Group 1: Office-to-Apartment Conversions - The trend of converting office buildings to apartments and condos is accelerating, with the number of repurposed units more than tripling since 2022 and the conversion pipeline expanding by 28% between 2024 and 2025 [1] - The total pipeline for office-to-apartment conversions has reached 70,700 units, with major cities like New York (8,310 units), Washington, D.C. (6,533 units), and Los Angeles (4,388 units) leading the way [1] - Office-to-apartment projects account for significant shares in cities such as Omaha (85%), Dallas (79%), and Minneapolis (78%), indicating a shift towards repurposing newer office spaces built between the 1990s and 2010s [1] Group 2: Fraud Prevention and Risk Management - FundingShield reported that 46.05% of transactions in Q4-2025 were flagged for risk, marking an all-time high of 3.2 issues per loan, with CPL discrepancies impacting 48.78% of transactions [2] - The company emphasizes the importance of real-time source-level validation and remediation in closing agent vetting, title diligence, and wire fraud prevention as regulatory pressure and cyber threats increase [2] - The rise in licensing irregularities surged by 58% quarter-over-quarter, highlighting the growing need for proactive verification in the mortgage industry [2] Group 3: Mortgage Market Trends - U.S. mortgage rates fell to 6.18%, leading to a surge in purchase and refinancing activity, which supports improving new-home sales and provides some relief to affordability challenges in the housing market [16] - Existing home sales rose by 5.1% in December to a 4.35 million annual pace, with single-family sales reaching their highest level since 2023, although inventory levels decreased [17] - Despite the drop in mortgage rates, overall prepayment activity remains subdued, with only 13% of the conventional 30-year universe showing meaningful rate incentive as of the end of 2025 [18] Group 4: Renovation Lending Opportunities - Renovation lending is identified as a significant untapped opportunity in the mortgage market, with training sessions being offered to help brokers structure and close various renovation loans effectively [9] - The training aims to position brokers as go-to resources for buyers and referral partners, emphasizing the importance of in-house disbursements and dedicated renovation support [9] Group 5: Technology and Innovation in Mortgage Services - ACES Quality Management conducted over 8.6 million quality-focused audits in 2025 and launched ACES Intelligence™, the first AI-powered quality control engine in the mortgage industry [5] - The new technology enables natural-language loan selection and automated exception writing, significantly reducing manual review time and enhancing overall efficiency [5] - ICE's MSP loan servicing system is highlighted as a best-in-class platform that can help servicers drive efficiency and meet evolving demands in a competitive market [6]

Core Insights - The U.S. homeowners currently hold a record $17.8 trillion in equity, with $11.6 trillion being tappable, indicating a strong potential for continued HELOC and second mortgage offerings [1] - The Mortgage Bankers Association (MBA) anticipates a rise in overall origination points from $1.7 trillion last year to $2 trillion this year, with unit origination expected to increase from 4.572 million to 5.598 million [1] - Non-QM loans have seen a significant growth of 53% over the past year, increasing their market share from 5.21% to 8%, with projections suggesting a potential rise to 15% in less than two years if the current growth rate continues [8][9] Industry Trends - The mortgage market is experiencing a shift towards non-agency loans, with innovative lending solutions becoming increasingly necessary as traditional banks withdraw from conventional lending [8][9] - The introduction of AI-powered tools, such as ACES Intelligence, is redefining quality control in mortgage services, enhancing efficiency and productivity for loan reviews and compliance [4] - The updated MeridianLink® Mortgage product suite aims to streamline the mortgage lending process, providing lenders with greater control and efficiency [2] Economic Indicators - New home sales unexpectedly surged by 20.5% in August, attributed to lower mortgage rates and builder incentives, although caution is advised due to the volatility of the data [17][18] - The overall trend in new home sales has been relatively flat, with expectations of a slowdown in single-family construction impacting GDP growth in the coming quarters [18] - Seasonal hiring in 2025 is projected to decline, reflecting ongoing economic uncertainty and a shift towards leaner staffing strategies among companies [13]

Financial Data and Key Metrics Changes - In Q2 2025, the company achieved a funded loan volume of approximately $1.2 billion, representing a 25% year-over-year growth, while revenue increased by 37% to $44.1 million [14][34]. - The adjusted EBITDA loss for the quarter was approximately $27 million, with expectations to reach adjusted EBITDA breakeven by Q3 2026 [34][36]. - Total expenses decreased by approximately 3% in Q2 compared to Q1 2025 [35]. Business Line Data and Key Metrics Changes - Funded loan volume by product was composed of 67% purchase loans, 20% second lien, and 13% refinance loans [34]. - The home equity and HELOC loans saw a significant increase of 166% year-over-year, while refinance loan volume increased by 109% [14]. - The direct-to-consumer (D2C) model generated 64% of the funded loan volume, while the Tinman AI platform contributed 36% [34]. Market Data and Key Metrics Changes - The company reported a lead-to-lock conversion rate increase of over 30%, from 3.3% to 4.4%, attributed to the implementation of Betsy AI [10][46]. - The Birmingham Bank in the UK grew its loan book by 90% sequentially in Q2 2025 [38]. Company Strategy and Development Direction - The company aims to achieve profitability by focusing on AI-driven technology, reducing corporate costs, and diversifying product and distribution channels [7][14]. - The strategic priorities include driving growth opportunities independent of broader economic conditions, reducing expenses, and improving operational efficiency [14][16]. - The company is expanding its Tinman AI platform to serve local mortgage bankers and financial institutions, creating a unique market position [7][19]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving adjusted EBITDA breakeven by Q3 2026, driven by volume growth and improved contribution margins [34][36]. - The company highlighted the increasing consumer adoption of AI and its potential to enhance operational efficiency and profitability [10][16]. - Management noted that the mortgage market presents significant opportunities, particularly in home equity lending, which is expected to grow substantially [60][64]. Other Important Information - The company has built a comprehensive AI platform that integrates various mortgage processes, enhancing customer experience and operational efficiency [10][12]. - The company has a strong pipeline of partners interested in utilizing the Tinman AI software, indicating robust demand for its technology [23][28]. Q&A Session Summary Question: Can you characterize the partners trying to enter the space using your technology? - The company is engaging with next-gen wealth management firms, traditional fintech lenders, and mega fintechs looking to offer mortgage products to their customer bases [41][44]. Question: How much volume is needed to see meaningful benefits from cost reductions? - The company indicated that it already sees benefits from reduced costs, with labor costs per fund significantly lower than industry averages [46]. Question: What has driven the lead-to-lock conversion rate increase with Betsy? - The expanded functionality of Betsy, which now assists throughout the entire loan process, has significantly improved efficiency and customer outcomes [51][52]. Question: Can you provide updates on the B2B side, specifically regarding the Tinman AI software? - The company has successfully onboarded a small to medium-sized bank onto the Tinman AI platform, achieving rapid implementation and loan processing [54]. Question: Can you elaborate on the home equity business growth? - The company reported a 260% year-over-year growth in home equity volume, positioning itself as a leading home equity lender in the U.S. [60][61].