For Caliber Home Loans's VA loan program, should we focus on expanding eligibility criteria or improving the loan terms for existing qualified borrowers?

Introduction

For Caliber Home Loans's VA loan program, we're faced with a critical trade-off: should we focus on expanding eligibility criteria or improving loan terms for existing qualified borrowers? This decision will significantly impact our market reach, customer satisfaction, and overall business performance. I'll analyze this trade-off by examining key metrics, designing experiments, and providing a data-driven recommendation.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking our VA loan program might be underperforming. Could you share how it's currently performing compared to our other loan products?

Why it matters: Helps understand the urgency and potential impact of changes Expected answer: VA loans are growing but at a slower rate than other products Impact on approach: Would influence whether to focus on expansion or optimization

• Business Context: Based on market trends, I suspect there's untapped potential in the VA loan segment. What's our current market share and growth targets for VA loans?

Why it matters: Aligns our strategy with overall business objectives Expected answer: We have a 10% market share, aiming for 15% in the next year Impact on approach: Would guide the aggressiveness of our expansion strategy

• User Impact: Considering the unique needs of VA loan borrowers, I'm curious about our current customer satisfaction rates. How do they compare to industry benchmarks?

Why it matters: Indicates whether to prioritize improving terms for existing customers Expected answer: Slightly below industry average due to lengthy approval processes Impact on approach: Might lean towards improving terms if satisfaction is low

• Technical: Given the complexity of loan eligibility criteria, I'm wondering about our system's flexibility. How easily can we modify eligibility rules or loan terms in our current platform?

Why it matters: Determines feasibility and timeline of implementing changes Expected answer: Moderate flexibility, but major changes require significant dev time Impact on approach: Could influence which option is more viable in the short term

• Resource: Considering the potential scope of changes, I'm thinking about team capacity. What resources do we have available for this initiative in terms of personnel and budget?

Why it matters: Helps determine the scale and timeline of potential changes Expected answer: Limited additional resources, must prioritize high-impact changes Impact on approach: Might favor focused improvements over broad expansion