Top 10 Strategies Driving Revenue and Reducing Operational Costs in 2024.

I love you, kp.

You just cracked me so good to.

Have you joining him, bud.

You know, it's crazy. It's like I'm wrapping up an investor call, you know, with social coach, and then teeing up the mortgage Innovator conference for California mba and then hot. And I told him, I was like, hey everyone, I'm hopping on with David and Richard and Delfino, so you got to cut me some slack. So anyway, thank you guys.

Good. It's good to have you here. Sliding in at the last minute again. We're glad to have you here. What I'd love to get is real quickly, can you give us your, your take on the, the forecast that we have up there?

Well, I, I wanted, I want to make sure people got their poll answers in first. And I'm glad. So let me, let me just.

Hey, market share. Everyone's, everyone's looking at the game. Market share, 74. I agree.

Well, I mean, that all. You know, we're still here, right? Like, we're still standing. You know, it's like my avatar. You know, you've been fighting at the, your back to the gates of hell for the last year and a half and, and you're still standing. And sadly, in that movie 300, everyone dies at that gate except one guy. But for us, we're still here. So you should just. Because of attrition of your competition and because 50% of mortgage loan originators did not renew their license in the last two years, we should gain market share. The market will grow. If you need validation, look at your lock pipeline. You probably haven't had a January lock pipeline look like this. Your locks are up in January. Cold, crappy, wintry, non seasonally purchase market. January, your locks are up compared, you know, to December and November. And so, you know, it's all right there in front of our face. And I will tell you, you know, just to put up a bow on this comment, the difference between me being at the New Orleans imb, the Independent Mortgage Banker show last week put on by NBA, you know, know, and the vibe and feeling in October, the national convention in Philadelphia for the NBA, when rates were at 8%, the highest they'd been in my, in my short 23 year career. People back then were doomsdaying and survived till 25, which is a stupid thing to say. It's only for commercial real estate. And then this last week in New Orleans, everyone was fired up. They were excited, they were ready to go. They were, they were positive. And so I, I hope people are Feeling it. Of course rates don't go up or down in a straight line, but the trend is for rates to go down and business goes up.

And I love this number that's up there that Doug has put up to Doug and Crew at Fannie Mae. 5.8. That's encouraging. Fourth quarter. I think we could actually see that sooner than, than that. Kp, your thoughts on sooner?

Yeah, yeah. So, so interesting. You know, I'm watching, I've been watching the two year treasury yield, right? So I know we watched 10 year for rates, but when the two year continues to collapse and come down and we got like within 15 basis points just the other day, when that two year gets uninverted, there's now money back, right? There's, there's, there's profitability. People start to get a little bit more liquid buying mortgage backed securities as institutional investors and that's what brings in profitability, that's what brings rates down. You know, and not to get super technical, but you know, there's a huge spread between the 10 year yield and the 30 year mortgage fixed rate. And you know, it's been hovering around what, three, what, 200, 300 basis points all this time. I mean it's really, you know, it should be a lot less. It should be around 170 and I think, you know, maybe even 150 historically. So you watch a couple of these like technical signals, they'll show you ahead of time where rates are going to go and, and it's usually predicated, you know, based on economic data, inflation data and what the Fed says tomorrow and then the next meeting March 20th.

We could go on and on. This is your sweet spot, kp. Watch you too. Watch your. Yeah, no, we all do this. It's good stuff. Watch KP's videos. It's awesome stuff. Let's move on to product mix. This is a big, big topic in Delfino. This is really an interesting topic and I want you to cover what it is. And we're going to do a poll in just a minute. But first of all, let's talk a little bit about product mix before we go into the poll. If we could just do that real fast.

Yeah, yeah, let's talk about it.

Let's already. The poll I guess is already up there so people can ask about it. But if you could talk about it.

Great.

Yeah, yeah, no, definitely. And you know, I echo KP's comments as well. I mean, more importantly is having that positive mindset, right, that we made it through. We're all trying to grow. But I think as a lender, you know, we're really focusing on trying to have the right product mix and as margins have changed and the world is kind of changing a bit as well too, you know, we've really looked to expand our product base, especially in the non QM space. I've seen more and more lenders get into that space. For us, the product and I think for the industry is education. Educating our customers, our brokers, our sales teams, our underwriters, really driving that and surrounding ourselves with a good team that understands that product right, Being able to fulfill it and being able to offer that service to our customers. We recently hired somebody in our company, Will Fisher, who in the non QM space is well known, he has a great background in that. But I think for us as lenders has been really trying to educate our broker base. For example, most of them might not be too proficient in that non QM space. Some of them are learning as well. So for us our focus has been making sure we're educating our customers specifically on the non QM space. And I don't know Kevin, what your thoughts are on that.

Yeah, we've been pretty heavy in the non QM for about five years. In house we have our own dedicated team, education, team content. So I agree with you. Yeah, we're a three channel lender, so about 900 loan officers in retail and then, you know, you know, correspondent, both delegated and mostly non dell and then of course wholesale. So yeah, I agree with you. I, I will say one thing, just to, you know, kind of add some color is that non QM was my biggest. Like, like if I had a top three, what should originators be doing? A year ago when people were asking that question in my top three was learn non QM. I, I think, I think in March of 20, when the pandemic started in the, in the secondary market completely melted down, you saw the non QM loans just go away. They literally just disappeared. No one was buying them, was frozen, it was done. Now I know this is kind of unpopular, but Dodd Frank work, okay, so in that regards, having a qualified mortgage, which is Fannie, Freddie and Jenny back, which is our overwhelming focus at prmg, especially this year with, you know, all that, you know, businesses coming. But you know, those loans which are deemed, you know, a little more risky, not as liquid, they disappeared and kept the integrity of Fannie, Freddie and Ginny intact. And so they didn't take hits because the borrower, one day out of bankruptcy got a loan and, and decided, well, I'm just going to default again. And I know that's kind of. I'm not trying to make an unfair assessment because non loans actually perform very well and their loan balance are actually very high. But after that market came back, I think the originator at that point, especially with volume being down the last year and a half said okay, this is a viable product. It's not like hey let's do solar loans because things are busy or let's go do second liens because the loan amounts 50,000. And I mean it's like, like this is a viable first lien product that it has legs to stay. And I think with more entrance and more liquidity, I think it's worthy for all of us lenders to invest in resources, education, pushing it and communication about it.

