Mortgage

LoanDepot and CEO Hsieh sued by former COO over underwriting program

LoanDepot's former chief operating officer, Tamara "Tammy" Richards, is suing the company for refusing to participate in a program to relax underwriting standards.

The lawsuit in California's Superior Court for Orange County also alleges that the company had a "frathouse" environment that encouraged abuse of women in the workplace.

In addition to the company, Anthony Hsieh, company founder and CEO, and Peter MacDonald, executive vice president and general counsel, are named as defendants.

"loanDepot is committed to operating ethical, responsible and lawful business practices at all times, based on values ​​of inclusivity and respect for our team members, customers and all of our stakeholders," said an email statement from the company. “The claims in the lawsuit, which we take very seriously, were previously thoroughly investigated by independent third parties and found to be unfounded. We intend to vigorously defend ourselves against these outlandish allegations and will respond accordingly during the trial. "

Richards has over 30 years of experience in the mortgage business including Countrywide Home Loans; According to legal records, she was one of the few Bank of America employees who acquired the company in June 2008 after it collapsed during the financial crisis.

She joined LoanDepot in February 2018, but almost immediately Richards, along with other female employees, became concerned about gender abuse, the lawsuit said.

"As the only female executive, Ms. Richards has not only witnessed numerous incidents of senior executives, including Hsieh, engaging in acts against women who created a hostile environment, but she was also treated differently, marginalized or open at times sexualized. " as a woman of her male counterparts, "her lawsuit states." From parties full of prostitutes to sexual assault on female employees, Hsieh and other executives have either swept these complaints under the rug in some cases or completely ignored them in others. " Filing contains several examples of this alleged behavior.

But the breakpoint apparently happened last August when Richards claimed, "Hsieh finally started his large-scale fraud attempt, we need to close loans immediately regardless of documentation!"

Richards said she then went to the LoanDepot executive she reported to, Jeff Walsh, the senior executive vice president, and told him that Hsieh's urging the production team to close loans without documentation was illegal and that she was not going to do it would employ or participate in such activity. But Hsieh reportedly persisted in this program, which aimed to increase issuance volume.

Eventually, Hsieh allegedly began to take revenge on Richards. In November, she was removed as COO and instead offered a non-C-suite position as Chief Mortgage Officer. The move also had a negative impact on the untransferred Class X shares, which were part of their compensation package, which began prior to LoanDepot's February 11 IPO.

After going public, the company traded between $ 14 and $ 39 per share, the legal filing said. (Yahoo Finance has a 52-week low for the stock at $ 6.81 and a high of $ 39.85)

"Since Defendants are unjustifiably forcing Ms. Richards' untransferred Class X shares forfeit, Ms. Richards has an inventory loss of between $ 25 million and $ 50 million," the filing states.

On March 30, Richards resigned, citing a "constructive resignation" as a result of the company's retaliation against her.

In addition to the lawsuit, she also filed a complaint with the California Department of Fair Employment and Housing on September 21.

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