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When Phil Shoemaker was in college, he never intended to become a mortgage professional. And today, in his role as executive vice president of wholesale lending at Irving, Texas-based Caliber Home Loans, he is still pleasantly surprised at his career trajectory.
National Mortgage Professional Magazine recently spoke with Phil about his journey in mortgage banking and his view of the industry where he has become one of the most prominent figures in wholesale lending.
NMP: How did you first get involved with mortgage banking? Was this your original career path?
Phil Shoemaker: This question always makes me laugh a bit because I have yet to meet a person who dreamed of growing up and becoming a mortgage banker. My original career path was engineering and my degree is in electrical engineering, yet here I am in mortgage banking.
I was a freshman in college and needed a job. Through a friend, I ended up getting an opportunity with a start-up mortgage bank as a shipper in post-closing. The company was First Magnus Financial, and I was lucky that I had the opportunity to participate in a start-up that eventually became one of the largest privately-held lenders in the country. By the time I finished my degree in electrical engineering, I had been exposed to how dynamic and rewarding it was to work in mortgage banking and decided to make mortgage banking my career path.
The day First Magnus closed was one of the saddest days of my life, yet in hindsight, it was one of the best things that ever happened to me and my family. That event brought me to Caliber Home Loans and taught me many valuable lessons about mortgage banking. Specifically, it taught me how important it is to never lose sight of what’s best for the consumer and the valuable role that servicing plays in the long-term financial viability of a mortgage bank.
How did you first become associated with Caliber Home Loans?
After First Magnus, I participated in another start-up mortgage bank. We ended up selling the assets of the company to Lone Star Funds and it was this acquisition that seeded the technology and origination platform of Caliber Home Loans. I relocated to Dallas to run operations and we’ve been building on the platform ever since.
In your opinion, what makes Caliber stand out from the competition?
The people and the culture. It took six years and it wasn’t always easy at Caliber, but I am very proud of the culture we have built and humbled by the people I work with and work for. They are the most intelligent and experienced mortgage bankers in the industry, yet there is zero arrogance.
Every day, I am part of a team that comes to work with the goal of how to better serve the consumer, our customers and our employees. There aren’t silos … the layers of management are thin and we are building a company that has integrity and longevity. It also doesn’t hurt that we are one of the most financially stable independent mortgage banks in the country, which allows us to retain all of our servicing and create our own suite of non-agency portfolio products.
How do you see the current state of the wholesale lending market?
I am very bullish on wholesale lending. The credit quality in wholesale has never been better and the brokers we support are providing a valuable service to the consumer. I believe there has been an overreaction to the regulatory reform that has occurred over the last five years and the belief that the broker model is no longer viable is unfounded.
As the U.S. residential real estate market continues to recover, I see wholesale lending gaining market share because consumers appreciate the options and competition always results in a better product and price. This will be especially important as non-agency products become a more substantive part of the market. Mortgage brokers will play a critical role in helping educate referral partners and consumers about the additional lending options that are now available.
How has Caliber been able to keep on top of the many regulatory changes that have taken placed in recent years?
We’ve had to dedicate a large percentage of our corporate resources to interpret, educate, implement and validate that we are properly complying with all of the regulatory reform that has occurred. There is no doubt that the cost to the consumer has increased, and I would argue that some of the regulatory reform has been a bit overboard, but I also believe the regulators got it right in key areas, specifically, the ability-to-repay requirement that is critical in making sure the industry does not repeat the mistakes of the past. These regulatory changes will keep the industry grounded in responsible lending as the non-agency market emerges.
Caliber offers a brochure with the title "Our Products Make Us Different/Our People Make Us Great." What kind of people does the company look for to strengthen its employee base?
Above all, we look for people who have integrity and are capable of placing the interests of the consumer above their own. Caliber is very much a performance management culture, and we look for and attract those who want to be part of a team that is constantly striving for perfection and never happy with status quo. Despite the fact that we are one of the largest lenders in the country, Caliber Home Loans has been able to maintain an entrepreneurial culture, where creative people who like to innovate can flourish.
As a follow-up to the previous question … what can the industry as a whole do to encourage young people to pursue careers in mortgage banking?
The lack of young people entering this industry is a real problem, but I think it’s more of a function of the current market, regulatory environment and overall perception of the mortgage banking industry by the general public. Given all of the regulatory reform, the environment has demanded experienced individuals, and with all of the consolidation in the industry, there hasn’t been a shortage of experienced people.
A big part of the issue is the industry’s motivation to attract and teach new mortgage bankers. As the industry recovers, I think we’ll see a natural push by many companies to bring young people into the industry because there will be a need. A more stable regulatory environment will also afford companies the time and resources to invest in attracting and educating new mortgage bankers.
I also cannot help but think there is a correlation in the low rate of first-time homebuyers. Young people are not buying homes, but this is slowly changing. As they start to experience the joy of owning their own home and the perception of working in the mortgage banking industry improves, it will drive more interest to careers in the mortgage banking profession. I believe this industry is one of the most diverse and exciting industries to work in, and we perform a valuable service to the consumer. I don’t think young people see that right now, but they will as the perception of the industry changes.
Looking back on your work in the industry, what do you see as your greatest challenges and your greatest accomplishments?
The early years at Caliber were my greatest challenge. The industry was in shambles, our culture was a mess, we lacked experienced people in critical roles, and as a result, we churned through some very good people and had to reinvent ourselves several times.
In terms of my greatest accomplishments, I think that whatever role I have played in getting Caliber to where we are today, as tiny as that may have been, is my greatest accomplishment. I am very proud of what we have been able to build, yet I also feel like we are just getting started.
What do you see as the near-term future for the mortgage banking industry?
There will continue to be consolidation over the next couple of years. Companies that have not focused on driving purchase business, creating a sustainable business model that involves the stability of a servicing portfolio, and investing the appropriate resources to ensure regulatory compliance will likely have to exit and sell to companies like Caliber.
I also think we will continue to see non-agency products evolve and become a more substantial part of the market. As of August, Caliber is the first lender in the country to issue a private label security of this type of product since 2007. We intend to lead the way in making the market for non-agency, but we also intend to do it responsibly by ensuring that borrowers are placed in the best loan possible and can demonstrate the ability to repay such that we don’t repeat the mistakes off the past.
Outside of work, how do you spend your leisure time?
I spend time with my family and focus on being a dad. I don’t see them much during the week, but I’ve gotten pretty good at shutting down and enjoying time with my wife and kids on the weekends.
Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at [email protected].
This article originally appeared in the September 2015 print edition of National Mortgage Professional Magazine.