9.25.26 NEXA’s Mike Kortas on Rumors; Spring EQ’s Reno Heine on Non QM; Talking Rates Up or Down

SPEAKER_01 0:02

Welcome to the Chrisman Commentary Daily Mortgage News Podcast. I'm your host, Robbie Chrisman. Got a big episode for you today. We have an interview with Mike Kortas addressing some allegations that have been floating out there recently. We'll get to that in a second. We have a primer on the lesson that you can't talk rates up or rates down. And I have an interview with Spring EQ's Reno Hein on actively navigating a ballsole mortgage market by expanding into non-QM offerings, among other things. Here, take a listen, do a little preview. So when you look at the evolution of third-party originations, particularly what brokers and their clients are looking for today, how has the market changed? And how is Spring EQ adapting to those changing needs?

SPEAKER_00 0:45

When we look at the changes that consumers and LOs are asking for in today's market, it is unique. It used to be the best price always wins the deal. And what we're finding right now, you have to be competitively priced. Consumers demand that they deserve that. So you have to be competitively priced. But it's probably not the lead thing people are looking for, at least brokers are looking for now. Now it is about speed and it's about ease of use and very competitive rates. So when you look at that landscape now, I think some people confuse speed with ease of use. And it's not the same thing. You're seeing a lot of digital platforms come onto the market now. How easy are they for LOs and or consumers to navigate through? Because when it's not easy to navigate through, it's not intuitive, then what you run into is low conversions. So when you look at the whole economic in one fishbowl, conversions play a huge part on that. It might be cheaper to produce a loan strictly through technology, but if all of a sudden your normal conversion as you speak to a customer used to be uh, or you take, say you take a registration, used to be call it 60% to fund. On some of the digital platforms, because customers are confused, the platform's not intuitive, LOs are not as involved in using on those platforms, you're seeing conversions of 25, 30, maybe 35%. Well, half your customers just walked out the door on you. The problem is on the digital platforms, when a consumer goes in and for some reason they can't navigate through it or they or they're told they don't qualify on that platform, that customer is frustrated. So now the broker comes back and says, Hey, sorry that didn't work out. I've got another solution. That consumer a lot of times has moved on because there's other available products and companies out there. So they lose that customer potentially forever because that customer goes to another broker, gets a deal done. What's gonna happen in three years, four years, five years when it's time that person may be ready to refinance again? Um, maybe they're purchasing a new home. When you lost them the first time and they went to another broker, who are they gonna call the next time? So you didn't potentially just lose that one deal. You lost that customer potentially four or five, six times in the future.

