Guaranteed Rate Affinity has initiated legal action against former loan originators, accusing them of breaching contracts by failing to pay back advanced signing bonuses and commissions after they left the company.
Two anonymous sources told HousingWire that multiple former employees have received demands from the company to return their compensation. It has resulted in the company filing at least two lawsuits in California related to the matter.
Guaranteed Rate Affinity is a joint venture established in 2017 by Guaranteed Rate and Anywhere Real Estate (former Realogy). The company originates and markets its mortgage lending services to Anywhere’s real estate brokerage and relocation subsidiaries.
According to the lawsuits and former employees who requested anonymity for fear of retribution, Guaranteed Rate Affinity has demanded that former loan originators who left months or even over a year ago return their signing bonuses because they did not meet the predetermined duration of employment required to be eligible for the compensation. In addition, the company has requested the return of commissions paid for loans that were originated but subsequently recaptured.
A spokesperson for Guaranteed Rate Affinity declined to comment on pending litigation.
On Sept. 1, the company sued Kristin Bati, a former vice president of mortgage lending, in Superior Court in California for Orange County. Guaranteed Rate Affinity says it advanced Bati a $200,000 signing bonus, which she was required to repay in full if she did not remain employed for at least 13 months.
The firm alleges that Bati worked at Guaranteed Rate Affinity from June 2021 to January 2022 and should have returned the signing bonuses within 10 days after her departure. Despite repeated demands, Bati has refused to repay, the lawsuit states. The lender alleges Bati owes around $192,166 after discounting $7,833 in deferred compensation – exclusive of interest at a rate of 9% per the promissory note terms, fees and costs.
Guaranteed Rate Affinity further alleges that it paid $14,000 in commissions considered “advanced and not earned” until it determined that no recapture event had occurred in connection with the loan.
Per the lawsuit, Guaranteed Rate Affinity has 180 days after selling a loan on the secondary market to determine whether a recapture event has happened. If positive, Bati was required to return all or part of her commissions. The company alleges that two of her eligible loans became subject to recapture events.
Bati and her attorney declined to comment.
Bati’s lawsuit follows another filed on July 31 in the same court against Gabriel Gifoli. The company said it advanced Gifoli $400,000 as a signing bonus, with the condition that he remain employed for at least 13 months. Gifoli served as a loan officer from May 2021 to October 2021. He declined to comment on the lawsuit.
Guaranteed Rate Affinity was among the scores of mortgage lenders that offered six- and seven-figure signing bonuses to executives and loan officers during the refi boom of 2020 and 2021. However, as market conditions shifted in 2022 amid surging rates, most lenders stopped offering huge signing bonuses and increased efforts to recover them from former employees.
In a shrinking mortgage market, G-Rate, the seventh-largest mortgage lender in the country and part-owner of Guaranteed Rate Affinity, laid off hundreds of employees across two rounds of layoffs last month, HousingWire reported.
The lender originated $10.6 billion in the second quarter, up from the previous quarter’s $7 billion — totaling $17.6 billion in the first six months of 2023, according to data from Inside Mortgage Finance. The production volume in the first half of this year was down roughly 47% from the same period in 2022. Guaranteed Rate ended the second quarter with a 2.5% market share, IMF data showed.
