A class action lawsuit was filed against Celebrity Home Loans
Oakbrook Terrace, Illinois-based Celebrity Home Loans has been subject to a class action complaint. The complaint is based on the “callous” decision to shut down the company without giving employees a 60-day heads up. It also alleges that executives knew for weeks, if it not months, that the company was in trouble and that negotiations with Arizona-based On Q Financial Inc., which was to acquire parts of the business, had failed. This could have led to the company being closed down. Circuit Court of Cook County, Illinois County Department will hear the case on June 27th. Celebrity Home Loans, which is believed to have closed $5.9million in total mortgage origination volume last fiscal year, did not respond when asked. Former employees have called the events at CHL “bizarre”. Documents filed Feb. 24 give a glimpse into the events at the lender’s shop. According to the litigation, three days before many employees’ paydays, the lender sent separation letters “approximately 92 percent” of its workforce informing them that they would be being fired that day. According to employees who were affected by the layoff, the lender sent separation letters to 92% of its workforce on February 13, three days before payday. The letter also stated that the company would acquire assets including the remaining production team. David Robnett, CEO of the company, repeated the same message to a larger audience the next day. According to National Mortgage Professional, On Q Financial Inc. was also shocked by Celebrity Home Loans liquidity issues and wasn’t aware of what was going on inside the company it was to acquire. On Q spokesperson Pat Lamb told the publication that On Q was unable to complete its deal to acquire Celebrity’s assets due to the recent layoff. The lawsuit seeks damages equal to the amount “any unpaid or underpaid salaries, commissions, wages and final compensation, along with damages of 5% for each month in which such underpayments remain unpaid.” The company has been reducing its operations since March 2022. National Mortgage News interviewed former employees to find out if the company’s executives were optimistic about the future. They were ready to weather the storm. One former employee who was affected by the February reductions said that the CEO and other high-ranking executives of the company had always made very positive comments about the company’s state. There was a disconnect in the conversations about the real issues at the company. Evidently, something was seriously wrong. The bottom doesn’t always fall like this. This takes a long time. CHL joins a few lenders like Majestic Home Loan or Amerifirst Financial that have been accused of abruptly closing down operations without giving employees any explanation.