Some Mortgage Industry Players are Part of the Home Buying Problem

While there are multiple factors why home buying has become more difficult for so many Americans, the ongoing partnership between two of the industry’s biggest actors make things more difficult for home buyers and loan officers seeking to get their clients the best deal possible.

In February, I wrote a column in these pages  questioning the business practices by United Wholesale Mortgage (UWM) and its CEO Mat Ishbia. In so doing, I engendered the ire of Ishbia’s longtime confidant Anthony Casa, who now runs a Philadelphia-based loan origination business called UMortgage. Casa argued, publicly, that the article should just be ignored on the grounds that no one had ever heard of me or Real Clear publications. 

Now, Anthony Casa knows me all too well. In July, I broke the story that Casa had sent a series of untrue, obscene, and misogynistic videos and comments to his friends about a competitor’s wife. Within weeks, Casa was forced to resign from his job as head of the Association of Independent Mortgage Experts (AIME). After leaving AIME, he went into purgatory – specifically Philadelphia.

But the underlying issues I originally raised about UWM are even more relevant than they were in February. As background, UWM doesn’t offer loans directly, but as one of many wholesalers in the market, UWM works with mortgage brokers and loan officers across the country to facilitate mortgages for its customers. Despite going public in 2021 at a valuation of $16 billion, its stock has dropped precipitously and now is hovering around $4 a share ($UWMC), 60% off its open. As I noted in my previous article, Ishbia has attempted to spur additional business, but thus far these attempts have proven unsuccessful.

UWM is one of the largest companies participating in the wholesale mortgage market, but given it doesn’t seem to value the benefits of free market competition. For example, in March 2021, Ishbia announced in a Facebook Live presentation that the company would no longer work with any broker or bank that also worked with either of UWM’s main competitors. The ultimatum was panned by industry professionals and consumer-advocates, with some viewing it as “bizarre” and “anti-competitive.” UWM claims to be the “#1 advocate for independent mortgage brokers,” but restricting choice and business opportunities among independent brokers runs counter to that bold claim.

Separately, after the Federal Housing Finance Agency rescinded its temporary 50 basis point fee on conforming loan refinances in August 2021, UWM delayed removing the fee. For a short time, UWM continued to charge borrowers 0.5 percent on loans, costing customers thousands of dollars in additional fees while padding its own bottom line.

Now it appears Ishbia is attempting to backdoor his way into the loan origination space – to compete directly with the loan officers (Los) he relies on to bring business to UWM.

Enter Anthony Casa, now the rehabilitated and rebranded CEO of Umortgage,

As I noted in February (and as far back as June 2020), there are interesting connections between these UWM and UMortgage including similar branding from Ishbia’s previous endeavors, crossover business connections, and many of UWM’s former employees. Ishbia also presented at one of UMortgage’s sales meeting, where he encouraged LOs to “feel good” because they will soon be one of the biggest mortgage companies.

It’s certainly plausible that Ishbia may be underwriting this latest venture. If so, that would mean Ishbia is leveraging his relationship with Casa at UMortgage to directly compete with other loan officers – in order to have two bites at the mortgage apple. Of course, there’s nothing illegal about Ishbia and  Casa teaming up again – but if loan officers who have been working with UWM start to believe that Ishbia has an interest in a loan shop that competes with them, loan officers might think that they aren’t getting the best deal or the best service.

Let’s face it – a partnership like this probably isn’t in the best interest of consumers, especially when potential borrowers are taking out loans worth hundreds of thousands of dollars. With the recent surge in mortgage rates, consumers have a lot on the line. Average 30-year fixed rate mortgages are now over 5 percent – nearly 2.5 percentage points higher than a year ago, according to the St. Louis Fed. As a result, homebuyers are likely to pay hundreds of dollars more on their monthly mortgage payments than they were just a few weeks ago.

Consumers need relief, not mortgage industry insiders who are making a tough situation worse. Only time will tell if Casa’s latest business ends up helping or hurting loan officers, home buyers, and UWM’s shareholders.

Jared Whitley is a longtime DC politico, having worked in the U.S. Senate, the White House, and the defense industry. He has an MBA from Hult International Business School in Dubai.