We recently had the chance to speak with Drew Miles, Pricing & Revenue Optimization Analyst at Homestar Financial Corporation, who is leveraging MCT’s Business Intelligence Platform software to glean impactful insights into rates, pricing, and the industry. Homestar also utilizes MCT’s Hedge Advisory and MSR services, such as MSR portfolio valuations and Enhanced Best Execution (EBX), which helps with retain-release decisions for servicing rights.
The mission of Homestar is to “be the easiest way home.” Their loan officers are heavily involved in the community they service. In addition to community outreach, Homestar prides itself on putting families in homes, and advocating for children to have their own backyard and bedroom. Mr. Miles leverages the Business Intelligence Platform in his full-time role as Pricing & Revenue Optimization Analysis and has seen enormous benefit from the insights gained from market intelligence.
In this case study, Mr. Miles describes how MCT’s Business Intelligence Platform enabled him to decrease his average approval times with buyers and achieve an impressive pickup on committed loan volume while delivering via mandatory executions.
The use of MCT’s software has also allowed Homestar to have an edge over the competition, finding necessary outlets and adding additional investors when industry challenges have forced Homestar to pivot their strategy, such as when the agencies capped second home mortgages and investment property mortgage at 7% of total deliveries per lender.
Pricing and Revenue Optimization Analyst at Homestar Financial Corporation
Mr. Miles has been working at Homestar Financial Corporation for 8 years. Homestar had foresight to see the benefit of Business Intelligence during competitive times, allowing Mr. Miles to explore several business intelligence softwares and, finally, step into a full-time role in pricing and revenue analysis. By signing up for MCT’s Business Intelligence Platform, Homestar accessed an incredible tool to gain visibility of the secondary market to help them optimize their company’s overall performance.
Featured Quote: “Apart from getting an edge over the competition, you also gain confidence when you can see your feet and see where you are sitting. You feel like you have a better grasp on where you sit at any time. The confidence MCT gives us through the Business Intelligence Platform is huge.”
MCT Services Utilized by Homestar Financial Corporation
How Homestar Financial Corporation Gains Insight through Secondary Market Business Intelligence
When the Business Intelligence Platform was released, Homestar was excited to see what other lenders like themselves were doing on both the back and the front end of business. Homestar has been using the BI Platform, MSR Portfolio Valuations, and Enhanced Retain-Release Extension (EBX) tool successfully for several months.
MCT Business Intelligence Platform – MCT’s Business Intelligence Platform is a secondary market intelligence software that aggregates proprietary mortgage pipeline and loan sale data from MCTlive!® to provide strategic insights to MCT clients in the form of customizable reports and illustrative charts. This platform also provides MCT clients with the opportunity to compare aspects of their secondary market data to their peers and to the MCT average.
MCT Hedge Advisory Services – Technology and service to help lenders achieve their goals such as making the move to mandatory executions or seeking improvements to your mortgage pipeline management process. Lenders of every size trust MCT to manage risk and optimize profitability in their mortgage pipeline.
MSR Services – A comprehensive capital markets platform used for day-to-day loan pipeline management, trade positions management, and loan sale best execution. MCTlive! automates repetitive tasks and frees your time for other high-value functions.
Enhanced Retain-Release Extension (EBX) – MCT’s EBX tool automatically pulls loan pipeline data from MCTlive! and portfolio characteristics from MSRlive!® to give traders and portfolio managers actionable insights for retain-release decisions.
Contact us for a sneak peek at the technology leveraged by Homestar.
Case Study Interview Question / Answers:
What was the most compelling part of the Business Intelligence Platform which made your company excited to get immediate access?
The owner of Homestar had the foresight to see that during competitive times, when margins compress that you will want to be prepared. My role at Homestar is pricing and revenue analysis and we really saw the need for a full time person to be on top of this. I was at Homestar for four to five months when the Business Intelligence Platform was released and at the time we didn’t have enough insight, especially in regards to peer averages.
There’s currently not a lot of secondary market intelligence to gain visibility. Before this role was created, they would reach out to other BI platforms that weren’t as inclusive as MCT’s platform.
Additionally, those platforms were not secondary market focused. There are business intelligence platforms available but they don’t give you any insight into rate, pricing, and the whole industry, for example.
