[00:03:11] Pavan Agarwal: And I think a lot of people who have sort of gone down this path have learned the same thing, which is just stay committed and, and just keep up the work ethic and that’s the only way to really get through anything.

[00:03:23] Patrick Donley: So did he build out a pretty large real estate portfolio prior to starting Sun West?

[00:03:28] Pavan Agarwal: Yes.

[00:03:29] Pavan Agarwal: So in the seventies after we immigrated, he worked as a, started first as a real estate agent, then got his broker’s license. And back in those days, HUD had this program, you could buy a HUD repo for a hundred dollars. And so you could buy, you could still do that program today, but in limited markets, limited pockets.

[00:03:48] Pavan Agarwal: And back then you could do it as a non-owner. So you could literally, with hundred dollars down, you could buy a HUD repo, non-owner occupied. And so he systematically built up a large investment portfolio using leverage from the.

[00:04:05] Patrick Donley: Where was he located at that point? Where, where was the houses that he was buying?

[00:04:10] Pavan Agarwal: It was all in Southern California, so buying real estate in the seventies and Southern California, you could imagine what a great investment that turned out to be. But back in those days, and I went to a number of these auctions with him, HUD would have, in the HUD building in la, there was this big, huge room where it’d have the auctions and everyone would be in there and they’d put the property at us up and you’d bid verbally.

[00:04:30] Pavan Agarwal: And that’s how you, you won a property. So he would spend. When, how do I put out the list? He would spend a whole bunch of time driving around looking at the properties, talking to the neighbors, and that’s the other thing I learned from him is the first thing you do is talk to the neighbors, find out what’s happening in the neighborhood, a lot of door knocking, a lot of cold calling, just getting familiar with the location and what’s happening and there.

[00:04:50] Pavan Agarwal: And then from there he would determine what he would like to buy that and what his max price is.

[00:04:57] Patrick Donley: Was that a pretty exciting process?

[00:04:59] Pavan Agarwal: I don’t know. I was like eight, nine years old. I, I don’t know if it was exciting, I was just sort of just sitting there watching, and this is before you had, you know, game boys and all that, so it was literally, you had to keep yourself, there was no distractions and, and, and all I could do was watch and, and see what he was doing.

[00:05:16] Patrick Donley: That’s a great learning experience. I remember as a young kid going to a couple auctions with my dad, and I just loved the action. I loved the, you know, the, speaking of the auctioneer. It just seemed like really exciting. It’s such a good education that, that he gave you, you know, whether you were observing or just kind of absorbing it by osmosis.

[00:05:33] Patrick Donley: It’s really a great way to, to grow up, to learn.

[00:05:36] Pavan Agarwal: And by example, I don’t know if it was exci, if I remember it as exciting, because I remember sitting in that auction room for like 10 hours in a day after like hours seven or eight. You get pretty anxious, especially as a little kid. Right. But, you know, we did what we had to.

[00:05:51] Pavan Agarwal: I also remember growing up and we kept buying real estate up until now, we still buy real estate. And then when we grew up, every time we went on vacation, drove someplace, we always stopped and looked at real estate along the way. So I remember we used to go, we used to go skiing in the wintertime, so we drive to Big Bear from Cerritos, right?

[00:06:08] Pavan Agarwal: And along the way, it would take three hours or four hours to get there because along the way you’d stop and see five proper.

[00:06:14] Patrick Donley: So you mentioned that you’re in Puerto Rico now. Is that something that you still do? You’re walking around or driving around Puerto Rico taking a look at things? Or are you too busy with work?

[00:06:23] Pavan Agarwal: Hey, you know what, I, that is the best part of the business. Driving along, looking at real estate. I, I did this last 12 months buy up some real estate in Puerto Rico. It is, those are fun days when I can get away from the computer and, and get away from technology. I love just, just seeing what’s happening in the markets, boots on the ground, kind of research is hard.

[00:06:43] Patrick Donley: Is your dad still alive?

[00:06:45] Pavan Agarwal: No, unfortunately he passed away last year from an accident, but he had, you know, he lived a full life and it was a painless ending. So that’s good news.

[00:06:55] Patrick Donley: Yeah. It seemed like you learned a ton from him. Great gift that he gave you. I know you studied and graduated with a degree and engineering.

[00:07:03] Patrick Donley: What were your career plans either coming outta school or even as a kid? Was it a foregone conclusion that you joined Sun West, your father’s company, or did you have any other career aspirations?

[00:07:14] Pavan Agarwal: If you ask my father, it was a foregone con conclusion. He only saw one path for me, which is, which is being in the business and in the industry.

[00:07:21] Pavan Agarwal: It was coming out of engineering school. I what I, I actually wanted to go to med school afterwards. I had a toss up between med school and, and getting into the business and he very cleverly shepherded. He never said, no, don’t go to med school. But he pro he put the right breadcrumbs in front of me. So then I, I made my own decisions.

[00:07:39] Pavan Agarwal: I went towards the business.

[00:07:41] Patrick Donley: So did you start right outta college and, and if you did, what capacity? How did you start?

[00:07:45] Pavan Agarwal: What was the training like? So, actually no. I mean, literally I’d been working in the business with him all along in college. Before college in high school, I, I was, did everything from taking out the trash to setting up accounts and accounting process, doing accounting myself to loan servicing, collections, you know, so I’ve done it all, getting files submitted to HUD for ensuring, so after college I started working, this was like 1990.

[00:08:12] Pavan Agarwal: I’m dating myself. That’s when I graduated.

