Glenn Stearns on making the mortgage industry "not so callous"

Maria Volkova, Technology Reporter, National Mortgage News
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Article by National Mortgage News - Click here to see Original Article

Glenn Stearns, the founder and CEO of Kind Lending, loves the mortgage industry, which he has been a part of for over 30 years. "I love the business, the culture, and problem solving," he said. "It's not hard. It's very simple. It's all about people.

"In 2020, he founded Kind Lending, a Santa Ana, California-based multichannel lender, and according to Stearns, the company is doing well, growing by 300% since last year.

This is not the CEO's first rodeo in owning a mortgage company. From 1989 to 2019 he was the founder of Stearns Lending, one of the top wholesale companies in the nation, making him a bit of a celebrity in the mortgage world.

In 2015, Stearns made the decision to sell 70% of the company to Blackstone Group, one of the largest private equity firms in the world. Four years later, Stearns Lending filed for bankruptcy.

"I really loved what I did, I loved the company, but I got cancer and it kind of freaked me out, so I sold to Blackstone and then took some time with my family and traveled the world," he said. "After a couple of years, I started to miss [building a company], the people and problem solving."

"It wasn't about making money, it was about the people, so the minute I could come back, I did and I made Kind Lending very purposefully. "During his sabbatical, Stearns traveled the world with his family in a yacht and starred in Undercover Billionaire on the Discovery Channel.

Stearns has coasted through all of the ebbs and flows that the mortgage market has had in store for him the last three decades. Some of those experiences were good, some were not. Nonetheless, the mortgage veteran is enthusiastic about what he does and the industry he is in.

National Mortgage News sat down with Stearns to discuss his soon-to-be published book, "InteGRITy," and why the mortgage industry keeps pulling at his heart strings.

Why did you name your company Kind Lending?

Right after Dodd Frank and Basel III banks started to shed their market share and nonbanks started to dominate, and when that happened you started to see a lot of Wall Street influence, private equity. It happened to me and to many other companies in the last few years. It created a situation where you're not able to run your company like you used to. You're driven by making other people money.

In the past, when employees would leave Stearns, we would thank them for being with us and let them know they were always welcome to come back, even if they were leaving to a competitor. But in this new world order [where private equity has bought many nonbanks], if you leave, you're the enemy. We're going to keep your commissions and we're going to give you a bonus at the beginning, but you have to work for us for two years under contract.

I don't want to be a part of that. I love the family atmosphere. I love the fact that you know you can stay here as long as you're happy, not because you have to stay here. And by the way, your commission is safe, even if you want to leave. I want to bring that back into the community not only at my company, but I hope I can shift the industry into [being more empathetic.]

Those are very lofty ideals, but I wonder how realistic they are in the mortgage industry, especially when it is so cyclical?

The reality is [these ideals are] working. I have a different vantage point. I rang the bell before. I'm not coming back to try to make a bunch of money, I've done that. I'm here because I want to have my happiness. I want to look at what we've done in this industry and change it along the way.

In the last year, we've gone up 601% in market share and from the last three months we've grown by 200%. We have our business, we are profitable, all those things you can't say [other lenders are doing] that are laying off people left and right.

It's a very different feeling when you're doing more business than you did. Most of the companies out there have lost 60% to 70% in volume last year, but we have done nothing but double and triple [our business].

There's actually more business for the ones that survive because they don't have as many people to fight with, and the same thing is true with companies that are going out of business. I am friends with a lot of those people that have left, and I believe in abundance, not scarcity. I don't wish that on anyone. We are very friendly with our competition. And we try to help each other out. There's always enough room.

What is your vision for Kind in the next five to 10 years?

We're having fun and I don't want to go and say 'oh, we're going to dominate'. That's never been our style, but we're gonna keep getting better and better and pushing other people.

A while back I ran into Mat Ishbia and when he found out that I was getting back into the business, he said to me 'Glenn, I never had more fun than when you and I were going head-to-head.' It's fun when you sharpen each other and make each other better. And you know, we were always number one and UWM was number two, until I sold. And then they dominated and rightfully so, they did a great job.

We've come at it now with a different style. We're giving them a run for their money. We're taking their market share, and it'll be fun again. I hope I can help change the industry and make it not so callous.

What technologies are you relying on in building out Kind?

I've tried Encompass, Empower and I've had some frustrations with both. They were a little bit outdated. After doing a lot of research, we chose Blue Sage, which is a newer platform and we think it's very efficient.

Regarding our portal for brokers, our engineers built one out and we call it the "Kwikie."

It's fast and it's easy. And if it's your first time, we'll take it easy on you. We make fun of ourselves and laugh. We take the mortgage industry and your loan very seriously, but we like to have a good time. And so the Kwikie was born.

