11 ms·

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

63 points by fairytalemtg 3y ago

timnetworks 3y ago
I had no idea this was a practice, isn't the bonus for some deliverable? How widespread is this practice?
- pxx 3y 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 3y 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) https://en.wikipedia.org/wiki/Good_faith_(law)
- paulddraper 3y 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.
  - hyperhopper 3y ago
    Contracts I've signed stipulate that the bonus can only be owed back if fired for cause.
    - dclowd9901 3y ago
      Still seems dubious. What if the cause is “you didn’t meet our [obscenely unrealistic] expectations”?
      - nine_zeros 3y ago
        Performance is not a "for cause" reason.
      - paulddraper 3y ago
        Are you suggesting there is no reliable legal distinction between cause and without cause dismissal?
      - red-iron-pine 3y ago
        "for cause" in the US usually implies a reason that is above and beyond bad performance, such as egregious or criminal actions (theft, fraud, abuse, sexual harassment, criminal negligence, etc.). not showing up on time enough, or being kinda crappy at your job generally would not qualify
  - SoftTalker 3y 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.
    - arcticbull 3y ago
      They're certainly allowed to ask. Now whether they are likely to enforce the terms in court, and whether the court would side with them, and whether they would recoup more than the cost of pursuing the claim, well, that's a different matter. [edit] Not to mention the risk of negative PR, and the consequences for their recruitment pipeline. I suspect if you just said "nope" a bunch, they would come back to you and accept a compromise. They're going to get pennies on the dollar if they send the account to collections. If this were me I'd probably start by saying "I'll give you back 33% if you sign a document disclaiming your interest in the remaining 67%" and kick off the negotiation there. IANAL of course, lol, and this kind of thing I'd want to run by a professional. This is just my gut instinct.
      - paulddraper 3y ago
        > They're going to get pennies on the dollar if they send the account to collections Collections fees are not that much FWIW. Especially since the debtor often pays fees.
        klyrs 3y ago
        Collections will negotiate though, and settle for less than the full amount.
        paulddraper 3y ago
        For sure. Also, don't forget about your credit score.
    - naet 3y ago
      It was probably written in the contact that if they were fired for cause, they'd have to return the signing bonus. That is pretty typical for most signing bonuses, so that the employer is covered from employees trying to get the signing bonus and then not following through on their work obligations, and also for the employee to be covered that they won't be fired right before collecting and then denied the bonus. They're basically trying to reframe a large layoff to save money as a bunch of individual employees being fired for cause. When the market took a downward turn, the companies likely tried to introduce new 'cause' to fire them and attempt to legally claw back the bonus. Like this example of setting unrealistic performance goals given the market turn: "Siegel, the former banker at a Guaranteed Rate affiliate in New Jersey, said when business slowed down last year, the company introduced monthly performance goals. They hadn’t been part of the signing bonus agreement. He emailed his boss multiple times offering to leave the company and return a prorated share of the signing bonus, but it went nowhere, he said. In October 2022, and then again in December, he received letters saying he wasn’t meeting the performance goals, he said, and that he was at risk of termination and having his bonus clawed back." Unfortunately US worker protections are not great (IMO), so the employees in question will likely have to face a legal battle if they want to argue for keeping their bonuses. Mortgage companies also likely have a strong in house legal team, meaning their ex-employees will have to pay out of pocket for a good lawyer if they want a chance of winning in court. Most places in the US are also "at will employment", meaning you can be terminated at any time without warning for any reason, and that makes it much harder to argue that you were unfairly terminated. There might be a chance you could argue that the company is obviously facing financial issues and so you were let go as more of a "layoff" type termination (and then you have some more rights to things like unemployment) but it's likely to be an expensive argument that some may not be able to fund, and even then you're definitely not guaranteed to win. -- I personally was laid off a few months into a position where I had been given a signing bonus, but they were laying off the entire office and did not ask me to repay it. It was a pretty small bonus and they probably forgot about it anyways, but given that it was a large layoff they probably would have a hard time arguing that I was fired with cause. They also tried to then rehire me at a lower rate in a different region, but I didn't want to relocate so I declined.
sokoloff 3y ago
https://archive.ph/7Is3F https://archive.ph/7Is3F
- hmmdar 3y 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 3y 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.
    - derekja 3y ago
      Thanks. I get it on ios as well. Hadn’t thought to try a vpn.
    - 4death4 3y ago
      It’s because of iCloud Relay, which is powered by Cloud Flare. If you turn it off it will work.
  - derekp7 3y 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 3y 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 https://news.ycombinator.com/item?id=19870415
underseacables 3y ago
This is despicable behavior.
- ilyt 3y ago
  [dead]
reducesuffering 3y ago
What would happen if an employee doesn't have the funds to give back, or ignores and/or refuses their requests?
- toomuchtodo 3y 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.
  - wombatpm 3y ago
    Sounds like wage theft. I’d ask the State Attorney General to look into things
    - wombatpm 3y ago
      And I’d ask the taxing authorities to be ready for an increased tax payment from my employer.
  - paulddraper 3y ago
    Bankruptcy is a nuclear option; it ruins your credit for years.
    - toomuchtodo 3y ago
      You’re usually eligible for credit immediately after going bankrupt because you can’t go bankrupt again for several years. Nuclear option, but an option.
  - 3y ago
refurb 3y 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.
- ilyt 3y ago
  [dead]
bandyaboot 3y 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.
- leventonportera 3y ago
  [flagged]
  - crzyman 3y ago
    I would argue that offering your employees a massive loan that you might forgive but it depends if they like you, is incredibly predatory. Terrifying in fact. I guess less bad that giving $100k in cash and asking for it back out of nowhere. But only because it's in the contract.
    - leventonportera 3y ago
      Wait, so the fact that banks offer loans to people, which they don't have to take is predatory then? The 0% APR for 2 years offers I get in the mail are predatory? This indeed must be terrifying for you, since those terrifying zero-interest offers of credit are in every store you go to, every bank you go to, and omg even in your own mailbox. So again just to be clear what you're saying. A loan with interest is ok. A loan with zero interest where you might get a chance to have it forgiven if you are a top performer at work, is "incredibly predatory and terrifying?" And by the way, for a guy selling his house for $3mil, having to give back $100k that he knew he might have to give back, after using it free for almost 2 years, is not "a massive loan." My wife and I spent $80k on refugee aid last year, and I don't have a $3mil house. It was an unplanned expense, but it changed our other spending or lifestyle in zero ways. It just means last year we didn't save as much for retirement as the year before.
    - Ferret7446 3y ago
      Why? It's literally free money. Stick it into an low risk investment account or even a money market account, give it back at the end and keep the interest. People should be held accountable for their own stupidity, and it's not like the company did anything deceptive AFAIU. If an adult doesn't understand what a loan is then that's on them (or their education, but that doesn't absolve their responsibility).
belltaco 3y 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 3y 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”?
- junofan 3y 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.
vsskanth 3y ago
Is it hard to become a mortgage banker? Why were signing bonuses so high?
- typedef_struct 3y ago
  What is a mortgage banker? Is it a program?
  - vsskanth 3y ago
    Mortgage loan officers I believe. They're the ones with the NMLS ID, licensed to talk about loan terms
crzyman 3y 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 3y 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 3y 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.

