Bradley Shuster: Yes. Hi, it’s Brad. So as we said, we do have active dialogue with FHFA and the GSEs. We always have and we value the consistency and transparency of that engagement. As you can imagine, there are a range of items that we discussed. Our most recent conversations surround access, affordability, and fairness and those remain points of focus among a broad range of other issues, but nothing really critical pending right at the moment.
Daniel Eisen: Okay. That’s all from me. Thank you.
Adam Pollitzer: Okay.
Operator: [Operator Instructions] Your next question comes from Geoffrey Dunn with Dowling. Please go ahead.
Geoffrey Dunn: Thanks. Good afternoon. Adam, I wanted to ask you about vintage seasoning and specifically, there’s going to come a time where the ’22, ’23 books, higher loan vintages, higher interest rates, they stick to season out and take more effect of the earnings profile and credit results. But I’m curious, as you look at the ’19 through ’21 vintages, are those developing along the same curves? Or is the unique low interest rate profile, maybe elongating those curves? And is there any potential for that maybe softening when the ’22 and ’23 hit a couple of years out from now?
Adam Pollitzer: Yes. Jeff, it’s a good question, you know. And look, obviously, we spent a lot of time talking about how our existing borrowers, broadly speaking, are so well situated to manage through both good times and also to the extent that a stress environment emerges because they have significant embedded equity in their homes. Because we’re in an environment today with high employment, very low unemployment, they’re all gainfully employed. And because they are locked in with record low 30-year fixed rate notes that provide them with a manageable debt service obligation. Obviously, as we look forward, you know, as we sort of progress the production stream from ’22 and through ’23, we’re seeing more and more borrowers in the portfolio that had equally strong credit characteristics as those who came into the portfolio in earlier periods, but they’re carrying higher note rates.
And so what does that mean, right? What does that mean for portfolio performance going forward? I think one critical piece is that they are – we’re still seeing the same rigor, the same rigor from an underwriting standpoint that’s applied on the origination side. That hasn’t shifted. These are borrowers that are fully vetted that are tested where their ability to pay and support their mortgages is evaluated and there’s an affirmative decision made upfront. So that’s a positive. Even though the rate itself is higher, these are borrowers who’ve obviously been underwritten, assuming that rate will carry forward, and we’re comfortable with the debt obligations that they have. As we look forward, the bigger driver of credit performance that we see that may shift the experience we see for the ’22 and ’23 production years compared to, say, 2019 through 2021, it’s really the house price path, right?
The borrowers who are in their homes and in their loans for several years now benefited from an extraordinary house price appreciation environment through the course of the pandemic that we may not see again ever or certainly for some time. And so the appreciated equity positions of the borrowers who begin to face stress just as a natural seasoning of the portfolio happens from the ’22 and ’23 book years will be different in its implication than what we see now and we’ve seen for the 2019 through 2021 borrowers. But that’s not necessarily related to the note rate. It’s really just about the house price path going forward.
Geoffrey Dunn: Okay.
Adam Pollitzer: At the end of the day borrower with 35 DTI, whether they get there with an 8% mortgage or a 3% mortgage still has a 35 DTI. A borrower with a 45 DTI, whether it’s an 8% or 3% note rate, it’s still the same calculation in terms of their – call it, their debt service coverage.
