The industry continues to witness corporate shifts (the latest example being 11Mortgage making “the difficult decision to exit the wholesale and correspondent lending channel, effective immediately”; more below). Money, profits, and how they are thought about matters. I know plenty of loan officers who make it a point to tell potential clients, up front, how they are paid and what the client will receive for the price. Some companies use “loss leaders.” Costco, for example, famously uses its $1.50 hot dog combo and $4.99 rotisserie chicken to attract customers, encouraging them to purchase additional items while shopping. That is not really possible in mortgage lending. What about smaller places… do you ever grab a bag of peanut M&M’s after you fill up with petrol? A new analysis of 153 consumer complaints alleging overcharges at convenience stores Circle K and 7-Eleven reveals what appears to be a pattern of mislabeled pricing or upcharges at the register, which critics of the chains allege to be a consistent practice across many stores. A California inspection found that between 2023 and 2025, 7-Eleven stores in LA County failed 335 of 909 price accuracy inspections, a failure rate of 37 percent. Over the same period of time, Circle K failed 35 percent of government price-accuracy inspections in Florida and 62 percent in North Carolina. You gotta be careful out there when money is involved.
Saturday Spotlight: Kastle
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“The most deployed AI agent in the mortgage industry”
In 3-5 sentences, describe your company.
Kastle helps leading banks, IMBs, and credit unions add capacity across their originations, fulfillment, and servicing operations without adding headcount. We are excited to announce our $24 million Series A led by Insight Partners, and to continue innovating for our customers and supporting the transformation of our industry.
We believe the future of loan operations is a hybrid workforce: people and AI working together to keep operations moving around the clock.
Today, our “AI FTEs” work across originations, fulfillment, and servicing, engaging leads, advancing loan applications, following up on missing documents, ordering third-party data, and handling customer service and collections. They complete that work inside the loan origination systems, servicing platforms, and CRMs lenders already use, and go live in a matter of weeks.
Every interaction is audited for compliance and logged securely. Our AI FTEs are continuously tested for both regulatory compliance and customer experience, and they can be configured through KastleOS, our no-code agent-building platform.
Kastle’s agents have handled more than 10 million customer interactions and processed over $2 billion in transactions. If your team is carrying more work than it can clear, we should talk.
What does your company do to help elevate your employees’ growth?
Our engineers work closely alongside our Agent Success Managers to fully understand a customer’s needs during deployment. They build with a customer over many weeks, so that the product fits the way that institution’s workflows and processes actually run. That gives our team deep customer, industry, and product understanding, which translates into a better product for everyone we work with.
Things you are most proud of that don’t have to do with sales.
Kastle is the most deployed AI agent in the mortgage industry, and our footprint keeps growing as we add capabilities to the product. We focus on two things: a strong product and strong customer support. That means building alongside our customers, so the product fits their systems, which makes both integration and day-to-day use straightforward.
Fun fact about your company.
In our early days we moved from San Francisco to Tempe, Arizona, to work hand in hand with our early customers and build the product alongside them. We spent weeks onsite, deeply understanding how their operations worked. That time built the foundation of what Kastle is today, and one of those customers has since processed more than $1 billion in payments using our agents.
Is there anything else you’d like to share along these lines?
If you would like more details on what the agents do and where they fit inside a lending or servicing operation, our website is the best place to start, and several of us will be at MBA Annual in October. Please visit https://www.kastle.ai/
(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)
Corporate things to think about
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Certainly, mergers and acquisitions are not going to stop among lenders and vendors. There are plenty of other activities of note, like joint ventures and financing. And closures.
“11Mortgage has made the difficult decision to exit the wholesale and correspondent lending channel, effective immediately. Friday, September 25: Last day 11Mortgage will accept new locks or loan submissions. Wednesday, November 25: Last day loans will be funded or purchased.
“For any existing pipeline, loans with an active interest rate lock as of close of business yesterday (Friday) may continue to close as planned. Loans without an active lock will be considered rejected. Files will be returned to you upon request. Underwriting guideline changes, effective immediately: The following changes apply to all loan applications remaining in our pipeline, for all products except Investment/DSCR, FHA Streamlines, and VA IRRRLs… A minimum of three (3) months’ reserves (PITI) is required on every loan application. Tax transcripts are required on every loan application, regardless of income documentation type. Clear Capital AVMs will be used to support value on all loans including Investment property and DSCR loans.
“Lock Policy changes effective Immediately: Lock extension pricing increases from 0.020 (2 bps) per day to a flat 100 bps for a one-time, 15-day extension only. Extensions are no longer available in increments shorter than 15 days, and no further extensions are available after the one-time 15-day extension. Any loan that does not close within the one-time 15-day extension period will no longer be eligible to close. The 15-day extension is available only to loans in underwriting-approved status. Loans with an expired lock are not eligible for re-lock and will no longer be eligible to close.”
