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Texas-based PrimeLending is suing its direct competitor, First Community Mortgage, Inc. (FCM) claiming to have looted its talent pool.
According to a lawsuit filed on Dec. 20 in a Tennessee district court, First Community Mortgage, Inc. (FCM) PrimeLending’s Central American staff walkout — reportedly on the same day without notice.
The attrition is said to have resulted in more than $30 million in lost annual revenue, along with about $150,000 in rent for vacant offices and default costs in cities including Cincinnati and Indianapolis.
FCM CEO Keith Kanter wrote in an email to HousingWire that the company does not comment on pending litigation.
A spokesperson for PrimeLending said the lender had no comment at this time. National Mortgage News first reported the lawsuit.
PrimeLending claims in the lawsuit that its competitors approached its employees through Gary Sindal of CAVU Partners, who worked as a recruiter for more than 11 years.
HousingWire returned a request for comment, but Sindall did not respond. Lenders and recruiting firms entered into a formal agreement until June 12, 2020, with a no-solicitation clause prohibiting CAVU from recruiting or attempting to recruit its employees to leave the company.
Lenders said CAVU will continue to provide services until September 2022, although the contract has not been formally renewed.
According to the lawsuit, about 100 employees, including a regional manager, four branch managers, and a regional operations manager, tendered their resignations on September 1, 2022, and left FCM without notice.
This equates to approximately 10% of PrimeLending’s employee turnover. The PrimeLending employees’ contracts included non-solicitation, non-interference, and confidentiality clauses, the lawsuit alleges.
The lender indicated that FCM had acknowledged its knowledge of these liabilities in a letter dated September 1, 2022, from its attorneys.
“In this letter, FCM notified PrimeLending for the first time that it intended to lay off as many as 100 or more PrimeLending employees.
FCM also claims that it has not accepted or solicited offers from current PrimeLending employees or former PrimeLending employees according to a non-solicitation agreement,” the lawsuit states. .
The lender claims its former employees leaked its trade secrets, including customer information, loan records, pipeline reports, loan estimates and contracts from the PrimeLending system, to the new employer.
PrimeLending, a subsidiary of Plains Capital Company, has originated $12 billion in loans over the past 12 months, according to data from the mortgage technology platform Modex. It has 994 active loan officers, 38 branches, and licenses to operate in 23 states.
Meanwhile, rival FCM, which is ten times smaller, originated $1.15 billion in mortgage loans in the past 12 months with 150 active loan officers based in two branches, according to Modex data. The company is licensed in 18 states.
Reference Source: Housing Wire
