April 13, 2021

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Mortgage News

Why a fight between United Wholesale Mortgage and Rocket is good for Homepoint

When Mat Ishbia issued his ultimatum to brokers in early March, he inadvertently opened an opening for other lenders’ wholesale channels. By getting Ishbia brokers to choose between working with Rocket Mortgage and Fairway Independent or working with United Wholesale Mortgage, Ishbia forced brokers across the country to seek new partners. Now they are turning to somewhat smaller lenders that they may not have worked with before. These lenders, in turn, take aggressive steps to capture the brokerage business.

Phil Shoemaker (pictured), President of Originations at Homepoint, told MPA that his company has seen a significant increase in broker interest since the UWM announcement. While unable to share specific numbers at such an early stage, he emphasized that this interest represents “healthy” growth for Homepoint’s wholesale channel. However, it is one thing to generate interest. Turning that interest into a partnership is something else. It depends on delivering what brokers need.

“We see brokers making choices [Rocket and UWM] and that makes us really good at finishing someone’s runner-up, ”said Shoemaker. “Brokers need consistency and stability. They are looking for a lender who is able to consistently provide the service they need to run their business. We are really well positioned to fill this gap. “

Shoemaker stated that Homepoint is currently “almost entirely” focused on growing its wholesale channel and offering a gamut of operations that few other lenders can match, he claimed. As business becomes more of a commodity, Shoemaker claims that a lender’s scale determines the level of service they can provide to a broker. As one of the largest wholesalers in the country with a year of rapid growth and an IPO, Shoemaker believes his company is now able to fill a void left by one of the mutually exclusive mortgage giants.

While some brokers looking to fill in the loopholes may need more specialized niche products, Homepoint’s scalability strategy dictates that the emphasis be largely on traditional agency credit. However, it complements his FHA and government sponsored loan offers and exploration of expansions in the jumbo area. Shoemaker found that a number of wholesalers offer niche products for these brokers, but these groups of products simply lack the scalability Homepoint is aiming for.

The extremely fast turnaround times of Rocket and UWM have given lenders a new challenge to fill in the gaps left by one or the other. In today’s hot real estate market, brokers need a lender who can work fast, and while Shoemaker admitted that Homepoint isn’t operating at the speed of either giants, he stated that their emphasis on economies of scale and new investments in mortgage technology should fill the void fast.

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In light of these developments, Homepoint is aggressively looking to add new broker partners. It targets broker networks and provides Homepoint’s more local networks for this purpose. Unlike some other large wholesalers, Shoemaker explained, Homepoint has more small offices across the country so they can connect with smaller brokers faster. Shoemaker believes the approach will help Homepoint consolidate its business with smaller brokers by giving them the price and service they want.

Aside from his company’s efforts to grow in the broker channel, he believes the channel will grow in general. The price flexibility that wholesalers can offer will make a huge difference in a tight shopping market. He said that as Homepoint works on the scale of Rocket and UWM, brokers will attract a number of partners who will be able to fuel their continued growth. However, his optimism for the station rests on a more fundamental fact that the growth of wholesalers is driven by brokers.

“The price, finish, service, and product a consumer receives at wholesale are ultimately superior to retail,” said Shoemaker. “Now there’s a lot more exposure, even if you watch the last Super Bowl, there were two sets of ads from Wholesale lenders. Consumers are beginning to realize that someone in your market who understands what they’re doing but has options can really ensure the best price, execution, and service. “