CrossCountry Mortgage is rejecting accusations that it operated a kickback scheme, and is defending the comarketing agreement in question as lawful.
The retail giant in a legal filing Monday offered several arguments to a federal court regarding why a borrower’s Real Estate Settlement Procedure Act complaint falls short. Jeremiah VonBlohn and five other North Carolina-based borrowers are accusing CrossCountry and a local brokerage, Raleigh Realty, in separate lawsuits of conspiring to steer them to higher mortgage rates.
“All that plaintiff’s 112-paragraph complaint describes is a run-of-the-mill, industry-standard comarketing agreement,” wrote attorneys for CrossCountry in a motion to dismiss.
The six plaintiffs filed their claims over the summer, suggesting the scheme between the real estate businesses deprived them of their ability to shop for more advantageous mortgage rates. VonBlohn obtained a 6.75% interest rate on an adjustable-rate mortgage with CrossCountry in November 2022.
The lender has not yet filed motions to dismiss the five other lawsuits in the North Carolina federal court. A spokesperson for CrossCountry told National Mortgage News Tuesday morning the company doesn’t comment on pending legal matters, while attorneys for plaintiffs said they look forward to proving each of their clients’ cases.
Neither attorneys for CrossCountry nor a representative for Raleigh Realty returned requests for comment Tuesday morning.
CrossCountry breaks down the RESPA complaint
The lawsuits focus on a 2021 comarketing agreement in which CrossCountry and Raleigh Realty agreed to pay $15,000 per month each for search engine optimization services. The marketing company is not accused of wrongdoing in the suit.
Aggrieved borrowers claim a CrossCountry executive told the president of Raleigh Realty he expected an average kickback of $500 for each home loan referral. The brokerage boss in turn allegedly reprimanded real estate agents who did not refer business to the mortgage lender.
CrossCountry wrote Monday that comarketing agreement, which allowed for its LOs, links and logos to appear on Raleigh Realty’s website, was not unreasonable and within RESPA’s carve-out for such agreements, even if they’re explicitly tied to referrals. The lender did not address the specific accusation about its executive and the alleged $500 kickbacks.
VonBlohn claims a Raleigh Realty agent recommended CrossCountry but no other lenders, a “benign allegation,” attorneys for the company wrote. VonBlohn did not provide supporting accusations, such as a competing prequalification, that he could have obtained a lower interest rate and origination fee, they argued.
Even if VonBlohn can prove he was overcharged, he cannot show that it was because of the comarketing agreement, the motion continued. Attorneys also suggested the borrower’s complaint is time-barred by a 1-year statute of limitations in the circumstances of his case.
CrossCountry also said there were no unfair or deceptive acts in violation of the North Carolina Unfair and Deceptive Trade Practices Act, which VonBlohn raised.
“Plaintiff cannot base a UDTPA violation on conduct that is already subject to extensive regulation by existing statutory and regulatory regimes, such as RESPA,” wrote attorneys.
The lender’s motion also referenced a 2022 complaint by the same plaintiff’s attorney including similar accusations from a North Carolina borrower against the same two companies. That lawsuit was settled for undisclosed terms in June.
CrossCountry is one of the nation’s largest mortgage originators, generating over $39 billion in origination volume last year according to Home Mortgage Disclosure Act data. Its parent company also recently said it would expand its asset management arm.
Other lenders have faced litigation from borrowers who claim they were denied lower interest rates because of an originator’s nefarious scheme. Loandepot recently fired back at a complaint filed this summer which accused it of steering borrowers to higher rates.
