Voice of the Industry: Michael Tannenbaum

My path into mortgage was not accidental, but it also was not linear. I was first exposed to the space as a student during the financial crisis, when I was studying real estate and working as a research assistant at a mortgage-focused research center. At that time, the work was closely tied to the government’s response to the crisis, which gave me an early appreciation for how central mortgage is to the broader economy. It is not just a financial product. It is a system that sits at the intersection of policy, capital markets, and household balance sheets. That realization stayed with me even as my career evolved.

When I joined SoFi, mortgage was not the focus. The company was built around student loans, and the mortgage business was still in its early stages. I did not initially join to run it. My background was in capital markets and finance, and like many people early in their careers, I was building functional expertise. What changed for me was the opportunity to take ownership of a business line. Mortgage, at that point, was underperforming relative to other parts of the company. It needed to be rebuilt. That made it an opportunity. Leading that effort was my first real chance to demonstrate that I could operate, not just analyze. It forced me to think holistically about origination, customer experience, and capital markets all at once.

That experience also exposed something that I do not think the industry fully appreciates. Mortgage, particularly within the Agency (ed. note: Fannie Mae and Freddie Mac, with their government backing) framework, benefits from a level of structural support that is highly unusual in financial services. When I later left to work in other areas like credit cards and venture-backed fintech, I saw the contrast very clearly. In those businesses, there is no equivalent of a guaranteed takeout. You are constantly thinking about where the capital comes from, how stable it is, and whether it will still be there tomorrow. In mortgage, a large part of that problem has effectively been solved by the presence of Agency capital. That has enabled scale, but it has also created a functional atrophy. When the takeout is guaranteed, the incentive to over-optimize the 'manufacturing' process disappears. We’ve ended up with a $12,000 cost to originate a product that should cost a fraction of that

Despite leaving the industry, I found myself drawn back to it. Mortgage has a level of complexity and scale that is hard to replicate elsewhere. It is the largest consumer asset class, and it affects the majority of households in the country. It is also deeply human. People are emotional about mortgages, especially when it comes to buying a home. At the same time, it is intellectually engaging. It involves interest rates, macroeconomics, supply and demand, and capital markets dynamics. There is always something changing, always a new cycle, always a new set of constraints. That combination of technical depth and real-world impact is what makes it compelling.

Now, in my current role, I spend a lot of time thinking about how the industry evolves from here. One of the most important issues, in my view, is liquidity beyond the Agency system. Fannie Mae and Freddie Mac have played an essential role in creating stability and scale, but their goals are not perfectly aligned with the goals of the industry. They are government-backed entities with their own mandates, which can shift over time. At the same time, they are not expanding product coverage or modernizing processes at the pace that the market is changing. This creates a gap, particularly in areas like non-QM, second liens, and other products that fall outside the traditional Agency box.

That gap is directly related to the cost structure of the industry. Many of the processes that drive cost today are rooted in legacy assumptions about risk. For example, requiring a full title report or a new appraisal in situations where the underlying risk has not materially changed adds time and expense without always adding proportional value. This is especially true for smaller balance loans, where these costs have a greater impact. The challenge is that the authority to change these standards is centralized, and the process for doing so is not always transparent or aligned with the needs of lenders or consumers. As a result, innovation often happens at the edges of the market rather than within its core.

Another area that I think is under-appreciated is the scale of the global capital markets that sit behind financial services. Most mortgage operators are somewhat insulated from this because of the Agency system. But when you step outside of that and engage directly with large institutional investors, you see a very different picture. There is an enormous amount of capital in the world looking for assets, but accessing it requires infrastructure, standardization, and trust. It is not enough to originate loans. You have to be able to package, distribute, and service them in a way that meets the expectations of that capital.

This is where I think the industry has an opportunity to evolve. If we can create more standardized and efficient ways to connect mortgage assets to broader capital markets, we can unlock new forms of liquidity and enable more innovation. I often think about this in the same way that the internet transformed content creation. Before the internet, distribution was expensive and limited. After the internet, the cost of reaching an audience dropped dramatically, and that enabled an entirely new ecosystem of creators and businesses. There is a parallel in mortgage. If we can reduce the friction in capital markets, we can enable more participants to build and scale new products.

The reason I am interested in contributing to this conversation is that there is a lot of noise in the industry, but not always a lot of depth. Many discussions are focused on short-term objectives or specific products, which is understandable, but it leaves less room for thinking about the structural changes that are underway. Having spent time both inside and outside of mortgage, I have found that some of the most valuable insights come from comparing it to other areas of financial services. What is unique about mortgage is not always obvious when you are operating within it every day.

My goal is to bring that perspective into the conversation in a way that is practical and grounded in real experience. This is not about promoting a single solution or pushing a specific narrative. It is about asking better questions and highlighting where the industry may be taking certain advantages for granted. In future discussions, I plan to go deeper into specific issues like the cost to originate and the operational changes required to bring that down in a meaningful way.

Mortgage is a large, complex, and deeply important industry. It has been shaped by decades of policy decisions, market cycles, and technological change. The next phase of its evolution will depend on how well we understand those forces and how willing we are to challenge the assumptions that come with them. From my perspective, the opportunity is not just to improve the system incrementally, but to rethink how it connects to capital, how it serves borrowers, and how it enables innovation at scale. 2026 will be the year the industry realizes Non QM / 'private' label doesn't have to mean 'niche.'