6.24.26 Industry Storylines; Spring EQ's Reno Heine on Competitive Differentiators; Agency Security Profiles

Today’s episode includes storylines from around the mortgage industry. Plus, Robbie interviews Spring EQ's Reno Heine on differentiating oneself in the increasingly competitive home equity and non- QM markets, how technology and AI are shaping growth, and practical advice for brokers seeking new business opportunities. And we close with a look at various duration and prepayment profiles across the Agency MBS sector.

Thank you to Equifax, a global data, analytics, and technology company, helps mortgage lenders gain the borrower and market insights they need to improve efficiency and make accurate decisions. Access differentiated consumer credit data, powerful consumer and market insights, and income and employment data from The Work Number.

The Chrisman Commentary is your go-to daily mortgage news podcast, where industry insights meet expert analysis. Hosted by Robbie Chrisman, this podcast delivers the latest updates on mortgage rates, capital markets, and the forces shaping the housing finance landscape. Whether you're a seasoned professional or just looking to stay informed, you'll get clear, concise breakdowns of market trends and economic shifts that impact the mortgage world.

Transcript

Speaker 2 0:02

Welcome to the Chrisman Commentary Daily Mortgage News Podcast. I'm your host, Robbie Chrisman. Topics on today's episode include storylines from around the industry, why the agency MBS market continues to offer a compelling case for shorter amortization securities, and my interview with Spring EQ's Reno Hein on differentiating oneself in the increasingly competitive home equity and non-QM markets, how technology and AI are shaping growth, and practical advice for brokers seeking new business opportunities. Here, take a listen to a little preview.

Speaker 1 0:34

Can we talk about meeting the borrower where they expect to be met, or maybe even exceeding their expectations? Because every everything that we're doing in this industry is ultimately to win business and cater to the borrow. What does the modern borrower that's in the home equity space, shopping for a home equity product, look for demands? Where can we exceed their expectations even?

Speaker 0:59

I think it's speed. I think speed is the answer there, but speed with a high conversion. If you have a client that should qualify for a loan, we need to meet their expectations. Some of the technology platforms that we've looked at do a wonderful job from just a speed aspect. But if you're only getting 25 or the 30% of the clients approved, you're leaving a very large part of the population out there on an island who unfortunately they may not know there's other options out there, and they may just think they can't qualify for a loan that may dramatically decrease their monthly outgo. I saw a client just yesterday that had $107,000 in credit card debt. And, you know, when you look at doing a HELOC, you're saving that person hundreds and a lot of times thousands of dollars monthly. That client had been turned down by one of the platforms out there. And it was a no-brainer to us. The customer worked perfect. The customer had a great job, stability, the property was wonderful. So I think the customer's expectations right now fall in two categories. It's I want to be able to qualify based on all the work I've done for my credit profile, the home I have. But secondly, I need it done quickly. And the reason I say done quickly is again a little bit different in the home equity space is a lot of times these people, it's not a plan thing, like I'm planning to buy a house in three or four months. It could be, holy cow, I just got my kid's college bill and it's $40,000 and I don't have that cash, but I need it in the matter of two weeks. We and this, the product, the home equity product, can step in and support those people. So that's what I think the customers' needs are is for the people who need money quickly and have done all the right things to deserve it, give them the speed and the accuracy on the product.

