the Chief Mortgage Officer of Hope Credit Union talks about his experience in the housing industry
I sat down for a conversation with Jon Mulkin, the current Chief Mortgage Officer of Hope Credit Union, who has been working in mortgage lending for four decades. Hope Credit Union is one of our favorite Better Banking Options because of the vital work they do for under-privileged populations in the Deep South. Their mission since inception has been to build the wealth and financial wellness of under-resourced communities. Many of these communities have been systematically denied access to financial resources due to institutionalized racism.
Before working at Hope, Jon spent seven years as the Managing Director of Home Loans for Morgan Stanley, one of the biggest investment banks in the country. I asked Jon to talk about his role at Hope and how his experiences in housing led him to this point in his career.
My first question is what initially drew you to work in banking and more specifically in housing and mortgage lending?
You know, I wish I had some interesting story to tell, but I started out in mortgage banking right out of college. I had, candidly, no concept of what mortgage lending was, what mortgage lending did. I just happened to get an offer to work for a bank headquartered in Birmingham, which was AmSouth bank at the time, and they had an active mortgage business. I interviewed with them after graduating from Tulane University in New Orleans. They happen to have an opening for a mortgage loan officer in their New Orleans branch. I wanted to get back to New Orleans, so I took the job.
Over time, I came to love the mortgage business. What I loved about it was the fact that you help people become a homeowner, and it was rewarding work. It wasn't always easy work. You know, mortgage is a tough business, a lot of paperwork, a lot of anxiety, a lot of partners you must bring to the table to make the transaction happen. But I also like the complexity of the business, that that was appealing to me as well. Just seeing the smiles on people's faces when they got into their home, and they closed their loan, warmed the heart. So, I just fell in love with the business, and that's all I've ever done. I've spent over 40 years in the business, and it's been a rewarding career for me.
The next thing I wanted to ask you about was your time at Morgan Stanley, because there's such a great contrast between that company and Hope Credit Union. What would you say is the most valuable experience you got out of being the Managing Director of home loans there?
You know, I think it was really building out a very large complex mortgage business. They [Morgan Stanley] recruited me to come into New York City and build out their mortgage platform. At the time, they had outsourced the business to a large company called PHH Mortgage, which was one of the largest mortgage companies in the country. A lot of the wirehouses had outsourced to PHH. Unfortunately, the model just wasn't very effective for the types of customers that we were lending to, so we needed to build out our own platform and have our own folks servicing our clients. It was $100 million project and four-year endeavor.
[I was] leading that large effort and then scaling the business up rapidly, then leading and running a large complex mortgage company. It presented a lot of obstacles and opportunities, and I got to solve a lot of problems and have some fun along the way. So, I think that was really the most rewarding aspect of the opportunity. And what I learned most was, again, building and running complex organizations.
I'm assuming that moving from Morgan Stanley to Hope Credit Union, you took a significant pay cut, just because Hope is more localized and mission focused. If it's not the money factor for you, what was your motivation for moving to Hope?
No, it was not the money factor. You know, as I've mentioned I’ve had a long, successful career in mortgage banking, and it's been very good to me professionally and financially. When COVID hit, I moved back to the Deep South, where I'm from, and really spent most of my career in. Once I got back home and worked a little bit back in the South, I realized that I really wanted to stay, as I have a lot of family here. My parents are both still alive. My dad's 95 years old. I want to be close to home. I contemplated retirement but was called out of the blue by a headhunter about a role at Hope. I didn't know who Hope was; I'd never heard of Hope Credit Union. I began to learn about hope and their mission and their purpose, and then met their leadership team, in particular Bill Bynum, who's an incredible leader. I was drawn to the organization, and I felt like this was an opportunity for me to give back to a business that's been so good to me, to make a difference, and use my skills to do more rewarding work for people who deserve it.
What's the biggest difference between the work you were doing at Morgan Stanley and the work that you're doing now at Hope Credit Union?
Well, it really couldn't be more different. Our clients at Morgan Stanley were all very wealthy people, high-net-worth individuals. They were not coming to Morgan Stanley to get a mortgage to become a homeowner. Most of these individuals could pay cash [for a home] if they wanted to. For them, a mortgage was just another financial tool to help them manage their wealth. They had significant income, significant assets. It was just a totally different profile, and really, a different goal objective.
