Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad streets in New York City, you're inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership and vision and global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism right here, right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now welcome inside the ICE House.
Peter Asch:
Today, we are bringing you a special episode, recorded in the middle of ICE Mortgage Technology Experience Conference. And I do mean literally, we are in a glass room, dropped in the center of the exhibition hall, surrounded by the people and companies that are leading the transformation of one of the oldest financial transactions, buying a home. Attendees, participants, and vendors have all descended on Experience in Las Vegas, Nevada to swap ideas, share their latest inventions and catch up with industry peers and colleagues after two years separation. And it gives us an opportunity to connect with and speak to some of the Titans that are reshaping the mortgage technology world.
Peter Asch:
Joining us in this fishbowl today is one of those leaders, Paramount Residential Mortgage Group, or PRMG's chief lending officer, Kevin Peranio. His weekly video updates have become a must watch for industry insiders and anyone wanting to understand how the economy and global affairs are impacting the industry. Our conversation with Kevin on his experience at Experience, his career, and what we all need to know about financing real estate is coming up right after this.
Speaker 3:
Connecting the opportunity is just part of the hustle.
Speaker 4:
Opportunity is using data to create a competitive advantage.
Speaker 5:
It's raising capital to help companies change the world.
Speaker 6:
It's making complicated financial concepts seem simple.
Speaker 7:
Opportunity is making the dream of home ownership a reality.
Speaker 8:
Writing new rules and redefining the game.
Speaker 9:
And driving the world forward to a greener energy future.
Speaker 10:
Opportunity is setting a goal.
Speaker 11:
And charting a course to get there.
Speaker 3:
Sometimes the only thing standing between you and opportunity is someone who made the connection.
Speaker 12:
At ICE, we connect people to opportunity.
Peter Asch:
Our guest today, Kevin Peranio is the chief lending officer of PRMG. His mortgage career began with leadership roles at NorthStar Lending and First Magnus Financial. And before that, he spent two years with Dell Computer. Welcome Kevin inside the ICE House.
Kevin Peranio:
Thank you brother. I appreciate it.
Peter Asch:
So this is the first time Experience has been in person since ICE acquired Ellie Mae. How has it stacked up to past ones?
Kevin Peranio:
There's a huge buzz. You can feel the energy. Everyone's excited to be out in-person, live right here together in a gorgeous venue. And do many companies do it more professionally or better than this team right here? And now, now part of a larger team with ICE. I mean, it's really, really well done and the vibe here is super positive.
Peter Asch:
I was just watching your video update from Experience. You've been on the road a lot, but last Friday you recorded a special video after a round of golf. Is that your new process for getting ready for a video? And have you gotten the feedback you've been missing on those late week updates?
Kevin Peranio:
It's funny, I've been putting LinkedIn videos out for several years. And when the pandemic happened about two years ago at this point, even industry veterans were unclear of what was happening, what was the CARES Act? Why we have all these margin calls. You've got loan officers that are pretty new in the business. They're looking at their rate sheet and seeing zeros on the rate sheet like, "Oh my gosh, I can't even lock loans." Non cumulative loans in process, just dead instantly. I've been in the business about 21 years and I just felt like stepping up my LinkedIn game. And instead of just doing from the road or from a conference, maybe do two or three videos a week, try and calm some nerves, create a collective community, and LinkedIn's pretty good for that, and just try and serve everybody. There was a lot of uncertainty, a lot of unknowns, not just within our industry, but from a health pandemic standpoint, gosh, what's going on with school and our families and our kids.
Kevin Peranio:
And so I strive to be a humble servant leader. That was my motivation for putting stuff out. But I like to have fun too. It's a fun business. This is a fun show. There's fun things going on. Sometimes you got to have some work life balance, and so occasionally some of my videos will be some from cool spots, fun places, and me just letting loose and just being as authentic and genuine as I can be.
Peter Asch:
And you mentioned you really got into it during the pandemic. A lot of uncertainty and I heard at first, some of your fellow management over at PRMG were worried about the optics of their chief landing officer posting videos at 1:00 in the morning. What's a typical day like for you? And are you always up at that time?
