@Chadstroma - need your insight please. I read a rumor on Stocktwits (great source - I know) that RKT is closing about 200 mortgage loans per day while UWMC is closing about 1500-2000 per day. Any insight as to if you think those numbers are real? I’ve been reading your posts for years about how you feel UWMC is far superior. I’m just curious - these rumored numbers are striking - if true, how long is Rocket for the game. May go in HUGE on UWMC.
I can't say how much bottle rocket and UWM are closing per day but yes has taken the title of largest mortgage lender in the country. A big part of this is how these companies are built and how they do business.
Bottle rocket, as I say often, is a GREAT marketing company that happens to do mortgage loans poorly. That really says it all about the company. They spend heavily in marketing and are good at it and they have made it a point over the years to develop relationships where they basically give RESPA the middle finger (RESPA is the law that forbids lenders from giving money to others for referrals or otherwise not being involved in the actual lending process) with companies like American Express and Allstate that they use their client bases to get loans and then the partner company gets more revenue. Their wholesale division has taken hits with UWM forcing those with broker agreements to choose either bottle rocket or UWM- the large majority had the easy decision to UWM. A lot of what they do was wonderful business in a refi boom market. Many consumers have no clue but they know rates are lower. They get something in their AMEX statement that is going to give them $500 credit on their AMEX plus they will get a lower rate on their mortgage and think... man, why would I pass that up? Well, the answer is that that $500 is nothing compared to the lost opportunity of actually using a decent lender. BUT.... back to the point... your Allstate rep calls you and says, "Hey, you have had the same mortgage forever, I am going to save you more money" and "ok" or someone who doesn't know what to do sees the millionth commercial on tv and finally picks up the phone. That is the great marketing company part. Then there is the doing mortgages poorly part which is that they have a poor reputation among pretty much any professional involved in RE. Most realtors will urge a seller to accept an offer from another buyer with a pre-approval pretty much anywhere else. They don't really market this anymore but it is still the same idea.... most consumers want a professional to handle their loans and not "push button, get mortgage". You typical consumer may be more comfortable getting an easy/cheaper route on a refinance but typically want competence and expertise as their primary drivers in a purchase. All of their marketing is based on easier and cheaper (though they are no where near cheaper). In a purchase market like this, they just are not set up to do well. People are not going to a pre-approval to buy a home from their AMEX statement or their insurance guy or pushing a button. They want a person with experience and knowledge that can make sure this all goes smoothly.
UWM has built it's business around brokers. They went all in on brokers when brokers were nearly extinct. They have been a powerful force for growing the broker channel to prominence again. They are laser focused on being broker friendly and invested heavily in tech to make them more appealing than any other lender. Over the last refi boom, you wouldn't really have MLO's changing from lender to lender as much because there was so many loans that to walk away from your loan pipeline would be costly and there was no big driver to do it. Now, that is gone. The retail channel (banks and non-bank lenders like bottle rocket, Fairway, Guaranteed Rate, etc) is being hammered as there are no easy loans. Their organizational and overheard structures has caused margin compression so when they were, in the past, somewhat near brokers on cost now they are no where near brokers on cost and losing loans left and right. There is a huge migration of MLO's from retail to the broker channel which in turn is fueling UWM to continue to grow as they are the 'preferred' lender of most brokers.
I will say that bottle rocket continues to be sneaky. They are all about data and they will use that data to continue to sell overpriced crappy mortgages. A great example of that is their "Rocket Money" app which basically is a "hey, we will help you save money just give us access to ALL your personal financial data.... trust us, we got your back". With what I have seen countless times in terms of how they lie, cheat and steal with consumers and brokers as a matter of normal SOP... I would sooner file bankruptcy than sign up to a free app that will save me money.
I am still long on UWM. I do think that Wall St is behind on this because they think of UWM as just another mortgage lender when they are not. It is more akin to a tech company focused on mortgages using the growing broker channel as it's salesforce.
I remember two friends arguing over AAPL or MSFT in the early 90s. MSFT was winning, but the tables turned, and both won at this point, if they just held on. But MSFT in the 90's went bonkers. Then stagnate for 10 years. Literally, at one point, it was the same price one decade later. But now in this last 13 years or so, it's a whole other story, including a little dividend to go along with it.
The argument was how marketing almost always wins. And at the time (early 90's), Microsoft and Gates seemed to be the "Rocket" (Mortgage), if you will. While the Apple argument guy was like no, Apple will win out because of innovation and such (UWM).
Now it seems, the roles are reversed, ironically enough, in that Apple is all about the marketing -- and there is no question they are not just good at it, but great -- and less about innovation (although I wouldn't know for sure). Meanwhile, Microsoft, the big bad monster monopoly at one time, has quietly chugged along with a lower profile. And with that, the results speak for themselves. MSFT is no longer some laughing stock (sorry, had to). Anyway, that dinosaur (for tech) has gone from a T-Rex to a Brontosaurus. And the grazing is good.
Now, not knowing a thing about the mortgage biz, but having followed Chad's drum beat for UWM on here, along with his disdain for Rocket, likens me back to the two tech giants above, in some way. And don't get me wrong, I'm in no way against Chad, and VERY much appreciate the info and his side of things, but it will be very interesting to see how this plays out, is all.
Wall Street isn't dumb. That price, corresponding to the overwhelming yield are there for a reason. There's no way it's that easy. Rocket, and others I assume, must have something (marketing for one, obviously) that makes many astute analysts and firms, not convinced on UWM. Or maybe it's just that they are more convinced on the strategy of Rocket and others. I really have no idea and would follow the advice of Chad, if I had to pick. That being said, it does seem to derive from a, and I don't want to say biased, but certain side of the industry. Unless I'm mistaken, that's not the entire pie, if you will. Anyway, that price and yield are too good to be true, imo, and something has to give. What exactly, I wish I knew. I may start nibbling, actually.
As for the marketing side of things (getting back to Rocket's strengths), I am a strong believer in it. People are idiots, for the most part. If the marketing is that good -- so much so that the "innovation or technology" of a competitor is compromised -- then I will side with the marketing (and the not-so-smart humans that follow it) winning out. It doesn't always matter who has, or what the best product is...all that matters is who and how many will buy it.
So as much as Rocket sucks, from what I've learned here (when you get down to the nuts and the bolts of it), they might be doing something right (marketing), to be able to suck all these apes into the campfire in their cave. And that just might be enough to stave off competitors, and more. We'll see.
FTR, I wouldn't put a penny on them, after reading this ongoing discussion. And I would love more than anything to go all-in on UWM. But Wall Street isn't this clueless. People like to think they are, and sure, occasionally you can find some story of how "easy" it was. But it isn't.
That yield and price are not going unnoticed in the least. That's actually the part that gives me pause. There's way more here and I would love to know what it is.