CrossCountry Mortgage Issues Legal Demands to Former Loan Officers Over Client Poaching
CrossCountry Mortgage has initiated legal action against at least 25 former loan officers, alleging violations of two-year non-solicitation agreements. According to reporting from HousingWire, the Cleveland-based lender is demanding cash penalties for loans closed with previous clients and has issued formal orders to cease all further business with its customer base.
Context from Industry Pulse
The aggressive stance taken by CrossCountry Mortgage follows a period of significant turnover, with RETR data cited by HousingWire showing 843 loan officers left the firm in just over a year. Among those, 61 officers managed at least $20 million in volume during their final months at the company. By asserting that every borrower handled during an officer's tenure remains the exclusive property of the firm, the lender is attempting to enforce strict boundaries on client portability. This legal strategy relies heavily on the Gramm-Leach-Bliley Act to classify borrower information as protected trade secrets, effectively challenging the standard industry practice of loan officers maintaining long-term client relationships across different employers.
"each loan is presumed to violate your non-solicitation covenant."
CrossCountry Mortgage is currently targeting former employees with cease-and-desist letters that claim any mortgage services provided to the company's past or future clients constitute a breach of contract. As reported by HousingWire, the firm is leveraging specific employment provisions that create a legal presumption of violation for every loan closed with a CrossCountry Mortgage customer. These letters, issued by the company’s senior corporate counsel, demand that recipients stop all solicitation activities immediately.
Financial penalties are a central component of these legal demands. HousingWire notes that the lender is seeking payments based on 75 basis points for each refinanced loan. Documented repayment requests seen by reporters range from a few thousand dollars to nearly $20,000 per individual. Former employees are being directed to submit these payments via check to the corporate headquarters in Ohio within a ten-day window.
The scope of the crackdown involves significant data preservation requirements. Recipients must secure all records related to their current employment and any communications with former borrowers. HousingWire indicates that this demand extends to personal devices and digital histories, including text messages and AI chat logs. The company has warned that failure to maintain these records could lead to sanctions for evidence destruction.
Industry data highlights the potential scale of this legal campaign, as hundreds of loan officers have departed the firm in the last 14 months. While only a small group has received letters so far, HousingWire suggests a larger pattern may emerge if other former employees have closed deals with the lender's clientele. The company has stated it may file lawsuits without further notice against those who fail to comply with the demands.
The Industry Pulse Bottom Line
CrossCountry Mortgage is signaling a zero-tolerance policy regarding client retention. The demand for basis-point-based penalties sets a high-stakes precedent for loan officers moving between competing firms while attempting to maintain their existing books of business.