Introducing No Surrender with Greg Sher, Jennifer McGuinness & Coby Hakalir

The first episode of No Surrender is here—and it delivers exactly what the industry’s been missing: real opinions, real tension, and zero pretending to agree.

Greg Sher is joined by Coby Hakalir and Jennifer McGuinness for a fast-paced, no-holds-barred debate on the biggest issues shaping housing and mortgage right now. From executive orders and bank re-entry into lending, to Opendoor’s headline-grabbing rates, evolving LO comp models, and the ongoing credit bureau chaos—nothing is off limits.

This isn’t a polished panel. It’s three industry insiders challenging each other in real time, unpacking what actually matters for lenders, borrowers, and the future of the business.

If you want honest takes, sharp disagreement, and conversations that actually move the needle—this is it.

Transcript

SPEAKER_01 0:22

Boom. Wow. And just like that, the dynamite drops. What's happening, Jen? What's happening, Kobe?

SPEAKER_04 0:30

I'm still reeling from that open. It's so good.

SPEAKER_03 0:33

I do. I'm not gonna lie, I was bopping my head a bit to that open. Well done, everybody.

SPEAKER_01 0:38

It's got about two million views, and Kobe has been responsible for uh 1.999 million of the replays. So congratulations on that. It's good for two of you. I'm I'm looking forward to getting this thing up and running. No surrender. I mean, it kind of speaks for itself, uh, and it's there right below the taglines. How excited are you two?

SPEAKER_04 1:01

Oh, super excited. I can't wait for the merch. That's what I'm really looking forward to.

unknown 1:05

The merch.

SPEAKER_03 1:06

No, I uh listen, I think the market's been screaming for this for a while. I think you know everybody watches a lot of things, reads a lot of stuff. But when you get the you know, three people together that don't always agree, I think this is exactly what the market wants.

SPEAKER_01 1:21

Yeah, and what we're gonna do every week just to set it up is talk about things that are happening in the industry that people have opinions on that are germane to the success or failure of uh of companies out there right now. We are at a critical juncture uh in the mortgage business. I know we say that a lot, and it seems like we're always at a critical juncture. But this one with you know AI and uh sticky inflation and uh the government trying to make an impact on housing affordability, um, MBA pushing back. There's a lot to get into today. So, you know, we're gonna start getting into it. And that's what we're gonna do on these shows is get into three or four topics every week um that we uh unpack and have a dialogue about. We may agree on all of them sometimes, and then we might completely disagree on others. So without further ado, let's jump right into the executive orders, which were uh shared last week, and uh we'll get a quick soundbite from the prez himself.

SPEAKER_00 2:15

Executive order is about bringing more community banks back into the mortgage business. Two decades ago, over 5,000 community banks were offering mortgages. Today that number has been slashed by more than 50 percent, largely because of burdensome, unnecessary regulations that radical liberals imposed on community lenders for the benefit of their donors on Wall Street and frankly for the benefit of themselves. The result was less competition and higher mortgage rates for hard-working Americans like you. That is why, under my order, we will eliminate the thicket of unnecessary rules and restrictions that crippled community banks. They've been hurt so badly, we're bringing them back. When more local banks start offering mortgages again, fees will go down, costs will fall, and home buyers will be able to get a mortgage under the more affordable terms that we're insisting on.

SPEAKER_01 3:15

Very interesting. There's a lot there. Uh, community banks, Jen, not just the focus here. Tell us about these executive orders and is there a there there?

SPEAKER_03 3:24

Yeah, look, I mean, I think the two that are top of mind is you have the building executive order and then you have the access to credit executive order. And to be candid, you know, I think the building one is a little bit silly, not because we don't need more homes to be built, but because the large majority of the sound bites coming out of that building order are based on a study that was done in 2021. And, you know, with regard to things like the cost of building, you know, having $90,000 worth of regulatory costs in there and stuff like that, I think, you know, a lot of it is just not going to come to fruition. In addition, since 2021 till now, there's been a vast array of things done at the state level to get more houses built. Do I think that some aspects of this executive order from a you know environmental perspective or certain other features may help, you know, bring up that or, for example, uh increase opportunity zone, you know, uh building over 400,000 units, maybe, but um, I don't want to see the market do what it's doing, which is hanging on $90,000 worth of regulatory costs. That's not a current number.

SPEAKER_01 4:32

Kobe, uh, it says while the EO identifies numerous mortgage-related rules that need reform, in many cases it limits the relief banks with less than 100 billion in assets. Um, and then the MBA goes on to say they support efforts to increase bank participation in mortgage lending and servicing, and the goal should be to revise overly burdensome rules for lenders of all sizes and business models. What are they talking about? How is this uh separating um certain net worth lenders from others?

SPEAKER_04 5:04

Yeah, well, I I think the the the aim of both of these executive orders, you know, is in the right uh direction. The housing, sorry, the community bank one, it's it's putting a little bit more common sense back into how they can do some portfolio lending, allowing them to take a little bit more risks, which they should be doing in the community. Um did also offer some pathways to doing more construction loans, which is great. Um but the reality is that the community banks didn't get out of the business because, and I think the number that that the president gave was 5,000 down to 2,500, they didn't get out of the business because of the regulatory issues. They got out because they could no longer compete with IMBs on price. And that's what that's what drove them away from being able to do um the business that they wanted to do, so they just shifted away from it. So I'm not sure it's aimed entirely correctly, although I would like to see more construction lending. I think we do need to build more homes. So what Jen said, um, you know, I I don't know where states are that are doing all these miraculous things to remote building. I think that $90,000 number um is probably true in some areas, not true in others, but we still do have a lot of local barriers and that in building, and that's where those executive orders misfire because the majority of the issues happen at the state and local level. They don't happen on the federal level.

SPEAKER_03 6:17

Right. And you'd need an act of Congress to do a lot of this stuff.

SPEAKER_04 6:21

I think you need an act of I think you need an act of local communities that start to say Yimbi instead of NIMBY. And I think that's where it starts, and that's where the efforts need to be.

