Rocket Pro TPO’s executive vice president recently turned heads with an opinion piece claiming United Wholesale Mortgage represents a massive threat to America’s mortgage brokers and their future independence.
In the piece called “America’s Mortgage Brokers Face an Unprecedented Threat to their Independence,” Austin Niemiec said leaders at UWM have reduced broker optionality by contractually forcing their brokers to choose between Rocket Mortgage and UWM, enforcing that same “ultimatum” contract to eliminate a UWM broker from brokering to Fairway Independent Mortgage, and engaging in a price war to eliminate the competition.
“If Mat Ishbia and UWM were truly committed to the real kind of competition that benefits brokers and their clients, he wouldn’t use his lawyers to take away brokers’ options, and he wouldn’t celebrate the demise of other wholesale lenders…. which only further reduces broker choice,” Niemiec wrote.
Niemiec wrote that Ishbia, president and CEO of UWM, wants to turn America’s independent mortgage brokers into a personal net branch loan officer network.
“America’s brokers must not give up their independence to the whims of one man. A broker’s lifeblood is choice and optionality. The stakes are too high. The long-term viability of their companies and their livelihood is on the line,” Niemiec wrote.
The Mortgage Note Editor Kimberley Haas sat down with Niemiec to talk about the state of the mortgage industry and his opinions.
Haas: So, tell me your thoughts, Austin, about where the mortgage space is right now when it comes to wholesale mortgages and what some of the threats are out there.
Niemiec: Let’s start with the market. The year 2022 looks a lot different than 2021. It’s a very dynamic market. And look, the mortgage industry is very cyclical, right?
But this one’s a little bit different. I mean, we went from a four-and-a-half trillion-dollar market a year ago and very quickly we’re probably a two trillion-dollar market.
There’s a lot of capacity in the industry, but the production flowing through the industry has contracted pretty significantly.
So, people are adapting and people are figuring out this kind of “new normal.” And you’re still seeing a lot of success and people doing things that are still working. But you’ve got to act a little bit differently.
We’re seeing brokers adapt pretty quickly and it’s dynamic.
The nice thing about Rocket is we’re blessed to be very well capitalized. So, when things get tough, we can still lean in and innovate and help brokers continue to grow and win business.
You see us investing, still building technology and rolling out new products — which we’re excited about — while others are maybe shying away from that.
Now, you asked about threats. I think that the biggest threat if we’re talking about the mortgage broker community is what we’re seeing UWM and Mat Ishbia doing, and you’re starting to see a lot of chatter and a lot of folks really waking up to what’s going on.
A mortgage broker’s superpower is choice and optionality. Consumers go to brokers because they have access to all sorts of lenders, and these lenders are competing for their business. And so, they have choice and optionality and, of course, a fiduciary responsibility to find the best loan for the consumer.
UWM and Mat Ishbia claim to be a champion of the mortgage broker model. But if you look at their actions over the last two years, it’s really the opposite.
What I mean by that is they’re really doing everything they can to take away those options, to take away those choices, for mortgage brokers. And those choices are their superpower as a broker. A broker’s not a broker without a lot of great, strong choices.
And really this started about a year and a half ago when Mat Ishbia came out and said, “Look, you can’t use Rocket Mortgage, Rocket Pro TPO.”
He also said, “You can’t use Fairway Independent Mortgage,” which is the 10th largest option for brokers.
And then, most recently Mat came out with the game on pricing, which he claimed to be an initiative to help strengthen the mortgage broker model. But really it was an initiative to help Mat Ishbia take out his competition.
He drove prices down and what happened? Loan Depot, the broker’s fourth most popular lending partner, they exited wholesale and now they’re just focused on retail.
Haas: Do you think this kind of stranglehold that he’s attempting to put on the market has been successful, or more successful than it normally would be, given the current state of what’s happening? I mean, we started this conversation with you saying you’re going from a four-and-a-half trillion dollar space down to a 2 trillion dollar space. So that would be hard for many of these brokers no matter what UWM does.
Niemiec: I think Mat saw an opportunity to take advantage of the situation for himself. Again, it put the broker community in a worse spot.
We kept funding loans at a time when rates were at a historic low. Americans needed help. Brokers had the opportunity to grow their businesses.
Mat went a corner and hid and we stood strong for the broker community. And you saw our market share skyrocket because of it on the wholesale side, while his went way down. We did that for several months. And it was probably one of the proudest moments for us at Rocket Pro TPO to help brokers continue to win business and help American families.
And then ironically, a few months later he comes out of the corner and says, “Hey, all you brokers that signed up with Rocket because you needed somewhere to go, guess what? If you use them now, I’m gonna fine you $50,000 or you can’t use my platform.” So, it’s ironic that he went away and hid in a time when brokers needed help the most.
Haas: What do you tell brokers are your advantages at Rocket?
Niemiec: We’re unique. We’re both the largest lender in the United States and we’re diverse. We have a retail side, we have a wholesale side, and we have all sorts of companies in our ecosystem. That gives us stability. And if you’re a mortgage broker, you’re not looking at your career in a span of months. You’re asking yourself, “How do I build a great business that can last decades, that can survive tough markets and take advantage of incredible markets?”
Brokers are looking at the long term and, because we have a strong foundation, we’re well capitalized and we’re very diverse, we’re able to be resilient.
On top of that, we have incredible technology. Over the last 12 months we’ve invested more than $100 million in building broker technology.
We have a lot of tools. And when I talk about tools, I mean it in a few different ways.
We’ve built an incredible technology platform called Pathfinder. In fact, we worked with Google to create it and it’s like a Google for mortgages.
There are gadgets within Pathfinder for brokers to calculate self-employed income or understand how visas work.
We rolled out a new marketing hub that gives brokers the ability to create their own custom marketing, whether it’s social tiles, or mailers, to help promote all the products that we offer or that they offer to consumers.
Haas: You said this technology platform called Pathfinder, you worked with Google to create it?
Niemiec: Yeah, we have a great partnership with Google.
Haas: So, at the end of the day, it sounds like it’s really about the people and those brokers and giving them the tools they can use to better serve their businesses and their clients. And as a result, they can make sure that the average Joe like me gets a better mortgage, a better product, a better experience going through the sometimes painful process. Am I correct in thinking that?
Niemiec: Absolutely hit the nail on the head.
Here’s how this whole thing works. We work for the broker, the broker is the boss, and the way a free market should work is the client is the broker. And we have to provide enough value for the broker to say, “I want to send this client to you.”
That value can come in price, technology, the relationship, everything. And how this broker model works best is when there are many wholesale lenders all fighting for the boss, which is the broker, the right way through value, through great products, great pricing, great tools.
When the broker model operates the way it should operate, the consumer wins. Most importantly, the broker wins because they’re in control and they’re setting their loans to whoever serves them best. And we get better as wholesale lenders.
On October 17, leaders at Rocket Pro TPO announced the national launch of “Correspondent Assist.”
Through the new program, Rocket will offer non-delegated correspondent lenders new and valuable operational benefits with the option to use a suite of new tech-driven fulfillment services, in addition to the existing platform supporting correspondent partners, according to a press release.
With the new Correspondent Assist program, the homebuyer uses Rocket Pro TPO’s digital client portal – with the partner lender’s branding – to apply, submit their documents, e-sign, and manage the whole mortgage process. Rocket will generate loan estimates, closing disclosures, and final closing documents – issuing them to the client through the portal.
“Rocket has always supported choice for our mortgage broker partners and their clients. Now, we are providing correspondent lenders with more options while we underwrite their loans,” Niemiec said in a statement.
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