On the basis that it was a loan, a mortgage company with the ironic name “Guaranteed Rate” is demanding ex-employees return their signing bonus, some up to a million dollars. 
Lenders Want Ex-Employees to Give Back Their Bonuses
The Wall Street Journal reports The Mortgage Market Is So Bad Lenders Want Ex-Employees to Give Back Their Bonuses
David Siegel went to work for an affiliate of Guaranteed Rate in 2021 and got a signing bonus of more than $100,000. Interest rates were super low, and mortgage bankers were raking in cash.
Now that business has dried up, the mortgage company wants its money back. He said it fired him one month shy of the date when it could no longer ask for the bonus back, then demanded the money. Guaranteed Rate and its affiliates are also telling hundreds of other former employees that they have to return their signing bonuses, people familiar with the matter said.
Its general counsel, Anwar Shatat, said, “We are not going to be apologetic about exercising our legal rights to recover our money.”
“The former employees who have been sued know very well that they signed agreements, including promissory notes, making it crystal clear what they needed to do to receive and earn the money,” said Shatat, Guaranteed Rate’s general counsel. “They have been sued because they have, and continue to, blatantly violate these agreements, and have steadfastly refused to repay what they clearly owe to the company.”
“I’ve been in this business 40 years and I don’t remember a correction like this,” said David Stevens, a former housing-finance regulator who now consults for the industry.
Correction or major bear market? Few want to admit reality.
Not a Signing Bonus, It’s a Loan
The signing bonus wasn’t a bonus, it was a loan unless the employees stayed two years and met performance goals.
Nations Lending and CrossCountry Mortgage also seek return of signing bonuses.
Steve Walsh at Scout Mortgage says headcount is down about 90%. Walsh wants to downsize. but he has been unable to sell his 7,700-square-foot house at the $3 million he is seeking.
Amazing Greed Everywhere
For starters, only someone very greedy would sign a two-year promissory for their “bonus” when too many things can go wrong in two years.
Guaranteed Rate lured many of its hires from Wells Fargo, who now no doubt is happy to be relieved of those employees.
Hoot of the Day
Wells Fargo CEO called Guaranteed Rate CEO Victor Ciardelli and asked him to stop poaching Wells employees. Ciardelli accused Wells Fargo of treating its bankers poorly.
Now Guaranteed Rate is firing people 1 year and 11 months into a contract demanding signing bonuses back.
Existing Home Sales Drop Another Two Percent to a 13-Year Low
On October 19, I noted Existing Home Sales Drop Another Two Percent to a 13-Year Low
Existing home sales are down 37.5 percent in less than two years.
Home sales were 6.34 million in January of 2022 at a seasonally-adjusted annualized rate. They are now 3.96 million.
Looking Ahead
Mortgage applications are a a 30-year low. And it will not get any better with mortgage rates hovering near 8 percent, a 23-year high.
Who wants to trade a 3 percent mortgage for an 8 percent mortgage?
How the Fed Destroyed the Housing Market and Created Inflation in Pictures
There’s plenty of blame to spread but especially the Fed for creating the artificial boom in housing.
For discussion, please see How the Fed Destroyed the Housing Market and Created Inflation in Pictures
Also see Fed Chair Jerome Powell’s half-baked admission What the Fed Could Have Done to Prevent Inflation Rise.
Despite this sorry state of affairs being a tragedy of the Fed’s making, does anyone feel sorry for people signing two-year promissory notes as a signing bonus?
Correction: The title of this post was originally said Real Estate Agents, corrected to Mortgage Broker Employees.
Without a doubt many Real Estate Agents also overleveraged and are stuck holding the bag on multiple houses. The same applies to AirBNB rental property owners.
Mortgage is a cutthroat business, managed by thieves. But still, to determine what is allowed to get the money back, somebody has to examine the language of the agreement. That would provide definitive answers. Thank you.
amerikan exceptionalism displayed in FIRE industries, with nit wit employees, who are sleazy salesmen paper pushing good for nothings, too stupid and greedy, to know they are dealing with hucksters and con men from the C suite to the local congressman and priest and rabbi………….idiocracy was a documentary.
