Strategies to Maximize The Power of Day 1 Certainty: Episode 2

All right, I think folks are joining. Good to have you all on the webinar. Thanks. Thanks for being here with me and really excited about the. What are we going to chat about today? All right, while people are rolling in, why don't we start with Richard's favorite question? Tell us about the thing. Tell us a thing about yourself that nobody else would know.

You want me to start, Kirill?

Go ahead, Josh.

I was. So I went to school, to college as an opera singer, and. And I was actually recruited like a football player because I had done really well in the Texas Allstate competitions as a junior in high school. And I had deans of the school of music calling my house, asking to talk to my parents and trying to convince me to come to their school. So I think nobody would really know that about me.

That is crazy. I mean, maybe at the end of the session you could give us a couple notes.

I'm retired. I'm retired. This is what I do now. This is what I do now. I'm retired. A long time ago. Long time ago.

All right, that's fine. Yeah, I. I won state bowling championship.

13 year old.

Yes. So I'm a Pennsylvania state bowling champion. Yeah. I don't know where that goes on your resume, but.

Keystone does.

Pretty impressive, Sean.

It is.

So I guess if I'm next, I. I really wasn't sure what I would do, but just based on, I guess Josh and Sha. Sean's response, I. I should mention that I was actually Tennessee state 1600 meter champion and 3200 meter champion in high school.

There's no getting away from you. That's awesome.

Oh, wow. Okay. I. I guess I was going with something else, but I'll just say that I have a brown belt in Kudo. It's like a mix of judo and kickboxing. So.

Did you just make that up, girl?

Of course. Took me seven years to get it, so that's awesome. And a bunch of beating, actually. So I was not that good. That was just very persistent. All right, I think we have some folks joining the webinar and I'm going to share my screen. And for those who join, we'll obviously post the recording somewhere on Truth website. Okay. I'm going to share my screen. Can everybody see it?

Yes.

All right. All right, let's get started. I think we'll just start with introductions. Josh, tell us a little bit about yourself.

Yeah. Josh Byram. I'm the head of technology and innovation at Prosperity Home Mortgage. I've been in the industry way longer than than I should should mention. But I think that happens to all of us. We kind of enter mortgage and, and it's a trap, right? We get stuck, we stay. But I've been working with prosperity for a long time. I love working with prosperity and really, you know, partnered with, with vendors to, to grow our company to become more innovative in, in the lending space. And so yeah, really happy to be here.

I think you forgot about that. You're. You have the best customer experience and you JD Power Powell, number one lender in the country. So which is very impressive.

We did. And as relevant to this conversation we are JD Power with a rating JD Power number one in customer satisfaction and that includes being number one in digital channels. So very, very thank you. Thank you for the shout out, David.

And I'll mention that Josh has a pretty nice video on Fannie Mae's website highlighting using Day one Certainty tool where, where you know he may have won sort some sort of Academy Award for that.

I believe it was an ace. It was a cable Ace award. Just let's be clear.

Everyone.

My name is David Talbot. I'm a senior director of Product management at Fannie Mae. I've been at Fann Mae for a while. I actually came to Fannie Mae as a developer. I guess another kind of fun fact about my career is I was actually one of the main developers on the product that became Collateral Underwriter. But I went from the dev space to the more product space and now I manage all of our Day 1 Certainty products under that umbrella such as, you know, the DU validation services and income calculator and as well as FMConnect.

Awesome. David, I didn't know you're an engineer by training. That's really cool. Yes, engineers make the best product managers. That's awesome.

We end up knowing when we're getting bsed or not by the dev teams.

You're stealing one of my talking points for today, David.

All right, Sean.

Shawn DeGius, CTO co founder at Lotosoft, spent the better part of the last decade building out mortgage technology at lotusoft. Just working with our clients to better their lives, try to get their processes streamlined and help them close more loans faster.

Awesome. Thanks, Sean. And Lottasoft is a great positive. We actually love working with Sean in terms of integrations. It's beautiful experience. So thanks for joining. And I'm Kirill. I'm CEO and co founder of Truth. Truth is a consumer permission data and we'll get to in a point in a second about what is consumer permission data but consumer Permission platform to verify income, employment, and assets. And we're day one certified by Fannie Mae, and we're certified by Freddie Mac for both income, employment, and we recently announced assets. So this is a really exciting week me, and I'm looking forward to see what, how that works out in the next few months. All right, thank you, David. Thank you. It's, it's, it's been an effort.

We, we, we make sure all of our vendors go through the ringer. You're all tested, you're battle tested before we, we approve you. You know, we, we have that responsibility since we're such a big player in the market.

Thank you. Well, I guess we passed the bar. All right, let's dive right in. I think the first question. This is a question from David. What is day one certainty and how it evolved in its role in minimizing risk?

Yeah, thanks, Kirill. I'll try not to show the evolution specifically of this day one certainty, really, as you can tell, is just a marketing term, but what it really does is it captures a concept of what the idea first that we had at Fannie Mae is how can we make the lending process to selling loans to us easier? And how do we eliminate risk in that process? Because the complexity of it actually introduced points of risk. And so you can think of the model as being a lender would underwrite a borrower following Fannie Mae's guidelines and our selling servicing guide, and then they would sell us a loan, deliver it to us. Fannie Mae would have LQC department that would sample those and determine whether the underwriter documented that loan appropriately. Well, obviously, this process has a lot of holes, a lot of gaps and inefficiencies. So we were saying, how can we, you know, you've heard it kind of like another marketing term. How do we shift left? How do we move that up front, provide those capabilities to a lender up front to know if we're going to ding Josh on a loan that his team is going to deliver to us? How can we tell him that we're going to ding him before he actually finishes underwriting and he can correct that mistake? So that's really what it came about. So we started to look at the marketplace and partner with various vendors who could provide us those data sources. And, you know, we started with various components like being able to validate income, being able to validate a borrower's assets, their employment with documentation that vendors could deliver to Fannie Mae as well as to the lender. So we could tell the lender what we see what our opinion of that documentation is. I should I mentioned collateral underwriter earlier. We also do it with the collateral assets with being able to tell what our view is on a property. So so day one certainty really encompasses that concept of Fannie Mae is constantly trying to find vendors in the marketplace to give us trusted source data. And you know what, even if we don't have trusted source data, we're looking for ways to incorporate non trusted source data that we can at least tell you the calculations that we would use ourselves in the selling guide instead of dinging you after you've delivered to us. That doesn't make a good experience for lenders, it doesn't make a good experience for borrowers. It makes everything cost more. How do we get out in front of that? And we're constantly looking for ways to layer on more data, more vendors to support this ecosystem.

