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Market Pulse is a monthly podcast by Equifax, in partnership with Moody’s Analytics. Equifax hosts bring you interviews with industry experts on the latest economic and credit insights that can help drive better business decisions. Whether you’re in financial, mortgage, auto or another service industry, we help make sense of the latest economic conditions that impact you. This podcast series supplements our Market Pulse webinars, which occur on the first Thursday of each month.
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Welcome to the Market
Pulse podcast from Equifax,
where we break down the latest economic
and credit insights to help you navigate
today's business landscape.
Welcome to this special edition of
Equifax Market Pulse podcast. I'm Ashley,
senior Vice President
Mortgage sales leader,
and I'm honored to host this conversation
with one of the most insightful voices
retail lending. Jordan Sullivan,
director of Retail
lending at CSL Financial.
No corner of our industry is seeing
more change right now than the
credit scoring ecosystem since the
FHA announced its decision to welcome
VantageScore into the
mortgage scoring process.
CSL Financial is one of the first lenders
to use VantageScore for underwriting.
Jordan, I just want to say thank you
so much for taking time with us today.
Thank.
You very much for having
me on. I appreciate that.
But first, let's get an economic
update from Moody's Analytics.
The Federal Reserve is in for
an interesting year in 2026,
but it started on a
quiet note. As expected,
the rate setting Federal Open Market
Committee held its target range for the
federal funds rate between 3.5% and 3.75%.
At its January meeting,
inflation is elevated,
but doesn't appear to be accelerating.
Some of the price hikes from tariffs
have made their way through to consumers,
and the FOMC will continue to bet that
any additional tariff induced inflation
will be temporary.
This is consistent with our baseline
forecast as we expect that growth in the
core PCE Deflator will top out at
2.9% in the second half of this year,
up from the latest reading of 2.8%.
And while it may be a difficult time
to be on the job hunt right now,
layoffs remain relatively subdued,
and this is affording the FOMC,
the ability to be relatively patient
when it comes to monetary policy.
The economy advanced at a
solid pace in late 2025,
and our tracking estimate of incoming
data in the fourth quarter suggests that
real GDP grew at just under 3%
and stimulated fiscal policy
and the lagged effects of previous rate
cuts will deliver a jolt in the first
half of this year as well. As a result,
the majority of the FOMC is not seeing
an economy that is in need of immediate
support,
but we do expect that a few more
weak job reports will persuade the
committee to cut the Fed funds rate by
25 basis points when it meets again in
March. And after that, we assume two
more 25 basis point cuts for 2026,
the gradual pace of rate cuts and heavy
fiscal borrowing will limit the impact
that overnight rates when their lower
will have on the yields of longer
dated treasury securities, which are
typically used to price mortgages.
We expect that the yield on tenured
treasuries will remain range bound between
four and 4.5% for the foreseeable future,
which is roughly consistent with our
estimate of its long run equilibrium.
But the stubbornness to decline further
will keep upward pressure on the 30 year
fixed mortgage rate. However,
an announcement in January by the Trump
administration outlining instructions
for Fannie Mae and Freddie Mac to
purchase $200 billion in mortgage backed
securities will likely compress mortgage
spread somewhat in the near term.
The spread has declined by about 20
basis points since the announcement,
but we expect the spread to bottom out
at about 180 basis points by the end of
the year without additional MBS purchases.
The housing market will therefore
gradually improve this year as lower rates
modestly stoked demand,
but affordability concerns will
remain a key limiting factor.
Thank you, Justin. To start could you,
could you please give our listeners
just a brief overview of who CSL
Financial is, your core mission and
the philosophies behind your motto,
common Sense Lending?
Yeah, thank you.
Our core mission obviously CSL Financial
CSL stands for Common Sense Lending,
and our core mission is to provide housing
opportunities for individuals looking
to purchase manufactured homes.
So we primarily do what we consider
called chattel lending and we provide
financing for individuals who are looking
for alternative to the standard brick
and mortar sticks and bricks type found
out foundation homes that other buyers
are looking for.
So our philosophy here at Common Sense
Lending is to use practical lending
guidelines that are easy to understand
and follow for both our retailers,
our borrowers, and for
our employees as well.
So we try to make the
process simple. .
Yeah, I love that.
