11.13.26 What a Week; Lower’s Gino Fronti on Anthropological Tech; Home Sales Decline

Robbie ChrismanWelcome to the Chrisman Commentary, Daily Mortgage News Podcast. I'm your host, Robbie Chrisman. Topics on today's episode include what a week. Thank goodness it's Friday. A report on how home sales are continuing downward, and my interview with Lower's Gino Fronti on how consumers are increasingly open to AI and mortgage lending for faster, more reliable pre-approvals. But the future of the loan process will depend on combining automation and speed with human guidance, personalized mortgage strategies, and deeper loan officer expertise. Here, take a listen to a little preview. When we talk speed, it's not necessarily speed to close a lot of the time, as much as it is speed to certainty. Consumers out there want the certainty of I can actually get a loan. Now I can confidently go shopping. You talk about your perception of speed to certainty and what it means at Lower. Gino FrontiYeah, I mean, here's the thing. We want to be ready to close in 10 days, whether you need to close or not. Our job is to be prepared to close when you want to. Uh, I actually learned that from Bill Dallas, one of my great mentors. Uh, he said, we have to meet the client where they are, and we have to be ready to act when they want to act. And I think that that's just something that stuck with me my whole career. That was probably 10 years ago. And it stuck with me my whole career, and I continue to bring that forward. And that's why I found so much alignment with Lower because Lower says we want to be ready in 10 days. I mean, from contract to ready to close in 10 days, maybe eight, maybe seven. Uh, but we're regularly, and I've been operating this way since almost 2012, 15 days to close is not abnormal and should be attainable. Anybody that's still working on the last minute tying up of the knots uh on day 29, you have to question what is their workflow, what is their process, why are they stuck 10 years ago? The ability to close every loan in 10 days is right around the corner. Robbie ChrismanThanks to this week's podcast sponsor, Truework, a checker company, the one verification solution to replace in-house waterfalls. Verify any borrower with a VOIE solution that automates the entire process to quickly deliver the most accurate and complete reports with broad GSE coverage. To learn more, visit Truework.com. Seen on a fortune cookie. Your destiny is to spend hours proving you are not robots on websites run by robots, just to read articles written by robots. Is big tech reminiscent of Big Tobacco? Chrisman LLC over here had a backup system to replace Outlook being down. Meanwhile, United is restricting AI agents from booking flights. Next week, my dad heads to St. Louis in Kansas City, and I go off to Texas MBA's housing summit in Austin. Local and state organizations are doing well and certainly have their fingers on the pulse of the industry, which includes the pros and cons of technology. For example, data breaches have become commonplace. Earlier this year, we had figures breach opening up a million user records and apparently caused by an employee clicking on the wrong link. Attackers claim to have stolen data on over one million Vanderbilt students and staff. Democrats won control of Congress, and the decisive results point toward our cohesive democratic majority scenario. That is, key market implications, including incrementally negative AI sentiment on greater expectations for data center restrictions. U.S. Treasuries sold off sharply yesterday following the midweek Veterans Day market closure, pushing 10-year and 30-year yields to three-week highs, while the two-year yield reached a four-week high as expectations for a 50 basis point December rate hike more than doubled to above 15%. Persistent selling pressure was reinforced by crude oil prices climbing, exacerbating concerns over inflation and a potentially more aggressive Federal Reserve tightening path. And that's to say nothing of NVIDIA leadership changes dragging the equities market down, or the Microsoft Outlook outage giving a huge swath of employees an adult snow day. Additionally, the Federal Reserve released its meeting schedule for 2027, designating the October meeting as a monetary policy strategy meeting. Yes, U.S. inflation has accelerated for the third consecutive month, exceeding expectations as persistent core and services inflation, rising costs, tariffs, geopolitical tensions, and strong AI investment continue to fuel price pressures. Stronger employment data and increasingly hawkish Federal Reserve commentary have shifted market expectations toward a 25 basis point rate hike on December 9th, reflecting growing concerns that inflation will remain elevated and interest rates higher for longer, despite declining inflation expectations, suggesting continued confidence in the Fed's eventual ability to contain price pressures. The hawkish outlook is creating sustained pressure on treasury markets, mortgage-backed securities, mortgage rates, and housing