The mortgage industry is navigating one of its most significant credit scoring changes in decades. This week on Optimal Insights, Erin Wester, Tiffany McGarry, and Jim Glennon discuss the industry's transition to a multi-model credit environment, including the introduction of VantageScore 4.0 alongside traditional FICO models.

The conversation covers how lenders, investors, and technology providers are adapting to evolving credit model requirements, operational challenges, loan sale considerations, pricing impacts, underwriting workflows, and the uncertainty that remains as new guidance continues to emerge. The speakers also explore how future credit models could influence borrower affordability, competition, and mortgage technology roadmaps across the industry.

In the market update, Alex Hebner and James Cahill break down recent inflation data, employment trends, mortgage rate movement, Federal Reserve expectations, and what mortgage professionals should monitor ahead of upcoming CPI and PPI reports.

Topics Include

• VantageScore 4.0 and mortgage lending
• FICO and emerging credit score models
• Credit model adoption strategies
• Mortgage underwriting and investor considerations
• Loan sale execution and pricing impacts
• Mortgage technology readiness
• Inflation and employment data
• Federal Reserve outlook
• Mortgage rates and capital markets trends
• Mortgage industry workflow transformation

Optimal Insights Team

• Jim Glennon, Senior Vice President, Hedging & Trading Operations
• Alex Hebner, Hedge Account Manager
• James Cahill, MSF/MSR Account Manager

Special Guests

• Erin Wester, Chief Product Officer
• Tiffany McGarry, VP, Product Management, PPE

Production Team

• Executive Producer: Sara Holtz
• Producers: Matt Gilhooly & Alex Kreuter

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

Mentioned in this episode:

Get Ahead of What’s Next at Optimal Blue Summit 2027

The mortgage market keeps moving. Optimal Blue Summit 2027 brings together industry leaders, innovators, economists, and technology experts for three days of market intelligence, hands-on learning, and meaningful connections. Join us February 1–3 in Scottsdale, Arizona, to hear from Troy Aikman, Bob Broeksmit, Michael Fratantoni, Joe Tyrrell, and other influential voices shaping the future of mortgage. Optional training sessions and a championship golf experience are also available. Early-bird registration is just $199 through October 31. Register today at Summit.OptimalBlue.com.

Welcome to Optimal Insights. I'm your host,

Jim Glennon, Senior Vice President of Hedging and Trading Operations

at Optimal Blue. Our clients and industry partners have long relied

on Optimal Blue for trusted insights and commentary.

And these podcasts are an evolution of our commitment to keeping

the industry informed. Let's dive into today's episode.

Good morning and welcome to Optimal Insights.

I'm your host for this week, Alex Hebner,

a hedging and trading analyst on the hedging and trading desk at Optimal Blue.

Today is October 5th, 2026.

We got a great show for you today.

We have Jim Glenn speaking with Aaron Wester and Tiffany McGary

on the Optimal Blue product side,

just going through their vision and the current product roadmap.

There's a lot of discussion there about what credit models currently are going

on in the industry, as well as what's going on here inside of Optimal Blue.

before

we get to the market update with myself and James here in just a moment,

wanna shout out the NBA in Chicago.

If you'll be at the annual NBA,

you know, reach out to your Optimal Blue representative,

whoever you talk to the most. just schedule some time with our team.

We'll have a lot of representatives out there.

and be sure to stop by booth 325 to participate in the share your take experience,

where you can record a short video about what you're seeing in the market right now.

And leave with a a brand video you can download and share on your socials.

you also have a chance to learn more about Summit 2027,

which is the Optimal Blue Summit,

we'll be hosting in February of next year in Arizona.

And you can register during that event as well.

now for the data. jumping right into things here this morning on Monday morning,

October 5th. OBMI, that is the average rate lock that we see across

the Optimal Blue ecosystem currently pushing up above.

seven and three eighths we're at seven three seven nine as of Friday

and right now the ten years trading at about five three three.

another sell off this morning to to start the week off.

with that we can kind of jump into the market update here.

James, welcome.

Yeah, Alex, thank you and good morning,

man.

Good morning. Good morning. Good to see you as always.

I guess let's start with last week.

It's always where we seem to to start,

~ ~ set ourselves for the week and and where things have shaken out over

the last seven days.

Yes. So a lot a lot to ~ ~ run through from last week,

right? Middle of the week, Wednesday,

PCE came out. So last week we got both an inflation measure and a jobs report.

