Welcome to this month’s episode of the Market Advantage. Hosts Olivia DeLancey, Brennan O'Connell, and Mike Vough kick off the show with a review of September’s mortgage data, highlighting a strong rate rally and notable trends in purchase and refinance activity.

The team then welcomes Andria Lightfoot, VP of client success at FirstClose, for a timely discussion on home equity lending. Andria shares insights on technology integration, evolving borrower needs, and how lenders can streamline processes to maximize efficiency and results.

Key Takeaways:

• September saw a strong rate rally, boosting both purchase and refinance activity.
• First-time homebuyer and affordability metrics improved, bringing more buyers into the market.
• Home equity lending is evolving, with technology driving faster, more efficient closings and expanding opportunities for borrowers and lenders.
• Lenders can maximize results by focusing on process sequencing, technology integration, and value-driven partnerships – doing more loans with less overhead.

Links and Resources:

• Follow Andria Lightfoot on LinkedIn: https://www.linkedin.com/in/andrialightfoot/
• Subscribe to the Market Advantage data report: https://www2.optimalblue.com/market-advantage/     
• Follow Optimal Blue on LinkedIn: https://www.linkedin.com/company/optimal-blue/   
• Subscribe to Optimal Blue’s YouTube channel: https://www.youtube.com/@Optimal-Blue
• Follow Mike Vough on LinkedIn: https://www.linkedin.com/in/michael-vough-60467826/  
• Follow Brennan O'Connell on LinkedIn: https://www.linkedin.com/in/brennan-oconnell/    
• Follow Olivia DeLancey on LinkedIn: https://www.linkedin.com/in/olivia-delancey/   

Commentary included in the podcast shall not be construed as, nor is Optimal Blue providing, any legal, trading, hedging, or financial advice.

Welcome to the Market Advantage podcast. Today we will be looking at September's rate lock and secondary market data. Then we'll be welcoming a guest. We have Andrea Lightfoot from FirstClose joining us this month to talk about all things home equity. always, I have Brennan O'Connell, Mike Vogues joining me. Guys, welcome.

Hey, Olivia. We made it. Full trip around the sun for the podcast. Our first full year and we added a mic along the way, but yeah.

We kind of adopted Mike along the way.

I'm happy to be here. Thank you for welcoming me to this family. So I think I'm super proud of the content we put out.

It wouldn't be the same without you.

So guys, what did we see in September? Let's kick it off.

the market wanted to celebrate with us. So, the OB MMI 30 year conforming rate, that's the benchmark rate. That's the basis of the CME, futures contract finished the month at, 6.32. So that's down another 18 bips. And after the rally that we saw in August and continued into September, that led to some really, strong production for our originators that are out there listening. So.

Happy to report that total rate lock volumes were up 28 % in September. Purchase lock volumes, I'll get to refis, but purchase lock volumes were up 6 % month over month, despite the typical seasonal decline that you'd expect to see this time of year. nice to see that affordability improving prospects for home buyers and folks jumping into the market and sort of bucking the seasonal downturn that we expect to see this time of year. On a year over year basis, purchase lock volumes were up

kind of six high sixes seven plus range are moving quickly to improve their monthly payment. Worth noting that rate term refi volume that we saw in September, they're up 55 % on a year over a year basis, despite rates in September of 24 being pretty similar or even slightly better than current levels. And so I think it's really a strong indication that the refi demand has increased and going to see.

really some good tailwinds for our origination community another 12 months of buildup for higher interest rates. ⁓ Just kind of a tag along with that. Credit scores did shoot up for both cash out and rate term refis. What you see in these markets when there's refi activity, the credit scores overall pick up a bit in aggregate, given the folks that have higher credit scores tend to rush to and lower their monthly payment.

