Episode Transcript
[00:00:00] Speaker A: Hello and welcome to the up show, season four, where every mortgage has a story. This is the ultimate hub where the hidden stories behind mortgage industries come to life.
My name is Michael Kelleher.
[00:00:13] Speaker B: And I am Michael Zhao.
[00:00:15] Speaker A: And in every episode we will dive deep into the entrepreneurial spirit. And this episode will be no different. The strategic insights and the breakthrough innovations that built the world's greatest mortgage companies. So whether you're advancing your career or as we always say, you want to go to all these conferences but you can't afford it or your leaders won't send you because you're too talented.
We're here to help you understand what the industry leaders are saying and show you they are approachable if you are talking about the subjects they're interested in. So if you're exploring opportunities in fintech prop tech, you're in the right place. So let's get ready to unlock the story behind every mortgage. Today we are going to dive in with Ben Fertig from Constructive Capital.
And if you don't know about this company, there are one or two like them that you will be hearing a lot more about because they are driving about a quarter of the business of the top lenders out there. And a reason behind it is I think loan officers are evolving to where they are today. When we talk about evolving, you have a stronger capital market background than I'm used to and I talk to a lot of CEOs because this is where seem to have dived in. Do when you first got into the industry, can you tell us like where you came from? We, we hear a lot of people coming from sales. Would you say that's where you came from or more from, from the number side.
[00:01:42] Speaker C: That's, that's an interesting question. So September of this year will mark my 29th anniversary as a mortgage banker and all but 10 months out of that time have been in, you know, some type of a leadership position. So I did start out as a loan officer but I started back in, you know, right at the time where you know, the finance company model was transitioning into, you know, the nationwide subprime all day, you know, platforms in, in the mid-90s. And it, that's just the way that it was. If you were any good, you generally got promoted. So I did have a sales background but you know, once I got into leadership the capital markets in and themselves which were transitioning back at that time right where the first subprime and all day securitizations, you know, started to, to come to market just, it was Always prevalent.
And now if you look at the residential investor loan market where constructed deploys capital, you know, I think relative to, let's say the agency markets where you know, there is a lot of focus on, you know, the function of price because the liquidity is generally always going to be there because of the GSEs. You know, I think liquidity at large is, has been a big driver of non QM in general, but even more specifically business purpose loans. And you know, that's why I spend a lot of time focusing there.
I think it's just a driver in terms of everything that we do. I mean getting the best terms and cost and construct of capital is definitely integral in this space.
[00:03:29] Speaker A: With your unique background, I think Joe Cocker has the song I wish I knew what I knew now when I was a little younger. Do you think you find that a great leader is judged by how many people they're leading or is it a different metric, like how much volume you're, you're overseeing? Do you have a different look on that now than you did back when you started?
[00:03:50] Speaker C: Totally different look. I mean I think, you know, one of my core principles in terms of leadership in general is that you know, your, your leadership priorities and style have to always be evolving. Right. And I do believe that that leadership and management are, are two distinct systems of action. But if you just go back to when I started and you guys remember this from the mid-90s, I mean everything was a hyper sales focus. It was yes sir, no sir.
And the leadership in it of itself was really tied very, very closely to like the direct management, you know, of those businesses where um, now I mean, I think you see a bigger divergence. Yeah, you gotta manage your business. But leadership is really kind of, you know, there's a bigger gap in between and I think there's a couple of inflection points in my career where you know, you've seen the, the employee base change. You know, I think the global financial crisis was one, you know, after that. Mortgage management wasn't the same prior prior global financial crisis. And I think Covid was obviously the bigger one, which just changed employees and employee mindset, employee priorities at large.
Well beyond mortgage banking, what is it.
[00:05:11] Speaker B: That in the subprime space that you came from, there's a lot of sales that were involved, but you had plenty of product that was available and with constructive capital. Fast forward another 25, 30 some odd years.
We don't have subprime anymore. We have DSCR loans. However, one of the products that are out there right now the name is different, but the product's the same. It's rtl. Some people know it as private or hard money. But the residential transition Loan, otherwise known as rtl has always been around. It just hasn't been as prevailing because actually versus 30 years ago where everybody knew about it and it was just kind of a product that we just kind of put it on the wayside because of the lack of inventory there has been recently in housing. That product is actually gaining some traction and speed not only as a mortgage broker, but also it's picking up some steam on Wall street right now. So can you explain how constructive capital has entered into that space deeper on a national scale?
