Mortgage Daily Logo

Doc Prep Gets Litigious

Mortgage News

In a lawsuit filed last week in a California federal court, DocMagic Inc. claims Ellie Mae Inc. dumped the online document preparation firm from its transaction platform and used its monopoly to steal DocMagic customers.

The lawsuit was filed Friday in U.S. District Court for the Northern District of California, according to a copy of the complaint published by Courthouse News Service.

Ellie — the developer of the Encompass, Genesis 2000 and Contour loan origination systems — operates the ePASS Network. The Pleasanton, Calif.-based firm claims “one third of the nation’s $3 trillion loans pass through the ePASS Network,” while mortgage brokers use the platform to transmit 4,000 loan files per hour to wholesale lenders, Fannie Mae and Freddie Mac and credit bureaus — among other vendors.

The lawsuit by Carson, Calif.-based DocMagic supports Ellie’s claim, noting that ePASS has been widely adopted in the industry. Participating vendors reportedly include 88,000 appraisers and 2,200 service providers, while transaction volume for the 150,000 ePASS users was cited at $5 billion monthly.

DocMagic, which claims it “revolutionized the mortgage document industry,” said it first entered an ePASS agreement in November 2003. Its fees to Ellie were based on transaction volume.

But Ellie recently terminated DocMagic from the network, according to the complaint. And that wasn’t all.

“Ellie Mae took drastic steps to prevent hundreds of current DocMagic/Encompass users from accessing DocMagic products through unfair and anticompetitive behaviors, including sabotaging its clients by preventing access to DocMagic through alternative (non-ePASS) Web service calls,” the complaint states.

In addition to encouraging DocMagic to use its own competing loan documentation system, Ellie is allegedly blocking DocMagic customers from bypassing ePASS for a direct connection to DocMagic.

The market for Internet loan documentation services was estimated in the lawsuit at between $100 million and $200 million.

Ellie is accused of monopolizing the market and abusing its monopoly to squeeze out DocMagic. It allegedly violated Section 2 of the Sherman Act, 15 U.S.C. 2. and the Cartwright Act, Cal. Bus. Bus. & Prof. Cod 16700 et seq.

DocMagic claims damages exceed $5 million and seeks punitive and exemplary damages under California civil Code 3294. It seeks a permanent injunction against Ellie

Officials from Ellie weren’t immediately available to comment.

DocMagic Inc., a California Corporation, Plaintiff, v. Ellie Mae Inc., a California corporation; and Does 1 through 10, inclusive, Defendants.

Case No. CV 09 4017, Aug. 28, 2009 (U.S. District Court for the Northern District of California).

Related Posts

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

There is No Such Thing as a Free House …

Over the past several years, those who service loans in the State of Washington(1) have seen a dramatic rise in the number of lawsuits in which delinquent borrowers seek to quiet title to their homes on the grounds that lenders are barred from foreclosing based on...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Mortgage Servicer Portfolios

servicing news | mortgages outstanding statistics | foreclosure news   Servicing Portfolios as of 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 Residential Servicing Portfolios by Servicer Last Updated December 14, 2018...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Fannie Mae Profile

Last Updated December 27, 2018 7:38 PM Central   full list | other directories | bank search | SEC filings | execs | m&a | production   Government Takes Over Fannie, Freddie Sept. 8, 2008 The government has seized control of Fannie Mae and Freddie Mac. The move --...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Freddie Mac Profile

Government Takes Over Fannie, Freddie Sept. 8, 2008 The government has seized control of Fannie Mae and Freddie Mac. The move -- which is likely to push mortgage rates lower and provide a sense of stability for the more than 10,000 employees at both companies -- is a...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI