I’ve known Max for about 7 years now and he’s become one of my best friends. In this interview, we talk about his journey from being the number one volume producer of loans in Austin to starting his own mortgage bank. This is not an easy thing to accomplish.
We’ll talk about what real estate agents need in a mortgage partner and what it means to build your company from the ground up.
This is part two of our interview with Max Leaman, watch the first part of our interview where we talked about inflation in today’s market here.
How Max and I Met
Max and I met 10 years ago when I was a listing agent most of the time and Max had investors who were pre-qualified with him. I had a deal that was going south, Max stepped in as the loan officer and we were able to get it done quickly.
During that time, I was working with a loan officer who I really liked, and every deal that we did was super stressful at that time. What was happening was that he just wasn’t doing the job upfront.
Max invited my wife and I to a party and the next thing, we started hanging out as good friends. We’ve had this support group throughout the years and Max has been an amazing friend to me in the highs and lows.
Getting into the Mortgage Business
Max started growing his team and became the number one lender in Texas. For the last 10 years, Max’s team was in the Top 10 in the nation, and at that same time in 2015, they were the No. 1 Lender in units in the nation.
Max started in Capital Mortgage and worked with Prime Lending for 14 years and moved over to New American. Max has always been more entrepreneurial-minded and didn’t want to do things just the way they’ve always been done. In 2019, he spoke to his wife about wanting to do the business on their own to do things differently and have a flat-level organization.
Difference Between Mortgage Broker and Banker
Most people, when they start up a company, they start up as a broker. A mortgage broker is a middleman. They don’t, lend their own money. They don’t underwrite houses, they’re not selling loans after the fact they are beholden to wherever it is that they’re sending the loan.
If they send a loan to this lender, and there’s a problem in underwriting and they have to switch gears. They’re subject to rate movement and extending closing and all of that.
You find different banks to sell loans and deliver loans. You have control over where you send it. Once you start going down the path, you don’t really have much control. When you’re a banker, you’re picking the companies, when you’re working for them, you’re picking the ones that have the most control over you.
As a banker, if you come to loan people to get a loan, we’re going to keep that loan in-house. When you fill out the application, and you send us your documents, we’re going to give your interest rate and your loan package. We’re going to underwrite it. The underwriters for the most part sit in my office. Right now people work from home, which is why I say that but it’s they’re all employees of LoanPeople.
Starting a Bank
In 2018, we’re big enough to be our own company. I decided that I wanted to have a platform where there was no middle management driving up interest rates, where we could be super competitive, but still have quality efficiencies and everything that Leaman Team knew.
The first thing I knew that I was going to need was a warehouse line, a warehouse line is a line of credit. All these companies, when they fund a loan, they are a bank or an independent mortgage company. They are pulling money to fund the loan from a line of credit. You fund that loan. Once the loan is closed, you go sell the loan to an aggregator.
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Generally, most people will start as a brokerage. Then they maybe go down a couple of years, they get one warehouse line, they start kind of funding stuff themselves, then maybe they get an underwriter. They’re like a hybrid at first.
The whole idea behind LoanPeople is to not have a lot of fat. If we can be very lean, a flat-level organization with like-minded professional technicians. Loan officers are technicians that understand how to put loans together, that don’t want to be bogged down with management.
Expanding and Marketing the Business
LoanPeople is licensed in several states including Colorado, Oklahoma, Tennessee, New Mexico, Arkansas, and Florida. This also allows Max to go beyond Austin. LoanPeople has found success building teams where I’ll bring in the business you work for.
LoanPeople’s marketing is very hyper-locally focused on whatever city it is that they’re in. They do the neighborhood maps of Austin, San Antonio, Dallas–Fort Worth, and they’re working on Houston. If you’re in Austin, you get some Austin cool looking stuff. If you’re in Dallas or Fort Worth, they’ll look like Dallas-type things. It’s different and things that nobody’s doing.
Specifically, with the maps, this is a big deal. Agents can’t get enough of them. They’re valuable. They let your clients know where every neighborhood is in town. They look great in a background video. They’re useful. They’re actually very useful for consumers.
When someone’s moving to Austin, you don’t know where anything is. You’re able to give them this guide. Well, not just that you also have the website.
From a marketing standpoint, LoanPeople has all of these tools from a technology standpoint that allows their loan officers to move much faster through the process so that they can do more loans. There’s less management. There are more competitive interest rates.
Max opened this thing up, and nobody cared. You start a company. Fortunately, the Leaman Team has a great reputation in town, and everybody knows who we were. All people saw there was another name behind this. We were able to know the loan people’s name is out there and people understand if LoanPeople is on a pre-qual letter.
Max is not interested in doing mass text messages to everybody to try to get people to call.
Building a Culture
One of the big rules at Loan People is you have to be nice to work there. If you’re not nice. I don’t care if you’re doing a billion dollars a year, you cannot work here.
You’ve really got to fit into LoanPeople’s culture to work there. You got to fit with their convictions. If you’re just a loan officer that’s throwing a bunch of stuff up against the wall, and some of it’s gonna stick and some of it’s not and you don’t really care about your customers, you’re only in it for the paycheck.
The Vision for Loan People
At the end of 2021, when they started, LoanPeople had about 24 employees an one branch. By the end of 2021, they’ve got about 100. It was about 110-112 employees. Now, they have 118 employees and a branch in New Braunfels.
LoanPeople’s goal is what they’re calling five-by-five. They want to get to 5 billion in origination in five years from 2022 to 2027. It starts with making sure that processes are in place and that they are efficient.
They have processes and procedures for everything. They are also 100% transparent to their loan officers. LoanPeople shows their officer the financial, raw pricing, and how margins get built.
One of the terms in our industry is corporate allocation, which is the corporate office needs to take some piece of the pie to cover corporate expenses. This is because we have to pay things like underwriters and closers, funders. We have technology that needs to be paid for, which could come in a term of a guy’s for more money grab
A lot of these companies will put out a rate sheet to a branch and they’ll say, here’s your raw price, but they’ve already taken a corporate allocation out of it. They’re taking a per-file fee from the branch, and they’re doing all these things that make it appear to be transparent, but they’re not.
The way that they do it is they put the full margin to the branch, then take out our corporate allocation, so they actually see it on the profit and loss statement versus them taking out a piece before it comes to them so they can see exactly what corporates making.
How to Find Good People
Max wants a tight-knit group of like-minded people that are all in together that can bounce ideas off each other and he’s there with them.
One thing that a lot of these other companies don’t have, is they’re run by people who have either never originated or haven’t originated in 20-30 years. They don’t understand how to put a loan together, and definitely don’t understand what they’re dealing with for the last three or four years.
A lot of that gets lost on a lot of these old executives who have just been doing it the same way. Max was able to build something where he’s clearly good at his craft. He’s there to help people.
Connect with Max Leaman
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