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
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"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 cast suspicion on the suit, noting it was not informed ahead of time that it would be filed.
"It essentially repeats the frivolous allegations contained in a virtually identical lawsuit filed last year by a law firm that has a business arrangement with a hedge fund," a spokeswoman said. "In response to that lawsuit, we are seeking sanctions against the law firms that filed it, and have moved to dismiss the claims. We will take similar actions against this PR stunt by the Ohio Attorney General."
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.
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.
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