00:12From Chicago with HousingWire, I'm Alison LaForgia and I'm sitting down with Joe Estepa,
00:18Spring EQ's CEO and Executive Chairman.
00:22Good to see you again, Alison.
00:23It's always good to see you, Joe.
00:25Thanks for having me back.
00:25Now, the last time that we spoke, you talked about affordability, rates, and untapped equity.
00:31How are you feeling about the industry today?
00:34Industry is certainly facing a few headwinds right now, but it's nothing that the mortgage
00:38industry hasn't seen before.
00:40In 2026, mortgage rates today, Freddie Mac 30-year mortgage rates about 7.4%.
00:46If you look back historically, over the past 50 years, the industry average has been about 7.6%.
00:54The difference is, you still have consumers that have fresh in their mind the rock-bottom
00:59lows from 2020 and 2021 when interest rates were 2% and 3%.
01:03So if you remove that from the equation, I think you wouldn't be talking about the same
01:07headwinds that we're facing today.
01:08But volumes are low.
01:10Volumes are low right now.
01:11If you look at Fannie and Freddie Conventionals so far this year, there's only been about
01:14$150 billion of net issuance.
01:17There's been a little over a trillion so far, gross issuance.
01:20You'll probably end up around $1.5 trillion-ish or so gross issuance.
01:26To put that in context, in 2021, there was $2.6 trillion of gross issuance.
01:32So you're seeing volumes that are down significantly.
01:35But if you put those things aside, many of the same themes hold affordability, rates,
01:40supply, untapped equity, the same things we talked about last time.
01:45There's been a shift, though, that we've seen in consumer behavior and a structural shift
01:51such that people now believe in home equity as a viable asset class.
01:55You're seeing more people warm to it.
01:57You're seeing all the largest originators come into it now.
02:00So that's been a big structural shift.
02:01I don't think there's anything different themes from what we talked about last time
02:05to today.
02:05I just think that there's more of an opportunity in front of us to focus on home equity, given
02:10other large players are also entering into the space as well.
02:13So let's dig in there a little bit because, to your point, we know that home equity is
02:19something that people are increasingly interested in.
02:21With rates continuing to rise and home equity continuing to be, to your point, an important
02:28lever for people to be able to be aware of, how do you help your broker partners and your
02:33LOs position themselves to sell that to their customer base?
02:37That's a great question, Allison.
02:38So one thing that we're doing, first and foremost, is education.
02:41We're hosting weekly webinars, teach-ins.
02:45We're having events where we're getting people together to educate them about our products
02:50that we have available in the full suite of products.
02:52We have now also a monthly newsletter that's going out from our marketing team.
02:58That's contributions from our cap markets.
02:59Contributions from the portfolio manager at Cerberus, our parent company.
03:04So you're seeing those things that are constantly coming out now to educate the borrowers.
03:08The marketing toolkits that we're now available that are tailored for each partner for their
03:13borrowers that they're going out to.
03:14So that's first and foremost, education about the home equity products.
03:17The second thing that we're doing is you have to be able to give them the technology
03:21to use.
03:23One of the things that we've developed now is for our product called FastTrack Pro with
03:28our AI optimizer.
03:29So what that enables a partner to do is enter in the basic pieces of borrow information,
03:35and then it can tell them what to solve for, what the borrowers are looking to maximize.
03:39Do they want the lowest rate?
03:40Do they want the lowest payment?
03:42Do they want the maximum amount of cash that they can take out from their home?
03:46So when you think about that, throwing all this in, our AI optimizer solves for that.
03:50It spits an answer back to the partner within seconds, and they're able to communicate that
03:54very quickly back to their customers so that they're able to sell that much quicker.
03:59And the last thing that we spend a lot of time on is customer service for these broker partners
04:03as well, and for all of our partners, is making sure that both the sales and the ops team
04:08in particular are there to deliver that best-in-class customer service experience for the partner
04:13or for their customer so that they're coming back time and time again, and they know that
04:17they're going to get what they believe is going to be a proper experience for their
04:22borrow.
04:23So you just touched on several ways that SpringEQ helps support their partners.
04:29And one of the things you mentioned was education.
04:32And we know that that's one piece of that ongoing customer support that SpringEQ provides.
04:37But how else is SpringEQ helping loan officers better see their business in today's constantly
04:44changing market?
04:46One of the things that we're doing is thinking about diversification.
04:49So we're no longer just only so focused on home equity.
04:53We are now expanding into other products, non-QM in particular.
04:57And we're not even fully rolled out with all of our non-QM offerings yet.
05:01And I'm already thinking about and we're already thinking about what are the next products that
05:06we're going to roll out to the broker community.
05:08We have an aspiration to be a top 10 IMB in the country.
05:11You can't do that only doing a somewhat niche product, although it's becoming more mainstream,
05:16like home equity.
05:16So we've expanded into other products, and that gives our partners more offerings that
05:21they can give to their customers.
