Mike Loftin is the CEO of Homewise, a New Mexico-based social enterprise that has been closing the racial wealth gap through homeownership for nearly 30 years, and a Nonresident Fellow at the Urban Institute.
Finding meaning and purpose
Not selling anyone short
Helping people escape poverty
Telling people that it’s doable
Everybody wants to find work that’s meaningful and purposeful whether they know it or not.
People care about their self-interest but we have to be careful not to short-sell anyone. People want to do good things, people want to find meaning in their life, people care and are happier when they know they’re helping others out.
It seems like people are more comfortable helping people survive homelessness than helping them escape it. Giving people a chance to escape poverty is a difficult thing, but it’s the only way to create real sustainable change.
Sometimes, all people need is for someone to tell them it is doable and that they can do it, that it is possible for them to transition into better circumstances.
“The path to happiness is being content with your life and finding purpose. When you just focus too much on yourself, it’s unsatisfactory. We get meaning outside ourselves.” - Mike Loftin
Website: www.homewise.org
LinkedIn: https://www.linkedin.com/in/mike-loftin-a780468/
Website: Rewire, Inc.: Transformed Thinking
Email: grow@rewireinc.com
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What we try to do here at the Insight Interviews is bring people that we can have an interview with to the table that can get us some insights. That's why we call it the Insight Interviews. The idea behind this is that we aren't necessarily looking to say, “Here are our insights,” but we're rather trying to interview someone in a way where you walk away going, “I got some insights there.”
In this episode, my guest is, I'm going to go as far as to say a very unique person who takes a particularly interesting approach to his work and how he does what he does, and specifically why he does it. The why behind this is super powerful. With all of that, I'm certainly going to get to ask him about what he does and there will hopefully be a cool thing for us. Please welcome my guest, Michael Loftin. Mike, say hi to the Insight Interview world.
Hi, Insight Interview world, I’m glad to be here.
Before we even jump off, I have a question for you. You're in Santa Fe, New Mexico and that's a cool place. We're here in 2022. What are you grateful for? That's my first question.
I’m grateful for pretty much my whole life. I've had a good life. I was the first kid in my family and the only kid in my family who got to college and I had opportunities open to me. I've always been able to do work I care about and made it to and am passionate about. I don't mind a lot of blood, sweat, and tears to get it done because it's rewarding. Having a purpose in life and something you care about that you work on all the time is a real gift. I feel lucky to have that gift.
My hope is that people step back and go already ask themselves, “Are you doing something that you're passionate about? Can you find meaning in it?” Thank you for that gratitude. That's awesome. What's been your experience out in the world with the people that you encounter as you're working on home ownership? We're going to talk about that but what's been your experience with people around you in terms of finding work that they do that's meaningful and purposeful?
Pretty much everybody wants the path to be content with their life, whether they know it or not. Finding purpose when you focus too much on yourself is unsatisfactory. We get meaning outside ourselves. Most people want that. Even we help a lot of people buy a home and we're trying to help them get ahead financially. We're going to talk about that and they care about that. They care about themselves and their family.
It is unsatisfactory to focus too much on yourself. We must get meaning outside ourselves.
They also get like, “I'm making an investment in the bigger community,” and that's good for the community. They're the ones going to pay that mortgage off for 30 years. They're making a big commitment. We short sell people. We think that they're narrowly self-interested. We also care about others. Inherently, we get ahead when we all get ahead together. We got to be careful not to sell people short. People get the big picture. It's part of who we are as humans. It's our big evolutionary advantage because we figured out how to cooperate and get more done together for our species than if we were completely alone in it.
Before we get too far in, my business partner, Jason, and I, tag team on this show. He likes to tell people their resumes, where they’re from, and what they’re doing. I can read all that stuff. I would rather it come from you. I would love it if you took a handful of minutes, what's the Michael Loftin story? Tell us that. Give us a thumbnail version of it if you could. It would be great.
