Why Freedom’s Stan Middleman Is Betting Big on Third-Party Origination

(l. to r.: Stanley C. Middleman, Laura Escobar)

AUSTIN–Freedom Mortgage is betting on third-party origination despite other independent mortgage banks exiting the business. Freedom CEO Stanley C. Middleman thinks TPO will provide the mortgage industry with growth opportunities and increase profitability.

Third-party origination is another revenue source for mortgage lenders to close loans by working with mortgage brokers or loan correspondents rather than relying solely on direct-to-consumer lending.

Speaking here are MBA’s Independent Mortgage Bankers conference, Laura Escobar, 2025 MBA Chair and President of Lennar Mortgage, asked Middleman why he is betting on TPO when other IMBs are not.

“Well, the people that lean on direct origination, retail origination, a lot of them need take-outs and don’t deal or aren’t comfortable dealing directly with the Agencies, whatever the case may be. Or if they do, they can’t afford to retain the servicing. So we’re giving an outlet to create liquidity to the industry that is not always readily available.”

Middleman noted he believes that the credit that has been created in the last two years is some of the best credit the housing industry has ever seen. “I’m not sure how much longer that’s going to last, but I like it today,” he said. “I think it really goes to a theory, and the theory is that the values of properties are going to continue to rise for the next couple of years, and then we’d expect there to be a correction. And it’s not always the best time to aggregate product and aggregate credit, because credit changes in the cycle, and the credit that we’re seeing today is not the same credit that we’re going to see two years from now.”

The price that Freedom is prepared today to pay for today’s credit is not the price that will be prepared to pay two years from today, Middleman said. “That’s not a Freedom thing; it’s a market thing, that the risk in that credit is going to be different in the future than the risk is today.”

Freedom likes that credit today, “and we really liked it last year,” Middleman noted. “We leaned in pretty hard. Last year we didn’t lean in as hard in previous years. I think it’s important to mention that as well.”

Freedom had to “right size” its operation in 2022, because, “like everybody else, we were larger than we needed to be, and we had done an enormous amount of originations, primarily retail,” Middleman said. “And as interest rates rose, we reduced the amount of retail we were doing to get right sized; to get our expenses in shape. We liked the credit where it was, but we weren’t prepared to lean in because we had work to do on our balance sheet.” He said his firm raised a lot of high-yield debt and moved from a lot of secured financing to unsecured financing. “By making that fundamental shift in 2023 it set the stage for us to lean in.”

Escobar noted that she recently finished reading Middleman’s recently published book, Seeing Around Corners: Achieving Success in Business and Life. “We should all read it,” she said. “I want to thank you for sharing your wisdom through Seeing Around Corners. Your words have challenged me, personally, to pause, reflect and truly look beyond the immediate. What I’ve learned from you is that the importance of stopping to check around the corner, to take the time to look at the bigger picture, embrace growth and anticipate what lies ahead with intention and clarity.” She called the book a reminder that vision comes from thoughtful observation and having the courage to adapt.

“When we talk about seeing around corners, that’s understanding that we live in a tidal, cyclical environment, one that is not static and doesn’t stay the same, but one that is extraordinarily volatile,” Middleman said. “If we’re not willing to embrace change, you’re going to be crushed by that change.”