← Coffeez with Joe Shalaby
Coffeez with Joe Shalaby
A.I. in Finances and Mortgages ft. Pavan Agarwal | Coffeez for Closers with Joe Shalaby Ep. 46
00:53:12
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- [00:04]
A
What's up, everybody? And welcome to another episode of Coffees Foreclosers. Joining us today is a true pioneer in the artificial intelligence space. As CEO of Celigence International and Sunwest Mortgage Company, he has not only transformed financial services through technology, but also championed equality. Under his leadership, Sunwest has dramatically reduced loan decline rates for African American applicants, aligning them with national averages. A testament to his dedication to fair lending and equality. But our guest impact doesn't stop there. His creation, angel AI, revolutionizes AI with the ability to make empathetic multimillion dollar decisions at lightning speed. A first in the industry. This, combined with his engineering prowess boasting numerous patents in AI and blockchain, sets him apart as a leader whose innovations are truly making a difference. Join me in welcoming the one, the only CEO of Sunwest, Pavan Agarwal. Thank you, Pavan, for joining us today.
- [01:17]
B
Thank you, Joe. And it's an honor to be here. We've been friends and business partners for years, so thank you for having me on the show.
- [01:25]
A
Yeah, I'm really, truly blessed to have someone of your stature, a person who really has impacted the mortgage industry, a person I've been following since I entered the mortgage space. And you've really been a mentor and someone who I really aspired to follow. So I thank you for coming to the show and we're going to make some magic happen today. So I like to start the show with a little icebreaker just to get people introduced to who you are. So the first thing I like to ask someone is what's your morning routine? What's your daily morning regimen?
- [02:01]
B
That's a good question. Usually up around 7. And the first thing I do is I start while I'm brushing my teeth, I'm posting, checking social media, I'm posting, you know, my thoughts for the day. And also I notify my team of this is what I'm going to do today, this is what the plan is. And then I get ready. I actually have a couple of small dumbbells in my office and I have a little short workout routine. And you know, the idea is just to get the heart rate up for about 10, 15 minutes and that's pretty much all you need. If you just do that every day, you can, every day you can stay in decent shape. There was a time in my life when, when I was like going to the gym hard with a trainer, two hours, three hours a day, doing all the heavy weight lifting and all that. And then I was like, you know what? I'm never Going to be Ironman or something like that, never going to be a bodybuilder. And I kind of went off that phase and then just my, my trainer taught me this very simple, you know, 10 minute, 15 minute routine. It's like if you just do that and eat right, you're gonna be in good shape. You're in good shape wherever you.
- [03:19]
A
I love it, I love it. Now You've been the CEO of Sunwest Mortgage Co. How long Sunwest been around 1980.
- [03:26]
B
My dad started it in 1980. Met my dad once. Yeah, a couple years ago.
- [03:30]
A
Sweet man, sweet man. God rest his soul.
- [03:32]
B
Yeah, so yeah, 1980. I've been working with him and my mom since the 70s, since we immigrated the country. So pretty much, you know, as typical immigrant family, you every, everyone works together, right? And you got to put food on the table somehow.
- [03:49]
A
Same with the, with our company here. We're immigrants, you know. You know, I came from Egypt, my brother works here, my sister works here.
- [03:56]
B
Yeah.
- [03:56]
A
My partner, his brother works here. So it's very similar here at E Mortgage capital as well.
- [04:04]
B
10.
- [04:05]
A
And when did you become CEO of Sunwest?
- [04:09]
B
Around 2008, 2009. Right after the, the big, the big short.
- [04:15]
A
The big short. Nice. And then Sunwest, Sunwest Mortgage Company. Sunwest Bank. So there's two very variations, right? There's a.
- [04:23]
B
No, there's, there is a Sunwest bank. That's not us, that's a different company.
- [04:27]
A
Okay.
- [04:28]
B
That's Eric and Carson. I know them well. They're nice people. He's actually running for the, the owner of Sunwest bank is actually running for Senate in Wisconsin on the Republican ticket.
- [04:37]
A
Oh really?
- [04:37]
B
Yeah. Solid guy, nice.
- [04:40]
A
Yeah, sun was been, we, we do a lot of business with Sunwest. We, we've been working with you guys since we started the company and I don't even know if you checked. I think we can boast. I think we're either number one or number two broker with some west in the whole country.
- [04:56]
B
Yeah, I believe, believe after we spoke last, I think we're number two for E Mortgage.
- [05:01]
A
Okay. Yeah, yeah, yeah, you guys are number two, but I think you're number one. I'm not sure.
- [05:07]
B
Probably, yeah, probably.
- [05:10]
A
But yeah, it's an honor. It's an honor. Now I want to talk about, because everybody's talking about AI and Sunwest has been on the cusp of artificial intelligence since before the word artificial intelligence was a trend. And you know what, I have a couple questions because this is going to be a very AI centric conversation, but first off, what inspired you in the very beginning to start an empathetic AI model to help loan decision making?
