Fairway, accused of poaching, takes claims to federal court

A regional lender claims Fairway Independent Mortgage Corp. is raiding its loan originators, accusations Fairway is taking to federal court.

Albany, New York-based Homestead Funding Corp. claims in state court filings that Fairway has already poached one high-performing loan originator with a seven-figure bonus offer and texted other employees a rumor about their colleagues mulling a departure. Homestead is seeking a preliminary injunction to stop Fairway’s alleged activities and seeking damages exceeding $400,000. 

“This is a wholesale effort by Fairway to raid Homestead’s workforce in an attempt to establish an immediate footprint in markets that have heretofore been unsuccessful efforts by way of organic development,” wrote Richard Miller Jr., an attorney for Homestead, in a June state court filing.

Homestead is seeking an Albany County judge’s ruling for a preliminary injunction to stop Fairway’s alleged solitications in a hearing Sept. 2. 

Fairway responded Wednesday by moving the accusations to the U.S. District Court for the Northern District of New York because the legal battle involves companies from different states; Fairway is based in Madison, Wisconsin but also has headquarters in Texas. Other poaching lawsuits between national mortgage lenders have also been filed in federal courts or moved from state courts.

Attorneys for Fairway and Homestead didn’t respond to messages, while corporate representatives declined to comment Friday.

Fairway allegedly began its raiding efforts in May when Chris Lowis, whose position is listed as Business Development, texted Homestead loan originators with rumors regarding their colleagues.

“Heard a rumor that a group from your company is thinking about a change and was curious if you were keeping your options open?” he wrote to Homestead staff, according to exhibits of images of undated texts. The employees responded to Lowis that they weren’t interested.

The action prompted Homestead’s vice president of business and legal affairs to send a cease-and-desist letter to Fairway in May, which it acknowledged, according to court documents. Despite the notice, Fairway allegedly continued its solicitation efforts. 

Fairway in June allegedly poached mortgage loan originator Andrew Aiello, based in its Clifton Park, New York branch, with a $600K signing bonus. The alleged offer included a $500K volume bonus if Aiello’s yet-to-be established branch closed a minimum of $200 million during its first two years. Aiello, who allegedly made $500K in commissions in each of the past two years, resigned from Homestead on June 14 and sent a text message to former Homestead colleagues June 15 announcing his move.

“All of which serves as a thinly veiled attempt to entice Aiello to recruit other loan originators from Homestead — who are also under employment agreements — to Fairway,” wrote Miller.

In July, another loan originator, Lou Ann Daparto, resigned and told Homestead she would join Fairway, according to court filings. She did not go to Fairway and instead joined Movement Mortgage, but Homestead claims Daparto improperly sent borrower and prospective borrower information to her personal email address ahead of her resignation. 

Mortgage companies in the past year have cast numerous poaching lawsuits against one another, accusing competitors of raiding their ranks ahead of, and during the market’s current downswing. Homestead said at-will contracts encourage poaching because of the lack of legal consequences, while its 1-year employment terms with termination options at the end of each contract constitute tortious interference by Fairway.

“An injunction proscribing Fairway from continuing to raid Homestead’s employees with impunity would be, at most, a minor inconvenience causing Fairway to solicit “at-will” employees from any number of other mortgage lenders,” wrote Miller on behalf of Homestead. 

The sides have a Sept. 28 scheduling conference via telephone in federal court.