BETR: A Beaten-Down Mortgage Stock, a Digital Adoption Thesis, and a Founder Fighting for Control

BETR: A Beaten-Down Mortgage Stock, a Digital Adoption Thesis, and a Founder Fighting for Control I think Better Home & Finance ($BETR) is an interesting situation for value investors because there are really two separate things happening at once: a deeply out-of-favor mortgage business operating near the bottom of its cycle, and an unusually aggressive fight over who gets to control the company if and when that cycle turns. The first part of the thesis is pretty simple. Mortgage has been a terrible place to be for the last several years. Volumes collapsed after the refinancing boom ended, rates moved sharply higher, housing turnover fell, affordability deteriorated, and essentially every mortgage originator was forced to operate against an ugly macro backdrop. BETR has obviously suffered through all of that. But I think the market risks confusing a cyclical collapse in mortgage activity with a permanent impairment of the underlying business model. The long-term secular driver here is digital adoption. Consumers increasingly expect financial products to be delivered digitally. Mortgage has historically been one of the slowest and most cumbersome financial products to move online because of the complexity of underwriting, documentation, title, appraisal, closing and regulation. That does not mean the shift is not happening. It means the transition takes longer. The next healthy mortgage cycle will not look exactly like the previous one. My expectation is that, when mortgage volumes eventually recover, digital penetration will be materially higher than it was during the last major cycle. Better has spent years building infrastructure specifically around that transition. If that thesis is right, the interesting question isn’t whether mortgage activity stays depressed forever. It obviously won’t. The question is what Better’s economics look like when normal mortgage volumes eventually meet a more digitally adopted industry. That is where I think the potential operating leverage becomes interesting. The market currently values BETR after years of losses, restructuring, collapsing mortgage volumes, enormous reputational damage and a brutal de-SPAC experience. Almost everything investors dislike about the story is visible today. What isn’t visible yet is what the business looks like in a normalized mortgage environment. That brings us to the proxy/consent fight involving founder Vishal Garg. To me, this is almost a second thesis sitting on top of the first. The underlying asset either has value or it doesn’t. If mortgage recovers and Better participates meaningfully in increasing digital adoption, there should ultimately be value creation regardless of who occupies the boardroom. But the current control fight determines **who gets credit for — and control over — that eventual unlock.** Garg built the company, raised the capital, survived an extraordinary collapse in the mortgage market, absorbed years of public criticism and dilution, and remains economically tied to what happens next. Now, with the asset depressed and the industry still weak, there is a fight over control. My concern as a shareholder is the classic one: assets can become most vulnerable to opportunistic control changes precisely when their reported financial performance looks worst. If Better’s platform ultimately proves valuable, I don’t particularly want outsiders arriving near the bottom of the cycle, taking control after most of the pain has already been absorbed, and then receiving credit for the recovery that follows. You can dislike Garg personally. You can dislike decisions he made during the boom. You can think the company was wildly overvalued at one point. None of those observations necessarily answer the investment question today. The relevant question is what the company is worth **from today’s price and today’s operating environment forward.** And the governance question is whether the founder who built the asset should be allowed to finish the turnaround, or whether control should shift just before the industry’s economics potentially improve. I think the stock can work under either outcome. If Garg loses, the mortgage cycle can still normalize, digital mortgage adoption can still increase, and Better’s assets can still become more productive. But if Garg wins the consent fight, I think the thesis becomes more compelling. You retain the founder with the strongest economic and reputational incentive to prove that the business he built was not a zero. You potentially avoid another strategic reset. And you give the existing operating thesis time to play out into a better mortgage environment. In that scenario, I think the stock can work **faster and better**. So my basic framework is: Mortgage is cyclical and currently depressed. Digital mortgage adoption is secular and, in my view, still moving higher. Better is one of the few public companies built specifically around that transition. The current valuation reflects an enormous amount of historical damage. A normalized mortgage market should provide a much better test of the actual asset than the last several years have. And the proxy fight determines whether the founder gets the opportunity to realize that value or whether control changes hands near the bottom. I don’t think investors need to believe BETR returns to its old private-market valuation. They only need to believe that the current market is pricing the company as though the mortgage depression and Better’s operational problems are essentially permanent. I don’t think they are. That is what makes the setup interesting to me.