[00:08:15] Patrick Donley: At what point did you take over as CEO and what was that transition like? That can be tricky doing the father son handoff.

[00:08:22] Pavan Agarwal: That was 2008. After Bear Stearns crashed, I was pretty deep in the business. I was handling a lot of the trading and execution. And when Bear Stearns crashed, we had fair, a large warehouse line with a, with a bunch of reverse mortgage loans on the line.

[00:08:40] Pavan Agarwal: And those loans went from 104 to 90 over. And we had these, and they were on this, in this warehouse line with personal guarantees. I called my, I was in New York at the trading desk and I called up dad. I said, dad, we got a problem now we got this, you know, 20, 30 million margin call and we don’t got 30, 20, 30 million.

[00:08:59] Pavan Agarwal: And we got personal guarantees. And he is like, well, you know, I’m going back, I’m going, I’m going to go back and take my nap. And you figured this out. You, the company’s yours and do whatever you want, but do with it.

[00:09:10] Patrick Donley: That’s an interesting time to take over for. So how did you handle that?

[00:09:15] Pavan Agarwal: The good news is I made a few friends along the way, and it’s like the old Beatle song.

[00:09:20] Pavan Agarwal: I get by with a little help of my friends. Basically, a friend on the street bail me out and he said, okay, I’ll take these loans, but they need to get Jenny issued. And we were, I think at that time, the only ones with the ability, with the technology and the approvals to issue reverse mortgages into Jenny.

[00:09:40] Patrick Donley: Explain to our listeners who aren’t familiar with what a reverse mortgage is, how does a reverse mortgage work? Because there’s several people I, I, I know that are listening that are like, what’s a reverse mortgage?

[00:09:51] Pavan Agarwal: So reverse mortgages are for seniors. I think it’s a great opportunity for many seniors, it’s often considered that that is only for low income or seniors that are, that are institute.

[00:10:01] Pavan Agarwal: But as, I don’t think that’s the. It’s actually an excellent annuity program and because you can literally take a reverse mortgage and not draw the money, so you get a line of credit. So let’s say your house is worth, let’s say your house is worth a million dollars and you get a, you know, the reverse mortgage, depending on the age, maybe the line of credit you’ll get is, say, $400,000.

[00:10:22] Pavan Agarwal: You don’t have to draw that money. You leave it in there. And the reverse mortgage, the, the line of credit grows with the current interest. Whatever treasuries are today, what, three, 4% 10-year treasury plus the margin. That’s how your line of credit would grow. So think about it, it’s better than putting money in a CD or a mutual.

[00:10:39] Pavan Agarwal: You’re going to get a higher return by just doing a reverse mortgage, letting the money sit and the line of credit is there for you to, is cash. You could draw upon any time you want.

[00:10:49] Patrick Donley: And was that your main focus at Sun West at that time? In 2008? Reverse mortgage.

[00:10:55] Pavan Agarwal: Yeah, from 2004 till today, but our biggest product in that decade was reverse mortgages.

[00:11:02] Pavan Agarwal: In fact, until even till now, you know, we have the number one reverse technology. Most of the reverse mortgages are serviced on our platform. Like you know, we had Wells Fargo, bank of America, generations, Guggenheim. We’re all using our technology to manage and service those, those loans.

[00:11:19] Patrick Donley: I wanted to backtrack a little bit and learn more about the history of sun.

[00:11:24] Patrick Donley: Why did your father start the company and what were, what are some of the company’s core values and mission?

[00:11:31] Pavan Agarwal: He started it as very simple. It wasn’t out trying to change the world or anything. Remember he was a real estate broker in the seventies and in 1980, if you recall. But the way the policies were where inflation was not, seems very similar to today, but interest rates hit 19% and real estate wasn’t.

[00:11:48] Pavan Agarwal: So the only way to do a loan back, the only way to buy a house back then, I dunno if you remember this, is to do a negative amortization. You got a starting rate at 12% and negatively amortized by 7% a year. The what he thought was, okay, let me, let me start lending also, let me get a warehouse line to start lending and then I can make some real estate commission and I can make some loan commission.

[00:12:07] Pavan Agarwal: It was that simple. And also I can control the experience, the whole experience for my customer end to end and provide better. That was the idea. But then as the, the mortgage company started and started growing slowly, he, he let go of the real estate brokerage side and just focused entirely on the Maury side.

[00:12:27] Patrick Donley: I, I’m assuming he kept his real estate portfolio, but his focus at that point was on growing the mortgage company, correct?

[00:12:34] Pavan Agarwal: Yeah. The only time he, he did real estate brokerage activities was really as friends and.

[00:12:40] Patrick Donley: Talk to us about the growth of the company. So he started in 1980. How did the company grow and develop over time?

[00:12:47] Pavan Agarwal: Well, so he started the company in 1980 with like very little money. It was like $50,000 or something like, which is, oh, 1980. Money is, maybe it’s half a million today in today’s money. Initially was, it was, it was slow. The first couple years it was the Morris Company was there to do his deals out of his brokerage, and it did fine.

[00:13:05] Pavan Agarwal: It, it was nothing right home about, but it was making money and the brokerage was making money. And then I think what, in 82 or something, when the Federal Reserve passed the Truth and Lending Law, and that’s when he had to disclose an APR to the borrower within, within three. It was a long, complicated process.

