The Alimond Show
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The Alimond Show
Cedric Johnson - Mastering Mortgage Banking and Embracing Change with Priority Financial Network
Ever found yourself in a career you never planned for, yet it fits like a glove? That's the story of Cedric Johnson from Priority Financial Network, who joins us to share his unexpected foray into mortgage banking. What started with a young intern's flair for spreadsheets, led to rescuing the Big Rivers Project and catapulting him into a thriving career. Cedric's tale is not just about numbers; it's about cultivating genuine connections and adapting to the dynamic nature of mortgage banking, a journey that took him from Sears Mortgage to Chase Home Mortgage with a celebrated expertise in VA loans.
When you step into the world of mortgage banking with a maverick like Cedric, you're bound to encounter a trail of innovation. He recounts a particularly memorable commendation—complete with chocolate cake—that recognized his outstanding work with VA loans. His narrative continues to unfold the challenges of exceeding loan production limits set by his past employers, prompting moves to new opportunities where he could continue to shape the industry. From pioneering FHA renovation loans to offering invaluable educational resources, Cedric's influence is a testament to the transformative power of embracing change and the unwavering pursuit of excellence.
Wrapping up our conversation, we cruise through the complexities of credit reports and the post-COVID mortgage landscape with Cedric's seasoned guidance. His insights into starting a brokerage firm and navigating fix and flip loans highlight how deep knowledge in renovation loans can be a cornerstone for success. We cap things off with a reflection on success built upon honesty and impeccable communication—anchored by Thomas Jefferson's wisdom to seize the opportunities ahead. Join us for this enlightening dialogue that's bound to leave you inspired, whether you're a seasoned professional or a newcomer to the world of finance.
My name is Cedric Johnson. I work for a company named Priority Financial Network. We're a really good company. The owner of the company sits on the board of governors at the Mortgage Bankers Association Not very many of those guys around so we have a terrific network of people, an even better network of products that we can offer our people, and we do our very best to give the best service that is possible accurate, upfront information at the beginning, making it a lot easier for everybody involved.
Speaker 2:Yeah, how did you get into this business? I know you've been doing it for a long time.
Speaker 1:Yeah, I kind of joke and say I've been in it since a little bit before the pre-Cambrian yeah, and it's kind of a weird thing how I never planned on being in the mortgage business when I was in college business. When I was in college I moved to Washington from out west and I came here as a student intern working for a trade association and that led me into meeting a whole bunch of people, one of which anyway. So I got into it kind of by, into the mortgage business, banking business, a little bit by mistake or fate or whatever. So I went to work for a consulting company in Arlington and what we were doing is we were doing mergers and acquisitions in the agricultural world and also cable television.
Speaker 1:And one of my projects and this was kind of an investment banking thing one of my projects was to figure out how to save the Big Rivers Project in Tennessee. That was the largest public utility in history that was in danger of going bankrupt. They couldn't meet their government bond programs. So that was where I learned how to build spreadsheets and I became very good at it. Actually it took me a year and a half to build this thing and it was on the 17 by 14 size tractor bar paper. It was three inches thick when I was done with it.
Speaker 1:We boiled the whole thing down the entire financial portfolio or financial cash flow, if you will into one input screen. So we figured out if you change the kilowatt hours by so much, it would do this to the revenue, and it took me a year and a half to build it. It took us 20 minutes to negotiate it. We saved the project from bankruptcy. When we were all done, they patted me on the head, said good job, thank you, go find another job. You've done a wonderful job, you've got experience, but you've worked your way out of a job.
Speaker 2:Oh wow, how did you feel then?
Speaker 1:but you've worked your way out of a job.
Speaker 2:Oh wow, how did you feel then?
Speaker 1:Well, I wasn't sure, you know, because they paid me $25,000 a year, which was peanuts for what I was doing, considering I saved the country millions of dollars, yeah, and the project okay. Now I didn't do it. I'm not going to take all credit, because there were lots of people you had some help.
Speaker 1:A brilliant man was helping me understand how to put this together, but out of that I learned how to build spreadsheets. And he was a former mortgage banker and he said why don't you give mortgage banking a try? Maybe you'd like it, because I've always been a people person. I like that, and so I got into it and I fell in love with what I was doing, because it was very numbers oriented.
