Top 10 lenders pledge to protect broker business

Brokers rejoice at the movement against 'wholetail' lending

By Kimberly Greene

21 Aug 2018

Home Point Financial and Pacific Union Financial, two of the top 10 lenders in the country, have pledged to support the AIME mortgage broker protection addendum, which means that they’ve implemented the suggested policies and procedures in order to prevent lenders from soliciting brokers’ past clients and have made a long-term commitment to support the initiative. The agreement will be circulated at the end of the year, when brokers renew their agreements with the lenders.

This push came out of the BRAWL movement, which saw independent brokers coming together to put a stop to the practice. BRAWL garnered a lot of publicity, ultimately resulting in more and more lenders adjusting their business practices. The AIME protection addendum takes that support a step further, where lenders sign an agreement contractually obligating themselves to keep the improved practices on a long-term basis, and becoming part of their broker contract.

“We understand that as a partner, it’s important that we look at how we can help, (and not hurt), your entire business. As a true partner, this means not soliciting your employees for employment. It means not soliciting your clients for future transactions. Our relationship is truly symbiotic and dependent on each of us having success today and in the future,” Evan Stone, CEO of Pacific Union Financial, wrote in a letter to brokers.

Anthony Casa, founder of AIME, says that he’s seen a shift in the way the industry perceives the issue; initially lenders were very “dismissive” when he broached them about the topic of going after past broker clients, but he’s been able to open a dialogue and encourage lenders to view brokers the same way they view retail officers and to make an equal investment in them.

“The local broker has such an inherent value to all those consumers that they touch because they’re part of their community and they have a personal relationship with those people. Instead of trying to circumvent brokers, if [they] actually just embrace it, then [the] ability to recapture that relationship with them in the mix is so much higher,” Casa said. “When we started to have that dialogue and really getting into the weeds about it, the lenders started to really open their eyes.”

Lenders also realized that when going after brokers’ past customers, they had to work much harder to do what the brokers can do easily because they already have an established relationship with the client. Relying on brokers to more efficiently get the business is beneficial for all parties.

“We have taken several strategic actions to both reduce friction and enhance alignment with our TPO partners. Most notably, we are exiting our retail branch network. With that, we are committing to our TPO partners as the extension of our presence in local markets. In other words, strategically we consider our TPO partners our retail branch network,” wrote Willie Newman, President and CEO Home Point Financial.

It’s been a real battle, Casa said, but seeing lenders change their infrastructure to accommodate policies and procedures that protect broker business and avoid ‘wholetail’ lending practices, including poaching former clients, is satisfying work.

“Being a part of that and actually seeing it happen, and getting validation that it’s happening, is just, it’s really, really vindicating and it just clarifies why this investment is worth it.”