One of the most contentious issues of the Brokerage Brawl debate at Originator Connect centered on United Wholesale Mortgage’s (UWM) ultimatum that brokers could choose to partner with either UWM or Rocket Pro TPO (and Fairway Independent Mortgage), but not both. The two wholesale lenders dominate the broker channel, offering some of the best pricing, products, technology, and programs for their broker partners. Partnering with one or the other could affect originators’ decision to join a certain brokerage.
While every contender in the brawl agreed it would be ideal to be able to do business with both Rocket Pro TPO and UWM, that’s simply not an option anymore. Every broker owner had to make the best possible decision for their business. However, a bold proposal put forth by Daniel Iskander, CEO of West Capital Lending, and Thuan Nguyen, CEO of Loan factory, could potentially make that option a reality once again.
The Ultimate Decision
Pablo Martinez of Equity Smart Home Loans, like a few of his fellow contenders, was partnered with Rocket Pro TPO and UWM prior to the ultimatum, but ended up going with UWM. Although he portrayed UWM’s ultimatum as being anti-competitive and negative for the broker community, he did decide to choose them over Rocket Pro TPO.
“Our wholesale lenders shouldn't have too much power over us to dictate what we can and can’t say and do,” Martinez said. “But it’s our job to provide our loan officers with the best tools, resources, and lenders that are available out there. And then let the loan officer decide which lender is best for their borrower.”
In a follow up interview, Martinez added, “They’re a great partner. Do I agree with everything they do? No.”
The rest of the contenders seemed to strongly believe that one wholesaler or the other is wrong in how they do business, which motivated their decision.
One such contender is Iskander of West Capital Lending. At the time the ultimatum came out, Iskander was working as a vice president for E Mortgage Capital under his CEO Joseph Shalaby, who is now his competitor. Iskander sent most of his loans to both UWM and Rocket, but after Shalaby decided to go with UWM when the ultimatum was issued, and he left. Despite the fact he would be leaving a job that he “loved working for,” he could not side with a lender that would limit broker options. He then went on to start his own brokerage, West Capital Lending.
“When the ultimatum came out in 2021 that was a deal breaker for me,” Iskander said. “If you lose that ability to choose it’s an entire danger to the whole broker community.”
Nguyen of Loan Factory, likewise, chose Rocket Pro TPO and said that UWM does not support broker choice.
“They are anti-boker model,” Nguyen said. “And they always say brokers are better. Whoever says one thing and does the other thing, you shouldn’t work with them.”
Mike Kortas of NEXA and Shalaby of E Mortgage Capital justified their decision to choose UWM by claiming Rocket’s retail division is valued over its wholesale division and is a direct competitor to its broker partners.
“If I’m going to have to choose,” Kortas said, “I’m going to choose the one that does not compete against me.”
Shalaby alleged that, in the past, his originators would lose clients after sending in loans to Rocket’s wholesale division. Rocket’s retail division would retain E Mortgage Capital's customers for future transactions, causing borrower retention at his brokerage to “plummet,” Shalaby claimed.
Executive Vice President of Rocket Pro TPO Mike Fawaz had a chance to respond to those accusations in a follow up interview.
“If you’re working for Rocket TPO, you eliminate Rocket retail as competition,” Fawaz said.
Rather, if one of Rocket’s broker partners is working with a borrower who ends up reaching out to Rocket’s retail division, the retail loan officer will refer the borrower back to their broker partner, Fawaz explained.
Bold Proposals & Predictions
Iskander put forth a bold proposal to the audience at the Brokerage Brawl: he and Nguyen discussed putting together a petition that all mortgage brokers could sign, urging UWM to end the ultimatum so brokers could again have the option of working together with both lenders.
“Kortas laughed at me at dinner last night, saying, ‘You must not know Ishbia very well, because that’s not going to happen.’ Great, but I choose to believe that is going to happen,” Iskander said. “In the next couple years we’re going to have the option to [work with] both lenders.”
Although Kortas said that he would work with both wholesalers today if that were an option, but it's not and is adamant that it’s never going to be.
“Ishbia is not going to change it because it worked,” Kortas said to Iskander. “He’s winning from it. Why would he change it? He has nothing but a winning mentality and he will win at whatever cost it takes.”
He added that NEXA has 208 lenders set up so his loan officers have plenty to choose from.
“Losing one of them is not going to affect me,” Kortas said. “I could lose 15 of them tomorrow and it would not affect us in the slightest.”
How many broker owners or originators would agree that losing access to 15 more wholesale lenders would not affect their business? Could a petition against the ultimatum actually convince Ishbia to scrap it? And, how many brokers out there are willing to sign such a petition?
Leave your comments below or email [email protected] your thoughts.