You Don’t Have To Like It

NEXA Lending’s business model has been one of the most debated topics in mortgage this week, with questions across the industry about how the company pays loan officers, how it recruits, how its business development program is structured and how its new servicing plans will work. We asked founder Mike Kortas to answer those questions in his own words. His response follows.

There has been a lot written about NEXA this week. A lot of people have questions about our business model, how we compensate people, how we recruit, how we handle servicing, and whether all of it fits within the rules. I actually welcome the questions. What I find funny is that a lot of the people making the loudest accusations have never called me to ask how any of it works. They see something they don’t understand, compare it to something they do understand, and then decide it must be wrong. I don’t take that personally. I understand why it happens. Mortgage is a complicated business, and our model is different from what most people are used to seeing. But different doesn’t automatically mean illegal.

We operate under the rules and regulations that apply to us. Our contracts and business practices have been reviewed by regulators, and when complaints or questions have been raised, our attorneys have defended our model. I’m not asking anybody to take my word for it. If you have a question about how we do something, call me. I’ll explain it. I’d much rather have a conversation about the actual model than watch people try to reverse-engineer it from a LinkedIn post or a headline.

One of the biggest misconceptions is that NEXA is some kind of MLM (multi-level marketing) because we pay people for recruiting and supporting other loan officers. I think that’s a pretty lazy comparison. Traditional mortgage companies have middle management. They have regional managers, branch managers, sales managers and recruiting organizations. Those people get paid because they help build and manage the business. At NEXA, we’ve chosen to put some of those economics in the hands of the people who are actually helping us recruit and support loan officers. That’s not a secret. It’s part of how we built the company.

And no, the borrower isn’t paying for it. Our loan officers can see the economics of the transactions they’re working on. They know where their money comes from. We don’t have to hide that. One of the things that frustrates me about this conversation is the assumption that if somebody can’t immediately understand how we’re doing something, there must be some hidden charge or some trick. Sometimes the answer is simply that we’ve built the business differently.

The same thing applies to our business-development program. People hear that someone with a real estate license can participate and immediately assume we’re paying for referrals. That’s not what we’re doing. Our BDMs (business development managers) are marketing our company. Some are Realtors. Some aren’t. One of our best is a hairstylist. Another is a grandmother. We’ve had people from all kinds of professions do this. The question isn’t whether someone happens to have a real estate license. The question is what they’re actually doing and how they’re being compensated for it. We employ and manage these people, and we structure the work as marketing services. We’ve had regulators look at it, we’ve had questions about it, and we’ve defended it. I’m comfortable with what we’re doing.

The servicing business gets the same kind of reaction. If a loan officer has spent years building a relationship with a borrower, why wouldn’t we want that person helping us retain that relationship after the loan closes? We have a separate company handling that work, and the people involved are being compensated for servicing-related retention activities. It isn’t the loan officer changing the borrower’s rate. It isn’t NEXA dictating the wholesale lender’s pricing. It is a separate business doing a separate job. Again, you don’t have to like the model, but you should understand the model before you tell people what it is.

I think that’s really the issue here. People look at what we’re doing and say, “This sounds too good to be true. There has to be a catch.” I understand that reaction because I would probably have the same reaction if somebody showed me a model that looked completely different from anything I’d seen before. But I’ve spent years building this. We’ve gotten big enough that we have access to economics and opportunities that smaller organizations simply don’t have. We’ve taken the scale created by thousands of loan officers and tried to push that value back down to them. That’s the whole idea.

I didn’t come from money. I was homeless as a kid. I dropped out of high school. I shoveled rock and dug ditches and landscaped when I was 17. The people who followed me into this business helped me build everything I have today. I’m never going to forget that. That’s why I’ve always had a different view of what a mortgage company should be. I don’t want to build a company where the people at the top keep more and more of the economics as the company gets bigger. I want the people actually producing the business to participate in the upside.

That doesn’t mean everyone has to agree with me. And I know there are legitimate criticisms of NEXA. The fairest one is probably that I’m a pain in the ass. I’ve earned that one. I’ve been difficult. I’ve ruffled feathers. I’ve said things I probably shouldn’t have said. I’ve been too quick to assume that because something makes sense to me, it should make sense to everyone else. It doesn’t work that way. I’ve had to grow up, too.

I’ve also changed my opinion of some people in this industry as I’ve gotten to know them better. That’s probably one of the most important things I’ve learned. You can disagree with somebody and still realize you had the wrong impression of them. I think about our competitors the same way. I don’t want Rocket to fail. I don’t want UWM to fail. I don’t want any mortgage company to fail. I want them to compete with us. Competition makes us better.

Every time somebody tries to take our loan officers, I have to figure out how to make NEXA a better place to be. Every time somebody comes up with a better economic model, I have to respond. That’s how we ended up building programs like NEXA 100, NEXA Unlimited and our servicing model in the first place. I’d rather have to compete with a good company than operate in an industry where nobody pushes anybody.

So keep asking questions about NEXA. I mean that. Ask about our compensation. Ask where the money comes from. Ask how the BDM program works. Ask about servicing. Ask about our contracts. Ask about the regulations. But ask me, too. There is a difference between saying, “I don’t understand how this works,” and saying, “I understand how this works and it’s wrong.” I’m happy to have the first conversation.

And if somebody can show me something we’re doing that isn’t right, I’ll deal with it. I’m not interested in being right just for the sake of being right. I’m interested in building the best mortgage company I can. That’s what I’ve been doing since I started, and that’s what I’m going to keep doing.

Mike Kortas founded NEXA Lending in 2017 and grew it to more than 3,000 loan officers nationwide. He now serves as NEXA’s executive partner, focused on growth and new business, and is the founder of evoLend, a servicing company that helps loan officers keep their borrower relationships after closing.