Speaker 1:It's numbers oriented, which I had no problem with. My favorite class in college was the present value class, where they taught us how to build sinking funds and amortize loans and do all the kinds of stuff that loan officers need to know how to do Not sinking funds but amortized loans and understand that. And so I got into that. And then I went to work for at the time, one of the top five mortgage banking companies in the country and it sounds really hokey, but at that time one of the top five was Sears Mortgage. Oh really, yeah. And so I time one of the top five was Sears Mortgage, oh really.
Speaker 1:Yeah, and so I had a.
Speaker 2:I had no idea, yeah.
Speaker 1:Yeah, the problem was people didn't, even though we were top five in originations and servicing. People didn't want to get a mortgage the same place they bought their lawnmower even though it had a great jingle, or their tires, yeah.
Speaker 1:Cedric from Sears just rolled off your tongue, you know pretty easy. But they didn't want to. So I went to work for another company, even though Sears was very productive and we did really well. I went for another company, a big name company, and it was awful Beyond words Awful. You can't even begin to describe how awful it was when seven out of eight eight branch managers locally quit within a month. You know you got a problem.
Speaker 2:Yeah, that's a sign.
Speaker 1:And so you know, I bounced around and ended up with and that's kind of the way that mortgage banking goes. You know, it's very rare that somebody goes with one company and they're there for 25 years or something. Right, that hasn't been my career path anyway.
Speaker 1:Even though I've always worked for good people and good companies, it just hasn't worked that way. So I ended up with a really good company that ended up eventually turning into Chase Home Mortgage and had a tremendous experience there, and I started doing my own specialized marketing, and at that time I was doing VA loans.
Speaker 2:Okay.
Speaker 1:And I did hundreds and hundreds of VA loans.
Speaker 1:Okay, and I did hundreds and hundreds of VA loans and I'm the only one in the industry that can say this that I know of. So, yeah, I don't know how to say it. I think it's cool, okay, yeah, it sounds like I'm bragging a little bit, but it actually did happen. So I'm sitting at my desk one day and the phone rings. Pick it up. Hello, this is Cedric. And they said Cedric, we're you know. And he lists off this big long title and a big long name and I'm like okay, I'm head of VA production in the Washington DC field office. You have an appointment with me Tuesday at 2 o'clock In my office at 1120 Vermont Avenue. Be there, click.
Speaker 2:And I'm like You're like, I didn't make an appointment.
Speaker 1:No, he called me and told me you're going to be in my office at 2 o'clock. Well, I'm petrified. I don't know what's going on. So I put on my Sunday best to go down and meet this guy.
Speaker 2:And you have no idea what you're getting into.
Speaker 1:I have no idea. I'm thinking and I'm going through my pipeline in my head and I'm like what have I done wrong? You know what in the world is going on. So I go into the office and I walk up to the front desk and I said I'm Cedric and I have an appointment with and they said their eyes got real big and they said oh, mr Johnson, go down the hall to the left and it's the first door on your left. So I went in and I sat down. It was a big conference room. I'm the only one there. Then one guy walks in. He looks at me, sits on the other end of the table. Another guy comes in, looks at me up and down. Well, there's probably about 25 of them, and another five came in. There's about 30 people in the room.
Speaker 2:Yeah, how are you feeling at this point?
Speaker 1:I'm sweating bullets.
Speaker 2:You're like what's?
Speaker 1:happening. And then a guy walks around the corner in a three-piece business suit and he's obviously in charge. And he walks up to me, looks at me and he goes. Mr Johnson, yes, sir, you're probably wondering why we called you in here, and I'm sweating like mad by this point. And I said well, it has crossed my mind yes, sir. And he goes. Well, we just wanted to know who you are. I'm like what, what do you mean? We want to know who you are.
Speaker 2:Okay, sounds like a national security crisis.
Speaker 1:What did I do? And then he starts smiling and laughing and he goes you were the top producer of all VA loans for the past five years in the Washington DC MSA. We called you in to congratulate you. I'm like huh and then a guy walks around the corner with a big chocolate cake and a candle in it and it says congratulations. And I'm like he says we called you in to thank you for your service. We love working with you. All of your loans are perfect and they go right through.
Speaker 2:Oh wow, how good did that feel.
Speaker 1:Well, I think I stopped sweating.
Speaker 2:You probably feel like a weight off your shoulders.