Yeah, it's really good.

I think that's the biggest part is the communication. Right. And making sure that everybody understands the product because there's so many pieces of it that changes. Even it's changed over the last couple of months. Right. So for us that's been a big focus on it.

If you could take one quick question. Delfina, take a quick question from Dana. If you can look at the comments section there, read that and respond to that real quickly. I'm trying to make meet as many of these questions while we're in on topic here. We can try to address the ones we miss at the end if you want to stick with. But it has to do with business purpose lending. Is that considered alternative mortgage product? Is that under the alternative your thoughts real quick?

I think the pieces of it can be. We're not offering that type of financing right now but I sure, I'm sure some lenders are. We're more focused than the bank statement DSCR coverage ratio, P and L product. We even have a full dog product as well too. So there's a lot of pieces in that non Kim space. We haven't tapped into that market KP out of you guys tapped into that?

Yeah, I would say generally I agree as well. Although some, I mean we do lend on businesses in the cannabis industry. So I mean maybe that qualifies if that's where they're getting at. But other than that, I mean we're not doing SBA loans and stuff like that but we do have some, some real, some niche stuff. The. Some non QM nuggets and the niches are in the riches.

Yeah, niches.

Anything that we're talking about increasing profits. That's really important. Let's move on to the Tech stack, it's an important topic. Never has that been more important. We say tech has always been there. But we want to get a poll again. On a scale of 1 to 10, what is, I've got to change my slides up here that I'm looking at the scale 1 to 10, how would you rate your tech stack in terms ROI? Remember we're talking about ROI. Are you getting the investment that you want out of this? This is a big one. So Richard, I'd love to get, this is a great opportunity for True to talk about how you can save so much by using True on the verification side.

Richard?

Well actually this is actually a, a question I think for kp. You know, I've worked with KP in a former life and at the current company I'm at right now and his team Robin is who I'm calling out is fantastic at actually quantifying roi. So my recommendation for anybody in the audience when they're thinking about how to quantify their ROI is if you're working with a vendor, don't just take what they're giving you as the ROI because they're going to use their calculations. You really want to own that number. And I think that's true with all things in life. Right. Like you should be invested in knowing and controlling that conversation. And so the first step is just to come up with some assumptions and calculate an ROI for every one of your pieces of tech and then, and then be prepared to defend them with, against other people. Bounce them off people you respect. Like, you know, you got KP and, and Dell on here who, who know a lot about what they're getting with different roi. I'm going to share the results really quick and while we're looking at those results, I'm going to just do two quick slides on, on True. Just as my only part of the whole crazy.

Look at that. Look at those results.

Yeah, look at those results. Right? I mean that's interesting that I, I mean it's right middle, I would say it's kind of like right in the middle, right. Five to seven. Most people are kind of ho hum about their tech. Well, so look, we were at imb. AP just called this out. We were at IMB and the topic was credit and verifications. Everybody's feeling on December 23, sorry, December 31, 2023, the credit cost to pull credit when shooting up for all the IMVs. Everybody's feeling it and that's what everybody was talking about at the conference. They were saying it's tone deaf at this time of the, you know, right now in a high interest rate environment to be doing that. And the same for verifications, right? Some people don't like calling it out, but I don't mind calling it out. The cost for the work number has gone up like crazy over the last couple years, and people are, are hurting because of it. So this is what TRUE does, right? We do verification of income, verification of employment, verification of assets and insurance. And, you know, we can get into that if you want to learn more. I'd reach out to true, but just at a high level. We got 92% of the US workforce covered. I think most people are loving to see that. We're a Freddie Mac AIM approved provider, World class conversion. The product just works. It's awesome. It's slick. And some of the highest ROI out there over, you know, the savings over the work number. So what I would say is this. You got the QR code on the screen right now. If you want to learn more about truv, reach out to us. We'd love to have a conversation with you. And then without, without further ado, let's stop and get, get back to our presentation here on education.

Yeah, I think we're on.

Maybe we can have Kevin share kp, maybe some ideas on the, your, the IT piece.

Yeah, good call. Let's just talk about the results really quick.

Yeah, okay, sure. Yeah. I mean.

Kp. Kp muted out by accident.

Yeah.

Kp. Well, we'll have to wait till he finds his unmute button. I would love to get his perspective on it. One of the things, Delfino, that you we talk about is one of the strategies is number three is education. This is a big one for you, and I love it. Why is education such a central point of your 2024 strategy? I love what you share on.

Did I go, did I go mute? I apologize.

You did go mute for the first time ever.

Kevin. You know, it is okay. I, I, I'm a big Android fan and obviously we have a lot of Apple Android haters on here. And I will, I will give you all some ammunition. I don't know what it is, but when I'm on Zoom, even though I have do not disturb if someone calls in, it blocks out my audio. It's super annoying. Anyway, um, what? I, I was on kind of a roll there. Let me, let me finish the thought. Yeah, finish your thought.

Go ahead. We'll go back to that. Yeah.

So two years ago in February was the lowest rates in the history of history, and they rapidly went up to June of 22. And so 1H22 is actually decent, but then everything kind of froze. Right. And so a lot of C level executives, they started going into cost cutting mode. And we still have plenty that are in cost cutting mode right now. And so you have to make a shift into your investment and your roi. Not just a hard dollar ROI on cost cutting, but also ROI and getting new business. And so some people wait until the market turns and gives back, so they're waiting to get back to profitability or get back to a certain level before they invest and spend money on something that can create sales roi. So there's still a lot of focus though, I would say, on cost cutting ROI right now. But you know, the tide's turning so, you know, get, if you haven't already made that shift, I would say, you know, make that shift if there are any sea levels out there, you know, listening.

That's good, Good stuff. All right, Delfino, your favorite topic? Education.

Education. Yeah. We as we were prepping for this webinar, we spent some time talking about this. And for us, it's like a three pieces to the education puzzle. Right. Obviously, a part of a big part of that is educating our teams, both operations and sales. You know, so we have a training department that really handles, you know, calculating income tax returns on a monthly basis. Refreshing, believe it or not. We're going to get back into an earl market or in va streamlines are going to be popular again. We start to see rates. So, you know, when's the last time? We've all done a lot. We've all closed a lot of V8 earls and streamlines. It's been a minute, right, with rates, where rates have been. So we're spending time educating our underwriters, our sales teams as well, both retail and wholesale, spending time educating them, helping them how to explain our products. And also, but more importantly in the TPO space, our brokers. So we've had series in both non QM conventional in our government products where we have a series, for example, of educating how to how to calculate income. Specifically, you see a lot of variable income out there in the market and it's some loans are even more challenging and so forth. So we have, we set a series for our brokers to attend, not only for non qm, going over non qm how to look at bank statements, but also looking at how do you calculate income on a VA loan, helping them with bah, whatever they use to qualify. Or like I mentioned earlier on, on a nursing for example, we spent, we had a lot of requests. So it wasn't just us saying, hey, you should learn this. We actually put a poll to our customers. What are some pieces that you want to learn about when it comes to this? So how, how can we help you support. So it's been a big, it's helped us reduce mistakes, right. Help us close loans a lot faster. But I think being able to educate our partners has been a big piece of our success and our big plan going into 20, 24. But it takes three pieces, right? It takes the sell side, loan officers, account executives, the operations piece with the underwriters, and then also our, our customers as well, our partners. So that's a big part of what we're doing this year. We have another theory. Starting on Friday, we have a training for earls and streamlines. Like I mentioned, that's a big focus of our in 20.

Well, I have a quick, quick, quick, quick point here. Dell kp, I want you guys to just, you have to opine on this. 35 of the people in the audience here just said that they don't think their team's able to calculate income consistently. That's a huge percentage.

Yeah, yeah.

If you think about it, it is. And that's why we gotta have constant training, right. Educating. And if there's, if there's a trend that we're seeing out in the market, we like to get ahead of it. You know, if we see something coming, if we're seeing more type of product for whatever reason, we're really trying to get out there and get ahead of it. With education, it sounds like it's, it's an easy thing to do. Right? Educating, making sure everybody knows. But it really, you have to be detailed. You have to be strategic on what your offering is and bring value. And that's what we try to do for all of our teams.

Yep, that's really good. Jim Harrison just echoed with echoed in what you're saying. Well said. I think training, what is there real quick trip. How are you doing? Is online. What do you find to be the most effective way and how long are you doing it for? Is it an extended period of time? Is it more frequent, that type of thing?

So it depends. I mean, we're dealing with, you know, salespeople sometimes and brokers. Right. I think the, you have to be very strategic. I don't think you can go longer than 30 minutes. We keep them at 30 minutes. Right. And we break it into sessions. So it's not just a big piece on overtime or self Employment tax returns, or we'll break it down into two that we can explain and take questions. We'll send the recording out to our customers as well too. But I think the biggest piece to it is making sure that you're adding value. Right. Like if you come out, like if you can come out with your, with your training and there's no value to it, people are not going to want to join the next one. So we actually go through live examples, right? Like this is how you would calculate it. This is how we, this is how you should look at this kind of variable income, whatever it is. I'm a little old school, David. I like to be out in the field. I travel a lot, just like kp. He attends a lot of events, I attend a lot of events. I'm in Texas next week. I think training in person has been kind of lost a little bit ever since COVID Right. So we just brought in all of our customers, for example, into Southern California, the Southern California ones for an in training, CALHFA training. Right. That was great. And there was so much value and so much great input.

There's ancillary value too. There's value just beyond, just beyond the education. It's getting people together and talking.

That's right, that's right. But the majority, yeah, the majority of them, excuse me, the majority of them are online in zooms. I would say that probably 80 to 90% of them that we do are online.

Love to get your thoughts on that, kp, but we're all running, we're only on strategy or thought number three. Let's get on to number four, data quality. Why is increasing the accuracy of data so important? As we look at your strategies for 2024 kp, this is right in the middle of your. Where we allow. I know you've got a few opinions on this one.

Yeah, I mean, you know, a few years ago everyone's like, oh, data is the new oil. Like, what the heck does that mean? Right. But you know, if you look out there, the data scientist is like your highest entry level job, you know, for people coming out of college. You know, you talk about data, you hear it and why is it so important? What's going on? You know, I'll just, I'll give an example. So I, I was, I was with CoreLogic and, and they said that they have collected a piece of data on every property in America. Okay, Just, just, just for example, the, the volume of room in the floor or the first floor or the height of the ceiling. Right. Does it have vaulted Ceilings versus not. Now, that's not necessarily a data point captured on an appraisal form, but we all know being in this business, that's an appealing data point, right? So you're collecting this data when you take all these pictures of these rooms and scan and make these measurements, and there's this dark data, data that is collected, you have, but you're not putting it to use. That's a pretty powerful thing to be able to kind of take and quantify, like, all right, well, you know, how much more per square foot on, you know, the footprint of the house and how much more valuable. How much higher can I set my price knowing I have more volume in the house or higher ceilings in the house? And that's just one little piece of data, right? And so there's so many, you know, so you have to have, you know, first. I would say most lenders are now in this position, but I would say, gosh, even five years ago, we're not this position. You have to have a data warehouse. You have to have a warehouse where you store whatever you collect. And then your data team in house can create an API and do a single purpose report to give to any, you know, technology partners that want to tap in with you. I want to partner with someone, like, true. They want to give me information regarding employment or income or whatever that we can share it back and forth and map it to certain places. You have to have a process in place to do all these things to make underwriting go faster and be cheaper and be better. And so that's that. You hear data, and then you start, think it's the same thing as AI. Like. Like AI, AI. Well, what does it. What does AI mean? Well, I mean, if you don't know what to say, type something in a prompt and give Chat GPT a chance to, like, crank something out in two seconds and go, okay, all right, now that gets my gears going. Now I can kind of put it in my own tone. So it's obviously, you know, having accurate data, lots of data, a formula to collect data and then put it to use. That's where a lot of our emerging winners will be coming from in. In the landscape over years to come.

Yeah. Delfino, quick thoughts.

He said it best. You know, I don't know what else to add on that. I think data is important, you know, and. Go ahead, David.

I'd say I've got one other thing to add to the data. Quality is also data. When it comes to this is business intelligence. It involved data. Where are we Lending. Why are we lending there you look at, there's so much act. Not only do you look at the data you're collecting in your 1003, the data, the richest document for gathering data on an individual that you could get. That's why we got to work on also data security. But now the whole nother topic, but where should we be lending? So it's data about the markets and we have never had so much excellent data about the market. So I just want to put in a plug for data intelligence. We could go on and on on this one. Good comments on that. Kp, let's talk about five common mistakes coming on on this one. Good comments on that. Kp, let's talk about five common mistakes. How are you minimizing common mistakes in your loan pro, your loan origination process? Delino, let's start with you on that and then get some feedback on that from, from Katie. What are your ways to save money?

Yeah, no, I, I think that we've obviously seen the market change so much. Right. You know, there's been a lot of changes in the market in different products for us. I touched on the education piece but us is finding the right, the right partners to partner with, with the tools. Right. And making sure we're up to, up to speed on the technology that's out there. That's been a big one for us to mistakes. One of the pieces we put into as well too is having the right tools for, for our ops teams with checklists. Right. Making sure that's going through the process, making sure the files are coming in as they want from submission to funding. Right. It might sound easy, but really maintaining that checklist has helped us reduce mistakes and, and minimize the easy pieces. Voes, right. Making sure we're following voes has been a big thing for us. Right. And there's been an increase in those costs as well too. And for us, one of the simple tasks we've done is making sure there's a, there's a validation process after it's done in the first 10. So an account manager will do it and we have somebody else backing it up during a certain time period.

So this, this, this fits really hand in glove with your education. Passion for education too. I mean this, this is one of the biggest ways to eliminate the mistakes is through education. But it's also how you're monitoring. It kind of goes into the data component which is the previous one. Kp, your thoughts real quick?

Yeah, I'd say income calculation is our biggest one to tackle. It creates the Most cost down the line with repurchases from the GSEs. It has the most back and forth and inefficiency within the process. And honestly it has the potential to be the most easily solved. If I'm getting information from an employer through a vendor out there and I'm tapping straight into the irs, well, I don't need to worry about educating anybody other than the bar how to, you know, upload their information. If I'm getting information from the employer via a great, you know, vendor, well, then I don't have to worry about that. Right. So. So for me there's all this back and forth. You know, Delphine, our companies both do a lot of bank statement loans using a bank statement income calculator upfront to upload all 12 months of bank statements or just get the data straight from the bank. When the borrower gives you their username and password and it calculates it and then that income is imported into the system and then everyone's on the same page, borrower, loan officer, processor, underwriter, most importantly. And then it's also agreed upon by the end investor ultimately that they like the income because hey, it's the same bank statement income calculator the investor told us to use to sell them the loan. And so all the back and forth, all the guessing, we got to take as much of that out. So then we focus our time, the one commodity we can't get back on, the harder stuff, the exception processing, the things that you can't automate. Right. And so that, that's where we're going. And that's probably the biggest one I see is income calculation and the loan origination process.

Yeah, really good point. And then when it's a great plug for True too, I mean if you're going to go out and do it, when you download it from true and save 80% over the leading the other vendor and they're no longer leading. I don't think troops take a market share fast furious because of the cost saving. So it goes back to that. Let's go on to number six, speed. Kp, you touched on this as we were talking and it gets us into another poll question. Surprise. But when it comes to speed, what parts of the loan origination process are you most focused on in terms of increasing speed?

