United Wholesale Mortgage Holdings Corp. on Thursday escalated its mortgage war with Rocket Companies Inc., saying it would not do business with brokers who continue to work with the Detroit-based lender – a move Rocket calls “desperate.”
UWM, the exclusive Pontiac-based wholesale lender, draws attention to competitors working to undermine independent mortgage brokers looking to find the best rates for homeowners and homebuyers, CEO Mat Ishbia said during a Facebook Live. It comes as Rocket Mortage, the No. 1 mortgage lender in the United States and the dominant player in the direct-to-consumer industry, is making inroads into the UWM-dominated wholesale channel.
Ishbia accused Rocket Mortgage of Quicken Loans LLC of encouraging and working directly with real estate agents to exclude brokers from the process. He also claimed that Wisconsin-based Fairway Independent Mortgage Corp. solicits loan officers from brokers.
“There are two companies that are sneakily trying to grab the lifeblood of mortgage brokers by soliciting loan officers and real estate agents,” Ishbia told the Detroit News Thursday. “We don’t agree. We’ve decided that if you want to work with them, we won’t help you guys. Simple.”
Fairway declined to comment. Austin Niemiec, executive vice president of Rocket’s wholesale brokerage platform, Rocket Pro TPO, did not deny some of UWM’s specific accusations, but said, “Look, if our goal was to remove the As a mortgage broker, we wouldn’t invest tens of millions of dollars in our technology platform, bringing in brokers and putting them on our website.
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“Obviously, Mat Ishbia and UWM don’t want to compete with us anymore.… It limits the superpower (of the brokers), limits their choice. In the end, it hurts them and is selfish. It only helps one. company and Mat Ishbia. Brokers are realizing that. “
In 2020, Rocket issued a total loan volume of over $ 320 billion. Its “partner network” which includes its wholesale business grew 128 percent year-on-year to $ 106.5 billion. Last year, UWM closed a loan volume of $ 182.5 billion, a 69% increase from 2019.
Rocket has gone from 3,000 brokers three years ago to 10,000, Niemiec said. But only about 3,500 have submitted loans with Rocket or Fairway in the past 90 to 100 days, Ishbia said. UWM works with 12,000 brokers across the country, he said.
Brokers have until March 15 to sign an addendum, committing not to do business with any of the lenders. Within four hours of the announcement, about 550 of the 580 brokers who responded remained loyal to UWM, Ishbia said.
UWM undertakes to close any outstanding loan with brokers who do not sign the rider. Brokers who sign and then work with Rocket or Fairway must pay UWM “liquidated damages” in an amount greater than $ 5,000 per loan entered into with UWM or $ 50,000, depending on the language of the addendum. It’s a measure of accountability, Ishbia said.
“We are going to do what we have always done: offer brokers real added value, and I am convinced that we will continue to grow,” said Niemiec. “We would never try to control a broker by giving them an ultimatum. It is the broker’s choice. We offer value. We will compete in the right way.”
The move makes UWM look weak, which likely means UWM is losing business, said Erik Gordon, a professor at Ross Business School at the University of Michigan.
“It’s not because ‘Oh we hate each other,’ Gordon said. “It’s not a high moral position. If you say something like ‘you have to decide it’s us against them,’ you’re worried that people will shift their business a bit. Rocket has to do something that pleases him. some of the independent brokers, or United Wholesale would not have to make that threat. “
When asked if Ishbia feels threatened, he replies, “Not at all. The brokerage channel is under threat. We have been # 1 for six consecutive years.” He added that brokers and home buyers always have a choice in the competitive mortgage market with 73 other wholesale lenders open for business.
Some brokers applauded the move: “Honestly, brokers who send loans to Quicken don’t deserve UWM,” Casey Finn, senior broker at Finn Lend Homes Loans in Troy, said in a text. “Everything they do is for the benefit of the brokers. I’m glad Mat finally drew a line in the sand.”
UWM went public in January as part of a merger with a blank check company affiliated with Alec Gores, the brother of the Detroit Pistons owner. The deal provided UWM with $ 925 million in capital, which Ishbia says the company uses to promote the wholesale brokerage channel and invest in UWM technology to help brokers close loans. The deal also made Ishbia, whose family retained 94% of the company, a billionaire worth $ 11.1 billion, according to Bloomberg.
A GameStop-like “meme stock” frenzy sent Rocket and UWM stocks soaring earlier this week, and they have fallen since. UWM shares closed more than 9% at $ 8.73 on Thursday, slightly lower than they were earlier today. Rocket closed 4% lower at $ 26.86, more than the major stock indexes.
UWM’s move is just the latest attempt to retaliate against its crosstown rival. During the Super Bowl last year, UWM ran a 30-second ad saying rockets are “complicated and expensive” in a not-so-subtle jab that has gone on to promote FindAMortageBroker.com, a UWM-backed website with more information on mortgage brokers and how to find one. Both lenders ran spots during the Super Bowl this year to promote brokers.
“At UWM, we only grow if you expand,” Ishbia said on Facebook Live for its broker partners, “or I don’t stand a chance. I have over 8,500 people here. We win when you win, and we all win together, but there are two companies that are hurting the wholesale channel.
“Here is the question: are you all-in, or are you out?” “
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