Speaker 1:Yeah, and I was like, well, that's really cool, thank you. And he, you know. And then all these people well, I'm head of, you know, valuation, I'm head of this and that and something else Now I have to clarify. You know we were a direct lender so we underwrote and did all that stuff. But you know, all VA loans have to be the final sign-off and they see everything that we do downtown. And I was like geez and he says just continue what you're doing.
Speaker 2:Okay, great, I thought that was really that was a little feather in my cap, I suppose. Absolutely so. How are loans today, Like? Are you still doing the volume that you were doing then?
Speaker 1:Well, one of the what's changed since At that particular point in time, I was closing anywhere between 30 and 40 VA loans a month, so that means over a loan a day. And that's major production. That's major Anybody. That's major production. At that particular point in time, I had three assistants and we were cooking. Then and this is kind of a funny story too the companies kept collapsing under my production, if that makes any sense at all. Yeah, because I'd turn in too many loans and they didn't have the horsepower to produce them all. They couldn't process them all, and so. So in fact, I had one of the companies they actually put a production limit on me told me I couldn't turn in any more loans because they couldn't handle it, which I thought was really bizarre. And so we had a little bit of a meeting and I said you know, uh, you hired me to bring in loans. Now you're telling me not to bring in any more.
Speaker 2:Yeah, and he just it doesn't make sense, it makes no sense at all.
Speaker 1:And he said well, we want you to bring in loans, but we don't want you to bring them in like that. We want you to tell us how you did it, because we want to turn it out to the masses. I'm like, I'm not going to tell you how I did that. That's my secret. So I quit and I went to work for another company and worked there for a couple of years and same thing happened again Not a production limit, they just couldn't handle it. And then I got knocked off by another big national company and had a terrific experience there. And you know one of the things that you learn about in mortgage banking you'd be the most brilliant mortgage banker in the whole world and sometimes the back office can't handle it or somebody in the back office makes a mistake and you're like tell me a little bit more about your process, your system, the systems that you use.
Speaker 1:Well, what I did.
Speaker 2:I'll get to that, okay, yeah, okay.
Speaker 1:So that happened. I went to work for another company and I was doing the same thing again you know the VA loans and I was doing the same thing again you know the VA loans and I was killing them. And then my boss called me in and he said he looked at my resume and he said I see that your dad was a general contractor. Yeah Well, we have this new FHA program that rehabilitates loans or properties and we want to send you to the meeting, to the national meeting. I'm like, okay, I've been hearing about these ever since I've been in the business. So I said, okay, so it was down at the Sheraton, down just off 395 in Arlington, so I go to this meeting. And all the big shots from HUD were there. I mean Chief Architect of HUD, the DAS Deputy Assistant Secretary, I mean and they're all good and I'm listening to them. I'm like, oh, this is what I want to do.
Speaker 1:And so I started doing renovation loans. Now that's both good and bad, because they're harder to close and a lot of people have really bad vibes about renovation loans. I love them. Personally, I'm good at them. I've written books about it. I'm the first continuing education instructor for renovation in the United States.
Speaker 2:Oh wow, congratulations, Thank you.
Speaker 1:I wrote the very first max mortgage worksheet in America. I was told it couldn't be done. And you know, chief architect said you can't do this and said who are you talking to?
Speaker 2:don't tell me I can't and I said give me the weekend.
Speaker 1:And I went home and figured it out and I handed it to him and I said here you go. And he's like what he said we can't figure out how to do this at HUD. And I said, well, it's right there, here, let me show you, and I put the numbers in, and he's like huh, and so you floored them. Here, let me show you, and I put the numbers in and he's like huh, yeah, and so you know, you floored them, I floored them yeah.
Speaker 1:Now, that's not to say I'm the world's greatest mortgage banker.
Speaker 2:I just you know mortgages though.
Speaker 1:I know mortgages.
Speaker 2:Yeah.
Speaker 1:Well, I spent 30 years doing renovation loans. Okay, and I'd like to say, and I believe this, I think I'm as good as anybody in the country doing them. I worked at every major renovation house. I've been there. I've helped them go to the top and I've seen them fall because of the back office mistakes. And it happens in the mortgage business. Happens in the mortgage business. Now, in the current environment, you ask what's my secret?
Speaker 2:Yes, your systems, my system, yes.