affordability, while potential safe haven demand amid equity market and AI investment uncertainty could provide some offset to Treasury selling. We learned yesterday that existing home sales fell 5.5% month over month in October to an annualized rate of $3.75 million, significantly below expectations, marking an 8.8% decline from a year earlier. Sales dropped to their lowest level since August 2010, reflecting weaker buyer demand as mortgage rates remained above 7% and persistent inflation further strained affordability. All four U.S. regions recorded year-over-year declines, with the West experiencing its weakest sales pace on record since 1999. Put simply, there are a lot of challenges facing the housing market. For today's interview, I wanted to welcome to the show Lower's Gino Fronti to talk about how consumers are increasingly open to AI and mortgage lending for faster, more reliable pre-approvals. But the future of the loan process will depend on combining automation and speed with human guidance, personalized mortgage strategies, and deeper loan officer expertise. He's EVP, Division President West, and VP of Product for LOAI, the company's AI-powered productivity suite for loan officers. He guides key growth initiatives across the West Coast and helps advance the company's AI product, which helps loan officers unlock greater efficiency, personalization, and customer delight throughout the mortgage journey. Just two dudes talking about AI today, and Lower recently surveyed consumers about how far they're comfortable letting AI into the mortgage process. And the results suggest borrowers are pretty open to AI, taking on much more than basic research or rate comparisons. Can you just to set the background here a little bit, can You walk people through the survey, maybe a little bit of methodology, but the findings that you found interesting, big takeaways? Gino FrontiYeah, I mean, look, we surveyed a thousand people, so it's a relatively small sample, but it's not too small a sample that we wouldn't be able to really get just a general idea of where the consumer stands today. And 49% were comfortable with AI in general working on their loan. That means they're not afraid of their information being touched by AI, is what I'm hearing from that 50, 49% number, right? That means they're comfortable that the fact that the mortgage process, although it holds the most private information in their life, that they're comfortable with it and they know that there's no stopping it, right? That train has left the building. And this is the most efficient way that ultimately results in a lower price to the consumer by lowering the cost to produce a mortgage. Robbie ChrismanThere's a distinction that we have to draw here because just because people are open to something doesn't mean that they want it. And I would love your thoughts on kind of that intersection of openness or acceptance versus what people actually want. And then sure, we can bring it, we can relate it to Lower in a practical sense of how y'all are thinking about this from the origination side of things. Gino FrontiYeah. So Dan Snyder and I, we were talking about, we had our own little interview and we were sitting down talking about him and I. And maybe we're not the best sample size because we're AI people, but just I want things to be easier. I it just in life, I want things to be easier. We have busy lives. The world has gotten busier, our attention span is gotten shorter. And so, how can I have the least amount of friction possible in every process in my life, not just in mortgage? So I think this is telling about the general consensus of where people are. With anything that makes my life easier, I'm in on it. And I think one of the things that was interesting in the survey was, and this is probably the most telling part of the survey, 72% were okay with an AI making their pre-approval decision. And I think that one tells the difference of I'm comfortable versus yeah, I actually want this because they want speed. And the traditional pre-approval process to do it right could take two to three days while we verify employment, while we verify assets, while we verify income and all those things. It could be a very slow manual process. And so by introducing AI into that, we speed that up. And somebody that calls you on a Thursday that wants to go shopping on a Saturday can do that if we utilize the modern technology to deliver their pre-approval letter. To me, a pre-approval letter is like an insurance policy. I know not every institution believes this way, and they give you a loosey-goosey pre-approval letter. But for me, it's a promise that you're going to get your keys. And so it's not about can I get you a pre-approval letter quickly? It's about can I give you a pre-approval letter that you could stand behind quickly? And AI does that for us. Robbie ChrismanYour VP of product at Lower. Can you talk about how this AI acceptance, adoption factors into the ways that you are thinking about the products that you offer and the experiences that you're