Michigan-based United Wholesale Mortgage faces federal lawsuit over business tactics

United Wholesale Mortgage faces federal lawsuit over business tactic

PONTIAC, Mich. (CBS DETROIT) – For those looking to buy a house or re-finance, they'll likely end up working with an independent mortgage broker like Frank Hempel.

"If you're shopping rates online and a whole bunch of rates pop up, we essentially get to do that on the wholesale side with lenders in our channel," Hempel said.

Andres Gutierrez/CBS Detroit

One of those lenders is United Wholesale Mortgage (UWM). 

UWM touts itself as the number one mortgage lender in America, and now one of its business tactics is facing legal scrutiny. 

"Back during the pandemic, UWM gave brokers an "all-in" agreement to sign, which basically said, we're gonna give you the tools, things like that to help your business. But, by us giving you those tools, you can't work with a couple of lenders, which would be Rocket and Fairway," Hempel said.

In a lawsuit filed this week in federal court, UWM and its CEO are accused of pressuring brokers to send their clients to UWM, which in turn pushed homebuyers into expensive mortgages.

"Some people will use UWM for everything because it makes their life easier," Hempel said. "Well, that's not what we're supposed to do. We're supposed to use who's going to be the best fit for the client." 

Borrowers from Tennessee, Florida, and North Carolina filed the lawsuit and are seeking class-action status for other borrowers across 27 states.

Hempel, who isn't tied to this case, has this advice for those working with mortgage brokers.

"If you see UWM on your agreements, ask them, you know, why did you choose UWM? Are there other lenders that are better priced? If so, why aren't we using them? If they are," Hempel said. 

UWM provided a statement to CBS News Detroit regarding the lawsuit:

"The lawsuit filed this week is a sham.  Although the real party behind it is a hedge fund named Hunterbrook, the lawyers concealed the hedge fund's involvement. 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. UWM will defend these allegations to the fullest extent permitted by law and stands with the thousands of independent mortgage brokers who serve the unique needs of borrowers across the country."

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