So we got to see both sides of what the Fed has to tango with.

I would say PCE came out about the expectation,

maybe a little worse. we saw kind of a lot movement building into this.

and it came out at three point four percent,

which was right about the expectation.

The month over month core PCE,

however, came out at 0.3%, where is expected to be 0.2.

So there is a little bit of an increase as we go.

Alex, you and I were chippering about this before we hopped on,

but PCE, a lot of this is gonna be coming from the oil and gas prices,

which over the past month have gone from

Roughly four dollars and fourteen cents to about four dollars and forty cents

at time of recording. So a pretty decent kick up.

But much of that is coming from the memorandum of understanding expiring during

August. So some of PCE prices that in and some of it doesn't.

The first few weeks rolling through August don't have any change

as the memorandum of understanding only came at the end or the resolve.

This means, ~ ~ inflation pushed back up.

It gives a signal that it may continue to do so.

A lot of this market selling off is likely people baking in higher rates as we go,

thinking about this higher and higher inflation number.

So that's where I would start there.

Is there anything you took away from the inflation?

no, not not beyond what you said there.

I think all inflation reports are coming with I wish they came rather with with

an asterisk on them that say, you know,

this was largely driven by by energy and and those costs being

fed through the economy. As as you stated there,

gas prices remain solidly in the four dollars throughout the nation,

and diesel prices are are solidly in the sixes,

if not sevens, in in some areas as well.

so so just those pain points are there and

Yeah, this PC report captured both memorandum of understanding

and once the memorandum understanding had expired and gas prices steadily rose again

from there. I think as I noted last week,

I think the October reports that we'll be getting,

not this week, but next week, those CPI and PPI,

those will be the first reports that the entire sampling period took place under

the post-memorandum of understanding environment.

And that'll give us a a better idea of,

you know.

how energy is is currently being fed through into the inflation picture.

'Cause I think this PC, as you said,

some of the sampling period was during the memorandum,

some of it was not. And I think that introduced a little bit of static into

the number that we're seeing.

I agree. I do think one ~ ~ glimmer of hope on this is as gas prices have

you know come up over the past two weeks especially.

Over the weekend, the administration was going back and forth on whether

or not a diesel export ban was something that they wanted to try and push forward.

It was decided this weekend that that would not be pushing forward

as Europe is going to be tapping into their own strategic reserves to

try and lower the price of diesel in Europe,

which will, by extension, help cool the cost in the United States.

we talked about this last time.

Something like 40-odd percent of European cars are run on diesel,

or that is.

Not the case in the United States.

So there are less immediate cars on the road that require diesel,

but all of our 18-wheelers and our heavy construction materials do.

So that will help us if that price can come down.

Just a you know continuing battle:

where can we inch things down as the price continues to climb its way.

A

hundred percent. And that's a good reminder that that even if you're driving a,

a a petrol gas car or you know,

you dri maybe drive a hybrid or an electric vehicle,

keep in mind, you know, all the groceries that get to your grocery store

are all still coming in on a on a big box truck and those are diesel as well.

So, you know, that you will see that pain spread throughout the economy,

you know, whether you directly drive a diesel yourself or not.

So the other big measure came out Friday.

This was, of course, the unemployment and jobs report.

So unemployment did creep up this time around.

We hit 4.2%. And the unemployment or the employment rate only added about

29,000 jobs. This came in decently below the expectation at 84,000.

this is, you know, this is a tough pill to swallow as you know,

the Fed has to balance jobs and inflation.

They've been making the choice to try and tamp down inflation,

finally raising the rate. And the first job support that we have come out is subpar.

So it's definitely going to ruffle a few feathers.

And on Friday, you would even have seen the price did rally back for

a while before ultimately faltering.

I think the market itself decided that inflation is still going to

be the target here. Rates will likely just be higher for longer.

And even if this jobs report wasn't perfect,

four point two percent is not in the emergency zone.

And twenty nine thousand jobs is still a positive number.

So that would be the takeaway.

Then as I see it, everything is still trending up,

even if slower. the market will definitely be watching and reacting to this.

This has definitely added volatility to what we're seeing,

but it's not enough to stop the sell-off right now.

The expectation is still that rates are going to be rising.

Agreed. No, couldn't have said it better myself.

If if anything, I think this employment report maybe locked in

the October federal reserve meeting.

it was already kind of up in the air.

