Revolutionizing Mortgage ft. Pioneer Michael Cohan | Coffeez for Closers with Joe Shalaby Ep. 49

0:29What's up, everybody?

0:46Thank you for having me on board. Nice to be here. Absolutely, Mike. Thanks for jumping in today. And it's going to be a good show. We got a lot to talk about. A lot of new things that recently have been rolled out by Unisource and moreover, a recent acquisition of Unisource. You guys recently acquired MFI, so we're going to dive into that and how that can be very, very helpful for the mortgage community. So I like to start these shows off the same way with every one of my guests is their morning routine. So, Mike, what is your morning routine every day? Sure. I usually get up around 5.30 or 6 in the morning.

1:31I start out usually with a little bit of a quick workout, if possible, and time permits, of course, to start out the day and start out with answering some emails, getting into the boxes out there and seeing what's happening. I like to read upon the news a little bit and get into that and get a little involved. I'm usually at the office by 7.30, 7.45 in the morning, and we start our day, and our day takes us as long as it needs to be to get through what we need to. Grinding early, staying late, and always, always hustling. That's something I really admire about you. Now, let's dive into it. What year did you start in the actual mortgage industry?

2:19I started back in 1994. I had just recently graduated from my graduate program and had an opportunity to join my father. And at that time, we were in the credit reporting business. And I had no idea of what credit reports were, had no idea what mortgages were, and had an opportunity to start out at the ground floor. I took it upon myself to learn a little bit about the business and seeing if there was a desire to stay in here. And many, many years after that, I'm still stuck in the mortgage business. So it was your dad's title company? Was it your dad's company when you started? It wasn't my father's title company.

3:06He never got into the title side of the business. What we started out back in the days, even before I joined the company, was that he had started a credit reporting company back in 1986. Okay. And the desire to start a credit reporting company back in 1986 was based on pretty much lack of a technology to deliver what at that time, if people recalled or recalled RMCRs, where they were really typed up manually on a typewriter. And the whole purpose of starting out the credit reporting company was to take an Apple IIe computer and electronicize the RMCRs onto a computer, which no one had thought about before or had the technology to move it along.

4:00So the whole premise of delivering these RMCRs that would take six weeks, five weeks, four weeks to deliver to a bank, the whole ideology was to do it on an Apple IIe computer and deliver those back in 24 hours. and really where it started out is that the banks really were accustomed to these, hey, I'm accustomed to six weeks and five weeks churn times at best. And so the concept of using technology to deliver the RMCRs back then, to have it delivered in 24 hours was unheard of. Yeah, revolutionary. Yeah, exactly. So my father got started with that in that business with his brother. And they were up till 2 o 'clock in the morning every night making sure that these RMCRs were getting produced.

5:09And they were being delivered to the customer at 6 a.m., which really brought the success of the credit reporting company at that time to really deliver something that was not available in the market. And it eventually came out that in 1989, we started our own technology company. And this technology company produced the technology, the algorithm, to produce our own logic to build our own credit reports at that point. and again we pioneered that in the market back in 1989 and at one point we had about 120 credit reporting companies including some of the biggest ones like First American Credco that were utilizing our technology to produce the credit reports and it was very nice to see that we've been in the credit reporting industry prior to my time at the title side.

6:15We were the pioneers over and over again in building creative products that were wanted in the industry, automation that was not thought of. We built a lot of integrations to third-party loan origination softwares where it It electronitized them getting a credit report within 30 seconds. And we really partnered up with a lot of these guys, these LOS companies, and really delivered a product that was needed to help advance the credit reports to customers instantaneously. Wow. So you guys were one of the pioneers of delivering instant credit reports through LOSs. That's fascinating. I had no idea.

