Griffin Funding alleges West Capital Lending, former LOs diverted borrower leads

loanDepot wasn’t the first mortgage lender to accuse West Capital Lending (WCL) of engaging in unlawful business practices — allegations that have drawn renewed attention to the tensions between retail mortgage lenders and brokerages in California.

The cases spotlight the transfer of leads and borrowers when loan officers move between companies, raising questions about the balance between corporate ownership of customer data and the personal relationships LOs maintain with borrowers.

In June, consumer-direct lender Griffin Funding filed a complaint in the Superior Court of California, County of San Diego, against LOs who left the company in 2024 and 2025 to join WCL. The suit alleges that these former employees diverted leads and customers belonging to Griffin Funding.

According to the complaint, Griffin invests millions of dollars annually to generate exclusive leads through its website. To protect that investment, the company’s employment agreements prohibit LOs from copying or soliciting these leads for up to 36 months after leaving the company.

Griffin believes former employees “have stolen lists of leads provided to them while employed with plaintiff” because they “intend to continue to solicit and are actively soliciting business from those leads.” 

The lawsuit claims that when the first allegedly diverted loan closed, WCL “immediately wired” the amount shown to have been diverted by the three former employees. But other loans based on Griffin’s leads continued to be closed. In total, the defendants have diverted at least 203 customers, causing damages in excess of $3.71 million in lost revenue, the lawsuit states. 

Griffin’s lawsuit alleges breach of contract, conversion, misappropriation of trade secrets and unfair competition. Griffin declined to comment when contacted by HousingWire.

WCL founder Daniel Iskander refuted the claims, saying “anyone can sue anyone for any reason.”

“This isn’t the first time a competitor has tried to sue us for losing loan officers to the broker channel,” he said. “We operate within all state and federal laws and most importantly with integrity for our loan officers and our borrowers. There’s absolutely no validity to any type of corporate theft in any way shape or form.”

Who owns the leads?

The Griffin case mirrors similar allegations in loanDepot’s suit against WCL.

loanDepot claims WCL recruited its LOs and induced them to take “active, hot leads,” later reassigning them “on paper” to conceal the transfers while the same LOs continued to work on the files — in some cases before officially leaving loanDepot.

Industry attorneys say the lawsuits highlight the persistent tension between corporate ownership of client data and the personal connections LOs build with borrowers.

Troy Garris, co-managing partner at Garris Horn LLP, said that, “if the LO has nonpublic personal information about a customer the company did business with, it belongs to the company — there usually is little doubt about that.” But LOs control much of the business because of their relationships with borrowers, he added. 

“Every mortgage company out there, every day they’re hiring, they’re running the risk that somebody is bringing somebody else’s information into them — and then when people quit, they run the risk that people are leaving with their data,” Garris said.

“LOs believe that data and those relationships belong to them, and are right in some ways. The law doesn’t say that, but nobody owns those relationships, and the relationships are usually between LOs and these individuals.” 

Ron Gapp, founding partner at Brody Gapp LLP, said these situations often raise questions of borrower consent and data transmission practices. He added that, even if the contract doesn’t specify whether LOs can take the data, the questions include: Did the borrower give you permission to take their information? How did you do it? How did you transmit it?

“It’s probably the No. 1 issue when a group of people leaves one shop to another,” Gapp said. “They try to take the data with them, and that creates a lot of liability, not only for the new employer but for the LOs personally. There’s a lot of risk there, even if the contracts are not clear.” 

James Brody, a founder and managing partner at Brody Gapp LLP, added that unapproved data transfers can trigger state data breach notifications.

“That leads to a data breach that has to be taken into consideration by the employer they’re leaving as well as the new one,” Brody said. “In many states, when you have that type of data breach, depending on how many consumers are at issue, you have to write a letter to the state attorney general.

“You may have to give the consumers notification that this happens — and this happens all the time.”