Great question, Brennan. Kind of same, same, but different. So I think last year folks were jumping ahead of potential policy impacts of a new administration. we saw that kind of kickback during Day events in the spring. we haven't really seen the amount of impact that we expected to see from an inflationary standpoint from the tariffs just yet. And also folks trying to get ahead of some

administrative moves in the policy standpoint, especially with the Fed. We're seeing folks kind of, I think, in the bond market try and get ahead of that right now. We're almost exactly where we were a year ago in terms of rates, which I think is really, really interesting. So we'll have to wait and watch and see. But I kind of think we're going to be in this general range area. Maybe we're down in our 10.

10, 15 basis points by the end of the year, knock on wood, but I think we'll generally be in this area now because we were here before folks thought that there would be more tariff impact we just haven't seen just yet. with that, I'll jump into some of the other capital market stats that I wanted to highlight this month. of the stats that I thought was interesting was that we saw, know, generally the best effort mandatory spread remain fairly constant the course of the month.

Typically when you see rates kind of drop like this, you sometimes see that spread widen a little bit, which we did not see. interesting stat was on the pull-through side, and I want to focus on refinances here. Refinances were down about 1 % in pull-through. So it went from 61 % to about 60 % pull-through, which may not seem like a lot, but over the course of the year, it's down about five points.

in terms of pull through. And I that's super interesting considering the fact that we saw rates decrease. And so what that's meaning to me is that people that are actively in that mortgage underwriting process, see rates drop and if they're not seeing.

lender that they're working with keep up with what they perceive as the market, they're more likely to be shopping around. They're calling somebody else. They already have their paperwork together they're going out there and trying to find the best rate possible. purchase pull through was more stable, a half point down over the course of the month. So I thought that was an interesting trend.

And focusing more just kind of on like loan sales, for example, we continue to see the trend that we've been observing over the last month where we've seen MBS securitizations continue to take more market share, two points from 40 to 42 % this month, mostly at negative decrease to cash and bulk executions there. So again, more market share moving to those larger lenders.

And we also saw some stress on the loan sale side where it continued kind of rise up in terms of the amount of loans sold to Best Ex. So we were typically in that 70-ish percent range most of the year in terms of where you saw loans sold to rank one, meaning that lenders are taking their time, looking at soft eligibility, they're trying about the entire representative mix of loans that they're selling to individual investors.

primarily maybe because of this market share shift that we're seeing to some of the larger securitizers, seeing about 78 % of loans sold on average to rank one execution. for example, that fourth or sale option, was somewhere in that 12 to 13 % earlier in the year is down to about 8 % right now.

So it seems like lenders are really chasing that cash that they need and thinking about eligibility, soft guidelines, representative mix as more of a tomorrow problem.

In the last set, want to break up, which makes sense because of what we saw what rates this month on average, the MSR value that we saw over the course of the month dropped about six or seven basis points. on average, we saw OB MMI over the course of September and that like 6.25 to six three range. we saw servicing rights drop from 1.16 to about 1.09.

that's less pricing power that the lenders have today to offer lower rates But it also means that they're taking a more conservative view on that asset because of rates dropping if you've a loan at 7 % and now the current rate is six and a quarter That loans pretty likely to prepay So you want to make sure that your servicing? Valuation is moving with that in order to make sure that the lender isn't losing money in comparison to where the market is today

Okay, so I think it's time for stat of the month. Brennan, you wanna kick us off?

Yeah, think mine's more of a theme here. So two stats, both around As we see rates improving, it does a lot for folks who are kind of on the fringe of whether or not they should get into the home buying market. And so I think this is really exciting to see some of those folks coming back in and we can see it play out in the data. The first time home buyer percentages rose for both

products, so FHA and VA production. also saw DTI levels falling, both for conforming and FHA production, which I think this is really exciting. bringing more buyers into the market. And it's also an indication that the borrower less financially constrained given the new rate environment we're in. So hopefully that continues.

What's good for the borrowers is good for the originators. So Mike, you got one as well.