I was born and raised in Albuquerque, New Mexico, not too far from Santa Fe. My parents bought their first home and only home in the ‘50s for not very much money but they didn't have any money. They didn't have any savings, so the Palm builder loaned them the down payment to buy their house, which at the time was illegal and it is still illegal for a seller to provide the down payment. That was a good path to financial stability. Later on, they divorced. My mom had to raise three kids on her own, was a receptionist, and didn’t make a lot of money. That's my background.
I was the only one that go to college. I had a couple of teachers who told me, “Mike, you're pretty smart. I don't know why you keep screwing up and trying to be funny in class. Why don't you get a little more serious? You could go to college.” I'm going, “Really?” I don't have the fork in the road in eighth grade and I took it seriously. It’s like, “Maybe I should take myself more seriously.”
I did, so I got a full scholarship to college in Chicago and then came back to New Mexico. I missed it and started working at Homewise where I work now. It's been a long journey. It's been terrific. I've never been bored. I feel like I do get to contribute to a broader good but I also get a lot back from that. I would do my life over in the same way.
That is fantastic. Tell us about Homewise. I could ask you some more directed questions but I think what you do and how you do it is unique to this industry. In fact, you can attest to the fact that when you and I first spoke, I was a little like, “What? How?” It's a little bit off the norm. Tell us a little bit about what you do at Homewise.
You always reflect on, “Why do I do what I do?” Oftentimes, what you tell yourself evolves and changes. Rooted in it is our stability, especially after my parents got divorced and my dad died two years after that at the young age of 47. Our financial stability was pretty much in the house. It was the one thing that we could rely on because there wasn't a lot of cashflow. If you buy a home, most of your payments are fixed.
Homeownership Gap: The only solutions to make housing more affordable are increasing rental housing and rental vouchers to subsidize rent. Homeowners are getting left out of the picture.
Your principal and interest payment, if you get a fixed rate mortgage, doesn't go up. That was a huge deal. I went away to college and learned about neighborhoods in Chicago. They were interesting to me. What I bumped up against was that people struggled with where they lived and the people that own their own homes and stuff usually did better. There was more stability and kids weren't moving in and out of school because they had to move all the time because their apartments changed. You notice this stuff. I go, “This is important.”
When I got back to New Mexico, I work at the organization that provides home repair loans on the Westside of Santa Fe. There’s not very much of it. I went out and talked to a lot of our clients and said like, “What should we be doing? What aren't we doing that we should be in?” You need to help our kids buy a home because I can't afford to live here. This is a community where people grow up generation after generation owning their own homes.
This is going to be the first generation that couldn't because Santa Fe became so expensive at the time. It was back in 1992. We said, “We got to try some stuff.” No one knew exactly what to do and we started trying. It took us six months to get twelve families into a home but it’s something. It's been a long journey since. How do we get good at this? This is such a big mover of people's well-being. It’s like access to higher education like the GI Bill. It’s probably one of the most important things we did to build the American middle class.
There was access to higher education and access to homeownership. It's like, “God, this is something we can do. This isn't rocket science. The tools are all there. You got to do it well. You got to execute. I don't think they're assembled in the right configuration so it makes the process confusing but this is doable. Let's work on it.” That's what we've been doing.
You have said affordable housing. I'd love to hear from you about the correlation between how people think about affordable housing. It is becoming increasingly relevant in the world. I've got a good friend that lives in San Francisco and has affordable housing. In many places around the country now, inventory is very low. People are talking more about affordable housing. I'd love for you to address that. Homeownership, if I heard you right, is the key to how we address affordable housing. Help us understand the correlation. Maybe that sounds trite to people but explain that. Talk to me about it.
This is something that is not a well-understood thing. Especially policymakers do not think of homeownership as an affordable housing strategy. They think of it as what happens after you've already had access to affordable housing, which is rental housing. The solution to making housing more affordable is more rental housing. I want to rent vouchers to subsidize the rent. Homeowners get left out of that discussion. What we do talk about homeownership is how it’s important for wealth building, which is true.