SPEAKER_03 6:32

Um let's make sure our wires aren't crossing here. I feel like we got a little wire crossing going on here. I was talking about the building version. You went directly into credit. Let's make sure that we don't mix our sandwiches, right? So, with regard to the credit, right? It's very specifically targeted $30 billion small banks or under $100 billion in asset banks, right? With regard to why banks exited the market, it wasn't all just because IMDs were more competitive, because you got to remember that a lot of these guys could tap the Fed window for a much lower cost of funds, right? And it also was about, you know, the lack of diversification in lending products. And as the market has started to come back with regard to diversification in lending products, now it becomes more interesting to hold a portfolio asset for more yield, right? If everything's getting you know delivered to the GSEs, it's not very exciting for a bank to deliver loans to the GSEs. Although we still do have certain multi-billion dollar smaller bank lenders still very much in the hunt and being active in the mortgage business. You know, a great example is citizens. They do almost $4 billion worth of loans a year, right? Now, that number may not sound like a big number for a bank, but it is for a mortgage lender. I think my bigger problem with the mortgage one is why are they calling on the CFPB to adjust regulations that are super strict only for portfolio loans? You know, what they're asking for in here is reform the ability to repay the qualified mortgage rule, include a potentially broader QM safe harbor for portfolio loans, replace trade timing requirements with a materiality-based standard, and ease cap some points and fees for small balance mortgages. You know, that needs to be done across the board. Okay, not just for smaller banks, not $30 billion banks, not $100 billion or less banks. It needs to happen across the board. And if you could find a way for it to be done for portfolio holdings, then you can find a way for it to be done for the entire market.

SPEAKER_01 8:28

Now, let me pivot to uh the first hot take of no surrender. Are you ready for this?

SPEAKER_03 8:33

Absolutely.

SPEAKER_01 8:34

So Bob Brooksmith, the president CEO of the Mortgage Bankers Association, recently came out and said that he is not only in favor of banks playing a larger role when it comes to servicing and having capital requirements uh potentially readjusted uh to something more reasonable, but he's also in favor of banks taking more market share. Now, I'm an IMB. I pay the MBA lots of money, you know, several tens of thousands of dollars annually. And when I hear that, I think, why is he standing up there saying that he wants to bring more competition in for me to have to fight against when the pie is already getting smaller and smaller? I want to know what you both think about that. Kobe, what what are your thoughts?

SPEAKER_04 9:19

You know, I've I've I've I've been looking at this for a couple of weeks now since we've had the uh the Fed vice chair talk about changing the capital requirements. You know, I I I think more competition is better for the industry. You know, 15 years ago, we had Wells Fargo with, you know, 31, 32% of market share. And now we're at a point where no single lending entity has more than eight or nine percent. I think that's good for the industry. And we're gonna get into it later in the show, and we're gonna talk about the different innovations and comp models and kind of break them down. But I don't think the IMBs need to worry about the banks coming in um and and taking their market share. I think the banks are going to see what the landscape looks like. Some will, some some won't. I don't think it's an uh all of the above answer. Um, I think it's the MBA's responsibility to represent all different factions of mortgage banking because it's mortgage bankers uh association.

SPEAKER_01 10:08

Just remember that. Let's say that a couple times.

SPEAKER_04 10:10

If you want to mortgage bankers, what that means.

SPEAKER_01 10:13

I don't want competition. Why do I want competition? I'm getting enough competition, I'm getting enough competition from mortgage brokers who are at 30% of the business right now. That's plenty of competition for me. I'm good with it. The banks can keep doing what they're doing, provide warehouse lines, be a great partner. But historically, they get in when the going's good, they get out when the going's bad, and all it does is put pressure on us, and we end up holding the bag and doing the tougher loans.

SPEAKER_03 10:38

Yeah, but a lot of that context is really the larger banks, right? So um, not necessarily community-based banks, but I think I'm gonna throw something out to the independent mortgage bankers, and I agree with you, Mortgage Bankers Association, and not to mention 83% of all loans last year were originated by independent mortgage bankers. So let's give everybody credit where credit is due. But let's also, where's the creativity, folks, right? Partner with the $30 billion or below bank, $100 billion or below bank, be the actual channel for the origination of those loans, gain access to better cost of financing, deliver loans in a structured way where it's actually a good positive holding. I mean, this being done for years and a lot of years already. I've done it many times. And you know, there doesn't need to be uh us versus them structured in this. If there's going to be a benefit at that level, well, guess who's been creating all that volume that that bank may want today? Right? There's an opportunity here for really exciting partnerships, in my opinion.

SPEAKER_01 11:41

Yeah, I I say bullshit to all that, honestly. I mean, I feel like all you want. I know that they can come, they can come, they can grow, they can grow their business. And believe me, Jen, you know, if they push us out, the IMBs, when they decide to run away again and none of us are left to do the business, there's going to be a real problem generating financing. We got to keep this moving. Let's let's keep it moving here. Let's talk about open door because we promised on the show.

SPEAKER_04 12:04

I just want to know, I just want to know what you think the alternative is. That's all. We'll talk about that another episode.

SPEAKER_01 12:08

I mean, that the all the to keep doing what you're doing. What's the problem right now? We have plenty of there's plenty of competition out there. This idea that we need more competition is beyond me. Like, believe me, you want you wanna even without triggers, you want to know what the competition is like? Talk to a loan officer about how many people are nipping at his or her heels on a loan transaction. Just how low, just how low they have to go on rates because their local banks are or their or their realtor has another lender or something. There's plenty of competition. Consumers are getting really, really good deals out there.

SPEAKER_04 12:40

So you want to see Basel III tightened.

SPEAKER_01 12:44

Sure. Why not?

SPEAKER_04 12:46

There you go.

SPEAKER_01 12:47

I didn't say that. You did. All right, we're gonna pivot into open door here, wanting to be the e-trade of mortgages. Uh look, open door, um, you know, they've got this rollout now claiming that they've got a 4.99% mortgage. It's like anything else, folks. I mean, this is not free. So uh, Jen, what's going on here?