05:23So plain and simple, more of the diversification that we've started to do.
05:28The other thing that we've done for a lot of our broker partners is we've started to
05:32host events, getting them together.
05:35So we hosted our first ever broker summit in New York a few months ago, where we brought
05:40seven of our top eight accounts, there's about 15 or so people, plus senior individuals
05:44from spring, got together in a room for two days, and we went through everything.
05:49What are your friction points?
05:50What are your pain points in the origination process, in the ops process, et cetera?
05:54And we learned.
05:55So education is important, but listening is also really important.
05:59So listening to those top partners of ours tell us where all the things that we can do
06:03to help them be better, and that's where some of these great ideas that we've come
06:06out with.
06:07So we came out of those two days, we made guideline changes, we made improvements to
06:11our rate sheet, we made things simpler for the customer, and so that they can continue
06:15to sell and reach out to their end borrower as quickly as possible.
06:18So you've created a whole feedback system.
06:21It's a partnership.
06:21It has to be a true partnership in this business.
06:24We want to obviously be educating our partners, but we also have to be listening to that 360 degree
06:29kind of review that we're doing is hopefully going to continue to improve our standing
06:32in the mortgage industry.
06:34So taking that standing in the mortgage industry and looking ahead to 2027, what are the three
06:41areas where you expect to see meaningful change across the industry?
06:45You and I talked about one of them last time, but I think what continues is consolidation
06:49in M&A.
06:50Yeah.
06:50Smaller players that maybe can't support or afford the compliance, rising compliance costs,
06:57or technology costs, which are becoming more, increasing more and more at this point.
07:02So I think that consolidation that we've seen with origination and servicers and others continues
07:07to take place well into 2027.
07:10The second piece obviously is technology.
07:11That's an easy answer.
07:13But as AI continues to develop, it's not taking away jobs.
07:18It's just changing jobs.
07:19So for example, I think AI will potentially make it so that you don't need some ops staff
07:24on many types of loans, but then that ops staff doesn't go away, they shift and now they're
07:29looking at more complex loans or they're looking at harder to do loans.
07:32So AI is not necessarily replacing the jobs, but the technology is going to continue to change
07:36and make it so that we're able to focus on other loans or the borrowers that necessarily
07:41wouldn't be able to be reached, which is making hopefully things more affordable and be able
07:45to penetrate deeper with the customer base.
07:48That's a fantastic outcome.
07:49It's a great outcome for not only just for us, but for the industry as a whole, because you're
07:53talking about right now, people being concerned about their jobs being displaced.
07:57And I feel as if they don't have to be displaced.
08:00They're just shifted and they're just changed in some way.
08:02And also a great point to think about how you're ultimately serving the end user, which
08:06is the borrower.
08:07The end user, the borrower.
08:08And what you often want to do is get them a faster decision and you want to be able to
08:12give them the best rate possible.
08:14And by enabling using the technology, but also then repurposing some of our personnel, you're
08:20able to deliver on both of those goals.
08:21Now, I'm going to change things up for you.
08:24Speaking of the year ahead, we have the holiday season right around the corner.
08:29Last year, Spring EQ put its own spin on Giving Tuesday.
08:32Can you tell us about that initiative and whether we can expect to see something maybe
08:36do come back again this year?
08:38Giving Tuesday was a great spin.
08:40So traditionally the Tuesday after Thanksgiving has been this day of giving charity day.
08:43We rolled it into two days of giving.
08:45And what it really was was we wanted to become more engaged with various charities that I
08:50think make a meaningful impact across the country.
08:53And we chose two and I'll get into those in a second.
08:55What it does is we pledge a certain amount as a company dollars to certain charities depending
09:02upon how many loans we bring in over those two days.
09:04So we reach out to all of our partners.
09:05We work really hard on the retail side.
09:07We have more correspondent partners.
09:09Clearly they're very happy about it as well.
09:11Very excited.
09:12So we have all these very partners that we reach out to in advance to try to drum up as
09:17much business over those two days.
09:18And we make a donation to a charity based upon that.
09:21We also had some other partners join in on that as well.
09:24One of our top vendor partners Mortgage Connect is big here at the event as well.
09:28They contributed in a meaningful way.
09:30Last year we chose two great charities.
09:32One was Hire Heroes USA.
09:34They're focused on finding meaningful employment for military families and communities.
09:40And the second one that we partnered with was a foundation called the Valerie Fund, which
09:46is a type of charity that focuses on children that have rare cancers and blood disorders
09:52and finding them care close to home.
09:55So those are two great charities we've partnered with.
09:57We raised a little over $30,000 last year.
09:59We're looking to double that this year with some of our partnerships that we have as well.
10:03So looking forward to that Giving Tuesday coming up in early December.
10:06Joe, thank you so much for joining Housing Wire.
10:08And thank you for talking us about the trends, where we should see meaningful change, and
10:12springing Qspin on Giving Tuesday.
10:14Thanks Allison, always good to see you.
