United Wholesale Mortgage has set out to be an ally to mortgage brokers in unprecedented ways as CEO Mat Ishbia works to evolve the channel's transactional nature into a more relationship-driven dynamic.
Like many wholesalers, UWM prides itself on providing distinct service to brokers that translates into a better experience for borrowers. And for now, it and others who stayed the course may have an upper hand on new or returning competitors that haven't seen how the dynamic between wholesalers and brokers has evolved since the mortgage crisis.
Precrisis, wholesale lenders exerted more control over customer relationships and only provided limited operational support to brokers.
But post-crisis regulation changed this. Wholesalers today have to exert more control over brokers' operations in order to ensure regulatory compliance and are more likely to let the broker take the lead on borrower interactions.
New wholesale lenders must embrace this shift to be successful, said a number of board members from the New York Association of Mortgage Brokers.
"I think if a new lender wants to get into the business, they really have to sharpen their pencil because the lenders that have been serving mortgage brokers really have fine-tuned their operations quite a bit," said mortgage broker Mark Favaloro, owner of Aamtrust Mortgage.
The time-sensitive requirements of the TILA-RESPA integrated disclosure rule and other compliance requirements have shifted the dynamic between brokers and wholesalers to being more relationship-oriented than transactional.
It used to be that a wholesaler could act against a broker's interest and say, "you'll do business with me anyway," said Lou Borsellino, owner of brokerage Paramount Capital Services.
Now, "I feel more like we've become partners with our wholesalers," he said.
Large or small, a wholesaler that tries to work with brokers on a transactional basis will end up limiting how much business it gets, said Deborah Robertson, a sales manager at wholesale lender Plaza Home Mortgage.
"If you go in with a mindset of, 'How do I win?' then that's more transaction oriented," Robertson said. "I think it is more 'slow and steady wins the race' today. How do I develop a relationship? How do I prove myself? How do I earn your business?"
One way that wholesale-only lenders like Plaza Home Mortgage and UWM do this is by championing mortgage brokers' interests in referral business from existing customers.
"Since we don't have a retail platform, if we get a call from someone who wants to refinance their loan, it's sent back to the original originator," Robertson said.
"Our wholesale lenders often give us an opportunity to be named as the contact person on mortgage statements, whether they are online or come in the mail," said Favaloro.
Brokers appreciate this, but don't depend on it. They can always stay in touch with borrowers and compete for referral business on their own, Borsellino noted.
"It's just about marketing and staying in touch with your clients," he said.
Any loyalty to a wholesaler for the next loan has to take a back seat to borrower needs, Borsellino added. "You have to weigh all the factors first, discuss with the customer, and let the customer decide."
Quote"If you go in with a mindset of, 'How do I win?' then that's more transaction oriented. I think it is more 'slow and steady wins the race' today."
— Deborah Robertson, sales manager at Plaza Home Mortgage
While brokers would prefer to remain loyal to the wholesalers that have stuck with them long term, they also need to ensure borrowers are aware of the full scope of products and service levels available to them, regardless of the source. Mortgage companies also need to stay in compliance with anti-steering rules.
"I don't want any options for customers taken away," Borsellino said.
With consumers increasingly communicating about and exploring their options online, borrower-facing technology is becoming more important to brokers, and wholesalers that can facilitate that have a competitive edge.
"The wholesale market has been growing and is beginning to comprise a large percentage of U.S. mortgages. This is an important piece of the market for Blend to serve," Nima Ghamsari, the company's CEO and co-founder, said in an email.
Wholesale could comprise 20% of the mortgage market by 2020, according to the Association of Independent Mortgage Experts, which has set that benchmark as its goal for growth in the next couple years, Ghamsari noted.
Currently, the average dollar share of production across different types and sizes of lenders is a little over 7%, according to peer group studies by the Mortgage Bankers Association and consultancy Stratmor Group.
Although wholesale lenders have long shared technology with mortgage brokers in order to compete for loans, consumers' increased use of automation has meant the sophistication of the tools they offer today must be greater to be effective.
"Now there are different innovations in technology they share with us," said Bob Russo, president of New York brokerage Mortgage Managers.
While most online, consumer-direct originations are done by retail lenders, brokers are still better suited for helping borrowers with unique circumstances find a lender, said Rich Biondi, owner of brokerage RJB Financial Consultants.
"When you deal with some of the online lenders, if you don't fit their cookie-cutter mold, you don't get the loan and they don't know how to fix that. I have a loan that's going to close in the next two weeks because of that," he said.
With the battle for borrowers increasingly playing out online, digital-savvy mortgage companies are dedicating significant resources to ensuring their marketing message appeals both prospective borrowers and the algorithms that power search engine results.
And larger organizations can leverage their scale and sizeable marketing budgets to improve their search engine optimization, often at the expense of small, local lenders and brokers.
UWM is trying to close that gap with a number of technology initiatives for brokers, including Blink, a consumer self-service point of sale system that brokers can white label with their branding, and FindAMortgageBroker.com, an online directory for consumers to search for brokers in their area.
Blink helps UWM and brokers compete with new digital mortgage self-service systems, while the website is designed to collectively give brokers more visibility in search engine results than they could otherwise achieve on their own.
UWM takes this a step further by helping brokers manage their operations, too. The company has a dedicated staff of more than 50 loan processors to help brokers coordinate tasks such as making sure borrowers have homeowners insurance, title services and other disclosures documented and ready to go before closing.