SPEAKER_03 13:08

Yeah, I mean, look, I think that, you know, you got to take this in context. You know, you also have to look at where they are in the land of originating mortgages. I think, you know, last I read they have two loans in Colorado. So I think that's the first thing. Number two, you got to remember what they have from a you know revenue production model. Uh, you know, they buy houses and they look to sell them at a premium, right? The mortgage itself can actually expedite that. It's actually a bigger risk for them to hold the assets longer if there's going to be property value volatility, right? And in those markets. And as you know, we've started to see declines in a vast array of markets. And, you know, at the end of the day, they're not looking to make you know their big bank money on a 499. But, you know, Kaz, who's the CEO, you know, versus what Dan Green put out there on LinkedIn was very different. Kaz said, you know, this is what we're going to do to start a promotion in order to bring the optics to our business, which is honest, right? You know, Dan is like, oh, let's talk about 350 basis points. It's like not relevant. At the end of the day, what they're talking about is a triage of 80 basis points, maybe 85, but they're picking up the money on the sale of the house. And let's not forget that they also have ancillary services. Title and Escrow is a great example. So it's not just the mortgage for them. Actually, the mortgage is a de-risking solution if they can get it done.

unknown 14:29

Yeah.

SPEAKER_01 14:30

So, so Kobe, they're claiming, and I think that this is what will really land with people that are listening to this program anyway, that they're gonna they're eliminating 350 basis points of the spread and and and of the excess there, which is very, very misleading. By the way, they're not the only ones that are doing that these days. We're gonna get to a couple of lenders uh that have a so that have a similar pitch out in the marketplace.

SPEAKER_04 14:52

It's it's it's misleading. And and what bothers me about it, I'm all for innovation, I'm all for creativity. What bothers me about it, and I think I mentioned this to you, Jen, yesterday when we talked, is that isn't the mortgage process already confusing enough for buyers? Isn't the home buying process already a web that somebody gets entangled with as soon as they start going into this process? Why are we doing things that you know are shuffling the deck a little bit, shuffling chairs around the deck, whatever the phrase is, where we're making it more confusing, we're hiding the transparency part about where the costs are coming from. A straight up conventional mortgage, when you give an LE to somebody, it's already confusing what the fees and the rates and the APR and all of that. I mean, it is. And and we have an another problem where we where we don't communicate well with our buyers. We use a lot of jargon, we use a lot of uh a lot of a lot of terms that they're not familiar with. And now we're starting to create products where we're moving the cost of the home from the price of the home into the mortgage and back and forth. And I think it's only going to foment more mistrust in the industry. And I think creating misleading programs like that is bad for all of us.

SPEAKER_03 15:56

Yeah, but I also think misleading headlines, right? Like um housing, mortgage finance, and asset, you know, acquisitions and sales are never going to be e-trade. E-Trade is a broker intermediary. They don't own hard assets, they make money off interest income of people putting money into their trading accounts. They don't ever own anything, they're actually transacting and never take in security. Risk exposure for them, market activity, whether it's you know good market, bad market, trading activity in a bad market goes up even more, right? Key disclosure, you know, would be net interest income from client balances is their biggest way that they make money. That's not going to happen in open door. Open door.

SPEAKER_01 16:37

You guys ever heard of open door home loans? Have you heard of that before? Okay, so this is a renewed push into the financial services for this entity. If the company announced open home loans in 2019 as part of a broader expansion strategy, and they later shut the division down in 2022 as rising interest rates pressured the housing market. Again, they want to get in. And by the way, is open doors even a success at this point? Or is that is the jury seems to be still I mean are they significant? Are they a success? Are they a failure at this point? Is this a reach? I mean, they're going, they're going somewhere. You're smiling, but they're but they've like well just make an argument that this is a bottom-of-the-barrel attempt to grab headline.

SPEAKER_03 17:23

I'm smiling because I'm agreeing with you. Oh right, we've already seen this, we've already seen this before, right? You don't remember Zillow did a you know i buyer program, and they literally have to shut it down after losing a billion dollars because they Zillow couldn't predict valuation properly in order to buy homes at the right level to actually get to the right return profile. And by the way, they do have Zillow home loans and a vast array of other things. At least their CEO, when they shut it down, was honest about the fact that they just couldn't get the forecasting right on what the home prices needed to be in order to make that business successful. So, like we've seen this movie before, we could call it whatever we want.

SPEAKER_04 18:04

We've seen it, we've seen it many times, and here, you know, we're spending way too much time giving them way too much publicity right now. But the bottom line is that they they came in and and made a claim that's simply not true. It's misleading, it's bad for business. We need loan officers in this country, we need loan officers in our industry. People don't buy stocks or buy homes at the same rate that they buy stocks. So we're never going to have an e-trade mentality in our business. People want that guidance. That's why AI is not going to replace the loan officer. We've seen it on the real estate brokerage side with the discount brokerage. Customers don't want that either. What they want is true, genuine leadership, and they're willing to pay the price for it. They're willing to pay a fair price for it. That's why about 4% of borrowers say they've made the decision on their lender based on interest rate. And the rest is all based on value and leadership and trust. And when somebody comes into our industry and lays down a bomb like that, that's not true. That's creating mistrust in the industry. And that's where I have a problem with.

SPEAKER_01 19:00

Yeah, we got to call it out. Uh, we we've talked a lot about money here, so let's let's continue, right?

SPEAKER_03 19:04

We're gonna follow the money uh and talk about let's follow the positive cash flow, Greg.

SPEAKER_01 19:10

I love positive cash flow. Um all right. So so you mortgage Anthony Casa recently coming out with this flat model where you pay a fee. I mean, this sounds very familiar to people that follow real estate. You know, you pay a flat fee, everything else is all yours. Nexa's got the Nexa 100. Um, what's going on here, Jen? What's your opinion on this? And it's just more of the same. I mean, it's everybody's paying something somewhere along the lines.

