United Wholesale Management CEO Mat Ishbia is facing significant blowback from industry leaders over his edict that his company will not do business with brokers who work with his competitors.
Ishbia announced Thursday that UWM will force brokers to sign an agreement that they will not work with Rocket Mortgage or Fairway Independent Mortgage – or else be banned from work with UWM, the largest wholesale mortgage lender.
Critics are calling the edict “bizarre,” “unethical,” “anticompetitive” and antithetical to the whole broker model. One broker said UWM is “butthurt” over Rocket’s deeper foray into the broker market.
“We’re not sure this is even legal. It certainly isn’t ethical,” National Association of Mortgage Brokers President Kimber White said. “And it doesn’t represent the American way of free enterprise. This is counter to the spirit of freedom and independence that is the very foundation of our broker businesses. You should be allowed to work with whomever you want and who offers the best product and customer service. Not a company that dictates your business model to you. At NAMB, we support all lenders and your choice for whomever best supports you, your business, and your borrowers. We’re NAMB for all.”
David Stevens, the former CEO of the Mortgage Bankers Association and a former FHA commissioner, called UWM’s announcement “one of the most bizarre things I’ve seen in my career.”
“A mortgage broker value proposition is that they offer loans from a variety of lenders and are not beholden to one like other lenders,” said Stevens, now CEO of Mountain Lake Consulting. “But this action from UWM says that you need to be beholden to one or get cut off. … Imagine if UPS said they wouldn’t do business with you if you did business with FedEx. Competition makes the business better and provides consumer choice. This is extremely odd, and frankly sounds like an advertisement for Quicken Loans and Fairway. In other words it sounds like, `you are beating me in price and/or service so I am cutting you off.’”
NAMB, Stevens and others were reacting to Ishbia announcing on Facebook yesterday that, “Starting today, we are not helping those that help them. If you work and send loans and send business to Fairway Independent or Rocket Mortgage … you can’t work with UWM any more, effective immediately.”
Ishbia charged the two companies with “hurting the wholesale channel.” He accused Wisconsin-based Fairway Independent of “criticizing brokers … and not doing right by the broker channel,” while saying Detroit-based Rocket Mortgage is working with realtors to “circumvent brokers.”
UWM’s announcement comes a little more than a month after Rocket announced a new national broker directory on its website – allowing homebuyers and homeowners seeking to refinance to find local independent mortgage brokers to guide them through the process. Part of Rocket Pro TPO, the directory is designed to deepen Rocket Mortgage’s partnership with the broker community.
Roger Mansourian, a broker at Vantage Realty & Home Loans, said UWM “seems to be a little butthurt” by Rocket – part of the Quicken family – making a stronger push into the broker market, adding that Ishbia’s edict is “taking away our freedom to choose which bank we want to take a certain client to.”
“There are days and programs where Quicken might be a better, and there are programs and situations when UWM has been better,” Mansourian said. “It has put us in a really, really tough place to have to choose between the two lenders. I don’t know what I’m going to do. I love UWM, and I love Quicken. I’ve been using Quicken a lot more recently over the last six months because their rates are just better.”
Glenn Stearns, the CEO of Kind Lending, had a decidedly different message than Ishbia for brokers: “It’s your business. Your choice. We’re not going to stop you. Do what’s right by your customer and you will always be successful in business. Let’s keep it KIND!”
Stevens added that he is “surprised that a public company would behave this way … and let’s leave the antitrust debate for others. I’d advise brokers to not go here.”