Loandepot, Crosscountry Mortgage to settle poaching lawsuits

Two of the nation's leading mortgage lenders are ready to end their long-running courtroom feuds.

Crosscountry Mortgage and Loandepot have reached confidential settlements in principle in two separate poaching and theft of trade secrets lawsuits, according to court filings in recent days. The parties are now working on written agreements to end the cases, which included a combined 30 mortgage professionals as defendants and entangled CCM founder and CEO Ronald Leonhardt. 

Jessica Pizzutelli, shareholder at Littler Mendelson P.C. and attorney for Loandepot, notified a federal judge in a New York case Friday, while attorneys for all parties signed a joint status report filed Monday indicating a settlement in an Illinois case. 

Loandepot filed the complaints in 2022, accusing its competitor of raiding its branches and taking with employees thousands of confidential company documents. The lender and servicer accused CCM in New York of poaching at least 32 employees responsible for 81% of the company's origination volume in the Greater New York City region in 2021.

The Southern California-based Loandepot scored some victories against its rival in the past two years, including a preliminary injunction in the Illinois case and permission to depose Leonhardt over his alleged recruiting trips. It's unclear if Leonhardt was deposed before the recent announcements.

The Cleveland-based CCM meanwhile lobbied false advertising accusations against Loandepot, for its alleged use of loan officers' marketing materials after they switched firms. The lenders took part in arbitration proceedings in Illinois this past summer and were awaiting a judge's decision there, according to court filings. 

Jury trials had not been scheduled in either case. Representatives for both CCM and Loandepot declined to comment Monday afternoon, while attorneys for the parties didn't immediately respond to requests for comment. 

The lenders, which have a strained relationship, have settled a similar case in the past, reaching an undisclosed stipulation in a 2018 complaint from Loandepot in New Jersey. Crosscountry last month also said it reached a settlement in principle in a similar lawsuit from American Mortgage Network.

Both companies are among the industry's largest, with CCM ranked as the nation's top non-bank retail lender in 2023. Loandepot meanwhile retains a massive servicing portfolio and returned to profitability in its third quarter earnings.

The two suits came amid a spate of similar raiding and trade secrets complaints between lenders, as lenders attracted competing LO talent during the tail-end of the refinance boom. While the pace of those lawsuits has waned, lenders are still weighing serious accusations against one another.