It's the most powerful way that people build wealth. Brandeis did a good study on this homeownership. Access to homeownership is more important than access to higher education or even income growth in terms of wealth building. When you have a stark racial wealth gap in America, how are you going to start closing those gaps and providing opportunity? Homeownership is a powerful way to do that.
As long as you’re a successful home hunter who settles payments on time, your housing gets more affordable over time than rent.
Policymakers are increasingly seeing the importance of homeownership and wealth building. They miss the affordable housing part. I did a paper for the Urban Institute. It’s interesting to work on this project. The typical homeowner pays 10% points less of their income on housing does the typical renter. That's not 10% less. That's 10% points. The typical renter pays about 34% of their income on housing. The typical homeowner pays 24%. That's a big difference. If you make $40,000 a year and you look at those percentages, that's $333 a month less the homeowner pays than the renter does. You get a $300 a month raise. You're pretty happy.
Most people would be happy. It's powerful that way. It's not that complicated to understand why the paper goes up at length than a lot of different causes. The biggest one is the fact that the principal and interest portion of your mortgage payment is held constant. It's not subject to inflation. Only taxes and insurance were in rent. You're 100% due to inflation. Over time, you get ahead when you own a home.
If we're going to solve the affordable housing problem in America in a long-term way, we have to get more people in owning their own housing, not think about why we are writing a monthly check to subsidize people's rent. When I would argue, why don't we have a home ownership voucher that says, “We'll write you one check for $20,000 to help you with a down payment and you buy a home and you're done?” As long as you're a successful homeowner and you've made your payments on time, your housing gets more affordable over time compared to rent.
I don't want to say that there's no need for rental programs and stuff. There are. Rental housing, depending on where you're at in life, is important. When I was twenty-something, I wasn't one of them because I didn't know where I was going to live and all that. It's an important part of the housing spectrum but we overlook as much, even a homeowner. This is the irony. Homeownership is a key part of the American dream and all this. When it comes to national policy on housing, we ignore it. We do not help people who've been left out of homeownership, access homeownership. That's what I'm passionate about now.
The irony is humorous. Let me make sure I understand. If the American dream is homeownership, are you saying, how is it that homeownership is largely left out of the discussion when talking about the American dream? Is that right?
We take it for granted that it will happen. It happens naturally. There doesn't need to be government policy to help it. We do some things like FHA. Insurance is a way to help people get into mortgages and there's some stuff. If you look at the HUD budget, which is mostly housing money, 75% of it goes to rental programs. That doesn't mean 25% goes to the homeownership programs. It's way less than that because the rest of it goes to other things like community development and urban development stuff.
I mentioned the GI Bill earlier. The GI Bill was phenomenal in building the middle class. The biggest problem with it was it left out a lot of people, mostly Black, Hispanics, and other people of color because there was red lining, and couldn't get legal up until the Fair Housing Act of 1968. It was completely legal for FHA to discriminate based on color and they did.
Homeownership Gap: Access to homeownership is more important than access to higher education or income growth in terms of wealth building.
If your parents and your grandparents didn't own a home and never built wealth or had assets, they're not in a position to help you with your down payment. When we bought our first home, my wife's grandmother helped us with the down payment. We bought a home way earlier in our life length. We would have if we had to save that all because she was able to step in and help. If you don't have that, someone needs it. We need to provide that and help people.
Part of the problem with a lot of social policies in America is we help people get by. We help people survive being poor, instability, or poverty. What we're not good at is helping people get ahead and become financially independent which is what we all aspire to as human beings. The role of society should be to help others do that. I don't mean like it's a blank check. We do need to level the playing field so that all Americans could get ahead.
We've done this before. We did this after World War II with the GI Bill but for a lot of people. We're good at this stuff. We're proud of our middle class. We've built the middle class that's the envy of the world but that middle class has fallen behind and some people have still been left out. It's important that we figured out ways to do that.
