Insights from Down Payment Resource CEO Rob Chrane | Current Market Volatility | March 10, 2025

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Your profitability this week.

Jim Glennon: 00:01:15

Welcome to Optimal Insights, your weekly source for timely market analysis and expert commentary from Optimal Blue. I'm your host, Jim Glennon, vice president of hedging and Trading client services at Optimal Blue.

Our clients and industry partners have long relied on Optimal Blue for trusted insights and commentary. And these podcasts are an evolution of our commitment to keeping the industry informed. Let's dive into today's episode. Hello everybody. Welcome.

Thanks for being here. Thanks for listening today. Got another great show.

So in a minute here we'll, we'll check in with Alex and talk a little bit about econ and what's going on in current events and really dig into what's going on in this wild market. And, and then as promised, we have an interview coming up. Rob Crane has joined us. He's with Down Payment Assistance Resource.

So they've taken on the challenge of corralling and organizing and curating the thousands of down payment assistance programs that are out there that we are either using or could be using in our industry, make deals work to help borrowers get a little bit of cash for their down payments. So we'll talk to Rob at length about that a little bit later. But first, just in the way of data, there's market chaos.

This volatility can be our friend in the mortgage industry as we know. So we are seeing rates continue to tick lower. We are approaching the six and a half mark on the OBMMI. So the conventional 30 years right around 6.6.

Right now we're seeing a little bit of a rally today, Monday on the heels of another just bloodbath in the equities market. So again, we feel good about that in terms of mortgage, in terms of mortgage volume anyway.

e saw in January, February of: 2019

So, you know, hoping this rally in bonds continues.

Jeff McCarty: 00:03:05

I don't feel great about that in my personal life, but certainly professionally it'll help a lot of our clients and the industry, as you said. But the bloodbath path and equities is, is pretty crazy right now.

Jim Glennon: 00:03:18

Yeah. Disclaimer if you haven't been looking closely over the past couple weeks, kind of, you know, don't don't look at your 401k. Just let that hang.

All right, let's go over, check with Alex. All right. Welcome. Alex Hebner, local guru of all things economy and market.

We were thinking, why don't you, me and Jeff riff a little bit on what we're seeing right now, just wild volatility in the market. Some of it kind of foreseen a little bit. Right.

I think the administration hasn't, hasn't been shy to say there's going to be some disruptions from a lot of this tariff discussion.

A lot of the other things that are happening right now, we're seeing that people are starting to, starting to reset, I think their expectations for economic growth over the next few years.

So that the leading indicator for that would be the, the equities market, which is getting pounded this past couple weeks to, to our advantage in the mortgage industry. We're seeing rates drop. But I don't know, what do you gentlemen think about what we're seeing right now?

Alex Hebner: 00:04:14

As you, as you said, you know, we got the tariffs on the, on the horizon and that seems to be the really thing, the big thing that people are pricing in.

We haven't seen all that many tariffs yet go into effect, you know, and it's becoming pretty clear to a lot of people that they're really being used in negotiating tactics, seeing what can be gotten from our trading partners and, and adversaries around the world. And so I think, I think when we, if all of them are put into effect, I think we could really see a very large drawdown in the equity space.

I mean, last week we saw, you know, the proposed 25% on Canada and Mexico and then they did an immediate carve out for the auto industry because the auto industry is like, this is going to pummel us and they got a one month extension. So who's to say what's going to happen in the next 30 days?

I'm sure negotiations are ongoing behind closed doors, but if those auto tariffs go into place, that's going to be really painful for not just the auto industry in America, but anyone who's involved in any inputs to that. Because as we know, automotives are one of the largest or most diversified supply chains out there.

Jim Glennon: 00:05:20

Yeah, it just, it feels like a full fledged trade war is heating up pretty quickly.

ll trying to look back to the: 1800

It seems like the situation we're in is everyone is going to continue to get aggressive and potentially not back down. And maybe that was totally foreseen.

Like some of these things seem like they're very, they're, believe it or not, well thought out from the beginning and that there are economists that work for the folks at the White House that are kind of gaming this thing out in all the different ways that it could permutate. And we're seeing, we're probably just in the early stages of it.

Jeff McCarty: 00:06:04

Yeah. And we finally saw, Jim, to your point earlier.

We, you know, the administration is explicitly saying there is going to be pain over the past several days. In particular, you know, we, we've heard it from Trump explicitly over the weekend.

