There is a better way - Better product. Better experience. Less cost.

All right, Justin, thanks for joining me today.

Hello. Hello. Thanks for having me.

Oh yeah, well, I'm going to take just a second to get our LinkedIn live stream going and as soon as.

That'S going.

We will get started.

Great.

I hope everybody has got really fun Memorial weekend plans going. I. I do for sure. I'm taking my kids to an amusement park. I was just telling Justin about that. How about you, Justin? What you got going on?

Yeah, we're going with some friends to hang out on the beach of weather cooperates so should be, should be good. My, my kids as well with some of their friends and parents we've become close to. So should be a good time.

I don't think anybody in our industry truly checks out.

Much as you can.

But I just read a really interesting article that was talking about, what was it? Silent vacationing. Like the millennials and Gen Z's are silent vacationing because they don't. They feel like they would make them look bad to their bosses. I don't know if that's a thing.

But.

I will be two minutes and we'll get started.

Actually, let's just get started.

I'll. I'll figure this one out at another time. So the first thing I wanted to do is talk about, I think a great way to tee up this conversation is to talk about a post that I saw on LinkedIn and I'm sharing my screen right now. Justin, you want to confirm that you can see it too?

Yeah, I got you.

Cool. So this is a post everybody, by Greg Sure. Greg sure is very well known in the industries from NFM lending and you know, he's, he's really well followed and he, I think his posts are usually really on the pulse of kind of what's the hot topics in mortgage. And this post in particular was about, you know, he was at MBA secondary this week and it really, I think, by the way, the reason I'm, I'm talking about this post is because it really leads into the conversation we're going to have today about TRUV and how Compass has had success with True. And so what the post is about is that an MBA secondary, Rohit Chopra really teed off on the credit bureaus in FICO at NBA secondary. And that's basically for the increasing costs of credit that the industry has seen over the last year or two, as much as 400%, which is a lot. And then of course for verifications, which is what True does over the last three years or so it's been like 130% plus 136%. The incumbent has increased the cost of verifications. What used to be, you know, $20 to get, you know, a pull for an income or, you know, income and employment verification is now, you know, like $90. Right. Or. Or more, depending on if you have. Depending on how many times you have to pull it during the application process. And so that has really created the market for companies like truvas, my company, to come in and really help lenders save on these costs. And so that's why we have Justin today, because he. Justin's been a customer of True for a long time. And what you're going to get to hear today is just Justin's journey, Compass's journey with Tru, how they discovered Tru and some of the success that they've had. You're going to hear tips from an operator and, and Justin's one of the best. So first I'm going to say is, Justin, thanks so much for joining us today. And I'll. I'll give you a chance if you want to make any comments on what I just shared.

Yeah, you just. Simply put, it's the reason we started looking at Trude. You know, it's. For a long time, the products that are talked about there worked, worked well. They were nice. You know, they were helpful to our marketplace. They allowed us to get things done in a quicker fashion. You know, verification of employment can be a pain. In having a technology tool that comes alongside of you to do that is not a bad thing, unfortunately. You know, it's hard to interpret it any other way other than they just took advantage of the situation they were in and made it to a point where these products just don't make any sense anymore because of the price point. So a lot of what we can talk about today, you know, what, what we did joining Truv and how that's been and other things we've done to try to combat this, because it's. It's disappointing. Not only that, I mean, that it would happen to anybody in any industry, but just with what. On top of what we're going through with housing and how this affects borrowers, when affordability is a huge, huge issue in our marketplace. It matters. It matters a lot. And that's why you see, you know, what is our top regulator getting involved with it now. Because it's a problem.

It is. Yeah, it is a problem. Well, why don't we just set the table here and why don't you tell us a little bit about Compass and your role at At Compass?

Yep. Compass Mortgage is an independent mortgage banker. We've been around for about 25 years now. I have been there for almost 12. I am our chief operating officer. So I, I'm involved with most aspects of the company, but have always had a little bit of a bent towards technology and how that can fit into our, our operational process and make things more productive. So we're primarily focused in the Midwest, but licensed in about 23, 24 states. So we, we do business all over.