I absolutely love easy processes for sure.
So you've established a
significant presence here in
manufactured home industry.
What drew CSL to this
vital market segment,
and what unique challenges
and opportunities do you
see in serving hardworking
families with varied credit profiles?
So what really brought CSL
financial to the marketplace was a
need for simple simplified
financing for manufactured homes
lending with programs that actually
are for the borrowers that make up the
marketplace for manufactured homes.
One that the borrowers could understand
our program to understand our
guidelines. So we just wanted to
try and make it simple and reliable.
One of the challenges we face, obviously,
is the same challenge I
think everybody faces,
and that's that regulatory climate
that everybody has problems with,
and it's always seems
like it's always changing,
and they're always adding
stuff or taking stuff away.
So I would probably say that's one
of our biggest challenges in today's
environment.
But what we're trying to do is we're
trying to play catch up with that.
Another unique challenge that we see
every day is that the borrowers that don't
fit a traditional credit profile with
either a thin credit profile or a skinny
credit profile,
or a derogatory credit on their credit
report we want to make sure that we're
providing them the opportunities
for home ownership.
So one of the things that we saw was
when FHFA approved the use of the Vantage
scoring models,
we wanted to make sure that
we took advantage of those
scoring models to help us
maybe gain that competitive
edge over our competition so
that we could kind of help win to those
people a little bit better and make sure
that our portfolio's a little
bit stronger. And then we also,
the other thing that we saw was the
families and the borrowers that are using
our services,
we found out that they typically have
gone out to one of the credit monitoring
services. Several of 'em out there. I
won't name any of 'em by name but they're,
everybody knows who they are.
And what we found out is that they used
the Vantage scoring models as well.
A lot of 'em used the Vantage 3.0 or
have used the Vantage scoring models
previously. So the borrowers are
real familiar with those scores.
And what we saw was a ever widening
gap between the old scores and the auto
oh fours and 90 eights to what the
VantageScores were being used in those
monitoring services. So we would
constantly get those questions of, well,
I thought my credit score was 850
and now you're telling me it's 650.
So what we wanted to do is we wanted to
be able to have scores that were more
relatable to our borrowers so that we
didn't have that challenge of having to
explain what was going on
with the credit scores and,
and things of that nature to the borrowers
and just make it simplified process
and make it easier for them to
understand what's going on as well.
Nice.
And when did you start utilizing
VantageScore in your underwriting process?
We started using the
VantageScore right around 2023.
We had used the other scoring models,
obviously the FICO 98 Classico
four Beacon, but in 2022,
we started exploring ways to save money
and acquire better predictive scoring.
And so when we met with
Equifax, they said, Hey,
we've got a great product that
we're just coming up with.
We've been using the Vantage 3.0 Scores
for a while but we have a Vantage 4.0
model that we'd like to start using.
We're trying to get it approved.
And so we said, well, let's
look into it. Let's make, see,
let's see if it makes sense to
us. Let's see if it, you know,
show us how it's better.
So Equifax put together a couple of
reports doing some research using
scoring models from a cross section of
our borrowers and our borrower profile.
And we saw that the vantage scoring model
was a better predictor of that credit
risk than the other models
we had used before were.
And so around 2023,
we began using the Vantage 3.0,
and then obviously we had to,
to wait for our LOS or one origination
software to kind of catch up
with those scoring models.
So as soon as they were able to include
the Vantage 4.0 model into their
software, we immediately added it.
And I want to say that was
probably wait 2023 was whenever we
finally got all of that
engineered and going together. So
but we've enjoyed using it.
And with the information that we gained
from our studies showing that it was a
better predictive model, we said,
why, why don't we start using this?
Yeah, that makes complete sense.
So shifting a little bit,
VantageScore is positioned to help
lenders qualify up to 10% more borrowers.
How does this, in addition to
the 24-month trended data view,
provide the visibility needed to
confidently approve a borrower who
might have been missed by
a limited snapshot model?
Well, in risk-based lending,
it's always important to know whether
your borrower's credit is improving or
declining,
not just how many late payments they
had or where those late payments have
fallen, or what type of of credit
those late payments were attached to.
So the trended data really helps us
visualize and explain this in a way that's
understandable to our borrower
and to our loan officer.
