Steve Jacobson (pictured), CEO and founder of Fairway Independent Mortgage Corporation, claims he was initially “happy to receive the attention” after Mat Ishbia, CEO of United Wholesale Mortgage, told brokers If they wanted to work with UWM, they couldn’t work with rocket or fairway anymore. For Fairway, who is largely a retail lender valued at around $ 60 billion, the attention meant that the five or six broker inquiries that would come in each week spanned several hundred through the rest of March . But now he’s yelling “buyers watch out” over UWM’s deal.
Jacobson claims that a penalty in UWM’s addendum signed by thousands of brokers across the country on March 15th seriously restricts a broker’s freedom of choice. Section 2.03 (a) of the Agreement contains the following line: “The broker’s transfer or sale of a mortgage loan blocked by UWM to another company during the lock-up period constitutes a breach of the Agreement and the Broker shall be liable and indemnify UWM immediately for all losses UWM incurs as a result. “Jacobson understands this to mean that once a broker has set his client’s interest rate, he cannot flip the mortgage to another lender with a better interest rate without UWM’s permission.
“The reason you become a broker is because of freedom and flexibility,” said Jacobson. “When I’m a broker, I need the freedom and flexibility with the markets so that I can say [my client]”We’ll bring you 3.125%.” If we lock them up at three and a half and the market gets better and I can’t make that decision from my end, that’s insane. “
Jacobson said that this particular clause led him to come forward. He believes that UWM “took a baseball bat to the fairway” and further claims that the presence of this phrase implies that the addendum was not written by someone who has ever taken out a loan. He cited his own experiences as a creator, going back to 1984, as counterpoint and blew Ishbia up in the process.
“To have [come up] as the author who entered the business in 1984, Mat [Ishbia] I played basketball in 2000. The clause tells me that this person never came into existence because if you did you would never put that clause in the agreement, ”he said. “There are people who say ‘no’ to Fairway because of an agreement and we feel they haven’t read the fine print.”
Jacobson compared this clause as effectively “working for UWM, retail”.
When asked to comment on the issues raised by Jacobson, a UWM spokesperson found that the language has long been part of UWM’s brokerage agreements.
“That language has been in our agreement for over a decade, and it’s not just UWM unique,” the spokesman said. “The reason this language is included is to protect against double locking. As with many mutual agreements, the terms are intended to protect against abusive situations. So far, we have never taken any action on this line of the brokerage agreement. “
However, Jacobson believes that brokers should be concerned about this clause. While the legality of enforcement was raised as an issue, he noted that legal issues could be discussed forever without affecting the actual enforcement of a clause allegedly limiting choice. Jacobson stressed that he was not trying to return to UWM for having issued an ultimatum against his company. He claimed this concern was due to a desire to protect brokers. He told MPA that he thinks Brokers who have signed the addendum should find a way to get out of there.
“We’re a little player, we’re like the kid in the sandpit when two all-star basketball teams compete on the pitch,” said Jacobson. “It’s not necessarily about the fairway – we’re getting more attention now, we’re grateful that Mat and UWM even mentioned us. We’re not mad at them at all, we say “buyers watch out”. Better be careful what you sign, because that choice is the whole reason you’re a broker in the first place. “