Well, the title of this webinar is There has to be a Better Way. So what does that actually mean to you? Because it came from a discussion that we had leading up to it.

Yeah, kind of what we were just. I just alluded to, you know, this. There was. We had the ability to do essentially two ways of doing, you know, verifications of employment historically. Call up hr, right. Or you do something like the work number and try to, you know, get the verification that way. And again, for years and years and years, that was, that worked. It was fine. Nobody really thought it was broken. The last couple years with the extreme increases in costs with products like this, you know, there's also a lot of whole separate conversations on credit, but lenders were kind of forced to, to have to look at these things in new and fresh ways. What, what was working? Again, the tech. It's not really a comment about technology. The technology was fine. But while you start looking at these things because of, because of cost, frankly, you realize, oh, there really are better ways to do this. There's more intelligent ways to do this. There's ways where we can not just get a PDF back, but pull down all this data with it. You throw in things like day one, certainty, better borrower experience, all these things kind of add up to. Yeah, there really is a better way. And that's when we started exploring true and implemented them.

I love it and well, so talk to me about the, that experience. Like when you first reached out to him, were you. Did you know right away everything about Truth or was there like a big discovery process?

Definitely a discovery process. I mean, the, the toughest part of joining Truth was I was skeptical. I had. Is not the first. You know, it's, it's not uncommon in my role to be, you know, told something works a particular way, which almost always sounds really, really great in that initial conversation and for it to not live up to those expectations. So a lot of those initial couple months were just proving the model right, proving that it works, proving that people would use it once you, once you do that. And once you see that it works and that it is better, it's very, very easy. Right. Any operator could very quickly look at that and just be like, yeah, this makes sense. This is working. So that. And that was our experience, you know, but that first hurdle was. Yeah, I was skeptical about whether or not this is what. What I was being told that it was.

Yeah, yeah. Well, why don't you describe how you're implemented with True? Like just, you know, how does, how does the process work? Maybe talk touch on the technology if you can.

Yeah, so we're, we're Encompass users. We've been with Encompass for a long time. So initially we had started just trying to figure out how to get it baked into that. So we have our equivalent of like a pre processing team who tries to make sure that before we get to underwriting, we are armed with good employment and income information and ideally, you know, have that voe in hand. Sometimes you get it, sometimes you don't. Sometimes you end up chasing hr. Those are all things you. You all are familiar with. But getting more of those and being armed with that when you're going to underwrite is a big deal. So we structured it in Encompass and we did some connectivity with our POS as well, just to try to get in front of the borrower. There's a lot of different ways you can do that and can customize things. Frankly, a lot of the True stuff right out of the box is pretty dang good, though, so. But that's how, that's how we implemented. And it, it works well. Conversion. Conversion rates are good, price was good, borrower experience was good. And what we got back, you know, the whole reason we do this, you know, underwriting's the core of that mortgage process, is that that peak point where that everything kind of leads up to this is a very important part of that. And, and this helped with that process a lot.

So I'm going to ask a question about, like, metrics. And so usually what gets people most excited about True is like the cost savings over the incumbent. And so you can, you know, in somewhere between 60 and 80% is on average. Is that kind of what you're seeing right now?

Yeah. So. And this is a moving target because of all the things we started with. Right. So I can tell you when we started that first year, when we used true versus when we used alternative. Yeah, it was like 60, 70% somewhere in there for the files that did it versus the ones who didn't. I have not run that metric this year because Everything's shifting. But that's real. They're very real dollars. I don't. It's a, it's not something you need to track super close once you get rolling because it's so blatantly obvious. So. But yeah, huge right off the bat, huge win on price.

Well, let me ask you this. In terms of evaluating cost savings versus speed, like reducing days to close with like higher quality data and less errors, how important is that? As you compare that to cost savings.

You have to have both, you know, like obvious statement. If you, you save money in, in your products, not getting you what you want, what are you doing? Right. Like you, they both need to exist. So. And that's kind of our first couple of months when we were vetting that that's what that exercise was. You know, the price is built into a contract and I know what that is going into this relationship. Right. But how good is the product so going to get it. Get us what we need? That's. That's what we needed to that and it definitely checked those boxes.

Yeah. And our. How about GSE approvals? That is that meaningful for your business?

