Key facts
- West Capital Lending is opposing loanDepot's motion to dismiss a lawsuit.
- The lawsuit alleges loanDepot violated the Truth in Lending Act (TILA) by using an illegal compensation structure for production managers.
- WCL claims this structure tied managers' pay to loan pricing concessions, giving loanDepot an unfair competitive advantage.
- WCL argues the TILA rule applies to production managers because they negotiated loan terms with borrowers.
- The company asserts it lost customers, market share, and revenue due to loanDepot's alleged practices.
- WCL also has standing for claims under California's Unfair Competition Law.
West Capital Lending (WCL) is actively opposing loanDepot's attempt to have a lawsuit dismissed, which accuses the mortgage lender of employing an illegal compensation structure to gain an unfair market advantage. In a brief filed on June 18 in the U.S. District Court for the Central District of California, WCL argued that its complaint adequately alleges loanDepot violated the Truth in Lending Act (TILA)'s loan originator compensation rule. WCL contends that loanDepot tied production managers' compensation to the pricing terms offered to borrowers, a practice that allegedly allowed loanDepot to undercut competitors like WCL.
The original lawsuit, filed in March, specified that loanDepot's consumer direct division violated TILA by linking production managers' pay to loan profitability and pricing concessions. WCL asserts that these managers negotiated loan terms with borrowers, making the TILA rule applicable to their roles despite supervisory duties. The alleged compensation structure provided loanDepot with pricing flexibility, enabling it to selectively offer lower prices and thus lose customers, market share, and revenue to WCL.
To substantiate its claims, WCL presented declarations from former loanDepot production managers and executives. These individuals reportedly stated that managers frequently negotiated rates and fees with borrowers, and that their compensation decreased when they approved pricing concessions. WCL also pointed to an internal compensation formula that allegedly reduced production managers' bonuses based on the number of pricing exceptions granted. Furthermore, WCL alleges that former employees were instructed to match or beat WCL's offers, even at a loss, subsidizing these discounts with profits from higher-priced loans and reduced manager compensation.
WCL further argues it has standing to pursue claims under California's Unfair Competition Law, citing losses in customers, market share, and revenue. The company contends that California law permits unfair competition claims based on alleged TILA violations, even though TILA itself does not grant competitors a private right of action.
This legal dispute is not the first between WCL and loanDepot. In October 2025, loanDepot accused WCL and its founders of poaching loan officers, misappropriating trade secrets and customer data, and violating labor laws. That case is ongoing. loanDepot also alleged that WCL improperly classified loan officers as independent contractors and used revenue-sharing to gain an unfair advantage, which WCL denies. Separately, WCL faces a similar lawsuit filed in June 2025 by Griffin Funding, alleging former employees diverted leads and customers after joining WCL, causing significant lost revenue.