Tensions rise in the broker channel

Mortgage companies are keeping the courts in Detroit busy. United Wholesale Mortgage this week sued two more broker shops for allegedly violating the so-called "All-In" addendum.

Good afternoon! Was this newsletter forwarded to you? Sign up here. Hello, LOs!    It's been an eventful week in the wholesale channel, so let's get right into it, bullet point style.    *Mortgage companies are keeping the courts in Detroit busy. United Wholesale Mortgage this week sued two more broker shops for allegedly violating the so-called "All-In" addendum. UWM claims California-based brokerage shops Kevron Investments Inc. and Mid Valley Funding & Inv. Inc. sent loans to Rocket Mortgage and Fairway Independent Mortgage, a violation of the broker agreement. UWM is seeking a total of about $420,000. But that's not all! America's Moneyline, which UWM first sued for $2.8 million, today filed a countersuit against the wholesaler. AML argued that the ultimatum prevents brokers from working with Rocket Pro TPO, which offers loan options to potential borrowers who have credit scores between 580 and 600, whereas UWM "has little, if any actual options" for such borrowers. "A broker like AML is thereby losing the ability to provide financing to 5%-10% of the market of possible borrowers by excluding Rocket Pro from its lending options and would be failing to reach clients that UWM is not even pursuing," AML's attorneys wrote.    *Homepoint's Q4 2021 earnings report showed that its profitability was saved by the $13.1 billion sale of Ginnie Mae MSRs, which yielded a $175 million gain. Even with the big MSR sale, Homepoint sported a profit of just $19 million in Q4 as revenue and margins declined. They've been as aggressive as anyone in containing costs, selling assets and outsourcing operations. Is it enough not to see red in upcoming quarters as rates climb? We'll see.    *Then of course, we have Rocket Mortgage, which saw overall origination volume fall from $88.1 billion in Q3 to $75.9 billion in Q4. Of that $75.9 billion, $30.3 billion came from its Rocket Pro TPO business,  with a gain-on-sale margin of 79 bps. Origination volume from the TPO business was down from the $37.6 billion registered in Q3 2021, during which the gain-on-sale margin was 78 bps. "The company remains focused on protecting margin and profitability in the face of rising rates, which could impact market share gains in the near term," analysts for Wedbush Securities said Friday. Rocket disclosed in its 8-K that it ended 2021 with about 9% of the overall mortgage market.   That's it from me, hope you all have a great weekend!

James Kleimann

Managing Editor, HousingWire

UWM sues two more broker shops for working with Rocket & Fairway

Mortgage, HW+ Exclusive Content

UWM just escalated its war against broker shops that allegedly violate its controversial "ultimatum" by sending loans to rivals Rocket Mortgage and Fairway Independent Mortgage.

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Rocket Mortgage wants you to forget about the 2020 refi boom

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Overall, Rocket Companies reported $6 billion in profits in 2021, a 35% decline from the incredible heights of 2020. The lender expects origination volumes and margins to keep falling in Q1 2022.

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