Disruption or delusion? Jennifer McGuinness on the future of mortgage and housing finance

HousingWire

In this exclusive executive interview from Colorado Springs, HousingWire President Diego Sanchez sits down with Jennifer McGuinness-Lubbert, CEO of Pivot, to explore what’s really happening at the intersection of AI, regulatory pressure, and innovation in the mortgage industry. With decades of experience across the entire mortgage lifecycle — from origination to capital markets — Jennifer offers sharp, grounded insight into how industry buzzwords often obscure deeper challenges.   The conversation pulls no punches, from the hype of AI tools misinforming borrowers to the reality that “automated underwriting” is still far from automated. Jennifer also breaks down the regulatory headwinds facing lenders, including CFPB policy swings and rising data privacy lawsuits, while offering a blueprint for lenders seeking resilience through realistic tech strategies and cross-silo collaboration.

Transcript

00:00Live from Colorado Springs, I'm Diego Sanchez, president of HousingWire, and I'm joined today

00:13by Jennifer McGinnis, CEO of Pivot Financial and also sponsor of our Vanguard Forum yesterday.

00:19Very true.

00:19Amazing. Jennifer, thanks so much for joining me today.

00:22Absolutely. Happy to be here.

00:23So before we dive in, could you just briefly introduce Pivot Financial and what you do

00:29with lenders?

00:30Yeah, I mean, at the end of the day, Pivot should be thought about as a lifecycle platform.

00:34So we're very tech-driven, but where most lenders become disjointed or most investment management

00:39companies become disjointed, we have a full lifecycle platform.

00:43So what does that mean?

00:44We have an aggregation platform where we buy non-agency loans, and then we also are a due

00:49diligence company that also specializes in breach defense and litigation support and also

00:56default oversight.

00:57Right. So all the things that can go wrong, one side of our business, and we help you

01:01fix them. Things that go right, new origination, we have it on the other side. Full lifecycle.

01:05Full lifecycle. And so right now, it's a little bit of volatility, right?

01:11Just a little.

01:12A little bit of uncertainty. We have the tax bill that's going through Congress. We have

01:17GSEs potentially exiting conservatorship.

01:19We have mortgage rates staying higher for longer than I think anyone would like. How are you managing

01:26your business with all of this uncertainty and volatility?

01:30So I think that everybody's focusing on the uncertainty and volatility instead of what's

01:35the opportunity.

01:36Right. And I think if, especially on the lender side of things, if we could get the lender

01:41mindset shifted to what's my opportunity instead of am I going to have a midsize refi boom?

01:48Am I going to be able to pick up some more people?

01:50You know, educate your loan officers.

01:52Get them into diversified products.

01:54I think we are still too stuck in an agency world. And, you know, we really need to start

01:59peeling that onion back in order for the lenders to really succeed.

02:03It sounds like you're advising the lenders that you work with to flip the script, right? Like

02:08it's not volatility and uncertainty. It's an opportunity.

02:11No, it's an opportunity. But it's and the other thing is, is listen, everybody's talking about AI and

02:16everything else. But have your loan officers be the expert at your products when they're the expert

02:22at a product and the entire suite of your product. As soon as they hear a borrower buzzword, they're

02:27going to go, you're a perfect fit for this. You're a perfect fit for that. And I think that that

02:31makes your funnel speed up. And then it gives you more closed loans. I think that's what everybody

02:36should be striving for. A lot of our clients are closing record months right now, whereas a lot

02:41of people are saying this is a tough market. So how is that happening? What are specific strategies

02:46that they're deploying and that they've worked on with you to help them to record

02:52months when others are struggling? Well, some examples are really being able to do

02:56some predictive analytics on what borrowers would qualify for before people are on the

03:01phone. So being able to take, even if it's borrowers you've done loans for before or you're

03:06buying data, refreshing certain characteristics and putting credit overlays on top of that to

03:11say fail, fail, pass, pass, pass on products. And then look at what's the benefit to the borrower.

03:16Now you've got an empowered loan officer really making a call and saying, hey, I noticed this

03:22about where you are in your stage of life. This is what I'm seeing. The product you're

03:26in does this for you, but this is a product that can do that for you and it's a benefit

03:30to you. And I think that's really important before a loan officer picks up the phone.

03:35You brought it up once. It comes up in almost every session here at the gathering. Artificial

03:42intelligence, AI, it is here. Absolutely.

03:46But there are some lenders that maybe are scared of it, cautious about it, and for whatever

03:52reason have not dipped their toes into those waters. What are you advising those folks in

03:57terms of starting to play with AI?

04:00Well, I mean, anybody who says they haven't dipped their toe into AI is lying to you. And

04:04the reason for that is just put anything into Google in a search engine and AI is talking

04:08to you every day, right?

04:09Right. I don't think lenders should be afraid of AI. I think they should consider where they

04:14can deploy it and then how to control how it works within your organization. You don't

04:21necessarily, without sufficient testing, want to have that become your finite underwriting

04:25engine or be speaking to your borrower. I actually thought today, I saw it on the stage here, total

04:33experts' voice for their AI bot was pretty amazing. It actually sounded like a human. And I, I

04:39I thought that was really cool. But I think there's that too. I mean, who doesn't call

04:43their airline to change a flight and get annoyed with the AI? I think it's really getting it

04:47to be that interactive conversation if you're going to use it there. And in some cases, if

04:52everybody goes to that, the lender who's going to win is going to be the one with the real

04:55human on the phone as well.

