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UWM moves to dismiss AML’s antitrust claim 

America's MoneyLine filed an amended counterclaim in Michigan with 12 antitrust counts regarding UWM's ultimatum imposed in 2021

United Wholesale Mortgage (UWM) has moved to dismiss an amended counterclaim filed by broker shop America’s MoneyLine (AML) that accuses the lender of antitrust practices regarding the “ultimatum” it imposed two years ago. 

UWM’s motion to dismiss, filed on April 19 in Michigan federal court, states that the dispute is not an antitrust case, as AML claims. Instead, it’s about a broker that “repeatedly breached the terms of its agreement and is now grasping for any rationale to evade liability.”

California-based AML filed the amended counterclaim on March 8, alleging UWM violated antitrust laws, unreasonably restrained trade, and attempted to monopolize the wholesale mortgage space with its “All In” initiative. The document brings 12 antitrust counts, including claims related to Michigan, California, Florida, and Texas statutes. 

A spokesperson for UWM said the company had no comment. AML’s representatives have not responded to a request for comments. 

The case began in March 2021, when UWM CEO Mat Ishbia announced the lender would not work with brokers who also did business with Rocket Mortgage or Fairway Independent Mortgage. Any broker who did so would face fines

In February 2022, UWM filed a lawsuit against AML, claiming the brokerage firm owes $2.8 million for breaching their amended agreement imposing the ultimatum.

A few days later, AML countersued the wholesale lender. A judge decided in December 2022 to dismiss AML’s fraud and promissory estoppel claims. However, a declaration that the ultimatum violated antitrust law survived.  

The claims 

To support its antitrust claims, AML says in its amended counterclaim that UWM has “dominance” and “market power” in the wholesale channel, with a current 54% share, compared to 34% in 2020, prior to the ultimatum. 

That’s the share Ishbia mentioned during a call with analysts to comment on the company’s 2022 earnings. The executive said UWM may not have 54% of the broker channel forever. However, it’s “very realistic” that the company will keep the 11% overall share of the mortgage pie, which is a record high.  

AML also claims that wholesale lending is a separate submarket of the mortgage industry, which has barriers to entry. Participants are required to have and make substantial resources and efforts, generally over several years, to enter and win in this market.  

“UWM’s dominance and market power have also been enhanced by the exit of many wholesale lenders from the market,” the amended counterclaim states. The document cites companies such as Wells Fargo, which reduced its presence in the channel, and loanDepot, a competitor that exited the wholesale space in 2022.  

In response, UWM said in its motion to dismiss the amended counterclaim that the ultimatum resulted from the fact that Rocket and Fairway “have eroded” the broker channel by converting customers from wholesale lines to retail lines.

It added that brokers were free to accept or decline its amendment. 

“AML alleges it agreed to the amendment reluctantly and later terminated it. Now, faced with legal action because it closed numerous loans with Rocket in breach of the amendment while it was in effect, AML seeks to rewrite its bargain by asserting facially defective antitrust claims,” UWM states in its motion. 

AML’s claims, according to the lender, rest on a “legally unsustainable premise” that there is a separate wholesale mortgage lending market. However, “AML admits, from a consumer perspective, what is needed is a mortgage, not a wholesale or retail mortgage specifically.” 

According to UWM, AML’s grievances pertain only to its preferred business practices and loan volume. “But antitrust law ‘is designed to protect consumers from producers, not to protect producers from each other or to ensure that one firm gets more of the business,'” UWM states.  

Other brokers are critics of the ultimatum – including some who signed the addendum – because it limits their capacity to offer consumers the greatest range of mortgage options, which is central to their mission. Ultimately, it prevents brokers and prospective homebuyers from achieving the lowest price and better quality products, they say. 

AML was not the first broker shop to enter a legal battle with UWM. In August 2021, a Florida mortgage broker named Dan O’Kavage filed a class-action seeking lawsuit that targets the ultimatum on the grounds that it violates the Sherman Act. A mediator to the case was appointed on April 12.

After filing the lawsuit against AML, UWM sued California-based brokerage shops Kevron Investments Inc. and Mid Valley Funding & Inv. Inc. in February 2022. UWM requested $420,000 in damages.

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