7.10.26 Housing Statistics; Rate’s Ryan Ogata on Profit and Loss Models; Rates Versus Volatility

Today’s episode includes a discussion on housing statistics from the beginning of summer. Plus, Robbie interviews Rate’s Ryan Ogata on why more and more originators/branch operators are choosing “profit and loss” models over traditional retail. And we close with a look at why rates aren’t great but a lack of volatility is welcomed.

This week’s podcasts are sponsored by FICO. As the industry's most predictive credit score, FICO Score 10T combines proven performance with deeper insight into borrower behavior to help support a stronger and more resilient housing finance system.

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 0:02

Welcome to the Chrisman Commentary, Daily Mortgage News Podcast. I'm your host, Robbie Chrisman. Topics on today's episode include some statistics from around the mortgage industry. Rates aren't great, but a lack of volatility is welcome. In my interview with rates, Ryan Ogata, on why more and more originators or branch operators are choosing profit and loss models over traditional retail. Here, take a listen to a little preview. I want to ask you when we when we look at just the lending landscape right now from a borrower perspective, what are borrowers focused on? It seems like we've moved away from from the rate a little bit toward what's my payment. There's a new Fed chair. I don't think that should concern borrowers terribly much when it comes to interest rates and some stuff in the Middle East that there's a lot of uncertainty there. But but what do you what is the borrower in mid-2026 that wants to own a home? What's going on with them from your vantage point?

Speaker 1 0:56

Oh wow. I mean, look, every market's different. Every market. I mean, look, I'm I'm in San Francisco. I'm in San Francisco, okay. In the general area as well, and you can see what's happening with all the AI ideos and all the money that's just being done. It's gangbuster, right? I don't think you can buy a single family home in San Francisco for less than like three million dollars at this point. I mean, it's it's it's out of control. Millions of dollars over asking, and this is making headlines, you know, every single day. That that is that is one particular part of the housing market, and then there's other places. So I don't think it's fair to kind of talk about these things in complete like generalities. All I would say is, I mean, again, going back into this PL model is that no company knows more about what a like smaller like market, what what's going on there more than the actual originator of living in that market, they are front lines, and every single marketplace is gonna have a different dynamic that's going on. That's what I love so much about this profit loss model because it's basically, hey, look, here's the rate platform. You do what you want to do for your market because you know your book of business better than we do. And if you're seeing that our pricing affords you the ability to make a little bit more on a government loan, maybe make a little bit less on a jumbo loan, that is for you to decide where those margins need to be set in order for you to be competitive in your respective market. I frankly cannot look at the entire country and be as dynamic as I would need to be in order to take advantage of every single little pocket of opportunity that exists across the entire map. Impossible to do. Companies battle at it. This is where this model really kind of comes to play, is that I'm gonna leave that decision making to the branch operator who knows that best in the marketplace. And that's everything from the margin side of things, that's the fees that you charge a customer for processing, all that stuff. I would be arrogant to think that I know that better than you do if frankly I haven't even been to a city or the state that you are doing business with. You know, I think I've I consider myself somewhat well traveled, but again, I have not been to every single market that we serve, and I don't know what the dynamic of every single market that we serve in.