Besant, Mike Johnson, all these people are saying you are going to feel some pain to go through this process.

Jim Glennon: 00:06:25

Yeah. Not even ruling out a recession. Right. Saying it could happen. And that might be part of the plan.

And that as we've talked about on this podcast and we've heard elsewhere, part of the plan might be to draw rates lower, which is happening right now. It lowers the cost for the government to borrow money, lowers the cost to buy a home and some of these other things that fall into place.

Alex Hebner: 00:06:46

Yeah. It's definitely not explicitly stated if that is the plan, but I agree with you.

I don't think they would cause pain and admit to causing pain without some other payoff objective. Yeah, exactly. Some sort of payoff. You don't do something without some sort of payoff.

Jeff McCarty: 00:07:01

And it may not be economic payoff too. Right.

I mean, I think, you know, a lot of the, the geopolitical motivations for, for a lot of these things as well, you know, it's not explicitly to prop up equities or even to, you know, to get interest rates lower. Those, these all might be some of the motivations that go into it. So we'll see.

Jim Glennon: 00:07:22

But still, it's still a bargaining tool. Right. We're still trying to get some things done and, but how quickly do they need to get done?

Is it realistic that some of these things regarding immigration and fentanyl and some of these other things can actually get fair trade practices can actually get done.

Jeff McCarty: 00:07:36

So usually when we come in Monday after our big monthly non farm employment numbers, it's the first thing we talk about. Right. We're barely talking about that, I think for a couple reasons.

One, it was a little bit of a You know, it came in at expectations, but two, it's based off of data from, you know, early to mid month. And a lot of things have happened since the week of February 12th where they do the survey of this data, right, Alex?

Alex Hebner: 00:08:00

Yeah, absolutely.

And I think what a lot of people, when they're thinking about jobs right now, they're thinking about those federal layoffs that are, that are every other headline that you're seeing, these kind of austerity like measures that we're seeing come out of the federal government. And really the lead time, like you said, they're doing their survey mid month in February. The new administration came in January 20th.

And yeah, they started cutting things fast and furious. But really we're not going to see those job cuts really feed into the jobs numbers for at least until the next release or the release after that.

A lot of these people, that email that the Doge department sent out, you know, you could choose to retain your position, I think it was through September or October. So we could see a bleed of jobs from the federal workforce for many months to come.

One point I did want to bring up, and this will be feeding into the jobs reports into like late spring, early summer is over the weekend, the va. It was kind of leaked actually. It wasn't actually announced.

It was more leaked that there's going to be about 80,000 job cuts there, which is a little under a fifth of the workforce over there. So those job cuts definitely continue to be taking effect and it's just something to keep the eye on moving forward.

But like you said, this one came in at expectations. I think ADP on Wednesday spooked a little, a couple people. It came in at like 50% of expectations, like 77,000 versus 140 expectation.

But yeah, by and large, the jobs market seems to be holding the line for the time being. But definitely keep an eye on how that's going to evolve in the next month, 90 days or so.

Jim Glennon: 00:09:28

Yeah, not super healthy levels.

Would definitely expect government jobs to start eating into the unemployment rate to get up to maybe 4.2, 4.3 to some level where the Fed may have to focus on it more so than they're focusing on inflation. And meanwhile, you know, a couple other things we noticed about the jobs report.

The hospitality jobs number was actually negative, which that number had been a big part of what was dragging the number up in the past. So that's something to keep an eye on. You know, it was kind of the white collar story. The, the white collar jobs was the story. Right.

That there Was a little bit of a jobs recession there. Now hospitality comes into it, still hiring huge and things like healthcare and construction, but it took one of the legs out of that stool.

Plus you have other impacts such as, you know, some of just the health of the consumer is in question right now more than it's been in many years. Right. You were, you were reading something about that, Alex, where I think consumer debt is higher than it's ever been.

We're starting to see delinquencies in some areas.

Alex Hebner: 00:10:26

Yeah, yeah.

I mean, as you always point out, Jim, that you know, consumer lending is at its, at its highest levels, you know, in, you know, recorded history, you know, quote unquote.

But there's always the counter argument to that of, well, how much of that is offset by rising wages or inflation, you know, you know, you know, or how much of the same goods are we buying with just more dollars. And it really depends on what numbers you're looking at.

If you look at the median wages published by the Federal Reserve, things look all right, yes, lending is going up, but if you, those Federal Reserve numbers often exclude hourly wage or not full time employment. And so you get a much bleaker picture when you include those numbers of people on the lower end of the income spectrum.

