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Here are a couple of analogies to describe Velocity Financial:

• Think of it as Rocket Mortgage for landlords, providing loans for investment properties rather than owner-occupied homes.

• It's similar to a specialized SBA lender, but exclusively providing loans for real estate investors to buy or refinance rental homes and small commercial properties.

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• Origination of Investor Loans: Velocity Financial provides new loans to investors for the purchase or refinance of 1-4 unit residential rental properties and small commercial properties.
• Management of Investor Loans: Velocity Financial services and administers existing loans it has originated, ensuring collection and portfolio oversight.

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Velocity Financial, Inc. (VEL) primarily serves individuals and small business entities rather than large corporate customers. Its major customers can be categorized as:

• Investors in 1–4 Unit Residential Rental Properties: These customers are typically individuals or small entities who seek financing to acquire, refinance, or rehabilitate residential properties (single-family homes, duplexes, triplexes, or fourplexes) with the intention of renting them out for income.
• Investors in Small Commercial Properties: This category includes individuals or small business entities who require loans for the acquisition, refinancing, or improvement of small-scale commercial properties such as small office buildings, retail units, light industrial spaces, or mixed-use properties. These properties are typically held for investment purposes or for the operation of a small business.

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• Midland States Bank (MSBI)
• JPMorgan Chase & Co. (JPM)

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Christopher D. Farrar Chief Executive Officer

Christopher D. Farrar has served as Chief Executive Officer for Velocity Financial, Inc. since co-founding the company in 2004, and has also served on its Board of Directors since January 2020. He brings extensive experience in finance, lending, capital raising, and business operations. Prior to co-founding Velocity, Mr. Farrar served as Senior Vice President of Production at Weyerhaeuser Mortgage Company and as Chief Credit Officer for Worth Funding, a mortgage banking firm. Velocity Financial received significant early investment from the private equity firm Snow Phipps Group.

Mark R. Szczepaniak Chief Financial Officer

Mark R. Szczepaniak has served as Chief Financial Officer of Velocity Financial, Inc. since May 2017. He has over 35 years of experience in the real estate and financial services industries, holding various senior positions with both publicly and privately held finance companies. Before joining Velocity, Mr. Szczepaniak was the Managing Director of Finance, SOX, & Tax at PennyMac Financial Services Inc. from 2013 to 2017. He also served as Chief Financial Officer of Prospect Mortgage from 2009 to 2012, and held roles as Chief Financial Officer and Vice President of Finance of the Federal Home Loan Bank of Seattle (2004-2007) and Senior Vice President and Corporate Controller at the Federal Home Loan Bank of Chicago (1996-2004).

Jeffrey T. Taylor Executive Vice President, Capital Markets

Jeffrey T. Taylor has served as Executive Vice President, Capital Markets for Velocity Financial, Inc. since 2004, having co-founded the company in June 2004. He possesses over 30 years of experience in the secondary mortgage market. His prior roles include working for opportunity funds that purchased Resolution Trust Corporation and FDIC loan portfolios, Vice President of Operations for 2dmkt.com, and Vice President with BayView Financial Trading Group L.P., where he managed commercial lending markets. Mr. Taylor also served as a Transaction Manager at Countrywide Securities Corporation.

Roland T. Kelly Chief Legal Officer

Roland T. Kelly has served as Chief Legal Officer for Velocity Financial, Inc. since March 2021, and as General Counsel and Corporate Secretary since July 2020. He has more than 25 years of experience in corporate, regulatory, governance, and capital markets. Previously, Mr. Kelly was a Managing Director and Associate General Counsel for Jefferies Financial Group Inc., and worked for the law firm of Morgan, Lewis & Bockius, as well as a regulator with the U.S. Securities and Exchange Commission.

Joseph A. Cowell Chief Operating Officer, Velocity Commercial Capital LLC

Joseph A. Cowell has served as Chief Operating Officer of Velocity Commercial Capital LLC, an operating subsidiary of Velocity Financial, Inc., since April 1, 2016. He has over 20 years of experience in real estate finance and mortgage lending operations. Mr. Cowell has held various roles at Velocity Commercial Capital since joining in 2004, including Chief Credit Officer, Senior Vice President of Whole Loan Acquisitions, and Vice President of Production and Operations from 2012 to 2016. Before Velocity, he worked at BayView Financial Trading Group as a capital markets analyst and an account executive for its subsidiary, Interbay Funding.