And we all love competition in the space David, so thank you for that because we all as lenders need competition in this space to help keep costs down because we've all been you know kind of stuck working with certain monopolies who the shower name name was for this call that that have kind of taken the liberty to increase prices on us over and over because they didn't really have a lot of competition. But now you guys are helping level that playing field and we appreciate it.

That's right.

David. I, I guess I had a follow up question to day one certainty. How would a lender if they're on the call would be able to check if they got day 130 on some loans?

So you know it every lender. I, I've talked to enough lenders that it's so nuanced it just depends on the technology stack of each lender. What I can tell you is that in the DU findings DU will issue messages to tell you whether what component that you may have received today one certainty on and and you know I should be clear again Day one certainty is more of a marketing term what Day one certain if you receive a DU findings message indicating that you have day one certainty that means that we relieve you of the reps and warrants you have for that component that you're validating of the borrower's input to the loan application. So if your borrower has day one certainty on their income and employment that means we provided you relief from your reps and warrants on that income and employment documentation. That data that you've supplied to us by referencing that vendor data to DU we have guarantee we've ensured you that we will not request a repurchase based on that income unemployment from the borrower. No matter what happens, we take on that burden or that risk.

And you do you highlight all of the messages in the findings with it's a day one certainty message. Right. You guys call them out visually. But lenders, I believe, still have to opt into this. Right? They have to opt into getting these messages. So they have to ask their Fannie Mae account team to turn them on. Right?

Well, that's a great point. So we, it's, it's interesting. The lenders have to opt into the process of doing income and employment using an asset verification report. If you're using a traditional voi voe to document income employment, you don't need to opt into that product. We've had enough, you know, uncertainty in the industry that we didn't want to go ahead and sign up all lenders to be able to document income and employment from that asset transaction data because the various conversations we've had, not all lenders were comfortable with doing that and we didn't want to step on their messaging for their voie reports as well. But yes. So if you are interested, I would refer you to the Fannie Mae website if you're interested in exploring how we validate income and employment using an asset report. Those are the direct deposits that go into your borrower's bank account statements. If you want to explore that, go to the Fannie Mae website, look up the DU validation services and you can. There's a checklist of lender readiness. There's no like, tests or anything. You just have to opt in and you'll receive those messages back in the DU findings. Like Josh said, it'll be marked deal uncertainty and. And depending on your los, it may be highlighted within your LOS feedback as well.

Excellent. Thanks, David. All right, let's move on. I think this is a poll, so I would need some help pulling it or pulling it. Before we dive into the poll itself, let's first tell what consumer permission data is. There are multiple ways to get the data. You can get the pay stubs directly from the borrower. That's documents. That's not really consumer permission data because they just share the documents with you. You could go to payroll providers or employers and ask them to share the data with the database. That's historically been how traditionally verifications would be done. And then you would get the data from the database. And in the last few years, consumer permission data started taking off. The idea here is you can actually partner with a borrower and ask them for their access to their bank account or their employer information or their payroll account, and you would be able to verify assets or income and employment. So the question is, do you use a consumer permission verifier with your POS today? So, okay, let's vote. I don't know what I should put. No, I guess, oh, I cannot vote. All right, let's give it a few seconds. We're gonna do 5, 4, 3, 2, 1. All right, let's, let's see what we got. Yes. So 67% actually use it and 33% of folks who voted did not. Do not use it. All right. Is that surprising, Josh? I guess. Would that be surprising to you?

No, because it's not always easy.

Right?

It's not always easy. So I get it. Like, I imagine some of those people in the 33% have at least tried it and then maybe there wasn't a high enough level of success. And that's what we're here to talk about today, right, Is how to drive that success more effectively. So hopefully we can, we can help close that gap a little bit for you.

All right, great question in the chat. All right, let's see, what's the question? Does F give every D1C? Sorry, how should I read it?

I think it's. Does Fanny ever give D1C variable hourly income? And that's a great question. And Dave, can you speak to that?

You know what it, it depends on if you're, if the borrower has two different employers, are they 1099 borrowers is really the main answer or are they W2 borrowers? If they're W2 borrowers, then we do, we are able to use it if they're 1099. We don't, we consider that self employed and we don't currently allow self employed income to be counted in the D1C program, although that's what we set up our income calculator to be able to do.

And you do handle if they change jobs, right. When you're validating through an asset report, right. You will handle if they change jobs over the past 12 months, you'll still see that cadence of consistent deposits, right?

That's correct. So, so if you, if you left one borrower to it to, if you left one employer to another employer, if you put in your former employer, we'll be able to match and, and we'll be able to, to determine whether you still have that 12 months of income that is required to see for, for validation. We also do handle Two different employers. If, if you are employed at two different jobs, we will count both of those income deposits to both of your employers. Obviously the borrower would need to report both employers. We're able to provide D1C on the total income amount and employment on both employers.

