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Today we talked with Paul Klimke, a revolutionary financial mind with BOK Financial, who actually worked with The State Department of Financial Institutions to create a Licensure process for Loan Officers.

If you want to know what the housing market is trending toward in the near future, or what it’s like to open for Van Halen, you will not want to miss this show!

So today on its going to ones that need it, you get it thrown out and it’s between two ferns. But oh, you do another reference. Oh, of course, I do. I actually the first podcast we ever did, I named it Between Two Thrones before I even knew it. Between Two Ferns was with that. Zach Galifianakis. Yep. Zach Galifianakis.

And the first one I watched was with Hillary Clinton and that was funny. He is. He is. He’s a talent, like half of the ones I saw between two firms, Between Two Ferns. Yeah, I didn’t like it. Didn’t super gravitate to my, I guess, sense of humor. But the Hillary Clinton was hilarious. Yeah. I mean, to have a Trump ad in the middle of every how these politicians agreed to do this, I don’t know.

But it was hilarious. Well, you get a lot of face time. Do you ever see the Barack Obama win? I did. Oh, that one was funny to you. And Barack was on top of it. He was. He was right there. He was right there. He didn’t let him get away with, you know, even though we all know it’s all scripted.

Yeah, it was it was still really really it felt very spontaneous. So but between two thrones here we are. We have Paul Klimke. That’s me. Mortgage banker. Yep. With BOK Financial Mortgage correct. You are officially a C amps. What does that stand for? Certified mortgage planning specialist. Sounds fancy. You know, pay some money, take a class, get some initials.

But it really it’s got a real practical purpose in the mortgage world, which is, you know, typically a home mortgage is most people’s largest single financial tool investment expense in their lifetimes. And as I see, what we try to do is try to mold that into the overall financial plan, working hand-in-hand with financial planners that they should have and think of it more as a tool rather than just an expense and have that helped them build personal wealth for the family.

Nice. Yeah. And you’re also a guitarist? Sort of. Yeah. So that’s guitar and bass guitar guitar, a little bit of bass. And I play the tuba, too, but tubas, my main instrument, too, is a huge dude. Yeah, they are like, you actually own a tuba? I actually own a two, but not like rented from a music store, you know, a tuba.

No. You wanna hear that story real fast? Yeah, yeah. Okay, let’s do it. So well, maybe let me talk about music in general because music is had a huge influence on my life in many ways. So I’m a Midwest kid, grew up born in Minneapolis. Parents were from the same stupid little bit or not same on telly. Wisconsin is stupid, but it’s a small town still a small town.

They actually went to the same high school but didn’t know each other because my dad was two years ahead of my mom, even though they’re the same age, which is another long story. They met up at the University of Madison after World War Two. My dad started at the University of Madison, Utah, Varsity, Wisconsin. Madison went off to war in the Navy, came back, was finishing up, happened to bump into Arlene’s summer, felt on a street corner, and as they say, the rest is history.

So I happened to be born. We were living in Minneapolis, moved out to California in the 1960 actually. And then I ended up here you know ended up here through job change which we’ll get into a little bit later. But music was always a big part of my life. I always started out as a clarinet player when I, when I got into seventh grade, I wanted to be a drummer and my band instructor said, You’re not going to do that, you’re going to be a tuba player that I became a tuba player so you know, along the way, you know, I started playing guitar, formed little garage bands as in junior high and

in high school and, you know, still play somewhat to this day, mostly to recordings in my own little my own band. But don’t get out there very much. I have played tuba I played all the way through high school. I taught tuba in college for a while and then I didn’t play for 20 years, didn’t even pick up a horn, didn’t do anything.

We went to Disneyland one day and we were sitting in the New Orleans Square and there was a jazz quartet there, and there was a guy playing tuba for the bass. And at that point I said, I got to have a tuba and so I went out and found a tuba. Started taking lessons, you know, took lessons for a couple of years to kind of get the old chops back and played in some brass content.

So I played in some pit bands for a local community orchestra or community musical productions. So it’s been great. So without the question, did I get to it? I don’t remember the question. I didn’t know the question either. But I’m just so you know. Well, let me so so so let me kind of, you know, talk a little bit about my family because I actually met my wife.

