00:00We had to flip the script here at AFR. We're used to being a niche lender. Things took a while. There
00:03were tough loans dealing with that, and that doesn't work in that conventional Manila space
00:08that we've grown so much. I'm Diego Sanchez, president of HousingWire, and this is 10 Minute
00:22Talks. My guest today is Rob Piclow, president and COO of American Financial Resources. Rob,
00:31thank you so much for joining me today. Thank you so much for having me. So glad to make the 10
00:35Minute Talk. Before we dive in, could you give a brief introduction of yourself and AFR?
00:43Sure. I'll be as brief as possible. I tend to rant when I talk about this. But yeah,
00:48I am president and COO. It's been a long journey for me. I've been in the business for quite some
00:53time and have come full circle. I actually started my career at AFR and ended up as
00:59one of the junior partners and sold AFR back in 2017, 2018, and took about a five and a half year
01:08hiatus from AFR and had an opportunity to work with a fund to come back and purchase AFR with
01:16the help of proprietary capital and a fund that was raised by them. And we were able to purchase
01:21AFR back in February, and they asked me to take over as a chief operating officer and
01:28eventually as president. So excited to be back here at AFR. What an interesting story. Tell me
01:35more about that journey. First of all, stepping away from the company for several years, but then
01:44getting involved with investors to buy it back. Yeah, it was a long journey. It was interesting.
01:52So I actually left in 2018 and got to work with a friend in the business. And a gentleman actually
02:01was appointed to run a Ditec Financial. If you remember Ditec, it was a distressed public
02:05mortgage entity. I got to run Originations. It was supposed to be a short stint. So I went from
02:10AFR, which is a medium-sized company, to this large distressed public company. I got to see
02:15that, got to run Originations, Correspondent Wholesale, and the retail division there.
02:21And we cleaned it up and ended up getting that company sold to New Res. And then I just opened
02:26a brokerage. I just opened a small, just wanted to get back to my origination roots that I did
02:30in 2003 through 2010, and just opened a small broker shop with one of my friends. And it was
02:38interesting to kind of see that world again. And we had been on the wholesale side and kind
02:44of understood how it worked a little bit. But from the front end, trying to work with
02:47wholesale companies and kind of living in that space. When the opportunity came for actually,
02:54it's a really full circle moment. It was a high school friend left a large company called Penny
02:59Mac. I'm sure you've heard of them. And went to a fund. They were interested in purchasing an
03:04originator. And they asked me if I can help them find a target. And I was like, I think I know
03:09somebody. So there was an opportunity. They shared the same belief that the wholesale channel was
03:14something that was going to continue to grow. And then we worked on that. And then kind of halfway
03:19through that process, as I was consulting for them, for the target piece, they asked me if
03:25this were too close, if I can come on and help run the company. So it was an exciting full circle
03:30moment. Get to work and talk to friends, but have that same mindset. And dealing with a capital
03:36raise and having investors that are long term focused on the mortgage business and share the
03:40same vision that we have for AFR and the new AFR. So is there a big focus at the new AFR
03:48on the wholesale channel? There is. Yeah. So we have a very small retail division that focuses
03:54on specialty products. They do an amazing job for a lot of manufactured home dealers and doing
03:58one-time closed construction loans and renovation loans. So they have a really good core business
04:03there. Our wholesale channel, we have lots and lots of brokers. So they were known as a niche
04:09player. They can really get into the normal, I would say, vanilla loans. And we knew that it
04:14was an opportunity since we had so many approved brokers already. It wasn't a challenge to go get
04:19more customers. It was about getting wallet share within those customers. We weren't getting a ton
04:23of business from the approved clients. So we just saw that this wholesale, this opportunity and the
04:28migration of a lot of retail originators going in to be a little more entrepreneurial in their
04:33business and get into the broker channel. Obviously, number one lender in America has been promoting
04:38the channel for quite some time. And we know they've done an incredible job of getting people
04:41into the channel. And we thought there was just this incredible opportunity to change the face
04:49of what kind of business comes to AFR just by providing some different service levels and
04:54different pricing mechanism and rebuilding some of the technology that's here. And that seemed to
04:58work so far. So we're kind of knocking on wood here that we continue down that path and continue
05:03to grow at the levels we've been growing in the wholesale channel. You've got two real juggernauts
05:10in the wholesale channel. You already mentioned UWM, but Rocket TPO is also a major presence.