I don t understand sh* t about your so called ‘signing bonus’ but then again the US is a exceptional nation with exceptional policies ….In Belgium allmost everyone buying a property opts for a fixed rate, meaning that most people are paying very low rates, some as low as 1% for the next twenty or thirty years ! Of course rates have increased in recent months , homebuyers now pay between 3 and 5 %… The housing market has cooled down considerably but not dramatically either, at least the FOMO insanity has been ‘cured’….thank gowd …
5) During Oct 2008 and Mar 2020, under the biggest threat, the Fed unleashed a cytokine storm. Our overweight economy survived, but may have been severely
impaired since then, b/c we accumulated too much fat (debt) after eating too many oriol cookies.
1) During covid, under the biggest threat to their lives, impaired people died from a cytokine storm, they died from their body friendly fire.
2) Mortgage broker employees are getting killed by a cytokine response.
3) In 2002, when 40 Chechen terrorists took over Dubrovka theater in Moscow, 130
Russians died from Putin’s response.
4) On Oct 7 many Israeli hostages may have died from a cytokine response.
“Now Guaranteed Rate is firing people 1 year and 11 months into a contract demanding signing bonuses back.”
This is now what passes for “business” in the US. After 50 years of pretty much every single penny being transferred by The Fed: From productive people and enterprise, to this kind of abject nothings sitting around playing office with funds stolen from others.
First thing I did was check for this company’s ticker, to short.
They’re not public.
They were already hit with a DOJ suit for false claims a few years back, sleazy outfit.
.
Love this comment. I looked them up too
I would offer a pro-rated repayment of $4,166.66. The $100,000 divided by 24. Because that’s how zero interest loans work. You fired me in month 23, so I only owe you for a month.
Legally the mortgage company may be within their right. I’m not really sure. What is a legal right per contract may not be right by any moral or ethical calculus. This sounds like that kind of thing. Just because what you do is legal doesn’t mean it’s ok. I wish more people were guided by the latter rather than the former.
They’re a mortgage company.
Why would you expect ethical behavior?
I obviously don’t know the details of the contracts, but the company and the employees damn well should. With that being said, if the employee spent any money freely, that they were not legally entitled to spend without repercussions, then they must pay it back. Liens work very well in some cases as one way, or they used too, for this sort of purpose. If they we’re entitled to the money, then let the company waste there money chasing a ghost, and no lawyer is required in that case. Seems pretty straightforward to me…
My newest policy the debt jubilee/gift of half the profit of loan at loan signing resolves the housing market crisis, inflation and the human civilization long dominance of everyone all in one fell swoop. It goes like this: A 500k home is sold at retail and reduced in price by 50% to $250k. Then it goes to finance where in exchange for gifting half of the total interest costs of the $250k loan the bank would reduce the loan to $100k.
The bank gets its full interest on the $250k loan and the consumer only pays $125k to buy a $500k home. Accounting and the new monetary paradigm of Gifting. The greatest progression for mankind since forever.
Or or…and here’s a controversial idea:
Let the current normalized interestrates work its way through the economy, the housingmarket and stockmarket.
Clearly something went deeply wrong in the last 15 years.
And I will keep shouting from the rooftops that banks, central banks and the financial industry have become so powerful that it’s destabilizing society.
When housing became an object for speculation and when properties were bought up by investmentfirms, rather than normal working class people, it should’ve been the writing on the wall of my statement.
Nothing was done, no regulations were put in place and now a rentier class has put its claws into the residential propertymarket. Unaffordability forces a huge part of society to rent from corporate masters.
Never in my wildest dreams did I imagine living in this kind of future where corruption is rampant and societal cohesion is declining at this rate.
I’m blaming politicians, central bankers, banks and big money and so should you.