63 points by fairytalemtg 3y ago

timnetworks 3y ago

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

pxx 3y 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 3y 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) https://en.wikipedia.org/wiki/Good_faith_(law)
paulddraper 3y 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.
- hyperhopper 3y ago
  Contracts I've signed stipulate that the bonus can only be owed back if fired for cause.
  - dclowd9901 3y ago
    Still seems dubious. What if the cause is “you didn’t meet our [obscenely unrealistic] expectations”?
    - nine_zeros 3y ago
      Performance is not a "for cause" reason.
    - paulddraper 3y ago
      Are you suggesting there is no reliable legal distinction between cause and without cause dismissal?
    - red-iron-pine 3y ago
      "for cause" in the US usually implies a reason that is above and beyond bad performance, such as egregious or criminal actions (theft, fraud, abuse, sexual harassment, criminal negligence, etc.). not showing up on time enough, or being kinda crappy at your job generally would not qualify
- SoftTalker 3y 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.
  - arcticbull 3y ago
    They're certainly allowed to ask. Now whether they are likely to enforce the terms in court, and whether the court would side with them, and whether they would recoup more than the cost of pursuing the claim, well, that's a different matter. [edit] Not to mention the risk of negative PR, and the consequences for their recruitment pipeline. I suspect if you just said "nope" a bunch, they would come back to you and accept a compromise. They're going to get pennies on the dollar if they send the account to collections. If this were me I'd probably start by saying "I'll give you back 33% if you sign a document disclaiming your interest in the remaining 67%" and kick off the negotiation there. IANAL of course, lol, and this kind of thing I'd want to run by a professional. This is just my gut instinct.
    - paulddraper 3y ago
      > They're going to get pennies on the dollar if they send the account to collections Collections fees are not that much FWIW. Especially since the debtor often pays fees.
      - klyrs 3y ago
        Collections will negotiate though, and settle for less than the full amount.
        paulddraper 3y ago
        For sure. Also, don't forget about your credit score.
  - naet 3y ago
    It was probably written in the contact that if they were fired for cause, they'd have to return the signing bonus. That is pretty typical for most signing bonuses, so that the employer is covered from employees trying to get the signing bonus and then not following through on their work obligations, and also for the employee to be covered that they won't be fired right before collecting and then denied the bonus. They're basically trying to reframe a large layoff to save money as a bunch of individual employees being fired for cause. When the market took a downward turn, the companies likely tried to introduce new 'cause' to fire them and attempt to legally claw back the bonus. Like this example of setting unrealistic performance goals given the market turn: "Siegel, the former banker at a Guaranteed Rate affiliate in New Jersey, said when business slowed down last year, the company introduced monthly performance goals. They hadn’t been part of the signing bonus agreement. He emailed his boss multiple times offering to leave the company and return a prorated share of the signing bonus, but it went nowhere, he said. In October 2022, and then again in December, he received letters saying he wasn’t meeting the performance goals, he said, and that he was at risk of termination and having his bonus clawed back." Unfortunately US worker protections are not great (IMO), so the employees in question will likely have to face a legal battle if they want to argue for keeping their bonuses. Mortgage companies also likely have a strong in house legal team, meaning their ex-employees will have to pay out of pocket for a good lawyer if they want a chance of winning in court. Most places in the US are also "at will employment", meaning you can be terminated at any time without warning for any reason, and that makes it much harder to argue that you were unfairly terminated. There might be a chance you could argue that the company is obviously facing financial issues and so you were let go as more of a "layoff" type termination (and then you have some more rights to things like unemployment) but it's likely to be an expensive argument that some may not be able to fund, and even then you're definitely not guaranteed to win. -- I personally was laid off a few months into a position where I had been given a signing bonus, but they were laying off the entire office and did not ask me to repay it. It was a pretty small bonus and they probably forgot about it anyways, but given that it was a large layoff they probably would have a hard time arguing that I was fired with cause. They also tried to then rehire me at a lower rate in a different region, but I didn't want to relocate so I declined.

