Good leaders transform from being just tacticians to humanists. And that starts with learning to listen, says Jay Bray, CEO and chairman of Mr. Cooper, the nation's largest non-bank mortgage servicing business.
Bray started off as a self-described "numbers guy." But he shifted after becoming CEO. He says making that leap is the only way to navigate a legal crisis and a complete rethinking of the company. It even changed its name from Nationstar Mortgage to Mr. Cooper to reflect its more human attitude.
"For me this growth has been transformative, from being transaction-focused to being a people leader," Bray told Investor's Business Daily.
The makeover of Bray and the company is paying dividends for investors. In 2012 (the year Bray became CEO), the stock traded for less than 6. Fast forward to today. It's up to more than 40 a share, rocketing more than 230% in his tenure — topping the S&P 500.
"The company's culture has changed 180 degrees," said Chris Marshall, Mr. Cooper's CFO. "Jay has always wanted to create a lasting company that's something special."
Mr. Cooper CEO: Build Teams From the Bottom Up
Bray began to think about improving the company's culture from the time he took over as CEO. And he sought counsel from other leaders, including Dave Ridley, a former SVP at Southwest Airlines. Bray asked him to come and observe a management meeting at Nationstar (the company name before its rebranding in 2017) and give him some feedback.
His observations were sobering. "Dave said you have brilliant people, but you're not functioning as a team," Bray said. "To build the company you need to work as a team."
Bray didn't reshuffle the company right away. And he didn't put out new management edicts. Instead, he surveyed team members. He held town hall meetings. He wanted to find employees' thoughts on how the company could work better. "Then we executed on their feedback," said Bray. "We rolled out a number of new programs based on what our team members said they wanted."
"Jay's grown as a leader, and a company can't grow without the leader being willing to do that," said Kelly Ann Doherty, Mr. Cooper's executive vice president and chief administrative officer.
Examine All Your Businesses
While this re-imagining process was underway, the company was legally compelled to take a hard look at its business practices. The Consumer Financial Protection Bureau (CFPB), a committee of banking regulators, investigated it for violations in loan servicing. The company settled the matter, paying $85 million to consumers in restitution and more than $6 million in fees and penalties.
Much of the legal action came from Nationstar's failure from 2010 through 2015 to identify loans on its systems that had pending loss-mitigation applications or modification plans. And as a result, it failed to honor borrowers' loan modification agreements, said the CFPB.
Bray says he owned the legal problem to move beyond it. "I didn't say 'let's just let the attorneys work it out,' " he said. He even took calls from angry mortgage customers.
Then, the company made changes and invested heavily in its compliance systems. It's now committed to being "one of the best at finding solutions for homeowners when they have problems," said Bray.
Know Words Matter, Like The Mr. Cooper CEO
The company wanted its name to reflect its new focus on customers. Again, it started the process by getting feedback. It asked customers "what do you like about your mortgage company or your servicer?" Bray said it always came down to an individual, "someone who helped them."
So, after coming up with a number of company names, and running them past customers and employees, Mr. Cooper seemed right. "It stands for our team members being advocates for our customers every day," said Bray.
Bray says the name raised some eyebrows and got some laughs. But he believes the new name and new focus on customers "made a tremendous difference" for team members, customers and shareholders.
"The whole focus (with the rebranding) was to personalize the mortgage business," said Marshall.
Bray: Never Be Satisfied
Bray grew up outside of Atlanta. Neither his father nor his mother attended college. His father spent his career working for the railroads. And his mother was a school secretary. They taught him to "work hard and never be satisfied," he said. He became a driven student, attending Auburn University. He graduated with a B.A. in accounting.
"Accounting is the language of business," said Bray. And more importantly an accounting degree meant "I knew I could always get a job."
After college, he went to work for accounting firm Arthur Andersen. There he saw "different management teams and businesses," he said. He then joined Barnett Bank, which eventually merged with Bank of America.
At Barnett, and later BofA, Bray began working in the mortgage business. And he says he found the business' "complexities fascinating and attractive ... and being part of the American dream drew me to the mortgage business," he said.
Pick Partners Carefully
Bray joined Nationstar (previously known as Centex and now Mr. Cooper) in 2000, as its first CFO, challenged with helping it grow. It was a great training ground because the CEO at the time, Anthony Barone, "gave me a lot of autonomy and the ability to run, and learn all facets of the business."
The real estate and mortgage business was booming at the time, in part due to new investment instruments and types of mortgages that encouraged loose lending. Fortress Investment Group bought Nationstar in 2006.
Then, in 2007, the worldwide real estate and mortgage markets melted down.
Bray says several things enabled Nationstar to survive the crisis. For one, Bray says that all the other investment firms that had bid against Fortress to buy Nationstar folded. It pays to have a strong parent.
Secondly, Nationstar's management slashed head count, as mandated by the business downturn, from 2,300 employees down to 700. And the Federal National Mortgage Association or Fannie Mae, already a "good partner," needed more help servicing loans. Through a deal with them "we more than doubled Nationstar's servicing business," said Bray.
Exit Your Comfort Zone
Nationstar started rebuilding and in 2012 Bray was named CEO. The first order of business — take the company public. That wasn't so straightforward as the reputation of the mortgage business hadn't fully recovered from its missteps. Still, Bray and his managers got the job done at 14 a share in March 2012.
Now Mr. Cooper is outstripping earnings expectations. Last year, the company posted adjusted profit of $8.89 a share, up more than 4,000% in just five years, says S&P Global Market Intelligence. And revenue in that time jumped more than 20% to $3.3 billion in 2021.
"We're excited about the momentum heading into 2022," Bray said. Lending competitors include many banks and other non-bank mortgage companies, such as Rocket Companies and PennyMac Financial Services.
"Mr. Cooper has been focused on the core operations of origination and servicing," said Kevin Barker, an analyst with Piper Sandler. "They've been making those businesses more efficient and that's allowed them to improve their operating margins and return on assets."
Celebrate Success
Mr. Cooper now has results worth celebrating. And that's an adjustment, too.
Bray says he's "struggled with that because I'm always looking forward." But now he believes celebrating success keeps teams motivated. Bray believes in promoting from within whenever possible. And he's not afraid to push people to rise to their fullest potential.
"He pushed me — he's seen things in me that I didn't see in myself," said EVP and Chief Administrative Officer Doherty.
Mr. Cooper CEO Bray's Keys for success
- CEO of one of the nation's largest mortgage servicers, Mr. Cooper. Took the company public in 2012.
- Overcame: The massive mortgage industry meltdown in 2007, along with legal actions that battered the company.
- Lesson: To lead a company, a CEO should transform "from being transaction-focused to being a people leader."