Yeah, similar in that affordability standpoint. It's that time of year where we start to see and lenders start to try and get ahead of Fannie and Freddie when it comes to the conforming loan limits for high balance loans. we've seen some of those larger players the UWMs, the cross countries, rates, PennyMax come out with new conforming loan limits. And so this is for the normal conforming loan limit to high balance. And then if you exceed high balance, you move over to jumbo.

So this is like for that in the middle area. And typically, investors and the agencies typically charge about a point a high balance spread because of these larger loan amounts, they're actually more likely to refi if there is a incremental decrease in rates like we just saw, right? You think about it, you have a larger loan you have to pay off, you're more likely to prepay than if you have a smaller loan amount.

And so we've seen in general those fast movers move from a, let's call it an balance limit, not including the high cost areas to about an amount range. So if you're below 819, you're an average conforming loan if you're not in a high cost area. If you're in a high cost area, you're probably in a million plus.

in terms of where that high balance number is. And so what we did is we looked at our data across our hedging clients and that like difference of, know, 803 to 819 impacts about 1 % of the loans that we see. But because these are such large loan amounts, it has a disproportionate impact from a P &L perspective. It's somewhere in that a million to $2 million of additional value that we're seeing across our clients there.

from moving the 805 or the 810 or the 818 loan

from normal agency high balance pricing to the agency conforming kind of like vanilla pricing. And so that gives lenders more firepower to go to be more competitive for the borrower and actually offer them a lower rate. So I think that kind of dovetails nicely with your affordability trend that we might be seeing some lenders stretching a little bit here get ahead of that, you know, that limit raise, but also trying to provide more value to the borrower.

Great, thanks guys.

it's time to welcome this month's guest. We have Andrea Lightfoot from FirstClose joining us. She is vice president of client success.

Andrea, welcome to the Market Advantage. We're so happy to have you joining us.

Thank you so much, Olivia. Great to be here.

Now our company has just completed an integration, so I thought we could kick things off by talking a little bit about that.

Yeah, I am so excited about this. I've been a long time user of Optimal Blue in my past life. I worked in banks and IMBs, did some consulting. And as soon as I joined here at FirstClose and heard that we were working on the power of the partnership, I was super stoked because the unique thing that FirstClose is bringing to the equity space is this integration with top notch partners like yourself, where we're actually loading rates and getting borrowers off the street so that at that point of thought,

we're actually surfacing what a borrower wants to see, not just all the qualification data you would see at a typical point of sale. So just think of it as like we've kind of flipped the whole point of sale life cycle on its head, and that is only possible through the product and pricing engine of folks like you at Optimal Blue.

I don't think we could have said it any better ourselves. I love the call out to the point of thought. been something that we've been thinking about a lot here at Optimal Blue as well. just given we see the nature of the home equity market right now, you speak to maybe just some of the that you guys think you're solving at first close from that perspective?

Yeah.

Yeah, I want to kind of first level set on home equity is very different than first trust. You know, if you spent any time in the first trust space, so we've all had those great boom years just coming off of COVID. You know, there's this tendency to think about it as maybe apples to apples. And what we're coming in and doing is trying to be the authority in that home equity space with our banks and credit unions and lending partners to help them.

rethink some of their lending patterns in that space. And I'll give you a, example, what's working with our credit union who is doing full boat underwriting. We're talking like 30, 45 day closing. They're running full title, full ALTA. They're doing all these additional full appraisals. And when you look at underwriting guidelines as a whole in the space for home equity, it's a much more low dock, lower risk process. And I don't want anyone,

Chief risk officers don't come for me. I know there's still risk involved, but because of the way capital markets works in home equity, oftentimes it's a servicing game. And that way you're holding that book of business longer. You're actually working with that member or borrower for longer. And so I just want to call out that as we're helping what that workflow looks like, it's important to kind of check yourself and look at your processes and make sure that you didn't try to forklift your first close stuff and just dump it in the equity space. It is really...

