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27 June 2025 F E A T U R E S T O R Y June 2025 ยป top FHA lender, the top VA lender, and one of the top USDA lenders. Those loans help underserved, active-duty military personnel, as well as people who live in rural areas. At Freedom Mortgage, we have the expertise and knowledge of these government-backed loans, so we can find the best loan for our borrowers. Traditional banks don't offer as many options when it comes to home loans. There was a time when they dominated those markets, and that time is not now. Freedom Mortgage is committed to helping customers. At the same time, we're also focused on con- forming loans and the good borrowers with a decent down payment who get conventional loans. They're the meat and potatoes of our industry, represent- ing probably 60% or 70% of the total industry's production. The thing that nonbanks are probably less good at is jumbo loans that are made for the highest earn- ers. Those tend to come from a bank, where they do wealth management and provide other credit facilities. When you think about the breakdown of who the customer is, banks want to provide cus- tomers with multiple products, whereas we're in the business of homeowner- ship: financing residential loans and supporting the first-time homebuyers, underserved communities, active-duty military, rural homeowners, and the reg- ular person with a regular job who gets a conforming loan that's neither stressed nor needy. Those groups of people are who we focus on. Q: Do you think we're in danger of seeing any sort of correction or downturn within the housing market? Middleman: It's always good to have equity, but it's better to live in a house you can afford. If you live in a house that you can afford, don't leverage it up so much that you can no longer afford it. I think the best mortgage is no mortgage, and the best way to get rid of your mort- gage is to pay it off and live within your means. Make sure you're making your payment every month, and, over time, you'll build a nest egg to retire with. Your kids will have the home that they had their memories in. And if you want to move up and can afford a nicer home because you built up a lot of equity, and you have a different family dynamic than you had when you started, you can use that equity to purchase a larger home. Just make sure that your family is living in a house that fits your needs and your budget. Q: You mentioned some of the government loans that Freedom Mortgage handles, and you've previously served on the boards for some of the GSEs. Did you take any lessons from those experiences that gave you a better understanding of how the industry can best work with the government and the GSEs? Middleman: I don't know if I want to shape society, but I will tell you that the GSEs were meant to drive the percentage of homeownership under the premise that homeownership was good. I think they may have taken several strides too far, particularly when I served on those advisory boards. Their missions were overzealously pursued during the Great Recession, and if they had stuck to their knitting and allowed FHA and VA to focus on first-time homebuyers and high-LTV borrowers, a lot of the problems that we've faced wouldn't have occurred. It was the open- ing of that credit box, in particular by the GSEs and the private-labeled secu- rities that levered them, that opened the gateways to the problems that occurred. It became very challenging because people overshot their responsibility to the marketplace. The solution is to stick to your knitting. Q: Are you seeing any changes in the demographics of homebuyers? Middleman: We've seen a cultural ex- pansion in the demographics, and we've seen an aging population. That should add supply over time, because there's a lot to be understood about immigration, about how many first-time homebuyers we're going to have. Where is that next level going to come from? I think that the demographics, as we see them here in the United States, are going to be somewhat stable. We know a big chunk of the popula- tion is getting older. We know the baby boomers are going to retire, and what happens next is going to be a question. Are they going to age at home, or will they need different facilities? There are a lot of questions about the change in that population, but, for the foresee- able future, I don't think demographic changes are going to play a large role in shaping housing, at least through the 2020s. What happens in the 2030s and the 2040s remains to be seen, because there's a lot of policy change that could impact that, particularly around immi- gration. Q: From your three decades in the industry, is there one lesson about homeownership that you've learned that has remained true? Middleman: When it comes to credit, the percentage of skin in the game that you have matters. We have found that it's the driver, even though your debt- to-income ratio (or how much you can afford to borrow), has an impact. Your history of making payments has an im- pact. At the end of the day, people with a lot of value in their homes end up not getting foreclosed on. As a lender, the loan-to-value ratio (LTV) matters. How much you owe against the value of your home, and what that ratio is, is a big deal. The reason we get in trouble when we open the credit box is that we raise the percentage of the population that has a higher LTV and therefore, has less skin in the game. That puts more people at risk and subject to the value of their homes going down. If you already don't have much money, and you're upside down in your home, it's frustrating and emotionally difficult to make that payment, knowing you're not going to be able to break even.