United Wholesale Mortgage is suing Atlantic Trust Mortgage Corporation for submitting loans to Rocket Mortgage or Fairway Independent Mortgage, an alleged breach of its “All In” ultimatum.
Lawyers for UWM claim that Atlantic Trust submitted at least 71 mortgages to rivals Rocket or Fairway, causing about $355,000 in damages. If the company wanted to work with other lenders, they argue, it needed to submit written notice that it was terminating its business with UWM.
This is the second legal action by UWM regarding their ultimatum since December. A similar case was filed against Madison Atrina LLC, which operates as District Lending.
The ultimatum has been controversial since it was introduced by UWM CEO Mat Ishbia in March 2021.
“If you work and send loans and send business to Fairway Independent or Rocket Mortgage … If you work with them, you can’t work with UWM anymore, effective immediately,” Ishbia said in a Facebook Live message at the time.
Industry analysts weren’t sure what to make of it, from both a legal and business standpoint.
“We’re not even sure this is legal. It certainly isn’t ethical. And it doesn’t represent the American way of free enterprise,” National Association of Mortgage Bankers President Kimber White said in a statement at the time.
Thuan Nguyen, CEO of Loan Factory, told The Mortgage Note in 2022 that he saw the move as anti-competitive and restrictive. “As a broker, I believe in choice. A broker is supposed to shop around, look for what’s best for the consumer. I don’t want people to coerce me, I try to have freedom as a broker,” he said.
Still, many brokers agreed to work exclusively with UWM.
Since then, UWM has been aggressively litigious when it comes to lenders working with its competitors. Last year, Mid Valley Funding paid $40,000 to settle a suit after it sent loans to Rocket and Fairway.
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