Tuesday, July 2, 2013

WV Courts Continue Pounding 'Unconscionable Home Loan' Peddler In 'Quicken Loans' Case; After Earlier Review By State Supremes, Trial Judge Responds By Banging Bankster For $3.5M In Punitives, $116K In Compensatories, $875K In Attorney Fees For Screwing Homeowner In Violation Of State UDAP Statute

In Ohio County, West Virginia, The State Journal reoprts:

  • In a strongly-worded judgment, an Ohio County circuit judge granted a Wheeling homeowner $3,500,000 in punitive damages against Quicken Loans after the state Supreme Court determined the company fraudulently promised the homeowner could refinance her loan and fraudulently concealed an "enormous" balloon payment.(1)

    The case started when Lourie Brown and her daughter Monique purchased a duplex in 1988 for $35,000. When Lourie died in 2002, Monique became "solely responsible," the state Supreme Court opinion states.

    Deciding to refinance the project, Brown alleged the loan was higher than the price she expected on the Internet pop-up ad she had seen earlier. Although the property was deeded to her daughter, Brown later obtained the title and continued with the loan process.

    As a result, she called Quicken and said she no longer wanted to go through with the loan, but the $181,700 appraisal was approved the next day, according to the order.

    After the loan was approved, Quicken informed Brown that it was ready to move forward. Yet, Brown did not respond to Quicken's phone calls regarding the consummation of the loan.

    Brown said she intended to purchase a new car and pay the existing debt with the loan proceeds.

    According to the opinion, Brown had the understanding that once the loan was in place, Quicken would refinance the loan in three to four months and she could get a cheaper rate.

    Court documents state Quicken ultimately refused to refinance the loan but told her that if she dedicated more money toward the closing cost that the interest rate would be reduced.

    Brown closed on the $144,800 loan in July 2006. According to court documents, the interest rate was not reduced even though Brown paid more money.

    The court also outlined a balloon feature in the loan which "amortizes over 40 years but becomes due after 30 years leaving a large balloon payment."

    Brown was required to make 360 monthly payments totaling $550,084 but would still owe a $107,015 lump-sum balloon payment to repay a $144,800 loan, or nearly four times the amount financed, the order states.

    "It is uncontroverted that Quicken Loans committed fraud and engaged in unconscionable conduct in this matter. The mere terms of the loan made to the plaintiffs boggles the mind," the state court judgment states, citing the $144,800 loan on the $46,000 home.

    Court documents state Brown did not know about this balloon feature until the loan was closed.

    "Their only likely future option was foreclosure and the loss of their home," the circuit court order states. "Their only recourse to save their home was litigation."

    The state's highest court concluded that the company was unconscionable because it falsely promised refinancing, introduced a balloon payment feature at closing, misrepresented that the plaintiff was buying the interest rate down, negligently conducted the appraisal review and failed "to realize the highly inflated appraisal."

    Justices did not, however, determine whether Brown was entitled to punitive damages, saying analysis belongs at the state court level upon remand.

    In a recent judgment, Ohio County Circuit Court Judge David Sims said Brown will have "no further legal obligation" to repay Quicken Loans the note and deed of trust.

    If Brown decides to sell her property, then at the closing of the sale, Quicken will be entitled to receive all net proceeds up to $144,800, the principal amount of the loan, the judgment states.

    "There is a recklessness and inherent greed in Quicken Loans' conduct," the circuit court order states. "Quicken Loans has shown no concern for any of the consequences of its conduct. Quicken Loans' only motive in procuring plaintiffs' mortgage loan was to turn an immediate profit and then quickly unload what it had to know would eventually be a non-performing loan, to some other entity."

    Sims said the total potential finance charge on the mortgage loan was $520,065.

    "This is an enormous potential profit, which Quicken Loans could have reaped had the plaintiffs not instituted this litigation," the circuit court order states.

    In addition to punitive damages, the court also granted plaintiffs $116,276.72 in compensatory damages and judgment for attorney fees and costs against Quicken Loans in the amount of $875,233.44.(2)
Source: WV Judge grants homeowner damages in Quicken Loans case.

Representing the now no-longer-screwed over homeowner is the law firm Bordas and Bordas, PLLC, Wheeling, West Virginia.

(1) For earlier posts on this case, see:
(2) The complaint in this case included violations of the state Consumer Credit and Protection Act, West Virginia's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (generically referred to as state UDAP statutes).

For more on UDAP statutes across the U.S., see Consumer Protection In The States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

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