After facing one of the most devastating real estate downturns in history just a little over a decade ago, Arizona has now become one of the fastest-growing real estate markets in the country.
This is the result of two factors. First, the state is once again open for business after a colossal economic downturn and there is strong demand from those moving to the Grand Canyon State from California, Washington, Oregon and other high-tax states.
Second, there is a lack of supply, as the crash in the market in 2008 all but destroyed property values, led to a glut in the market and brought new homebuilding activity to a halt.
But over the past few years, home values have not only recovered in Arizona but skyrocketed due to record-low housing inventory. Another positive trend driving up housing prices is unprecedented demand from first-time buyers – largely from the expanding and historically underserved Latino and minority communities in the state.
But just as Arizona homebuyers finally recover from the consequences of the questionable practices by the now-defunct mortgage lenders of a decade ago that led to the housing crash, one player in the industry is looking to reinstitute anti-consumer policies.
United Wholesale Mortgage, one of the largest wholesale mortgage lenders in the U.S. with a presence in many states across the country, including Arizona, recently issued an unprecedented ultimatum to mortgage brokers in an attempt to win back market share and undermine its competitors.
In a Facebook Live announcement in early March, the company’s CEO, Mat Ishbia, told independent mortgage brokers that they must choose between doing business with UWM or two of the other largest mortgage lenders in the country and competitors to the company, Rocket Mortgage and Fairway Independent. Draconian financial penalties were instituted for brokers who violated this new and questionable policy.
Competition is the foundation of our free-market economy. It keeps prices down and allows choice by the consumer, in this case homebuyers and the brokers they work with who offer a wide array of lending instruments that fit the homebuyer’s needs.
Unsurprisingly, the mortgage broker industry is bridling at these unfair ultimatums on the part of UWM. These professionals are noted for streamlining the mortgage process and working to identify the lowest rates for homebuyers and homeowners. They rely on the ability to freely shop rates from banks across the industry and will be irreparably harmed if they cannot do so.
If this ultimatum by UWM stands and is not challenged, homebuyers and brokers will ultimately pay the price with fewer options and higher prices. It will also call into question the whole point of the independent mortgage broker industry, as it would impede upon a broker’s ability to stay neutral and provide the maximum number of choices and sources of mortgage finance.
Such a move begs regulators to step in to protect consumer choice from these types of anti-competitive policies by one company trying to corner the market.
The largest part of the average American household budget, about 37 percent of their take-home pay, goes toward housing costs.
Arizona currently is experiencing record-low inventory and record-high home prices, and artificially inflating mortgage rates by limiting competition will further impact consumer spending power in a state with citizens that have been hit hard with job losses and unemployment.
Now is not the time to limit choices for potential homeowners and brokers, and there never is a time to force unfair trade practices upon an industry that is recovering after a decade of struggle.
This anti-competitive action by UWM is not only bad policy; it also sets a dangerous precedent for American capitalism and the free-market economy as a whole.
Competition creates innovation and progress and enhances the experience of the consumer as the bedrock of American values and economic reality. This abundance of options is what makes America an exceptional nation, and it should not be infringed upon.
Freedom creates opportunity and supports the standard of living that we wish to continue for centuries to come for all Arizonans and Americans.
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