Saturday Cup of Joe: a lending and tech(ish) newsletter

10 min readOct 21, 2017

Friends & Colleagues,

SCOJ76. Busy week. That’s not likely to change next week either. I’m leaving this afternoon for a Mortgage Bankers Association conference in Denver. Still not sure why these things start at 9 AM on Sunday morning. But I’ll be there. I’m looking forward to moving the ball on a couple of interesting issues for QL. Hopefully next week I can include some news or updates on what I hear.

Just for finalizing this yesterday, I received word that FHFA, the federal authority over Fannie & Freddie, added a question on the new loan application asking consumers to identify their language of preference. This was worrisome to lenders who felt like it would raise expectations and create more questions than it answered. To wit, the disclaimer along is so long that it was hard to include it here. Likewise, there will be new race questions asked of consumers in January as well. Between the two questions it will be interesting to see what information and data our industry collects over the next year or two. Our industry has to move fast to keep up with consumer expectations, not only around technology to make things easier (like Rocket Mortgage), but also to deliver information to consumers in multiple languages & on the device or format of their choosing. It’s on us to raise the game.

Starting to look like Halloween around here


“Connecticut Craft Beer.” According to a new law in Connecticut, the state’s farmers can open the doors to brewing beer (which many were doing already) as long as the product is labeled Connecticut Craft Beer. Smart move for a state that has seen craft breweries triple in the last few years and is working hard to make a name for itself in microbreweries. With the one of the original homes to craft beer just to the northwest, Vermont, and arguably America’s first craft brewery, Samuel Adams, to the northeast, Connecticut has a good combination for this emerging industry. Old buildings + consumers with means = expensive IPA. Glad to see CT embracing these entrepreneurs. Can anyone from CT verify that the beer is good? Let me know.


Valuable lessons: People are not logical. We are biological. Not that it needed to be written so soon again; I wrote that just a few weeks ago. In order to counteract it, investor Marc Andreessen recommends “strong beliefs, loosely held.” The key is to trick the mind by giving it an excuse. “Convince your own mind that your prior decision or prior belief was the right one given what you knew, but now that the underlying facts have changed, so should the mind.”

It gets complicated quickly. If your beliefs are entwined with your identity, changing your mind means changing your identity. That’s a really hard sell.

The bottom line — strongly believe in an idea, but be willing to change your opinion if the facts show otherwise.



Fact of the week: San Jose, CA. First city in the U.S. with an average home price of $1 million.


Included this week:

· Of Interest — The big questions of poverty, wealth and home ownership

· Amazon HQ2 Update — It’s official

· Millennial Minute — Is it possible to technology too much?

· Walk the Talk — Bias can have seen and unforeseen results

· Quirky Story — The Quirky Quonset huts of Detroit

· Today’s Thought, the Quote and bonus

Detroit, MI, USA

Of Interest: One thing I’ve always tried to keep in mind when looking at our industry is economic conditions. The health of the real estate industry, particularly mortgage finance, depends on new homes, new homeowners and the confidence of existing home owners to tap into the credit markets. One reason I love this industry is how intertwined it is with cultural & societal expectations, with myth & tradition, and with national policy & economics.

Over half of people living in poverty are 18 to 56 year olds and over a third of those in poverty are children. That’s 13.3 million children. But let’s be honest: children cannot buy things, particularly houses. So, our economy is not focused on children. What we want to know is — how many adults are in a position to help the economy?

According to the Brookings Institute’s annual poverty numbers, almost 47 million people live in poverty. In 1980, the number of people in poverty was 29.3 million. In 2014, it was 46.7 million. Over this same period, the pre-tax income of the bottom quintile of earnings grew 4 percent while incomes of the top 1 percent grew 194 percent. The result? The growth in the number of people in poverty has come largely from working-age adults.

The tough part for our industry (not to mention our friends & neighbors) is how long these trends take to reverse. One good story, one dynamic leader, or one new invention/app/technology is not enough to reverse 37 years of increasing poverty. How long does it take to undo 37-year trends? Our industry remains at the heart of the economy. In many ways, we must simultaneously sell the economy and participate in it. I’m wondering what we’re doing to sell the economy. Sell the narrative. Is it enough?


Next Belt/Amazon Update: Well, it’s official. The Amazon Proposals were due on October 19. Detroit’s proposal is official and already being viewed as a top 10 contender by Bloomberg. Here is the Bloomberg Top 10. As part of the Detroit-Windsor bid, we also included a new website. Detroit Moves The World. #movetheworld.

New York City, Chicago and Pittsburgh all came out strong. Primanti Brothers offering 50,000 free sandwiches almost makes me want to move to Pittsburgh.

Toronto took a few shots at the U.S. in its bid. The Toronto bid confronted Trumpism head on. The proposal includes attacks like “The American Dream is not dead. It’s alive in Canada” and “We build doors not walls.”

As more information comes out over the next few days, I’ll be specifically looking for more information on the bids from Atlanta, Denver, Boston, and Raleigh-Durham. If it’s true that Amazon received more than 100 bids, it may be months before we hear about finalists but this week has given me even more confidence Detroit will be there in the end.


Millennial Minute: Millennials, apparently, are over. Leave it to BuzzFeed, a possible expert on Millenials if there ever was one, to make the announcement. Gen Z, it turns out, is now responsible for both explaining memes at Thanksgiving dinner and creating the next set of technologies that will save the economy. On the other hand, we’re already putting an incredible pressure on Gen Z. My colleague and friend, Jim Czapiga, sent me a sharp analysis of the next generation and technology. The author is a University of Hartford professor who sees this first-hand. His research says, “[s]everal investigations of this age group demonstrate that excessive use of social media is associated with poor sleep, anxiety, depression and low self-esteem. Compared to millennials and Gen Xers, they are leaving home less frequently to meet with friends, dating less, having less sex and not getting their driver’s licenses when eligible.”

