Top US Lender United Wholesale Mortgage (UWM) obtained a partial victory in a lawsuit against a brokerage firm United States money line (AML) about the controversial “ultimatum” that he imposed two years ago.
UWM CEO Mat Ishbia announced in March 2021 that brokers who did business with rocket mortgage either Fairway Independent Mortgage it also couldn’t send loans to UWM, which the lender called the “All In” initiative. Any broker who didmore than $5,000 per loan or $50,000, whichever amount of the violation is greater.
In February 2022, UWMin Michigan federal court against AML, a high-volume brokerage firm based in Southern California, for violating its amended wholesale brokerage agreement by imposing the ultimatum. According to the lender, AML $2.8 million by continuing to do business with UWM and Rocket.
A few days after UWM filed the lawsuit, AML countersued the wholesale lender. He argued that UWM’s guarantees were fraudulent; the promissory estoppel must be applied to enforce those guarantees; the ultimatum is invalid and unenforceable for various reasons, and you are entitled to a declaratory judgment.
UWM asked the court to dismiss AML’s counterclaims. Finally, on December 22, Judge Laurie Michelson granted UWM a motion to dismiss AML’s claims of fraud and promissory estoppel. However, a statement survived that the ultimatum violated antitrust law.
A UWM spokesperson said the company does not “comment on legal matters that are currently pending.” HousingWire sent requests for comment to AML representatives, but they have not responded. AML has to show in writing why the court should exercise its discretion to hear the antitrust complaint by January 9.
Judge Michelson based her decision on the brokerage agreement, which provides that UWM may change its policies, procedures, requirements, and instructions from time to time. And the simple loan or presentation of the application, without further signature or assent of any kind, represents the agreement of the brokerage firm with the modified policies.
The lawsuit claims that from the time it signed the “All-In” rider through February 2022, AML had submitted at least 560 home loans to Rocket and Fairway.
Regarding the claim of fraud, the judge wrote: “AML has not identified any duties that UWM has breached that are separate and distinct from the agreement.”
It also added that “because the parties reduced their agreement to a writing, the promissory estoppel claim fails.”
Judge Michelson decided that the antitrust subsuit will survive, since UWM did not propose any other basis for dismissing it.
ManyThey are critical of the ultimatum, including some who signed the addendum. They complain that it affects the identity of a mortgage broker: being able to offer consumers the widest variety of mortgage options was essential to their mission.
And AML wasn’t the first brokerage to get into a legal battle with UWM.
In August 2021, a Florida mortgage broker named Dan O’Kavageseeking a lawsuit that points to the ultimatum on the grounds that it violates the Sherman Act. On December 14, 2022, UWM filed a motion to dismiss a second amended class action lawsuit; the plaintiff’s response must be filed by February 1, 2023.
After filing the lawsuit against AML, also in February 2022, UWMKevron Investments Inc. Y Financing and investment of Mid Valley Cía. The cases are in the plaintiff’s expert disclosure and fact discovery stages. UWM seeks $420,000 in damages.