Key facts
- loanDepot is seeking dismissal of a lawsuit from West Capital Lending (WCL).
- loanDepot argues WCL lacks standing to sue under federal loan originator compensation rules.
- loanDepot claims WCL is using consumer protection laws to resolve a business dispute.
- loanDepot asserts WCL has not demonstrated financial harm or lost customers.
- loanDepot contends that loan originator compensation rules do not dictate mortgage rates.
- loanDepot previously sued WCL for alleged poaching and trade secret violations.
loanDepot has asked a federal judge to dismiss a lawsuit filed by rival mortgage brokerage West Capital Lending (WCL), which accuses loanDepot of violating federal loan originator compensation rules. In a filing on Thursday in the U.S. District Court for the Central District of California, loanDepot argued that WCL lacks the legal standing to bring the suit.
loanDepot contends that the Truth in Lending Act's (TILA) loan officer compensation rule is designed to protect borrowers, not competing lenders, and does not grant competitors a private right of action. The company requested the court dismiss the complaint with prejudice.
WCL had sued loanDepot earlier this year, alleging that the lender illegally compensated production managers, allowing it to offer lower mortgage prices and gain business from competitors, in violation of TILA and California's Unfair Competition Law. loanDepot argues that WCL has failed to demonstrate any actual financial harm or lost customers, noting that WCL is now only seeking declaratory and injunctive relief, not monetary damages.
The company further disputes the basis of WCL's claims, stating that the loan originator compensation rule governs employee pay, not the mortgage rates offered to consumers. loanDepot asserts that lenders can match competitor pricing without violating the rule, and therefore, WCL cannot prove competitive harm resulted from any alleged violations.
loanDepot also challenged the evidence presented by WCL, arguing that declarations from former employees describe past practices and do not establish ongoing misconduct, which is necessary for the forward-looking relief sought. The filing also reiterates that only borrowers, not competitors, can sue under federal LO compensation provisions and that California's Unfair Competition Law cannot override these limitations.
This legal action is part of an ongoing dispute between the two lenders. In a separate lawsuit filed in October 2025, loanDepot accused WCL and its founders of poaching employees, misappropriating trade secrets and customer data, and violating labor laws. WCL has denied these allegations, and that case is still pending. WCL is also facing a similar lawsuit from Griffin Funding.