According to a court filing, on March 26, 2021, Ronald Leonhardt, the founder and CEO of CrossCountry Mortgage hopped on a Zoom call with Anthony Hsieh, founder and CEO of loanDepot.
Hsieh had just taken his mortgage lending company
Perhaps surprisingly, then, Hsieh proposed not just a merger between loanDepot and CrossCountry, but one in which Leonhardt would reign as CEO of the consolidated outfit.
Leonhardt declined.
In the ensuing year, the mortgage refinancing market crumbled, and several companies including loanDepot
LoanDepot also subsequently filed at least three different
A private company and direct-to-consumer lender, CrossCountry has declared those lawsuits "retaliation" for Leonhardt "spurning" loanDepot, according to the same court document, which CrossCountry lawyers filed in June in Illinois federal court.
LoanDepot's lawsuits are just a few of the poaching complaints against CrossCountry, a mountain of accusations that have raised eyebrows in the mortgage industry.
An inexhaustive list includes lawsuits from Freedom Mortgage, Homeside Financial, Guild Mortgage, and
But the lender has another explanation for the legal actions.
"It is no surprise CrossCountry Mortgage has been able to attract great talent, talent others would sue to keep," CrossCountry spokesperson Alicia Mauer told National Mortgage News. "We look forward to recruiting, attracting and growing more great talent. We wish our competition had that courage."
So far, there have been few public repercussions to playing hardball in the war for talent. Poaching and trade secret cases fly between industry operators, only to be withdrawn or settled privately. The jittery pessimism of the mortgage market has only heightened the drama, a moment of decline and anxiety that CrossCountry claims to not be affected by.
"Who wants to work for a company that sues its employees for leaving, while at the same time reducing their staff?" Mauer said. "It's a shame that other companies are treating their loan officers so poorly."
The quintessential Cleveland Story
In 1997, Ronald Leonhardt graduated from Baldwin Wallace University in Berea, Ohio where he majored in sports management and played NCAA Division III college football. Six years later Leonardt founded CrossCountry in neighboring Brecksville, Ohio, which is 15 miles south of Cleveland.
Unlike Hsieh or fellow Midwestern mortgage moguls like Rocket's Dan Gilbert and United Wholesale Mortgage's Mat Ishbia, Leonhardt has a fairly low public profile. He did not return messages for this article, and the company declined to make him available for an interview.
Like Gilbert and Ishbia, Leonhardt loves sports. His LinkedIn
The lender has rapidly grown since its founding. In 2021, the company announced that more than 200 of its over 600 lending branches opened in just the last two years.
That was before a $400 million private equity fundraising round announced in November 2021, which was led by Ares Management. Kevin Alexander of Ares
According to the Scotsman Guide, CrossCountry was the
"They have some notorious recruiting tactics," said one former CrossCountry loan officer, who said he did not want to jeopardize his career by commenting for the record. "But they also did have a more retail-friendly model."
Last year, CrossCountry
"We have built this business from the ground up through hard work and a shared commitment to make the mortgage process easy, stress-free and rewarding," Leonhardt said in a statement announcing the new headquarters. "We are the quintessential Cleveland story."
See you in court, maybe
Litigation against CrossCountry is a mystery wrapped up in enigma, packaged in nondisclosure agreements.
In a dozen CrossCountry lawsuits filed since 2017 that National Mortgage News looked at, there has not been one significant ruling against CrossCountry. At most, judges have ordered injunctions to make CrossCountry stop doing things that, were they happening in the first place, would have been against the law.
There has also not been one key decision for CrossCountry.
In 2017, Freedom filed lawsuits in New Jersey and Nevada federal courts accusing CrossCountry of furtively changing a Freedom branch near Las Vegas into a CrossCountry office.
Two Freedom managers, Ed Kami and Christina Singleton, allegedly used their company's computers and office space to copy client leads, customer information and Freedom operating and training manuals and brought them over to CrossCountry. Kami and Singleton were accused of breaking non-compete and confidentiality agreements.
After little more than a year, Freedom voluntarily withdrew one case. The other resulted in an undisclosed settlement.
In 2018, Homeside Financial, a Columbia, Maryland-based company, filed two federal lawsuits against CrossCountry.
Charles Shackelford, a senior vice-president of retail sales at Homeside Financial's Stow, Ohio branch, "abruptly" jumped over to CrossCountry, according to a lawsuit filed in Maryland and brought 25 employees with him. Shackelford allegedly "diverted a number of Homeside's customers, prospective customers, and referral sources to Cross Country."
The cases settled within a year for undisclosed terms. Shackelford, who Homeside Financial declared led a team that generated $154 million in 2017 mortgage loan volume, has spent the past four years as a CrossCountry executive vice-president.
In 2018, loanDepot sued CrossCountry in New Jersey federal court for allegedly inducing Matthew Reid, a branch manager and mortgage loan originator, to jump to CrossCountry and take his sales assistant with him.
The suit claimed that during his last month of employment, Reid had stopped originating loans for loanDepot. Reid instead was allegedly emailing himself the names of 57 loanDepot customers worth almost $19 million in business to his private Hotmail email address.
Mortgage industry experts say such actions, if they occurred, would have crossed the line ethically, if not legally.