We use the Business Intelligence Platform as a sort of litmus test to confirm “Are we doing this the right way?”
“What’s so great from the platform is that you can actually gain insight from it. You can see something and definitely derive more questions from it and you can come up with a game plan.”
While working with MCT’s Business Intelligence Platform, which features do you find the most useful?
When we first got access to the platform, the first thing Homestar had action items for was in regard to investor bidding. We went into there and compared Homestar’s book of business and average loan size with other comparatively sized lenders so that we could see quickly if we were dealing with the correct aggregators.
For example, we were able to get a pickup on Jumbo pricing immediately because we could see a couple of investors that were high up on the pricing list and purchasing. So, we immediately established the relationship with those two investors that we found. It was a super easy win as we could tell that we weren’t dealing with the correct companies right off the bat.
I also really like the rate renegotiation features. We can filter it down for non-owner and second homes, for instance. We can check how much volume we have and ask if we are going to have a retention problem and we can tell where the rates are. This was especially useful when the agencies introduced the 7% cap when we could lay out a strategy for how we were going to proceed. There is this rate distribution grid which is a really simple graph that helps us make sure we are not missing the mark.
I look forward to utilizing the lock volume peer comparison, as there are very few southeast clients of our size. I can just tell this tool will become more useful as Homestar continues to expand. We also often use agency and aggregator bid pricing data. This simple chart helps us track the agency pricing and compare it to the aggregator pricing. This gives us an idea of a trend. For example, we can filter by non-owners and see where investors have lost their appetite for that product.
“When I have free time, there’s so much data to explore in there. I don’t think I’ve even touched 10% and I find new stuff I like every day.”
At first, we would try to use Ellie Mae’s platform but their software would never gave us insight into what other companies were doing. The huge incentive to use MCT’s Business Intelligence Platform was the ability to see what other people are doing on the back end. And what I’m really excited about is what you guys are doing on the front end.
How frequently do you go on the platform?
When I get started for my day, the first things I do are check the news and go on the Business Intelligence Platform. I go on the platform twice per day, once in the morning and again in the mid-afternoon.
What was the process like getting onboarded with the Business Intelligence Platform?
It was so smooth, I don’t remember it at all. MCT said, “Hey, your demo is ready, let’s get you logged in correctly,” and that was it! It’s a very simple process if you are already doing Best Ex. Essentially, Homestar provided a data tape and then all that was left to do was obtain logins and get a walkthrough of the functionality of the platform.
How did working with MCT’s business intelligence platform change your processes?
Our process has been upgraded the most in regard to rate distribution. It doesn’t take a lot of time but I often give it a good eyeball to check if we are on line. Before the tool, we created more work than intended. Our LOs were pushing for 2.99 rates instead of 3.00 and were resistant to change but ultimately even the LOs found some value from the BI tool.
We are also constantly checking to see better pricing on average. But, we do take with a grain of salt. When I have free time, there’s so much data to explore in there. I don’t think I’ve even touched 10% and I find new stuff I like everyday.
What were some of the problems you were able to overcome with MCT’s secondary market intelligence?
Non-owner was huge for us. MCT’s BI tool helped us with game planning our non-owner on the back end. When they came out with the non-owner announcement, all of a sudden we had no non-owners other than Wells Fargo. The platform gave us time to react.
Have you set and reached any specific performance goals by using the Business Intelligence Platform?
We will be, but right now I’m the only one on our team getting into the Business Intelligence Platform. I also use some of the tools for town halls every month. I pull some reports for the market update to share with my team. Eventually, we will be setting performance goals on our revenue projections which is a huge piece of determining if we are meeting our goal.
I’ll definitely be using the Investor pricing piece to set performance goals. I’ll be able to determine if we are executing as good as, close to, or better to other MCT clients on the same product mix. This will help to gauge how the rollout process for new products goes and will help us identify any tweaks we need to make on the pricing and delivery. For example, we can find the correct investors for the products we are looking at and then execute better.
Is there any monetary pickup or gain or operational risk reduced by using this technology?
Yeah, there’s immediate pickup from using the Business Intelligence Platform. We catch a couple loans a month where something didn’t pull through, someone found a loophole, and that rate renegotiation tool will catch that as well.