- [05:45]
B
Well, it started from my dad, because growing up, you know, since the 80s, he would tell me, look, this business is so simple. Just. Just automate it, find ways of automating it, right? So I was. I've been writing code since I was a kid. And, you know, the first AI program I wrote was back in 1985. So it was really when no one was talking about AI other than, you know, other than the nerds like, like me. So, you know, his vision was, hey, you, the mortgage, the mortgage business, it's all paperwork, it's all calculations, it's all. There's patterns to everything. He's like, there should be a way so that this could all be done by complete automation, right? He didn't use the word AI, but I took it to mean AI. And so after I wrote my first AI program, it was just a small little, you know, little thing. I don't even remember exactly what it did at this point now. But the, you know, the bottom line, what I discovered is it takes lots of data. You know, it takes lots of data, a lot of computing power. And I said, okay, we don't have. We don't have the data. We don't have the ability to store the data. Back in those days, 10 megabyte hard drive cost a thousand dollars, right? So I said, well, at least, let me at least put an architecture in place so that we can start collecting data and start planning for this. And it always seemed like AI was just a couple years away. So one more, the next chip from intel or the next hard drive will solve the problem. So because of that, because it always seemed just around the corner, we. I laid an architecture and a foundation so that we can continue to build on this. And so that became part of our DNA of our engineering team since, you know, in the last 40 years almost.
- [07:50]
A
Wow. So you guys are on the cusp of, you know, so many different technological platforms. At Sunwest, you also created the platform, the processor, to really streamline the processing at Sunwest. Talk to me a little bit about that.
- [08:09]
B
Yeah, so it's just another way for people to understand angel AI. So we created another brand called the Processor. So because the way Angel AI works is you as a loan officer, you don't have to, literally, you don't have to do anything other than build a relationship with your customer, and which is really the number one responsibility of a loan officer doing, like, what we're doing right now, this interaction and getting looking into each other's eyes and understanding, you know, where we're coming from. So if a loan officer can build that relationship and build that bond with his customer. Right. Why should he be so stressed out over the, the paperwork, over the details? Right? So take you, you know, Joe, I take your loan application. I say Give me your W2, pay stubs, bank statements, you know, whatever, and you pull those out, you give it to me, I take a, I take my phone, take a picture or scan it on my Xerox machine or whatever, drop it into angel AI, and then I'm done, More or less.
- [09:18]
A
Angel AI will pull the rest of the missing documents.
- [09:21]
B
Yes, Angel AI will automatically read the documents, scrape the. Off it. I'd complete the 1003. Okay. And if there are any. And it would analyze documents. Let's say the bank statement had a large deposit, then it would automatically tag that we need an explanation for this large deposit or source of funds. Right. Or if there was, if the pay stub showed, you know, variation in overtime, then it's going to ask for a boe or ask for more information on that. So it looks at every single data point on the documents. And because of that, it also catches fraud because it redoes all the calculations. So if someone tried to make up a W2 or make up a pay stub, Right. And numbers won't tie together properly. Okay. So it's very good at just catching compliance and fraud. And it also figures out what's missing and what's needed. And automatically. So literally it underwrites on the spot, automatically adds all the conditions, and then after that, we have a team that we call Angelistas. So it's a large team, this massive call center of bilingual agents that will call your, your customer and say, okay, you know, you, you gave me all your documents. Thank you. But this, the April bank statement had a large deposit of $50,000. Can you please explain where that's coming from? Can you, can you send us the backup information? So they're reaching out and having that kind of human conversation.
- [11:02]
A
So who, who calls them?
- [11:04]
B
These are, these are. We have a call center in, in Puerto Rico, so they're all bilingual.
- [11:08]
A
Oh, nice.
- [11:09]
B
Okay. And they, they make the call. They follow the instructions that the AI has generated and they make the call and they say and explain to the borrower, this is what is missing. So each account, so each loan officer, basically, whether it's through our wholesale channel, like, like with, with, with your loan officers, who gets assigned one dedicated Angelista Okay. And so they then reach out to the customer, or if they need to reach out to the realtor or the title company, whoever, whatever document is needed, they reach out and they explain to that person. They follow. They basically. They're just. They're kind of like, I hate to say this, they're kind of like robots. The AI tells them what to do. They follow the instructions. They've been coached and trained really well. I don't know if you know Bill Pipes. No, he's like the. I'd argue the number one. Some people would say he's number three behind Tom Ferry. I. In my books, he's number one. The number one real estate coach and in the country. And he's very good at coaching customer service teams. So I hired him to coach the Angelistas. So he co. So he's coached them and he does a regular. He coaches them every week on how to handle objections, how to communicate. So they're very, very good on the phone with the customer. They've been coached to have high level of emotional iq. Customer emotional iq. And so they're able to. Because they don't have to think about what's being asked, and they have to just focus on delivering the message. Because the thinking of what's being asked and why it's need needed has been done by the AI. And the AI gives them detailed, clear instructions of what they need and why they need it.
- [13:05]
A
Wow.
- [13:05]
B
Okay. So all they have to do is focus on understanding the customer, building a relationship with the customer, and making sure the message is communicated across.
