00:08welcome everyone my guest today is jonathan scarpatti chief production officer at finance
00:13of america reverse to talk about the shift in consumer behavior that has homeowners
00:18staying in their homes longer and what that means for lenders jonathan welcome to the podcast
00:25thank you for having me today sarah it's great to have you on um let's start kind of broad you
00:31know
00:31big picture what are you seeing in the market right now so you know one of the biggest things
00:37that we're seeing right now in the market uh is that it hasn't just slowed it's really fundamentally
00:43shifted you know for a long time the mortgage industry is built around movement buying and
00:48selling but today a lot of homeowners aren't moving like they used to they're staying and
00:54they're aging in place so once you begin to recognize that you'll start to see that opportunity
00:59has not gone away it's just showing up a little bit different than it has in the past i think
01:04that's
01:04a really interesting observation um and important if you're planning your business right so why do
01:10you think more homeowners are choosing the state right now there are a few different factors that
01:15are driving it rates are a really big one um a lot of homeowners are sitting on historically low first
01:21mortgages and they're not willing to give that up and i don't blame them um home prices are another
01:27big factor right moving is not necessarily more affordable these days but beyond that a lot of
01:34people actually like where they are they've built equity they've established in their communities
01:39so instead of about thinking about their next home they're thinking about how to make their current
01:44home work better for them you know i'm a huge hg tv fan and i uh always watch the show
01:50love it or list
01:51it where like they can choose to um keep their home once it's been all fixed up or they can
01:56choose a new
01:57home and i mean like 90 of the time people choose to stay in the house that has been fixed
02:03up it's it's
02:04where they raise their kids it's they have their neighborhood like so often people want to stay that's what
02:09they want to do aging in place is real and it's it's impossible to replace all those memories and
02:15and all the time they've spent in these homes makes sense so when you think about um homeowners
02:21thinking about like they want to improve it what does it look like in practice you know it shows up
02:27as
02:27a shift towards improving rather than moving you know we're seeing a lot of more homeowners these days
02:33planning renovations and it's everything from cosmetic updates to some pretty major home renovation
02:40projects because for them the goal isn't where to go next it's how to make the home fit the next
02:47phase
02:47of their life um it might be updating a space covering a large expense and maybe just creating more
02:53financial flexibility so the good news is it has nothing to do with lack of equity right it's it's become
03:01more about how to actually use that equity in a way to that supports their longer term goals
03:06if you see that you know this is the trend toward what borrowers really want where does that process
03:12break down the breakdown happens between what the borrower wants to do with their equity and the
03:18products that have traditionally been available to them today's borrower may want to stay in their home
03:23fund renovations consolidate debt or simply create more financial flexibility but when they start
03:29exploring these options a lot of the a lot of today's choices don't actually align with their goals
03:35right a cash out refinance is hard to justify when you're sitting on such a low fixed rate first
03:42mortgage that you don't want to lose um a HELOC may not be accessible because of DTI because of income
03:49qualifications and payment concerns as well so you end up with borrowers who have significant equity
03:55very clear financial objections but no solution that feels practical or efficient for their
04:02situation and that's where the disconnect is that's where the demand is um and the challenge
04:09really becomes traditional equity access weren't designed around how homeowners want to use their equity
04:16today that makes so much sense to me i mean things have changed a lot even in the last couple
04:21years when
04:21you think about people locked into those really low rates the things in the past would be like oh you
04:26know okay i can do that it's like they don't want to let go of that and i don't blame
04:29them
04:30i agree i agree and we're here to help so how are how are the best originators adapting to this
04:37new
04:37reality some of the best originators in the space today they're changing the conversation so instead of
04:44leading with product they're starting with the simple question right what are you trying to accomplish
04:49and more often than not the answer becomes they want to stay in their home they want to improve it
04:55and they want more flexibility so now the conversation becomes less about selling alone and more about
05:01structuring a solution they're thinking in terms of outcomes not just products and that's kind of
05:08where these originators begin to separate themselves um and begin to align with how borrowers are actually
05:15thinking you know we've we've talked for years we've heard for years about you know originators
05:21being the trusted advisor like you know don't make it transactional you you know you need to figure out
05:26how you can help them but if if you're just looking to buy a house it is sort of transactional
05:31it can be
05:31right because like this what i want you know okay in this it does seem like there's a whole other
05:35conversation that has to happen and it feels like originators might have to be trained in how to do that
05:41i think you're right um and i don't think it's a major shift but i think it is important with
05:48kind of reassessing each originator's thoughts and feelings around you know what it starts with that
05:56basic question right what does this borrower want to accomplish then that will eventually determine
06:02what the right product and solution is for each borrower
06:07when you think about how these um originators are are approaching this how these lenders are
06:13what does it look like in practice what is this really like what's that mind shift
06:18um i think that mind shift for us i mean it comes down to the idea of end right historically
06:26it's been
06:26stay in your home or access equity keep your mortgage or create flexibility but today's bars they're
06:34looking for both right they want to stay and improve their home they want to keep their low mortgage
06:39and access capital so the question becomes like how do you enable that right that's where solutions like
06:47home home safe second come into play it allows a homeowner to keep their existing first mortgage
06:52and still tap the equity that they need it approaches qualifications completely different so you're not
06:59relying on income in the same way you would with traditional financing so instead of forcing the
07:04trade-off it's more about aligning with what the borrower is actually trying to accomplish and that's
07:09what really begins to move the conversation forward and that's what really begins to to solution
07:15um a lot of what today's bar is looking for i think the thing um that strikes me as we're
07:23having this
07:23conversation is that this is a differentiator when you think about this this world of ai um and ai can
07:30be
07:30used very um efficiently and very well with in an origination process so um not to take anything
07:37away from that right there's so many things that can do but asking somebody what it is they were
07:43looking to solve and kind of digging in and having that conversation is a very human-centered
07:48conversation in my opinion i agree so what's the big takeaway for lenders right now um i think the
07:57biggest takeaway is that there is still a tremendous opportunity in our industry today it's just tied to
08:04different behaviors right so homeowners aren't moving as much they're staying and they're investing
08:09in their homes and their financial flexibility so the lenders that begin to recognize that and build a
08:15strategy around it are the ones that are going to continue to grow because again it's not about
08:20creating demands it's about meeting it where it already exists jonathan thank you for stopping by
08:26having this conversation always great to talk to you my pleasure thank you as well sarah
08:33you
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