NorthMarq Capital Finance
An Interview of Mr. Rodrigo Lopez, Executive Chairman, NorthMarq Capital Finance
By Patrick McNamara and Deanna Prentice, Creighton University MBA students
The real estate market was the subject of much misunderstanding and mistrust just a few years ago during the housing crisis. Bankers, mortgage lenders, and all level of personnel and financial entities were often blamed for this subprime mortgage crisis. Mr. Lopez, Executive Chairman of NorthMarq Capital Finance, witnessed these trends while stewarding his own company, AmeriSphere Multifamily Finance started in 2000, of which he was the president and CEO. Mr. Lopez’s company managed “$800 millions of multifamily loans for the Fannie Mae DUS [Delegated Underwriting and Services and $125 millions of FHA [Federal Housing Authority] loans in 2014” (Source: NorthMarq website). In 2015, Mr. Lopez sold AmeriSphere to NorthMarq. Mr. Lopez has remained an integral part of NorthMarq and is presently the chairman of the Mortgage Banker Association (MBA), “the only association representing all segments of the real estate finance industry” nationally (Source MBA website).
Background-where raised, education, career trajectory
Mr. Lopez shared that he is originally from Cali, Columbia. He came to the United States to study architecture at the University of Nebraska at Lincoln. He then began his professional career as an architect, worked in the insurance industry and transitioned from “designing to financing buildings”. He later earned an MBA degree from the University of Nebraska at Omaha. After his wide array of experiences, Mr. Lopez founded AmeriSphere and “became a lender for Fannie Mae through multi family home loans”.
What do you like most/least about your work?
As the spokesperson for the MBA, Mr. Lopez loves traveling around the country educating bankers and those related to the industry. Mr. Lopez did express some frustration with a lack of clarification coming from the Consumer Financial Protection Bureau relating to its communication with consumers.
Can you define ethics and tell us what ethics means to you?
Mr. Lopez was resolute and direct when addressing the issue of ethics. Mr. Lopez, who has been active with mortgage bankers and served in many capacities, incorporated ethics into his business from its inception. He had an interest in and began to researched ethics when he started his company. That was also the time that he became associated with Dr. Beverly Kracher’s Business Ethics Alliance. Mr. Lopez stated that ethics in the housing and mortgage industry should be based on the following philosophy: “If we look at the consumer’s prism to resolve everything we do, we’ll be okay. If it’s good for the consumer and tax payer, it’s good for us”. Mr. Lopez shared that ethics in a company or industry “must come from the top”. He also noted that “leaders have to speak about ethics and it must be embedded in culture”. Mr. Lopez has ample opportunities to share his ethical philosophy as Chairman of the Mortgage Bankers Association. He stated that after an engagement assessment through a consultant, an employee of his revealed that “Mr. Lopez would allow people to make a mistake and learn but never do anything unethical-they would be fired on the spot”.
Do you think there is a difference between “ethics” in general and “ethics” in business?
Ethics can be determined by who we are responsible to. We can get to ethics by looking at things through the consumer prism. In the healthcare system, and at Children’s the consumer is the children and their families. If we look at quality of care and safety, we can have a real impact… an ethical approach to pediatric care. “When I became chairman at Children’s Hospital, I instituted a policy where every meeting in the hospital started with a safety moment… and can be less than 60 seconds…. But the point is to keep safety front and center, which is our ethical responsibility to our patients and their families.
Is there a formal ethics program at your firm?
When Mr. Lopez was with Amerisphere, he traveled around the country doing “engagement assessment” on a yearly basis. He said it was necessary to discuss ethics “consistently and constantly.” Because there’s risk in every loan that we make, we want to make sure that we have a strong credit culture - “If we have a strong ethical culture, we’ll do well in the underwriting and credit side of the business.”
Mr. Lopez would allow people to make mistakes in underwriting and learn from them, but would never allow an ethical breach, and that you’d be fired on the spot. “We never had a company meeting where ethics wasn’t discussed.”
“In order for employees to keep ethics front and center, the leaders have to speak about it frequently to make sure it’s embedded in the culture”. If this was done at Wells Fargo, and the employees were constantly reminded, “we have to do the right thing for the customer, we have to do the right thing for the customer, we have to do the right thing for the customer” - employees would have reported this much before it became so out of hand.
When creating a code of ethics, it is best to have your employees create it themselves and review and update it themselves.
