Better Business: Stanley C Middleman

Stanley C Middleman remembers the day when, after addressing a group of students at his alma mater, Philadelphia’s Temple University, a young man raised his hand with a question. "Obviously you’ve done well, but do you do good?" he asked.

"I thought that was an intriguing view because at that age I wasn’t too concerned about what I left in my wake," the Founder, President and CEO of Freedom Mortgage Corporation tells The CEO Magazine. "I was focused on moving forward, on getting better."

The question – and the contemplation of its answer – stayed with Middleman long after the auditorium had emptied.

"I had always been involved in trying to help the community, but not in a very structured fashion. I’d support a little league, a school, an improvement, a charity. Those sorts of activities," he says.

But, as he thought about the business, he found it hard to pin down the particular causes it supported – and soon, opportunities became clear.

Our responsibility, and what we do for our customers, is obviously very important, and how to be better at that certainly resonates with me every day of my life.

"At the time we were one of the largest VA [Veterans Affairs] lenders in the United States – and we still are. We were servicing more VA loans than anybody in the country. One of my sons had joined the business and, through him, we became very active in the USO [United Service Organizations]," he says, referring to a private organization that provides activities and entertainment to members of the United States military around the world.

Middleman realized he had found the ideal area for Freedom Mortgage to support. Soon, an initiative called Rucksacks to Backpacks was launched, where the money raised went to buy school supplies for children of active-duty military, National Guard members and reservists, all distributed through USO locations across the country.

Last year marked the 10th anniversary of the campaign. In that time, the company has donated nearly 22,000 backpacks and more than 57,000 school supplies such as pens, notebooks and folders.

In 2013, he established Freedom Cares as the charitable arm of Freedom Mortgage. Food collections, toy drives and other fundraising efforts to support the communities across the country which the business serves are at its core. The team has also organized Freedom Mortgage employees and partners to share more than 8,500 handwritten postcards or video messages of appreciation with military members as part of their Project Gratitude campaign.

Constant improvement

After an initial career foray into insurance and annuities, Middleman founded Freedom Mortgage in 1990 with one mission: to foster homeownership in the United States.

"We help people own homes," he explains. "We help people take advantage of the homes that they live in for their economic benefit."

I often say I’m in the ‘better’ business. Wherever I am, I want to be better than where I’ve been.

Middleman says a strategic focus on government-backed loan programs, including Fannie Mae, Freddie Mac and Ginnie Mae, has allowed Freedom Mortgage to expand homeownership to those who need it most.

"By adhering closely to the guidelines and responsibilities that come with our relationship with the various agencies, our loans conform to their standards, making homeownership possible for millions," he says.

Today, the company, headquartered in Boca Raton, Florida, is considered one of the largest non-bank lenders in the United States and is licensed in all 50 states, the District of Columbia, Puerto Rico and the United States Virgin Islands. Last year, it returned to the Inc. 5000 Honor Roll for the eighth time as one of the fastest-growing private companies in the country.

Middleman says that the concept of continual improvement continues to motivate him.

"Our responsibility, and what we do for our customers, is obviously very important, and how to be better at that certainly resonates with me every day of my life," he says.

He acknowledges that his ability to self-motivate has been crucial to his ability to determine what will propel him forward to do a better job.

"I often say I’m in the ‘better’ business," he says with a smile. "Wherever I am, I want to be better than where I’ve been."

It’s the line of reasoning that he holds himself accountable to. "You need to have a reason to get out of bed every day and open those curtains and look out and decide what you are going to do today. How are you going to make the world a better place?" he asks.

Opportunities in challenges

When Freedom Mortgage launched, the mortgage industry was dominated by commercial banking. Then, during the years that Middleman calls the great recession (2007 –2011), such institutions found themselves incredibly restricted.

"The bigger the bank, the more constrained they became," he says.

Liquidity – and access to capital and cash – became a critical asset for survival; the lack of it was what signaled the death knell for many businesses.

"We had a nice business going into the crisis. We had been moving along for years and years, and life was fine, but like many other companies, we really took off coming out of it," he says.

Fast forward another decade or so to the COVID-19 pandemic, and Freedom Mortgage experienced another growth spurt.

"We supersized during the pandemic. These two social crises – one financial in nature and the other immunological – really drove our business forward," he explains, while acknowledging the past few years have been challenging.

"From waking up in the morning, getting dressed, jumping in your car and driving to the office where you work every day to, almost overnight, having thousands and thousands of people that you work with working from home, the world has changed dramatically," he says.

The key, he says, has been adapting to that change and transforming a problem into an opportunity and then a success story.

"I think that’s one of the great things that happened not only to us, but to our industry and, in a broader sense, society," he says.

Middleman explains that, as business overall has shifted from being very concentrated in offices to finding offices and parking lots empty, many of his traditional roadblocks in business have now been removed: space, office tools, parking spaces and physical room capacities.

"These things have all kind of melted away," he says.

The widespread acceptance, socialization and democratization of broadband across not only our country, but the world, has empowered companies to be much more nimble and agile.

New imperatives have, however, risen in their place.

"We had to quickly learn to control our business remotely and to create tools to empower our employees who were now working remotely," he says. A successful shift to an out-of-office culture meant that the company grew from around 5,000 employees to more than 15,000 during the pandemic. As interest rates began to rise, that figure has come down not only at Freedom Mortgage, but across the entire mortgage industry.

