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Your past customers are sitting on a pile of home equity and a first mortgage they're never going to refinance. Figure gets a borrower approved in 5 minutes and funded in as few as 5 days, and 489+ banks, credit unions and fintechs already partner with them to do it.

NEXA is one of the fastest growing mortgage companies in America. Is their business model even legal?

Depends which state you ask. Washington already answered. Their regulator fined NEXA last November for paying loan officers based on loan terms, the one thing the LO comp rule exists to stop, and the original charges asked to yank the license and ban them from the industry for five years. They settled for $62,650. That's a rounding error on a $14 billion shop. Nobody noticed.

Here's the model in plain English. You don't get rich originating at NEXA. You get rich recruiting at NEXA Lending. Every LO you sign up pays you on every loan they close, and every LO they sign up pays you too, THREE levels down.

And where does the override money come from? The margin on the loan. Which is another way of saying the borrower's rate. At the time housing in America can least afford it.

Then there's the "BDM program," where a Realtor becomes a part-time W-2 "marketer" and gets paid up to half a point of loan volume, as long as he/she promises not to talk about rates. If you've been in this business more than a week you know what that is. It's a referral fee wearing a name tag. I think it's supposed to be illegal to pay for referrals in mortgage? Who knows. Nobody cares anymore, evidently.

Now NEXA's going to pay LOs a slice of servicing income. Cadwalader's lawyers said the quiet part out loud: the higher the rate, the more the MSR is worth, the bigger the LO's check. Congrats to whoever locks at 7.25 instead of 6.875.

The owner Mike Kortas got a $281,733 judgment slapped on him personally in January by a Michigan judge who gave his sworn testimony "absolutely zero weight and credibility." BBB has them at D minus with 13 unanswered complaints. CFPB complaints have nearly tripled since 2023. And last month they made Anthony Casa an executive partner. Google him. I'll wait.

Here's who this actually hurts. The couple thousand small and mid-sized lenders who pay a compliance officer, run a fixed comp plan, can't match a "100%" pitch built on overrides they'd get fined for, and are watching their best producers get recruited by a downline calculator.

They're playing by 1974 RESPA and a 2013 LO comp rule written in shades of grey, while the biggest "broker" in the country swims through the gaps. Lenders have zero fear to operate however they want right now, consumers be damned.

Affordability has never been worse. This is the exact moment a kickback baked into a rate hurts the most. And both administrations, this one and the last one, have had the reform asks on their desk for years and done nothing.

Read the rest of this post here.

I've had more M&A conversations in the last 90 days than in the three years before it. If we don't see a pickup in volume between now and spring (that feels unthinkable), man are we gonna see another big wave of consolidation.

The shops on the block right now aren't dying. They're tired. Tired of carrying 2021 overhead on 2026 volume. Tired of paying signing bonuses to LOs who'll bolt for the next one. Tired of running a company whose math only works at 5-6% rates. Tired of the pay to play bull shit and what this industry has devolved into.

So here's my call. The next six to nine months will be a flurry of mergers, tuck-ins and founders handing the keys to somebody with a balance sheet. The biggest six months of LO movement in the history of this business starts now.

Banks that actually like mortgage win. Medium to big IMBs with capital win. Everybody in between picks a partner or picks a buyer, and the ones who wait get picked clean.

Please God let this be the final suckout. We're going on six years of a bear market for housing & housing finance.

Faking a paystub used to take a Photoshop license and a couple hours. Now it takes a prompt. Your doc review hasn't caught up.

I spend most of my week inside lender shops talking about AI. Every one of them is putting it somewhere. Marketing, the call center, underwriting summaries. Not one of them has asked me the question that actually matters. What does that same tech do in the hands of a borrower who needs to show $9,000 a month and makes $6,000?

Here's the honest answer. It makes a paystub your processor can't tell from the real thing. Right fonts, right deductions, year-to-date math that adds up, and an employer name that checks out when you Google it. The forger doesn't need Photoshop skills anymore. He needs a prompt and a free account.

We built thirty years of income verification on the assumption that faking a document took effort. That assumption was the whole control. The fonts and the math were never the proof. The effort was. And the effort is gone.

