Brokerage says UWM depositions poke holes in All-In's math

A brokerage fighting United Wholesale Mortgage's All-In mandate is trying to poke holes in how the company calculated penalties for breaches of the policy based on testimony by UWM employees. 

District Lending is countering UWM's motion for summary judgment in the lender's lawsuit to penalize the brokerage for allegedly selling loans to Rocket Mortgage. The smaller shop is one of two remaining brokerages fending off All-In suits in a Michigan federal court, before a judge who has ruled in UWM's favor in similar cases. 

The fight is moving forward after UWM Chairman, CEO and President Mat Ishbia sat for a 4-hour deposition on July 1 in a similar case with Atlantic Trust Mortgage, according to case filings. Attorneys for District Lending claim Ishbia was "unresponsive and evasive" in his testimony, and they're citing other employees' comments made under oath in its attempt to discredit UWM's policy. 

The brokerage argues that testimony by three others, including Chief Marketing Officer Sarah DeCiantis, shows the company arbitrarily determined its penalties for All-In violators. 

"UWM's upper management spun these figures from whole cloth after sitting in a room for a couple of hours," wrote attorneys for District Lending, referring to the All-In penalties added to brokers' wholesale agreements. 

Neither UWM nor attorneys for District Lending responded to requests for comment. 

Shaky math?

Attorneys for District Lending specifically raised questions about the math behind All-In in DeCiantis' May deposition, which she provided in the Atlantic Trust case.

It's unclear what exact formula UWM used to calculate District Lending's specific penalty under All-In, they wrote. UWM has said brokers are liable for "liquidated damages" of $5,000 per loan closed with UWM or $50,000, whichever is greater.

"Liquidated damages are hard to calculate. We were basing it off of our -- the amount of technology, marketing support, training, the things that we have a build versus buy approach for," DeCiantis said in the deposition.

"UWM's admission that the liquidated damages was a number concocted to penalize brokers raises genuine issues of material fact as to whether it is enforceable," District Lending's attorneys wrote.

The wholesale lender accused District Lending of originating over 100 loans with Rocket and Fairway in the years following the ultimatum's rollout in March 2021. 

Among other defenses, the brokerage says it didn't agree to the All-In addendum, and notes that its owner didn't electronically sign UWM's broker agreement renewal in 2022 and 2023. UWM counters that District Lending agreed by continuing to send loans to it, an argument that Judge Michelson has previously agreed with in other All-In cases.

The brokerage contends there are more questions to litigate in the case UWM wants to go away. The presiding U.S. District Judge Laurie Michelson has upheld UWM's All-In contract against two other brokerages who challenged the policy in similar cases in recent years. 

District Lending's attorneys will ask the court for additional time to depose Ishbia, they wrote. They also wanted to upload Ishbia's deposition to the court docket last week but were held up, claiming UWM improperly argued that the conversation was confidential.