For example, Alta Home Lending has been selected by DRB Group, one of the nation’s largest homebuilders, as its mortgage joint venture partner in the West, following a competitive search and extensive due diligence. The new venture, DRB Home Loans, will serve DRB homebuyers in Texas, Colorado, and Arizona.
Alta’s builder division is led by Andrina Valdes, CEO, a leading voice in builder joint venture lending with more than 25 years in the industry, and Michelle Gonzales, Executive Director of Strategic Partnerships. Together, they have launched mortgage joint ventures with some of the nation’s most respected homebuilders, including several on the Builder 100 list.
And being #1 in anything means you have plenty of eyes on you. United Wholesale Mortgage (UWM) reported its earnings and has been the subject of conjecture ever since. UWM is no longer in an immediate balance-sheet crisis, but the industry is still wondering what the Oaktree rescue actually means for the company going forward.
The $2.05 billion capital package has stabilized UWM and allowed it to pay down secured debt, but it fundamentally changes the economics of the company: Oaktree owns $1.5 billion of preferred equity carrying a 10 percent cash coupon (13 percent if paid in-kind), while the Ishbia family contributed another $150 million on substantially similar terms. Fitch, notably, intends to treat the preferred as debt for rating purposes, illustrating the difference between its legal accounting as equity and its economic burden as debt-like capital.
The next piece of the recapitalization is now concrete: UWM has set October 2 as the record date for a 200-million-share rights offering, beginning October 5, with a minimum $400 million raise backstopped by Oaktree and the Ishbia family.
UWM is going to “survive,” but how much of the old UWM survives the restructuring will be closely watched. The core mortgage business remains profitable (i.e., the Q2 loss was driven overwhelmingly by the $603.2 million derivatives loss, not by an operating collapse) and UWM continues to have a dominant position in wholesale lending.
But the company now has expensive preferred capital ahead of common shareholders, a suspended dividend, significant potential dilution from warrants and the rights offering, and a major institutional investor with meaningful governance rights. And scrutiny of the hedge remains unresolved: public filings have prompted questions about why such a large derivatives position remained in place as the Two Harbors transaction became uncertain, and shareholder litigation is now underway.
Whether management can rebuild enough earnings and capital to retire Oaktree’s expensive preferred position, restore flexibility for common shareholders, and convince investors that the risk-management failure behind the $603 million loss was truly a one-time event is what to watch in the coming months.
AI Governance Has to Move Upstream
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Attorney Wendy Lee has some opinions about AI governance worth sharing. “The mortgage industry should not assume that putting a human at the end of an AI-driven decision is enough to make the process safe. If an AI system is 97 percent accurate and the human underwriter rarely overrides it, lenders may gradually remove that human from the decision without realizing that the underlying data could have been contaminated several layers earlier.
“A document can look complete on the underwriter’s screen while the income statement or asset statement feeding that decision came from bad data, a prompt injection, or another compromised process. The more AI takes over the work, the more useful human oversight becomes before the output reaches the loan manufacturing process, where a reviewer can monitor model accuracy, incoming and outgoing data, cybersecurity threats, and the conditions that should trigger a system shutdown.
“That control structure also has to exist inside the technology itself, because open-ended prompting can produce outputs far beyond what the user expected. I have seen tools where prompt limits, data restrictions, and automatic curtailment were built into the product from the beginning, and I expect lenders to need the same kind of controls at the enterprise level as regulators examine how AI is being used. The CSBS framework released in September asks institutions what AI tools they use, what their vendors are doing, what their use cases are, and how those activities are governed, while Colorado’s rules scheduled for January 2027 create additional obligations around AI decision-making and remove exemptions that previously applied to some financial institutions.
“A lender that waits for an examiner to identify gaps in vendor contracts, data controls, or AI governance will be building its remediation plan under pressure; a lender that uploads its contracts, tests its AI use cases, documents its controls, and identifies gaps now can walk into an examination with evidence of what it found and how it is fixing it.”
Mortgage Innovation Has a Distribution Problem
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Marc Biron, MBA, CFA, and Steven Siegel, DBA, sent over their thoughts on what a new mortgage structure, built on diversification, might look like.
“A new mortgage structure can have compelling economics, consumer benefits and credit-risk advantages and still go nowhere without a national institution capable of bringing it to market.
Home Diversification illustrates the challenge. Instead of bearing the volatile price performance of one home, the homeowner exchanges that exposure for the much smoother performance of a nationally diversified pool of homes. The homeowner still owns the house, but the investment return is no longer tied to one property and one local market.
