The legal action, spearheaded by Hagens Berman, centers on allegations that UWM failed to disclose the extent of its exposure regarding a bid for Two Harbors Investment Corp. While UWM initially announced a $1.3 billion acquisition deal in December 2025, that agreement collapsed when Two Harbors opted for a different buyer in March 2026. The lawsuit claims UWM maintained speculative, over-hedged positions long after the merger prospects had vanished.

The fallout became public on August 6, 2026, when the company reported a $451 million net loss and a total equity plunge of approximately $615 million. Management admitted to being over-hedged during this period, a disclosure that prompted a plan for significant shareholder dilution. Between the initial merger announcement and the August market correction, UWM shares dropped roughly 75% in value.

Reed Kathrein, a partner at Hagens Berman, is scrutinizing why the company delayed unwinding its hedge positions and why leadership remained silent regarding the risks of naked hedging for months. The firm is currently seeking investors who suffered substantial financial harm during the class period of March 9, 2026, through August 5, 2026, to assist in the ongoing investigation.