Even though UWM’s competitors have released counter-programs — such as Rocket’s “Bully Shield” program that offers to cover legal fees for mortgage brokers breaking ultimatum agreements with UWM — the company isn’t discouraged. “[Rocket’s program] doesn’t even deserve a comment,” Wilner said with a chuckle.
When Rocket announced the “Bully Shield” program, Mike Fawaz, executive vice president of Rocket Pro TPO, told National Mortgage Professional Magazine reporter Katie Jensen, “We believe UWM’s ultimatum was one of the worst things to happen to independent mortgage bankers in 50 years. The ultimatum uses lawyers and contracts to limit choice and optionality.”
Fawaz added: “When we made a decision to go out there and protect the broker community, the last thing we looked at was cost and numbers.”
UWM was not fazed.
Both Wilner and Elezaj said that at the end of the day, UWM’s goal is to continuously improve. They both said that UWM doesn’t have a specific strategy or target; rather, they’re focusing on holding onto brokers’ business and improving existing products. “One of our company pillars is to keep doing better every day,” Wilner said. “There’s a tendency for businesses over time to get comfortable and not be as vicious as we are. It was only a matter of time before we reached the top.”
From an outside perspective, UWM comes off as confident and collected. Shampa Bhattacharya, Fitch Ratings’ director and primary rating analyst, closely analyzes UWM’s financial performance and business strategy. “It’s clear that they have one goal to be the top mortgage originator, and they also have market share goals, too,” she said. “They have executed this well. Mat [Ishbia] is a great leader and his team is young and seems to really engage and energize the brokers that they work with.”
Bhattacharya also pointed to UWM’s “unconventional strategies” (Game On, broker ultimatum, etc.) that have oftentimes branded the company as exclusionary and haughty. “There was a large emotional reaction like lawsuits,” she said. “But, it’s worked for them based on the numbers. They’ve managed profitability when others have suffered, which is impressive.”
Fitch publishes annual rating outlook reports that determine whether a company’s trajectory is positive or negative. Bhattacharya said that the reports look at several factors, such as leadership styles, diversification in business portfolios, liquidity, and profitability. UWM scored a BB- in October. “Their score is on the high end of the scoring spectrum, but they fell short in a few areas which led us to determine that their outlook is neutrally stable,” she said. “Rocket’s score was BB+ due to their diverse offerings and C-suite. UWM’s risks are that they focus on market share over general profitability, and they have key-man risk.”
Of note, since that ranking, Rocket’s C-suite has undergone an upheaval. CEO Jay Farner has announced he is stepping down as of June. No permanent replacement has been named. For the first time since Rocket Companies Inc. went public in August 2020, the Detroit-based fintech platform company reported a quarterly loss. For the full year, Rocket reported net income of $700 million, down 88% from $6.7 billion a year earlier.
Key-man risk, Bhattacharya explained, is when one person or a limited team of people possess most of the company’s skills, power, and knowledge. It’s not unique to UWM; Bhattacharya said many industries have entrepreneurs with heavy ties to their businesses. “Ishbia is their key man because he owns and controls most of UWM. A lot of the company depends on him. He sets the tone,” she said. “A lot of companies are entrepreneur-led and driven, but not to the extent of UWM. If he were to depart, the company might suffer.”
However, Elezaj and Wilner didn’t express any pessimism about the new market year. “The mortgage industry has always been crazy,” Wilner said. “We’re very nimble and a lot of us [at UWM] have been doing this for years so we know whether or not to anticipate a low or high volume season. I don’t see us facing any big challenges. We’ll just keep doing our thing.”