9.23.26 Philanthropy and Appraisals, Castor Financial’s Brooks Chamagne on Account Executive Compensation; MSR Warning Signs

Robbie ChrismanWelcome to the Chrisman Commentary, daily mortgage news podcast. I'm your host, Robbie Chrisman. Topics on today's episode include philanthropy from around the mortgage industry, why MSR fair values are showing early warning signals, and my interview with Castor Financial's Brooke Champagne on innovative account executive compensation plans and how AEs can build a team without management duties. Here, take a listen, do a low preview.Robbie ChrismanWhen we look at the recruiting landscape for AEs out there, how would you categorize it? And I get that's a very general question, but when we talk recruiting for AEs, what comes to mind? What's going on?Brooke ChampagneYeah, I think what's out there now is is you know, if you're a top producing account executive, you probably show your you know proof of what you're producing and you're getting money thrown at you to come over. And if you and if you produce what what you say you're gonna produce, then you don't have to pay back your signing bonus. And and if you don't, then you do have to pay it back. And and we're just we're seeing a lot of that. And then people just jump from company to company, and it's it's just like we're trying to build that more, you know, I don't want to be cheesy, but that more, that more family feel. Like we really we like the right people on our team that just have uh common goals that fit with our with our mentality. And so we see a lot of jumping around, Robbie, and a lot of that kind of stuff. And I think if we if people take advantage of this additional plan that we've put together, they can really build a long-term, you know, recurring revenue future as an account executive, as opposed to always be worrying, you know, from one month to the next if they can pay their bills.Robbie ChrismanThanks to this week's podcast sponsor, SpringEQ, the home equity expert. See why SpringEQ is the clear choice in home equity, helping over 150,000 homeowners access almost $15 billion in equity by visiting mortgage.springeq.com slash equity. I won the lottery for a million dollars yesterday, so I decided to donate a quarter of it to charity. I now have $999,999.75. One can make jokes about charities or about people and companies in residential lending, but giving in charities are serious and help keep our focus on things that matter. People in need. For example, there's Fairway Independence, Fairway Cares, and contribution to the American Warrior Initiative. Several years ago, the Southwest General Health Center received a one and a quarter million dollar donation from the Cosgrove Family Foundation to support the hospital's maternity unit renovation and expansion project. And in subsequent years has received much more. Stan Middleman, the CEO of Freedom Mortgage, Philadelphia-based, gave Philadelphia-based Penn Medicine a $50 million gift that will establish the Middleman Center at Penn Medicine and launch a new fund. It's designed to support scientific discoveries at Penn Medicine, including early stage research in cancer, autoimmune diseases, and infectious diseases. And that's after a quick Google search. I'm sure there are countless examples of many more. Switching gears slightly, this podcast has warned listeners of the approaching changes to the appraisal landscape for months. Yes, the focus is on conventional conforming loans, but there's a ripple effect to government and non-agency loans. This topic was buzzing around the Acuma conference this week, along with what lenders should be doing about UAD 3.6, besides just bracing for it. Appraisers are already reporting higher fees since the added inspection requirements and new format or new report format are extending completion time. Lenders should plan to disclose that now and prepare borrowers for longer turnarounds, especially over the next 90 days. Advice that I'm hearing is lean harder into hybrid appraisals. Appraisers have to capture more property data under UAD 3.6 than 2.6, and hybrid orders skip the added time. They're also priced lower than a traditional UAD 3.6 appraisal, which matters more by the week as fees rise. Ignore these options at your own risk. And there's no reason for rates to drop unless inflation or the economy start to slow. Put another way, persistent fiscal concerns and heavy debt issuance are expected to maintain upward pressure on long-end Treasury yields, largely offsetting the influence of a hawkish Federal Reserve. The Fed's policy shifts to combat headline inflation, contrast with its public silence regarding the soaring federal deficit, which is on track to reach $2 trillion this fiscal year. While officials justify their rate trajectory by pointing to well-anchored market inflation expectations, the sheer scale of the structural deficit must be influencing policy behind closed doors. Inflation is being driven by oil, which is being driven by the war. If there was a resolution in sight, why wait until after the election to make progress? Yesterday's roller coaster went like this. Falling oil prices spurred a wave of buying, though that positive momentum stalled when crude oil prices rebounded following President Trump's UN remarks about a potential post-midterm negotiation with Iran. However, late-day reports of a productive three-hour meeting between US and Iranian officials stabilized the market, allowing treasuries to steady near the close after absorbing an average of $69 billion. Or absorbing an average $69 billion two-year note auction. For today's interview, I wanted to welcome to the show Castor Financial's Brooke Champagne to talk about innovative account executive compensation plans and how AEs can build a team without management duties. He's president and founder of Castor Financial, a non-QM wholesale lender for brokers. They also do bank statement, DSCR, and asset depletion, all underwritten with common sense. You'd like to learn more, visit castorloans.com.Robbie ChrismanI know you do a lot