United Wholesale Mortgage (UWM) is making good on its threat to take legal action against partnering broker shops that also send business to Rocket Mortgage and Fairway Independent Mortgage, a violation of the wholesaler’s controversial broker agreement.
UWM filed a lawsuit in Michigan federal court late Thursday that claims America’s MoneyLine, a high-volume mortgage brokerage based in Southern California, owes it $2.8 million for repeatedly violating the terms of the agreement. The broker agreement was modified just under a year ago to prevent broker shops from doing business with Rocket and Fairway, an initiative UWM dubbed “All-In.”
In March 2021, UWM CEO Mat Ishbia announced on Facebook Live that mortgage brokers who did business with Rocket Mortgage or Fairway Independent Mortgage could not also send loans to UWM as of March 15. Any broker who did would face fines upwards of $5,000 per loan or $50,000 a month, whichever violation sum was greater. Ishbia told HousingWire at the time that Rocket and Fairway were “undermining” the wholesale channel, and the wholesale lender’s decision was based on a need to protect mortgage brokers from bad actors.
Critics, meanwhile, argued it wasn’t high-minded in the least. It was no more than a brazen attempt to kneecap competitors, they said. (Rocket and Fairway, however, both said UWM’s strategy ended up generating an uptick in wholesale business for them.)
The lawsuit claims that since signing the “All-In” addendum, America’s MoneyLine has submitted at least 560 mortgage loans to Rocket and Fairway. It goes on to say that if America’s MoneyLine — which is licensed in 20 states and originated $1 billion over the last two years — wanted to do business with the two lenders, they could have done so, but only after terminating the agreement with UWM.
Shawn John Nevin, the CEO of Orange County-based AML, declined to comment. However, in a statement he provided HousingWire Friday afternoon he described UWM’s move as “anticompetitive, anti-American” and said it won’t survive judicial scrutiny.
“We will outline and prove in court how we were misled by ongoing assurances of nonenforcement of this non-American antitrust provision,” he wrote. “We have lost and will continue to lose millions of dollars because of these unfounded tactics, of which we will pursue. Moreover, the broker community will get a glimpse into UWM’s true goal of seeking to control independent brokers to such an extent that they ultimately become effective arms of UWM; something we simply cannot and will not agree to do. This is why we are brokers — to have the right of choice. As independent brokers we need to be able to shop for the best terms and best programs for our clients, the American people.”
Nevin also said that “many brokers” are using both Rocket and UWM “without incident” but his firm is being made an example of.
In an interview with HousingWire, Ishbia, whose firm controls about one-third of the wholesale market, said that they discovered that a “handful” of brokers who signed the addendum were also sending loans to Rocket and/or Fairway.
“What we found was a couple had like two loans or four loans,” he said. “This company had hundreds of loans. And so this was the only one that was substantial enough…it was a large company that signed a contract, agreed to the terms of a contract and disregarded it.”
Nearly a year after the ultimatum was issued, Ishbia says it was an unqualified success. More than 11,500 brokers signed the agreement, and some top brokers who initially didn’t sign have since done so, he said.
Still, many brokers have chafed at the ultimatum. Even some who signed the addendum complained that the ultimatum cut at the identity of a mortgage broker – being able to offer consumers the greatest range of mortgage options was central to their mission, they said.
In August, a Florida mortgage broker named Dan O’Kavage filed a class-action-seeking lawsuit that targets the ultimatum.
The lawsuit argues that the “All-In” initiative undermined brokers’ ability to choose the best programs for their clients, creating harm and potentially higher costs to borrowers. It claimed that UWM “willfully violated numerous federal and Florida laws and regulations,” including the Sherman Antitrust Act, the Florida Antitrust Act, the Tortious Interference with Business Relationships and Florida’s Deceptive and Unfair Trade Practices Act. O’Kavage’s suit also alleges that brokers were forced into an unenforceable contract.
In his statement, Nevin said America’s MoneyLine won’t be taking on the biggest player in the channel alone.
“We have spoken to other customers and brokers throughout the country who intend to stand up with us and fight this tyranny together,” he said.
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