Kevin Peranio:
Our company was founded by Paul Rozo, our CEO and then Robert Holliday, our COO over 21 years now. I'm 45, they're in their mid to late fifties and they see how hard I grind and how hard I work and they worry about my work life balance. They truly care for me. They want me to go home and be with my family. And I get it. I try. I try really hard, but I'm also really motivated and inspired about this business and my work and my team and this community we built and this industry. And I feel like there's just so many people to serve and so many people to help lift up. And so there aren't enough hours in the day. I don't sleep a lot. I've got the whoop band and the day to prove it. I could show you my sleeping habits, it's pretty terrible.
Kevin Peranio:
But my typical day is I'm usually up in the morning when the market's open. I like to see what's going on with the stock markets. I like to read a lot of subscription services that I pay for personally. I use some of that information, knowledge. It's infused with what's going on with housing, because we all get the same trade industry magazines. We see a lot of the data points and I try and bring an outside perspective on just business in general, on some macro things that people don't talk about. Did you know that the nickel commodities market is exploding right now? Does that matter for housing? I don't know, maybe it does. It's just one more data point, one more sign that prices are rising. Inflation is rising. Electric vehicles are on the rise. Nickel's a big part of the batteries and those systems. And so there's just a lot of stuff to talk about that impacts ultimately is now the right time for a consumer to buy? Most consumers who are first time home buyers, they're 33. So they're worried about what's going on. They've hearkened back to '07/'08.
Kevin Peranio:
I spend a lot of my time in morning reading subscription services, seeing what's going on at the market, making sure I'm caught up on emails. I have meetings that start every day at 8:00 or 8:30 every day, multiple meetings, demos, conferences, calls, but we have four kids. So our kids are young. Our oldest just turned nine. So I got a third grader and a first grader. So I'm present, I'm there, I help. We shuffle them out the door. I'm still working. And then I make my way into the office anywhere between 11:00 AM and 1:00 PM West Coast. I live in Newport Beach. I move into my office in Corona and then I'm there for another 12 hours. That's my Monday through Thursday. Friday, I typically don't have as heavy a day. I try and do something relaxing at the end of the day, at the very end of the day Fridays on the West Coast for 2,700 person employed company. My West Coast end of the day starts to lighten up because we're going. 6:00 AM for me is 9:00 AM East Coast. So there's stuff going on all day.
Kevin Peranio:
That's my typical day, except 50% of the year I'm on the road, 50%. So I'm at trade shows and conferences. I'm beating the streets. I'm trying to see what's going on. So I think as a partner, as an owner, a shareholder and a lender, that's a three channel lender with 2,700 employees, and given my day that I just described and what I do and where I get my information, I think my perspective is somewhat unique. And so I love sharing it with other people and I love helping other people. I've never really thought of how to monetize it. I don't overtly recruit. I'm truly just trying to give. And I think that's what we all do every day. I hope that comes through and inspires other people and then I can learn and be better every day myself.
Peter Asch:
You went to school for business and communications as opposed to mortgage. So how do you get from going to college in Austin to the mortgage industry? Where did that inspiration come from?
Kevin Peranio:
Well, born and raised in Dallas. And I went to school in University of Texas, Austin and hung around Austin a few years after school. And I worked for Dell Computers for a little bit, when you'd call the 800 number, dude, you're getting a Dell. You see those commercials for those that remember back of the day. I'm selling computers starting at $2,000 a box. I was top 30 out of 800 plus, won all the trips, would go to all the things. Had number one enclose rate, because I like taking my time with clients. I'm not a slammer type salesperson. I like taking my time. As those of you listening will see, I'm very thorough when I talk, which puts some people asleep, but some people enjoy the detail.
Kevin Peranio:
Then about 18 months in, Dell and the computer industry is going through what I think our industry is going through right now. It was a really interesting lesson to learn at age 22, 23. When you are the leader like Michael Dell was in Dell Computers in that team, why have all this competition? They had the operating leverage. They had the systems. They had the assembly line of how to produce their widget, which we produce widgets in our business. So they stepped on the price. And I remember when I left there, starting price's $499 for a complete computer. They were there to squeeze out their competition and they ultimately did.
