For years, mortgage brokers have privately traded stories about their struggles with whole-tail lenders – companies that act as wholesale lenders but steal brokers’ business by repurposing loans for their retail divisions.
Now, Brokers Rallying Against Whole-tail Lending (BRAWL), a national network of independent mortgage brokers, is making that knowledge public with its inaugural Lender Scorecard, a ranking of 30 wholesale lenders based on the strength of their broker relationships. Overall, half of the rated companies were classified as whole-tail lenders, while six companies were praised as “true broker partners.”
Anthony Casa, founder of BRAWL and president of Garden State Home Loans, said he hopes the scorecard will increase transparency in the industry and motivate whole-tail lenders to change their practices. Casa has much more planned for 2018, including a webinar on the Lender Scorecard – scheduled for 2 p.m. Eastern on Wednesday – and a push to include brokers’ contact information on customers’ mortgage statements.
Power Originator: To start off, why should brokers be concerned about whole-tail lending?
Anthony Casa: If lenders are repurposing your past customers for their own use, they are stealing that relationship and that customer. Also, the customers aren’t being told the broker is no longer part of the transaction. They are not getting the very best terms available because the broker was circumvented.
PO: You just released the inaugural Lender Scorecard. How would you like brokers to use the scorecard? Are you hoping they will avoid the whole-tail lenders?
AC: To me, this wasn’t something that was ever meant to say, ‘Don’t use this lender.’ This is about transparency. We wanted to put this out there so brokers were aware of what they were dealing with. There hasn’t been a channel for people to compare and see the reviews and experiences of other brokers with different lenders.
PO: You are hosting a webinar on Wednesday (signups are available on BRAWL’s Facebook and LinkedIn). What are your goals?
AC: Over the last six months, we’ve accomplished a ton, so we are going to do an inventory of what we’ve accomplished. We’re going to do an inventory of the changes lenders have made that have been very impactful to our community – the scorecard reflects 2017 business practices. Then we are going to put out some forward-thinking thoughts to let the community know our work is not done. These are just the first steps of the mortgage broker community coming together and getting the proper support from its lenders so it can grow moving forward.
PO: BRAWL has only existed for about six months, but it seems to have spurred quite a bit of change.
AC: Yes, dramatic changes. Some of the things we have advocated for, people told us initially we would never get done, but when you get over 10,000 brokers supporting something, that is a really big movement. In the late stages of 2017, as a result of BRAWL, we saw a lot of lenders change their business practices to adopt the policies we were advocating. Companies like Quicken and loanDepot and Caliber – these are the biggest lenders in the country, and they started to make changes to accommodate this movement.
PO: Do you think BRAWL’s efforts could end whole-tail lending?
AC: I think we are well on our way to continued improvement for the broker community. One of the things we introduced is putting the mortgage broker and their contact information directly on the monthly mortgage statement of past mortgage broker customers. Companies like United Wholesale Mortgage and Caliber Home Loans will be doing that in the near future. It’s a trend we hope the rest of the industry adopts.
PO: What are BRAWL’s 2018 goals?
AC: Number one is getting all the mortgage lenders in wholesale to adopt the policies we’ve been advocating and to insert the mortgage broker’s contact information on the monthly mortgage statements of past customers. The number two thing is probably the most important to us. We are in the process of circulating an addendum to the mortgage broker agreement that lenders have with brokers that would be very specific to these policies. One of our biggest concerns is that lenders might come out and make these changes publicly now because of the groundswell, but a couple of years from now, they might just go right back to their ways. We want to add an addendum into our broker agreements to get a true commitment from the lenders and lock them up contractually.