Hello, LOs!
Let's dive right into the latest news regarding Better.com. Earlier today, CEO and company founder Vishal Garg announced that he was going on leave effective immediately. Garg simply couldn't weather an immense shitstorm of his own creation. CFO Kevin Ryan will take over day-to-day responsibilities for the time being, and the company will hire a third-party company to do a "leadership and cultural assessment" of Better.
I asked you all on Wednesday if you would work for a lender with a bad reputation, and I got quite a few responses, all of which were variations of "LOL, no way." Please allow me to share a few.
"I think a lot of lenders have a bad reputation but a lot comes down to individual transactions and who is involved – for example, a lot of Realtors hate Quicken [Rocket Mortgage], and others love them – boils down to their experience," said one LO. "What's sad about companies like Better and the other monster refi-focused chop shops is that most of their LOs seem to be entry level with little to no industry experience --- the companies focused on profits instead of training and development, as it seems Better is, really do their employees and customers a disservice.
The mortgage pro continued: "These LOs that were laid off are very likely going to struggle as they wont have the training and experience needed to succeed at most other lenders and with refis drying up, I can't imagine many call centers or shops paying LO salaries are hiring at the moment. I would never work for a place like that, however I can understand they could be a good entry point to the industry for people."
Another industry veteran said some lenders hire managers who knowingly violate compliance and laws or have been fired from a previous job for harassment. Some to this day violate Dodd-Frank compensation laws, he said.
"So when I see LOs going to work for ABC Company, I think, 'Wow, you know that X is there and he'll be your manager, right?'"
Finally, let's address Better's not-great present, and questionable future. Roger Moore, the president and founder of mortgage brokerage Loan Pronto, believes Better has some fundamental flaws it needs to address.
In a LinkedIn post, he outlined six reasons he believes will lead to Better's valuation dropping by 75% or more following an IPO.
- They lost money in Q1 of 2021- the most profitable quarter in mortgage history. A monkey with a computer could have made money in that market.
- No pricing elasticity- their product is entirely based on below market pricing. To make a profit, they have to increase pricing which ironically will kill their volume which means they have to continue firing people and raising margins which then leads even less volume- this is called a death spiral.
- Their only competing advantage is pricing- customers don't care about their process or #fintech BS. When your only value prop is price, you have no value.
- Fintech won't conquer mortgages-$2B+ raised and my company can close loans 3x faster than Better.com and at higher approval rating. We've raised $0.
- They are a one trick pony- They are not equipped to prosper in a purchase market or higher rate environment. No realtor in America will refer a client there.
- They don't understand the lifetime value of a customer- Better believes every client is a transaction, not a relationship.
Agree? Disagree? Share your thoughts with me at jkleimann@housingwire.com.
James Kleimann
Managing Editor, HousingWire
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