The next step for us is to build out our retail platform for consumers and loan officers. Regarding our broker portal, we want to make sure that the broker has the ability to stay in one ecosystem where they can pull rates, use an LOS and submit loans to their lender. We are working with three different companies that will create this ecosystem where brokers will never have to leave to pull rates.

We are also getting into AI technologies for underwriting, so we've been pouring a lot of effort into looking at what else we can utilize.

What do you prioritize during a time when origination volume is low?

Every month, we have what we call a vibe call with our whole company and a few days ago I was thanking everyone for working hard. I know that everyone is stressed.

Either way right now there will be stress, either happy stress or 'oh my god, I'm losing my job' stress. Employees at our company have happy stress. The days go by faster, we're relying on everybody and it's exciting to give people overtime. This business is never constant, it's always feast or famine and we've bucked this trend. We came into the market when the rates were low but we didn't have the opportunity to scale as the other guys did. Most of the other companies now are distracted. They built up big machines that they have to dismantle now.

They've got names on NASCARs and different arenas and stadiums, and they go 'holy crap, what did I spend all that money on?' But we don't have debt, our names aren't on cars or stadiums. We don't have a lot of offices. We're sitting in a very, very good position right now.

Tell me a little bit about the joint venture that you guys have launched. Are you looking to create more JV partnerships?

We've launched two, one was with eXp and the other was with a RE/MAX office. We used to have that relationship at Stearns, so we knew them very well, and we've got a few others that we've been very friendly with because we used to work with them. We like that business a lot. If somebody needs some expertise, I'd love to help them out. And we can both benefit. We believe in that business, wholeheartedly.

Do you think the key to success in this industry is to not get too big for your britches?

I love my competitors, but the reality is that in every cycle, we make a lot of money, more money than we should by a long shot, and we [should set] at least half of it away every single time. That's the problem with short memories. You made a lot of money, and you go off and you dividend it out, you go buy your fancy this and that and then you have to give it back and all of a sudden you realize that you don't have money to give back.

You have to remember that half of that money has to go back to building your company again because that's just the cycle.  I've gone through three big cycles and every single time I've made sure to put money away…you have to be able to prepare for the future.

You stepped away from the financial services industry after Stearns Lending. What inspired you to return to an industry that is so volatile?

This business is about relationships. That's it. It's fun when you're able to create something that absolutely makes other people feel good and grow and you get to be able to have friends in your corner. You have to have the ability. You can call it karma. You can call it, you know, integrity.

There are times that people will catch you and then if you're a bad guy and you cut corners, there are times that people will let you fall. Whenever I've needed people, I've been able to rely on them because I'm very proud of my reputation. I'm proud of what our company has done for not only consumers but for employees and other people out there in our industry. People work for people. They don't work for businesses.

What lessons were learned from running Stearns and how are you incorporating these lessons into Kind?

What I found is when I had an investor come in and take over the majority share of the business, everything turned from the people to profit. That is the death knell in a company if you don't understand the people aspect. When I came back at it, the first thing I learned was that people are before profit. The reality is, you have to be able to save for a rainy day. You can't spend your money foolishly. We're frugal. We don't spend money foolishly.

What is your outlook on bank participation in the mortgage industry?

As long as the environment stays the way it does, nonbanks will continue to dominate. It will take some change of law before we see the traditional banks really making a big play again in this space.

From what I've heard, 70% of UWM's business is through the non-delegated space. So you've got a lot of brokers that are becoming quasi bankers and getting to a size that they can do a lot of those different pieces themselves.

Thoughts on the banking crisis of the last few months?

You either live a life of fear or abundance. You have one of the two drivers in your life and I think when you're concentrated in a single asset, there is a time when things are going to go up and down. In their case, you know, they were too heavily weighted in a certain class of assets that caused them to go down. That brings fear in everybody's life and it got the government to step on rates. I think it helped the mortgage industry in a weird way. It's unfortunate. I think that it's a good teacher that you shouldn't put all your eggs in one basket.

Tell me about your soon-to-be published book, "InteGRITy: My Slow and Painful Journey to Success."

I did a television show a little while ago called Undercover Billionaire. It was a show that I had people ask me to do for years. [I decided to do it] because I came out of cancer and I really wanted to prove to my kids that when you work hard, and you have integrity, you can do anything. I never thought about how many people would actually get something out of [the show], but thousands of people around the world found something in it and it really made me feel good. People started telling me that I should write a book, so I did it.

For what it really is, is a book about me leading with my flaws. When people have had success, a lot of times you want to insulate yourself against everything that went wrong. Well, I'm the opposite. I'll tell you everything that went wrong because I'd like to see you be able to do it as well. I want people to know that I was raised by alcoholic parents that  failed the fourth grade and I had a child when I was a 14-year-old in eighth grade. Even a guy with a humble beginning can do some pretty interesting things. I have a lot of stories in there about my life and about overcoming adversity.