7:05Yeah, we had a great platform. We built the platform. We managed the platform ourselves. And it gave us a lot of opportunities to really understand what the need was for the business, for our industry, and to pioneer a lot of it through our own developers. We had at one point about 36 developers on staff, and we built an ASP platform that allowed us to go and sort of be in the cloud, sort of speaking, and deliver credit reports off a centralized database to 120 credit agencies out there that didn't have the technology to support their business. And we really helped them all out to be successful in their own ways.

7:59So I'm going to get this right. So you just kind of landed in the mortgage industry. You didn't pick the mortgage industry. You just kind of followed in your father's footsteps and just improved upon what he was doing. Very much. My father was, you know, I think in his late 50s, early 60s, the time I joined the company. and at that point he had grown the organization to a level that he could grow and obviously very successful to his level. So me joining the company at 24 years old, fresh blood, fresh mentality, came in here and understood what needs to be done to take the company to the next level.

8:45What is it that we need a technology-wise, service-level-wise ideology of growing that company? And so when I joined over there, it was a new perspective, a new generation that needed to become. I did not end up in this industry by will. It was more an opportunity that was given to me and strongly recommended to me, I should say. And I was told by my father that, hey, you give it a year. If you don't like the business, you're free to go do what you want. And I assumed at 24 years old, I don't have much to lose. I don't have a job. I just graduated from my MBA program. And I was like, sure, well, why not?

9:40Let's give it a try. And it really had a lot of success and a lot of motivation to push. As you were getting more advanced and pushing ahead, it really motivated me to continue on with it. And in July of 2003, we had the opportunity to exit the credit reporting business through a public offering through Fiserv, which most people probably know in the industry. And your credit reporting company went public? We did, and it was acquired at that time by Fiserv, which was at that time roughly an$8 billion market cap. And today they're valued at somewhere around$53,$54 billion approximately. So they did go through a series of acquisitions of credit companies and related companies.

10:41Their goal was at the time to build an end-to-end solution for their customers to have everything from the beginning product, which was credit, all the way down to appraisals, to title and whatnot, and have a full offering to their customers. And we were one of the acquisitions that was done through it. Nice. What was the company, the credit company called? At the time, the company was called Chase Credit. That was our business-to-business line, and our technology company was called Chase Credit Systems. Oh, awesome. So what year did you start Unisource? Was that your next venture after you guys sold Chase Credit?

11:25Yes, so we sold our organization in July of 2003. How much of an exit, if you don't mind my asking? No, not at all. It was about$100 million back in 2003 numbers. It's like$500 million now. Yeah, it's a pretty substantial increase considering inflation in there. And we were one of the most successful by far companies that had a platform for technology and a platform for… So dad retired right after that. He was just like, I'm done. Rightfully so. He did retire. He didn't want to be in a business which required this many extensive hours of being involved in an operating business. Were you the CEO of that company too or were you just a leadership?

12:17No, I was the executive vice president over sales and marketing. My father was the CEO and the president of the company of both companies, the technology company, as well as the business-to-business platform. You got to keep some of the exit then? Yeah, I was lucky enough. I did become a partner a few years before we exited it, and it did allow me a small piece of the organization, which really helped out. I was 31 years old, so a small piece at 31 years old, believe me. That's plenty of money. Yes. And it allowed me to take that and understand that, hey, there's a business out there. I was 31 years old, certainly had no intentions of retiring and was looking for, OK, where is the next level?

13:19Where is a technology needed and automation that's lacking in an industry? and I always had my desire to be on the title side. Comparatively to credit reports, it seemed a lot sexier. Albert, I don't know what's very sexy about mortgage anymore. We're bringing sexy back to mortgage. I'm working on that. Apparently so. We had that opportunity to get into the title side. It was really lacking some serious technology. And in 2003, I, with a partner, had started off Unisource. And we started out in Pittsburgh, Pennsylvania, which is the hub of all the national title companies. and understood what the need was and started incrementally building the technology to understand what clients need and deliver that to them.

