Citizens Bank is suing SoFi Bank for poaching its loan officers and loan pipelines, in a new lawsuit that shows the fight for mortgage talent and business remains intense.
The Rhode Island-based bank is accusing its fintech competitor of racketeering, for allegedly inducing over 30 LOs and other mortgage staff to breach their confidentiality and non-solicitation agreements in their departures. It's a rare federal poaching complaint between banks in the mortgage space, as independent mortgage banks and brokerages more frequently accuse one another of raiding branches and lifting client information.
The lawsuit was first reported by Law360.
Citizens raised an alleged violation of civil RICO, the latest mortgage player to invoke the claim against a rival that is typically reserved for organized crime. The lender described SoFi's actions as a "nationwide campaign" that had devastating results on its operations, including in the Tri-State area.
"Here in Connecticut, SoFi has decimated Citizens' mortgage business and essentially eliminated its market presence," the complaint read, alleging that employees poached from that in-state branch were responsible for $5 million in revenue in the year prior to SoFi's actions.
A spokesperson for Citizens declined to comment Friday, while a representative for SoFi didn't respond to a request for comment.
Devastating results
The suit, which doesn't name individual employees as defendants, accuses SoFi of poaching marketing managers and other home lending professionals across nine states over the past two years. Those workers allegedly absconded with information ranging from client and loan data, to referral databases and pricing models, in violation of their employment agreements.
The purported campaign began in 2024 when a Citizens executive vice president in its consumer lending department departed for a similar position at SoFi. The employees were allegedly lured by SoFi's promises to expand their mortgage business.
Citizens, which is also suing SoFi for misappropriation of its trade secrets, is seeking injunctive relief from a Connecticut federal court to prevent SoFi from using its stolen information.
SoFi is a significant home equity loan originator and has reported billion-dollar origination volume in recent quarters, including $1.4 billion in mortgages in the second quarter, according to its earnings. Citizens, a retail and correspondent lender, doesn't publish its specific residential mortgage volume. It ended its wholesale operations in 2023.
Consumers and lenders have infrequently raised RICO claims against real estate companies in recent years and have seldom taken those accusations to trial. More lenders have secured settlements with rivals in trade secrets cases, although some of those cases have remained pending after years of litigation.
