Mortgage companies posing as broker-friendly wholesale lenders but functioning as retail lenders are now, after years of anonymity, the talk of the industry. They’ve been outed by a growing faction of mortgage brokers that have dubbed themselves with the moniker of “BRAWL” (standing for “Brokers Rallying Against Whole-tail Lending”).
BRAWL introduced itself to the industry a couple weeks ago, and made a splash with coverage in numerous mortgage outlets. The group was a topic of a lot of discussion at NAMB National, a well-attended conference by brokers nationwide, and it has received an overwhelmingly positive response from brokers and lenders.
“There was a big sense of excitement and, quite frankly, relief, when BRAWL was announced,” said Anthony Casa, president of Garden State Home Loans and a founding member of BRAWL. “Mortgage brokers have known about whole-tailers’ shady tactics for years, but we just didn’t have a voice before. We’re speaking up now, and urging brokers to avoid doing business with whole-tailers, because they’re setting themselves up for long-term failure by doing so.”
BRAWL penned an open letter to voice the frustrations felt by the broker community over the years, including it with the group’s creation of a petition on Change.org. The petition asks mortgage brokers to sign their names in support of the group’s rallying cry against “lenders who appear to offer both wholesale and retail services, when the truth is that their wholesale divisions exist for one reason only: to feed their retail machines.” Nearly 500 people have signed the petition already.
An excerpt from BRAWL’s open letter:
Let’s get to the truth about lending. Whole-tailers are stealing our customers, but we’re the ones handing them the keys to the front door. Let’s pledge to partner only with true wholesale lenders until the whole-tailers put an end to their selfish and greedy ways. Let’s work together in the best interest of our borrowers and ourselves. Let’s keep wholesale true.
The group isn’t stopping there. This time, they’re naming names.
“The data is out there on what kind of business each lender does,” said Casa. “Right there in fine print you can see the names of companies that call us every day talking about how we’re their top priority. And then you look them up and see that the majority of their overall business is retail. It makes you wonder how many clients you’ve lost to them over the years when you thought they had your back.”
The group has submitted a BRAWL-endorsed list of wholesale lenders that do wholesale business the “right way” – wholesale lenders that support the broker channel and do no more than 20% of their business on the retail side. On the flip side, they also named the lenders that are notorious for flipping leads over to their retail channels and permanently stealing customers.
The Good Wholesale Lenders:
- Angel Oak
- MB Financial
- Nations Direct Mortgage
- Orion Mortgage
- Parkside Lending
- Plaza Home Mortgage
- United Wholesale Mortgage
The Notorious “Whole-tail” Lenders:
- The group has also compiled a list of lenders that are notorious for being a “Whole-tail” lender and you can find those by going to BRAWL's Facebook community.
To label a lender as a committed wholesaler versus a whole-tailer, BRAWL evaluates companies using a five-part checklist. If a wholesale lender does no more than 20% of its business in retail and checks the following boxes, they’re viewed as the “good guys”:
- Route all customers originated by brokers through the wholesale channel back to the originating broker, with no time limit
- No solicitation by the retail division, under any circumstances, of customers originated by brokers through the wholesale channel
- Communicate to broker when a previous customer orders or requests a payoff
- Non-compete policy for lender retail division on any customer registered through a wholesale channel that contacts the lender directly
- No solicitation of any broker employees for any employment opportunities with the lender
In addition to BRAWL's Facebook community for brokers and wholesale lenders that are committed to helping the broker channel grow, the group created a Change.org petition for people to sign showing their commitment to BRAWL.
After years of quietly falling back, mortgage brokers are speaking up louder these days. And from the looks of things, this BRAWL is just getting started.
According to BRAWL, it’s ultimately up to mortgage brokers to make the decision not to use any lenders on the whole-tailers list.
If there are other lenders that want to be included on the list of “good wholesalers,” they can reach out to StopWholetailLending@gmail.com to request a commitment letter. If mortgage brokers know of any other lenders that should be listed as a “good wholesaler” or a “whole-tailer,” they can let the group know and the list will continue to be updated.