Jan. 6, 2018: Brazen blitz of BRAWL, bitcoin, & blockchain blurbs

A mark or a yen, a buck or a pound…or a bitcoin?

All I know is what I read in the newspapers. In this case, did Fannie Mae clear up its stance on bitcoin? “Guild Mortgage had called Fannie Mae to confirm it would accept bitcoin as an asset for purposes of securing a mortgage. It would, the federal agency told the company, as long as there was a full paper trail documenting the buyer had paid for the cryptocurrency and then sold it back into U.S. dollars, and used that for the down payment.” The Seattle Times story details the purchase of a home made by someone who profited from bitcoin trading. From Missouri I received, “The Agencies and banks, due to the Federal government, won’t count marijuana-related income, but money from speculating on bitcoin is okay?”

What say we keep adding to internet-based currencies? In the final two months of 2017, the price of the cryptocurrency monero quadrupled in value to $349, and is up a further 7 percent this year. It grew faster than the top cryptocurrency, bitcoin, which is saying something. Per Significant Digits, “Criminals were once a core customer base for bitcoin, but as people have gotten better at tracing where the currency comes from and where it goes, it’s fallen out of favor. That’s left an opening for monero — which encrypts recipients’ addresses — to scoop up that core crime doer demo.”

And don’t forget Ripple, the money not my usual libation, which dropped 11% in a few days.

Blockchain: bitcoin’s wallet

“A blockchain, originally block chain, is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data.”


Debbie Hoffman sent in a note about another newsworthy item: blockchain. (Debbie is the Co-Founder of Symmetry Blockchain Advisors, LLC.) “As the recent co-founder of Symmetry Blockchain Advisors, and the co-author of the feature cover story on this month’s Housingwire ‘Harnessing the Power of Alternative Data:  When Facebook Meets FICO,’ I obviously found your blockchain commentary quite interesting. Blockchain does, indeed, provide for many use case scenarios within the mortgage industry, including evaluating credit. In addition to being a technology that is less susceptible to cyber threats when compared to more traditional methods of document transfer and storage, blockchain is also a more direct method to obtain information between parties without a middleman. It therefore enables lenders to obtain information about potential borrowers directly from the source, rather than the credit reporting agencies. This direct access to information, along with the incredible amounts of data points available due to artificial information (including machine learning) can be a game-changer.


“Will this new game-changing technology be embraced by mortgage lenders, real estate appraisers, title insurance companies, property recorders and other industry players along the lending life-cycle? I would speculate that at some point there will be no choice and those not taking the time to understand the value and implement changes will be left behind. Think back to just three years ago when the concept of ‘digital mortgage’ was new. The smaller FinTech companies were embracing it; in 2017, there are very few top mortgage lenders who aren’t either partnering with one of those digital innovators or looking at internal methods to develop their own digital mortgage infrastructure. Thus, will the mortgage lending industry be first to adopt blockchain in its infrastructure? Absolutely not – but give it a few years and it will become much more utilized along various segments of our industry.” Thank you, Debbie.

France is allowing use of blockchain technology to trade unlisted securities as part of a campaign to make Paris a global hub for financial innovation. The action clears the way for financial-technology startups and banks to set up blockchain platforms and immediately trade unlisted securities, eliminating a need for intermediaries.

More commodity firms and traders, including BP, ABN AMRO, Mercuria Energy Group, Natixis and Trafigura, are adopting blockchain technology to increase efficiency, changing the way they do business. “Once you’ve established blockchain and it’s working, you will see faster changes, because then the transformation of the value chain becomes an option,” said Rabobank analyst Harry Smit.

Vanguard has successfully completed a test in which its index provider, the University of Chicago’s Center for Research in Security Prices, distributed daily data to 15 funds via blockchain technology. Transmitting index data through distributed-ledger technology lets investment managers instantly distribute, receive and process information and eliminates human error inherent in manual updates.

Brawl: rumble, scuffle, clash

Brokers Rallying Against Whole-tail Lenders. Matt H. sends, “Rob, your December 16th piece on BRAWL and how servicing values impact mortgage prices should be required reading for anyone in mortgage banking.” Thanks Matt!

Andy Harris, CRMS, telegraphed, “There are a lot of arguments and points on both sides, but the topic is what needs to be clear on respecting partnerships and thinking of this as residual versus transactional as noted. If ALL wholesale lenders treat this as a residual business relationship versus transactional, it will be extremely rewarding for them, the independent originator, and most importantly the local consumer. I’ve spoken with Anthony for a long time. I agree with most and have mixed feelings about some other things. But only MLOs can change the game by opening eyes and sending business outside of retail via wholesale and independence.

“As we all know, the economics of the mortgage business is ‘transactional’ in nature. If our business partners work TOGETHER with us to maintain and keep our existing database, we can then ‘together’ slowly build a residual partnership versus transactional partnership which is long-term versus short-term. This is best for both the Mortgage Broker and Wholesale Lender. Remember, Mortgage Brokers are here for the long-run, as most of us have been. We do not have revolving resumes and doors like the retail loan officers they employ directly. They need to reconsider their investments in partnerships, versus recruiting, as the most profitable business model (and best for consumer). Let it be clear, Mortgage Brokers are the best investment for lenders in partnership for this industry-  as an independent versus employee. 

“The time is now to develop these residual partnerships while wholesale is on the rise and retail margins will be restricted. The large retail players investing in that ego-fighting channel will have a rude awakening in the coming years. Wholesale is simply better for the consumer and originator on all levels.” Thank you, Andy.