trying to give people? Gino FrontiInteresting you asked that because one of the super skills of a great loan officer, a great technician, so to speak, not a great salesperson, but a great technician, was to find the right product for the right person. And to zoom out a little bit, for the last 5,000 years, the most valuable thing that humans put value on was knowledge. And knowledge is being commoditized at the fastest rate of all time. At some point, every AI system will have ingested every piece of human knowledge and they'll all be the same and have all the knowledge. So if the knowledge is not only that this super AI has it, but also that it's easily accessible, then we have to be able to do something else other than knowledge as humans. So the human in the loop element of mortgage will never leave because what the other person on the other side wants, what the consumer wants, is they still want not only to know they're in the right product, but that somebody's accountable for it. That somebody that has empathy, sympathy, and understands what it's like to be a human with three kids and want the right school district and want to make sure that to somebody payments most important, to somebody net worth is most important, but somebody that understands what it feels like, and then the machines can do the work. Robbie ChrismanHow do we see the roadmap evolving toward what you believe the mortgage of the future looks like? It's not like we can just snap our fingers and overnight, boom, we can get decisions and boom, uh all the knowledge is being commoditized. Like, how do you see things progressing from your? And I I asked that very intentionally, rather than saying, what is the human, you know, the loan officer of the future loan officer look like? I want to think about the roadmap in steps of how we get to where you think we're headed. Gino FrontiThe first thing that you have is you have both consumers and loan officers using LLMs, uh, whichever one of their choice that they like, some people like Copilot, some people like Gemini, some people like Grok, to bridge the gap between what they know and what they think they need to know. And so that's the first step in the evolution, is what we've seen over the last two years was QA. Question and answer, question and answer, question and answer. Uh, then when that evolved a little bit, you had chatbot. So now the chatbot is giving you a little bit more of that human feel because it's actually speaking to you like a human does. So that was the next evolution. Then the next evolution we saw, and this is still not ironed out, this is still getting better, is voice AI conversation. So now my consumer can actually be speaking to my virtual AI assistant about whatever they want. So that's the next evolution that we're seeing. And so if we have people starting to have virtual conversations, by the way, this is interesting. When I started in origination, every you would go down the process and everybody would say, Can my uncle be on the call? He knows about buying houses. Can my cousin be on the call? Hey, can my attorney be on the call? Like we would hear that from consumers. I haven't heard that in years. Why? Because they feel empowered and educated enough with the information they already have to have an initial conversation and to be able to see if the person in front of them is authentic enough and cares about them enough to be their guidance and advisor partner through the transaction. Robbie ChrismanYeah, I heard some good advice the other week, and it actually came from a real estate agent. And he goes, All my clients are going to be doing research through these LLMs. I need to be 10 steps ahead of them. I need to assume that they've already coming in and having done queries, and I need to show that much more value beyond what a search engine or chat can give them. And so I thought that was interesting. In that same vein, how are you talking to, coaching up, advising your sales staff at Lower to embrace these technological changes and be masters of their craft as things move forward so rapidly? Gino FrontiYeah, I mean, look, I think it's you got to go back to some really basic sales skills. You got two ears and one mouth, use them proportionally, ask more questions, find out what one of my favorite questions as a loan officer is why is buying a home important to you? Chat GPT is not necessarily going to deal with them in that way. So, what if somebody was to tell me, no one in my family lineage has ever been able to buy a home and I want to be the first to do it? Well, then it's my job sitting on the other side of that call to say, if I can get that done, what would that mean to you again? Right. And then they tell you that. I think they just need more. Okay, I'm gonna back up. Sure. One of the problems in mortgage is that we're one of the only industries that required the loan officer to not only be in sales, we also require them to be in manufacturing. And so the loan officer always had this tug of war with themselves. Do I work on the loans that I have or do