Jury Awards Homeowner $21 Million In Mortgage Lawsuit
A federal jury has awarded a Georgia man more than $21 million in a lawsuit pitting the homeowner against one of the nation's largest mortgage servicers.
U.S. Army sergeant David Brash was awarded the damages in March, after a Columbus, Ga. jury found that PHH Mortgage, the country's eighth largest mortgage servicer, had incorrectly reported Brash to credit score companies as "seriously delinquent" despite the fact that all his mortgage payments had been automatically deducted from his paycheck.
According to court documents, Brash sent letters to the mortgage company that went unanswered, violating federal laws. When he called his mortgage company to find out why his payments were not going through, his attorneys said, he was repeatedly routed to overseas customer services staff who couldn't answer his questions.
"PHH's corporate representative testified that call center representatives had limited access to information," Teresa Abell, one of Brash's attorneys told The Huffington Post. Some of Brash's calls -- which were automatically recorded by PHH -- were played in court, Abell explained. "The jury got a flavor of what would happen, he could be put on hold for 30, 45 or 55 minutes, then representatives would give him whatever story they had concocted," she added. Different representatives told Brash different things, many of which were simply not true, Abell alleged. "They would tell him they would investigate and get back to him in 24 hours, he'd call back, and another representative would tell him "there is no investigation being done on your account.""
Consumer websites are packed with homeowner complaints of mistakes by mortgage companies and banks that can be impossible to set right -- in part thanks to unhelpful customer service departments. In the most extreme cases, these problems may have led to wrongful foreclosures. In January, JPMorgan Chase admitted to overcharging military families on their mortgages, illegally foreclosing on 14 families as a result. In February, The Huffington Post reported on a couple who were facing foreclosure despite having proof they had made every mortgage payment. In circumstances echoing Brash's, PHH Mortgage reported that homeowner, Kendra Parker, to credit rating agencies for missing payments, destroying her credit rating.
An investigation by all 50 state attorneys general launched last fall when improper paperwork practices at banks and mortgage companies -- like the "robo-signing" scandal -- came to light found many banks and mortgage servicers violated numerous state laws in handling mortgages and foreclosures. While banks expect penalties, it is unclear whether homeowners affected by their banks' actions will have any recourse.
Brash's case remains one of a few in which homeowners have successfully established that their mortgage company was in the wrong, but lawyers say more are on the horizon.
Brash originally took out the $160,000 mortgage on his Columbus, Ga., home in November 2007, setting up automatic payments so his $1,300-a-month payments would be deducted from his army salary. During the trial, the jury heard the homeowner called the mortgage company twice to make sure the paperwork was correct. In court, representatives for PHH Mortgage testified that mistakes on these forms -- which customer service staff had told Brash were correct -- had caused the missing and late payments.
After 15 months, according to court documents, PHH Mortgage started sending late payment notices to Brash, and threatened to report his "serious delinquency" to credit scoring agencies. After "numerous, lengthy calls" to a customer service department in India went nowhere, Brash hired an attorney who wrote a formal letter to the president of PHH about the errors. Under the federal Real Estate Settlement and Procedures Act, mortgage companies and banks have to respond to written requests within 60 business days, which PHH failed to do, the attorneys said. They did however adjust Brash's account.
In November 2009 PHH Mortgage sent more late payment notices, this time reporting Brash to three credit rating companies and seriously damaging his credit score, according to court documents. Brash, based in Fort Benning, Ga., sued the mortgage company for breaching the federal Real Estate Settlement and Procedures Act. He also sued under Georgia state loan servicing and breach of contract laws.
Attorneys representing PHH Mortgage did not return calls for comment, but told Georgia TV news station WTVM: "Although we respect the judicial process, we believe this verdict is not supported by the facts of the case or by applicable law, and that the award is grossly disproportionate to any damages Sgt. Brash may have sustained. We intend to seek further judicial review of the case."
The Columbus-based Ledger-Enquirer originally reported Brash's story.