Kevin Peranio:
And we're in a down cycle right now in our industry here in the winter about to be spring of '22. I think that's coming. I think it's been coming. You see the billions of dollars in FinTech surrounding our industry encompasses a perfect example of that $11 billion, $12 billion valuation. The strong are going to get very strong and they're in a time right now in this industry where there's less business. It's less profitable per loan. It might be more competitive and harder to get those loans. And so that experience from Dell really resonates over to here. But before I make all that leap, I wanted to make money. Even at 22, 23, I got spoiled. In Austin, Texas, $107,000 in age 23 in a year goes a long way. When they started cutting the price of the widgets, so did everyone's comp, which is something that happens in our industry too.
Kevin Peranio:
So a buddy of mine, one of my best friends, Matt Fankhauser, actually pretty high up at SoFi running their mortgage lending team, he had just started at First Magnus. He's like, "Dude, you will love being a wholesale account executive. You're dealing with B2B clients. You're dealing with wholesale brokers. They own their own business. They're entrepreneur, they're trying to grow. We help them. We're in the middle." And bam, that's it. I got hooked and I started with First Magnus in April of '01 and just been climbing the ranks. And had my own company in between First Magnus and NorthStar Lending. And then I joined Paul and Roberts team almost 11 and a half years ago. Privately owned company, fantastically run. They had no presence east of the Mississippi. Brought my team out there. And then six years ago, they made me their partner. So I moved my family to California.
Kevin Peranio:
We took on another partner, Gary Malis, who's an industry titan in his own right by all the chords. We have a very solid ownership team. Plus our senior management just chuck full of experienced people. And here we are, that's how it all came to be.
Peter Asch:
And you mentioned the impact that with ICE acquiring Ellie Mae and Jeff Sprecher and Jeff's career has been doing exactly what you're saying, seeing inefficiencies in the market, bringing in a tech solution, but also, and he touched on this a little bit in his talk here, is he also gave significant ownership to companies and people that he knew would help him take the company to the next level. How did you meet Paul and Robert and then you and Gary become those missing links to make PRMG grow to I think you said 2,700 employees today?
Kevin Peranio:
Well to speak to Jeff, I had a chance to sit with him, have lunch with him at the executive summit on Monday, spend some time talking with him Sunday evening at dinner. What an empowering, enabling leader. Totally down to earth. I mean, just being open and honest and talking about challenges that we face in business and personally, and just a straight shooter. At the end of the day cut through all the BS and just talk. What do we need to do to solve problems here? A lot of people don't know Intercon Exchange owns the New York Stock Exchange who have such an affinity for stocks and business and watching how that liquidity in that world of money flow operates.
Kevin Peranio:
If you look at what we do, yes, we're enabling home ownership. Yes, we're solving problems. Yes, we're building our communities, and that's the part that feels really good. But the secondary market is about liquidity. And not to sound cold or heartless and unforgiving, but we buy and sell money. So we buy and sell money in this business. We buy and sell mortgage backed securities, which are safe haven assets, fixed income assets that are backed by the home, the collateral and a quality investment loan in a borrower that makes their payment. This is big business. And when it comes to big business, you want to work with responsible leaders.
Kevin Peranio:
And when I met Paul and Robert through our vice president, a gentleman named Herb Lewis, that is one of our VPs at PRMG now, a mentor, a gentleman I look up to who has a legacy of his own, where he's got two sons in the business, one of them, Daniel Lewis is our HR director, they said this guy, Kevin, his team that he built and led was the number one wholesale team for the last two and a half years of First Magnus' existence, which was the preeminent privately owned lender with three channels prior to the crAsch in '07. And so I had a chance to meet Paul and Robert because of that introduction from Herb Lewis.
Kevin Peranio:
After that introduction, I was like, "These humble servant leaders are guys that can take that burdened out responsibility of building an employee base, taking care of them and their families, enabling them and their careers, being fiscally responsible, dealing with the liquidity of the money that we buy and sell, fostering the American dream." Fast forward five years, they make me their partner and then fast forward about another year and a half, two years, the come company I cherish so much that I first started at, First Magnus, one of their owners, Gary Malis, is now my partner here. It's been a great leap to finding good leaders that you can trust, that you can count on, that you can have tough discussions, heated discussions, but iron sharpening iron, and then together, we're all stronger building our business, building our communities in this incredibly fruitful and blessed industry that we're all in.
Peter Asch:
You touched on the two sides of the industry. There's the local aspect in working community and the large. And to borrow a line that I think you borrowed from a Baptist minister, how do you make sure that despite all the success that PRMG stays large enough to serve you, but small enough to know you?
