The chief executive of Pontiac-based United Wholesale Mortgage dramatically raised the stakes Thursday of his company’s competition with Detroit-based Quicken Loans, telling mortgage brokers that they must choose between the two firms.
While Quicken Loans, the largest component of Dan Gilbert’s Rocket Companies, is the nation’s No. 1 mortgage lender by overall business, it trails UWM in the key category of underwriting loans for independent mortgage brokers.
Of Quickens’ $320 billion in mortgage originations in 2020, just under one-third of that total involved mortgages for brokers, a category of business known as wholesale lending. UWM, ranked by industry publications as the No. 4 overall lender, did $182.5 billion in originations last year — all of it involving brokers.
In a live presentation on Facebook Thursday aimed at mortgage brokers, UWM CEO Mat Ishbia claimed that Rocket Companies and another Wisconsin-based competitor known as Fairway Independent Mortgage Corp. are engaging in behaviors that, in his view, inhibit mortgage brokers from growing their share of the overall business.
He did not accuse the companies of any illegal behavior.
Ishbia said he is giving brokers until March 15 to sign an agreement pledging to stop working with Rocket or Fairway. Those who continue working with those two competitors can no longer work with UWM.
“So I’m starting today and saying at UWM, we’re not helping those that help them,” Ishbia said. “If you work with them, (you can’t work with UWM any more.”
He added, “So here is the question, ‘Are you all in? Are you in or are you out?’ ”
Representatives of Quicken Loans and Fairway did not return messages seeking comment.
Ishbia’s ultimatum could cause problems for Quicken’s plans to continue expanding its business beyond direct-to-consumer mortgages by doing more business with mortgage brokers.
This pivot could become more crucial for Quicken later in the year, when the mortgage refinancing boom is forecast to fade and the majority of new mortgages would be for home purchases. Mortgage refinancing is a traditional strength for Quicken.
Quicken announced in January its launch of a new national mortgage broker directory on RocketMortgage.com as part of the company’s effort to expand options for home buyers and help brokers to grow their own business.
“The directory not only includes the 43,000 individual loan officers who work with us, but every mortgage broker in the country,” Austin Niemiec, executive vice president of Quicken’s broker division called Rocket Pro TPO, said in the news release.
Mortgage brokers currently have between a 17% to 22% share of the mortgage market, according to Ishbia.
Ishbia specifically accused Rocket of paying real estate agents to cut out competing brokers and instead refer clients to Rocket’s team, and of soliciting brokers’ past clients rather than working with those other brokers.
Rocket Companies has seen its stock soar and fall in recent days in a rally that some have compared to that which happened early in the year to GameStop. The company also reported record earnings and a $9.4 billion profit for 2020.
While it’s uncommon to see CEOs of publicly traded companies call out competitors and issue ultimatums in the manner Ishbia did, his Facebook speech doesn’t appear to violate any corporate governance rules, according to Matthew Roling, executive director of the Office of Business Innovation at Wayne State University’s Mike Ilitch School of Business.
“He said to his customers (mortgage brokers) that if you use them, you can’t use me. I don’t think the SEC is going to come breathing down his throat saying, ‘you can’t tell your customers not to use you,’ ” Roling said. “But it certainly makes for strange theater.”
He added, “Most of the people who run public companies are pretty milquetoast guys. Guys like Mark Cuban or Steve Jobs are the exception, not the rule. And maybe that’s just going to be how Mat is — he’s just going to be a really in-your-face, loud, provocative guy.”
Rocket Companies stock closed at $26.86 Thursday, down $1.15 or 4%. UWM closed at $8.73, down 89 cents or 9.25%.
Read More: United Wholesale Mortgage issues ultimatum, escalates war against Rocket Companies