Rocket sues UWM for $100M over nonsolicitation pact

"They were part of three bundles of mortgages with $65 billion in unpaid principal balance. Companies usually pay a higher price for servicing rights with nonsolicitation agreements. If the seller solicits the borrowers to refinance their loans, the value of the servicing rights is reduced. But in the case of these bundles, Rocket claims that UWM's actions resulted in prepayment rates 2.5 times higher than prepayment rates for comparable loan pools, equating to nearly $100 million in lost revenue that it seeks to recover through damages."

"Importantly, in the purchase agreements for those rights, UWM agreed to a broad non-solicitation covenant under which UWM was prohibited from soliciting, directly or indirectly, the refinancing of any mortgages within the loan pools that Mr. Cooper purchased, the lawsuit states. The prohibition against solicitation includes brokers, agents and independent contractors working on UWM's behalf. The lender, however, is permitted to engage in nontargeted mass advertising programs to the general public and accept applications from borrowers who initiate a refinance action on their own."

"The lawsuit also states that in March 2025, Mat Ishbia, chairman and CEO of UWM, directed brokers in a weekly video segment to target refinances on loans whose servicing rights were sold to Mr. Cooper. While putting a bounty on the loans, Rocket claims, he launched Refi Shield 100 to offer a 100 basis-point rate reduction for these borrowers. Mr. Ishbia emphasized that he would lose money just for fun' to harm Mr. Cooper by effectively stealing loans from Mr. Cooper's servicing portfolio through its wrongful solicitations of these loans in blatant breach of UWM's contractual obligations, according to the court filing."

Mr. Cooper purchased mortgage servicing rights from UWM between January and June 2024 for $773 million. The rights covered three bundles totaling $65 billion in unpaid principal balance. Rocket claims UWM’s solicitation of borrowers to refinance increased prepayment rates to 2.5 times those of comparable loan pools, leading to nearly $100 million in lost revenue. The purchase agreements allegedly included a broad non-solicitation covenant barring UWM from soliciting, directly or indirectly, refinancing of mortgages within the purchased loan pools. The restriction also covers brokers, agents, and independent contractors acting for UWM, while allowing general mass advertising and borrower-initiated applications. Rocket alleges UWM leadership directed brokers to target refinances in March 2025 and used programs offering rate reductions to induce refinancing, violating contractual obligations.

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