It matters. It matters. You know what helps with underwriting and post close. Right. And there's. If anybody on this call has experienced this with, with other product types as well, you know, you. It matters when you need it. Right. For underwriting, your underwriter has the benefit of knowing that Fannie, Freddie, whoever has already, you know, signed off on this. And, and obviously the part of that that's important is you know that the data is good because you got it straight from the source. Right. That's where I love true setup, where you're integrating directly with these payroll providers. You're getting it directly from the source and then you're validating that and getting day one certainty out of it. The underwriter can see that. And, and that's an easier underwrite when you have that still have to look at it, but that's a much easier underwrite. Post closing, you have the reassurance that if something were to happen post close, you know that piece is good, right. You know that piece is good. So those are the two components we always look at with operations. But I can tell you it matters. Even with things like loan officers and you know, loan officers we recruit. It's a commonly asked question, right. Like it matters to people have seen the light and understand that it's important to have this in your back pocket. And so it's great that troop has those pieces available with this product.

I'm just curious, do loan officers ask about GSE approvals for those kind of things? Like, is that true? I didn't know that.

I think they, I think loan officers understand that operationally it improves things. You know, like it doesn't necessarily give them a huge leg up with origination, but they, they very much care about when their files close. That's when you get paid. Right. So having a better way to do that, a more efficient way to do that matters a lot.

Well, Justin, okay, so you've, you've got the technology, you've worked out the implementation. How did you get the teams to actually adopt it?

Yeah, it's a good question. Change is always hard, you know, like we've, I've done enough technology implementations where I, I know going into it that that will probably be the toughest part of the project is just getting people to do things new. So we've always spent a lot of time on that and spent a lot of time vetting like the, the product before we even dive into it. Because if the change component gets too tough and people don't utilize the product, you're wasting a lot of time with a lot of people. And on top of that, probably creating a poor customer experience. Right. So we always try to find that balance of, you know, letting our systems assist with the work. So often there's automations that can be done, but if not automations, then you just got to make it really easy for the end users. So for us, when we initially kicked that off, that was in Encompass, right. So we just had, you know, we, there's lots of ways you can do this. You can utilize services in Encompass and they've got a lot of things there. We did a few extra development pieces. That true was, you know, helpful to come alongside of us just to make it work with specific screens that were custom to us where our users can just kick off order True. From that same page that they're already living on. So again, the out of the box piece is already pretty good. So if you don't have like a development team, I wouldn't overthink it. If you do and you need to make it your own, that, that is what we did. And that worked well too.

That's awesome. That's awesome. All right. I'm a marketer by trade, different from an operator. And so I like flashy, shiny things and it's just, it's just naturally what I like. And so I like to, I like to conclude this by just saying if you've got someone appear of yours who's looking at true or maybe is just hearing about it for the first time now. Like, maybe they're on the fence. Maybe they're hearing about the first time. Or what's that one sentence you would say to them to either, you know, get. Get them to find out more or get them to jump off the fence?

Yeah, I would. I would just say. I most. I. I would imagine everybody on this call understands with great pain what we opened with. And there is. There's really no excuse anymore to not look at products like tru. They work. They're. They're very easy for the borrower. You're getting back a better data set directly from payroll companies. You have GSE approvals on it. The price is more competitive. I mean, it's just. There's a. I don't do a lot of these webinars. This isn't. This is easy for me. It's. I just need to talk about how it went. It's. It really is. It's not a very hard decision once you start utilizing the product. So I'm a big fan of these guys and what they're doing and applaud them for assisting our industry in what has been kind of a difficult area to tackle. You know, the. The more we can get products like True going and getting verifications this way, I think the better off not only lenders will be, but consumers as well. That was a lot more than a sentence.

I thought it was beautiful, man. I think that's a perfect way to end this, Justin. And I just want to say thank you so much for sharing this. I don't know if you know this, but it really means a lot to folks who are out there, you know, who. Who are looking at saving on their verifications, who are looking at improving the quality of their data, you know, all of those different check boxes. So you're making an impact for. In the industry and for other lenders. So thank you so much.

Anytime. Happy to help.

Thanks, everybody.

Thank you.