A BRAWL Breaks Out In The Mortgage Industry

Mortgage broker Anthony Casa, the son of professional middleweight Jimmy Casa (who went the distance with a young Jake "Raging Bull" LaMotta), started a BRAWL with wholesale lenders, and he’s not backing down.

It started when Brexit passed in Great Britain and many spooked investors pulled their money out of Europe and put it into U.S. Treasury bonds, sending mortgage interest rates plummeting. Immediately, mortgage lenders and brokers started calling past clients informing them of the opportunity to refinance at historically low interest rates.

But what Casa, cofounder of Garden State Home Loans (GSHL) in New Jersey, found hit him like a straight right hand to the jaw. Many of his company’s clients had already refinanced. The wholesale lenders he had placed those clients with beat him to the punch and refinanced their loans behind his back.

"They’ve been growing their businesses on the backs of mortgage brokers," Casa said.

Casa said he complained to Quicken Loans, the lender he did the bulk of his business with, but the company refused to address the issue.

"They called it cross-channel conflict," Casa said. "We went a couple of rounds with them and we realized it wasn’t an error. It was actually the business model. We decided not to do business with them and that was very difficult. They pay almost twice as much as other lenders. If you look at it the way I do, which is long term, you can justify not doing business with them. You get the customer back and the referrals that come from them."

Quicken did not respond to a request for an interview.

Casa started talking to other mortgage brokers and discovered many large retail lenders across the country were doing the same thing. Together with his marketing department, he came up with a messaging campaign and called it Brokers Rallying Against Wholesale Lenders (BRAWL). The mission was to get the word out to the 35,000 mortgage brokers in the U.S.

Once the fight was on, Casa saw another opening and like any good fighter, he threw a shot. In January, he founded the Association of Independent Mortgage Experts (AIME), a trade association that already has more than 11,000 members. The two main purposes of the group are to share best practices in the industry and to develop and leverage technology from well-known tech companies that will allow mortgage brokers, which are almost all small shops, to compete with the big, national lenders. Casa estimates that technology would open $18 billion a month in mortgage business to mortgage brokers.

That punch hasn’t landed yet, but if it does, Casa thinks he’ll have wholesale lenders on the ropes. AIME members will be able to go toe-to-toe with the heavyweight lenders and win with better, more personalized local service.

As BRAWL’s message spread, Casa reached out to many wholesale lenders asking them if it was their practice to market directly to the customers mortgage brokers brought them and if so, would they stop. Many refused, some came around much later. One company, Caliber Home Loans, agreed almost immediately to work with BRAWL.

"There was a lot of strategy in what we did, and they realized I wasn’t going to compromise," Casa said. "That’s when people saw my perspective and they realized they needed our business, because in this purchase-driven market, broker business drives. That’s when they started to make those hard decisions. The broker business was going to double in the coming years regardless of what I’m doing. Most of these lenders lost money in Q1 2018. They can’t afford to lose broker business, too."

A win for mortgage brokers is very often a win for consumers, too, according to data from Thomson Reuters secondary mortgage platform. Because mortgage brokers generally have relationships with dozens of lenders, they can pair a borrower with the perfect lender program for their particular case and save consumers 1/4% on their interest rate on average. That's adds up to about $10,000 on a median-priced U.S. home loan.

John Gibson SVP, Head of Wholesale Production at Caliber Home Loans, voiced enthusiastic support for BRAWL’s initiative.

"Caliber is the second-largest wholesaler in the country. We understand that our partners have choices and we have to listen to them," Gibson said. "We’re fully in line with initiatives that move the broker initiative."

Once Caliber was on board, other wholesale lenders started taking BRAWL more seriously. United Wholesale Mortgage was another important, early supporter.

On its website, BRAWL publishes ranked lists of wholesale lenders who’ve pledged not to poach customers from mortgage brokers, and they’re updated quarterly. Currently there are 10 True Partners, 9 In the Middle, and 20 Whole-tail lenders.

The fight is still on, and Casa said he is emboldened by the success the movement has had so far. It has fueled the competitor in him, and he sees the conflict very much as a David vs. Goliath battle. And everyone knows how that turned out.

"It’s very easy to get intimidated by these people, some of whom are revered in our industry," Casa said. "I sit across the table from people I’ve only read about in articles and they realize that I’m a 33-year-old guy and they try to intimidate me. I’m really all in this for the end result, and I’m not going to let the person in front of me win."