I'm going to ask you a why question and it's part of a curiosity of mine. You mentioned that a certain chunk of HUD's money goes to these rental platforms and programs. You keep saying, “This is fairly basic.” You haven't said anything like, “That's a revelation I've never imagined.” It's fairly basic and again, I hope this isn't overtly political. I didn't mean to be like that. Why do they miss this? Why do you think this is missed largely? I love that you're doing something about it. I'm curious when you sit around at night or in the shower or whatever and you're thinking like, “Why is this missed?”
I have two theories on this. I've been thinking about this a lot. I don't have it all flushed out but one reason behind it is pretty clear. There's a lot of money to be made in developing rental housing and we need the people that make money, the developers, and others in rental housing. They're powerful. They have a lot of political power. Those programs for rental housing have political support because you can make a lot of money on them. Lower-income, working-class people trying to buy a home probably don't have that same love. That's part of it. It’s worth the political power.
The second thing is way more complicated. I haven't thought of working on thinking this out. I have some friends who are psychiatrists. They're interested in data. One would call himself an evolutionary psychologist. He goes, “Mike, there's a dominance hierarchy. You look at it and animals have it. Apes have it, and so do people. We like pecking order.” We're okay with helping people to the next step but if they get ahead of us, we don't know if we like that.”
As long as you maintain that hierarchy and we're helping people survive stuff but not truly get ahead, it fits in with human nature more and gets rid of that discomfort. You're like, “I bought my home. Nobody helped me on that.” Even though your grandmother did or your parents did. We don't truly want to advance everyone. It's a deep psychological and emotional thing. I'm not making a political critique at all. We're way more comfortable volunteering at a food bank or a soup kitchen for homeless people.
If you want to help close the homeownership gap, look at it as a systems problem, not a product problem.
With homeless people, tough love is what's needed. Tough love is way harder. Someone asks me to ask them a question, “What do you want to do with your life? Is this the way you want to be? Why am I feeding you and helping you survive homelessness if I'm not willing to help you escape it?” That's harder work to help real progress happen. It is what's in it. My father was an alcoholic and I have relatives who struggled with alcohol and stuff. I have a lot of exposure to AA, Al-Anon, and those kinds of things.
I believe that tough love is key to this. We get in our own way. Both are true. There are structures in society that block us from getting ahead, and so do we ourselves. Conservatives and liberals are right about different things. We tend to combine them. We need to take personal responsibility but there are times in order to move ahead, we're going to need the help of others. I'm like, “Both are true. These are not contradictory things. They're complimentary things.” We lose that. Our discourse on policy is dysfunctional because of that. It's a both and not an either/or.
First of all, thank you for all of that. I stated at the beginning that the idea here was to get some insights. I'm thinking, as the interviewer, maybe this was for me. I'm getting insights. I love that you're flushing this out. Some of the thoughts that you have around it are super interesting. For one, I hope you continue to flush that out. Maybe you'll write even a bigger paper on it but you could very well be right.
I'm curious, you sound like you speak to and understand the political and even the policy aspect of it. Do you sometimes have a hard time, even when you're working with borrowers? Do they have a block? Have we, as a culture, even blocked them? Have you ever talked to people who don't even believe themselves that they can get out of renting? Do you have to work on both sides of that equation?
That's true. People don't know that they can. They don't think that they can. We can get on our own way. We don't think it's a possibility. That's a big part of what we have to do at Homewise. You can do this. This is doable work. Helping people build their confidence that they can take something on is a huge deal. We have setbacks. We don't like the feats. What's scary to people is rejection. Sometimes, one of the hardest things to do with homeowners is to walk in that door and talk to someone or pick up the phone. What if we say no? People aren't used to being rejected and stuff.
People have those fears. We're human and emotional. There are all these complicated things going on with us. When you're compassionate and empathetic, you try to understand. You always try to put yourself in other people's shoes. It's like, “This is scary.” I don't know anyone in my family that owned her own home. I'm going to be the first one. When I went to college, it wasn't like college was an expectation for me but I have a couple of teachers who believe me and say, “You can do this.” It made all the difference in the world.