Kevin Peranio:
Oh, I'm glad you dug that one out. Yeah. Pastor V.E. Tipton the Southside Assembly of God in Garland, Texas. I was born and raised in Dallas, but from 1980 to... My mom still lives in our house in Garland, Texas, which is North Dallas area. So border of Plano, Richardson and Garland. Went to Partner High School in Richardson. I'm up late watching Hogan's Heroes and Get Smart and all these old shows and there's these old commercials. And here's this guy, this pastor, and I don't know why it just resonated with me, I must have been eight or seven or nine, I don't know, was just hearing this quote, "We are large enough to serve you, but small enough to know you." I mean, what a great mantra for anything, your church, your community, your business. You're basically saying this isn't a mom and pop shop.
Kevin Peranio:
We're going to create enterprise level technology, integrations, financial backing, onboarding human capital resources, never get complacent, continue to grow and be better every day. But we're not a hedge fund. We're not a bank. We're not so far removed that you don't know who your ownership is, who your senior leaders are. We're visible. We're leading from the front. We're serving our people. Our CEO, he made everybody read this book called and Raving Fans. It's a perfect example of how we're small enough to know everybody in our company. He had an account executive in Las Vegas say, "Hey, Paul, I want my broker partners to be raving fans of PRMG. I want them to love us. And it's this small little, a hundred page book on customer service."
Kevin Peranio:
So Paul read it, had this epiphany and about five years ago, he basically made all of our different departments in the corporate office read this book and basically give him, our CEO and founder, a book report in the boardroom. And what he said is, "In the book," I'll give you the Cliffs Notes here, "plus one service every day will give you 365% extra effort all year." How do you define your customer? When you ask your customer, hey, how are things going? They're like, "Oh, it's good." That's not a raving fan. You want them to go, "They're great. I love PRMG. I love it here. I love my leadership. I love this, this and this." That's a raving fan.
Kevin Peranio:
So he defined our customer in the wholesale and correspondent channel as the account executive. In our retail channel, he defined it as the originator and the branch manager. It's not the builder, it's not the borrower, it's not the realtor, the expert are the originators out there in all three channels. The expert in the wholesale and correspondent space are the account executives. They're the toughest critics, because they have to deal with everything. If you make them a raving fan, well of course the borrowers and the builders and the realtors would be happy. So he made marketing, payroll, finance, HR, you name it, secondary, each department read the book, report to him one at a time, each person get up and say how you're going to make a raving fan out of our client who we serve, which is those employees.
Kevin Peranio:
I had an account executive start here a couple days ago and she said, "Hey boss." I said, "No, no, I'm not the boss. Don't call me boss. You're the boss. You're our client. I'm here to serve you." We live and breathe that every day.
Peter Asch:
We're recording this. It's Women's History Month. We'll be releasing this during Financial Literacy Month. In an episode of the Clear Close podcast you appeared on, you said something and I'm going to paraphrase you, that, "Being an equal opportunity employer is just as important as being an equal opportunity lender." Can you expand on that and explain PRMG's philosophy when it comes to diversity, equity and inclusion?
Kevin Peranio:
Yes, it used to be called D&I, and then it's morphed into DE&I. And I love the fact that equity was added there in the middle, diversity, equity and inclusion. We're in the housing business and it's a forced savings plan, creating wealth for generations and closing the wealth gap. Really the best and fastest way is through owning a home in which you gain equity. So I love the fact that equity is part of diversity, equity and inclusion. I'm on the road all the time. I go to a lot of conferences. I get to hear a lot of people speak. I'm a very fair person. I'm actually socially moderate, even though I'm from Texas. And I think most of the country is slightly fiscally conservative and I would say socially, moderate. I think if you ask the overwhelming majority of people, that's where they land.
Kevin Peranio:
And so being socially moderate means even if you're religious, which I am, I'm Catholic and I'm a Christian, but not being judgemental and understanding and being empathetic about where people are from. And that's just how I am. My CEO will kill me, but he's a Columbian immigrant. And he doesn't pander to that. You won't see him out there touting that he's Latino. He doesn't pander. He doesn't do it. So I'm plugging for him the fact that we are a Latino founded company. Do we make concerted efforts to be a DE&I champion? Absolutely. I personally started the PRMG Women's Advisory Council several years ago. Handed it off to the women of our company, Christine Beckwith, vision 2020. She's fantastic. She was our first chairperson, Kristin Messerli, who's here. She's been our chairperson for a couple years. We're part of NAMMBA. I'm on the board of governors for NAMMBA, which is the National Association of Minority Mortgage Bankers of America.
