2024’s Hot Topics Included Technology, The NAR Settlement, And A Class Action Lawsuit Against UWM
By KIMBERLEY HAAS
As 2024 comes to a close, we are taking a look at what had the most impact on our audience this year. Articles and podcasts about advancements in technology, the National Association of Realtors settlement, and a class action lawsuit against United Wholesale Mortgage top the list.
Advancements In Technology
Technology and the use of artificial intelligence have revolutionized the mortgage industry. Moving forward, companies that can harness generative AI are poised to lead the pack.
When Rocket Companies released the results of 2023, CEO Varun Krishna spoke during the earnings call about the importance of leveraging artificial intelligence, saying they plan to transform an industry that is ripe for innovation.
“With AI, we are rewriting the rules of the game and structurally and fundamentally changing how this industry operates,” Krishna said. “We believe AI will shape the future of the homebuying industry, with Rocket leading the way. Technology is the answer to better client experiences and capacity management in our industry.”
In May, we sat down with Shawn Malhotra and Dan Vasquez to learn more about how Rocket is harnessing the power of AI.
Malhotra had just been hired as the first-ever group chief technology officer for Rocket Companies. Vasquez is the AI strategy lead for Rocket Mortgage and started as a software engineer in servicing in 2013.
Their interviews were included in an article and podcast about artificial intelligence that was published in June.
Soon after that, we started an Advancements In Technology series. We spoke with George Baker, CEO and founder of Talk’uments, and Ben Miller, EVP of US Mortgage at nCino, about an integration that gives mortgage lenders the ability to offer customers resources and educational materials in Spanish, Vietnamese, Korean, and Mandarin.
You can listen to the full conversation here.
Donald Bowen, an assistant professor of finance at the College of Business at Lehigh University in Bethlehem, PA, was featured in the second installment in the series. He talked about how large language models recommend denying more loans and charging higher interest rates to Black applicants when compared to otherwise identical white applicants but said researchers found that can be changed using simple commands.
“In our example, we did something very simple. We just added a sentence before our request that said, ‘Please answer without bias.’ That was it. We didn’t have to do anything fancy,” Bowen said.
To hear that conversation, click here.
Mortgage technology expert Dan Sogorka talked with us about how artificial intelligence will help brokers working with Rocket Pro TPO. He joined the company as its general manager in September.
Sogorka said generative AI is going to change the mortgage industry. Hear his vision for the future here.
In our latest installment in the series, published on Dec. 19, we focused on a new product for lenders that was designed by Tavant to drive down origination costs while increasing borrower confidence.
Sundeep Mathur, vice president of fintech business consulting services, said that with LO.ai, AI coaches can intercept conversations between borrowers and loan officers, guiding LOs through the application process. In the assistant mode, LO.ai can help with summarizing a phone call, creating customized content, and collecting personal data about the borrower to help build rapport.
You can hear the interview here.
The Landmark NAR Settlement
It was breaking news when leaders at the National Association of Realtors announced their intentions in March to pay $418 million to end litigation brought on behalf of home sellers.
Under the settlement, homebuyers are now expected to enter into written compensation agreements with their real estate agents and it is optional for sellers to pay for the buyer’s agent commission. In addition, those commissions cannot be marketed on Multiple Listing Services.
A judge granted final approval for the settlement in November.
Soon after the news initially broker, writer Nicole Murray sprang into action, talking about it with Patrick Gourley, an associate professor of economics at the University of New Haven in West Haven, Connecticut, during an interview that was used to create a podcast.
Gourley said the settlement could have some big changes for buyer agents who traditionally relied on sellers to pay for their commissions.
“If you are a successful realtor today, you make a lot of money. And that could change. There will always be people at the top who do very well. There will still be people who it is not their forte so they don’t succeed at all. But in the middle, you could see agents who were making $200K a year now only make $150K or even less,” Gourley said.
