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United Wholesale Mortgage Changes Business Practices

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United Wholesale Mortgage Changes Business Practices

United Wholesale Mortgage (NYSE: UWMC) has announced it will no longer do business with mortgage brokers who work with rivals Rocket Companies Inc (NYSE: RKT)-owned Rocket Mortgage and privately owned Fairway Independent Mortgage Corp. 

Both Rocket Companies' and United Wholesale's stock have seen volatile trading this week amid a surge in interest from WallStreetBets traders.  

What Happened: UWM President and CEO Mat Ishbia dropped the surprise announcement Thursday during a Facebook Live event that was promoted as highlighting UWM’s return to the jumbo market.

“If you work and send loans and send loans to Fairway Independent or Rocket Mortgage, which by the way is about 25% of the brokerage channel, if you work with them, you can't work with UWM anymore,” said Ishbia.

Separate from the Facebook Live address, UWM issued a press release stating its decision "comes in response to Rocket Mortgage and Fairway Independent Wholesale participating in actions including soliciting loan officers away from brokers and working directly with real estate agents to cut brokers out of the entire process."

Rocket Pro TPO's business increased 125% in 2020, and this "clearly has uwm very concerned," Austin Niemiec, the company's executive vice president, said in a statement to Benzinga. 

"Today’s move decimates the idea of the free and open market that is so critical to the broker community. We continue to advocate for the right of brokers and consumers to choose how they secure home financing. We do not support restricting consumers’ options — whether it is through economic and social pressure or intimidation tactics," Niemiec said.

A statement from Rocket added, "As we have said repeatedly, a broker’s power is in their ability to choose the best option for their client. By attempting to manipulate the market and have loan officers swear allegiance, sacrificing control as business owners to one company – with financial penalties if they stray –you harm their ability to compete. This move only benefits one company, to the detriment of thousands in the broker community and their clients."

A Fairway Independent spokeswoman told Benzinga the company has no comment on this story.

Related Link: What's Driving The Rally In Rocket Competitor UWM Holdings?

What Happens Next: UWM gave mortgage brokers a March 15 deadline to sign an addendum stating they are not working with the two lenders.

Pontiac, Michigan-based UWMC began trading on Wall Street Jan. 22 following its merger with SPC Gores Holdings IV Inc, a special purpose acquisition company, in a deal valued at $16 billion.

Ishbia stated his corporate goal is achieving 33% market share by 2025.

The comments from the Facebook Live audience ranged from “send me the addendum right away” to “this is the dumbest thing I have ever seen.”

RKT, UWMC Price Action: UWM shares were down 9.67% at $8.69 at last check Thursday, while Rocket shares were losing 5.25% to trade at $26.54. 

Editor's note: This story has been updated with comment from Rocket Companies. 

UWM President and CEO Mat Ishbia. Photo courtesy UWM.

 

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