We have a lot of new young loan officers,
so they want to kind of see why these
credit reports are scoring it the way they
do.
So having that trended data in there
helps them and also helps them explain it
to our borrowers. So it's been very,
very helpful to see those trended
views. Our pull through during this
time as you had kind of alluded to,
of 10% more borrowers are
being able to be qualified,
we've actually seen our pull through
from 2022 to 2025 increase from
about 8% to about 20%. So we've
definitely been able to see that,
that pull through come through.
And where I think we've
gained that competitive edge
is being able to grab those
borrowers that had a thinner credit file,
or maybe even those that
had the delinquencies,
but those delinquencies were further
back in their credit history and weren't
really indicative of what they're
going through at the current moment.
So that trended data was really
helpful in, in improving that score.
And what we've seen is we've been able
to approve those and get those loans on
our books while we've maintained
a lower delinquency ratio
with those credit scores as well. So
we're kind of following those on other,
they're newer loans,
but they haven't gone as delinquent as
fast as some of the loans in the past.
Wow, that's awesome. So as
you've mentioned earlier,
you specialize in manufactured home
industry a sector serving hardworking
families who sometimes
have, as you've mentioned,
thin or non-traditional credit
files. Right. and so, and and,
and you've mentioned, you know,
through the conversation how, you know,
leveraging Vanish score has impacted
your ability, you know, to deliver more,
more loans.
But how has that specifically impacted
your ability to fulfill your mission of
giving clients an equal opportunity?
Well, I think it's really kind of helped
us because the scoring models we see
throughout the marketplace
and the monitoring agencies.
So the borrowers kind of know what they're
going to be approved at as they kind
of move in with us. So we
kind of lay out, you know,
they already know what their scores
are going to be similar to each other.
It can also look at
that skinny credit file,
and I think it does a lot better job at,
at predicting a score or giving you
that predictive scoring with the
VantageScore versus one of
the other scoring models,
because it just puts more emphasis
on kind of what's here and now versus
what the borrower has
really done in the past.
So we've really been able to get in
touch with those skinnier borrower,
those skinnier credit files those
files that don't have a lot of depth,
but they've all of a sudden started.
So those hardworking people that
are monitoring their credit,
that are trying to build those credit
files, it's given those people scores.
So we're able to go out and kind of
approve those borrowers a lot more than
I think our competition does.
And we can see that because we can kind
of see who's pulled the credit reports
in the past with the,
with the previous pools,
and we know that they've been pulling
those credit reports through other
scoring models and we're
not approving them.
And however we've been looking at those
and thinking and seeing those going,
man, this person's been working
hard to improve their credit,
get better credit scores,
let's go ahead and give them an
opportunity to get approved and,
and show us what they,
what they're able to do.
So we're able to take that borrower and
fit them into our programs our limited
credit profiles, our derogatory
credit profiles a little bit better,
kind of help those people that have been
trying to recover their credit a lot
better as well.
I am going to ask a sidebar question.
So the question I have is, is,
you know, you talk about, you know,
you talked about the fact that you,
you've been able to generate,
you know, a greater you know,
qualifying more consumers.
And you mentioned, you know,
instead of what Vantage is saying from
a 10%, you're seeing more of a 20%.
Are you seeing that in a specific
demographic? Meaning like,
are you seeing more from
a millennial perspective,
or is it really kind of
widespread from thin, you know,
thinner no credit consumers are,
are they in one segment area that
you're seeing more, more than others?
No, not really. We're seeing it
across the board through everybody.
I do think that we're seeing our ability
to approve those people with a thinner
credit file and a lot more,
and those are probably your,
your millennials or your newer
generation borrowers. The,
I would say, you know, currently
probably the 25 and under crowd.
But then what we're also also seeing is
we're also seeing those thinner credit
files, especially on the
older people, the 60,
70 plus age categories that have
thinner credit profiles where
they've taken their retirement and they've
paid everything off and they haven't
needed to finance anything.
And now they're coming back to the
marketplace going, well, you know what?
My granddaughter needs a home.
I want to buy it for her.
Or I want to move out of my,
you know, falling apart one,
spend the last few years of
my life and in a nicer home,
I retire into a nicer home.
So we're seeing those people
with thinner credit files,
so we're also being able
to approve them as well.
