Hello, LOs!
United Wholesale Mortgage ratcheted up the pressure on competitors in the wholesale market by declaring that they would price-match any conventional primary loan from now until June 20.
The top wholesale lender will match pricing of up to 35 bps against loan offers from 15 lenders that operate in the broker channel: Caliber Home Loans, Cardinal Financial, Citizens Bank, Finance of America Mortgage, Flagstar Bank, Freedom Mortgage, Guaranteed Rate/Stearns, Homepoint, Homebridge, loanDepot, New Rez, One American Bank, Parkside, Penny Mac and Plaza Mortgage. Lots more details here.
UWM's escalation follows a relatively recent pricing strategy from the number two lender in wholesale, Rocket Pro TPO. Rocket has been offering brokers a 50 bps credit on all product times since May.
What's interesting to me about all this is the trajectory of the broker channel, and I don't just mean the market share of certain lenders.
One of the frustrations for brokers on both sides of the ultimatum was the fact that Rocket and UWM both have super-sticky platforms, and losing the ability to send loans to either simply made life harder.
Rocket and UWM both have spent hundreds of millions – billions, maybe? – to develop systems that heavily incentivize mortgage brokers to send as much of their pipeline as possible to no one else.
So let's talk about that for a moment. I know many brokers who send as much as 90% of their business to just one lender. Critics say such a practice effectively makes broker shops retail arms of a wholesaler. They question whether it is good for the LO's clients: Are you fairly presenting the best mortgage option for them, or are you just doing what's easiest/best for you?
I posed the question to UWM's Mat Ishbia this morning.
"Not at all," he told me. "That's just the loser's argument from the Rockets, Fairways and a bunch of loser brokers that don't understand it. The reality is, you have a choice... If you send me 100% of your business, you're still a broker because the difference is, if my pricing sucks, you move your pipeline the next day. If my technology is no good, you send your loan elsewhere. You have flexibility and freedom to move any day you want. UWM and other wholesale lenders have to be great every day to get the business. In retail they just have to be great the day they sign up. And if they don't like you, they have to quit."
LOs, what do you think about the 'stickiness' of UWM and Rocket Pro TPO's platforms? Are there others that make sending a loan relatively painless?
Finally, what do you think about this argument that some broker shops are retail arms of a big lender and the implications of that for the overall channel? Please share your thoughts anonymously by emailing me at jkleimann@housingwire.com.
P.S. Please make sure to check out Georgia Kromrei's latest HW+ feature on what's driving the executive exodus at Fannie Mae.
James Kleimann
Managing Editor, HousingWire
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