Getting Deep with Tom Davis | Coffeez for Closers with Joe Shalaby Ep. 42

0:03What's up everybody, welcome to another episode of Coffees for closers where success is served daily. Today, we have a special guest with over 20 years of experience in the mortgage industry. He manages wholesale, non-delegated, and correspondent non-QM, non-agency channels for all of Deephaven. A lender, a top lender in non-agency, non-QM lending. Known for developing exceptional sales teams and driving national growth. He's a top producing sales executive in mortgage banking. Get ready for insights on growth strategies from one of the industry's leaders. Please welcome Tom Davis, Chief Sales Officer at Deep Haven Mortgage.

0:47Thank you for having me, Joe. You're welcome, Tom. Appreciate it. Nice to be in California. Yeah, nice to be in California. Isn't it beautiful? It's nice out here, man. I took a little drive down to Carlsbad this morning. The ride was gorgeous. The ocean was beautiful. The mountains, this is God's country out here. It really is, actually. Absolutely. I love Carlsbad. I actually have a second home there. But you're in Florida. It's not too bad there. It's great. I have the Bahamas 50 miles away from me. It's like from here to Carlsbad, the Bahamas are 50 miles from me. That's my second home. Yeah, that's awesome.

1:19That's awesome. So Tom, I like to start all our podcasts the same way. So what is your morning routine? Yeah, for me is first thing I do, I wake up early every single day. And I have a plan. I look at the plan the day before. I look at my calendar and I work that plan, right? It's all about driving revenue, driving success, helping my team achieve their goals or financial goals. And I get to work usually around like five, six in the morning, I get started, check some emails. And then from there, I'll hit the gym. So it's important to get in shape and, you know, you know, work out. So I do about four to five times a week, I hit the gym, get back to the home or in the office and I go to work all day till about eight o 'clock at night.

2:06I'm always on seven days a week, you know, in order to be successful or highly successful. Uh, it, it takes effort, right? If you want average, average success is a 40 hour week. I like to work 80 hours a week. So more effort, more, more success, no effort, no results. Right. So it's all about the hustle. I, you know, in your office, you have those signs everywhere in here. I love it. I live by a lot of those mottos and quotes that you guys have here. And you know, I love the wind. So in order to win, you got to work at it, right? You know, it takes hard work. Yeah, yeah. You're grinding all the time and I love it.

2:38Never stop grinding. I love it. We have the same mentality, you know, we both resonate with each other. So I'm stoked that we had that mutual introduction and Tyler knew that, you know, we would hit it off once he met me. So he's been talking about you for a long time. Now, what year did you start in the mortgage industry? Pretty much I started pretty much out of college and I have a degree in finance and management and I did some retail for a little while and then a buddy of mine was a wholesale account executive and this was early 2000s and he I asked him how much he was making and he told me he was you know he was a producer not top producer but he I told him this fax me is w2 and his current pay stub and so at the time my wife was pregnant and after he faxed it to me I said look I told my wife I'm going to fly to back to Fort Lauderdale.

3:38Tom I was living in Ohio for a couple years and so I flew back to Fort Lauderdale interviewed with the the managing director of this wholesale shop and he hired me on the spot so he's he said come back start whenever you can so I flew back down my wife was pregnant she followed me a couple months later. And the first couple months was very interesting because my son was actually born in a hurricane and my wife was pregnant and we went back to Florida and a hurricane hit two months after that.

4:13So that's kind of how I got into wholesale and the mortgage pretty much right out of college. I can't believe you had the intuition to realize that you wanted to validate that person's income. That's what we even made the move. Yeah. I wish I was that wise. And I said, look, I said, if this guy's making X, right, I'm going to make two X. So I was in the wholesale space for, let's call it four or five years. And then the financial crisis happened. But right out the gate, you know, my wife had a baby, right? We just moved back to Florida. And I only, in order to be successful, I had to put into work.

4:50I was making more phone calls than anybody, being more strategic on who the brokers I was going after. And within that first year, I became a top rep in the company, five years, you know, top rep. And, you know, and then the financial crisis happened. And for me, I was very fortunate because while a lot of the products, non-agency products and products overall went away, I ended up getting a job at JPMorgan Chase in a small division there called the Rural Housing Division and crushed it for eight years at Chase doing USDA loans. So I became an industry expert, bought more USDA loans than anybody in the United States.

