April 13, 2021

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Peter Roff: Mortgage Market Battle Means Home Buyers Will Pay More | Opinions

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Peter Roff

The low interest rates we’ve seen in recent years have enabled millions of Americans to buy new homes, refinance homes, and pull out some equity to ease the crisis caused by the crisis COVID-19 Lock.

Families were able to increase their liquidity and pump billions into the economy when it was urgently needed. Consumers, real estate agents, lenders, and mortgage brokers have all benefited from it.

So the speech from March 4th about Facebook by Mat Ishbia, United Whole Mortgage CEOIt seems strange that he essentially gave his firm’s brokers and partners an “ultimatum”.

Ishbia told the brokers they would have to make a choice – either work with them UWM or but. Everyone who works with Fast Loans / Rocket Mortgage and Fairway independent mortgage wouldn’t get any more business from him.

Some call this the hard sell. Others might say it’s the type of threat that could provoke intervention from federal regulators looking for evidence of trade restrictions.

Either way, it’s bad business for consumers who want or wanted to take advantage of the current low rates.

Ishbia’s game did not go down well with industry watchers.

“Consumers are best served when given a choice created by a robust, competitive marketplace that offers a wide variety of credit prices, products and levels of service,” said a statement from Bob Broeksmit, President and CEO of Mortgage Bankers Association.

“Our mortgage market is extremely competitive, with thousands of lenders, multiple delivery channels, and different business models. MBA does not condone activities designed to thwart competition in the mortgage market and limit loan options for borrowers. “

What Ishbia wants is a “publicly traded non-bank”. Within mortgage finance reported “to amend the brokerage agreement and tell third parties if they breach this” representation and warranty “they will have to pay the wholesaler $ 5,000 to $ 50,000 in damages.”

Chris Whalen from Whalen Global Advisors LLC, a frequent contributor National mortgage newsIshbia’s claims are a direct result of the “slowdown in mortgage lending”, which is forcing companies to argue about brokers and manufacturing.

“Both companies are very dependent on loan refinancing transactions and therefore buy loans from mortgage brokers,” he said. “Rocket Mortgage is top notch when it comes to refinancing, while UWM is an upstart and bottom feeder when it comes to production.”

UWM is “the monk of mortgage lending,” said Whalen, adding it in a way Nationwide financially, a company that plays a key role in Subprime credit crunch more than a decade ago ”, but with the added fuel of the Fed’s Mortgage purchases. “

The story, Whalen predicted, “will end in tears” and put the blame right at the feet of Federal Reserve Chairman Jay Powell and the Federal Free Market Committee.

Perhaps, but what is certain is that by attempting to force third-party brokers to act as UWM employees, Ishbia guarantees home buyers and mortgage brokers will suffer. The policies he plans to put in place will limit competition, even though Quicken / Rocket launched a new national mortgage broker directory back in January, backed by a $ 100 million investment on its website.

Ishbia’s tactic undermines the goal of mortgage brokers: to find the lowest interest rates for borrowers and streamline the mortgage process. With Rocket – an industry leader in the mortgage business – which has since been removed from the Rolodex by many brokers, consumers will almost certainly have to pay more.

This will cause the property market to slow down at an extremely inconvenient time for buyers, sellers and the whole country.

– – Peter Roff is a senior fellow at Limits of freedom, a former US News & World Report Contributing Editor and Commentator of the One America News Network. Contact him at [email protected], follow him on Twitter: @ PeterRoff or Connect with him on Facebook. Click here for previous columns. The opinions expressed are his own.