By KIMBERLEY HAAS
Leaders at United Wholesale Mortgage are lashing out after a bombshell report that was followed up with a consumer class action lawsuit filed on behalf of borrowers.
Hunterbrook Media published the report on Tuesday, which claimed that $39 billion in mortgages were referred to UWM by independent brokers who sent more than 99% of their business to the lender.
These brokers were supposed to represent homebuyers and shop around for the best deal on their behalf. Instead, they became “loyalists” to UWM, according to the report.
Hunterbrook estimated that borrowers paid “between hundreds of millions and billions more in closing costs than people whose brokers found them typical loans.”
UWM CEO Mat Ishbia‘s “All In” ultimatum helped drive these results. Since declaring in March of 2021 that brokers who want to work with the company cannot do business with Rocket Mortgage or Fairway Independent Mortgage, the number of loan officers who sent 99% or more of their business to UWM more than doubled, according to the report.
“Litigators and mortgage experts say UWM’s conduct could constitute fraud and run afoul of laws passed after 2008 to protect borrowers,” according to the report’s introduction.
In addition to publishing the report, Hunterbrook submitted data analysis and research to the law firm Boies Schiller Flexner LLP and its nonprofit affiliate entered into an agreement with the firm to explore a class action lawsuit against UWM seeking restitution for borrowers. That lawsuit was filed on Tuesday.
UWM countered with a statement saying Hunterbrook is not a news organization.
The start-up, founded by investor Nathaniel Brooks Horwitz and writer Sam Koppelman, is comprised of two entities: a hedge fund and a website that publishes articles based on publicly available data. Hunterbrook Capital makes trades based on stories it uncovers through Hunterbrook Media.
Before the publication of the report, Hunterbrook disclosed placing a short position on UWM, headquartered in Pontiac, Michigan, and a long position on Rocket Mortgage, headquartered in Detroit.
“It is a hedge fund sensationalizing public information to manipulate the stock market to enrich themselves and their investors,” UWM’s statement said, according to The Arizona Republic. “As you would expect a hedge fund masquerading as journalism would knowingly mislead the public, the report itself is riddled with inaccuracies and incorrect information. A hedge fund scheme using journalists to short a stock is not only unethical, it may be fraudulent.”
On Thursday, when Ishbia was asked about the report, he went after Rocket Mortgage and its founder and chairman, Dan Gilbert.
“You know and I know that’s Rocket Mortgage and Dan Gilbert doing Rocket Mortgage and Dan Gilbert things and that’s just what it’s been funded by,” Ishbia said during a media scrum in Phoenix.
Ishbia is the owner of the NBA’s Phoenix Suns and a long-time rival of Gilbert, who also is the owner of the Cleveland Cavaliers.
Rocket Mortgage denied having any involvement with the report.
“Dan Gilbert and Rocket Mortgage have no investment, other financial interests, or relationship to Hunterbrook Media. The professional investigation speaks for itself and appears to be based on factual, public information uncovered by the journalists who conducted the investigation,” spokesperson Aaron Emerson said.
Koppelman posted his reaction to Ishbia’s comment on X, formerly known as Twitter, saying it is “a baseless conspiracy theory.”
“Neither Rocket nor Gilbert even agreed to provide us with comment. Ishbia, meanwhile, has yet to point to a single fact we got wrong in our reporting. Mat, up for an interview?” Koppelman wrote.
Koppelman, who is one of the authors of the report, spoke about it in-depth on an episode of the sports/news show “Pablo Torre Finds Out.” He said what they found showed that brokers working with UWM are taking advantage of the trust of borrowers, arguably at the company’s behest.
“I don’t know if they are going to face consequences for this. I don’t know what exactly is going to happen from here. And I’m sure UWM will mount all kinds of defenses. But what I can tell you is that the people I have spoken to who know these laws better than just about anyone else think something smells very, very, very bad here at UWM,” Koppelman said.
A leaked profanity-laden voicemail where Ishbia referred to Rocket Mortgage was highlighted at the beginning of the report and played on the show. LGBTQ+ groups have condemned Ishbia for the message, saying his use of an antigay slur perpetuates a hostile environment for members of their community.
The previous owner of the Phoenix Suns and Mercury was fined and suspended by the NBA in September of 2022 for workplace misconduct, including sexism and racial insensitivity, according to The Arizona Republic.
Total loan originations for UWM in 2023 were $108.3 billion, of which $93.9 billion was purchase volume.
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