9.15.26 Around the Industry; FirstClose’s Adam Nicholson on Cycle Times; Treasury Yield Patterns

Robbie Chrisman: Welcome to the Chrisman Commentary, Daily Mortgage News Podcast. I'm your host, Robbie Chrisman. Topics on today's episode include around mortgage in 60 or 90 or maybe 120 seconds. Where the 10-year Treasury yield is now at its highest level since 2007, is it doing the Fed's work for the Fed? And my interview with First Close's Adam Nicholson on how faster cycle times directly impact pull-through and funded volume. Here, take a listen, do a little preview. There's a common saying out there that time kills deals. How do longer cycle times impact borrower fallout pull-through rates and ultimately funded volume? Adam Nicholson: You know, throughout the industry that we're in right now, the main goal that every single customer has is making sure that their borrower, their member is happy. So when you get a member or a borrower that's gone to you is asking for a product and it's taking 45 days to get back to them. They're out shopping, they're out looking at rates, they're out exploring, you know, referrals from other people for, hey, I got mine in 10 days, I got mine in 20 days, I got their, they're getting more information if they're getting these long draw times in the industry. So getting that cut back to a quick turn time that not only gets them the product that they are looking for and gets them out the door and happy and satisfied with you as an organization, they're off the market. If you've already gotten the information, gotten the approval, and told them it's going to happen, they aren't looking. They aren't asking about other options. You, as their uh financial provider, have given them what they need and secure their business. Robbie Chrisman: This week's podcasts are sponsored by First Close. First Close helps lenders accelerate home equity originations with faster property decisioning, streamlined workflows, and a digital borrower experience from application to closing. First Close is the only end-to-end digital HELOC and home equity loan solution built specifically for home equity lending. Learn more at firstclose.com. While thousands around the nation regret the choices they made in their NFL fantasy football leagues, we are nearly halfway to the December day with the least amount of daylight, considering the autumn solstice is September 22nd. We're now losing three to five minutes of daylight a day. Retirees are warming up their road maggots to follow the autumn colors on the highways, and they'll be faced with some hefty fuel bills, as will people filling up their home heating oil tanks. Today I'm in Dallas for the Lone View Innovation Conference 2026, and Lone View recently rolled out its AI accounting software Luna. The CEOs, CFOs, and controllers here are focused on measuring, analyzing, and interpreting data, including volume. MCT's September indices report reflects a total lock volume decline month over month in August, with purchase and rate and term refinances both pulling back. Cash out refinances were the loan category to move higher. And according to Curinos's proprietary application index, August 2026 funded mortgage volume decreased 2% year over year and decreased 9% month over month. The average 30-year conforming retail funded rate in August 2026 was 6.52%, 10 basis points higher than July 2026, but 16 basis points lower than the same month last year. The latest MBA application data points to a broadening slowdown, with sequential declines across nearly all purchase and refinance indexes, and the sharpest weakness concentrated in refinance activity. The headline refinance index is down 58% over the past six months and 24% year over year, driven disproportionately by government borrowers, particularly VA, where applications have fallen 77% over six months, versus a 47% decline for FHA and 55% for conventional refinances. By contrast, conventional refinance applications have actually risen 12% over the past three months, while purchase activity remains essentially unchanged, down less than 1% over both six month and 12-month periods. With 30-year mortgage rates near one-year highs and only about 3.4% of borrowers retaining a refinance incentive, a near-term rebound in supply seems unlikely. Prepayments should remain above the exceptionally low levels of 2023, but the continued erosion in refinance activity could push gross MBS issuance below $100 billion per month by year-end. And the 10-year U.S. Treasury yield breaching 5% for the first time since 2023 yesterday, hitting levels not seen in 19 years, threatens economic growth and richly valued equities. The recent rise in treasury yields does not appear to be driven by a broad surge in market-based inflation expectations, as long-term inflation swaps remain relatively contained, despite inflation having stayed above the Fed's 2% target for years. Speaking of the Fed's sticky core inflation, renewed oil price pressures, and resilient economic data have strengthened the case for a 25 basis point hike at the conclusion of the Federal Open Market Committee meeting tomorrow. Though investors remain uncertain about how aggressively the Fed will continue tightening over the remainder of 2026 and into 2027. The bond market has clearly already tightened financial conditions independently. Expectations for a sharp decline in yields have been scaled back, with a year-end target around 4.60% and continued yield curve flattening. Faster growth in the money supply raises a deeper question about whether the Fed should focus less on interest rates and more on controlling money creation. For today's interview, I wanted to welcome to the show First Close's Adam Nicholson to talk about how faster cycle times directly impact pull-through and funded volume. He's director of professional services at First Close, where he leads implementation strategy, client onboarding, and process optimization initiatives that help lenders realize value faster. He's passionate about improving the customer experience through collaboration, scalable processes, and technology-driven innovation. For frequent listeners of this podcast, they will have heard me say that I think it's so neat how the home equity space is giving the regular old first lien residential mortgage conventional conforming space new ways and ideas of doing things. And primarily when I say that, I mean the time to close. And for a process that takes a lot of companies a long time, a lot of companies are still at 45 plus days when it comes to closing loans. There's a huge opportunity out there with home equity. And that's to say nothing of the volume that can be achieved. Regardless of what numbers you believe out there, anywhere from you know 1520 to 2530, 35 plus 38 trillion dollars of home equity that can be it's a huge opportunity out there. And we've seen it certainly come to prominence here during this part of the market cycle. We're gonna get right to the meat and gravy or whatever they say of this. Why is it still taking lenders so long to close loans? What are the biggest factors causing those delays, Adam? Adam Nicholson: Yeah, I think what you're seeing across the industry right now is that there's a lot of different avenues that they're ordering their services through. Um so instead of having a centralized ordering process in place, you see a lot of uh organizations in the industry that are using email still. So you have an email going out to your flood vendor, you have an email going out to your title vendor, to valuation, to your appraisals. It's all in its own individual lane of communication. So then you have each of those lanes that has their own individual response times. Um, and you just kind of snowball your overall time track that you put in place there by having those individual lanes that you are communicating through. So that's one of the big drivers right now. We actually did have a customer that we worked with recently, um, Lake Michigan Credit Union. They were having all of their staff go to these individual sites. We consolidated them down into an individual core system through First Close to order through. And that's really what led to the drive down into the turn times from what you're seeing in that industry average of those 45 plus days that's still out there. Robbie Chrisman: You've seen lenders reduce home equity turnaround times from 45 or more days to 15 or less. And maybe this is where I will shamelessly plug First Close if you won't. First Close cut, I saw somewhere. First Close customers have reduced average home equity turnaround times from 40 to 45 days to 15 days or less, which is a 65% improvement. That's massive. That means you can you can handle more business without adding staff, greater operational efficiencies, greater scalable growth, ton of a ton of good benefits. What changes have the greatest impact on accelerating the closing process? Adam Nicholson: So, as we touched on earlier, you know, consolidating all of these ordering services into a single platform, into a centralized location where in a one-stop shop, you can look at everything that's pending or outstanding, the status of each of those orders and know exactly what you need to finish your workflow with that member or that borrower. It allows you to not miss any nothing, nothing drops through the cracks, nothing is left out of view of your internal process and flow. And that's something that we sit down as a partner with each of our vendors to and we really zone in on. Not only is it talking to them about the first closed product and the ease of use and how it can consolidate all of those processes for them. It's also talking about the automation that our system offers for our customers. You know, we have some built-in functionality into our product that allows it to automatically order products based on what services you want ordered for certain loan amounts, certain CLTVs that are applied that are applicable to your member. So that automation also builds into those reduced turn times as well that you know for every single loan that comes in through First Close that you're going to automatically get an AVM, a flood, and a title report ordered on that. It's always going to be ordered. And you don't need to go manually click through and do those steps, wait for those emails to go out, or wait for the individual responses from those vendors. It's all happening as part of that flow that work that uh First Close has built for you. And you know that you can rely on that. We have amazing vendor partners that are brought in with us that really work on those turn times and ensure that we're getting the best possible experience for those uh for your members or your borrowers. Robbie Chrisman: I alluded earlier to institutions being able to handle more business without adding staff because many people assume increasing volume means adding more staff. Yet you've seen some institutions handle 21% more business without increasing headcount. How are they accomplishing that? Adam Nicholson: Yeah, that's a great question. You know, our goal as a vendor partner is not to, it is not staff reduction. That's that's not what we're looking to accomplish. What we're looking to accomplish for our partners is maximizing the output that your current staff can do and scaling that for your organization. So what we're doing is we are saying you have A, B, and C individuals working in your processing, your underwriting department, whoever's pushing the button to order these services for your specific organization. What we want to do is give them the tools to automate their workflows to know, like I said previously, that these are going to be uh services that come back in a timely manner that we know are going to be uh automated based on those criteria that I listed previously, whether it be loan amount or CLTV, whatever you have established, there's a level of comfort and reliability and knowing that these are going to execute the way that they are supposed to with the product. So, what that does is allow a kind of set it and forget it mentality for the most part. We all know we still have to go in there and we do our double checks and make sure those are coming back into the system. But you can take one individual who used to have to say, all right, I had a loan come in. Now I need to email flood vendor, write up my email to flood vendor, send that. Okay, now I need to email my valuation