I received this note from Mat Ishiba, President and CEO of United Wholesale Mortgage. “My take on BRAWL is different than what you wrote in your commentary on Dec 16th, and your readers should understand why we support these brokers and why we think this the right thing to do.

“BRAWL basically tells LOs not to send their loans to certain lenders that they compete with upfront for the loan, or that will solicit or steal the clients after closing. They think it is wrong for wholesale lenders to act as if they are business partners, just to steal the client that they worked so hard to obtain.

“At UWM we support BRAWL and are proud to be on the ‘good’ list of wholesale lenders. We don’t have a retail retention team, and we don’t ever contact our brokers clients. We realize that the customer is the brokers, not ours and we act in accordance with that. We refer them back if they call our servicing team, we monitor the borrowers credit to connect them back to their originator, we help brokers with post close marketing to stay in front of their client, and so much more. That is what partners do, and that is what UWM is with our brokers, Partners.

“This focus on helping brokers grow their business, and protect their business that they already earned, while focusing on buying the brokers ‘loans’ and not their ‘customer relationships’ is what has helped catapult UWM into the #1 wholesale lender in America for 3 consecutive years (2015, 2016, 2017). We are a great lender with excellent service, a great price and awesome technology, but the truth of the matter is, that brokers that partner with UWM have grown faster than all other brokers (and retail lenders for that matter) because of the partnership and the fact that we don’t compete with them.

“I also do think that correspondent lenders should have the same type of initiative in their channel as brokers, as they have the same issue. Sometime taking ‘less’ money on the first transaction will help you make more money in the long run because the customers will stay with you. Many lenders that buy brokers and correspondent loans, price in a value of ‘retention’ to the loans they buy, which gives them a better-looking price when you go to sell your loans, but you end up losing because they didn’t just buy the loan, they bought the loan and the customer relationship. Customer relationships are so hard to earn initially, and are so valuable to you in the long term, so giving them up so easily for an extra .25bps is a poor long-term decision, but a decision that many ‘Whole-tail’ lenders are excited for brokers/correspondents to take them up on.

“Overall, this movement is great for the industry and it will force lenders to modify their business or not play in the wholesale space. There are enough ‘good’ wholesale lenders out there for any broker to use, and the broker channel is stronger than it has been in the past 10 years, which makes the timing of BRAWL perfect. More and more loan officers are leaving retail lenders, and banks to join broker shops because brokers have the best price, the best product mix (multiple lenders) and the best technology (access to multiple lenders technology). With this overall shift to the broker channel growing each day, BRAWL will help all brokers grow further in 2018 and beyond, because they will be able to keep their clients for the long term.” Thank you, Mat.

Plaza sent this out. “You may have already heard or read about a new advocacy group of mortgage brokers called BRAWL, formed to stop lenders from utilizing their wholesale business to feed their retail channel. Plaza supports BRAWL, and is proud to be on their “good wholesale lenders” list. Plaza has always been committed to supporting mortgage brokers, and will continue to do so…To sign the petition in support of BRAWL and true wholesalers, click here.

Jeff Mifsud with Vantage Production dashed off, “The practice of wholesaler’s retail channels marketing to borrowers is not new. And it is not going to go away. The truth is once a loan is closed (or even before with trigger leads) it becomes open game for every mortgage lender out there (including the wholesale retail channels). The only way for LOs to combat the practice and protect their hard-earned clients is to: 1. Create strong relationships with their clients by staying in touch with them on a regular basis, 2. Provide greater value to their clients by giving them an amazing, aggravation-free, mortgage processing experience, 3. Become their clients go-to person for all types of referrals a home owner would need, e.g. insurance agents, financial planners, and home renovation contractors, and 4. Provide greater mortgage advice than anyone else their clients will speak to.

“I have found that when loans close, most LOs fail to keep nurturing the relationship with their clients and just forget about them until rates drop. The time to start marketing for repeat loans from past clients is the day after your close the first loan with them. If LOs don’t forge and deepen the relationships with their clients, then some other lender will.” (Jeff added, “If you’re an LO or owner that needs some automated support in nurturing your client and referral relationships, then check out Vantage Production’s Platinum Marketing; it will help you reach and convert more prospects, clients and referral partners.”)

Along those lines, Andrew Beyer radioed, “Personally, I’d ask Anthony Casa two questions. First, what make him think he ‘owns’ the client? And second, why did it take him years (by his own admission) to re-solicit those clients? I would think that if he had treated them well and done an excellent job, they would have come back to him for any of their subsequent needs. But apparently they didn’t, and he really needs to examine his own business and stop blaming others!”

I also received this. “This whole BRAWL thing is entering possible litigious territory. What they are saying is NOT TRUE. I send out leads to brokers every week, and even on BRAWL’s ‘censored’ website, people manage to sneak in comments promoting companies that offer both retail and wholesale channels. This is a propaganda campaign coordinated and orchestrated by two entities. All their HousingWire content, and their www.stopwholetaillending.com, was paid for the exact same day in October. In conclusion, this is a thinly veiled attempt to disillusion brokers, take away valuable partners, and discourage competition that favors the borrower. Companies that offer different channels are fantastic partners for brokers to work with in terms of excellent technology, valuable lead sources, retained servicing with wholesale borrowers excluded from retention efforts, and finally, competitive suites of products.”

I usually meet my girlfriend at 12:59.”

“Why is that?”

“Because I like that one to one time.”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Servicing: All It’s Cracked Up to Be?” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.


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Rob Chrisman