Phillies’ newest owner made his fortune from home loans

Stanley C. Middleman, 70, since 1990 has built Freedom Mortgage into one of the top 25 U.S. mortgage lenders and one of the five biggest loan servicers that collect monthly mortgage checks from U.S. homeowners.

He is sole owner of Freedom, a $5 billion-a-year business he moved from Cherry Hill to Boca Raton, Fla., last year. He also started Cherry Hill Mortgage Corp., a publicly traded home-loan investor based in Farmingdale, N.J.

Through booms and busts and big changes in U.S. housing finance, Middleman has steered his mortgage group.

“All you can do is try to tell which way the wind’s blowing and not get in the path,” he says.

What to do with profits from the good years? Last year he bought around one-sixth of the Phillies from one of its owners, the Buck family, at a price Forbes estimated at $455 million. That put Middleman in a small club, joining the owners’ group headed by cigar heir John Middleton, who first invested in the team 30 years ago.

“It’s great fun. It’s wonderful,” Middleman says.

Middleman’s biography, Seeing Around Corners, written by investment banker R. Christopher Whalen, was published by Forbes last month. On Oct. 14 Middleman spoke to business school students at his alma mater, Temple University in North Philadelphia, where he serves on the board of trustees and has endowed an accounting program and a Jewish center. That morning, he spoke with The Inquirer about the career that made him rich enough to be a pro baseball owner. Questions and answers are edited for clarity and brevity.

I’m familiar with failure. [Middleman laughed.] I know what it’s like to be haunted by the past and disappointed with the present.

It’s a shame we struggled this year. It’s more fun when we win than when we lose. We’ll get ‘em next year.

The owners are a nice group. John Middleton does a great job holding them together.

The exciting thing about baseball: There’s so much opportunity. It will become more and more interesting over time. There’s a big demand for [digital video] content, and nobody has more live content than baseball. I’m hopeful we’ll be able to fulfill some of the opportunities on the horizon.

When I was a kid and you walked through the tunnel [at the former Connie Mack Stadium, which closed in 1970] and that great big green field opened in front you, and you saw how bright green the field was, it jumps out at you. It’s a feeling you don’t get many places. Especially when you’re a kid, 10, 12, 14 years old.

It’s the kind of experience where all your issues and questions and problems in the world stayed on the other side, and on this side you can enjoy the experience of the game.

To be able to have that experience again is fun. It’s exciting. It’s profound.

There are significant [tax, financial, and weather] advantages to being in Florida. But we don’t do it for the incentives. We didn’t do it, particularly, for the employees [who now total around 8,000, in the United States, the Philippines and elsewhere, down from around 15,000 before interest rate hikes slowed home lending in recent years].

It’s more than partially because Florida is where I’m now located. At the end of the day, my office in Mount Laurel was 15 minutes from my house. Now my office in Boca Raton is 15 minutes from my house there.

Our presence here is still pretty big, we have significant offices in Conshohocken and Marlton. My sons are still here and in New York. They are both important pieces in the company.

The government’s role was actually even bigger in the late 1980s with the death of the savings and loans. Almost all our loans are government-backed loans: FHA, veterans, Fannie Mae, Freddie Mac, Ginnie Mae. [In crises] the government has acted swiftly and decisively to keep the system afloat.

Sometimes they have overreached. They went too far in the pandemic, pumped in so much liquidity we had inflation — it was obvious that would happen. But a collapse would have been insurmountable for most banks and most lenders.

One of the problems politically in our society is people trying to hold onto the past without facing the reality of the future.

People that own homes make stronger communities and stronger societies. So home ownership is often seen as a positive. But it needs to be done in a more measured and stable and methodical fashion. It needs to be done over time with small incremental changes, rather than large universal changes in short periods of times.

One of the things that caused the crisis in ’08, which was led by housing, was the gusto with which government said ‘more home ownership is better.’ Property values rose as it became easier to get credit. Lenders used these programs to squeeze people into homes they couldn’t afford, not following the fundamental rules of credit. Then they’d lose the homes. It wiped out their wealth.

It wasn’t the poor people’s fault. It was the greater access to credit. That benefited no one. Asset owners failed. Developers failed. Mortgage originators failed. This was led by housing. In the pandemic it was a different [real estate crisis], led by office values falling.

Everyone suffers when you get a correction. People look for good and evil. Everyone wants to find someone to blame. But you make your own fate.

That volatility [in interest rates] makes it hard to plan. And the localized rules, the ‘not-in-my-backyard’ NIMBY thinking. [Apartment and home construction] is super-constrained in California, New York, New Jersey, Pennsylvania. And insurance regulation [in Florida and other states] doesn’t allow insurers to cover the real risks. It’s really hard to change.

We’ll find out if I’m right.