UWM Moves To Dismiss Class Action Racketeering Lawsuit

By KIMBERLEY HAAS

Lawyers for United Wholesale Mortgage have moved to dismiss a class action lawsuit alleging violations of the RICO Act.

The lawsuit, filed on April 2 by Boies Schiller Flexner LLP, claims that UWM participated in a pattern of racketeering activity by conspiring with brokers to withhold information from homebuyers while misrepresenting material facts to get these consumers to use the mortgage giant while financing their properties.

It was submitted on the same day as a report released by Hunterbrook Media linked UWM to $39 billion in mortgages sent to the lender by brokers who worked as loyalists, meaning they sent more than 99% of their business to the company.

The motion to dismiss, filed on June 21, says the plaintiffs’ RICO claims fail for lack of proximate causation, absence of cognizable enterprise, and failure to plead predicate acts of racketeering.

It says 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.

Hunterbrook Media has disclosed they entered into an agreement to help explore a class action lawsuit against UWM seeking restitution for homebuyers.

“If you think you are paying too much on your mortgage, visit WasIRippedOff.com to learn if you might have used an independent broker who doesn’t shop,” an editorial position posted with the report says.

In their motion to dismiss, UWM’s lawyers questioned the motivations behind the lawsuit. Mat Ishbia is the CEO of the company.

“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.

Hunterbrook Media and its publisher sounded the alarm last month after a promotional partnership between UWM’s consumer-facing brand, Mortgage Matchup, and the National Basketball Association was announced.

Publisher Sam Koppelman, who contributed to the April 2 report, said on X that Ishbia will be paying “for the NBA to advertise UWM’s allegedly fraudulent website.”

The Mortgage Note reached out to Koppelman at the time.

“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.

A copy of that lawsuit can be found here.

Read More Articles:

RICO Expert Talks About UWM Class Action Lawsuit

Foul Called After UWM Announces Partnership With NBA, WNBA

Opinion: Latest UWM Allegations Show Mat Ishbia Puts The ‘I’ In ‘Team’

Sign up for our free newsletter.