Better Home & Finance’s board has drawn a harder line against founder and former CEO Vishal Garg, arguing that the lender’s turnaround, permanent CEO search, and planned expansion into wholesale lending depend on keeping him out of an operating role.
The company’s Special Committee said Monday that Garg should have “no continuing operating role at Better,” escalating a control fight that began after his removal as CEO this month.
Garg remains a Better director and is leading a shareholder campaign to remove five of the company’s eight directors, including interim CEO Daniel Lewis. The Special Committee was appointed to respond to that effort.
“The decision to appoint Daniel Lewis as Interim Chief Executive Officer, transition away from founder-led executive leadership, and conduct a search for a permanent CEO was supported by every director other than Better’s founder and former CEO, Vishal Garg,” the committee said.
The statement tied the leadership dispute directly to Better’s operating strategy. The committee said the company remains within its third-quarter guidance, expects to exceed $45 million in annualized cost reductions, and is on track to launch TinmanGo as part of a broader wholesale program.
Better also said an unidentified new partnership has produced the strongest initial performance of any partnership launch in its history, measured by locked loan volume. The company did not name the partner or disclose its locked volume.
At least two additional enterprise partnerships are expected to launch, while Better continues seeking a buyer for Birmingham Bank, its U.K.-based subsidiary, the committee said.
From CEO Transition To Control Fight
The dispute has moved quickly since Better announced Aug. 3 that Garg had “mutually agreed” to leave the CEO role. Lewis, then a director, was named interim CEO while the board began searching for a permanent successor.
Better subsequently changed its account of the transition. The company said every director other than Garg had voted to terminate him, citing concerns about his “judgment, temperament, and credibility.”
Garg responded by seeking shareholder consent to remove Lewis and four other directors without cause. His group also proposed reversing any changes to Better’s bylaws made after Aug. 22, 2023, before the solicitation is completed.
A preliminary consent filing shows Garg’s group controls approximately 13.7% of Better’s outstanding voting power. It must secure support from other shareholders to reach the majority required to remove the directors.
Garg initially claimed to have declarations of support representing more than 50.1% of Better’s voting power. Better disputed that assertion and filed a lawsuit accusing him of making misleading claims and violating federal solicitation rules.
In his own SEC filing, Garg said he does not want to resume control of Better or return as CEO. The filing also states that he proposed returning in an executive capacity as chair or chief product and innovation officer while the company searched for a permanent CEO with fintech and artificial intelligence experience.
The Special Committee said Monday that returning Garg to an operating position could damage employee morale, further reduce shareholder value, and discourage CEO candidates concerned about whether they would be allowed to remain in the job.
It cited a decline of more than 90% in Better’s stock price during Garg’s tenure as CEO. Garg, in contrast, has blamed the board’s handling of his removal for a more than 43% one-day decline following the leadership change.
Early Progress, But Few New Numbers
The Special Committee characterized Better as being at an “inflection point,” but most of the operating evidence disclosed Monday remains prospective.
Better did not update its third-quarter financial guidance. The company previously forecast $1.375 billion to $1.525 billion in loan volume, $49 million to $52 million in total net revenue, and an adjusted EBITDA loss of $15 million to $18 million.
At the midpoint, that would represent approximately $1.45 billion in volume, below the $1.67 billion recorded during the second quarter. Better did not specify the period or metric behind its statement that it expects to “return to growth.”
The company’s second-quarter production increased 38% from a year earlier, while revenue rose 28% to $54.7 million. Yet Better still reported a $30.6 million net loss and a $14 million adjusted EBITDA loss.
The adjusted result included a one-time $6.5 million release of a reserve tied to Truth in Lending Act-Real Estate Settlement Procedures Act Integrated Disclosure, or TRID, matters involving loans originated before June 2022. Without that benefit, Better’s adjusted EBITDA loss would have been approximately $20.5 million.
Lewis also acknowledged during Better’s earnings call that the company will miss its previous goal of reaching adjusted EBITDA break-even by the end of September. He declined to set a replacement deadline, saying profitability depends on transaction volume, product mix, and the timing of cost reductions.
Wholesale Launch Raises The Stakes
Better’s planned wholesale expansion gives the board fight a more immediate consequence for mortgage brokers and originators.
The company already offers wholesale home equity lines of credit and closed-end second liens. TinmanGo is intended to support a broader selection of products for independent mortgage brokers, with the rollout previously expected to begin around the end of September.
Lewis said during the earnings call that Better would enter the channel only when it could provide brokers with faster funding, lower costs, and a competitive originator experience. He also acknowledged that Better’s partner-support operation still requires work as the company moves beyond its direct-to-consumer roots.
The Special Committee said Monday that the wholesale launch remains on track, but it did not provide a launch date, participating broker count, product details, or production targets.
For now, the board is asking shareholders to treat Better’s early partnership activity, anticipated cost savings, and product pipeline as evidence that the post-Garg strategy is working. Garg is asking those same shareholders to replace most of the directors overseeing it.
The next test will be whether Better can convert those plans into profitable loan production while its leadership fight continues.
