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Mortgage Lawsuits News | Mortgage Litigation Index
Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.


Unpaid OT at Issue in Several Mortgage Lender Lawsuits

Recent activity in mortgage employment cases

March 12, 2012

By SAM GARCIA Mortgage Daily


portrait of Sam Garcia

Several mortgage companies are still battling claims by current and former loan originators and other production employees that they are owed wages for unpaid overtime. Some of the employers aren't even in business anymore. Another case filed by an originator alleges he was forced out of his job because he wouldn't sell toxic mortgages.

BBVA Compass failed to pay overtime to "mortgage banking officers" prior to reclassifying the employees as non-exempt in April 2011, according to a lawsuit filed on Feb. 2 in U.S. District Court for the Southern District of Texas. The company is accused of violating the Fair Labor Standards Act.

"Although Compass instituted a time-tracking system last year, it discouraged MBOs -- who regularly work overtime -- from entering more than 40 hours per work week so the bank could avoid paying overtime compensation," plaintiffs' counsel Lee & Braziel LLP said in a statement.

A putative class action was filed on Feb. 17 in a Georgia federal court by former production employees of AmericanHomeKey Inc., a news release from Nichols Kaster PLLP said. Among the plaintiffs are former closers, funders and underwriters.

The plaintiffs claim that the Dallas-based company reclassified the positions as non-exempt in February 2011, at which time it began paying overtime. But AmericanHomeKey allegedly failed to pay overtime earned before that point -- which the lawsuit seeks to rectify.

AmericanHomeKey reportedly faced a similar lawsuit filed by loan originators who claim they were misclassified as exempt employees who worked overtime without pay.

The Department of Housing and Urban Development said last month that AmericanHomeKey was hit with a civil money penalty for $138,900 over allegations it failed to remit up-front mortgage insurance premiums on time for Federal Housing Administration loans.

Former net branching giant 1st Metropolitan Mortgage, parent Empire Equity Group Inc. and former 1st Metropolitan chief Daniel H. Jacobs are among the defendants named in a lawsuit filed in June 2009 in a Maryland federal court. The case was filed by former loan originators at the company.

The nationwide collective action alleges FLSA violations because the plaintiffs weren't paid for all hours worked or paid for overtime. An answer to an amended complaint was filed in Dec. 23, 2011, and a motion for a default judgment was filed on March 6 by the plaintiffs.

The U.S. Court of Appeals for the Second Circuit affirmed a judgment by a federal court in Manhattan in favor of Citigroup Inc. on Oct. 19, 2011. The plaintiffs, Citi employees, alleged violations of the Employee Retirement Income Security Act, because the financial institution didn't limit investments in an employee stock fund once Citi's own stock became an imprudent investment.

"We also hold that defendants did not have an affirmative duty to disclose to plan participants nonpublic information regarding the expected performance of Citigroup stock, and that the complaint does not sufficiently allege that defendants, in their fiduciary capacities, made any knowing misstatements regarding Citigroup stock," the decision stated.

A lawsuit filed in 2009 by loan originator Greg Saffer against JPMorgan Chase Bank in Los Angeles Superior Court alleges that his former employer, JPMorgan-subsidiary Washington Mutual Bank, pushed him out of his job because he wouldn't sell payment-option adjustable-rate mortgages, the Center for Public Integrity reported. But JPMorgan countered in the case, which has been ordered to arbitration, that "Saffer was simply a guy who could not sell loans in an increasingly tough market."

As of Dec. 31, 2011, ERISA lawsuits totaled 8,414, down from 9,038 in 2010, Seyfarth Shaw LLP said in its Annual Workplace Class Action Litigation Report. FLSA lawsuits inched up to 6,779 from 6,671, while employment discrimination filings crept up to 14,771 from 14,559.

The report forecasted a "significant jump" this year in employment discrimination cases because charge number totals at the Equal Employment Opportunity Commission surged to the highest level in the 57 years the commission has existed, and there is a lag between the charges and the filing of lawsuits.



Kevin Vaughn, et al., v. Compass Bank, Compass Bank, Compass Bancshares, Inc., and BBVA USA Bancshares, Inc.
Civil Action No. 4:12-cv-00316, Feb. 2, 2012 (U.S. District Court for the Southern District of Texas).

April Maner, et al v. AmericaHomeKey, Inc.
Civ. No. 12-cv-00562-RLV, Feb. 17, 2012 (U.S. District Court for the Northern District of Georgia).

GAMAAL ROBINSON, SEAN REYNOLDS, LAWRENCE SILVER, LISA M. PUERINI, AND SEAN SPIES On behalf of themselves and all others similarly situated, Plaintiffs, -against- EMPIRE EQUITY GROUP, INC., 1st METROPOLITAN MORTGAGE, ROBIN ALCOCK, JOSEPH DAHLEEN, KYLE KILPATRICK, PAM HAMRICK, RICK PALLO, FRANCIS PHILLIPS, DANIEL JACOBS, PATRICK MCGEENEY, ROBERT CURRIER, MICHAEL PARKER, WILLIAM WARREN, DAVID TYRE, TERRY MELAND, CARLY FULMER, EZRA BEYMAN, HESTIA FINANCIAL, INC. Defendants.
Case No.1:09-cv-01603-WDQ, June 18, 2009 (U.S. District Court for the District of Maryland).

STEPHEN GRAY, JAMES BOLLA, and SAMIER TADROS, Lead Plaintiffs-Appellants, SANDRA WALSH, ANTON K. RAPPOLD, and ALAN STEVENS, Plaintiffs-Appellants, -- v. -- CITIGROUP INC., CITIBANK, N.A., THE PLANS ADMINISTRATION COMMITTEE, THE PLANS INVESTMENT COMMITTEE, CHARLES O. PRINCE, ROBERT E. RUBIN, JORGE BERMUDEZ, MICHAEL BURKE, STEVE CALABRO, LARRY JONES, FAITH MASSINGALE, THOMAS SANTANGELO, ALISA SEMINARA, RICHARD TAZIK, JAMES COSTABILE, ROBERT GROGAN, ROBIN LEOPOLD, GLENN REGAN, CHRISTINE SIMPSON, TIMOTHY TUCKER, LEO VIOLA, DONALD YOUNG, MARCIA YOUNG, and JOHN DOES 1-20, Defendants-Appellees.
Docket No. 09-3804-cv, filed Sept. 15, 2008, decided Oct. 19, 2011 (U.S. Court of Appeals for the Second Circuit, U.S. District Court for the Southern District of New York).

Sam Garcia founded Mortgage Daily in 1998 and became its full-time publisher in 2000. Prior to his news career he worked in mortgage lending for two decades.

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[email protected]


Mortgage Employment News | Employment Index | Employment Statistics
Job additions, layoffs and employment lawsuits. Employment data from the Department of Labor, state tracking, reports and analysis. Job finding tips.


Corporate Mortgage News
M e r g e r s, a c q u i s i t i o n s and private and public offerings. Other corporate activity including executive appointments, bankruptcies name changes.


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