Did UWM Squeeze Fairway Out Of The Wholesale Business?

By JARED WHITLEY

Did Mat Ishbia win another battle in the “Broker War?”

That appears to be the underlying message from Fairway Independent Mortgage Corporation, where leaders announced last month they would be shutting down their wholesale platform. Although CEO and Founder Steve Jacobson described the move as a “business shift, nothing more, nothing less,” about 100 people are expected to lose their jobs as a result.

“The people who have run Fairway’s Wholesale Department are some of the most talented, humble people in the business and will be a huge value add at their next mortgage home,” Jacobson said in a statement. “We want to thank our entire amazing wholesale team for its dedication and professionalism over the years.”

Fairway is pivoting the company’s business model to 100% retail originations and Jacobson said they will be focusing “on our core business to ensure that we continue providing the best customer experience going forward.” But eyebrows are raised because Fairway was one of the two companies targeted by Ishbia three years ago when he announced United Wholesale Mortgage’s “All-in” ultimatum, starting what is known as the “Broker War.”

During a Facebook Live event in March 2021, Ishbia said that his company would no longer work with brokers who do business with Fairway or Rocket Mortgage. He claimed the two companies were “hurting the wholesale channel.”

The controversial practice has triggered lawsuits, both against UWM for anti-competitive practices and by UWM for breach of contract. In January, UWM even sent a cease-and-desist notice to a Facebook group over the use of the UWM logo, while a high-profile antitrust case against UWM is before a federal judge in Florida right now.

So the “Broker War” rages on. And Fairway appears to be collateral damage.

To be clear, Fairway isn’t the only company to close its wholesale division; Citizens, Homepoint, loanDepot, and AmeriSave have, too. But the pressure from UWM likely didn’t help.

Last week, UWM released its 2023 numbers. Total loan originations were $108.3 billion, but the company reported a net loss of $69.8 million. This was the first full-year loss for the company since it went public in January of 2021.

Ishbia spoke during an earnings call, saying although last year wasn’t the company’s best financially, it will stand out from a dominance perspective.

“It was our second year as the number one overall lender, it was our third consecutive year as the number one purchase lender, and our ninth consecutive year as the number one wholesale lender. As you’ve heard me say many times before, the best mortgage companies shine in high-rate markets and that is exactly what we have done,” Ishbia said.

Ishbia said this performance is clear evidence of the strength of the broker channel. He said that loan officers continue to join the broker channel and to give them a competitive advantage, UWM is investing in technology that helps with speed, price, and process.

Ishbia will have his work cut out for him if he wants to improve morale. Grievances about UWM are published regularly on a Pillar 7 subreddit and the company has been sued for failure to pay minimum wages and overtime, gender/sexual harassment, retaliation, and for having a hostile work environment.