Would they, you know, would they hike rates again right before the election?

You know, would that be seen as too political?

you know, historically a lot of times they will kind of defer unless there's

a an emergency going on on that October meeting right before election day.

and right now CME rate futures are showing about a 75% chance that we will

not be having a hike in the next meeting and and that that next hike

we can expect will be in December.

we'll see if that reverses, if there's some really hot inflation numbers,

but I think that this employment picture kind of kind of settles us

in for for nothing to happen at the next meeting.

An item with rates having pushed higher.

We've, you know, over the past month we've seen the par rate really

go from between the five and the five and a half all the way up to it's very solidly

in the six and a half. I mentioned on one of the previous calls,

just because the rate is so much higher,

you might not want to flip your benchmark immediately.

You want to look at your population.

but we are going to be entering the role period.

Tuesday will be 96 hour day for class A roles.

So as you look to roll, this is a good opportunity to re-examine your benchmark,

look at where your population is,

where your hedges are, and likely adjust up to get more into that six and

six and a half zone. Six and a half is currently sitting at you know par 12.

By the time of the release of this,

it could be you know par flat.

So it definitely makes sense to re-examine that as you move to roll this week

and next week.

it's a good opportunity just to get ahead of that,

get the roll in early. You're going to be seeing a pop on your accounting

GL as many of your hedges will now be recognizing gain loss in the money.

Whereas last month you might have seen more of a hit as you were recognizing loan

sales that were lower.

Agreed, agreed. I think outside of maybe the odd lender who strictly

has builder production, that you should at least be at a six benchmark

at this point, if not higher. I'm seeing a lot of folks,

in the one clients that I cover,

six and a half is making sense for them at this point.

looking ahead to this week, it's not too much going on,

but Friday will be the University of Michigan,

Michigan Consumer Survey forecast is stay at about 48.

This is not historically low, but it is a pretty low number outlook on the economy.

It makes sense. Everything that we're talking about is kind of a little dreary.

Rates potentially going to continue going up,

jobs are not flying off the shelves.

So a lower value. This probably won't move the market,

but it's always interesting to see where the country's mind might be at,

especially now that we are as we're going 29 days away from the midterm elections.

I'm sure you're all starting to get commercials.

I certainly can't get rid of them.

and they will only worsen from here.

Absolutely.

Until they all disappear the day right after the election.

Yeah.

and as we get closer and closer,

the election always adds some volatility to the market as this will

get you know uglier and uglier,

and the discussion around who may be in charge and how that will impact the economy.

It's going to be more volatility as we get closer to November third.

Thanks for those highlights, James.

you know, we're looking like you said,

we're staring down the final month here until the twenty twenty six midterms.

we'll continue to see how those will play out.

Maybe we'll do a little election special as we get closer and maybe

the the polls are a little more accurate.

kind of take a look at, you know,

what different House and Senate configurations could look like and what that might

mean for the the remainder of the Trump presidency here.

but with all that said, it's a relatively quiet week in regards to data.

there's some Fed minutes that'll be coming out midweek as well that

we didn't mention, but those are those are just kinda,

the the inside thoughts from the last Fed meeting.

So I doubt it'll be moving the market much,

but it's it's good reading to get inside the head of the the folks that

are calling the shots on the FOMC board.

And then next week we will get more CPI and PPI.

Those are the numbers we will get excited about.

But we'll talk about those next Monday.

and with all that being said, we'll sign off here.

and you'll start hearing good old Jim talking with Tiffany McGarry

and Aaron Wester for a look at product and credit models.

with that, we'll sign off.

Thank you for the help today, James.

Thank you, Alex. Talk to you.

Have a good

Okay, as promised we have Aaron Wester,

Chief Product Officer, and Tiffany McGarry,

VP of product management here at Optimal Blue.

Welcome, Tiffany, welcome, Aaron.

Thank you for being here today.

Thanks for having us, Jim. Longtime listener,

first time caller. We're glad to be here.

Thank you.

Right on, that's true. That's that's true.

We haven't had y'all on here yet.

Thanks.

and we've got we have a pretty meaty subject to talk about today,

and it's timely too, because Tiffany was at Housing Wire conference last week

at the mortgage banking summit talking about navigating the credit model shift.

So she was representing Optimal Blue there at a really good time,

I think, for what's going on with the credit model shift.