Awesome. Great question, great question. All right, if you don't have consumer permission verifier today, give us a shot. That would be probably the first and the last block I'm gonna shamelessly put in here, but definitely worth exploring. All right. I think this is where we get to really to the meat of it. So Josh, what are some examples of gaining Day 1C certainty on a loan application effect the entire life cycle of the loan?

Well, I think, you know, kind of stepping back here, I think one thing that people kind of, you know when they step off on the wrong foot with this is when they're only looking for home runs.

Right.

When you're only looking for home runs where employment, income and assets were all validated or are employment and income. But really if you can just learn to capitalize and build your operation around capitalizing on incremental successes with day one certainty, you really drive the adoption by your loan officers and then from them to the borrowers to help overcome some of those objections to it and help them work through some of the difficulties they may have in the borrower permissioned verification process. But for example, you know, the employment verification, employment validation that you get from Fannie Mae is the most common thing you'll get. And we all know that if we have employment verified through a credentialed verification, a borrower credential verification, or through the 12 month asset report, we're going to save a ton of money by not having to go to those data aggregators who act like a troll under the bridge and hold their hand out for a three digit payment.

Right.

So it's a huge cost savings first and foremost for us as lenders. But second of all, it reduces the number of conditions on your loan because now you can verify employment all the way through closing. So maybe it's initially verified for 10 days. I can't remember exactly what it is for Fannie Mae, David, is it 10 days?

It's 15 days if you're using an asset verification report, 10 days if you're using verification income or employment report.

But once a borrower has linked that, you can then re verify through those same services at a very cost effective rate and extend that employment validation and never have to go back to the borrower, never have to condition them or worry about that stressful moment trying to get a loan clear to close where nobody can get a hold of the employer. The information in that third party aggregator hasn't been updated in three weeks.

Right.

So we're not getting data to where we can clear them to close. But now with, with day one Certainty for borrower credential verifications, you can actually refresh that on your own. And True, you know, part of our partnership with True was, hey, even on the loans where we don't have day one certainty and employment validation, can you at least send us the most recent pay stub?

Right.

Because that then satisfies the selling guy beyond day one certainty. Right. Dave? Yeah.

Hey Josh, sorry to interrupt you, but I'm just wondering like when you do get, you said day one certainty, you're not looking for home runs, but you do see where, where you find different components that provide day one certainty. When you do find it on loans, how does that impact, you know, your, your loan officers, saving them time? How do borrowers experience, you know, do they, do they see the impact that that has or, or is it kind of transparent to them? How, how do your customers experience that?

So it's, it's so like I was just speaking to the employment example, but if you do get income validated now, you're not asking for pay stubs and W2s and not having to ask for repeated updates of those as the loan just kind on if they're shopping for a property. In our case, Autobah is still shopping. There's no inventory out there. Please help us somebody. There's no inventory. So borrowers are shopping for a long time. So. But if you get income validated by Fannie Mae, which is for I believe 120 days, when you get an income validated, Dave, is that right?

Right.

For four months, 120 days.

Right.

So in that time period you're not going to have to ask for updated pay stubs and W2s.

Right.

The one thing you're going to want to do is refresh the employment verification. But just the employment aspect. Right, just the employment aspect to make sure that they are still there. And then that will extend it through closing for you. So you're reducing the number of conditions, the amount of documentation you're asking from borrowers also with assets, you know, with.

Assets, you know, I'll mention you don't need to do post closing re verification, you can accept, if Fannie Mae gave you day one certain to even accept that value, there's nothing more that you need to Document or verify on that amount.

Yeah. So it's, it's. As long as you're able to articulate this through your organization and capitalize on it and work with your teams to reduce the number of conditions, you can automate a lot of that by having it automatically clear conditions. Certain loses will do that.

Right.

So, you know, you can use enhanced conditions in encompass and, and I believe there's stuff invested that can do that as well. There's. There's all sorts of great loses out there that can help leverage these messages. You have the rep and warrant relief tracker in some systems, but really bringing those calls to action to the front, because the DU messages, I mean, the DU findings is a lot of, A lot of information. Right. So asking everybody to read that whole thing and find the day 1 certain messages can be a bit of a challenge. But bringing. Learning how to bubble that stuff up to the surface and then having everyone on your operations and sales teams working like detectives, trying to say, hey, I want to find every, every win we have here and then make sure my borrower benefits from that. That's. And that plays out in better borrower experience. If you work with real estate agents, agents love it because you just made their buyers experience more simple or simpler. What's the word anyhow. But yeah, it just pays off. It pays off in dividends and it drives that adoption because people want that success after they've experienced it.

That's great. Sean, anything to add here? I don't know. You look at this across multiple lenders. Would love to hear what you see.

Yeah, I think most of what we do is we enable them to fit this into their process the way that they want to fit it into their process. We're here to connect the providers, connect to Fannie from True with the data. You know, we provide the conduit and we provide, you know, the tools that Josh was talking about. How do I bubble that up? I don't want to read through those messages. I don't want to analyze that. How do I get, you know, one click visibility on? I've got this. Verification. I've got this. I've got this. My assets, my income, my appraisal, all those things are bubbled up to the top of our platform. Just bringing some ease of use and connectivity and some good connective tissue to this, speeding up the process, helping them get to where they need to get.

To where we live.

But again, we're. We're just enabling them to connect you guys together and utilize the product.

Yeah, I think if you can remove, from my perspective, work with mortgage lenders, but also we'll work with credit cards and consumer loans. If mortgage can feel and look like a credit card application where you just think of filling out everything in one go and you can do the same day underwriting. That's how you get, I guess, the J.D. powell Awards. Right, Josh, that is the best user experience. You don't have to go back and forth. Nobody wants to send paystubs over email. That's the most digital first and the most effective experience for the border.

Yeah. And just to kind of speak to that Kirill. It's like when we first started this, when we first started venturing into day one certainty, even before there were credential, payroll, you know, solutions and all that. This was years and years ago. And working with David and his team, you know, from, from a conventional loan standpoint, we were happy with getting maybe 8% of all of those, getting, you know, full. We call it green, green, Green.

