Fairway exits wholesale channel

Fairway Independent Mortgage announced on Friday that it is shutting its wholesale mortgage production operation and will now solely operate in the retail channel.

The company was targeted by United Wholesale Mortgage‘s “All-in” campaign that declared if mortgage brokers sent loans to Fairway or Rocket, they could no longer do business with Mat Ishbia’s outlet.

Fairway is not the only mortgage lender to exit wholesale in recent years, among the most recent being Citizens Bank, but the dispute with UWM puts a different spin on this one.

“We are simply making a business shift, nothing more, nothing less, in order to focus on our core business to ensure that we continue providing the best customer experience going forward,” said Fairway CEO and founder Steve Jacobson in a press release. 

Even though the move was just publicized, an industry source indicated the decision to shutter the channel was made in December.

The National Association of Mortgage Brokers expressed regret about the move. 

“We wish the Fairway employees well and are saddened to learn when any organization decides to leave the wholesale channel. As companies make decisions that impact the marketplace, NAMB will continue to represent the mortgage community as the preeminent volunteer-led and membership driven organization in the nation,” Valarie Saunders, president of the organization, said in a statement.

The last day for brokers to lock loans at Fairway will be Feb. 9, with the last day to make submissions one week later, on Feb. 16, explained Al Hecklinski, senior vice president of TPO production at Fairway.

Brokered loans must be closed and funded by March 15, while nondeligated correspondent originations must be delivered to Fairway on that day and purchased by March 22.

Approximately 100 positions are being eliminated as a result of the move. The channel did just $2.5 billion in production last year. In the third quarter alone, UWM did $29.7 billion, while Rocket Pro TPO originated $10.3 billion.

At the time All-in was announced in March 2021, Ishbia’s reason for cutting out brokers that did business with Fairway was his allegation that the lender recruited mortgage loan officers from broker shops. Unlike Rocket, no. 2 in wholesale volume behind UWM, Fairway was a smaller operator in the channel.

If anything, the ultimatum brought Fairway more business from brokers, Jacobson said in a National Mortgage News interview three weeks after Ishbia’s announcement.

“We typically get one to three inquiries a week for new brokers reaching out to us,” he said at that time. “Since March 4, we received 108.”

All-in still generates controversy in the industry, with lawsuits filed by brokers against UWM and the company pursuing action against brokers whom they say violated the agreement. UWM even sent a cease-and-desist notice to a Facebook group dedicated to discussing “Rocket Pro TPO vs. UWM” over the use of the UWM logo. 

Meanwhile UWM is continuing its practice of running pricing promos, with the latest offering being a 100-basis-point rate cut for refinancings. To get the discount, the original loan if originated by UWM must be at least 365 days old. No seasoning is required for loans from other lenders.