United Wholesale Mortgage (UWM) is the largest wholesale mortgage company in the country. It is also the largest overall residential lender and the largest purchase lender in the country (according to their SEC filings). Obviously, when you are on top, people will take shots at you. “Heavy is the head that wears the crown” and whatnot…

However, UWM probably was not ready for the article that was published yesterday by Hunterbrook Media (which I will discuss more below). Whether you want to generously call it an “expose” or, less generously, a “hit piece”, the article had some fascinating information in it. Not the least of which is how UWM uses its lead generation arm (www.MortgageMatchup.com).

Putting aside the issue of whether UWM is good or bad for consumers/brokers. Also, putting aside the issue of whether Hunterbrook being the media arm of a hedge farm completely biases the article. I have one major question after reading the article.

Does the “MortgageMatchup.com” rankings violate RESPA?

The Hunterbrook article alleges that MortgageMatchup.com (which is owned by UWM) uses UWM’s PRO Rankings system in which UWM rates brokers and “doles out a wide variety of benefits”. The PRO Rankings system gives out more points for more UWM services the brokers use. Directly from UWM’s website: ” The higher your PRO Score the quicker your turn times will be and the more visibility you’ll have on Mortgage Matchup.”

So, the more services a broker uses the higher they can rank on MortgageMatchup.com.

The CFPB issued an Advisory Opinion in February 2023. This Advisory Opinion was published “to address the applicability of the Real Estate Settlement Procedures Act…to operators of certain digital technology platforms that enable consumers to comparison shop for mortgages…including platforms that generate potential leads for the platform participants.” It’s obvious that MortgageMatchup.com would fall under this.

The Advisory Opinion states that a platform operate is getting a referral fee in violation of RESPA Section 8 when the following three things occur:

(1) The platform non-neutrally uses or presents information about one or more settlement service providers participating on the platform;
(2) Non-neutral use or presentation of the information has the effect of steering on consumers to use that settlement service provider; AND
(3) The platform operator receives a payment or other thing of value for the referral.

With MortgageMatchup.com, UWM is presenting the mortgage brokers based on their PRO Rankings points which are, by UWM’s OWN admissions, based on services used by the mortgage brokers. The non-neutral use boosts particular lenders on the MortgageMatchup.com website. Higher positions or as UWM says “higher visibility” is known to lead to more selection by consumers.

Clearly #1 and #2 are met here. But, where is the thing of value? Regardless if the brokers are paying to be on the site (and I don’t know if they are), then they are still violating RESPA because UWM is receiving additional business from the brokers for using UWM’s services.

Aside from any other problems the Hunterbrook article has exposed, the risk to both UWM and their brokers for RESPA violations is real.

Who is Hunterbrook Media?

Hunterbrook Media has written exactly one investigation. The UWM investigation. Interestingly, there is a disclosure at the end of the UWM article that says (among other things):

“Upon publication, Hunterbrook Media plans to share this article and the data with: Shareholder litigation firms whose clients own $UWMC shares and may have claims due to UWM’s governance and performance, including paying the CEO and his family over $600 million in annual dividends despite reporting a $70 million loss in 2023 by consistently missing SPAC revenue projections”

So, they are going to assist plaintiff’s firms in litgation against UWM. Wow, that’s not great.

Also, not great:

“Due to this editorial opinion and with compliance review, Hunterbrook Media provided the article to its investment affiliate, Hunterbrook Capital. Hunterbrook Capital took the following positions: The fund went short $UWMC, long $RKT, and purchased derivatives. ” (Emphasis in original)

Yes!

You read that right. Hunterbrook Media is an affiliate of a hedge fund shorting UWM. Isn’t that convenient?

I don’t really have an issue with Hunterbrook Media being an affiliate of a hedge fund. But, burying these disclosures at the end of the article seems a little dishonest. It should be at the beginning, so consumers reading the article know the truth. Something along the line of:

“Dear Reader: Enjoy this article. We WANT the stock of the subject of this article, UWM, to tank. So, here is a bunch of dirt on the company.”

Whatever you think of UWM or Hunterbrook Media, the reverberations of this article aren’t going to go away soon.

Keeping you in the loop.