$550K Payout OK'd To 2 Homebuyers, Landowners In RICO Suit Revolving Around Filing Of Unauthorized Lien Release; Judgment May Affect 100s Of Others

In Corpus Christi, Texas, the Corpus Christi Times Caller reports:

• A final judgment has been issued against one of the nation's largest mobile homebuilders related to a jury trial last year that found the company liable for civil racketeering and fraud in a South Texas case. A federal jury in November found Vanderbilt Mortgage and Finance Inc. liable for collecting payments on a home for four years after it filed a release of the lien on the home.

• The jury found the company engaged in unfair debt collection practices, committed common law fraud and violated the Racketeer Influenced Corrupt Organizations Act, also known as RICO. On Friday, U.S. District Judge Janis Graham Jack confirmed the jury's findings against that company and Clayton Homes Inc. and CMH Homes Inc. in a 13-page judgment. The companies plan to fight the judgment, their attorney said.

• The judge also reduced some of the plaintiffs' monetary damages to comply with state laws that bar double recovery and limit exemplary damages. The jury decision had ordered Vanderbilt to pay the two homeowners $327,000 each. Under the final judgment, Vanderbilt Mortgage was ordered to pay about $216,000 in damages and prejudgment interest to each of the two men who had purchased the mobile home, for a total of $432,000.

• The judge also awarded a couple that owned the land for the men's house more than $127,000 because she found all three companies were responsible for statutory damages, similar to a civil fine. The jury originally awarded no damages to the couple, Maria and Arturo Trevino.

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• Flores' and King's attorneys found a release of the lien that was filed with the county clerk in 2005 without the homeowners' knowledge. The company filed that release after it settled a round of lawsuits that alleged homebuyers' paperwork was fraudulently notarized.

• The two men sued the companies alleging they had continued to make mortgage payments for four years after the loan had been declared fully paid.

• They also faced foreclosure along with the landowners, the Trevinos, who alleged that their signatures were forged on documents to fraudulently use their land as collateral for the home.

• "We think a lot of Clayton Homes customers will be affected by the precedent that this case sets," said attorney Javier Gutierrez, who represents King and Flores. Gutierrez says there is evidence that the companies filed hundreds of the release of lien documents in South Texas without their customers' knowledge. That would entitle those people to a refund of all their payments since 2005 and a discharge of their mortgage loan, he said.

• The Trevinos' attorney, David Rumley, in a news release accused Clayton Homes of also misleading its investors by using fraudulent mortgages to raise more money because the loans were backed by real property. He estimated the judgment could expose Clayton Homes to more than $500 million in losses.

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• CMH Homes Inc. is the retail arm of Clayton Homes, Inc., which is owned by Berkshire Hathaway Inc. of Omaha.

For the story, see Federal judge finalizes judgment in Clayton Homes fraud case (A federal jury in November found Vanderbilt Mortgage and Finance Inc. liable for collecting payments on a home for four years after it filed a release of the lien on the home).