loanDepot claims West Capital Lending used illegal playbook to become a top brokerage

loanDepot is accusing West Capital Lending (WCL) of hiring hundreds of loan originators as independent contractors and paying them revenue splits — practices that loanDepot claims are illegal and enabled WCL to become one of the largest mortgage brokerages in the country in just three years.

The lender sued the brokerage and its founders, Eric Hines and Daniel Iskander — the latter of whom worked at loanDepot between 2015 and 2019 as a production manager. loanDepot alleges that WCL poached hundreds of employees and misappropriated trade secrets and leads in violation of federal and state laws, thereby gaining a competitive advantage.

A spokesperson for WCL did not immediately respond to HousingWire’s request for comment. 

“A fair and balanced playing field is the cornerstone of the free enterprise system,” a loanDepot spokesperson told HousingWire in a written statement. “As our complaint alleges in detail, West Capital Lending has manipulated fair lending, privacy and tax laws and regulations to create an unfair competitive advantage. We plan to pursue every legal remedy available to demand accountability and fairness.”

“WCL, Hines and Iskander raided loanDepot’s sales force and senior employees using unlawful means, stole confidential and proprietary information, and converted loanDepot’s business for the benefit of WCM and to the detriment of loanDepot,” the company stated in the lawsuit filed Friday in California’s Orange County Superior Court.

According to loanDepot, a WCL employee contacted the firm around June 2024. That person indicated that WCL had affiliated with lead generation company What’s a Mortgage and obtained customer data taken from loanDepot by two former employees who had joined WCL.

Upon loanDepot’s request, WCL agreed to deliver the information on a flash drive in September 2025. The lender said it learned for the first time that the drive included 10 different lists containing not only customer names and contact information but also FICO scores, loan numbers and loan-level details.

loanDepot said WCL’s has repeatedly refused to cooperate in ensuring the return and remediation of the data from its information systems and devices. 

Beyond customer data, loanDepot also accused WCL of recruiting its LOs by inducing them to take active, “hot” leads. The company alleges WCL reassigned these leads “on paper” to another LO to “cover up the theft,” while the original LO continued to work on the files. In some instances, the alleged diversion occurred before the LOs’ official separation from loanDepot.

Other practices

loanDepot further alleges that WCL misclassified about 600 LOs as independent contractors by requiring them to switch from a standard MLO license to a “real estate salesperson license with an MLO endorsement.” The change allowed WCL to pay them on a 1099 basis and avoid the overhead costs associated with properly classifying LOs as employees. 

The lender estimates 178 of its LOs have been solicited and hired by WCL, with the belief that they will “enjoy higher after-tax earnings as a 1099 independent contractor than as a W2 employee.”

loanDepot also claims WCL compensates LOs under a plan offering a “lucrative split” of loan revenue — typically 10% to 15% — which violates LO compensation rules and creates “a perverse incentive for LOs not to provide the best terms to a consumer in order to increase their own compensation.”

This resulted in loanDepot being forced to increase compensation terms for its LOs to levels that are “artificially high,” it claims.

The complaint also notes that in 2023, WCL entered into settlement agreements and consent orders with the states of Hawaii, Oregon, Idaho and Texas related to unlicensed activity in 2021 and 2022. The company agreed to pay more than $464,000 in administrative penalties.

WCL had 1,149 sponsored LOs and 16 active branches as of Tuesday, per the Nationwide Multistate Licensing System.

loanDepot is seeking temporary, preliminary and permanent injunctive relief as well as monetary damages, alleging that WCL violated federal labor, LO compensation and consumer privacy laws.