At the start of the new year, Black Diamond Mortgage Owner David Boye received an email from an account executive representing one of the nation’s largest lenders asking for a second chance.

“We are a completely different company from when you used us back in 2016 and we would love to show you,” the account executive said. “I understand you have a few lenders that you use. I am simply asking, what do you need from me…to get back in the fight with where you are placing loans?”

Boye’s response was swift and clear: “I wish you the best, there is no chance that we will ever do business together. NONE.”

Over the next 10 years, Millennials are expected to purchase at least 10 million new homes, according to the U.S. Census Bureau and First American calculations. By 2060, it is estimated that the generation will have produced more than 20 million first-time homebuyers.

Millennial demand for homeownership was one of the biggest trends influencing the housing market in 2018, First American Deputy Chief Economist Odeta Kushi said in a recent note. This is unlikely to reverse course going into next year, the year after that or for many years to come.

While this generation is often “mistakenly portrayed” as showing a preference for renting, Kushi notes this is incorrect – Millennials still appreciate buying a home but have different motivations and delays in doing so.

“Because they grew up in the wake of the housing bust, Millennials are less likely to consider homeownership as a means of building wealth and, therefore, choose homeownership based more on whether homeownership fits their lifestyle or not,” Kushi said. “Our research shows that, because lifestyle choices are the most important factors influencing the decision to become a homeowner, it is reasonable to expect the homeownership rate for Millennials to increase as more get married and form families.”

While the homeownership rate for young adults is currently quite low, with just over one-third of adults under age 35 owning a home, the potential for home sales is high. Kushi notes that more than half of all the purchase mortgages guaranteed by Fannie Mae and Freddie Mac in 2018 went to first-time homebuyers.

It was this data alone that prompted the writing of this story. We set out to ask how lenders were going to battle for the borrower. The answers we received changed our minds. There’s a battle happening on a much smaller scale, and that’s the battle for the broker.

In a recent interview with me, Caliber Home Loans CEO Sanjiv Das, referred to “skirmishes” in the mortgage broker space that hogged headlines in 2018.

The main one is the arrival of the newly formed trade group, the Association of Independent Mortgage Experts. The head of the group, Anthony Casa, is himself a lightning rod, posting candid comments on Facebook. He calls Quicken Loans, “Quickey,” saying it stems from a cease and desist order he once received from them.

AIME appears to be fighting the National Association of Mortgage Brokers for membership, and Casa posts regular commentary about NAMB with the same aforementioned flair, using a mixture of strategy and alarm.

“There is a marketing sense to everything I do,” Casa explained to me during lunch one recent afternoon at HousingWire headquarters in Dallas. “Talk to any mortgage broker about their fear and mix that with people willing to put themselves out there on Facebook.”

A group of mortgage brokers, led by Casa, recently decided to stand up against the way things have always been in wholesale lending, thus creating Brokers Rallying Against “Whole-tail” Lending.

BRAWL’s basic premise is that some wholesale lenders steal clients from brokers by cross selling to borrowers through their own retail channel and are therefore unsafe, while others are “good” lenders that avoid these practices.

Then the movement started naming names, and the real conflict began as companies fought to defend their practices.

AIME also accused NAMB of not standing up for brokers and defending them against lenders on the “bad” list.

But despite the conflict between the two groups, underneath the surface, the two trade groups might just be able to get along.

Casa believes AIME can coexist peacefully with NAMB, not unlike the Mortgage Bankers Association and the American Bankers Association. And despite his social media grandstanding, he may have a point.

I spoke to NAMB Executive Director Valerie Saunders and Board President Richard Bettencourt in a conversation that took a different direction than the one I had with Casa. The suite of public services NAMB offers members, and even nonmembers, is deep – office supply discounts, tech products, health care – some of which AIME doesn’t do.

Bettencourt is a champ at the lobbying game, meeting with Ginnie Mae to talk VA cash-outs and the Consumer Financial Protection Bureau to discuss QM ATR. In 2019, Bettencourt plans to tackle broker regulations on points and fees, flood insurance reform and the impact of federal regulations on condo sales in Florida.

“Our mandate is to help brokers in any way, shape or form,” he told me. “That’s what a trade group does. We’re not here to pick winners, that’s not what a trade group does.”

Casa applauds NAMB lobbying efforts and admits it’s not an immediate focus for AIME.

“I personally think there are bigger priorities to focus on,” he said. “Brokers need tech if they want to survive. And what will happen to us if brokers go out of business?”

And technology is one thing both trade groups agree on. Both NAMB and AIME launched new tech tools to members.

“We are always looking for ways to make mortgage lending more efficient for brokers,” Saunders said, herself a broker since 2006. “Pre-2008 people weren’t as concerned about keeping administrative costs low. Today, business owners are always looking for ways to keep overhead low, which includes minimal non-revenue generating support staff, greater reliance on technology and doing whatever it takes to keep your doors open.”

And while 2019 will be difficult for all lenders, not just brokers, there are rays of hope for those who are prepared.

“2019 looks like it’s going to be a year of a lot of disruption, a lot of consolidation, lots of folks getting out,” Movement Mortgage CEO Casey Crawford said when he recently acquired a big piece of Lennar’s mortgage arm, Eagle Home Mortgage. “A lot of people will be taking advantage of a lot of that opportunity in the marketplace.”

So where will the broker fit into this? In the brief video interview on HousingWire.com, Das discussed why being “deeply entrenched” in the purchase mortgage market will be key to success in 2019.

And lenders will need to be prepared to battle for the broker as competition heats up across the mortgage market. Das discussed some of his company’s principles of mortgage lending. Not stealing refi leads, a big issue for lenders that brokers chose to partner with in 2018, is at the top of that list.

