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00:00We are live from New York. I'm Diego Sanchez, president of HousingWire, and my guest today
00:13is Andy Peach, chief lending officer at Onity Group. Andy, it's so great to have you here today.
00:19Well, thank you, Diego. Good to be here with you in New York at the conference and
00:22be here with, you know, clients and colleagues and friends. So great couple of days here.
00:27So you've had a pretty extensive career in mortgage at brand names like Mr. Cooper,
00:33JPMorgan Chase, Bank of America. How has that experience in your career informed your role
00:42and your perspective at Onity? In a lot of ways. But I think what I would tell you is, you know,
00:49you start with, I've been doing this probably longer than I care to admit, but it's allowed me
00:55to see the industry and the business from a wide array of perspectives. So I've had the
01:01chance to work for, you know, the early part of my career was all working with large bank-owned
01:05mortgage companies. And then I spent some time working for a Wall Street-driven firm. And then
01:11I spent some time working for a privately-owned independent mortgage banker and now a publicly
01:16held independent mortgage banker. So a lot of different foundations upon which to operate a
01:23mortgage business that have different priorities. And then I've had the privilege of being able to
01:27operate in roles and serve in roles where I've done just about everything that you can do in
01:32production from a business model standpoint across all the channels and all the different
01:35means by which you can produce a mortgage loan, even done a year in servicing in my career. So
01:41that kind of gives me a wide perspective around how the business works. And then you kind of mix in
01:47with that a little bit of personal perspective, which is two things I've kind of picked up on my
01:51career that I have landed on that I find really meaningful in my personal life and in my business
01:55life is really kind of two things that I try to keep at the forefront of everything that I do.
02:00And it starts with the golden rule, which I guess the simplest way to say that is, is treat everybody
02:06the way that you would want your grandmother to be treated, right? And then the second part of it is,
02:09is to be better every day. And that's just to wake up every day and try to be a better version of
02:14yourself, make a better contribution to your company, put your company in a position to do better.
02:18And I find that if you focus on those two things, that good things tend to happen.
02:22Yeah.
02:22And so you kind of take that wide perspective and those two things and you kind of mix them
02:26together. And, you know, how now here we are at Onity where, you know, we really kind of started
02:32a relaunch of our production team in 2019, our production platform. You know, we were a meaningful
02:38servicer in the business, but we really had no originations capability and we wanted to build out
02:43originations capability that would complement our servicing platform. So, you know, I came to the company
02:48and joined in 2021 when we were kind of in the early stages of doing that. And I think we've
02:53done a really good job now that we've kind of built out a top 10 correspondent lender, a very
02:57influential co-issue buyer, a top five reverse lender. We have a successful consumer direct
03:03origination platform that's complementing our servicing platform. And I think we've done a good
03:08job of attracting people to our organization that kind of have that similar perspective of a wide array
03:13of experience because really what it's about is you take those experiences and you kind of figure
03:17out what the best of breed solutions are that you can bring to the business and apply to the business
03:21in order to make it successful. And so, you know, you look at that and say, coming here in 2021 and kind
03:27of living through that, it's been a really great experience to be part of working with a group of
03:32company to bring this company back to a state of prominence in the industry that is maybe equal to what it
03:38had in some of its legacy organizations that kind of were merged together to become the company that
03:44we are today. So you have an amazing background and experience in the mortgage industry. How has that
03:49contributed to your perspective and your strategy as chief lending officer at Onity? Well, I think,
03:55you know, it starts with you get a chance to see the world from a lot of lenses. It allows you to
04:00hopefully pick from your experiences around best of breed solutions in order to try to build your
04:05business, right? And so we've tried to do a good job in picking the right approach and the right
04:11strategy. We've also tried to do a good job of bringing the right talent in that has that same
04:15kind of broad perspective on the industry. And I think that's helped us a lot from a standpoint of
04:20the franchise that we've built. And then I think you take with that the fact, you know, we have a thing
04:24in Onity that's part of our culture that we call the Onity way, right? And the Onity way is really built
04:29around three things. And it's customer first, better together, and we say we do. And so what we
04:36really try to do is take that perspective that we have that both I and all of our teammates have
04:41gained throughout the course of our careers. And we try to bring that to life in this unmatched
04:45value proposition of services that we believe that we offer to the marketplace, and then wrap that up
04:51with the Onity way. And that's really what we try to accomplish.
04:54So Andy, why is now the right time for the company to be expanding in reverse mortgages?
