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Maryland judge rejects loanDepot bid to end LO compensation lawsuit
The court found borrowers plausibly alleged financial injury because the case says they paid higher interest rates and fees tied to loan officer compensation practices.
A federal judge in Maryland denied loanDepot’s motion to dismiss a proposed class-action lawsuit accusing the lender of violating federal loan officer compensation rules under the Truth in Lending Act, and of steering certain borrowers into higher-rate, higher-fee mortgages. HousingWire reports U.S. District Court Judge Julie R. Rubin rejected the company’s arguments for failure to state a claim and lack of jurisdiction, and ordered loanDepot to answer an amended complaint filed by borrowers. The lawsuit focuses on the TILA loan originator compensation rule, which bars paying loan officers based on the terms of a loan or its interest rate. In a memorandum opinion, Rubin said the plaintiffs adequately alleged a concrete financial injury by claiming they paid higher interest rates and fees connected to the alleged steering and compensation conduct, and she noted courts typically find higher interest rate allegations sufficient at the pleading stage. HousingWire reports the case, originally filed in July 2025 and amended in October 2025, names plaintiffs Nathan Johnson, Rachel DeBaun, Nathan Moore and Shawn Derrick. The borrowers allege a single TILA violation tied to a rate-based compensation system that rewarded loan officers for placing borrowers into more expensive loans, and each obtained a loan from loanDepot between September 2019 and June 2021 for properties in Maryland or Virginia. The judge also addressed loanDepot’s timeliness arguments, finding dismissal on those grounds “premature.”