Recorded live at the Optimal Insights Forum in Nashville, this special bonus episode features Vimi Vasudeva and Jim Glennon reflecting on notable themes, discussions and takeaways from the event.
The conversation explores the continued growth of the non-QM market. Speakers discuss its reported increase as a share of mortgage originations and why some lenders may be paying closer attention to alternative lending strategies. They also recap a well-attended session on pricing engines, hedging technology and recent efforts to better connect production and capital markets workflows.
The episode also highlights perspectives shared by the forum’s keynote luncheon speaker, including observations about consumer spending, housing affordability and the potential role of younger generations in future homeownership trends. Vimi and Jim consider whether housing could increasingly be viewed as a luxury purchase in certain markets and how lenders might respond to evolving borrower behavior.
Additional topics include the growing industry discussion around spec payups, lender-specific execution strategies and the value of maintaining flexibility amid uncertain market conditions. The speakers note that market disruptions can be difficult to predict, making preparation and adaptability important considerations for lenders seeking to protect performance.
The episode closes with a preview of the upcoming Optimal Blue Summit, where industry leaders are expected to continue conversations about capital markets innovation, lender profitability and mortgage market trends.
Key Points
Speakers discuss the continued growth and visibility of non-QM lending across the mortgage industry.
Lenders may be evaluating approaches to spec payups, pricing strategy and hedge performance as market conditions change.
Housing affordability pressures and changing consumer behavior may continue to influence homeownership trends.
Jim Glennon, Senior Vice President, Hedging & Trading Operations
Production Team
Executive Producer: Sara Holtz
Producer: Matt Gilhooly
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:
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Transcripts
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as expected, I thought this was the best forum we've thrown so far. We knew it was gonna be the most people.
We knew we were gonna the most sessions. It was a little bit tight, like there's so much information. I think people towards the end really w got started to get tired about me. And I think that was kind of the the point. It was to be a one-day event and for people to leave a little bit exhausted. Yeah, absolutely. We want them to absorb as much information as possible. We put a lot of effort into making this what it is, and we're just so excited that I I think it's a great sign that people are tired, as you said. Definitely. Ready to unwind a little bit. So I don't know, what do you think?
It was, I don't want to. I'm gonna pressure you to pick your favorite. What was your favorite session? Besides yours, you can't pick your own. Jim, just took my answer. you know what I think my favorite session was was the non-QM session. I just because it's such a hot topic right now, I I saw everyone in the audience, their ears really perked up to try to understand the stats that were being thrown out, the head strategies. And actually one stat that really stood out to me, and of course we know that non-QM volume has increased. We've we talk about this a lot.
In fact, I think our our data shows that non-QM originations are about eleven percent right now. But several years ago, we there was a stat thrown out that one in every was it one in every one. It was like four to five percent. So yeah. Yeah, basically. so just in just a matter of few years that has really increased. So I think that might have been my favorite session. How about you? I gotta go PPE slash hedge session. So just you know, we've worked over many years to integrate
our pricing engine with our hedge software and we've made huge strides this year with things like the Profitability Center and just some of the back and forth communication between the hedging software and PPE software. And I thought that and it was kind of a you know we had a couple new presenters on at least one new presenter, Max, did a great job, I thought, presenting on that. And then we had Kim who's done a ton of these. Kim does an amazing job. And Cam, Edsel who's done several of these before with this, I think was his best one yet.
So just a really kind of fun group to watch and they had a lot of really good things to say and it kind of brings together a main message that we have here at the forum, you know, in our marketing across the industry, and it's gonna be a big a big topic at the summit.
I feel like I'd be remiss if I didn't say a very close second was the lunch speaker, Kevin Kevin from Walls Fargo. KJ's amazing. I I I totally agree. He he's had some good insights about the housing industry, interest rates, the Fed, even a little bit on vantage score that I thought was really interesting. What what was I don't know, what was your favorite maybe stat or or
theory that he had about maybe what happens in the future. I think it was interesting that he brought in the release of the iPhone eighteen and what that actually says about our economy. So despite what all the data and the charts and the graphs show, the fact that there is the s supply can't keep up with the demand. I mean there's already a wait list, right, for this iPhone eighteen that's supposed to come out. And it it has a very hefty price tag, so this is not a product that's easily attainable, but consumers are obviously making it a priority. Yes.
Yeah, the totally. The point was that how can the consumer be struggling if they're lining up to buy a two thousand dollar phone that just came out, right? I did think that was interesting as well.
He does a good job of captivating the room. It's hard for me to sit through an hour-long presentation while I'm eating lunch. And so kudos to him for making it really interesting. Yeah, I'm not sure that it would have worked with anybody else. No. I thought it was interesting too how he said that we're basically counting on
Gen Z at this point to buy homes. If Gen Z continues living either rent or living with their parents, it it proves his earlier point, which it may be just right now owning a home as a luxury item. Right? There's been times in history when that's been the case. There's times right now in other parts of the world where that's always been the case, right? If you go over to Europe or you go to Great Britain, it could be considered a luxury to own a home. Most people rent, most people don't have that option to spend that much money on a home. And given that
You know, housing prices have gone up 30, 40 percent in the last five years, but the mortgage payment has doubled. So it's very difficult for anybody young, especially who doesn't have equity, to buy a home right now. And I thought that was it's like d there's nothing that's gonna change that anytime soon. We just have to accept that, and that's maybe that's what we need in this industry, is a little bit more just acceptance of what's going on and try to find more creative ways to to originate loans. That's a great way to say it. Yep.
What do you think of the talk of there's been a lot of talks about specs recently in the industry as well, and of course on some of our panels. I think it's a really interesting thing to think about how lenders are treating specs with respect to front end pricing. So are they passing through the entire spec pay up a portion? Not, are they hedging it, are they not? There I think that they're that's still one of those sort of to be determined best practices out there. I'm curious your thoughts on that. Yeah, I think it's as
Gary and some of the other folks who talked about this today, I think it's in it's lender specific.
Who are you selling your loans to? How are you executing? But also what do your borrowers look like? What MSAs do you work in? what are you trying to hedge? What kind of profitability margins are you trying to maintain? So, yes, the first question is just to maintain your volume and bring in the right borrowers, how much of that spec pay up do you need to pass on to the borrower to get that business? And then should you hedge it? Our our opinion on that is obviously that you should. We've certainly had you know an issue over
The first half of the year where spec deterioration has kind of destroyed a lot of PLs out there, at least created a lot of pain. On the other hand, we've had some clients who we've helped hedge spec payups over the past six months, and they've actually done fairly well. Not perfect, but very much smoothed out their PLs. So I think that was a conversation worth having, and it was part of the broader conversation of the timing of doing that, the timing of making any change to your hedge strategy or your execution.
ppen. Right? No one predicted:
Or not gonna be the one that ones that predict it, 'cause that's impossible. It's going to be the ones that are ready to move, the ones that are nimble, the ones that are ready to adjust to that new that new environment.
So coming up next is our summit. We're expecting double digit growth again for the summit this year, so we're expecting over 700 people to attend that event. So if
you're planning on going, you should register now. There's discounts going on for the next couple of months. And of course, as always, we have a celebrity speaker this year. It was just in a press release recently. In case you missed it, it is Super Bowl winning quarterback and commentator Troy Aikman.
And there will be continued conversations such as the ones we just talked about from today. A lot of this and so much more. So it's absolutely worth attending. We hope to see you all there.
