CrossCountry Mortgage notches court victory over loan officers

A federal judge has dismissed a lawsuit by former CrossCountry Mortgage employees accusing the lender of failing to pay them during the market's recent downturn.

Over 50 former loan officers have opted into the Fair Labor Standards Act complaint filed against CCM in an Ohio federal court, an attorney for the plaintiffs said. The dispute also involves the company's request for dozens of loan officers to pay back five-and-six figure sign-on bonuses. The firm accuses the ex-LOs of leaving the firm before the bonuses vested under an agreement.

CrossCountry argued its employment agreements, separate from the sign-on bonus paperwork, mandated disputes like the federal FLSA claim be settled through arbitration. U.S. District Judge Dan Aaron Polster agreed Monday, granting CrossCountry's motion to compel arbitration and dismiss the case without prejudice, meaning it can be refiled. 

"We do not agree with the court's conclusion, and we are evaluating the best path for our clients," said Brendan Sweeney, an attorney with the tri-state area Law Offices of Christopher Q. Davis, on behalf of plaintiffs in a statement. "We believe CrossCountry Mortgage violated federal and state laws by forcing employees to kickback wages."

Counsel for plaintiffs had not filed any appeal as of Thursday. A spokesperson for CrossCountry in a statement this week said the company doesn't comment on legal matters.

Sweeney previously characterized the company's actions in delivering, then requesting the bonuses as the firm trying to shift the risk of the mortgage market downturn onto individual LOs. 

CrossCountry since 2020 has sued at least 59 former workers in state court for portions of sign-on bonuses totalling over $4.3 million, according to a National Mortgage News review of public records. The suits are filed in the Cuyahoga County Common Pleas Court in Cleveland, near CrossCountry's headquarters.

Of those 59 state lawsuits, 26 were dismissed and 13 were settled between the frim and the ex-staffer. At least one case proceeded into arbitration. The court granted CrossCountry default judgment in 13 complaints where the former employee didn't respond, although the lender's subsequent attempts to garnish those defendants' wages either failed or remain inactive. The company did gain $12,000 in garnished wages from at least one former worker. 

Three of the state cases remain pending. The sign-on bonuses in question range from as little as $7,000 to as high as $1,198,221 for a former branch manager – the branch manager's suit has been dismissed. Most of the lender's lawsuits allege the LOs resigned, while others were terminated. It's unclear if any were caught in a layoff round. The company last year was mum on whether it undertook layoffs during the industry's massive rightsizing.

Paul Lundholm, a former LO based in New Jersey, filed the federal FLSA case in February after CrossCountry sued him in Ohio for $81,371 of his $135,000 sign-on bonus he agreed to at his April 2022 hiring. The lender claims Lundholm resigned voluntarily that November, a statement his attorneys disputed. The state case against Lundholm was dismissed in May.

The FLSA suit alleges the firm improperly classified Lundholm and others as exempt from state and federal overtime requirements despite them working over 40 hours per week. An attorney for Lundholm claimed there were "frequent weeks" where employees didn't receive any compensation amid slow business. 

CrossCountry didn't waive its right to arbitration because its state complaints were disputes stemming from the sign-on bonuses rather than the employment agreements, Judge Polster said. The magistrate disagreed that the LOs and the company lacked a "meeting of the minds", or mutual understanding of their contracts.

"Because the parties mutually agreed to the employment relationship and the employment agreement governing it, the Court is required to enforce the arbitration clause in those agreements," the magistrate wrote.

The loan officers in the federal suit had not achieved class certification ahead of Judge Polster's recent decision. 

CrossCountry, one of the nation's largest private mortgage lenders, counts over 7,000 employees across 800 branches. The major player has been entangled in numerous lawsuits from competitors accusing the giant of poaching. One of those complaints from Guild Mortgage was tossed last winter, while court records indicate a settlement in a separate case from Caliber Home Loans.

Other lenders have faced similar accusations of failing to pay minimum wages, most recently former Bank of America LOs suing their ex-employer last week for unspecified damages. 

Mortgage lender Annie Mac also sued two of its former branch managers for large sign-on bonuses after they left the firm before their agreements' 12-month stipulation to keep the sums. The company has since dropped both suits for $102,000 and for $496,000, respectively, in federal courts.