Speaker 2 3:22

Thanks to Equifax for sponsoring this week's podcast. With Equifax's suite of mortgage solutions, mortgage lenders can use trusted, independently verified consumer and financial data and analytics to reduce manual processes, accelerate loan decisions, improve accuracy, manage risk, and enhance the borrower experience from initial application through ongoing loan servicing. To learn more, visit Equifax.com slash business slash mortgage. Why did the Dalai Lama go to Vegas? Because he loves to bet. It's 107 degrees Fahrenheit in Las Vegas today. I know that because my dad is there. Some would say it's summer. What do you expect? Lenders and servicers are wondering if push comes to shove about air conditioning in homes or supplying a local data center with electricity, who will win? My bet is whoever has the money. Your company and family has money and criminals want it. The term bad actors seems a little weak. SithMA's twenty-sixth annual AML conference focused on the most pressing issues in financial crimes compliance. Something no company can afford to do without. There's a link to that story, as well as one on JP Morgan Chase's new policy brief on practical steps states and cities can take to increase housing supply and bring down costs on Crispincommentary.com, as well as a bevy of other things that we think are pretty useful for you if you putz around. We launched the website a a couple weeks ago, so go take a look. Using examples from across the industry, when we think about housing supply and bringing down costs, different places are testing new models to support innovations in home building. Turning to the capital markets, investors piled into safe haven assets yesterday amid a sharp technology sector sell-off and easing of concerns that higher oil prices would force additional Fed tightening. The rally in bond markets was led by the front end of the curve, pushing two-year and three-year yields back below 4.20%, though most of the post-FOMC rise in yields is set to, or yet to abate. It's a big distinction. Economic data is driving market direction less than technical factors, cross-asset flows, and sentiment around risk assets. Geopolitical tensions and oil price volatility are the main rate drivers, but a deeper equity market correction could revive flight to quality demand. The Federal Reserve's inflation-focused messaging has kept real yields elevated, even as market-based inflation expectations have fallen back to pre-conflict levels. Tenure treasury yields remain near 4.5%, largely because investors believe the Fed is willing to keep policy restrictive until inflation is convincingly under control. Strategists continue to favor a longer-term flattening of the yield curve, viewing any near-term steepening as temporary rather than a lasting shift. Your takeaway? Markets remain caught between easing inflation peers in a Fed that has yet to signal any willingness to relax its commitment to price stability, leaving rates range-bound and waiting clearer evidence on both inflation and geopolitical risks. For today's interview, I wanted to welcome back to the show Spring EQ's Reno Hind, to talk about differentiating oneself in the increasingly competitive home equity and non-QM markets, how technology and AI are shaping growth, and practical advice for brokers seeking new business opportunities. He's senior vice president of third-party originations at Spring EQ and a seasoned executive and entrepreneur with more than 25 years of experience building, scaling, and leading high-growth mortgage and financial services organizations. Today he continues to leverage his deep industry expertise and entrepreneurial mindset to identify opportunities, build strategic partnerships, and create lasting enterprise value.

Speaker 1 7:10

Let's start by talking about brokers, which are obviously a huge portion of the overall origination space. And where there have been tailwinds recently for them in terms of market share, there are also challenges that they're facing. Everyone wants to maintain their business, grow their business. This is to say nothing of the recent rate environment that we've seen here with all the uncertainty and volatility out there. Any advice from your end to brokers specifically looking to strengthen their pipelines and uncover new opportunities?

Speaker 7:44

We look at this all the time because I think it was out there for so many years that, you know, first mortgage rates, they're going to come down dramatically. And I feel that the broker community was kind of hanging on to those comments for a long time. And it ended up really hurting them because we're in a stable market now. When rates were in the 2% and the 3%, that's not sustainable long term. So though rates could come down and we may see them dip down, in my personal opinion, it's going to be a long time, if ever, if we see those kind of rates again. So I think what happened was mortgage brokers stayed very focused on how they had built their business over the last five, 10, 15 years. And unfortunately, the refi part of first mortgages, it's a tough business with any client who took out a mortgage, you know, from 19 through 2022. That refi business isn't always there. So part of the reason Spring EQ has had such a successful run is the second mortgage, the HELOCs, the HE loans, that gives the customers opportunity to tap into that equity, to pay off their bills, to send their kids to college, to do whatever they want without having to touch that first mortgage and lose that incredible interest rate that they gained through 19 and 22. As far as the brokers directly go, what we've seen is a lot of brokers having a tremendous amount of success because they are looking in a customer situation. Of course, they look at the first mortgage first, but they quickly pivot if it's not putting the customer in an ideal situation to touch that first mortgage. The most successful brokers I've seen lately, their first mortgage is focused on purchases and they're building their relationships with realtors, builders, all the different sources there. Of course, they're hitting the social media outlets to gain those customers. But when they come across the refi opportunities, I see a marketing for the refi opportunities, which is key loans, HELOCs, and those different products. And then they're also now shifting to obviously the investment products, the DSCR products, the bank statements, all the non-QM products. And now they've got a full arsenal. They're staying in tune with the purchase market and taking advantage of that. But they also have a refi opportunity, which when it doesn't fall into a first mortgage, they're doing HELOCs and HE loans. And they're also marketing to those that investor community or non-QM community, which could include bank statements and the different products. And those brokers are having a ton of success when people trying to do what they did eight years ago are having a tough time at it right now.

