← Pablo Torre Finds Out
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- [00:01]
A
Welcome to Pablo Torre finds out. I am Pablo Torre. And today we're gonna find out what this sound is.
- [00:07]
B
We took those suckers down them and we're gonna keep sticking it to them forever.
- [00:13]
C
Right after this ad, you're listening to Giraffe Kra Foreign.
- [00:31]
A
So, Cortez, we like to dilly dally at the top of the show. There is no dilly dallying today.
- [00:35]
D
What does dilly dallying even mean?
- [00:36]
A
Because by the end of this episode, you are going to wonder whether the billionaire owner of the Phoenix Suns could still own the Phoenix Suns.
- [00:44]
D
I was here in the studio walking around yesterday doing what I do, patrolling, and I heard you making the case passionately to somebody about why we shouldn't bleep the word sucker.
- [00:53]
A
That is absolutely coming in this episode. Okay, I gotta say, I'm kind of.
- [00:56]
D
Excited to see how you pull that off, but. Okay.
- [00:58]
A
But I want to introduce the visuals around Matt Ishbia here because I think people maybe only really registered him and his sort of vibe during the Western Conference semifinals last year. You remember what happened with Jokic as.
- [01:12]
E
Phoenix turns it over? Boy, Jokic, little bit of contact, boy, that potentially could get dangerous. Jokic, boy trying to rip it away from Matt Ispy. And then the little shove.
- [01:25]
A
Oh, wow, boy. Little bit of a. Maybe a flop from Ishpia there. And it's like, who's the dude who won't give the ball back? It's the dude who owns the Suns. Oh. But my curiosity. Yes, oh, my curiosity about Matt Ishbia started because I noticed the guy sitting directly to his right. He's grabbing Jokic's jersey from the back. He's trying to, like, defend his guy sitting right next to him. That is Isaiah Thomas.
- [01:52]
D
No, I distinctly recognized Isaiah Thomas because one time Stugots gave me an 8 by 10 at an event, made me walk up to Isaiah, get an autograph, and then hand it back to Stugat so he didn't have to do it.
- [02:02]
A
That sounds exactly right.
- [02:03]
D
He probably sold it on ebay.
- [02:04]
A
A hall of Famer, Isaiah Thomas. Yeah. And so when we talk about Matt Ishbia's intensity, his desire to win immediately in the NBA, it all starts with his love of Isaiah Thomas.
- [02:13]
F
So Isaiah is on the board here at my mortgage company. He's a great friend of mine. He's my idol. You know, growing up, I wore number 11 in high school. And always thinking of Isaiah as the. As the.
- [02:21]
G
I mean, you know, you've covered him and he's.
- [02:22]
F
He's the best I think the best point guard of all time.
- [02:25]
A
And multiple sources had told Chris Haynes over at Turner Sports that one of Ishbia's main first moves was going to be hiring Isaiah in, quote, a prominent role in the front office. And what happened after that gets really fascinating because what NBA sources have told me is that Chris Haynes's tweet sparked a backlash and a real worry because Matt Ishbia again was supposed to replace the worst owner since Donald Sterling. Right. Robert. Robert Sarver, a guy who had himself, quote, according to an NBA investigation, engaged in instances of inequitable conduct toward female employees, made many sex related comments in the workplace, made inappropriate comments about the physical appearance of female employees and other women, end quote.
- [03:06]
D
A bad guy.
- [03:06]
A
That was Sarver. Yep. And Isaiah, you may recall, was the dude running the Knicks for Jim Dolan for years.
- [03:12]
D
Trash organization.
- [03:13]
A
I mean, it was a dog team. Y. There was this scandal around how he treated Anuka Brown Sanders, who was an executive at Madison Square Garden, a woman who sued him, which led to press conferences like this.
- [03:25]
E
I'm extremely disappointed that the jury could not see the facts in this case. I will appeal this, and I remain confident in the man that I am and what I stand for and the family that I have.
- [03:43]
A
By the way, Isaiah Thomas never did appeal that jury's decision. The jury found that he had sexually harassed Anuka Brown Sanders. And what Isaiah Thomas and Madison Square Garden did eventually was reach an $11.5 million settlement with her, even though Isaiah Thomas continues to deny wrongdoing. The point being, last year, Isaiah Thomas, not unrelatedly, did not get hired by Matt Ishbia to officially run the post Sarver Suns. But what happened after Jokic and the Nuggets beat the Suns in that series we showed you before where Matt and Isaiah were watching courtside wrestling for the ball was interesting because Matt Ishbia again wasted zero time reacting fairly dramatically. He traded for Bradley Beal to add to Kevin Durant. He got rid of Chris Paul. And Chris Paul then told the New York Times that, quote, matt and Isiah wanted to go in a different direction, end quote. In fact, Chris Paul made a point of saying Matt and Isaiah three separate times in that same interview, which raised all sorts of eyebrows and questions around the league, because after buying the Phoenix Suns and the Phoenix Mercury for a record $4 billion, some of Matt Ishbia's first moves last year were to hire one of Isaiah's most trusted aides, this guy Gerald Madkins, as the Sun's assistant general manager, and also to hire Isaiah's son Joshua, as a member of the basketball operations department, the scouting staff, even though Joshua Thomas is a DJ with a LinkedIn profile that lists no basketball experience of any kind, I want to quote here a person intimately familiar with the Phoenix Suns organization who talked to us because they said, quote, isaiah traveled to all the playoff games, not with the team, but with Matt. He was in the tunnels, in the meal rooms. He had a prominent role in the draft room. He was a major voice amongst the staff and to the staff about how to do things, when, why to do things. The feeling was, and kind of still is, Matt's going to do whatever he wants to do with whatever people he wants to do it with. And he's not concerned about the optics of it. He'll go out and say the right things, but he's a very, very, very firm believer in doing things the way he wants to do it and doing things the United Wholesale Mortgage way. And the way he runs his company, it was just very kind of Wolf of Wall street esque. Just kind of come in and win, win, win. Go, go, go. Destroy. And everyone hold on.
