With Class Action Lawsuit Looming, UWM CEO Reports Strong Second Quarter

By KIMBERLEY HAAS

The CEO of UWM Holdings Corporation says Q2 2024 was another strong quarter for United Wholesale Mortgage and the wholesale channel.

Mat Ishbia said in a statement that the wholesale channel market share is at a 15-year high and his company is in a prime position to capitalize and grow when interest rates drop.

“We collectively continue to dominate the current purchase market while investing and preparing for lower rates ahead. Our momentum is building, with margins and production both up year over year, and our focus remains on our best-in-class people, process, and technology,” Ishbia said.

“UWM has never been as prepared for the upcoming opportunity as we are now.”

Leaders at the company released the second quarter results on Tuesday morning.

Total loan origination volume was $33.6 billion, of which $27.2 billion was purchase volume. The company reported net income of $76.3 million.

Technology was highlighted, as company leaders featured TRAC+, which allows brokers to close a loan without working with a title company or a settlement agent; and ChatUWM, an AI-powered smart search designed to support independent mortgage brokers.

Company leaders also highlighted their continued investment in Mortgage Matchup, which is now the official mortgage partner of the NBA and WNBA, the first-ever mortgage partnership for both leagues.

When the partnership was announced, it was criticized by Hunterbrook Media and its publisher, Sam Koppelman.

A report released by the start-up on April 2 linked UWM to $39 billion in mortgages sent to the lender by brokers who allegedly worked as loyalists, sending more than 99% of their business to the company.

Hunterbrook agreed to help the law firm Boies Schiller Flexner LLP explore a class action racketeering lawsuit against UWM, which was filed the same day as the report was released.

“If you read the federal RICO fraud lawsuit centered around UWM and Mortgage Matchup, you’ll see how dangerous this partnership could be to American homebuyers,” Koppelman said in response to the news of the NBA and WNBA partnership.

When asked what he meant by saying the partnership is dangerous, Koppelman referred The Mortgage Note to the class action suit.

According to the complaint, UWM borrowers are on the hook for billions of dollars in excessive fees and costs because the lender used tactics to get brokers to abandon their duties to their clients and funnel more mortgages to the company. Rankings on Mortgage Matchup is one example of how that was accomplished.

Racketeering is alleged because lawyers for the plaintiffs say UWM orchestrated a fraudulent scheme using bribery and engaged in a pattern of conduct that involved misrepresenting material facts.

Using Mortgage Matchup and its predecessor website, findamortgagebroker.com, UWM “published false and misleading advertisements and information about the relationship between UWM and brokers, as well as about brokers’ purported duty to shop for the best prices on behalf of the Plaintiffs. These advertisements were intentionally deceptive,” according to the complaint.

In June, lawyers for UWM moved to dismiss the class action lawsuit.

In their motion, UWM’s lawyers questioned the motivations behind the lawsuit.

“The claims against Mr. Ishbia – a prominent figure who owns an NBA team – are particularly meritless, and only underscore that negative media attention was this suit’s primary goal,” they wrote.

Ishbia is the is the majority owner of the Phoenix Suns of the NBA and Phoenix Mercury of the WNBA.

UWM lawyers argued the plaintiffs’ RICO claims fail for lack of proximate causation, absence of cognizable enterprise, and failure to plead predicate acts of racketeering.

They said the plaintiffs’ claims are also barred by notice-and-cure provisions in their mortgage agreements, the economic loss doctrine, and the Real Estate Settlement Procedures Act.

In addition, “Plaintiffs’ claims for aiding and abetting a breach of fiduciary duty and civil conspiracy fail for many reasons, including because Plaintiffs failed to plead facts establishing a fiduciary relationship.”

UWM’s lawyers wrote that two federal courts have already upheld the company’s “All-In Initiative,” which prevents brokers from working with Rocket Mortgage or Fairway Independent Mortgage.

“UWM adopted the ‘All-In Initiative’ to protect the integrity of the wholesale channel – and the brokers and borrowers it serves – from lenders who compete against their own brokers,” they said.

Bringing up the relationship between the class action complaint and Hunterbrook Media, the lawyers said the lawsuit raises “a kitchen sink full of claims against UWM” as Hunterbrook Capital shorted the company and took a long position on Rocket’s stock.

Hunterbrook is comprised of two entities: a website that publishes reports based on publicly available data and a hedge fund. Hunterbrook Capital makes trades based on stories it uncovers through Hunterbrook Media.

According to court documents, an amended complaint from the plaintiffs in the class action lawsuit is due by Aug. 30.

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