I’ve known my wife since she was in the fifth grade, and I knew who she was. She has no memory of me. Till high school. And we were around each other a lot, which is kind of funny. So we, you know, played clarinet in the elementary school band. We had an all city band and I remember I was like first chair, first chair, first clarinet, back row.

And she was first clarinet, second chair. And I remember seeing her. I do have some very specific memories of her. Went off to junior high. We went to the same junior high. And in fact, we were in the same junior high marching band, although I was a year ahead of her my dad actually took some super eight movies of us marching and I’m marching with my tuba.

And she is Debbie is literally straight in front of me, right in front of me. And, you know, when I talk to her about these times in junior high, she does not remember. You know, she has a very, very clear memory of a good-Looking tuba player that sat second chair. I sat first chair. So it wasn’t me he was.

That was wayne sitting next to me in second chair for his chair, but so then off we go to high school. I’m in high school year longer, and then we go to band camp and is as a as the saying goes, one day at band camp, Debbie and i run into each other, start a conversation. She’s 15 and I’m 16 at this time.

We went to a parade. Still weren’t, you know, just kind of around each other. We went to a parade seal beach and during the awards ceremony she couldn’t see and she weighed all of about £85, then picked her up on my shoulders. She was able to see the presentation and pretty soon were holding hands and kissing and yeah, yeah.

And then didn’t get married until I was out of, out of my undergrad. Got married when I was in grad school and she finished college so yeah, music brought us together and there you go. So how long have you married? We just celebrated our 47th wedding anniversary. 47 years. 47 years. And then on October 25th, that will be the 53rd anniversary of our first date.

So now you can all do the math. I’ve told you how old I was. Yes, I’m, I’m, I’m definitely in that category, but I don’t. Don’t feel like I’m a senior citizen. Oh, that is amazing. Just to hear the stories of people have stayed together that long. Yeah, I mean, it’s. It’s so rare, but it’s beautiful. It’s amazing.

So congratulations. Well, thank you. It’s, you know, I think about. I think about it is just amazing that she picked me. It really is. Because, you know, I can’t even imagine the life I’d have without her, but, I mean, everything that I have in my life and everything that I love in my life, including our, you know, her, our three kids, they’re all married.

They’re three spouses. We have eight grandkids. I mean, it’s because of her. Every bit of it because of her. That’s awesome. Yeah, she is. Shout out to Debbie. Hey, so that was in the past. Yep. Now. But what brought you out to Arizona? So my undergraduate. Oh, my. All my educational work is in economics, econometrics and math.

So I was kind of a math geek in college. I was, you know, one of these guys sitting in the computer center basement punching IBM cards. There’s a there’s a flash from the past because that’s how we had to put things into the computer back then. And so that was my my focus, my interest. I actually, you know, I actually wanted to I thought what I wanted to do is get a graduate a graduate degree in economics, maybe teach when I got out of when I graduated, I was out of money and I had to take a job.

And I had also during my college years, during the summer I worked as an electrician, a mechanic in a metal plating factory. So I was pretty good with my hands and technology and that sort of thing. And I landed a job as a sales application engineer with a company that did process controls and automation. So my job in that world is, to me, you know, it’s a sales job in sales engineering applications engineer, industrial engineer.

Those are sales jobs because you’re meeting with people that have a need. You know, for example, Starkist Tuna was one of my accounts, so I’ve heard of them. You’ve heard of them? Yeah. So I go into I meet the people and start this automation and they say, we got a tuna line that needs to go this way and then that way and stop for 3 seconds, go that way and then go here.

Now what they don’t tell you is they need one line of cans to go to human, one line of cans to go to cat food. But we’ll skip that for now. So I would help them design that. I would help them from a practical standpoint of these are the relays, timers switches that would make that happen. And then hopefully they would buy our products.

You know, that was the idea. So I started doing that because they would number one, they paid me the best of anything I could find. They gave me a car and I had lots of free time to go to school. So I did that. And then opening came up over here. We were in Los Angeles, opening, came over here, took the transfer and was able to buy a house and a phone and tell you what we paid $40,120 for the first house.

It was a long time ago and I started, you know, advancing my career that way. And I continue to go to graduate school. But eventually, you know, my career path was leading me away that that I was enjoying a lot. I did a lot of interesting things. I did that for close to 28 years and I eventually I spent the last roughly eight and a half years in the semiconductor industry.