- [06:12]
D
So you're telling me this episode is about mortgages?
- [06:15]
A
I should be clear. This episode is also about mortgages because Matt Ishbia is the king of mortgage lending in America. That's how he got his money. United Wholesale Mortgage is his company. He is the CEO. And so when it comes to the UWM way, which is what our source called it, right, I wanted to understand what this $11.5 billion plus company even is. I want to understand their culture, how Matt ishb and it turns out that if you look at Matt Ishpia through the prism of his relationship with Isaiah Thomas, which we'll get deeper into, a lot deeper into, you realize that there's a lot more going on here. And so I brought in an outside reporter for today's episode, a guy who has this huge story that he's breaking today, actually, this incredibly in depth investigation into Matt Ishbia, into uwm, because it changed everything about how I understand the many terms I've thrown at you already. Billionaire ownership.
- [07:11]
D
You said the word culture. You know, I love culture.
- [07:13]
A
Culture, heat, culture. And of course also the word sucker.
- [07:17]
D
You should bleep that. I don't like when you say that.
- [07:20]
A
I think people need to hear this.
- [07:35]
H
Foreign.
- [07:43]
A
I'm very excited that you're here. Thanks for having me, Sam Goppelman, my friend, because we've been talking in secret for, for a little bit now about a story that I consider to be massive. And it's.
- [07:56]
G
It's a story that shocks me every single day. You go deeper and deeper, and it gets weirder and weirder.
- [08:01]
A
Yes. Because it is shocking in terms of its repercussions in terms of the American economy, in terms of the NBA, all of that stuff. It's also just this perfect, weird little Venn diagram of, like, our shared personal interests.
- [08:11]
G
100%.
- [08:12]
A
Yeah.
- [08:13]
G
I don't want to reveal too much, but this is a story where, you know, the Chekhov's gun was planted when I was a wee lad. A child.
- [08:20]
A
Chekhov's point guard.
- [08:22]
G
Exactly.
- [08:26]
A
So you should know that my friend Sam Koppelman is both a lifelong Knicks fan and also the publisher of a startup called Hunterbrook Media. And it is important to explain Hunterbrook here for a second because their newsroom specializes in the deep div. Dissection of public data, the results of which are then shared with Hunter Brook Capital, an affiliated investment fund, which can then trade on and profit off the information Hunter Brook Media discovers, which can then be used to support more and more reporting. But what Sam and I mostly talk about as sports fans and native New Yorkers is the Knicks is basketball. And so my whole curiosity around Isaiah's relationship with the Suns, this big national NBA mystery involving a former head coach and president of the Knicks, it all led us to a conversation about a startling story that Hunter Brook happened to be reporting. A story that changed the way that I will always think about some of the most powerful people in sports, and also importantly, about Wednesday night's game between the Cavs and the Suns. So I asked Sam to come onto the show as a guest to explain his and his company's reporting, which you can read in full@www.hntrbrk.com. and I needed him to begin here by simply answering a very important question. How would you explain what the mortgage lending is?
- [09:53]
G
There's, like, two ways you can get mortgages. One is, like, you go to the bank. Bank where you've got your deposits, and you're like, hey, guys, like, what's the rate that you can give me on a mortgage? That's like, way one.
- [10:05]
A
That's what I did.
- [10:06]
G
You might have paid more, but that's okay. That's your bank. You trust them? I'm sure they were great.
- [10:11]
A
I hope so. Chase, if you're listening. Yeah.
- [10:13]
G
The other thing you can do, which sounds pretty appealing to folks, is like, mortgages are complicated. A lot of math, a lot of numbers. So you can say, actually, I'm going to hire what's called an independent mortgage broker. And the premise of an independent mortgage broker is that they are your advocate. There's actually a video I wanted you to hear that lays out the difference between a bank and an independent mortgage broker pretty well. It was actually a video that I found on the website of an independent mortgage broker.
- [10:44]
C
So why get a personal shopper for your mortgage? Because you want an advocate. And choices, lots of choices. Choices set up competition between lenders, and that's good for you. The salespeople at banks and big lenders can't show you the big picture, but a broker compares deals from hundreds of banks and lenders of all sizes across.
