Transcript

Roy Meshel · Calm Under Fire

Col. John Boggs: Hey, welcome back to Calm Under Fire. I'm Colonel John Boggs. I'm the president of Fortitude Consulting, and that's an executive leadership development and coaching firm. And today I'm joined by Roy Meshell, co-founder of Local Mortgage here in Arizona. Roy spent nearly three decades navigating the ups and downs of the mortgage world, helping clients cut through the complexity of financing and making smart decisions about their homes and investments. His approach is straightforward, disciplined, and grounded in serving the community he works in. So Roy, it is great to have you with us today. Roy: Thanks for having me. Col. John Boggs: Perfect. Well, Roy, I'm not going to waste your time. Can we jump right in it? Okay. Okay. Roy, the mortgage industry has been, has seen some pretty wild cycles over the last 30 years or so. Yeah. What have those cycles taught you about leadership and staying steady when the market's turning all over the place? Roy: Yeah, let's jump in. I'm not a yeah, let's do it. Yeah. Well, I think the biggest thing is you know, it's going to change. Like whatever happening now, you know, is going to change and you got to be prepared that it is going to change for good or bad. And I think getting people not to live in the moment, but prepare for the future is a big thing. Like, know, there's times in the mortgage business that I basically were printing money. Like when rates went down to two, we're printing money, but you got to be prepared that that's not going to last. And so rates are going to go up and you got to be prepared for that. And when rates go up, you got to be prepared that rates are going to come back down. it's, it's constant preparation for the next phase and not to get caught up in the moment. Col. John Boggs: Wow, you that's interesting. You said when rates go up and you let, let's go there for a second. When interest rates move, emotions tend to go with them. So how do you help? I could imagine. How do you help your clients make, how do you help them make calm, rational decisions during those uncertain markets? Roy: Yeah. Yes. Yeah. So, you one of the things like we have to tell them all the time is you only get one shot to negotiate your purchase price of your house. So if you're the purchase price of your house is five hundred thousand three years later, you can't renegotiate it. You paid five hundred thousand. But with your mortgage, you get to renegotiate your rate. So if, you know, there's different types of loans, rates go up and down. So you might, you know, what I tell people is get a house that you love at a payment you can right now afford. Col. John Boggs: Mm-hmm. Roy: that you're comfortable making that payment. And if rates go down, you're going to love it even more. Because, you know, if you're, if you were good with spending 5,000 a month and then rates go down and you're spending 4,200 a month, that's $800 a month that, you know, goes back into your pocket that can go into investments, go into taking nice dinners, whatever you want to do with it. So it's really telling people like, Hey, like, don't worry about rates so much because people will ask us all the time lenders, like, what do think rates are going to do? And we can give an honest answer, like right now we think they're trending down. But if you're in a 30 day close of escrow, that doesn't mean they're going to go down in the 30 days you're in close of escrow. And now, especially with all that's going on in the world, it's kind of a roller coaster, right? Like, so tomorrow, something on the news will hit and rates could really benefit from it. But then Friday, something else will hit and it's like gas prices in a sense, right? It's going to go down. Col. John Boggs: ⁓ my gosh. Roy: So we try to encourage people not to be emotional about the interest rates right now, but you have to be comfortable. Like if I was doing your mortgage, I'm like, you'll have to be comfortable with what rates are that payment now. And if you're comfortable and you love the house, let's go forward. if rates go down, trust me, we're like roaches on a pirate ship. We're all gonna tell you that rates went down and try to get you to refinance. And then the other thing is people Col. John Boggs: ⁓ huh. ⁓ my. Roy: who have rates in the twos and the threes, it's an emotional thing. If they have to give a new house because of job transfers or divorce or marriage or downsizing, upsizing, they'll say, my rate's two and three quarters. And I'm like, my grandfather used to tell me movies were a nickel. Not very helpful when I go to the movie theater anymore. Yeah, rates have changed. Col. John Boggs: Mm-hmm. ⁓ Well, so tell me, professionals, other people that do what you do, how do they survive? Do they survive the market downturns