Better’s CEO Bromance Ends in Corporate Warfare 💔

The Better breakup keeps getting messier. Founder Vishal Garg apparently handed Fortune roughly 2,000 texts between him & Daniel Lewis, arguing they show Lewis befriended him, gained his trust & then backstabbed him. Lewis’s rendition is that the closer he got to Better, the more convinced he became that Garg was the problem.

Also in today’s edition, AmeriTrust tries to claw back $14M from an alleged DSCR fraud scheme, who’s doing a ton of rate/term refis & mucho mas.

Amanda Gerut’s excellent feature details how Better founder Vishal Garg went from getting extremely chummy w/ investor Daniel Lewis to getting replaced by him as CEO, followed almost immediately by open corporate warfare that’s reminiscent of “Barbarians at the Gate” but also… this? 👇

The relationship before the breakup is actually incredible. Garg & Lewis exchanged thousands of messages over roughly a year, bonding over corporate finance, AI & a mutual inability to stop working. Fortune reports the two would humblebrag about ducking out of date nights & parties to try to “3x” distressed debt trades.

Even vacation was apparently a struggle. During the holidays last year, Garg told Lewis, who was in Mexico, to “have a tequila shot 🍋‍🟩& just let it all go.”

“My ability to relax is the same as yours,” Lewis replied. “Doing my best.”

At one point Garg was apparently trying to build Vishal 2.0 (or 3.0???). In an October ‘25 text, he told Lewis that “this time around” he was focusing on humility & gratitude, going so far as to print the words in big type & stick them on his wall. But some of the old-school Garg management philosophy was still very much alive.

Discussing Better’s direct-to-consumer sales operation, Garg wrote that leadership needed to run the culture, “in the kindest way, a boiler room sweat shop.”

“My flaw was hiring & promoting [the] same type of people. So the managers & workers were friends,” Garg wrote. “I need the opposite. I should be friends w/ the workers. But they should hate their managers.”

😬

The relationship allegedly started to change once Lewis got a closer look inside Better. Lewis told Fortune that as he began working directly w/ execs, he saw “w/ my own eyes” how employees were treated & how information & strategy flowed through the company.

His conclusion: Garg was the problem. “I have never in my career seen a culture promoted by the CEO that was more the antithesis of my personal values,” he said.

Lewis also accused Garg of making promises he didn’t ultimately deliver on & said the culture Garg built was badly mismatched w/ the innovative technology Better’s employees were developing.

Garg says he was hoodwinked & backstabbed. And to his point, there’s an extremely foreboding text in the story. Lewis once sent Garg an article about a previous activist investment & described himself as “a good wingman.”

He followed that w/: “I own the record for fastest control proxy fight ever, 8 days. It took me 8 days from announcement to take over the board of the largest hotel REIT in Canada.”

Perhaps worth remembering!

Lewis joined Better’s board in late July. Roughly a week later, Garg was out as CEO & Lewis was running the company. Now Garg is trying to remove Lewis & four other Better directors, while Better has sued Garg & accused him of waging a “scorched-earth campaign” to regain control.

In terms of the plan moving forward, Lewis says he wants a leaner Better centered around mortgage manufacturing, wholesale, partnerships & technology, though he’s lost a lot of execs who would carry that out. Garg argues the company was finally turning around & that the board disrupted a strategy that was starting to work. He says he has a bunch of partnerships that would immediately bring serious revenue into the fold.

Anyway, Fortune’s reporting makes the sequence pretty remarkable. These guys were talking about becoming BFFs, trading vacation advice, discussing management philosophy & nerding out over distressed debt. Then the guy who bragged about taking over a board in eight days joined Garg’s board. A week later, Garg wasn’t CEO anymore. Fuckin’ brutal.

Purchase money production accounted for 62.2% of new securitizations, up from 57.0% in Q1'26 and down from 75.1% in Q2'25. Rate/term refinances represented 26.4% of new loans in Q2'26, compared to 31.5% in Q1'26 and 13.4% in Q2'25. Cash-out refinances remained stable at 11.4% of new loans, compared to 11.6% in Q1'26 and 11.4% in Q2'25.

Of those lenders issuing at least $1 billion in Q2'26 (excluding builders and housing finance agencies), Cornerstone Capital Bank had the highest purchase share of total issuance (92.0% of issuance) followed by American Pacific Mortgage Corp (79.3%) and PrimeLending, a PlainsCapital Company (79.2%).

Of those lenders issuing at least $1 billion in Q2'26, CitiBank had the highest rate/term refinance share of total issuance (38.2% of issuance) followed by Community Mortgage Corp (33.2%) and Truist Bank (32.7%).

Of those lenders issuing at least $1 billion in Q2'26, loanDepot had the highest cash-out refinance share of total issuance (24.4% of issuance) followed by Rocket Mortgage (24.4%) & Wells Fargo (18.0%).

This report is brought to you by Milliman. Milliman provides strategic and quantitative consulting services across the mortgage market with expertise in origination, servicing and capital investment.

Source: Fannie Mae, Freddie Mac, and Ginnie Mae MBS Data Disclosure

Remember all those warnings about fraud creeping into DSCR? Here’s a pretty ugly example.

Per NMP, AmeriTrust Mortgage is suing a group of investors, a broker, appraisers & title companies over an alleged $14.1M fraud scheme involving roughly 90 Baltimore-area investment-property loans. This is known colloquially as The Baltimore Scheme. 

The complaint alleges properties bought for around $40K to $50K were quickly resold to affiliated entities for roughly $200K, w/ financing based on the higher value. Many of the loans then defaulted almost immediately, triggering repurchase demands.

That tracks pretty closely w/ what I’ve reported in The Scoop: investors & warehouse lenders have grown increasingly nervous about DSCR loans featuring inflated property values, questionable rents & weak counterparties. Even yield-hungry Wall Street tends to notice patterns like that eventually…

(🙏 If you like what you’re reading, tell a fellow mortgage junkie to sign up here.)