Of all the changes triggered by the pandemic, Middleman says the empowerment of the individual employee working remote without diminishing responsibility from a corporate entity standpoint in terms of management and controls has been the greatest.

"I don’t think that would have been possible if, during the five years prior as a society, we hadn’t seen such technological advancement in broadband," he says."The widespread acceptance, socialization and democratization of broadband across not only our country, but the world, has empowered companies to be much more nimble and agile in their use of technology and empowering employees to embrace it. That’s the greatest change."

He believes Freedom Mortgage had its two most successful years in 2020 and 2021 despite not collecting many borrowers’ monthly mortgage payments (some for more than 24 months) to allow borrowers to stay in their homes. Reflecting on what were initially daunting challenges that became huge successes, he believes there was a certain level of chance involved.

"Sometimes it’s better to be lucky than good," he says. "Sometimes it’s nice to be a combination of good and lucky. I think that was the case for us."

Great leap forward

What Middleman may call luck, others may call smart planning.

"Just before March 2020, we had acquired a lot of laptops in advance as part of our disaster recovery plan. Having dealt with snowstorms and hurricanes and other disasters we were prepared," he says, noting he just never expected the disaster to be a worldwide pandemic.

It did mean, however, that people had already switched to a more mobile work environment.

"The speed to move into work at home was accelerated by our choice to move our employees to laptops and workstations and have them less anchored to their office desk," he says.

Yet Middleman wouldn’t go as far as to describe himself as an innovator.

"I’m a much better fast follower," he says. "I can think the innovative thought. I know what I want to get done. But sometimes getting the message delivered and the results generated is not an easy thing to do."

He adds he has great admiration for those who are able to not only have the vision, but execute it.

Instead, he’s learned to define innovation as it works for his company.

Sometimes it’s better to be lucky than good. Sometimes it’s nice to be a combination of good and lucky. I think that was the case for us.

"We want to be innovative in taking proven technologies and putting them together to apply to our business," he says. "We don’t necessarily have to be the first one to do something, but we want to get better all the time."

Again, it all comes back to his concept of the better business.

"In our corporate culture, our employees have that feeling and understand the concept," he says. "And they do a really good job of pushing forward with the thought of incremental improvement that, all of a sudden, becomes a great leap forward."

And, in the context of the pandemic, that "great leap forward" was the move from desktop to laptop technology.

Quilts of information

During the pandemic, Middleman also found time to read classics such as War and Peace. As he turned the pages of Tolstoy’s tome, he realized there were lessons that could be applied today.

"War and Peace was very helpful in gaining an understanding of society and social responsibility and where you fit in," he explains.

Doris Kearn Goodwin’s The Bully Pulpit: Theodore Roosevelt, William Howard Taft, and the Golden Age of Journalism was another lockdown read and revealed new insight into media manipulation and management.

"It was tremendously interesting and helpful in understanding the world we are living in and what people really mean when they speak," he says.

There’s good and bad in all humans, and you want to try and pick out and learn from the good and avoid the bad.

On a business level, he says there was a lot to learn about the modern banking system in the biography of JP Morgan, as well as philanthropy in the Rockefeller story. There were also important lessons on what not to do.

"You don’t want to replicate the idle rich in War and Peace, you don’t want to replicate abuse of powers like Rockefeller did, and you don’t want to replicate bad succession planning like JP Morgan," he says, noting the latter was particularly relevant, with his sons Michael and Greg holding executive posts in the company.

"There’s good and bad in all humans, and you want to try and pick out and learn from the good and avoid the bad," he says.

That belief, crossed with his better business motto, forms the basis for his leadership philosophy.

"I don’t think anybody really comes up with all these brilliant ideas," he says. "Instead, I think they just connect a variety of dots together to build a quilt of information where the results become self-evident. The decisions that I make are a quilt of lessons learned throughout my life, combined with the intention to get better."

On purpose, with purpose

Over its 30 years in business, Freedom Mortgage has collaborated with many companies large and small. Some of its long-standing relationships include CoreLogic, Matic Insurance, Proctor Loan Protector, Archwell and Mortgage Connect.

"These strong working relationships enable Freedom Mortgage to operate more efficiently and better serve our borrowers," Middleman explains, focusing on the word ‘better’.

"Relationship building is giving more than you’re taking," he says. "If you can make sure that everybody is better off dealing with you than before they dealt with you, you’re going to build a pretty good relationship."

After all, a friend in need is a friend indeed, he says.

"If you’re meeting their needs, you’ve built a friend," he says.

It’s a way of thinking that has become a critical element of the business. "We’re not just doing it because it’s our culture. We’re doing it because it is the right thing to do," he explains. "We’re doing it more on purpose, with purpose."

With that bridge crossed, a range of vertical and horizontal opportunities have opened up, as have outside silos of opportunities "that don’t necessarily integrate with our day-to-day business," he says. Such developments only highlight Middleman’s beliefs.

"The opportunities to grow and to get better and to drive stronger results really come with the cognizant understanding of the people that you interface with," he believes.

Reflecting on the two words he’d like to see most associated with the business, Middleman names agility and humility. The descriptors he’d most like to avoid?

If you can make sure that everybody is better off dealing with you than before they dealt with you, you’re going to build a pretty good relationship.

"Arrogance and self-righteousness," he says without hesitation. "I don’t think anybody sets out to be arrogant or self-righteous, but that’s the norm in some corporations’ cultures. And I think it’s important to not only see things your way."

And there is a reason for that thinking, he says.

"Because that stops you from being in the ‘better’ business."

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