"Downloading, say, the entire customer database would in my opinion constitute a breach of confidentiality or a noncompete agreement an employee might have" said Clifford Rossi, Citigroup's former chief risk officer for consumer lending and currently a professor at the University of Maryland.
But it was never determined if Reid and his cohort did anything wrong, or if CrossCountry broke laws in their recruiting of Reid. Two years after the lawsuit was filed, U.S. District Judge Kevin McNulty signed a stipulation from the parties dismissing the case.
In a lawsuit filed against CrossCountry
That complaint references the New Jersey settlement, stating it was a "Settlement agreement that compensated loanDepot for a raid on loanDepot's New York City branch."
What compensation? Well, neither loanDepot nor CrossCountry would elaborate on the New Jersey settlement.
LoanDepot declined to comment for this story, stating it was a company policy to not address pending litigation.
Other companies also declined to speak about lawsuits.
Loan officers also declined to speak for the record, either because they are involved in the cases, or are not involved in the cases. They expressed genuine uncertainty and conflicting stories about CrossCountry.
"I am aware of the lawsuits and CrossCountry's recruiting," said one loan officer in Southern California, "But I would prefer to let the legal process play out."
In some ways, the CrossCountry cases are similar to other recent trade-secret litigation in the mortgage industry: There's a headline-grabbing lawsuit. Then crickets.
For example, Black Knight's lawsuit against Pennymac,
Perhaps Homestead Funding's
One publicly known decision is HouseCanary, a company that makes real estate valuations, winning a $740 million trade secrets misappropriations judgment against Amrock, a subsidiary of Rocket that now does business as Title Source.
Even there, an appeals court threw out the jury verdict. The case
The conspiring loan officer
Last year Scott Bonora earned seven-figures as a loanDepot area sales manager, a job where he supervised 55 people and generated over $100 million in loan applications. According to loanDepot's New York court complaint, Bonora went on a months-long scheme to relocate to CrossCountry culminating in a March 22 resignation.
Bonora transferred 200 folders named after customers onto his USB drive. He asked permission to go into a loanDepot office he didn't normally work from, ostensibly to retrieve a cornhole game. There, Bonora took more reports, leaving the cornhole game behind. Meanwhile, Bonora used loanDepot laptops to read up on lawsuits filed against CrossCountry, the complaint states.
If true, Bonora's behavior raises a question. Why would a millionaire loan officer jump over to a different company knowing he'd probably be sued for doing so?
The obvious answer is money. But the Bonora complaint does not allege the loan officer received a higher pay package for jumping ship.
A few lawsuits allege pay hikes, but just for the top manager.
Matthew Reid purportedly nabbed a $250,000 bonus to join CrossCountry. But the court papers say nothing about his colleagues receiving bonuses.
According to Caliber's lawsuit against CrossCountry in Seattle federal court, Mark Everts, a district manager, received a $1 million sign-on bonus, plus $500,000 more if his team met certain loan origination goals.
One former CrossCountry loan officer said the team's perks are directed at a few managers or top producers.
"I don't think a lot of people know about the bonuses or are affected by it," the loan officer said.
Sometimes, CrossCountry finds ways to claw back bonuses, the former CrossCountry employee said, criticizing the lender for "questionable ethics," but also acknowledging the company did not break any contractual obligation.
There might be reasons besides money for loan officers joining CrossCountry.
In the Guild case, also in Seattle court, a former manager, Christopher Jordan Flowers, allegedly bolted the company in July 2021 and took confidential information with him.
Flowers, though, filed a lawsuit of his own, which has since been sent to a private arbitrator.
The unusual claim says that two Guild managers, Gina Durosko and Stephanie Ann Peavey (who has since left the company) made comments to Flowers that he would "feel the wrath of Guild." Durosko allegedly had a third-party company, Poop Senders, send the loan officer a package in the mail smeared with gorilla feces.
Peavey and Guild declined to comment. Messages left with Durosko went unreturned.
No other departed loan officers assert scatalogical harassment. But there are counterclaims including ones filed against loanDepot in Illinois federal court. These state that part of joining loanDepot is entering into a shared spreadsheet customer leads accrued from prior jobs.
CrossCountry itself made a counterclaim in the loanDepot Illinois lawsuit, a legal document that chronicles the purported Hsieh-Leonhardt meeting and includes accusations that in fact loanDepot stole CrossCountry's trade secrets.
The firm is also not above filing its own lawsuits. In August, CrossCountry
Meanwhile, CrossCountry sued in August Cash Call Mortgage for trademark infringement. The claim? Cash Call Mortgage's "CCM" logo
As a private company, CrossCountry is not subject to the same reporting requirements as many of the companies suing it. Just as the outcome of several lawsuits are not known, neither is whether CrossCountry is profitable, or whether its lending volume gains produced a commensurate revenue rise.
Without providing specifics, Mauer says that in a tumultuous market CrossCountry is a port of "stability and growth."
Whatever the case, there is one point everyone can agree about: CrossCountry seems fairly indifferent to these lawsuits.
"At this point," loanDepot's lawyer penned in their New York lawsuit. "It is clear CrossCountry is willing to absorb such litigation and injunctive relief as the cost of doing (illegal) business."