So again, there's been a ton of discussion around scoring models in our industry.

and we've had some great guests on from both FICO and Vantage Score on the podcast.

So they've given us some really good background,

some good education on these models and where they are.

so we just want to talk a little bit more about that.

There's been some developments in the past couple weeks.

So, first let's just level set real quick,

right? So, as of today, FICO Classic and Vantage Score 4.0 are both eligible.

For delivery to the GSEs, Fannie Freddy.

you can also use them for government loans.

And they're in various stages of review for other types of loans like non non-QM,

non-agency. So it's an evolving story right now.

And again, every couple weeks,

we're going to give you a little bit of an update on what's going

on there because it's important to the mortgage industry,

but also just I think the consumer out there needs to know that these these models

exist and that they're they're currently changing how we look at credit

for mortgage loans.

Yeah, I just want to talk a little bit about what's happening and maybe

get even get a little color from the,

Tiffany's visit to the conference last week.

So, you know, let's just start with some current thoughts on where we are,

right? So the GSE's rolled this thing out.

and there's a lot of hype around it.

It's almost like, you know, I think in our industry,

people feel like they're missing something.

Like they need to be doing something differently.

They need to be jumping on some sort of augmented process.

So, I mean, where do we start?

What are the dynamics at play today and what are some of the questions that people

have when they when they talk to you?

Aaron, I'll start with you, Aaron.

When when people talk to you about these models,

what what's what are they wondering?

What what are what are people grappling with right now?

Yeah, one of my favorite topics right now and top of mind I think for so many

and it really ties around how the data is passed back and forth

and then how customers can like operationalize around that.

So a lot of the conversations that I've been having lately is more

in the tech provider space on

Mm-hmm.

how everybody's going to be treating the data and are we flexible enough.

to allow for different different interpretations that clients may want

to apply to how they ingrain the different credit score models into their current

process. So I think on paper it sounds so simple and straightforward of

a change or an introduction. But as with anything in mortgage,

there's all these layers of complexities and nuance.

and y like I said, different interpretations and everyone's trying to move fast

to your point. There's there's a lot of movement around this.

There's been I think a long runway of discussion about the new credit models

and now it is pedal to the metal,

it feels. And I totally agree with your comment on people wanting to make sure that

they're not falling behind, that they're not missing something.

and you know, we see a lot of the the the sellers in the space kind of really,

really moving quickly.

And a lot of conversation I think that I've been a part of is really been around

are we setting ourselves up for success as technology providers to make sure that,

you know, we can support clients' needs.

And

Mm-hmm.

there's still some unanswered questions in in some of the the details,

particularly on the pricing engine and making sure that we're,

you know, accounting for things properly as credit models may change over

the course of the life of the loan.

But now we're just in the we gotta get down to brass tacks,

get a few reps under our belts and make sure that,

everything's kinda flowing seamlessly.

but there's been lots of conversations,

that's for sure.

Yeah, no real I mean, no real clear direction,

right? I I will say that we've talked on this pod pretty frankly about it,

that it's the way that sort of the communication style of the F H F A right

now is I think it's made it very difficult for folks to know what's going

on or to figure out what their approach should be.

But I think lenders have done a really good job of being patient

and listening and also learning some you know,

learning some things about Vantage Score four point on their own.

for instance, but also, talking to us about it and helping us navigate through it.

so current state, Tiffany, what what was the what was the discussion

at Housing Wire? What what were people talking about or even asking

you about how should we be what are we missing something?

How should we be approaching this today?

then in a minute here, I do want to talk about how this is going

to evolve because it's we're certainly not done with this with this saga.

We're probably in chapter two,

if anything, right now, right?

But what's what's the current state according to the

The folks at the h at the summit last week.

Yeah,

they they're definitely a little shy on getting started.

Their thought is if if we start originating loans with multiple credit models,

what happens if the rules change before they sell

Mm-hmm.

the loan? there's what happens if the investor guidelines change and they're kind

of stuck holding on to something that was true a few days ago and then a week later

the circumstances or the pricing around it does need to alter.

They're concerned with

how the industry technology providers

are responding to if they're flexible enough had a follow-up call with

a customer after housing wire.

they just wanted to see how flexible we are for when changes keep coming.

They will keep coming

think we all know that

Sure.

is a the one certain is that we're to your point we're not done yet and will

we be able will everyone be able to react appropriately when there's

another if there's a kink that comes up that that was unexpected path

to implementation.

