The U.S. District Court for the Eastern District of Michigan granted in part and denied in part United Wholesale Mortgage’s (UWM) bid to dismiss a putative borrower class action, dismissing the majority of claims — including all federal RICO counts — while allowing a pair of Florida-based claims to move forward. The court also denied, without prejudice, UWM’s motion to strike the class allegations and rejected its motion for sanctions.
In an 87-page opinion and order, U.S. District Judge Brandy R. McMillion granted in part and denied in part UWM’s motion to dismiss a civil RICO and consumer fraud case filed by borrowers across multiple states. The court dismissed the majority of the plaintiffs’ claims, including federal racketeering, conspiracy, unjust enrichment, and most state consumer protection counts. However, the court ruled that two Florida borrowers’ claims under the Real Estate Settlement Procedures Act (RESPA) and the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) may proceed.
A UWM spokesperson responded: "We are very pleased to see the court dismissed nearly all claims and defendants, leaving only two narrow claims. This decision confirms the entire case is nearly resolved in our favor and underscores that there was no merit from the start to the allegations. We are confident the remaining claims will also be resolved in our favor."
Key Claims
The lawsuit, Escue et al. v. United Wholesale Mortgage, LLC, et al., accuses UWM and its CEO Mat Ishbia of running an alleged “steering enterprise” that used the company’s “All In” broker agreement to pressure mortgage brokers to send loans exclusively to UWM, allegedly leading to higher costs for borrowers. Plaintiffs also claimed UWM’s broker marketing platforms — such as FindAMortgageBroker.com and its successor MortgageMatchup.com — misrepresented broker independence.
The lawsuit was filed on April 2, 2024, the same day a new media firm, Hunterbrook, published an investigative article on UWM that contains similar allegations. UWM and its CEO, Mat Ishbia, then filed a motion to dismiss the case with prejudice, claiming the complaint by borrowers “reflects an unprecedented and coordinated effort to smear United Wholesale Mortgage, LLC ('UWM'), its affiliates, and even its CEO — all of which serves to benefit market speculators.”
Judge McMillion rejected those racketeering claims, finding that the borrowers had not plausibly shown that UWM’s conduct directly caused their injuries. “While the amended complaint sufficiently alleges an association-in-fact, the facts fail to sufficiently show that Defendants’ conduct was the proximate cause of Plaintiffs’ injuries,” the judge wrote.
The court also ruled that UWM’s Wholesale Broker Agreement and “All In” policy — which bars participating brokers from sending loans to Rocket Mortgage or Fairway Independent Mortgage — did not in itself constitute bribery or fraud under federal law. McMillion held that the alleged broker conduct “originated from the brokers, not UWM,” and that plaintiffs’ injuries were “well beyond the first step in the causal chain.”
Still, the judge allowed borrowers Jill Jeffries and Daniel Singh to pursue RESPA claims based on alleged kickbacks or unearned fees tied to broker compensation, and allowed Jeffries, Singh, and Brian Weatherill to proceed under Florida’s consumer protection law. The remaining claims — including those under RICO, state bribery laws, and the California, Tennessee, and North Carolina consumer statutes — were dismissed with prejudice.
Judge McMillion also dismissed UWM Holdings Corp., SFS Holding Corp., and Ishbia as individual defendants, finding insufficient evidence of personal involvement beyond corporate actions. The court denied UWM’s motion for sanctions and declined to strike class allegations, leaving open the possibility that the Florida-based claims could later be certified for class treatment.
“The only remaining claims are Count III (RESPA) as to Plaintiffs Jeffries and Singh, and Count IX (FDUTPA) as to Plaintiffs Weatherill, Jeffries, and Singh,” Judge McMillion concluded.
The Escue v. UWM case continues in the U.S. District Court for the Eastern District of Michigan.
Takeaways For Brokers And Lenders
Attorney and founding partner of Brody Gapp LLP, Ron Gapp, said that the judge dismissed the broader racketeering (RICO) and consumer-fraud claims because the plaintiffs didn’t show that UWM intentionally misled borrowers or engaged in a coordinated fraud scheme.
“Those claims require proof of deceptive intent and specific harm to consumers, which the court found lacking,” Gapp said. “By contrast, the RESPA claim was allowed to continue because it does not require proof of intent or deception, only that something of value may have been exchanged in connection with loan referrals.”
The main takeaway for brokers and lenders, Gapp believes, is that courts are demanding detailed, borrower-level proof for fraud-based claims, but will still closely scrutinize incentive programs that might implicate RESPA’s strict liability rules.
The ruling also comes at a time of major change for how RESPA will be interpreted.
“After the Supreme Court’s Loper Bright decision ended Chevron deference, judges, not just regulators, will decide what counts as a ‘kickback’ or ‘thing of value,’” Gapp said. “That shift could eventually narrow how far RESPA reaches, but it also creates more short-term uncertainty.”
For that reason, Gapp does not recommend straying too far from long-standing HUD or CFPB guidance, since those interpretations remain persuasive to many courts and continue to influence regulatory enforcement.
“Incentive or loyalty programs should be reviewed carefully to ensure they do not, even unintentionally, encourage steering that is not in the borrower’s best interest,” he advised. “Transparency, documentation, and sound internal compliance practices remain the best safeguards in this evolving legal environment.”
Beyond Escue, UWM remains a defendant and plaintiff in multiple legal actions tied to its “All In” (ultimatum) broker policy. The lender is also currently defending a class action filed last April by former employees in the U.S. District Court for the Eastern District of Michigan, alleging violations of the Employee Retirement Income Security Act (ERISA).
