Imagine this: a real estate agent refers a client to an independent mortgage broker, who secures their mutual client a loan from an originator. The originator then turns around and encourages the agent to drop the mortgage broker and work directly with them going forward. Fair?
That exact scenario is now causing some controversy on social media, after an email sent by a loanDepot originator in California to a Realtor urging them to drop their broker and work with the originator instead was published on Facebook.
“The Realtor who was on the purchase transaction that the mortgage broker did with loanDepot wholesale received an email from loanDepot retail basically saying, ‘hey, you worked with this broker on this transaction and we want to work with you directly,'” Anthony Casa, the chairman of the Association of Independent Mortgage Experts, who first made the email public on Facebook this week, explained.
In the email posted by Casa, the loanDepot mortgage originator – whose name is redacted – urges an unidentified Realtor to work directly with loanDepot instead of the Realtor’s preferred mortgage broker, later identified by Casa as mortgage consultant Matthew Cady with Summit Lending.
“You may not realize that ultimately, some of your clients received their home loans from loanDepot, such as [name redacted] and [name redacted]. Their loans were brokered from Matt to loanDepot. I feel a better strategy would be to work directly with loanDepot. If you were not aware, my loanDepot office is down the street from your [Keller Williams] office – I’m in the Kilroy Airport Center.”
Casa told Inman that the Realtor who received the email immediately forwarded it to his preferred mortgage broker, Cady. Cady then forwarded the email to an account executive at another mortgage lender, who then shared it in the social media group for BRAWL – an organization of mortgage brokers rallying against retail and wholesale lenders like loanDepot – which is where Casa saw it and re-posted it from.
Cady told Inman, he viewed the email as highly unprofessional. He brought the incident to light because it brings up a topic that he doesn’t really think is addressed enough in the industry.
“If you’re a company that works in both the retail and the wholesale channel – what are the rules of engagement?” Cady said.
Cady told Inman that he does believe it was just one employee that, “went rogue,” and not specifically loanDepot’s policy. He said he’s waiting to see what action is taken, but willing to give loanDepot another chance, as a wholesale lender.
“If one person does an isolated incident, and you have a relationship with a company or any relationships in life, you give somebody the opportunity to fix it,” Cady said.
Casa’s original Facebook post, bringing the incident to light, elicited more than 100 responses from angry mortgage brokers.
“That is ridiculous,” Josh Steele, a mortgage loan originator with Hallmark Lending posted. “How do they not understand a broker/realtor or lender/realtor relationship.”
“Wow,” Ryan Goodemoot, senior account executive at AmWest Funding Corp, added. “This is a gigantic heap of nonsense. The immediate word to describe this is audacity.”
Many Realtors have preferred mortgage brokers and vice versa, and they work together to serve home buying clients, referring clients to one another, though they cannot exchange any kickbacks or monetary awards per the Real Estate Settlement Procedures Act (RESPA). Some Realtors and mortgage brokers work together on multiple transactions and maintain an ongoing business relationship that can last entire careers.
In recent years, some companies including loanDepot have tried to formalize more of this arrangement while still complying with RESPA. At Inman Connect New York 2018 in January, loanDepot announced the launch of mello Home, its platform that matches pre-approved mortgage customers of loanDepot with real estate agents who choose to join the platform (paying fees back to loanDepot for every transaction closed with a client from the network).
However, Casa said he’d never seen anything like this loanDepot originator’s email before in the industry and was motivated to call attention to what he perceived as improper business conduct. Since making the email public, he has heard from others that have seen the same thing.
“LoanDepot utilizing consumer contact information from a past transaction, brought to them by a mortgage broker for the purpose of their retail loan originator soliciting the real estate agent…specifically identifying [and] ‘cutting the mortgage broker out’ is unheard of, and the opposite of what they [loanDepot] tell mortgage brokers they do,” Casa wrote to Inman in a text. “Bringing attention to the behavior is extremely important. Mortgage brokers, which account for 25 percent of LoanDepot loan volume, will stop sending them business.”
LoanDepot confirmed the email was sent out by an originator from its Long Beach office.
“This originator used public records to produce this piece, and it was immediately addressed hours after the issue was raised,” a spokesperson for the company told Inman.
“We are aware of the originator and we are managing it internally,” the spokesperson added. “Additionally, we want to be clear that it is against our policy for originators to solicit business in this manner.”
When asked if loanDepot was putting any measures into place to address the issue rising again, the spokesperson provided the following statement:
“LoanDepot has been committed to the Wholesale business for some time now, and we have invested significantly in the channel. We provide notice of payoff demands, trigger leads and MLS listings to Brokers as well as segregate our Wholesale portfolio from any retention programs. We have future plans to invest further in this channel, to include technology, products and, ultimately, lead delivery.
“If you choose to do business with loanDepot Wholesale, you will get the same great service you always have, along with the commitments outlined. We can and do address issues quickly when they arise, even if it’s a rarity, as any broker who has done or is currently doing business with us is aware.”
Inman contacted Keller Williams Pacific Estates, which has an office located on the same street as the loanDepot office in Long Beach, but they could not immediately identify the Realtor involved.