I don't want to say it's a different beast because I think it truly we're seeing a moment now in the market that this is an opportunity that we haven't seen. I haven't seen in over 20 years in the business.

Yeah, well certainly, right? the talk all the time about the home price appreciation that has occurred over the last several years and then the equity overhang that exists. It's so obviously the right time your product and for the home equity space in general to start providing some borrowers some liquidity on that equity that they've developed in their home.

I feel like we spend so much time here. You kind of alluded to it talking firstly, your traditional mortgage is here. Is it possible if we just take kind of like take a step back sort of a loaded question, but if you would give us a little bit of an overview of the home equity space, like who are the big players? What are some typical terms? How big is this market right now? And like, how has that changed? Right. Like I'm assuming it's grown, right? Like we were, we're bigger than we were, but how big are we?

Yeah. Yeah.

Mm-hmm.

any of that context, I think it'll sort of provide the background for the rest of the dialogue.

No, that's great. let me just level set with when you look at your Big Ten banks, which I think everyone would assume is going to be the leader, right? Chase, the Bank of America, Wells Fargo, et cetera. When you actually see published HELOC volumes that came out in January, just earlier numbers, and then we just got another round in the summer. What's surprising to me is that the regional mid-tier is starting to come up through there. And Citizens Bank is by no means a regional, but

That's a great example of a company that's using equity as a vehicle to start increasing their depository cash size as well. You're getting a member for life. That's what we hear our credit union friends talking about the most. Our credit union partners are probably the most surprising because you would expect a PNC, a truest Navy Fed is leading heavily in this space. And then I can't be on a podcast with my capital market friends without mentioning

the five billion pound gorilla figure that just hit in the equity space. If you haven't been watching the news or reading your updates on housing know, figure IPO'd and they were in the top 10 this year of HELOC volume. We're talking like 25,000 units plus of just raw HELOC power coming through an entity. So clearly the markets are also signaling that they see this.

as a really unique opportunity with, as you mentioned, look, we're all stuck in the houses we had two, three, 4 % interest rates in, not really looking to move, inventory super low, and yet somehow for the first time we're seeing this major equity push up, the appraised values are still maintaining. That's a really interesting So back to the numbers, well disputed, I think at this point.

I would defer to Brendan and Mike, they're my experts in this, but just the research we've done at First Close with our partners, it can be anywhere between 29 and 34, 35 trillion with a T of untappable equity. And the dispute there is really like my parents who are sitting on a house with no mortgage. So some numbers will exclude that household, some will include it. Either way you look at it,

even at an 80 % CLTB. Let's say you're let them lend up to that. There's many hundreds of billions of trillions. I mean, there's trillions of dollars sitting out there of untappable equity. And your average HELOC price, gone are the days of a $50,000 HELOC. With these rates in markets like New York and LA and DC, we're gonna see average HELOC sizes north of 200,000. So these are pretty meaningful loan sizes still as well.

Yeah, mean, and I'll pick on myself. I recently bought a home and I used a heat lock to help kind of carry me over until I sold my initial home. And it was in that same range that you're talking about, living outside the DC area. You know, I think some folks kind of think about this almost as a, as a debt play as well, right? Can you use this to kind of do some debt consolidation? Can you speak to like maybe some of the trends you're seeing, whether it's...

Mm-hmm.

you know, is it X percent of loans that are your more, you know, more traditional like debt consolidation versus cash that folks just need on hand? Can you speak to any of the trends there on the purposes behind the rise in this loan vehicle?

Yeah. Yeah.