vendor. I'm gonna write up that email. And for each vendor, they were doing that. You're talking about hours and hours throughout the day that you were manually sending out these individual requests to vendors to have a partner, a vendor partner come in and say, I can consolidate this for you into a single button click, and then it will automatically go to each of those representatives, each of those vendors that you need it to go to. They will fulfill their portion of it, it will automatically come back into the system and upgrade, uh, excuse me, and will upload into your LOS. It takes so much time out of the day where instead of thinking of, I can't get through my work in a day, it's I'm through my work, I can take more. You're scaling your organization, you're scaling your HELOC department, you're able to take more with the resources that you have. And then as a partner, we want to sit down and say, what can we do next? What let's let's talk about your internal processes. Let's talk about what other areas we can continue to uh enhance and lift for you to make that one person's output continue to grow. Then in the future, it's how can I keep automating? How can I keep building this relationship and this partnership to where I can get the maximum output per resource rather than I can't get through my work, I need to have another, I need to hire another resource. Those are two completely different paths that you would be on with the utilization of the first closed platform. We recently did do an independent study with MarketWise. Um, we did see, you know, through that study that uh there's about a 22, 21 and a half percent more business handled um without adding any additional staff, building those automations into the system, and they were able to get almost eight to one ROI by using the platform with First Close. That's a huge figure, which is very huge. Robbie Chrisman: Yeah, that's that's awesome. Adam, before I let you go here today, Adam, if you're a lender listening to this who still operates with a 30 plus day cycle time, what's the first thing they should evaluate or change to improve speed and compete more effectively in today's market? Adam Nicholson: Well, first off, uh, I would say we are always happy to sit down and discuss that with you. If at any time you want to take a look at the first closed product, you can always reach out to us at uh firstclosed.com/slash demo. We're happy to sit down and have those conversations with you. Um, but look at how you're ordering your services today. Look at the number of clicks, look at the manual process that you currently have in place. Think about if you could consolidate that to a single button push, what that would do to your day, what that would do to those people, to your individual resources who go in and order that on a day-to-day basis. How much time would that save to just have one button click and be able to move on to your next task and know that all of those services are taken care of and how you can scale that? Robbie Chrisman: Adam, ton of good stuff. So actually, you know, I'm gonna throw in a bonus question here. What's it like working at First Close with the added dimension of this is a great time for the home equity space? What's it been like working there? What's what's it been like working in this market uh to bring home equity to the masses? Adam Nicholson: You know, home equity is a little bit different. You know, I've been in the industry for for 20 years, plus years. We don't we stop counting years after a while, but um it is it's a different side. I I've it's been really interesting getting in and really learning uh, you know, how the credit unions that we specifically work with uh and banks how they value the HELOC side. It's a it's a it's a different market right now, too, which is something that you have to keep in perspective is that the HELOC and the home equity sector are really booming right now. And it doesn't seem like it's going anywhere anytime soon. Really understanding like the regulatory differences for HELOCs. There's a lot of conversation points that you really need to have when you're talking about process to maximize your output there. So it's been great. It's been great getting my hands you know in the weeds here and like really understanding the home equity sector. But I love it. I love it. It is fun to scale, and it is something that I'm really passionate about. Robbie Chrisman: Very cool to hear. The passion is certainly evident in your voice throughout this interview. Ton of good tidbits there for listeners. Hopefully, we'll talk again soon. Until then, best of luck. Thank you very much for making the time. Adam Nicholson: Appreciate it. Robbie Chrisman: Today's economic calendar has the minor September Empire State Manufacturing and a Treasury auction for $13 billion of 20-year bonds. Expectations for the rest of the week are that consumer spending should remain resilient with retail sales rebounding 0.7% in August, while elevated mortgage rates and affordability challenges are likely to keep housing starts under pressure in August. We begin Tuesday with agency MBS prices worse than Monday's close by an eighth to a quarter, the two-year yielding 4.65, and the ten-year yielding of 5.00 after closing yesterday at 4.96%. Let's wrap up with a joke and some housekeeping. A burglar breaks into a house late one evening and starts to roam around the living room looking for valuables to steal. Suddenly he hears a voice say, Jesus is watching you. Startled, he shines his flashlight over in the corner where the voice came from and saw a parrot sitting in the cage. The burglar then says to the parrot, Was that you? The parrot replies, Yes. The burglar asks the parrot, What's your name? To which the parrot replies, Clarence. The burglar then asks the parrot, What idiot named you Clarence? To which the parrot replies, The same idiot that named the Rottweiler Jesus. Thanks again to First Close for sponsoring this week's podcast. First Close provides fintech solutions to HELOC and mortgage lenders nationwide, and their home equity lending platform accelerates the home equity lending process, reducing application to closing times from 45 days to less than 10.