- [11:08]
A
The US So that is an ad from an independent mortgage broker who's located in North Carolina.
- [11:14]
G
That's right. She's the number one mortgage broker in North Carolina, according to her website.
- [11:18]
A
Yeah, I got that several years running in. In between the acoustic chords that she was playing for us.
- [11:24]
G
It's a banger. I've. I've probably watched that video a thousand times, but each time I get a greater appreciation for the music behind.
- [11:31]
A
Yeah, definitely. The earworm aspect of it has burrowed into my brain to the point where now I'm just thinking about, okay, she's there to get lots of choices for you. Hundreds, hundreds of choices. And to make the best one for your best interest.
- [11:44]
G
And look, in all seriousness, this is a really appealing proposition. It.
- [11:49]
A
Right.
- [11:50]
G
It's hard to figure out how to find the right mortgage for you. And so if someone's job.
- [11:55]
A
Yes.
- [11:56]
G
To go get you the best loan.
- [11:57]
A
So that you don't have to learn even what any of this is.
- [11:59]
G
Exactly. They're going to be your advocate.
- [12:01]
A
Right.
- [12:01]
G
So of course you would want to hire that person, especially Pablo, if they were really going to save you a whole bunch of money.
- [12:09]
A
So just to be very clear, to state the obvious, this is the biggest purchase that most Americans will ever make in their lives.
- [12:14]
G
Yes.
- [12:14]
A
And so Matt Ishbia, who is the king of this, of the king of mortgage lending. I want to be clear about this, too. His chief rival in this industry, the number two to his number one, happens to be who?
- [12:27]
G
It's Dan Gilbert, the king of Comic Sans.
- [12:32]
A
So Dan Gilbert, the owner of the Cleveland Cavaliers, describe where he is in this hierarchy of mortgage lenders in America.
- [12:39]
G
So it's a. It's an absolute feud. It's a blood match. You've got Ishbia and Gilbert going back and forth on who's the top mortgage originator in the country. And the thing that's tricky about these businesses is that they operate on these tiny, tiny margins. They will lend people money for a mortgage, and then they'll go sell that mortgage. There's a tiny little bit of money that they make as the margin.
- [13:03]
A
Right. Doesn't sound like a great business so far.
- [13:05]
G
Well, the way that you make money is if you do, like, a lot of mortgages. And so Gilbert and Ishbia are constantly competing for share of the mortgage market. They want you, when you're about to get a mortgage, to go to their company. Gilbert's company is called Rocket Mortgage. Ishba's company is called United Wholesale Mortgage. They also just kind of hate each other as dudes. I've noticed that, like, their Companies are based 30 miles apart. They're both in Michigan. They both own sports teams. They're both kind of, you know, alpha male Y guys. Actually, when Ishbia was up for a vote to approve whether he could own the Phoenix Suns, he won that vote 29 to 0.
- [13:47]
A
Right. There were three NBA teams, notably.
- [13:49]
G
Yeah, yeah. If you do the math, there's one missing, and that's Dan Gilbert of the Cavs. And he abstained. He decided not to vote to approve HBA as an owner. And HBA responded in kind with some choice words on the Bill Simmons podcast.
- [14:04]
F
He doesn't like me and I don't like him. Right. That's how it is. Business. His company used to be number one in mortgage. Uwm. My business is number one in mortgage. I don't like the way they do business in a lot of things. He probably doesn't like the way we do things. We're in the same town. We compete, we're winning. That's what it is right now. And the reality is, people ask me what I thought about that. Like, I knew without a question that that probably be how he handled it. And the best part is now you get to see who I see. Very simple. You now you see who I see and what I know about that, man.
- [14:36]
A
How is it that two rival NBA owners are doing the thing? Dominating the thing that I imagined, like, banks like my bank Chase would have.
- [14:45]
G
Dominated before the financial crisis, banks did dominate mortgage lending in the country, and then they, like, you know, messed up a little bit.
- [14:54]
A
Yeah. 2008. I vaguely recall a big short being a thing. Yeah.
- [14:58]
G
Yeah. They had to pay basically for the fact that a bunch of home buyers felt that they'd been misled.
- [15:05]
F
So today, my administration is proposing a sweeping overhaul of the financial regulatory system, a transformation On a scale not seen since the reforms that followed the Great Depression.
- [15:16]
G
And so there ended up being all these new regulations. Dodd Frank may ring a bell. And the Consumer Financial Protection Bureau, cfpb, this new agency that was supposed to basically defend home buyers and protect them.
- [15:30]
A
Yes. Everyday Americans.
- [15:31]
G
Everyday Americans. And so what happens is that amid this labyrinth of regulations, the banks are like this. And so they start to retreat from the mortgage industry. It's just way too risky. And so then you've got a group of folks who are a little bit less risk averse. The kind of people who might, you know, trade a bunch of draft picks.
- [15:54]
A
For Bradley Beal, kind of people who might send an email to LeBron James in comic sans font.
