6 legal disputes affecting the mortgage industry this year

6 legal disputes for mortgage professionals to watch

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Cyberattacks, discrimination claims, poaching and other poor hiring practices are just some issues the mortgage industry has faced in court this year.

Read more about these related lawsuits in our roundup.

Borrowers sue over servicer's data breach

Two separate lawsuits filed this month accuse Pingora Loan Servicing of failing to protect personally identifiable information in a breach that lasted 41 days in the fall of 2021.

“Due to defendant’s negligence, cyber criminals obtained everything they need to commit identity theft and wreak havoc on the financial and personal lives of thousands of individuals,” said William Federman, an attorney with Federman and Sherwood.

Victims in both cases are suing for negligence, breach of implied contract and unjust enrichment.

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Mortgage servicer sued by borrowers over data breach

Wells Fargo probed over hiring practices

Federal investigators are looking into Wells Fargo’s hiring procedures after a report that the firm was conducting “fake interviews” with nonwhite and female job applicants. The civil rights unit at the U.S. attorney’s office in Manhattan is leading the probe, according to the New York Times.

In a statement Thursday, Wells Fargo said that “no one should be put through an interview without a real chance of receiving an offer, period.”

Allegations of poor hiring practices are not new for Wells Fargo. Sen. Sherrod Brown of Ohio wrote to CEO Charlie Scharf in May asking him to “once and for all address Wells Fargo’s governance, risk management, and hiring practices — weaknesses that have plagued the bank for almost a decade.”

Read more:

Wells Fargo faces criminal probe over interview practices: Report

Alleged talent poachers taken to court

After it was accused of raiding talent from two of its competitors, Ohio-based CrossCountry is suing one of its accusers, Guild Mortgage, for allegedly persuading a departing employee to divert loans and information before leaving the firm. This comes after a previous lawsuit last October in which Guild sued CrossCountry over an alleged raid of Guild’s Kirkland, Washington branch.

“On information and belief, Guild has perfected its scheme and will continue to harm CCM unless stopped,” said Marc Cwik, an attorney with Lewis, Brisbois, Bisgaard & Smith, LLP, on behalf of CrossCountry.

Separately, Dallas-based Caliber Home Loans is suing CrossCountry for allegedly stealing more than 80 of its employees responsible for more than $2.3 billion in annual mortgage originations.

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Lenders take more poaching accusations to court

Movement Mortgage settles discrimination claims

Movement Mortgage agreed to pay $75,000 to settle claims that a loan officer with the firm twice engaged in discriminatory practices. The complaints, filed by the National Community Reinvestment Coalition with the Department of Housing and Urban Development, claimed that Seattle-based officer Dave Skow violated the Fair Housing Act by withholding loan information and product options to the organization’s Black test applicant.

“This agreement reflects HUD’s commitment to ensuring that everyone has equal access to credit regardless of their race or national origin,” said Demetria L. McCain, HUD’s principal deputy assistant secretary for fair housing and equal opportunity.  “It is imperative that lenders comply with fair housing laws.”

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Movement Mortgage agrees to resolve discrimination claims

LO wins out in overtime salary lawsuit

United Wholesale Mortgage has agreed to pay $2.75 million after a former employee’s lawsuit last July claimed the company did not pay account executives overtime salary.

"None of our policies or practices need to change or will change at this time, as we have always treated our account executives and team members correctly but made the decision to settle this case as is," Allen Beydoun, executive vice president of sales wrote in a memo viewed by National Mortgage News.

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UWM settles overtime case for $2.75M

Servicer to pay $200K for breaking NJ law

Select Portfolio Servicing agreed to pay over $200,000, plus court and attorneys’ fees, to settle a class-action lawsuit over its compliance with a New Jersey law relating to foreclosure judgments.

“The [New Jersey] law doesn’t say you have the right to sue for this, the law just says if you get a foreclosure judgment, this is your new statutory interest rate that you can charge,” said Ari Marcus, an attorney for the plaintiff. However, “the Fair Debt Collection Practices Act says you can not charge an amount that's not authorized by law.”

The settlement was approved by U.S. District Court Judge Brian Martinotti and calls for the distribution of money to around 1,500 affected individuals.

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Servicer may pay over $200,000 to settle class-action suit