[00:06:18] Speaker C: Yeah, no, I mean, so if you. The term residential transitional loan, I would, you know, not going to surprise anybody. It was a, was a Wall street term. Right. I mean they didn't, when they were going to investment committee and you know, they didn't like to use fix or flip or rehab loan or certainly not hard money. But I think, you know, your point's absolutely right.
You know, this lending has existed for a lot, forever or a long time.
It was generally more of a regional fragmented market.
And I would say that, you know, when I came into this space, and I've been exclusively in the residential investor loan market since 2012, is where you really started to see capital engage. And you know, from there, you know, you started to see these more, you know, institutional recognizable mortgage bankers offer these products and when, and back then you were still coming out of, you know, post GFC dynamics, there was a lot of foreclosure inventory. The end retail market was pretty strong, you know, and you're like, okay, well it's, it's. Maybe this is more of a trade than a business, right? You've got a lot of inventory, you've got a strong end market, which is really your key mitigator, you know, when it comes to the risks of these loans.
And you know, at that point institutional capital, you know, felt that there, there, there was an opportun that all shifted obviously getting into 2018, 2019, where there was no freaking inventory, no foreclosures. And you know, you started to see some markets. I mean this is before we were going into Covid, right? Kind of cool off like the NFC west markets, for instance, California markets, Seattle, etc. You know, so now it's, it create. You know, obviously Covid changed everything. There's no supply out there, you know, relatively speaking. But to the extent that the borrower base for these loans can get an opportunity in terms of acquisition, the, you know, the ability to sell it into the end market, you know, because of the supply constraints is probably a little bit easier. And then this, the biggest challenge comes back to you know, the same thing that all of us are dealing with in this ecosystem and the IMBs, which is just the affordability, you know, relative to that end buyer, you know, subject to a high six low sevens mortgage rate and you know, just trying to get the economics to work.
[00:08:57] Speaker A: How does a loan officer and a leader at a company right now listen to this podcast and say to themselves we need to diversify into that product a little bit. You say items like securitization, but the loan officer listening says I need that. How do they approach their, their leader and say so what do they say? Like we need to reach out to constructive capital?
[00:09:23] Speaker C: Yeah, I mean I think if you look at the use case from the perspective of you know, an IMB or a mortgage broker who's historically originated in the, you know, let's say conventional or govy space, right.
If you look at, from the most macro perspectives, right, You've got, and you look at housing, you know, rental and this is, this is pre global financial crisis, but was accelerated by the global financial crisis. You've got rental becoming a bigger part of housing at large and you've got single family rental becoming the bigger part of rental, right? So if the home ownership rate is 67%, you know, and single family rental is about half of what rental is, I mean call it 15% of the market to be, you know, among friends, you know, that's, that's a huge opportunity from a macro perspective. Then you go back and you look at these products and you go well you know your, it allows you to diversify your revenue stream. They've really proven to be pretty price agnostic. I mean there's a little bit of rate sensitivity and impact, especially more so in the DSCR space, maybe, maybe than an rtl. But, but they still both, both asset classes have, have proven to be rate agnostic for one. And then you know, so you're diversifying to that end, you know, and, and the cost to originate them. I mean we've seen it actualized but conceptually should be less. The investor borrower base is a recurring borrower base. Therefore you can dilute your cost of acquiring that borrower. And then I think the other side of it from a cost perspective and an efficiency perspective is that it's a more relaxed compliance and regulatory environment, at least for now.
And you really can see that when you're scale or constructive or we're doing 750 to 1,000 of these loans a month. I mean you can see that in real basis points. So I mean I think there's just like, it's, it's almost crazy like not to be in them. And I think, you know, mortgages against homo for the purpose of homeownership and ordoc high mortgage is a great never going anywhere. It's very dependent, as we all know, to state the obvious, on market conditions. And I just think that these asset classes just buy you a little bit of a hedge, you know, in terms of market rates and market conditions in general. Yeah.