Sure. like we were saying, the the announcements have been quite erratic

and there's not been there's been zero lead time for most of them,

right? It's it's kinda like a surprise.

Things changed again like we had last week via via a tweet which said we're gonna

combine the the pricing grids for Fannie and Freddie,

for instance. that's maybe that works well with the way it was announced,

how it comes out in a social media post before the GSEs are are announcing it.

does make it a little but does make you feel uneasy that that could easily happen

again and and multiple times over.

and these a lot of these changes could be reversed,

which is kind of spooky as well.

we have scars from that from many years of changes to rules and L L

PAs that came out and then got reversed from the G S E's well before this

administration at the F H FA, to be fair.

Right.

Yeah. That was some baggage.

Yes.

So natural that folks are a little bit skittish about how to approach this this

new world. but it like you said,

it's gonna change. I mean, was there any talk,

Tiffany, at the conference about maybe what the next evolution of chapter three

or four looks like? 'Cause I mean it seems highly unlikely that we're done here.

We I we like FICO ten T is coming out,

for instance, and that's being evaluated by the FHFA as well.

So that will probably come out.

That's like the

The FICO answer to vantage score.

It's it's it's a more forward-looking,

a more trend-based b model, right?

was there more talk about how all of these things come together

to maybe improve best X finally,

maybe improve rates for borrowers finally,

as as these which was the whole point of this drama around.

These

credit scoring models, right? It's just to make things better for the borrower,

as it should be.

Yeah. I think there there's some confusion on how far they can go with best best

decks if that's if that's the case.

and then each time that there's a new model,

what's the what's the effort? Are we repeating effort every time?

Or is it something that it gets easier?

I think ideally everyone wants it to be easier every time there is a new model.

It shouldn't be reinventing the wheel every

Mm-hmm. Shouldn't be harder. Yeah.

each round. Yeah.

one conversation I had the following day as

a follow-up was exploration of Is it possible to originate a loan with

one model type? And then if it changes,

what is that how does that impact impact loan sale?

Are there investors

Mm-hmm.

that are weary about purchasing loans that started

with one model and changed mid-flight before closing.

what happens after closing if you need to re-pull credit?

And

Mm-hmm.

it's a different type. I think there's a lot of unanswered questions

or some enough uncertainty still where even if they feel good with

the the first step, you know, pulling multiple credit models

at origination and processing that with guidelines and LLPAs.

What happens then?

still more questions than answers and I think overall it just it's making everyone

hesitate a a bit more for now.

Yeah,

and that's and that's just the pricing side,

right? what about what about underwriting?

Are are you having to re-underwrite the loan or is that

Yeah.

going into longer turn times, more man hours on processing a loan?

Is that decreasing the cost of origination?

yeah, there's it's there's a lot of a lot of nuance downstream in

in so many different departments and process when you talk about something

as critically ingrained as something like credit.

Right. So once again, just not enough detail with some of these announcements that

have come out and and the lead time,

right? It's it's I think when you have lead time,

then you have time to ask those questions.

The industry advocates such as the MBA will go to the regulatory agencies like

the FHFA and ask, Hey, there's some things that lenders are wondering,

but this is more of a just here it is,

let's go do it. But to to make that investment,

right? To to completely change how you deal with credit.

we do need a little more confidence in the industry,

I think, at this point. And ~ Optimal Blue,

we can help get folks there. We have a lot of connections at not just

at these you know, credit model vendors,

but also in the MBA and just in general,

talking to, you know, a thousand lenders a day.

But even even we're a little bit still trying to gather good information

and develop best practices around using these different types of models without

asking clients to completely shift how they how they originate a a mortgage.

Mm-hmm. Mm-hmm. Not to mention people trying to react quickly.

Like the latest change that you're that you were mentioning,

Jim, I think some people see that as,

great, I have like maximum flexibility to best X price myself now if

Mm-hmm.

it's using the same grid. But then you get into the like especially

if you're buying these loans, then you get into the questions of,

well, are you comfortable pricing with a different model that was used through

the the processing and underwriting and closing of the loan?

Right.

Are you are you comfortable with that risk?

there are a lot of answered questions and there are a lot of unanswered questions.

and I I agree the lead time and the the open space for discussion

and giving people the opportunity to to breathe and think before we before

we have to act is is critically important.

