David Lykken’s Approach: Be Transformational, Avoid Legacy

SA Ibrahim: Well it’s a real pleasure to be here with David Lykken this morning. David is a real legend in the industry and I’m sure you’ve all had an opportunity to hear his podcast and watch his videos and he brings news and information and insights into the industry. So David, tell me, what got you started?

David Lykken: It’s good to be here. Well it’s a funny story. A lot of people get into the mortgage industry – most people I interview got into it by accident or they found themselves in it. And that’s my story. I love the stories for those who got into it on a purpose basis. My story began after graduating from college, getting married, and I went to my dad, I said, “Dad I have no idea what to do.” And he said, “Why don’t you go to work for a bank, at least you’ll learn how to balance your checking account, you struggled with that at college a little bit.” So that was the career advice I got, SA, and it was-

SA Ibrahim: And do you know how to balance your checking account?

David Lykken: We figured that out pretty quickly. The best part is that it really gave me insights into an area of that I really have passion about, and that’s first time home buying. For first time homeowners, getting into home ownership. Because I believe that is one of the four most transformative things you can do. So I found my way into the mortgage division, that’s was 45 years ago, been there, I’ve had three mortgage banking companies and a software company that went, it ended up going public, and so it’s been quite a journey.

SA Ibrahim: I agree with you. I used to describe, early on when I got into the mortgage business that other than getting married, having a kid, buying a home was an equally emotional decision, with a lot of financial complications.

David Lykken: I think that’s it. I look at it this way. When you look at the power of our industry and the transformative effect it can have on people’s lives, I don’t know that we take it as seriously as we should. And I know we take it very seriously if we don’t, the regulators are there to make sure that we take it seriously. But i think the most important thing, is you look at the four most transformative things that can happen is a powerful religious experience, getting married to your spouse, watching your child be born, and buying that first home is the fourth most transformative thing. You look at what it does to anchor people in their life, and they have a new purpose for getting through the difficult times. Whether it be marriage or a job or whatever else is going on in their lives, housing and first time home ownership is so powerful.

SA Ibrahim: So what could we, as an industry do to make that process less intimidating and more informative for first time home buyers?

David Lykken: Number one is we have to be more intentional about how we’re going about this. What I look at is, all my years and having three mortgage companies and now consulting for the last 16 years to mortgage companies, I look at the lack of intentionality. By that I mean, is what are your processes? Are we really keeping the borrower at the forefront of what we want to do. And a lot of people say, “Well I’m doing that.” But are we doing it to the point where we understand their needs? Do we understand what their issues are? You look at the stack of papers we’ve been handing out for, I’ve been handing out for 45 years to get loans closed, it’s crazy. So number one is we have to be more intentional about making this process more friendly. And that’s been said a few years, but we’re finally getting there.

SA Ibrahim: I agree with you. I think one of the things we lose sight of, because we’ve got an industry where we’re so involved with each other, the secondary market, the buying and selling loans and all the different resources and technology and other things we need, that we forget. It’s all about the borrower who wants a loan to buy a home.

David Lykken: Exactly right.

SA Ibrahim: And we’ve got to focus on that and make it easier for them.

David Lykken: Well you look at buying a car. That same borrower’s going out and buying a car, and some of these cars are three times more expensive than the first home I’ve bought, and probably the first home you bought. And we go out and look for it, test drive it, we want it, we got buy it, and we are out of there within a few hours or within an hour, with a new vehicle, and it’s so expensive. Why can’t we make the housing process that kind of simple. And that’s what we’re really focusing and dedicating a lot of our efforts to now, is to really focus in and making that experience streamlining it and getting it to the point where people can get that done with the least amount of hassle possible.

SA Ibrahim: So what are barriers that are preventing it from happening?

David Lykken: Well first of all, legacy thinking. A lot of us have been in this industry for a long time. And I think it’s legacy thinking. By that I mean is looking at it in a way from, “we’ve always done it that way”. And I think that’s the thing we really have to focus on, we cannot continue to do things as they’ve been. So let me give you an example. You’re in Seattle, I started my career in Seattle, there’s this company called Amazon up there. They’re rumored to be getting into the mortgage business, I think it’s more than a rumor, I think it’s a fact. What are they best at? They’re best at process, they shorten and make it so efficient for the consumers, that’s how they gain the market share. We need to bring that kind of discipline into the mortgage industry, shortening the experience. You look at Quicken, they’ve tried to do that. They made great strides at it, but there’s a lot more strides that need to be made.

SA Ibrahim: And yet in the last couple of years, in the San Francisco Bay area, there were a lot of startups that attracted a lot of money from the VC industry, and these players who were aiming to disrupt the mortgage industry, and most of them came from non-mortgage industry backgrounds and most of them failed. So what do you attribute that failure have to?