Yeah, and I want to call out, you know, because this is a savvy audience who understands these loan vehicles that we're discussing to a degree of specificity that I can totally respect. The closed in second is not what we're talking about for HELOC, right? We're talking about open-ended credit, a line of credit extended. It's the credit card for your home is what we hear a lot of loan officers describing to borrowers when they're trying to make a decision about is this the right loan vehicle for me for my needs.

they start with home equity loan, we're seeing still a lot of he loans through our platform. So a fixed home equity for a set period of time, set term. And really what the guidance, loan officer I was with up in Michigan, one of our partners last week had the best explanation where he really just kind of level set like they were on an equal playing field, which is first I'd heard, know, there's been a lot of years in this business where

Home equity was seen as like, this is a waste of our time. They're not taking out the line. It's too variable. No one wants that, right? And I'm loving how loan originators are embracing this opportunity to go, this is a choose your own adventure, right? Do you like a fixed amount payment that's guaranteed? And oh, by the way, even at 8%, way better than that 28, 32 % credit card that you got sitting around.

Or are you the type of savvy financial person who's got college tuition or student loans coming up, got a car payment that you're trying to consolidate? think you might want to go on a big trip with the family this Christmas, like funding a whole renovation to your basement, right? Do you want to be able to take out the money when you need it and have more choice and more control, still understanding that that variable payment is really just at your disposal? It's the best type.

of credit card for your house that you can get. So having both of those in play right now is why I think we're seeing such a swing to your point. I love hearing that story of you using that because who needs a bridge loan? When you're sitting on $250,000 of equity on the house, have most shops are letting you season that, work with it, move it, especially again, back to those underwriting guidelines. Credit unions and banks have a lot of in-house underwriting guidelines. You're going to see wide swings.

Yeah,

in my personal example, I was working with an IMB on my fixed and then they referred me to a credit union for the HELOC. And now I have a checking and a savings account and a HELOC that I've almost paid the credit union just a couple of months ago. now I'm a customer with this credit union and they're able to potentially offer me other items in the future. So it's a great acquisition those institutions like that.

There you go. Yeah.

Yeah.

Yeah.

Yeah, and omnichannel play, have to call that out. You one thing that we're really excited about is the way that our platform integrates with a lot of other LOS partnerships as well. So we love working with product and pricing engines. We love working with LOSs in the ecosystem. And shout out to Meridian Lake. He's a great partner relative to their consumer and mortgage systems. They do a really nice job in that space of helping originators stop, look across a consumer lending channel.

you

and then get the cross sell. So I don't want you know, if you're an IMB and you're listening, there's still a lot of power and encompass and other LOSs, but certainly is not surprising to me that a member first credit union is looking at their tech stack right now and evaluating how they can get into this HELOC.

Yeah, it makes a lot of sense. and sort of touch on it, but there's a lot of reasons for folks at this point, consolidating that, picking out, some of this liquidity in their home to, you know, maybe make an improvement in the house by, by car, by, know, whatever the case may be as they're contemplating that. And for these originators, it's great to have the sort of suite of products available to them. But I think folks probably are, coming down to a.

Like how do I tap the equity on my home and is it a cash out refinance or a HELOC? And so can you speak to that? Like what is the of decision points or the key characteristics would push in a borrower and therefore an originator one way or another?

I think it's the education of understanding that a second lean position loan product is not a scary thing. Any more south four letter word back in 2018, 2008, there were other periods of time where you've seen these dips in the market 10 years, right, we'll see a I think the consumer sentiment doesn't line up with the reality of the risk that they're signing up for. And in this case,

when you have a two, three, 4 % interest rate in your first position. So the house you're in, the loan you're paying, 30 year fixed, beautiful product, never gonna leave, it's your forever home. looking around and realizing I need new carpet, because I'm not leaving. I've gotta redo the basement, so the bathrooms are old and dated, that kitchen is from the 80s. And so having the same access to the cash that you would receive in a cash out without forfeiting.

all the power of that first trust that you're, so that's a sweetheart deal that we're, I'm myself sitting on a great rate, right? I have no interest in refinancing that to even six and a half, right? Or having print six and a quarter if it hits next week. So the idea of an 8 % cash out deal on a much smaller portion of the total mortgage, and I'm still gonna you know, terms as high as 20 years.

