Fairway Independent Mortgage is finally firing back at United Wholesale Mortgage, pointing to a clause in the latter's mortgage broker agreement limiting the opportunity to look for a lower interest rate after a loan locks.
Fairway CEO Steve Jacobson cited the following portion of the agreement, which was revised following UWM President and CEO
"The transfer or sale by broker of a mortgage loan locked in by UWM during the lock-in period to another entity, shall constitute a violation of the agreement, and the broker shall be liable, and promptly indemnify UWM, for any loss sustained as a result thereof by UWM," the clause states.
Fairway does not have such a clause in its agreement, Jacobson said, nor would he ever include it.
"I would never sign an agreement saying I have to work with that one company. I don't care how many loans a month I close with them, because then they're dictating to me how I do my business and no corporate office can dictate to me as an originator how to do my business," Jacobson said in an interview with National Mortgage News. "That's why you're a broker in the first place."
Jacobson referred to his experience as a mortgage broker — Fairway started out as a mortgage brokerage and became a mortgage banker because of its growth.
When Fairway first opened, "one month, I personally closed 27 loans, 24 of them with one company," Jacobson said. "If that company told me as originator that if you locked a loan at 3.5% and you have to close it at that I would never sign an agreement. There's other options."
But UWM said that clause is not new — it's been in its agreements for over a decade and is also used by other wholesalers.
"The reason this language is included is to protect against double locking. Like many mutual agreements, the terms are to protect against abusive situations," a UWM spokesperson said. "To date, we've never taken action on this line of the broker agreement."
From March 4 until now, Fairway has been relatively quiet, Jacobson said.
"As far as the other company, they can do their business the way they want to; that's their choice," Jacobson said. "I have been doing this since 1984, competition is always going to be competition; that is a non-issue."
He said he was speaking out because this clause is harming mortgage brokers' flexibility and freedom.
Jacobson added that he was
"We typically get one to three inquiries a week for new brokers reaching out to us," he said. "Since March 4, we received 108."
So far though, it has been net-net between the number of brokers Fairway has lost because of the UWM addendum and the number it added from the increased interest, said Al Hecklinski, senior vice president of TPO production at Fairway Wholesale Lending.
"Unfortunately, there are some relationships and partnerships that have severed ties," Hecklinski said. "We're hopeful that we can get them back."
UWM said in a March 16 press release that over 10,000 mortgage broker shops signed the addendum. "We're going to be able to look back at this as a pivotal moment that helped catapult independent mortgage brokers' growth," Ishbia said in the press release
