10.13.26 National Storylines; nCino’s Casey Williams on Process Friction; Incoming Data

Robbie ChrismanWelcome to the Chrisman Commentary Daily Mortgage News Podcast. I'm your host, Robbie Chrisman. Topics on today's episode include chatter from the hallways at MBA annual, some trader talk on the capital markets, and my interview with nCino's Casey Williams on how lenders can improve affordability by expanding access and removing process friction through faster, more responsive technology that helps borrowers from first contact through closing and beyond. Here, take a listen to a little preview. We're here at MBA annual. What does a successful conference look like for you? And what are you so excited about on the product side that nCino's rolled out that you're excited to let the industry know about? Casey WilliamsYes, successful conference for me personally is building relationships. We do so much remotely over Zoom, virtually, an opportunity to get together in person to truly understand. For me, on the tech side, it's understanding pain points and how can we help? How can we build those relationships that ultimately hopefully we can come in and solve some of those pain points? And if not, maybe connect with other industry experts that can. For me, one thing that I'm personally really excited about is our nCino MCP. MCP really is like a plugin that can live within your AI platform. We've recently released an admin MCP and a loan officer MCP. So think of all of these duties that I've been talking about, running credit, AUS, disclosures. Think about supercharging or having a loan officer having their own assistant being this MCP that can go out and do those functions for them. As a loan officer, I could set up and say every 9 a.m., every morning at 9 a.m., go scan any loan file that's come through that doesn't have disclosures and send them. Okay, anything that hasn't had AUS or the file has changed and we haven't done a new AUS run on it, go do that. Saving me all the clicks, saving me all the time so that when I wake up and I first open my computer, all of that's already done for me because our MCP is taking place. Robbie ChrismanThanks to today's podcast sponsor, nCino, the platform for agentic AI and mortgage lending. nCino is helping mortgage lenders deliver a faster, simpler path to homeownership. If you're here at MBA Annual, come find the nCino team and see how their agentic homeownership journey puts AI to work across the mortgage lifecycle, helping loan teams spend less time on manual tasks and more time serving borrowers. Visit nCino.com slash mortgage slash US to learn more and schedule a meeting while you're on site. Here at the MBA National, tech is not only a popular topic, but thanks to Addy AI, there's an agentic registered attendee named Adele. The robot's job is roaming the halls. Chatter at the National here in Chicago is how lenders need to focus on some of these roles as they can mean the difference between success and failure. For example, the biggest inefficiency in mortgage underwriting is the manual coordination required to resolve exceptions, clarify documents, and move information between borrowers, brokers, and underwriters. Advances in document intelligence and large language models can now address both sides of that problem, enabling AI to identify issues up front, generate explanations in real time, validate documents and flag fraud, and even match borrowers with alternative loan products without changing existing credit standards. This should create an incremental shift toward AI assisted decisioning that earns trust while materially compressing cycle times and reducing labor. The atmosphere in the hallways is somewhat cheerful and forward-looking. George W. Bush did a fine job on the stage yesterday, telling stories of Putin and Tony Blair in domestic politics. He said that the U.S. government is in no position to control the U.S. economy and leave it up to the marketplace. Meanwhile, Bill Pulte, director of the FHFA, which oversees Freddie and Fannie, their market share has indeed reversed, delayed, then entirely canceled any appearance in front of the largest trade organization in the industry. I received plenty of notes saying that he'll just sit and tweet things in the middle of the night instead. He's not a lender. What does he know? The lack of accountability is no way to run the most powerful organization in our industry. What's he gonna do next? Confuse mortgage insurance with title insurance and cut their profits as well. Anyways, for pipeline hedgers, uncertainty over whether duration, extension, and convexity-related selling have peaked creates two-sided risk. Further rate increases could widen mortgage spreads, while a treasury rally could shorten mortgage backed security duration and force costly hedge adjustments. Ultimately, the next inflation readings and the Fed's response will shape both treasury direction and mortgage market stability, with basis volatility, hedge positioning, and origination profitability remaining key concerns. Bond market direction will increasingly depend on whether incoming economic and corporate data continue to justify elevated trends. Third quarter earnings, particularly from banks and other interest rate-sensitive sectors, will test consumer demand amid higher borrowing costs and energy prices. Strong quarterly results from Wall Street could reinforce expectations that the economy can withstand tighter financial conditions, keeping yields elevated. Conversely, weakening demand, margin compression, or cautious earnings guidance could expose the delayed economic impact of higher rates, which could support a treasury recovery. Although technically stretched conditions, solid auction demand, and the potential for economic deterioration offer a more constructive near-term outlook for bonds, a sustained rally will require evidence that inflation is moderating or growth is losing momentum. For today's interview, I wanted to welcome back to the show, general manager of nCino Mortgage, Casey Williams, to talk about how lenders can improve affordability by expanding access and removing process friction through faster, more responsive technology that helps borrowers from first contact through closing and beyond. MBA Annual always