Kp well yeah, for me as a, as a partner and a lender, a three channel lender, you know, it's underwriting. I mean underwriting is, is where, you know, all the heartache goes. So like that example, you know, that I Just talked about doing income calculation. All those are real life heartburn, you know, headaches. And, and, you know, think about, you know, Delphina and our companies both have, you know, wholesale channels. Now you're dealing with a third party originator. So like, your, your, your process has to be on point, right? So, so that way, you know, you're, you're, you get the next loan from that third party originator. They, they're like, okay, you know, speed shows you care. And, and I think that's kind of, it's a crazy, you know, thing to think about, but I, I saw someone at a, some speaking event a few years back and he was saying, you know, today's client, especially as they skew younger, you know, they, if you want to show them you care about them, speed shows you care. And I thought that was interesting. It wasn't like, you know, me getting on the phone and saying, oh, I'm so thankful for your business. And you're so. They don't care, you know, like to care. They don't, you know, disregard that. But speed shows you care. That is, that is the thing. And for us, the biggest hang up out of all the ones that I see up there is usually underwriting.

Yeah, I just got to throw this out here. Kp document collection was winning and you started talking and you influenced underwriting.

I don't know.

I think there was a correlation.

You're a poll mover, kp. You're a poll mover. Look at you.

You're a poll mover. Yeah. Manipulate you.

Wait, he's on mute later.

He's a manipulator of the polls. All right, I love that so much. But how do you reconcile that, kp, along with what we were talking about just a little bit about, about accuracy? When you deal with speed, where's that, where's that point where you start tripping over the accuracy point? How do you solve for that, kp?

Well, that, that's the whole point of being, you know, having data partners and being more data driven. Right. And so I, I don't have to worry, you know, about accuracy if I'm confident in the source of data. If, you know, we, you know, we've been working with True here for a while now, and it's got a great reputation within our walls and it's gaining market share within our walls. And, you know, same thing with the bank statements. Like, if I'm logging into bank of America and I'm getting the information straight from bank of America, I trust the data. And so that's where I get the accuracy. You know, we have.

Great, great point. Undisclosed debts is what Tony put out there. Yeah, absolutely. Anything you want to add to that, Delfino?

No, I think you said it best. That's interesting comment that you said about, about the younger generation, you know, go faster and they think you care. Right. And I.

Isn't that true? That's so interesting.

Yeah, it's interesting. I think to them, I think it's really important to get that great mix of quality and speed. Right? And I think that's all we're looking for, right, is having great quality and having that speed aspect. Like he mentioned, we're in the TPO space where turn times are important. That's how you get your next deal. Right.

But.

But also to stay in business, you need to have great quality, too. So us finding that mix, those data points is really, really important to us as well.

I see some comments about document collection in there. And just on that point, I don't want to collect documents. I don't want documents. I want data. Right? And so we, we. The whole point of, of getting more data driven is to. Is to collect less documents. Collecting documents inherently is a problem. It inherently is an issue. And it's usually the borrower that is kind of slacking, right. And so, you know, do you have a point of sale that makes it easy, right. And efficient? Do you have some kind of way to take more data and less documents? Do you have some kind of, you know, borrower portal that walks them through, how to upload this? And it's super quick. They could take a picture, do it from their phone, and then your document ingestion system on the inside. As a lender, do you have something that's on point? Does it have adr, automated document recognition? Does it go a step further and go into data scraping or even OCR and start pulling data into different fields? And so, you know, document, you know, document collecting is inherently a problem, and so we're just trying to avoid it all together.

Yeah, good point. I'm looking at the time, trying to keep this on as a moderator moving along. Let's get on to Matrix Delfino. We've all heard managed by the metrics, KPIs. It's such an important thing. We've got another poll question up here, but how are you doing this to reduce costs and increase revenue? Delfino?

Yeah, no, thank you. I think we touched on almost every piece of our conversation has been data, right? So if you can measure it, you can manage it, right? So I think for us has been really the reporting is critical to us. Right. Like we have on your screen here. I have a average loan cycle time, that's important. Making sure we have the right pull through. That's extremely important. Especially as rates drop. Kevin talked about our lock pipelines. He's right. Like it's our highest stock pipelines but if you have a dip in rates, everybody in lenders on our side are switching pipelines. Right. If they don't have a float down policy. So that's something we monitor greatly on ours is the data points making sure underwriters have, are hitting their mark on a daily basis. Conditions are rotated at the same time. And it comes down to the speed part too. Somebody made a comment here about collecting the data collecting documents for us. KP mentioned too, like we don't want to data is important too but collecting conditions from our partners and borrowers, et cetera is starting to be a little bit more of a challenge for some reason. Right. So making sure we get the right information at the right time has really helped us kind of close our loans faster to help us cycle time. But what I, I don't know. KP will agree probably on this too. But really making sure we're, we're telling our teams what the metrics are. So they are aware of it too.

Right.

What the expectation is, is really important. So I don't know kp, if you got Indiana hat on that front.

