Good LOs are losing deals for doing it the right way.

“I just lost a deal to an LO promising 3% down when the borrower is qualified for 5% down only,” Terry Kashat, a broker-owner in Michigan, told The Scoop. “It will eventually change to 5% down & I lose the deal for no reason due to being timed out & the truth comes out. I lose the deal for providing the real accurate quote…A bait & switch or incompetence. Either way it’s scummy & needs to get cleaned up out of our industry.”

The Scoop received loads of reader feedback after Friday’s story about an Independence Home Loans LO telling a borrower they could “skip” 4 mortgage payments. One regulator reached out for additional details & several LOs who lost or almost lost deals to Independence complained about their alleged tactics, particularly on VA loans.

I believe there’s a larger conversation to be had about alleged bad actors in the industry. One IMB owner in CA who’s lost deals & LOs to call centers leaning on shady practices said there simply aren’t enough consequences for noncompliance. “So what’s the worst that happens? They get a $2M fine when it’s all said & done. They probably made $50M by doing it the wrong way.”

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An East Coast IMB exec said he no longer does wholesale in part b/c some broker shops were trying to broker fraudulent loans. He said many of the bad actors don’t have warehouse lines, so it’s like a game of whack-a-mole.

“We caught them, we want after them, they all shut down. And then they open up in a wife's cousin's friend's name & start rocking again."

Of course, some of the accused companies are toggling between broker & non-del & do have warehouse lines. Their risk tolerance might simply be higher b/c the CFPB has been neutered & they’re betting that the states aren’t going to catch the alleged misdeeds, said one attorney in the mortgage space. “I don’t think it’s very smart but it’s a trend we are seeing,” he said.

Hey, everybody! The Mortgage Scoop launched about 2 months ago & I’ve been blown away by the support. Thank you 🙏 so much. I wanted to share an important update about the business. We’ll be moving to a paywall pretty soon.

Paid subscribers will get exclusive MWF newsletters packed with scoops, analysis & insights you won’t find anywhere else (plus some bonus content). Founding Members can lock in the price for 2 years for $240. Monday editions will remain free & open for all subscribers. Hit me up w/ any questions you might have. - James Kleimann

Next to the waterfalls at the Grand Ole Opry in Nashville, The Mortgage Scoop was invited to a VC pitch meeting between Ben Anderson, the founder of Cindie.ai & Kevin Peranio, an executive at PRMG who also invests in mortgage companies. Anderson, a former top LO turned mortgage coach & techie, was seeking an investment from Peranio. He’s in the middle of raising a $5M round.

Cindie is built to solve a painful problem for lenders: Their sales forces do a poor job of converting ‘dead’ leads in their database & leave a ton of money💰on the table. It’s an old story: the typical LO reaches out 1-2x to an applicant that didn’t close, hears nothing & moves on to a newer, warmer lead.

Cindie will message a prospective borrower dozens of times w/ 90 pages of scripts. No LO or LOA has that kind of work rate. “For less than a couple thousand dollars, we can replace 10 LOAs,” Anderson said.

Over the past 90 days, Cindie sent 418,500 messages 🥴 to prospective borrowers, per an investor doc Anderson sent to Peranio. Just over 7,000 replies came back, a 1.7% response rate. That resulted in 147 working applications that yielded 57 closed loans, roughly $591K in revenue. Expenses came to $173,276 w/ Cindie.ai (including $57K in processing labor, $80K in marketing costs & $3,400 in raw data purchase) to just over $3,000 per closed loan. That’s a 77% profit margin (a savings of $8,000 a unit). Anderson said he also enlisted the help of TCPA super lawyer Eric Troutman to ensure compliance.

It will be interesting to see if Anderson & his team can achieve the scale needed for Cindie. Other large lenders have plenty of money & could try to develop similar tech in-house. And some might simply not like the idea of having an AI bot that contacts people 40+ times 🤷‍♂ .

Peranio though was convinced by the pitch. A few days after they met at the Grand Ole Opry, he told The Scoop he planned to invest. 

“A lot of companies are thinking about how to add agentic AI to uncover business opportunities,” he said. But Cinde.ai is the only one he’s seen w/ a “highly experienced originator’s coaching, training & data paired w/ top tech…”

The Trump administration has consistently said that mortgage rates are too high. But they haven’t rolled out policies to address the situation.

But LLPA changes are coming & sources said they might happen before the end of ‘25. On a call w/ AIME President Jonathan Haddad at FUSE, Pulte spent about 3 minutes discussing the LLPAs. Pulte barred press from attending or any recordings from being made, but sources who attended told The Scoop that he vowed to act quickly on the LLPAs. Barry Habib is sharing a proposal w/ the FHFA Director.

“While reducing LLPAs would reduce mortgage rates, we think the impact is likely to be limited, mainly because LLPAs are generally quite modest and higher LLPAs are on lower credit quality loans that are most likely already being done at the FHA,” KBW wrote in a recent report.

If I had to speculate, I’d say that LLPAs are basically guaranteed to be reduced on investor- and 2nd homes. The question is how much they’ll be slashed on other squares in the pricing grid. The GSEs have made at least $120B in revenue on the LLPAs since 2014...

Huntington Bank has struck a $7.4B deal to acquire Ohio-based Cadence Bank. The acquisition will extend Huntington’s footprint to 21 states & add more than 390 Cadence locations. They’ll rank 5th by deposit market share in Dallas & Houston & No. 1 in Cadence’s home state of Mississippi. Cadence is doing about $3B a year in mortgages.

It also sets them up to go toe-to-toe in the Southeast w/ Fifth-Third Bank, which itself just acquired Comerica Bank & is growing its mortgage presence. They’ll be competing heavily in the Carolinas, Nashville, Alabama, a source said.

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