- [13:13]
A
That just saves so much time. So much time for the los. It's truly like an LO assistant.
- [13:18]
B
Yeah, it is a complete LO assistant. The processing, the processor is the AI because within the hour. So if you as an lo, take the application, right? And by taking the application, you don't even fill in a 10.3. You just give me the documents. The 1003 gets filled from the documents. Okay.
- [13:43]
A
Wow. So it completes your 10.3.
- [13:45]
B
It completes the 103 for you. Because me as an LO, when I was an LO back in the 80s and 90s, right. I hated completing the tail 3. I never did it. Right. I would talk, I would interview the borrower. The first question is, so what do you want out of this transaction? Right? What did you. What do you hope to achieve? Right? And just build a relationship, understand what their goals are and, you know, why they're buying this house and so forth, and understand their background. And based on that, I would ask them then for the documents. I Need these documents. Okay. And when I look through the documents, okay, they're complete or relatively complete. And then my loan application was done and I would give it to an assistant, a processor, back in the day. And I say, okay, everything you need is in these documents. Go complete a 10.3 and go get the disclosures out. I'm not going to waste my time completing a 103 myself. There's no point. So now instead of giving to a human being to read documents and complete a tile three, we give it to a computer that reads the documents, completes the 10.3 and its accuracy is going to be 100%. A human being can make a mistake. But these OCR systems and the cross data validation stuff, it's super accurate. Within the hour of you taking those documents, dropping the AI, within the hour the 1003 is completed, all the verifications are done, work number, whatever, you know, the 411 lookups, all that happens automatically. So it's integrated with all the systems out there and your disclosures are sent automatically to the customer. So everything that what normally an LOA or a processor does is done within the first hour.
- [15:31]
A
That's awesome.
- [15:32]
B
Yeah, it's a great time saver. And the thing is like, people get so confused by it because they're like, why is it free? Right? Because we have. We have. And we were talking about this earlier and before we enter this podcast, like you were telling Me you have CEOs from competing mortgage brokers, right? I mean, competing. Not really competing, but from other mortgage brokers that compete with E Mortgage in the podcast with you. Right. And we were just talking about there are no competitors in this business where it should all be collegial and.
- [16:13]
A
Yeah.
- [16:13]
B
And work together. The market is so huge. So same thing. Like I make the Angel AI completely free and accessible to every company. To every company. Even like, you know, whether you work for cross country or fairway or Freedom or whatever, you know, or movement, it doesn't matter to me. If you're a loan officer, you can use it.
- [16:32]
A
Are the Angelisa's free too, or. That's only if the loan comes to Sunwest.
- [16:37]
B
If the loan is submitted to Sunwest, then the Angelis take over. Right, but there's something similar to Angelistas, which we can talk about a little in a minute. But the point is that when. So we have loan officers from other mortgage banks who would never submit a loan to Sunwest. And that's okay. They use it nonstop because they have literally stopped reviewing income and assets anymore. So they take an application and they'll just drop it into angel and let angel tell it what the qualifying income is and any problems or what the assets are and their loan is basically set up for them. So I've got Ellos calling me and thanking me, saying, you save me hours every day and I don't have to, you know, given where margins are and things are so compressed. Like I was, I need another assistant, but I can't because I don't have the. I don't have the money to do it. Money to do it. And now I've got Angel and it's a free assistant. Yes, yes. This free assistant is the best assistant I ever had.
- [17:51]
A
Because he's accurate every time.
- [17:52]
B
Exactly, Exactly.
- [17:55]
A
Yeah. Los. Make sure you get a free assistant with angel AI. So what are some of the biggest challenges that you face bringing Angel AI to life?
- [18:05]
B
Oh, shoot. I mean, it's decade plus of work. So AI is all about training. Right. And so we've been running loans through it constantly, nonstop. And it learns a little bit of time and then it can make a mistake. So in the early days it would make a mistake and then a human being has to get involved and deal with it. Right. Just before we had the warranty. So once. So just all that constant learning and adjusting and tuning right. Creates this. It's a big challenge. There's a lot of work to do. And that means that our mortgage process. Right. So the way Southern west is organized, it's not organized like any other company because it's all centered around the AI. So our, you know, our people never worked in, or I would say not never, but for a long time, have not worked in a traditional way that you would normally expect processors and underwriters to function. So they're always supporting the AI and if the AI kicked out an exception or did something correctly and then their job was to go in and correct it. So we had a very non traditional workflow for last 10, 15 years. So the challenge has been just running enough scenarios through. So since 2018 when we officially launched Angel AI and a year later in 2019, we put in the warranty like where we said, okay, I've done enough transactions through this. We've tested this so much that it's. I'll say that if it got something wrong, I'll eat that loan. Okay. That means, that means if it got it wrong, and let's say you got a DU approval when it shouldn't have been approved because the income was wrong or whatever. Right. I'll fund it anyways. And I'll balance sheet it. Okay. So. So since 2019 to today, I've had the balance sheet about four loans.
- [20:11]
A
Four?
- [20:11]
B
Yeah.
- [20:12]
A
That's it.
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B
That's it.
