Millions of Dollars Pilfered From the Pockets of Ohio Families, Says Suit Against Top Mortgage Company

There’s a case pending in Montgomery County, Ohio that will either startle or sadden everyone who cares about people struggling to buy homes. At this time, everything discussed here is alleged. The case has yet to be decided.

Ohio Attorney General Dave Yost has filed the suit. Yost claims UWM Holdings — doing business as United Wholesale Mortgage — steers hopeful borrowers to UWM® mortgages. UWM, says the lawsuit, doesn’t shop around for the customers and save people money, as its advertising promises. Instead, says Yost, its network of brokers steers the business right back to UWM, which then charges borrowers more than competitors would.

Yost has declared: “This predatory business practice has no place in Ohio.”

What the Filing Says: A Sampling of Allegations

A.G. Yost’s lawsuit is now in the Common Pleas Court for Montgomery County, Ohio. It can be seen on the Attorney General’s website.

It seeks compensation for affected mortgage borrowers and a court order requiring the company to comply with Ohio law. Ohio also seeks $25,000 in civil penalties for each unfair or deceptive activity.

According to Dave Yost’s extremely long and detailed filing, United Wholesale Mortgage:

• Is Ohio’s largest wholesale mortgage lender.

• Regularly and publicly promises customers that it sources loans from independent brokers in order to dig up the best rates for borrowers.

• Praises the ability of its brokers to independently shop from multiple lenders, making the wholesale option more supportive to borrowers than retail. The claims that UWM’s network of brokers save people money by seeking out lenders with the best offers is false. Thus, says the Ohio legal filing, “thousands of Ohio homebuyers have been duped.”

• Has “corrupted a large swath of brokers and turned them into the functional equivalent of retail ‘loan officers’ loyal to a single lender, UWM.”

• Generates marketing statements that its brokers must use verbatim. These marketing materials “amplify UWM’s own public misrepresentations” that its network of brokers will work independently to benefit customers.

• Does not disclose to the public that it supplies the “independent” brokers’ marketing materials.

• Expects the brokers to steer applicants back to its own mortgages. UWM mortgages are nearly always more costly for the customers. The average Ohio UWM borrowers’ loan origination cost $1,016 more in 2023 than competitors’ offerings.

• Does not offer lower interest rates to offset higher costs.

• Expects brokers to agree not to shop for loans for customers. Expects brokers to withhold low-priced findings from customers. Brokers thus withhold information from borrowers about better offers from UWM’s main competitors, such as Rocket Mortgage®.

• Take action against brokers who stray from the expectations. These brokers are penalized, sued, or cut out of the network. In this way, UWM gets 99% of the brokers’ business redirected to itself.

• Uses the website FindAMortgageBroker.com and its search function to point potential customers to brokers that steer the most loans to UWM. This rewards complicit brokers by increasing their flow of customers and revenue.

There are other allegations as well. For example, that the company “frequently flies corrupted brokers to its campus in Pontiac, Michigan” for conventions, courses, and events, which often include “lavish meals and live entertainment, all at UWM’s expense.”

Thereby, alleges the Ohio Attorney General, UWM has broken several Ohio consumer-protection and anti-corruption laws, including Ohio’s Residential Mortgage Lending Act and its Corrupt Practices Act.

Ohio Wants the Public’s Input

In the filing’s own words, “UWM does everything in its power to ensure that the mortgage brokers in its network are anything but ‘independent.” The filing explains further:

Through a pattern of misrepresentations, deception, and unlawful inducements, UWM and loyalist brokers have conspired to funnel Ohio consumers into purchasing UWM home mortgage loans, which are materially more expensive than readily available alternatives…As a result, UWM and its loyalist brokers have pilfered millions of dollars from the pockets of Ohio families.

UWM has issued hundreds of millions of dollars’ worth of mortgages in Ohio. Thousands of unsuspecting borrowers, according to the court filing, have been  “ensnared in UWM’s scheme.” This is why the Ohio A.G. wants United Wholesale Mortgage to be fined and forced to pay compensation for the borrowers’ losses. If Ohio’s lawsuit succeeds, the court will also issue civil penalties, and an order that the company must comply with state laws.

Meanwhile, Ohio is asking the public to submit consumer complaints against UWM, using the email address UWMOhioComplaints@bsfllp.com.

UWM^® Denies State’s Allegations

The Michigan-based lender denies the allegations. The company says it will fight Ohio’s claim to the fullest extent of the law.

UWM insists:

• The court case is a “PR stunt” by the Attorney General.

• UWM had no prior warning that Ohio considered the company in breach of state law.

• Brokers are within their legal rights to send most, even all, of their customers to one lender.

• Yost is rehashing allegations made in a 2024 filing by a law firm working with a hedge fund. A spokesperson for UWM said investment groups coordinated a smear campaign against UWM, then shorted UWM stock before releasing a scathing report, gaining financially from UWM’s subsequent stock price drop.

UWM communicated with Scotsman Guide, a data firm providing informational tools to mortgage originators, declaring all of the above. The company told Scotsman Guide it stands by the “thousands of independent mortgage brokers who serve the unique needs of borrowers across the country.”

Success—At What Cost, Ohio Asks (And Who’s Footing the Bill?)

Since 2020, UWM® has been the largest wholesale lender in the industry, says A.G. Yost’s court filing. Since then, UWM has become “the largest mortgage lender overall — retail or wholesale — accounting for more than $107.9 billion of mortgage originations annually.” But the company achieved this top-notch status, says A.G. Yost, through methods “widely regarded as brazenly aggressive.”

If Ohio is right, this company is sabotaging the very reason customers want a wholesale option. Buying a home is hard enough, as Ohio’s Attorney General has said, without a top company using its market power to deceive hopeful borrowers.