or do they disappear? What happens to them? Roy: So the smart ones survive, but a lot of times you'll see a huge thinning of the herd. So rates will go up and the herd will thin. Cause there's a lot of people who get into it who think it's easy money. I'm gonna, you know, I'm gonna barely work and I'm gonna make a million dollars. And that's just not the case. But the smart ones, when rates are in the twos and the threes, yeah, they'll spoil themselves a little, maybe take a nicer vacation than they would have, or, you know, they might buy the next car up that they wouldn't have bought. Col. John Boggs: Mm-hmm. Roy: But the smart ones are socking money away during those times so that when rates go to eight, you know, they have, they have a nest egg that they can, you know, if they need to, they can draw. And so I think it's those and the good one, a lot of the good ones will tell you that when rates go up, sometimes they make more money because of the thinning of their herd, because they're like, well, all these loan officers left. So I'm getting, you know, there's more pie for me to eat. So they're getting more deals. because so many people got out of it even though there's less deals. Col. John Boggs: Okay, clearly buying a home is the biggest decision people make. how do you build trust? mean, what makes me want to come to you instead of coming to Joe Blow over there? Roy: Yeah, yeah, for sure. So I'm big on education when we first talk. So I'm big on bounding on that first call saying to you, right, like, tell me ⁓ what our goals are. And you know, lot of people say, look, you know, I have an eight-year-old kid, so my ⁓ deal is I want to have ⁓ house till they're 18, till they high school, and then we'll downsize. So it's finding the right, you know, situation that fits and building trust. But I think there's a lot of, you know, the ones just who get in and out when rates are... you high and low, they just start taking your mortgage and start selling you on an interest rate and selling you how to do it. And they don't really do a discovery like kind of call where they're saying like, Hey, John, tell me, you know, why do you want to move to Arizona? Like I plan on retiring in three years. Okay. Like what's that look like? is, know, let's manage the payment. How in three years, what kind of retirement income do you have so that we can manage the payment that way? So a lot of it's educational. Col. John Boggs: Is there a, what's the biggest misconception about Morgan? Yes. Roy: About mortgages? So the biggest misconception is, well, there's a few. So one is that if you tell me you had a 3 % rate, there's something I could do in today's environment to get you another 3 % rate. So I think some people consider it like a shoe store that I can go into the back room and go, well, I don't have a 10 in the brown, but I have a 10 in the tans. Will that work? Col. John Boggs: Mm-hmm. Roy: There's no back room office inventory that we have from, you know, the COVID years that we have leftover mortgages that are collecting dust. So that's probably one of the biggest ⁓ misconception is. And the other that in the short term, even in the long term, like there's analysts we listen to particularly, even in the short term, I can tell you what rates you're gonna do. And so, like the short term chart, right? Cause you know, the Friday before, Col. John Boggs: ⁓ Roy: the Iran conflict happened, rates were about three or lower than they were. But, you know, if I knew that conflict was going to happen, you know, I would have been a genius. so people who that Friday and I have one client in particular that that Friday we priced their loan at five and three quarters for a 30 year fix, jungle 30 year fix. They didn't pull the trigger and they, you know, so they could have pulled the trigger Friday, Saturday, Sunday. Monday, you know, Col. John Boggs: Mm-hmm. Mm-hmm. Roy: That rate was at six and eight. And again, the misconception, like, can't we do something? And I'm like, well, no, Friday, we, you know, Friday, we could have locked your rate, but you didn't want to lock your rate. So now I only can deal with today's rates. So unfortunately, they trickled back down. So they ended up with five and three quarters again. So I think that's, another misconception, how much control we have over it is kind of a big misconception. And then that we ask for paperwork that we don't need, like everything we're asking for, like we take no joy in asking you for all this paperwork, but we're following most of the loans are Fannie Mae or Freddie Mac loans, conventional loans, and they have guidelines and we're following those guidelines. So, you know, we get all the time, like, do you really need that? You don't really need that. And like, yeah, we do. To sell you a loan to Fannie Mae, you know, we