Five borrowers sued the lender in July, claiming they were steered to higher rates via a long-running scheme in which loan officers who did not participate faced punishment. The megalender this month responded to those accusations, calling the alleged behavior implausible. 

The lender also took issue with plaintiffs' suggestion that its purported actions may have violated criminal fraud statutes.

"When plaintiffs seek to harm a company's reputation by asserting sweeping claims of fraud without facts or evidence — and without any explanation for how they know about the supposed fraud — they should not get a second chance," attorneys for Loandepot wrote in a filing seeking to dismiss the case. 

A spokesperson for Loandepot declined to comment. Attorneys for both sides had not responded to inquiries at deadline. Plaintiffs want to certify a class of an untold number of Loandepot customers who were allegedly steered into higher-rate loans during a period that started in January 2019.

The details of borrowers' claims against Loandepot

According to the filing in a Maryland federal court, the company allegedly penalized loan officers who couldn't secure higher rates from borrowers by forcing them to transfer such loans to internal loan consultants (ILCs). The LO still did the work, but the ILC transfer allowed Loandepot to cut the originator's compensation from an average of 100 basis points to as low as 30 basis points, according to claims in the lawsuit. If an LO didn't supply a false excuse to transfer to an ILC, they received no compensation, plaintiffs alleged.

Loandepot used false justifications for the ILC transfers, encouraging LOs to push inflated rates in violation of the Truth in Lending Act's Regulation Z, the borrowers claimed.

The lender allegedly electronically robosigned for at least one ILC on federal loan disclosures with the company enabling the fraudulent behavior and never investigating or disciplining LOs subject to repeated transfer requests.

Loandepot slams the complaint

Attorneys for Loandepot argued the case rests on a "stunning proposition" and pointed to supposed holes in the customers' complaint. 

The individuals who allegedly received favorable interest rates are not plaintiffs nor members of the class, and the borrowers suing also received ultra-low rates between 2.5% and 3.25%, according to the lender's court claims.

Other alleged missteps include a lack of details about the scheme, how borrowers found out about it, and Truth in Lending Act claims filed outside TILA's 3-year statute of limitations. One of the named plaintiffs obtained his loan via Loandepot's direct channel, which does not employ ILCs, and thus could not be affected by the alleged scheme as described, according to the company's court filing.

"Even accepting Plaintiffs' fanciful allegations as true at this stage of the litigation, 'the defendant should have broken the law for me too' is not a legally cognizable basis for recovery," an attorney representing the lender wrote.

The complaint also fails to specify the allegedly higher rates LOs had to target to receive full compensation. The lender also made mention of the Consumer Financial Protection Bureau's proposal to rescind the LO comp rule earlier this year in its filing, but did not speculate how it would impact the case, and said no court has had an opportunity to interpret the provision.

Loandepot also pointed to counsel for plaintiffs making similar accusations about Loandepot's LO comp scheme in a separate poaching case involving Movement Mortgage. The claim was raised in an early filing in that lawsuit, which the parties dismissed last summer.

A federal judge has ordered the plaintiffs to respond by Oct. 10. Borrowers have asked for damages including the sum of finance charges and fees paid by certain impacted borrowers.