"Borrowers have added new details in an amended complaint alleging that loanDepot engaged in a sophisticated, years-long scheme to steer customers into higher-rate loans to inflate its performance ahead of its 2021 initial public offering (IPO). The class-action lawsuit, filed in July in Maryland, claims the lender required loan officers (LOs) who couldn't push higher-cost loans to transfer borrowers to internal loan consultants (ILC)."
"However, they allege these transfers were fictitious because the original LOs continued to perform the same duties. According to the original complaint, if LOs truthfully documented a transfer to secure a lower rate for the borrower, they received no commission. But if they used a preapproved false justification, they were paid at a reduced rate. Consequently, loanDepot penalized LOs who didn't close higher-rate loans and withheld pay altogether if they refused to falsify records."
"In September, loanDepot filed a motion to dismiss, arguing the plaintiffs offered scant detail on the alleged scheme by failing to identify any specific LO or manager. The company also said there was no explanation of how Plaintiffs supposedly discovered' loanDepot's alleged fraud.loanDepot declined to comment on the amended complaint. Ari Karen, partner at Mitchell Sandler and attorney for the plaintiffs, told HousingWire, The level of detail in the complaint and the exhibits speak for themselves and demonstrate why this action was filed."
An amended class-action complaint alleges a years-long scheme by loanDepot to steer borrowers into higher-rate loans to inflate performance ahead of its 2021 IPO. The complaint claims loan officers who could not push higher-cost loans were required to transfer borrowers to internal loan consultants, but those transfers were allegedly fictitious because original loan officers continued the same duties. The filing alleges truthful documentation of transfers resulted in no commission while using preapproved false justifications yielded reduced pay, and refusal to falsify records led to pay being withheld. New evidence includes former-employee testimony and internal documents. loanDepot filed to dismiss, citing lack of specific identifications and unclear discovery of the alleged fraud. Communications between plaintiffs and counsel began in or after December 2024, and borrowers were unaware whether they had been affected until that timeframe.
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