LoanDepot imposed stiff LOs on its own LOs based on commissions and rival claims
CrossCountry Mortgage claims that loanDepot “routinely, and falsely”, underpaid its originators’ commissions. This is CrossCountry Mortgage’s latest scathing counterclaim in a lawsuit for theft and poaching of trade secrets. CCM was sued by LoanDepot last July in New York Federal Court for allegedly poaching at most 32 of its employees since February. The lender, based in Cleveland, has denied any wrongdoing. It also included the commission claims in its responses filed in late 2012 and earlier this week. “LoanDepot routinely and falsely designated bona fide company-generated loans to pay a lower compensation to the originating individual defendant,” CrossCountry’s counsel wrote in a lengthy response this past week. This was a material breach of contract, as loanDepot’s loan agents were entitled to a higher compensation for self-generated loans than they were for company-generated loans. “Another former loanDepot worker who became a CCM originator claims that his employer pushed the loan’s closing date beyond a 30-day earnings window to deprive him from the compensation. The allegations didn’t specify the amount of compensation that employees were denied. Representatives from CrossCountry as well as loanDepot declined to comment this week. CrossCountry is also accused of stealing trade secrets by loanDepot in the collection of financial information and customer contact list details. The lender stated that the named defendants were responsible for $846 million in loanDepot’s annual loan volume or 81% of its New York production. These accusations are similar to the loanDepot’s separate Illinois action against CCM. In that case, a federal judge recently barred CrossCountry of using the thousands loanDepot documents it had gathered from employees who were transferred. CrossCountry claims that loanDepot is suing the suits to retaliate for rejecting an alleged merger offer made by loanDepot in 2021 after its initial public offering. According to S&P Global data, the two lenders are among the top players in the industry. LoanDepot generated $48 billion last year through Oct. 31, while CCM generated more than $31 billion during the same period. The Ohio-based lender has accused CCM workers of being poached by loanDepot, misappropriating trade secrets in Chicago and Pennsylvania, as well as using the names and likenesses of current CCM originators and former loanDepot employees to attract business. CCM counsel has also claimed that loanDepot does not treat basic customer contact information like a trade secret. This claim was rejected by a judge in Illinois. The dispute over loanDepot’s proposed preliminary injunction against CCM was ongoing as of Friday. A federal judge has given a March 10 deadline to file responses. Lenders have been hit hard by the court battles. CrossCountry claims that it spent hundreds of thousands of dollars in the New York loanDepot case. Guild Mortgage claims that it spent more than $2 million to litigate a poaching case against CCM in a federal case that was since dismissed. CrossCountry is also facing a new accusation by Paul Lundholm (an ex-employee) that the firm failed its workers when mortgage activity slows down last year. CCM sued Lundholm in Ohio to get his sign-on bonus. The suit was then brought to the Northern District of Ohio federal courts.