United Wholesale Mortgage (UWM)) Chairman & CEO Mat Ishbia was delighted to announce earlier this month that his company had claimed more than half (54%) of the wholesale lending channel during the fourth quarter of last year.
That revelation, however, is now the latest ammunition in a class action lawsuit originally filed in 2021 over UWM’s ultimatum to brokers to not work with Rocket Mortgage or Fairway Independent Mortgage if they wanted to continue to work with UWM.
In a motion filed Friday with U.S. District Court for the Middle District of Florida-Jacksonville Division, The Okavage Group has asked a judge to allow it to file a supplemental complaint to its original complaint, which was filed in April 2021.
The original complaint was filed on behalf of a large group of independent mortgage brokers from Florida, who claimed that UWM’s ultimatum violated a number of state and federal laws and regulations, including the Sherman Antitrust Act, The Florida Antitrust Act, Tortious Interference with Business Relationship, and Florida’s Deceptive and Unfair Trade Practices Act.
In the motion filed Friday, The Okavage Group states that since the filing of a second amended complaint, “Mat Ishbia and United Wholesale Mortgage … have made numerous statements which squarely support Okavage’s antitrust claims. Additionally, UWM’s most recent market share is dramatically higher than in the past, also strongly supporting these claims.”
The motion adds that, “These statements and disclosures were not made until the end of February and beginning of March of this year, and therefore could not possibly have been learned until after the filing” of the second amended complaint.
As the motion notes, the latest market share result and the reasons for it were disclosed with the release of UWM’s fourth-quarter and year-end 2022 earnings report and a related webcast, both of which occurred on March 1.
In the report and during the webcast, Ishbia said his company had achieved a 54% share of the wholesale channel in the fourth quarter, up from 41% in the third quarter, as well as an 11% share of the overall mortgage market.
The wholesale channel share is “an all-time market share record,” Ishbia gloated during a webcast with analysts about the company’s fourth-quarter and year-end earnings for 2022. He credited it in part to the company’s Game On pricing strategy announced in June 2022.
“I never expected market share to get there,” Ishbia said, adding that his target had been 40%. “Will it stay at 54%? I doubt it, but it will be higher than before” Game On.
The motion filed by Okavage states, however, cites disclosures made by UWM and Ishbia during February and March 2023, including “the statement that UWM’s greater share, and corresponding lesser share possessed by its strongest rival, Rocket Mortgage, is directly due to UWM’s ultimatum requiring mortgage brokers to cease using UWM’s main competitors …”
It also cites a statement by Ishbia that no broker “is willing to take [the] chance” of losing UWM’s services.
The motion also notes that a “number of firms, including at least two major lenders, have exited or drastically curtailed their activity in the relevant market.”
In the supplemental complaint, a copy of which is included with the motion, Okavage states that UWM’s ultimatum for brokers it works with to boycott Rocket Mortgage and Fairway “was highly successful. UWM announced ‘93% of the brokers presented with the addendum agreed to join the boycott.’”
It adds that “UWM later stated that more than 11,000 to 12,000 brokers participated in the initiative.”
The complaint continues, “UWM also stated that after the boycott was initiated, UWM received more than 17,000 more loan applications in April than it had in the month prior to the boycott. Mr. Ishbia predicted on [a] video that Rocket Mortgage and Fairway would lose 70%-90% of their business.”
The supplemental complaint seeks an order certifying the status of the class, an order awarding the plaintiffs treble damages and attorneys fees for each count, and an order declaring the addendum to brokers’ contracts that includes the restriction from working with Rocket or Fairway as unlawful and unenforceable.
It is not known when the presiding judge will rule on Okavage’s motion.
