FBC Mortgage sues New American Funding, again, for poaching

FBC Mortgage is suing New American Funding, alleging the larger competitor has poached its staff and is interfering with its relationships with home builders. 

The Orlando lender filed its complaint last week in an Arizona federal court, its second poaching and theft of trade secrets claim against NAF this year. The newer suit accuses four ex-FBC employees, in their new roles at NAF, of using FBC’s confidential pricing strategies to gain business with their former employer’s homebuilder partners. 

“The Former FBC employees are individually and collectively with NAF soliciting FBC’s clients, employees and builder accounts and undercutting FBC from a pricing standpoint,” wrote attorneys for FBC.

The lawsuit alleges NAF solicited an entire FBC branch in California and is attempting similar moves in Arizona and Georgia. An attorney and representative for FBC didn’t respond to requests for comment this week, while a spokesperson for NAF declined to comment. 

The former workers left FBC for the rival between September and November and took company information with them before departing, the suit claims. The personnel have performed loan origination activity for Woodside Homes and The New Home Company, in violation of their non-compete agreements. NAF allegedly had no prior relationship with the firms. 

The named defendants also told the home builders to cease, or reduce their relationship with FBC, according to the complaint. The homebuilder relationships provide the lender with a stream of qualified leads, decreased transaction costs and a smoother origination process, bolstering loan volume. 

FBC said it sent demand letters to NAF in October and November to no effect. Two loan officers among the four workers named are still working at the rival, according to consumer Nationwide Mortgage Licensing System records. 

The poaching suit is the latest in a series of similar claims between mortgage competitors in the past two years, some of which have since been settled. FBC’s earlier poaching claim, which was filed in January in California and targets four different employees, remains pending.

The latest lawsuit in the U.S. District Court for the District of Arizona accuses NAF of violating the Defend Trade Secrets Act, requests unspecified damages and seeks to restrain the lender from using FBC’s confidential data, along with unspecified damages. Both FBC complaints sue NAF under its legal business name, Broker Solutions, Inc. 

The Tustin, California-based NAF has originated over $6.8 billion this year through September, according to data from S&P Global. FBC, the smaller firm, still originated over $1.5 billion in loan volume over the same time.