14:27Beautiful Pittsburgh. Why would you pick Beautiful Pittsburgh right after a big exit? A couple of factors that took us there. Number one, I had a partner that was based out of Pittsburgh, and he was already in the technology, he was already in the title business, excuse me, and he already had a platform for it. That is number one. Number two, cost of business in Pittsburgh was typically a lot lower than most other areas of the country. And three, a fairly good amount of employee base with experience in title and escrow. So it seemed like a logical explanation of starting there and can't and don't regret anything that we had started in there.

15:22in 2008 my partner and I decided to sell the the remaining shares that I didn't own in Unisource and in 2008 I took it over as the 100 % sole owner of of Unisource and having a partner has certainly a lot of advantages, but it also allowed as a single ownership at this point for us to understand what expansions we can have, what technologies can we continue to build and deliver. And after the acquisition of the remaining shares, it really, that's when the real growth started to happen at Unisource. That's awesome. So Unisource, you bought a national title company with all the licenses and the ability to do title in every state.

16:25I started it out. I was the founder, and yes, I built all the licenses, all the infrastructure ourselves with a partner. So we didn't buy anything. We mostly built it from scratch. You got all the licensing in every state, state by state. And it still continues to be an uphill battle. Yes, in 2003, it was a lot easier to get licensing. It was a lot less regulations at the time. So we certainly went into as many states as we could possibly grow into. In 2008, when I took over the company entirely, it opened the door for us to invest pretty significantly and go into the secondary states where it was a lot tougher to get licenses.

17:20It had a lot more regulations into getting those licenses, and it allowed us to invest the capital into getting those licenses one by one and gradually, over time, build into a lot of the states. Today we're in approximately with direct operations in I would say 43 or 44 states that we operate out of. And those are mostly all the primary states where people do business in. That's awesome. I mean, to have a national footprint as a title company and escrow, that is one massive undertaking, especially on the regulatory side. It is. It continues to be. And I think certainly it will become and continue to become more difficult as new regulations come up.

18:18And there's a lot around, hey, what is it that you can do to keep your licenses and grow into other states as well? Right now, we don't need predominantly any other states. We're pretty much almost into any major states that people do business in. But I do anticipate it's going to continue to become harder to get licenses and maintain your licenses as well. Now, my question is, since you had this big exit and you decided to start a national company, hyper-regulated company, what motivated you to start Unisource knowing that you didn't really have to do it? Yeah, good question. There's a couple of factors in there.

19:08One of it is that you're correct. It is a hyper-regulated industry. and we do like an industry that is regulated because there are some industries out there that anyone can come into and anyone can get out. This industry, the entry of it is quite complex and it intrigued me for the reason that you have to be sophisticated to go into such a business and the people that are in this business have a sophisticated model as well. Otherwise, they wouldn't be in this business. So that challenged me to a certain degree of understanding, A, how we can get into the business that has a very high cost barrier to get into and what challenges does this industry see that you can overcome.

20:15So there's two really aspects to it as well. You don't want to get into a business that anyone can come into with$500, in my opinion, of course, and you want to get into a business that has a need for a specific product or development or advancement that you can provide to those customers. And the barrier to entry into the title space is not like you'd need some pretty decent money. That's why you were able to start at the level you were at. Yes, absolutely. So today we have multiple brands that we go into. We've been very lucky enough to be successful in building multiple brands, some of them with other national title organizations, some of them the biggest ones in the United States.

21:08And so we do have multiple brands and we understood the process of building the infrastructure. And once we had the advancement of doing that, we're able to take it along and replicate it into different brands as well. It's incredible. Now, let me ask you this. You think there's a specific skill or mindset that you have to have right now to be successful in the title industry or the mortgage industry as a whole? I do believe it and I don't believe it's industry specific. I do believe that the skill set that someone needs to have the opportunity to be successful. and the reason why I say opportunity is because there's certainly a lot of people that work extremely hard and sometimes they don't have that success so I preface by saying that success isn't solely based on how many hours you work in a day success to me is based on the opportunity you have based on the hours that you work.

