West Capital Lending opposes loanDepot bid to dismiss TILA comp suit

West Capital Lending (WCL) is pushing back against loanDepot‘s attempt to dismiss a lawsuit that accuses the lender of using an illegal compensation structure to gain an unfair competitive advantage in the mortgage market.

In an opposition brief filed June 18 in the U.S. District Court for the Central District of California, WCL argued that its complaint sufficiently alleges loanDepot violated the Truth in Lending Act (TILA)’s loan originator compensation rule by tying production managers’ compensation to the pricing terms offered to borrowers.

TILA’s application to production managers

WCL filed the lawsuit in March, alleging loanDepot’s consumer direct division violated the Truth in Lending Act’s loan originator compensation rule by tying production managers’ compensation to loan profitability and pricing concessions. WCL argues the rule applies to production managers because they negotiated loan terms with borrowers, despite also serving in supervisory roles.

The complaint alleges loanDepot used the compensation structure to gain pricing flexibility unavailable to compliant lenders. This allowed it to selectively undercut competitors — including WCL — while reducing managers’ compensation, causing WCL to lose customers, market share and revenue.

To support its claims, WCL cited declarations from former loanDepot production managers and executives who said managers regularly negotiated rates and fees with borrowers, and that their pay decreased when they approved pricing concessions.

The filing also points to an internal compensation formula that allegedly reduced production managers’ bonuses based on the number of pricing exceptions granted to borrowers. WCL argues the policy directly linked compensation to loan terms in violation of Regulation Z.

WCL further alleges former employees were instructed to match or beat offers from WCL regardless of profitability. According to the declarations, loanDepot was willing to lose money on individual loans to prevent borrowers from choosing the rival lender, using profits from higher-priced loans and reduced manager compensation to subsidize the discounts.

The company also argues it has standing to pursue claims under California‘s Unfair Competition Law because it allegedly lost customers, market share and revenue as a result of the practices. It contends that California law allows unfair competition claims to be based on alleged TILA violations, even though TILA itself does not provide competitors with a private right of action.

Legal battle on multiple fronts

WCL is asking the court to deny loanDepot’s motion to dismiss or, alternatively, allow it to amend its complaint if the court identifies any pleading deficiencies. The case remains pending, and neither WCL nor loanDepot returned HousingWire‘s requests for comment at the time of publication.

The suit isn’t the first time WCL and loanDepot have gone toe to toe in the courtroom.

In October 2025, loanDepot accused WCL and its founders of poaching hundreds of loan officers, misappropriating trade secrets and customer data, and violating LO compensation and labor laws. That case is still ongoing.

The lender also alleged that WCL improperly classified hundreds of loan officers as independent contractors and compensated them through revenue-sharing arrangements that gave the brokerage an unfair competitive advantage. WCL has denied the allegations.

WCL also faces a separate but similar lawsuit filed in June 2025 by consumer-direct lender Griffin Funding. That suit alleges several former LOs diverted company leads and customers after leaving for WCL. Griffin alleges the former employees misappropriated trade secrets and caused more than $3.7 million in lost revenue, claiming that WCL benefited from the alleged misconduct.

This article was written by Sarah Wolak and generated with the assistance of HousingWire Automation, then reviewed by a HousingWire editor before publication.