HousingWireHousingWire
Top U.S. mortgage lender United Wholesale Mortgage (UWM) this week won a three-year legal battle with a mortgage brokerage firm. The case involves the lender’s controversial “All-In” initiative, which states that brokers who work with UWM cannot engage in business with competitors Rocket Mortgage and Fairway Independent Mortgage Corp.
On Monday, U.S. District Court Judge Wendy W. Berger ordered the dismissal without prejudice of a supplemental class-action complaint filed by Florida-based Okavage Group and directed the termination of all pending motions. Berger responded to Okavage’s objection following federal Judge Laura Lambert’s ruling in February to dismiss the case, which cited inadequate evidence to prove accusations against the lender.
Okavage, a one-person mortgage brokerage, claimed UWM violated the Sherman Antitrust Act and the Florida Antitrust Act when it forced its broker partners to sign an addendum saying they would not send loans to the named competitors. The brokerage, which refused to do so, accused UWM of monopolizing the wholesale mortgage market.
According to Okavage, when UWM forced a boycott against Fairway and Rocket, it increased costs for loans and mortgage operations to an artificially high, non-competitive level. Since then, Fairway has chosen to exit the wholesale channel.
In her decision, Berger discarded the claims, saying that the plaintiff failed to show the ultimatum constitutes “invitations to collude” nor that it was against brokers’ self-interest. She added that the brokerage also failed to show market power by the lender or barriers of entry to the wholesale market, which would increase prices and expenses.
“There are no factual allegations that the brokers were predisposed to concerted action toward a common improper goal, that the brokers were told that the change would only be made with majority agreement, or that a majority agreement was necessary to reach the desired result,” Berger wrote in a court filing with the U.S. District Court for the Middle District of Florida.
“There are only minimal allegations regarding pushback on dissenting brokers and no allegations that there was significant pressure applied between brokers to accept the agreement.”
In a statement sent to HousingWire, a UWM spokesperson said the company’s “victory in this frivolous lawsuit reaffirms that the claims against us were baseless from the start. … The accusations suggesting that All In was harmful have always been false, and this court ruling further underscores that reality.”
Attorneys for the Okavage Group didn’t immediately responded to a request for comment.
UWM has been hit with federal antitrust claims and has also sued lenders for breaching their contracts by doing business with Rocket and Fairway. Most recently, UWM sued Atlantic Trust Mortgage Corp. for selling loans to rivals Rocket and Fairway despite agreeing to the contract. The Florida-based firm has asked a Michigan federal court to dismiss the case.
