Employee-owned American Mortgage Network expands during the pandemic

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American Mortgage Network, the fledgling employee-owned non-bank lender, has done more than just survive during the pandemic.

The growing company has just announced a partnership with Active Duty Passive Income, an organization dedicated to helping those who have served in the military to become financially independent and build sustainable income. As a result, ADPI's staff members are joining AmNet and will become the latest group of employee owners.

The move deepens AmNet's penetration into the market of those eligible for Veterans Affairs-guaranteed mortgages.

"My whole family was veterans; I'm the only one that did not go into the military," said Joseph S. Restivo, CEO and president of AmNet. "So I already knew a lot of veterans and fellow loan officer veterans. When we started this model and started talking to them, a lot of them were very interested in what we were doing."

That eventually brought him in contact with ADPI founder and CEO Markian Sich, Restivo said.

"With the talent at ADPI, it's an opportunity to train veterans and their families as future mortgage bankers for careers — loan officers, processors, underwriters and closers. As employee owners, military veterans and their spouses can work from anywhere," Restivo said. "Most importantly, they make great team members who are fully engaged in growing the company."

Typically, military families relocate frequently because of the needs of the various service branches andcareers in the mortgage industry often lend themselves to such a lifestyle.

“Our members — the military community — want to learn new skills that are highly mobile, while simultaneously learning investing strategies that produce passive real estate income," Sich said in a press release.

Since it began originating last year, AmNet's percentage of volume from VA loans has been above 35% and continues to go up, primarily because of the veterans the company is hiring, added AmNet Executive Vice President and Chief Financial Officer David Wallace.

Amidst the pandemic, the company has used its cloud-based technology to allow its employees to work remotely. While the leadership said the transition was smooth, the pandemic has presented other challenges. AmNet sells its VA originations to aggregators, and "some of the different outlets for those products went through some pretty tough times, so we were sort of impacted that way," said Wallace.

AmNet already has had its first business appraisal and made its first share allocation. "So the ESOP is fully set up and intact and the employees got stock certificates. The employees actually own more of the company at this point than David and myself," said Restivo.

Wallace added "The total percentage that Joseph and I own together is 6.7%; the employees own the rest."

This set-up is the opposite of what Rocket Cos. is proposing for its initial public offering. An updated prospectus stated that the company is establishing an employee stock purchase plan. The program "permits our employees to contribute up to a specified percentage of base salary and commissions to purchase our shares at a discount."

The Rocket Cos. plan covers 10.5 million shares of the Class A stock, which prospectus puts at 0.5% of the total of that class. At the same time, after the IPO, Dan Gilbert, Rocket Cos. chairman, will own or control 79% of the company's equity.

AmNet's ESOP has changed the way those that work there view their company, the leadership team said.

"There's a lot of comradery, the way that everybody works together in this company is something I've never seen before and it gets back to the whole principle of the company," said Restivo.

The ESOP, along with a policy of not making any layoffs has helped to make AmNet an attractive option for potential employees. All staff, including leadership, are on a variable compensation structure, which means that individuals take home a lower salary if the company’s volume substantially declines.

Restivo recently spoke with a VA underwriter applying for a position, who asked what the company would do in terms of headcount when the current refi boom ends and volume shrinks.

"When everything is doing really well and the volume's up, they can make more money here than they can at other companies," Restivo said. "But when the volume goes down, they make a little less; but they've still have employment, they still have the retirement plan, they still have health insurance. So, maybe they don't make $120,000 some years, maybe they make $80,000, but they still have a job.”

The company has grown substantially since the Mortgage Bankers Association's annual convention last October, when it had between 10 and 15 employees. By the end of 2019, it was up to 54. The current headcount is 90.

"And we continue to hire anywhere from five to 10 people a month," Wallace said. "And the majority of those are originators. [The ESOP] resonates with originators and operations/back office people alike."

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