Illinois-based mortgage lender Celebrity Home Loans and its parent company Celebrity Financial, Inc. are the target of a class-action-seeking lawsuit.
A former employee is suing the companies, alleging they “abruptly terminated hundreds of its employees” without giving legally required 60-day advance notice as required by the Worker Adjustment and Retraining Notification Act (WARN Act).
In addition, plaintiff Michael Blake, a loan officer who worked at Celebrity for five years until his termination in early February, claims the companies failed to timely pay wages, commissions, and financial compensation in violation of the Illinois Wage Payment and Collection Act.
The lawsuit was filed on Feb. 24 at the Circuit Court of Cook County, Illinois. HousingWire reached out to Celebrity’s representative, but they did not return requests for comments.
HousingWire first reported on the Celebrity’s several layoff rounds on Feb. 14, citing multiple sources. Celebrity’s retail channel, former employees said, was in a tailspin only six months after the company shut down its correspondent lending division. Several branches transitioned to another lender, and the company was negotiating a deal with Arizona-based On Q Financial, which fell apart after the layoffs.
The lawsuit states that problems became evident during a conference call with employees on Feb. 7.
The company announced the acquisition by On Q Financial and a furlough of 75% of its staff. An email subsequently mentioned that some employees were being furloughed immediately, while others would only be furloughed on Feb. 27. But it didn’t unfold like that, according to the complaint.
“On Feb. 13, 2023—just three days prior to many employees’ payday— Celebrity sent separation letters to approximately 92% of its workforce, informing them that they were being terminated that same day,” attorneys for the plaintiff wrote in the lawsuit. “Making matters worse, the letters also told employees that they would not be receiving timely compensation for the pay period prior to termination.”
According to the lawsuit, the unpaid compensation for many employees refers to the entire month of January and the first half of February. Separated employees did not receive accrued vacation time and other compensation owed at termination.
“Defendants’ representation that employees were being terminated ‘due to unanticipated events’ was false and misleading. Defendants and their executive officers knew for weeks if not months before sending separation letters in February 2023 that their financial conditions and the breakdown of negotiations with On Q could lead to a mass layoff and closure of Defendants’ facilities,” the attorneys wrote.
The former employee demands recovery of all available actual, compensatory, and statutory damages, prejudgment interest, costs, and reasonable attorneys’ fees.
The lawsuit mentions that Celebrity Home Loans originated $21 billion in home loans since its foundation in 2006. Volumes reached $5.9 billion for the 12 months ending Dec. 1, 2022. The company employed more than 300 loan officers and “numerous employees” in other positions, such as underwriters, processors and administrative staff.