Kevin Peranio:
Tony Thompson is an absolute blessing to this industry. I read something, diversity, equity and inclusion, it's not just being invited to the party. It's being asked to dance. And I love the message there. I'm on the board of Axis Lending Academy with Paul Gigliotti and a great group of colleagues. You can see that on LinkedIn as well. They're intentional about hiring people that might not necessarily be hired in this business. And it's a huge DE&I initiative that also trains people how to be good employees in our industry. So I could go down the list and I don't want to sound like I'm pandering and be guilty of what I say we try not to do, but we live it and breathe it. Anyone that knows PRMG they know it, it's just part of who we are
Peter Asch:
After the break, Kevin Peranio, the chief lending officer for PRMG and I will talk about his experience at ICE Mortgage Technology Experience and what to watch across the industry, that's right after this break.
Speaker 14:
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Speaker 15:
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Peter Asch:
Welcome back. Before the break, Kevin Peranio, the chief lending officer of PRMG and I were discussing his career and the importance of diversity from inside the podcast booth at ICE Mortgage Technology Experience 2022. You and I were in the room when the CEO of SuperWorlds gave his pitch to the room about investing in digital real estate. So as PRMG's thinking about the future in office, out of office, are you also thinking about hanging the digital shingle out there and get into the digital world?
Kevin Peranio:
Well, I am, because I love that stuff. I'm that guy that tries to bring some forward thinking to our senior management, and that's not to say that there aren't others that are thinking about it, but your traditional mortgage lender probably has an established team. And we got people on our board that aren't even on Facebook. And now they just rebranded Meta. Harish was one of the guest speakers at executive summit of SuperWorld. And it was very fascinating. It did have my gears turning. The metaverse is all of it. It's the all encompassing name for everything. Then there's completely virtual worlds like sandbox where everything is in that platform and system.
Kevin Peranio:
What I liked about SuperWorld was it was a virtual world laid on top of the real world, which I think is an easy transition for even someone right now that's very skeptical of it. People are still skeptical of cryptocurrency, which is just a blockchain ledger, which is immutable and absolutely E amazing when it comes to encryption and security. And so people are still getting their hands around that, which is only 11 plus years old. So now they got to get their hands around the metaverse and this virtual world. But when Facebook came out, to quote Gary Vaynerchuck, Gary V., he's like, "50 year olds scoffed at Facebook. Now it's only 50 year olds." So it's funny and I'm not age shaming here, but I'm just saying there are early adopters to technology and then everyone comes along.
Kevin Peranio:
Will the metaverse as a whole be mainstream? Yeah. For sure. Who will the winners be? Will SuperWorld be the Facebook of that part of the metaverse? I mean, I live in Newport Beach. I was thinking maybe I'll go buy real estate in the area and buy my own house. What if five years from now I log into SuperWorld and I see that some other dude owns my house? And then I put on the virtual AR VR glasses or goggles or use my phone or whatever it is and I look and someone has graffitied the front of my house in the virtual SuperWorld. I'll be off. So maybe I got to buy all my properties. And that's not even thinking about being violated by what you own. But then there's certainly going to be money made in there. Just look at our kids who play video games and spend money in the video games to buy the hyped up weapon. They're going to go to these virtual worlds. They're going to go to the metaverse, they're going to be buying stuff to hang out in there.
Kevin Peranio:
Will everyone on the planet completely replace their real life with a second virtual life? No, but almost everyone on the planet has a smartphone. So our lives are enhanced with our smartphone. So why wouldn't there be some enhancement in the metaverse in some way that resonates? And it's not going to be the same for everybody, but I can certainly see people putting their eyeballs on screens and it might have something to do with certain areas of the metaverse. And SuperWorld was a very cool concept. And it was pretty awesome that ICE put them on to speak at this conference.