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A
That's amazing precision.
- [20:16]
B
Yes, yes. And since 2018 to today, we've been down over 200,000 transactions through Angel AI.
- [20:24]
A
So every deal that Sunwest does is ran through angel AI.
- [20:28]
B
Correct.
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A
So how much of a cost savings has that been for Sunwest?
- [20:32]
B
Yeah, it's massive. I mean, I think MBA put out something recently that like the average mortgage banker spends about $13,000 per closed loan. And I think that includes commissions. So let's just say half of that is commissions. So that's six, $7,000 is the operating cost for an average mortgage banker. Okay. Per loan. And you know what the margins are these days? That's your operating costs. You're already underwater, forget the commissions. Right?
- [20:59]
A
Yeah.
- [21:00]
B
Right. So you know, the three years ago, we were at about 300 bucks a closed loan, and we made it more efficient than that. So we're under 200 probably. I haven't checked lately, but my guess would be between 100 and 150. A closed loan.
- [21:18]
A
That's all it costs you to close loan now.
- [21:19]
B
Yeah, right.
- [21:20]
A
You should be making more money with Sunwest.
- [21:24]
B
Yeah, of course. Then you have the out of pockets like credit reports and stuff. I'm not including them. Credit report these days is $100 a loan or something.
- [21:34]
A
Fannie reissues this, that and the other.
- [21:36]
B
Right, right. So they're cheap.
- [21:38]
A
Well, are they more $100? No, they're like 60 to 80.
- [21:42]
B
No, whatever it is.
- [21:43]
A
Yeah. And it's not 100 yet. Stop adding inflation to it. We're not there yet. It might be by the end of.
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B
The year, but 20% inflation rates, maybe.
- [21:54]
A
So you've had such a vast background in so many different, you know, so many different professions. You, you, you've been like expert engineer, mortgage professional, CEO of one of the largest mortgage bankers in the country. With all that experience, like, what do you think some of the needed traits are for a mortgage CEO or a tech CEO in this environment, in this rapidly changing environment?
- [22:22]
B
You know, that's a good question. I mean, we were talking about that again. Another thing we were talking about before the podcast started, which is our kids, right. And you know, we're talking about how kids these days are making so much money because of they're on YouTube and whatever. And my son, 10 years old, and when he was nine, he went through this YouTube phase and he made some money because he Got some viral videos, and at 10, he grew out of that phase. And now all he does is soccer and track and ninja warrior. Now he's just sports. And that's it. That's all you could think about. And I would rather he's doing sports all day long than, you know, being a YouTube star. Okay. And because when you're doing sports, especially competitive sports like soccer, right. You are learning the real lessons of life, which is the real character, right? Yeah. When you get hit. Right. And you lose or you win, and knowing how to win gracefully and how to lose gracefully, how to take a hit. Right. And how to hit back, and knowing what to hit back. Understanding the boundaries of life, understanding the boundaries of interpersonal relationships that you would get with living your life and interacting with people, not virtually interacting, not in the metaverse, but real interacting, and ultimately all of life and all success boils down to your ability to build relationships and create connections. Right? And if you're fundamentally good at that, and if you're fundamentally good at working with the culture and the people around you and understanding cultures, especially I'm fortunate enough to be an immigrant, where I have two cultures. I have my Indian culture and my American culture. And so. And I think that's an advantage to my kids because now they. They grew up in multicultural environment, so they're able to understand that not everyone is the same, not everyone thinks the same way. Right. And similarly, you. You grew up in multiple cultures as well. So when you have that kind of core understanding, then if you want to be a YouTube star, or if you want to be a top loan originator or realtor or a doctor or engineer or whatever, right? You understand, you have a better, deeper understanding of the nature of your customer. There's always a customer. And if you don't understand the customer, like really understand them, you're never going to be able to deliver a product that they. That means something to them.
- [25:00]
A
So you're. How are you teaching your kids in this environment? Like, how do you teach them to understand that sort of. That philosophy of, you know, to be outside of sports? You know, because you got your one son, he's in sports.
- [25:16]
B
Yeah. Yeah. Well, I think it's. It's. The kids learn the most by watching their parents. So the most important thing is what I think the biggest lesson that a kids learn is to see how mom and dad treat each other. So if the way mom and dad treat each other in front of them is the number one lesson, and if you start with that and you focus on the proper how to respect each other properly. Right. That 99% of what they need to learn, they've already learned right there. So we start from that level and then, and then ultimately, you know, just, you know, like, I work a lot, you know, it's, you know, what it takes to run and build multiple businesses. And I get them involved, I show them what is dad doing? Why is dad traveling so much? And I like to take them with me wherever I travel, as much as I can.
- [26:13]
A
That's awesome.
- [26:14]
B
Right. So let them see firsthand, Let them have these experiences and see that, you know, money just doesn't fall out of the sky, that you got to work for, that you. And these are things you do. And let them observe. Right. Let them be a part of your life and automatically they will, they will learn the right values. Yeah.
- [26:35]
A
Because something me and you have the, the blessing of is like, we grew up probably poor because we immigrated.
