The initiative, Brokers Rallying Against Whole-tail Lending (BRAWL) is aimed at stamping out what it describes as “whole-tail” lenders – lenders who claim to offer both wholesale and retail services, but whose wholesale divisions really exist only to pass leads on to their retail operations.
“In our business, there are wholesalers and there are retailers,” BRAWL said in a statement. “Retailers have their place. But as independent mortgage brokers, we know that wholesalers are best for us and we are best for borrowers.”
“Whole-tailers,” BRAWL said, are not brokers’ partners, but their competition.
“Whole-tailers use wholesale lending as a lead-generation tool,” BRAWL said. “They are literally buying our customers for life for a one-time payment of just 25 (basis points) or $400 less in closing costs to our borrowers.”
According to BRAWL, whole-tail lenders could buy leads on the open market, “but why pay what they’re worth when they can steal them from us for less than a penny on the dollar? They don’t care about that first loan. They’re focused on the second, third and fourth loans from our customers. They count on us to feed the machine.”
Some of the blame for this, BRAWL concedes, has to go to brokers themselves.
“We hand these whole-tailers our borrowers’ names, phone numbers, email addresses and more – and when they pull credit for a new purchase or refinance, whole-tailers steal our business before we even know our hard-earned borrowers are back in the market,” the group said.
The group was careful to draw a distinction between whole-tailers and legitimate wholesale lenders
, which BRAWL said “are 100% focused on promoting the success of independent brokers.”
“(T)hey look out for our interests, keep us informed, and provide everything we need to deliver a great loan and a great experience to our borrowers,” the group said.
BRAWL is encouraging brokers to help put an end to whole-tail lending by committing to work only with true wholesale lenders.
“Whole-tailers are stealing our customers, but we’re the ones handing them the keys to the front door,” the group said. “Let’s pledge to partner only with true wholesale lenders until the whole-tailers put an end to their selfish and greedy ways. Let’s work together in the best interest of our borrowers and ourselves. Let’s keep wholesale true.”
BRAWL has invited brokers to join the effort against whole-tailers by signing a petition .
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A network of independent mortgage brokers has launched an initiative to combat unethical wholesale lending practices.