Right. Yeah, and ~ ~ on the capital markets side,

our team is certainly still grappling with what I think,

at least as a capital markets person,

are obvious questions around what does the ultimate performance of these loans

end up looking like because they're scored with a completely different model.

I mean, there's not just anecdotes at this point,

but data that says, you know, on average the vantage score is well above

FICO score. And in some cases,

it can be 50, 60 points above for the same exact borrower.

Right. So it's not as if you get a better score.

You're automatically going to perform better as a borrower in terms of credit.

Obviously, you're the same person,

right? It's the same tendencies.

So there's been tens of trillions of dollars of loans originated under

of mortgages, originated under classic FICO.

We know what that performance looks like for the past 40 years.

What does it now look like with vantage?

And I think we can find that out.

And we could do that math, but I'm not sure that it anyone's done it yet.

This is the is the problem.

Yeah.

So you have all the way down the chain,

if you have buyers of these loans ultimately not knowing what these credit profiles

are going to produce in terms of performance,

they're not they may not pay as well right now.

They're gonna wait to see till that performance comes out.

So I I hope we're not indirectly reducing like making the the situation worse

for a borrower just because we're creating uncertainty.

in the industry by saying, here's a new thing,

let's go try it out, without really having a lot of confidence

and rigor and statistical analysis behind it,

because we haven't had a track record yet.

and to save a hundred

Sorry.

bucks on a on a on a credit report,

right? And yeah, how about how much volume's been done so far?

We know that it's, you know, for some of the big lenders like Rocket and

UWM and New Res, there's there's they've originated quite a bit with that.

Those loans haven't had a chance to perform yet.

Right, right. What is the lag time?

What is the volume that's going to get everybody comfortable with that finger

in the air? And

Mm-hmm.

then what what's the lag time?

Like even on like the servicing side,

right? I mean, you're gonna need a a pretty s substantial,

you know, track record before folks feel like start to feel comfortable.

Yes. Various market conditions,

different, changes in the housing market.

And some of that just I think we'll have to accept we're not going to

get ten years worth of this stuff before we we decide how to adopt.

and I think that will that will come,

but I think right now it's just again,

probably more questions than answers in the immediate term on how this

all shakes out and what it looks like in the future.

Is that s safe to agree on?

Yes. I think that's very safe

For sure. Yeah.

to agree on.

Yeah. I think I think some people might it might be well worth their time

to start thinking about what what they do have control over.

We don't have control

Mm-hmm.

over how some of this is being implemented and the changes that are coming.

But what can they do for now? is what I was talking to some folks about last week.

And that I I mean, I know my perspective is coming.

We work in mortgage technology,

so it's not only mortgage technology,

but what they could be doing now is is

They know that there's multiple credit models that they will most likely

be originating either in the near future or upcoming future.

A year from now, things will look,

I imagine, differently. so should they what can they do now?

They can start looking at their own workflows,

start mapping a bit of the changes that they know will start impacting them.

Where does credit make decisions in their operations?

Where does it impact workflow?

And

go ahead and get an idea or at least a a an outline of every location within their

own business that would need to be evaluated for change if they haven't already done

so. those have been some some worthwhile conversations with customers that I've had.

Yeah, and I think a lot of people

Sure.

to that point, Tiff, are also doing ~ controlled rollouts,

~ controlled beta rollouts with a group

Yeah.

of originators to really make sure that once they've mapped out the process,

you know it's firing on all cylinders before it's kind of unleashed to the masses.

been a couple of other approaches that I've heard as well.

That's great. Yeah. ~ ~ we're here.

It's it's definitely happening.

So just because all the answers aren't in front of us yet,

I think we can't we can't slow down.

We have to, you

Right.

know, adopt a new model that's there and figure out how to build

it into our technology so that we we can then be a little bit flexible when

the best practices start to really take shape.

Cause they will, they always do,

right? We're if we're if nothing else in this industry,

we're we're used to change and we're good at kind of rolling with that

and finding the best way to do things.

So yeah, it's good y'all have,

been hearing from folks trying to build this into the front end of

the process on the on our trade desk.

We've been, talking to investors over the the past few months about

how they're building it into the back end process.

Just ~ when you go to bid get a bid on a loan,

what do the investors want to see?

Which is a little bit easier because the loan's done,

it's been originated, you know what credit score and what model was used.

to evaluate it, but it's it's yeah,

everything in the middle is is kinda coming together,

which is which is good. We're we know we're good at improvising,

we're good we're good at making things happen.

