Lower is the target, and victim, in two new poaching suits

Lower is both plaintiff and defendant in two new poaching lawsuits.

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Two federal complaints involving the lender filed Tuesday invoke claims of tortious interference, in employees violating their non-solicitation agreements. The company sued Atlantic Coast Mortgage in an Ohio court, while Chicago-based The Federal Saving Bank sued Lower in a Maryland forum. 

The depository is seeking damages of “several million dollars” from Lower, an attorney for the bank told National Mortgage News Wednesday. Its lawsuit accuses Lower of coordinating with a TFSB senior vice president in charge of a Maryland production office resulting in 15 employees switching firms. 

The competitor allegedly promised the bank leader, who isn’t named as a defendant, a $100,000 signing bonus for moving to Lower with as many subordinates as he could. Seventeen TFSB employees resigned en masse last July, 13 of them sticking with Lower, according to the complaint. 

“Lower intentionally and deliberately interfered with TFSB’s profitable Elkridge operation,” wrote attorneys for the bank. 

Lower also accused the Virginia-based Atlantic Coast Mortgage of tortious interference, and misappropriation of trade secrets, in its own poaching case. The plaintiff firm claims ACM worked with former Lower chief production officer Nicholas Gallagher to raid entire branches last month, resulting in 31 total departures including loan officers and branch managers. Gallagher isn’t named as a defendant in the case.

Before leaving Lower, Gallagher and others obtained confidential loan pipeline information, and data on referral partners and prospective borrowers, the company said. The former Lower originators allegedly contacted former clients and solicited them to transfer their loans in progress to ACM. 

The plaintiff firm also asked the court for injunctive relief, which TFSB did not specify in its own complaint. Both lawsuits were light on details and just 11 pages long, unlike some of the dozens of pages other corporate poaching victims typically include in their initial complaints.

Neither Lower nor Atlantic Coast Mortgage replied to requests for comment Wednesday. A summons for ACM was issued Tuesday. 

The companies are all sizable originators, with Lower topping the competition with $5.3 billion in loan volume in 2024, according to publicly available Home Mortgage Disclosure Act data. The Federal Savings Bank reported $3 billion in total originations that year, while ACM posted $2 billion in production volume over the same period. 

Lower no stranger to poaching disputes

The multichannel Lower has been a frequent litigant in industry poaching battles, filing at least three such complaints in the past few years. 

That includes a 2023 lawsuit against a former branch manager and his team, accusing them of filing bad loans before joining AmCap Mortgage. The case went into arbitration proceedings last year, according to a federal court docket.

Other cases include poaching suits against New American Funding and Residential Wholesale Mortgage, the latter which stemmed from movement following Lower’s acquisition of Thrive Mortgage. The parties all reached settlements in those respective suits last year.