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B
Yeah.
- [26:42]
A
You know, and one thing that our kids don't have the blessing of is they, they're not poor. So how do we make sure that they have that balance, you know, to, to continue to maintain that same grit that we have?
- [26:56]
B
Yeah.
- [26:57]
A
And that's something that, you know, I'm always like asking everybody, everyone who comes on the show who has good kids, you know, well raised kids, you know, it's a, it's something that is a. My kids are younger. They're all 10, 8, 3, 2. So I want to make sure, you know, you just. That's. My wife likes to look at our kids like she's like, that's my life's work. Like that, that's what I do for a living. It's like that please them and like, I do this and I'm good at this and she does that, you know, so, so any. And so she watches all the shows because she knows I always, I always hit you with parenting advice. So that's awesome that you take your kids with you, you know, to work, travel, you know, they see you grinding, they see, they see you making it happen. What are some of, like, what are some of the struggles that your family faced immigrating from India? Your dad had, you know, obviously a much greater barrier with language. Like, yeah, my dad. So what are some of the challenges when he started the sun west and you know, what, what sort of issues did he face and how did he overcome them?
- [28:08]
B
You know, I, maybe because I was just a kid back then, I, I never saw anything as, I never saw the challenges. I just saw it as, as fun. Right. As excitement and you know, like coming from the poverty we came from in India to America. Right. And the little things you take for granted when you come to America, like Americans take for granted, which was like luxury for us. So as far as I was concerned, we're kings, you know, like, this is great. We live in a one bedroom apartment in the hood. But it was like, wow. You know, it's amazing. It's amazing, right? So kind of having that childlike wonderment or how good life is, I didn't see the challenge. Everything was always positive. And I think that's probably one of the reasons why I'm an entrepreneur is because still I like to keep that same sense of wonderment and positive mindset about everything is so wonderful. Yeah, right. Certainly when I think back and look at where we were, you know, when I was, when I was little to now, it's like, well, I lived through that. It doesn't matter what comes tomorrow. Whatever, you know, whatever God is going to hit me with tomorrow don't really matter because I've already lived through that.
- [29:34]
A
Yeah. So I was talking to someone else on the podcast the other day. I said, you know, as a CEO, like, I could take a big beating. Like, I just, like, you could hit me with anything and I'll still smile at you like, you just can't hurt me.
- [29:50]
B
Yeah.
- [29:50]
A
You know, it doesn't matter what comes at us, but we're able to overcome tribulation. And, you know, you, India, all very poor. I'm from Cairo, Egypt, but I'm from this place called Helmet. Is that which is like the poorest part of Cairo? Because now Cairo, there's a lot of rich parts. But, you know, I'm from like. So Egypt's considered a third world country, as is India. But like, there's certain parts of India and Egypt that should be considered six world countries. They're like, multiplied, you know, like, exponentially worse, you know, like, I'm from those parts where it's like really, really poor. Like, you're on the seventh floor, no elevator.
- [30:27]
B
Yeah.
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A
In a little one bedroom. You know, with that. The one bedrooms are like half the size of the one bedrooms here. They're like 200 square feet. Right. And no air conditioning. Right. So they're really poor. So we're really. Now it's like, it's just crazy to live in the environments that we live in now and then, you know. Have you ever taken your kids back to India?
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B
Yeah, many times.
- [30:50]
A
Where, but where you grew up?
- [30:51]
B
Not where I grew up. My wife grew up in Mumbai. So they spent actually we were just there last year over Christmas. So they get to see their grandparents and cousins and so forth.
- [31:06]
A
Nice. What's their interpretation of how the lifestyle is there.
- [31:12]
B
For them? They don't see any difference. Right. Because my wife comes from, from a wealthy family over there and, and you know, it's like, and you know, remember when I, I left India in, in the 70s, right. When it was basically a socialist country under you know, almost Soviet occupation, you could say. Wasn't exactly behind the iron curtain. So between then and now, I mean it's, it's a different country now. It's opened up. It's, it's, it's, it's a free economy and it's, you know, it's booming.
- [31:48]
A
I love it. I want to get back to the AI and ask you this question because this has been a big like debate in the, in the AI world and it's, it's really like what do you, what's your opinion on the balancing of innovation and ethical considerations, especially like in high stake environments like the mortgage environment where they have to make big decisions and you're balancing empathy with it as well.
- [32:16]
B
Correct. So I'll get back to the empathy that's, that's a, that's a big topic on unto itself. But as, as far as the ethics of making these big decisions. So I think it was the Federal Reserve last year or the FDIC set out of circular about almost exactly a year ago that said it's okay to use AI to make lending decisions or banking decisions or credit decisions as long as, but you cannot use that. Oh, this is the AI's decision as the excuse. Okay. So you can use the AI to make a decision, but then you also have to be able to explain how the AI made that decision. Okay. So you have to be able to connect the dots and that has to.
- [33:09]
A
Be a human doing that.