David Lykken: First of all, I think they underestimate the complexity of our industry. We are in a highly regulated environment and when you step just outside of the regulatory boundary there’s a whole plaintiff bar, that’s that part of the legal industry that’s ready to pounce on anyone just outside of it. Because why do robbers rob banks? Just because it’s where all the gold is? Why do they sue mortgage industry, because there’s a lot of gold in our industry. So I think what we need to really look at is the complexities, and I hope, this administration and future administrations will do all they can to reduce the complexity that goes on, and quite frankly the litigious nature that we find ourselves in.

SA Ibrahim: So David, one of your favorite words is transformational.

David Lykken: Yes.

SA Ibrahim: What does that word mean to you and what would you like people to understand from it?

David Lykken: Well first of all I love the word transformational, it’s the name of our company, Transformational Mortgage Solutions. It really comes from renewing your mind. We need to look at how we go about the business, the same thing we’ve been talking about. And how we transform our thinking. You say, “Well I do transform my thinking, I’m thinking this way about it.” And you dive into it, and you dig for the legacy. So when I’m working with a client, I’m rooting and digging, like you’d be in your garden, trying to get out some bad weeds. And you’re looking for, what is the legacy thinking that’s locking you into a process that’s inefficient and causing friction that is not necessary. And it’s amazing what you can do by being intentional and transforming the way you think about the industry and the process.

SA Ibrahim: So what led you to be a podcaster? Clearly, you’re a great talker-

David Lykken: What’s so interesting about that is that was another thing I just fell into. So I was asked to speak on a topic, and I didn’t feel like I had enough information, I have some dyslexia so at the end of the day, reading can be one of those things that’s more of a challenge. I graduated from college, so I overcame the dyslexia, but I have better auditory skills, so I like listening to things. So I said, certainly there must be a podcast out there that I can listen to on this topic. I searched and searched and searched. I’m also an entrepreneur, if I see a need, it’s not being fulfilled, I have a tendency to go, I wonder if there’s not an opportunity in it. So nine years ago we launched that, we now have over 450 thousand downloads of our podcast. Over 100 thousand regular listeners within the mortgage industry, real estate industry, and even regulators are listening to our program. So it’s really interesting the race it has. And it all started because I needed information. So I invited some people, really smart people, and I started interviewing them. Nine years later, that’s the result. Pretty amazing.

SA Ibrahim: Wow, that’s quite a story and it’s very inspirational to someone like us. Who’s just getting started.

David Lykken: I’m so glad your in the space, because you are one of the iconic leaders of our industry. You have a fabulous track record. And I think when you get sitting down with a mortgage professional, drawing out that story, we can’t have enough of us doing that. Because we have a whole new generation and what we failed to learn from history, we’re doomed to repeat. And you telling us the stories, I putting those stories on my podcast, together. It’s gonna be a repository. So we at least have a fighting chance of not repeating some of those mistakes a lot. We’ve seen a lot of mistakes in this industry.

SA Ibrahim: David, thank you for that flattering comment. But let me ask you what your secret is, because it’s hard enough to engage in a dialogue with people who are sitting in front of you, and yet you do it so effectively with people you don’t even see.

David Lykken: Well here’s the thing, I think number one you gotta enjoy people and you do, clearly you do. You have to be passionate about what you’re trying to do, and I believe in everybody there is a story. And our responsibility when you’re recording these videos or I’m interviewing people on a podcast, is to draw out that story. And I have a passion, and I have a belief that there is a story in there. The number of people I sit down with that say, “I don’t have anything to talk about.” I say, “Why don’t we just turn on the recorder and let’s see where it goes.” By the time they’re done, they go, “I can’t believe you got me talk about that.” Or, “I had forgotten about that story.” These are the things you need to do, and you’re doing a great job, I’m so excited for you.

SA Ibrahim: Well thank you, and I look forward to being on your podcast and having you and interviewing you again in the future. But before I let you go, I understand you have a hobby and you’re quite an accomplished musician.

David Lykken: Well.

SA Ibrahim: Tell us about that.

David Lykken: I don’t know if I’m … there was a day when I’d say I was a more accomplished at it. I’m a vocal major, I went to college not having any direction I was immature, quite frankly. My goal was to stay out of Vietnam. And so I went to school not necessarily for a real purpose other than that. So I was a vocal major and I found out I was pretty good and so I worked my way through college doing a lot of vocal stuff. I did some studio backup work and all that. We had a group in college and we did alright with that. But my dad pulled me in and said, “There’s no money in that, son. You’re good, but not that good. Go to work at a bank.” So that’s how we made that decision. Recognize what you’re good at, but really get into something where you can make a difference, and that’s what we’ve done here.

SA Ibrahim: Well thank you for your time and really a pleasure talking to you and keep doing the great work you’re doing.

David Lykken: Thank you so much SA, good to be here with you.