| Saxon Settles Suit With Originators
Unpaid overtime at issue November 14, 2003 By PATRICK CROWLEY |
| They sat all day in cubicles, typing loan applications into computers, putting in more than 40 hours a week but not getting paid the overtime.They were called “loan officers” but really they were simple loan originators, plugging info into a computer that decided if an applicant was credit worthy.
And, according to the attorney that fought a winning legal battle for their overtime, “they worked like dogs.” But now 325 loan originators from around the country — mostly in Virginia, the Southeast, Texas and California — will receive back overtime pay from their employer. The plaintiffs worked for America’s MoneyLine Inc. It’s parent, Saxon Capital Inc. of Glen Allen, Va., has agreed to settle a suit brought by the originators under the Fair Labor Standards Act, or FSLA. Terms of the settlement were not made public. But in a statement Saxon said that due to the lawsuit settlement it will take a $1.4 million pretax charge against third quarter earnings. With the revision Saxon earned $16.6 million, or 55 cents a share, compared to $17.5 million, or 58 cents a share prior to the settlement. Saxon was sued by its originators for not paying overtime, the company said. “The FLSA collective action litigation alleges that loan officers who routinely worked more than 40 hours per week were denied overtime compensation in violation of the FLSA,” the company said in the statement. The agreement is contingent on a stipulated court dismissal by the United States District Court in the Central District of California, and approval by all of the members in the collection action. Minneapolis lawyer Paul Lukas, the lead attorney in the action, said the brokers have agreed to the settlement and will receive their back overtime pay. In an interview Lukas said the brokers worked long hours, taking loan applications over the phone and inputting the information into computers. “Unfortunately, this is a standard practice in the mortgage industry,” Lukas said. “These people are called ‘loan originators’ or ‘loan officers’ but really all they do is sit at a desk in a cubicle and take loan applications. “The company was treating them like they were high level bank loan officers who had discretion on how much they lend, or whether to lend or not,” Lukas said. Bank loan officers would not normally classify as employees eligible for overtime, Lukas said. “But (the loan originators) are not loan officers,” he said. “They plug the information in a computer that spits out if a loan is rejected or accepted. “They worked like dogs, putting in long hard hours,” Lukas said. “It’s probably slowed down a little, but during the refinancing boom they worked a ton of hours.” Lukas said with 325 members, the action was actually small. He successfully sued Conseco Finance for back overtime on behalf of approximately 2,500 loan originators. The case, Casas v. Conseco Finance Corp., was decided in March of 2002 in federal court in Minnesota. It is considered the leading case on white collar exemptions for overtime pay in the residential mortgage lending industry, according to a report by the Washington law firm of Weiner, Brodsky Sidman and Kider. MortgageDaily.com publisher Sam Garcia holds share of Saxon Capital, a publicly traded residential mortgage lender and servicer that originates, purchases, securitizes and services mortgages. The company says it has about 4,000 brokers and a mortgage loan portfolio of $8.8 billion. |
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Patrick Crowley is a political reporter and columnist and former business writer for The Cincinnati Enquirer. Email Patrick at: pcrowley@enquirer.com |
