A class action lawsuit brought by mortgage lenders in California alleges that United Shore Financial Services LLC wrongfully changed the commission structure on mortgages that were quickly paid off by borrowers.
The lawsuit, filed Friday in U.S. District Court for the Eastern District of Michigan, alleges that United Shore — which does business as United Wholesale Mortgage, or UWM — has breached its contract with the brokers by "withholding commissions or charged back commissions on loans that were paid off over 180 days."
A spokesperson for Pontiac-based UWM, the country's largest wholesale mortgage lender, strongly denied the allegations in a statement to Crain's on Sunday evening.
"UWM partners with over 11,000 independent mortgage brokers nationwide and the allegations brought on by a couple brokers will be vigorously defended as they hold no merit," the UWM statement reads. "UWM is the (No. 1) wholesale lender for six consecutive years with over 34 percent market share. The company has always and will always act in the best interest of borrowers, brokers and the entire broker channel."
The brokers say they have long worked with UWM as one of the wholesale mortgage lenders in the marketplace and operated under a legal agreement that mandated UWM pay a commission to the brokers after 180 days. The brokers would "encourage" their borrowers to avoid any refinancing during that period.
But in the spring, the lawsuit says, UWM informed about 100 brokers in California "that it was retroactively amending its contracts so that borrowers would be required to hold onto their loans for 365 days otherwise the brokers would need to return their commissions."
The brokers bringing the lawsuit, citing invoices they say they received from UWM, say that the mortgage lender insists they owe between about $10,000 and $77,000 in commissions from mortgage loans that were paid off early.
The brokers named in the lawsuit are:
- Rishi Bhasin of First Plus Funding Inc.
- Anne James of First Allied Financial Services Inc.
- Nelson Otero of Reliance Mortgage Service
While each of the brokers bringing the lawsuit have their businesses located in California, the lawsuit says that other members of the class action case "are so numerous and geographically disperse" that naming all would be impractical.
UWM is nearing the culmination of a deal that will make it a public company by merging with a special purpose acquisition company, valuing UWM at more than $16 billion.
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December 14, 2020 at 06:01PM
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United Wholesale Mortgage sued by mortgage brokers in class action case - Crain's Detroit Business
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