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West Capital Lending asks court to reject loanDepot bid to dismiss TILA case
The lender said loanDepot’s consumer direct managers negotiated borrower loan terms and were paid based on pricing outcomes, a structure West Capital Lending says violated TILA and enabled competitive undercutting.
West Capital Lending urged a federal court to deny loanDepot’s motion to dismiss a lawsuit that accuses the mortgage lender of using an allegedly illegal loan originator compensation structure to gain an unfair competitive advantage in the mortgage market, according to HousingWire. In a brief filed June 18 in the U.S. District Court for the Central District of California, West Capital Lending argued its complaint adequately alleges loanDepot violated the Truth in Lending Act’s loan originator compensation rule. The lender said consumer direct managers negotiated loan terms with borrowers and were compensated based on pricing outcomes, which it says is prohibited under TILA and Regulation Z.
West Capital Lending filed the suit in March. It alleges loanDepot tied production managers’ compensation to loan profitability and pricing concessions, which it said gave loanDepot pricing flexibility not available to compliant competitors, enabling it to selectively undercut rivals such as West Capital Lending while reducing managers’ compensation. To support its claims, West Capital Lending cited declarations from former loanDepot production managers and executives. The filing says managers regularly negotiated rates and fees with borrowers, their pay decreased when they approved pricing concessions, and an internal compensation formula allegedly reduced bonuses based on the number of pricing exceptions granted, while former employees were also instructed to match or beat offers from West Capital Lending regardless of profitability.