Right.

Getting income, employment and assets validated. Now we're closer to 20%. And that's working with the iterations and partnering, choosing the right players in this industry and people who are smart and know how to solve problems and then leveraging your relationship with Fannie Mae because they want this feedback. They want to know when they're, when they're missing an at bat.

Right.

They don't deliver Day one certainty as a, as a, hey, this is, this is what it is. It is what it is. You get what you get. They want feedback to say, hey, did we miss something? And so over these years, we've worked with Fannie Mae to really improve our success rates. And now we're at close to 1. One in five conventional loans gets a same day, fully underwritten commitment letter.

This is all great. I guess the next question is how to actually do it because there's so many common pitfalls. And I guess, Josh, the question goes back to you. What are some common pitfalls and highlights you've learned from trying multiple POS solutions?

Yeah. It's been trial and error for us. And what we've learned is we are not a one size fits all lenders.

Right.

There's a lot of solutions out there that are one size fits all. And they want you to meet them where they're at.

Right.

They want you to change. They want you to change your workflow, your business model to be what, the one way that they can support taking an application.

Right.

That doesn't work for us. We want to be able to innovate. We want to be able to embrace new things. And so the other component of that is working with really, really smart people who are, who are still deeply connected to how their product works, how it's built. You know, I think something really interesting about this call, this panel is like, all of us have written or still write code, right? And so, like, for an example, when I'm working with a point of sale now, working with lotusoft, and I ask lotusoft, hey, we want to build a true integration. Sean, I'm gonna put you on the spot. How long did you tell me that that would probably take? If you could just sit down and build it, Like a week.

I'm guessing it was somewhere around a week.

And I know that's the right answer. I know that's the real and honest answer, because I've written code, I've built integrations, and so has everybody on this call, everybody on this panel. So I knew he wasn't BSing me. Now, granted, I understand that there's prioritization issues, right, that we're gonna ask for other things that may take time away from that, but in reality, it's only going to take a week of work to build something like this in a modern infrastructure, a modern development environment with these rest APIs. It's all pretty standard, and it's not hard. You take that to a lot of other point of sales out there, and they're going to tell you six months on a good day, they're going to tell you six months and they're going to charge you as if they're going to be working on it for six months, right, to build these integrations. So that's the difference between working with somebody who understands how their product works is. Understands that everything is not hard. Everything is not an act of Congress to build some of these things and trying to meet you as a lender with what you're trying to do to stand out, to advance your business, to differentiate yourself. And that's where Lotus off for us, has really, really moved the needle. I mean, things as simple as, hey, we want to try out, you know, Kirill, you just launched Assets, right? We've been doing asset verification for a long time, for probably seven years, eight years almost. But when we rolled out your true voie product, credentialed voie, we needed to play around with it a little bit. Should it be in front of assets or should it be after assets in the application workflow? Well, in every other point of sale we've worked with, you don't have a choice. It's one way and it's the one way they built it. Right. So but with, literally with, with lotusoft, it's drag and drop the tiles. I want digital income after digital assets. I'll just drag and drop it in my workflow. Piece of cake, right? Done. I didn't have to submit a change request. I just went in and did it myself. As an administrator, that is how you know, that's the difference in a point of sale wanting to meet you and enable you as a lender versus just a point of sale trying to bring you into their sandbox.

Right.

And do things their way. And that's what really matters to us.

I guess. I have a question for Sean. Sean, how do you think about the product, right, and the customer service? Like maybe you can talk about how you work with Josh and other customers in terms of features, the roadmap, the benefits of using LottoSoft.

Yeah.

From our perspective, it, like Jeff said, it's not a one size fits all. Everybody has their unique flavor of how they want to do mortgage, right. At the end of the day they all deliver. Deliver them to David and team over there and you know, here's my loan. But getting that manufacturing line put together is a unique experience at each lender. Right. We've worked with a ton of lenders. Everyone has and wants to do it the way that they want to do it. And again, they're not always willing to make a change. So we've designed our product to be completely configurable like from the ground up. Bring your los, bring your vendors, bring your third party providers and we plug them in into a single workflow. Everything being configurable from, you know, status flows, tasks and when things fire to the borrowers, when internal staff's doing it, it's a completely dynamic experience which allows us to work with the lender to kind of design it the way they want. And it's a no code environment. So again, Josh, the team needs something, they show up, we throw in a widget. They have the widget in a week or two and it's like off to the races, back to building. So we try to keep everything to very quick iterations, very configurable experience. Again, enabling them to do business the way they want to do business, not being pigeonholed into the way we told them we think it should work.

All right. Meeting customer where they want to be where they are. All right, I guess next question is can you speak to the use of 12 month asset report? I guess let's first, David, we Spoke before the start is like, what's the official term? How should we be thinking about? There's an asset report which I think most folks request like couple months, maybe 30 days. And then there's a 12 months, 24 months asset report where you can also give validation on the income. Right. Can you walk us through how to even talk about it correctly? And then also what is it?

How much time do you have?

You have seven minutes before we move on to the next question. No, as much as we need. We want to educate folks.

Right.

It's for the benefit of people who join.

