UWM sues nearby rival Towne Mortgage for poaching

United Wholesale Mortgage is suing nearby rival Towne Mortgage in a rare theft of trade secrets case from the industry's largest lender.

The lawsuit filed in January accuses nine former UWM account executives of taking trade secrets, including broker partner information, to Towne. The competing retail and wholesale lender and servicer last month denied the allegations in a Michigan state court filing. 

While UWM like other large firms is involved in numerous litigation, the company was not involved in the wave of poaching cases between originators during the refinance boom. UWM says Towne tried to expand its wholesale presence by scooping up UWM talent between last August and this past January. 

The Troy, Michigan-based Towne is an approximately 20-minute drive, or 10 miles from UWM's sprawling Pontiac campus. While the firm is a fraction of the size of the megalender, it's a competitive player, reporting nearly $2 billion in loan originations and purchases in 2024, according to Home Mortgage Disclosure Act data compiled by Richey May. 

Eight of nine named individual defendants appear to still work at Towne after making the switch, according to the company's website. In a statement this week, a spokesperson for UWM said the employees in question had consciously breached their employment agreements. 

"Therefore, UWM has taken decisive legal action to hold Towne Mortgage and a select number of former UWM team members accountable and to protect the hard work and dedication of our team," the statement said. 

Towne's attorney, and the outside counsel who filed the defendants' response, didn't return requests for comment. 

UWM accuses Towne of a raiding campaign

The lawsuit charges Towne with familiar violations in other poaching suits, from breach of contract to tortious interference. The named defendants all had non-compete, non-solicitation and confidentiality agreements with UWM in effect for a year after their departure; four of them had agreements lasting two years post-departure.

Former UWM AEs used their work email accounts to send to their personal addresses confidential company data, including broker partner compensation information, the lawsuit alleges. Towne denied the information was proprietary and confidential, and said at least one of the defendants deleted the emails from his personal account before resigning from UWM. 

The complaint also accuses one Towne executive, a former UWM divisional leader, of leading the scheme. That employee, who is not a named defendant, allegedly aided AEs to solicit broker partners for Towne before they resigned from UWM. Towne denied that accusation, stating the executive hadn't worked at UWM for 10 years, and had worked at four other companies since, suggesting his knowledge of UWM was outdated and limited at best. 

While UWM states counsel for the sides met in November 2024 to discuss the employment agreements, Towne said UWM never provided any documents. 

Without providing additional details, Towne listed numerous defenses, among them that UWM failed to pay employees wages under state and federal law, and that the claims could be subject to arbitration. 

The industry leader, which regularly generates tens of billions of dollars in loan volume each quarter, is embroiled in federal lawsuits on topics including its retirement savings plan, its lending practices, and its "All-In" mandate for brokers.