- [16:01]
G
These are the people who seize the day. And the biggest mortgage lenders in the country become rocket and uwm, these non banks which basically have these huge lines of credit from big banks which they use to go loan people money, they're basically a middleman now between banks and people who want to buy homes so that banks hands are clean and they don't have to worry about actually lending people money or being stuck in these regulations. And that's where Ishbia becomes the biggest lender in the country.
- [16:33]
A
But as for the question of how, as in how Matt Isbia actually became the biggest lender in America, how he defeated his nemesis Dan Gilbert to become the king of mortgage lending in America. This, this is where I need to get into what Sam and reporter Matt Termini and the whole team at Hunter Brook Media actually did in their investigation. Because they wound up combing through two enormous data sets of federal and county level mortgage records. And from there what they did was build a new data set, one that could link lenders and independent brokers to the actual prices they were charging American home buyers. At which point, Hunter Brook reports United Wholesale Mortgages entire strategy for dominating Dan Gilbert became very clear. What UWM was doing was targeting legions of independent mortgage brokers, like the independent broker whose commercial we played for you before. And they were working to convert these independent brokers into loyalist brokers. And loyalist brokers is the term that UWM actually uses when talking to investors. And what Hunter Brook found in their data analysis is that thousands upon thousands of these brokers, these loyalist independent brokers, they just kept sending American home buyers to UWM at these conspicuously staggering rates, even when UWM was not offering the best deal.
- [18:06]
G
There was actually a voicemail that leaked to this Facebook group of independent brokers that ISHBA left One of his sort of close counterparties in the mortgage business. Right around the time that UWM passed, Rocket passed Gilbert in total originations. And Ishba did not hold back in how he characterized his what is, what.
- [18:31]
A
Is not holding back sound.
- [18:32]
G
You've got to hear it for yourself.
- [18:34]
B
Hey, buddy, hope you're doing good. Just want to say I love you. We took those down them and we're gonna keep sticking it to them forever. Those guys, we're number one. We kick the out of them. Brokers are number one, UWM's number one, you're number one.
- [18:48]
F
We're all number one together.
- [18:49]
B
And them, I hate them with all my heart. We're keep kicking their ass every day. That's why I was here at 4am again today. I don't give a. We're gonna keep kicking ass and so love you, man. We talked about it, we went, if the rates go up, I'm going to win, you're going to win. Both are happening right now. Keep hiring, keep building, keep growing. Let's fucking go.
- [19:07]
A
That feels like the guy who, yeah, would trade immediately for Kevin Durant no matter what people were charging him.
- [19:12]
G
And here's the thing, the like, sobering reminder, because all this stuff can get very big and entertaining. Is that like what he's describing there? Like the victory that he's describing is that these brokers, who people trust with the most important purchases of their life, are just sending him business instead of shopping for the best deal. Yes, that's what he's celebrating. That's what he means when he says, we took those suckers down. I love you, man. He's like celebrating something that's catastrophic.
- [19:46]
A
And so this label of independent, right, which is at the heart of this whole story, to me, what's the truth behind it as you understand it?
- [19:54]
G
Well, look, these brokers who are supposed to be independent, and you saw that video earlier, it turns out that there are thousands of brokers around the country who funnel UWM 99% of business, even when it's not even close to the most affordable option. And by the way, that broker who made that video earlier.
- [20:21]
C
And a better mortgage can save you time, frustration, and most importantly, 20, 30, 50, or even $100 or more off your monthly payment.
- [20:30]
G
That video was actually originally posted by uwm and she was at the New York Stock Exchange with Ishbia when he rang the closing bell to honor the occasion.
- [20:42]
A
Chairman and CEO Matt Isbia is ringing.
- [20:45]
G
The closing bell of the New York Stock Exchange. She was right There. I mean, you said these people aren't subtle. They're not subtle.
- [20:56]
A
The North Carolina independent mortgage broker with that video that we saw, that video turns out to be made by uwm. And she, in all of her independence happens to be. Yeah. Right there ringing the bell with the. Yeah. Multi billionaire that we're talking about. So I want to be fair to Matt Ishbia whenever possible here, because UWM, his company is a over $10 billion enterprise. It's enormous. And so how hands on is Matt Ishbia when it comes to what he's charging Americans?
- [21:24]
G
Well, according to Matt Ishbia, who says he wakes up at 4am in the morning, like he's waking up early. He says that every morning after he wakes up, he personally figures out what UWM is going to charge home buyers.
- [21:43]
H
Like I've said for years, I, I set the margins daily. So it's, we make the decision what the margins are going to be. We control those. And, and we always will control the margins in a positive way. So we, you know, so it's not market driven. It's not, it's, it's UWM driven. And we're very involved with the details of it and we try to set great pricing out for the brokers and help the brokers be competitive. But, you know, so the market doesn't dictate that as much. I don't, people, you guys don't like to understand that or believe that. But that's just the reality is that every day I look at the pricing, I said it with our capital markets team, personally, I do it.
