NEXA Mortgage CEO talks breakup with co-owner

NEXA Mortgage CEO talks breakup with co-owner, plans for the future

April 3, 2024 1:05 PM

"Does this look like a guy who wasn't involved in aviation?" asked NEXA Mortgage's CEO Mike Kortas Tuesday, sharing a photo of him and his former partner, Mat Grella, standing next to a jet.

The question was posed after a falling out between the co-founders of NEXA, one of the largest mortgage brokers by loan officer headcount. Grella was terminated from the organization and soon after he filed a suit against Kortas accusing him of misappropriating funds to purchase luxury aviation.

Kortas and Grella have a 50.5 percent and 49.5 percent stake in the company, respectively, documents show. Kortas is in charge of growth, while Grella was in charge of operations at the company.

Kortas claims that Grella wanted out of the firm in November because he didn't like the terms of their 2019 operating agreement. On March 26, Kortas announced during a company-wide call that Grella would no longer be a part of the organization, though he was officially terminated days prior. Soon after the termination, on March 19, Grella filed a suit in Maricopa County, Arizona. The former co-owner of NEXA claims Kortas used company funds to purchase unauthorized aircraft related purchases using Nexa funds.

"Grella discovered that despite his clear lack of consent to any more aircraft related expenditures, Kortas has been using Nexa funds to make secret, unauthorized aviation related purchases — including for aircraft and a down payment on a hangar lease — for himself and his own entities," the suit said. "In short, Kortas has been converting Nexa funds to buy millions of dollars worth of planes and hangar space solely for himself and his own benefit, without any corresponding distribution being paid to Grella."

Grella said his termination occurred "after months of frustration related to what I believe to be serious breaches of NEXA's operating agreement, which requires profits to be distributed equally."

"I am deeply proud of what we have built at NEXA and hope these issues can be resolved in a way that protects the company's best interests," he added in a written statement.

NEXA, founded in 2017, has 2,405 sponsored loan officers and is licensed to operate in 48 states, according to the Nationwide Mortgage Licensing System. It originated close to $6 billion loans in volume last year, Kortas claims.

National Mortgage News interviewed Kortas about how the dissolution of the partnership is impacting the functioning of NEXA and whether he is seeking to replace Grella in the organization. This interview has been condensed and edited for clarity.

What led to the breakdown of your relationship with Mat Grella?

I believe I notified him on March 15 that I was going to terminate him due to tortious interference and I actually terminated him on March 20. We announced [the termination] to the company during our standard weekly town hall meeting on March 26.

He actually notified me in late November [about his desire to leave the company.] He wanted to request a buyout. We actually agreed to a buyout date on Dec. 31, 2023 in writing, so we're just waiting on the valuation to come in. I think the dispute really is that Mat does not want to go by the operating agreement. He wants to act like the operating agreement is not actually in writing and he doesn't like the terms of the operating agreement. But Mat is basically trying to take all the cash out of the company and I simply will not allow that.

He doesn't like the terms of the buyout– I won't disclose them since that will come out in court– he just doesn't like the terms he wants to get all the cash out. NEXA has built up a large war chest if Mat wants out and we're not just going to deplete it.

We signed an operating agreement and he needs to follow that operating agreement. I have five attorneys on this and all of them are telling me I'm absolutely perfectly in the right. That's the direction we're gonna keep running. This operating agreement was redone in 2019. It was part of my agreement to continue to run this company and drive it forward. The operating agreement makes me the only manager of the company, full operational control.

Can you explain what parts of the business were handled by whom?

This company operates well and we have such a phenomenal team of Nexans who are running the support and keep everything running operationally.

If anything, I was in charge of growth. Mat was in charge of operations – the back side of the house. That side of the house, everybody knows, has been ignored for quite some time, so there's absolutely no difference between Mat's exit or if he was still around.

I allowed him to stay on for a long period of time as a courtesy until he started doing things that were clearly only in his best interest and that's not what NEXA's about. NEXA is about everybody, so it's not about an individual. It's not about Mat, it's not about me. That's why I had to, unfortunately, terminate my business partner.

Are there plans to find a replacement?

There are no plans to replace Mat. There's no need to replace him. I told Mat last summer to go find a CFO and that was never done, so it's something that I think we need. There were too many things being missed and accounting on mass part because he was in charge of the operations of that. I said we need to go find the CFO, we need to find somebody who can check that part of it to make sure it's wired tight and that was never done.

It's pretty early on [in the searching process.] I'm not in a rush. We do have accounting teams and support teams in place. We built our own software for this, so the sky is certainly not falling.

NEXA has a huge number of sponsored loan officers. Are you worried that the unfolding situation may have an impact on your company's headcount?

Not even close. We're going to double in size by the end of 2025. I'm going to add 2,500 loan officers between now and 2025, so we're doing some incredible things. We're about to offer a 100% program, where we literally pay out 100% of every dime that comes in on that loan and we will share the purchases base with loan officers. We have so many innovative things that are coming out.

Everybody knows what sails the ship at NEXA Mortgage. Everybody knows that already. We are so confident in our growth. This is a blip on the map and this will fade away into the night and everybody will watch our company grow like crazy.

I don't think I would do anything different.

NEXA Mortgage CEO talks breakup with co-owner, plans for the future

What led to the breakdown of your relationship with Mat Grella?

Can you explain what parts of the business were handled by whom?

Are there plans to find a replacement?

Grella, after being fired, filed a lawsuit in Arizona accusing you of making aircraft-related purchases with company money without his knowledge or consent. What do you think of the accusations?

NEXA has a huge number of sponsored loan officers. Are you worried that the unfolding situation may have an impact on your company's headcount?