[00:13:20] Pavan Agarwal: Back then you had to use a service bureau and all this. So what he said, he came to me and he said, Hey, why don’t you write some software that can calculate this thing? It doesn’t seem so hard. Calculate this apr, write some software to print, print this form. So I said, okay. So I did. So then we were the only lender that had the ability to generate trickle lending in 30 minutes.

[00:13:39] Pavan Agarwal: And with that capability we were able to really expand our retail operation and, and. We basically hired as many loan originators as we could that are warehouse lines at that time until we could max out our warehouse lines.

[00:13:53] Patrick Donley: So you were a key part of that growth by writing this program that calculated the APR.

[00:13:57] Patrick Donley: What, how old were you at that time?

[00:13:59] Pavan Agarwal: I guess so. I never saw it that way. I didn’t even think about it until you, you said it right now, so it’s like, no, it’s like, OK . At that time I was like, what? 13 or something, and I was just following orders. So, dad, I said, write something. I, I wrote it. I don’t think twice.

[00:14:14] Patrick Donley: That’s really cool that you made that development for the company at a super young age. I want to do a deep dive now into Morgan. Tell us about Morgan and what empathetic technology is. That’s a term that, as I was doing research, I’d never come across. So really interested in hearing more about Morgan and empathetic technology.

[00:14:35] Pavan Agarwal: I’m going to start with that. It is actually, yes. It’s not in the mainstream people. If you Google it, not a whole lot comes up. Most of it is stuff we put out, but it’s a science that’s been around for a while. It’s nothing new. AI has been around for a long time, since the fifties. People just don’t, it just hasn’t been in people’s consciousness until, until recently.

[00:14:54] Pavan Agarwal: The same thing with empathetic technology. The idea is, is that a computer can actually do a better job in figuring out how you feel. Even though a computer doesn’t feel it can do a better job. Figuring out how you feel than you do or than another human being can, obviously you know how you feel and the reason is because a computer doesn’t have emotions.

[00:15:10] Pavan Agarwal: So it doesn’t have its own biases to conflict with what his senses are picking. So the fundamental empathetic technology, it means that the tech is determining how you feel. Are you feeling anxious? Are you feeling sad? Are you feeling happy? And there’s a lot of clues in the way you speak and, and the words you use that trigger that detection and based on detection, it then has combination of, and rules.

[00:15:36] Pavan Agarwal: It decides how to respond to you so that you have a smooth, natural flowing feeling always when you’re working with, with the.

[00:15:45] Patrick Donley: At this point, what can Morgan do if I hop on the website? What does Morgan do and what is the, your view of the future for the product?

[00:15:54] Pavan Agarwal: If you gotta hop on the website, the first thing I always tell someone to do is just get a little comfortable with it.

[00:15:59] Pavan Agarwal: Have a little fun with it. So when you go in, the first thing is Morgan will say, hi, I’m Morgan. What’s your name? Just give it your name. You know, you don’t have to give it your full name. You can just say Pat or Patrick. Or you can give it an alias. You can say, you know, Dr. Doom or whatever you. And the first thing I always recommend anyone do is just play with it and have some fun and just ask it for one of these cool t-shirts and just say, Hey Morgan, I want a T-shirt, and it will mail you a T-shirt, right?

[00:16:22] Pavan Agarwal: So you’ll get in a couple of days. So that’s the first thing and that’s just a good way to just have some fun with it. And then after that, you could ask it pretty much any question about mortgages and home finance. You could say, what is the maximum f a loan limit in my city? Whatever that city is. You could say, I make $10,000 a month and I have $500 a month in debt, and my credit score is whatever, five 50, what do I call it?

[00:16:45] Pavan Agarwal: Five for? So run, run it through pretty much any question you would ask. A best human loan officer underwriter, you can ask Morgan and I’ll have the. Most answers, it’ll give it to you depending on how complex. It’ll give you an answer in a couple of seconds. In the worst case, it’ll take an hour and I’ll tell you, I have to analyze this.

[00:17:03] Pavan Agarwal: It’ll come back to you in an hour.

[00:17:06] Patrick Donley: I wanted to hear how you conceived of the idea for Morgan. How did, how did you come up with the idea in the first place?

[00:17:12] Pavan Agarwal: The whole idea of Morgan, we weren’t really trying to make Morgan, we were trying to make AI to automate the lending process because 90%, 99% lending process is just a whole bunch of complex rules and layers and layers of rules.

[00:17:26] Pavan Agarwal: And so we started collecting data since the eighties. Since the eighties. It always seemed like AI was just around the corner, seemed like there was always, and the tech circles was always talk about ai. The AI is a feature and just around the corner of. Well, that’s because the technology, the algorithms existed, but the hardware didn’t.

[00:17:44] Pavan Agarwal: So we’ve been collecting all this mortgage data since the last 40 years. And then when the, when the hardware finally arrived, the last, what, four or five years ago, we, we started training the AI. And then with that training now we created an engine that can answer basically anything and the most complex situation.

[00:18:03] Pavan Agarwal: And you can literally right now, take your tax returns, drop it into Morgan, take a, you know, take a picture of it or scan and email it or whatever. Drop it into Morgan. And Morgan. Will will read the tax returns. We’ll OCR and read the tax return and we’ll calculate your income to Fannie Mae Guide. It knows what I’d like to add back depreciation and take out whatever expenses and all this kind.

[00:18:25] Pavan Agarwal: It does all of that. And even if you have complex K one s and schedule of real estates and all this kinda stuff, and it’ll come back with a number and it’ll say your income is whatever, 15,000 a month. And it’s so accurate and we’ve done this so many times that we warrant it. It’s Morgan calculated the income wrong and it came back with, let’s say Morgan said your income’s 15,000 when it was really 10,000.

