Mortgage brokers took a major hit after the financial crisis, vacating their individual businesses and fleeing to the security of working for a bigger company.
But eight years passed since the crisis. Eight years filled with new regulations and even new regulators, revitalizing the appeal of becoming a broker.
Brokers are the entrepreneurs of the industry, Mat Ishbia, CEO of United Wholesale Mortgage, explained in an interview with HousingWire.
(Photo below, me on the left).
United Wholesale Mortgage, which is based in Troy, Michigan, is the No. 1 wholesale mortgage lender in the nation, based on 2015 performance.
UWM stated that in the fourth quarter, UWM’s origination activity rose by 12.8% over the previous quarter. And for all of 2015, it originated $12.957 billion, representing a year-over-year increase of 54.6%.
As Ishbia explains it, after the crash, brokers got scared hearing that they wouldn’t be able to survive.
Retail brought a sense of protection with it.
This sense of fear, however, is going away. Back before the crisis and during the crisis, the share of mortgage brokers hovered above 30%, Ishbia said.
The share of mortgage brokers has since dwindled to a mere 10% of the market, but this is changing.
Ishbia explained that the main thing slowing the exodus from retail is the uncertainty of how to start your own company, an uncertainty that UWM is actively working to help fix through training and tools.
Looking ahead though, he could see the share growing to 20% over the next five years.
Brokers allow borrowers to shop around and secure the best price since they are getting wholesale prices.
Ishbia explained that UWM can price better since it is not spending a bunch of money on marketing efforts.
Consumers are so dependent on marketing that these large lenders spend all their money on marketing to gain their business. But UWM mortgage doesn’t need to do that since brokers do the marketing, which they do help provides tools for as well.
Instead, UWM chooses to focus on its people and culture.
“We put a value on our people culture and clients,” said Ishbia. To not go through the same layoffs as the rest of the county, Ishbia said they insulated themselves from that layoff mentality by investing in technology, so when business slows down, people are cross trained to do more things.”
When UWM was named to the No. 1 wholesale lender in 2015, Ishbia said, "Our mission is to champion our brokers’ success and bring them the tools, knowledge and service necessary for them to compete in today’s market.”