The state of Ohio is accusing United Wholesale Mortgage of “duping” thousands of its residents via an alleged scheme between the megalender and “loyalist brokers” to only do business with the company.
As a result, Ohioans have been pushed into paying “millions of dollars in improper fees and excessive interest rates on their mortgage loans,” a suit filed by Ohio Attorney General Dave Yost claims.
The litigation, lodged April 16, says that Ohio borrowers are not presented with the best loan option partially because of UWM’s controversial “All-In” ultimatum and the “Lock In” provision, which prevents brokers from shopping rates once they’ve locked-in a rate with UWM.
This suit is reminiscent of a federal class-action filed in 2024 by borrowers who similarly claim that UWM holds independent brokers captive, contributing to consumers being overcharged by hundreds of millions of dollars. The case is specifically cited in the 122-page complaint filed by the Ohio attorney general.
“Thousands of unsuspecting borrowers did not obtain any such ‘independent’ advice or representation,” Yost said. “Rather, they were ensnared in UWM’s scheme, and steered, without their knowledge, to UWM’s higher-priced loans.”
Ohio’s suit claims UWM violated the state’s consumer protection laws, including its Residential Mortgage Lending Act and its Corrupt Practices Act.
UWM did not immediately respond to a request for comment Thursday.
An analysis of Home Mortgage Disclosure Act data included in the lawsuit shows that over the past three years, UWM issued nearly $605 million in Ohio mortgages through brokers who referred 99% of their business to the company. In 2023, Ohio brokers sent 99% or more of their mortgages to UWM, which the state attorney general claims is worth at least $215 million.
Ohio borrowers who obtained a mortgage loan through UWM broker partners in 2022 paid “hundreds of dollars more in origination fees” compared to other homebuyers, the complaint said.
The Ohio lawsuit, just like the 2024 class action, takes aim at the firm’s sponsored website, known as mortgagematchup.com.
It dubs the site a “tool for UWM to compel brokers to steer loans to UWM” because getting featured on the page increases online searchability. “The message to brokers is simple: the more you steer borrowers to UWM, the more UWM will steer borrowers to you and thus increase your deal flow and revenue,” the lawsuit read.
Loyal UWM broker partners are also lavished with gifts and parks, such as meals, live entertainment and vacations to Costa Rica at the wholesale lender’s expense, the suit alleges.
Concurrently, UWM spends ample time and resources monitoring its databases to ensure that brokers stay loyal to it. Litigation states that brokers have reported receiving “harassing communications from UWM employees” inquiring why the loan volume sent to it compared to other wholesale lenders has changed.
Meanwhile, brokers who violate the “All-In” mandate are punished, the suit claims, citing at least five lawsuits brought against various broker firms seeking damages for breaches of the ultimatum.
“Buying a home is hard enough without having to worry about a lender scheming behind your back,” Yost said. “This predatory business practice has no place in Ohio.”
Despite ongoing public criticism of UWM’s ultimatum, the megalender has been successful in defending its “All-in” mandate in court.
Most recently, two separate federal judges in Michigan refused to dismiss UWM’s All-In litigation filed against two brokerages: Atlantic Trust Mortgage and District Lending.
Both judges overseeing the two lawsuits ruled that Atlantic Trust and District Lending were bound by the wholesale broker agreement with UWM, despite not signing the ultimatum, because they continued doing business with the Pontiac, Michigan-based company.
Other brokerages, including America’s Moneyline and The Okavage Group, that were also sued for breaking UWM’s All-In ultimatum and thereafter countersued, face an uphill battle against the megalender.
A Michigan federal judge tossed AML’s countersuit for fraud in March 2024, citing another court’s decision where a judge earlier that year was unconvinced by The Okavage Group’s similar arguments.