[00:18:47] Pavan Agarwal: Then Sun West will stand behind the 15,000 and we’ll move forward and we’ll proceed with the loan at that number. And that means we have to balance sheet the loan. We will do that.

[00:18:56] Patrick Donley: So has Morgan eliminated a good chunk of your underwriting team, or how does that work? Does the underwriting team override Morgan or does Morgan override the underwriting?

[00:19:08] Pavan Agarwal: Underwriting team all writes Morgan, what they’ve been repurposed. I, I guess I, I would say, is it restructured? Now, the underwriting team focuses on dealing with the exceptions. If Morgan can’t figure something out or if it’s below its threshold of confidence threshold, then it gets escalated to underwriting and then, then look at it and they make a decision and every time they make a decision on, on Morgan’s analysis, well guess what?

[00:19:32] Pavan Agarwal: Morgan gets a little smarter. The next scenario like that, it’ll be able to generate with higher.

[00:19:38] Patrick Donley: How involved were you with the development process? You had mentioned when you were 13 or 14 that you wrote the program to figure out how to calculate a p r. Were you really involved in the development for Morgan?

[00:19:48] Pavan Agarwal: Morgan is, is a massive system. I was involved in most of the core, what I call the kernel of it that does all the mortgage processing. And after that, I’m involved in, in guiding, like I, I look at the designs that the engineers and the architects come up and I give ’em suggestions and review the, the project direction and make sure that what they are creating meets the needs, the customers.

[00:20:13] Pavan Agarwal: I also look at the architecture and I’m always pushing them to make it more robust, more scalable. Just looking at it from different perspective that, that it always helps like having one foot in the door, having both the technology side and you know, having an engineering technology background and having customer facing banking background.

[00:20:32] Pavan Agarwal: That gives me the ability to give a lot of, lot of insight that the team by itself may not, well, it would take them a time to discover and they’ll discover the hard way. I could prevent that from making a lot of mistake.

[00:20:44] Patrick Donley: I wanted to hear how and why. I understand that you use the blockchain in using Morgan.

[00:20:50] Patrick Donley: Explain to us how you utilize the blockchain.

[00:20:54] Pavan Agarwal: If you look at a typical real estate transaction, and, and I know most of the people listening here today are real estate agents, one thing you would appreciate is truth is a hard thing to come by, and that’s where a lot of your time. Is the loan is what I’m hearing from the loan officer.

[00:21:11] Pavan Agarwal: True. Not that the loan officer is purposely misleading you, it’s just that the loan officer is dealing with the best information he has at that time, and it’s a lot of opinions and, and no one has any assurance of anything until the loan closes. So what Morgan does is, number one, there is a hundred percent warranty on anything Morgan says.

[00:21:29] Pavan Agarwal: So now truth is, becomes. First you have, you have an AI engine that can generate answers and conclusions analysis with a hundred percent warranty. Then you take that data and you put in the blockchain, and once you do that, it’s immutable and there’s a permanent record and everyone knows what the truth is.

[00:21:46] Pavan Agarwal: So the blockchain doesn’t create truth. AI creates truth. So blockchain’s job isn’t to say this is true or not true as people misunderstand blockchain, but the blockchain’s job is to say so that everyone agrees on this fact. So everyone, everyone can see what the fact is. So that way you don’t have a situation where someone tells the buyer one thing and the seller or something else.

[00:22:07] Pavan Agarwal: And once it’s in the blockchain, then the modern seller both know exactly what the ball is and that’s what the blockchain. So the another example is people ask me, oh, what is the blockchain? And I explain it this. In the old days, if you’re old enough to remember when you had a savings account, you had a little passbook where you make a deposit and you had your copy of your paper passbook, right?

[00:22:29] Pavan Agarwal: And the teller would stamp it, and then the teller would have their copy of the bank, would have their copy of the passbook. Right? And then if you try to change a number, if you try to, if you said, my, if your balancing account is a thousand dollars and you try to add a zero at the end, well it’s not going to work because they have their copy and they, and they compare and say, wait a minute, this, these numbers don’t.

[00:22:46] Pavan Agarwal: That is essentially a blockchain. You know, that’s a manual blockchain. You have two entries, two ledgers, manual ledgers, right, that have to match all the time. That’s, that’s all a blockchain is, and everyone can see it. Now, if you make that electronic and put it on the internet and everyone can see it, and that’s how you solve the truth problem in real estate.

[00:23:03] Pavan Agarwal: So that what we did was we said, okay, if the truth is that Patrick qualifies for a million dollar, Let me issue you, Patrick, an entry on the blockchain that says, Hey, you have a million dollar line of credit, and this has been generated by an ai, so it’s a hundred percent warranted. That’s on record, right?

[00:23:21] Pavan Agarwal: Public record. And now when you go to buy a house, the seller can see that you have a million dollars available to you. And the seller will say, okay, I know that Patrick’s offer is valid and it’s as good as a cash offer. And then you, because you have a warranty, you can make an offer to the seller without loan contingency.

[00:23:41] Pavan Agarwal: And everyone can see that because you have the confidence to make an offer because you got the century in the blockchain. Okay? Seller has the confidence to accept that offer because he can see the enter in the blockchain. Your realtors are happy because both the listing agent and the buying agent don’t have to worry about is Patrick.