So it's not just like a five year installment loan, although I've seen products across our customer base that go five, 10, 15, 20 is pretty sweet for most people. You look at $150,000 cash out, I'm gonna get that either at the time I want on a HELOC, right? And the credit card functionality, I gotta highlight this, Brenna. I don't know if yours was like this, but one of the technology advantages to the HELOC that we didn't see when I had one years ago.

They're moving away from paper, banks and credit unions and IMBs, and they're moving into consolidated technology that allows you to access that money without having to drive out to the bank or get an old school cashier's check. I don't even know if my kids in college would even know what a cashier's check is. So the idea that now you're going to have that, the same power of the money you're trying to take out of your house, and I didn't forfeit the first.

and I'm still gonna be able to have a stable interest rate that far exceeds any installment loan or credit card I could get, yeah, I'm definitely putting the new bathroom into the master suite.

Yeah, the one I used was not as tech savvy as that, but it was at least like the equivalent of like a checking account, right? So I can give them the routing number and the account number.

Well, yeah, let me know, Mike. I say, let me know who they

are and I'll get with them and we can hook them up. We got some cool, cool partnerships.

Yeah, I think you mentioned this earlier, Andrea, about the time to close. So I think you maybe quoted like 30 to 45 days previously. I've always heard anecdotally it's shorter than that, but maybe you could a little bit about the normal underwriting process for some of these loan vehicles.

Sure.

Yeah, so let me highlight something that I'm really excited that we brought to market, specifically at first close. And this is where we've been able to quote with case studies, taking customer or partner from that 45, 30 day average turn time that would have been typical. I refis were up to 60 and 90 days a couple of years ago, right? really taking that bar or getting them off the street quickly. The way that we're doing that is

front loading with that product and pricing engine, the experience to qualify the borrower early using technology that lets them see real meaningful data around their equity. Let me repeat that again. So it's not give me your name and your two year history. We're not approaching the borrower like we're underwriting the borrower. We're approaching the borrower like we're trying to sell them on the idea of this is what your potential is with us. Like come to us, get off the street with real meaningful

data and with the guidelines, meaning without the need for full appraisals, and AVM with a property inspection report, we're seeing 80 % of our current customer base using those type of vehicles that come in at the time that the point of sale is processed. So applications processed, you might typed in what you needed. That data is already pushed into the LOS automatically coming in with a credit pool.

We have soft pull technology if they're not ready for a full hard pull. So we front loaded that piece and as soon as it hits the desk of what traditionally would be, you know, processor, like sitting there going through files, we actually have automated service ordering across a deep ecosystem for property condition reports, title reports. can go to full alt if you need it, but we actually have a three day property report process that helps folks on title judgments, liens.

your flood certs already in the file, you've loaded the bulk of that data into the underwriting file for credit risk before it even hits the underwriter's desk. And that's how we're able to take that 45 and then whoop, we're down to like two weeks. At two weeks, we're getting ready, clear to close, wrapping up some letters of explanation, and then starting to work on RON or in-person closing, whatever that borrower's choice is.

we're really excited about the integration opportunity here is sort of immense. Do asking you to put your economist hat on, maybe it's an unfair, a lot of times we end up interviewing economists on this podcast, but at least internally, do you think about

where home values are going and that impacts your strategy. Obviously, more home equity that exists out there, the more opportunity there's going to be for home equity products. But how are you guys thinking about that internally?

Sure. ⁓

Yeah, no, it's a fair question. And we, as an executive team, think about that in terms of our partnerships, where we are going with building towards the loan officer process, building towards omnichannel products, looking beyond maybe that horizon, near-term horizon of equity. But we're feeling pretty bullish, at least with the economic outlook reports that we're seeing, that these rates are not coming down anytime soon in years. We're not going to see a precipitous drop.

that it's going to make exodus out of the first primary property happen, like we saw maybe even a decade ago, right? Right, so if that homeowner's not going anywhere, for anyone that's listening or for you all that own homes, I my home, it's a solid-built construction. I have had to pour a lot of money into upkeep of that home. It's a reality of homeownership.