- [33:11]
B
No, they didn't say it has to be human. They just said the AI needs to be able to spit out kind of like a receipt of how I came to this decision. Right. And so that's a, you know, traditional neural network is very hard for a neural network. I mean it's near impossible. You can't, the way back propagation training works is you can't explain how it makes a decision. Just it learned, it sort of becomes intuitive and it says okay, you know, turn right or turn left. It makes that decision. If you ask it, how did he make the decision? Well, so here are my weights and that doesn't mean anything. It's not understandable. So if you to basically. So they put the bar, by putting the bar there, that you have to be able to explain how you got to that decision. So if the AI says I'm going to approve Joe's loan, it has to also explain why it approved Joe's loan. That's a high bar and it's hard to do. Okay, so the way we build angel is, and it's not built off the shelf tools like large language models, and I'm throwing out terms which I don't want to confuse the audience, but essentially that's the technology that's behind ChatGPT. So it's not built on tools like that. And it's a custom built neural network that we built from the ground up. So because we were building it for mortgages and financial decisions, for us to test it, that it's doing it right. We had to build it from scratch to be able to spit out the reasoning for his decisions along the way. Okay, so when the FDIC came out with that rule, we're like, okay, no problem, we already have that covered. Otherwise there was no way for us to test our own product. We had to write the code so that it generated the logs automatically. That's awesome, right? So the ethical standard is, at least according to the fdic, that if you make a decision, you better be able to explain why you made that decision. Okay, you better able to explain if you said that the credit is unsatisfactory, you better be able to explain why is it unsatisfactory. Okay. If a human underwriter underwrites the loan file, obviously they can explain why. And their notes would have some of that written down, depending on how good notes the underwriter keeps. But you could always question the underwriter there to explain why. But out of the box AIs can't do that unless you build it to do it. That's how we know that it delivers the right decisions. That's how we audited ourselves. I mean, apart from the 200,000 loan files that we have put through, real loan files that we put through, it's like we run test cases, like tens of thousands of test cases every week through it. So we have a test script that goes and runs tens of thousands of scenarios and loan cases and so forth to make sure that it's working correctly.
- [36:15]
A
AI generated test cases that you're just.
- [36:17]
B
Well, it's sort of a generated. We basically taking real loans from the past, changing circumstances. There's a whole process where we change the data around, take all the pii out, and that becomes a test data set that we run it through through an automated script. So we're constantly testing the AI to make sure that it doesn't go off the rails.
- [36:42]
A
And I think I know the answer to this one. But if you look back on your career and all the success you had, what do you think the most significant milestone of your career has been thus far?
- [36:55]
B
Getting married. I mean, I got married young. I was thinking was 26, and without her, I. Nowhere.
- [37:06]
A
Yeah. It's like my wife.
- [37:07]
B
Yeah.
- [37:07]
A
My backbone.
- [37:08]
B
Yeah.
- [37:10]
A
Yeah. That's awesome. So that's the most. You know, hopefully she's listening to this. You get some major kudos for that.
- [37:16]
B
She knows how I feel, so no secret.
- [37:18]
A
Yeah. Yeah. That's awesome. Yeah, I, you know, I'm up there with you. It's. Getting married has been, you know, insurmountable to my success. Like, without my wife, I'd be nowhere.
- [37:30]
B
And it just. It's just kept me. It's kept me grounded, kept me thinking clearly. Right. Because ultimately, it's all about listening to your inner voice, to God, or whatever you want to call it. Right. People, different cultures, different people, call it different things. But ultimately, it's all about having that tapping into that calmness inside you and saying, okay, this is what I'm going to do next.
- [37:55]
A
Yeah, okay.
- [37:56]
B
As opposed to reacting on the spot or being. Being driven by an emotion, whether. Whether the emotion is anger or excitement. Right. That's when the worst decisions are made.
- [38:08]
A
Yeah, you're absolutely right. And that voice of reason which often comes through your wife is like the reason why you're able to continue to excel.
- [38:18]
B
Yes.
- [38:20]
A
So what advice would you give to a young entrepreneur or innovator who's basically like, following in your footsteps?
- [38:31]
B
Oh, don't follow myself footsteps. I made so many mistakes.
- [38:35]
A
But that's the thing. You're giving them advice now.
- [38:39]
B
Yeah. Take the time. And I was given this advice, and I didn't do it, you know, when I should have. But take the time to really write down who you are. Right. What do you really. What is. What do you hope to accomplish? The why. If you don't. If you don't write down your why and define it, okay. Then you will be kind of floating around, kind of in a fog, and you'll get pushed in this direction or that direction, and the path will be long and difficult. So start with writing down your why and what you want your tombstone. Tombstone to say. When you are 100, you know, 100 years old and you're buried what do you want that tombstone to say? How about you? And then. And then from that point forward, it doesn't matter what you're building, whether you're building microchips or potato chips, it doesn't matter what your business is. I'd stick to that. Fundamental and every decision, every relationship, if it doesn't, it doesn't put you on a path towards that, why don't do it.
- [39:57]
A
Excellent advice.
- [39:58]
B
Any relationship that you have around you, which is pulling you away from that, why? Or distracting you, okay, there's time to end those relationships. You want to stick with the people that are going to help you achieve that, that future, that goal.