- [22:21]
A
And that clip of Ishva, by the way, is from an earnings call last November. It had just been sitting there, this clip, in plain sight, hiding in a corner of the mortgage broker industry this entire time. Kind of like the, you know, clip we played before and also kind of like that federally mandated mortgage data that Hunter Brook filled finally decided to merge and analyze, which revealed for the first time the true scale of these allegedly independent brokers who had been sending Matt Ishbia 99% of their business. In fact, there's even another policy that Ishbia had publicly instituted in 2021 in order to obliterate Dan Gilbert. And it's a policy that became known in the industry as the ultimatum. Because what Ishbia declared was that any broker who wanted to do any, any business with uwm, they all had to promise that they would not give any business, not one single loan to Rocket Mortgage or else.
- [23:16]
F
If you're Going to work with them, don't work with us. That's nothing crazy. There's 75 wholesale owners. I'm not taking away choice from anyone. It's actually been very positive. Out of my 12,000 brokers, less than 500 have said they're going to go with them.
- [23:28]
A
And so that's a pretty blunt force way to ensure loyalty. But EWM apparently also used more subtle strategies to incentivize and win over this legion of independent brokers.
- [23:43]
G
And the other thing is that it's not just this ultimatum. It's not just that Ishba essentially blocked these brokers from shopping with Rocket. He's been offering these various carrots to brokers who are loyal to him for years. There was actually a Super bowl ad in 2021, I believe, right. Where Ispia and UWM spent five and a half million dollars to air this thing.
- [24:07]
C
Because the only way to get a mortgage that's cheaper, faster and easier is to find a local mortgage broker first go to findamortgage broker.com so I'll point.
- [24:19]
A
Out beyond the fact that that a guy had a house for a head, I'm at the last. I also noticed that it said powered by uwm, which felt like a disclosure. Right. So they're at the very least saying it there in their super bowl ad.
- [24:32]
G
So they say that UWM owns the website. What they don't tell you is that when you search your zip code on the website, the broker who comes up is not necessarily going to just be the best broker. What it seems like based on our research, is that UWM will consistently elevate the brokers who bring the most business to uwm. Let me just have you guess. If you Google in North Carolina, if you type in the zip code of Chapel Hill and findamortgagebroker.com is your guess that she shows up low?
- [25:09]
A
I'm guessing if she's there at the stock exchange with Matt Ishbia, that she probably somewhere near.
- [25:15]
G
Yeah, she's right up. Yeah, she's right up there. She's right up there. And so you can imagine, just put yourself in the shoes of someone watching the Super Bowl. They're like watching the weekend do that weird dance. It's 2021.
- [25:26]
A
They feel like the weekend searching through a labyrinth.
- [25:30]
G
Exactly. They're just looking.
- [25:31]
A
They're looking American finance.
- [25:33]
G
Where can I find a home? And they're like, finally, findamortgagebroker.com they're going to help. And they go to the website and they type in their zip code and they go to her website. And on her website, they find a video, and it says she's going to shop for hundreds of options to find you the best deal. What an exciting moment for you. If only you knew that she would come back and give you to UWM regardless of the price.
- [25:57]
A
And what you're saying is that you're reporting at Hunter Brook, Your investigation has discovered that it's not just in North Carolina. This is something that it sounds vast.
- [26:07]
G
Thousands and thousands of loan officers, billions and billions of dollars worth of loans, all going to uwm, even when they're not the best option. These are people sending 99% to one lender. Again, independent people labeled as independent.
- [26:23]
A
Right.
- [26:23]
G
It does kind of boggle the mind.
- [26:24]
A
Yeah, it boggles the mind. It also demands a question, which is how the. Is any of this legal?
- [26:30]
G
I'm not going to make a claim on whether this is legal or illegal. I have written a couple books, one with a former Attorney general, one with the former Solicitor General. So I know a bunch of lawyers.
- [26:39]
A
Who's counting, though? Yeah.
- [26:40]
G
Not to flex or anything. I've spoken to many of these lawyers in the research of this piece, and at least one of them played a role in shaping the language that became the basis of the mortgage regulations after 2008, that scary language that made the banks run away.
- [27:00]
A
The law is meant to protect us.
- [27:02]
G
And what that individual said and what almost every single lawyer we spoke to to A T said, is that UWM's conduct is an attempt to skirt the rules that were put in place to stop banks and lenders from taking advantage of home buyers. And so, look, I don't know if they're going to face consequences for this. I don't know what exactly is going to happen from here. And I'm sure UWM will mount all kinds of defenses. But what I can tell you is that the people I've spoken to who know these laws better than just about anyone else, think something smells very, very, very bad here at uwm. The scale of this is absolutely vast. UWM loans over $100 billion a year to Americans, and many of these Americans are paying thousands of dollars more, controlling for interest rates, just on closing costs alone to uwm, than the folks who got the best deal, who are kind of similar to them. So the scale of this is. Is absolutely massive.
- [28:05]
A
That's at least a couple Bradley Beals.
- [28:08]
G
It's a couple of Bradley Beals, Kevin Durant.