5:28And as you know, the riches are in the niches. So that was a nice snitch for eight years when the market was kind of slow and all these products kind of went away. I had a product that people needed. It was 100 % financing, no money down. And I just, I've been very fortunate in my career to, in up markets, I do extremely well, but in down markets is where I really excel because in down markets, you have to hustle everyone else to drive the production, right? And I've been able to make some great moves in down markets, including my last one I did two and a half years ago when I landed at Deep Haven.

6:04That was a phenomenal career move for me. That's awesome. One thing I'm really impressed about with you, Tom, is your grit. Now, what inspires you to have such such a hustle mentality? Yeah, so everyone's a little bit different, right? So, you know, we all have a story. My story, you know, my name is Tom Davis, you would think that, you know, I was born in the United States, but I was actually born in Cuba. And so my father was in the US government, he was actually born in San Francisco, he met my mother in Cuba. And we came to the United States. And, you know, growing up, my mom worked a couple jobs and really worked hard.

6:41And it was the worst feeling to see my mom. She's an angel. I love my mom. She's like my hero, right? She's an angel. And I saw how hard she worked. And I really, you know, it was a bad feeling, right? And so that's what has driven me at an early age. I started working when I was 13 years old, mowing lawns and being very entrepreneurial spirited at a young age. And I never wanted to have that feeling of not having and seeing my mom work. And so my mother is who's really driven me. And I started at a young age really hustling every day, whether it was mowing lawns, selling candy, doing whatever, right?

7:22And so that's always carried out. I always wanted more and wanted to achieve more and just wanted to be the best Tom Davis that I could be. So at what age did you realize you're an entrepreneur? I would say at 13 years old. I had 20 lawns, and I bought a friend of mine had like 15 lawns. And so I bought his lawn. So then I had 30 lawns. And I was making all this cash. And I didn't know what to do at the age of 13, 14 years old. And so in middle school, I actually had a teacher. It was a math teacher. His name was Alan Gaberwitz. I forgot the guy's last name. He was a wealth, like a financial advisor for all the teachers in the county.

8:15And so this teacher, who was a wealth advisor, asked everybody after class, who wants to be a millionaire, right? And the guys and the girls would raise their hand. There was only a couple folks that raised their hand. They stayed after class. And so he started teaching us about mutual funds in sixth grade. And so a week later, he came to my house. He met my mom and dad, and he got me started investing in mutual funds in sixth grade. And so since sixth grade, I started investing money, and that's one of the reasons why I got into finance at an early age. And, you know, with money, there's three things that make money grow, right?

8:51There's time, interest, and how much you put into the vehicle or the fund, right, the investment. The number one thing that makes money grow is time. So I've been very fortunate to have time and, you know, time's a very important asset that we have. And, you know, throughout the day, you know, one of the things that I do is when I look at my calendar and I have white space, if I have the white space, you know, I fill it up. Right. Because it's valuable. And just like you people manage their money or manage, you know, a lot of different things, like people should really manage their time better because, you know, you can be more efficient and be more strategic about how you utilize that time.

9:30Everyone says time is money, right? That's right. That's right. So one thing that you're known for in the mortgage industry is like you are the figurehead for the non-QM space. Like what year did that start? Yeah. So, I mean, I love non-agency pre-financial crisis and I've always been a niche guy. And, you know, as conventional government to me is not really exciting. It's kind of boring. And in non-QM, it's more common sense underwriting, manual underwriting. and back in 2012, after Dodd-Frank was passed and ATR was passed, there was a company that was a pioneer in the non-QM space, was Deep Haven, where I work today as a chief sales officer.

10:10And they introduced non-QM. They brought liquidity to the space. They created the products that we see in the marketplace today. And so I was going to conferences around the nation, and what I really was intrigued by how they were creating the market. They were providing liquidity. So early on, I wanted to be a part of it. And about three years ago, I went all in. All we do is non-QM. We're one of the largest buyers, investors in that space. And it's a great space because we serve entrepreneurial spirited borrowers. Non-QM is meant for self-employed. There's 18 million self-employed people in the United States that account for 33 million businesses.

