|A Missouri appeals court ruled in favor of borrowers who previously settled with First Horizon Home Loan Corp. The case centers around non-compliance with the state's second mortgage laws.
The decision was handed down on March 10 in the Missouri Court of Appeals Western District, according to a copy of the ruling.
In 2006, the Irving, Texas-based company agreed to a $36 million settlement with 4,400 borrowers who obtained second mortgages from subsidiary McGuire Mortgage. The unit was acquired by First Horizon in 1999.
The mortgage broker was accused of violating Missouri's Second Mortgage Loans Act by charging excessive and unauthorized fees for loan discounts, tax services and flood certificates. Other unauthorized fees included express mail, direct mortgage brokerage and underwriting fees as well as processing and origination fees.
The class-action plaintiffs were appealing a judgment that granted First Horizon a Motion for Court Interpretation of Settlement Agreement and Enforcement of Judgment.
First Horizon had protested the amount of claims for borrowers who subsequently filed bankruptcy or submitted incorrect or incomplete claims forms, the Kansas City Business Journal reported. The appeal involved around $2 million.
In their decision in favor of the plaintiffs, the judges wrote, "The circuit court erred in granting First Horizon's motion because the court lost jurisdiction to modify the judgment approving the class action settlement when the judgment became final after thirty days because no post-judgment motions were filed. Despite the title of First Horizon's motion, the motion sought to have the court modify the terms of judgment, not merely enforce the terms of the original judgment."
The ruling reportedly grants claimants the opportunity to fix flawed claim forms.
First Horizon sold most of its mortgage operations to MetLife Bank, N.A., on Aug. 31, 2009.
DAVID C. McLEAN, et al.,APPELLANT-RESPONDENT vs. FIRST HORIZON HOME LOAN CORPORATION, RESPONDENT-APPELLANT.
WD69505 (69529), March 10, 2009 (Missouri Court of Appeals Western District)