SPEAKER_01 3:37

Thanks to SpringEQ for sponsoring this week's podcast. SpringEQ is the clear choice in home equity and non-QM solutions. Since 2016, Spring EQ has helped more than 160,000 homeowners access over 16 billion dollars in equity. To learn more, visit wholesale.springeq.com. Hey, it's either network or no work. For lenders, networking is an important part of their business. In addition, generally speaking, renters are prime feeding rounds for loan originators searching for clients. But there's some disturbing signs out there. What if renters can't even afford their rent? I was talking to a successful LO recently who uttered fifty calls, five leads, two applications, one closing. The next day, fifty calls, five leads, two applications, one closing. Rinse and repeat every day. It's a pyramid. Being an originator is a numbers game, as is running a branch. Manage to the numbers. It doesn't matter how long your team has been with you. You can be cheap, easy, or fast. Pick one. You're not going to be all three consistently. Meanwhile, LOs are faced with keeping up with technology. I received a note saying, I stopped asking, will AI replace me, and started asking how can AI make me better? And I also regularly receive emails to the effect of saying, I'm not competing against other LOs. I'm competing against Google, YouTube, TikTok, AI Search, Reddit, ChatGPT, and more. And we need to be competitive, as falling for sale inventory, driven by millions of homeowners locked into sub-4% mortgage rates, has triggered an unprecedented pricing anomaly, pushing media and existing home prices to a record nearly $49,000 premium over new construction. Agency mortgage dollar volume has surged 50% over the last decade due to rising home values, even as overall loan counts dropped by 10%, illustrating how high prices are crimping broader consumer demand. With 30-year lending rates hovering near 7% and a rising share of new homes exceeding $600,000, affordability headwinds persist, leaving mortgage-backed securities issuers facing muted supply that remains highly sensitive to fluctuations in annual home sales. The housing market is shifting leverage toward buyers as affordability pressures force sellers to adjust. Nearly one in five homes for sale received a price cut in August, the highest share for that month in Red Pin's data since 2020. Inventory is also up 46% from 2023, and homes are taking longer to sell, giving buyers more negotiating power as elevated borrowing costs continue to weigh on demand. And it's not just on the primary side of things. A lender may have an agent working on pricing while an investor has another agent operating on its side. And both may be acting in real time based on their own instructions and objectives. The capability is exciting, but also creates a fundamental governance question. When something goes wrong, who ultimately owns the decision? We need people who understand both the technology and the messy reality of mortgage execution. Because simply having a risk manager on one side and an AI specialist on the other does not answer that question. That becomes even more important as AI moves into negotiations, servicing, and the long-term borrower relationship. Agentic systems could potentially negotiate pricing or exceptions, while servicing agents maintain relationships with borrowers over years rather than relying on occasional outreach when rates change. Those capabilities create real opportunities, but they also make governance something that has to operate in real time, rather than simply as an annual certification exercise. We need to understand what these systems are doing, where their instructions come from, when human intervention is required, and how responsibility is assigned when multiple agents are interacting. The path forward depends on understanding what we're actually deploying rather than getting distracted by the latest buzzword. The cost of experimentation is lower than it ever has been, so lenders do not need to wait for the industry to have every answer. They do, however, need to experiment thoughtfully, bringing people who understand the technology beyond the highlights, and build the government, and it's necessary to know exactly what they're getting into. Speaking of knowing what you're getting into, as Nexa has grown, it has been under a microscope by those outside the company. Questions range from everything, including its compensation model and recruiting practices, to its approach to servicing. Mike Kortas isn't running from those questions. In fact, he thinks some of the criticism comes from people trying to explain a model they haven't actually taken the time to understand. I had a nice interview with him yesterday in which he addressed the biggest questions head-on, including where the money comes from, why he rejects the MLM comparison, and how Nexa thinks about regulation and compliance. Nexa's been in the news this week. People are talking about your business model. There's a lot of debate. There's a lot of rules out there in the mortgage industry. Maybe that's everyone can agree on that. Thoughts on your model? People saying it doesn't land within the rules. Where do you come down on that?

SPEAKER_02 8:41

Well, I love that they think that because when somebody doesn't understand our model, they all all there is to do is attack it at that point. But they don't ask me about it. It's the funny part about it. But that's okay. Because as far as when it comes to you know the rules and everything, I go by the rules uh that the regulators regulate me at and that my attorneys defend me at. And the regulators that regulate me have reviewed all of our models, all of our contracts, all of our ways of doing business. They've received all of the attacks by regulation, if you will. We've had the complaints filed against us, and the regulators have dug in. They they always do. They have to, and our attorneys defend us, right? Our attorneys think that what we do is creative and hasn't been done, and they're they're excited to defend it. And the regulators agree. But I'm happy to talk to anybody about our models and why they're legal. They just they just have to call me, talk to me.

SPEAKER_01 9:36

Let me run through a couple of the accusations. There were charges sought to revoke Nex's license and ban the company for five years. There was a settlement in Washington last year. We can get into that. But also people are saying the model rewards recruiting over lending, and uh commenters are calling it an MLM or multi-level marketing thing. What's your response to those two things?

