Tension growing between mortgage brokers, wholesalers, survey reveals
As mortgage brokers gain more leverage in the market, concerns about borrower poaching and retention are making channel conflict with lenders more prevalent.
A group called Brokers Against Wholetail Lending, or BRAWL, released a three-tier ranking of wholesalers based on brokers' perceived competition with lenders' retail divisions in 2017.
Of the 30 mortgage lenders ranked, 15 were in the bottom tier that allegedly has the most channel conflict. Only six made the top tier, and all of those companies were credited for supporting BRAWL.
The remaining nine were put in the middle tier indicating that they had strong service and technology but didn't do enough to return brokers' customers to them.
Other factors in the survey include whether wholesalers provide home listing notifications and retention marketing resources, retain servicing, reroute past customers, and have trigger leads or payoff notifications.
Lenders are categorized based on data that is publicly available or submitted to BRAWL by some of the wholesale lenders included, according to a BRAWL press release.
Channel conflict "has been an issue for a long time, the frustration just kind of mounted," said BRAWL founder Anthony Casa when asked about the catalyst for the report and BRAWL were. Casa, who is president of Garden State Home Loans, described the group as "a grassroots movement."
Only consistent improvement over three consecutive quarters will allow companies in the tier with the most channel conflict to move up, Casa said.
The longstanding concern about competition for brokers' customers is resurfacing because of growth in the wholesale channel as mortgage brokers have become a means for lenders to grow cost effectively in a more fragmented market.