One says UWM accusations give ‘another black eye’ to industry

Explosive investigation and class action lawsuit alleges United Wholesale Mortgage Corp. Defrauded borrowers of billions of dollars Many in the mortgage industry worry the story will damage their reputation in the eyes of consumers.

that report by hunter brookVenture-backed institution claims UWM has independent Broker Captive and overcharging borrowers by hundreds of millions of dollars. class action lawsuit, Filed in Michigan Shortly after the report was published, it accused “corrupt UWM loyalist” agents of violating their fiduciary duties to homebuyers. UWM denies the allegations.

Although some industry stakeholders believe the case could lead to More regulatory scrutiny In the short term, they say, the allegations alone will shake consumer confidence in home lenders and make borrowers reconsider working with mortgage brokers.

“The infighting on the lending front is bad enough, and when you add it all on top of that, it just doubles the reputational hit. It doesn’t look good,” he said. Greg Sher, Senior Director, NFM Lending“The result may be that more consumers decide to deal with their local bank.”

Consumer confidence was already shaky during the Great Recession, and “it was very difficult for brokers and banks once regulators came out,” he said. Bill DallasFormer U.S. Treasury Department President and Industry Advisor, Thursday.

He predicts that the same situation may happen this time, but only for TPO channels.

“There was a sentiment that retail loans were of better quality than TPO loans, and I think that sentiment may come back,” Dallas said. “That’s not good for the broker pipeline.” Regulators could easily That’s noticed, and obviously it’s easy for portfolio investors to say, ‘I don’t want to deal with the underlying risk. ‘”

Broker Andrew Dort, owner of Pride Lending, agrees. “Anytime you have a story like this that’s subject to regulatory scrutiny, that’s not always a bad thing, but it also shakes consumer confidence in our pipeline,” he said.

“Educated loan officers on the brokerage side are superior to other channels in the service they provide to clients, but a shaken confidence in this can ultimately lead to consumers actually paying higher prices by sticking with more traditional agency lenders. ,” Dort added.

Industry veteran Paul Hindman believes this is “just the beginning and, if confirmed, will reignite the ripple effects that will be felt across the industry and will once again give consumers more reason to distrust home finance companies and the people who work for them.” . “

Meanwhile, Scott Olson, executive director of Community Home Lenders of America, said the allegations “do not reflect the vast majority of IMBs” and, if true, the allegations facing UWM are “troubling.”

While the court of public opinion and a Michigan federal court are debating whether UWM is guilty of “systemic and willful corruption,”[ing] Wholesale Mortgage Pipeline,” which some say will be a wake-up call for the brokerage community.

“I think the blame does lie with the brokers themselves, which is why I think this is going to be a reckoning for our industry,” Dort said. “Corporations are a bad thing.” That’s their job. But any broker who specializes in originating loans to one lender, if you don’t check the rate schedules of all available lenders, how do you know you’re actually doing the best thing for the consumer? “

Broker Andrew Harris, president of Vantage Mortgage Brokers, echoed similar sentiments, noting that the industry has taken too long to start paying attention to the fact that some brokers only do business with one wholesale lender.

“The outcome has to be that brokers understand they have a fiduciary duty to consumers and they need to respect that and not lie to the public,” Harris said. “If you’re out there saying you shopped with hundreds of lenders and you But you are lying, you are simply a liar. This is not okay.”

Mortgage consultant Michael Kelleher added that the lawsuit could “clarify what a broker really is and what everyone should and shouldn’t do.”

“I think what’s really going on here is that it reminds brokers that they need to add another piece of paper to their paperwork and explain with every closing why they chose a higher rate because there are so many benefits to working with a different company. And not just the interest rate,” he added.

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