Yeah, yeah, definitely. I mean, you know, it's a great time to circle back on a repeat question on the cost per unit and by the way on that alternative product, I mean anything investor, you know, to save hard money, you know, we're doing investor loans. I know you guys are. We are so the, the alternative business purpose loans. So cost per cost per unit. You know, you see these numbers that the MBA puts out overwhelmingly, that number that cost produce alone is the originator's compensation. So it is the originator who hunts alone finds it and charges a point or two, you know, or the margin overall in the origination part of the cost to produce. So the operational expense of a loan, let's just say it's 3,300 bucks. Okay. If that's the average to, to produce a loan, that's average in the mortgage landscape. We've been trying to, we've been, we've been having some good months around 2800, 2900. We have certain loans for example. Yeah, it's great. I mean and we have some loans where just the underwriting piece, if it fits in the green path which we're about to get a lot of green, green path happy loans coming up here. As soon as the Fed cuts the rates, we use some offshore for that. And then we, on every offshore loan we have, we also have an onshore resource to clean it up and communicate with our clients whether in retail or wholesale correspondent. So I'm 50 bucks offshore to underwrite a file and 25 for the onshore resource. So it's $75 just to underwrite a loan if it fits that mold. And we're even doing, you know, some simple self employed borrowers, not really any FHA borrowers unfortunately just because there's kind of regulations on who could underwrite government insured loans. But you know we're about to be in that environment where there's a lot of cheaper loans and costs produced will come down. And all These stats for Q2, Q3 and Q4 as soon as the Fed cuts the rate. So that's our cost produce alone. But that includes everything. And to be honest, like we could be way less. We have chosen to invest in our people and we still remain slightly overstocked because we will one, we're already getting busy so that move was justified and spring is busy for us. And so this year when the spring comes around, I think what a lot of C level executives are going to do is they're going to try to hold their staff as long as possible without hiring. Maybe they flex with some technology investments they made, maybe they flex with some offshore resources that are kind of there as backup without having to hire more expensive and pay up for the pro, the, the people that do the operations. But then see where we land when spring purchase season is over. And my guess is by then the Fed will have cut and we'll be back in a refi land with even a little bit more late year purchases with lower rates than we normally see. So that, that's how we're thinking about cost. I know the lowest number I've ever heard for anyone to cost to produce a loan is around 1500 bucks, maybe, maybe 1450. But that's cherry picking loans, doing only the easy loans, setting up an assembly line, you know that that's a different model. Our model. We, you know, we're, you know, let them go fight be number one. We fight the community. We've got branches in the community, we serve the underserved, we do manual underwrites, we do tough stuff and that is more expensive to produce. But that's, that's what makes us Happy. We love serving our communities.

That's, that's a, that's a whole webinar just in and of itself.

We've got, that is. But we'll say we've got, we've got.

We'Ve got clients that are producing and quality and doing a broad diverse product mix and doing it under $1,000 per loan. So when you go like how the heck are you doing that? But that's a whole nother topic for another way. Let's get moving over to number eight, the F word for every mortgage lender fraud. Ah. I want to ask KP and Delfino, I want to ask you, what are your current trends? What are you seeing? There's been reports in the press about reports coming out about increased fraud. What are you seeing in your shops and how are you working with it?

Yeah, I'll just start.

I mean it's definitely up when, when business goes down, people cut corners. We've seen some straw buyer stuff. So, you know, it's out there. It's less than, I mean, I mean I would say less than 1% of our book. But you know, but if you do two, you know, we did 22, 000 loans last year. Right. So that's a significant number. Yeah.

More volume. But that does help. That does that.

We're starting to see quite a bit too. And, and we were. When it happens to us, we educate our brokers on what we see. Right. Like I think that's a big deal. And obviously in the retail channel they're, they're aware of it, they have processes is in place. But in the TPO space specifically, we'll talk to our customers about it. We're seeing a lot of bank statement stuff happen, even believe it or not, and some income pieces. But more importantly assets. We're seeing that quite a bit actually. And that's been on the rise. I would say. I've seen it. Right. 30%, you know, so that's something we're, we're cognizant of. We have tools in place to help us with that in the underwriting space right before funding etc, but for us we have seen an increase. But education is something we've all talked about here a long time. But once it happens, what do you do with it? Who do you tell? How do you share that information and how to protect ourselves as a lender want to be.

I want to be respectful. Everyone's time on the webinar here. We're wrapping this up. We got two more strategies to go. Let's Talk about Team kp. You've already talked about a little bit. You touched on this. If you wouldn't mind, touch on again. Delfino, this is one of your favorite topics. You're all about Team Delfino. Both you guys are that you got great teams. But you talked about overstaffed, being overstaffed. Slightly overstaffed. Kp, let's start with you real quick.

Yeah, I mean, I can give two, two real world, real world examples. I mean, you know, there are some cutthroat businesses out there. Let's just say Amerisay, for example. Right. Just naming names, really. A consumer director, this is my opinion, does not reflect the opinion of Kind or David or anyone else. But, you know, they took a very hardcore approach on their third party origination channel. And the owner just called up, you know, you know, Mike over there, he was running and said, shut it down. And he's like, what? He's like, yeah, just shut it down. Shut down. Now he's like, well, give me some time. So, you know, to be fair, I mean, like, that guy probably saved 50 million bucks. Okay, so he fired everybody on his team. Okay. Yeah, okay. Yeah. But I mean, look, so that, that's one extreme, right? Obviously we didn't do that. And I would say on the other side is, you know, you, you, you kind of hang on, you hang on. Which is mostly what independent mortgage bankers do. Like us, we hang on longer than we should. We're hopeful, we're optimistic. We think the market's going to turn any minute. And it took a year and a half and it still hasn't quite turned. And so, you know, so like I said before, we're. We're investing in our people and we think it's okay because when the market does turn around, we want to capture a lot right away within those first two, three months when it's really, really crazy. And you know what? We can sleep well at night. We held on to people, we put bread on their table for their families, and they got a roof over their head. And so I, I think there's those two different extremes of how. And, and, and let's not forget, I mean, you know, Delfina, you and I agree. So at the end of 22, we were the fifth ranked, excuse me, we were the tenth ranked wholesale lender in the country. We're tenth. Five of our competitors in front of us went out of business. Just out of business. Right. So, you know, you know, not, not going to get into each one of them. But, you know, I don't know what their strategy, what they were thinking, but they weren't all in and they're not here. So this isn't a post to brag that we're fifth the post. The point of bringing that up is that at least in wholesale, some of these lenders didn't have the stomach or the intelligence or the wherewithal or the care to remain in the business, which required you to lose money, AKA investing money, to be here and ready to roll the moment it popped back up. So we, we paid our dues as a lender, but we're here in those channels and all channels and it's just a different approach how you look at down markets and not everyone is built the same. So. I know that's a great point. Glenn Stearns, personally, you work for an absolute legend. Delfino. He's a great, a great friend and I love the way you guys have done it. Kind. And he's all in. There's a few of us that are all in and we're ready to rock and this market's turning in our favor finally.