Yeah, that lock-in effect is not going anywhere.

Thank

Eventually

there's a roof you're going to need or an HFAC that you're going to need. So we feel pretty confident just knowing the way homeowner, the cost of home ownership works, that there's always going to be a need for equity. So long as, and this is the caveat, so long as inventory remains at a lower stable pace, we're not seeing like spike in new build construction. That would be a leading indicator to me that I would want to rethink maybe getting in the first trust.

space or, you know, kind of change the strategy. But for at least the next few years, we really feel like the way to get in to higher volume, higher units for loan officers across the country is to really consider what are you doing with home equity and what technology are you using to fast track it.

Mm-hmm.

I don't know if I have my crystal ball, but that's, that was a,

You know.

No, it was great. ⁓ It's as

good as anyone I've heard terms of forecasting out the market.

Yeah, enjoy.

Yeah, I have I'll

acknowledge, Brendan, I have Boomer parents and talking on a fairly regular basis, both them and my in-laws. will be interesting to see as those of us geriatric millennials are coming into a space where we're launching kids off to college. That's happening. I'm here to say the hate to break it to you. I know for economists that I listened to at NBA and et cetera, it was always the millennials are coming. The millennials are coming. Well, we've we're here. We have homes.

And we rates north of $150,000 on average that we've got to figure out, right? So that would be maybe the other piece to consider is the demographic play. I think we focus a lot on that boomer exodus. But the reality is, is what are folks in the middle going to do as soon as those kids are launching? And if you have aspirations of even vocational technical degrees, I don't want to be political, look at

The financial system right now in terms of the educational backing and liquidity for student loans. Your home equity may be a vehicle to help your students realize the dream of going to college too.

That's a really good point. But pivot a second here. I one of the things that I kind of look at as a capital markets nerd is the pull-through That's one of the things that we're hedging for first liens typically. Can you speak at all to the normal pull-through rate for HELOCs? I would imagine it's got to be higher than your traditional first lien, or am I mistaken there?

Yeah, sure. ⁓

Yeah, so one of the evaluations we do when we walk into a shop is we actually work with them on their pull through rate. It's really important to us that they're paying for value. We work with them on success of the platform and the value that they're seeing because we are a combination platform of both that point of sale specifically for home equity all the way through get your all of your services automatically ordered and run through quickly and efficiently to get that underwriting done So when I'm looking at turn times, one of my first questions is

Am I talking about a first close turn time? Or am I talking about it in the house, paper based, you know, processor sitting there, right? turn times condensing, but the pull through efficiency that happens with that is where we're taking that product and pricing engine and filtering out, you know, what we might traditionally consider not committed bar wars, right? The day shoppers, the, just want to shop your raid. I just want to come in here.

in a kind of an old school paper based system, we don't know that until so far in, so much labor and time, that of course it's a pull through rate of like 45%, right? We've been able to bump that up close to 20%, getting over the 60s for pull through, which we're really happy about, by simply filtering out the not committed borrower. I mean, it could even be a borrower that doesn't have the equity, because our platform is able to plug into these partnerships and say, hey, here's the rate.

based on soft credit pool, based on what you have in terms of equity, you actually don't qualify for anything that we offer. And we'll let the loan officer know that you're interested, but that's a different lead playbook that our banks and credit unions are saying than just having every single name off the street, every single bogus deal coming in. And so I do wonder if not focusing on your processes, people will pick up the technology and think that's gonna change a pull-through rate.

We really feel like it's the sequencing that helps change the pull-through rate.

Yeah, so like that whole change of like more of the, know, aggregation or digestion of the materials the point of thought that you mentioned earlier, like that helps so much then from your experience, right?

