District Lending has allegedly sent 84 loans to Rocket or Fairway since pledging in March 2021 to abide by UWM's controversial ultimatum, which instructed brokers to cut ties with the two retail lenders if they wanted to continue to partner with the wholesale lender.

The lending giant claims District Lending's flouting of their agreement resulted in damages of at least $420,000, which UWM would like to recoup, per its suit filed in a federal court in Michigan.

"District Lending is one of the companies who signed a contract and then knowingly breached it, therefore we will follow the agreed upon contract and win damages," a UWM spokeswoman said in a statement Thursday. "This company is one of very few companies we have found that has knowingly breached the contract, and we will continue to hold people accountable to the contracts they sign."

According to the company spokeswoman, all damages collected from "All-In contract breaches will be invested in findamortgagebroker.com to further support the growth of the broker community."

District Lending did not respond to a request for comment. The broker is an Arizona-based company founded by Josh Rapaport. It offers its services in 19 states, its website states.

"If District Lending sought to do business with the select retail lenders, it could have immediately done so by terminating the agreement before submitting the loan(s) to the select retail lenders," UWM's lawsuit said. "But instead, District Lending elected to continue doing business with and benefit from UWM while simultaneously breaching the agreement by submitting loans to the select retail lenders."

The mortgage broker reaped the benefits of partnering with UWM, such as having access to the wholesale lenders proprietary technology and products, the wholesale lenders suit said.

Apart from seeking damages, UWM is also asking the court to award it compensatory damages relating to the breach and attorney fees, costs and other expenses the wholesale lender incurred in this action. The mortgage shop is requesting a trial by jury.

In February, Rocket Pro TPO unveiled a "Bully Shield" to protect mortgage brokers breaking ultimatum agreements with UWM. Its initiative pledges to indemnify brokers with UWM who choose to work with it or Fairway, covering their penalties and any court costs in any UWM litigation. It is uncertain whether District Lending plans to take advantage of this offer.