So you will hear all different names for it. And I will mention that if you come to Fannie Mae's site, you will see us talk about an asset verification report. That's what we call it because that's what we're using what we call an asset report to verify income, employment, assets. It can be used for all of them. We also use it for other means. The 12 month kind of came in is because in order to use your asset transactions for income, in order to use your asset transactions to document your rent for our PRPH positive rent payment program, in order to use your asset transactions for a cash flow analysis to help thin credit borrowers, we Fannie Mae needed 12 months worth of asset data within that. And you know, DU can use that in order in its models to validate, to provide D1C and for the programs that I mentioned. And why that gets confusing is because what a lender might receive, what a lender will receive is really only 30 or 60 days worth of transactions. They're not receiving that whole 12 months. So it, it can be kind of confusing. And when Fannie mae talks about 12 months, all we're trying to say is you need to make sure whatever asset vendor that you are using that you're ordering an asset report from is sending DU 12 months worth of data. That's, that's the key. And every single asset vendor has a different name for a product. They have multiple products where they sell. Send us, you know, 12 months, 24 months. When, when a lender is talking to their vendor, they, they need to make sure that, that 12 months worth of history is being sent to DU. I will point out that you can go to Fannie Mae's website and you can see the various asset report vendors that are authorized either as report vendors or as report distributors of our approved vendors. And I will mention that brand new Truve is the latest one that got added to our website as an authorized asset report. Ve.

Awesome.

Can I jump in here for a second too. I would warn everybody, please don't call a 12 month asset report when talking to your sales team. They'll all run for the hills, right? They're all going to run for the hills like, oh my God, my underwriter is going to be digging through 12 months of data and finding every large deposit ever and every potential undisclosed debt. That's just a gym membership. We all know that's what happens, right? We probably would more likely refer to it as an employment and income enhanced asset report.

Right.

And then speak to the. You kind of explain it from there. Hey, they use the first 60 days to validate assets, right? To underwrite assets just like our underwriters would. And then beyond that, Fannie Mae is only looking for good news. They're only looking for good news in that additional data. There's never going to be any bad news that comes out of that data. They're only going to tell you when they were successful at finding some good news. That's it. There is nothing bad that can happen with the additional 10 months of data that is going separately. It's not even going into your loan file. We have access to it because that's our responsibility under the selling guy.

Right.

We have access to that data if we need it. But we're not putting more than 60 days into our loan file for underwriting by our underwriter. The additional data is going to Fannie Mae for them to put through their algorithm in DU and see if they can find anything that's going to help make the borrowers loan easier.

Right.

And drive higher loan quality validations, all that. And, and you know, I would almost call the asset. If you're not doing the asset report yet and the 12 month asset report, it's the one thing you should be doing. You know, what was it in Jerry McGuire Cuba? Getting Junior called it the quad.

Right.

This is actually the, the quint. Right. It can do five things right. An asset report can validate employment, income, assets, positive rent payment history for borrowers who have thin credit files where you can demonstrate they can afford a home based on their rent payments going back 12, maybe even 24 months. If we can get that much data to Fannie Mae. And then positive cash flow for gig workers and people who may also non traditional credit.

Right.

We can see they consistently keep money in the bank. They can afford a mortgage payment. And now Fannie Mae has automated the analysis of that. So you have five things you can do from an asset report when you and Josh.

I'll Add that our latest D release, D12, has actually expanded the usage of that 12 months of data cash flow analysis to all borrowers to enhance credit opportunities for all borrowers. And you know, just along those lines, we are going to continue mining all data sources we can to improve our ability to, to find more borrowers to provide more liquidity to the market. We're going to continue to innovate on the various data sources we have. So I think the asset report, the transactions that, that are involved, when you're sending DU that length of history, it's just going to be additive. And if you're not using it now, you're going to be left behind because we're just going to continue to do more with it.

And David, I think we can speak to like when we have an asset report, as far as employment validation goes, because it's pretty consistent that you're going to find a cadence of direct deposits that are employment related.

Right?

So when you have an asset report and we're able to validate employment, that's probably somewhere around 60% of the time, I think. Dave that's right. Think about how much that saves you from going to those third party data aggregators who are the troll under the bridge is the term I use. But and making you pay an exorbitant amount of money to get that same data. But Fannie Mae, 60% of the time, if you have a VOA, you're done.

With verifying employment, or conversely, how about your staff? How many hours does that save them from having to go back to the bar and ask for documentation? How much is that saving you if your loan officer can actually do more loans in the same amount of time?

And I know when these, when these asset reports first rolled out, they were cost prohibitive. But the landscape has changed, right? The landscape has changed. These costs, there's a lot of competition in the space. These costs have come down. Don't pay what you heard it cost six years ago. It doesn't cost that anymore. You need to have these vendors, including true, compete for your business and make sure you're getting something cost effective. But even at sticker price, today's sticker prices, you're still going to save probably a hundred dollars per every time you get employment validated by a VOA, you could save $100 on that loan from other verification sources. And you guys all know that's true.

David, I think there was a question in the chat, not in the chat, but in Q. How do I get the Q and A? The question was if using asset report to verify income, do you only give the borrower credit for the deposit? Do you gross it up, gross up the income for taxes? So we don't actually change the data. But as far as I know, Fay might be doing some, some of that calculation. Would love to understand how, how you think about it.

That, that's a great question and probably one of the most fundamental, you know, issues that we're continuing to tackle and try and solve within this, this space. Because, yes, there is a gap when, when Fannie Mae, when DU is looking at those deposits, all we see is the net income that's hitting the borrower's bank account. So we do put back, based on where the borrower is and how much income you make, you know, the state that you are, we add back federal and we add back state taxes because, you know, that's pretty determinative. The, the real hurdle is what about those payroll deductions? We don't have insight into that. If we're only using asset data, we don't know how much those payroll deductions could be. And they can vary dramatically from different borrowers. So right now, when, when we're providing income validation, we do model some tolerance, some range that accounts for those payroll deductions. But, I mean, I can go ahead and tell you that right now we're, we're still very conservative with that because that's an issue that we continue to debate. We don't want to take on extra risk by just assuming everyone has large payroll deductions. We also don't want to put lenders in a position of trusting Fannie Mae that, you know, we're, we're guaranteeing this and you don't actually have insight into that. So, you know, that's something we're actually really looking at hard at this very moment. I might jump ahead a little bit. Maybe we can touch on this again. But this is exactly why it's so important that lenders get involved in day one certainty. This is exactly why I love working with my friend Josh at Prosperity, is we don't look at lenders as customers. We look at them as partners. You know, when I said day one certainty was, was a concept, it is a concept. We, we're not, we didn't have a magic wand, you know, to solve every problem in the space. What it was, was a concept. And we're looking for vendors and lenders who want to help us solve this problem, make lending easier for borrowers, make it cheaper, make it more standardized, take the risk out and so we need lenders like Josh to tell us, Fannie Mae, we don't think you're right here, push us, you know, and, and it's a conversation. We'll, we'll say this is what we're thinking. And, and we may disagree, but you know, we've, we've come so far in, in the seven years since we've been working on this in terms of improving this product and it's really been that partnership that we've had.