Yeah, I couldn't, couldn't agree with you more. I, I, we're excited for this market and I think, you know, like every lender, when the downturn happened, we obviously had to adjust our staffing levels. But I think one of the best things about one of the things we do is c, we're growing, we're hiring now. We can't hire fast enough. Actually. I think we're preparing, like you mentioned, for what's happening in the spring, Kevin. And I think the first thing we do is call back the people that we, we had to adjust Right.

Last year.

So that's the first step. Go to them first. How come we're going to bring them back. We have brought back 90% of those people. Right. They want to come back. Right. So that's a big deal for us. I think our teams, all of our teams, a great team at prmg, all the companies on here is our teams make us who we are. And I think that's a big piece. They're all our competitive advantage and we focus that here in kind and making sure they're, they're feeling comfortable, making sure they're feeling productive and the best way to first support them. So we're hiring. I know some people are looking for people as well, too, but it's a good sign of what's happening in the market.

That's a, that's almost a good note to end on. We got one more to go and then we're, we're slightly over time. So we'll go to this one. Customers experience, man, it's at the end of the day.

Yeah.

All about the customer. Let's hear about this, get this poll question out there. Where does the borrower experience stand today from your perspective? Delfino, let's start with you and wrap it up with kp.

Yeah, no, for us, I mean, respectful time. This could be a whole webinar itself.

To David, you know, but every one of these points.

Yeah, but for us is, is two things. Right. Number one is setting the right expectations. That's important.

Yes.

Everybody, right. Setting the right expectations for your borrowers, your partners, making sure they understand the process. That's a big piece of the customer experience too. And specifically in the TPO space is your technology. We focus a lot of our experience on technology with our portal, with some of the pieces of the updates that we're doing to our backend for the underwriters on the condition process. All these little pieces make us who we are as a lender, make us that lender who they are. So we really focused on the communication, really making sure that they set the expectations both internally and externally. So we really just strive on that and we really tried to have the best in technology. Right. There's a lot of lenders that focus on that. There's a lot of great tools on that. We actually built our portals, our technology, on what our customers want. We didn't go out there and say, you will like this. We would say, would you like this? We pulled our broker asking what was good for you. That's big for us.

That's good.

Yeah, well, yeah, well said. I mean, I think, you know, we, we built a type of lender that is really good at exception processing. So helping with manual underwrites, helping with down payment assistance programs, helping with loans that are, that require customer service and personal attention, picking up the phone and walking through it. And so when you build a system like that, you, you're not over indexing and trying to be the best at the easy peasy stuff, the assembly line stuff, the slam dunk refi. Having said that, we think we have the best balance of both. And to your point, Delfino, we agree with you. You've got to invest the technology. We spent the first six months of last year going to the best in class product and pricing engine. We're on poly as our pricing engine. We're just in the middle of testing our brand new TPO portal to serve both our correspondent non Delegated. Delegated and wholesale channels. And we're going to be first to market with a portal that we think is best in class. And so we agree with you, you have to invest in these things, you have to get data driven, you have to get all these things, tie it together, have a process that's seamless and easy but then also doesn't forget about the human aspect of it. And I saw someone in there, Gene, I think you made a comment and I will, I will agree for some people it's all about price. Right. And so they're going to, so just whoever that is, there's one person sitting at USAA and you need to call that person because they're the only person with the best price. Just so you know, I guarantee you, whoever you're talking to as a borrower, there's a thousand other people, you just got to keep making all the phone calls, you're going to find them. But there's only one the best. Right? But having said that, for your average consumer, especially your first time home buyer, they want help, they want help, they want attention, they want care, they want education, they want a seamless process, they want a fast process, they want it all right. And that's hard to build and that's why this business is hard. It's sticky. And that's what we're trying to build at PRMG.

Yeah, very good. Let's. Richard, we went through all 10 questions. We've gone a little bit over. Let's get into some of the. For those that hang on. I'm impressed. We've held onto our audience even though we've gone over a bit. My apologies.

Yeah. Can I make a quick comment, David, while you guys.

Please do. Yes, of course.

I just want to say this is that, you know, one of the. Thank you to you and Richard for, for hosting this but I think it's a great to have two lenders on here because this industry, we're stronger together. Right. Ideas and, and making each other better. You know, iron sharpens iron. So I just want to thank you guys.

We need more of this.

We need more of lenders working together. Right. In this industry because we are stronger and there's a lot of great, a lot of great people out there sharing some, sharing some great ideas. So, so thank you, thank you for that. It's a big deal for us.

Kudos to true for making this happen, bringing two outstanding lenders together and giving me the privilege to moderate. Richard, what questions do we want to focus on as we wrap this up?