Because when you include hourly wages, it really eats into median wage by about like 16%. Brings it from like 65k a year down to I think like 52, $53,000 a year.

Jim Glennon: 00:11:24

Interesting.

Jeff McCarty: 00:11:26

I did also see something in the employment numbers that essentially there's more people moving to, you know, part time work.

So while they're employed, technically, you know, we're starting to see an increase in or decrease in the amount of full time employment and an increase in the amount of part time employment. Is that right, Alex?

Alex Hebner: 00:11:47

Yes. Yeah, yeah, yeah. A couple months ago.

I haven't looked at that number recently, but inside the past 60 or 90 days we have seen more of those people move to the part time for economic reasons category. And those are people who would prefer full time employment, but they're currently working a part time role for whatever reason that may be.

And then an often overlooked metric which is really unreported on is people not looking for work. If you're, if you're part of the unemployed number, you are actively looking for work.

Inside the last four weeks, there are millions of people who are not included in that number who have just simply given up on looking for work, man.

Jim Glennon: 00:12:21

All right, Something to continue to keep an eye on. Remember it's, you know, 4.3, 4.4. We're not far from that.

And if the government keeps hacking jobs the way they are and if we see reductions in other areas of the private sector, we could hit that number here before mid year. And then again, yeah, rates are already going down.

You could see the Fed start cutting short term rates on top of that, which again good for the industry, not great for the economy. Absolutely. This week. So this is the other half of it.

We have inflation numbers coming in this week and if those any inflation numbers going forward start to heat up, I think that that starts to tweak the narrative a little bit of what's going on right now and how advantageous it could be for anybody.

Alex Hebner: 00:13:02

Yeah.

As we've been talking about I think since the beginning of the year, that number to really watch out for on cpi, which CPI really seems to capture the headlines despite PC being the Fed's preferred metric. But CPI has been flirting with 3%. It touched 3% last release. We see 3% or higher.

That's like you said, it's really going to tweak the narrative of, you know, are we in a stagflation scenario? Does the Fed have room to cut rates without stoking more inflation? Definitely keep an eye on inflation this week.

Jim Glennon: 00:13:28

Yeah, stagflation, that'll be Wednesday morning. Horrible word.

Kevin Foley: 00:13:30

Yeah, yeah.

Jeff McCarty: 00:13:33

Looking at this CME rate, watch to see where the Fed's gonna go with rates.

You know, we've now, by three meetings from now, 30% of the market expects two interest rate cuts, which again still seems crazy, but some of this recent news is starting to potentially feel more and more likely something like you could see a path to that.

Alex Hebner: 00:13:55

Two cuts in three meetings feels aggressive. Emergency. Yeah, aggressive. That feels very.

Jeff McCarty: 00:14:01

Emergency. Yeah, that's a good word for it. But that's, I mean 30% of at least this particular market, you know, thinks that.

Rob Chrane: 00:14:08

Yep.

Jim Glennon: 00:14:09

Yeah. We almost seem to be in emergency mode.

If you follow equities at all and you believe what's going on there, I mean when you're dropping in a point or two in a day for a week, it's. People are starting to panic a little bit I think and really reset their expectations for growth over the next few years.

And tariffs obviously have a huge part in that, but uncertainty does too. Right. Like there may be opportunities here. We've been talking on the side, you know, when, when do you get into the stock market?

When you see this kind of sell off, what's the, what's the potential short term payoff there? But I don't know, as the administration admits that pain is coming or already here, we don't know how long that's going to last.

To be able to just completely shock the system and reconfigure the way our economy works, the way the world economy works, which is kind of what's happening.

Alex Hebner: 00:14:51

Right now and conversely to what the CME Fed watch is showing there on Friday.

Powell, during his testimony, he was saying we have breathing room here to feel out the effects of what Trump is doing and not to don't make any sudden moves was essentially what he was saying.

Jim Glennon: 00:15:08

He's trying to instill confidence, I think, and let the world know that the Fed is confident that we have to wait for this storm to blow through and see what the pieces look like when we put them back together.

Alex Hebner: 00:15:19

Yep.

And it, it worked while his mouth was open because you saw actually on Friday, stock equities trend back up until he stopped talking and then they went back to where they were.

Jim Glennon: 00:15:29

That is true, man. It's all about the mood of the consumer. And investors follow that.

