Tuesday’s edition of the Mortgage Leadership Outlook series
featured Jeffrey Tesch, chief executive officer of South Windsor, Connecticut-based RCN Capital
. Tesch was joined by series host Andrew Berman, head of engagement and outreach for National Mortgage Professional
magazine, to discuss the COVID-19 pandemic's impact on RCN, the industry overall and the future of RCN in the “New Norm.”
Tesch began in the restaurant business, but as he explained to Berman, his true passion was in real estate investing. He established RCN Capital, a direct, private lender, at a time that the mortgage meltdown of 2008-2009 was fizzling out, and the industry was in a major state of flux.
“We used private money to begin making mortgages to individuals buying distressed assets coming out of the great recession,” recalled Tesch. “We came out of the financial crisis of 2008 really trying to elevate a product that was in the shadows. We have done that with our partners across the nation, the independent mortgage broker, and we couldn’t be more proud to continue to provide them with the tools they need to expand their product offerings and build their business from Main Street on up.”
Tesch is a firm believer that the local mortgage brokers are truly the ones who have their fingers on the pulse of the communities they serve. “Empowering our brokers to have the certainty of the close and getting their customers across the finish line … it’s really everything to us,” said Tesch. “We are really proud to be that broker’s partner.”
And like the rest of the industry, RCN had to weather the stormy period inflicted when COVID-19 first struck in March. The company had to pause lending for a brief period, but Tesch was happy to report that RCN Capital retained its entire team during the pandemic and business is beginning to pick up.
“For us, it was a very turbulent time. The securitization market froze up. We had to freeze pricing and eventually, we came out with new, updated models. Slowly as time moved on and we got into May, the securitization market began to thaw,” said Tesch. “We are seeing non-QM loans once again going to the marketplace and things are beginning to return to normal. It’s been a crazy 60 days, but our brokers are blowing up our phones today … people are back in the game in a big way.”
Additional Highlights Of Tesch’s Conversation Include ...
►On the housing market’s role coming out of the pandemic: “Real estate, while it caused the last recession, I believe it is what is going to take us out of this recession.”
►On the difference the independent mortgage broker brings to their local community: “The independent mortgage professionals knows their community better than I will ever know their community. I have no business sitting in my office in Connecticut, meeting with an investor from middle-America and telling them how I know their community. But when I partner with an originator based in their community, get to know them and their needs, then bring RCN’s products into the mix, it’s just a match that you can’t beat.”
►On spreading the RCN message and bringing it to local communities: “Once we started investing in the technology behind what powers RCN Capital, that’s when it became apparent to me that we might have something here. I can be that local brand in the hometowns across America, financing those investors via that local residential mortgage broker and we would really have the ability to be the hometown lender, while being remote here on the East Coast.”
►And on the topic of housing demand, Tesch feels not much has changed since the pre-pandemic days of Q1 2020: “I am going to argue that today, there are not enough single-family homes. You look at the demand and the purchase sales that are being executed … the demand is there. There are just not enough single-family homes today, just as there were not in February.”
Check out the full discussion between Tesch and Berman below.