And my last job in that area was I was the global customer manager for our companies. Products at the Intel account. So I had Intel Sales Service and logistics worldwide. So I did a lot of travel. I was always traveling some to Ireland you know, that was fun. I like that. But, you know, the semiconductor business has changed a lot and our company basically decided to get out of the Intel business and they said, I could, I could continue on in my role, but I’d have to either living in Asia or I’d have to spend two weeks a month in Asia or I could they’ll give me a year’s pay and I’ll go away.

I said, I’m in, take me, I’m out. So I did that. And I had also I’ve been a real estate agent for 14 years on the side and my middle son had graduated from ASU and he jumped into the mortgage business and was making fabulous money. And so I said, you know, I think I can do that. And so off I went.

That’s how I got into the mortgage business. What are some of the fun things that you’ve come across in I mean, what are some of the happy stories on your path in the last 20 years in the loan industry? You know, I’d make the comparison between engineering and mortgage because when you when you’re dealing with engineering, you’re dealing with basically numbers, problems and people mortgages, home financing numbers, problems.

And people say it’s really the same thing. It’s both of them are putting a big puzzle together. And I like doing that. You know, the the really great things are when you can help somebody and improve their life and improve their family’s life. I you know, I have this, you know, in my, quote, elevator speech, I have a phrase that I talk about.

You know, a home is important, home is critical. Home is where memories are made and character is developed. And having your own home to do that is far superior than having one that you don’t own. So the times that I’ve been able to, you know, help people that were, you know, that couldn’t figure out how to get into a house on their own.

And I’m able to provide a path to that or they have a tough credit problem. They don’t know what to do with. And I can help them solve that problem or they’re in a you know, I’ve had situations where people are absolutely drowning. I had one recently where they’re absolutely drowning in debt. And I managed to, you know, do a refinance, consolidate a lot of the debt.

Their monthly their monthly cash flow improved by 1200 dollars. That’s that’s life changing. Well, yeah. And those are the kinds of things that I really enjoyed doing and enjoy working with. And that’s one of the reasons I, you know, although I you know, I do have a small team that I’m working with now, but, you know, I’d rather I’d rather work with a small team which gets me to the other part of the things that I enjoy doing, which is helping people develop themselves as professionals.

You know, that’s, that’s really important because, you know, the mortgage business, if you go back to the, you know, the early 2000 when just about anybody could be in I mean, you know, you’re a bartender one day and the next day you’re a mortgage guy. You know, there were no standards back then. That’s always been important to me to improve the quality of the profession.

I’ve been very active in the in the trade organizations here. I’ve been I was president of the Mortgage Brokers Association once as president of the Central Chapter, once I’ve been to Washington, D.C., lobbying on behalf of the mortgage industry, you know, with spent time with Jeff Flake in his office and a couple of the politicians back when when a lot of the regulations were forming, you make that the Dodd-Frank Act was happening.

Elizabeth Warren was heavily involved with that. God bless her soul.

I like both good and bad things to say about her, but I may be the only guy that has something really good to say about her. But excuse me. But there are a few things that. Oh, well, but that’s you know, I worked starting in 2007. I was working with the State Department of Financial Institutions and helping implement licensing requirements for loan officers because until 2010 loan officers didn’t need to be licensed.

I mean, you know, you’re talking to people about their finances. You’re taking in all of their identity information, things about their lives. You’re collecting documents and you didn’t have to be licensed at all. So we worked in, we got that implemented and then there was a national licensing requirement that came in. So that’s that’s been important, but that’s on kind of the macro level.

On the micro level. I truly enjoy working with people and helping them be better loan officers, helping them better understand what they’re doing, how to solve problems on their own. You know, what’s what do I do with this? I’ll show you what to do. With it, but I want to show you how you’re going to find out the next time this comes up.

So helping them develop, you know, skills and techniques that that really can make a difference as opposed to just slinging loans. That’s amazing. First of all, thank you for being willing to share and teach other people. That’s how all professions and things move forward and we learn. So let’s go to present day. So what is going on right now?

Dark clouds and Armageddon I think when I when I came in here this morning, I said, you know, the today is like September 1st 2008. You asked me why. I said because on September 1st, 2008 rates were about six and a quarter percent. And that’s what they are this morning. Yeah. So so you know, the current state of the mortgage industry, if you look at what’s happened you know, rate and term refi applications are down 85% from one year ago.