04:56Right, right.

04:56So I think you need to really understand what business are you in, who's my client, are they

05:02going to benefit or not from us implementing AI? Is this or is this not going to become

05:07cost prohibitive, et cetera?

05:09So break that down by lender size, because there's a difference between what a big lender

05:14can do and how many tech people they can deploy on AI and what a small or mid-sized lender

05:20can do.

05:21Right.

05:22How do you think about that?

05:23So think about the fact just how different expenses are for different size lenders.

05:26You know, if you looked at, for example, even MBA research, right? They say that, you know,

05:31the really efficient lenders, it costs them a little less than $9,000 alone, right? And then

05:36they say the standard or smaller independent mortgage banker costs them upwards of $11,000

05:40alone.

05:41That's a big gap.

05:42This is huge, right? Very different on what you can spend. But when you boil it down to

05:46what is the actual profit they're making on a loan, if you look at what MBA put out this

05:51year, it was like $440 a loan. Do you get excited about $440? Can you spend or do a lot

05:58with that? The answer is how does it need to be deployed and is that truly your net and

06:03where can you cut your expenses? And I think that's interesting from a technology perspective.

06:08If I could make $800 a loan, if I could make $1,200 a loan with the tech spend, great.

06:16But do the life cycle analysis. You know, on the stage with Sarah yesterday, I said, guys,

06:20your LO may be screaming, I need this technology. But if you really did the downstream analysis

06:25and you found that it's now going to take you five more days to close the loan, if you

06:29implement this, that same LO is going to be screaming, get rid of it as soon as you implement

06:34it. So you've got to really look at what's that impact going to be all the way through your business.

06:38Let's stick with costs for a moment, because I think it's a really interesting topic.

06:43I came into housing in 2018. But you know, we've been digitizing mortgages for a long time.

06:50And the costs just keep going up. Right.

06:53What's going on? That should be a different relationship.

06:55So clearly we have not digitized mortgage yet. Yeah.

06:58Right. And look, I remember the rise of fintech, you know, it was call it 2015,

07:03everything's going to be disrupted, et cetera. And look, I think there is a place where, you know,

07:08technology has enhanced, you know, the manner in which mortgages are originated. But I also think

07:14that there are certain components of the origination that cost too much. You know, credit reports,

07:20great example, appraisals at times cost too much. So it cost and time, right? You have to remember

07:26when you're in a lender or you're in an aggregator, time is money and you're paying all your people.

07:32And if they're touching the exact same loan over and over again, nobody's making money.

07:36And that really tight margin on my $440 example, it's getting smaller and smaller by the second.

07:41Right. Right. All right. Let's pull out our crystal ball for this last question.

07:45What are you seeing? So uncertainty, volatility right now, we talked about that. What are you

07:50seeing as the issues that are going to be at the forefront over the next one to two years?

07:55So I think some of the issues that we're going to continue to deal with over the next one or two

08:00years are issues that have actually existed for a long time. For example, most of the independent

08:05mortgage banker universe is beholden to an aggregator or the GSEs, right? What I want to see

08:10happen in the next year or two is I want to see them get their own liquidity. And we're actually

08:15focusing on that at Pivot. And if we can start to give those independent mortgage bankers true

08:20liquidity through securitization as a great example, now you start to level the playing

08:25field of mortgage. And no matter what happens with the GSEs, which if you knew the answer today,

08:30great, because I don't. They can't make up their mind going on there. But that will actually start

08:36to level the playing field, make it a little bit more fair. You'll see the margins on the revenue

08:41come up, et cetera. Should the GSEs come out of conservatorship?

08:45It depends on the day. You know, I mean, no. And look, I think you have to be really

08:51careful when you answer that question. And the answer is they can come out of conservatorship

08:56as long as it's not done badly. Okay. What is doing it badly look like to you?

09:00Doing it badly is doing it too quickly without the right experts involved from the market.

09:08You know, not really communicating, you know, if there is an implicit guarantee or an explicit

09:14guarantee, not documenting it efficiently. And then everything gets a little haphazard.

09:20Do you think it can be done in a way that rates will either stay the same or go down or do you see

09:24rates going up? Well, I think it's a little ridiculous that rates are fully controlled,

09:27you know, called by the 10-year and certain things anyway, right? And how quickly tariffs

09:32could play with your rates, right? I think that either could happen, right? I find it humorous that

09:40people are saying, you know, oh, they're going to do an IPO for the GSEs. They're public companies

09:44already. They're just in conservatorship. So why are we talking about we're taking them public?

09:48They're already public, right? So I think, you know, we need to pay attention to the details,

09:53dig into them efficiently. And yes, then they could come out of conservatorship. But I do think

09:58that they also need to be regulated. And one thing I admire about you is you really do focus

10:01on those details. I've seen those posts where you're diving in deep. Yeah. And look, I think,

10:06I think the reason for that is, and somebody said it really well on the stage today. I think it was

10:11Jennifer from Raid, actually. She said, you know, everybody just focuses on, you know, the headline,

10:16right? And the headline is not actually what should be driving your business. What should be driving your

10:21business is the details behind the headline. And you know what, if the headline is impacting, you

10:25know, 20% of the market, that means you have 80% of the opportunity left. And I think that's key.

10:30Amazing. Jennifer, this is great. Thank you so much. Thank you so much. I appreciate the time.

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