SPEAKER_03 19:38

Again, I think you gotta, you know, I'm the annoying details person, so I'm gonna go details on you for a minute, right? Like you look at the year mortgage structure, you know, their basis on it, and the way they pitch it is 275 basis points alone, but instead of uh split, there's gonna be flat fees, but then it goes into a $995 flat fee until you reach 50 loans. So it's about $50,000 to the house. You got a $300 QC closing fee, you got a 10% admin fee, plus a payroll associated cost, right? And you know, after you reach that 50 loan threshold, you get rid of the 995, but you're still covering the cost of marketing and a vast array of other things. But one thing I do think was an interesting ad though was a recruiting incentive, right? So they um added a $500 per loan recruiting incentive. Um, and you know, that could add some additional um income for um for for you know your LOs and whatnot. But again, you know, make sure that you're understanding the details, you know. I want to go into Nexa, though, it's totally different. Kobe, you mind if I just put the side by side and then we'll go there?

unknown 20:46

Yeah.

SPEAKER_03 20:48

The core structure for Nexa is that they they say 100% of the money is yours. Well, 100% of the money can't be yours when they have you covering all the expenses, right? Right? If you're covering all the expenses, right, the the money's not yours. So you're still responsible for all your marketing, you're still responsible for all of your costs, etc. etc. So again, devils in the details. And quite frankly, kudos to Nexa. They said this is the hardest model to work under. They did.

SPEAKER_04 21:18

Recruiting is a basic. You don't qualify for it, and you don't qualify for it unless you're doing the non-dell loans and working with their non-dell lenders and engaged in recruiting activities. I find it interesting that both of these have recruiting components to them. Um, and I'm not sure how that sits with me. I don't the on the face of it, I don't like it. I think there's something wrong with putting a comp plan in place that requires people to go out and get other people. That to me smells like multi level marketing. And I don't think it's the right way to build a business because when you do that, you're inherently saying we care more about the bodies than we do about the culture of organization. And I think that's a dangerous way to grow a business.

SPEAKER_01 21:53

Let me peel this onion back a couple of layers here and talk about something just as interesting. That's Anthony Casa. About Anthony and his role at AIM and brokers are better, and then pivoting to UMortgage, and then getting people to invest in that company and him going down the lender path, and all of a sudden now he's going back to the uh rhetoric that brokers are better and here's why, and come here for the flat fee model. Yeah, well, I think nobody's fascinating to me.

SPEAKER_03 22:20

No, nobody can ignore the connection of UMortgage to UWM. I know it's like it's a faux pas to start talking about it, but like UWM really helped him start that business. God knows UWM was also behind AIM and a vast array of things. And that's not necessarily a problem on its face, but there is a loyalty structure there. And Kobe, I would say that, you know, I hear you on what you were saying about Nexa with regard to certain lenders and certain loans, but actually they came out recently and said, we're not going to restrict the brokers anymore to only specific lenders. If they want to sign up to do products with certain lenders, we're going to get those lenders into the system.

SPEAKER_04 22:57

That's the recruiting piece that bothered me more.

SPEAKER_03 23:01

Yeah, and I think that that, but I think that's an important change for Nexa because they too, very much like you mortgage, were absolutely only certain lenders, right? Only certain programs, only certain products. So the question is going to be is anybody gonna buy into this? And you know, if people buy into this and it doesn't work out exactly how they think it should, we'll be hearing about it very quickly.

SPEAKER_01 23:24

That's how I mean I think I think Nexus proven that they're a winner and that they're they're here, they're in it to win it. I mean, Mike was right on the cutting edge at the right time and he sought the opportunity. And I think can you juxtapose that against Anthony, who's who who I like and is a friend, um, brilliant mind, but it just seems like he doesn't get all the way there on the lending side, uh, for whatever reason. But but on a technology front, technology front, he he is there. Like he he helped, he helped to create arrive. Um, and now he's got another piece of software. So, I mean, both really, really talented people. And uh, I think it'll be interesting to see uh you know what comes of this new model for you, mortgage. Yeah.

SPEAKER_04 24:10

And I will say that while I don't agree with the recruiting component of it, and I know, and I know Cortis wants to go.

SPEAKER_01 24:15

You're stuck on that recruiting thing, buddy.

SPEAKER_04 24:17

I am, I am, but I'm but I'm pivoting off of it. Um, if if he wants to go from 2,500 loan officers to 5,000 loan officers, I think I think it's bad for the business to to consider growth in terms of bodies as opposed to volume and customer benefit. But um, you know, what I will say is that you know they're there the the pressure of having this this market share that's fragmented is that companies are forced to be innovative and do things, and some of those things are gonna fail, and some of those things are gonna backfire, but some will work.

SPEAKER_01 24:43

Yeah, but at least they're taking shots. They're all taking money.

SPEAKER_04 24:46

And they are taking shots, and so I agree with that and I and I welcome it.

SPEAKER_01 24:49

Yeah, and you know what, you know who else is taking shots over and over and over and over again? Cross country mortgage.

SPEAKER_04 24:54

That's right.

SPEAKER_01 24:55

They took a big shot by taking down Summit funding, Todd Screma, who's a name a lot of us uh know if you've been in the business any length of time. Cross country acquiring summit. I think it was officially announced on uh Friday, and uh Ron Lenhart, the CEO of Cross Country, said quote, in 2025, we financed one in 35 homes sold nationwide, ranking as the number one retail lender. And their market share, Jen, just continues to grow. I mean, just look at this right here. You and your fabulous team at Pivot Financial uh came up with this graphic here, but you know, 51 billion and growing in 2025. What are your thoughts?

SPEAKER_03 25:34

So I think the thing that nobody's talking about with regard to this, and we'll get to what they acquired in a minute, is how close they are to direct to consumer at Rocket. Rocket's 2025, direct to consumer sold loan volume was 68.4 billion. And cross country before the acquisition of Summit, et cetera, was already at 51 in 2025. So the question is, where are they gonna go in 2026? I think it's gonna be really telling once we see where they're at at the end of Q1, 2026. The other thing Are you saying rocket?

SPEAKER_01 26:09

Wait, let's just clarify where Rocket's gonna be or where cross country is gonna be.

SPEAKER_03 26:13

Where cross country is going to be in comparison to rocket.

