He says the math behind the offer amounts to nothing more than 'smoke and mirrors'
A day after Rocket Pro's chief revenue officer took direct aim at United Wholesale Mortgage's broker ultimatum, pitching a $10,000 incentive for brokers willing to switch, the rebuttals from the broker community started rolling in.
Brokers from all corners of the industry had thoughts on Rocket’s plan to help brokers leave UWM for Rocket. Others discussed Rocket executives taking aim at UWM’s most recent quarterly financial report.
Some of the sharpest pushback came from a veteran broker who has worked both sides of the retail and wholesale divide and says he knows exactly what the numbers behind that offer mean.
Amir Nurani (pictured top), broker-owner at Left Coast Leaders in San Diego, said the economics behind Rocket's pitch tell a very different story than the one being sold to brokers.
"When you look at the economics of what Austin (Niemiec) is proposing here, it is insidious," Nurani told Mortgage Professional America. "This is a bunch of smoke and mirrors. It's framed around protecting the broker, protecting a low price, broker choice. It doesn't have anything to do with any of that."
Behind the $10,000 math
Nurani walked through the numbers using a $300,000 loan, a figure he said reflects the national average for both companies.
"Wholesale channels are going to make anywhere between 80 and 120 basis points on a loan when they get a loan funded through a broker," he said. "We're going to use the median, 100 basis points. On a $300,000 loan, the wholesale lender makes 100 basis points, or $3,000."
That figure only tells part of the story, Nurani said, since he believes Rocket is positioning itself to capture a second, far larger payday down the road.
"On retail, they're going to run between a 400 and 500 basis point margin," he said. "That's why retail mortgages have higher rates, because they make more money on them."
According to Nurani, data shows that roughly 70% of borrowers who get a mortgage through a broker end up refinancing through a retail lender instead, often because the servicer already has a relationship and calls first. Applying that expectation to the larger retail margin, he argued, is what makes the incentive pay for itself.
"If they capture one loan from the new broker, they have a theoretical expectation of $11,400 in top line revenue," he said. "It is a profitable top line move the minute they get the first loan on a four-year time horizon."
The broker landscape
Nurani said the part of Rocket's pitch he takes issue with most is what happens to a client after a broker-originated loan closes.
"Rocket is completely burying the fact that they solicit broker clients," he said. "While they're telling brokers we're protecting you on price, what they're failing to say is, right after you fund that loan, we're going to stick a dagger in your back and take your client from you."
Nurani said he experienced that firsthand as a customer, not just as a competitor, when he used Rocket for his own home purchase in 2020, before the UWM dispute began.
"It was the most turbulent loan process. I missed my close date and had to give them things multiple times over," he said. "Not only did I have a turbulent process there, but on top of that, they were calling me to solicit refinance business in the future."
Nurani contrasted that with UWM's broker-exclusive model, which does not compete with brokers for the same client's future business. He said Rocket's messaging leaves out one basic fact about the wholesale market.
"He likes to frame it like brokers don't have a choice, that UWM is taking away choice," he said. "There's 70-plus wholesale lenders out there."
He said the difference comes down to whether a company needs to pay people to recommend it, rather than letting the product speak for itself.
"How much money has Apple paid you to incentivize your friends to go get an iPhone?" he said. "People talk about the iPhone because it's a great product. How many people has UWM paid me to recruit to UWM? The answer is zero. They don't have to, because their product is so good."
Nurani applied that same logic to a wave of recent headlines about UWM's own financial position, which he said have no bearing on the day-to-day experience brokers and borrowers have with the company.
"This is analogous to Tesla having issues in their factory," he said. "The person who owns a Tesla driving it around the streets isn't feeling any adverse impacts from Tesla having problems making cars. My process, my loans didn't slow down. My service didn't decrease."
Asked why he thought Rocket was leaning on a cash incentive rather than a product pitch, Nurani offered a simple explanation.
"When somebody has absolutely nothing else to offer, they offer their wallet," he said.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