10:53right? There's a lot of migrants in the United States. We have a mass migration. When those folks come to the United States, they work very hard. A lot of them start businesses as soon as they get here, right? And so that's about 14 % of our population was not even born in the United States. There's high net worth, high income borrowers, investors. If you look at last year, 26 % of purchase transactions in the United States were investor transactions. Those are very entrepreneurial spirited, you know, investors that want to invest in real estate. And so I just love the product because you're serving entrepreneurial spirited borrowers.

11:35And you know, I love it. You know, that's, that's, that's, you know, to me, that's my passion is the non-QM space. and then at what point did you start like being the spokesperson on all the panels and just kind of being the figurehead yeah i mean i eat and breathe and you know not non-qm right that's all i do i do and for me like if you go to conferences or you go to people's shops no one goes into the shops or no one wants to hear about conventional or government loans it's all manual at us right so for me you know like if you look at the mortgage space two years ago the mortgage space This was a$4.4 trillion market.

12:12Yeah. And originations this year will finish around like$1.6 trillion or$1.8 trillion. Wow, almost like a third less, huh? Yeah, like 60 % down almost, right? From$4.4 to$1.6 trillion. This year is$1.8 trillion. So about three years ago, a little over two and a half years ago, I came to Deep Haven. And the reason why is because I knew that purchase money was where it's going to, where that was the place to be. But refi business was going to be almost non-existent. And I knew that originators needed products to compete, to retain talent. I knew they needed products to serve other referral sources that they never thought of, right?

12:56Because two years ago, three years ago, 75 % of the business was refis. It was just easy to manufacture, easy to kind of generate loans. So today is like, you know, if you look at originator count in the United States, it went from like 150 ,000, 160 ,000 to like 80 ,000. You know, we've lost like 60 ,000, 70 ,000 originators in the last two years. The originators that are in the market today are the folks like you and me, very hardworking, entrepreneurial spirited. spirited. They're here to work through it. And they are embracing 9toM in a major way. I mean, we're seeing, look, last month was a period of time, existing home sales last month were the second worst in the last 10 years.

13:44So second worst month over the last 10 years, and we just came off an all-time company record for production. And the second worst purchase month in the last 10 years. And the reason why is because borrowers are adopting these products and they're leveraging them to tap into new referral sources. They're leveraging them to go after the top realtors in the United States. And so we're teaching our customers, our partners, how to leverage these products, how to source these loans, how to be more tactical and strategic. We talked about time. So if you look at realtors in the United States, right, the top 5 % of realtors, they account for 90 or realtor teams, they account for 90 % of the listings.

14:26Top 5 % account for 90 % of the listings. So the bottom 10 % of the, excuse me, the remaining 90, 95 % of realtors in the United States only have 10 % of the listings. So if you're an originator, right, and you're in the mortgage space and you're calling on realtors, like you should be contacting the top 5 % to have 90 % of the listing. So, you know, if you look at production and people that aren't producing, they're spending a lot of time calling realtors that don't have listings. So what we do is we train our clients, go after the top 5%, be more strategic and tactical and use these products as an end to go into those realtors and show them how you could put more borrowers in the homes.

15:13Show them how you could, how that realtor can maybe leverage these products. because realtors, a lot of them own investment properties. So when you teach them about a program like an investor program, DSCR, they're going to want to leverage that product on their own. And they're all entrepreneurs. They're all self-employed. Right. They're all 1099 self-employed. And guess what? Guess who the realtor works with? More self-employed people. Title, insurance, appraisers, contractors, builders, you name it. Roofers, plumbers, more self-employed people. So then now once they adopt it, now you start getting this adoption.

15:52So year over year, 9QM is almost going to 2x, almost 2.5x in a market where the market's down significantly. It's going to 2.5x over last year's number. Wow. Yeah, it's super bullish. That means that entrepreneurs are making more money. Absolutely. Which is amazing. That's great to hear. Whereas the regular, you know, non-farm payrolls are, they're declining. Yeah. And entrepreneurs, it's self-employed people. They're well-heeled. They usually have higher net worth. If you're dealing with investors, look, you know, investors, once again, 26 % of the market is investor transactions. In the investor space, right, we have existing inventory right now on the market, about a million units, right?

