In 1990, Stan Middleman, a former insurance and annuities salesman turned mortgage broker, launched Mount Laurel, N.J.-based Freedom Mortgage. Now celebrating its silver anniversary, Freedom Mortgage is licensed in all 50 states plus the District of Columbia and Puerto Rico.
During the past two years, the privately-held Freedom Mortgage has seen substantial expansions to its operations. In 2013, Middleman, current CEO of Freedom Mortgage, created another company, Cherry Hill Mortgage Investment Corporation, a real estate investment trust (REIT), with the goal of creating a new source of liquidity for his lending operations. The REIT raised an impressive $130 million in its initial public offering. Also in 2013, Freedom Mortgage expanded into commercial real estate lending, placing its focus on first mortgage originations from $2 million to $10 million in size for commercial mortgage-backed securities (CMBS) execution.
Last year, Freedom Mortgage acquired a pair of mortgage companies: BluFi Lending, a regional lender serving California and Nevada, and Continental Home Loans (CHL), serving New York and New Jersey.
National Mortgage Professional Magazine spoke with Middleman about his career and his success in the mortgage marketplace.
NMP: Freedom Mortgage is celebrating its 25th anniversary in business this year. What have been the most important changes in the industry since you began the business?
Stan Middleman: We went from paper files to paperless files, and we are more regulated now than we ever have been. Also, the number of employees it took to close a file in early 1990s is vastly different than today.
All of the activity we are involved with now is done much quicker and we are more efficient than ever. The technology that is now in place gives us much more confidence in our data. I believe our industry has never been as user-friendly as it currently is today.
The best is in front of us, not behind us. It is great to work hard and see so many people blossom in their careers.
Over the past quarter-century in business, what have been your most significant triumphs and challenges?
I don’t think I’ve had the highest of highs and lowest of lows. Every day, you put one foot in front of the other … I cannot say there was any particular triumph or challenge that was monumental. Surviving the mortgage meltdown is a pretty big deal … we grew our business post-crisis. That was a very big opportunity.
What makes Freedom Mortgage different from the competition?
There are lots of reasons to do business with us. We have correspondent business, wholesale business and conduct business relationships with customers in our portfolio. We deal in traditional referrals and direct-to-consumer as well. Each has a different value proposition. We offer a fair value in terms of price and service. I don’t know if Freedom Mortgage is as different as we are diligent, determined and consistent. Those are the types of things that make a company great.
What do you look for when seeking out new members of the Freedom Mortgage team?
It is always nice to work with someone who has the right skill set and believes in themselves. I look for someone with a good personality, someone you can trust and depend on—the kind of people you want to be around and can trust your children with.
Is it correct to assume that you do not have a high turnover rate?
We have given out a lot of 25-year anniversary gold watches! That is a testament to the number of people who choose to stay with us at Freedom Mortgage. We went from employee number one in 1990 to being well on our way to 4,000 today—you really cannot grow a company if the people you have leave every 15 months.
What is the story behind starting Cherry Hill Mortgage Investment Corporation?
A major difficulty in the financial crisis and during the post-crisis period was finding liquidity–it is the lifeblood of the industry. REITs, in general, will provide another source of liquidity to industry. Cherry Hill invests in mortgage-backed securities (MBS), whole loans and mortgage servicing rights. We were able to establish the REIT and help it come into existence, and then take it public on the New York Stock Exchange (NYSE). That was a very exciting event.
You are also serving on Fannie Mae’s Advisory Board and previously served on Freddie Mac’s Advisory Board. What do you see as the future for the government-sponsored enterprises (GSEs), which are going into their seventh year under federal conservatorship?The GSEs serve an extremely important function in providing liquidity to our industry. Those agencies enable companies like ours to foster homeownership. Without the GSEs, our job becomes infinitely more difficult.
As for a solution to the state of the GSEs, it is very difficult for Congress not to kick this can down the road. When the GSEs are feeding the Treasury as much as they do, it is hard to say, “Oh, stop that!” There is certainly not a lot of urgency for it.
What do you see as the near-term future for housing?
The volume of activity is okay. There is a lot of latent demand for homeownership. My expectations are that purchase activity will increase and continue to grow. We are at the beginning of an economic upturn and are coming out of the doldrums. I see people living in houses they can afford, which will give them the opportunity to grow their own personal wealth.
Outside of the office, how do you spend your leisure time?
I like to spend time at our summer house at the Jersey Shore and pursue the seasonal activities there. But one great thing in my position is that it allows me time to think of what new opportunities I can create and how I can grow the business.
Ultimately, what is your goal for your businesses?
To make Freedom Mortgage all it can be. The opportunities that exist in today’s market are greater than ever before. It is up to us to take advantage of these opportunities as they present themselves.
Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at [email protected].
This article originally appeared in the August 2015 edition of National Mortgage Professional Magazine.