[00:12:03] Speaker A: And if you want to hear reasons to jump in, our season three season finale was why RTL is where IMB should go. We have four common themes in our show. One is the riches are in the niches.
Another one is, you know, you only know what you know.
And then if you keep doing what you've always done, you're going to get what you've always got, you know. So some of these are, are themes along the lines of people are, are staying within what they're comfortable with. Just traditional. What is the culture constructive that they could be aware of as they start to branch out and start to give deals that fit your matrixes?
What's the type of culture they're going to be working with or need to start understanding how to work with?
[00:12:52] Speaker C: Yeah, look, it's interesting because you, you asked the question before, you know, how has, you know, my, my leadership philosophy, you know, evolved? And I'll tell you that what works really well in residential investor lending and it's, I wrote an article on this actually years ago was that what part of the resume was really important, you know, because as a young manager I wanted to just dart straight to experience. Right. I mean, was, did this person have, you know, a reasonable background where I could get them in with a short curve and get them into production, period, you know, but you know that there's that like kind of spine print underneath the, the name of the candidate that just says, you know, critical thinking, hard working, you know, that's the stuff I look for, you know, so I mean everybody has it to some extent, but as you're screening candidates for this space, you know, and I, I think like it's a little bit more like subprime where, you know, I'm not going to go out and say that it's, it's pure common sense lending because I mean it's scale. Obviously you're worried about certain analytics and, and those types of things.
But, you know, if you just look at how you're putting loans together with compensating factors and how that, you know, integrates your credit policy, how it integrates into your processes, how it integrates into how you make decisions, and how it integrates into how you recruit, I think is super critical. So that's what you're going to find. I mean, we know that especially if we have a new relationship with an IMB or a broker, you know, there's going to be some aspects of these loans that they're not familiar with, whether it be lending to an entity or something along those lines. And I think, you know, we have, of course, unbiased, you know, the right personnel and the right systems in place to deal with that. And then I think the other side of it is that, you know, we've had unbelievable retention. Now look, we're growing in a, in a market where there's no job. I mean, obviously the mortgage labor market isn't, isn't exactly tight right now. But, you know, look, we do some things where, you know, we think we're uniquely transparent.
We have, you know, quarterly meetings where I have, I don't know if you guys have ever been familiar with slido at the conferences where you can ask the anonymous questions, you know, I mean, you could say bad things about the panelists, do whatever the hell you want, but, you know, so we actually put that out there in these quarterly meetings. My HR people told me that was crazy because it's just unfiltered, you know, and, and look through 2022, we got a lot of questions. Hey, are we going to have layoffs? Are we going to have, you know, we're going to shut down like all these other lenders? I mean, you know, as rates were going up after the first quarter and you know, we took those head on, you know, and I think, you know, that that aspect goes, it goes a long way. And you know, we're always looking to get feedback from our employees. I think, you know, what's important to an employee in 2025 is a lot different than when I started in the industry where it was how much money can I make? You know, what's my opportunity for career advancement? You know, that's, that's, that's not necessarily what employees priorities are right now. You'd be surprised if you actually, you know, spend some time in, you know, aggregating that feedback.
[00:16:33] Speaker B: If you could just hold that thought, Mike. I think right now we need to go to our sponsor. Then we'll come back and I'll have a question on for you on some of the products that might be available for growth for the independent mortgage banker.
[00:16:45] Speaker A: Yeah, you couldn't have a better match, Mike. Being a, a savant in the, in being on the field of these type of loans, you do need good partners, as Ben said. And what an incredible opportunity. That really is a blue ocean for a lot of these lenders in certain zip codes that just aren't. No, they don't have competition bringing it to market, especially to the real estate agents. So when you have partners like at the closing table or partners that know how to use data locally to bring those deals to light, let's, let's listen in and hear two of those great examples here.
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[00:18:41] Speaker B: How often is it that we can actually synergize for those of us who are in the LRTL space, How often can we actually synergize with other independent mortgage bankers and act either as a wholesale conduit or even act as a partner in case another IMB just doesn't have the capital markets team to go up and train and create more bandwidth because the cost to produce a mortgage loan on the agency side has been higher over the course of the last few years but the cost to produce an actual RTL or DSCR loan has actually decreased because of the amount of potential profitability that as a result of interest rate and product and ltv. How do you think you would propose to introduce your product out there instead of working against the grain? Or how about working lockstep as a partnership with other independent mortgage bankers? So how would you want to be able to introduce what you do into the industry with the imb?