05:01Well, Diego, we see the demographics being favorable to the reverse marketplace right now
05:06and the opportunity in reverse, right? And so you look at it from our standpoint, one, as a company,
05:12we want to be able to offer options for people throughout their entire home ownership life cycle.
05:17We feel like reverse kind of fills that bill from a standpoint of covering the entire life cycle.
05:22And then we feel like the demographics line up very nicely. When you look at what's going on in that
05:26marketplace, you got, you know, $14 trillion in senior home equity outstanding. You've got,
05:32you know, 27 million seniors that are eligible for the product today. You got a million seniors
05:37becoming eligible for the product every year. And so that market's going to be growing just because
05:43of what the demographics are in the United States. And so then you kind of couple that with that it's
05:47an underserved market. There's a small number of companies that are really kind of focused on that
05:51market. But yet we see that opportunity growing. And so we like how we're positioned there because
05:56we want to be able there, be there to be able to serve the needs of that market. You know,
06:01that people, there's a growing desire on the part of that population to age in place.
06:05So we believe the reverse mortgage is a good solution for that. Some cases that's, you know,
06:10a refinance type of transaction, so to speak, on a new reverse mortgage where you're basically
06:14restructuring your debt in order to be able to live in place. In other cases, people can use
06:20a reverse mortgage to purchase a property that they want to live in to age in place.
06:24So we think that those are great options as well. When you look at what's going on,
06:28you know, there are more and more significant, meaningful originators in the marketplace
06:32that are adding reverse as part of their offering. And so we see that as a sign of growth as well.
06:37And obviously we're both a third party originator and a retail originator in reverse.
06:41So we're there to work with those companies that are in the market, entering the market on a third
06:45party basis, as well as to offer that product directly to the consumer. And we see it as a big
06:49opportunity. We like how we're positioned. Yeah. Let's talk more about that. From your perch
06:53as the chief lending officer, what do you view as the company's role in the overall mortgage
07:00ecosystem? Well, you know, let's start with as a company, you know, first of all, our CEO,
07:07Glenn Messina, talks all the time about that our focus is on creating positive outcomes, right?
07:11So positive outcomes for consumers, positive outcomes for clients, positive outcomes for
07:16investors, right? So everything kind of starts from that premise and flows. And then, you know,
07:22you think about what we want our role to be. Really, I think we want our role to be to be a very
07:26influential force and a provider of solutions and a provider of power almost in the way that an
07:33electric company provides power to businesses and homes to U.S. housing and U.S. housing finance,
07:39right? And so we really do that with our platform and the business that we've built between
07:43our originations platform and our servicing platform because we're able to provide solutions
07:49to our clients and we're able to be there in order to provide solutions to consumers through
07:53the loan administration that we work that supports their home ownership, right? You think about the
07:58originations platform, you know, we really feel like that what we have built now is we've built this
08:02what we'll call unmatched breadth of solutions that we offer in the mortgage or in the B2B space
08:08across correspondent lending, co-issue, reverse, bulk MSR purchase, subservicing. And that's really,
08:16we feel like there's nobody else that can offer that to everybody in the industry from a standpoint
08:20of what we do and what we have to offer. And so we feel like that makes us very relevant to our clients
08:27and our partners in a way that others can't be because we can meet them where they need to be met
08:31with a solution in any cycle of the industry, right? And so you pair that together with our servicing
08:37platform that's been awarded accolades by Fannie Mae and Freddie Mac on multiple years for the high
08:43quality servicing work that we do. We feel like we have a pretty strong value proposition to the
08:48industry and we're well positioned in order to be that, you know, kind of, you know, provider of power
08:53and success and solutions to our clients and to consumers in the industry. Are there other product
09:00areas such as non-QM that you think makes sense in this environment, which is hire for longer,
09:07mortgage rates, I think, longer than anyone would like? Now, other than non-QM? No, like non-QM.
09:13Yes. I mean, look, from our standpoint, it does feel like in a higher for longer mortgage environment
09:19that we're going to kind of move. I mean, we've really not been in a product-driven market in the
09:23mortgage business in, you know, 20 years practically. I mean, you could literally go back to
09:27the early 2000s and we haven't, well, I guess you probably say in the late 2000s when we were in the
09:33exotic product cycle, we were in a product-driven market, but we really haven't been there since
09:37then, right? And I think we are, with higher rates, going to get in the market that's going to be more
09:42product-driven, especially if we start to see the yield curve start to take on, you know, a normal
09:47shape. I think you're probably going to see a world or maybe ARM loans come back. But from our
09:51perspective, you know, we're looking at non-QM as an entry point to expand into. We think it's something
09:57where we can continue to expand on that unmatched breadth of solutions that we offer that I spoke
10:02of earlier. It increases the size of our addressable market. So we are making plans to
10:08expand in that and step into that market to provide another solution to our customers.
