The BRAWL, Brokers Rallying Against Whole-tail Lending, movement is pushing back against the way things have always been in the wholesale lending space, choosing to no longer be the little guy.
And looking at HousingWire comment boards, it’s working, or at least it’s creating a conversation.
The initiative is fairly new, but it’s spreading fast and is focused on stopping the alleged, unethical practices used by “whole-tail lenders,” the term they’ve given bad wholesale lenders.
The group has even gone as far as publishing a list of good wholesale lenders and whole-tail lenders.
HousingWire is talking to wholesale lenders on both sides of the fence to get their perspective on the movement that’s disrupting the space.
Mat Ishbia, president and CEO of United Wholesale Mortgage, one of the good ones, shared his thoughts on what the movement means for the space and why they support it.
“In general, we think it’s not only the right thing to support BRAWL and these brokers, but it’s the right thing in the space,” said Ishbia.
At its core, BRAWL is fighting back against wholesale lenders that steal clients from brokers by cross selling to borrowers through their own retail channel.
Ishbia explained that it’s the wrong thing to be one of these lenders.
“It’s struck a chord in the industry. We’ve always heard of it as a one off. Now, they have a group of people rallying together,” he said.
While United Wholesale Mortgage has a retail arm, it’s a small part of the company’s business and mainly used as a team member perk.
“I have 3 LOs and 3 processors at UWM that handle UWM employee loans only. 99.5% of the business is wholesale. We do retail as a team member perk, not as a business channel to compete with clients,” said Ishbia.
Ishbia outlined three main areas he thinks the movement will help accomplish:
- Create awareness and a group of people rallying together and supporting each other.
- To evoke change. Getting these guys to stop using these wholesale lenders that are stealing clients. A loan staying in the broker channel is good for all of us. They should use good guys that are doing the right thing.
- Get these big retail lenders to change their business practices.
“Will the movement cause Quicken Loans or loanDepot to get out of wholesale? Maybe not. But if they get less business, maybe they would stop soliciting to clients,” said Ishbia. “We used to always think it’s the wrong thing to do, but that’s just the way it is. These brokers are saying that’s the way it is but we are doing something.”
While it’s been an issue for a long time, he explained that brokers are getting stronger and stronger in number.
In the past, Ishbia has explained that after the crash, brokers got scared hearing that they wouldn’t be able to survive, so they moved into retail since it came with a sense of protection.
However, this sense of fear is going away, as the share of mortgage brokers starts to grow.
“When you’re the smallest segment in the business, it’s hard to take a stand against the people making the money,” said Ishbia.
And now, it’s their time to come together and fight back. “The biggest thing is getting the messaging out to brokers and wholesale lenders,” said Ishbia. “These brokers who basically would argue have less of a voice are rallying together and standing up for what they believe is right.”