16:40And we have a five million, million to seven million undersupply housing or homes in the United States. So there's a supply demand imbalance, right? So, you know, one way originators could really take advantage of the market and differentiate themselves outside of the non-QM space is by helping bring housing stock to the market. Now, how do you do that? New construction. So new construction is now 30 % of purchase transactions today. 30%. Two years ago, it was only 15%, right? Because existing homes are not on the market. No one wants to sell because of those lower rates, right? So if you could provide construction solutions for a home or a community or, you know, of multiple homes, that's how you bring housing stock to the market.

17:23Also, you have a lot of homes out there that are not habitable today. And so what do you do there? You could rehab them and bring them to the market. So if you have those, they're called residential transition loans. I'm actually here for a big conference, I'm on a panel talking about residential transition loans and non-QM. And so the fix and flip bridge, ground up construction, if you have those products and you have non-QM products, it gives you a competitive advantage. You could serve all borrowers, not just the agency borrowers that are in that small box. Yeah. There's a much bigger box in the non-QM space.

17:56Absolutely. Huge opportunity in the space. Let me ask you this. You're seeing a ton of success right now in the non-QM space and in the mortgage space in general. What are you foreseeing in the future? We talked about non-QM possibly doubling. What else do you foresee? Yeah, I think you're going to see non-QM continue to grow in a major way over the next 10 years. You're seeing what happened in Q1 of last year, that accident with some of these regional banks. The way a home builder finance is being done, that's changed. Bank credit is at a 20-year low. So banks have pulled back on a lot of these portfolio products, construction products, multifamily loans, commercial loans.

18:38So you're seeing bank pull back on that. And we expect that to continue to happen over the next 10 years, maybe 15 years. And the reason why is because there's regulatory pieces that are coming out, such as Basel Endgame, that require banks to have higher capital ratios. So banks are actually pulling back, and private credit is coming in. That's where we kind of fill that void. Yeah. And so, you know, I think we're in our gig economy is super strong, very entrepreneurial spirited country. That's the like the engine behind our country. Right. It always has been. And so I think the agencies have have pulled back on certain products, you know, on second homes and investor homes.

19:21They kind of pull backs. And so, you know, non-QM is going to continue to grow and we're forecasting it to be a sizable part of the market over the next five to 10 years. That's awesome. And that gives the people a lot of hope because a lot of people are going all in on the non-QM business right now. Now, is there a specific skill or mindset that one must have right now to be successful in the mortgage industry or in any entrepreneurial industry? There's a couple of things, right? So, number one, hustle is you have to have the hustle. I call it the hustle muscle, your heart, right? So you got to have the hustle muscle, right?

19:57So the heart, you got to wake up, outwork everyone. In this market, in every market, it doesn't matter if it's up or down or just horrible market, there's opportunity in every market. It's either you win or someone else wins. Either you take someone else's, their share, or they take yours. I know me, I don't like when anybody takes anything from me, my family, my sales team. I'm sure you feel the same way, right? Yeah. So you got to have the hustle, right? Outwork everyone. And then from there, you know, the other piece is be an advisor to your referral partners, an advisor to your clients. You have to be, you know, help them not just by offering, you know, service, but pick up the phone and become a product knowledge expert.

20:44Help them structure loans, help them put deals together that maybe they don't have the expertise. So having product knowledge and having product expertise, that's what really sets you apart. It's like any other profession. I mean, I'm sure you've worked with attorneys and you go to see a doctor, right? If you're gonna have a surgery or you're gonna put a financial plan together, are you gonna go to the person that's new to the industry or new to that space? Are you gonna go to the expert? You're gonna go to the expert. Same with the loan originator, right? If the realtor calls it or a borrower calls that originator and that originator doesn't know their product, right?

21:22And doesn't know how to structure the deal. And they feel that they can sense it. Do you think that realtor is going to call them back? No, they're going to go to the expert, just like a financial advisor or a doctor or surgeon, right? That might be their paycheck for the month. They're going to trust the advisor who they know they could trust to get that loan closed or whatever it might be, right? So know your products inside and out. So treat your customer like you want to be treated. Put them first every day and mean it and outwork, out hustle everyone. That's how you win big and that's how you become highly successful.