Alex Hebner: 00:15:34

Absolutely. 60% of our economy is consumption spending.

Jim Glennon: 00:15:38

So that is right. What else do we have here, Alex?

Alex Hebner: 00:15:43

Not a whole lot, no. Like we've covered the big ticket items. I wanted to cover today employment, you know, next 90 days.

Keep an eye out for, for increases there in unemployment, Keep an eye on inflation this week. And then just, just trend wise, you know, we're seeing maybe some stress for the consumer. You know, consumer lending's high.

We saw some record high auto delinquencies, the highest actually, that Fitch Ratings publishes auto delinquencies. And they're first for subprime borrowers of auto who are going to be the first to get hit when the pressure is put on.

They approach 6% of 60%, 60 days or more delinquent. So definitely, definitely signs of stress out there.

Jim Glennon: 00:16:23

Right. The debt cycle, keep an eye on that. We're starting to see a little bit of it in Ginnie Mae loans. Not yet in conventional.

Just a ton of equity out there. We kind of nuts to see conventional delinquency start to take up. But you start seeing it in government. You can see the stress coming again.

All good for mortgages. Keep an eye on that 6% number on the 30 year conventional.

That's really where pretty much everybody thinks there will be a bit of a, like a levy that's going to break in terms of the lock, in effect, people finally stepping out, selling their homes. If we can stay there for a decent amount of time. Right. We got close to it. Last year, but it only lasted about 40 days.

But this seems to be like we're going lower and it seems to be hanging in there. So anyway, put that under your pillow tonight, I suppose. All right. Thanks so much, Alex.

Alex Hebner: 00:17:07

Thank you very much. Have a good one.

Jim Glennon: 00:17:09

All right. As promised, we're here with Rob Crane, founder and CEO of Down Payment Resource.

Their tagline is helping the housing industry connect families with home buyer assistance programs. Welcome. Welcome, Rob. Good to see you.

Rob Chrane: 00:17:23

Thank you, Jim. Thank you, Kevin. Appreciate the chance to talk with you guys today.

Jim Glennon: 00:17:28

All right. Just.

I mean, to start out, obviously, I think most of us in the mortgage industry are familiar with down payment assistance programs, and we may have used them in our own lives or may have used them for our borrowers. But can you tell us a little bit about your organization and about what you do and about yourself?

Rob Chrane: 00:17:44

Yeah. Well, thank you. So we've been around 17 years, which is the fastest 17 years I've ever lived, I think, and it's just been tremendous fun.

But my background is real estate and mortgage banking. I was a real estate agent when I was 23 years old, became a real estate broker.

So I was in that industry 15 years and then transitioned into the mortgage industry. And I was there for about 20 years. Pretty much dated myself right here. But. And in the mortgage industry, I did a lot of those years.

I was a loan officer, originating loans here in Atlanta, where I'm based, and had some other positions, sales management positions, other leadership positions. But one of the things that I just said for I don't know how many years was, you know, in the area regarding down payment assistance.

There's got to be a better way to deal with this because even, even when you're saying hello and you're working in a metropolitan area, there going to be dozens of programs and dozens of program providers. How's anybody supposed to keep up with it? Because it's not something you necessarily do every day. And you know, there's tons of programs.

The eligibility rules different. The funding, funding mechanisms, the benefits and the funding status can all change. So I just kept saying for years, somebody's gotta fix this.

And with absolutely no intention. Probably the last thing on my mind that I wanted to do. But be careful what you wish for, because it might happen.

And I say that tongue in cheek, obviously, because it has been an amazing journey. So at the heart of our platform, we built the only comprehensive database of every down payment assistance program in the country that we know of.

There's no other list to check ourselves against. When people Say, well, do you have every program? It's like, yeah, yeah, we think so. But we've got over 2,400 of them.

And actually those: 2400

So mortgage credit certificates, the affordable first mortgage programs through state housing finance agencies and all that. So that's the heart of the platform and the key is keeping it up to date because things do change.

Our team, we have a team that does nothing but that. And to give you an order of magnitude, last year alone our team made over 240,000 updates.

And a lot of that is manual because these agencies don't have APIs to access their information. In fact, we've sort of become the default API because we do have APIs and we're collecting it all in one place, keeping it up to date.

So as you were saying at the opening, we help our business partners connect homebuyers with the down payment help they need.

And our primary channels, customer channels one, obviously mortgage lenders, but also multiple listing services who make the information available to their agent and broker members. So the MLS that we partner with represent probably 5 or 600,000 agents around the country.

