What do the next 15-18 months look like for the broker channel? According to United Wholesale Mortgage (UWM) CEO Mat Ishbia, who rallied brokers at the Association of Independent Mortgage Experts (AIME) Fuse conference in Las Vegas on Saturday, the next year and a half will be a proving ground that will level set the market for brokers, and only some will come out winners.
In an interview with HousingWire after his presentation, Ishbia provided more context to his comments, especially on UWM’s aggressive pricing strategy and its impact on mortgage lenders’ decision to leave the wholesale channel.
UWM in June launched the ‘Game On’ pricing initiative, slashing prices across all loans by 50 to 100 basis points.
“Game On pricing has no impact on where people exit the market. Their business model was not good, they’re not committed to the broker channel, and that’s fine,” Ishbia said.
He added: “The broker community is stronger than ever. So, it’s got nothing to do with that. That’s just the business model that isn’t in a great position. And so they make those decisions.”
The wholesale space, like other channels, has been affected by surging mortgage rates and shrinking origination volumes. But stronger competition has made rivals exit or plan to exit the channel to focus on more profitable business divisions.
On the list are rivals such as loanDepot, Mountain West Financial, AmeriSave, Point Mortgage Corporation, Stearns Wholesale (owned by Guaranteed Rate) and Finance of America’s forward wholesale business.
The latest victim is American Neighborhood Mortgage Acceptance Company LLC (doing business as AnnieMac). The company posted on its website last week, “As a result of worsening market conditions, it has made the difficult decision to cease wholesale operations effective October 31, 2022. “The company suspended new loan submissions at 5:00 PM EST on September 27, but it will honor all existing policies and procedures.
Market share
According to Ishbia, lenders leaving the space have no impact on his forecast for the wholesale channel to achieve 33% market share by 2026. AIME estimates that the wholesale channel currently has 23% market share.
Meanwhile, an Inside Mortgage Finance’s (IMF) analysis of first-lien mortgage originations shows the broker channel accounted for just under 15% marketshare from April to June, with retail at 61% and correspondent at 25%. The data shows that brokers originated $94 billion in the second quarter, down 16% from the first quarter.
“All those lenders have no impact on it (marketshare) at all,” Ishbia said. “As long as you have lenders out there, brokers are fine. These lenders have zero impact on the brokerage, and we will hit all those goals.”
During his session at the AIME event, Ishbia said that his “Game On” pricing strategy is an investment that will continue moving forward amid its mindset to grow its business.
“It’s not designed for competitors to like me,” he said. “I’m not trying to survive, I’m trying to thrive.”
Ishbia also unveiled three initiatives during his presentation, including an alternative to the traditional lender title process, called TRAC. The other two initiatives are UClose 3.0, a platform that will allow brokers to choose from three closing options, and Safe Check, a soft-pull credit check to get an appraisal waiver pre-check before submitting their loan without initiating trigger leads to brokers’ competitors.
