Saturday Cup of Joe: a lending and tech(ish) newsletter
Friends & Colleagues,
SCJ65. Busy week in the D. I’ve learned quite a bit about online lead generation and digital marketing in the last few months. Surprising revelations — cats & cat videos are not effective when marketing financial services only when wasting time on Youtube and world class conversion for online leads in financial services is 2% of the time. If you have an idea to create an online lead generation company with no cats and a greater than 2% conversation rate, give me a call.
In the meantime, we’re watching closely for a few political moves in DC. We keep seeing rumors from some DC law firms that CFPB Director Cordray might be nearing his resignation in the hopes of returning to Ohio for a political campaign. He’s always maintained his home in Ohio and his family never relocated to DC. I assume we’ll find out one way or another by Labor Day.
This week also saw the end of our formal summer intern program. Before the program ended, I hosted a debate among the legal interns about the mortgage markets including fair lending. I was impressed. We have interns ranging from current college students to this year’s college grads to law students. All embraced the assignment and put on a conference-style panel discussion about the role of the lender in consumer protection, the responsibility on the consumer over their own destiny and what, if anything, regulators can do proactively to help. Great job done by all. One interesting option was rethinking document disclosures. What about video? What about other ways to reach consumers? Should we have mandatory financial education? It was encouraging to see the mortgage business (and the world, in fact) through their eyes.
Challenge question: How do you define commitment? I read a blog post this week that defined commitment as a “pledge/belief that binds a person’s actions.” This is a great definition! According to the article, the most successful and rewarding commitments are those that emanate from our true selves. Literally we’re living out our dreams. Listen to your true self, make the commitment, make it public and give it time (a few months) to become a habit and then a reality. (It’s that simple, ha!).
Interesting Proposition: English mortgages are getting longer. According to The Guardian, “the 25 year mortgage is a thing of the past.” Now both British and Canadian banks are looking at 35 year and 40 year mortgages. While longer makes them more affordable, additional and longer debt obligations don’t necessary ensure economic productivity.
First time homebuyers don’t always estimate or anticipate the ancillary costs of homeownership. Routine maintenance. Upkeep. That time a bear broke into the garage through the window. According to one estimate, first time homeowners can spend up to $9,000 in these types of unexpected costs. In Detroit, it was more like ~$8K. In Boston, ~$14K. In Chicgao, ~$10K. In some cases these costs could be annual.
1. Legal articles of note (Of Interest)
2. Innovative grocery store coming to Detroit (NextBelt)
3. Homeownership in the place you were hoping for (Millennial Minute)
4. Commitment to community is taking shape (Walk the Talk)
5. Learning from surprises can be difficult (Valuable Lessons)
6. Today’s Thought and the Quote
Of Interest: What’s that category on Jeopardy? Potpourri? (Click here for an odd but funny youtube clip of a recent potpourri category). 3 interesting legal articles from this week:
Lead generator settles with FTC over consumer data violations. (Not the lead generator we acquired).
NextBelt: One thing that several people asked us after we decided to live in downtown Detroit was where we planned to get groceries. The funny thing was the grocery store in Connecticut was about 15–20 minutes away from our house in the woods. Yet, here in Detroit that was considered a long way to go. For us, it wasn’t an issue. That’s not to say it wasn’t an issue for everyone. Many Detroiters cannot easily travel across town or to the suburbs for the nearest grocery store. At the same time, since we got here, there have been several developments along those particular lines. A new grocery chain called Us Food Market has plans to address food sourcing here in Detroit. The story of food deserts and urban farming in Detroit is part of a larger narrative about the resources or lack thereof in the city. A food center meant to create a sense of community and support is healthy for individuals as well as the neighborhoods. This profile does a great job describing how necessity breeds creativity and how it inspired Mr. Wright to bring his idea to fruition.
People of Detroit: Profile of Kimberly Dowdell highlights an amazing woman who articulates Detroit’s potential from her expert view. Lots to be excited about here.
Walk the Talk: Much of what I read and write about each week is about the narrative, the story we tell ourselves, our friends and our generation about who we are and who we want to be. I write about it as a Millennial looking to push my workplace, my community and my country forward. I think about it as an attorney representing a company dedicated to home ownership and stable, vibrant communities. I talk about it…with anyone who will listen (thanks to Brad & Laura who joined in last week). This week, several different articles triggered a collision of these ideas yesterday.