It really has. And David. And I mean, yeah, I mean we, we debate this often, this particular topic. You know, we, we want them to be more aggressive on the gross up of the income.

Right.

We feel like they're, they're too conservative in that, in that regard. And he's been receptive to, his team's been receptive to it. They're working on solutions to, they're discussing, I won't say working. They're discussing and having their own discussions. I don't want to speak for you, but what I want to tell people is like there's a missing piece with the way it is today, there's a missing piece of the puzzle that I'm going to give you right now.

Right.

So Fannie Mae, if they can't support the income that the borrower stated via what they see in the voa, so that their gross up number doesn't match what the borrower said they make, let's say in the case of a borrower said they made $10,000, well, Fannie Mae is going to message back now that they were unable to support the income submitted.

Right.

Something to that effect. And they're not going to give you a number that they had their magic number that they had calculated. But what I'm going to tell you is that they generally have about this is something we've kind of reverse engineered is they generally have about a 1% tolerance.

Right.

So if you lower that income, so let's say they had 10,000, if that income, if, if the actual income Fannie Mae calculated was, was less than 9,900, they're not going to validate you.

Right.

And I don't know if it's still 1%, David, but that's kind of what I've been experienced with. But this is where you talk to your borrower, you look at the data from the verification, you say, hey, it looks like it's probably more like 9500. And if you rerun that through du, boom. If that matches within the 1% tolerance of what they had as Their magic number that they don't tell us anymore, which I'm mad about, but that's okay. But these are the things we work on.

Right?

That's where. That's. That's the key.

Right.

You can't look at the findings that come back as a report card. They're a road map.

Right.

Fannie Mae isn't telling you, hey, period, end of story. This is all you get from your verifications. They're saying, here's what we could calculate now. You know, here's what we could support now based upon what you submitted. They're literally telling you, based upon what you submitted, we can't support it. So kind of it's telling you maybe try submitting a different number. Right, Right.

I would put it as. As we're saying, we don't see evidence in your asset transactions. We don't see evidence of what the borrower has reported. But it is clear we, we do see income deposits. We do see evidence of that borrower's job. That there is a, like I said, a tolerance. It's a little. It's more than 1%. And, you know, we're. We're constantly debating that. Josh mentioned about returning an income amount. Currently in our D findings, we don't return an income amount. That kind of comes around the concept of Fannie Mae wants to always have the lender in the driver's seat for doing the underwriting. We don't want to tell you an income to target, but if you have a conversation with your borrower and the borrower wants to change their reported income, you know, that's totally up to. We just want to make sure the lender is in that. But, you know, the point is, if Josh and his team are using the product, you have feedback. Fannie Mae's product teams are here to listen. We want to hear feedback from lenders to make this process. This process is not, you know, for us. This process is for the entire industry. We want to be part of a solution. We don't want to be dictating how things work. Obviously, Fannie Mae has a point of view on, you know, how we see risk, but we want this to be a conversation. So, you know, if. If you're out there and you're exploring it, if you're currently using any, you know, voie reports, asset verification reports, to try and achieve D1C, we'd love to hear your feedback. If you're interested and you have questions for getting on, on board, we'd love to hear from you as well. You know, this is a evolution, it's.

A partnership in this, this, this particular puzzle is unique to the asset report, to deriving income from the asset report because that's where Fannie Mae is calculating a gross up number that doesn't necessarily, is not a literal number they've been given.

Right.

On all the other verification products that aren't an a 12 month asset report, they are going to return back to you the number they calculated because it's literally coming from the actual data. They're not deriving some other number, you know, capture. And so that's why they're, they're trying to minimize their risk here. So I totally understand it. And if you guys think about what they're trying to avoid is steering borrowers into higher DTIs, which could impact MI, or steering them into lower AMI brackets. Right to where now they're qualifying for things they really shouldn't. So it makes sense. But there's, I think there's a middle ground we can find. David. We're going to continue working on that.

We're going to solve it. Josh, I, I'm very confident.

David. While we are on this topic, there's a couple questions in Q and A and I actually don't know how to answer both of them. So can we see the truth report ID on DU findings so we're sure that DU sees the report?

Yes. Every DU finding will tell you which report was received. You know, as we mentioned, the DU findings are very complex. There's a lot of different messages. But there will be a D1C message talking about all the reports that were referenced, all your D1C reports that are referenced, if they led to validation. We'll also give you that report id. One of our conditions when you read our selling guide is that we want you to put that report in the loan file. So when you sell that to Fannie Mae, we can open up that loan file, we can see that report reference. That's what you use for underwriting. That's what we provide. D1C. It all checks out.

Yeah. And those, that particular message is so valuable. So for those who are operationally thinking about building a waterfall through different types of verifications in your organization, you have engineers working on that. That message, when Fannie Mae says we received it that way, you know, the most recent thing you tried, they got it. And then whatever the result is, is the result from that report. Right. So that is the key message to know, hey, they received the true report. These are the results with the true report. If that's good enough to validate what you need to validate, you stop your waterfall right. You stop your waterfall right there and prevent additional spend. That message is so crucial to building your own waterfall. That can save you so much money and verification costs. Thank you for.

