Velocity Financial, Inc. (NYSE: VEL)

Velocity Financial, Inc. is a vertically integrated real estate finance company founded in 2004. The company originates, securitizes and manages a nationwide portfolio of loans secured by real estate. Its primary focus is on investor loans for one to four unit residential rental properties as well as loans for multifamily, mixed use and commercial properties. Velocity Financial, Inc. builds its origination platform through an extensive network of independent mortgage brokers and direct borrower relationships that have been developed over more than two decades. The firm aims to be a preferred and widely recognized brand in its core market. It operates in a large and highly fragmented market where demand for financing exceeds the supply of institutional lenders. By concentrating on the needs of small scale investors Velocity Financial, Inc. has created a niche that allows it to earn attractive risk adjusted returns throughout various economic cycles.

Velocity Financial, Inc. generates revenue primarily from the interest earned on its held for investment loan portfolio. For the year ended December 31 2025 the company reported portfolio related net interest income of two hundred ten point four million dollars which represented a net interest margin of three point six one percent. In addition to interest income the firm collects origination fees when it funds new loans and servicing fees from the loans it manages on behalf of third parties. Through its securitization activities Velocity Financial, Inc. sells loan portfolios to trusts and retains the residual interest which can produce additional gains. The subsidiary Century Health & Housing Capital, LLC contributes origination fees from its FHA insured multifamily and senior housing loans and servicing fees from its mortgage servicing rights. The company’s total revenue is the sum of these interest, fee and gain components.

Velocity Financial, Inc. operates through two reportable segments that are defined by the nature of their business activities. The first segment is the Loan Origination segment which encompasses the firm’s core activities of originating, securitizing and managing investor real estate loans. The second segment is the Government insured Mortgage Financing segment which consists of the operations of Century Health & Housing Capital, LLC and its role as a Ginnie Mae issuer and servicer of FHA loans for multifamily, senior housing and long term care facilities.

• The Loan Origination segment originates investor real estate loans that are secured by first liens on properties and often include personal guarantees from borrowers. The segment focuses on one to four unit residential rental loans as well as financing for multifamily, mixed use and commercial properties across the United States. Loans are funded through warehouse facilities and once a sufficient volume is reached they are securitized using a REMIC structure and sold to investors. The segment employs customized technology and data analytics to streamline underwriting, pricing and loan monitoring. An in house asset management team works with third party servicers to oversee delinquent loans and mitigate credit losses. The segment’s portfolio consists mainly of fixed rate loans with a smaller portion of loans that become floating after an initial fixed rate period subject to a floor equal to the starting fixed rate. This structure allows the spread to benefit from rising interest rates. As of December 31 2025 the held for investment portfolio totaled six point five billion dollars in unpaid principal balance spread across forty eight states and the District of Columbia. The weighted average loan to value at origination was sixty five point two percent and the weighted average credit score at origination was seven hundred.

• The Government insured Mortgage Financing segment operates through Century Health & Housing Capital, LLC which is a licensed Ginnie Mae issuer and servicer. The segment originates FHA insured loans for multifamily housing, senior housing and long term care facilities. Loans are originated via a borrower direct channel and are serviced using an in house servicing platform. Revenue for this segment comes from origination fees charged at loan closing and servicing fees earned on the mortgage servicing rights portfolio. As a Ginnie Mae issuer the segment must maintain a minimum net worth and remains in compliance with that requirement. The segment also benefits from the company’s expertise in structured finance and its ability to access long term funding through securitizations of its loan portfolio. In addition the segment contributes to the company’s diversification by providing exposure to government sponsored housing programs.

Velocity Financial, Inc. holds a strong position in the fragmented investor real estate lending market due to its established franchise and deep history since 2004. The company’s competitive advantages include a recognizable brand among mortgage brokers, a proven track record of executing dozens of securitizations and access to durable long term financing. Its investment in customized technology and proprietary data analytics allows it to control origination costs while maintaining credit quality. An experienced management team with decades of combined experience in financial services and real estate lending provides strategic continuity. The firm’s large held for investment portfolio generates a stable base of interest income that benefits from rising interest rates. Compared with specialty finance companies, regional banks, mortgage bankers and institutional investors Velocity Financial, Inc. differentiates itself through its integrated approach that combines origination, securitization and servicing capabilities. The company has completed forty six securitizations of its investor real estate loans issuing a total of ten point six billion dollars in securities between 2011 and the end of 2025. This extensive securitization history demonstrates its credibility with investors in the capital markets and supports its ability to obtain financing on favorable terms. Furthermore the firm’s focus on risk adjusted returns and disciplined underwriting has helped it maintain steady performance through various economic cycles. These factors together give Velocity Financial, Inc. a defensible edge in a competitive landscape where many participants rely solely on balance sheet lending or originate loans without securitization expertise.

The company’s customers consist primarily of independent mortgage brokers who originate loans on behalf of their clients and direct borrower relationships with individual real estate investors. These investors typically own one to ten properties and seek financing for rental, multifamily or small commercial assets. In addition Velocity Financial, Inc. sells securities to institutional investors who purchase the bonds issued in its securitization transactions. Through its Century subsidiary the firm also serves government sponsored programs by providing FHA insured loans to developers and operators of multifamily housing, senior housing and long term care facilities. The borrower base is therefore diversified across private investors, broker networks and public agency programs. The company does not disclose the names of individual broker partners or investor clients in its public filings but it indicates that its broker network includes thousands of approved mortgage brokers spread across the United States. Similarly the institutional investor base comprises pension funds, insurance companies and asset management firms that acquire the securitized notes for yield and diversification purposes.