I had, as I often do, 8–10 articles open in my browser. As I read and re-read an author by the name of Molly McHugh, I realized there is definitely something going on with how young professionals (yes, Millennials) look at housing & community. I think we’re on the brink of a change in the timing and commitment people make to home ownership. At the same time, the desire for community remains strong (and getting stronger) at every age.
The Wall Street Journal published a special report titled “Struggling Americans Once Sought Greener Pastures — Now They’re Stuck.” Apparently, we’re not nearly as mobile as we once were. But this is my whole case for the #NextBelt. Thanks to the Internet and the growing number of jobs that allow for flexible work schedules or locations, we can literally build a career or, at a minimum, maintain employment from almost anywhere. Admittedly, the inability to move coupled with the lack of skills to acquire the types of jobs that exist for remote or flexible work environments is a double whammy. Putting aside the lack of job skills for a minute, there are places where the cost of living still allows people to take risks — even those without a college degree. Long Island, NY, Grand Rapids Michigan and Troy, Michigan were just ranked in the top 5 for places home ownership without a college degree. It’s tougher to own a home without the promise of higher long-term income rates but not impossible.
But beyond that, the #NextBelt — Detroit, Cleveland, Milwaukee, Pittsburgh, Cincinnati — are affordable places to take a chance. Take a risk. Whether that’s starting a business or being able to afford a couch/studio/apt while looking for work, we’re making it happen here.
What’s more, the keystone to this whole process appears to be community. A sense of community is enough to encourage folks to make the move AND to build a life based on shared values and commitments. If you don’t have a subscription to access the WSJ link or you want to read another blogger’s response to the same article, this post on The Billfold does a great job. What caught my eye was the third reason she cited for why people cannot move from economically depressed areas to areas of some opportunity — “a supportive community” binds them to their current place and a new city “rarely” has that type of community. So they stay put.
McHugh, a writer for The Ringer, cited co-living or communal living as one way that we’re seeing young people afford to live in places like San Fran and Brooklyn. Several single bedrooms all sharing common areas like kitchens, bathrooms and living rooms. In reality, the companies she highlights — Nook and Common — cater to highly qualified tech employees in rapidly growing companies. The same need exists for those people cited in the WSJ piece to move to medium sized or Midwest cities too. Same theory applies. Co-living can lower the barriers to get people moving again. Why do we want them moving? The growth of the economy and the ability for us to fill in the wealth/income/education gap demands it.
And the trends around co-living are just one example of several “on-demand” options Millennials seem comfortable with (Netflix, Blue Apron, Uber, being others). McHugh wrote this week on the subject and included in her analysis, she touches on two things I believe are key to our industry — the concept of the value of our time and the approach toward ownership. Both are somewhat nebulous concepts but will be incredibly powerful forces over the next 20 years. Do you want to own something that ties you to a particular place, a particular community? If so, how much time do you want to spend on being an owner? I recently had a young co-worker express shock that anyone still finances a car to own it. She just assumed everyone had a lease. Many even young colleagues do not own or lease cars at all and opt instead for Uber + their bicycle.
My point is this mentality is creeping into the idea of homeownership but not at the expense of community. In fact, our generation doesn’t want the long driveway, the high fence or the gated community. We want to be in the mix. We crave the supportive, thoughtful tribe.
Here again is where the #NextBelt comes in. We’re building that in Detroit and capable of building it in many other places all across the country. Success (like venture capital and great restaurants) is not a bi-coastal duopoly.
In writing about this, I was drawn to a piece written by my brother-in-arms Bradford Frost who passed away a little over 6 months ago. Brad wrote an essay in 2015 outlining a view of Detroit that used inclusion and a sense of real, meaningful community to draw people in to the next, great American story. Brad saw Detroit as the land of opportunity. No need to go West (or to the moon) anymore. Americans looking to make a significant impact and feel a sense of authentic community should look to Detroit. In some small way, I’ve picked up that torch. But in a much larger way, Millennials are redefining the way we want to buy, to own and to live. A sense of community, or the potential for authentic community, is the lynchpin of attracting people who want to work hard, commit to a place and improve the story for everyone in their lives. This is the message we have to send the rural workers craving economic opportunity from that WSJ story, to the men & women of Detroit who have be through the lows & are hoping to share in the coming highs and to the ambitious, passionate Millennials who want to feel like they are taking risks & contributing to something bigger then themselves. Come to the #NextBelt and we’ll figure it out together. Whether that’s co-living / co-working communities, dynamic tech-based education & training opportunities, or entrepreneurial opportunities, anyone is welcome to come here & weave yourself into cities that need energy & commitment as much as investment capital. Something is brewing under the surface and we have to find a way to stoke that into the type of movement that changes the course of our communities for everyone. Not just for Detroit but to improve outcomes for everyone over the next several decades.
