– United Wholesale Mortgage (UWM) is involved in legal battles with broker partners who are selling loans to rivals Rocket Mortgage and Fairway Independent Mortgage Corp.
– UWM has filed a lawsuit against Atlantic Trust Mortgage Corporation, claiming that the broker shop breached their contract by submitting loans to Rocket and Fairway despite agreeing to UWM’s “All-In Initiative.”
– UWM is seeking damages of at least $335,000 from Atlantic Trust.
– Another lawsuit has been filed by UWM against District Lending, alleging that they also breached their contract by submitting loans to UWM rivals.
– UWM’s CEO asked brokers to sign an “All In” agreement in 2021, pledging to stop working with Rocket and Fairway.
– The All-In Initiative has been successful for UWM, with over 11,000 broker partners participating.
– UWM has previously sued Kevron Investments Inc. and America’s MoneyLine for breaching their contracts, and settled a lawsuit with Mid Valley Funding.
Three years into its controversial ultimatum, United Wholesale Mortgage (UWM) continues to engage in legal battles with its broker partners selling loans to rivals Rocket Mortgage and Fairway Independent Mortgage Corp.
UWM’s latest move was on Thursday when it filed a lawsuit in a U.S. district court in Michigan against Atlantic Trust Mortgage Corporation, a Florida-based broker shop with 18 loan officers, per the Nationwide Multistate Licensing System (NMLS).
The lawsuit states that Atlantic Trust signed a wholesale broker agreement with UWM in January 2018 but agreed to amend the contract to add the “All-In Initiative” in December 2022.
Through the All-In Initiative, or “ultimatum,” UWM had ended its business relationship with brokers who chose to continue originating loans to Rocket and Fairway. The decision was made because the company believes the retail lenders’ business model negatively impacts consumers, brokers, and the wholesale channel, it claims.
According to the lawsuit, despite agreeing with the All-In Initiative, “Atlantic Trust has submitted at least 71 mortgage loans to the select retail lenders” since December 2022.
Ultimately, the lawsuit states that Atlantic Trust brought damages to UWM by sending loans to its competitors, including “to reap the benefits of UWM’s investments and services” without complying with the agreement’s requirements.
The lender claims Atlantic Trust’s submission of the loans equates to at least $335,000 in liquidated damages.
A UWM spokesperson wrote to HousingWire, “Unfortunately, Atlantic Trust Mortgage is one of the companies who signed a contract and then knowingly breached it. Therefore, we will follow the agreed upon contract and win damages.”
“This company is one of very few companies we have found that has knowingly breached the contract, and we will continue to hold people accountable to the contracts they sign,” the spokesperson wrote in an emailed response.
A spokesperson for Atlantic Trust did not immediately reply to a request for comments.
Another lawsuit recently filed by UWM was against Madison Atrina LLC, doing business as District Lending. Based in Arizona and with seven loan officers, the broker shop in March 2019 signed UWM’s wholesale broker agreement and agreed to the All-In Initiative after two years, the lawsuit states.
However, District Lending has submitted at least 84 mortgage loans to UWM rivals, which brought at least $420,000 in liquidated damages, according to the lawsuit filed in Michigan on Dec. 13.
A spokesperson for District Lending did not immediately reply to a request for comment.
In March 2021, UWM’s CEO Mat Ishbia asked brokers to sign an “All In” agreement by pledging to stop working with Rocket or Fairway. He said the lenders were inhibiting mortgage brokers from growing their business. Those who decided to work with Rocket or Fairway could no longer send loans or applications to UWM.
The UWM spokesperson wrote that the initiative “has been a massive success,” as UWM has over “11,000 broker partners who are All-In with UWM, and we continue to grow the wholesale channel.”
However, the All-In Initiative also has been the focus of several lawsuits.
UWM sued Kevron Investments Inc. and America’s MoneyLine (AML) in February 2022 for breaching their contracts by continuing to selling loans to Rocket and Fairway. The cases are still in progress. In another case, UWM settled a lawsuit with broker shop Mid Valley Funding in June 2023.
Property Chomp’s Take:
In the world of mortgage lending,
Recently, UWM filed a lawsuit against Atlantic Trust Mortgage Corporation, a Florida-based broker shop, alleging that it breached its contract by continuing to send loans to Rocket and Fairway. UWM claims that Atlantic Trust’s actions have caused damages amounting to at least $335,000 in liquidated damages.
This lawsuit is just one of several legal battles that UWM has been involved in. Another recent lawsuit was filed against District Lending, a broker shop based in Arizona. UWM alleges that District Lending also breached its contract by sending loans to UWM’s rivals, resulting in damages of at least $420,000.
UWM’s legal battles stem from its “All-In Initiative,” which it introduced in 2021. Under this initiative, brokers were asked to pledge to stop working with Rocket and Fairway. Brokers who chose to work with these lenders would no longer be able to send loans or applications to UWM.
While UWM claims that the All-In Initiative has been a success, with over 11,000 broker partners on board, it has also faced several lawsuits from brokers who have chosen to continue working with Rocket and Fairway.
These legal battles highlight the complexities and challenges of the mortgage lending industry. They also shed light on the power dynamics between lenders and brokers. As the industry continues to evolve, it is likely that we will see more disputes and legal battles in the future.
In conclusion, the