Hard work and execution built Constructive Loans.

Ben Fertig, president of Constructive Loans, readily admits his entrepreneurial trajectory was not a “rags to riches story.” Though he’s worked with well-capitalized partners, his focus and drive spurred his success.

Fertig started his career in mortgage lending through a series of fortunate events. Growing up, he dreamed of playing hockey for the New York Rangers. He made it as far as playing Division 1 hockey at the University of Minnesota, but he realized he needed a fallback plan.

“I consider myself a fairly smart guy, which enabled me to realize early on that playing hockey for a living wasn’t realistic,” he said.

Although he majored in psychology, Fertig focused on the financial services sector when it came time for job interviews.

“I applied for I don’t know how many jobs out of college,” he said.

Then he went on an interview for a job as mortgage loan officer, one of numerous financial services positions he’d applied for. Fertig received the job offer at the end of the interview.

“I didn’t even know what a mortgage was,” he chuckled.

He’s since spent his entire 24-year career in mortgage banking, with the last nine in private mortgage lending.

Building a Team

Fertig’s upbringing as an athlete led, in part, to the founding of Constructive Loans. In late 2017, he connected with the partners at Fay Financial. Like him, they were former Division 1 athletes, which made them “relatable,” Fertig said—and their common bond proved crucial for navigating the COVID-19 crisis.

Before linking up with the partners at Fay, Fertig had seen plenty of success. He served as chief operating officer at Jordan Capital Finance. In that role, he was instrumental in two sales of the company, including to Blackstone and Finance of America in 2017. After the sale, he remained with Finance of America commercial to run credit and asset management.

“I liked it at Finance of America,” he said. “I got to work with a lot of smart people.”

But once he clicked with his current teammates, he left Finance of America and quickly got Constructive Loans, which focuses on third-party origination, off the ground. It started strong, earning national recognition early on and proving itself with strong results.

“My primary motivation was I knew I could do this business correctly. I knew I could strike the balance between the markets’ needs and organizational necessities,” he said. “I was confident that I could make a lot of stakeholders happy.”

Fertig noted Constructive Loans is one of the biggest originators of debt-service coverage ratio (DSCR) rental loans in the private lender space.

Fay Financial “has a lot of clients with capital,” he said, and a vision for building complimentary companies that can take advantage of that capital while giving its investors a great return.

Crisis Mode

The coronavirus pandemic hit the industry and Constructive Loans with unprecedented challenges.

The company was firing on all cylinders, and “by far” was hitting its highest production in March 2020 Fertig said. Then came the shutdowns and uncertainty.

“In the third week of March, the market for non-agency mortgage loans dropped between 15 and 20 points in what amounted to four business days,” he said.

By comparison, he said, it took about a year to see that level of price slippage in 2008-2009 at the beginning of the Great Recession.

“That effectively stopped lending activity. It was not prudent to write loans that were worth 80 to 85 cents on the dollar as soon as you funded them,” Fertig said.

On top of that, the team, which had been centralized in a Chicago suburb with a small contingent in Dallas, went remote.

“It was uncharted territory.”

So, the leadership team circled the wagons and considered the lessons of the previous financial crisis.

“We turned our focus to taking care of stakeholders,” Fertig said.

That included paying broker fees on loans they didn’t fund, reimbursing earnest money to the borrowers, and paying off warehouse banks first and foremost.

During that time, the leadership team relied on its athletic training to come together as a team to achieve the best outcome possible in the wake of the crisis.

“We were noticeably hyper-focused during that period,” Fertig said.

By May 2020, capital began to return to the market, and Constructive Loans saw few performance issues with its portfolio, Fertig said, and it continued to perform “significantly better” than agency mortgage assets.

“As early capital came in, more and more capital came in. Our historical loan performance was attracting more and more capital,” he said. “Investors wanted to get back in.”

The team’s focus is paying off. Fertig said March 2021 was on track to be the biggest revenue month in the company’s history.

Leadership on All Levels

One of the company’s keys to success has been empowering its 50 employees, Fertig said. Rather than create narrow, prescriptive processes that employees must follow to a T, the company offers broad directives that allow employees to exercise their own critical thinking, judgment, and influence when processing loans. The approach emphasizes and encourages leadership at all levels.

“It’s very difficult to manage through a crisis, especially the one that we went through in March [2020],” Fertig said. “Leadership is not something that I believe exists only at the top of the organization. I think that philosophy was critical in being able to navigate the third week of March and beyond, and it will be critical to navigate the next time things change unexpectedly.”

In the third and fourth quarters of 2020, revenue grew steadily, and it continues on an upward trajectory. As the numbers show, the team has been clicking despite the changes and challenges of the past year, including many employees still working remotely.

“I miss people being in the office. I hope we get back to that at some point,” Fertig said.

‘No Magic Bullets’

Constructive Loans relies heavily on 360-degree feedback from employees, clients, and capital partners about all aspects of the business. Fertig said they ask employees how the leadership team is managing the business to what type of culture they want—and a range of questions in between. He said he asks clients how he can help them succeed and how the company’s products, processes, and even pricing fit in.

“We’re obsessed with making sure that our clients are successful,” Fertig said. “You can’t really do that without understanding what they need.”

In Fertig’s eyes, all that feedback adds up to success for the business.

“At the end of the day, we’re building a good company. It’s for our clients, for our employees, for our capital partners,” he said. “We know these loans often have a unique story. We need to appreciate that story and keep it in an organized process at the same time. And that is why we’re successful in this space. There’s no magic bullets here.”

This or That

• Text or call: Call
• Android or Apple: Apple
• Sneakers or flip-flops: Sneakers
• Night owl or early bird: Early bird. It’s rare that I sleep much after 5.
• Rain or shine: Shine
• Mountain or beach: I spend more time on the golf course by far, but between the two, I’d rather hike a mountain.

Favorites

• Movie: Moneyball
• TV shows: I watch Cheers reruns more than anything else.
• Book: “Straight from the Gut,” by Jack Welch
• Season: Fall
• Guilty pleasure: Caymus Cabernet. I highly recommend it.
• Activities to do in his spare time: Golf, running, working out

DOG DAYS OF THE PANDEMIC

Like so many Americans during pandemic lockdowns, Ben Fertig signed up to rescue a dog but ended up far down the waiting list. In the end, he turned to a breeder for his new furry family member, a yellow lab puppy named Millie. He previously had yellow labs who passed on years ago.

“She’s our third lab and by far the craziest,” he said. “She is something else.”