Why Would a Wholesale Mortgage Lender Push to Restrict Consumer Choice?

By at 15 March, 2021, 12:03 pm

By Karen Kerrigan

Recently, the CEO of the country’s biggest wholesale mortgage lender surprised the industry by announcing that companies working with them would have to sign a letter stating that they would no longer work with two of the company’s competitors.  In a Facebook Live video, United Wholesale Mortgage (UWM) CEO Mat Ishbia announced that brokers working with UWM would have to sign an agreement to stop working with Rocket Companies and Fairway Independent Mortgage Corporation. Ishbia claimed that the two companies were preventing brokers from being able to grow their own companies and “creating roadblocks for the broker community to thrive.”

As warned by Ishbia in a press release:  “After March 15, continuing to do doing business with UWM means these brokers can no longer do business with these two lenders.”

Such a move could impact American homeowners’ and homebuyers’ opportunity to access the broadest range of financing options available, which in the end undermines the growth of many small business brokers who would not be able to offer such choice under Ishbia’s edict.  Limiting the choice of financing options for customers doesn’t seem that smart.

In fact, Ishbia strategy will only undermine the broker’s top priority: finding the best options for their clients.  Customers value and deserve choice in general, which is no different when it comes to home financing.

As one economic observer of UWM’s announcement wrote:

“What is certain is that by trying to force third-party brokers to act as UWM employees, Ishbia is guaranteeing home buyers and mortgage brokers will suffer.  The policy he is attempting to put into place will restrict competition, despite the launch in January by Quicken/Rocket of a new national mortgage broker directory backed by an investment of $100 million on its website.”

As smart business owners and entrepreneurs well know, the modern economy is all collaboration, innovation and meeting customers where they are. The type of restrictions Ishbia has called for – while self-serving to UWM – run against the trends in consumer finance.  Let this be a lesson to startup entrepreneurs and small business owners everywhere:  Trying to restrict choice in an industry or sector where innovation is rampant and positive transformation is rapidly occurring is not a savvy strategy for growth.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council

News and Media Releases