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UWM Gave Brokers Big Discounts to Play With. It Could Be Risky


United Wholesale Mortgage‘s (UWM) aggressive moves to gain an edge on the competition tend to provoke controversy.

The ‘ultimatum’ it imposed two years ago effectively prohibited broker partners from also doing business with two of UWM’s rivals. It quickly prompted antitrust lawsuits. The lender’s price reduction by 50 to 100 basis points across all its loans last year led to accusations that UWM was making it impossible for some lenders to do business in the space. The strategy forced competitors to exit the space entirely, arguably weakening the channel overall.

Two weeks ago, UWM announced that it would be giving 125 basis points to brokers as a discount to be used on any loans, with up to 40 basis points per loan. 


Colgate Selden, a former lawyer with the CFPB and current partner at the law firm Blank Rome LLP, agrees: “I think there’s a way you can do it to reduce your risk. But nothing is risk-free.”  


According to Selden, the rule is clear. If UWM is not reducing brokers’ compensation to change the mortgage pricing, the initiative is only a pricing discretion, which would be permissible under the law. However, it requires monitoring. 

“Now, let’s say the LO uses its full pool of discounts. Then the next quarter the company reduces the broker’s compensation to account for that,” Selden said. “The CFPB does forensic accounting. That’s how they caught several of the alleged violations in the past by going through and matching later quarters to what happened in prior quarters.”

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"UWM Gave Brokers Big Discounts to Play With. It Could Be Risky," by Flávia Furlan Nunes was published in HousingWire on January 24, 2023.