United Wholesale Mortgage and its CEO Mat Ishbia are under fire with accusations that the company’s independent brokers aren’t independent after all.
A report from Hunterbrook Media makes the claim that at least $39 billion in mortgages were referred to UWM by brokers who refer more than 99% of their business to UWM, throwing these brokers’ relationships with the lender into question.
The claims call UWM’s basic setup into question: the idea that it works with independent brokers who shop around for the best deal for homebuyers. Instead, UWM turns its brokers into “loyalists” who choose UWM regardless of price.
Hunterbrook estimates that borrowers paid “between hundreds of millions and billions more in closing costs than people whose brokers found them typical loans.”
Since 2021’s “All In” ultimatum, the share of brokers sending 99% of their business to UWM has nearly doubled.
“All In” has divided the industry and resulted in several lawsuits brought by UWM against brokerages it says broke the agreement by working with Rocket Mortgage or Fairway Independent Mortgage.
The report further alleges that UWM could be in violation of regulations designed to protect homeowners in the wake of the 2008 financial crisis. Specifically, the Truth In Lending Act prevents lenders and brokers from encouraging borrowers to take more expensive loans if they qualify for cheaper options. Other laws at the federal and state level create even more protections.
“Brokers that claim to help consumers shop for the best deal but deliver virtually all their business to one wholesale lender in exchange for a kickback would appear to be deceiving their customers,” Deepak Gupta, a former senior counsel for enforcement strategy at the CFPB and a lecturer at Harvard Law School, told Hunterbrook.
“It’s easy to envision a judge or jury calling that fraud.”
On Tuesday, a proposed consumer class action lawsuit was filed against UWM on behalf of borrowers.
The report also leans into Mat Ishbia’s ownership of the Phoenix Suns and long-time rivalry with another NBA owner, Dan Gilbert of Rocket Mortgage. Hunterbrook published an expletive-packed voicemail left by Ishbia for a “close counter-party” after UWM surpassed Rocket Mortage as the U.S.’s number one lender last year.
The message, allegedly first leaked in a Facebook group of independent brokers, aggressively celebrates UWM “sticking it” to Rocket.
Ishbia has long sparred with Rocket and Gilbert in particular. Gilbert, who owns the Cleveland Cavaliers, was the only NBA owner who did not vote for approval of the Suns’ sale to Ishbia in December 2022.
This is the first investigation from Hunterbrook Capital, a hedge fund/newsroom crossover that makes trades based on stories it uncovers. Before publication, the company disclosed placing a short position on UWM and a long position on Rocket Mortgage.
A UWM spokesperson told The Financial Times that the story is inaccurate and called Hunterbrook “a hedge fund sensationalizing public information to manipulate the stock market to enrich themselves and their investors.”
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