of recruiting at Castor financially trying to gain some traction on the AE team. You're out there talking to a lot of people hearing about their challenges. And you launched a comp plan. I don't want to put words in your mouth. Maybe, maybe we'll start with the comp plans historically for AEs. What have you heard? Kind of common complaints, or when did you realize it wasn't working and needed to change? And maybe set some, give us some historical context for what the his the traditional AE comp plan was.Brooke ChampagneYeah, for sure. Yeah. Thanks again, Robbie, for having me. You know, as I talked to AEs and we're trying to build our team, we kept hearing, you know, the same kind of struggles. And it was really based on time. A lot of these account executives on traditional plans, you know, they just, you know, the more volume that you do, the more money you make, right? And they kept running into where the consistency and time. So they kept saying, Well, I'll have a good month and I'll do five or six million a month, and then the following month I'll do a million. And then I might have a good month at four million, and then I'll do one million a month for two more months in a row. So they found that they'd have a good month here and there, but consistently, if they were honest with themselves, they were only doing about 2 million a month if you averaged it out in volume. And so they're like, I just don't have any more time in the day. I'm really working hard going through all of my, you know, I'm out there, I'm working, I'm not being lazy, I'm I'm using all of the sources at my disposal. I just can't seem to get consistent higher volume. So we thought, okay, well, let's find a way to solve that. Let's let's find a way to help us build our team and also reward these account executives and pay them more on their own volume and then help us recruit at the same time.Robbie ChrismanSo, what exactly is the new comp plan in plain terms for someone hearing it for the first time?Brooke ChampagneIn plain terms, it's just simply like a way to make more money for the same amount of loan volume you're doing and time you're spending on that volume. So you'll essentially you'll make you'll make the basis points on your volume increase as you refer account executives into Castro Financial uh to be on your team. Be getting paid more for the same exact work and volume that you're currently doing.Robbie ChrismanThat sounds crazy. Yeah, that's sounds that sounds pretty good. Yeah. Well, you said that this changes the rate AEs get paid on their own production on top of adding a new income stream. How's that actually work? Maybe it'd be good to walk through a real example.Brooke ChampagneWe have the traditional comp plan that every other lender has. You know, you just you do more volume, you make higher basis points, and you make more money. So we have that. But this additional plan, it just allows you to make those more aggressive basis point splits, but on the same volume you have now. Um, and again, it's just by recruiting and referring account executives onto the caster team. So let's just say, for example, on your current plan, you're averaging that $2 million that I was referring to before. And let's say on your current comp plan, you know, you have a little salary and then you maybe make 25 basis points on that two million. And you can't get up to say 50 basis points until you hit like a $5 million, you know, uh loan volume. And that's pretty traditional, you know, something in around that range is kind of like normal lender compensation. Well, what you'll do in this case is you you can make that 50 basis points on that $2 million in volume instead of having to get it up to $5 million. You can make the 50 basis points on only $2 million in volume by referring in account executives into the team. And the best part about this whole thing, Robbie, is you're giving yourself a raise kind of twice. So you refer account executives into the team, you make more basis points on your same volume, in this example, that $2 million, but then also you get an override on all of the account executives that you referred in to your team. So you're you're making, you're kind of, you know, increasing your revenue in two ways. And that's kind of what we were trying to accomplish, right? From the beginning when we were talking, it's it's like, how do we take that same amount of time you're spending and make it more efficient? And at the same time, helping Castor, you know, build out their account executive team. So that's kind of really the the exciting part is we've got people on this plan that are that are just they're making more on the $2 million volume they're doing, and they're making an override on the people that they referred into Caster and all of their volume. So it's really, it's really a nice, uh, exciting raise. And we got a lot of people excited about it.Robbie ChrismanYou keep coming back to the idea of AEs building their own team. But what does that look like for someone who's never recruited anyone in their life? Does that mean they have to manage them?Brooke ChampagneYeah, no, good question. Yeah, I want to set the record straight on that. They do not have to manage anyone, they're simply getting an override on the volume uh that's done by the account executives that they refer in. But we have a typical management structure. So they don't have to have meetings and go over pipeline reports and do any kind of that. That everybody that they recruit in will have a manager, um, and it and it's not them. They don't have to do any of that at all. They're simply being rewarded for bringing in account executives into the team, and they're getting an override uh for doing that.Robbie ChrismanThat sounds pretty dang good. Well, for AEs listening who want the actual numbers, how do they get those?Brooke ChampagneWe have a uh QA session actually this week on Wednesday at 3 p.m. uh Pacific time. So they can go to CastorLoans.com forward slash account executive. So again, this Wednesday at 3 p.m. Pacific.Robbie ChrismanToday