[00:19:42] Speaker C: Well yeah look, I mean we offer you know we're active in both DSCR and DSCR related products and that includes actually you know, a multi asset portfolio structure, you know which is, you know I think that's unique in terms of, yeah you can see DSCR on some of the non QM shelves but really just having a full suite of product classes in terms of dscr. If you really dig into the needs of the residential real estate investor you'll find that that's important for several reasons. And then you know, RTL in of itself, yeah you've got your you know, kind of down the middle fix and flip loan but you've got ground up construction loans, you've got just straight bridge loans that don't have you know, a construction component but are transitional in nature. Good example of that would be property's completed, it's listed, you know, there, there's equity and the borrower wants to effectively you know, advance against his marketing time for instance. So constructive offers two, primarily two constructs in terms of being able to provide capital to an imb. Number one is you know we will table fund, you know we, we actually will table fund in the name of the IMB to the extent that they are interested in that so that you know, they can maintain their branding and those types of things.
So they're facing the borrower the same that they would in anything that's conventional or guvby or we'll buy the closed loan and we can do that through effectively a non dell or delegated structure.
We actually work with some, well a couple of large IMVs where they actually just want to broker it to us and you know I don't think they want the compliance headache to be honest is they'll just broker it to us and we fund it in our name, you know but that gets them out of having to you know, report it to whatever, you know, licensure they've got to report it to. So you know, we're flexible with how that we do, we support it regardless of what the ultimate funding construct Is, but we think it's just, you know, imperative that the IMBs are in this space. Right? I mean, just look, I mean you've got diversification of rate agnostic products, you know, to help with the recruiting retention of loan officers.
You know, I think that you can find very quickly that to your earlier point, you know, there's some advantages in terms of the cost to originate.
[00:22:43] Speaker B: You know, there's some software out there on there which, which I've used, you've used. And maybe the independent mortgage banker, they have accessibility to it, but maybe they just don't want to sign up for it. Some of it can be cost prohibitive. You know, I, I know of one construction software program that online it's like $15,000 a month and if you're not doing that type of business on the regular, it's just not cost effective. Right. You got, not only do you have the online software, but then you have all the stuff that's affiliated with it, the trust account, AB escrow, so on and so forth. Is that something that they need to have or is that something that you can provide as a result?
[00:23:19] Speaker C: Yeah, no, so, so Constructive would effectively absorb all those costs and you know, depending on the structure. So, you know, let's just take your, a typical fix and flip loan, for instance, right? You're going to make an initial advance generally against the acquisition of a property.
And then to your point, you're going to hold back a portion of that loan that's going to be dispersed, you know, correlated to work completion effectively. Right. So you know, we do it on work completion. You could do it on cost reimbursement. There's different structures but you know, if it's work completion, you're going to need somebody to go out there, order those inspections to validate that the work has been done and you're going to have to have a funding process to disperse to the underlying borrower, you know, the proceeds for the work that's been completed. So to your point, I mean it takes a, you know, you've got to have a technology infrastructure to deal with that. There are a ton of good programs out there. But if you end up working with Constructive, we would actually allow that part of the process to be white labeled back to the imb. Also, to the extent that they want to do it and not all of them want to do it at that point, they could be the direct contact to the borrower. They can bring it in to our asset management group and we would basically run it through our process almost similar to how the conditional approval would work on the front end. Right.
And you know, at that point they could maintain the borrower relationship and all the communication thereof. And I think that's another understated point of these loans that, you know, you've got this recurring borrower base out there and the loan structures in and of themselves are enabling you to have more touch points throughout the process of the loan. Right? So conventional loan, and I'm going to stereotype them. Look, you close the loan, you know, you send that borrower birthday card, you keep in touch, you do your referral work, but that borrower is coming back in four or five years, generally when, when the market conditions make sense or when he goes and buys another property. You've got multiple touch points intra loan in terms of an rtl. And by the way, that's a recurring borrower most likely because real estate investors generally, you know, work with more than one property. So if you start looking at the fact that, you know the opportunity is there, if you're a good relationship builder, it gives you more of a chance to differentiate yourself.