22:19So the skill set that you need in this industry as a minimum is definitely a good work ethic. Generally speaking, the good work ethic includes being disciplined to work hard to achieving what you want and having that opportunity to achieve what you want. And I think that that is the base of whether you're in mortgage, whether you're in title insurance or any other industries, to have the person that wants to build the company be disciplined to work hard enough to have that opportunity to grow the company. Excellent. Now, right now, given all your success that you've had over the years and your continual success and your ongoing mindset to continue to win, where do you continue to find that kind of motivation?

23:18Sure. To me, the motivation isn't based on dollars any longer. For me, the motivation is how can we deliver a better product, better technology, better experience to the customer. So for me, it isn't only based on, okay, do we bring in this customer based on how much revenues they deliver to the table? It's based on how can we make the experience better for that customer? And the motivation for me comes within understanding and challenging ourselves how to make a product better for the customer experience. And that's where it motivates me to build bigger and better in that sense. Love it. Love it.

24:11Now, what are you guys doing right now with, you know, with with AI? How are you implementing AI into the title space? Definitely we are. A little bit of understanding in Unisource, I'm a big believer because of my tech background that to build a lot of our own proprietary technology. So I'm a very big believer in that because I do believe that you stifle yourself if you're solely relying on third-party technologies. There's going to be developments you want to do. There's going to be timeframes that you're going to need to do these developments on. And if you're relying on solely a third party to get that work done for you and you're working on their time schedule, it's going to really prevent you from the speed that you need to grow your company.

25:05I'm a big believer in building automation. I'm a very big believer in AI technology. We are at the very beginning stages at Unisource to implement some very advanced AI technology that continues the automation and that can deliver a finished product back to our customers in significantly less time. So we are very much already developing automation and customized solutions every day, but we're also implementing AI. We're on the back end. It's going to be able to help us produce at a faster speed to the customer. So you'll be able to deliver title reports in seconds now? I think hours. I think that and I think we are.

25:56Full title reports. Full title reports, we're doing it in many states today. And thanks to the technology that's out there, we do have a relationship with our underwriters. We do have a relationship with developers that have allowed us in some of these states to have a full instant title report delivered within three, four or five hours. What about for credit? How is AI being implemented in the credit space? You know, AI is going to, it's behind in comparatively to the title space in the AI technology, I feel. I do believe that where AI is going to come into play is more on doing products, customer service products, such as rapid rescores, supplements, where actually the technology needs to be verified or information needs to be verified.

27:02I do believe that that is where it's going to be implemented as the lenders implement more automation and AI on their side as well that we can plug into. Yeah, so it's still a little bit behind on the credit side. I do think so. I think that it is in its infancy stages because a lot of lenders haven't adapted to building AI on their side. So it's pretty hard to implement technology yet. But I do believe that it is on the horizon to happen in the next couple few years for that. Nice. Okay. So pivoting a little bit. But now if you were to tell your younger self, your 20-year-old self, some advice, what would that advice be?

27:53I believe working smarter and not working harder is essential in understanding. I think a younger self of myself, and I believe a lot of people will relate to this, is that working 20 hours a day because you have the energy at 22, 23 years old may not be the answer. It's how much you can get done and how much you can advance, not in the 20 hours, but how much can you advance in a day without working 20 hours. Nice. So just be mindful of your time and work smarter, not harder. Yes, I'm a big believer comparatively to 20 years ago at least that understanding what you're trying to achieve and having a roadmap to there doesn't equal to every single day having to work 20 hours.

28:53It certainly doesn't also, on the flip side, doesn't necessitate working two hours a day and expecting success or the opportunity for success. But I think there's a happy medium between working enough hours without overdoing it to achieve your goals. Now, a follow-up to that question is what would you tell a 20-year-old right now to build wealth? How would you tell a 20-year-old? What would you tell a 20-year-old right now to build wealth? I would really set out a couple things. And I know the generation after me has a different mindset than maybe our generation, Joe. So I say that one is number one, find what you really like to do.

