Real Estate

Lawsuit Accuses United Wholesale Mortgage Of Antitrust Violations

A Florida mortgage broker alleges UWM is violating the law by refusing to do business with brokers who send loan applications to Rocket Mortgage or Fairway Independent Mortgage.

A Florida mortgage broker is suing the nation’s second-biggest mortgage lender, alleging that United Wholesale Mortgage (UWM) is violating federal antitrust law by refusing to do business with mortgage brokers who send loan applications to rivals Rocket Mortgage or Fairway Independent Mortgage.

The April 23 lawsuit, filed by a St. Augustine-based mortgage broker, The Okavage Group LLC, alleges that at least 3,000 mortgage brokers have suffered more than $5 million in damages, and seeks class action status to represent them.

Not in dispute is that during a March 4 Facebook Live event, UWM CEO Mat Ishbia told mortgage brokers that, “If you work with [Rocket and Fairway], you can’t work with UWM, effective immediately.” Ishbia has accused Rocket and Fairway of trying to undermine independent mortgage brokers by competing with them through their own retail channels.

UWM then allegedly asked mortgage brokers to sign an addendum to their existing agreements with UWM, stipulating that they would pay damages of at least $50,000 if they continued to send business to Rocket Mortgage or Fairway.

The lawsuit characterizes UWM’s move as an “ultimatum” that is “manifestly anticompetitive, because, regardless of whether any broker agreed … it limits the choice of lending options available to brokers, and ultimately the loan options available to consumers, in the relevant market.”

UWM had not filed a response to the complaint as of Wednesday. The company provided a statement to the Detroit News saying that although it does not comment on legal matters, only 600 of the 12,000 mortgage brokers it has worked with in the past “have declined to move forward as a partner.”

Interviewed for an Inman profile, Ishbia said he “was perfectly fine” with those 600 brokers leaving, saying they “were of nominal or inconsequential business for us.”

Brokerage owner Dan O’Kavage told the Detroit News that he filed the lawsuit because UWM’s actions are “bad for my clients” and “bad for the industry.”

In a recent Inman interview, Rocket Companies COO Bob Walters called the ultimatum “deeply offensive.”

“In my 25 some odd years in this business, I’ve never seen anything like it,” Walters said. “Imagine if Fannie Mae said if you sell to Freddie Mac you can’t work with Fannie Mae. I realize that those are two government sponsored enterprises, but it would be absurd. Whether or not it’s legal or not isn’t something that I can opine on, but it does set a really really bad precedent.”

According to an analysis by iEmergent of data submitted to federal regulators, Rocket Mortgage was the nation’s biggest mortgage lender in 2020, with $313.4 billion in loans originated, followed by UWM, with $182.8 billion. The iEmergent analysis ranks Fairway Independent Mortgage Corp. as the nation’s ninth-largest, with $65 billion in 2020 loan originations.

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