sokoloff 3y ago

https://archive.ph/7Is3F https://archive.ph/7Is3F

hmmdar 3y 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 3y 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.
  - derekja 3y ago
    Thanks. I get it on ios as well. Hadn’t thought to try a vpn.
  - 4death4 3y ago
    It’s because of iCloud Relay, which is powered by Cloud Flare. If you turn it off it will work.
- derekp7 3y 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 3y 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 https://news.ycombinator.com/item?id=19870415

underseacables 3y ago

This is despicable behavior.

ilyt 3y ago
[dead]

reducesuffering 3y ago

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

toomuchtodo 3y 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.
- wombatpm 3y ago
  Sounds like wage theft. I’d ask the State Attorney General to look into things
  - wombatpm 3y ago
    And I’d ask the taxing authorities to be ready for an increased tax payment from my employer.
- paulddraper 3y ago
  Bankruptcy is a nuclear option; it ruins your credit for years.
  - toomuchtodo 3y ago
    You’re usually eligible for credit immediately after going bankrupt because you can’t go bankrupt again for several years. Nuclear option, but an option.
- 3y ago

refurb 3y 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.

ilyt 3y ago
[dead]

bandyaboot 3y 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.

leventonportera 3y ago
[flagged]
- crzyman 3y ago
  I would argue that offering your employees a massive loan that you might forgive but it depends if they like you, is incredibly predatory. Terrifying in fact. I guess less bad that giving $100k in cash and asking for it back out of nowhere. But only because it's in the contract.
  - leventonportera 3y ago
    Wait, so the fact that banks offer loans to people, which they don't have to take is predatory then? The 0% APR for 2 years offers I get in the mail are predatory? This indeed must be terrifying for you, since those terrifying zero-interest offers of credit are in every store you go to, every bank you go to, and omg even in your own mailbox. So again just to be clear what you're saying. A loan with interest is ok. A loan with zero interest where you might get a chance to have it forgiven if you are a top performer at work, is "incredibly predatory and terrifying?" And by the way, for a guy selling his house for $3mil, having to give back $100k that he knew he might have to give back, after using it free for almost 2 years, is not "a massive loan." My wife and I spent $80k on refugee aid last year, and I don't have a $3mil house. It was an unplanned expense, but it changed our other spending or lifestyle in zero ways. It just means last year we didn't save as much for retirement as the year before.
  - Ferret7446 3y ago
    Why? It's literally free money. Stick it into an low risk investment account or even a money market account, give it back at the end and keep the interest. People should be held accountable for their own stupidity, and it's not like the company did anything deceptive AFAIU. If an adult doesn't understand what a loan is then that's on them (or their education, but that doesn't absolve their responsibility).

belltaco 3y 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 3y 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”?
junofan 3y 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.

vsskanth 3y ago

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

typedef_struct 3y ago
What is a mortgage banker? Is it a program?
- vsskanth 3y ago
  Mortgage loan officers I believe. They're the ones with the NMLS ID, licensed to talk about loan terms

crzyman 3y 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 3y 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 3y 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.