Meanwhile the paper keeps piling up. More gig income, more side jobs, more income swings, more documents per file. More documents means more surface area for a fake and more processor hours staring at PDFs that can't be trusted.

So what's the fix? It isn't a better fraud detector pointed at the PDF. That's an arms race, and the other side has more time, better tools and no compliance department.

Meanwhile the paper keeps piling up. Truework’s 2026 Housing Affordability Report found the share of mortgage applicants with income instability climbed from 50% in early 2022 to 62% by mid 2025. More gig income, more side jobs, more income swings, more documents per file. More documents means more surface area for a fake and more processor hours staring at PDFs that can't be trusted.

Read the rest of this post here.

There’s nothing like a TMC conference. Lenders pouring into each other, talking about what’s working, what’s not. Experiences with tech and third party providers.

The AI governance sessions at The Mortgage Collaborative's Austin conference were packed all week, unsurprisingly.

A lot to unpack for lenders as they integrate this powerful new tech into their orgs in a safe and responsible manner. Kudos to TMC for facilitating these critical discussions and creating a council of its members to help guide actions and discussions. And to my friends Brian Vieaux and James Brody for providing specific guidance to lenders.

If you want to learn more about this incredible organization, just reply to this email. The February 2027 conference spot was announced this week!

NEW ORLEANS

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Taylor Swift has a new song named “Cleveland”

Presidents Cup weekend, golf fans

Oct 5 - THE REALTY ALLIANCE ANNUAL MEETING, Hilton Cleveland Downtown. Featured speaker.
Oct 11-14 - MBA ANNUAL CONVENTION AND EXPO, Hyatt Regency Chicago. Moderating the CMB Society session, and back with the MBA's Community Bank Committee, which I helped start back in 2014.
Oct 25 - ABA ANNUAL CONVENTION, Salt Palace, Salt Lake City. Speaking on the mortgage lending track.
Oct 27 - FHLB DES MOINES. Keynote speaker.
Nov 16 - TEXAS HOUSING SUMMIT, LBJ Library, Austin
Dec 7-8 - HOME FOR THE HOLIDAYS, The Ohioan, Columbus. Ours, and it will sell out.

If you're going to be at any of these, hit reply and let's get time on the books.

Sept 24-27 - PRESIDENTS CUP at Medinah Country Club, Snedeker vs Ogilvy
Sept 27 - MLB REGULAR SEASON ENDS
Sept 27-29 - MBA Compliance and Risk Management Conference, Washington DC
Sept 29 - MLB POSTSEASON BEGINS
Sept 29 - NHL SEASON OPENS, first year of the 84-game schedule
Sept 29 - JOLTS for August
Sept 29 - NATIONAL COFFEE DAY

OCTOBER

Oct 2 - September Jobs Report
Oct 7 - September FOMC minutes released
Oct 10 - mPowering You: MBA's Summit for Women in Real Estate Finance, Chicago
Oct 11-14 - MBA ANNUAL CONVENTION AND EXPO, Hyatt Regency Chicago
Oct 12 - Columbus Day / Indigenous Peoples Day
Oct 14 - Consumer Price Index (CPI) inflation reading
Oct 14 - Fed Beige Book
Oct 14 - MBA Tech Exchange, Chicago
Oct 15 - Producer Price Index (PPI) inflation reading
Oct 16 - Import and Export Price Indexes
Oct 16 - NATIONAL BOSS'S DAY (your move, direct reports)
Oct 17 - SWEETEST DAY (invented in Cleveland in 1922, so Ohio gets the credit and the blame)
Oct 20 - NBA SEASON OPENS, Knicks raise the first banner in more than 50 years
Oct 23 - WORLD SERIES GAME 1
Oct 27-28 - FOMC MEETING, rate decision Wednesday the 28th
Oct 30 - Employment Cost Index, Q3
Oct 31 - HALLOWEEN, on a Saturday, and the night a World Series Game 7 would be played

"Show me the incentive and I will show you the outcome." - Charlie Munger

$30 billion in home equity unlocked and 382,000 households served on Figure's platform. If your borrowers want to tap their equity and your shop can't get it done in days, somebody else is having that conversation with them.

Until the next one,
Swerb
[email protected]