Adam Zausmer: Yes, sure. So on the agency side, certainly noise in the market regarding certain brokers that may have engaged in fraudulent activity. And I think given the market dynamic where sponsors are certainly trying to refinance their loans and slowdown in activity. I think being cautious of the broker market, I think, is certainly at the forefront and certainly something that the agencies are making sure that lenders are aware. So from a process standpoint, what we’re doing differently today given this noise in the market, we are doing things such as obtaining source documents directly from the sponsors. I think historically, brokers have provided the source documents themselves. And so we’re getting directly from the sponsorships, making sure that when we go to property visits that the sponsors are touring with us, we’re getting into a significant amount of the units to confirm that they’re occupied and that those units kind of match what the rent rolls are saying.
In terms of ordering third-party reports, certainly staying on top of that, making sure that sponsors are not involved during the inspection process for the third-party inspectors and also that the brokers keep their distance. I do expect that this trend of seeing kind of additional fraudulent activity in the market is going to continue given this environment. I’d say on the agency side, probably 90% plus of our originations comes from the broker community. Certainly, there are some very strong solid reputable brokers out there that we do business with. But certainly, there are some that we have to be cautious of.
Jade Rahmani: So does this change your forward outlook? I know the third quarter had a fairly strong quarter with Freddie Mac. Does it change your forward originations outlook?
Adam Zausmer: Yes. No. I mean, I think overall, the agency volume is down probably around 30% versus last year. Where you see our uptick this year is more on our tax-exempt affordable business. Those guys are expected to originate record volumes significantly over where they originated last year. Our Freddie Mac small balance lending, that is certainly slow compared to prior years. We do expect as rates move down a bit here that going into — certainly, the Q4 today, we’re certainly building a pretty sizable portfolio, which would close in Q1. So I think 2024 outlook for the Freddie SBL I think is strong and expectations that we’ll — we should originate more than we did this year. And then continued growth on the tax exempt to 4%.
Jade Rahmani: So that sounds like you do not expect this Freddie Mac issue to curtail or reduce originations?
Adam Zausmer: That’s right. That’s right. Yes. I don’t think the noise with these brokers, I don’t think is going to slow down our business. So it’s just going to cause us to really be extra cautious as we underwrite these transactions and deal with the brokers. But yes, I don’t expect it to slow down volume at all.
Operator: The next question is from Henry Coffey of Wedbush.
Henry Coffey: Two things. If I heard you correctly, you’re talking about potentially selling the mortgage — residential mortgage business?
Tom Capasse: Andrew, do you want to touch on that, mortgage and…
Andrew Ahlborn: That’s right. As we — yes, I just wanted to touch…
Tom Capasse: I’m sorry. Go on.
Andrew Ahlborn: Yes. Just on the residential mortgage banking business, for quite some time, we’ve talked about a strategy of simplifying the REIT to be more purely focused on the lower to middle market CRE space. Over the last couple of months and quarters, we have taken time to explore a variety of strategic options for either downsizing or moving that business. And I think we are getting close to the conclusion of that process and expect that as we move into the new year, we repositioned that equity into our core channels.
Henry Coffey: There is actually demand for those assets, though it’s usually at a fairly discounted price, perhaps at or below book value. Would it be simpler just to liquidate it or — and then let the brokers find their own spots? Or what are your thoughts about how that would kind of wind down over the next few quarters?