[00:23:57] Pavan Agarwal: Tell the truth because it’s all there for public visibility. And think about how much energy is wasted in the real estate process by simply convincing the parties, all the agents that are listening, you know how much energy is spent by convincing if you’re a buyer’s agent convincing the seller that, no, my buyer is good for it except the offer.

[00:24:15] Pavan Agarwal: Or if you’re a listing agent convincing the buying agent, like, no, I’m the seller’s not going to do something poorly and and reject your offer in the last minute. Cause once it’s on the blockchain, and, and that offer is accepted instantaneous. That the buyer cannot commit that million dollar NFT to more than one seller, and the seller cannot take an NFT from more than one buyer.

[00:24:36] Pavan Agarwal: The transaction is done instantaneously, and no one can change that. And the chances of fraud or misrepresentation by diminished greatly, what would that be called?

[00:24:47] Patrick Donley: Somewhat like a double spend problem?

[00:24:49] Pavan Agarwal: Yes, exactly. Solved a double spend problem. Yes. Patrick, you, you’ve been reading Satoshi’s.

[00:24:55] Patrick Donley: I wanted to hear more about Morgan here.

[00:24:58] Patrick Donley: What are some other advantages of using Morgan? Why would somebody use it over just a traditional, what they’re used to? A traditional mortgage application process?

[00:25:08] Pavan Agarwal: It’s pretty simple because in a traditional mortgage application process, it’s breaks down into a computerized and a human step. The computerized step is simply the data collection, just electronic forms, so the data is received electron.

[00:25:24] Pavan Agarwal: Then after that it goes, it’s all manual. There’s humans that, that review the data, figure out what to do and give you decision that’s slow and it’s error pro and there’s no warranty on that. Cause they can, all the real estate agents here, I’m sure many of them had that experience where they have a pre-approval letter or pre-qual letter.

[00:25:42] Pavan Agarwal: Alfred goes into escrow and now you have four weeks into escrow and then you suddenly find out loans decline and all hell breaks loose. That can’t happen. When you’re AI driven and in our true approval process, when when you submit that offer, the AI has made a decision and has calculated everything, and that true approval is good until closing, that whole risk of last minute fallout disappears.

[00:26:07] Pavan Agarwal: Then the attorneys will have me say this, that not in all cases, because if the bar is hit by a bus or something, you know, there, there, those kinds of situations could still exist, but in most 99% of the time it’s going to go right. And most of the time we’re getting loan docs ready in a couple of days after escrow, after the deal goes in escrow and we’re just waiting for the parties to come to the table, to to close.

[00:26:31] Pavan Agarwal: And that’s a lot better situation to be in than not knowing whether it’s going to close and then blowing up on you a couple weeks later.

[00:26:40] Patrick Donley: I wanted to hear about the customer reception. How has it been received? How’s it impacted the customer experience at Sun West?

[00:26:46] Pavan Agarwal: What’s the feedback that you’ve been. Oh, the customers absolutely love it.

[00:26:51] Pavan Agarwal: Realtors are the, the biggest fans of it because they can get in there and ask whatever they need, they can ask. They don’t have to wait for a voicemail or callback or whatever, and they don’t have to wait for, oh, I gotta run that by underwriting. And most good real estate agents, I experience real estate agents, they know more about loans or I would say, I should say, as much about loans and financing process as most loan officers do.

[00:27:16] Pavan Agarwal: Cause they have to, I mean, it’s just, it’s part of the process. Venues means that they, they’ve had to because they’ve been forced to, right? Because of the manual nature of the business. They’ve been, they’ve been pulled into the weeds of stuff that they probably, that they shouldn’t have to, they should be focusing on getting more buyers and sellers.

[00:27:32] Pavan Agarwal: Now, when you have a tool that you could just ask like, Hey, I got a buyer with this situation, or, or the Jones file that we started last week. He just lost his job and he got another job with this, which is now a commission only. What do. So you can, you can really throw it these hard are the left field questions and it’ll figure it out simpler questions.

[00:27:51] Pavan Agarwal: It’ll give you answers in seconds, more complex questions because it goes through this iterative algorithm. And then it may have exceptions that it could raise to a human that will have to double check it the way the thing is designed that almost everything is done within an hour.

[00:28:05] Patrick Donley: Can you give us a, like a recent specific example of how Morgan streamlined the entire app mortgage application process?

[00:28:13] Pavan Agarwal: Well, I can, you know what, I was talking to one of our loan officers yesterday and he had this, he was about to, about to say no to a deal and then he said, okay, let me ask Morgan just to make sure, and it was this weird manufactured home situation in lease land or something like that. I don’t remember the exact scenario.

[00:28:29] Pavan Agarwal: He was like, so he put into Morgan the full scenario of this deal and he was expecting that this a dead deal, and Morgan, Morgan turned around within a few minutes, said, okay, this is how he struck. And, and he got the deal done and, and. And that’s happens a lot with loan officers is, is here you get a deal request for something you’ve not heard of before.

[00:28:47] Pavan Agarwal: Most loan officers, what they would say is, oh yeah, we can’t do that. Because they’d rather say, no, I can’t do that than try to do something that they never done before and then, and blow up on them. But since he went to Morgan and asked Morgan, Morgan gave him the, Morgan gave him an answer, a way to do it, and he knew there’s a warranty on it.

[00:29:05] Pavan Agarwal: He went forward, he had the confidence. So now everyone went right? The buyer won, the loan officer won, and the realtor won. And the interesting thing about it is that the realtor himself could have gone into Morgan and asked the same question. Th this was a, a situation of a very unique props.

