UWM says it won't do business with brokers working with Rocket, Fairway
Mar. 5—United Wholesale Mortgage Holdings Corp. on Thursday escalated its mortgage war with Rocket Companies Inc., saying it will not do business with brokers who continue to work with the Detroit-based lender — a move Rocket calls "desperate."
UWM, the Pontiac-based wholesale-exclusive lender, is calling attention to competitors that are working to undermine the independent mortgage brokers who seek to find the best rates for homeowners and homebuyers, CEO Mat Ishbia said during a Facebook Live. It comes as Rocket Mortage, America's No. 1 mortgage lender and the dominant player in the direct-to-consumer business, is making inroads in the wholesale channel, which UWM dominates.
Ishbia accused Quicken Loans LLC's Rocket Mortgage of incentivizing and working directly with real estate agents to cut brokers out of the process. He also claimed Wisconsin-based Fairway Independent Mortgage Corp. solicits loan officers away from brokers.
"There are two companies that are underhandedly trying to take the lifeblood of the mortgage brokers by soliciting the loans officers and the real estate agents," Ishbia told The Detroit News on Thursday. "We don't agree. We made the decision that if you want to work with them, we are not going to help you guys. Simple."
Fairway declined to comment. Austin Niemiec, executive vice president of Rocket's wholesale broker platform Rocket Pro TPO, did not deny some of UWM's specific accusations, but said: "Listen, if our goal was to cut the mortgage broker out, we wouldn't be investing tens of millions of dollars in our technology platform, bringing brokers in, and putting them on our website.
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"Clearly, Mat Ishbia and UWM don't want to compete with us anymore. ... It limits (brokers') superpower, limits their choice. Ultimately, that hurts them and is self-serving. It helps only one company and Mat Ishbia. Brokers realize that."
In 2020, Rocket originated a total of more than $320 billion in loan volume. Its "partner network" that includes its wholesale business grew 128% year-over-year to $106.5 billion. UWM last year closed $182.5 billion in loan volume, a 69% increase over 2019.
Rocket has grown its wholesale channel from 3,000 brokers three years ago to 10,000, Niemiec said. But only about 3,500 have submitted loans with Rocket or Fairway in the last 90 to 100 days, Ishbia said. UWM works with 12,000 brokers nationwide, he said.
Brokers have until March 15 to sign an addendum, committing to not do business with either lender. Less than four hours after the announcement, about 550 of 580 brokers who had responded were sticking with UWM, Ishbia said.
UWM agrees to close any outstanding loans with brokers who do not sign the addendum. Brokers who sign and then proceed to work with Rocket or Fairway must pay "liquidated damages" to UWM of the greater between $5,000 per loan closed with UWM or $50,000, according to the addendum's language. It is an accountability measure, Ishbia said.
"We're going to do what we have always done: providing brokers real value, and I am confident we are going to continue to grow," Niemiec said. "We would never attempt to control a broker by giving them an ultimatum. That's the broker's choice. We provide value. We will compete the right way."
The move makes UWM look weak, which likely means UWM is losing business, said Erik Gordon, a professor at the University of Michigan's Ross Business School.
"This isn't because 'Oh, we hate each other," Gordon said. "This isn't some high moral stance. If you say something like 'you have to decide it's us vs. them,' you're worried about people shifting a little bit of their business. Rocket must be doing something that appeals to some of the independent brokers, or United Wholesale wouldn't have to made that threat."
When asked if Ishbia feels threatened, he says: "Not at all. The broker channel is threatened. We've been No. 1 for six consecutive." He added that brokers and homebuyers still have a choice in the competitive mortgage market with 73 other wholesale lenders open for business.
Some brokers applauded the move: "Honestly, brokers who send loans to Quicken don't deserve UWM," Casey Finn, principal broker at Finn Lend Homes Loans in Troy, said in a text. "Everything they do is for the benefit of brokers. I'm glad Mat finally drew a line in the sand."
UWM in January went public in a merger with a blank-check company affiliated with Alec Gores, the brother of the Detroit Pistons owner. The deal provided UWM with $925 million in capital, which Ishbia says the firm is using to promote the wholesale broker channel and invest in UWM's technology to help brokers close loans. The transaction also made Ishbia, whose family retained 94% of the company, a billionaire now worth $11.1 billion, according to Bloomberg.
A GameStop-like "meme stock" frenzy drove Rocket and UWM shares up earlier this week, and they have been falling since. UWM's shares closed down Thursday more than 9% at $8.73, slightly less than it had been earlier in the day. Rocket's closed down 4% at $26.86, more than major market indexes.
The move by UWM is only the latest attempt to hit back against its crosstown rival. During the Super Bowl last year, UWM aired a 30-second commercial saying rockets are "complicated and expensive" in a not-so-subtle jab that went on to promote FindAMortageBroker.com, a website supported by UWM with more information about mortgage brokers and how to find one. Both lenders aired spots during the Super Bowl this year to promote brokers.
"At UWM, we only grow if you grow," Ishbia said during the Facebook Live geared toward its broker partners, "or I've got no chance. I've got 8,500-plus people here. We win when you win, and all of us win together. But there are two companies out there hurting the wholesale channel.
"Here's the question: Are you all-in, or are you out?"
Twitter: @BreanaCNoble