SPEAKER_02 10:00

Well, yeah, I mean, if we want to call next an MLM multi-level marketing, got to remind everybody else that they also work for an MLM, but it's middle level management. So instead of giving that money to middle level management, we decide to give that to our recruiting loan officers that help us grow instead. And they support the loan officers along the line. Um, but can they get rich off recruiting at Nexa? Oh, you bet they're making seven figures a year January 1st when they wake up. No different than other people are making in other spaces that are in recruiting and in and growth and middle level management. They are too. Um, the difference being is it doesn't from us, it doesn't actually come from the loan officer. I've been at companies where they've really increased, uh they jacked up the margin on the rates in order to pay for those folks, but that's not how it works here next. So they just can't figure out how I am making my money. And so they want they look the number one thing I have the problem with is people say it sounds too good to be true. So there's got to be some other catch to it. How do you do this, right? Which I understand. They don't they don't know how to do it, what I'm doing, but it that's exciting to me also. I'm glad they're talking about that. Well, where does the recruiting money come from? Does the borrower pay for it? Not at all. The borro can't pay for it. We share the purchase advice, both from the warehouse lender and from our lenders, on every single transaction. So our loan officers absolutely know it doesn't it doesn't come from that. And so the loan officers know that. Talk to any next to loan officer and they say, guys, Mike is completely and 100% transparent. I make my money in different ways. One of the major ways I make my money that people simply can't understand or wrap their heads around is buried deep within the U.S. tax code. It's no secret that I'm a big fan of, you know, my tax strategies and and what have not, and all the things that I do within aviation and other things. But there is a very specific tax code that has allowed me to do the next 100 and the next unlimited programs and pay the revenue share on top of it all that allows for this. And they just people just haven't been able to figure out how I'm doing it at the end of the day.

SPEAKER_01 12:02

Tell me about the realtor BDM program a little bit. How is that different than paying for referrals?

SPEAKER_02 12:08

Well, it's not a realtor business development marketing program, BDM program. It's it's it's just a BDM program. In fact, our top BDMs don't hold a real estate license, but for some reason, people think that just because you hold a license, you can't do the job that somebody else is able to do legally, also, just by nature of the fact that you hold a license doing something. That's kind of crazy. So our top business development marketers, right? One is a hairstylist, one is a grandma. I can hire a business development marketer in any category. Uber drivers can be business development marketers by talking to their passengers all day long about Nexa and loans, right? Our hairstylists sit there and they spend an hour with somebody every single month, and they can they can talk to them about doing it. So now we just happen to also allow people who are in the real estate industry, insurance industry, title industry, you name it industry, to do those things. But they got to do it within the limitations of the law. They have to be employed by the company, employees, they have to be managed, and we we do those things. Now, we've actually came at by multiple regulators on this particular, both DFI and DRE departments of multiple different states. And they've all looked at it and said, wow, it's actually pretty smart. They understand that we regulate it properly and that it's not the R word at all. It's it's actually marketing services that those folks are doing for us, and we're paying them separately to do those marketing services. So we're very proud of it, and we're glad that they're talking about it, and we're glad that they don't understand it. But it's legal. I keep talking about it. But I'd love to talk to anybody, any of them who don't understand it, they could call me. I'd talk to them.

SPEAKER_01 13:44

No problem. You are sharing servicing income with LOs. How do you keep that from rewarding a higher rate?

SPEAKER_02 13:51

So it's got nothing to do with rate at all. Because, first of all, that's a separate legal company, and that's the only way to actually make it potentially legal at all. Because the loan officer is actually employed and hired by that company to do a retaining as a retaining specialist. We want them to retain our MSR portfolio, no different than a servicing rep. So just because they also hold an MLO license doesn't mean that they can't also help us retain servicing on the loans that they they originally helped us get because they have the relationship with the consumer. Who better to make sure that loan stays with us in the future? And that's not a Nexa thing, that's an Evo Lin thing. EvoLin does that. That's a separate legal company. So companies that don't have a separate servicing company can't do it legally, is the reality. So I've been trying to do this for a lot of years, and I kept getting roadblocks, roadblocks, and the same thing that you're saying. But it doesn't, it wouldn't affect the rate anyway, is the reality because Nexa can't dictate the rate of a wholesale lender. And that's how we do it. We do it through our wholesale lender, so through uh a partnership with EvoLend.

SPEAKER_01 14:52

Smaller lenders say they can't match your comp. What do you say to them? And how do you make that happen?

