United Wholesale Mortgage (UWM) is requesting the Michigan federal court dismiss a class action lawsuit filed by borrowers, with the defendants claiming, "This Hunterbrook-affiliated lawsuit is a putative class action that raises a kitchen-sink full of claims against UWM, its holding companies, and its CEO."
The class action lawsuit, filed April 2, claims the nation's top wholesale lender, UWM, holds independent brokers captive via its "All-In Initiative" and overcharges borrowers by preventing brokers from shopping around for clients. It alleges the lender violated the RICO Act and the Real Estate Settlement Procedures Act (RESPA), civil conspiracy and unjust enrichment among other claims. On the same day, venture-backed capital outlet, Hunterbrook Media, released an exposé containing similar allegations.
"Accountability requires action,” said Hunterbrook Media Publisher Sam Koppelman when the class action lawsuit was filed. “That's why the Hunterbrook Foundation shared research with Boies Schiller Flexner — and we hope homeowners have a path to restitution for what our data analysis indicates could be substantial damages.”
On June 21, the defendants, UWM and CEO Mat Ishbia, 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.”
UWM argued the plaintiff’s allegations under RESPA are time-barred, and the complaint fails to state a claim under that statute in any event. The lender also argued that the RICO claims fail for lack of proximate causation, absence of a cognizable enterprise, and failure to plead predicate acts of racketeering.
“Plaintiffs’ claims for aiding and abetting a breach of fiduciary duty and civil conspiracy fail for many reasons, including because Plaintiffs failed to plead facts establishing a fiduciary relationship,” the Motion To Dismiss read. “Plaintiffs cannot state a claim under any of the state consumer protection statutes they invoke. They do not plead unjust enrichment. And their claims against UWM’s holding companies and CEO suffer from a number of additional fatal flaws.”
In regard to the “All-In Initiative” in which broker partners must choose to work exclusively with Rocket Pro TPO and Fairway Independent Mortgage or UWM, the defendant claims the plaintiff presented no facts showing that Rocket or Fairway would have offered the named plaintiffs loans at better rates. UWM claims that the plaintiffs’ own data reflects that Rocket’s fees are generally higher than UWM’s.
Additionally, the wholesale lender claimed its “All-In Initiative” is at-will, and something a broker can choose to forgo or pull out of following a seven day notice.
UWM also argued that unjust enrichment claims fail against the non-UWM Defendants because they allegedly do not plead facts showing that any of those defendants were actually enriched. The defendants also claimed that plaintiffs paid UWM, not the Holding Company Defendants or CEO Ishbia, so the plaintiffs cannot pursue an unjust enrichment claim against them.
"Every single claim made in this lawsuit is meritless and riddled with flaws," a UWM spokesperson added in a statement sent to NMP. "We’ve already seen tremendous success with the dismissal of other frivolous lawsuits against our business over the last few years and we are confident in the same outcome here. We will continue to aggressively defend all counts to the fullest extent and stand with the thousands of independent mortgage brokers who serve the unique needs to borrowers across the country every day."
Hunterbrook Media, nor the plaintiffs’ attorneys, immediately responded to NMP’s request for comment.