Millennial Minute: This week we have a story, courtesy of Business Insider, that breaks down some recent research conducted around Millennial home ownership trends. And an infographic! How exciting. Seriously, though, the numbers support Millennial home ownership increasing over the next 5–10 years. Here are the highlights.
1. 65% of Millennials associate home ownership with the American Dream
2. 1/3 expect to own a home in the next few years
3. 60% located a property on a mobile device
4. ½ of Millennials want a new house or one without the risk of repairs but 68% see the first/current home as a step to their next home
5. 65% used ‘convenience to work’ as a primary factor in location
This is good news for Detroit. A recent study profiled Detroit’s growing Millennial population that is also fueled by growth in wages, tech degrees and jobs. Given the continued and steady growth, the future looks good for home ownership in Detroit if you believe the CBRE figures from this report would naturally lead into the trends discussed in Business Insider. If you were are looking for the next opportunity or growth community (think Austin 15 years ago), Detroit might just be the place.
Millennial Minute, part deux: A couple of months ago I admitted that I am, in fact, a Millennial. Reading an article this week on millennial work ethic versus generation X or even boomer work ethic, I realized that we just define work differently. Or we approach work differently. A recent OZY article looked at research showing Millennials are working just as hard (if not harder!) than previous generations. For instance, we are not tied to the traditional workday. Our (grand)parents were “9 to 5” but Millennials work anytime from anywhere. Coffee shop till 2. Gym at 3 and then back to work from 7 to 8. “It’s a different way of thinking about work.” Yet, older individuals hear flexibility and think its “code for being a slacker.”
Millennial footnote: Found a new Millennial-focused resource this week called Millennial Money. Click here for the blog and podcast.
Quirky story of the week: Urban freeways are a microcosm of American priorities. Like our democracy, complexity and inefficiency abound.
One qualified voice on urban infrastructure is New Jersey Senator Cory Booker. In this interview with Tim Ferriss, Senator Booker discusses a wide range of policy issues including real estate redlining, suburban infrastructure and federal funding for highways connecting downtown and the suburbs in America’s cities.
Valuable lessons in unexpected places: One of my goals the past few years has been “always be ready to learn a lesson from anywhere at any time.” I discovered that so often a lesson or principle will present itself and then in a moment be gone — if I didn’t write it down or otherwise call it out to remember. Valuable lessons are everywhere (if you’re looking). This week my friend Michelle and I exchanged emails about a fascinating article where software engineers at Facebook are learning valuable lessons about how machines communication and how artificial intelligence (AI) will become more efficient. These computers were programmed to communicate in English but ended up creating a shorthand language that human engineers could not understand. The article worried, almost immediately, about what this means for power and control. My reaction was — what can we learn from this? Not just about AI, but about how we communicate and what the next evolution of language might be among humans not just computers. Is there a better way to communicate? If nothing clarifies like clarity, can we find new and better ways to communicate that addresses inefficiencies & unnecessarily fluff (and even implicit bias!)?
Today’s Thought: Implementating. Yes, you read that right. I’m inventing a word here. In a meeting earlier this week, someone was referencing the process of implementation being a cycle with constant improvement. I thought with a simple addition here, we could embrace a word that fundamentally means implementing but when implementation is a constant cycle of small-step improvements, it needs a new word. When I first started “Today’s Thought” in this newsletter, one of the earliest concepts was the concept of successful businesses being capable of the following workflow — ready, aim, fire, aim, fire, aim, fire, aim, fire. Implementating is the more tech-forward version. In one word.
Quote: “Friendship is the only cement that will hold the world together.” — Woodrow Wilson