Fairway CEO hits again on United Wholesale Mortgage over brokerage settlement

Eventually, Fairway Independent Mortgage falls back on United Wholesale Mortgage, referring to a clause in their mortgage brokerage agreement that limits the ability to look for a lower interest rate after a loan is frozen.

Steve Jacobson, CEO of Fairway, cited the following part of the agreement, which was revised following the announcement by UWM President and CEO Mat Ishbia that brokers selling to Fairway or Rocket Pro TPO will no longer be able to do business with his company:

"The transfer or sale by a broker of a mortgage loan blocked by UWM to another company during the blocking period is in breach of the Agreement and the broker shall be liable and immediately indemnify UWM for any loss incurred as a result thereof UWM ", it says in the clause.

Fairway doesn't have such a clause in its agreement, Jacobson said, nor would he ever include it.

Steve Jacobson, Fairway CEO

"I would never sign an agreement saying that I have to work with this one company. I don't care how many loans I get with them each month because then they dictate how I do my business and no corporate office can dictate me as the author of how to do my business, "Jacobson said in an interview with National Mortgage News. "That's why you're a broker first and foremost."

Jacobson referred to his experience as a mortgage broker – Fairway started out as a mortgage broker and grew to become a mortgage lender.

When Fairway first opened, "I took out 27 loans, 24 of which with a company, for a month," Jacobson said. "If this company told me, as the originator, that if you took out a 3.5% loan and had to close it at that point, I would never sign an agreement. There are other options."

But UWM said the clause isn't new – it's been on their agreements for over a decade and is used by other wholesalers as well.

"The reason this language is included is to protect against double locking. As with many mutual agreements, the terms are designed to protect against abusive situations," said a UWM spokesman. "So far we have never taken any action on this line of the brokerage agreement."

Fairway has been relatively calm from March 4th until now, Jacobson said.

"For the other company, they can do their business any way they want. That is their choice," Jacobson said. "I've been doing this since 1984, competition will always be competition; that's not an issue."

He said he spoke out because this clause affected the flexibility and freedom of mortgage brokers.

Jacobson added that he was grateful for the publicity the controversy brought about for Fairway, a smaller operation than UWM or Rocket Cos.

"We typically get one to three inquiries a week for new brokers to contact us," he said. "As of March 4th, we've received 108."

So far, however, it has been a net net between the number of brokers Fairway lost due to the UWM addendum and the number it added due to increased interest, said Al Hecklinski, senior vice president of TPO production at Fairway Wholesale Lending.

"Unfortunately there are some relationships and partnerships that have broken ties," said Hecklinski. "We hope we can get them back."

UWM said in a March 16 press release that over 10,000 mortgage brokerage deals have signed the addendum. "We will be able to view this as a pivotal moment that has helped catapult the growth of independent mortgage brokers," Ishbia said in the press release

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