How Mat Ishbia parlayed passion for basketball, fortune from mortgages to buy key stake in Phoenix Suns, Mercury

Mat Ishbia’s slam-dunk rise in the mortgage-lending business could portend well in his role as the new controlling owner of the NBA's Phoenix Suns and WNBA's Phoenix Mercury.

He took a company founded by his father and built it, in little more than a dozen years, into the nation’s largest mortgage lender. He has shown a strong work ethic, attention to detail, concern for employees and a willingness to embrace innovation. He seems to enjoy, if not thrive on, competition.

“I’m in the office at four in the morning and I stay until 6:30 p.m. at night,” he told Forbes in an interview. “These aren’t small (companies) I’m competing with.”

Now the question is whether Ishbia can maintain his hot shooting touch outside of Michigan, where he has scored his major athletic and business successes, and transfer it to Arizona, where he has no home-court advantage.

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The father of three, who turns 43 next month, already has emerged as one of the wealthiest people in the country, estimated to be worth $4.6 billion by Forbes, largely thanks to his 71% stake in UWM Holdings Corp., the parent of United Wholesale Mortgage, which was founded by his father, Jeffrey. His brother Justin, who also is buying into the Suns and Phoenix Mercury, owns another 22% of the mortgage company.

Mat Ishbia brings a huge passion for basketball, a sport in which he was a high school star and reserve member of Michigan State University’s NCAA-championship squad in 2000. Former NBA standout Isiah Thomas, from Indiana University and the Detroit Pistons, sits on UWM’s board of directors which, otherwise, is dominated by Spartans.

The former Michigan State Spartan heavily influenced by that state  

Ishbia has demonstrated a huge allegiance to his home state and to his alma mater, where he walked on as a 5-foot, 10-inch guard before eventually securing a scholarship and ultimately graduating with a degree in business administration. He pledged $32 million earlier this year to Michigan State’s athletic department, plus $24 million later with another donor to subsidize the contract of Spartan football coach Mel Tucker, the Detroit Free Press reported.

Ishbia played under Tom Izzo, the winningest coach in Big 10 conference history. In the company's financial documents, Ishbia credits the lessons he learned playing basketball under Izzo to helping him run a highly successful business.

Five of the nine members of the United Wholesale Mortgage board of directors are Michigan State graduates. Nearly all of the 8,000 or so corporate employees work in Michigan. The company hosts an annual summer fair, for staff and family members, at its headquarters in Pontiac. Ishbia tweeted that 20,000 people, including family members, attended this year’s event. He wore a blue T-shirt that day with his "Never relax" motto on the front.

A company holiday party in 2019, as described by Forbes, included 10 new Cadillacs given out to lucky employees, along with 100 all-inclusive vacations, free groceries for a year and other prizes. The musical act the Chainsmokers provided entertainment.

Ishbia has vowed to 'never have a layoff because we are ... focused on what's best for our people'

Despite a sharp downturn this year in the issuance of new mortgage loans, under the pressure of higher interest rates, United Wholesale Mortgage has refrained from mass layoffs, even though profits have sunk.

"We will never have a layoff because we are a family company focused on what's best for our people," Ishbia tweeted.

It's a bold statement considering that mortgage loan issuance is projected to drop in half this year from 2021's total and remain at depressed levels for at least another couple of years, according to forecasts from the Mortgage Bankers Association.

Ishbia, the company’s chairman, president and CEO, showed some competitive swagger in UWM’s latest quarterly financial report by boasting that the firm had eclipsed Detroit-based Rocket Companies as the nation’s largest mortgage lender.

Rocket, formerly Quicken Loans, was founded by fellow Michigan State alum Dan Gilbert, who remains the company’s majority owner. Adding a layer of intrigue and rivalry, Gilbert owns the NBA’s Cleveland Cavaliers. Forbes estimates his worth at about $17 billion.

News reports indicate the two Spartans are not on friendly terms. When Rocket announced 2,000 layoffs earlier this year, Ishbia tweeted that he found it "disgusting that they're thinking short-term and are focused solely on cutting a few million (dollars) per month in costs."

The Arizona Republic sought an interview with Ishbia for this article, but a United Wholesale Mortgage spokeswoman said the company couldn't offer that or any additional information at the present time.

