In the newest episode of the Power House podcast, HousingWire President Diego Sanchez sits down for a conversation with Prosperity Home Mortgage CEO Justin Messer. The duo explore Prosperity’s transition from refinances to purchase mortgage originations, the company’s Realtor affiliate model, servicing partnerships and mortgage rate predictions for 2025.
This conversation has been edited for length and clarity. To start, Messer explores Prosperity’s recent ranking by JD Power as the No. 1 mortgage originator for customer satisfaction.
Messer: I’d be remiss to say that the shift in volume from refi to purchase didn’t help us. The bottom line is that purchase is hard to do. Part of that expectation versus reality from consumers is a little bit tougher. But, you know, we are the best at doing purchases. That’s what we core believe. That’s how we’ve built our model.
Sanchez: Let’s talk a little bit more about how Prosperity is unique. You have a unique ownership structure and way of doing things. Can you walk us through that?
Messer: We’re a Realtor-affiliate model. What that means is about two-thirds of our purchase business comes from owned real estate affiliates that we have. In major markets, we usually own the top one or two real estate brands in that market. One officer serves those offices and those real estate agents.
Two-thirds of our purchase business is affiliated. One-third is unaffiliated, whether it be self-sourced, past relationships as we’ve hired folks in, or whether it be agents who’ve left us. They leave us in terms of the real estate side, but they don’t leave Prosperity because, again, what’s the value add that we provide to them, right?
Sanchez: How do you think about servicing at Prosperity Home Mortgage?
Messer: Well, let’s start by saying our parent company, HomeServices of America, and structure are some of the best capital allocators that have ever existed in Berkshire Hathaway. As such, they aren’t yet willing to allocate capital to us for retention of servicing.
For us, retaining servicing would be the natural core of our business and the most important piece that we could offer to maintain homeownership. Alternatively, we try to focus on partnering with servicers who have aligned incentives with us.
To end the conversation, Messer shares his personal forecast for mortgage rates in 2025.
Messer: Stubborn. The biggest telltale sign that I’ve seen is that there were certain things that would trigger instant precipitous rate drops. One of those things would certainly be a war in Eastern Europe. But now, inflation kind of regulates a little bit, and we see missiles flying throughout the Middle East. That would have been, probably, next to a 9/11-type event, one of the big ones that would have moved markets in an absolute race or flight toward safety in terms of bonds.
With that, combined with potentially deficit-inflating policies coming in, I don’t know if they’re going to be or aren’t going to be. I don’t know if it’s going to be offsetting. I have no idea. Unless something breaks in terms of real deficit control, I think it would be really hard to see rates go anywhere into the 5s next year.