Speaker 1 10:55

For better or worse, the industry has certainly realized that the home equity space is one to dive into head first. And I say for worse because that means more competition for you. And we've certainly seen the overall space become increasingly competitive with more lenders entering the market. How is Spring EQ navigating this evolving landscape? And ultimately, what kind of differentiates your approach?

Speaker 11:16

Yeah, we expected the competition to really gain because our momentum has just grown year after year after year for the last three to four years. And we knew competition was going to come after market share there. Luckily, we've stayed a little bit ahead. We've got specific products that are only springy cube products, which gives us quite the advantage. The other thing is we've been doing this since 2016. This isn't a bolt-on product for us. We built this company around second mortgages, around HELOCs and HE loans. And though that was very tough initially for the build up through 2022, we got to work out all the kinks. We got to put our company in a position to really serve that market share very well. So that's why we've just exploded over the last four years. And where I think it works for us against our competition is again, if first mortgage rates drop, you will see a lot of the competition probably shift back to what they know best, which is really focusing on that first mortgage business. We'll stay true to second mortgages, HELONs, HELOCs are our number one focus. Now, we are adding non-QM. We're doing the same thing that other people are doing. We're looking to expand because we've built the processes, we've built the systems, we've built the technology to support a broader band of products. Competition is always going to take place. I think it's healthy for a market, but we continue to stay very in front of the competition from products, from pricing, from service levels. And we do that by understanding that competition is nipping at our heels.

Speaker 1 13:13

I'm glad you brought up non-QM because I believe you recently expanded your product lineup with the launch of a non-QM offering. Overall strategy behind the move into non-QM and how has the product been performing since launch?

Speaker 13:28

The non-QM, the launch non-QM, we did roll initially just a DSCR product, and the launch has been great. We focus on definitely making sure that we give extremely competitive rates in anything that we roll out. And we did the same thing with our DSCR product, and it allowed us to get out of the gates very quickly. We've continued to um refine our service. We have put massive amounts of resources into building technology inside our non-QM product to allow it to be faster. I mean, we did notice in non-QM when we first looked at offering the product, we looked at the time frames nationally that were being offered in that product, and we weren't pressed. So we said, okay, wait a minute. That means there's opportunity. There's opportunity to come in if you have a good product from a guideline standpoint. You're offering aggressive rates. You can be better than your competition by figuring out why the time frames to close these loans traditionally have been elevated, increased longer than they should be. Building the technology we've built, we have started to see very recently as we keep adding in layers of technology to help our employees be more efficient, more effective. We're seeing our turn times drop dramatically. And that's going to help us expand the product mix. We are just launching right now, it's in test mode right now, is our bank statement product. And we will continue to add valuable products to the market in the non-QM space.

Speaker 1 15:21

I'm starting to see some of those advancements that the home equity space pioneered coming into the first lien space, which is really encouraging. There's a big elephant in the room that we haven't touched on yet, and that's artificial intelligence and technology in general. These are dominating the conversations across the mortgage industry. I guess I will allow them to dominate this question. How is Spring EQ leveraging these? And where do you see the greatest opportunities for impact?

Speaker 15:47

We've embraced it fully, but I think our view on AI and technology enhancements may be a little different than some. I believe a lot of our peer group looks at it like we do. And we look at utilizing AI and any technology build as a way to make our people more efficient and to close loans faster. We're not looking at rolling out a platform that removes team members from being involved. Because personally, I'll tell you, I don't think that's going to be a hundred percent effective anytime in the near future. I think you have to build technology tools that allow, let's use an underwriter for an example. If an underwriter on an average day can underwrite four to five deals, we want to be build technology that allows that same person to handle 10 to 15 deals, 20 deals a day. And then we look at our sales team and say, hey, we never want to lose any of our team members. So we need more business. And we've given you a tool through speed to go out there and present this to the broker community and say, hey, you're used to closing non-QM deals in 25, 30, 35 days. What if we can consistently get them closed in eight to 10 days? And that's where we have to use technology. We hired some extremely intelligent people to come in and build technology to help in our non-QM space. And we're seeing approvals come out in lightning speed. We're seeing conditions when they come in be picked up by the technology and being decisioned in a matter of seconds. Those advancements are really helping us, you know, win over the broker community. They'll allow us to expand our products faster. But at the same time, our team members, we're still hiring because we're using it to grow our volume, not to eliminate team members.