Speaker 3:16

In a market where every loan counts, FICO score 10T lets lenders say yes to more borrowers without added risk. As the industry's most predictive credit score, FICO score 10T combines proven performance with deeper insight into borrower behavior to help support a stronger and more resilient housing finance system. FICO has set the standard for decades, and I'm grateful for their support of today's podcast and the conversations that help bring mortgage professionals together. I was asked recently where I got the statistic that 30% of repeat buyers paid cash and did not finance their home. It's from the most recent home buyers and sellers report from NAR, and if you'd like to see stats based on age, the link to that, as well as some other really neat things, are at ChristmasCommentary.com. Lenders and vendors love data, and according to Kuranos proprietary application index, June 2026 funded mortgage volume increased 6% year over year and increased 8% month over month. The average 30-year conforming retail funded rate in June 2026 was 6.35, 10 basis points higher than May 2026, and 44 basis points lower than the same month last year. Certainly, the ability to look at granular statistics has increased, but are you managing to or managing through? Investors continue to manage, or at the very least, monitor, renewed Middle East tensions. The focus remains on whether inflation and labor market data will validate expectations that the Federal Reserve can remain on hold, particularly as oil prices this week have stayed below levels that would signal a meaningful inflation shock. We learned on Wednesday that the June FOMC minutes reaffirmed that persistent inflation from energy tariffs or AI-driven demand could warrant additional tightening if economic conditions remain resilient. But with Treasury action demand proving strong and energy markets relatively contained, the recent rise in yields appears driven more by hawkish policy expectations than by escalating geopolitical risks. The Treasury's $25 billion 30-year bond auction yesterday capped off a good finish to this week's trifecta of solid auctions, with solid investor demand reinforcing, but the market continues to absorb increased treasury issuance, despite elevated yields, geopolitical uncertainty, and persistent inflation concerns. With long-term treasury yields having climbed back above 5% after recent selling pressure, the higher yield environment attracted buyers and helped stabilize the long end of the curve, easing concerns that weak auction demand would push rates materially higher, and shifting investors' focus toward next week's CPI report and the evolving outlook for Federal Reserve policy. June, Ginny, May, two 30-year prepayment speeds declined 7% with slower activity concentrated in higher coupon loans, while older lower coupon vintages continued to accelerate modestly. VA loans continued to prepay faster than FHA loans, particularly in higher coupons due to the VA streamlined refinance program, with servicer performance remaining a key driver of pool behavior. Planet Home Lending led the fastest VA prepayment rankings, Rocket Quicken dominated the FHA rankings, and Village Capital consistently posted the fastest speeds among newer loans. Reinforcing that servicer characteristics remain one of the strongest predictors of prepayment performance. For today's interview, I wanted to welcome back to the show Rates Ryan Ogata to talk about why more and more originators and branch operators are choosing profit and loss models over traditional retail. He's executive vice president of reverse mortgage lending across all rate companies, and he's also served in the capacity of regional and divisional sales leader. Let's focus on profit and loss models today. And it's come in vogue in a lot of ways because there are certainly benefits. People running their own businesses are probably a little more inclined to be striving for something greater. Maybe call it capitalism versus socialism. I know I won't go quite that far, but don't go quite down enough. It's a little far down. Yeah, it's a little longer. But but let's set set the groundwork a little bit for people when we talk about just what we mean when we say profit and loss models and uh high level why the industry is trending that way.

Speaker 1 7:40

Well, look, they've been around for a while. I mean, again, I look back into my own kind of personal career as an originator, you know, coming out of the whole implosion in 2008. I think I discovered the profit and loss model in like 2010. And we referred to them as like net branches, you know, kind of back back in the day. And they were probably around, you know, for you know, again, I don't know the exact timeline, but they've been around for a while and they've existed in various forms, right? I think, you know, compliance is sort of uh, you know, a moving target in in a lot of ways. And as, you know, sort of rules, regulations, and interpretations of, you know, set of rules for regulations, you know, kind of come come out, companies have to sort of pivot and evolve, you know, what uh profit loss, you know, model looks like. Today, it seems to be a very, you know, kind of just attractive option for you know established branch operators, but even, you know, let's just call it, you know, more seasoned individual producers, because it really just affords them a lot more flexibility than a traditional kind of retail, you know, model would allow, right? So if I take, you know, kind of like big retail, like the B of A's, the Wells Fargo's, you know, the world, I put them on one end of the spectrum, and I take, you know, the broker model, put it on the other end of the spectrum, I would say, you know, this sort of fits, you know, in a happy spot somewhere kind of between the two. And I don't necessarily think, you know, don't necessarily think too much about the big retail, you know, kind of being you know, kind of one, you know, sort of sort of end of it. Just really think more about, hey, I want to do sales, I want to kind of focus on building a business. This is sort of that next kind of level up above just doing sales and kind of controlling your own branch and being able to adjust the margins as you see fit, control your costs as you see fit, you know, take additional revenues and invest on how you see fit. You know, you kind of run the show. It's your branch to operate about kind of thing. And that's that's why I think it appeals so much to that entrepreneur. You know, again, this is a this is a very entrepreneurial business, you know, again, the the the mortgage space, it's it's this great example of you can do something different than your competition, and if it yields uh a positive result, good for you kind of thing. You can make all these great changes at the market, the market is so big, there's space for everybody to attack it in like a different way. So I think it really just sort of fits in with maybe the the psychology of a law officer.

Speaker 10:12

Yeah, I'm I'm trying to find the the middle ground here because when I talk with top originators, they're they're very happy that a lot of automation and technology out there has freed them up to focus more on relationships or advice or peer, you know, building their book of business. And now going one step further, what can some of this distract from it where it's like, hey, I'm good at original, I don't want to have to deal with worrying about the stuff, or you feel like for the the real top dogs, for lack of a better term, that that it's it's normally something that they all want to do.