Peter Asch:
And one of the things in the full section that Joe talked about is this 1% incremental change over time. So we're not going to go from buying our house the old way to going to the metaverse tomorrow. But when you think about incremental change, one of the big changes that's happened in our time since the last time Experience was here was Ellie Mae, Simplifile and MERS all slowly acquired by Jeff Sprecher by ICE, relaunched as ICE Mortgage Technology. As a client, what has been the benefit of that combination? And what's your reaction when you first hear that news?
Kevin Peranio:
It was a complete validation of something that I've actually been saying for a couple years. MERS is basically an electronic registration system. There's no competition. It's a complete monopoly. When I watched the way that business was built, every loan gets registered when it becomes a completed funding of collateral. And it's a data point. It's a record. And it's the standard in our industry. They did a price reduction somewhere along the way and I said, "What a brilliant move? Why allow your competition to come in?" The barrier to entry in that space of electronic registry of loans, of property, of collateral, it's so high that no one's going to come in and do it. It's like saying let's add a 27th letter to the alphabet or let's change the order of our alphabet. It's not going to happen. It is a protocol. It's established. It's how we roll.
Kevin Peranio:
So then when I saw Chris Sullivan, who's an awesome dude, plays in a band called Wakeland, he now works at Reggora, who I met at ICE Experience three years ago, I met Brian Zitton here, brought us together. It's now our appraisal management software partner. Chris worked at Simplifile and I would meet them at the shows for several years prior to that. Again, I had this thought. Now I'd seen what MERS had done. And Simplifile basically is the e-recording of deeds and trusts and promissory notes. And they went out to all the counties, 3000 plus counties. Some of them where Mabel was sitting there with her cigarette and a manila folder file and recording at her own sweet will. Once or twice a week, Simplifile went out to all these counties and digitized the recording of notes and deeds and trust. And I just said, "Here it is, this is just like MERS. What a brilliant way to monopolize this."
Kevin Peranio:
And then I swear, a year after having that thought, bam, bam, bam, they're all bought in together. And I was like, "Oh my gosh." And I didn't know Jeff at the time. And I'm like, "Dude, this guy is aligning vertically monopolies. He's aligning these hard barrier to entry business that are staples of our industry." But it was a great thought to see it line up and just go, "Wow." Sometimes you have an idea and then it happens. You got to give these guys at ICE a lot of credit. They wanted Encompass, they wanted Ellie Mae, they wanted to align these pieces. They're 55% to 65% market share. I don't know the number for Encompass. And second place is I don't even think even 15%. That's a validation of years of effort, years of building bridges. And to see them all lined up together was just pretty amazing.
Peter Asch:
Good investment. Good for industry aligning processes altogether in one simple package. You have to tell me, I'm sure that helps PRMG reduce costs having everything in one spot. How does all this really help the end customer, the person who wants to buy that house, the person who's been saving up and now looking for their first home, or like I just did, just moving up to a little bit bigger space now that my kids are a little older?
Kevin Peranio:
Just know that behind the scenes, there are electronic recordings and records and data points that are digitized that safeguard your asset. And for you or anyone else, the home is the largest purchase you make in your life typically. And knowing that it can be insured by title companies, that you know that you're the owner. There's no defects on title. The process was recorded in a safe manner and an accepted manner, which makes mortgage backed securities, again, a safe haven asset backed by collateral that you know is actually the collateral underneath the asset that people trade mortgage backed securities around the world, which is a great return and a great investment vehicle. And so not to get too far into it, but people have been talking about blockchain ledgers disrupting the title business.
Kevin Peranio:
Now, the data that's been collected by title companies for years, they don't want to give that away. They'd rather make billions than millions. But if I knew exactly A to B to C every single person involved in the title of this property, then there's no defect. There's no risk of my asset. So blockchain or something like that could disrupt the title business. I'm just a bystander on that, but it's all the same thing. It's safeguarding your asset and knowing that your home is truly, truly yours.
Peter Asch:
I want to do a little side trip about technology implementation. There's an interview floating around the internet of you talking about using Picasso to purchase your vacation home in Park City site unseen. Besides giving your family access to the best skiing around, was that an interest in that technology, part ownership in a home, buying a home unseen, and then sharing that collateral with a group of people who now can access those slopes?