I mean, it’s just, you know, it’s very unusual to do one of those unless there are still people that have bleeding. I still run into people that have seven, 8% rates out there once in a while that they just never and never got around to fixing it. But that’s very very rare.

You know, cash out refi applications are not pretty much stable because cash out usually involves some sort of payoff or something that you’re doing. And it doesn’t seem to be as influenced by rates quite as much. They’re down. But it’s you know, if you if you watch the line over time, it just kind of oscillates up and down a little bit.

Purchase loans are down 23%. Year on year today as of yesterday, actually. So, you know, we’re seeing there’s a massive decline in the industry. We’re seeing companies shutting down Calibra home loans, which I worked for for three years. A while back, they’ve completely pulled out of Arizona and a couple of the state’s just done I have heard, but I haven’t seen it solidly confirmed that there’s another major company that’s been around.

I don’t want to throw the name out there because I don’t know for sure. Solid company. Many people in the business have spent time. They’re great people. Family business here, they’ve shut down their websites dead and nothing’s happening. So you’re going to see more of that. And the reason for that is a lot of the big mortgage companies, if you’re strictly a mortgage bank, where all you do is mortgages, you do, you do mortgages, you sell them off, you’re operating only on the margin that you can make on the loan itself.

And with some of these expenses, I mean, some of these companies have you know, they have 25,000 30,000 square feet of office space that nobody’s in anymore. And, you know, $100,000 a month nut it’s pretty hard to make it. So you’re going to see a lot of changes there.

As I see the mortgage business shaking out, I think that you’re going to see continued growth of the broker. I mean, we’re seeing, you know, there was a general trend of brokers increasing and coming back because it’s one and two man shops that can operate very efficiently. And, you know, yes, they make money only on the loan, but they don’t need to make all that much money.

And they can be profitable and make a good living and have a good life. The other people that are going to survive are companies like B, okay, financial. All right. So, B, okay. Financial is the mothership is the Bank of Oklahoma. That’s our mothership. We are a Full-Service FDIC bank. We operate in eight states, primarily in the Midwest and eastern southwest but you know, if you looked at our our contribution to profit last year, it was huge.

It’s been huge. This year. It’s not so much, but we’re a good solid bank with lots of ways to make money so we can endure. So you’ll see. You know, I think that’s what you can see. I think you see the real strong mortgage companies are going to be the regional banks be okay. You know, Bell Bank is another good bank guardian, which is part of the Sunflower Bank.

I think these are all really solid banks on their own. They’re going to survive. And you can see mortgage brokers survive. They’re going to see a lot of change in the correspondence. So well, so me as a homeowner to say I’m a homeowner that’s listening to this. Any quick advice that you’d have when you started a conversation?

Armageddon. Do you know what advice do you have for a homeowner? Looking to you for a sure this is where do you think this is where the planning becomes really, really important so let’s talk about purchase. Let’s kind of go through a couple of different scenarios, different opportunities, purchase loans, you know, the purchase business in the Valley and many places, not just here, has been changed because we had such low rates for such a long time

I mean, you know, six months ago or beginning of the year, rates were just in the three threes and now we’re six and a quarter. That’s massive. But they were so low for so long that it changed what the affordability was for people. They could afford more expensive houses. So when you can afford more expensive houses, what happens over time?

Naturally, as houses get better because people can afford it, you know, that’s why, you know, year on year 20 to 20, 2022, 20, 21. You know, the median house price of a home in Maricopa County went up about from like three 80 to four 60 in one year. But what happens when rates go up, they’re not as affordable now.

People can’t afford the houses. So you know, I mean, I think I’m going to skew the numbers a little bit, but in, you know, about a year ago, 60 roughly 63% of the families could afford a you know single family three to four bedroom house, 2000 square feet. Now that number is about 23% of the families in Maricopa County can do that.

So that changes the business, the changes, who can afford it and what they can do. The thing is, you have to compare the good news. If it’s good is rents have been going up, too. So this the comparison should always be what does it cost me to rent? What does it cost me to buy? You know, if I can afford to buy, I should buy.

Now, that may mean smaller homes, maybe not as much amenities, maybe not the same neighborhood you thought you could live in. But if you’re doing it first, it’s never a bad time. To buy your first house. Well, of course, maybe unless it was 27. But I digress. Well, and it still wasn’t a bad time, even in 2007. Yeah, you just have to live there.