And it's just a, it's just a great asset class. For, for that reason, one of the.
[00:26:01] Speaker B: Fears that an originator in and an IMB would have is let's say you're. There's an origination, right? So there's, there's points, there's fees and so on and so forth. And then there's a rehab part. It might even be a bridge loan. All of a sudden it gets paid off in say three months because they've rehabbed it. Hot housing market. Someone comes in, buys the property, it's three months later.
The originator who did the Fannie Mae loan or the FHA 203k loan, they're like, I got to pay back my commission.
[00:26:28] Speaker C: Now there's no premium recapture in rtl. I mean, because it's, look, that's the nature of the loan, right? Actually, if the loan pays off in three months, look, you'd like it to, you'd like it to have a longer duration than that, I think optimally. But I think that, you know, most of the stakeholders, whether it be, you know, the owner of that loan or are pretty happy if, if that happens. So you're not going to have there, you know, there may be three months minimum interest in, you know, you've seen that in some closing documents, but that's not anything that is going to revert back to the originator. That's, that's, you know, mean that's a borrower contractual obligation to the extent. And I would say that's still a pretty low. I mean you do see it, but that's still a pretty low percentage of the population. I think, you know, I, I think, you know, you, you've seen duration go up for obvious reasons, not the least of which is that the trade I think has gotten a little bigger on the construction side. So when I started back in, you know, 13 years ago, seven, eight months was, was probably the average duration. And I think, you know, you've probably seen that get to the 12 to 15 month range.
You know, just based on the evolution of the market.
[00:27:50] Speaker A: Selfishly, Ben, podcast, video casts, they can go viral if you actually speak beyond the loan officer to the end, United States citizen just trying to do the American dream and work their way up and, and obviously property and fix and flip and hgtv.
If somebody is listening, trying to learn here and you've done it really at somewhere, I'd say on the eighth floor out of 10. But bringing it back down to the first floor in their backyard. What, what is a profile of somebody that wants to go out and try and find one of these loans from a loan officer? What, what, what is the character of somebody that can get into this type of industry? Well, I shouldn't even say this can.
[00:28:33] Speaker D: Get into doing picks and flips.
[00:28:36] Speaker C: Yeah, I mean, look, I think that, you know, to answer your question, it's a wide range, first of all.
Secondly, I'd say, you know, from a prevalence perspective, you see a lot of potential investors come out of educational programs, for instance. Those are, I mean, they've been around forever and not to your point on tv, you'd be surprised how, how prevalent those are. But I think if you look at, you know, what, what the market impact is on that potential borrower pool. Look, I mean, you've got programs out there for a residential real estate investor to buy a, you know, transitional property with 10% down. Right. Even for somebody who is, even for somebody who's got no experience. Right. So the barrier for entry is, is pretty low, I think. So anybody who's, you know, got the ability to, you know, effectively put the money down, who's got the ability to front, you know, enough or carry subs or whatever it might be up until the point of being be reimbursed through the aforementioned process is a potential borrower. I will say that, you know, this has been a difficult market I think just because of the supply constraint that we've seen at least up until now, where, you know, you've got to be careful because the same supply constraint that exists at the end retail market, you know, you're seeing it, you know, in terms of the value added, the transitional markets and you know, it's not, it's, it's not a, it's not a great landscape.
[00:30:20] Speaker B: Right.
[00:30:20] Speaker C: I mean there's not a lot of foreclosure, inventory out there, as you guys know, etc. So it could get better. But, but look, to the extent that somebody can find a project, you know, where the economics pencil, I mean the barrier for entry to get in is, is not that great.
[00:30:37] Speaker A: It seems like Compass real estate agents, you know, with their internal network now or it doesn't hit the MLS, Mike, for me it screams loan offices. Hello. Like 30% of fix and flippers are real estate agents. Aren't those the ones you're all trying.
[00:30:51] Speaker C: To get tons of great, you know, off market strategies there that are, that are big. I mean, you know, you look at the homevestors franchises for instance, I mean that's kind of, you know, how they, how they build that, that thing.
