Competitors like Ann Arbor, Mich.-based Home Point Financial Inc. say they have seen an influx in interest from brokers to work with them since UWM issued the ultimatum.
"We will continue to provide brokers value propositions and grow our market share," said Maria Fregosi, Home Point's chief investment officer. "As long as the brokers are on the ground and continue to provide excellent pricing on products and services, homebuyers will be drawn to that as a place to conduct their business."
Two sides to story
But two narratives have emerged among brokers. One celebrates UWM's actions as a way to preserve brokers from a similar fate to which real estate agents have fallen because of online real estate marketplaces like Zillow Group Inc. The other says forcing brokers to choose between the two largest wholesale lenders undermines the broker channel's purpose for competition and choice.
"As a business, I am seeking counsel as far as what I can do about this situation," said Dan O'Kavage, a Florida-based broker who does roughly 30% of his business with UWM and Rocket each. "It is going to affect clients and the way I do business. UWM is taking away freedom, taking the independence part of being a broker."
O'Kavage declined to go into specifics about the actions he is considering.
"The reality is there is nothing we did wrong," Ishbia said in response to possible litigation, likening the ultimatum to a business having a Pepsi or Coca-Cola contract. "Most of the brokers that are unhappy are Rocket Mortgage's puppets. That is perfectly fine. You don't have to have a case to sue someone. Some brokers will try. There is nothing against the rules for what we did."
On Thursday, Ishbia said, more than 1,400 of about 3,300 brokers working with both companies responded to UWM's addendum request. To continue to work with UWM, brokers must not work with Rocket or Fairway or else pay liquidation damages of $50,000 or more. At end-of-day Friday, 90% of brokers who had responded had agreed to the addendum, a company spokeswoman said. Loans currently in process still may close.
Last week, Ishbia clarified that no other lenders will be added to the list: "We know the companies that are a threat to the broker channel," he said. "We are addressing those."
UWM last year closed $182.5 billion in loan volume through its 12,000-broker network, a 69% increase over 2019. In 2020, Rocket originated more than $320 billion in total loan volume. Last week, it disclosed $97 billion of that was through its Rocket Pro TPO wholesale channel. The company has grown its broker partnerships from 3,000 to 10,000 over the past three years.