Tammy Richards, loanDepot’s former chief operations officer, is accusing her former employer of pushing its workers to accept mortgage applications without documentation. The allegations are found in a civil lawsuit Richards filed against the company on Wednesday. News of the lawsuit was first reported by The New York Times.
The lawsuit specifically targets Anthony Hsieh, founder and CEO of California-based mortgage lender, as well as the company’s general counsel Peter Macdonald and ten other unnamed “Does.”
“Ms. Richards began to grow concerned about Hsieh, having recognized that his behavior had become more alarming than his usual over-the-top, narcissistic, grandiose personality traits,” the lawsuit alleges. “And that based upon her past experience with Hsieh’s willingness to cross ethical and fiduciary boundaries, to satisfy his greed and obsession with being number one, she believed that it would be only a matter of time that Hsieh would begin to take a ‘by any means necessary’ approach for the purpose of fraudulently inflating LoanDepot’s value.”
According to Richards, the concern is loanDepot’s practices are similar to those leading to the mortgage collapse — and eventually the Great Recession — in 2008. She alleges that she was targeted for verbal abuse for not supporting the company’s overly-aggressive business practices.
“On or around August 20, 2020, during an executive committee meeting, Hsieh began to berate Ms. Richards in front of the entire executive team, laying blame on Ms. Richards for loanDepot’s failure to match the volume of closed loans as its largest competitor, Rocket Mortgage, due to being too overcautious during the underwriting process.”
loanDepot is the nation’s fourth-largest mortgage provider in dollars lent. In a statement to The Mortgage Note, the company said:
“loanDepot is committed to operating at all times according to ethical, responsible and compliant business practices grounded in values of inclusivity and respect for our team members, customers and all of our stakeholders. The claims in the lawsuit, which we take very seriously, were previously thoroughly investigated by independent third parties and found to be without merit. We intend to defend ourselves vigorously against these outlandish allegations and will respond as appropriate during the legal process.”
On Thursday morning, the company declared a regular cash dividend of $0.08 per share.