You know, a lot of the data companies offer some type of off market opportunities. The fricking servicers offer off market type of opportunities. Now you know, when you're, when you've got a servicer who's got a sophisticated client on the other end of that REO and you know, you're a first time investor, you know, bidding against a servicer, you know, I'm not sure that's the trade that you want to be in. But to your point, there's a lot of strategies that are out there that are not just hey, go comb the MLS for you know, something that looks like, you know, it needs some love and care.
[00:31:46] Speaker B: You know, I have one specific question to ask you Ben, if because I, I've seen this more often is that, you know, dad owns a house in Florida or Los Angeles, they've owned it for X amount of years. Free and clear, they pass on and the kids inherit the property. And the kids live in St. Louis or Des Moines or whatever. Not in, nowhere near that subject property. But it's not a purchase. They've inherited the property. And free and clear, can they still get, can they still get this type of loan to fix up the property?
[00:32:17] Speaker C: You generally on RTL sometimes that's tougher. In DCR where you know, you're reporting the actual basis of that property to data that's going to end up in, let's say a securitization, right? So it gets a little Bit, a little bit trickier probably. But rtl, I mean, and this is kind of what, you know, and we've had this conversation before where you know, you look at RTL in and of itself, right, as an asset class becoming more standardized.
There was $8 billion of, of securitizations issued in RTL last year. I think you know the forecast from like let's say a Nomira and these guys know RTL capital markets like really good is 12 million. I would say that, you know, most of those deals will probably end up rated and you know, so they're going to be rated, you know, by the agencies. So what that ends up doing is like, you guys know the rating agencies as well as anybody. I mean it just creates the need for a lot of data. So you might, if it's a refinance because they inherited it, have to put that data point in there. And it could be tricky for a rated deal. But that's why I think there's so much room outside of the rated deal for other capital to come in, you know, and make a common sense loan in that, you know, in that situation where yeah, look, there's, there's no basis, right. But I mean, you know that borrower has had some type of a vested interest through inheritance and you know, you can get comfortable with the rest of the credit quality. That's a good loan. I mean I, you know, so I think that you know, you can, but to answer your question, you can find funding for that loan at good terms.
[00:33:59] Speaker A: And this is really, we're hoping our audience is the mortgage industry that here's you, you really need this to fight against the technology revolution coming because I can tell you there's no app that knows how to do this yet. And having an ally like Ben and his team is. It's people that are in the trenches. Before Mike does his wrap up question slash outro question, I just have a question coming off of Easter here. I think we went the whole Easter where I didn't get to say one thing about what I do or there's nobody cares about mortgage. It's not interesting enough. Do you have any stories Ben, about talking with your capital market friends and they're like why are you in mortgage? And you're like it's a six. I don't know what your numbers but.
[00:34:43] Speaker D: It'S like six trillion dollar industry.
[00:34:45] Speaker A: What do you mean? This is a pretty big one. They're like, yeah, but it's, it's mortgage or some adversity like, like you know running into.
[00:34:52] Speaker C: So I'll tell you, you want to talk about capital markets.
One thing that's interesting about constructive, right And I've gone through, you know, there was a, there was a cr, you know, probably not crisis the way that we would define it today, like relative to Covid, but there was a crisis back in the late 90s when they got all of the securitization assumptions wrong. And like, you know, the market started 80% then you could go to 85% LTV and all these things got paid off early and they, you know, and then I've, I've been through the gfc, I've been through Covid and I've been through, you know, the, the second quarter of 2022, which was extremely difficult, the non agency, you know, in the non agency space. But interestingly, constructive relative to our origination ramp up was really hitting critical mass by far and away. March of 2020 was going to be our biggest, biggest month that we ever had.
And then, you know, second, third week, March 2020, capital markets just ceased to operate, right? Especially non QM. Nobody could hedge because, you know, the Fed was picking up all of these, you know, agency bonds and it was like, so we stopped lending. What are you going to do? You hear there's no capital markets for this stuff, especially on the, on the DSCR side.
So I'm running a contest, a March Madness contest for brokers which was kind of like front weighted, like, okay, you get the thing done in the first round, we'll pay you this amount of extra yield spread. You do it in the second because you can play yield spread on these loans and quite honestly it's, you don't have to show it on the hud.
