A federal magistrate judge in Florida is recommending the dismissal of a lawsuit filed against United Wholesale Mortgage's "All-In" initiative, citing a lack of evidence to support claim it limits competition.
Florida-based Okavage Group sued UWM back in 2021 shortly after the Pontiac-Michigan based lender announced the initiative.
"Although plaintiff includes statements regarding mortgage brokers generally and how they operate, it again fails to address the reasonable substitutability, or lack thereof, of mortgages from a wholesale lender versus mortgages from a retail lender or the cross-elasticity of demand, aside from a conclusory statement that wholesale consumers would not readily switch to a retail lender due to their desire to obtain professional advice," U.S. Magistrate Judge Laura Lothman Lambert wrote.
She goes onto say that the Okavage Group "includes no factual allegations to plausibly allege the potential for genuine adverse effects on competition and thus, fails to allege a sufficient link between the ultimatum and harm to competition within the overall mortgage market or the wholesale retail mortgage market."
A UWM spokesperson said they are not surprised by the decision "and know her recommendation is accurate."
The "All-In" initiative, or ultimatum, means that any of UWM's broker partners can't do business with Rocket Mortgage or Fairway Independent Mortgage.
"Moreover, plaintiff asserts the 'elimination' of Rocket and Fairway 'significantly reduced competition in the relevant market;' but there is nothing in the factual assertions—and plaintiff does not argue—that Rocket and Fairway were ever eliminated, or that they no longer participate in the wholesale mortgage market," Lambert wrote.
The 49-page recommendation seems to have been made before news later week that Fairway Independent Mortgage was exiting the wholesale channel.
Attorneys for Okavage did not immediately respond to requests for comment, but they have 14 days to file write-in objections to Lambert's filings. The report will be reviewed by a U.S. District Judge.
UWM recently sued District Lending and Atlantic Trust Mortgage Corporation for violating its "All-In" initiative, urging brokers to cease dealings with Rocket TPO and Fairway Independent Mortgage Corporation. It previously sued America’s MoneyLine in February 2022 for contract breaches by working with Rocket and Fairway, with these cases still ongoing. In June 2023, UWM settled a lawsuit with Mid Valley Funding, another broker that had been involved in a legal dispute over the All-In Initiative.
Mid Valley Funding agreed to pay $40,000 to settle the lawsuit, according to a UWM spokesperson. The nation’s largest lender had sought $310,000 in damages, as well as other compensatory damages, attorney fees, court costs, and other expenses.
