Broker who sent loans to Rocket and Fairway has to face more court action
A federal judge has denied a motion to dismiss a breach-of-contract lawsuit filed by United Wholesale Mortgage, LLC (UWM) against Atlantic Trust Mortgage Corporation, allowing the case to proceed over allegations that the Florida-based mortgage broker violated an exclusivity clause added to its broker agreement.
The dispute centers on UWM’s “All-In Initiative,” a policy introduced in March 2021 requiring its broker partners to stop submitting mortgage loans to two competing retail lenders—Rocket Mortgage and Fairway Independent Mortgage—as a condition of continuing to work with UWM.
To implement the initiative, UWM amended its broker agreement by adding what it called the “All-In Addendum,” which barred brokers from submitting loans to the two named competitors and included a liquidated damages provision—$5,000 per loan or $50,000, whichever is greater—in the event of breach.
Atlantic Trust had been a broker partner since 2018. Although it ceased submitting loans to UWM shortly after the All-In Initiative was announced, it never formally terminated the agreement. In late 2022, UWM invited Atlantic Trust to resume its relationship under a 60-day “trial period.”
According to the amended complaint, Atlantic Trust reviewed UWM’s yearly renewal package—including the All-In Addendum—on December 19, 2022, and approved the renewal through UWM’s online broker portal on January 19, 2023. From December 2022 to February 2023, Atlantic Trust closed 10 loans with UWM during the trial period and continued to submit loans thereafter, totaling 87 submissions.
UWM alleges that beginning in or around March 2023 and continuing through February 2024, Atlantic Trust also submitted at least 71 mortgage loans to one or both of the prohibited lenders while still working with UWM, in violation of the Addendum. UWM is seeking at least $350,000 in liquidated damages.
Atlantic Trust moved to dismiss the complaint, arguing that the All-In Addendum was not valid because it was not signed by both parties, as required under Section 7.01 of the broker agreement. It also contended that the amendment was unenforceable under Michigan Compiled Laws § 566.1 due to a lack of additional consideration.
U.S. District Judge Terrence G. Berg rejected both arguments. The court found that the broker agreement allowed amendments under two provisions: Section 7.01, which requires a signed writing, and Section 7.08, which permits UWM to unilaterally amend the agreement by posting changes on its website. Under Section 7.08, a broker’s continued submission of loan applications constitutes acceptance of such amendments.
The court held that UWM had sufficiently pleaded it followed this process. UWM alleged that Atlantic Trust received notice of the Addendum, approved the renewal through UWM’s portal, and submitted loans thereafter.
Judge Berg also found that UWM plausibly alleged sufficient consideration under Michigan law through the continuation of the parties’ business relationship. The court cited precedent holding that such continued dealings can constitute valid consideration for contract modifications.
The decision allows UWM’s lawsuit to proceed and may carry implications for the enforceability of exclusivity provisions and unilateral amendment clauses in wholesale mortgage broker agreements.
The court’s order is not a final ruling on the merits but requires Atlantic Trust to file an answer within 14 days.
Case Citation: United Wholesale Mortg. v. Atl. Tr. Mortg. Corp., No. 2:24-CV-10216-TGB-DRG (E.D. Mich. Mar. 25, 2025)
Court: U.S. District Court for the Eastern District of Michigan
