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BRAWL founder seeks to empower brokers

Last fall, mortgage brokers banded together in a movement called Brokers Rallying Against Wholetail Lending (BRAWL), alleging that certain large wholesale lenders with national retail divisions were stealing their customers. BRAWL drew up a list of allegedly offending wholesale lenders that were referring borrowers to their retail divisions that originally had been brought to them by brokers. Then, without contacting the brokers, BRAWL says the lenders were aggressively trying to convince those borrowers to refinance their loans. From the BRAWL movement, there quickly emerged a new national organization set up to serve mortgage brokers and called The Association of Independent Mortgage Experts (AIME). The man behind both of these developments, Anthony Casa, president of the Cherry Hill, New Jersey-based Garden State Home Loans, recently spoke with Scotsman Guide News about BRAWL, AIME and the outlook for mortgage brokers in the changing mortgage market.  

Has the movement BRAWL, the broker movement that you started in protest to ‘wholetail’ lending still ongoing, or has that served its purpose?

anthonycasaIt is something that is definitely not complete. I wouldn’t say it is part of my current focus as far as my day-to-day right now, but it is something that I am definitely communicating actively with lenders about. More than that, I think lenders are very proactively communicating with me about it more now than ever. So, it is out there.

Most lenders have adjusted their policies and practices to adopt BRAWL types of friendly practices. What we are working on is circulating an addendum that amends the broker agreement that we have with lenders, that would more or less contractually obligate lenders adopting those policies to stick to them down the line. It is an open, continuing dialogue. One of the things that I try to tell people is that BRAWL is not an organization. It is a grass-roots movement, obviously a popular topic of brokers, but not anything that is officially an organization.   

Have you made any progress with eliminating wholetailing?

The fact that I was at a conference for brokers two weeks ago in California [and] listened to multiple lenders go up and speak to this crowd of 200 loan officers, [and] every single company that spoke essentially said that they have changed their practices, and all the changes were relevant to that movement. So yeah, if somebody is openly saying that they changed practices that are direct to the movement, then I personally think that we are seeing the fruits of everything that is going on over the last six months.

Why did you start AIME, the new organization for brokers?

There is definitely a need within the broker world. We had 10,000 paid members in 90 days. We have had one event so far. We were expecting 300 people. Six-hundred people showed up. It was standing-room only. We have an event in Denver in a couple of weeks. It is a very similar situation. A lot of people will talk about the associations that are out there. This is not a competitive thing. We are not focused on us versus them. We are focused on empowering the broker community, and being a resource for the broker community. There is plenty of room for two, three, four of those resources out there. As far as we are concerned, there hasn’t been a resource like us in recent memory for the broker community.

What is your long-term goal for the organization?

No. 1 is being able to bring the best technology to brokers in a way that is user friendly, and that enables them to scale their businesses. People will say, "Well, how hard is that? A broker can just call a technology company." The reality is that you are in the weeds and actually running a business. The technology companies don’t have offerings that are broker-specific. Anything that you get from a technology company you have to customize. Financially speaking, that is not a proposition that most brokers can afford. We are working on some real, high-level partnerships with some major technology companies to bring that customized, out-of-the-box technology to the broker community. That is priority No. 1.  

Priority No. 2 is providing the support and resources to help brokers grow their business. That means, how do they get better at running the businesses? A lot of brokers are originally, by trade, sales people or loan officers that became business owners. They do not have that background as a business operator. Providing the resources to help them become better business operators [is important].

Long term, for me, the most important thing that we can do is unify the community. At the end of the day, I am not planning on doing this for an extended period of time. My goal is to successfully get AIME in a position where it can serve the broker community, and then I can hand it off to other people, and I can focus on my brokerage shop. My main goal is to put that infrastructure in place, develop that resource and put it into a position that it continues to be a resource long term.

Given the rise of large, direct online-retail platforms and other services that encourage borrowers to shop for mortgages, where do traditional brokers fit into this new market dynamic?

The online marketplace, the online lending part of this, statistically is not going to continue to perform the way it has performed over the last eight years in a purchase-driven market. It is already massively declining. It is just a simple fact that when you are shopping as a consumer for a refinance, it is not an emotional transaction. It is easy to go with one of these online platforms. All of these companies are down pretty substantially. These are online, refi-driven operations.

In a purchase environment, a local mortgage loan officer-broker, is more relevant. If you look at the trends, now that we are in a rising-rate environment that is purchase-focused, [the] mortgage-broker share of the purchase market is rising rapidly. The reality is that if you are a Realtor, and you get a pre-approval from [an online lender] at a call center, they are what they are. They are an internet lender. You are going to want to make sure that in a hot market — a market with tight inventory with a bidding war on every house — there is someone to validate that the lender can deliver. You’ll refer them to the in-house, local mortgage guy to get a local approval. That is why mortgage brokers and local entities are really doing well, and their market share is picking up. So, I think the very opposite is happening right now. You are going to see the third-party mortgage-broker origination market share increase dramatically over the next couple of years, because it will be less online focused and more locally focused.

If you are a mortgage broker, how do you make it successfully in this day and age?

I think a couple of things. AIME’s biggest project is a technology fund. The reason I have been in the position I am, as far as having support from lenders and having support from my peers in the broker community, is we run a highly successful broker shop and it is technology focused and process-driven. Adapting best practices, a lot of peer-to-peer, and understanding that the broker of yesterday is not going to be successful in the brokerage of today and tomorrow.

Just understanding that you have to adapt, and you have to adapt really quickly right now, [matters]. In a market that was 90 percent refi just a couple of years ago and now is 80 percent purchase, you have to realize it is a purchase market and you have to be in front of consumers. You have to be in front of real estate agents. If you are a broker, your competitor is not the online lender anymore, it is really the Movement Mortgages, the Guaranteed Rates, those distributed-retail companies. The reason we compete against those companies, the reason they are so successful, is that they are in the Realtor’s office. They are getting in front of homebuyers. They are going to open houses. They are doing the approvals and all of that stuff.

That is a big part of the dialogue that I am having with brokers. You have to understand that, even if you were a refi driven company a year ago or six months ago, rates are rising. It is a purchase market. You do have a lot of value because you have product optionality. You have all the different varieties of products out there that one singular lender doesn’t have. You need to leverage that, and you need to pound the pavement and build your relationships, so that you can be successful in this environment. Overwhelmingly, what I was told from the executives in the big distributor-retail companies, brokers are viewed as the biggest threat to their business model. Brokers have low overhead, are very nimble and they can work at lower margins. So, if they can execute on getting in front of Realtors and good messaging, and doing good business, at the end of the day, they are going to be able to beat the big distributor-retail loan officers. We are focused on supporting that and helping them be in a position to do that. 


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