Das, who served as head of CitiMortgage from 2008 to 2013, also talks about what to expect in the looming mortgage slowdown, why nonbanks are here stay, and how to deal with interest rate volatility.

As for economic troubles on the horizon, Das explains why this “might not be such a bad thing.”

“The broker community is actually going through an interesting time right now, a transition of its own,” Das said. “For a start, we’d like to see an increase in their percentage of total mortgage originations. I think right now it’s around 9% to 10%. I don’t see why brokers can’t reach 18% of the market for originations- it’s a large market.”

“We think of brokers as our partners and we think of their customers as their customers,” Das added, referring to the fundamental problem that started the BRAWL movement.

Das is not alone in seeing a growing opportunity for working with mortgage brokers.

“Our thoughts on the broker haven’t changed,” Quicken Loans CEO Jay Farner said when I caught up to him recently. “We are here to support and help that community.”

Quicken Loans is on BRAWL’s list of “bad lenders,” however it denies any unfair treatment toward its brokers.

Farner said Quicken Loans has a three-point attack plan: offer brokers great products, strong pricing and great technology.

“From our perspective, it’s the internal efforts that make the difference,” he said, pointing to the company’s Rate Shield program that provides a 90-day rate lock, the newly launched automated application The Answer which gives answers to questions commonly asked of underwriters and the Fresh Start program which gives credit advice and assistance to clients who don’t qualify for a mortgage.

“Our model allows us to adjust by the day or week, based on current market conditions,” Farner said.

And brokers such as Boye will need all the convincing lenders have. He often feels like some lenders with big retail shops are more interested in taking loans away from him.

“If a loan is going to get botched, it tends to be with one of those big guys,” he said, adding that borrowers are changing and so is their perception of the mortgage market.

“Back in 2008, we all had to hide under our desks,” he recently told me. “Everyone fled to the safety of the big banks – they were seen as safe.”

How the times have changed.

“Consumers feel harmed by the big banks,” Boye said. “And normally my relationship will trump any internet lender. Today I can take a loan from Wells Fargo just by saying that I won’t work with Wells Fargo.”

But if the market for purchase mortgages is tough, the market for refis is even tougher.

The Federal Reserve Bank of New York’s Center for Microeconomic Data recently released a survey based off consumer experiences. The survey is the result of panel data acquired directly from consumers when they apply for credit.

The whole BRAWL initiative started in response to lenders refinancing loans previously originated by brokers, and cutting that broker out of the process. But now, it seems there are no mortgages to even refinance.

The Fed’s latest poll finds rejection rates are on the decline across all credit applications, but not for mortgage refinancing.

The survey found that more homeowners are getting their refi applications rejected. In fact, this rejection rate is the highest since the Federal Reserve began polling consumers about their credit experiences.

“The October rejection rate on mortgage refinance applications of 34.3% is the highest reading since the start of the SCE Credit Access Survey in October 2013,” the Fed reports. “For 2018 overall, rejection rates for credit cards and credit card limit extensions and for mortgage refinancing exceeded those in 2017, while those for auto loans and mortgage applications were stable.”

Of course, with interest rates rising, refinance applications are slowing down. Respondents reported a 6.8% likelihood of applying over the next 12 months in 2018, compared with 8.2% for 2017 respondents.

Further, more and more Americans also report that they don’t plan to even try to apply for a refi in the next 12 months.

Interest rates are not going through the roof in 2019. However, Capital Economics wrote in a note to clients that this remains nothing to get too excited about. For example, even as technology continues to replace processing jobs in mortgage lending, the cost efficiency has yet to translate into more mortgages.

“The drop in mortgage applications in December, even as interest rates saw further falls, supports our view that lower financing costs will not be enough to boost housing market activity in 2019,” Capital Economics Property Economist Matthew Pointon wrote.

“A slowing economy and moderation in house price expectations will act to keep mortgage demand and home sales flat over the next year or so,” he added. “And, as it stands, there is this one, clear indication of a looming slowdown and a big potential for recession that we will be watching this year.”

According to today’s Structured Finance Credit Update from S&P Global Ratings, a recent Duke University/CFO Global Business Outlook shows roughly half of U.S. finance chiefs believe the economy will slide into recession by the end of 2019. Americans are paying 5.6% of their disposable income servicing non-mortgage debt, a figure that has been mostly rising since 2012.

Slowdown aside, United Wholesale Mortgage CEO Mat Ishbia said he believes the opportunity is now to help brokers grow their business. In 2018, UWM closed out the year with $41.5 billion in total loan volume, making up nearly a quarter of the entire wholesale industry’s market share. Also, toward the end of 2018, the company rolled out two products aimed at enhancing the way brokers do business.

“We’re known for having great products, pricing, service and technology, but the truth is that UWM is a great partner because we’re on the same team as our mortgage broker clients,” Ishbia said. “We’re 100% aligned and tied at the hip. We’re not just a lender or an investor, we’re a partner.”

UWM was on BRAWL’s “good lenders” list, and from the start has shown its support for AIME’s initiatives to battle for the broker.

And it looks like UWM is setting the bar even higher in 2019, as the company has recently announced plans to change its pricing philosophy.

According to UWM’s announcement, it will now provide mortgage brokers with what it’s calling “the best rates and pricing in America.”

However, in a recent video interview with me, Ishbia said he didn’t agree that 2019 would be the battle for the broker.

“It’s really a battle for the originator,” Ishbia said. “Originators are coming to the broker channel, and I don’t think it’s much of a battle anymore, I think they’re leaving in droves from retail lenders. You know, it’s a lot easier than you think.”