really do need that. Like I wouldn't ask you for extra stuff. I take no joy in collecting paperwork. Col. John Boggs: Mm-hmm. Roy: That's not the part of the job I love. Col. John Boggs: Wow. I love that comment. It's like, not like a shoe store. Roy: No, and people think that when they tell me they have a two and three quarter rate, that means like I can get them a better rate than is existing today because they have two and three quarters. And you know, that's, you know, that's just not the way it is. Like I can't like say, well, well, you have three, so let's, you know, reach out five and three quarters, but let's get you four. Like it's just not, you know, it's not within my control. Col. John Boggs: Are there, I'm curious, are there things that happen in the news, in the world, that affects mortgage rates more than other things? Roy: So, know, it's weird being in 30 years, everything affects mortgage rates. So the job reports affects mortgage rate, a war with Iran affects mortgage rates. You know, the straight of your news, not, you know, oil not flowing affects mortgage rates. you know, consumer competence affects mortgage rates because mortgage rates are really tied to, everyone thinks it's tied to the Fed, which is another probably misconception when the Fed lowers, you know, mortgage rates go down. Typically the day the Fed announced, Col. John Boggs: Mm-hmm. Roy: when they do the announcement and they lower, rates actually go up because it's built into our market. Mortgage rates are closely tied to the 10-year treasury. So anything that affects the 10-year treasury affects mortgage rates. And the whole reason for that is if you were gonna, say you were a pension fund and had a billion dollars to invest, investing in mortgages has to be more attractive by rate than the 10-year T-bill, right? 10 year treasury is backed up by the faith of the US government. Mortgages are fairly safe because most people pay their mortgages on time. But we have to be, our return has to be higher than the T bill. we kind of go up and flow with the T bill. So anything that affects the T bill, which job reports does, consumer confidence does, know, all that's tariffs do, all that stuff affects mortgage rates. Col. John Boggs: Okay. Mm-hmm. Mm-hmm. Okay, cool. So, you you founded State Mortgage years ago. Roy: Yeah, yeah, my baby. Col. John Boggs: And now your local mortgage. So what have you learned from the first one to the founding the first mortgage company and then the second? What have you learned about that? Roy: Yes. So the first thing is don't hire A-holes. So that is the first thing that we that the second time around, you know, we learned from the first time around. We won't hire anyone I wouldn't want to go to dinner with now. And the first time we didn't, you know, we didn't so much follow that rule and, you know, conflicts, drama, culture got affected by that because we Col. John Boggs: Okay. Roy: We hired people who might've been good at mortgages, but not the greatest people. Didn't treat their coworkers great, didn't treat their clients great, but they were good at mortgages. So we learned that lesson. And then also learned a little bit more life balance than a lot of the problems we have. You don't need to work to midnight. That problem will still be there the next day and you can solve it the next day and nothing's gonna happen at. 12 o'clock at night or at one o'clock at night working on it. And then, you know, probably one of the biggest things is don't sweat the small stuff. did the first time around, you know, we sweated everything and like, like pick your battles, pick the hills you want to die on. Like only the things that really move the needle should you be, is the battle worth it. Don't worry about the small stuff. Col. John Boggs: Don't worry about the small stuff. is, you it's really interesting. You said culture. In a lot of organizations, a lot of organizations I've worked with, reigns supreme. Roy: Yeah. Yeah. It's a, so we learned it at state mortgage the hard way. So in the last, ⁓ seven years before we sold, were on the best place to workless every, every one of those years. But those first few years we didn't, cause we were so aggressive on growing and recruiting people and all that, that we really didn't have, really didn't take culture into account. And there's a lot of in the mortgage industry, really good producers. Col. John Boggs: Mm-hmm. outstanding. Roy: that you probably wouldn't say are good people sometimes. So they would treat their coworkers like crap and all that kind of stuff. so we learned the hard way that, yeah, their production was good, but they're just jerks. And in the end, it really wasn't worth it. And so the second time around, me and my partner, we're only gonna hire people that we wanna go to dinner with. If we