The mortgage landscape is changing fast, with the two biggest players making major moves to increase their market share even more.
Today, top mortgage lender UWM announced it was shifting to in-house loan servicing, a strategic change designed to recapture more repeat business for its vast mortgage broker network.
The company is already the #1 mortgage lender by a wide margin, but perhaps to fend off its crosstown rival Rocket, it’s getting proactive to secure that lead.
In a nutshell, bringing servicing in house will enable the company to better control its stable of existing customers and ideally sell them another mortgage in the future.
If you’re an existing homeowner with a mortgage, this is a good reminder to shop around beyond the company that services your loan.
Mortgage Recapture Is Top of Mind
In case you missed it, back in September UWM launched a new initiative called KEEP, designed to help its mortgage broker partners drum up more business.
KEEP leans on AI to continuously monitor the company’s loan database to identify any borrowers who could benefit from a mortgage refinance, or perhaps a second mortgage like a HELOC or home equity loan.
This information is tailored to the borrower and includes the contact info of the originating mortgage broker so they can win the business again.
The idea is to KEEP the customer for life, instead of simply providing them with one home loan and moving onto a new prospect.
It’s known as “recapture” in the mortgage world, where you originate both the original loan and the new loan.
It works because loans are typically sold to investors shortly after origination, meaning the broker and UWM can profit a second time, a third time, and so on.
Recently, Rocket Mortgage announced plans to acquire Mr. Cooper, the nation’s largest mortgage loan servicer, for this very reason.
Rocket knows it’s good at origination (sales), so acquiring an enormous book of business is a great way to turbocharge growth.
This is especially important with lending volume a lot thinner than it used to be and new business harder to come by.
And it’s probably what sparked UWM to bring its own loan servicing in house, as opposed to working with sub-servicers like Mr. Cooper.
It’s no coincidence they severed their agreement with Mr. Cooper in early April, just days after the Rocket announcement.
Going forward, UWM wants full control of the loans it originates on behalf of its fleet of mortgage broker partners.
Similarly, Rocket is basically bringing loan servicing in house as well via its Mr. Cooper acquisition.
Stronger, Stickier Relationship with Mortgage Brokers
In the news release, UWM President and CEO Mat Ishbia heralded the move as “a huge win for UWM and, more importantly, the broker community.”
He added that it will create a “better experience for borrowers and a stronger, stickier relationship with their brokers.”
The idea here is that UWM will have control of that loan after it funds, instead of a third-party company holding the data and trying to originate loans itself.
Without managing the servicing themselves, a company like Mr. Cooper could mine the database and use its own team of loan officers to make phone calls and “steal” that business.
Going forward, UWM will be the one holding the cards, a strategy they believe will allow them to garner more repeat business and referrals, while also enjoying related cost savings.
Remember, it’s harder (and more expensive) to go out and find a new customer than it is sell something to an existing one.
UWM’s New Loan Servicing Portal Powered by ICE
UWM’s new servicing platform will be powered by ICE Mortgage Technology’s MSP loan servicing system.
It features a homeowner portal that is designed to “keep borrowers engaged through the life of a loan” via “robust retention and recapture features.”
My guess is stuff that is extremely tailored to borrowers, such as emails and alerts that display their current mortgage rate, available home equity, and options to tap into it or lower payments.
The portal will also incorporate loss mitigation options to assist homeowners facing hardship, including streamlined lien releases.
And it’s all intended to keep you in the UWM ecosystem, instead of seeking out a mortgage elsewhere.
What makes it somewhat strange is that brokers who work with UWM are independent and can theoretically send loans to any of their wholesale lender partners.
So there’s no real guarantee a loan they originally sent to UWM will go back to UWM if it’s refinanced in the future.
But perhaps this increases the odds of that happening. It reinforces something I’ve said time and time again; if a lender reaches out, reach out to other lenders.
Be sure to put in the time to shop around to ensure you receive the best deal, whether it’s the lowest interest rate and/or fewest fees. Loyalty is great as long as it’s a good deal for you.
Read on: What is Mortgage Matchup?
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.
