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Sun Sep 26, 2021, 12:52 PM

Mortgage Lender Cut Corners in Echo of 2008 Crisis, Ex-Executive Says

A lawsuit by its former operations chief says that as loanDepot prepared to go public, its founder pushed workers to approve mortgages without documentation.

LoanDepot, one of the mortgage industry’s biggest nonbank lenders, was riding a boom.

Historically low interest rates last year sent residential loan refinancings to their highest level in well over a decade. And thanks to an aggressive sales push, loanDepot made $100 billion in loans, a company record.

But in its eagerness to grow before an initial public offering early this year, loanDepot illegally cut corners and processed thousands of loans without required documents such as employment and income verifications, according to a lawsuit filed Wednesday by one of its former top executives.

The allegations by Tammy Richards, loanDepot’s former chief operations officer, echo some of the abuses that fueled the mortgage meltdown in 2008, which led to extensive new industry regulations. Ms. Richards, who was a midlevel executive at one of the most notorious firms during the crisis, said in her suit that she had been forced out of her job at loanDepot for refusing to break the rules.

https://www.nytimes.com/2021/09/22/business/loandepot-lawsuit-Anthony-Hsieh.html

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