SPEAKER_01 26:16

Well, what are you saying that that that volume-wise they might surpass rocket?

SPEAKER_03 26:20

For direct to consumer, I'm talking. So if you look at direct to consumer for 2025, 51 bill cross country, 68.46 bill rocket. Okay, that's not that many billion apart, guys. And you gotta look at the case.

SPEAKER_01 26:36

That's not direct, that's not correct to consume direct to consumer. I just want I want to clarify here. Uh uh, because I think we're getting wires crossed. You like that, Kobe? You like how I did the wire thing with her? That's good, right? Cross country, the majority of their business, the majority of their business comes from self-generated loan officers that get stuff from realtors. There they don't have a massive direct to consumer.

SPEAKER_03 26:55

Whereas whereas they still call it direct to consumer.

SPEAKER_01 27:00

You're talking about guys, are you talking about retail? Because Rocket has retailed wholesale, Rocket has everything, right? And yeah, cross-to-based.

SPEAKER_03 27:07

They are multidimensional hybrid model, the whole nine yards. So let's call it retail if we don't like direct to consumer. But even if the you know lead comes into you from a realtor, you're still doing a direct-to-consumer origination.

SPEAKER_01 27:19

You're talking about numbers like Rocket compared to cross-country volume, right? We're focusing on volume.

SPEAKER_03 27:24

Yeah, that's what I'm talking about. 68 and 51 are not that far apart.

SPEAKER_01 27:27

Well, well, the difference is Rocket is getting it largely through a wholesale platform where they're having brokers plug in, whereas cross-country is generating all that.

SPEAKER_03 27:36

Actually, at this point, Rocket is getting it through Mr. Cooper, through Redfin, and through everything else, right?

SPEAKER_01 27:42

Well, that that remains to be seen. That remains to be seen. So, yes, no, no, no, no. They're getting they've they're one in six loans now that they're servicing, right? That's what they got. Now, having said that, will they be able to turn that into new loans and new purchase loan? New purchase loans. New purchase loan. Yeah, that's what that remains to be seen. Kobe, you're chilling.

SPEAKER_03 28:04

But what I would say is there is a cross-country acquisition cycle. They bought three companies two years apart in succession to actually grow their footprint, starting with Lend US, then they went to um, I forget the other one's name. I gave you a visual for it, Ampro, I think. And then they just did Summit, right? Every single one of those was strategy to get access to the first one, Lend US, was seven billion dollars worth of originations and getting, you know, directly into you know other markets and increasing um, you know, certain markets like Texas, California, etc., all through these three acquisitions. The second acquisition was like 2 billion, right? This one's I think just shy of 4 billion, and it's all increasing their footprint.

SPEAKER_01 28:49

Yeah.

unknown 28:49

Yeah.

SPEAKER_01 28:51

Last word on this.

SPEAKER_04 28:52

Yeah. What I like about what cross country is doing is they're they're being very strategic about their acquisitions. Um, they've raised a lot of money. They're continuing to raise money. Um, they uh I think Ron said that he turns down 15 deals before he gets one that he likes. So they're not out there trying to acquire everybody and just be a behemoth, like kind of like what we're seeing in real estate brokers with Compass, just trying to buy anybody that'll listen to them. Um so I like the fact they're strategic. I think it's good pressure on the market. We're gonna continue to see consolidation coming into 2026 and beyond as you know, we don't go from 4 million transactions to five. We're just gonna continue to hopefully incrementally get bigger. But there's gonna be the the middle, the mid-sized and the smaller IMBs are gonna continue to get squeezed and continue to get acquired.

unknown 29:34

Yeah.

SPEAKER_01 29:35

Yeah, it's very interesting to me how uh all in that like similar concentration in the United States, you've got Rocket, uh, you've got UWM, and you have cross country. I mean, that represents an awful lot of volume uh in that neck of the woods. Let's talk about Loan Depot. They are going into wholesale lending. Tell me if you have heard that before. Um they exited wholesale in August of 2022 during its earnings call when the company announced a second quarter loss back then of uh 224 million. It was also the first call led by Frank Martel, who was hired as president. He later left. Um this is interesting, right? I mean, uh the timing here and who knows uh what's gonna happen there. Are they gonna pivot to a flat fee model for wholesale? And I think there's even a larger question, Jen, that I'll pose to you is can this really work? Can you really be a big badass retail lender with a big badass wholesale arm?

SPEAKER_03 30:36

Well, I think the first thing that anybody's gonna think about is they have a very large direct and consumer retail presence and brokering loans into them, like anybody who does, you know, are they ever gonna get that borrower back or are they gonna get to keep the borrower is gonna be a big question. But, you know, I think this is also another question. Do brokers want to work with them again? You know, how did the last wind down in 2022 really go? Like if you read the quotes back then, they were gonna honor a billion dollar pipeline. But I could tell you, I remember being in the business back then and how many lenders had to come and ask for help to get out of loans because they only honored the LOX pipeline. And the loans that were actually in the underwriting pipeline or in a pre-approval status or whatnot were not honored. Um, and that was an issue. In addition, when they announced that line down back in 2022, they said they were gonna do it in a constructive, calm way and then end in October. They actually shut off the engine for new loans in August, right? Even though you know they spoke to that there was gonna be a you know, ease of transitional timeline. Really, all they did was honor what was locked, right? And then there was some of that that fell out too. But you know what? We've seen this rodeo before too. You know, people have to remember not to have selective amnesia. And I don't think Lone Depot is the biggest offender not to have selective amnesia about, but they have to remember, you know, when I did business with these entities, and it's not just Lone Depot, it's all a lot of them, right? What was my experience? Is the same management team in play or not? Is this what you know is going to be most conducive to my business? So, what I would say is it's a great reminder to brokers and lenders alike, make sure you have multiple takeouts for all your products, whether you're a broker, lender, etc., so you don't end up in those situations hung with loans.