Speaker 1:Everybody in the world the biggest thing was here's this new gizmo, a new CRM, and we're going to use this. So I bought into it and I'd go into it and I'd start playing with the CRM. I said, well, I need this field because of this type alone. And I would call the head guy and all these CRM people and they'd all say, well, we can't do that, and I'd be like I've got to have that or it's too hard for me to manage, we don't have it. Sorry, find a different CRM. I went through about four or five of them and I'm like this isn't working, so I wrote my own.
Speaker 2:Oh, there you go.
Speaker 1:And it works like a charm.
Speaker 2:Yeah.
Speaker 1:Perfect.
Speaker 2:Absolutely perfect yeah.
Speaker 1:Now, it took me a little bit longer than other things to build Um, but it works terrific for me now. Yeah, Um to build, but it works terrific for me now.
Speaker 2:Yeah, so you built your own CRM.
Speaker 1:I did.
Speaker 2:Yeah.
Speaker 1:And you still use it to this day, every single day. Wow, now, one of the things that my CRM does that others won't for example, I wrote a mortgage comparison chart, and what the mortgage comparison chart will do is you can give me any type of loan and basically, after you boil it down in a paper, there are five types of loans FHA VA, 510 and 20% down. Conventional well, for years and years and years, I would write my own good faith estimates and all that kind of stuff. So I know all. I knew all the formulas that the title companies use and stuff like that. So I built this thing and, side by side, all five loan types FHA, va, 5%, 10% and 20% down.
Speaker 2:Yeah.
Speaker 1:I can put in the individual pricing for each product and it does vary the cheapest of which, interest rate-wise, are your VA and FHA loans, and all I have to do is mark whether it's a purchase or a refinance, put in the sales price and it will generate everything all at once.
Speaker 2:That's amazing and it's all right there for you.
Speaker 1:So, side by side, the customer can see oh, my payment is lower if I go here, but I'll need more money if I go here, and I can share it with them, you know, with current technology, through Zoom or whatever, if they want to see it, and then I can also evaluate their debt-to-income ratios, cash-to-clothes.
Speaker 2:And I'm sure they love being able to have that service, right, oh they go gaga over this?
Speaker 1:Yeah, because no one has it. You know, what the other people will do is they'll send them five different CDs or LEs or something like this, and then the guy has to sit there and go through these papers. And you know, I've there and go through these papers and no-transcript, boom there you go, boom, put it in.
Speaker 1:Now it's not perfect, and the reason it is not perfect is because on every loan that you close, every loan that's ever been closed, there are four costs you have to deal with Downpayment Now that's easy, that can be easily analyzed Cost to close the loan or closing costs, and that comes from the title company and that can vary by location and jurisdiction. Things like that. Escrows can vary by the month that you settle on okay and points you know, and that can vary by loan time. And so one of the most difficult questions that people ask you and it makes everybody crazy is you pick up the phone and they say what's your rate?
Speaker 2:Oh.
Speaker 1:Well, okay, what product do you want?
Speaker 2:There's lots of different variables.
Speaker 1:There's a ton of variables. What's your credit score? Why am I going to give you my credit score? Well, if you want accurate information, say oh well, I got a credit card the other day and I'm like well, hold on, hold on. You understand that there are different levels of credit reporting. What do you mean? Okay, if you buy a car, how easy is it to have a car be possessed? Well, drive over, pick up the car and you're done. Okay, so that's not a fully researched credit report. Okay, some people will go online and they'll get a two-merge credit report or two-repository credit report. It's not a fully researched credit report. So they'll get these credit scores that are inflated or incorrect somehow, and then the most expensive thing that you're probably ever going to buy in your life is your home.
Speaker 2:Absolutely.
Speaker 1:Yeah, and so guess who's going to have the most accurate credit report? The mortgage company, yeah, and so some people get a little bit antsy about that because they don't understand.
Speaker 2:That's okay. Well, it sounds like you do a good job navigating them through that process and helping them to understand. I do.
Speaker 1:I think I try my very best, but you still have people that say well, I don't want to run my credit. Well, run your own free annual credit report. You can get one a year. Credit reports are not transferable.
Speaker 2:Right.
Speaker 1:Okay, so the mortgage company has to pull your credit, and then we work on the credit or your loan based upon the credit report that we have and once in a while you get a little fireworks because people well, I didn't buy that A little pushback yeah, blah, blah, blah, and you're like, well, okay, okay, you need to call the credit bureau and you need to get that situated and we can move.
