In this episode of 10 Minute Talks, Diego Sanchez interviews Rob Pieklo, president and COO of American Financial Resources (AFR). Rob shares his journey back to AFR after a hiatus, focusing on the company's strategy in the wholesale mortgage channel. He discusses the competitive landscape, particularly against major players like UWM and Rocket TPO, and highlights AFR's unique approach to capital markets, technology, and service levels to differentiate itself in the market.
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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.