21:56That's right. That's right. I totally agree with everything you just said. Now, after all the success you've had in the mortgage space, you know, you don't really need to grind this much. How do you continue to find that motivation to wake up and out hustle everybody? You know what? For me, it's a lot of different things. But, you know, my family, my kids, you know, I work every day for my family and my kids. And so they motivate me in different aspects. My daughter motivates me and goes to the gym with me. She has that grind as me. My son has that grind. My son's actually just graduated, going into college.

22:29He's going into finance. So it's like a family kind of DNA that we have, which is a super – I'm super fortunate to have that, right, and to have my family, the support there. but um you know for me my team at work man they they go all in all day you know seven days a week they push hard you know i'm there for them you know they don't work for me i work for them right and and so um you know you know my team i would say and just i hate losing hate it yeah so i wake up every day i want to win i want to win big right and so i'm always looking at ways uh the win and push the ball forward and, and, and grow.

23:10Uh, and once again, I don't care if we're in the down market or up market, I'm always just going to keep pushing. That's right. And you know, the, the, the hustle, you know, brings the results into success in any market, right? So, uh, Deep Haven's known for having a lot of top talent. How are you, and you're the chief sales officer of the entire organization. So how are you continuing to foster talent at Deep Haven? Yeah. So look, we're growing. Like I said, we're hiring all across the entire platform in operations and sales. In the last two years, even though the market has been down, let's call it 60%, we've grown our customer base 4X, 5X in a down market.

23:53right? There's, you know, there's maybe 24 ,000 brokers out there. There's thousands of mortgage bankers out there. There's 90 ,000 plus originators. So we're just scraping the surface. So there's plenty of opportunity. You know, you do a great job on social media. You have a lot of followers, you know, people don't, can't buy from you if they don't know who you are, right? So you do, you're really well, you do a really great job, phenomenal job at getting out there. People know who you are. Right. So that's what I try to do with non QM. I want everyone to know who we are. I want everyone in the United States.

24:25I don't even overseas. I'd like the people to know who we are. Right. And so we're just pushing to grow the brand and grow, create awareness. And so, you know, we're, we're, we're looking to hire and add the right people with that hustle and drive. And so, you know, it's, uh, you know, uh, it's, there's plenty of opportunity out there. So we're just going to continue to go out there and grab it. Love it. Now, how do you, what do you think the key factors are for the success of DeepPave Vanilla to quadruple over the last couple of years? Well, I would say it's not just the last couple of years.

24:57So what makes us unique is we have expertise, knowledge, and focus. We've been doing this for a little over 12 years. So we're not new to the space. We were the pioneers. And we have within the platform, We have a parent that manages close to$50 billion, actually over$50 billion in assets. They're the largest owner of single-family homes. Also, in that ecosystem, we own a servicing platform. They own a servicing platform. There's another business that focuses on construction, renovation, fix and flip, bridge. So, you know, all the components, everything's done in-house, and all the components to our platform are in-house.

25:40We don't use third parties. And so I think what makes us unique is our capital structure. With our parent, we have a diversified exit execution. We have the ability to securitize. We've done over 20, 24 securitizations. But we also have the ability to hold on portfolio loans in the funds that our parent manages or funds that our parents funds or funds that they manage for investors, right? So having the ability to securitize and whole loan portfolio loans, that actually gives you a diversified exit strategy. Because securitizations in that market, if it becomes suboptimal, like when rates rose and we saw spreads widen in the mortgage space, securitization became suboptimal.

26:31So the whole loan, that strategy, the other strategy that we have, actually, we had better execution than the market. And a lot of folks don't have that additional execution, right? So that's why a lot of folks actually sell us their closed loans because we have a diversified exit strategy. That's awesome. Actually, a lot of people don't realize that most non-QM businesses sold to Deep Haven. Yeah. They don't know. We have like 50 non-QM lenders that we're approved with, but at the end of the day, they're all just selling them back to you guys. Yeah, I would say there's a handful of investors in the non-QM space, like a Deep Haven, only a handful that really kind of aggregate the majority of non-chem out there.