- [28:12]
A
But this is the guy. I mean, this is Matt Ishbia, right? The guy replacing Robert Sarver, who was the worst owner since Donald Sterling. This is the guy hailed to be a. A palate cleanser, a moral palate cleanser. He ends up being the person running the company, doing the things, beating these suckers. We're number one.
- [28:33]
B
We fucking took those suckers down them and we're gonna keep fucking sticking it to them forever.
- [28:38]
G
I mean, if he's the palate cleanser, it's like. It's like giving someone a Listerine strip of, like, tuna salad. It's disgusting.
- [28:45]
A
Which is all to say, though, why he's doing this and why he is being even sloppy in the process of doing it as fast as he can, right? I guess it seems like that too, that there is a, there's a win now kind of approach, both with the Phoenix Suns as an organization as well as United Wholesale Mortgage as a lender.
- [29:04]
G
I definitely have been thinking about that parallel a lot, which is ironic for someone in the mortgage business who should really understand what happens when someone bites off more than they can chew.
- [29:34]
A
It is worth noting here that UWM has very quietly made some key changes in its own SEC filings and also its investor presentations, changing the words that they choose to use. For instance, in 2022, UWM had claimed that its brokers, quote, find the best deal for their borrowers. But in their 2023 investor presentation, UWM changed this. They say that its brokers, quote, find the best solution for their borrowers, end quote. So not the best deal, which implies a financial proposition, arguably, but the best solution, which is amorphous. And it is also taken both of those presentations offline entirely. And I bring this up because of the deal in question here, right? The larger deal for American home buyers. What Hunter Brooks data analysis indicates is that over the last four years, UWM has charged its home buyers in total an estimated $3 billion more than in closing costs compared to borrowers whose brokers found them the cheapest similar mortgage. So the context here is important as we are discussing all of these things you've uncovered. Because uwm, United Wholesale Mortgage is a publicly traded giant. It's worth almost $11 billion as we sit here today at this table. And so the question then for me is, how have they gotten away with this? Like the guardrails that are supposed to exist around a publicly traded, multi bazillion dollar company, what oversight is there supposed to be?
- [31:10]
G
So UWM is a public company, but it's really a lot more like a family business.
- [31:16]
F
Originally, my father, who's a lawyer, started the company inside business. I joined as the 12th person. Now we have 7,500 people. I bought the company 10, 15 years ago when we had a couple hundred people building it. And so, yeah, I don't call it self made. If you don't get self made, give credit to my dad. My dad's an amazing man. I love giving him credit. Anyone credit. I'm just grinding every day.
- [31:33]
G
So you look at the board. You got Matt Ishbia to be expected, the CEO, you've got his dad, Jeff, who founded the company.
- [31:39]
A
There he is.
- [31:40]
G
You've got his brother Justin. And then you've got a bunch of other board members who are supposed to hold the single entity that owns the company, the family, which still has 95% of the shares. The other board members are supposed to hold them in check. They're supposed to be advocates for the shareholders, the rest of the folks who own the company to make sure that the company isn't being used, for instance, as a piggy bank for the family. And the number one next board member listed on the UWM website after Matt, Jeff and Justin.
- [32:15]
A
Yep.
- [32:16]
G
The three widest names possible to run a company like this. The next person listed is Isaiah Thomas, because of course, he is Isaiah Thomas, the former Knicks general manager who didn't quite make the dream team. That Isaiah Thomas.
- [32:33]
A
Right. Last dance. Isaiah Thomas.
- [32:35]
E
I met the criteria to be selected.
- [32:40]
G
But I wasn't that guy. I met the criteria.
- [32:42]
A
Hall of Famer. I.
- [32:43]
G
That's the guy, yes.
- [32:45]
A
So the criteria here, though, for what it means to be on this board in this capacity is what? Because the title Isaiah has then just to formalize it here, because it's required, I believe, by the securities and Exchange Commission is what?
- [33:00]
G
Yeah, he was listed starting in 2021 as an independent board member of UWM, supposed to have no material business interests outside of the company with the family that runs the company. And by the way, across uwm, there's all sorts of people who should probably be holding the HBS in check who are actually in some way tied to them.
- [33:21]
A
So the shareholders of uwm, let alone the Americans who are relying on the honesty of a giant mortgage lender, those people on this board include who else besides Isaiah Thomas?
- [33:36]
G
It also includes a member of the Michigan State women's basketball team who played for the team at the same time as Ishbia. It's got a few other sort of mortgage industry professionals worth Noting that the chief legal officer of the company also a teammate of Ishbia's. Though Ishbia himself averaged like 0.6 points a game. He was a walk on, famously, yes. Point guard, the Michigan State national championship winning team and this guy averaged like 5 1/2 points a game. He got real minutes. So he does have some credentials. But the truth is that throughout UWM from top to bottom, you've basically got Ishbia allies, lackeys, supporters, and the independence.
- [34:18]
A
Of Isaiah Thomas in specific. Which I want to. I want to just drill down on here because it's how we started this story today. The independence of Isaiah Thomas is a legally defined concept.