So we're kind of seeing that across
the board. And then, you know,
we're, we're really also seeing is those
people that have a full credit file
we're able to see, I, we, we feel,
and we see those scores being able to be
populated for those people just as well
and giving us kind of a better predictor
of that. Are they moving from like a,
a b credit to an a credit category,
or are these people starting to really
load up on their debt with that trend
analysis, and are they moving from that
a category down to that B category?
So we're able to kind
of see that as well too.
So it's kind of helping us across the
board kind of in all markets of our,
of our sales.
Thank you for sharing the move by f the
Federal Housing Finance Agency FHFA to
adopt VantageScore 4.0 Marks a
significant shift towards affordability,
that projected,
that's projected to deliver 600
million plus in savings to lenders and
borrowers. For lenders who
are hesitant or slow to adopt,
how would you reframe non adoption,
not just as a missed opportunity,
but as a competitive disadvantage?
The cost of it,
we've been able to see cost savings
using the vantage scoring versus what the
cost of the other scoring models
are. Over the past two years,
I would say we've probably saved close
to a hundred thousand dollars just in our
expenses alone. So from,
so one advantage to adoption of doing
adopting it very quickly was we were able
to start seeing our own cost savings
change almost immediately
overnight. So our,
the cost of our credit especially for
those that we don't recoup such as
declined loans or withdrawn loans
we've been able to see recoup
those costs very quickly and not have
to have such a high expense on that. So,
so one of the things I would tell
other, other lenders is saying, Hey,
if you want to try and
keep your costs down these,
these scoring models tend to be a little
bit cheaper or less expensive so you
can immediately see a return
on your investment there.
Also I think with these credit
report, with these credit scoring,
with the vantage scoring we are capturing
several areas of the marketplace where
other credit score scoring models
are missing especially with those
major derogatory or those
thinner credit files.
So our risk-based lending approach allows
us to feel comfortable with the scores
that we're receiving,
knowing there are a better predictive
model than what we're seeing with the
other scoring models. So we really reply,
we re we rely on that to approve
the loans that others are passing
up and or giving higher pricing on
so that we can actually help the
borrower and we can feel better that
we're giving the borrower a better product
and a better price than
what our competition is.
So we've seen a tremendous
growth and our a and b paper,
or what we consider a and b paper our
delinquency has not been increasing in
these categories.
And one of the things that we're actually
looking at is we're going back and
relooking at all of
the, the credit before.
And what we're seeing is we're seeing a
really ri a really big rise in our B and
C paper delinquency based on
those other scoring models.
And one of the things that Equifax did
was when they ran that research report on
us,
they kind of showed us that those what
we considered A and A and B and B and c
paper was really kind of a step below,
and we should have been predicting
that these loans were going to be going
delinquent,
whereas the loans that we're doing
now are holding steady and not going
delinquent.
So it means that we're saving money on
the front end of not having been charged
as much,
and then we're saving a lot of money
on the back end and not having to spend
those expenses on servicing and
collections charge offs and things of that
nature because the,
the model is just better predicted
and just a better decision tool.
So .
That's amazing. Thank you so much for
sharing that and going that in depth.
We really do appreciate it.
As you well know there is a focus,
and this is going to kind of skirt on
what we were just talking about a little
bit, right? There is a focus
on high cost origination,
yet credit report fees are minimal,
part of the total costs, a closing cost.
We feel that the solution
to cost isn't less data,
but earlier intelligence and having
a true financial picture of what the
borrowers of, of the borrower
earlier in the process.
So can you kind of walk us
through how CSL utilizes soft
pool data, like a pre-qual
or a pre-approval and
to take on a smarter risk by
reducing origination expenses and
helping ensure your credit decisions
are both reliant and accurate?
Sure.
one of the things that we've really
found out to be really helpful with us is
the Equifax and tele Emerge product which
allows us to be able to only pull one
credit score and using
the Vantage 4.0 scoring,
we found that the scoring across
the credit bureaus is a lot,
SIM is very similar to all of the scores.
So that emer really helps us
pick and choose, you know,
if somebody's going to have a low score
on one bureau then they're probably
typically going to have that low
score on the rest of the bureaus,
so we don't even pull those bureaus.
So that's a huge cost savings for us.