SPEAKER_02 14:58

Well, honestly, there's not a smaller lender or a larger lender that can match what we do. And that's why we have so many brokers joining Nexa so we can all partner together and make every loan officer uh better at what we do. And then IMBs, right? I just met with an IMB at the conference down in the lobby uh a few minutes ago before this, and they understand that they just can't match the rates we have. They can't match the comp that we're able to do. But that's because the way that brokers and like Nexa work, we got so large with so much volume that we can do things that others can't do anymore. And I'm just not inherently a selfish individual. So I'm going, I believe firmly that these people have given me everything ever in my life. Don't forget, I was homeless as a kid. I was, I literally shoveled rock and dug ditches. I was landscaping when I was 17 years old and on the streets. And that's what I did. I'm a high school dropout, so I shouldn't have what I have today. And I've been blessed by these people who followed me to do these things, and I will do everything I possibly can to give back to them for giving me everything that I currently have.

SPEAKER_01 15:57

Well, you mentioned growing fast. How do you keep the service quality up? I think there's some chatter about CFPB complaints, better business bureau grades. How would you address that?

SPEAKER_02 16:07

Well, the better business bureau is a for-profit company, so the fact that people still even look at that is a kind of a joke to me because we don't. The Better Business Bureau to me, it's pay to play. And I'm not gonna pay them, right? So I don't respond to the Better Business Bureau. You're right. I absolutely don't. No response whatsoever. The CFPB, we have a very low complaint ratio to the CFPB. Everybody gets complaints with the CFPB when you're doing the volume we give. I guarantee you, you could do something good by somebody, you're still gonna get a complaint, no matter what. But we don't have a highest complaint ratio. That's kind of crazy to even assume it. But look, you can spin math or anything any way you want. And they're gonna do that. They're gonna do that when we're winning. They're gonna do that when they're threatened by us. It's okay. Like I said earlier, I'm just kind of happy they're talking about us at this point. Keep talking because that's okay then. More people are gonna wonder, then they're gonna talk to us and they're gonna see, wow, it's not what they said it is, you know, all those good things.

SPEAKER_01 17:01

So there's a question out there is 100% real if your LOs are 1099? What does 100% actually mean for your LOs?

SPEAKER_02 17:11

So the Nexa 100 program is a program where we give access to 100% of the revenues. Now we have to follow LO compensation rules, and that's where people understand we're not calling it 100% compensation, we're calling it 100% revenue. So what we do is they still have their LO comp, but then we give them access to the rest in a Nexa account so they can grow our business for us. They can use that to use their LOAs and all those different things, and then they spend all that money to grow like crazy and get even more, is what they do. So that's what it is. There's a miss we purposefully leave certain things out of it online because we want people to reach out to us. You know, that's gonna cause some uh misunderstandings, especially by our competitors, and that's okay. Because, like I tell the Nexons, as long as they're talking about us, other people are calling us, and that and that works for us. And then when we then we can explain it under our terms to them and how it really works and why it's legal to do it, and why every regulator has already gone through my contracts and verified them. We get the regulation attacks by our competitors all the time, and the regulators are required by state laws to follow up on those and validate those, and and we're still doing business. And you know, people say we're not gonna be in business, we weren't gonna do this years ago, but we still are, and we're making it better. What's the fairest criticism of Nexa that you've heard out there? The fairest criticism of Nexa is that I'm a pain in the ass. Um, that would be the fairest criticism because I've I've had uh I've had some growing up to do myself, you know what I mean? And the people say I'm not working for Mike Kortas. And that's fair. I can understand that because I've I've definitely ruffled some feathers in the past, and I have to I have to own those those demons, right? I the perception is reality, and that's my per the industry's perception of me. It's my decision to change that reality. So um, that's a very fair assessment that I've been known to be difficult.

SPEAKER_01 19:00

I've been difficult to work with in the past, but you know, I'm trying to let me uh let me dig into that slightly. I had Matt Ishbia on this show the other week, and obviously people are gunning for him constantly. And his his response is when you're the number one guy out there, people are going to gun for you. And I would say that sure that's true, but people seem to be preying on UWM's downfall or Nex's downfall a lot more than like a rocket mortgage. And you kind of meant touched on it there with with personalities or egos. Thoughts on on why you're attracting this and and maybe what you hope to to change going into the future. I certainly uh and I I'm trying to be an unbiased interviewer, I definitely have a different, nicer perception of you than I did the first time I met you. I think I think people believe I believe in growth, I believe in change, and and uh yeah, it's something I'm going through too as well.