SPEAKER_04 32:28

Yeah, but why do I even want to deal with it? You know, I mean, if it loan depot is looking at the horizon on the market, when they made this announcement, it was before the conflict in Iran when rates seemed to be floating down into the fives, and they saw a horizon where they could make a lot of money on refinances and they bought a bouquet of flowers and went back to the broker community and said, baby, I'm sorry, it's gonna be different this time. And if I'm a broker and I've already got relationships that are solid and I know who the players are that really want to be in the brokerage business and the wholesale business, why am I even taking a chance? Like, yeah, if I'm gonna do a deal with them, I want to have a backup, but why even get into that situation to begin with? Who's gonna trust them again? That's the question. I want to know who the mortgage broker profile is that's gonna say, oh yeah, let me start doing business with Loan Depot and send my pipeline there again just because they said they want to now.

SPEAKER_03 33:12

Yeah, but they need to boost their production. And they actually attempted to do this on the quiet before they attempted to roll out true wholesale again, just trying to find a couple of broker partners to really feed that additional enhancement to their production. I mean, by virtue of it now being announced that they're going fully back into wholesale, I would say that there were a bunch of dudes that said no.

SPEAKER_04 33:32

Yeah, and oh, by the way, and oh, by the way, Rocket has this problem now where Rocket has direct consumer competing with the broker channel, and the brokers are trying to figure out is Rocket really serious about staying in the wholesale game? And Rocket is doing everything they can to reassure that community, what Lone Depot is doing is facing that same dilemma, plus the fact that they bailed on them for four years. So I don't care where they're your point, Jen, was so excellent.

SPEAKER_01 33:58

We've we've had like four or five segments in here. I think that little piece was the mic drop piece that you were able just on the fly like that to go peel back four layers and say, let's not forget how they exited. And you said it's a lesson for everyone to not have uh selective amnesia, and uh it's also a lesson for those that are exiting the business to do it with class and dignity because people have uh hopefully short-term memories. Last point here, this is it. We're at the end here. We're gonna talk about one of my favorite subjects, and that is the credit bureaus, FICO, vantage score, and this just in all three uh bureaus, which uh own a third of vantage score, yes, what a tangled web we weave, have come down to under 99 cents per vantage score um if you use them for mortgage, which sounds amazing. Except for the fact that the GSEs and the whole thing is not set up yet to take these loans and we don't have uh LLPAs yet either. There's a there's a thread here, I think that uh it goes through every topic that we've talked about. There's a sense of like Hail Mary desperation in just about every topic that we've talked about, Jen. To me, this is no exception. I I'm not sure what's going on with vantage score. Um right right now, they're not anywhere near uh the finish line. And this this again to Kobe's point, more confusion. Like, oh my goodness, I'm a consumer. I'm 99 cents. Where can I get that? Oh, it's not available to yet. Well, then why is FHFA talking about it? And why is why why is this out there as a as a conversation point?

SPEAKER_03 35:41

I'm gonna be candid. If I were a lender, I'd be offended by all of this. And the reason I'd be offended is because it sounds like they think you're a bunch of cheat suits, right? You know, like for three dollars, you're gonna decide on what your risk profile should be is ridiculous. Does that make sense? I think there's cost to manufacture, and then there's also risk assessment, compliance, and modeling, right? And if you want to be able to keep, you know, the best price outcome if you whether you're putting the loans from a mark-to-market perspective on a balance sheet or you're selling, you know, secondary on your loans, performance is going to be key, right? And the manner in which your loans and your prepays occur is key, right? Not to mention, you know, what could be the actual, you know, downstream to upstream pricing adjustment that's going to occur here for an unknown model, you know. And um when I say unknown, I mean not dissected to the extent that FICO is. And look, I'm not saying FICO has been perfect by any means, right? We know that's not the case, but in the same vein, you know, don't offend the mortgage industry. We're not only about cost. And by the way, as soon as they can give you the 99 cents, note that they didn't tell you how long that's gonna last, right? So if everybody starts, you know, running over there and signing up for vantage score, and then you know, all of a sudden you got a big piece of the market. What do you think they're gonna do? They're gonna make it five dollars again. That's what's gonna happen. It's still feels like we're direction.

SPEAKER_01 37:07

It still feels like we're miles away from any solution on the credit front. In the meantime, you had one of the bureaus raise their scores for the FICO three dollars, and Kobe, I don't see any solution.

SPEAKER_03 37:19

No, that was the credit report, not the FICO. So you and I have had a disagreement about this since you said it. The three dollar additional cost increase after the original annual cost increase, right, for credit reports.

SPEAKER_01 37:35

Yeah, it's still it's still 10%. They they raised it 10% because they're roughly around $30 uh for a single pool for us for IMBs. So to go from 30 to 33, which again, that that was mischaracterized as well, because the people that wrote about the increase said that it represented a 3% increase. Yeah, when you factor in the other two bureaus and the fact that uh the cost usually for TriMerge is around $95, but really it was elevated 10%.

SPEAKER_03 38:02

Well, just so you know, the letter, the letter that went to the resellers actually says three percent, and they actually modeled it at three dollars.

SPEAKER_01 38:08

Yeah, well, that's a point. It did say three percent. It's pretty simple math. So maybe maybe they're to blame that.

SPEAKER_03 38:13

Yeah, but at the end of the day, I just want to be clear though, that's report cost, not score costs.

SPEAKER_01 38:19

I get it, I understand. It's still an increase, it's still an increase of 10%. Let's stay on point my message here. Sure, it's a 10% increase, it's a 10% increase and a continuing pattern of abuse. And Kobe, I'm gonna give you the floor here.

SPEAKER_04 38:33

Yeah, I mean, you know, it's just like how much more of this can we take from these guys? Um, you know, at a certain point, you have to start questioning are they all just sitting in a room together, the FICO leadership, the three bureaus, is vanished score even a real thing at this point, or is it just something they're using to kind of you know pretend to have this battle around what the pricing is, raise scores, lower scores? At the end of the day, we're still beholden to both entities with nothing on the horizon to indicate banish score can be used. Um, if you think Loan Depot is giving mixed messages to the uh mortgage audience, think about what these what these folks are doing to us. Um, you know, just constantly raising prices, lowering prices, telling us, hey, we can use this. Experian in in the announcement about this talked about how their data is is the most complete out of anybody's now, and it's going to inform the vantage score better than they ever could have done with FICO. They just put out a white paper two months ago talking about how their data is so incomplete that we need all three bureaus to make a whole customer. That was their phrase, a whole customer. Exactly. You took the words out of my mouth. In the span of two months, they talk out of both sides of their mouth, tell us different stories, raise prices, lower prices. I'm sick of all of it. We need real solutions to actually take control back from this because we are at their mercy.