Right until 20, 20, 16 is about when all the prices came back. Yeah, but it still wasn’t a bad time to buy. No, you just had to hold it for a longer time. Six, eight years. So that, you know, and again, it’s, you know, work with the mortgage professional. It can help you talk about what can you afford, how can you afford it.

There are still programs out there, you know, for low and moderate income families to get into homes that where you can get what are now called mortgage credit certificates, where you can get a credit towards your payment on a monthly basis. That’s out there. There is some down payment assistance out there. Still not as much as there was, but it’s important to work with a professional that knows what they’re doing.

They can get you into the right product. So so that’s, you know, be careful with that. The other thing I would say is, you know, if you’re in a home right now and there’s lots of people in homes with, you know, two and a half, three and a half percent mortgages, if you need cash, the way to do that is with a home equity loan.

There are lots of companies out there that do home equity loans. We do them. And actually we have a really great product. We have a couple of different products that are very unique I’m probably the only guy in the valley that will do a home equity loan for somebody with a six 35 FICO score. Usually it’s got you got to be at 700 to get an equity line.

I can do them and we can help, you know, design a custom loan for you. I can tease. I actually have 100% LTV program, but it’s like this wide, you know, for very small situation. I never sold one because I can’t find anybody that fits, but I got one. So yeah, me but, but that’s, that’s really you got to be thinking long term.

You got to think about, okay, so what do I need right now if I need $100,000, you know, heck, if you need $40,000 cash, don’t even think about doing a cash out refinance unless you have to for some reason. And there are situations I’m, I’m working on one now. Right now that’s a divorce situation. The only way for the one spouse to cash the other out of the house is to do a cash out refinance mortgage.

He’s going to go from 4% is six and a quarter percent to do it. He can afford it fortunately. And but you know there’s a case, you know, where home equity line isn’t going to work for that but for anything else, a home equity line is the way to go because then you can look at your blended rate, you know, and that’s where you take the you know, you look at the amount that you owe, the rate it’s at for both loans compare them together and figure out what’s your blended rate.

So if you’re if you have $400,000 at, you know, three and you need $100,000 and you’re going to pay maybe six and a half for it on an equity line, you’re blended rate is maybe four, which is still pretty good, which is awesome. Yeah. So be careful. So. Got it. Well, Paul, are we out of time already? We are almost there.

Wow. So I’ve got one more supercritical question and. Sure, did you open for Van Halen well, yes, in a way. You know, it’s one of those stories that I can tell and depending upon how much information you want and kind of like the old Paul Harvey. Rest of the story, you know? Yes, in a sense.

But let me take you back long and go in far away. As I mentioned, I played in a numerous, numerous, you know, make up bay, you know, make up garage bands, that sort of thing. We have she had a team of Paul and The Persuaders you like that about that? I like it very sixties, you know. But yes, if you if you consider that my little stupid group that we could play about three or four songs we played at a teen center one night the same the same night, no money, nothing.

Just you got to play at the same night that another group coming along named Mammoth was playing there and Mammoth later became Van Halen. So but I actually have a deeper connection to them too, which is their bass player is a guy named Mike Anthony. His real name is Mike Seville Askey. He and I played in the same band together.

That’s a fact. Yeah, we did same band, the Arcadia, California High School Marching Band.

So, yeah. So is this where I ask for your autograph now? Don’t bother. It’s not worth anything unless I put it on a check and then who knows if it’s good. All right, go. You know what, Paul? Thank you for joining us. Well, thank you for the chance. I appreciate it. If someone would like to get in touch with you, what is the best way to do that?

Call me that’s that’s the best way. I mean, you can, you know, of course, Google me for, you know, Paul Klimke, at BOK Financial. You can find me online pretty easily. I do have a Facebook page book, Financial, Paul Klimke of BOK Financial, Arizona, you’ll find me on Facebook. My phone number has been the same number I’ve had for like forever.

You know, Verizon. Verizon says usually when I call and they go, you’ve had your number longer than most people have been alive, you know, but it’s (602) 402-1801 again (602) 402-1801. Give me a call and how’s the traffic KBAQ radio time is 7:28. That’s pretty good. Yeah, not bad. I have to retire now.

I got a better Rust Belt. Well, thank you for joining us. I appreciate it very much. Thank you. Modern industry, like I say, anytime.