UWM slams investigative report, racketeering lawsuit

United
Wholesale
Mortgage
is
defending
itself
from
explosive
allegations
in
a
media
investigation
and
class
action
suit
that
the
lender
defrauded
borrowers
by
billions
of
dollars. 

The


first-ever
report
by
Hunterbrook,
a
venture
capital-backed
outlet,
claims
UWM
holds
independent
brokers
captive
and
overcharged
borrowers
by
hundreds
of
millions
of
dollars.
The
publication’s
editorial
board
suggests
the
wholesale
giant
is
at
risk
of
wide-ranging
consequences,
and
shared
its
findings
with
regulators
and
a
law
firm
that
filed
a
class
action
suit. 

The
lengthy
article
and
its
attached
research
points
to
over
8,000
independent
mortgage
brokers
who
sent
99%
or
more
of
their
loans
to
UWM,
volume
that
powered
the
company
to
the
top
of
the
industry.
The
lawsuit
accuses “corrupt
UWM
loyalist”
brokers
of
breaching
their
fiduciary
duty
to
home
buyers,
part
of
racketeering
charges
against
the
firm
in
a


new
Michigan
lawsuit. 

The
report
also
compares
UWM’s


$70
million
net
loss
last
year
against
a
$600
million
dividend
in
2022
to
CEO
Mat
Ishbia
and
his
relatives,
who
control
a
holding
firm
with
the
majority
stake
in
the
company. 

“UWM
has
systematically
and
intentionally
corrupted
the
wholesale
mortgage
channel
through
fraudulent
practices
to
line
its
own
pockets
and
those
of
its
senior
executives,
including
Mr.
Ishbia,
at
the
expense
of
everyday
Americans,”
said
John
Zach,
an
attorney
with
Boies
Schiller
Flexner
LLP.
Hunterbrook
said
it
shared
its
research
with
the
law
firm
ahead
of
publication. 

The
lender
allegedly
responded
to
Hunterbrook
queries
with
a
cease-and-desist.
UWM
in
a
statement
Wednesday
afternoon
called
the
lawsuit
a
sham,
and
slammed
Hunterbrook’s


affiliation
with
Hunterbrook
Capital.
The
lawsuit
has
no
mention
of
Hunterbrook’s
research
or
Hunterbrook
Capital. 

“Although
the
real
party
behind
it
is
a
hedge
fund
named
Hunterbrook,
the
lawyers
concealed
the
hedge
fund’s
involvement,”
a
statement
from
a
UWM
spokesperson
said. “Hunterbrook’s
business
model
is
to
sensationalize
public
information
to
manipulate
the
stock
market,
thereby
enriching
their
wealthy
funders
at
the
expense
of
regular
investors,
many
of
whom
are
hard-working
UWM
employees.” 

Hunterbrook
Capital
took
a
short
position
in
$UWMC,
a
long
position
in
$RKT,
and
purchased
derivatives
at
undisclosed
amounts.
The
entity
said
it


raised
$100
million
to
make
trades
based
on
its
affiliate’s
articles,
scoops
only
based
on
publicly
available
information.
Reporters
continued
to
update
the
story
Wednesday
afternoon,
sharing
instances
of
UWM
deleting
marketing
content
the
story
scrutinized.

Zach,
the
attorney
who
filed
the
suit,
responded
to
UWM’s
comments
Wednesday
afternoon
by
saying
the
company
didn’t
attempt
to
address
the
fraud
in
its
statement.

The
article
was
compiled
by
veteran
reporters
and
legal
and
financial
experts
over
a
thousand
hours,
including
reviews
of
Home
Mortgage
Disclosure
Act
data.
Hunterbrook
also
shared
a
website
where
consumers


can
see
if
they
were “ripped
off”
by
their
mortgage
broker.

The
probe
and
lawsuit
focus
heavily
on
UWM’s

“All-In”
mandate,
already
the
subject
of
multiple
lawsuits
both
from
and
against
the
lender.
The
so-called “ultimatum”
bars
brokers
from
working
with
Rocket
Mortgage
and


Fairway
Independent
Mortgage
Corp.,
and
prevents
brokers
from
shopping
rates
once
they’ve
locked-in
a
rate
with
UWM. 

Of
the
30,229
brokers
who
sent
at
least
one
loan
to
UWM
last
year,
12,936,
or
42%,
sent
more
than
75%
of
their
mortgages
to
the
company.
Another
8,665
sent
more
than
99%
of
their
loans
to
UWM,
the
report
claims.
The
proportion
of
brokers
going
all-in
has
increased
since
2020,
with
75%
or
more
submitters
accounting
for
48%
of
UWM’s
origination
volume,
Hunterbrook
found. 

Reviews
of
HMDA
data
allegedly
showed
borrowers
with
UWM
loans
paying
on
average
more
than
$865
over
the
median
cost
for
such
loans
with
other
lenders,
controlling
for
interest
rate
and
type.
Home
buyers
working
with
a
99%
or
more “steerer” 
broker
paid
over
a
thousand
dollars
more
per
with
UWM
than
the
median
cost
with
other
broker-generated
loans,
the
lawsuit
claims. 

The
consumer
overpays
in
the
aggregate
were
at
least
$400
million
between
2021
and
2023,
the
suit
claims. 

Hunterbrook
acknowledged
its
research
was
limited
by
the
absence
of
borrower
FICO
scores
in
HMDA
data
and
other
variations
such
as
lender
credit
reporting;
it
defended
its
reporting
in
a


breakdown
of
its
analysis.

The
report
and
lawsuit
also
take
aim
at
the
firm’s
sponsored
website,
known
as
MortgageMatchup.com.
It
characterizes
the
site
as
a
proxy
for
loyalty,
suggesting
UWM
doesn’t
disclose
its
backing
and
support
of
brokers
with
advertising,
gifts
and
other
benefits. 

The
lawsuit
seeks
claimants
who
paid
for
a
mortgage
with
UWM
from
March
5,
2021
to
the
present,
with
brokers
who
referred
75%
or
more
of
their
loans
to
UWM
among
at
least
five
separate
transactions
with
the
giant. 

Hunterbrook’s
article
also
attributes
a
profanity-laden
voicemail
slamming
competitor
Rocket
Mortgage
to
Mat
Ishbia,
allegedly
sent
to
Anthony
Casa,
former
head
of
the
Association
of
Independent
Mortgage
Experts.
Casa,
today
president
and
CEO
of
UMortgage,
left
AIME
in
2020
after


lewd
comments
referencing
Ishbia
and
a
Rocket
executive’s
spouse. 

A
federal
judge
recently
handed
a
victory
to
UWM
in
one
of
its “All-In”
lawsuits,
tossing
a


complaint
from
America’s
Moneyline
over
its
alleged
violation
of
the
ultimatum.
The
Pontiac,
Michigan-based
business
posted
a
net
loss
of
$62.5
million
in
the
fourth
quarter,
but
remained
in
line
with
Rocket
as
the
industry’s
top
originators.