A Utah lender is suing CMG Mortgage for allegedly surreptitiously raiding two of its Phoenix-area branches.

SecurityNational Mortgage Co. sued the larger competitor last month in an Arizona state court, and CMG elevated the case to a federal forum this week. The complaint identifies both SNMC and CMG employees purportedly involved in the scheme, although none are named as defendants. 

The rival in 2024 collaborated with SNMC's branch managers in Scottsdale and Glendale, Arizona and facilitated the transfer of confidential company and customer information, the suit claims. In transferring loans to their future workplace, SNMC employees allegedly handed them to placeholder loan officers at CMG. 

In communicating with SNMC's staff, CMG said it "sought to recruit and sponsor entire branches rather than individual originators, in order to gain immediate market position at the expense of its competitors," wrote attorneys for SNMC. 

The new lawsuit is the third federal poaching and theft of trade secrets case against CMG in the past two years. The Bay Area-based CMG has not formally responded to the new allegations, although its removal of the suit to federal court indicates another lengthy legal battle. 

Neither attorneys for the parties nor spokespersons for the companies returned requests for comment Thursday afternoon. 

The scheme

According to the suit, two CMG executives started speaking with two SNMC branch managers in July 2024, telling them they wanted to buy their Phoenix-area branches. By August, the two branch managers told their local employees that a licensing change was imminent, and to send their loans to CMG workers. 

One of those branch managers allegedly shared confidential information with CMG in September 2024, despite being told by SNMC the previous day that it would not authorize a release of that data. An unspecified number of staffers from the Glendale and Scottsdale branches resigned en masse that month, the lawsuit claims. 

SNMC, which accuses its former workers of violating their 12-month non-solicitation agreements, is seeking unspecified damages to be tripled upon a resolution. 

The Salt Lake City-based SNMC has 72 branches and generated nearly $2 billion in loan volume in 2024, according to public records. CMG meanwhile is one of the nation's larger independent mortgage banks, with over 400 branches nationwide and $21 billion in production volume in 2024. 

CMG's other lawsuits

The larger lender is still fending off similar complaints from A and N Mortgage Services and Nations Lending. 

The Chicago-based A and N accused a former regional manager, who departed to the CMG-owned brokerage Select Lending Services, of misappropriating a proprietary loan program for asylum seekers, among other activities. The sides are currently deposing opposing witnesses.

Nations Lending, an Ohio-based originator, claimed CMG helped two of its former branch managers divert business to the rival and entice eight additional loan officers to switch firms. A federal court last month ordered the branch manager defendants to arbitration, while the larger complaint against CMG remains pending.