Speaker 1 10:43

You know, here's the thing, and I like to I like to say it like this whether you know it or not, you're on a PL, right? I mean, let's just be let's just be fully honest about what that is. And then you know, the second part I want to kind of just highlight is this is the mortgage business, it's not like rocket science. Okay. And I think that anybody who has you know some experience in the mortgage space has a rough idea of margin revenue coming in, fee revenue coming in, and costs going out, right? Let's just not overcomplicate what a PL really is. I mean, so you know, as much as there may be a little bit more, I don't know if work is the right way to characterize it, but just focus on kind of how your business is performing, what your branch financials look like. I don't necessarily see that as a detractor from the sales side of things. Because at the end of the day, you're already on a PL, whether you know it or not. You know, that's just the harsh reality of things. And if you're a successful salesperson, the chances are that PL is making money. You know, so again, I don't don't don't let it you know overwhelm you, don't let it intimidate you. It's not, frankly, that much work. And it really just provides that PL owner a lot more autonomy and the ability to kind of make kind of decisions on their terms and run the business on their terms.

Speaker 12:09

I believe the language you use to me was rate is growing fast with this offering. And yeah, I'm hoping you speak a little bit to rate and and why you see it as as spurring all of this growth for you all.

Speaker 1 12:27

You know, so I would say, look, we're we are arguably the best, not yeah, one of the best. I don't you know, I don't want to say if I if I look at my kind of uh history here, I've been with a company for eight plus years, and I think we've done a really, really good job growing the company, recruiting with what I think is tangibly a superior platform. And that manifests itself in different ways, but let's just talk about the sales side of things, right? If if I'm engaging with a uh a producer that maybe they've hit a ceiling and maybe they feel sort of stuck, then I'm able to show them all of the tangibles that we offer as an organization from the technology, the marketing, just our our manufacturing of the loan, the the product that we offer, right? Those are those are things that the salesperson will hopefully see that there's some value there, choose to join us, and that that will be kind of a catalyst for them to really sort of take their business to the next level. Right. So we as a company, I think we've done an amazing job creating what is arguably like the best value proposition in the market space. That still exists, but we're finding that the industry seems to be shifting a little bit more towards this problem loss model, which is kind of the opportunity for us to add that additional offering of kind of how it is that you want to, let's just talk, how it is that you want to control the economics of your business. So I can still provide all the great things that we offer the salesperson, all the things that historically have worked for us to help an originator grow their business, but now we're able to do it with profit and loss economics, and that's opening up a whole new offering of a whole new recruit that historically we probably haven't been able to engage with very well. I think we've done a great job as a company of finding top producers in any market, bringing them over and helping grow their business. This is really more hey, there is a branch, there is an existing, thriving team that is working rather than focusing on individual players inside that branch. Let's talk to the branch manager, the operator, show them all the benefits of rate, show them how our PL works, right? The margin revenues coming in, the fee structure going in, the corporate costs going out. And chances are we're gonna have a superior value proposition for that entire team. And rather than kind of focusing on the individual originator, it's more about the group, the the entire branch team making the switch and joining joining our organization.

Speaker 15:09

Yeah, you brought up recruiting there, and I do want to talk about recruiting a little bit. How would you characterize the current landscape? There, it's always this is always a topic of interest. What uh you not with too much specificity here, but what are we seeing in terms of signing bonus trends? What are we seeing in terms of what top talent is is asking for from companies, not not monetarily, but in terms of textile, how can companies woo talent and also build loyalty with the the good talent they have?

Speaker 1 15:36

This is one of the things that I love most about the profit and loss phase, is that at the end of the day, the pitch is very simplified. It is let's look at your pricing where it exists today, let's look at your corporate costs where they exist today. On the PL, if I am able to show you a scenario where your pricing is improved, your corporate costs of doing business are lesser than where you're at. Meaning, let's just say, let's simplify it. Same rates, more money, better rates, more money. It's money in, money out. It's kind of the most sort of you know fair, impartial way of comparing two platforms, especially on a PL. Are you seeing a financial economic benefit to pursuing this conversation further? And that's a yes or a no question. It is very simple for us to do a margin comparison and a corporate cost structure comparison, right? You already know your rent. You already know what your staffing expenses are, salaries for processors, when you're paying for bonuses. So all that stuff is going to be the same. I'm just going to show you a different rate sheet, maybe more product than you're used to seeing. I'm going to show you our corporate cross structure. If we're able to pay you more profit, right? If our PL is generating more, chances are that that branch manager who is a business owner is going to want to engage further and see all the other positive attributes that we as a company provide to help them kind of go out and attack the market opportunity. Two part, two part answer though, because you did ask about kind of the signing bars thing. I mean, look, that is a kind of reality of the world that we live in today. I mean, the mortgage industry has evolved to where, you know, some of the these producers, they've got a large amount of business, and there's something of a disruption that is going to happen changing platforms. As much as I think we do a great job of onboarding new originators and helping them connect the dots at a new organization, there is going to be a disruption there. It is a little bit of work, sometimes a lot of work, depending on how much buying we're talking about, right? We've got, thankfully, we have the resources to make it happen, but there is going to be a signing bonus, something that that originator is going to need in order to kind of make it worth their while.

