United Wholesale RICO/RESPA violation?
Shortly after being claimed #1 wholesale lender in the country and after suing several brokers for violating its “all-in” lender agreement, United Wholesale and its owner have been served a class action lawsuit for violations of the RICO ACT & RESPA. An investigation revealed that $39 billion in mortgages came from brokers who sent UWM more than 99% of their business.
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."
This lawsuit allegations are concerning on many levels. But first and foremost, I’m not sure why any lender would think that they can mandate 100% of anyone’s loan volume be required to go to them as the lender (if that in fact is what the agreements say). This could not only be considered “quid pro quo” for services provided but also sounds like a blatant RESPA violation and in my opinion a Dodd Frank steering violation. Unfortunately, this could create a ripple effect in our industry and cause the CFPB and DOJ to jump on the band wagon and create increased regulation or enforcement in this area and not just in the broker world. This will be one to watch for a lot of reasons.
Sadly, when you file a lawsuit for vengeance you must be ready for what will come back to you. The truth has a way of coming out.