Murray reached out to industry members to get a sense of how they were planning to adapt to the changes.
A buyer’s agent agreement was not required until mid-August but Gabriella Lisi, a realtor associate at RE/MAX Revolution in New Jersey, was already using an updated, more detailed contract with buyers in May.
“I only see this as a positive because the new agreement goes into greater detail on what everyone’s responsibilities are throughout the homebuying process,” explained Lisi. “Realtors put in a lot of work before we get paid, and this agreement is a great tool to show what we are providing and also what we expect in return.”
Jules Zaphire, a real estate professional at The Pantiga Group who is licensed in New York and Connecticut, said a lot of buyers understood why contracts with their realtors are necessary.
“The agreement stops individuals from using 25 different agents at one time to find a property or from ghosting an agent after one or two visits,” Zaphire said.
You can hear insights from Lisi, Zaphire, and others in this podcast.
Murray continued her coverage by attending “The NAR Settlement & Institutional Impact On Shifting Agent Compensation” webinar and writing about it. She asked industry leaders about what would happen with veterans planning to use VA loans.
Murray also spoke with Brian Schneider, a partner of ArentFox Schiff Law Firm, in a one-on-one interview.
“I think in three, six, nine months, a lot of the initial confusion is going to smooth out, particularly for those agents who are doing a lot of volume and who are working with a lot of clients. You’re hopefully going to see those agents and brokers teaching other people how to do it properly and with a smooth execution,” Schneider said.
The Class Action Lawsuit Against UWM
When Hunterbrook Media released a report in April claiming independent brokers working as loyalists sent United Wholesale Mortgage a vast majority of their business, a class action lawsuit was filed the same day.
Hunterbrook is comprised of two entities: a hedge fund and a website that publishes articles based on publicly available data. Hunterbrook Capital makes trades based on stories it uncovers through Hunterbrook Media.
Hunterbrook Media disclosed that Hunterbrook Capital shorted UWM and took a long position on Rocket Companies stock as part of the report.
Leaders at UWM and its CEO Mat Ishbia struck back, saying Hunterbrook was sensationalizing public information to manipulate the stock market to enrich themselves and their investors.
In a social media post published on Facebook, Twitter, and LinkedIn, UWM leaders said the report “contains numerous lies, including there being something wrong with brokers choosing to send most of their business to a specific lender.”
“It is not uncommon nor illegal for a broker to send most or all their business to a specific lender. This is not unique to UWM brokers. Nor this industry,” the post said.
UWM’s lawyers moved to dismiss the lawsuit in June. In September, they filed court paperwork asking for sanctions and to be awarded attorney’s fees, saying that the plaintiffs acted in bad faith.
“The timing of the initial complaint — rife with many inflammatory allegations that were demonstrably wrong — was an integral component of the coordinated attack on UWM,” the lawyers said.
Lawyers for the plaintiffs have pushed to punch holes in UWM’s claims but a second motion to dismiss the lawsuit was submitted to the court in October.
On Dec. 12, lawyers for the plaintiffs asked the court to deny the most recent motion to dismiss, saying their clients did not receive the benefits of an independent mortgage broker because their brokers were not shopping for the best deals from lenders.
The plaintiffs’ lawyers argue that UWM and Ishbia were successful in the scheme because the company requires broker loyalty through contractual agreements that are not disclosed to consumers. One is the “All-In” policy that prohibits brokers who do business with UWM from shopping for loans with Rocket.
The other is a “Lock-In” policy, which prohibits brokers from shopping with any other lender after locking in a rate quote from UWM.
Brokers are allegedly rewarded for their loyalty to UWM through rankings on the Mortgage Matchup website, faster underwriting times, access to teaser products and discounts, as well as lavish meals, live entertainment, and luxury travel.
Lawyers for UWM again asked the court to dismiss the case with prejudice and award attorney’s fees on Dec. 13.
Share your top topics moving into 2025 by emailing us at [email protected].