DETROIT — United Wholesale Mortgage Holdings Corp.'s decision to stop working with independent mortgage brokers who do business with crosstown rival Rocket Companies Inc. after Monday has brokers choosing sides and led some to explore legal options.
Pontiac, Mich.-based UWM has been the country's largest wholesale lender for six consecutive years. It relies exclusively on brokers who partner with lenders to find the best rates and products for homebuyers and homeowners. Brokers represent more than 20% of annual mortgage volume. UWM CEO Mat Ishbia says Detroit-based Rocket's Quicken Loans LLC and Rocket Mortgage brand, the country's largest mortgage originator, is undermining the growth of that sector.
UWM also accused Wisconsin-based Fairway Independent Mortgage Corp., the country's 12th largest originator, of soliciting loan officers away from brokers.
"You can work with UWM and 73 other lenders, or you can work with those two and 73 other lenders," Ishbia said on Friday. "The response has been overwhelming positivity. I was with a client yesterday, and they stood up and gave a round of applause. They said, 'Thank you for standing up for the industry.' "
Ishbia says Rocket is recruiting real estate and home insurance agents to be loan officers, paying for their licenses and offering extra commission. Those agents often are powerful referral sources for brokers. Rocket denies it pays agents for referrals and says UWM's decision takes away choice just as Rocket is increasing its market share.
Rocket works with approximately 90 real estate professionals who can originate mortgages through its Rocket Pro platform, spokesman Aaron Emerson said Friday in an email.
"None of these real estate professionals," Emerson said, "are paid for referrals — that was simply the desperate claims of a desperate company looking for any reason to justify its broker ultimatum."
In the immediate aftermath of the March 4 announcement, lenders reduced interest rates that had been on the rise, and some have relaxed certain credit score thresholds, brokers said. Industry observers, however, expect the decision will have minimal financial impact on homebuyers and homeowners refinancing.
"While competition is, of course, a good thing overall — and more competitors make for a spirited marketplace — there are a range of players in the wholesale space both large and small," Keith Gumbinger, vice president of mortgage resource website HSH.com, said in an email. "So this decision shouldn't create difficulty for consumers in either getting access to mortgage credit or finding competitively priced loans."
In a statement, Fairway CEO Steve Jacobson reaffirmed the company's commitment to its broker channel: "We've always believed in doing what is best for the consumer, and that will never change. For that reason, we will always support a broker's decision to work with any lender they choose, and we will continue to work every day to earn the trust and respect of all our origination partners."