So I had a couple hundred thousand dollars in broker fees. I'm like, I, I have no chance to bring in any revenue indefinitely at this point. Nobody knew what was going to happen back then, right? And then the complaints started to come in and so we went back as far as, and we were working a third party model paying back earnest money to borrowers through the brokers. I mean $12,000, $15,000 earnest money check. Paid out every penny of the, paid out every penny of the broker contest. Cost us about a half a million bucks all in.
And you know, it was funny because everybody kind of went away and then the market came back, call it third quarter 2020. And we had so much momentum and that was one of the times where we picked up a ton of market share. And the other thing we did is we diversified into you know, direct insurance Money back in 2021 when everybody was getting huge premiums regardless of what mortgage asset you were originating.
And you know, we structured that in the forward commitments and you know, when, when price, you know, when the, when the non QM markets were getting repriced, as rates were going up and spreads were blowing out, you know, we did really well there. And, and you know, so there was a couple of really difficult times that were integral to our growth cycle, you know, in terms of getting it to where it is now.
[00:38:15] Speaker A: Kudos on that. For context, they were editors of yours in the industry. Didn't even pay their own employees.
[00:38:22] Speaker C: Didn't pay employees. I mean, you know, you had $3,500, you know, payments to an LOS subscription, not getting paid.
But then even in 2022, I mean, I don't know if you guys remember, but the DSCR space and even non QM broadly, you know, you had retrades of 200, 250 basis points in terms of coupons. And we happened to be sitting in a forward commitment at the time.
You know, that was, that was a big leg up for us. And you know, then we grew 40% from 22 to 23, another 40% from 23 to 24, you know, and we're well ahead of where we were in 24, you know, for through the first quarter. So it's just kind of, and I hear, you know, your guests all the time. I mean, and these guys, like these IMBs who've been around for a long time are unbelievable businesses, as you guys know. I mean, they've been through every, like we're, I mean, you know, I don't want to take any away from myself, but constructive is well capitalized. Right. It's institutional ownership. And you know, some of these businesses are, it's just kind of incredible. But the more the common theme is you always hear these guys talking about the long game, you know, and that seems to be what, you know, separates longevity from, from otherwise. Right. Like, it's just like, it's just you, you've got to commit to that mentality. And in mortgage banking, it's hard. In non agency, it's harder because, you know, liquidity itself is always, you know, such a focus. But yeah, it's been a good ride. Yeah.
[00:40:06] Speaker B: Yeah. Ben, this marketplace of rtl, it's interesting because number one, it's profitable for the independent mortgage banker and it's good for the loan officer. There's a lot of things that the IMB look at, but I think that one of the things that not only is it profitable, not only is there no early payoff, it's a, it's an opportunity to be looking at the types of products that are available for investors and even people who want to figure out, hey, I have this free and clear property, what can I do to make some money? The RTL market just isn't for fixing and flipping. It's also fixing and maybe and if you have a portfolio, portfolio as an independent mortgage banker of wanting the product to give to your loan officers so they can go get another refinance, maybe they have a credit issue or something like that, now there's an opportunity for them to figure out how do they fix it, how do they fix their credit opportunity, Go and go, put it into a DSCR or even an agency loan for the future. The alternative products that are available for investors are great. Turning into owner occupied, you're going to have some issues. Why? Because business purpose loans, they're, they're very flexible. The owner occupied loans are the ones where you're going to have qualifying features that may prohibit the refinance opportunity. So always be informed on what you're going to be doing as the end goal in mind. Most consumers don't necessarily have that and I think that this is the opportunity now to be marketing as we still have at least one and a half to two years of growth and demand in the owner occupied housing market, causing even more demand for investment properties. Ben, thank you so much for joining us on the show. We appreciate it. And if anybody has any further questions, please reach out to us or reach out to Ben. He'll put his, we'll put his contact information in the LinkedIn post. And Mike, take it away.
[00:41:57] Speaker D: Thank you for joining us on this journey into the heart of mortgage innovation. Remember, every mortgage has a story and we're here to help you write yours. If you enjoyed today's insights, please subscribe, share with your network and connect with us on social media. Until next time, keep pushing the boundaries and uncovering the stories that drive our industry forward.