- [40:17]
A
Awesome. That's awesome advice. Awesome advice. One question I have for you, and this is an issue that I suffer with with my own company, is, you know, what are some of the challenges that you face with mortgage professionals right now implementing, and more importantly, adopting angel AI? And how are you overcoming those challenges?
- [40:42]
B
Yeah, so it's been an interesting run. Last couple of years with this. I've gotten the, you know, what is that curve called? The four phases of grief or whatever it is. I've seen that across mortgage professionals. So initially it was what is it? And I heard of it. It sounds like bs. Yeah, right. It's a complete denial. Right. And then they listen to it, they may play with it a little bit, and then it's kind of like.
- [41:22]
A
Still don't believe it.
- [41:23]
B
Well, they're starting to believe it now. They're starting to poke at it. Like they're saying, well, it doesn't do this and doesn't do that or whatever. It's almost like an anger kind of response. Right. And then, you know, I would say right now we're kind of at a point where people are either just ignoring it. I get a lot of loan office, like, I don't want to have anything to do with this. They're so threatened by it. Like, this is going to take away my job, it's going to take away my future or whatever. I don't want to have anything at all to do with it. And then we have another side which are looking at this, saying, oh, my God, this is helping me so much.
- [42:02]
A
This is revolutionizing my business.
- [42:03]
B
Right. I could do so much more business now. So now we're kind of. The split is happening where. Where you have. You have one. One group which doesn't want to have anything to do with it, doesn't want to hear about it, and another group which is give me more.
- [42:19]
A
And the early adopters, those people that are saying, give me more. Those are the people who are thriving anyways.
- [42:24]
B
Yes, yes. And I'm seeing that. Well, yes and no. I see big producers that will say, never. Right. That are very offended by it. And I see big producers that'll say, this is saved my life. Right. So it's. It's all over the board. And on the other hand, realtors immediately take to it because they don't find it as. Because it helps them so much and it generates business for them that they're not afraid of it. They're not. They don't. They're not. They don't find it as competing against their skills.
- [43:05]
A
That's awesome. And very fascinating. Very fascinating. I mean, adoption is something that, you know, in technology is always a major hurdle. Yeah, it's just. It's just a hurdle.
- [43:14]
B
Yeah. And that's why the design and the approach is to keep it as simple as possible, is it should be. The experience needs to feel like. And that's where the empathy comes in, that you're chatting with your best friend. And so the whole empathy side of this is the. The responses and the training that we do is the. It should feel comfortable. It should feel like the way you and I feel comfortable. We're natural that we're chatting with each other. Right. And so the responses from angel should feel that way. And that's a constant work in progress. And it's very complicated to teach a computer to be empathetic.
- [43:56]
A
It's ongoing.
- [43:57]
B
It's ongoing. It gets better. It gets more empathetic every day. So the user interface is sometimes disturbingly simple because we get loan officers and people go in there like, was that it? What I do is just talk to it. And it's on. Purposely designed to be. I want the interface to be. Have nothing on it, to be as simple as possible. I told the engineers, I don't want any buttons. If you could do it with zero buttons, do it. But, you know, you can't do zero buttons.
- [44:33]
A
It's only got one button. Right.
- [44:34]
B
Basically a send button. It's got one send button. So it's like. It's kind of the.
- [44:38]
A
Just like, kind of chat. It's like chat GPT. It's on steroids for mortgage.
- [44:43]
B
Kind of like that. One way to say it that way. But, you know, one of the people I get inspiration from is Apple. And, you know, I think the whole idea of a phone, when they came out with the iPhone, with just a single button and keeping everything uncluttered. Right. When you first. If you were using a BlackBerry and you got an Apple, you got an iPhone, you're like, what the heck? It's so confusing, right?
- [45:15]
A
Yeah.
- [45:15]
B
Because there's nothing there. How does this work? Right. Where are all the buttons? Where this was at? Right. But then you realize that the beauty of it is that the simplicity is the simplicity.
- [45:27]
A
Yeah. When I switched from BlackBerry to Apple, I was like, I need the keyboard. I need a keyboard. What do you mean there's no keyboard?
- [45:34]
B
Exactly.
- [45:35]
A
No, the keyboard's there. You just gotta score. Like. No, I don't want that.
- [45:37]
B
Yeah.
- [45:38]
A
So I was. I took me a while to adopt Apple because I was so used to that keyboard. Then it totally died off.
- [45:44]
B
Yeah. Yeah, it dies off fast. Once you understand. It dies off fast.
- [45:48]
A
Yeah.
- [45:48]
B
And that's the same idea is there's no menus, there's no. There's nothing. You just say what's on your mind and you tell it what's on your mind. What do I want to do? Right. And it goes. And then again, another. Another company that we got inspiration from was. Was Google. And Google came out with, you know, and it was the late 90s or whatever with their web browser. Right. And they broke the mold. They did it completely different than Yahoo and the others, right? Yahoo. When you went to Yahoo, you had. You had a million things on that page, right?
