Rocket Pro TPO announced Monday it will cover the ultimatum penalties and court fees for any brokers who want to get out of United Wholesale Mortgage’s ultimatum contract, in an initiative called “The Bully Shield.”
“In my opinion, the ultimatum is immoral,” said Mike Fawaz, executive vice president of Rocket Pro TPO. “We believe UWM’s ultimatum was one of the worst things to happen to independent mortgage bankers in 50 years. The ultimatum uses lawyers and contracts to limit choice and optionality.”
UWM’s ultimatum, issued in March 2021, stipulates that its broker partners are forbidden from doing business with Rocket Mortgage and Fairway Independent Mortgage Corp. Not signing the ultimatum would mean severing ties with UWM. Brokers who sign the ultimatum need to obey the rule or pay significant damages — either $5,000 per loan closed with Rocket or Fairway, or $50,000 as liquidated damage for such a breach, whichever sum is greater.
A number of companies have been sued by UWM over accusations they have violated the contract, including America’s Moneyline, Kevron Investments, and Mid Valley Funding & Investments. UWM claims America’s Moneyline owes the lender $2.8 million in liquidated damages, Mid Valley Funding owes at least $310,000, and Kevron Investments owes at least $110,000.
“The dollar amount is so arbitrary — where do they come up with that number? We make less in profit on these loans … maybe between $500 to $1,000 profit per loan,” America’s Moneyline CEO Shawn Nevin said in response to the lawsuit.
Watch The Interest's Exclusive on Rocket Pro TPO's announcement
According to Fawaz, Rocket is willing to back up any broker who wants to get out of the contract, no matter the cost. Afterward, the broker is not required to do business with Rocket or Fairway, nor to pay any money in return. Brokers then have the choice and freedom to work with any lender on any loan.
For any broker seeking Rocket’s help in paying off ultimatum-related legal fees, Fawaz says to simply give Rocket a call to start a discussion.
“When we made a decision to go out there and protect the broker community, the last thing we looked at was cost and numbers,” Fawaz said. “It's not about numbers, and it's not about cost. It's about truly standing up against a bully that tries to control the broker community every single day.”
UWM could choose to retaliate in a number of ways, such as filing a lawsuit or increasing the violation penalties, but Fawaz said he’s not losing sleep over it.
“Rocket Mortgage isn't afraid of anyone,” he said. “As far as myself, I am not worried about a bully. I've been through two civil wars in my life; I've seen a lot. The last thing I'm worried about is someone trying to control the broker community and me standing up for what's right. If standing up for what's right is going to cause legal action, then so be it. We'll go to court.”
The debate over the legality of UWM’s ultimatum is ongoing. Last month, UWM scored a partial win when Judge Laurie Michelson of the U.S. District Court in Eastern Michigan granted UWM’s motion to dismiss parts of American Moneyline’s counter lawsuit, though its declaration that the ultimatum violated antitrust law survived.