SPEAKER_01 39:45

And the white papers, Jen. The white papers, I mean, they're they have stacked up at this point. You've got you've got the credit bureaus, the CRAs, you've got FICO, you've got Vantage Score, you've got these outside firms, these inside paid firms. There's so much con it's it's so convoluted at this point. It's really hard to understand. And then you got to unpack who paid for this study, right? And who didn't.

SPEAKER_03 40:08

Right, right. And you know, that we honestly at Pivot got sick of it, so we started modeling the data ourselves, right? And then we started testing that data against all these different papers, and you know, honestly, none of them are 100% correct. Some of them are absolutely off the wall, but what is absolutely consistent, right, is there is a big deviation between the two models. The matter and the the duration of time the data is going to be needs to be available in order to be used to calculate scores. And I think that's really important. You know, the other thing is, you know, they keep pontificating vantage about trended data, this, that, and the other thing versus FICO classic. And I keep saying this, I don't care. And the reason I don't care is FICO 10T has that trended data. And at this point, Fanny and Freddie are working on getting to the release of that data for FICO 10T publicly. And I think once we have that, then we can really finish the analysis of these two scoring models.

SPEAKER_04 41:14

The real question is in an age of AI, in the age of technology that we're in, the right question, I believe, is how do we get past the nonsense of discussing which score is better? And how do we get to the point of figuring out how do we ingest enough data to be making good decisions and eliminate 30% or 40% of this cost altogether and be able to get all of these secondary investors to go along with it? I think we can get there, and I think we're wasting our time talking about which scoring model is better. We don't need scoring models, we need the data.

SPEAKER_01 41:45

I have a lot of fame here, and there are a lot of alternatives.

SPEAKER_03 41:48

I disagree.

SPEAKER_01 41:49

There are a lot of alternatives.

SPEAKER_03 42:00

Right, they're not going to dissect every single trade line across three different bureaus, etc. We don't need to, we need to. I put out a post that very clearly said this is all voluntary, right? Which is true for who credit bureau the credit providers actually report to. You fix that, maybe we can start talking about what you're talking about, Kobe. But until then, it's an antiquated sandwich of different formats, right? The manner in which the data needs to be formatted for each bureau. Trust me, I've worked in servicing at the lender level, etc. And the asset management side of the business is who provides this data.

SPEAKER_04 42:36

Well, you're not disagreeing with me. You're just you're just you're just saying we're not there yet, which I agree with, but you're saying that we can and should try to get there.

SPEAKER_03 42:42

And I'm realize uniformity, though, is also gonna have to happen there, even if we could get mandatory reporting. But yeah, I mean we're not a hundred percent disconnected, I'll give you that.

SPEAKER_01 42:53

Jen, more more importantly, this is the first conversation I've ever had outside of a cafeteria where there have been two references to a sandwich. You have well, you know, you have pulled that off. You wanted to make sure there wasn't a combination of meat and the same sandwich, and then you just made another sandwich reference. All right.

SPEAKER_03 43:10

Well, I'm gonna have to turn it into another reference now, Greg. I apologize for my sandwich references. I don't actually I don't mind.

SPEAKER_01 43:18

I don't mind. Um we're we're gonna wrap this up in one second. Um, a lot of these things that we're talking about hinge on what's happening right now in the world. So we have uh oil sites being bombed. We've got a bond that is hovering near a critical area now, another critical level of 427. Um if it breaks through 430, it's gonna run a little bit more. A lot of these bets that people are making is that we are turning the corner finally after four or five years. Uh this is concerning. It's concerning for me and want to know what you guys think uh about the the direction here. It it seems to me, without getting into too much. Politics, which maybe isn't possible that uh we got in a little bit deeper as a nation than we thought we would be getting in Echo.

SPEAKER_04 44:07

Yeah, I mean that's first of all, that's the history of our wars is you know, it no matter what we call it, a conflict, a skirmish, an intervention, uh, we always wind up getting deeper than we want to, especially it seems like when it comes to anything having to do with oil in the Middle East. Um, you know, I I I think we can talk politics without being political. Um I think there's a way to have a discussion about this and where it goes. Um I think we have to acknowledge that there's real people losing real lives, and that's that's always tragic and that's always sad. Um, it where where are we gonna go? How long is this gonna last? I mean, it it it really remains to be seen. I, you know, when when Russia invaded Ukraine, did anybody think that was gonna go four plus years and that's still ongoing and there's no resolution in sight? In fact, we're not even talking about it anymore. Um, you know, I I I think it's I think it's one of those things where, you know, if uh we're gonna feel the the pressure from it at the gas pump, we're gonna feel the pressure from it when it comes to people making decisions to buy homes and see what it does to uh the cost of living overall. Uh we already know that it's impacted the Fed's decision yesterday to hold rates where they are because of the uncertainty surrounding it. Jobs were a factor as well. Um, you know, I I I think it's one of the things that um, you know, we're gonna have to we're gonna have to really think about on the mortgage industry is okay, we're we're probably not gonna be in the low fives anytime soon, which was where we were heading um at the end of February. Um so I I think we it's time to maybe start readjusting our expectations for this year based on this data. Now this could all end, but I think I think we'd be wise to start looking at things a little bit differently.

SPEAKER_03 45:39

Remember that thing at the beginning of this that you all pushed back on about the idea of partnering with banks that have a lower cost of funds. Yeah? Yes, how you could do more loans right now, everybody. Go partner with banks with a lower cost of funds, right? So the other thing is what's ridiculous about the oil impact on the United States is we actually produce enough oil for ourselves, but because of the pricing mechanism that's actually global, that's why the oil price that's rising the way that it is is so impactful here in the United States and elsewhere. So I think you know, that's something important to keep in mind. So Kobe, I'm gonna agree with you. I think we're in too deep than where they intended.