With all that's gone on in the world with the pandemic, with social unrest, with all the inventory things, you've been doing this for several years. You've seen a lot of markets and cycles. What over the last few years has impacted your business? How have you guys responded to the markets over the last few years?
Homeownership Gap: Part of the problem with America’s social policies is that people get by with help. No one really helps people become financially independent.
The big recession was probably the biggest challenge. Our mission is around not just helping people own a home or buy a home. It's around helping people improve their long-term financial security. Homeownership is the means. We never used subprime loans. We've never liked it. Why are you paying $300 more a month when all you did is pay your bills on time, and improve your credit? You could save that money.
It's always been around the long-term success of the homeowner. We weathered the recession well because of that orientation. We didn't cut corners. We made sure people got the best mortgage that was possible out there. Having said that, the biggest challenge with it was the recession. People didn't think you'd have a loan to buy a home anymore. You had to have 20% down because that's what you heard on CNN News all the time, which wasn't true at all. You had to make other adjustments. We did a lot of work with employers. We figured out that if an employer told their employees, “You should look at buying a home. You could do this,” it’s like a teacher saying, “You can go to college.”
People tended to believe them. It's like, “Maybe I should check this out.” You're not going to battle the media messages that you can't buy a home and you need 20% down through the same means. You're going to have to go talk to people and have conversations, so we did that. We hired more people to go out and have conversations. Mostly through employers. With COVID, I still don't. We're going to try to understand what this is all about. I would have never expected home prices to start skyrocketing in a global pandemic. I thought people were going to hunker down and do nothing. We're still on that journey.
I was hoping you would make sense of that for me. I was waiting for you to have some grand luck, “Here's what that's all about.” I can't wrap my brain around how we had this huge increase and even joblessness, which is coming back a little bit but also a huge increase. There were some things that didn't add up and they still don't.
We've never been through a global pandemic together. One of the funniest things was how animal shelters ran out of animals because everybody decided they wanted to adopt during COVID because they're home all the time. I heard secondhand stores quit taking stuff because everyone had been cleaning out their closets because they're all off. They had too much stuff. Who would have thought that things would manifest themselves during a pandemic?
If you are going to encourage people whether they were in mortgage banking or real estate, maybe not everyone's going to get up and go do what you do. If you were to speak to a group of traditional retail, mortgage people, or banks, what would your talk be about? How would you want to encourage people to tangibly help this field of homeownership?
I would say that if you want to help close the homeownership gap and help improve access to homeownership, assuming those are goals that you want to achieve, you got to think about it as a systems problem, not a product problem. The mortgage lenders tend to always look for, “What's the new product? What's going to be the killer mortgage product?” It's a dead end. It's not that. if people don't think they can buy a home, someone has to have a conversation about how they might be able to. If loan officers are paid by commission, why would they originate an $80,000 mortgage when they could do a $250,000 mortgage or more? It's the percentage of the deal. It’s the same with a realtor.
Power is just an ability to act, and we all have it. We just need to figure out the best way to use our resources and be realistic about what we can change.
You're going to have to think about the problem differently as a systems problem. Who could do those smaller mortgages and who could be those realtors? They're going to need to be compensated for a salary, not through a commission. People generally don't work against their own economic self-interest, so let's not expect them to. Let's figure that out together. There may have to be a social public component. There may have to be some public support to make that happen because the money's not there in the regular market, which we do all the time.
Name a stadium that was built in America that didn't get a public subsidy. Sometimes, that's a part of the economy. You need to do those things but we need to think about it in a more systems approach, as opposed to this there's some silver bullet, a killer app. We have a lot of problems that we never solved because we don't think of them as something wrong.
Do you what's the trick? Good schools are run by good leaders and managers. They have good leadership. They're working on the system. It's not a new curriculum or schedule or some little shortcut. If we would focus on building good systems which require good leaders and managers, we would solve 80% of the stuff out there, or at least we've made a lot of progress.