“People ask, ‘Why diversify the home?’ For many households, the home is their largest asset, and that concentration matters for mortgage credit risk as well as for wealth. The most damaging foreclosure outcomes occur when borrower distress coincides with a major decline in home value. Equity disappears, refinancing becomes difficult, and selling may no longer repay the mortgage.
“Diversification addresses the local, property-specific part of that problem; it does not remove exposure to a nationwide decline. Research by Marc Biron and Michael J. Seiler, published in Real Estate Finance in 2022 and drawing on more than one million Freddie Mac loans originated between 1999 and 2020, modeled expected annual losses of approximately 5 basis points on a zero-down Home Diversified Mortgage, and about 6 basis points in an updated version of the model, against a conventional prime benchmark of roughly 29 basis points. These figures are modeled and have not yet been independently validated, but the magnitude of the difference is hard to ignore.
“If they hold up under independent review, they open the possibility of a zero-down mortgage without traditional private mortgage insurance and with a very different risk profile from a conventional zero-down loan.
“Your readers should know that the consumer case is broader than affordability. Zero down is easy to view mainly as a solution for buyers without enough cash. That understates the opportunity. A financially strong buyer who could readily make a down payment may still prefer the product: preserving liquidity, sharply reducing exposure to a local price collapse, and gaining a risk-adjusted wealth benefit by replacing volatile single-property exposure with diversified housing exposure.
“The question becomes not, ‘Can I afford the down payment?’ but why concentrate so much wealth in one property when I can own the home and exchange its volatile price performance for that of a diversified national pool?
“Economics are only the first hurdle. Once the economics appear workable, the next question is whether the structure fits the existing regulatory framework, and that question does not yet have a definitive answer. The central classification issue is whether the agreement falls within the federal swap framework or is more properly characterized as a mortgage-related instrument. In our view, the mortgage-classification argument is stronger: as currently designed, the agreement is secured by real property, cannot be traded, and settles only when the home is sold rather than through periodic payments against a reference index.
“But that is not a legal determination. A formal opinion from qualified structured-finance counsel is the prerequisite for institutional distribution, and it has not yet been obtained. Whether mortgages paired with the agreement are eligible for purchase by Fannie Mae and Freddie Mac is a separate question counsel must also answer.
“Regulators have, in other contexts, resolved classification ambiguity for novel structures through interpretive guidance, no-action relief or safe harbors rather than blanket prohibition. In June 2026, the CFTC and the SEC jointly requested public comments on drawing clearer regulatory lines for innovative products under the Dodd-Frank swap definitions. Those are the constructive channels once counsel has framed the question precisely. The point is that the classification issue is identifiable, not that it has been resolved.
“There is a bigger commercialization question. Even with a workable legal path, someone still has to turn the concept into a mortgage product. That requires underwriting, compliance, servicing, disclosures, technology, origination, capital-markets execution and, ultimately, investors willing to finance or purchase the resulting mortgages.
“Building all of that independently would be inefficient when established national mortgage platforms already have much of it. The more logical model may be a partnership: the innovator provides the product and intellectual framework, and an established lender provides the infrastructure for national execution. National scale also matters because diversification itself depends on geographic breadth.
“Real estate brokers could become a powerful distribution channel. Once the product exists, residential real estate brokers and agents, as distinct from mortgage brokers, could become an important distribution channel. They interact with consumers while they are deciding whether to buy and how to finance the purchase.
“The product could appeal to buyers short of a down payment, buyers preserving cash and financially strong buyers seeking protection against a local price collapse. The buyer gets another financing choice, the real estate professional may gain more qualified buyers and completed transactions, and the lender gains origination volume while diversification is designed to reduce the credit risk of high-LTV lending. But the order matters: first create the executable mortgage product, then give the real estate industry something to distribute.
“Who will provide the national platform? That may now be the central question. A national lender could integrate Home Diversification into its own channels. A lender and product innovator could jointly develop real estate brokerage distribution. Or a national institution could provide the mortgage and capital-markets infrastructure while an outside organization builds additional distribution. The structure can vary. What matters is bringing together product innovation, regulatory execution, national mortgage infrastructure, and consumer distribution. What is missing is not another theoretical model. What is missing is the national platform prepared to turn the model into a product.
(Marc Biron is chief executive officer of Home Diversified Solutions Corp. and co-author, with Michael J. Seiler, of the underlying research published in Real Estate Finance (2022). Steven L. Siegel serves in an advisory capacity to the company.)
States have rivalries, some fun, some not so fun. Here’s one on the lighter side about “Adopting a Coloradan.”
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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes, visit the Chrisman Job Board. This newsletter is intended for sophisticated mortgage professionals only. There are no paid endorsements by me. For the latest mortgage news, visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.ChrismanCommentary.com. Copyright 2026 Chrisman LLC. All rights reserved. Paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman. The views and opinions in this newsletter are mine alone unless otherwise specifically stated herein.)
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