is Wednesday. This is airing Wednesday. So today at 3 p.m. Pacific, people, if you listen.Brooke ChampagneOh, oh, I'm sorry, I apologize. Yeah. Right. Today today at 3 p.m. Pacific, um, you just go to Castorloans.com forward slash account executive, uh, and you can register there. And and then again, if if that time doesn't work for you, you've got something, you know, a conflict, or you want more information in detail, you can always get a one-on-one discussion with us. You just go to careers at castorloans.com. So again, careers at castorloans.com and you can schedule, you know, a one-on-one. We can go over examples, details if that, you know, if that Wednesday, if later on today, uh that that doesn't work for you that time. And oh, by the way, I just want to mention to you too, Robbie, one one last thing. This is not just for current account executives. You know, so I know a lot of people listening might be like, oh, I'm not, you know, an account executive now. It's all in mortgage industry professionals. So we have loan officers that are current account executives, we have title people, we have uh, you know, I think we have a CPA even that's that's an account executive. So this is for all professionals um in our industry, so not just current account executives. I want to bring that up.Robbie ChrismanVery cool. Well, before I let you go, anything else exciting from Castor Financial? What have you been working on? How are you winning business out there?Brooke ChampagneYeah, I mean, we I I we continue to push our very aggressive guidelines. You know, we we talked, you know, I've been on your uh podcast a few times and we've talked about how aggressive our programs are and how wide our guidelines are. And we continue to really focus on that make sense underwriting approach. I mean, we're doing exceptions on a daily basis, uh, those tough to place non-QM loans. We're finding ways to get them done. We're we're super aggressive on how we calculate income. We've got a couple companies where we'll put um an actual income panel right into their LOS system. And before they decline any loan, they run it through that system and it uh it'll tell them how much additional income they have and try to, you know, so they make sure that every loan, if they run it through there, they know that okay, if they have to decline a loan, it's been exhausted and they're not wasting any marketing dollars. And that's been really important for a lot of brokers. They want to make sure that all the money they're spending gets squeezed as much as possible, especially in this market. You know, we've had a interesting uh since we talked last been a lot of interesting things in the market, right, Robbie?Robbie ChrismanYeah, definitely uh tough times out there in a lot of senses. And and the mood that I'm I'm sensing for my travels is uh one that that really requires getting out and grinding. So cool to hear that you're doing that. Uh Castor, I always enjoy talking to you, and we'll do this again soon, sir. So thank you very much. Thanks so much, Robbie.Brooke ChampagneAppreciate you having me.Robbie ChrismanServicing and its fair value is always a topic. For almost four years, bank mortgage servicing rights, fair values have exceeded the 1.5% of unpaid principal balance threshold, an early warning signal. And some conventional and jumbo servicing portfolios have reached six to seven times earnings. Slow prepayments can support strong service and cash flow while rates remain high, but the owner's financing structure determines whether that cash flow can survive a liquidity shock. An owner with liabilities termed out in the debt markets has more staying power than one relying on bank financing that can be pulled when lenders become nervous. Warehouse lenders are working hard to make money but are not eager to increase MSR financing, while investors remain more willing to own conventional servicing than FHA and VA servicing because of the different funding risks. When Oak Tree provided capital to UWM, that outside support prevented a potentially much larger market problem, raising the question of whether another investor will provide similar capital when the next issuer gets into trouble. A lender buying or retaining MSRs should therefore calculate not only expected servicing cash flow, but also how long its financing is locked, how much liquidity it can access, and what happens if its funding source stops being willing to finance the asset. In terms of short-term news, today's economic calendar kicked off with MBA mortgage application volume falling by 1.5% for the weekending September 18th, driven by a 3% drop in refinances and a 1% decline in seasonally adjusted purchase loans. Despite a short-term 9% unadjusted weekly bump due to a holiday rebound, overall activity remains significantly suppressed compared to last year, with refinance and purchase indices down 62% and 11% year over year, respectively. Later today brings preliminary SP Global U.S. manufacturing PMI and services PMI, remarks from Fed Governor Barr, crude oil inventories, and a $70 billion five-year treasury note auction. We'll be on the day with agency MBS prices, little change from Tuesday's close, the two-year yielding 4.78, and the 10-year yielding 4.98 after closing yesterday at 4.97%. Let's wrap up with a joke and some housekeeping. A guy walks into a cafe and asks for a bowl of chili. The waitress says, This guy next to you got the last bowl. He looks over at it and sees that the guy's bowl of chili is full. He says, If you're not gonna eat that, mind if I take it? The other guy says, No, help yourself. He starts to eat it, and about halfway down, his fork hits something. It's a dead mouse. And he vomits the chili back into the bowl. The other guy says, That's about as far as I got, too. Thanks again to SpringEQ for sponsoring this week's podcast. Spring EQ is the clear choice in home equity, helping over a hundred and fifty thousand homeowners access almost fifteen billion dollars in equity. To learn more, is a mortgage.springeq.com slash equity.