Yeah.

Yeah, yep.

Absolutely, yes. Got it.

Okay, I think it might be a good moment to chime in and pose our bonus question to you, Andrea. So as you may know, Optimal Blue's mission is to help mortgage lenders maximize their profitability on every loan transaction. So we like to ask every guest that joins the Market Advantage this question, what is one thing in your opinion a lender should be doing in today's market to maximize their profitability?

⁓ okay.

I'm ⁓ going to phone a friend on this one, which is actually Joe Tyrell, who I got to hear speak. He's a great, great guy. Joe is on a couple of CIO forums that he helped lead. And, you know, the phrase human speckles thrown around a lot relative to efficiencies. And I'm sure you guys probably heard him talk about this. It was one of the best ways I ever heard to describe this idea that, you know, maybe when you say maximize profitability, you're in the C suite, you're like, yes, we've got to, we've got to help make sure it beat us the best.

I think for most of us that are in this business to see where we can actually make meaningful change, I like to think about where do we maximize value. So just a slight adjustment because doing the right activities with your human capital investment or your OPEX investment is maybe one of the more difficult pieces. It's easy to go keep pulling software off the shelf and say, I'm going to buy this one and this one.

So if I were to counsel anybody on what do you do to fight that human spackle problem? Don't just throw more bodies at it. I would maybe caution as a software provider, don't throw more software at it either. Make sure that in your evaluation process, you're looking at the value metrics that that provider is giving you and the options they give you in their partnership ecosystem. When I was running systems at a bank, that was always the greatest efficiency we saw to bump up.

what our loan officers could do. They could do more with less. And not just less people. It was that surgical scalpel of making sure the cost of a loan was not now just another 500 bucks for this CRM and this LOS and this product and pricing engine. They are not all created equal. And having partnerships that are really smart about creating that efficiency, it takes that load down when they're connected correctly. I think that's the value.

That really is the fact, because I've been there, done that, and have the t-shirt on taking loan files with the two-hole punch and thinking that if we just could upscale two or three more underwriters or processors, this would go faster. But the overhead cost was never scalable. And we got the big refi booms. We saw a big market. We would just see our profitability crushed. And so the value proposition, I think, of at least what we're trying to bring forth in the home equity space,

is to be really smart with that process sequencing and come in as an authority and help you smooth that out so that you're not just repeating old habits for the sake of old habits in First Trust land. We're actually gonna help you think about your rates, how you're publishing them, taking a company like Optimal Blue and getting out there at the point of thought with that borrower, taking them off the street. And I do think that the value you're gonna see is you're going to do more loans with less. It is a badge of honor to me when I meet an office.

And I can see a processor doing 3X the loans that I know even five years ago at a shop, I couldn't have loaded up a processor with that many deals. And not because they're not value added, it's because they were literally, we were just doing like the human spackle experiment like Joe has talked about, right? So I love that idea of high tech, high touch. That's another one of his great quotes. He's got to write a book is where we're at at this point, right? I we would all buy the Joe Tyrone book at this point.

I'm certainly invested, know FirstClose is, not just the profitability, but maximizing the value so you can make smarter decisions with the budget you do have to reduce that cost of closing alone.

Andrew, that was such a great answer. The phone a friend thing. Nobody has done that before. ⁓ insert slow cop here. Yeah.

⁓ Joey T. and I go back. Yeah,

bro hammers in my phone. We go back like he's he's the man right there. Tell him I said hello. ⁓

Absolutely will.

⁓ Andrea, this was such a terrific conversation. going to speak in advance for our audience. I learned so much today and I know our listeners will feel the same and you are absolutely welcome back anytime. So thank you so much for taking time to join us.

good.

Well, when David told me I was with Professor Brennan and Mike over here, right? Like I told you, I listened to the podcast. I was fangirling. I was like, yeah, this is going to be a great afternoon. Let's do it.

Thanks so much.