Mortgage

UWM’s authorized motion in opposition to California dealer leads to countersuit

Following United Wholesale Mortgage’s lawsuit in early February against a California broker it claimed had violated a contractual agreement to not work with its main competitors, the defendant fired back with a suit of its own.

America’s Moneyline filed a federal lawsuit in Michigan district court on Friday challenging the legality of the UWM contract. In March 2021, Pontiac, Michigan-based UWM announced it would no longer purchase loans from brokers who also sold to rivals Rocket TPO and Fairway Independent Mortgage, raising concerns among many at the time of anticompetitive behavior. The Mission Viejo, California-based multistate broker initially refused to sign a contract agreeing to the policy but later acquiesced when UWM refused to fund over 100 of America’s Moneyline loans unless it agreed to terms, according to Dean Lob, chief operating officer at America’s Moneyline.

“For nearly nine months we have been explicitly clear with the leadership team at UWM that we will not abide by the terms of their ultimatum,” said America’s Moneyline CEO Shawn Nevins, in a published statement issued with the court filing. “Each time, we were assured that if we just signed the document, it would not be enforced.”

America’s Moneyline attempted to rescind the agreement shortly after signing, but were again told that the contract would not be enforced, according to the filing. The company continued to sell its loans to Rocket and was met with the $2.8 million lawsuit this month.

America’s Moneyline also reiterated claims of potential antitrust practices that initially met UWM’s broker policy announcement last year.

“The fundamental purpose of being an independent broker is to have as many choices and options as possible to provide to your clients with the very best rate and loan program. UWM’s ultimatum restricts our ability to do this,” Nevins said. He also noted that UWM pricing is frequently higher than competitors’ and does not allow for lending to borrowers with lower credit scores.

In response to the countersuit, UWM said its action was centered around a legal violation.

“UWM, like all companies, must comply with the terms and conditions in the contracts we sign. In turn, we hold people accountable for following the terms and conditions outlined in our contract, which America’s Moneyline knowingly and purposefully breached,” a company spokesperson said in an emailed statement to National Mortgage News.

“This is not about UWM’s business model; this is a contract law case.”

With the lawsuit, America’s Moneyline seeks to terminate the agreement and is also asking for compensatory damages likely to exceed the amount UWM sought in its “nonsense claim,” Lob said, without noting a figure.

“We are calibrating damages,” he said, adding that the company was gathering expert opinions on the extent of its losses. “We’re basically looking at some antitrust violations.”

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