At Hope, we're dealing with people who in many cases, no one in their family has ever owned a home, and certainly they haven't ever owned a home. For them, mortgage was a tool to become a homeowner. Most of them don't have significant assets. They may have good income, but they haven't been able to save for a down payment. The journey is much more scary and emotional for them. You need to really hold their hand. In many cases, they don't trust financial institutions. And so, it's a radically different experience that I'm managing today than what I did at Morgan Stanley, even though the product is the same.
If you could have like a minute to explain Hope's mission as you see it, how would you do that?
The mission of Hope is to really strengthen the financial health and wealth of people in the underserved communities of the Deep South. We try to expand access to capital and financial services. Just to give you a little color on the people we serve, 1/3 of our members never had a banking account before they came to Hope. 94% of the mortgages that we do are to first time homebuyers and that compares to 32% for the rest of the industry. 58% of the small business loans we do are businesses that operate in poverty communities. Eight out of 10 of our members are black. Six out of 10 are women. And a quarter of our branches are in rural communities. That gives you a sense of who we are and who we serve.
And then, Hope leverages public finance and tax credit programs to really help rebuild and re-energize our communities. We help build schools and new hospitals; we invest heavily in HBCUs [Historically Black Colleges and Universities]. That's who we are, that's what we're about, and that's why we exist.
Do you feel like that mission aligns with your own values as a mortgage lender?
You know, it does. I could tell you one of the most disappointing times of my career was what happened in the [2007-2009] financial crisis and the abuse that occurred in our industry. I was very active in our industry at the time, and I actually took a step back to reassess, who is this industry that I'm working for, because we just did some really bad things.
Everybody should have the opportunity for a mortgage, but not everybody is ready for a mortgage, and not everybody needs the mortgage that you might want to try to sell to them. You've got to do the right thing for people. That is the most important thing to me, is you've got to treat people fairly. Everybody deserves an equal opportunity at financial health and financial wealth. They need to be treated with dignity, and they need to be treated with respect. And they need a good customer experience. They deserve just as much as anybody else deserves. So yes, my values align completely with Hope.
Looking into the future, how do you see Hope's presence in the mortgage market changing in the next 5 years?
I think what we're trying to do is really set a new standard. You know, I don't think most of the financial institutions in the country don’t really know how to serve the communities that we serve. I think in many cases, they do it to check a box and to get their community reinvestment credits. But do they really believe in what they're doing, do they have a passion for it? Do they know how to do it? A lot of times they don't really know how to go about serving [these communities].
So for us, it's about leading the way, setting the pace, showing others how it can in fact be done, and can be done successfully and sustainably. You know, Hope can't close the Black-White homeownership gap on its own. We're going to have to pull a lot of people along the journey with us. To do that, we've got to show them how it's done. That's really what we're trying to do.
We have an incredible affordable housing product. Candidly, it is the best in the industry. It's 100% financing, no mortgage insurance. We go down to a credit score of 580. You tell any other financial institution what you're doing, they're like, what are you thinking? But the truth is we've crafted our program based on our own experiences and what we've learned from decades of serving in these communities. The performance of these loans is impeccable with very low loss rates. So it can be done. We're doing it, and we want to show other people that it can be done.
What do you see as the greatest obstacle to having that influence on the mortgage industry?
I would say the biggest obstacle we have is funding our operation. In a traditional bank, the leveraged deposits fund your loan growth. If you look at our client base, they don't have a lot of money in these checking accounts, so we really can't build our loan book on a traditional banking model. So we really have to go out and search for transformational deposits.
We have individuals, philanthropies, and corporations across the country that put money at Hope as transformational deposits, which helped fuel our loan growth. In order for us to do more good work, we need more transformational deposits. So if there's one message I could leave for your readership is if you want to make an impact, make some deposits at Hope and help us achieve our objectives.
What do you think the modern role of mortgage lending is in closing the racial wealth gap?
I think it's important that people understand that home ownership is really a game changer. It stabilizes families and communities for everybody that's been on the wrong side of opportunity. In the United States, every year of home ownership creates an average of almost $14,000 in additional wealth. Homeownership reduces high school dropout rates. It reduces teenage pregnancy rates. It prevents unemployment and [creates] shorter unemployment spells. It creates higher wage earners, and children of homeowners have higher graduation rates and higher participation in post-graduation. [Homeowners] participate in voting at higher levels.
That's the modern view of mortgage: how it can, in fact, change lives. We want to help change those lives. To close the gap, we're going to have to make a lot of changes to the systems that created the gap in the first place, and that means we've got to do things differently. So we hope that other financial institutions will join us in this journey, and let’s make a difference in people's lives.
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