05:19And they just hired a new GM and I think have intentions of growing in the wholesale channel
05:26in 2025. How do you compete or do you compete with those two juggernauts in wholesale to grab
05:35market share for yourself? That is the beauty of the wholesale channel, right? And I love the
05:40channel so much because not only do the originators out there that work for the brokers have to fight
05:46tooth and nail for every loan, we have to fight tooth and nail for every single loan. We're
05:51battling some incredible companies, UWM, Rocket. These guys are amazing. Their technology stacks,
05:56what they have. We look for spots where we can provide a different level of service,
06:03different level of expertise. And with our team members as experienced as they are,
06:07if you couple that with some of the things we can do in capital markets and how we can execute,
06:12we've been able to make a dent, a very small dent. It's like a rounding error for them,
06:16but for us, it's a lot of business. But every single day when you wake up, we're competing
06:21with, and it's a challenge for our team members as well, because we're competing with these
06:25juggernauts. And we know if our systems are down for an hour, they're just like,
06:31I'll just take the loan over here and we'll get it approved quickly.
06:34So every single day we have to continue to get better. We think there's opportunity. We think
06:38that brokers want choice. And you've seen that they've knocked out a lot of choice out there. A
06:44lot of people have left the wholesale channel. That's why we love the channel so much actually,
06:48is we're running in going, brokers need options and we want to be one of those options. It can't
06:53just be two players. It can't just be three players. The beauty of the wholesale channel
06:56is that there's optionality and that we get to battle and we get challenged every day to be
07:00better. So we're seeing that, we're seeing the opportunities kind of arise. More brokers want
07:06to work with different lenders. They want to have five, six, 10 lenders that they consistently work
07:12with. And we're doing a pretty good job of earning that opportunity with them.
07:18Seems like the three main competitive factors in wholesale are obviously rate, hugely important,
07:26but then there's tech and service levels, right? How are you differentiating yourselves
07:34at AFR across those three variables? Yeah, for us, we talked a little bit about this,
07:41do a lot of stuff on LinkedIn talking about this. And we really focus in on bringing capital markets
07:47to the broker's hands. That's something that a lot of lenders don't do. We are incredibly
07:52transparent. We try to pass through, instead of it being loans come in and generally a mortgage
07:58company will take their loans and figure out a way to optimize the execution on those loans.
08:02We kind of look to the secondary markets first. What is the ax out there? What is it that people
08:08are asking for? Is it non-occupied? Is it certain loan balances? What is it that people are really
08:13buying up right now? How do we get that pricing that those incentives pass through to the broker
08:17channel? So that's what we've been focused in on right now for us in terms of finding niches.
08:22So there's a niche in this space with some of the lower loan balances. There's way more stories in
08:26the capital markets world than there used to be. Five years ago, there was a handful. Now,
08:31the spreadsheets go on and on of different opportunities and different ways to package
08:36loans. So we're taking that information and that pricing and those incentives, those payouts,
08:40passing that through to the broker channel and brokers are loving it.
08:43So we're differentiating ourselves that way. Again, much more transparent than what they're
08:48used to seeing in terms of rate sheets. I mean, my rate sheets can make your head spin. There's
08:52so many different ways to have pricing show up based on note rate and loan size. But we pass
08:59that through and then we have our own proprietary portal. We're not like the typical wholesaler that
09:04wants to dabble in the business and they're using an off the shelf portal. We have our own portal.
09:10So we've built that portal. We're creating experiences and continue to update it every
09:14single day. We're making different changes and updates to that portal. So we have an experience
09:19that's ours, not somebody else's. And we've been doing that. And then on the service levels,
09:24we had to flip the script here at AFR. We're used to being a niche lender. Things took a while.
09:28There were tough loans dealing with that. And that doesn't work in that conventional Manila space
09:32that we've grown so much. So we've really made a focus on mindset of the team members, obviously
09:39some process changes and technology changes internally, but really flipped the script.
09:44So now where we went from being about 2% to 3% conventional to being around 50% conventional
09:50in our product mix today. Rob, I really appreciate you taking the time today to
09:57walk the audience through what you're working on at AFR. Good luck to you in 2025.
10:03Oh, thank you so much, Diego. Thanks for having me.
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