SPEAKER_02 19:50

Yeah, I mean, likewise, I didn't have the greatest perception of you know uh Crisman commentary at one point. Um, but I understand, and I as as I do it and I learn and I get to know you guys better that okay, well, this this actually makes sense because the whole industry doesn't nobody thinks the way I think. And I gotta understand and remember that that I can't criticize people because of how I think because there's reality out there that's not mine. I mean, that's why we have multiple presidential candidates and we can't get along on who to vote for. But this is the nature of America and what it's about. But I'm glad because and I'm and I'm thankful because you know, we can recognize when people want to be better or do better or go through change and and and grow up a little bit sometimes, right? In my case specifically. But I do believe, right, what you were mentioned earlier, that I do probably I get a lot of the slack that Matt Ishby is getting just because I am his number one partner, and I do defend him. I mean, I tell people that if if you don't like him, beat him at the end of the day. And there are people who don't like UWM more than they don't like Rocket, but the only people that are those people are generally the retail space because he's anti-retail, you know what I mean? That's what he hangs his hand on. Anyone who's a fan of Rocket is obviously gonna dislike him because they have such a dislike for each other, of course. But I do bear some of that fall off from that just because we are his number one partner. I've been called Ishpielite, you know, a few times, so um, amongst other creative names, but that's fine. And I said, look, he's obviously you know taken some hits lately, and I know a lot of people are praising his, you know, any downfall or print, you know, hoping for that. And that's unfortunate. Like, I'm not, I don't even think like I'm not a Rocket fan, but I'm not like praying for their downfall. Yeah, right. I'm like, they they have a place in the market and they make those of us who need to compete against them better at what we do, and that competition is better for the consumers at the end of the day. And then by the way, it's better for loan officers at the end of the day. I love my competitors because they constantly have to push me to do these crazy things that I do, like the next 100, the next 100. Limited in the servicing plant things. I'm only pushing these things because my competitors are pushing me to do it. So they're got you got to have a little bit of respect for your competitors, you know. I think along the way. And boy, it sure makes conferences a lot more comfortable when you have some respect for your competitors.

SPEAKER_01 22:15

I don't know if I respect my competitors. They're all trying to get eyeballs through salacious headlines, but I guess I guess that's they do do that.

SPEAKER_02 22:22

And I want to give you guys credit that you don't do that. Right? They do these crazy headlines and they spin these things. But I'm like, look, somebody's paying these guys to do this, and every now and again they come up with something to keep us honest about something, and fine. No, my only problem is I got to sit there and answer to some of the garbage that gets put out there when I can spend my time doing better for loan officers in this industry. And so I can't spend my time doing that because I got to answer some of the other things. Let's close with this.

SPEAKER_01 22:53

If there's anything you could change about the LO comp rule, what would it be?

SPEAKER_02 22:58

Look, the rule is designed to be fair to consumers. There's so many loopholes in it, don't get me wrong, that make people be able to do things. And then people's interpretations of them are clearly different than other people's. But I guess I'd like, you know what I'd say? I'd like to see them clarify some things in those rules. Because there's some ambiguity in those rules that don't always make sense. That you're like, well, is it this or is it that? You know what I mean? So that's I think I'd like to see a little bit of clarity in it. But I also don't think the government loves clarity. I think they want it to be that way. So that depending on the administration that's coming in, one of them can come and get us.

SPEAKER_01 23:37

So well, I appreciate the time. I appreciate you lending some clarity to this, taking the accusations on head on. And I know it's not fun to do, but um, hopefully we'll talk again soon, sir.

SPEAKER_02 23:46

No, I'm looking forward to seeing you at the events, man.

SPEAKER_01 23:51

For today's other interview, I wanted to welcome back to the show, Spring EQ's Reno Hind, to talk about how actively navigating a volatile mortgage market can be helped by expanding in non-QM offerings, how Spring EQ's third-party origination strategies have evolved to meet modern broker needs, and how it's advancing a new digital platform to capture future growth opportunities. Let's talk about the current market a little bit. Obviously, there's been a lot of volatility in the mortgage market over the past few years, but that could also mean opportunities. So, how do you feel like Spring EQ is navigating this current market environment? And where do you see the biggest opportunities?