10:12So we think that's an opportunity for us from that standpoint, and we're excited to go in that
10:16direction. But, you know, in the end for us, from a customer strategy perspective, as I said,
10:22we really want to be there to support customers through all stages of the home ownership lifecycle,
10:26right? So whether that's through our B2B channels and what we do to support our clients there,
10:30or whether that's what we do with consumers through whether it's a purchase, a refi, a GSE loan,
10:37a government loan, a non-QM loan, a reverse loan, we want to be able to be there to support their needs.
10:42When you talk servicing and when you talk multi-channel lending, I think of technology,
10:47right? And how important technologies like artificial intelligence are to being a thriving
10:54multi-channel lender and servicer. What role does your technology platform, including artificial
11:00intelligence, play at Oddity? Well, it's playing a bigger and bigger role, right? I mean, some people
11:05have had a lot of emphasis on it. We're certainly increasing our emphasis on it when it comes to AI.
11:11In our world, you know, we're looking at AI in a variety of ways. You know, we're looking at AI from
11:15the standpoint of how it can really be a power tool for our people. I heard someone say once in a session
11:20that I attended that really kind of hit the mark to me that AI is not necessarily what's going to take
11:25your job, but somebody who knows how to use it will, right? And so we're really looking at, okay, how do we
11:30pair AI solutions with our people as a power tool to make them a lot more productive, have more capacity? If we can
11:37take, let's call it the non-highest and best-use tasks off their plate by providing them with AI solutions,
11:44allowing them to focus on the highest and best-use tasks for their talents, those are all things that
11:50we're doing, and we have applications that we're applying today in our business to do that.
11:55Another area where we have a lot of focus is around using analytics and big data. You know,
12:00we have 1.3 million customers in our customer base. We certainly would like to do everything that we can
12:06to extend the relationship that we have with those customers, and the only way we're going to do that
12:11is if we're timely, relevant, and personal in the way that we engage them. And when you think about
12:16all the data that we have on 1.3 million customers, if we're not making the most of that data and
12:21deepening our knowledge in a responsible way around that customer, then we're missing a huge
12:26opportunity, right? And so we're making big investments in managing that data and in analytics
12:33in order to understand that data and have that deeper understanding of our customers. And then another
12:38area is we rolled out recently, and it was in the press that we rolled out an application called
12:42LASI for our subservicing customers. And LASI is an AI application that allows our subservicing
12:48customers to search documents and data around their subservicing, their portfolio that we service
12:53for them, allows them to ask unstructured questions and get detailed answers back and detailed information
12:58back to make their life easier in terms of how they're managing the book of business that we service
13:03for them from a standpoint of their servicing analysis and oversight work.
13:08So let's take out a crystal ball for this last question. As you think about all these different
13:14business lines that you have under the Oddity umbrella, where are you leaning in and really
13:19prioritizing over the next year, year and a half?
13:23You know, I think we're, well, there's a variety of places where we're leaning in, because from our
13:29standpoint, it's almost like where are we not leaning in from a production perspective? Because at the end of the
13:33day, if we're going to complement our servicing portfolio, that's about helping us create scale and grow the
13:39size of our business, right? So we're certainly leaning in across the board almost in everything that we do.
13:45But I would say, you know, a couple areas where we're leaning in particularly are, you know,
13:51we're leaning in from a standpoint of servicing portfolio recapture, because if you're a servicer,
13:57that's just a really important part of how you operate in the business. And we're seeing that, you know,
14:02MSR buyers and investors are starting to assume value for recapture in their bids. So you really,
14:08it's just table stakes that you have to be really good at recapture. And so we've been making that
14:12investment in order to try to raise our game when it comes to servicing portfolio recapture. And then I would
14:16say on the side of with, you know, our correspondent clients, we're making some investments in
14:21order to try to make it easier for how we ingest information and documents to make those transactions
14:27faster and smoother for our clients. And so we're working on those things and we're making on those
14:33investments right now. And I think, you know, in the coming, you know, weeks, months, and years,
14:37our clients are going to see those things pay off. Well, Annie, this has been a great conversation.
14:41Thank you so much for joining me today. Well, thank you, Diego. I appreciate the time. Great to be with you.