The mortgage market is so bad lenders want ex-employees to give back bonuses

https://www.wsj.com/finance/banking/the-mortgage-market-is-so-bad-lenders-want-ex-employees-to-give-back-their-bonuses-52e96080

by fairytalemtg • 3 years ago

63 45 3 years ago

wsj.com

timnetworks• 3 years ago

I had no idea this was a practice, isn't the bonus for some deliverable? How widespread is this practice?

pxx• 3 years ago

The very first paragraph talks about a signing bonus. It is very common practice to claw back signing bonuses if you don't stay a predetermined amount of time. From the article:

Signing bonuses aren’t unusual in the mortgage industry, and they were particularly big during the recent boom. Neither are attempts to get them back, especially in the current bust.

dharmab• 3 years ago

The objectable part is that the employees were fired right before the clawback period ended. Depending on the legal jurisdiction, there may be a strong case that the employees should keep at least part of the bonus.

https://en.wikipedia.org/wiki/Good_faith_(law)

paulddraper5• 3 years ago

Signing bonus.

Any signing bonus stipulates a period of time (often a year) you need to stay in order to keep the bonus.

Firing without cause before that period ends...not sure what the common practice is for that.

tbh it's probably quite rare, as you would only offer hiring bonuses in a tight labor market.

SoftTalker3• 3 years ago

It was most likely spelled out in the bonus terms and conditions. It sucks for the fired employee, but the lenders are probably doing something they are allowed to do.

hyperhopper• 3 years ago

Contracts I've signed stipulate that the bonus can only be owed back if fired for cause.

sokoloff• 3 years ago

https://archive.ph/7Is3F

hmmdar• 3 years ago

The archive.ph links never work for me. The are you human, check always gets stuck in a loop. Is there there any way around that?

abracadaniel• 3 years ago

I get it on iOS exclusively, but turning on a VPN resolves for some reason. I’ve tried different browsers, different DNS providers, and WiFi or cellular, and none have helped. Not sure why a VPN would make a difference. Same country of origin.

derekp7• 3 years ago

Are you using Firefox with DoH turned on? That routes your dns (via https) to Cloudflare by default which archive.is doesn't like. Even if your OS has a different DNS server configured.

foobiekr• 3 years ago

If you are using Cloudflare DNS, that's why. This comes up frequently, CloudFlare always comes along and gives a vaguely dishonest answer as to why they won't fix it. Stop using 1.1.1.1; if you are using private relay (which implicitly uses cloudFlare) that's why this is happening.

see: https://news.ycombinator.com/item?id=19870415

underseacables• 3 years ago

This is despicable behavior.

reducesuffering2• 3 years ago

What would happen if an employee doesn't have the funds to give back, or ignores and/or refuses their requests?

toomuchtodo2• 3 years ago

Civil court litigation. The dollar amounts in question are well over small claims court amounts (6-7 figures). Guaranteed Rate is arguing those with signing bonuses did not meet their contractual obligations, while employees are indicating the terms were changed unilaterally while employed.

Not an attorney, but depending on state and other situations, I’d expect some folks to shed this claim in bankruptcy if necessary (if the amount owed is hundreds of thousands of dollars, they can’t get relief, the mortgage industry is dead for another 2-3 years based on the Fed effective rate, etc) or otherwise leverage state statute. Florida has very strong protections against creditors, for example.

paulddraper5• 3 years ago

Bankruptcy is a nuclear option; it ruins your credit for years.

wombatpm2• 3 years ago

Sounds like wage theft. I’d ask the State Attorney General to look into things

reducesuffering2• 3 years ago

The amounts matter for the lenders in aggregate, but standard lender employees probably only had $5k - $40k signing bonuses. They're going to spend non-existent resources to litigate against the ~20% that don't pay?

refurb• 3 years ago

These mortgage brokers are the same vultures that pushed crappy ARMs before 2008 because they made a bigger commission than a fixed 30 year.

Reading the article they seem like used car salesman. I love the guy who admits the business is "feast or famine" but now laments he's "been unable to sell his 7,700-square-foot house at the $3 million he is seeking".

Every sign-on bonus I've gotten only makes me pay it back if I choose to leave before a certain time. Fired for cause? I keep it.

Sounds like these employees didn't read their contracts. I love the guy who is choosing to leave early and is mad they won't pro-rate it.

These are the same snakes that would sell their own mother a mortgage she couldn't afford.

bandyaboot• 3 years ago

We are not going to be apologetic about exercising our legal rights to recover our money.

Well…I guess coming right out and not hiding your douchebaggery is ever so slightly preferable than offering the sterilized and fake words of regret via press release that you might see from many other companies.

belltaco• 3 years ago

To save money, Walsh wants to downsize. But he has been unable to sell his 7,700-square-foot house at the $3 million he is seeking.
“We got the rug-pull of our lives, everyone did,” he said. “Rates are not supposed to be here.”

Huh? Why are the rates 'not supposed to be here'?

And also how or why is it a rug pull to hike interest rates to tame high inflation which affects low income folks the most? The consequences of runaway or hyperinflation will be far worse.

tiahura• 3 years ago

The higher rates are due to inflation expectations. Perhaps he was foolish enough to believe Treasury Secretary Yellen who assured that inflation would be “a transitory thing, not something that's associated with a buildup in wage—in wage pressures”?

peyton• 3 years ago

In 2020 the Fed explicitly adopted a long-run avg. inflation target of 2%. Since we’ve moved so much productive capacity offshore, the old policy lets rival nations fuck with the dollar by shutting down factories and pipelines temporarily. Abandoned that policy is the rug pull.

vsskanth2• 3 years ago

Is it hard to become a mortgage banker? Why were signing bonuses so high?

typedef_struct• 3 years ago

What is a mortgage banker? Is it a program?

vsskanth2• 3 years ago

Mortgage loan officers I believe. They're the ones with the NMLS ID, licensed to talk about loan terms

crzyman• 3 years ago

I've heard of needing to stay for X years after Company pays for tuition. I've heard of signing bonuses of $1-10k that only pay out if you stay for X years (dumb name, that's a "thank you for staying for 2 years" bonus, not a signing bonus). I've heard of vesting schedules where the company helps you fund a 401k and annually increases the percentage you could take if you quit up to 100% after X years.

I have never heard of something as predatory as immediately approving your employees for a $100k loan at 0% APR that's only forgiven if they stay for 2 years.

I don't care how pretty the bow on the box is, it's still a box of poop.

rrrrrrrrrrrryan• 3 years ago

if they stay for 2 years

If it were "if you decide to stay for 2 years" bonus, I don't think there'd be an issue

The issue is that it's really a "if we decide to keep you longer than 2 years" bonus, improperly named a "signing bonus."

It is paired with a real "bonus" or perk of sorts, but it's just a weird 2 year 0% APR loan that must be repaid in full at the end of the term, which works out to maybe $10k in risk free returns.

conductr• 3 years ago

I've been apart of many a board room where clawing back bonuses has been brought up. Ever single instance, it's almost instantly shrugged off as a "PR nightmare". Seems like we got it right.

The mortgage market is so bad lenders want ex-employees to give back bonuses

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