gives the industry a chance to take stock of the biggest issues facing mortgage. Affordability is still at the top of that list. Where do you think lenders can actually make a difference? Casey WilliamsIt's a great question. Honestly, affordability, a lot of it's out of outside of lenders' hands. Lenders don't get to choose rates, they don't get to dictate the market, they don't get to dictate what borrowers come to them when they're comfortable buying homes, but they can dictate other things. They can dictate their workflow, they can dictate the tech and the experience that when a borrower does come to them, are they getting the pull-through that they want? There's a lot that they do have ownership, some that they don't. And to me, it's important to make sure that what they do have ownership of, that they're taking advantage and making sure that they're fixing their own processes. Robbie ChrismanWhat does that look like in practice? Casey WilliamsThink about how often a loan file changes hands from an LO to an LOA to a processor to an underwriter, potentially back to an LOA, back to a borrower. There's so much back and forth. That's really why we doubled down and we built out what we call the agentic homeownership journey. It's the end-to-end workflow that puts AI at the front of the entire experience, at the front of the funnel, so that where a borrower is, where a borrower is asking questions and we're getting their captive information, that's where all the information is funneling through. But it also doesn't stop right there. It continues on to post-closing as well. I know there is not a ton of refinance opportunities out there currently, but when refinance opportunities have come over the past couple of years, they come in short windows. They come in one to two week segments where, hey, it's really hot to a refinance. And it's important to give loan officers tools like our refinance opportunity analyzer tools that do that analyzing for the loan officer, identifying and saying, hey, Robbie closed at X percent interest rate. Today's interest rate is this. Did you know you could be saving him money? Reach out and starting a CRM campaign directly within the point of sale connecting to the CRM to make it a really a one-stop shop to help those processes that we're talking about. It's not just post-closing, right, on the refinance analyzer side. Uh, we also have the opportunity that borrowers, right? There, there's so much back and forth that any given moment a borrower might be stuck waiting for something, whether that's waiting for a document, waiting for the next step, waiting for an appraisal that maybe they have to make a payment for. But a borrower is often wondering, hey, what comes next? If the answer to any of those items is yes, that we do need a borrower to do something, that's really what we're going after to make sure that we're making sure the borrower is taking action. Robbie ChrismanWhere does that waiting tend to start? Casey WilliamsYou know, it it starts kind of all over the place. There's a lot of lenders that lose borrowers without realizing it. We sit on about 15 years worth of industry data, understanding exactly where fallout of an application takes place, as well as what borrowers are comfortable completing an application versus, hey, I'd rather pick up a phone and just call a loan officer. We've recently built out our lead gen pre-quall experience because there's a lot of borrowers and a lot of feedback that we're getting is saying, hey, borrowers, they just want a quick shopping experience. We understand the difference between a pre-quall and a pre-approval. Pre-approval has has much more validity to it, but sometimes borrowers just want to know, hey, can I get an answer of what I can get qualified for based off of what I'm gonna state to you? But again, there's the timing problem of to get that, do I have to pick up the phone? Do I have to spend 20 minutes? That's really why we built out the pre-qual experience. It's a two-minute shopping experience backed by GSE regulations, backed by credit polls, and really allows the borrower to feel the feel the instant access to being able to get um to get a letter and get an approval. There's also questions that come up along the way. Questions of, hey, when a borrower, okay, I've now been pre-called, I'm now going through that full application experience. What do you, why do I need to put in my social security number? What are you going to do with that? Borrowers get spooked at some of those times and giving somewhere for a borrower to ask questions in real time. Because as much as we would love for borrowers to fill out applications between nine to five when we, or even the after hours, right? Borrowers are submitting applications at midnight, 1 a.m., 2 a.m. when they have free time, when it's convenient to them. So they have questions around what is APR? What are you going to do with my social security number? Why do you need my W-2? Our mortgage advisor experience allows borrowers not just to ask questions, but to get real-time feedback. Loan officers also have a similar experience and can fully audit the borrower's experience. So if they ever want to know what questions are being asked, they have it. But hopefully loan officers aren't asking questions around, hey, why do you need a W-2 or what does APR mean or an LE, things like that. But they're asking questions around, hey, I have loans closing this week, which ones still have outstanding tasks, and which ones have I not sent a closing disclosure to? Our platform's always been able to give you that information if you click through it. But mortgage advisor for the loan officer really is great at digging through that information and mining the data to surface it all in one spot. Really a meaningful conversation when all the paperwork's already been filed and when everything's already ready to go. Robbie ChrismanSo let's say that borrower does apply. There's still a lot of road between there and the closing table. How do you keep that file moving? Casey WilliamsYeah, we keep the mile the file moving with AI and automation. AI is good at automation, but not all not all automation is AI. Things such as a pre-approval. If the borrower provides credit off, we then pull credit. If