Analysis: Disruption and Defamation in the Mortgage Industry

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by Sean Kennedy

 

A few weeks ago, Anthony Casa began sending lewd text and video messages to Austin Niemiec, an executive vice president at the world’s largest non-bank lender, Quicken Loans and third-parties including other bankers.

In one video, Casa said, in her college days, Niemiec’s future wife, Theresa, had performed oral sex on a man in college named Mat Ishbia and congratulated Austin for “marrying up.”

Casa followed that up with similar videos and texts until Niemiec’s wife filed a defamation lawsuit against him on July 6.

Jeffrey Morganroth, the attorney for the Niemiecs, said in an interview, Theresa filed the suit because “to stand up for her honor and principle.”

Casa has since apologized in an online video, attributed his behavior to “being from New Jersey.” The Niemiecs, who initially sent Casa a demand for an apology and retraction of his statements, are unsatisfied with Casa’s response.

According to Morganroth, Casa’s apologies were sarcastic in tone and “Mr. Casa followed up the next day with another unsolicited text message sent to Mr. Niemiec and others referencing Mrs. Niemiec and filled with ‘emojis’ symbolizing male and female genitalia recounting Mr. Casa’s prior lewd and vile statements directed at Mrs. Niemiec.”

Theresa Niemiec has disputed that she ever attended college with Ishbia, who attended Michigan State University where he played basketball – reaching three Final Fours in his time on the team in the early 2000s.

The Niemiecs’ attorney said in an interview, “[Theresa] was 11 years old when Mr. Ishbia attended college. Needless to say, she doesn’t know him as a friend or acquaintance or anything. She’s never had any contact, conversations, or communications with him at all – ever.”

But this episode is about much more than online sexual taunts, however. Casa’s videos and texts also open a window into a mortgage market transformed by disruptive technology, ultimately demonstrating how social media can turn competition into a blood sport.

On one side of this dispute are traditional mortgage brokers, who since the financial crisis of 2008 lost much of their market share to non-bank lenders such as Quicken Loans. The 35-year-old Casa is a lobbyist for such brokers, serving as chairman of the Association of Independent Mortgage Experts (AIME). The man who Casa claims had sex with the wife of the Quicken Loans executive is a longtime financial backer of Casa: Matt Ishbia, the 40-year old CEO of United Wholesale Mortgage (UWM), which relies on brokers to bring it business – and is thus a chief rival of Quicken Loans.

But beyond the broader industry issues lies a matter of pure personal and business animus. Casa’s online fusillade is only the latest example, if not the most salacious, of his crusade against Quicken Loans.

Fueling that campaign is AIME, the organization Casa set up to challenge some industry players. And even as Casa’s online escapades raise questions about him and his judgment, a four-month investigation of AIME reveals a litany of concerns about the organization itself.

Chief among them are what experts call questions about AIME’s finances and revenues, along with whether the group represents the small brokers it claims to serve – or well-heeled corporate interests.

The ongoing defamation lawsuit suggests the enormous stakes behind Casa’s fatuous strategy, and hints at his obsession with Quicken Loans. It alleges that “Casa and his affiliates’ key objective is to injure Quicken Loans’ business activities in wholesale lending because Casa and his comrades fear the competition from QLMS [Quicken Loans Mortgage Services] and anything that is detrimental to Quicken Loans’ wholesale lending business is viewed by Casa as beneficial to himself, Ishbia, UWM and AIME.”

Mr. Casa, who initially agreed to be interviewed, later refused to make himself available for comment. Mr. Ishbia did not respond to a request for an interview.

Disruption and its Discontents

Independent mortgage brokers are a lot like travel agents. They offer a concierge-type service and assemble a package, after reviewing options and perks, tailored to the customer’s needs. Like travel agents, they often have special relationships and incentives with service providers (banks rather than airlines) that pay them a commission or fee for their efforts.

Just a few years ago, a would-be homebuyer had to rely on banks and professionals along the home-purchasing chain to achieve part of the American dream – homeownership. But today any prospective buyer with a laptop or smart phone can compare options, research lenders, and even get pre-approved for a loan anytime, anywhere.

This disruption has flipped the home-buying advantage to consumers by driving down loan-related fees and expenses of home purchasing. It has forced banks to lower what they charge, and even brought competition to real estate agents who now may offer incentives, including reduced commissions for buyers’ and sellers’ business.

