A previous version of this article was published on Oct. 11, 2024, under the headline, "UWM's Motion To Dismiss RICO Class Action Denied".
United Wholesale Mortgage (UWM) and the company’s CEO, Mat Ishbia, have had their motion to dismiss a class action lawsuit alleging violations of the RICO Act and the Real Estate Settlement Procedures Act (RESPA), civil conspiracy, and unjust enrichment, among other claims, denied as moot as of Oct. 3, 2024, due to plaintiffs' Aug. 30, 2024, submission of an amended complaint.
District Judge McMillion’s text-only order means the case continues at present. UWM must submit a new motion to dismiss if it wishes to pursue having the case thrown out.
“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,” read the initial, June 21, 2024, request for dismissal with prejudice. The defendants, UWM and Ishbia, also claimed that the class action lawsuit “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.”
The class action lawsuit in question, filed April 2, 2024, in the United States District Court for the Eastern District of Michigan, claims the nation's top wholesale lender holds independent brokers captive via its "All-In Initiative," thereby overcharging borrowers by preventing brokers from shopping around for clients. On the same day the lawsuit was filed, venture capital-backed news outlet, Hunterbrook Media, released an exposé examining similar allegations.
UWM and Ishbia’s request for dismissal also argued that the plaintiffs’ 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.
In 2021, UWM issued an ultimatum to all of its broker partners stating they can either choose to do business with UWM or their rivals, Rocket Pro TPO and Fairway Independent Mortgage, but cannot continue to do business with both. Since the ultimatum was issued, a number of lawsuits have been filed between brokers and UWM for allegedly violating the ultimatum.
In late September, a Florida federal court dismissed a separate antitrust case alleging UWM and Mat Ishbia conspired with brokers to mount a group boycott of Rocket Mortgage and Fairway Independent Mortgage Corporation, filed in 2021 by the Florida-based Okavage Group after the Pontiac, Michigan-based UWM announced its "All In" initiative.