Kevin Peranio:
Yep. I've lived in California for six years. I'm a Texan. I do love California, things I really love about it. And part of the thing is the convenience of getting up to Park City to ski. I love skiing. I love snowboarding. And I want my kids to have that passion and love when they're younger, because now I can make that happen for them through hard work and sacrifice. And so I've been watching properties on Newport Beach Peninsula and Park City for years and I'm like, "I want a property up there in my family's portfolio. Maybe can hand it down to my children at some point."
Kevin Peranio:
You're looking at Redfin, you're looking at data points. You're seeing the prices like, "Okay, this house is 1,500,000. Now it's two. Now it's two and a half. Oh my God, I'm never going to be able to afford this house." And then boom, here comes this tech driven concept of co-ownership for second home. I happened to just be on social media and I saw buddy of mine hAschtagging Picasso. I clicked on it. And there was the very first night, the very first listing of the very first home in Park City. And it was amazing. And they basically, they buy a home and they break it up into eight units. And I in an LLC together with my wife buy an eighth. I am on title of a second home. Second home use only.
Kevin Peranio:
They mark it up a little bit, mark it up 12%, break it into eights. Turnkey, furnish it, monthly fee, offer financing through First Republic Bank. It was 50% down before, now they offer 20% financing down on their newer homes. They're trying get into a hundred markets and they're even international. So paying $647,000 for an eighth unit and being able to use a home 44 days a year and give my family that blessing of skiing as they're little and growing, my kids are nine and under, all four of them, it opened up a door. To quote Spencer Rascoff the CEO and founder of Zillow and Austin Allison, who is the founder of Dotloop, these guys are co-founders of Picasso, "This is the democratization of second home co-ownership."
Kevin Peranio:
So then I bought another one in Newport Beach Peninsula. Not that I'm taking 88 days of vacation a year, but I can staycation out of that beach house in part of that work from anywhere concept. I can veg out, give my driven five houses from the sand experience, an experience I never had for an affordable entry price. It's brilliant. I love it. I can't talk enough about it.
Peter Asch:
Whether we talk about primary or secondary homes, there's a lot of conversations going on around rates. The Fed this morning raised, I think, 25 basis points. Considering slowing growth, geopolitical events, and other issues, what do you think is going to happen with rates? You're pretty on the ball with your updates.
Kevin Peranio:
The tenure is up to 220 today. The Fed just spoke today. Today is the Open Market Meeting and their comments were seen as more hawkish on inflation. They basically said at our coming meetings, we're going to talk about reducing our balance sheet. And that is reducing their footprint that is seen as less liquidity in the system. And our business is based on liquidity. Our business is based on the velocity of money. Our economy is based on the velocity of money, how much money changes hands. So if there are less buyers of mortgage backed securities, less buyers of treasuries, if the borrowers are spending less on the economy, which our GDP is 70% consumer growth, that could be seen as a slowing of our economy.
Kevin Peranio:
In the face of rising prices with inflation and housing supply shortages, I mean, these are some uncertainty times, but the Fed brought some certainty today saying, "Hey, this is what we're doing. 25 basis point hike. We may have some more hikes coming up at a faster pace potentially, and we're going to reduce our balance sheet." The markets are trying to digest how to react to that. Generally, the trend is for higher rates, but if you're buying a home and you're a renter now, you pay 100% interest rate right now. If you are a renter, you pay 100% interest rate and you're making a landlord rich and you are missing out every day on the opportunity to create wealth on a payment you're already making because you're renting.
Kevin Peranio:
So you've got to open a door, you got to do it now. It doesn't matter what the rate is. You have to start building your equity and paying down that for savings plan. So it doesn't matter what rates do. For purchase money, you got to get in the door. Will it impact rate into refis? Yes, it will. But there's a lot of equity out there. So people are doing cAsch out refis and consolidating their debt. That's not a trend or a fad, that's just being fiscally responsible for your personal balance sheet at home.
Peter Asch:
One of the things that's an ongoing issue is these underserved communities that don't have that ability to create equity. They don't have the ability to buy homes. You spoke recently to the Mortgage Pro four-one-one on the impact of community investment acts and what they could have on non-banks and on the one level, that's a great thing investing in underserved communities. Can you explain how those acts work and how they can actually have some major risks to non-bank lenders?