SPEAKER_00 24:28

You know, when I look at Spring EQ, you know, all the way back to our founder in 2016 when he came out with the second mortgage HELOC, HELON type products. I don't think everybody in the market understood what he was doing and probably thought he was crazy. But it put us so far ahead of the game that this market and the volatility over the last couple of years has obviously worked in our favor. Because as interest rates continue to rise on the first mortgage, you've had so many loan officers and even broker companies sitting out there waiting for interest rates to drop again, trying to get customers to refinance their first if they needed to do debt consolidation or cash out. They were trying to do the first. The people sitting on those two and a half, three, three and a half, even four, four and a half percent interest rates, they're not making that move. And it was amazing to us to see how many LOs and broker companies were just waiting. And every time the Fed was going to make an announcement, they're sitting on the edge of their chairs. We haven't have a solution and have had a solution for a very long time. So the volatility in the market, our volume has continued to grow. Spring EQ has continued to grow. And I think the thing that I'm most proud of with that is that over the last two years, competition has come into this market at a very high level. Where it used to be us and maybe one or two smaller competitors, now everybody in the wholesale arena is trying to offer some type of second mortgage or HELOC loan. We've continued to grow through that. With 20, 30, 40 competitors entering the market, we've continued to grow. And I think the reason is that we've had so many years to figure this out. Our process through the home equity side of the business, it is consistent, it's smooth, we offer very competitive rates, our products are very expansive. We're just positioned really well. So we've got to dodge that volatility, to be honest with you.

SPEAKER_01 26:47

You joined this podcast a couple months ago. I always enjoy interviewing you. But the last time you were on, you mentioned a new digital offering that Spring EQ was working on. How's that initiative progressed? And where does it stand today?

SPEAKER_00 26:59

The timing for this interview is actually great for us. We have continued for the last two years to work on a digital platform, enhancing the platforms that we have. And it is at a point right now where we're very proud of it. We feel that we built a platform that is extremely intuitive for customer use. It gives them options. We've built in things into it, like we call it the optimizer. So a consumer can be asked one or two very general questions. What is your main objective in getting a HELON or a HELOC, any type of equity product? And if they come back and say, most important thing is I need 80,000 cash in hand to renovate my kitchen, then the optimizer will come up with the lowest price, best product, paying off as little or no debt as possible, and it will give them that solution. Where if they came and said, hey, I'm looking for straight debt consolidation, I want to lower my monthly outgoing payments. That optimizer will go in and it'll evaluate all the credit on their credit bureau, all the debt that they have, and it'll put together the best scenario to lower their monthly outgo. That is a huge difference maker in our platform versus other platforms. The second thing, it's always ease of use. We talked about that just a minute ago. And we believe when consumers get on our new digital platform, they can navigate right through it without a lot of confusion. Most important thing about it, we still have some human interaction available for that product because we refuse to allow our conversions to go down like some of the platforms that are out there today, because we do not believe that's best for the consumer. If somebody deserves to get a loan and they need that help, we want to be available for them.

SPEAKER_01 29:13

Yeah. Launching a non-QM offering is a huge deal in this market. How's the rollout been for you? And what are you seeing from brokers and clients in terms of demand and response?

SPEAKER_00 29:24

I think we timed ourselves pretty well to add another category because we've lived in the home equity space up until this product launch. And we went into this offering a very good DSCR product. And like I've said, Spring, no matter what we roll out, no matter what product it is, we will be competitively priced. And we did the same thing on our DSCR product. In 100% honesty, like any new product you roll out, the first couple months, we learned a lot. We learned a lot about the process, about conditions that probably are not needed. But I think we've navigated extremely well in getting that product in the right position to eliminate conditions that are unnecessary for customers to speed up the process. So we are seeing our turn times come way down on the product. We are seeing a much higher conversion than we were before. And our volume is starting to grow very rapidly in the product. So I feel we're in a good position after, what is it, six months after launch, where our volume is today and continuing to grow, I feel we're positioned extremely well with our non-QM.

SPEAKER_01 30:42

Yeah, I can certainly hear the optimism and excitement in your voice. So that's that's very neat. Before I let you go, we've talked about the exciting digital platform. Anything else you're working on right now that has you and the team energized about the future?