[00:29:19] Patrick Donley: Are you finding that realtors are sending buyers to Morgan when they’re showing a property?

[00:29:25] Patrick Donley: Are you finding that realtors are recommending the product?

[00:29:28] Pavan Agarwal: Well, here’s the thing. We have only to this date only released Morgan for licensed professionals, so it’s available for realtors and loan officers to use. Now we got a big announcement on the Super Bowl. We are announcing the, the consumer release of Morgan, where realtors and loan officers and just in general, people would go to Morgan and start talking to it for their own personal home buying.

[00:29:52] Pavan Agarwal: So that’s the big announcement’s coming out. We have an ad running the Super Bowl for this. It’s going to be super exciting. Gotta I gotta, I actually have a party at my house here in Puerto Rico. Patrick, you’re welcome. Come on down, get away from the cone. Join us. We got a lot of lot of key people here at the party.

[00:30:06] Pavan Agarwal: It’s going to, it’s going to be a great time. That is really exciting. Talk to us about that experience.

[00:30:12] Patrick Donley: I’d love to hear how the, how’d you decide to advertise for the Super Bowl? That’s super expensive.

[00:30:17] Pavan Agarwal: Obviously I hate to ask what you paid, but talk to us about that process. Well, the plan was, we, we actually, I actually wanted to do it last year.

[00:30:25] Pavan Agarwal: I wanted to do a last year, February Super Bowl, but the product was already, I was close, but I, I wasn’t happy. I was like, you know, this isn’t consumer ready. We kept working and fine tuning it and just the, the user interface, the feeling, the experience has to be just right or I, I said I’m, I’m holding it back until the experience is perfect.

[00:30:43] Pavan Agarwal: So it’s actually, it’s been in the works for a long time. It’s taken us the whole year to create this ad. It’s been a process. We went through a lot of different variations and, and we spent the production cost was significant simply because we made a commercial and then we threw it away. It wasn’t good enough, but we did that several times.

[00:31:03] Pavan Agarwal: And because I think when you only have 30 seconds, it’s a 30 seconds spot. It’s not like, you know, Amazon’s, you know, 30 minute spots on Super Hollow. It’s a 32nd spot, and you have to communicate the essence of the product and the feeling of the product in 30 seconds. That’s. You gotta tell a whole story in 30 seconds.

[00:31:22] Pavan Agarwal: Especially for a brand new product. For a brand new product. For something as complex as ai, as new as ai, people don’t really understand what that means. How do you connect with that? You gotta communicate the idea of an empathetic technology, get people comfortable, the idea that a computer computers can and do understand how you.

[00:31:42] Pavan Agarwal: And it’s actually that technology’s out there right now. We’re not the only ones. As as many other people utilizing these capabilities in different parts of their systems, you just, you do it every day. You just don’t realize you’re doing it. So to get all of that out there in a package that gets people comfortable and say, you know what, I’m going to try this out and we’ve got 30 seconds to do it in, it’s an amazing piece of art that we’ve produced.

[00:32:01] Pavan Agarwal: The music was composed by a true authority and, and a genius. His name is Anhill Pania. He is the, I think, the number one composer in, at least in the Hispanic market. And you can look him up on Google, like he did compositions for Mark Anthony and Ricky Martin, all this kind of, he’s, he’s like the number one music composer, choreographer, I’d say he’s the Quincy Jones of the Hispanic community of the Hispanic genre.

[00:32:27] Pavan Agarwal: He composed the music and the score for the ad. So it’s, it’s, we’re going to actually release in a week or so. We’re going to release a making of video. It’s going to go into how this was produced in May.

[00:32:39] Patrick Donley: How involved were you with the advertisement? Did you turn that over to an outside company or were you pretty involved in, in the making of it?

[00:32:46] Pavan Agarwal: I’m very involved in the whole branding and presentation of. We have a number of firms that creative and ad firms that work with us. One particular firm, very smart out New York, actually called Inventus Media. They came up with the concept, or, I mean, they came up with, they came multiple concepts. We, we tried it, we threw it away, and then this final version they came up with.

[00:33:06] Pavan Agarwal: I’m involved in the creative direction and music selection, the words, and, and Andrew and I, we just constantly go back and forth and we just got a good synergy between the two of us. It’s just getting this thing refined and refined.

[00:33:21] Patrick Donley: Did you hire a, a spokesperson for that? I know, I know. Like we mentioned earlier in the, before we recorded the podcast, that p Rodriguez has done some work with you guys and Tyrell Owens has done some work.

[00:33:31] Patrick Donley: Did you hire a, a spokesperson like

that for the ad?

[00:33:34] Pavan Agarwal: No. Well, yes. Pra Rodriguez, for those who don’t know, he’s probably the greatest catcher in Major League baseball. He’s a spokesperson for the firm, and he’s been a friend and a spokesperson for almost 10 years now. Trail Owens has done some spots for us in the past, and maybe he’ll do some more in the future.

[00:33:54] Pavan Agarwal: And we’re talking to other people, obviously you, I’m sure you’ve heard of Jason Oppenheim, star selling Sunset, in my opinion. I think he’s a number one realtor in, in the country. He doesn’t like me saying that, it makes him blush, but I believe he’s so professional. He’s so amazing. I think he’s number.

[00:34:08] Pavan Agarwal: He loves a product. He’s used it and he’s like, ok. He’s, he put his full weight behind it. He recently just a week or two ago, put out a video explaining how to use the Morgan product on his Instagram channel, but in the ad itself, there’s no spokespeople in the ad. I’m going to leave it a little bit of mystery that want people, I, I think, in my humble opinion is I think it’s an award-winning ad.