So that inte emerge product through
Equifax has just been a game
changer for us. But it also makes
us feel comfortable that if we,
if we see that first score or that
soft score on the Equifax report,
if it's going to be outside of our range,
we can just go ahead and deny that loan
or offer all alternative financing for
those loans.
So that automatically right there
saves us just a ton of money.
And then also over the past, so yeah,
so over the past few
years we've saved tons,
tens of thousands of dollars
just on that product alone,
so that's what's really,
really been helpful to us.
Wonderful. Wonderful, thank
you. Well, before we wrap up,
I do have two final
questions for you. ,
what major innovations or strategic shifts
can the mortgage industry expect from
CSL over the next 12 to 18 months to
further drive common sense lending?
One of the things that we're,
we're looking to implement and wanting
to do is the integration of the
employment check that Equifax
now offers on the credit reports.
That is becoming a very efficient tool
for us because we automatically know
where we have to go and what we need to
do in order to get that V-O-E-V-O-Y if
we need to, you know,
can we go ahead and order it from the
work number or do we need to swap over to
another product to order that.
So implementing that on our credit
reports is a huge game changer for us,
implements a lot of efficiencies.
And then we're also working with our LOS
provider to incorporate the bankruptcy
score and with our credit reports as well.
We had been using it,
but we switched LOS systems and
the new one didn't work with it.
They didn't know how to handle it.
So now we're working with them to be
able to incorporate that bankruptcy score
again,
to be able to come up with a full
school card scorecard for our borrowers.
We think that that's just going to be
invaluable and we just really appreciate
those products for Equifax to
be able to implement those.
The other thing that we're looking
forward to is really kind of expanding our
online presence and our
self-directed services,
so our online application and then being
able for the borrower to actually be
able to pull up their own credit
reports so we don't even have to,
so they can almost get an
automatic decision right
there just based off of those
soft scores, those soft pulls, so
that the borrower can say, okay,
I will be approved for this, or
I won't be approved for that.
And really kind of be real innovative
with that and almost have the borrower
kind of decision their own.
So really targeting the younger generation
that loves the automation. .
, you know what, we've
actually found that the, the,
the Gen Xers you know, myself
included in that category,
are actually using a lot of
those services a lot more.
I agree. I am too .
We're seeing a lot of the, you know,
that 50 to 60 to 70
crowd they're going, no,
just email it to me or just text it
to me. Whereas the younger crowd goes,
oh, I see, I saw a text
message from y'all, but I, I,
I texted stop to it because it was spam.
And they're just so less trusting and
they don't want to use that technology
technological advantage. So it's kind of,
it's kind of weird how it's gone through
those generations like that. So yeah.
It really, yeah, it really
has. I agree. I agree.
What final piece of advice do
you have for other lenders and
industry leaders who are
still evaluating VantageScore?
My advice is to go ahead and use the new
scoring model sooner rather than later.
All it's going to do is help boost your
portfolio and ensure that your credit
risks associated with the, your
borrowers is priced accordingly.
You're going to have better
delinquencies, you're going to have better
scorecard modeling if you start
using these credit scores earlier.
Many of the times in the past I've used
scoring models that were not as adept or
as good a predictor of the borrower
which has led to pricing issues or us
losing loans to our competitors.
So if you want people to think of you
as innovative and you want to make sure
that your portfolios are kind of
buttoned up and really tight go
ahead and switch over to
the new scoring models. Now.
a lot of the research out there can
show you that the vantage four is a lot
better even product.
So and what we've seen is it's
really hard to explain those,
those scoring models to our borrowers.
Again, the scores that they see that are,
that are public are not the scores
that they're getting from you,
and it just causes a lot of
confusion in the marketplace.
So to help your borrowers,
to help your loan officers and to ensure
that your loan portfolios are going to
be producing, go ahead and
switch over to this course now.
Thank you, Jordan.
We really do appreciate you joining
us today and providing such a power,
such powerful insights.
And thank you to everyone tuning into
this special edition of Equifax Market
Pulse podcast.
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The information and opinions provided
in this podcast are intended as general
guidance only, and are subject
to change without notice.
The views presented during the podcast
are those of the presenter as of the
date.
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Investor analysts should direct inquiries
using the contact desk box on the
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