One of the nation's largest lenders wants over $1 million back from two originators it fired after rates shot up earlier this decade. 

Movement Mortgage filed a petition in federal court this week to confirm an arbitration award of at least $1,235,000 against two Chicago-based employees. While clawback requests have persisted since the massive layoff rounds earlier this decade, the Movement filing is one of the largest individual amounts sought by a lender in recent years. 

Victor Shkolnikov and Igor Velyunskiy were paid $835,000 and $400,000, respectively, in early 2022 to operate a Chicago branch, according to case filings. They were terminated a year later, after their production fell precipitously alongside a major rise in mortgage rates. 

The pair filed counterclaims against Movement, but an arbitrator denied their arguments in a hearing this summer. Shkolnikov and Velyunskiy now face a payment potentially exacerbated by 8% statutory interest accruing since their April 2023 firing, according to Movement. 

Both originators remain in the industry. Neither they, Movement nor its attorney responded to requests for comment. 

Poor performance in a worsening market

Lengthy filings describe Shkolnikov and Velyunskiy's employment agreements and performance, with the lender claiming they lost money every month. The company says the originators ended their run with a negative $459,928 profit share, and cost Movement $350,281 on the Chicago branch.

According to the filing, the pair averaged $36 million per month in origination volume before joining, but just around $4 million per month once joining Movement. Modex data shows the originators' production fell significantly once joining Movement, with only a few units per month toward the end of 2022.

From around the time of the duo's hiring, the average 30-year fixed-rate mortgage shot up from around 4% in March 2022 to the low-to-mid 6% range in April 2023. 

In the arbitration proceedings, the originators filed counterclaims over the terms of their employment agreement, including purported Regulation Z and wage law violations regarding their compensation. An arbitrator denied all of their claims, citing their employment agreement's at-will language, and because of a lack of evidence presented at the hearing. 

A larger trend

Movement lost 15% of its producing workforce in 2023, with 349 originators leaving that year per Modex. The company today has a smaller 1,700 total workforce, and still is a top industry lender with $13 billion in volume year-to-date. 

The clawback amount requested would be on par with some of the largest disclosed amounts sought from a former originator this decade. CrossCountry Mortgage, which has a history of seeking and securing clawbacks from loan officers, sought as much as $2.1 million from one ex-employee.

AnnieMac meanwhile has recently stepped up its pursuit of five- and six-figure sums from former originators, including $500,000 from a former branch manager.