(Editor's Note: This is the second installment in a four part series. To read the first installment, click here.
It’s the season of giving thanks, and for those who have worked in the mortgage and servicing industry throughout the ups and downs seen in the housing market, there are many aspects of the business to be thankful for these days. DS News spoke with several mortgage professionals to discuss their mortgage background, what changes they have seen over the course of their tenure in the industry, and what they love about the work that they do.
For the second installment of this series, DS News sat down with Rick Roque, President and Founder of MENLO, a company that provides builders and mortgage companies with mergers and acquisitions, technology, and mortgage origination growth strategies.
What is your background as a mortgage professional?
My father was in the real estate and mortgage industry throughout the 80's, 90's, and then he sold his business in the 2000's. I grew up in and around the business so much so that my undergraduate degree was in electrical engineering because I really thought to myself that I had done the mortgage and real estate thing through the family business, and I was going to venture off and do other things. I was in high-tech until the Dot Com Bubble in 2001, and then I started a small technology company called STI whose focus was providing technology solutions to mortgage companies among other things. I sold that business in 2004, and I joined another company and raised capital for a mortgage technology company called Push MX Software which was a pipeline management solution. We really did a very successful job up until the precursors to the market crash in penetrating the market that was heavily dominated by Calyx.
Seeing the writing on the wall of the industry, I felt it was safer to make a transition from Push MX to Calyx where I ran all their sales and business development. When it was clear that Calyx was not innovating to support the needs of the mortgage banker, that's when I started MENLO Company in. My focus early on was warehouse lines because the big need in 2009 was warehouse lines of credit.
Once people or companies had access to credit, it quickly became a regulatory question of technology and management. A lot of companies said "Hey Rick, we'd love for you to help us transition from Calyx Point onto a more mature mortgage banking technology platform." And so I did. My first client was Ellie Mae, and I consulted with them for about two years. We transitioned thousands of users and hundreds of companies over from Calyx to Encompass in that period of time.
My background was always this hybrid between business and technology, and so my focus has always been "how do you leverage technology to yield a better business result." In the last four years, my focus has largely been on retail growth and helping companies launch processes, procedures, and policies and then actually aggressively grow retail mortgage production.
What are the best parts about this industry and your specific position?
This industry is very unique in that you have bankers who are very focused and passionate about homeownership. This is a very unique niche because you have people who are helping people qualify and get into homes, and they bend over backwards to do everything they can to move a consumer into homeownership. There is nothing more intimate to a person's life than their home so you work with a collection of professionals around the country whose sole job is to sell access to money for the purposes of purchasing a home. It's money with a purpose because you are doing something really useful with it. That's why my love for the industry and my job are one and the same.
In looking back five years, what aspects of the industry have changed or shifted?
I would say one change I have seen, sadly, is the collapse of the middle-class mortgage banker. Mortgage companies were largely family-owned businesses. But because of the capital requirements, the cost of regulation, and the risk associated with it, a lot of the family-owned businesses have gone away. It's no longer as personal of an experience as it used to be.
The family piece aside though, you now are either a really, really small mortgage broker or you're really big. It used to be that there were tens of thousands of companies, but much of that has largely collapsed. Regulation has done everything to break the backs of the small to mid-sized mortgage companies. You see that through industry consolidation. With my work in mergers and acquisitions, I have helped that process and been a part of a lot of that consolidation, but I don't necessarily think it is healthy for the housing market.