The democratization of knowledge combined with the 2008 financial crisis to ravage the independent mortgage broker industry. Traditional mortgage brokers, including those represented by Casa, have seen their market share fall by half in the last decade, to about 15%, At the same time, big banks such as  Wells Fargo and Chase Bank, have seen their share of the market fall to about 21% from more than  50% in 2011.

The winners have been so-called “non-bank” lenders –institutions that can lend but cannot accept deposits and their lending is secured by capital that itself is borrowed from another institution.

Those with the strongest online presence, such as Quicken Loans, SoFi, Better.com, and Loan Depot, now originate more than  50% of new mortgages

Hoping to champion smaller brokers amid this ferment, Casa  stepped into the ring. Anthony Casa, who is the son of Jimmy Casa, a successful middle-weight boxer who famously went the distance with Jake “Raging Bull” LaMotta at Madison Square Garden in 1941, started working in eight grade. Later, Casa launched his own independent mortgage brokerage in Cherry Hill, New Jersey called Garden State Home Loans.

Casa and Ishbia struck up a friendship after a 2015 meeting at the Michigan offices of Ishbia’s United Wholesale Mortgage, an arm of the firm “United Shore Financial” started by Ishbia’s father, Jeff in 1986. Casa and Ishbia agreed that they should go all-in on the broker-led model. The pair began to speak via phone frequently – plotting how to build something to support brokers and wholesale lenders, the third-parties that actually extend the loan to borrowers after brokers package and process the loan.

The next year Casa, while again visiting UWM’s headquarters on separate business, told his counterparts that he felt jilted by so-called retail mortgage lenders (i.e. Quicken Loans), who he perceived as “stealing” his clients, by offering them services directly without a broker as go-between.

Ishbia told Casa that UWM had a similar issue with a competitor, another non-bank lender, Caliber Home Loans. Ishbia offered to back Casa’s so-called “passion project” to take on lenders that bypassed brokers.

Casa’s initial organization had a pugilistically resonant acronym: BRAWL, for Brokers Rallying Against Whole-Tail Lending. It devised strategies for winning over customers doing their own research on the Internet. In March 2018 it issued “report cards” that rated lenders’ business practices. Not surprisingly, Quicken Loans and other non-traditional lenders were rated poorly while UWM ranked highly among the 30 lenders.

Building on BRAWL, a new Casa-Ishbia organization ramped up to more effectively raise funds and direct its pro-broker advocacy efforts. Thus Association of Independent Mortgage Experts (AIME) was born. Organized as a nonprofit trade association [501c6], AIME launched in February 2018 on behalf of members who would sponsor events, share information, and support a lobbying effort.

But there are nagging questions surround AIME’s true agenda and the revenue sources of the supposedly member-driven, broker advocacy group. The answer to how and why Casa is engaged in a campaign against Quicken is inextricably tied up with AIME’s history and workings.

AIME’s Chairman, Anthony Casa was undeniably the face of the organization – appearing in social media posts and at conferences. The group quickly racked up corporate sponsors and a growing broker membership. Unsurprisingly, Ishbia’s UWM led the pack and remains the top sponsor of all its events. But other nonbank lenders also joined the fracas, including Caliber Home Loans, Finance of America Mortgage, AFR Wholesale, and Flagstar Bank in May 2018, three months after AIME launched.

At one point, AIME counted at least 20 major nonbank lenders as “sponsors” and dozens of vendors and exhibitors who offered members (independent mortgage brokers) specialty services for free or at a discounted rate. The number of actual AIME members remains obscure. The group has claimed steadily rising membership – as high as 50,000 – but last fall Casa and AIME refused to provide numbers for dues-paying members. (Curiously, Casa’s recently said in July 2020 AIME had 40,000 members – 10,000 fewer than it had the year before.)

However, in AIME’s most recent financial disclosure filing from FY 2018, AIME reported just $25,774 in dues and more than $1.3 million, or 94% of its annual revenue, from corporate sponsorships (i.e. its nonbank lender “partners”).

Nonprofit tax law expert Rosemary Fei said this is unusual. “Trade associations’ typical revenue model is membership dues, although as noted, they can generate income from other activities, and depending on the activity, that income may be taxable, net of expenses to generate it,” she said.

Indeed, this may run afoul of IRS regulations, which state:

While such an organization may receive a substantial portion or even the primary part of its income from non-member sources, membership support, both in the form of dues and involvement in the organization’s activities, must be at a meaningful level.