can't stand going in dinner with you, then we're not hiring you. Col. John Boggs: Mm-hmm. Hmm. Wow, now that's an interesting rule of thumb there. We're not gonna have dinner with you, we're not gonna hire you. Wow. Wow. Roy: Yeah. Yeah. So we have, know, state was a bigger company and, you know, slowly locals growing, but local is a really tight knit group that every one of those people I would have over my house for a barbecue. Col. John Boggs: ⁓ that's great. That's great. So you, it wouldn't be torture. Your brand is live local, love local. Roy: Yeah. And it wouldn't be torture. Right. Yeah, we're huge into the local market. like we're big on local charities. We're big on the local community. And so, you know, and the story behind it is that when I was dating my wife, she's from a small town in Connecticut. And we went there for the fourth of July and our town is half full time residents and half Wall Street kind of people who are there for the weekends because it's on the Connecticut River. It sounds like a postcard. Like when you think of the Col. John Boggs: Mm-hmm. Mm-hmm. Mm-hmm. Roy: Old New England towns, that's it, right? And the first time I was there was 4th July one year and all these people were wearing t-shirts, let's say local. And I'm a t-shirt guy when I'm not working and I like cool t-shirts. So I go to the general store to buy a t-shirt and the owner of the general store is like, I can't sell you a t-shirt. And I'm like, why not? And he's like, well, you're not a local. And so I name drop that I'm dating Ken Kell's daughter and such a small town, the guy's like, Dawn. And I'm like, right, yeah, I'm dating Dawn. And I think now Col. John Boggs: Mm-hmm. ⁓ huh. Ha Roy: here, now he's going to sell me the t-shirt. And he's like, I wouldn't sell Dawn a t-shirt. And I'm like, why not? You grew up here. He's like, but she doesn't live here anymore. So I'm like, yeah, we live in Arizona, which is the same thing as saying Mars to the guy. Cause he's like, yeah, that's not here. Like, and so I said, can Ken buy the t-shirt? And he's like, of course Ken can buy a t-shirt. He's a full-time resident. And I'm like, well, can Ken buy this t-shirt and just give it to me? goes, Col. John Boggs: You Roy: total East Coast attitude. like, whatever Ken does with his t-shirts, it's none of my business. So, Ken goes to the general store, buys me my t-shirt. And that night I think about it I call my partners and we own State Moors at the time. And I said, if we ever do another mortgage company, we're calling it local because what the community means to them is what we think about where we live in Arizona. Because we're all transplants ⁓ from some other place. I'm like, but we really love Col. John Boggs: Ha ha ha. Roy: Like I will preach living in Arizona all day long to people. And I'm like, so we got to call it local because we're really into the community. And we're involved with a bunch of local charities and stuff like that. And you know, me and my partner both raised our kids in Arizona and all that stuff. So yeah, we're really big into the, to the, to being local and supporting the local community. Col. John Boggs: Mm-hmm. Roy, can you tell ⁓ me, was there a moment in your business where things got tough? you know, how do you keep moving? ⁓ please, please share with us. Roy: Yeah, there were a lot of those moments. So probably the biggest one is, you know, the 2008, 2009 crisis, we had what's called a warehouse bank. So it's kind of like a credit card. So you bought a house and we gave you a $400,000 mortgage. We use this warehouse or this credit facility to fund your loan. And then we would sell your loan and get that $400 back and pay, basically pay down the credit card is the easiest way to explain it. Well, at the time, mortgages, you know, all of a sudden were toxic. And the people who owned warehouse lenders were the Citibanks of the world, the Chases of the world, those ⁓ companies. And they were giving these warehouse lines to guys like me. Well, as mortgages got toxic, the shareholders didn't want to be involved in mortgages. So those warehouse lines were going away instantly. And then mortgage companies were restricting what products they had. And the problem was, if I gave you a loan, that product that I would get an email on Monday, that products know we're no longer buying that IRA had your loan funded. And so we're seeing so that's probably the one of the most stressful signs we went through. We ended up ⁓ having a bunch of private friends who did our warehouse line for cash. And then the problem was that products were going away. So I wasn't concerned with fraud and all that stuff, because we had good systems. But we sat down with everyone who was investing and said, Hey, if the product goes away, you know, we're kind of screwed. so, you know, our