SPEAKER_01 46:19

I can't let you uh I can't let you get away with the with the bank comment. I can't. I gotta come back. Uh just hang on a second. Slow down, slow down, slow down. That's what I said, folks. You know, listen to what I said. Go partner with banks. Like what does that mean from your perspective? I'm an IMB, we have warehouse lines, we're direct uh seller servicers. We've got Fanny, Freddie, Ginny. How do you suppose what does that look like other than 30,000 feet? Uh how does it partner with the bank to do to do to do for to do first mortgages, to make the amount of revenue on a loan, to keep our lights on, which are flickering.

SPEAKER_03 46:57

Thousand percent. You might even make more money. So, one of the things I said, so you know, you got to understand that you know banks in general have a lower cost of funds, right? Than a warehouse line. That's why warehouse lines a lot of the time are from banks. There are non-bank warehouse lenders, but it's because they can put a plus on top of their cost of funds and then charge you when you pledge their loans to you, them, excuse me, and then they're getting the excess, right? And they're getting you're getting paid down. I'll tell you um, some strategies that absolutely work when you're transacting with banks right now with no regulatory change. Originate mortgage loans, structure them into single-line item securities, and deliver them to a bank. Put together a forward flow agreement to actually have a portfolio bank acquire your mortgages, they'll give you a rate sheet or a portfolio balancing um strategy, right? So that you have to deliver them loans that look like X, Y, and Z from a credit characteristics perspective. This is not something new, it's been done for a very long time. Most of the time, the people that get it done are who's doing this?

SPEAKER_01 48:02

What big lenders are doing this? I've never heard of this. That seems very it seems very sensation, very sensational.

SPEAKER_03 48:09

Large majority of the biggest.

SPEAKER_04 48:10

I worked at US I worked at US Bank for five years.

SPEAKER_03 48:13

US bank's not where you're getting this done.

SPEAKER_04 48:15

Hold on a second. I worked at big banks prior to that, too. I've I've been around banks my whole career. I don't remember any time working in a bank where it was like, oh my god, we can do mortgages so cheap because our cost of funds is less. We were actually paying lower commissions than the independent mortgage banks, lower commissions than the brokers, and we were charging higher.

SPEAKER_03 48:32

Yeah, a lot of the reason for that was the cross-sell requirement of being in a bank. A bank actually cares more about you selling deposits, right, than actually if they are cutting the interest rate on a mortgage loan. It is more valuable to a larger bank or a depository institution to get $200,000 more in deposits than it is to keep.

SPEAKER_01 48:52

Are you suggesting that's part of a that's that's that's part of a possible partnership is to say to a bank, hey, give us a lower cost of funds, give us lower warehouse fees. No, I was give us the higher, give us a higher payoff, and we'll introduce we'll we'll introduce the idea of our clients banking with you.

SPEAKER_03 49:07

No, well, no, I would not suggest that a lender actually start an independent mortgage banker start cross-selling like a bank. The inside bank origination units are incentivized to drive other ancillary business, not only mortgage, but sell them a credit card at the same time, get deposit income in at the same time, et cetera, et cetera, et cetera. That's how those programs work, right? With regard to IMBs partnering with banks, let's call it regional bank, super regional bank, smaller mid-size bank, right? Um, if you want to do a forward flow with GP mortgage, you can get that done depending upon what your net worth looks like right now. That's not what I'm talking about. You get with a mid-size bank or a super regional regional bank, you actually do a trade with a structured transaction, right? And then you give them a they give you a benefit and they're getting a benefit as well. For example, if they're trying to bring back their mortgage business from the dead, you know, if they believe that this is all going to shake out in a great way for them, or if they care in general, right? You can bring them production immediately versus them having to hire a team, bring in the systems, bring up the operating income, et cetera, et cetera, et cetera. And they can probably buy your loans at a more advantageous price.

SPEAKER_01 50:23

I'm not liking the way this sandwich, I'm not liking the way this sandwich tastes.

SPEAKER_03 50:26

I have to be I wasn't talking about the sandwich.

SPEAKER_01 50:28

I'm talking about uh too much mustard too hard cash, Greg.

SPEAKER_03 50:32

Too much mustard.

SPEAKER_01 50:33

I gotta check the expiration date on this mustard.

SPEAKER_03 50:35

Yeah, uh this has been great, not mustard.

SPEAKER_01 50:39

I understand, but we do 800 million dollars a year. So I mean, maybe we're an outlier, I guess we are, but how many banks would I have to have this relationship with to cover 800 million dollars? It wouldn't be one. You're talking about regional small community banks. So the last thing I need to do is go develop 50 more relationships. The business is complicated. So you got actually caveats now. Now comes the fine. Now comes the fine print. You see what you did there, Kobe?

SPEAKER_03 51:05

Not fine print, guys.

SPEAKER_01 51:06

There's only I'm gonna leave. I think I think we call those the condiments. I like that. Very good.

SPEAKER_03 51:13

I think both of you need to get rid of food and talk about money.

SPEAKER_01 51:16

Hey, you started it and it's lunchtime.

SPEAKER_03 51:18

And I'll just talk about money.

SPEAKER_01 51:20

This has been great. Uh appreciate uh this first episode. We'll do at least two more next Thursday at 1 p.m. Eastern. I think this went really, really well. I loved how we kept it moving. You guys were on point, and I hope the audience enjoyed it too. The first, no surrender. I think we had plenty of hot takes, fierce debates, and uh we're still not surrendering, so that's good. We're staying on this. Yeah. All right, enjoy your Thursday, everyone. Take care.

SPEAKER_02 51:45

See ya.

SPEAKER_01 51:46

Bye. Bye bye.

SPEAKER_02 51:48

No surrender on the tow. We vote on the tow. What fail, what fails? Who gets the hole?