing off. Alec out. Peace out.


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