If less sleep isn’t a deterrent to limit technology use, I wonder if less sex will be. Who knows, though. Perhaps there is no deterrent anymore. Technology is moving fast and advances are coming quickly. I got my first cell phone about 15 years ago and we’re already talking about autonomous cars and artificial intelligence. What is your interaction with technology? Do you rely on social media? On your phone? What do you do to avoid over-reliance on technology?


Callback from earlier: It’s crazy to me when I spend more than 2 minutes thinking about the dramatic gaps in society. For instance, the richest 1% owns almost 39% of the private wealth in the US. The bottom 90% holds 73% of all debt. That means the top 1% has more wealth than the bottom 90%. Education gaps. Income gaps. Another example this week was the OZY article highlighting corporate attempts to win engineering graduates from America’s top programs. American institutions like General Electric are sending senior executives to help freshmen students move on campus at schools like Stanford and Michigan State. This “gap” between those students not getting jobs (and ending up with student debt) and those so in-demand that the VP of Engineering from GE is carrying boxes in East Lansing feels self-inflicted. Our culture, our parents pushed hard enough on the “follow your dreams” message that we drove too many students to pursue an impossible reality of obtaining a job without deep, serious contribution to a company or area of study. In other cases, students delayed getting serious about a profession or study. Either way, many of us followed an area of interest without making the connection to a job, a profession or how we’d add value to an organization. I’m not suggesting I have the answer, but I am suggesting that it’s interesting that we read so many articles on unemployment and student debt among millennials only to see this article about the intense demand for these particular students. From where I’m sitting, it’s incredible we’re still willing to blame the millennials for actually listening to “our” advice and following their dreams.


Walk the Talk: How difficult is it to identify biases real-time in our own thinking? Twice this week, I came across articles attempting to address biases. First, bias that affects judgment. Second, bias that affects performance. Both powerful. Both important.

The helpful thing for me was thinking of unconscious biases as shortcuts. The brain wants to make things easier. Shortcuts “categorize information and make quick judgments.” Then do it again. Over and over again.

Self-serving bias. Confirmation bias. Bandwagon bias. No one is thinking about the thing you are thinking about as much as you are. According to the article, the two most likely sources of bias come from self-centeredness and wanting to be right. To be included. All these biases lead to the final issue: the blind spot. Our ability to assume that we’re less biased than everyone else.

There is a vaccine for bias: discipline and diversity. The discipline for self-reflection and the diversity of thought to see it another way.

Second, the blog Farnam Street wrote about Charlie Munger and his insights on the way to ensure biases in performance. The positive biases that drive people. Munger’s advice?

Find incentives and align them to goals.

In order to consider the incentives, the best approach is to consider reinforcers. Culture plays an important role. And what’s reinforced shapes culture. According to the article, “[o]ffering tickets to a cricket match might serve as a powerful reward for someone in a country where cricket is a big deal, but would be meaningless to most Americans.”

It is important not to rely too heavily on incentives, regardless of positive or negative. Only positive reinforcements can have lasting results. Punishment has the opposite result. It is only effective so long as the punishment remains. Remove the punishment and remove the change/discipline.

There are really only two practical approaches. Positive reinforcement of preferred activities or prompting & shaping to create a habit through iterative change.

How do you either create incentives or misuse punishment in your organization? Are you subject to judgment bias? Do you prefer positive biases? Are you using them effectively? As leaders, we have much more influence over behavior than we often realize. I’m thinking more and more about incentives in the coming week.


Next Level: What would remote economy or gig economy mean for home ownership? In this TED piece, the author argues that working from home should be or will be “standard practice.” Also this week I noticed WeWork received a $20B valuation. WeWork is the communal workspace company. Think Regus but cooler.

As seen in Detroit

I started to wonder what dramatic increases in remote employees would mean for residential real estate. For instance, it could mean that young professionals begin looking for houses with an extra room specifically to have some separation between work and home. It could mean that the preferred neighborhoods change as well. Even preferred cities could change. The commute becomes less important if we will be working from home 80–100% of the time.

In fact, the calculation on the part of employers includes happier employees. Employees who do not have to commute and can save money on lunch and other activities.

The TED piece concludes that companies have “nothing to lose and everything to gain by allowing employees to work from home. The ideal policy or timeframe appears to be approximately 2 days a week. If you imagine having 40% less space/resources in the office, it can be a real cost savings as well as a productivity and morale boost.”

While there’s a social component, one that WeWork solves for, most companies are likely to focus on cost savings and productivity. Curious if the future is some combination of work-from-home and WeWork. No headquarters or regular space needed. What do you prefer? Can your team or organization save time or maximize productivity leveraging some of these solutions?


Quirky Story: How are we feeling about Quonset huts? I found an article and photo show of Detroit’s Quonset hut community on the West side. I like the space but have questions about the climate control within the hut and as a loyal Eastsider, I’m not all-in on the location. I do find the communal aspects interesting.


Today’s Thought: “Decide against yourself.” My dad and I were talking the other day about maximizing potential. One elite performer talked about making decisions that challenge our own insecurities. My senior leader at QL talks about “getting comfortable being uncomfortable.” I see these as two sides to the same coin. Find value and innovation by second-guessing the usual instincts. Then, be brave enough to go for it. Embrace the discomfort.

Quote: “Nothing is a waste of time if you use the experience wisely.” — Auguste Rodin

Bonus Content: Weird article about Zillow’s attempt to estimate the risk of rising seas on shoreline homes.

Continued success,




Thinker, curious leader, once an attorney…always trying to answer well. Working on what’s next and next and next.