And it integrates with property data because properties have to be eligible. You know, you always think about the household's eligibility, but you know, the property, where is the property?

The Everett program has specific geographic boundaries, property types, property requirements, maximum sales price and things like that.

So for lenders, there are four tools in our suite and the heart of that is the, what we call the DPA directory that's used by product managers, people in secondary marketing and capital markets. And it's uncanny how many times when we do a demo, a lender will say, this is like all regs for dpa. That's what people tell us, I didn't make it up.

And then from that part of the platform, then there are tools for loan officers and help loan officers automate the process of matching a transaction, a borrower and the property they want to buy. With the programs that their organization has vetted and approved.

Underwriters can use it when they get a file that is layered with dpa and then there's a consumer facing component to it because we found over the years that there's no stronger, I don't know of any stronger call to action than putting it out there that down payment help is available. See if you're eligible people will engage. I mean, why wouldn't they?

And the crazy thing is, even after all these years, still most consumers, especially first time home buyers, don't have a clue there's even such a thing as down payment help. So this is news to them. It gets their attention. It differentiates you as a lender when you can start this conversation.

That's basically what, you know, what our system does and who we work with. And so fire away.

Jim Glennon: 00:22:41

In a nutshell, right? And that's a monumental project.

I mean, when I was working at a lender in secondary, but I'm a date myself, about 14 years ago, we would get one DPA from a loan that a loan officer would bring to us from a conversation with a realtor, or they went to a conference and heard about this thing. Right. And that was one. And I had to sign, go figure out where it came from, what the paperwork was.

And you find out these different municipalities and different governments put these things together very differently. You've organized all this over 2,000?

Rob Chrane: 00:23:16

Yeah, yeah. And again, it's just, yeah, it's, it's, it's, it's insane how much there is, how many programs there are.

And you know, the thing I was thinking about as you were saying that because again, having been in the trenches as a loan officer and probably, probably brought in a few flyers, you know, of my competitors that were offering a DPA program, bringing it into my secondary marketing manager, you may have had.

Hopefully not, but you probably had experiences where you went to all the trouble to learn the program, get it onboarded, how many were originated, never used it.

Jim Glennon: 00:23:47

Yep. Yeah. Nine times out of ten just didn't happen.

Rob Chrane: 00:23:50

I resemble that remark. I was, I was guilty of that in my past. So maybe this is my punishment, right? This is, this is your penance.

Jim Glennon: 00:23:58

17 years of it.

Rob Chrane: 00:24:00

Yeah.

Kevin Foley: 00:24:00

Yeah. Well, certainly I had no sense of how deep or how wide the market was for down payment assistance.

Rob, before you and I were connected, it does sort of feel like down payment assistance is having a little bit of a moment or, you know, a renaissance right now where, you know, DPA is pretty cool, whereas for a long time it's sort of been maybe the redheaded stepchild, as you all were remembering. And whether or not you did anything, Rob, to make DPA cool, we'll tackle that another time.

But I'm curious if you want to just talk about the state of down payment assistance today and also just why it's so important for loan officers just to be aware of their options when it comes to down payment assistance.

Because there's obviously down payment programs that, you know, lenders need to have some sort of relationship with, but there's also options that, you know, you can just go, if you're aware of the program, you can just go and apply.

Rob Chrane: 00:25:03

Yeah, exactly, exactly.

And that's one of the things when, when we, when we talk with lenders and they, they talk about, you know, why they, why don't you do down payment assistance programs? Or why, why they, or maybe why they don't like doing them as, as much. They are a lot of myths and misperceptions.

And for a long time, you know, we're kind of so proud of the fact that, yeah, we got over 2,400 programs and somebody pointed out to me that, you know, you gotta, you gotta remember that the person on the other side of the table from you, the lender, when you're saying that that can be intimidating in itself and overwhelming. It's like, oh, my gosh, I, you know, why do I want to wade into that layer of complexity?

So the thing I try to remember to point out is that you don't have to boil the ocean. You know, there are so many programs out there operationally, even with our tools, you know, it's not feasible to offer everything.

And you really don't need to.

You know, we find that when we look at some of the data, you know, if a consumer home buyer is eligible for one DPA program, if you look at our whole database, they're going to be eligible probably for six, eight or 10 programs, because there are that many programs. And so you don't necessarily need to offer every one of them.

