Union Home Mortgage sues another rival for trade secrets theft

Union Home Mortgage is suing yet another competitor to stop a former loan officer from using customer information he allegedly took with him to his new employer.

The lawsuit filed last week asks a federal judge to force EMM Loans to return all information it acquired with its hire of Christopher Fratelli in April. As part of an alleged conspiracy, Fratelli recommended to UHM his assistant be laid off only for her to join him at EMM. Fratelli is also still originating loans in his former Pennsylvania market in violation of an employment agreement, UHM contends.

The former UHM branch manager and current regional vice president of sales at EMM, nor his assistant, are named as defendants in this case. The lender in a statement Monday defended its company culture and said it brought the suit after internal efforts to address the issue failed. 

"While Union Home would prefer not to go down this path, our company will do so when necessary," wrote Cody Nett, general counsel for UHM. "And, we are reassured by the fact that having to file suit remains relatively rare."

Fratelli and EMM didn't respond to requests for comment this week. 

UHM has now been a party to at least four misappropriation of trade secrets suits, three as a plaintiff. It settled one of those complaints against a former loan officer in February. A judge last month granted Supreme Lending's request to toss a separate lawsuit against four Supreme employees. And just three weeks ago UHM filed a similar claim against Go Mortgage and two former workers. 

The Strongsville, Ohio-based lender this summer also settled a complaint from Caliber Home Loans accusing UHM of raiding 52 employees across the Southeast last year. 

The originator in UHM's latest suit, Fratelli, began working with the lender in 2015 as a producing branch manager in central Pennsylvania. He originated around $20 million in loans for UHM across the state, according to the lawsuit. 

EMM began negotiating with Fratelli as early as June 2022 before his exit this April 3, and the sides discussed ways to circumvent his non-compete agreement, UHM said. Fratelli told his firm to include his assistant in a layoff and she was terminated in March. The assistant later joined Fratelli and today is listed as a mortgage loan originator alongside Fratelli. 

Counsel for EMM allegedly dismissed a warning by UHM in April that Fratelli could be violating his employment agreements. UHM accuses the originator of continuing to work in central Pennsylvania, including with former UHM prospects. It points to evidence including search history on his former work laptop for office furniture in the Harrisburg, Pennsylvania area.

EMM's website lists the Fratelli team in both Sarasota, Florida and the firm's Cherry Hill, New Jersey headquarters. Consumer NMLS records as of Tuesday show Fratelli based in EMM's Cherry Hill, New Jersey headquarters with origination licenses in Florida and Pennsylvania.

Fratelli also allegedly took screenshots of UHM's Encompass loan origination system, downloaded them to his personal cloud storage and uploaded them to EMM's own Encompass LOS. 

UHM is seeking unspecified damages alongside preliminary and permanent injunctions against EMM from using and returning the data in question. A summons in the U.S. District Court for the District of New Jersey was issued to EMM last week. 

The Ohio lender is involved in more recent litigation, denying wrongdoing in a pending discrimination complaint from a former employee who claims she was fired while pregnant. 

UHM in September also settled another lawsuit against a former loan officer seeking his $217,000 sign-on bonus. That lawsuit, settled for undisclosed terms, was similar to litigation by numerous lenders against former employees seeking the significant sign-on bonuses they acquired during the mortgage industry's recent boom period.