Therein lies some of the cul-de-sacs that I want to go down. I'm taking notes feverishly here but this is a whole other show, Mike. I'm going to have you back. Let's talk about leadership. That requires good leadership. I've asked a few guests this before. I didn't even know I was going to ask you this but you sound like a super thoughtful guy. That's a social responsibility. I love even the background. I heard it in your story. That's all great. If all of a sudden, one day, you woke up and decided your calling was to teach a high school class on leadership, what would you hope would be a crucial part of that curriculum?
One thing I would be very clear on is that leadership is not about position or authority or title. Anyone can exercise leadership. Leadership is a verb. It's not a noun. Technically, it's in a noun but it's what you do. There are people in history who exercised leadership from positions that they wouldn't think. They realize something needed to be done and they did it. Everyone can exercise that. We all have some power. I don't believe there's such a thing as somebody who's completely powerless. There's less power and more power.
Power is the ability to act. We all have the ability to act. Given the resources we have, we have to figure out what's the best way to use those resources and be realistic about what we can change. Sometimes the best changes in an organization happened from somebody on the front line, not from somebody in a position of authority. People in positions of this authority would be wise to pay attention to other people's exercise of leadership and not get stuck in positional stuff. If you believe in that and encourage that, people tend to step up.
Our evolutionary advantage, as human beings, we have figured out how to operate and do stuff and form organizations and aggregate resources, money resources, people resources, other resources, and do more. We should embrace that. That's what I'd say. What I would teach is that figure out where you can have an effect. The old adage is that leaders do the right things and managers do things right. That's true. I would also say we overemphasize leadership sometimes at the expense of management.
Homeownership Gap: By focusing on building good systems, which requires good leaders and managers, 80% of the homeownership gap problem can be solved.
You also need to do things well. It's both in there, too. You need both. That's why I always say what we need in an organization, especially in government, is better leadership and management. We put people in position. We assume because they have a position, they can do it. That's not true. That's what we do as principals of schools. They take tests in New Mexico to become a principal. There's not a coaching program. There's not a training program. Who develops a leader of an organization like a school? If you can pass a test then you must be able to do that. It's an absurdity.
Those things are the makings of an awesome next episode. We got to wrap things up here. My last question for you is, as you think about your place in this world, what you've done, how you're doing them with Homewise, and all the various things that you brought out, was there anything that you were hoping I'd ask you that I didn't?
I can’t think of anything though.
I sure am super grateful for the time. I need to go sit and breathe into a brown paper bag for a little while. If the idea behind the Insight Interviews is to get out insights, I hope everybody reading this, learned what I learned. The idea that you're connected to where you came from and that you're working on purpose are all insights. “Do I have that purpose? Am I that connected?” It’s this social responsibility and the thoughtfulness with which you approach your work. I loved the idea of, “We need to focus on a system problem and not a product problem.”
I also wrote down quickly, “Power is the ability to act.” Many of us have that. Not to mention the idea that you gave me some cool insights into how we talk to people. It's not for me to give Homewise anything or any tagline. I almost wonder if, “Yes, you can,” would be a possible tagline for what you do. Even when you were sharing that 24% to 34%. maybe that's confusing for people that didn't want to do the math but that's super compelling and yes, you can.
One of my favorite quotes of all time comes from Henry Ford, who said, “If you think you can or you think you can't, you're right.” It's so true. If we think we can do stuff, we generally figure out how to do it. If you have already given up, forget it. It’s over.
That's right but then that brings us back to your social psychologist or anthropological psychologist. I would like to hear from you. Henry Ford’s saying is great. Why is it that people think they can't? Where did that come from? How can we reeducate people? That's why I think, “Yes, you can,” is a cool tagline for you. Mike, I'm so grateful to you and our time. Insights galore. Thank you for being part of the show. We wish you well with what you're doing. You're making a big difference in the world and we’re super grateful for that.
Thank you.
Mike had some great insights but it doesn't matter. What matters is what insights did you have? We'll see you next time on the show.