In terms of the state of dpa, we do a quarterly index called the Homeownership Program Index where we snapshot of our database, what's in there, how many programs, the nature of the programs. Are there more, are there fewer than the last report or year over year?

But one of the things that's always been consistent for years now is when we look at what percentage of our database is actively funded, it's always sitting around 82 or 83% are actively funded. So what that says again is you don't need to, you don't need every, every program in your footprint. There are plenty out there.

And, you know, it's never, there's, you're never going to be out of money. You know, there's, there's, there's, there's at least one DPA in every, every county in the U.S.

there are, I think, 2,000 counties or so that have 10 or more DPA programs. So there's always, always plenty of funding.

Some of the things that I think we see people missing, both home buyers as an opportunity and lenders that are serving them is, you know, there's some programs, for example, that will allow, as far as property types will allow two to four unit properties, as long as you're, as long as the borrower is going to occupy one of those units. But what an awesome way to start. You know, I mean, everybody talks about the wealth building benefits of homeownership.

Jim Glennon: 00:27:37

Yeah.

Rob Chrane: 00:27:37

If you start out, if you could start out with a duplex or a quad or whatever, be a landlord. Yeah, yeah. And you've got somebody helping you pay the mortgage payment.

Somebody pointed this out too, is, you know, a duplex doesn't cost two times what a similar sized single family home does.

Jim Glennon: 00:27:54

Right.

Rob Chrane: 00:27:54

Does a quadruple cost four times. So there's some economies there.

Another area, you know, because of inventory shortages and, and this, the, the availability of manufactured housing, that's one solution. They're, they're places where that's more plentiful than others. But there are programs that will allow manufactured housing.

And you know, the quality of manufactured housing these days is a lot better than it used to be. You still can't do it if the, if, if the property has wheels on.

Jim Glennon: 00:28:23

It, can't have wheels on it. That was the whole deal. But you could take the wheels off and then you might be in a good spot.

Rob Chrane: 00:28:28

Yeah, yeah. So, and then I guess as far as the opportunity opportunities for lenders, you know, why should they care about it? Why, why should they do this?

Well, one of the frequently, the most frequently asked question we get in terms of emails and in our inbox every day is from real estate agents. And they want to know who are the loan officers in my market that work with these programs, who can help my clients with these programs?

And if anybody doubts that, I just say, go to Facebook. Look up the Facebook group called Down Payment Insiders.

That's not our Facebook page, but it is our group we created and it's mostly real estate agents, but loan officers are finding it and leveraging that.

But when you just scroll through every posting, scroll through a dozen or two dozen posts and realtors are joining the, the group and say, hey, you know, I'm excited to be part of this group. Can anybody tell me, I'm in Tampa? Who are the, who are the best doing dpa?

So that's one way that we feel like, supports our contention that that there's a lot of opportunity for lenders.

Jim Glennon: 00:29:38

Yeah, I mean, it sounds like there's, it's like these scholarships that don't get used. Right.

If students are some, some parents will even hire a consultant for their child before they apply to colleges because they know the price of that consultant will be much less than some of the scholarships they're going to find just obscure everywhere, money that needs to be spent. And it sounds like some of these DPAs are just not, are not being spent. They're kind of asking to be discovered.

Rob Chrane: 00:30:02

Yeah, absolutely, they absolutely are. And yeah, so, and another way we sort of measure the opportunity and why we say it's such a vast opportunity, is that how people will engage?

I talked about that a minute ago, that if you put out, it's such a simple message, call to action that you put out saying down payment help is available.

One of our good customers is Zillow and we're actually integrated on Zillow, Redfin and realtor.com and what we do on those sites is we process the property data for every active residential listing and we bounce it off against our database and then we say, okay, what programs would be available to a buyer of this home, if any? Not every home is going to be eligible. Some are going to be too expensive or whatever.

But because we work with MLS as we know that across our different MLS markets, on average 80% of their active residential listings would be eligible, have programs available for buyers of those homes. So that's, that's a huge, you know, that's a huge percentage of the, of the for sale inventory.

And several years ago we did a study with Realty Track and looked at residential properties, you know, residential housing stock across the U.S. and it was, I don't know, 86, 87% of homes across the U.S. not just ones that were on the market. So there's a lot of opportunity on that side.

But on Zillow, they just celebrated and just announced, I think it was just last week, that since they've been using our information, they've had about 5 million submissions into the eligibility form and that's basically three years. So. And that's 5 million uniques. And you know, on one hand you say, okay, well, you know, Zillow has a couple hundred million visitors a month.

