Federal judge says suit against UWM’s ‘All-In’ initiative should be dismissed

A lawsuit against the “All-In” initiative at United Wholesale Mortgage (UWM) should be dismissed, a federal judge said, citing inadequate evidence to prove accusations against the lender. 

Florida-based Okavage Group sued UWM in April 2021, following the lender’s announcement of an ultimatum that the wholesale lender will no longer partner with brokers who also work with Rocket Mortgage or Fairway Independent Mortgage Corp.

Okavage refused to sign an addendum, which states that brokers cannot engage in business with Fairway or Rocket. UWM terminated its contract with the broker and no longer accepts mortgage applications from Okavage customers.

The one-member LLC and mortgage broker accused UWM of violations of the Sherman Act and Florida Antitrust Act, as well as monopolization of the wholesale mortgage market as a result of the lender’s ultimatum. 

Okavage Group had requested the court to declare the ultimatum illegal under federal and Florida antitrust laws. 

Okavage Group claimed UWM’s coercion of a boycott against Fairway and Rocket has had “the effect of increasing the costs of mortgage loans and has increased the cost of operations of plaintiff … to an artificially high, non-competitive level,” according to a court filing with the U.S. District Court for the Middle District of Florida.

But U.S. Magistrate Judge Laura Lothman Lambert wrote in a filing on Tuesday that Okavage provides “no underlying facts at all … to support its conclusion that the ultimatum has increased the costs of mortgage loans, nor does it specify whether the cost of all mortgage loans have increased, or only those in the wholesale market.”

The filing also noted that while Okavage alleges that brokers who decided to work with UWM could not apply for mortgages from Rocket or Fairway, there are no facts indicating the actual effects of the action on the market as a whole. 

In addition, despite Okavage’s claim that an “elimination” of Rocket and Fairway “significantly reduced competition in the relevant market,” there is nothing in the factual assertion that Rocket and Fairway were ever eliminated or that they no longer participate in the wholesale mortgage market, the judge wrote.

It is unclear whether the judge took into consideration Fairway’s recent decision to exit the wholesale channel. Earlier this month, Fairway — the nation’s ninth-largest mortgage originator — announced a 100% business shift to retail lending.

The judge also noted an insufficient link between the ultimatum and harm to competition within the overall mortgage market, or to the wholesale mortgage market.

“We are not surprised with the decision from the Magistrate Judge and know her recommendation is accurate,” a UWM spokesperson said. 

Okavage Group didn’t respond to requests for comment. It has 14 days to file written objections to the report’s proposed findings and recommendations.

Since UWM announced its controversial “All-In” initiative in March 2021, the lender has been hit with federal antitrust claims and has also sued other 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.