The federal charitable tax filing also raises questions about how AIME spends its money and, separately, how Anthony Casa gets paid. Casa filed for bankruptcy in 2012 listing nearly $750,000 in debts including $180,000 to the IRS, according to court records.

AIME’s largest expense, by far, is for hosting conferences – with nearly half of its annual expenses being listed for that function. Next highest is “other salaries and wages” accounting for more than $300,000 in 2018. Casa, however, isn’t listed as a paid employee of AIME – despite officially logging in 30 hours a week for the association.

Although how Casa receives any income is unknown, another passage from defamation suit by Theresa Niemiec, the wife of a Quicken executive, against Casa sheds some light on the issue:

Casa, individually and through entities with which he is and has been affiliated, derives substantial revenue from [United Wholesale Mortgage] and other entities affiliated with and funded by Ishbia or his family. For example, in April 2019, Casa was employed by Premier Processing LLC…a mortgage processing firm based in Southfield, Michigan and affiliated with UWM and Ishbia and Ishbia’s father, the founder of UWM. Premier Processing’s out-of-state corporate filings confirm Casa’s affiliation with Premier Processing.

According to a February 2020 filing with the New York State Department of Financial Services, Casa is seeking to buy Premier Processing with some other partners. Among the partners is Alexsander Elezay, the Chief Strategy Officer at Ishbia’s company.

This raises questions about whether AIME may have violated another IRS regulation that 501(c)6 organizations, like AIME, “cannot benefit any private shareholder or individual.”

Broker Buddies

Casa and Ishbia claim AIME is representing the so-called “beleaguered broker” and is not just part of settling a business-related grudge. But past antics tell a different story.

For instance, in August 2018, mysterious flyers were distributed outside Quicken Loans’ Detroit headquarters and taped to employees’ windshields, deriding the company’s lending practices and corporate culture. The unsigned flyers, Quicken Loans insisted, were distributed at UWM’s orders by its employees, which Ishbia denied while defending the flyers’ content as “true and accurate.” AIME’s Casa similarly justified the flyers.

After initially agreeing to an interview for this article several weeks ago, Casa has ignored multiple attempts to reach him by phone, text, and email – even before the recent text allegations surfaced.

But in October 2019, Casa spoke candidly at a conference in Las Vegas about what drove AIME’s efforts: an abiding hatred of Quicken Loans. The hour-long speech revolved almost entirely around Quicken Loans’ threat to brokers, “Quicken has so many angles to put us out of the game…Quicken is the boogie man. Quicken is the Amazon of the mortgage industry.”

It begs the question: if Quicken loses, who wins? The answer seems to be the same businesses that fund Casa’s broker group, including Mat Ishbia’s United Wholesale Mortgage.

Notably, Casa’s contempt was directed exclusively at Quicken Loans executives and invoked Ishbia by name.

And faced with the lewd text message revelations, Ishbia’s company is standing by AIME – though chastising Casa. The rest of AIME’s sponsors weren’t so forgiving. Over half of his lender-sponsors have abandoned the group over Casa’s antics including Caliber Home Loans, Home Point Financial, and Flagstar Bank – some of the earliest and biggest non-bank lenders working with AIME.

AIME president Mark Summers said Casa’s behavior was inexcusable and not reflective of AIME’s values, without defending Casa.

In Casa’s fight with Quicken Loans, he looks like he just KO-ed himself. Less than a week after the suit was filed, Casa announced, “Effective immediately, I will be taking a leave of absence from AIME.”

But the lawyer for the recipient of Casa’s alleged taunts says the Niemiecs aren’t satisfied and suspect Casa will be back sooner rather than later. Morganroth said, “[Casa] is in a leadership position and no leader in any organization should be making such statements which are intolerable and outside the bounds of civilized society…he should permanently resign and get professional help.”

Morganroth claims Casa is back to posting on industry matters on social media.

So maybe, Casa is not down for the count, after all.

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Sean Kennedy is an author, researcher, and investigator in roles at prominent media institutions, think tanks, nonprofit advocacy organizations and in Congress. Previously, he worked as a producer for CNN, a research director at the American Enterprise Institute, and a researcher for former House Speaker Newt Gingrich. Kennedy’s work has been featured by CNN, Real Clear Investigations, Drudge Report, The Washington Post, The Wall Street Journal, The Chicago Tribune, The New York Daily News, Politico and The Baltimore Sun. He is a graduate of the University of California, Berkeley and received a master’s degree from the University of Cambridge.

 

 

 

 

 

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