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Axios Detroit
Mat Ishbia's mortgage empire sued over fees
By Joe Guillen,
2024-04-12
Mat Ishbia's mortgage empire in Metro Detroit is the focus of a federal lawsuit alleging that borrowers nationwide paid inflated fees.
Why it matters: The lawsuit accuses Ishbia and his Pontiac-based company, United Wholesale Mortgage, of drumming up business by misleading borrowers into thinking their mortgage brokers would be shopping for the best deal.
Instead, the business model allegedly funneled thousands of borrowers to UWM, which then charged excessive fees that could amount to billions of dollars.
Hunterbrook Media shared its data and research with the Boies Schiller Flexner firm, which is representing plaintiffs seeking class-action status in the suit filed April 2 in U.S. District Court.
Hunterbrook's article , also published April 2, includes a disclaimer that it's affiliated with Hunterbrook Capital, which has taken a short position on UWM's stock.
A spokesman for Gilbert's Rocket Mortgage denied any financial interest in Hunterbrook or involvement in its article about UWM, per the Detroit News .
Catch up quick: UWM's business is built on relationships with independent — or wholesale — mortgage brokers who are hired by borrowers to find the best mortgage for them.
Brokers can earn a 1%-2% commission for their efforts. They are different from retail mortgage brokers employed by lenders such as Wells Fargo and Bank of America.
Friction point: According to the lawsuit, UWM enticed wholesale brokers with various perks to funnel borrowers toward UWM, which then charged excessive fees.
Last year, more than 8,000 wholesale brokers funneled to UWM 99% or more of their mortgages, which were valued at approximately $11.7 billion, the lawsuit claims.
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