Force the people you vote for to immediately reverse these practices because if you don’t there will be so much chaos, inequality and division….the joy of living will continue to decline.
It’s not hard, it’s holding the people responsible to account.
You’re absolutely right of course. But what will finally change all of that? Thats right a new monetary paradigm. Even the erudite theorists like Steve Keen haven’t recognized the new monetary paradigm concept let alone fleshed out an entire policy program that changes the realities in the entire patterns of economics and the money system.
you should watch this documentary. exactly what happened past 50 years. but remember old sport, the 30s were worse, and the 1860s really screwed man due to unpleasantness going on. we are heading into cat 5 storm. should be great depression level but a crumbled empire…….to boot. more like 90s in old USSR. i was over there. wild fun for swash buckling. misery for most, but eventually better than old empire……… https://www.youtube.com/watch?v=VzqDMnUG4kk
TT – how did you manage to keep your swash buckled those years? I have friends in engineering that were there and it wasn’t fun.
A dearth of buyers and stable home prices means sellers have not capitulated. They will. A collapse of home prices, auto prices, bond prices, and commercial real estate prices is inevitable.
I’m a renter with a lot of cash and would like to buy, but I hesitate to do so at prices that are 40% higher than 2019. So I wait. What’s the next move?
we wait. these prices will come down to 10 to 20% cap rates in next few years. i’ve traded 3 full cycles as a r/e investor, renovator and landlord………….my first cycle i was fucked badly and learned my lesson. back during 70s and 80s……
Get schooled on understanding and detecting foundation problems and get on an email list for house wholesalers. There’s lots of wholesale inventory (at least around Dallas), but you will need to be comfortable evaluating what fixes that need to be done.
At what point will The Fed and their fearless leader get honest and acknowledge their shortcomings over the last several decades? We are backed into an inescapable corner as a society as a direct result of the shortsightedness of money printing our problems into submission. We all knew that the bill would inevitably come due. What now Doctor of Economics? Where do we turn?
I think we witnessed our institutions of media, academia, politics and finance become captured.
Truth no longer exists.
Apparently, biology doesn’t matter anymore. Peer reviewed science no longer matters. Deficits no longer matter.
All that matters are narratives, created and upheld by people in positions of power.
Censorship is the prime example of these people desperately trying to hold on to their power, regardless of the costs to society.
This reality of chaos is a process and this decade will be a decade of chaos.
Yet the deficit continues to grow.
gold. god and guns optional. and a plan to run. gonna be lots of pain ahead with the coming effective default on the currency. not to mention potential huge blowbacks from idiotic imperial wars. turning off electric and water in Gaza and helping with extermination there, seems awfully stupid for a crumbling empire to help assholes like our israeli pawns…………war, economics and politics and currency is all the same topic.
Is that the same company that bought the naming rights to the old Comiskey Field (Chicago White Sox)? It was a stupid name then and it’s a stupid name now. They’d save themselves a lot of money by cancelling the naming right’s payment and give baseball back its heart.
‘Amazing greed everywhere’…
That pretty much sums up todays reality.
But you know what? The party is over and this is just the start…
An entire generation is brainwashed by social media influencers into thinking they will all have huge mansions, a box full of Rolex watches, 10 hypercars and a luxurious lifestyle.
And now reality is hitting home. There’s no such thing as free money and after 15 years of fraudulent, artificially low interestrates, the bill has come due.
Inflation, chaos, division, inequality, wars, record levels of debt, record levels of interestpayments to serve that debt and still, the majority seems in denial.
Luckily we’re here to shatter the illusion that everything is fine.
It’s not.
Harry, you forgot the trophy wife and trophy mistresses.
Wells Fargo experience? Even Al Capone wouldn’t touch that.
free jon corzine. that old codger did it correctly. he became a made man, then he stole funds directly out of farmers and commodity locals accounts………and got away with it. i warned one of my pals who got screwed by him…………to have gold stashed away. oh well.