Yeah, we had three or four questions that came in and I just wrote them down. So I want, real quick, I'm just going to touch on them. Jovan had asked first time homebuyer products, would you focus on those? And in this market which products specifically or special services? Do you guys want to touch on that?

Yeah, go ahead.

Yeah, I mean I, I mean just you know, just being you know, involved in three channels for, for a brief 23 years we see the distributed retail has a higher purchase percentage of business at all times and especially first time home buyer business. We see the broker channel not too far behind that. But let's say that you know, if, if retail is at 92% purchase, we see the broker channel at 65 purchase and then we see the non delegated correspondent accounts, we see them at about 55 purchase. And so obviously that's a, that's a historical average when there's only purchase business like there was last year, like everyone's at 89, 90, right? So, but, but there it's a different type of borrower. It takes a short, huge infrastructure to be in there, be educational, do the seminars, spend the time, make the relationships in your neighborhood, in your community. And so you know, supporting that is a whole different animal. And, and so I, I, I will say other than products, right. Whether it's non QM or fha, first timer down payment assistance, I mean we, we've got 200 million in Dream for All funds that we're about to start taking applications on February 1st, like literally in two days. And so we were the leading dream for all Calhapa lender last year, a year ago when that all came out and you know, we, we're ready, the systems are ready to get up to $150,000 in down payment assistance from the state of California's Housing Finance Authority. That's an example of how we're doing it. And then we have a national DPA whether through Chenoa or any of the other, you know, funds that are out there. So, so you know that and I'll tell you right now, like the homeownership hurdle, the down payment, it's only going to get harder. I don't know how the Fed thinks they're ever going to whip inflation because the second rates come down, home prices go up and then all the CPI numbers go up again. You know, I think they're just going to throw it out and start using super Core, right, which strips out housing because, because they can't build more houses, they're just going to have to say, hey, sorry, you know, I'm, I'm sorry, you know, inflation with housing is over our 2% target, but we're basically just going to have to say if you're on the lower end, there's just no houses being built for you. So I have to strip you out of the calculation. Honestly, they start talking about super core, they've already teed that up. So unless our great builders had a great meeting with Lennar, they're having incredible traction building tiny homes. You know, the 400 square foot starter homes, they're doing it in San Antonio. They're crushing it with that. And so I think that as the builders start to find a viable, profitable way to get houses that are starter level for the early buyer, for that buyer to help get the working class at least gaining some wealth so they can ladder up later, I think, you know, we're just going to have a problem with home prices until that's done.

Okay. In the interest of time. In the interest of time, two questions, one for Dell, one for kp. That's all we got. All right. Occupancy fraud, somebody asked what controls can you put in place to reduce that? They keep seeing it, they don't know how to reduce it. What do you got, Dell?

I mean obviously we, we, we use lfs lsfm, right. There's, that's a loan safe fraud manager that we use. That, that's a, that's a big part of us. I think it's really educating our, our, our underwriters on trends, honestly, like where anytime there's something, we have a loan committee, for example, that if somebody has a question regarding occupancy, that there's a committee for that. There's like minded people, they understand the guidelines, they understand what to look for. On that piece, we just had a, we just had a couple of communications with some of our underwriters on that piece, specifically on occupancy. Right. So we're starting to see a trend on that. But I think it's really keeping up with trends and they're changing. You know, I feel like almost every week, to be honest with you. Right. But really making sure that they have those tools in place. We follow that, that I mentioned as well as one of our primary ones.

Well, all right, kp, last one. And I'm, I picked you for this kb because you know, your, your finger is on the pulse of the economy so much. If you follow KP on social, hop on his LinkedIn, follow him on Social is one of the most informative Pieces of information I get personally. And so I would just recommend everybody go and follow him on LinkedIn. He puts it out regularly. Rate cuts. This is the question, how many rate cuts are we getting in 2024?

Well, okay, so there's just, I want to dispel a couple myths. Okay, so, so the, the first one's the most important one. Don't fight the Fed. Okay, so, so on December 13, the Fed said, they said they will cut 75 basis points in 2024. Okay. With the data that they had at the time. Now I'm in the camp that inflation data will continue to get better as time goes on. If you look at the PCE data and the GDP report, which has its own quarterly inflation read, we're at 2% for the last six months. So, so months seven through 12 ago is so high that it's keeping the number, you know, at 2.9 and not 2. So in the words of Smokey from Friday, why are you bringing up old shit? That's what I would say. But, but what I, what I would say is as we go forward, that data will continue to improve, which gives the likelihood of the Fed to cut sooner rather than later. Now they have to show their number again March 20th. Will it go up to a hundred basis points? And by the way, 75 basis points or 100 basis points doesn't mean exactly 3 or 425 basis point cuts. You know, if by May or July jobs are breaking or it's softening or whatever the case may be, maybe that first cuts, 50 basis point. This is kind of a thought. A lot of, a lot of times, more often than not, it is more than a quarter. They got to bring rates down to be impactful. Taking a quarter off everyone's car loans and credit report credit cards doesn't help the poor. Taking it down 50 basis points helps the underserved. So I think the first bed cut will be May and it'll be 50 basis points. And I've been saying it for over a year.

There you go, take it down, write it down. KP spoke it, folks.

Thanks so much. KP has spoken. Dell, I want to say thank you kp everybody. They do this because they love the industry. They love what they do. They're not getting paid for this. This is just giving back to the industry. They love giving back. So thank you so much for doing this for us, guys. And David, thank you so much as well.

Enjoy very much. Thank you, everybody.

Have a great one. You bet.

Thanks everybody. Peace out.