The first-ever report by Hunterbrook, a venture capital-backed outlet, claims UWM holds independent brokers captive and overcharged borrowers by hundreds of millions of dollars. The publication's editorial board suggests the wholesale giant is at risk of wide-ranging consequences, and shared its findings with regulators and a law firm that filed a class action suit. 

The lengthy article and its attached research points to over 8,000 independent mortgage brokers who sent 99% or more of their loans to UWM, volume that powered the company to the top of the industry. The lawsuit accuses "corrupt UWM loyalist" brokers of breaching their fiduciary duty to home buyers, part of racketeering charges against the firm in a new Michigan lawsuit. 

The report also compares UWM's $70 million net loss last year against a $600 million dividend in 2022 to CEO Mat Ishbia and his relatives, who control a holding firm with the majority stake in the company. 

"UWM has systematically and intentionally corrupted the wholesale mortgage channel through fraudulent practices to line its own pockets and those of its senior executives, including Mr. Ishbia, at the expense of everyday Americans," said John Zach, an attorney with Boies Schiller Flexner LLP. Hunterbrook said it shared its research with the law firm ahead of publication. 

The lender allegedly responded to Hunterbrook queries with a cease-and-desist. UWM in a statement Wednesday afternoon called the lawsuit a sham, and slammed Hunterbrook's affiliation with Hunterbrook Capital. The lawsuit has no mention of Hunterbrook's research or Hunterbrook Capital. 

"Although the real party behind it is a hedge fund named Hunterbrook, the lawyers concealed the hedge fund's involvement," a statement from a UWM spokesperson said. "Hunterbrook's business model is to sensationalize public information to manipulate the stock market, thereby enriching their wealthy funders at the expense of regular investors, many of whom are hard-working UWM employees." 

Hunterbrook Capital took a short position in $UWMC, a long position in $RKT, and purchased derivatives at undisclosed amounts. The entity said it raised $100 million to make trades based on its affiliate's articles, scoops only based on publicly available information. Reporters continued to update the story Wednesday afternoon, sharing instances of UWM deleting marketing content the story scrutinized.

Zach, the attorney who filed the suit, responded to UWM's comments Wednesday afternoon by saying the company didn't attempt to address the fraud in its statement.

The article was compiled by veteran reporters and legal and financial experts over a thousand hours, including reviews of Home Mortgage Disclosure Act data. Hunterbrook also shared a website where consumers can see if they were "ripped off" by their mortgage broker.

The probe and lawsuit focus heavily on UWM's "All-In" mandate, already the subject of multiple lawsuits both from and against the lender. The so-called "ultimatum" bars brokers from working with Rocket Mortgage and Fairway Independent Mortgage Corp., and prevents brokers from shopping rates once they've locked-in a rate with UWM. 

Of the 30,229 brokers who sent at least one loan to UWM last year, 12,936, or 42%, sent more than 75% of their mortgages to the company. Another 8,665 sent more than 99% of their loans to UWM, the report claims. The proportion of brokers going all-in has increased since 2020, with 75% or more submitters accounting for 48% of UWM's origination volume, Hunterbrook found. 

Reviews of HMDA data allegedly showed borrowers with UWM loans paying on average more than $865 over the median cost for such loans with other lenders, controlling for interest rate and type. Home buyers working with a 99% or more "steerer"  broker paid over a thousand dollars more per with UWM than the median cost with other broker-generated loans, the lawsuit claims. 

The consumer overpays in the aggregate were at least $400 million between 2021 and 2023, the suit claims. 

Hunterbrook acknowledged its research was limited by the absence of borrower FICO scores in HMDA data and other variations such as lender credit reporting; it defended its reporting in a breakdown of its analysis.

The report and lawsuit also take aim at the firm's sponsored website, known as MortgageMatchup.com. It characterizes the site as a proxy for loyalty, suggesting UWM doesn't disclose its backing and support of brokers with advertising, gifts and other benefits. 

The lawsuit seeks claimants who paid for a mortgage with UWM from March 5, 2021 to the present, with brokers who referred 75% or more of their loans to UWM among at least five separate transactions with the giant. 

Hunterbrook's article also attributes a profanity-laden voicemail slamming competitor Rocket Mortgage to Mat Ishbia, allegedly sent to Anthony Casa, former head of the Association of Independent Mortgage Experts. Casa, today president and CEO of UMortgage, left AIME in 2020 after lewd comments referencing Ishbia and a Rocket executive's spouse. 

A federal judge recently handed a victory to UWM in one of its "All-In" lawsuits, tossing a complaint from America's Moneyline over its alleged violation of the ultimatum. The Pontiac, Michigan-based business posted a net loss of $62.5 million in the fourth quarter, but remained in line with Rocket as the industry's top originators.