Speaker 1 17:57

You obviously established a strong position in the home equity market. Thoughts on a few factors that set you apart. And since I like to be forward looking on this podcast, do you share any insights into what's next for Spring EQ?

Speaker 18:10

A couple factors I believe set us apart. And we touched on them earlier in the interview, but because we've done this so long, we are extremely efficient at what we do in the second mortgage space. And we've been able to eliminate a lot of conditions through technology that at any other place you have to produce yourself. Our technology is going out, you know, to the world and pulling in the data. So hopefully, we're not asking the customer, we're not asking the broker to go chase down documentation that our technology is able to find itself. So that helps us stand apart. The other thing is we continue to try to advance our product mix. Example is our fixed line HELOC. So we truly have a HELOC that has got a fixed rate component for the life of the loan. And it is that single loan. So now no matter how many times they draw off that HELOC, that rate never changes. And it's not adding a second or third mortgage to it. It is the same mortgage. If you want it 30-year amateurization with a fixed rate, that, as far as I know, is very rare if anybody else in the HELOC space offers it. What's next for Spring EQ? Um, I don't think we have enough time to cover that. We have so many projects going on right now that we are excited about. Uh, we already offer a correspondent channel, which is, you know, got its delegated and non-delegated components to it. But on top of that, we're developing now other correspondent products to help maybe the smaller correspondents that are just breaking into it. So we are excited to be rolling out that product in the next couple months. As I mentioned earlier, we are rolling out our second non-QM product as we speak, which is our bank statement product. We have additional technology that we are going to be implementing. Um, we are looking at technology that we can put up on our platforms to help make the brokers' lives easier and help them close loans faster. Uh, we're always looking at ways that we can help the broker community gain more customers. We've got a ton we're working on right now, and we have high expectations for not only the remainder of this year, but into 27 and 28.

Speaker 1 20:52

Breno, always valuable insights from you. You know, I enjoy doing these, and I'm sure we'll talk to you again soon. So thank you very much for the time.

Speaker 21:00

Absolutely. Thanks, Robbie.

Speaker 2 21:04

The agency MBS market continues to offer a compelling case for shorter amortization securities, particularly 15-year pools, where investors benefit from both lower duration risk and a faster return of principal. While agency mortgage-backed securities carry virtually no credit risk, investment performance depends heavily on turnover, prepayments, and curtailments. Compared to 30-year pools, 15-year borrowers tend to have stronger credit profiles, lower loan-to-value ratios, and more accumulated home equity, reflecting borrowers who are often later in their financial lives and focused on accelerating mortgage payoff. As a result, these pools generally exhibit faster cash flow characteristics despite smaller loan balances, making them attractive in an environment where investors increasingly value liquidity and certainty of return. We learned yesterday that U.S. business activity grew at its fastest pace in five months in June as a rebound in manufacturing pushed the SP Global Flash composite PMI to 52.2, but the expansion masked underlying weakness. Today's economic calendar kicked off with mortgage applications from MBA, which rose 1.0% for the weekending June 19th, driven by a 3% increase in refinance applications, which were 17% higher than a year ago. Purchase applications slipped 1% on a seasonally adjusted basis, but remained 3% above year ago levels as mortgage rates remain largely unchanged, despite a more hawkish tone from the Federal Reserve. Later today brings building permits for May, new home sales for May, a five-year treasury auction, and remarks from Fed Governor Cook. We begin Wednesday with agent CMBS prices roughly unchanged from Tuesday's close, the two-year yielding 4.20, and the 10-year yielding 4.48 after closing yesterday at 4.49%. Let's wrap up with a joke and some housekeeping. A man wins $100,000 in Las Vegas. When he returns home, he hides it in his backyard, only to wake up the next morning and find it stolen, with a trail of muddy footprints leading to the mute deaf a few blocks away. Enraged, he enlists the help of the sign language professor next door, and together, the man armed, they confront the mute deaf at his door. Tell him I want to know where he hid the money, the man yells. The professor conveys this to the mute deaf, and he responds with sign language that he hid the money under the cherry tree in his backyard. The professor turns to the man and says, He won't tell you. He says that he'd rather die first. Thanks again to Equifax for sponsoring this week's podcasts. With Equifax's suite of mortgage solutions, mortgage lenders can use trusted, independently verified consumer and financial data and analytics to reduce manual processes, accelerate loan decisions, improve accuracy, manage risk, and enhance the borrower experience from initial application through ongoing loan servicing.