I speak to the people and spend the time with the people? Kind of like a doctor's office, if you think about it, right? You get in there, you're only there with 15 minutes, and you didn't get anything out of it. So we need to find a way now to separate manufacturing and make that digital and have the loan officer spend more time doing the human things. I really think that's important. And then they won't, it doesn't matter how the loan gets manufactured, it only matters that we get them to the finish line with the least amount of friction possible. And I always use Amazon as the best experience in the world. You click a button and in 48 hours it'll be there. How do we make the mortgage experience like the Amazon experience reliable, fast, and uh simple? Robbie ChrismanWho becomes the bad guy here when we talk about AI approving loans or somebody being told no? And and I get that that's kind of an odd question in this interview, but I think about like say someone asks you for money. You're not as much the bad guy if you say no. Sorry, I don't have it up front, as you are the bad guy if you give them money and then you say, Can I when are you paying me back? When you put you're much more the bad guy. And so I wonder how consumers are going to feel about being denied by AI versus being denied by people. Do you think that'll shift the way that they perceive mortgage companies and Net Promoter Scores, recapture rates, loyalty, all that stuff? How do you how do you see that factoring in? Gino FrontiWell, they should never be denied by AI. The AI upfront solutions should say you were not eligible for an automated pre-approval. Gino will be calling you and working on this manually to get you to the finish line. This is why we can't be fully automated. And so the bad guy is the company that says if they don't fit the box, they're out. And that's not what we do, right? At least in the retail IMB space, we find a way, we get creative, uh, we create a roadmap, we create a plan. There should really almost never be a no. There should be a not today, but if you do these 10 things, you can get what you want. So I think that the bad guy is anybody who tries to automate the whole thing. There you go. Robbie ChrismanAnd in closing here, obviously we've seen that borrowers are increasingly becoming becoming more open to using AI for much more than basic research or rate comparisons. In your opinion, as they continue to get more comfortable, where does an originator show their real expertise? How do they continue to stay that much more ahead? Gino FrontiI mean, it's the same as it's always been. You really have to work on yourself. You have to understand bond markets. You have to be a great bond trader to be able to tell them the timing of when they should lock their rate, depending on when they're going to buy. You need to be a good strategist. You still need to figure out how long is this person going to be in a home so we can determine if they need to be in an arm or a fixed rate mortgage. What's the return on investment if I refinance this? Sometimes people have seven or 10 properties in their portfolio, and we need to we'll re-equity balance all of them to get them all under 60% loan-to-value to make sure that they get the best rate on all of them and look at a blended rate amongst seven properties. I'm gonna just say this. If you're not in the top 10% of what you do today, get there fast, because there's only gonna be 10% left of the people that are here today, because the rest will be done by machines better than you do it today. So you have to be the best. Robbie ChrismanGood words to close the interview on. Gino, I really enjoyed this. It feels like the start of a bunch of conversations that we'll have. So I'm already looking forward to the next one. I really appreciate the time. Thank you. Gino FrontiGreat man. Thank you for having me. Robbie ChrismanToday's economic calendar is already underway with PPI. Came in at 6.5% year over year. Holy smokes, which was slightly less than forecast, but above the previous reading. Month over month, that's up 0.3%, which is below expectations. I guess that's good. Core PPI was up 0.3% month over month as expected, year over year up 5% as expected. Later today brings Fed remarks from Collins, Logan, Bowman, Daly, and Jefferson. God, these people don't shut up, do they? We began Friday with agency MBS prices worse than Thursday's close by an eighth to a quarter, the two-year yielding 4.85, and the 10-year yielding 5.13 after closing yesterday at 5.10%. Let's wrap up with a joke and some housekeeping. We're gonna have a traditional Thanksgiving this year. We'll invite the neighbors to dinner, murder them, and then take their land. Thanks again to Truework, a checker company, for sponsoring this week's podcast. Truework is the one verification solution to replace in-house waterfalls. You can verify any borrower with a VOIE solution that automates the entire process to quickly deliver the most accurate and complete reports with broad GSE coverage. To learn more, visit Truework.com.