I see this other question. Do you want me to go ahead and answer this one?

Yes, please. And I think we. It might make sense to clarify between assets.

Exactly.

Bank implement payroll, right?

Exactly. So, so TRU actually is a supplier of two different types of report that can be used for income verification. As you heard before, they have credentialed income, which is where they ask for bars permission to go in and get credit, extract payroll data. They turn that into what we call a voie report. That's primary source income data. That that report as it will be sent to Fannie Mae. As long as Fannie Mae sees that the income from that report documents a higher, equal or higher amount than what the borrower reports it validates, it doesn't have to be an exact match. And then truth is also just recently was approved to be a provider of asset verification reports. When Fannie Mae, when DU looks at that report and determines an income amount, as long as DU finds an income amount that is again, equal or greater with a range in there for those payroll deductions, equal or greater, what the borrower reports will validate that again, it doesn't have to be an exact match.

Okay. All right. All right. We have time check. We have 10 minutes. So let's talk about what actually lenders struggle with when implementing something like this. And it seems like based on the question, I think we should really want to spend some time on it.

Josh? Yeah, I mean, you know, because we struggled in the beginning and it's. And you know, Fannie Mae will admit this, like coming out and saying this was a rep and warrant relief product first and foremost, made it kind of alienated the sales audience. They're like, well, how does that benefit me indirectly? No, Sales needs to see a direct benefit for the process and for their borrowers.

Right.

So I think if lenders just focus on, hey, this is going to give us rep and warrant relief, sales is going to be great. You know, you have to be able to say how this changes the way and improves and simplifies the way sales works.

Right.

So I'll use an example with true.

Right.

Tru, Credentialed payroll is hard to do.

Right.

There's so many more payroll systems that it's, you know, there's multi factor authentication. Some of it can be very hard for some borrowers to do so overcoming that objection. And I think that's why we saw that smaller number, you know, or the number of people who don't use credentialed verification services because it can be hard, especially specifically the payroll part of things. But you have more than just day one certainty that you can get out of it, right? Because true, if the borrower successfully links, they're also pulling back pay stubs and you can configure how many pay stubs you want. And that's where they were a great partner for us because originally they were sending us back all the pay stubs they found for the last two years. Like no, no, no. Too many pay stubs. No, we don't want to underwrite all those. But. But we. Then they made it configurable so we can get four pay stubs and two W2s. They also offer like end of year W2s if you need that for certain types of income to help do verifications. But you can use the true result on all products, not just Fannie Mae products. Sorry, David. But all products can benefit by borrowers doing this right by because you're going to get Pay subs and W2s which you're going to need anyways. And that is often hard for the borrowers to get. So, you know, we get somewhere between 35 and 40% success with borrowers being able, which is. You have to work for that. I'll be honest. You have to work for that. You have to really train and coach back to your teams. But you have to be able to capitalize with a partner who can pull back things that make it a huge win when it does work. And that's where the voie product specifically is such a massive win to get those pay stubs and W2s and then be able to refresh later on in two updated pay stubs. No problem. Refresh. True. Here are my two updated pay stubs. You're welcome. You know, like so easy. So that changes the game for sales and it's not just about conventional loans because as those of us who are in the industry right now know that it's not all about conventional loans right now. There's a lot of non qm, non agency, everything else going on.

Right.

So we need to be able to make sure our sales team is benefiting universally from using these products. And that's the type of benefit that you get with these. The other thing I think is not really focusing on turning your teams into detectives.

Right.

So one thing you have to do is address it with your underwriters to say, hey, first and foremost, the messages we get back from Fannie Mae that say, hey, you've been validated, that tells you stop digging, right? Underwriters are trained to dig. But when Fannie Mae, if it's a DU loan and it's going to Fannie Mae, and they say, stop digging, stop digging. Because if your underwriters keep digging, even though the income and employment was validated, your loan officers, mortgage consultants, are no longer going to trust the process, right? So you have to address it with your underwriter saying it's Fannie Mae's money, right? Fannie Mae has analyzed this in a extreme algorithm that is saying, hey, we validate this, we're good. And Fannie Mae is very conservative about how they calculate these things. We just talked about that, right? So Fannie Mae is being conservative. When they validate something, it's good, it's validated, right? So you have to train your underwriters and even your QC teams to trust it. And then you show them all that they can benefit from this. You show how it simplifies loans, fewer conditions, and then your underwriters turn into detectives saying, hey, why didn't Fannie Mae validate this true report? Like me as an underwriter, I can see clearly that, hey, all the data is here for me to see. They work at this place, they make this much money. I can see the direct deposit. I can see the banks their direct deposit goes into. I can see their pay frequency on this true voie report, right? On the actual report, I can see all of that data. I can see when they started there. But why is Fannie Mae rejecting this? So they become the frontline feedback for you to help drive more success, right? So then we take that feedback from our underwriters, and literally, an underwriter emailed me with a report as an example, and I took it to David and I was like, hey, this report has 95% of the data is straight from the source. And then true derived, like, two data points. I mean, it seems like they're deriving it from data that's actually on the report. But you guys are just. Are you just rejecting it? And we worked with David and team, and they're like, hey, we should think about that. And they took it back, and now they are accepting some of those derived data points because they're seeing that it is actually derived from source data. And true was just being very deliberate and honest about the data had to derive because it just exists.