private investors who were friends who were, you know, basically holding the mortgage for two to three weeks before we sold it and they were using it to diversify their investments said, well, we'll foreclose then. And I'm like, well, you can't really foreclose on someone who's making their payment. That's not how it works. And they were like, well, how long are we going to be stuck with it? I'm like, well, I mean, technically it's a 30 year loan. Most people don't keep them 30 years, but Like technically we could be stuck with a loan for 30 years. And so that was probably the most stressful time navigating that crisis and owning a mortgage company and, you know, having families that rely on you for a paycheck. Cause we had a lot of support staff and all that kind of stuff. And, know, those people are coming every day and you could see, you could see, read their faces that like they were concerned. Like, Hey, is today the day that like they'd tell us we're not getting another paycheck, you know? Col. John Boggs: Wow. Roy: So that was probably the most stressful time. I didn't sleep a lot during that time. Col. John Boggs: And you got through it by a lot of. Roy: think grit. think we were stubborn. We were grit. I think it was one of those deals we had to find an answer. There wasn't an alternative. The alternative is we went out of business. I think when those things happen and talking to a military guy, I feel very humbled saying this. You got to shut up and figure it out. I think you guys are great at that. Every military person who I've spoken to in all the books I read. the total ownership or stream ownership and all the other ones. You guys are really good at that and your life and death is truly life and death. Ours was like, if we don't figure it out, we're going to be out of business. So it's kind of like we just had a everyday figure it out. And during that period of time, my partner and I stopped taking money, like work for free basically. So we're like, all right, we can get by with working for free. But we had to cut back. Col. John Boggs: Mm-hmm. Roy: when you're working without a paycheck, know, that vacation doesn't happen or you pass on getting a new shirt or your car, going to, you know, you don't look for a new car. So it was just total great, but it was one of those deals, you know, you're halfway up the mountain. You have to either go back or climb the mountain. And we had to climb the mountain. Col. John Boggs: Wow. Roy, if someone wants to buy a home in today's environment, what's the most important advice you'd give them? Roy: So I would tell you the Arizona market, which I know intimately, I don't know the national market as well, but in the Arizona market, it's a great time to be a buyer because there's a lot of inventory and houses are sitting. there's a lot of negotiation for seller concessions and price reductions and all that stuff. I'd say one, you know, during COVID, you put your house for sale on Friday. And by Sunday you had 35 offers. So if you were a buyer, like you had to pay over the ass price, you had to waive all your contingencies. You had to find a house that checks some of the boxes, but not all of your boxes, right? Because houses were, you know, they were lasting two days on the market. So if it had too small backyard, that's maybe a box you were like, well, I got to sacrifice it. Now I would tell buyers that there's a lot of inventory and like if the house doesn't check nine out of 10 boxes, don't buy that house. because tomorrow there'll be a house that checks nine out of 10 of the boxes, maybe all 10. So if you see the house with the right layout, but it's too small backyard, wait another week or two weeks, because that house with the bigger backyard is gonna come on the market. And they're gonna be negotiable because there's so much inventory. Col. John Boggs: Yeah. Mm-hmm. Wow. Wow, wow. Now that's good, Scoop. I wrote that down, by the way. I'm out here with you. So Roy, for listeners who want to learn more about local mortgage or to connect with you directly, what's the best way for them to reach you? Roy: That's good. Yeah. So my cell phone, 602-469-5022. And my socials are all either local mortgage or my name, Roy M-E-S-H-E-L, Michelle. So socials is a good way too. And I do a lot of educational videos on social. And then our website's localmortgage.net. Col. John Boggs: LocalMortgage.net Localmortgage.net. There we go. Okay. And that phone number was 602-469-5022. ⁓ Roy: 469. Correct. Col. John Boggs: Perfect. Well, Roy, this has been truly enlightening. Thank you very much. Thank you very much. Well, sir, thank you very much. I greatly appreciate it. And ⁓ for everyone else, I look forward to our next session. And until then, out here. Roy: ⁓ my pleasure. Yeah, no, thank you. And thank you for your service.