UWM is suspicious of media outlet's relationship with law firm

United Wholesale Mortgage wants to know how attorneys behind a racketeering lawsuit worked with a media outlet behind a scathing report about the company this spring.

The lender last week doubled down on calls to dismiss the class action complaint accusing UWM of scheming with brokers to cheat borrowers out of billions of dollars in excess fees. The motion for relief filed Sept. 17 in a Michigan federal court is the latest salvo in UWM's defense against allegations raised in Hunterbrook Media's lengthy April investigation.  

Boies Schiller Flexner LLP filed a 107-page lawsuit on behalf of borrowers against UWM the same day Hunterbrook's story was published. The article said the law firm had previously entered an agreement with the nonprofit newsroom. Hunterbrook's hedge fund parent at the time also said it took a short position in UWM's stock, and a long position in rival Rocket Cos.' stock.

Lawyers for UWM likened the timing to a "short-and-distort" scheme, an effort to drive down the company's stock via unsupported accusations. The filing claims Boies Schiller Flexner declined to share with defendants' attorneys their agreement with Hunterbrook. UWM questioned if opposing counsel are sharing in any hedge fund profits from the short position. 

The lender suggested plaintiffs' recent first amended complaint contains legal and factual errors, and asked a judge to impose sanctions on plaintiffs or hold an evidentiary hearing to uncover details about the relationship between Boies Schiller Flexner and Hunterbrook. 

"We remain committed to protecting our reputation and that of the hardworking mortgage brokers across the country who have been unfairly targeted in a campaign to benefit an activist hedge fund," said a company spokesperson in a statement last week.

Counsel for borrowers and Hunterbrook, which itself is not a party to the suit, didn't respond to requests for comment last week.

Hunterbrook claimed its research showed 8,655 independent brokers last year sending 99% or more of their loans to UWM, helping it to grow into the nation's largest originator. The company's customers last year paid over $865 more than the median lender, controlling for loan type and interest rate, Hunterbrook claimed. 

The complaint, which also names company president and CEO Mat Ishbia as a defendant, accuses the company of among other violations breaching its fiduciary duty to customers. 

UWM's latest filing recounted some of its arguments from a June motion to dismiss and criticized Hunterbrook's analysis of public data. Home Mortgage Disclosure Act records don't account for crucial credit score and rate lock factors in loan costs, attorneys wrote. 

The company took issue with the "corruption" label for brokers sending the majority of their volume to UWM, stating that over 6,500 of those originators closed only three or fewer loans in total the entire year. 

Lawyers for plaintiffs also allegedly sent "overbroad" preservation letters to at least 61 mortgage brokers and loan officers, threatening them with sanctions without informing them of discovery-related protections. 

UWM, in defending its All-In initiative under scrutiny, cited a court victory against brokerage America's Moneyline earlier this year. The mortgage giant is still suing three other brokerages for violating All-In, and battling a similar complaint from a fourth company. 

UWM is the nation's largest wholesale originator and top overall lender by volume, holding those ranks in its second quarter earnings. It recently raised its conforming loan limit for the new year amid several company rollouts.