Speaker 18:06

And not to be too draconian here, but is there still space for the traditional retail model in mortgage lemon?

Speaker 1 18:15

Absolutely. Absolutely. I mean, again, look, this business is not a one-size-fits-all kind of approach. And there are originators out there that, and that's it's not, it's not criticism. It's more all I care about is doing sales. I just want to plug in to rate, and I send loans. You guys take care of the rest, and that's totally fine. At the end of the day, there's nothing wrong with that. We do a great job of uh supporting that type of originator. Again, retail is the bulk of what we currently do. Okay. So we've historically done a great job of it, and there's nothing wrong with it. This is just another offering that we have for the person who's interested in either a converting from a traditional retail model and exploring what a profit loss would look like, or B, an existing branch operator that has a team that's already operating on a profit loss, coming over and connecting in with us uh and using us, you know, in order to in order to facilitate their business.

Speaker 19:14

We have a guest submission question from Rob Christman. He wants to know what constitutes a successful day. How do you qualify success in this business?

Speaker 1 19:26

Oh, uh, in this business for me personally, or I mean not personally, not not we're not personally here on the podcast. We're not personally on the podcast. Okay. Uh that's a good one. At the end of the day, I'm a numbers guy. Success is when I can look at our market share. I can look at our market share is the biggest one, right? Again, that that's that's the uh that's the the equalizer. You know, you can say you recruited all these people, but if you're not actually growing market share as a company, you're not really doing your job. And the same thing goes for emerging internet rising tide, race soft chips, that's the that's the saying. You know, great. Let's just say you know, we we are so fortunate to come into another like refinance boom or not boom or cycle, great. The business is going to increase for everyone. But if you're not outperforming your peers, you're not you're not really being successful, right? There, there's a there's a there's a pie of eligible transactions, eligible business, eligible recruits. And unless your slice is getting larger, uh, you're not you're not really being successful, frankly. You're kind of on borrowed time, uh, in my opinion. So I would say, you know, as long as we as a company are are increasing our market share, I'm I'm I'm happy. And that's a that's just that's a successful day.

Speaker 20:32

I like that. I I like competition, I like competitive people, and uh I I like talking to you. So this was this was a good time, man. Uh, hopefully we'll do it again soon. Thank you.

Speaker 1 20:42

Yeah, thank you so much. I really appreciate it. Any time.

Speaker 20:47

We learned yesterday that June existing home sales fell 2.4% from the month prior as high home prices and elevated mortgage rates continued to weigh on demand despite improving affordability driven by wage growth outpacing home price appreciation. With no economic data on today's calendar, we begin Friday with agency MBS prices, little change from Thursday's close, the two-year yielding 4.18, and the 10-year yielding 4.55 after closing yesterday at 4.54%. Let's wrap up with a joke and some housekeeping. A mortgage banker and a realtor get into a car accident and it's a bad one. Both cars are totally demolished, but amazingly, neither of the professionals is hurt. After they crawl out of their cars, the mortgage banker sees the realtor's NARS sticker and says, So, you're a realtor. I'm a mortgage banker. Just look at our cars. There's nothing left, but we're unhurt. This must be a sign from God. God must have meant that we should meet and be friends and live together in peace the rest of our days. The realtor replies, I agree with you completely. This must be a sign from above. Mortgage banker continues, and look at this, here's another miracle. My car is completely demolished, but this bottle of Chardonnay didn't break. Surely some power above wants us to drink this wine and celebrate our good fortune. Then he hands the bottle to the realtor. The realtor agrees, takes a few big sips, and hands the bottle back to the mortgage banker. The mortgage banker takes the bottle, immediately puts the cap on, and hands it back to the realtor. The realtor says, Are you having any? To which the mortgage banker replies, No, I think I'll wait for the police. Thanks again for FICO for sponsoring this week's podcasts. As the industry's most predictive credit score, FICO score 10T combines proven performance with deeper insight into borrower behavior to help support a stronger and more resilient housing finance system.