SPEAKER_00 30:55

We've launched a lot over the last year, Robbie. But the most exciting thing, and and it's in process right now of being launched to some of our larger accounts, and it'll be available to all brokers, I would guess within the next 30 days, is assisted core. And we looked at assisted core and said, okay, where are we missing in the broker community today? Well, especially when you talk about home equity products, we wanted to give broker companies who are looking to make a little transition into the lending space. We wanted to give them the opportunity to take more responsibility over the file, manage their margins better. And ultimately, the idea there is the consumer wins in that game because the broker/slash banker in this case is dealing with them directly. So they know things that we don't. So developing that assisted core allows the, you know, emerging bankers to do what they do best. Deal with the consumer, find a product and a solution that's best for them. So we're extremely excited about this launch. And we've currently, as we speak, we are delivering this information, these packages out to call it 12 or 15 of our larger accounts that have asked to make that transition into the uh banking world. That's what's coming. That's what's happening now, and we're excited about it.

SPEAKER_01 32:30

I always enjoy talking to you. It's it's cool to check in and hear what you're doing. There's always new stuff coming from you and Spring EQ. So already looking forward to the next one. And uh hopefully I'll see you at an MBA annual. So talk soon, Reno.

SPEAKER_00 32:41

All right. Thanks, Robbie.

SPEAKER_01 32:45

Morgan Stanley knows a thing or two about the markets. And Morgan's economists expect the Fed to stop after hikes in December and March, about one hike short of market pricing for 2027. They forecast 10-year treasury yields about 30 basis points below forwards by the end of 2027, believing that in a year rates will be somewhat lower than they are now. The 10-year U.S. Treasury yield again tracks market pricing of the Fed path closely, so higher yields would require a more hawkish Fed path than markets already priced. A moderate oil rise should lift treasury yields by adding to expected hikes, but a spike to $140 to $160 per barrel would likely push the Fed toward cuts and yields lower. Continuing that lesson that you can't talk rates up or down, U.S. Treasury yields climbed inexorably yesterday, with the 30-year yield nearing 5.5%, its highest level since 2024. Investors are grappling with robust domestic economic data, including a solid labor market, persistent inflation pressures, and the enormous supply of U.S. government debt. Fixed income traders have rapidly adjusted their projections, driven less by inflation expectations than by markets pricing, a much higher for longer Fed path, with the terminal rate approaching 4.86%, nearly 100 basis points above the Fed's September projections. Treasury and mortgage backed security demand are showing signs of strain with persistent cheapening across the coupon stack, and another disappointing long-end buyback, while equities have remained surprisingly resilient, despite the rise in long-term yields. The bond market is asking who's going to step in as the buyer of size? With increasingly expensive auctions struggling to attract traditional buyers, yesterday's forty-four billion dollar seven-year note auction, saw relatively soft dollar demand and foreign interest, and no obvious source of incremental demand emerging, the market is testing just how much higher yields need to go before buyers of size finally step in. This action has pushed the market-implied odds of an October 28th rate hike above 75%. Okay, Morgan Stanley. While easy broader financial conditions and resilient equity markets near record highs suggest the benchmark curve has structural room to sell off further before triggering defensive flight to quality capital flows. Today's economic calendar is underway with August durable goods orders, normally volatile, but it was unchanged. Later today brings final September University of Michigan consumer sentiment and remarks from New York Fed President Williams and Kansas City Fed President Schmidt. We begin the day with agency MBS prices, a little change from Thursday's close, the two-year yielding 4.90, and the 10-year yielding 5.18 after closing yesterday at 5.18%. The two-year note has risen 57 basis points this month, while the 10-year note yield has jumped 44 basis points and mortgage rates along with them. Let's wrap up with a joke and some housekeeping. Actually, there's no joke today. This is true. A robot has registered for MBA annual in Chicago. It has a badge and everything. Is it the beginning of the end or a wonderful start to something? It belongs to Addy AI, and I guess everyone's talking about AI. Now one of them is walking the floor. Expect to see more on this story, especially during the conference. Thanks again to SpringEQ for sponsoring today's podcast. Since 2016, Spring EQ has helped more than 160,000 homeowners access over 16 billion dollars in equity.