We weren't Bad people. We went out and we just said that vendors need to provide us only with the data that they actually have access to. No drive data. So true. Wasn't actually even sending us those reports. We were saying we didn't get that report. And so Josh, when, when you brought it to us, very rational explanation, we brought it to the team, ran it through risk analysis and policy and you know, we resolved that. We, we stepped down. We, we did what made sense. So again, just highlighting the partnership and, and if 100%, if your staff is as detectives as you say, Josh, you bring that to us. We're, we're willing to listen. We want this to be a conversation because day one certainty didn't end at launch date. It continues to expand. We, we want eventually it to be the exception of doing manual processes. We want it to be standard that you're using available trusted source data in order to, to validate upfront as opposed to waiting to hear back from Fannie Mae. What, what did Fannie Mae think about your underwriting.

David, while you're talking about what the future looks like and you say it didn't start, like didn't finish at launch, what the future looks like?

The future, as I would say, the real vision is we would like this to be the standard process. We want almost the majority of borrowers to come through using trusted source data. So we're continuing to look for vendors opportunities to provide us with trusted primary source data, other data that we can use to be more insightful to help lenders understand what our selling guide is. Not to make you detectives in the selling guide, not make you understand, you know, gray areas telling you what we would calculate from that. And it only being the exceptional case where there's a special condition, you know, it meets our selling guide, but we don't have insight into that. That's the, the future. We only want those cases to go through the, the traditional underwriting path. We want, we want everything to come through day one certainty because that eliminates risk for our lenders. It eliminates risk for us. It improves the borrower experiences. As Josh was saying, that's really the future. So one thing I will mention is right now we've had a very kind of single focus on reports of here's a specific type of report, here's what we do with the specific type of report, really what we're looking for and you know, the 2.0 or future of day one certainty. Let's look at lots of reports, let's look at data across reports and let's see if we can piece together data points across different sources of data that we get from trusted sources and see if we can get the best view of your borrower and provide lenders and a view into what Fannie Mae sees in your borrower.

One thing I'll add to that Dave, because I know you guys are looking into this. You have the self employed validations that happen from and somebody asked the question does Fannie Mae use tax returns obtained directly from irs? We even use, they even use tax returns obtained from the borrower to validate self employed income.

Right.

And so they're doing that today. But I would say Fannie Mae, we all know from experience there's a ceiling on how much data can be digitally obtained.

Right.

So some of these things, some institutions will never like financial institutions won't participate, some payroll systems won't participate, some data just can't be obtained digitally. But all, anything that we get from a borrower can be digitally enhanced.

Right.

So I think Fannie Mae started with the self employed and I'm pretty sure they're looking beyond that Borrower provided documents where they can look at them, analyze them, digitally calculate the income from those and then potentially rep and warrant like they do on tax returns, the income calculations, the income and amount they've calculated from those. So that's where day one certainty goes from one in five to four and five.

Right.

For us.

Right.

Because now it's, we're going to send every document right potentially in a, in a, you know, future state, future world, sending all of these income based documents to Fannie Mae for certificate per review, certification calculation. And that is, I mean the opportunity is here for you to get started and be ready for when this thing just goes kaboom like blows up big time. It's right here, it's about to happen.

That's exactly right Josh. And thanks for plugging that. Income calculator is a new, new tool we have. It's actually you can look at it on Fannie Mae's website. It's a free ui. It's, it's basically it walks you through if you have a borrower comes in and drops down their tax returns on your desk, it will tell you exactly, it will show you PDF images of the tax return, what fields to plug in and, and that's a recognition that yeah, there's a ceiling on what we can get from trusted source data. But you know what, let's, where we can't do that, as Josh said, let's take in the data. We can tell you what our calculation would be if we were looking at those forms, we can tell you that. So we can provide certainty, at least on the math. And that's exactly what we're doing. And that product can be expanded to all income types. So, you know, we're continuing to innovate, but it's dependent on lenders getting in, using these products, telling us what's working, what's not for them. You know, I will continue to say it's a conversation, it's a dialogue. We're looking to make your lives easier. We're looking to help your businesses underwrite more loans, give borrowers better experiences. So get in the game, use these products and then give us your feedback.

Awesome. I guess we'll leave it get in the game. If you're not playing the game, you would not learn the rules and you would not benefit from it. Josh, I didn't mean to interrupt. You wanted to also.

Oh yeah. Because there's one question and it goes back to the previous slide and I do want to speak to that. And it's where a lot of lenders struggle is, you know, you have to make sure that you, you reduce the number of conditions on loans when you have benefits from day one certainty and also building, you know, other better pipelines about the workflows where things move fast. Like I talked about, one in five of our commission loans gets the same day, fully underwritten commitment letter. Well then you can brand that.

Right.

And then that we present that to our realtors who then realize that the benefit of the borrowers going through this verification process is they can get that same day fully underwritten commitment letter.

Right.

So we do, our loan officers do educate realtors and then we've put this in a brand where we sell that to our realtors, say, hey, you can be benefit from this program if your borrowers opt into this and it's going to make your life easier. Fewer conditions. You'll be clear to close early. We can close early if you want to. So yes, absolutely. We're educating realtors and really trying to show them and have them benefit from the benefits of day one certainty as well. You know, no more chasing all of these conditions. You know, right at the last minute for closing. We're clear to close days ahead on these loans many, many days in advance. So great question.

Awesome, awesome. We're a little bit over time. Just wanted to say it's so many questions. It's really exciting program that David, you're building and Josh, I guess hearing from somebody who actually endorsed it and tried it. It's incredibly powerful for those folks who don't actually know what they want. C is or haven't used all the products for it. I'm beyond excited. I'm very aligned with David's vision of what we want to build is very similar to what David wants to build. You want to really understand the consumers and borrowers profile end to end, using all available data. Why discard anything? I think that's how the future looks. So we'll go from this 20% to 80% in the next few years. Then the dream of underwriting mortgage like you underwrite credit card is going to come true, I hope. Anything else you guys wanted to add, Sean?

No, all good.

All good then, I think. Thanks, everybody for joining. And it was great conversation, guys. Really appreciate you.

Thank you, guys.

All right.