Just before this call, I was looking through non-occupied refinance loans. There was an abnormally low rate I saw in the data there. All you had to do is see that lowest interest rate and know immediately off the top of your head that it’s not right. I was able to fix it in 10 minutes. If I hadn’t, most likely that loan was going to be denied. As you know, this can create a huge impact to the borrower and the LO if those mistakes aren’t identified and the loan denied by an underwriter.
Another of the goals in working with MCT was to cleanup who is actually going to buy these loans regarding investor eligibility and to take that responsibility out of secondary’s hands. The BI tool will help in this regard and we should see a pickup on the backend of that anywhere between five to 10 basis points.
“We see a pickup on the backend of anywhere between five to 10 basis points.“
How do you feel the Business Intelligence Platform has given you an edge over the competition?
Apart from getting an edge over the competition, you also gain confidence when you can see your feet and see where you are sitting. You feel like you have a better grasp on where you sit at any time. The confidence is a huge piece.
Are there any lessons or best practices that you would like to share with new users as you have been using this platform for a few months now?
The first thing I would recommend others to use is that rate renegotiation tool. That functionality opens up so many other questions that drive users to different questions in the BI tool. For example, you could look at a specific LTV, or specific FICO, and ask, “why are we so low, why is there such a disparity?”
We also use the rate renegotiation with LO comp. Individual Homestar offices almost run as franchises so they can name their own LO comps and the branch can niche their way into their own pricing. A lot of my job is manually pricing out loans, and while the highest paid branches were often dissatisfied with their rates, now I can show them the data to help them understand the context behind those decisions. It gives you more fire power as a margin manager. LOs trust you a lot more when you can show them where the market is.
How has your experience been since using the enhanced retain-release extension, also known as “EBX?”
We were really excited to use the EBX tool. What we were doing was similar to the tool as we don’t retain servicing values. The cool thing is that it’s automated and we can get way more detailed, such as putting your own tax rate in, then viewing the financing cost and gauging the operational lift from selling directly to agencies.
Some servicing valuations can cook in all those variables into that view but they are much less effective than the EBX tool. All of our loan sales will end on an EBX bid tape.
What would you say to lenders who are considering services offered by MCT?
First, I just want to mention that I’ve never worked with another hedge provider service. However, I will say the following about three areas that are remarkable about MCT services, at least to me.
MCT has very knowledgable people on board. Every person knows who you need to talk to and they will also attend the meeting to discuss it further. They won’t stop until they get you the answer. That goes across all platforms.
Also, MCT staff are available. Dustin Movius is our senior analyst. There is no way that guy is not slammed everyday. If he can’t pickup the phone, he will explain what he’s doing and when he will get back to us with an answer.
“MCT has very knowledgeable people on board. Every person knows who you need to talk to and they will also attend the meeting to discuss it further. They won’t stop until they get you the answer. That goes across all platforms.”
Finally, MCT has solid developmental services, There’s nothing that we have requested that they haven’t been able to deliver. MCT does a really good job of taking their products and catering them to client needs.
I started in the industry in secondary then transitioned into a development role. When I came back to secondary I had a lot of experience rolling out systems. When I say MCT does a great job, I mean it.
Case Study Summary: Homestar Financial
MCT’s Business Intelligence Platform and other services allow Homestar Financial Corporation to execute with confidence and gain an edge over the competition in their loan sale process. MCT’s software and services continue to ensure Mr. Miles’ best execution is at maximum efficiency and profitability.
- MCT Business Intelligence Platform – MCT’s Business Intelligence Platform is a secondary market intelligence software that aggregates proprietary mortgage pipeline and loan sale data from MCTlive!®to provide strategic insights to MCT clients in the form of customizable reports and illustrative charts.
- MCT Hedge Advisory Services – Technology and service to help lenders achieve their goals such as making the move to mandatory executions or seeking improvements to your mortgage pipeline management process. Lenders of every size trust MCT to manage risk and optimize profitability in their mortgage pipeline.
- MSR Services – A comprehensive capital markets platform used for day-to-day loan pipeline management, trade positions management, and loan sale best execution. MCTlive! automates repetitive tasks and frees your time for other high-value functions.
- Enhanced Retain-Release Extension (EBX) – MCT’s EBX tool automatically pulls loan pipeline data from MCTlive!and portfolio characteristics from MSRlive!® to give traders and portfolio managers actionable insights for retain-release decisions.