Speaker 2:Yeah um, and they get it straightened out and then we move forward with the loan well as we, as we kind of wrap up here um, could you tell me what you find most rewarding, uh, about what you do I want to say one more thing, yeah, one more thing about my story. So when?
Speaker 1:that whole meltdown occurred when COVID happened. Mortgage bankers were considered an essential industry and business was crazy.
Speaker 2:Yes.
Speaker 1:And now you know it slowed down. Interest rates popped up. 40% of the loan officers got out of the business. They're just gone.
Speaker 2:It was that much and for me.
Speaker 1:I'm glad to see them go. Okay. For those of us that are left, that are willing to work hard and be smart about how we market, there's plenty of business, but there have been some companies that have had some problems. Okay. So when this started happening, I figured out 40% of the real estate business is for investors right now, and so I kind of retooled a little bit and I started my own brokerage firm, also along with my mortgage company.
Speaker 2:Okay.
Speaker 1:And so I can do commercial and investment loans. And they're really cool because for the most part they're an ODOC loan. I don't need to verify their income. As long as I've got a 20% down payment, I don't need to season or track their funds, which makes it a breeze. I can do what I do now in the fix and flip arena because I've got years of doing renovation loans and so they showed me fix and flip loans.
Speaker 2:I'm like this is easy. This is a piece of cake.
Speaker 1:And so I just flipped right into it. And there's a ton of business. People can be their own GCs. They can be their own general contractor. People can be their own GCs. They can be their own general contractor. They can set their own prices. They go right through. There's nothing to it. But I couldn't do that. I could not function at that level had I not had the years of doing the renovation loans. Now I still do the A papers FHA, va, conventional purchase, refinance, all that kind of thing. But I've also highlighted my business by doing the commercial, the investment. I even have development money up to an obscene number that I'm not going to say right now.
Speaker 2:I can't imagine why. Well okay, I'm kidding. I can't imagine why. Well okay, I'm kidding.
Speaker 1:They call it ADC money and for many, many years, as I'm out running around selling renovation, I would run into the question all the time I need development money and your standard mortgage company wouldn't touch it.
Speaker 2:Yeah.
Speaker 1:And I said well, now they say I need development money, no problem, how much do you need? They're like what?
Speaker 2:We can do that for you. Yeah, I can do it. Are there any last parting words you'd like to leave us with? It can be in regards to the mortgage industry into life business, maybe a mantra that you live by.
Speaker 1:It can be in regards to the mortgage industry into life business maybe a mantra that you live by. Well, thomas Jefferson said I prefer the promise of the future to the history of the past. And I get a little emotional when I think about that because, especially in the mortgage business, with the growth and the contraction that it's had right now, you know, everyone thinks that they're chicken little and the sky is falling and the world is coming to an end and I, I gotta tell you, I don't see it. Um, I think there is a tremendous opportunity in front of us. Um, there are some challenges. Yes, there always will be challenges, but if you're working with a team that knows what they're doing and knows how to position themselves in this growing contracting, growing contracting market that is ever-changing which is a definition of the mortgage business there's always an opportunity.
Speaker 1:Yeah, there's always an opportunity. I can make just about anything work if the people are honest with me and if they give me what I'm going to ask them for? Yeah, one of the earlier questions you asked was what do I do? It sets myself apart Right up front with everybody. I tell them okay, this is what I need to see from you. I will give you a checklist that is perfect. That will tell you exactly what I need to see. Follow my checklist. That is your roadmap.
Speaker 2:Follow the roadmap. Follow the checklist. Yeah.
Speaker 1:Follow the checklist Now. If something changes, I will notify you. You know, and that happens sometimes in the business, because you know whatever they think. They make $30,000 a year and they end up making $10,000 or $300,000 and they make $100,000 or whatever. You know. So there are changes and they're inevitable. Okay, the key is how you navigate and negotiate that. Sure, you have to be honest and upfront and articulate with what's going on. As long as you do that, the future is very bright in this business.
Speaker 2:I loved the way that you said that and I loved the Thomas Jefferson quote. Thank you for being here today and thank you for sharing your story with us. I loved hearing it.
Speaker 1:Thank you.
Speaker 2:Thank you, it was a pleasure.