5 million is a drop in the bucket. But no, these are people that found the module. They found they were looking at a home that was interesting to them.

And on that listing details page, if you scroll through all the different widgets and, and modules and Things if there are programs available for that home, it'll show them that and then they can answer six questions and find out are they eligible. If I buy this home, which of these programs and how much money could I get? So, you know, 5 million.

That again, that tells you there's, you know, so many times people think of DPA as just a small niche, you know, a niche product, a niche market.

And no, it's, it's a segment, it's a, it's a significant segment I guess to this point of a final stat I'll mention is we do because, because our, we have this only. We're the only ones who have this database.

We could do some interesting reports by overlaying different data sets and we've done some studies with the Urban Institute and we like working with them because they, they're credible. They don't, you know, they're not going to put their name on anything that they haven't vetted and don't feel 100% comfortable with the methodology.

The last one we did with them, we looked at the 10 largest metropolitan areas in the country.

We took: 2022

Jim Glennon: 00:33:17

Yeah.

Rob Chrane: 00:33:18

And we said, and what we wanted to find out was how many of those closed loans and those borrowers would have been eligible for programs. It revealed a, a staggering gap that even as gung ho as we are about all of this, it was, it was surprising to us.

And what that is is if you take, if you looked at first, different first mortgage types. So look at FHA borrowers in those 10 metropolitan areas. 79.8%. So 80% of FHA borrowers were eligible.

Now FHA does a good job of tracking it and they report it. That's in their annual report to Congress. So what would you guess? What percentage of FHA borrowers do you think actually use dpa? 8.

That was a good number. They was close. Guess it's been the last few years, it's been 14, 15%. In fiscal year 20, 20, 24.

Kevin Foley: 00:34:15

It was still a huge gap.

Rob Chrane: 00:34:18

I mean, huge.

Kevin Foley: 00:34:19

Yeah.

Rob Chrane: 00:34:19

And, and you know the thing, the thing I, we can't, I would love if we could quantify this, but what that doesn't account for. Think about all of those initial pre qualification conversations between a loan officer and a potential borrower.

How many borrowers were turned away because they didn't have enough of a down payment? Right.

Jim Glennon: 00:34:43

They just Completely didn't, they didn't buy out. There was no transaction to track.

Rob Chrane: 00:34:46

Right.

Jim Glennon: 00:34:46

The application was denied because they were off on their dti. There, there's, to me, I'm sold. I think, I think most listeners are. I think.

Rob Chrane: 00:34:55

Yeah, no, I'm, I'm speak, I'm preaching to the choir. Right.

Jim Glennon: 00:34:58

At this point. Yeah. There's no excuse if I'm a borrower, you know, a buyer, an originator or a realtor.

Like I have no excuse not to look into down payment resource, just to look at a down payment assistance in general. And I don't know where else to go other than the experts.

Rob Chrane: 00:35:16

Yeah, yeah. And, and as Kevin mentioned earlier, there's so many different programs and program providers that the lender participation requirements vary a lot.

So sometimes lenders have this perception that oh man, I gotta jump through too many hoops or, and this is gonna cost too much money and blah, blah, blah. And there are plenty of programs and I would categorize them sort of the traditional community second mortgages.

Most of those or a lot of those, they're really no lender participation requirements. And that's actually a filter in our database. So some lenders who license access, you know, they're specific.

One of the things, one of their use cases is I want to find the low hanging fruit. And you know, then maybe, maybe I'll graduate and go to some of the other programs that, that require a little more effort.

But it doesn't have to be as complicated as people think. It's just human nature. It's the unfamiliarity. I mean, when I was originating loans, I didn't have a lot of FHA borrowers.

So when I got an FHA borrower, it's like, oh man, I got to go back to the guidelines because I don't do this every day. And then you do it, it's like, oh, this wasn't so bad.

You build it up in your mind as beings such a monumental hurdle and you just do it and doesn't have to be intimidating.

Jim Glennon: 00:36:35

And that kind of answers, you know, my second to last question was, which is why, you know, why are some lenders not even doing any kind of down payment assistance or searching for down payment assistance for their borrowers?

Rob Chrane: 00:36:46

Yeah, well, and I guess one more, one more data point that I would, I would share to underscore what you just said is in this same research that from that same report I was talking about with the Urban Institute, one of the other things we looked at is declined loans, declined loan applications. And we wanted to see how many declined loan applications could have been approved by applying available dpa. And we've done this exercise for years.