Talk about the ethical culture at your organization
Mr. Lopez stated that an organization would have “incredible business opportunities to do the right thing and should put in place things to reach this goal”. Mr. Lopez then articulated his framework for creating and maintaining an ethical workplace. He cited “dignity”, “constantly paying attention”, “zero tolerance”, and establishing a written “code of ethics”. Mr. Lopez “had employees volunteer for [an] Ethics committee” to “come up with a code of ethics”. His initiative was “employee driven”. Mr. Lopez said it took months to make form the ethics policies and guidelines and for them to be approved by counsel. His employee based ethics committee reviews the document annually and Mr. Lopez shared that “going through the process reminds people [of ethics]”.
Mr. Lopez even applied this great respect for ethics to the Mortgage Bankers Association. He said: “now they have an ethics program”.
Have you always done business in Omaha? Where else?
While Mr. Lopez is based in Omaha, his role as the spokesperson for the MBA takes him around the country on different talks, as well as Washington, DC to lobby on behalf of the MBA and the consumers it serves.
Describe an ethical situation in business you have faced
Mr. Lopez recalled an ethical situation that involved one of his employees. The employee sent an email with an inappropriate comment about a representative from another agency that partnered with his mortgage company. The representative from the other agency inadvertently received the communication. Before the representative’s manager was able to contact Mr. Lopez about the incident, the employee was fired. Mr. Lopez explained that the ethical solution was a speedy resolution.
Mr. Lopez then acknowledged that the mortgage industry’s incorporation of disruptive technology such as predictive analytics could present ethical dilemmas. He stated that social media may present such a challenge as algorithms have been designed to track social media conversations to predict when one, especially a millennial couple, “is at a point of time to become a homebuyer”. He shared that laws have not been developed yet to keep up with technology. Mr. Lopez poignantly asked: “Do we want people tracking what people say?” Mr. Lopez noted that even this technology could be used ethically by “using disruptive technology applications to reach and offer individuals the right products; look at the app and do the right thing”.
How does it feel talking about ethical quandaries with us? Is it something you do a lot? Is ethics talked about at your firm, or is it just assumed?
Mr. Lopez described the push within the industry to get into more predictive analytics that can assess the worthiness of a prospective borrower by looking at his or her social media postings. While these analytics allow for accurate predictions of a borrower’s ability to pay, they can also step over the line and dive too far into one’s privacy.
Mr. Lopez described a rule of thumb that always helps guide him and his company - “If we look through the consumer prism to resolve everything we do, we’ll be ok. Because if we do the right thing for the consumer, it will probably be ok ethically, and profitable for us as well”.
Are there unethical behaviors that give competitors or other businesses a competitive advantage?
Mr. Lopez discussed Wells Fargo, and its creation of incentives that resulted in unethical behaviors. “Employees will not recognize unethical [standards] unless the ethical programs come from the top, it comes from the top frequently, and is recognized”.
What does being a Business Ethics Alliance Trustee mean to you?
I’ve been active with the MBA for 30 years and have served in a number of different capacities. Dr. Bev was one of our first speakers. She spoke at a company meeting we had a long time ago. I wanted to establish a culture of ethics and doing the right thing. Subsequently I became involved with the BEA until my schedule no longer allowed. I still speak regularly about ethics when I travel around, and about where my industry has failed.
Mostly as the spokesperson for the industry, Mr. Lopez tries to weave topics into his mortgage talks… and always looking at issues from the perspective of the consumer. You’ll have a satisfied customer and you’ll be successful. I try to express these ethics in a way people can grasp, rather than simply “we need to act ethical”. Tying it back to the consumer allows people to understand the ethical issues more easily.
What are ethical challenges facing younger professionals?
There is frequently a lack of guidance from whatever team young professionals are a part of.
How do ethics impact other areas of your professional life?
Mr. Lopez, chairman of the board for Children’s Hospital, a member of the board of directors Mutual of Omaha and Mutual of Omaha Bank, United Insurance Company, and his own new mortgage company shared that ethics drives his decisions as he again “gets to ethics by looking at things through the consumer prism” even at Children’s hospital. As chairman, Mr. Lopez has made quality and patient safety a priority.
For example, he established the practice that every meeting at the hospital begins with a safety moment. He emphasized that it only took “sixty seconds to learn from each other and keep safety front and center”. He said that Children’s Hospital transitioned from three months of no preventable errors to “over 600 days of interactions with patients” without such errors. Mr. Lopez shared that “this changed the safety culture which is rooted in ethical culture”.
© 2017, Kracher & the Business Ethics Alliance