It’s UWM or independent. But it is not both.
For years United Wholesale Mortgage has claimed the mantle of a missionary, preaching the faith of mortgage brokerage. And in doing so, it did a lot of good: he built huge support systems for brokers, injected a sense of pride into an industry that was decimated after the Great Recession, and worked to attract new brokers. to strengthen the ranks of the initiators. .
But in March, with a personal decree, UWM CEO Mat Ishbia decided to make it clear that the company does not support mortgage brokerage. Instead, it supports Pretend Brokerage.
True brokerage is based on freedom of choice – for consumers and brokers. Entrepreneurs, who want to be their own boss and chart their own destiny, decide to open a brokerage house. They tell consumers that they are a better option than retail operations because they can offer a wider range of options, from multiple companies. No brokerage firm offers loans from all wholesalers. But it is the choice of the broker of the offers of the companies that he will represent.
Pretend brokerage, on the other hand, is when the broker is not the final arbiter on which companies they wish to do business with. Pretend brokerage is when a wholesaler tells the broker who he can and cannot do business with. Whether it’s 70 companies or two doesn’t matter. If the choice of a broker is strangled by a company, it is no longer a brokerage house. It is a retail branch where the local entrepreneur takes all the risk.
When Ishbia announced that UWM would no longer work with any brokerage firm doing business with Rocket Pro TPO or Fairway Independent Mortgage, he said he was acting in the best interests of the broker community. But it’s not supposed to be up to him to make that decision – it’s each broker’s province.
For a few years, Allen Middleman, Executive Vice President at Freedom Mortgage, hit the road with a series of conversations with mortgage brokers. He always told them that, if he was a broker, the first thing he would do was sign up for Quicken Mortgage, the old name of Rocket. Quicken was a great advertiser for its retail products, but brokers could profit from it. They could show consumers wowed by the magic of Quicken marketing that they too could offer everything Quicken could, but they could also offer more. And that way, they could prove to borrowers that they were the best choice.
It is a rather pointed advice, ransacked by the decree of the UWM.
AN IRON GRASP
Ishbia says UWM is only taking a stand against two companies and brokers still have a lot of choices. Aside from the timeliness of this action, nothing prevents UWM from continuing to narrow down the list of what it considers acceptable competitors. Ishbia said UWM did not plan to distance itself from other lenders, but certainly did not make any binding promises.
Some brokers do not believe that UWM, when it looks good, will act more maliciously or take other action to hurt brokers. But there is a long game here, and UWM is playing it very well.
Right after Quicken blew up the industry by showcasing its Rocket Mortgage app (“Push Button. Get Mortgage” was the catchy slogan), UWM decided to launch a big tech offensive. He was already offering marketing products to help brokers. Now he has unveiled a brand new mortgage application app – called Blink – that any registered broker could use. And, its leaders promised, it could be used by brokers to accept a request, even if these loans do not end up with UWM. These executives said the company just wanted to be good stewards of the brokerage community.
They also rolled out much more aggressive marketing support – email newsletters that could be sent to clients, advertisements that could carry their broker’s brand, presentation videos and much more, including a CRM system that the brokers could use it for all of their creators and products. , and everything is free. When brokers who had access to all of this didn’t take the time to voluntarily sign up, UWM removed the choice by automatically signing them up as soon as they were approved to work with UWM. It was a decision that telegraphed two years ago that UWM would force brokers to do business its own way when it decided what was best.
This decision foreshadowed his current position. In a statement last month, Ishbia said he had no interest in letting brokers have access to his company’s great technology if they wanted to support Rocket and Fairway as well. For the thousands of brokers who now had their entire marketing program and customer database in UWM’s hands, it was an intolerable situation: either adhere to UWM’s terms or lose their entire business infrastructure overnight. .
At the heart of UWM’s position is a claim that the brokerage channel is hurt by having Rocket and Fairway in the game. But neither UWM, nor any of the brokers or the only trading group that has backed it. game did not show any evidence to support this claim.
In fact, all the evidence points to the contrary.
In 2011, mortgage brokers accounted for only 7% of the mortgage originator market share in the United States. Last year brokers had increased that figure to well over 20%.
While Rocket, in particular, has increased its reach with brokers, it has also adjusted its business practices and technology offerings to meet the demands of the broker market. This pushed Rocket’s share of the wholesale chain to second place, just behind UWM. But if Rocket had been so bad for brokers, or for the brokerage community as a whole, the industry’s market share wouldn’t have gained the incredible traction it has.
Ultimately, UWM’s power play is not in the best interest of the brokerage community; it compromises the free choice of brokers and undermines their ability to actually deliver the best product to consumers – which is why consumers come to them in the first place. But it does serve to tie brokerages to UWM as contract retail branches, while trampling on a business large enough to challenge UWM’s market dominance.
What’s wrong, in particular, is that UWM is a huge achievement, as it has competed on the basis of superior service, great product, and great customer support. He has no need or right to try to limit the choice of brokers. But he’s ignoring that and in doing so shows he’s putting his own interests ahead of the brokerage community, no matter what turn it tries to put.
Some brokers may shrug their shoulders, saying they don’t care because they like doing business with UWM. But it’s today. Tomorrow, or next month, or three years from now – whenever UWM sees it to their advantage – the rules will change again, and next time around, brokers won’t be able to be so optimistic about the outcome. Because UWM is their new boss.