it comes back with a certain credit score, we then can move it down and to okay, let's now order verifications. If we get positive verifications back, let's go run AUS. Each of those have meaningful costs to a lender. And if credit comes back too low, we probably don't want our pull verifications because we know they may not qualify. That's where pre-check comes in. Credit comes in, credit comes back at 800. Great. We've got a golden borrower. They're going to be able to come in. We're going to do a lot with that borrow. Comes back at 525. Ooh, probably not going to qualify for a ton of loan programs. But let's just assume it's that 800, right? We're good to go. We have a lot of next steps. We know exactly what we're going to do, but we also need documents. We're requesting documents automatically. We're running AUS automatically. We're comparing the documents to the AUS findings. We're doing all that. And we're embedding intelligence all behind the scenes with it. Borrower uploads a bank statement because that's what we're being asked for. Okay, did we get pages one, two, three, and four? Or do we just get pages one and two? If we just got pages one and two, let's communicate back to the borrower in real time that we still need more, that we still need pages three and four. Let's tell them all the things that your processor LOA is going to tell them once they review the file. But it's not just for what I would call like your front office staff, also your back office staff of disclosures, like disclosures, have a hard cost with them. If borrowers don't sign disclosures, you're manually fulfilling, which isn't just a cost from postage, but also a human cost of getting that ready. Our automated disclosures experience creates that bridge to the back office teams to allow them really to automate a lot of what they're doing on a day-to-day basis and also keep your loans compliant. Robbie ChrismanYou mentioned a few numbers along the way here today. If a lender listening wants to see how their own process stacks up, what should they be tracking? Casey WilliamsI'd say don't overthink it. There's a lot of numbers out there of the cost to originate a loan. And you might talk to two different lenders and they might think of how they originate a loan in two different ways. Is LO comp included in that? Is it just tech cost? Is it salaries? Is it like right? Like there's so many different ways. And so I would first say internalize it yourself. Understand exactly what are our costs, what are our numbers as a lender. Also, just focus on a segment. Maybe it's the application. How many borrowers are starting an application versus how many are finishing? Maybe it's the back office side. How many closers do we need, or how many back office individuals do we need to ensure that we're getting disclosures out in a proper timeline? Don't boil the ocean. Do it one step at a time. Look to see what you can find and make changes on it. From those changes, continue to iterate. I like to think of it really iteration kind of like as the scientific method. We go into everything with a guess of, oh, if we do this, we believe X will happen. And so do it and see if X happened. If it didn't, if there's no harm, maybe you continue doing it. But if there was harm, you can roll things back very easily. It doesn't necessarily take six to 12 months worth of planning to get to a, oh, this is what we want to do, if you can slice it into really small chunks. So that would be my recommendation of just identifying quick, measurable items that you can work on and taking action from there. Robbie ChrismanCasey, always a pleasure speaking with you. Excited to see you out there in the exhibition hall. And um already looking forward to the next one of these we're going to do together. So thank you very much, sir. Casey WilliamsThanks, Robbie. Right back at you. We'll see you in Chicago. Robbie ChrismanInflation data will be the primary market catalyst this week, with September CPI on Wednesday and PPI on Thursday, likely to shape expectations for the Federal Reserve's next policy decision. Investors will also monitor retail sales, initial jobless claims, manufacturing surveys, industrial production, and the Fed's beige book for signs of whether economic momentum is holding up or weakening. The combination of inflation and growth data will be particularly important. Persistent price pressures alongside resilient activity would reinforce the case for restrictive monetary policy, whereas easing inflation or deteriorating demand could strengthen the argument for a more cautious Fed. Treasury markets were closed yesterday for Columbus Day. For economic news, there's nothing major. September at NFIB small business optimism declined 0.8 points in September to 97.9, one tenth of a point below the 52-year average of 98.0. And September existing home sales are expected to be little changed from August. This morning, we find the two-year yielding 4.77% and the 10-year at 5.19 versus closing last week at 5.24%, down four basis points over the course of the week last week. Agency CMBS prices are better than Friday's close by about an eighth, depending on coupon and maturity. Let's wrap up with a joke and some housekeeping. Over the weekend, I visited the Chicago Museum of Natural History and overheard some tourists marveling at the dinosaur bones. One of them asked the guard, Can you tell me how old the dinosaur bones are? To which the guard replied, They're three million, four years, and six months old. That's an awfully exact number, says the tourist. How'd you know the age so precisely? To which the guard answered, Well, the dinosaur bones were three million years old when I started working here, and that was four and a half years ago. Thanks again to nCino for sponsoring this week's podcasts. nCino is the platform for a gentic AI and mortgage lending, helping mortgage lenders deliver a faster, simpler path to home ownership. If you're here at MBA Annual, come find the nCino team and see how their agentic homeownership journey puts AI to work across the mortgage lifecycle. Helping loan teams spend less time on manual tasks and more time serving borrowers. Visit nCino.com slash mortgage slash US to learn more and schedule a meeting while you're on site.