Yikes! I bet there will be problems on all sides:
1. People will have spent the money.
2. People will be incentivized to drag repayment out.
3. The company will have loans to repay that are now needing refinancing at higher rates.
4. The company will have to pay lawyers and file court case to get repaid.
5. Employees will have to pay lawyers and defend court cases while they deal with severely reduced income.
6. Many employees will file bankruptcy to get out of repayment.
7. The whole mess will drag on for years.
8. The company will have a major drag on investment, growth, and strategic planning.
Many if not all realtors are also investors in the housing market, snapping up the best deals. Somehow, I am not going to shed tears for the laid off realtors.
You fault real estate agents for investing in real estate? Really?
Realtors front-running the market is no different than brokers front-running the market.
Can the central bankers who brought us super-loo interest rates be sued for pricing out all prudent borrowers from the housing market?
Claiming stupidity is not a valid defense, and getting old.
the difference from a loan is that a bonus is taxable income.
Doesn’t it become taxable income the moment the Bonus is effective?
That’s how it always worked for me. Especially if paid up front.
Normally on one this long the company would pay in increments to keep taxes lower (ie half first year and half second year). Again, I have had it happen this way.
Employees should not have to pay back the taxed part of the bonus.
why not? they are just employees? like furniture and fixtures………
Loans are not taxable. However, loan forgiveness is taxable.
paid
The moment that “loan” is forgiven it becomes taxable.
Unless your last name is Biden it is not advisablel to play the “it was a loan” game with the IRS. They’re quite wise to it.
If it is considered a loan, then the ex-employee would have to pay interest in addition to paying back the “bonus”.
Ouch.
Jeff, you are ALSO on to it. IF the mortgage Company added those BONUS LOANS to their Annual Tax W2’s, then it was INCOME, not a loan.
So would the loan also be taxable when it became the employee’s money to keep. The loan would be forgiven and create a taxable event. Unless you’re Clarence Thomas or someone.
Somehow, I don’t think the courts will agree….
Those mortgage brokers who got fired, especially those fired close to the vesting date, might have some legal fallback. It seems like the mortgage firms should have just let them fail to make the performance requirements instead of firing the employees. If the employee would have met the performance requirements of the “bonus” but got fired, it would seem like a case of intentional firing to avoid payment of the contracted bonus.
That is my take – especially of the person fired one month away.
I have a question into a highly skilled attorney.
back in 90’s when I worked w-2 for several tech companies
I routinely got ‘laid off’ and had matching 401k funds taken back by companies
in 80’s and 90’s companies started ending pension with vengence
then they did 401k plans and would layoff lots workers shy of their 5 year vesting
THEFT by corporate america
why I left and only do self employed contract work
the W2 salary debt serf is a dumb way to go through life. there are 2 tax codes. too. owners don’t pay taxes if in proper fields. the serfs do.
when i was young i signed a forgivable loan bonus package for major wall street firm. i also figured out shortly sandy weill was paying himself hundreds of millions per annum in early 90s selling into nit wit employees purchasing employee stock plan equities. owners and serfs. it is 2 ways to go through life. sometimes to the rewards of being an owner of oneself, cannot be calculated in shekels. reminds me i’m going to be shorting shekels this week……………
Firing older workers exceptionally close to their full pension vesting date was a practice YEARS ago. Someone sued and the courts agreed the company still had to pay the FULL pension. A company I worked for required 3 years of vesting to be eligible for 401K contributions they made to my account. Fortunately I stayed 3.5 years and didn’t have to contest anything. The same company changed their tuition reimbursement program to require 2 full years of service after the last course taken, or repay the company. Effectively the benefit was a loan.
1st off all 401k plans ought to vest immediately
2nd companies should be required to contribute 15% salary/income each year(again immediately vested)
You are correct. Legally, the Employee was not allowed the ABILITY to meet the quota and extra commission. Since that ABILITY was canceled by the Mortgage Company, that money does not have to be returned.
I agree!