PHH ordered to pay homeowner $16m in fraud case

by Ryan Smith21 Jul 2014
A major mortgage servicing company has been ordered to pay a California man more than $16 million in a mortgage modification fraud case.

A Yuba County, Calif., jury awarded Phillip Linza $513,902 in compensatory damages and $15.7 million in punitive damages in the case, which dates to 2010, according to a News 10 ABC report.

Linza said that in 2010, he reached out to PHH for a loan modification, and the company agreed to reduce his payment from $2,100 per month to just over $1,500.

“I made the payments for months,” Linza told News 10. “Then I get a letter in the mail that says, ‘Oops, we made a mistake. Your payments aren’t $1,530, they’re $2,300.”

“They jacked it up, never explained why,” Linza’s attorney, Andre Chernay, told News 10. “They sent another letter demanding $7,000, never explained why.”

Linza testified in court that he made every effort to straighten things out, but only got a substantive response when he threatened to sue the company.

Linza said PHH told him, “’We’re a multibillion-dollar company. Stand in line because we’ve got a busload of attorneys that are on retainers.’”

Those attorneys didn’t end up doing the company much good. The judgment is one of the largest of its kind ever awarded in California, according to News 10.

Linza told News 10 that the verdict sends a message to the mortgage servicing industry.

“You people have been taking advantage of enough people and the country’s tired of it,” he said. “I mean, society’s tired of it.”

PHH is no stranger to legal woes. In January, the company was accused of orchestrating a massive kickback scheme. The company is also being investigated by the US Attorney’s Office for allegedly overcharging the government for foreclosure expenses on federally backed mortgages.
 

COMMENTS

  • by William Matz | 7/21/2014 11:16:45 AM

    I just argued a case before the California Court of Appeals [Rufini v. CitiMortgage] in a similar modification misconduct matter, resulting in a reversal in favor of our client. In our case the client lost the house due to such misconduct. So he was harmed even more.

    As one of the few attorneys in the nation with extensive origination experience, I continue to be amazed at the arrogant disregard of the rules, as here. As these multimillion dollar verdicts and settlements grow, perhaps lenders and servicers will finally start to follow the rules. But it will be too late for millions who have lost their homes, many of whom could have been saved.

    In the past the courts have shown too much deference to the banks. But that is now changing as cases like this and ours begin to hold lenders responsible for their deliberate misconduct.

  • by Jim in CT | 7/21/2014 11:18:48 AM

    First trickle in a little stream that will become the Amazon. PHH will probably get it knocked down but no matter.
    Has anyone ever talked to a mortgage mod participant who WASN'T delayed/deceived/misdirected/"paperwork lost/wrong/expired"/told-to-skip-payments/bullied etc etc etc?
    I sure haven't.
    This litigation has a long long way to run.

  • by Cheryl M | 7/21/2014 1:16:30 PM

    I'm not an attorney but I did all that without an attorney or a court room. Just a MLO and a consumer advocate for my clients. With the knowledge of this industry and use of those "rules" in the end I've used the CFPB to help my customers to receive their mortgage modifications, lien releases of fraudulent second mortgages and all have stayed in their homes. My customer did not win a sum for damages; but gained $ in lien release and stayed in their home. They feel like winners and at the end of the day that's what we set out to accomplish. I do believe there is more attention to this in society today; but many (if not all) consumers do not know where to turn.

Poll

Is TILA-RESPA a good or bad thing long term?