Mortgage firms and their former employees are fighting a multitude of issues in courtrooms across the country. One case deals with whether bonuses and commissions should be considered in determining overtime compensation, while another tackles the liability of parent companies when employees are laid of from a subsidiary that closes down. Several class actions have been filed by loan originators who claim they weren’t adequately compensated — and one law firm is behind many of those actions.
Bank of America Corp. was ordered by the Department of Labor to reinstate an employee who was improperly fired by subsidiary Countrywide Financial Corp., an announcement last week said. In addition, the bank was ordered to pay the employee $930,000 in back wages, interest, compensatory damages and attorney fees.
The government said that the fired employee led internal investigations that uncovered widespread and pervasive wire, mail and bank fraud involving Countrywide employees. But because Countrywide allegedly retaliated against employees who attempted to report fraud to its employee relations department, the employee was fired. The firing violated the whistleblower protection provisions of the Sarbanes-Oxley Act.
On Sept. 8, mortgage loan processor Susan Dooling filed a putative class action in U.S. District Court for the Eastern District of Texas against her former employer Bank of the West and subsidiary GSB Mortgage Inc., according to a copy of the complaint. The class includes loan processors employed at either firm during the past three years. Dooling worked there from July 2009 until last month.
In addition to hourly wages, the processors were paid flat commissions on closed loans that they processed and commissions on loans they originated. The defendants allegedly violated the Fair Labor Standards Act because they did not factor commissions and non-discretionary bonuses into the overtime rate — which was based solely on 1.5 times the hourly rate. The plaintiff alleges she was not classified as exempt from FLSA.
The complaint cited a regulation that states, “Commissions (whether based on a percentage of total sales or of sales in excess of a specified amount, or on some other formula) are payments for hours worked and must be included in the regular rate. This is true regardless of whether the commission is the sole source of the employee’s compensation or is paid in addition to a guaranteed salary or hourly rate, or on some other basis, and regardless of the method, frequency, or regularity of computing, allocating and paying the commission.”
In addition, Dooling cited a Fifth Circuit ruling that employers must consider commissions in overtime calculations.
After terminated employees filed a putative class action against Accredited Home Lenders Inc. and indirect parent Lone Star Fund V because they weren’t compensated as required by the Worker Adjustment and Retraining Notification Act of 1988 and the New Jersey Warn Act, Accredited went out of business. The employees were laid off in June 2008, though the number of people employed at the time is disputed.
In an opinion decided on June 14, the Superior Court of New Jersey, Appellate Division, found that the New Jersey Act does apply to parent and affiliated companies. The court reversed an order of the law division that dismissed the complaint. The case was remanded for further proceedings including the consideration of the Department of Labor’s five-factor test.
Nichols Kaster LLP announced that a U.S. District Court judge conditionally certified a class action against Prospect Mortgage LLC on Aug. 24. The class includes loan originators employed at the company since Aug. 24, 2008. The lender allegedly violated FSLA when it didn’t pay former commission-only loan officers overtime and minimum wage compensation.
Nichols Kaster also touted an Aug. 31 class certification for a collective action filed on behalf of Fifth Third Bank loan officers who worked at the company from Aug. 31, 2008, until Jan. 3, 2011.
The Minneapolis-based law firm — which has been aggressive in its attempts to exploit the Labor Department Wage and Hour Division Administrator’s Interpretation No. 2010-1 from March 24, 2010, that reversed a 2006 opinion letter — said in May that it filed a lawsuit in U.S. District Court for the District of Maryland against Prosperity Mortgage on behalf of loan officers who were allegedly misclassified as exempt from overtime. Chantilly, Va.-based reportedly operates branches in Maryland, Pennsylvania and Virginia.
Ally Financial Inc. filed a federal lawsuit in Philadelphia against terminated employee Tanya L. Blackwell during July, Bloomberg reported. Blackwell is accused of stealing confidential borrower information and hiding the fact that she was working on the side as a foreclosure defense attorney while employed by Ally-subsidiary Residential Capital.
Late last month, Sovereign Bank won its bid to arbitrate a putative class action brought by mortgage development officers in U.S. District Court in Pennsylvania, Law360 reported. The plaintiffs claim the bank failed to pay them minimum wage or overtime wages.
SUSAN DOOLING, on behalf of herself and all others similarly situated, Plaintiffs, V. BANK OF THE WEST, and GSB MORTGAGE, INC., Defendants.
Case No. 4:11-cv-00576-RAS -DDB, Sept. 8, 2011 (U.S. District Court for the Eastern District of Texas).
PATRICK DEROSA and CHRIS SCHAUB, Individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. ACCREDITED HOME LENDERS, INC.; ACCREDITED HOME LENDERS HOLDING COMPANY; JAMES M. MORAN, CHIEF EXECUTIVE OFFICER — ACCREDITED HOME LENDERS, INC.; JEFFREY WALTON, PRESIDENT and CHIEF OPERATIONS OFFICER — ACCREDITED HOME LENDERS, INC.; and LSFV ACCREDITED INVESTMENTS, L.L.C., Defendants, and LONE STAR FUND V (USLP) and HUDSON ADVISORS, L.L.C., Defendants-Respondents.
Case No. A-3727-09T3, Submitted April 12, 2011, Decided June 14, 2011 (Superior Court of New Jersey, Appellate Division).
Sliger et al. v. Prospect Mortgage, LLC.
Civ. No. 2:11-cv-00465 (E.D. Ca.).
Myles v. Prosperity Mortgage Corp.
Case No. 1:11-cv-01234 (U.S. District Court for the District of Maryland).
Ally Financial Inc. v. Blackwell.
Case No. 11-cv-4694, July 26, 2011 (U.S. District Court, Eastern District of Pennsylvania).