- [34:31]
G
He was listed as the official independent board member of uwm. Only three total independent board members. One of them is Isaiah Thomas, who is supposed to be independent and holding the Ishba's accountable.
- [34:44]
A
He's being listed as independent in these SEC documents, independent from the Ishbia family. Even though Isaiah Thomas happened to help install the former assistant general manager of his New York Knicks as the assistant GM of these Phoenix Suns, and even though his son happens to now be a scout for the Phoenix Suns, and even though Isaiah Thomas himself sits in the owner's seats, and even though Isaiah Thomas himself is being reported, according to our journalism, as a leading voice in the ear of the owner of the team, Matt Ishbia, the man who he's supposed to be independent from but couldn't be hired by because he was involved in an infamous sexual misconduct scandal when he was running the New York Knicks, that Isaiah Thomas is independent, per those documents from Mat Ishbia.
- [35:34]
G
That is also my understanding.
- [35:40]
A
Also, if you're wondering, as I have been, if Isaiah Thomas has gotten paid for any of the stuff he does for any of Mat Ishbia's companies, it turns out that Isaiah has been getting a six figure salary from UWM for years for being a board member. And that is on top of the annual grants of stock that he gets in the company. That's all according to government filings that we saw and we here at Pablo Torre finds out requested formal comment about all of this from Isaiah Thomas and his representatives. We sent over a detailed list of questions and they did not respond. So just to be extra clear here, I am not suggesting that Isaiah was personally devising the mortgage strategies that Hunter Brook is describing in this episode. Not at all. Isaiah is not a mortgage expert. Matt Ishbia is. But what I am saying is that a UWM board member is supposed to be a Guardrail against malfeasance. And an independent board member is also supposed to be a person who is, quote, free of any material relationship with the company, oaths, management, end quote. All of that according to the sec. But around the time we were looking into this, how UWM's preferred guardrail in this way for years has been Isaiah Thomas, we got another intriguing update, actually.
- [37:01]
G
A few weeks ago, UWM quietly changed its security filings and announced that Ishbia was no longer going to label Thomas as an independent board member. He's now just a board member, still supposed to serve the best interest of the shareholders, not necessarily the executives. But he is now no longer labeled as independent.
- [37:25]
A
Okay, I'm going to circle this. I'm going to put a pin in it. We're going to return to the idea that Isaiah Thomas is no longer an independent board member despite being listed as such, while simultaneously, per our reporting, your Pablo Torre finds out being involved with the Sun's decision making for months and months and months. Now, we're going to put a pin in that because you mentioned something about what it is that Isaiah Thomas and these other board members are supposed to do in their capacity as representative of shareholders and normal Americans.
- [37:55]
G
One thing they're supposed to do is figure out what the HBS get paid, right? They're supposed to be the compensate part of the compensation committee that figures out what's like a fair amount of money to pay the family. And Bishps have been paid well, as you might have noticed from the fact that they bought the Phoenix Suns for a record $4 billion. The ISHBAs receive every year an annual dividend that's distributed quarterly of $600 million. For context, Facebook just announced a dividend.
- [38:29]
A
Sounds like a lot, Sam.
- [38:30]
G
Yeah, yeah, it's a big number. Facebook just announced a dividend company 135 times or so the size of UWM to give Mark Zuckerberg 700 million a year. The HBs are getting 600 million. They're also getting paid through what are called related party transactions by the sec, which is basically a fancy word for pay, using company money to pay the family privately. So company money, UWM company money, shareholder money, is being used to rent the Ishbia families private jet company money, UWM money, right, is being used to hire Ishbia's dad's law firm. And company money is being used to rent land owned by the family, to lease the family's land as their headquarters. Land that now has eight different intramural basketball courts.
- [39:26]
A
Of course it does.
- [39:27]
G
It's basically Matt Ishbia's paradise, funded by the company, which is funded by your mortgage.
- [39:36]
A
It is remarkable to me when you lay all of that out, not just the scale of it, but also the way that basketball is just interwoven through everything we're talking about here.
- [39:47]
G
This is something that ISHPIA does not shy away from in their sort of like, presentations to investors. They always say, Matt Ishbia runs UWM like a sports team. They've got these daily huddles, they've got team captains.
- [40:03]
A
The UWM way is basketball.
- [40:05]
G
What UWM doesn't tell shareholders is the sports team. They're running it like is the 2007 Knicks a win now mentality that is potentially hemorrhaging the company's future and a lot of people's mortgages.
- [40:25]
A
It does, though, explain to me, I suppose, how it is that Matt Ishbia got to afford the Phoenix Suns for that record $4 billion price. He's been getting nine figures in payouts regularly, thanks to people like Isaiah.
- [40:39]
G
So here's the thing that definitely helped. Think of the money he's gotten from UWM as a down payment on the Suns. We're talking mortgages, we're talking down payments. This is technical. One of the more technical episodes of Pablo Torre finds out. But what ISHPIA didn't reveal at the time, but Bloomberg later reported, was that he actually bought the Phoenix Suns with the help of a $4 billion loan, a line of credit from JP Morgan, which is collateralized by his stake in UWM, which means that your mortgages, which together ended up making up the value of uwm, those are being posted to JP Morgan for JP Morgan to finance Ishba's purchase of this team. And it also means that if the value of those shares declines, what that could mean is that he'd have to give JP Morgan an asset to pay.
