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Who Owns the Client Database

JAN 30, 2014 10:03am ET
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I recently read an article about a company that is suing a loan originator who switched companies and allegedly took her database with her.†

Digging into the entire article, itís a little more complicated. When she was working for Company A, she brought her database to Company B.† As she worked for Company B, she added contacts to her database. Now that she has moved to Company C, Company B is suing Company C, claiming that they own the ENTIRE database, including the contacts from Company A.

The article does not really indicate if there was a written employment agreement between the loan officer and Company B as to the ownership of the database.†

Whether you realize it or not, your database is your only real asset in the mortgage business. If you decide to retire or leave the business, your database could be sold to the highest bidder. Or you could enter the Pearly Gates tomorrow, and your database is an asset that could be sold by your estate.

Thatís how valuable it is to both you and your company, and other mortgage pros that have the ability to purchase a book of business!†

Iíve talked to loan officers who have negotiated ďjointĒ ownership. Other companies specifically state that they own the contacts. Still others allow loan officers to keep their own database and take it with them if they ever leave.† However, the worst is having no agreement at all. Thatís the stuff lawsuits are made of.

I STRONGLY suggest that you determine who owns your database right now!††

Iím taking a poll so please post your answer belowĖif you ever decide to change companies, can you take your database with you?†

Comments (5)
I am commenting on the ownership of a database. What amazes me here is that an EMPLOYEE of the company, emphasizing EMPLOYEE, which collected proporietary information as an EMPLOYEE and paid a salary while employed would think they have ownership of any database. As an employer and owner of a company for 14 years to think that while the EMPLOYEE of the company gathered information such as customer data would think that is their property is estonishing. Loan officers on not contract employees, they are W-2'd EMPLOYEES. The taking of any property at the financial gain of another employer would be negligent and considered theft of proprietary information.
Posted by | Tuesday, February 11 2014 at 4:46PM ET
I certainly agree with you--especially about the part of collecting sensitive information. The point that I wanted to make is that if there is an employment contact involved, or part of the company's employee handbook, that's it clear as to who owns the database and what info can be shared. Thanks so much for your comments. Karen Deis
Posted by | Tuesday, February 11 2014 at 4:56PM ET
In response to your comments from my previous comments, in this business there is something called the "Red Flags Rule" and safegaurding of confidential information. If an EMPLOYEE were to take this information with them to another employer, they have violated the "Red Flags Rule" and may get a personal visit from someone other than their wife or kids at work and it starts with the initials FTC. ;)
Posted by | Tuesday, February 11 2014 at 5:12PM ET
A loan officer who takes on a job with a new company should know their previous clients anyway and don't have to run a printout. Running a database program and downloading data of clients while working at company A? Big problem. Knowing who to send your most recent "I've Moved" emails from memory? Pretty easy.

When employers interview a potential loan officer candidate, don't they all ask, "So, who do you call on and how many loans have you close?"
Posted by david R | Tuesday, February 11 2014 at 6:38PM ET
Hey David, That's a good point--and a double-edged sword here. The new company asks about previous business and if the loan officer has a database--yet there needs to be a discussion regarding whose database is it if the loan officer leaves the new company, because part of the database was brought with them. Other that the personal info, it think that's what part of this law suit is all about.
Posted by | Wednesday, February 12 2014 at 11:25AM ET
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