[00:34:29] Pavan Agarwal: I think it’s right up there. It’s not better than the, than the Apple think d. We’ll leave it at that.

[00:34:36] Patrick Donley: I won’t press you any further on the, on the ad, but I’m, I’m excited to see it. Excited to watch Super Bowl now. That’ll be fun to keep an eye out for. I wanted to hear about just some of the challenges and the obstacles that you experienced trying to implement a new technology such as Morgan and just how, how you overcame them.

[00:34:53] Patrick Donley: Is it the team that’s amazing that handles a lot of these issues?

[00:34:57] Pavan Agarwal: Technology is always challeng. The rule number one, technology is expect the unexpected. Just when you think you got it figured out, you’ll hit a snag and you’ll be like, oh, shoot, this didn’t work the way way we thought it was going to work, and you gotta go back and, and rewrite it.

[00:35:09] Pavan Agarwal: So we’ve actually rewritten Morgan three or four times already to get to this point, and with every rewrite it comes out better. And I suspect we’ll probably do significant, I, I don’t think before rewrite. I think we’d be doing significant overhauls to it in the future. That’s why technology is so expensive is because unless you’re constantly investing in it, and, and as you scale and use it more, you’ll find, you’ll find nuances and issues that will require upgrades.

[00:35:33] Pavan Agarwal: The biggest challenges, and frankly I find the biggest challenges, is just that getting people used to the idea that you can talk to an AI and it will, it will have answers. And actually I, I think Elon Musk has helped us a lot. Cause with all the noise he’s made up by ChatGPT, now suddenly it’s in people’s sphere that, hey, it’s okay to talk to an.

[00:35:51] Pavan Agarwal: So he’s done a lot of, we’ve gotten a free, a lot of free marketing Prime Milan. Cause when, when I rolled it out four years ago, initially people were little like, what do you mean? It was not in people’s, it was literally Ir putting product, real product, real a conversation. GPT, they don’t have a monetization model.

[00:36:13] Pavan Agarwal: They don’t have, they haven’t figured out how to make money with it. Maybe they, they think about running ads or so. But this is, you’re using AI and you through conversation to actually do real work and to actually, it’s like a human enhance. You’ve seen the, the, the avatar movie. The first version, I, I haven’t seen the second one.

[00:36:32] Pavan Agarwal: I saw the first movie. I haven’t seen the second one. I saw the first one where they had that, that suit where the, the army people, the soldiers go in their suit and it’s like this, this enhancer, I think lift these big, big boxes and stuff right in that suit. Well, well, a chatty AI is the same thing.

[00:36:45] Pavan Agarwal: Instead of moving physical objects inside, inside, inside this enhancement suit, think of it like enhancement suit where he could move large amounts of paperwork, large amounts of administrative and work that he would do manual. This is, this is an enhancer that would do all those for you so you can focus on what’s doing what’s important.

[00:37:02] Patrick Donley: So I’ve just become a fan of ChatGPT. Is the process of Morgan pretty similar to that, or is it entirely different?

[00:37:10] Pavan Agarwal: It’s very different because it is on a different premise. ChatGPT is sort of a jack of all trades. Give us something and I’ll give you an answer. And it’s not necessarily a reliable answer.

[00:37:22] Pavan Agarwal: They don’t give a warranty that if you’re not happy with the podcast title I just gave you, I’m going to give you a money back. They don’t give you a warranty, whereas the Morgan approach is you ask it something and it’ll give you an exact answer that it can stand behind. It doesn’t do everything. It cannot give you a podcast.

[00:37:42] Pavan Agarwal: But what it does do, it does very, very well. And what it does do is banking and finance, right home finance, it knows that inside out and you ask it anything on more on home finance, it’ll give you only one answer and an exact answer. You can’t tell it to write an essay on home finance. That’s not his goal.

[00:37:58] Pavan Agarwal: But you can tell it to, Hey, here’s my situation. How do I get finance? How do I qualify? And I think that’s a, you know, if you were to ask me, here’s a tool that could write an essay about home finance, and here’s a tool that can tell me how I can get money, finance by home, it can actually get me money or not.

[00:38:15] Pavan Agarwal: How do get money? It actually get me money. Finance by home. Which tool do you think is more valuable? Obviously the tool that can actually get you the money that’s more valuable. Yeah. And that’s what. Exciting stuff.

[00:38:25] Patrick Donley: At this point though, a guy, just an average guy like me, couldn’t hop on and start working with Morgan.

[00:38:31] Pavan Agarwal: Right. You said it’s just realtors and yes, officially it’s released. I mean, anyone can go on it. You can go on it and you can start using it. And even if you’re not a licensed professional, you can use it. But we are advising it only be used by professionals because I don’t want the AI to confuse. If you’re not a licensed professional, you may not enjoy the experience because it would end up talking a little bit too much to jargon.

[00:38:56] Patrick Donley: How do you envision this unfolding? How’s AI going to change the mortgage industry in the next say, five to 10 years?

[00:39:03] Pavan Agarwal: I think it’s going to change the industry. This year we’re rolling out the product for consumer access on Super Bowl, and then after that we are within two or three months of that as we’re rolling out the full, full blockchain capabilities.