- [46:18]
A
Yeah. And then a little search there.
- [46:20]
B
Yeah. And then Google, when you went to Google, it just search simple. Yeah, The Google doodle and a little search. Right. And whatever you wanted, you type there. And guess what? Simplicity always wins.
- [46:33]
A
I love that. Now, I got a couple last questions for you, and then we'll adjourn. And these are all personal.
- [46:39]
B
Sure.
- [46:40]
A
So the first question is a three pronged question. Okay. What's a personal goal that you have for yourself? What's a business goal that you have? And most importantly, above all, what's a family goal that you have for this, for this year? And this is all for this year and the next year.
- [46:57]
B
I think all three of them would boil down to the same answer, which is, I need to spend more time. I need to take away. I need to take out more time regularly. Like we described our. My morning schedule, what was missing in there was, you know, 15 minutes of meditation, and I need to have that discipline. I was doing that for a while, and it was like my whole life was just. Everything was so much better. And somehow, you know how it is, you go on a diet and then you fall off the diet. I gotta get back on that. I gotta get back on that. Diet of that 15 minutes of meditation every morning. And, and I think just by doing that, everything else falls in place. Like my goals for the family is I just want if they can continue, their kids can continue to follow their heart and do what they are doing, that's achieved. Right. There's this like you can't, you can't really make a goal for your family because they're their own people. Right. So if I can keep teaching them what I know and then their own souls have to find their own paths. Right. So. And I feel like they're on their, on their personal path and they're doing what they need to do. And that's a great, great thing where those paths take them. When you know that's not up to us, that's test up to God to figure out where that takes them. And as far as goals for the business is again goes back to meditation. And taking care of that means making sure I make all the right decisions that offer and deliver the best possible solutions to my customers. Whether it's my customers on the AI side of the business or the mortgage side of the business, I want to make sure that they always have a best in class feeling that was they always enjoy and value the service. Right. If that's. As long as that's the goal is, is taking care of my, taking care of my customers and you know, my. In the mortgage business, as you know, there's multiple customers. There's your is your consumer, right. There's your loan officer, there's your, your employees and there's your regulators and people. A lot of people forget the regulator, right?
- [49:21]
A
Oh, they're my best friends.
- [49:23]
B
They're our customer. And finally, of course, the biggest customer is the investor because they're buying the product that we produce. We manufacture a product which is a loan and then they buy it.
- [49:32]
A
And we actually look at our vendors as our customers too.
- [49:34]
B
Our vendors, yes. Absolutely.
- [49:36]
A
Yeah. Because we have to build awesome relationships with them.
- [49:38]
B
Yeah. So. So, so everyone, you know another way to say it, Everyone around you is your customer. So deliver the best possible, highest level of service and at the highest level, integrity to everyone around you. And whatever happens after that, whether you make a buck, lose a buck, it's not in your hands. That's in God's hands. Let him figure out. He will decide what you've earned.
- [50:08]
A
As long as we're of service at all times, God figures it out for us.
- [50:12]
B
Yes, exactly.
- [50:14]
A
Every time. It's just guaranteed. My last question, it's my favorite question and you could answer it quickly or go into a deep discussion about it. But when. When you're in front of the pearly gates, what do you think God's going to tell you?
- [50:37]
B
I don't know. I think. I don't even. I think I have to wait that long. I think God's talking to us all the time. I never thought about that question ever in my life. Because there is, I think if you're tuned in and if you're paying attention, that conversation is happening continuously. Right. So just listen and stop and listen. And that's what the point of meditation is. And you can call it meditation, you can call it prayer, call it going to church or going to the mosque or whatever it is that you want to call it. Whatever ritual that is that you want to follow, follow that ritual. Right. And you're having that conversation. You just have to tune in. Yeah. Why wait until you get to the pearly gates when you can have it, when you can have it today?
- [51:31]
A
You know what? You're the first person to describe it that way when I ask that question. And, and, and it really puts things in perspective because I'm always trying to have that conversation with God and actually had a discussion with, with a mentor yesterday about meditation. And he's like, you know, he teaches people how to meditate. He's like an expert meditator. I've been doing it for years and very, very successful guy, you know, hire CEOs for Fortune 500 companies and, and I don't necessarily meditate. I pray I don't do it as much as I'd like to, but it is something that, you know, I have to learn more and, and tap into more because it's important. And hearing you put that as one of your. Your primary goals just puts it in perspective. So hopefully people are listening right now. This is the real deal. This guy's the real deal, guys. Listen to everything he said. Re listen to the podcast, because Pavan is one of the most brilliant minds of our time, in our generation, in this space and now in the AI space now trailblazing the mortgage AI. So, Pavan, you've been an absolute wonderful guest. I thank you so much for joining us today on Coffees Foreclosers. I thank you so much for everything that you're doing for the community at large and having that collaborative mindset for the entire mortgage community. God bless you, your family, your businesses, your ventures, everything that you're doing. I appreciate you. Thank you, Pavan.
- [52:55]
B
Thank you, Joe.
- [52:56]
A
All right, thanks, everybody. Thanks for watching it.