Kevin Peranio:
So you're referring to the recently proposed liquidity requirements of non-banks and the standards to which they're held to. Remember, non-banks don't have access to the Federal Home Loan savings funds or the Fed funds. And again, we're talking about liquidity. So if our leadership team has to set aside more capital to meet certain requirements, that's less capital that we're using to serve the underserved. And IMBs, independent mortgage bankers, by the way, we're the ones in the community doing the tough loans. We're the ones serving below to moderate income borrowers. We're the ones with really wide credit programs and serving those that need it, the first time home buyers that maybe haven't been taught financial literacy don't know about how to build their credit or their wealth or save for that down payment, looking at liquidity and velocity money as it relates to serving the underserved.
Kevin Peranio:
We really need to take a look at it because setting aside money, this isn't '08. Dodd-Frank worked. The loans that were tough one day out of foreclosure bankruptcy, they're now called non QM loans, non-qualified loans, that market seized up in March and April of '20. Fannie Freddie Jenny was just fine. And that was a crAsch recession. So Dodd-Frank work the hype of being under capitalized and having a crAsch from '07, '08. You can't think of every policy going forward that that's how you have to take such an extreme stance. So I still feel there's some middle ground to also set out and serve the administration's missions, which are very much aligned with independent mortgage banks of how to serve the low to moderate income borrowers and get more people in a home.
Peter Asch:
As we wrap up talking about getting more people into homes, we've had two unprecedented years of refinancing in sales. How are you seeing things coalescing as things return to normal and the economy goes forward? Where is this all going?
Kevin Peranio:
We have a massive housing shortage. So there's just no supply. There's a wave of demographics of borrowers that are in the household formation years age 33. And they're looking for homes. That's going to continue to be around for this year, maybe deep into next year. If the economy slow down, if there's a recession and people lose jobs, they'll start to tighten up and there'll be less buyers out there. And then the cycle will start again then the Fed will step in and then rates will come back and improve because we need to provide liquidity to get our economy out of this recession. So the good news is whether economies are good or bad, housing is a very insulated market. You're either doing refinances or you're doing purchases, regardless of what's going on in the cycle of the economy.
Kevin Peranio:
And at the end of the day, putting someone in a home is the way to bridge the wealth gap. It is the way to create wealth. It is the way to build our communities and we just have to continue to push forward. And I think that will always be a shining light, a shining beacon for anyone, no matter how hard or tough times get, whether you face a health pandemic, job loss, a rough time in your life, having that bedrock foundation of a home with a roof over your head, it's a safe haven and that's never going to change.
Peter Asch:
You've been here for four days I think, if I'm doing my math correctly. You've heard from Karl Rove. You've heard from Abby Wambach. You've heard from Jeff Sprecher. When you get on that 8:00 AM call tomorrow, what's the one takeaway you're going to make sure your team gets from something you've learned here at Experience?
Kevin Peranio:
Well, we had one of those 8:00 AM calls already today. I had to have another one tomorrow. I said some of these tools that we have, we're not using. And we need to think about ROI more than just in terms of dollars, but in terms of time. And technology enables us, it doesn't replace the human relationship aspect of our business. You can't replace that part of it. And a first time home buyer leans on us as originators to help coach them through an emotional and tough process, but leveraging technology, leveraging the tools that we have here at ICE and everything we've been talking about gives us time back.
Kevin Peranio:
So what do you do with that time? Do you reinvest it in your business and yourself and your health and your family? Think of things in ROI in terms of time, not just dollars and how are you going to reinvest that time? Where can I save time? How can I manage that? And then be a better person in my society and in this industry. That's my big takeaway. I talked about it this morning on one of my big team meetings. I got another meeting tomorrow. I'm going to talk about it again.
Peter Asch:
Use technology to use better time. Thanks so much, Kevin for joining us inside the ICE House.
Kevin Peranio:
Thank you, Peter. Appreciate it.
Peter Asch:
That's our conversation for this week. Our guest was Kevin Peranio, the chief lending officer of Paramount Residential Mortgage Group or PRMG. If you like what you heard, please rate us on iTunes so other folks know where to find us. You got a comment or question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us @ICEHousePodcast. Our show is produced by Stefan Capriles, with production assistance from Ken Abel and Ian Wolfe. I'm Peter Asch, your host, signing off from the podcast studio at the 2022 ICE Mortgage Technology Experience. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor approve or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of length or clarity.