So I'm pressed that the industry's taking this in stride.

So as you said, you have to evaluate what this looks like in your process

as a mortgage originator, but how how do you make a change like this that affects

your whole tech stack? what how do you approach that today?

And and how do you approach it going forward?

Yeah, I'm sure that's that's top of mind for a lot of our lenders right now,

~ with something as pervasive as credit through really every application,

your your front office and back office leverages.

that's a lot of different platforms that you'll need to kind of make sure

are handling things in a similar way or at least able to bend around

the approach that your institution wants to take.

That's not as simple as just your LOS anymore,

right? It's your your point of sale,

your pricing engine, your hedging platform,

your CRM, any of like your third party providers that are integrated into your

LOS platform for processing and underwriting that involve credit,

which, you know, those are numerous.

you know, and it's different tech providers absorbing information at

the rate that they're they're receiving it and interpreting it themselves too,

with these, you know, net new concepts that don't have

some of those answers that may be unique or specific to a particular vertical.

And I think that's a lot for for a lender to manage.

And, you know, I think the the fragmentation of some of the platforms

can make that even more complex.

and, you know, at Optimal Blue,

we wanted to make sure that we took some of that burden off of the shoulders

of the lenders. So we surveyed all of our

partners that we integrate with and on how they're planning on handling

on at the time, this is before it it formally launched into production,

how they were planning to handle vantage score.

And you and, you know, there's different interpretations across loan origination

systems. And, you know, you have to be able to be flexible enough

to work with different interpretations,

you know, at a baseline at the infrastructure level,

at the technology level. And then you also have to layer in,

you know, policy interpretations at the at the lender level.

So

it's our job, especially as, you know,

capital markets platform, it's our job to make sure that that we understand

how you will receive data from critical sources and how you will send data back

to those critical sources. And I think we did a great job,

you know, making sure that we had those boxes checked and we could have educated

conversations with our customers on what they can expect.

You know, well, we talked to your,

you know, XYZ provider.

and we understand that this is how they're implementing it.

So just so to support that, we

Right.

will be, you know, doing X, Y,

and Z because it's really there's too much nuance,

there's too much technical nuance,

there's business nuance, there's nuances on the nuance,

I'm sure.

Right.

and and you know, us as tech providers should offer that service for our customers.

So that was kind of the proactive approach we tried to take.

Sure. Good call. Yeah. ~ ~ we're we're creating a roadmap around this.

And it's a roadmap

Mm-hmm.

that can be used hopefully in the future as this evolves,

right? So just, you

Yes.

know, probably a good thing to end on is where does it go from here?

So vantage score is introduced to the mortgage industry the impetus for

it was to create more competition in the mortgage scoring space,

which is great. That sh that should be the case in any industry.

There should be more than one provider for a thing.

but now that there's going to be more evolution that that comes because of that,

right? FICO had already been working on FICO ten T.

That's coming down the road. I believe there's FICO Ultra or Ultimate coming down

the road as well. So there's gonna be another opportunity to do this,

to say, okay, now there's a third model and maybe a fourth model.

And then how how do the old models even get retired,

right? There's probably gonna be a discussion that's coming about that as well.

So it's good that we're

ev ev even if it's g being rolled out a little bit clumsily we're

all learning from this and we're gonna be able to use this hopefully this roadmap

in the future, the next time we have a a a new credit model to absorb into

the into the industry. And again,

it's hopefully it'll create improvement.

It'll be a better rate for the borrower and a better situation for lenders.

improve affordability here here.

And I think, ~ ~

Yes.

just keep talking about it. ~ ~ everybody needs to keep talking about it.

Everybody's perspective is going to be unique in this case.

And I think the more we talk about it,

the more perspectives we can cover,

the more successful we're going to be as an industry in in tackling that,

preparing our best practices. So as new models come out,

you know, it's easier to kind of roll with it because we've you know,

we've got a kind of try true, you know,

roadmap to use to use that term

to to follow.

Well said. Well said. All right.

Tiffany, Aaron, thank you so much for being on the podcast today.

We'll have to do this again soon.

Yeah, we we waited too long, two years before having y'all on.

So thanks for doing this.

Save

Thanks for having us. Save the best for last,

Jim, right? And that's what that's what you're yeah.

That's right. That's right. All right.

Yeah.

Thanks, guys. Bye.

Thank you.

Thanks you two. Talk again soon.

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