Caliber Home Loans says competitor raided over 80 employees

Caliber Home Loans is accusing a competitor of raiding more than 80 employees responsible for a total of more than $2.3 billion in annual mortgage loan origination, according to a new federal suit.

The Dallas-based lender is accusing Ohio-based CrossCountry Mortgage of unfair competition and misappropriation of trade secrets in a complaint filed last week in the Western District of Washington U.S. District Court. The lawsuit explicitly identifies dozens of departed Caliber branch and sales managers allegedly involved in the raid and claims CrossCountry is in possession of Caliber’s confidential information.

“CrossCountry’s actions were malicious and done with the intention of causing significant harm to Caliber’s retail mortgage business,” the lawsuit reads.

CrossCountry knew Caliber employees would violate their workplace agreements in soliciting others to depart, misappropriate Caliber confidential information and pirate loans in process, the suit claims. Since February 2021 more than 40 producers were poached, in addition to other support and administrative staff across 18 different branches in six different states, Caliber said.

Neither an attorney and spokesperson for Caliber nor a representative for CrossCountry responded to requests for comment Monday. According to the lawsuit, CrossCountry denied wrongdoing in response to Caliber earlier this year.

New Residential Investment Corp., which acquired Caliber last summer, wasn’t mentioned in the lawsuit.

The lawsuit claims CrossCountry offered Caliber employees financial inducements to uproot colleagues. A former Caliber Seattle branch manager was allegedly offered a combined $1.5 million signing bonus by CrossCountry. In an email exchange with a CrossCountry executive, attached to the lawsuit as an exhibit, the branch manager detailed the likelihood of six specific subordinates departing.

Caliber said others used their work email to solicit colleagues in violation of their restrictive covenant agreements. The former Seattle branch manager and at least eight other departing employees also forwarded confidential information regarding a combined thousands of loans to their personal emails, according to the suit. 

A borrower who previously worked with one of the departed Caliber employees alleged CrossCountry pulled her credit unauthorized and a member of the employee’s team reached out to her. Caliber said it believes more misappropriated confidential information is in CrossCountry’s possession.

The lawsuit is similar to an October complaint filed against CrossCountry, in which Guild Mortgage claims the lender misappropriated nearly its entire Kirkland, Washington branch with over two dozen employees. Guild in a court filing last week accused CrossCountry of deliberately delaying the discovery process in the case slated for a jury trial early next year.

The raiding allegations come amid a period of upheaval for the industry in which lenders small and large are laying off employees in response to declining origination volumes. Caliber parent New Residential Investment Corp. laid off nearly 400 employees earlier this year, according to HousingWire. 

CrossCountry last month also reportedly entered an agreement to acquire Alamo, California-based retail lender LendUS, according to National Mortgage Professional.