United Wholesale Mortgage (UWM) announces today that it scored legal victories in ongoing litigation around the All In Addendum (ultimatum) included in its broker contracts.
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 (AML), Kevron Investments, and Mid Valley Funding & Investments, Atlantic Mortgage Trust, and others. UWM initially claimed AML owed the lender $2.8 million in liquidated damages, Mid Valley Funding owed at least $310,000, and Kevron Investments owed at least $110,000, according to each of the complaints filed.
The court's decisions have “set a new standard for our ongoing cases and further highlight that UWM’s All In Initiative remains legal,” said a UWM spokesperson.
On March 31, Judge Michelson of the Eastern District of Michigan granted UWM’s Motion for Summary Judgment against Kevron Investments Inc. The ruling awarded UWM $70,000 in damages, along with attorney fees and costs. The damages were calculated based on the liquidated damages provision in the agreement, amounting to $5,000 for each of the 14 loans that violated the terms.
The court opinion reads: “Specifically, as UWM puts it, Rocket and Fairway operate in both the retail and wholesale channels but use ‘very aggressive’ strategies and initiatives designed to essentially convert borrowers to the retail channel (where Rocket and Fairway make more money) for good. Per UWM’s chief marketing officer, ‘once a loan ends up in retail, it oftentimes is out of wholesale forever.’ So despite what Kevron’s singular focus might suggest, the measure of harm according to UWM is not the individual loan that a wholesale broker like Kevron sends to Rocket or Fairway — it is the loss of the borrower themselves.”
In similar actions, both Atlantic Trust Mortgage and Madison Atrina, LLC filed motions to dismiss UWM’s complaints but were later denied. The judges in both cases adopted much of the reasoning used in the Kevron case.
In early 2024, Atlantic Trust Mortgage was sued for allegedly violating the All-In Addendum by submitting 71 mortgage loans to rival Rocket Pro TPO, equating to at least $355,000 in liquidated damages to Rocket or Fairway in violation of that agreement.
In February, UWM also achieved a significant ruling in its litigation with AML. The court upheld the validity of All In, despite AML’s allegations that the initiative was unlawful.
“We were also allowed to amend our complaint to include claims against a new entity formed by AML’s ownership,” the announcement by UWM adds. “UWM was sued in multiple jurisdictions alleging that the All In initiative was unlawful. Each of those attempts failed and multiple courts have properly held that the initiative is perfectly legal.”
UWM Wants To Claw Back Loans Sold To Mr. Cooper Group
UWM has stated in court cases against various broker partners, such as Kevron Investments, that Rocket Companies uses “very aggressive strategies and initiatives” to “convert borrowers to the retail channel.”
However, since Rocket recently acquired Mr. Cooper Group, the nation’s largest mortgage servicer in the nation, UWM is launching an aggressive initiative of its own, called “Refi Shield 100,” —somewhat similar to its 2024 Refi 100 Pricing Incentive. CEO Mat Ishbia notified broker partners during the company's weekly Wednesday sales meeting that UWM will be giving brokers 100 bps to reclaim any UWM loan in their portfolio.
“UWM will be discontinuing our sub-servicing relationship with Mr. Cooper and they will no longer be an MSR sale partner,” a UWM spokesperson told NMP.
Carlos Scarpero, loan officer at Edge Home Finance Corp., notified about the program over the Wednesday sales meeting that CEO Ishbia releases weekly. Since Edge Home Finance is one of UWM top broker partners, every loan officer at the company was notified by email immediately after the sales meeting as well.
“While it's interesting, it's also very limited,” Scarpero continued. “My understanding is the offer only applies to UWM loans that were sold to Mr. Cooper. No other Mr. Cooper refis or any other refis would apply for the program.”
Scarpero said he doesn’t have any files that would qualify under the program, but adds “If I did, I would certainly reach out to them to try to refi them.”
