Home improvement lending with fewer bankers and more computers

McKenzie unpacks the four‑party economics: the bank legally originates the loan (examples named include Cross River Bank), a facilitator handles origination, underwriting and compliance, and capital providers (like Sunlight Financial or private credit funds) buy the paper via warehouse/forward funds flow arrangements. He estimates fee slices — e.g., facilitators and banks collecting ~1% fees, servicing charges around 1% annually — and shows how installer subsidies can meaningfully raise effective yields to capital providers (bringing a quoted 6.99% consumer APR to nearer ~7.9% economic yields once installer contributions and prepayment behavior are considered). Compliance and fraud controls are central: McKenzie hit a fraud queue because his title was in a land trust, requiring manual review; sales reps are strictly scripted not to translate or promise approvals. On collateral, originations avoid immediate title liens (too slow); lenders take a security interest in the product and rely on contract judgments and later lien mechanics if collection is needed. McKenzie argues this model is materially different from 2008‑era mass mortgage misbehavior — loans are documented, borrowers are generally high credit quality, and losses fall to private credit rather than becoming taxpayer‑backed bank failures — while acknowledging rate sensitivity and the potential for risks if underwriting standards are loosened to chase volume.