Bose George: Okay, great. Thanks a lot.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Eric Hagen – BTIG. Your line is open.
Eric Hagen: Hey, thanks. How are you doing? Good morning. A quick one here. I mean are you projecting any increase in delinquency rates as a result of higher interest rates and mortgage rates? And are there any kind of assumptions around the credit environment which you know appear in the earnings sensitivity that you have on, I think it’s Slide 12?
Kurt Johnson: Hey, Eric, it’s Kurt. So we are projecting a slight increase in delinquencies from here. We’re starting to see not just in our portfolio but portfolios overall a pickup in delinquencies in other consumer products. So primarily auto, but credit cards are ticking up as well. So we do anticipate a small increase. However our market LTB is 54% and it’s pretty clear that this time around consumers are definitely prioritizing their mortgages. So we’ve indicated that the 2% delinquency rate that we saw at the end of the quarter was about what was the lowest that we’ve ever seen in our portfolio. So while, yes, it will take up slightly and we anticipate to tick up slightly, it probably won’t be a material adverse environment for us in 2024.
Eric Hagen: Yes, got it. That’s helpful. You know from a modeling standpoint, what are the kind of like drivers or conditions you might look at for selling or financing, the excess spread, maybe how to think about that benefit to the bottom line and even your cash flow and your leverage into next year?
Kurt Johnson: Yes and so if you look at kind of the supplement, you’ll see that the retained was a 225 basis points and that’s not because we’re paying a big multiple for that, it’s because we are actually retaining a bigger strip. So we’re looking probably in 2Q or 3Q to be able to do another access transaction like we did in 2Q of this year.
Eric Hagen: Got it, okay. And then just following up on the conversation around capital, I mean it sounds like you guys kind of alluded to it, but you mentioned you’re looking at the high yield market. It sounds like maybe you’d tap that market just to be opportunistic and kind of keep a cushion of cash. Is that — am I — are we reading that correctly? And just kind of what you might access for the high yield market for just being clear about that? Thank you.
Kurt Johnson: Yes, I mean I think exactly that. We’re certainly looking at kind of where we’re trading right now. We’re talking to the agencies. We’re engaging the interests of high yield investors. But we think doing that and paying down some of our MSR lines is sort of a, it’s something we think about pursuing maybe not this quarter because we’re going into the holidays, but maybe in the first quarter of next year.
Eric Hagen: Got it. That’s helpful. Thank you, guys.
Kurt Johnson: Thanks Eric.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Giuliano Bologna with Compass Point. Your line is open.
Giuliano Bologna: Good morning and congratulations on another great quarter here, and Chris so great working with you. I’m looking forward to working with you for the next year and good luck when you move on from, at the end of next year. The one thing I was curious about was when I look at the deals you’ve done, you’ve obviously made a lot of acquisitions, imported a ton of lines in the past couple of quarters and you still have a strong pipeline going into 1Q. I’m curious about your appetite for doing larger deals in the high 10s or you know $100 billion plus range and is that something that we should think would happen a little later in the 2Q or 3Q range obviously depends on what are the conditions. Is that a good way to think about how you try and scale things or is there any limitations to how much you can board in a two or three quarter range?
Kurt Johnson: You know, there’s Giuliano, first of all, thank you for the comment and I’ll just remind you, 15 months is a long time. So you’ll hear a lot from me between now and then. But that aside, we have a very large appetite for very large deals and we’re the buyer of choice in the industry. We’re one of only a few buyers that could even operationally take on those large pools. And so we’ve been preparing for this for a couple of years and now with Basel II endgame in place, we think a number of larger banks, regional banks will begin bringing some large pools to market. So we’re expecting to see that happen. We’re prepared for it. We have the liquidity lined up. We’re going to be raising a fund to take advantage of those returns as well.
So I think you should assume our appetite is very strong and probably the strongest in the industry, but we’re well prepared for it. And we have the capability obviously you’ve seen consistently we’re buying $5 billion to $20 billion pools as we speak. Obviously Home Point was you know 80 billion. The subservicing we announced that we just won is $80 billion. And to Chris’ point we’re starting to have strategic conversations with some large entities that could really result in significant size and fully prepared to take those on. And then to Chris’ point also we’re probably the only counterparty that can really move that kind of size. And your question about operational limitations, yes, there are some, but we’ve got an outstanding platform.
Jay Jones who’s our leader over there has been running servicing has onboarded some massive amount of loans in the last two years. So I think we’ve proven we can do it. We’ve developed a lot of proprietary technology that allows us to do that much more seamlessly than anyone was able to do in the past. So there is a limitation, but we space out certain boardings to avoid ever tripping that and I think we can buy lots of volume next year without in any way cause, coming even close to what our limitations are.
Giuliano Bologna: That’s great. Thanks for that. The next thing that I’m serious about just taking on for a second was, well, when I think about the originations side of the platform, you’re obviously bringing on a lot more [indiscernible] and that should translate into more opportunities to originate. Yes, it seems like there’s going to be a quarter or two delay to jump Home Point up and running. But is that is that a good way to think of it? And then I realize we’re probably, if we’re not at the draw for probably close to the truth somewhere, volumes, origination volumes will probably go. So we think about that in more linear way as you could grows over the next few quarters in terms of that where origination could go or is there any other optionality there?
Christopher Marshall: That, you’re looking at exactly right. A lot of the portfolios, I’d say probably half of them have not really been solicited in the last couple of years. So we would expect to have marginally higher opportunity there. Of course rates are higher. We’re at the trough for originations, but with more portfolio we have more at bat, so you should see originations do a little bit better. The second thing I mentioned on originations, we’re making some very large investments in originations right now, even though we are at the trough, we are preparing to be much more efficient and to be able to ramp much more quickly when the cycle does turn the other way, just like we did with servicing back in 2019 and 2020. So we’re seeing the benefit of that now. We’ll eventually see the benefit later. But in the near-term, we should see incrementally higher opportunity in originations.