[00:39:16] Pavan Agarwal: With those two combinations rolled out a consumer, any consumer can go into Morgan and say, here’s my situation, and Morgan will ask some more questions, maybe ask you for your approval to run credit, and within a few hours you’re going to get an NFT for say a million dollars. So that’s your credit limit and you’re good to go.

[00:39:36] Pavan Agarwal: That’s unheard of. You can’t do that anywhere. You can’t just go on any, nobody’s got a website we can go on and say, here’s my situation, here’s my documents, here’s my supporting document. Gimme credit. It doesn’t work with that. I think consumers are going to be going to, to Morgan first, getting their credit, hitting their nft, and then going shopping and think about how easy that makes a realtor’s job.

[00:39:56] Pavan Agarwal: You don’t go to your listing agent with the pre-approval letter, right? You’re going to them with essentially cash and, and the realtor can see and it’s say, yeah, that’s there and it’s locked in and, and it’s not like even cash. Buyers will go and they’ll show you a bank statement with the million dollars.

[00:40:09] Pavan Agarwal: You don’t know it’ll be gone tomorrow. You don’t know where he came from. Right. You don’t know if it’s really his money or whatever, but this, and you see an N F T, it’s there. It’s good. And it’s, it’s, it’s, you know, it can’t go anywhere and it can’t be double pledged or anything like that.

[00:40:24] Patrick Donley: And so, just to be clear, that’s available at this point today, correct.

[00:40:29] Pavan Agarwal: That will be available on Super Bowl on February 12th. The NFT will be available about 60 days after that, but on February 12th you will be able to go in and give it your information and it will give you an approval within hours and a guaranteed, or sir, I should say, a warranted approval within hours.

[00:40:48] Patrick Donley: Is it just residential or is it also commercial applications?

[00:40:53] Pavan Agarwal: At this point it’s, it’s all residential, one to four. All the government products, agency products, jumbo, non qm, all of that.

[00:41:01] Patrick Donley: I wanted to segue a little bit, and I wanted to just talk about some of your market predictions going into 2023 with respect to interest rates and just your overall macro outlook for real estate.

[00:41:12] Patrick Donley: Is there anything that’s keeping you up at night that you’re concerned about, and just what do you see unfolding this.

[00:41:18] Pavan Agarwal: What keeps me up at night is basically I have too much coffee during the day. , no, I try not to worry about those kinds of things. I, I try not to worry about things that I can’t, I have no control over my, well, Fannie Mae and F H F A put out a guidance document I think earlier this week or last week, that they predict 50%, 50%, 50 basis points, reduction in interest rates this year, which would be good news, and I hope they.

[00:41:45] Pavan Agarwal: My personal prediction is I don’t think that’s going to happen. That’s not what the Federal Reserve has indicating, and I don’t see the real core drivers of inflation actually any relief in there, and to the things that I should cause, the things that caused inflation, I don’t see that getting fixed. I think right now we’re in a bit of a bear market.

[00:42:04] Pavan Agarwal: Rallying rates. Rates have improved recently. I think there’s a lot of optimism and I don’t see that rally lasting more than a month or two, quite frankly. I’m surprised it lasted. My prediction is we’ll be back to tenure around 4% very soon. hate, I hate to be the, the wet blanket here, but I’m just telling you as I see it, I hope I’m wrong.

[00:42:23] Pavan Agarwal: I’d love to be wrong about this and this is good for everyone.

[00:42:26] Patrick Donley: I tend to agree with you. I think J’s pretty set on dampening and stamping out inflation.

[00:42:32] Pavan Agarwal: Exactly. And I, I’m pretty sure he doesn’t want to go down history as making the same. Repeating the mistakes in 1970s. One thing to be the first guy to make the mistake.

[00:42:40] Pavan Agarwal: You don’t want to be the second guy. Cause they did the same thing in the seventies. They, they raised rates, interest rates, inflation calmed a little bit, and then they said, oh, okay, we’re out of it. And then they, they did a victory dance and lowered rates again. And then, and then inflation went completely outta control.

[00:42:54] Pavan Agarwal: And then we ended up in 19%. I don’t see him making that same mistake again.

[00:43:00] Patrick Donley: I remember having a CD as a kid at 19%. It was like 18 something around there.

[00:43:05] Pavan Agarwal: It was like, 19% interest rates. That’s like Banana Republic currency, right? You can be a leader of the free world and have 19% interest rates. Doesn’t make sense.

[00:43:15] Patrick Donley: Pavan, this has been really fun to talk with you. I am eager to see the Super Bowl ad. I can’t wait. Really excited about the product. It sounds pretty awesome. I’m eager to check it out as well. For those that want to learn, maybe more about you connect with you or, or even the company, what’s the best way for them to?

[00:43:33] Pavan Agarwal: Just go to the company website. You can go to swc.com and it’s very simple. Four their letters, s wc.com, and all the information about the company is there. If you want to actually use the product and try out the product and, and start by getting your own t-shirt, getting your, your free t-shirt. It’s a good, fun thing to do.

[00:43:50] Pavan Agarwal: Just go to uscmorgan.com and it’s so intuitive and if you want to talk to. I don’t have to even give you my phone number. Just go to USC Morgan and say you want, you want to talk to Pavan and, and Morgan will connect you to me.

[00:44:02] Patrick Donley: Pavan, thanks again for your time. This has been real fun.

[00:44:05] Pavan Agarwal: Thank you, Patrick. Cheers.

[00:44:07] Patrick Donley: Okay, folks, that’s all I had for today’s episode. I hope you enjoyed the show, and I’ll see you back here real soon.

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