Ishbia eschews 'megabanks' and 'gimmicky online apps'

United Wholesale Mortgage doesn’t deal directly with consumers who are seeking home loans. Rather, Ishbia built the company by selling loans through 30,000 independent mortgage brokers. He shuns “megabanks” and shows disdain for “gimmicky online apps" — another apparent dig at Rocket.

The broker channel is faster and easier for consumer borrowers, he contends, and offers lower interest rates and fees. For example, the company claims its loans close within 17 days on average compared with 29 for Rocket.

“There’s huge room for opportunity and growth going forward,” Ishbia said in a statement in November upon announcing that UMW had surpassed Rocket. “We’ll never relax.”

Stock analysts at Wedbush Securities expect more mortgage brokers to switch from the retail to the wholesale side. That could fuel further growth for the company "despite a weak overall mortgage market," they said in a recent report. The Wedbush analysts have a "neutral" rating on United Wholesale Mortgage stock but cited expenses that came in lower than expected as a positive for the company amid tough market conditions.

The company claims its proprietary technology gives it a competitive advantage, allowing it to close on loans faster and more efficiently. Roughly 1,000 employees work in information technology and related fields.

United Wholesale Mortgage got a break early in its young life by missing the subprime lending craze that ultimately sunk competitors and industry giants at the time such as Countrywide Financial. Mat Ishbia joined his father's still-modest company in 2003 and became president in 2009. Both Ishbias sit on the company's nine-director board, as does brother Justin. The company was founded in 1986.

United Wholesale Mortgage's stock price has tumbled

But for all of Ishbia’s success, fellow shareholders in United Wholesale Mortgage haven’t shared all that much in the prosperity, at least so far. The company’s shares began trading on the New York Stock Exchange in 2020 following a partial merger with Gores Holdings IV, a company headed by Alec Gores, the brother of Detroit Pistons owner Tom Gores.

Gores Holdings is an SPAC, or special purchase acquisition company. These entities raise money from public investors with the purpose of merging with or buying large stakes in various private businesses. SPACs offer a way for the acquired companies to go public without the time, hassle and expense of traditional IPOs, or initial public offerings. Phoenix electric-truck manufacturer Nikola Corp., among others, followed a similar route with another SPAC. So did Lucid Motors, a California-based company that's making luxury electric vehicles at a new factory in Casa Grande.

United Wholesale Mortgage, valued at $16 billion at the time of its stock market debut, has stumbled to $5.9 billion. The per-share price, which peaked above $13 in December 2020, today trades below $4. Profits, revenue, new-loan volumes, cash on hand and other measures have slipped over the past year as mortgage rates spiked amid the Federal Reserve’s efforts to clamp down on inflation.

United Wholesale Mortgage isn't exactly putting up airballs, but its profitability has deteriorated. Over the first nine months of 2022, for example, net income dropped to $42 million compared with $81 million over the same stretch last year, as revenue eased to $2.1 billion from $2.4 billion.

Rocket’s finances and those of other competitors also have slumped. The Mortgage Bankers Association projects mortgage originations will tumble to 2.2 million this year from 4.4 million in 2021.

Ishbia too has felt the pinch. United Wholesale Mortgage reported his total compensation at $7.8 million last year, up slightly from $7.2 million in 2020 but down sharply from $18 million in 2019, when he earned a $15 million bonus. The figures include salary, various incentives and perks such as, in his case, personal use of company aircraft.

Ishbia aspires to championships

Ishbia sets goals and has achieved some big ones. Nearly two years ago, for example, he publicly aspired to eclipse Rocket in the mortgage game and this fall hit nothing but net.

In a statement announcing the purchase of a majority interest in the Suns and Mercury, including all of majority partner Robert Sarver's stake, Mat Ishbia touted his company’s No. 1 ranking in mortgage lending. He expressed confidence in bringing the “same level of success” to the two Phoenix basketball franchises.

“Basketball is at the core of my life from my high school days as a player to the honor of playing for coach Izzo and winning a national title at Michigan State University,” he added.

Sarver, also a successful financier who founded Phoenix-based Western Alliance Bancorporation, had been under pressure to sell since a league-commissioned report raised allegations of racism and sexual harassment on his part.

In his own statement, Sarver praised Ishbia for his “philanthropic outlook and commitment to using sports as a way to elevate and connect people.” He also described Ishbia as an accomplished leader with the "right spirit, commitment and resources to pursue championships."

It has worked so far in mortgages. Can Ishbia now come off the bench and deliver with the Suns?

Reach the writer at russ.wiles@arizonarepublic.com.