We've probably done it, you know, probably analyzed tens of thousands of declined loans and done this.

But for this, again, going back to this, this market, this 10 largest metropolitan areas, the number was 31% of decline loans would have been approved because there was available dpa. And these are not loans that were declined for credit or declined for property issues.

We were looking at loans that, that either cash to close and also DTI, because when you take that available DPA, on average it reduced the loan to value by 6%. So if you're reducing the loan to value by 6%, you're helping those close cases where DP DTI is too high.

Jim Glennon: 00:38:03

Man, those stats, that's another big stat that's pretty, pretty convincing.

Kevin Foley: 00:38:09

What I love about you guys is you're not just a software platform that compiles all this information. You guys really are like the authority on down payment assistance.

And some of the research that you do, some of the stats that you've shared with us I think are super impressive and just things that lenders should know and things that originators should know because it's just so important in terms of what we do here at Optimal Blue, helping lenders maximize their profitability on every loan. This plays directly into that.

Rob Chrane: 00:38:40

Yeah. And a whole nother conversation and sort of objections we hear.

If I summarized 17 years of talking with lenders, I could summarize it by saying, you know, we love, we love the concept of dpa, but we struggle with the logistics and economics. And what you just said reminded me about the economics.

And, you know, yes, there's some, some types of DPAs that may limit how much an originator can make on the loan, but that's not true with all of them. Actually, housing wire, they're, they're actually, I think it's supposed to be published today or sometime in the next couple of days.

An op ed piece we did, just talking about this, this comment that we hear that, you know, you can't make money doing DPAs or that it's a loss leader, and that's just not always the case.

But you know, we had a major imb, very large IMB that we work with, and they were talking about their internal discussion when they were deciding whether to license our tools. And you know, another executive said, well, do we want to, do we really want to originate more loans that we're not making money on?

And as they were building that case fortunately, our champion there turned that around and said, you know, what's the cost of not doing those loans? There is a cost if you don't do those loans.

Jim Glennon: 00:39:53

Sure.

Rob Chrane: 00:39:54

And just like if you can, if you can increase your pull through rate by 31%, that's a real cost. And then you get into cost about, you know, meeting some of the requirements by the GSEs in terms of L.

My loans and LIP and VLIP loans, all that kind of stuff that might end up costing money if you're not meeting their goals.

Jim Glennon: 00:40:13

So that's a very good point.

Rob Chrane: 00:40:15

Yeah. You know, over, over 17 years, we try to come up with an answer to every objection, but.

And we like to do it, we like to do it with data, not just, not just our opinion. So.

Jim Glennon: 00:40:27

Sure. Okay. Well, I only have one more question for you, Rob. How do people get a hold of you? And Down Payment Resource.

Rob Chrane: 00:40:37

Yep. Quickest way is you can go to infoownpaymentresource.com so down payment Resource, all one word.

And also directly to me, it's R Crane and Crane has an H in it.

So R C, H, R a n e downpaymentresource.com and love to hear from any, anybody who has any questions or who want, who, who wants to debate any of these, any of these claims that I've been making. We, you know, that, that, that being challenged is, it just makes you sharper. Right. And you know, we're not perfect. We, we make mistakes too.

But so we'd love to hear from anybody.

Jim Glennon: 00:41:15

Absolutely. Any, any other questions from you, Kevin?

Kevin Foley: 00:41:18

No, I think it's a great, great conversation, Rob. Really appreciate you taking some time to talk to us and really looking forward to getting the word out there.

Jim Glennon: 00:41:27

Agreed.

Rob Chrane: 00:41:27

Well, thank you for helping get the word out there. Thank you for letting me come on your platform and spread the word. So thank you.

Jim Glennon: 00:41:34

Anytime, Rob. Thanks so much, Kevin. Rob, take care.

Rob Chrane: 00:41:39

You too.

Jim Glennon: 00:41:39

All right, let's close this thing out. Thanks so much, Jeff. Thank you, Alex, for the wisdom. Really good conversation today. Thank you, Rob Crane, for being our guest. Tune in next week.

We're going to record here actually at the end of the week. And Tom, we're going to cover just get even deeper into what's been going on with tariff talk, with the economy, with the crazy stock market.

I'm sure a lot will happen over this next few days before we get there, so be sure to tune in for that on Monday. That's it for today.

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