29:44don't get into a business because you think or you hope that one day you're going to like it don't get into a business that well they all want to be youtubers when you want to be youtubers you're correct and uh maybe having a backup plan of hey if youtube doesn't work out instagram doesn't work out what is it that i can do that's gonna a support me because majority or some or at least a lot of the people that go into a social media platform don't have the stamina to make it into a large platform. And you do have to have a backup plan. You can't always go in saying, well, I want to go into social media and I don't have a backup plan.

30:30So I do think having that backup plan is essential to knowing what is it, do you like it, and can you wake up every day seeing yourself doing it? I mean, I certainly wake up every day and I'm challenged, but the challenge is good for me. I like to see where I am and where I can be. And I think that if that person takes the same viewpoint, it does really help them to succeed. So do they like it? Do you like it? Do you love it? Or do you live it? I would say at this point I love it. And this is the prime of where we are right now. It's taken a lot to get here. It was not an easy work to get here.

31:19And some people come and they base it on, oh, well, you're lucky or that it just fell into your lap. Nothing falls into your lap. success is not for the most part it's not handed to you there's a lot of work that goes behind the scenes to build that whether people admit it or not and the success that we've had enables me to love what I do so far and I certainly don't have any intentions of slowing down if not anything expanding and building faster is what we're looking at. That's awesome. Continue to grow, continue to dominate. Now, what is your favorite quote? You know, I've always been brought up with this quote over here and it may sound cliche, but I always tell everyone, you miss all the shots that you don't make.

32:22and I'm a big believer that you don't take you miss every shot that you don't take and I'm a huge believer in that because a lot of times there has been opportunities that has been so out of reach or seemed so out of reach and we took that. We took that risk. We took that fear of being shot down and it really paid off. And so I tell everyone out there, there's no opportunity and there's no shame in you trying for something. It may not happen. There's no guarantees in life, But I can guarantee you that you would regret not trying to take that opportunity at the minimum. You know, I love who said that.

33:24Michael Jordan said that quote. And it's, you know, I think we have that quote in our office somewhere here. So, you know, and it's such a wise quote from him. Yeah, it is. And it really speaks to, you know, like the way he even played basketball. So, yes. So that's great. Very, very wise quote. And now what's the best piece of advice someone gave you? Don't be deterred by failure. Whether it's a failure of your business, whether it's a failure of something you tried to achieve. I'm a big believer that you learn based on your failures. I believe that you grow to be a better person and a more experienced human being as a result of your failures.

34:23And never fear failure in itself because it gives you the opportunity only to be a better person and grow personally and in business by experiencing failure. Love that. Love that. Now, we're coming close to kind of wrapping up here, and I like to always kind of end on a couple questions. Now, this is a big topic in this society right now. Do you think that college is important right now? I do believe that college is important, and not only for the education side, but I believe it's important for developmental growth as a person. And people say, well, you can get it by working or you can get it by being on a social platform.

35:17And I do think that the social platform and by working brings a different level of developmental growth and social growth. But I do believe that in the long term, education is something that no matter how wealthy you get or how unsuccessful you are in your life's pattern journey, that the education is something they can never take away from you. And I do believe that, in my personal opinion, that college is important. College is where you learn. College is where you have fun and experience different things. And you're careless with a lot of things. And it gives you an opportunity to spend those years, grow developmentally, and be more prepared.

36:11And certainly people that don't go to college, it's not a bad thing. but I do think it's an opportunity that's worth the investment for a lot of people. So you're going to send your kids to college? Of course, I can't make anybody go to college, but if it's my desire, absolutely, I would love for them to go to college and be educated as much as possible. No, no, I honestly agree with you, but it's just a big topic of debate, and that's what we like to do here. Now, kind of a follow-up to that question is, how are you instilling that same grit that was passed down from you, from your father to you?