And I think that’s, the next final step, which is probably the option that’s furthest away, just commercialization of the technology. And that would require some investment to allow for multi-tenancy on the platform. But I think that, as I said, we – there’s a lot of talk about AI in the marketplace. And I look at what we’ve done on the system and I know many in the industry, I’m hearing want to get to 60%, 70% self-serve using AI. We’re at 95% self-serve on our system. And I think a lot of the AI discussions that are taking place in the marketplace are really yesterday’s automation discussions. And we built this system really to be robust and to really allow borrowers to – really be served. And I think that, we’ve had a lot of great AI development here in the organization.
On the production side, we have, we’ve deployed AI to read documents from clients and brokers, which helps in the classification of documents and extraction of data. On the servicing side, we can route all documents to the area that is affected, or needs to address documents coming in. We have a lot of great voice AI tools that we’re using. The most exciting one is the one that, we can record all customer conversations to drive better business outcomes, but also be able to see all customer complaints, which allows us to reduce the complaints, and continue to reduce costs. And so, I think that, this system is going to continue to outshine, and is one that is going to be really meaningful, first and foremost for us. We also think it’s important for the industry, and I’m excited about seeing others, reap the benefits as well.
Kyle Joseph: Got it. Very helpful. Thanks for answering my questions.
Operator: The next question comes from the line of Terry Ma with Barclays. Please ask your question.
Terry Ma: Hi. Thanks. Good afternoon. So, I think last quarter you guys spoke about a seasonal decline in ROE in the first quarter, but you should expect to continue to kind of build on that throughout this year. And obviously you guys printed 15% operating ROE this quarter. So maybe can you just speak to your confidence level that, you can continue to build on top of that 15% going forward, despite the new, I guess, higher for longer rate outlook?
David Spector: Yes. I think looking at the higher for longer rate outlook, we would expect our ROEs to generally be, our operating ROEs, I should say, to generally be in that sort of mid-teen potentially moving up to high teen ROE level as we move through the year, depending on the size of the overall size of the mortgage market. As David noted in his remarks, despite the fact that we are higher for longer, there are more and more mortgages that exist at these higher rates. And so, any bit of, interest rate volatility leads to greater and greater, refinance opportunities or opportunities for the market, to become that incrementally larger and sort of feed the flywheel in terms of our refinance business and boost our other channels. And so, we do expect a general increase from these levels of ROE, but probably remaining in the mid to high teens for this year.
Terry Ma: Got it. That’s helpful. And then I just wanted to follow-up on the hedging. If I interpreted your comments correctly, you guys were initially positioned for more rate vol in the first quarter. That did not materialize. So therefore there was some hedging inaccuracies that you guys have since adjusted. Is it possible to kind of give a mark-to-market on how those hedges have performed quarter-to-date?
David Spector: So, we don’t typically give the sort of inter quarter, updates and everything changes a little bit on a day-to-day basis, but we are tracking, adjusted for costs, much closer to our 90% to 100% hedge ratio this quarter than, than what we saw last quarter.
Terry Ma: Okay. Great. That’s helpful. Thank you.
Operator: We will take the final question from the line of Eric Hagen from BTIG. Your line is open.
Eric Hagen: Hi. Thanks. How you’re doing? Looking at Ginnie correspondent, I mean, how sustainable do you think those margins are at these rate levels? And how do you weigh the option to either, cut your margin or expand the credit box to win more business when rates are at these levels versus maybe rates being lower? How would you maybe change your risk, or return hurdles if rates are in fact lower?
David Spector: Yes. Look, I think as it pertains, listen, we’re not the organization that’s going to be going down the credit box to get more production. We’re always focused on margins, return and profitability. I will tell you that in the first quarter, we saw – we saw some kind of weird activity. We had a market participant who raised a bunch of capital that was just being overly aggressive. I will tell you that, there’s still share to be gained. We had a good quarter. We had over, we’re going to finish the quarter over 20% market share. We’re still the dominant player on the government correspondent side. I will tell you that I expect margins, to continue to, kind of run where they are today. I don’t, we’re kind of holding steady state here.
And we’re getting, as it pertains to correspondent. We’re getting increased gain on sale activity from good whole-own executions away from the GSEs. And so, I think that that’s important as well. But I don’t, as I think, we’ve gone off to a nice start in April, and I would expect that to continue through the quarter.
Eric Hagen: Yes. Okay. That’s helpful. I’m looking at Slide 23, and looking at the tangible net worth to assets. I mean, is there a target range for your leverage, at these rate levels? I mean, you guys are doing a 15% pre-tax ROE. I mean, how does that compare to your cost of capital and how do you see that maybe changing at, different levels of leverage?