- [41:42]
A
Back the loan, an asset worth approximately a couple billion here or there.
- [41:48]
G
It's possible that he could have to sell the team.
- [41:55]
A
In an attempt to just better understand all of this, we here at Pablo Torre finds out, did reach out to the NBA League office, but the league's chief spokesperson did not respond to a detailed list of questions. But I should also tell you that Matt Ishbia has previously claimed to the Wall Street Journal last November that despite taking out this enormous loan, this line of credit from JPMorgan Chase to buy the tea, he has drawn very little from it, and that he paid cash to Buy the suns. That's what he claims.
- [42:27]
G
I mean, look, you don't have to take my word for it. A lot of smarter people than I have analyzed this business. I think you should probably hear what Secretary Janet Yellen said about the stability of non bank lenders like UWM just the other week.
- [42:44]
I
Non bank mortgage companies lack access to the kind to deposits which banks have. Their short term, they're reliant on short term financing that may be a lot less stable than deposits. And in stressful times, their credit lines can be pulled. They don't have access to the kinds of liquidity backstops that banks have as well.
- [43:17]
G
What Secretary Yellen is saying is that an entity like that, like uwm, it's not actually backed by deposits. And so as one professor we spoke to when we were researching this, a Stanford professor, focused on mortgages, as he said to us, banks like this, these non bank actors, they're not too big to fail. And so it's possible that if UWM were to get in some kind of legal trouble, they would be in breach of their contracts, which say, we're in compliance with all the consumer protection laws, right? We're going to do things the right way. They may be in violation of those. And as a result, your Goldman Sachs could say, wait a second, I don't need to work with uwm. And if they lost access to those funders, UWM would likely just stop being a major mortgage lender, in which case its shares would of course fall. And this is all hypothetical, but if it were to happen, if there were to be some kind of accountability, it is possible ishbia could default on that loan to JP Morgan and lose the basketball team that he spent his whole life chasing after.
- [44:22]
A
The reason why all of this is especially chilling is because we're now circling back around to 2008, to the financial crisis and to the idea that mortgages were at the heart of why the American economy collapsed then. And they're coming back up into public light again. And that suggests what about, you know, the actual broader American economy.
- [44:44]
G
So the good news is that even if what we think is happening is happening, it would not lead to some kind of economic meltdown because of the regulations that in some ways have worked to insulate the people who give out mortgage loans like UWM from the banks that hold up the entire economy, where Goldman Sachs could just decide tomorrow that they're going to stop funding UWM's loans. But what it does show is that there's all these vulnerable Americans when they're about to go make the biggest purchase of their life, and a lot of people think twice before figuring out what to order at Starbucks, they trust an independent mortgage broker. And what this is showing is that once again, as was lampooned in the Big Short, it's showing that these mortgage brokers, at the behest, arguably of uwm, are taking advantage of that trust to rip people off.
- [45:59]
A
I do need to get back to what I just pinned before and circled, because the idea of Isaiah Thomas, independent board member for Matt Ishb as UWM no long is something that has sparked a hypothesis in my brain because I suspect, as you suspect, that one reason he did that is because, oh, Isaiah Thomas actually was never independent. He was de facto working with me, if not de jure, on my masthead of the Phoenix Suns, and therefore I need to clean that part up because it's a contradiction of vocabulary, not actually independent at all. That's the one hypothesis I think we're.
- [46:34]
G
Both that makes sense.
- [46:34]
A
That's a reason we're both sort of seeing. But the other hypothesis is that Matt Ishbia, who tends to do what he wants, is removing Isaiah Thomas's independent designation for another reason. Because Matt Ishbia is planning on potentially, amid this struggling season that his sons have had, firing some key members of his front office to install Isaiah Thomas formally finally on the masthead as a Phoenix Suns executive.
- [47:06]
G
Oh my God. I think Pablo Tor may have just found out.
- [47:10]
A
I mean, the guy who wanted to work with his childhood hero from the beginning, the way we started the story that he wants to hire Isaiah Thomas but couldn't because of all of these scandals being dredged up from the past. The thing that Matt Ishba may be doing here is not anticipating your reporting. He may be anticipating the move that he's been dying to make ever since he bought the Suds. And yeah, his desire to rule the NBA with his childhood hero hand in hand can finally be accomplished.
- [47:40]
G
It's like a buddy comedy, but it's a horror film.
- [47:54]
A
For more of the Hunter Brook team's reporting in detail, go to www.hntrbrk.com. there will be more updates to come, and in the meantime, we can all watch Dan Gilbert's Cleveland Cavaliers Visit Matt Ishbia's Phoenix Suns in Phoenix on Wednesday night in a game that is suddenly fraught with far larger meaning. But until then, this has been Pablo Torre Finds Out a Metal Arc Media production, and we'll talk to.