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Here are the key risks to Velocity Financial (symbol: VEL):

1. High Debt Levels and Financial Strength: Velocity Financial demonstrates poor financial strength primarily due to high debt levels, with a notably high debt-to-equity ratio, which suggests a significant reliance on debt financing. This elevated leverage increases the company's financial risk profile.
2. Interest Rate Volatility and Sensitivity: As a real estate finance company, Velocity Financial's business is highly sensitive to fluctuations in interest rates. Changes in interest rates can significantly impact its net interest margin, borrowing costs for its debt issuances, and the overall demand for its mortgage products, potentially leading to reduced profitability and slower loan origination growth.
3. Credit Quality and Nonperforming Loans: The credit quality of Velocity Financial's loan portfolio, particularly the percentage of nonperforming loans (NPLs), poses a significant risk. While there have been improvements in this area, the nonperforming loan ratio has been substantial, for example, 10.3% of the portfolio in Q2 2025 and 10.8% as of March 31, 2025. A deterioration in credit quality or an increase in nonperforming loans could negatively impact the company's financial performance, earnings, and book value.

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The emergence of technology-driven direct lending platforms and financial technology (FinTech) companies poses a clear threat. These platforms leverage advanced algorithms, artificial intelligence, and streamlined online processes to offer investor loans for residential rental and small commercial properties directly to borrowers. This model can bypass traditional independent mortgage broker networks, which Velocity Financial relies upon for its loan originations. By offering faster application approvals, potentially lower operating costs, and a more convenient digital experience, these emerging competitors can erode Velocity Financial's market share and challenge its established distribution channel and operational model.

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Velocity Financial, Inc. primarily originates and manages investor loans secured by 1-4 unit residential rental and small commercial properties in the United States. The addressable markets for these services are substantial within the U.S.

Addressable Markets:

• Investor Loans Secured by 1-4 Unit Residential Rental Properties: The single-family rental (SFR) market, which includes 1-4 unit properties, encompasses approximately 14.1 million households in the U.S. as of 2022. In 2018, the total valuation of the SFR market, including two- to four-unit properties, was estimated to be well over $4 trillion in the U.S. The broader U.S. Real Estate Loan Market, which includes residential lending, was valued at $3.5 trillion in 2024, with residential properties accounting for over 61% of the total share.
• Investor Loans Secured by Small Commercial Properties: The total commercial real estate (CRE) debt outstanding in the U.S. was $5.9 trillion as of the fourth quarter of 2023. In 2024, total commercial real estate mortgage borrowing and lending in the U.S. was estimated at $498 billion. The overall U.S. commercial real estate market size was valued at approximately $742.3 billion in 2025 and is projected to reach $995.6 billion by 2034.

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Velocity Financial (NYSE: VEL) is expected to drive future revenue growth over the next 2-3 years through several key strategies and market dynamics:

1. Expansion in the Business Purpose Loan Market: Velocity Financial aims to capture a larger share of the fragmented business purpose loan market through ongoing strategic initiatives and by continuously enhancing its loan production platform. This strategy has already contributed to the company's sustained earnings momentum.
2. Growth in Loan Originations and Portfolio Expansion: The company has demonstrated strong performance in increasing loan originations, achieving a record of $2.7 billion with a 49% increase driven by higher productivity from its account executives. Velocity Financial's loan portfolio expanded by 28% year-over-year, reaching $6.5 billion in unpaid principal balance (UPB), which is expected to support future interest income. The company has an ambitious long-term objective to grow its loan portfolio to $10 billion by 2030, primarily through robust loan originations.
3. Maintenance of Stable Net Interest Margins (NIM) and Healthy Loan Coupons: Management anticipates net interest margins to remain stable, near 3.5% to 3.6%, which, coupled with strong portfolio growth and disciplined rate setting on new originations, will contribute to sustained revenue. The company has also seen its weighted average coupon on loans climb to 9.7%, with new held-for-investment loans in Q4 reaching just over 10%, indicating healthy yields on its lending activities.
4. Strategic Capital Markets Execution and Diversified Funding: Velocity Financial's sophisticated funding framework, including its ability to execute securitizations effectively, is a crucial driver. The company significantly grew its outstanding securitization balances and plans further long-term loan securitizations. Additionally, the issuance of its first rated unsecured debt offering has enhanced liquidity and diversified its funding sources, reducing reliance on short-term warehouse lines.
5. Effective Non-Performing Loan (NPL) Resolutions and Strategic Sales: The company's proactive approach to managing and resolving non-performing loans, including strategic NPL sales, contributes to revenue. In 2025, NPL resolutions generated $30 million in total recovered revenue. A significant NPL sale transaction in Q4 not only generated earnings but also freed up approximately $50 million in working capital and will drive future earnings from retained servicing fees.

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Share Issuance

• In 2021, Velocity Financial, Inc. converted its outstanding Series A Convertible Preferred Stock into 11,688,310 shares of common stock.

Outbound Investments

• In December 2021, Velocity Financial acquired an 80% ownership interest in Century Health & Housing Capital, LLC for $12.8 million in cash.
• As of January 2026, Velocity Financial indicated that up to $75 million of the net proceeds from its $500 million senior notes offering could be used toward a potential business acquisition under consideration.