It's been more than two months since Mat Ishbia's Facebook Live tirade, and the mortgage industry is still struggling to understand United Wholesale Mortgage's unprecedented ultimatum to brokers.
Why should the leading wholesale mortgage lender block independent brokers' access to two of the other largest mortgage lenders – Rocket Pro TPO and Fairway Independent – and prevent brokers from serving their customers the best they can: home buyers and homeowners looking to refinance?
Ishbia has claimed it was all in the interests of independent brokers, but experts across the board have labeled it "bizarre," "unethical," and "anti-competitive," suggesting the move may be more of a knee-jerk reaction that continues Fairway and rocket growth in the wholesale mortgage market is more important than anything else. The National Association of Mortgage Brokers and others even questioned its legality.
Although Ishbia missed its goal of attracting 80% of the independent mortgage brokers, it has now declared victory. But what may be a victory for UWM in his eyes is certainly a loss for consumers, brokers and the free market in the long run.
Mortgage brokers play a key role in directing the consumer funding process, leveraging competition between big banks and other mortgage service providers to find the best loan terms and rates available. However, they are only able to meet the needs of homebuyers and refinance buyers if they have access to all lenders. This is especially important for low-income borrowers or credit problems who may have difficulty finding affordable financing from some lenders.
David Stevens, former CEO of the Mortgage Bankers Association and former FHA commissioner, stated, “A broker is not bound to a specific lender and can offer the consumer a far wider range of options. If I were to force a broker not to do business with a particular wholesale lender based on their competitive practices, I would wonder if that broker really offers the best choices in order to provide the most optimal options. "
By banning brokers from working with Rocket and Fairway, borrowers have fewer options, less-than-extensive experience, and higher overall costs.
That's why Consumers for a Strong Economy (CASE) recently launched Save Broker Choice, a new project to help consumers and protect competition in the mortgage industry. The market should lead to better rates and improve the overall consumer experience. However, UWM's policies do the opposite by restricting competition and limiting options for brokers and consumers alike.
One broker took to YouTube to explain their company's position and broader concerns:
"We believe in freedom of choice and providing the best credit to our customers," said Roger Mansourian, a broker at Vantage Realty & Home Loans, whose company has not signed UWM's addendum. “We choose Rocket, we choose freedom. We don't want to set a standard for banks telling us what we can do, what we can't do, where we can send customers, where we can't send customers, and then face a $ 50,000 fine. "
American homeowners and home buyers, like all consumers, deserve a competitive market. They deserve choice, as well as access to a variety of affordable options that best suit their individual needs. UWM's new anti-competitive policies put this at risk and consumers will ultimately have to pay the price.
UWM's ultimatum sets a dangerous precedent for the mortgage industry and beyond. We have seen similar decrees in other industries, from manufacturing to services and everywhere in between. Plain and simple, this is bad policy and shouldn't stand still.