Mat Ishbia
Ohio Attorney General Dave Yost is suing Pontiac-based United Wholesale Mortgage, the nation's largest mortgage lender, for “predatory business practices” in Ohio.
The lawsuit, filed Thursday in Ohio, alleges that United Wholesale Mortgage falsely claims mortgage brokers are independent from the company and help borrowers save money on loans by finding the best deals from different lenders.
"In reality," the lawsuit says, "the company colludes with many brokers to funnel nearly all loans back to itself," according to a press release from the Ohio Attorney General's Office. "The scheme enables the company to charge borrowers above-market rates and fees instead of saving them money, as it claims."
“Thousands of unsuspecting borrowers did not obtain any such ‘independent’ advice or representation,” the lawsuit alleges. “Rather, they were ensnared in UWM’s scheme and steered, without their knowledge, to UWM’s higher-priced loans.”
Mat Ishbia, 45, a big Michigan State University booster, is CEO and chairman of United Wholesale Mortgage. He also is the majority owner with his brother Justin Ishbia of the NBA team, the Phoenix Suns, and the WNBA team Phoenix Mercury.
In a statement to Crain's Detroit Business, a UWM spokesperson said:
"We had no prior knowledge or warning of this lawsuit filed by the Ohio Attorney General, which is in and of itself suspicious. It essentially repeats the frivolous allegations contained in a virtually identical lawsuit filed last year by a law firm that has a business arrangement with a hedge fund. In response to that lawsuit, we are seeking sanctions against the law firms that filed it and have moved to dismiss the claims. We will take similar actions against this PR stunt by the Ohio Attorney General and will continue to defend these allegations to the fullest extent permitted by law."
The lawsuit further alleges:
“While UWM proclaims ‘brokers are better’ because they are ‘not captive or connected’ to any one lender and instead ‘independently shop’ to get borrowers the ‘best deal,’ UWM secretly works to ensure that brokers operate on UWM’s behalf, driving up borrower costs and increasing UWM’s profits.
“In pursuit of increased revenues and market share, UWM has corrupted hundreds of so-called ‘independent’ mortgage brokers in Ohio to make them captive and connected to UWM, so that they do not ‘independently shop.’ This means borrowers do not get the ‘best deal.’ Instead, they get the UWM deal — no matter what — even if it is significantly more expensive, as it almost always is.”
