PRMG and NJ-based lender resolve poaching lawsuit

Two mortgage competitors have apparently settled a years-old poaching and theft of trade secrets lawsuit that never approached a jury trial. 

An attorney for Nationwide Mortgage Bankers wrote in a filing this month the firm reached a resolution in a complaint from Paramount Residential Mortgage Group. The larger PRMG sued NMB in July 2022 in federal court, claiming the rival poached 41 employees from five states and took with it confidential company and customer information. 

Those departed employees were responsible for $260 million in annual loans which generated $3 million in revenue annually for PRMG, the lender contested. A dollar amount for the resolution wasn't disclosed, and an attorney for NMB this month wrote in a court filing that the parties are still working on written settlement terms. 

Neither attorneys nor representatives for the companies immediately responded to requests for comment Monday. 

PRMG recorded over $6.2 billion in origination volume in 2023 according to Home Mortgage Disclosure Act Data. It also reports to the Nationwide Multistate Licensing System 189 active branches and 768 sponsored LOs. NMB meanwhile spans 36 branches and 254 sponsored LOs, and reported more than $1.3 billion last year in production volume according to the public databases. 

The lawsuit was filed in the midst of numerous similar raiding complaints between home loan players during the tail end of the recent refinance boom. PRMG is also still seeking tens of millions of dollars in damages from Axia Home Loans in a 2020 poaching case whose trial has been continuously postponed in a Southern California state court.

Corona, California-based PRMG accused NMB of working with two of its managers to coordinate the raid and a partial mass resignation in May 2022. The branch managers, loan officers and underwriters came from offices in Florida, Ohio, Indiana, Kentucky and Michigan, PRMG's amended complaint filed in 2023 said. 

Five days after the raid, PRMG said it sent a cease-and-desist letter to NMB regarding departed employees' non-solicitation and confidential information restrictive covenants. NMB allegedly ignored that letter and continued to poach more employees after the May raid. 

Staff moving to NMB sent confidential customer information to their personal email addresses ahead of their move, PRMG said. Nationwide Mortgage Bankers allegedly offered indemnification for the incoming employees from penalties and damage awards PRMG could garner in future litigation.

The defendant firm also countersued PRMG for unfair competition, claiming the original lawsuit was an effort to stifle the firm's former employees. A New Jersey federal judge rejected those claims in May on legal grounds, dismissing them with prejudice meaning they couldn't be refiled. 

Amidst the dozens of raiding and trade secrets cases between lenders in recent years, companies have increasingly moved to resolve claims. Some long-simmering feuds between major players, including multiple cases between Loandepot and CrossCountry Mortgage, remain.