Next, I give you Celebrity Home Loans, which stands accused of laying off more than 90% of its employees just three days before they expected to be paid. Even Silicon Valley Bank paid its workers their annual bonuses — bonuses they earned in 2022 — just hours before the financial institution collapsed.
Yes, the timing of the bank’s incentives seems a tad shady, especially since the officers had to know they were on the brink of failure. But they weren’t paid to just the top guys. They were paid to everyone. Also, according to news reports, bonuses have always been awarded on the same day every year, and the payments had been in the works for days.
And yes, there does seem to be some shadier — more shady? — dealings among leadership. Reportedly, several officers sold stock they owned in the bank to SVR’s parent company, pocketing millions for themselves, just before the bank went under.
Pay Withheld
But Celebrity, if the suit proves true, denied employees timely compensation for the pay period immediately prior to their termination. “For many,” the suit alleges, “the outstanding pay included salaries, wages, and commission earned during the entire month of January and the first half of February.” According to the lead plaintiff, they weren’t paid for accrued paid time off and vacations, either.
Come on, guys. These are the people who brung you there. Where’s your sense of right and wrong? At least Homespire Mortgage has agreed to pay 12 former loan officers the full amount they were due for working overtime and off the clock. It took a lawsuit to get Homespire to step up, but it finally did.
Citing violations of the Federal Fair Labor Standards Act, the Homespire suit sought to recover unpaid overtime, minimum wages, and commissions as well as attorneys fees and court costs. According to the suit, the plaintiffs were individually owed between $9,500 and $42,960, including both total wages owed and liquidated damages. The loan officers were said to be compensated through a baseline hourly wage plus commissions on loans they closed. The amount of the commissions depended on a number of factors, such as the number of loans closed, loan size, and the loans’ interest rates.
Poaching
And then there’s the less-than-ethical practice of pouching the other guy’s employees. Here, PrimeLending is suing First Community Mortgage for raiding 100 of its employees last September, stripping it of about 10 percent of its workforce and $30 million in annual revenue. And earlier last year, LoanDepot sued CrossCountry Mortgage for purportedly poaching at least 32 of its New York employees, taking with them thousands of confidential documents.
Actually, CrossCountry also has been accused by two other lenders, Guild Mortgage and Caliber Home Loans, of raiding their workforces. In Caliber’s case, the company alleges that CrossCountry snatched more than 80 employees who were responsible for more than $2.3 billion in annual originations.
“We see cases like this all too frequently,” says mortgage banking consultant Joe Garrett of Garrett, McCauley & Co. “So here’s our advice: Anytime you’re thinking of hiring more than two or three employees from a competitor, talk to your attorney first to make certain you do it in a way that will avoid a lawsuit.”
And how about junk fees? Call them legit if you want, but to me, it’s out-and-out thievery. And the Consumer Financial Protection Bureau agrees. In March, the watchdog agency identified them as “illegal fees old and new ways that mortgage servicers attempt to run up” the tariff on homeowners.
Among the controversial fees: Charging the maximum late fee allowed by relevant state laws, even when owners’ mortgage contracts capped late fee amounts below state maximums. Charging for property inspection fees for every visit even after addresses were known to be incorrect. Charging for mortgage insurance premiums that were not owed. Failing to waive late fees for borrowers entering certain loss mitigation options that precluded late fees from being charged while in forbearance.
