Lawsuits, Lawsuits, Lawsuits

A net branch operator has been ordered by a judge to pay more than $700,000 to a former vice president who claims she was sexually harassed then fired for complaining. Among several other pending mortgage-related cases are predatory lending actions, fraud lawsuits and appraisal litigation.

A class action lawsuit was filed in U.S. District Court alleging that Countrywide Financial Corp., subsidiary LandSafe Appraisal Services and KB Home conspired to artificially inflate appraised home values, the Laborers’ International Union of North America announced last week. One of the plaintiffs, Abraham Nieto, fell behind on his payment and lost his home to foreclosure. He blames the three companies for selling him an overpriced house — which left him unable to refinance.

Denver-based Frontier Appraisals LLC settled with Ohio’s attorney general a December 2007 lawsuit alleging that it tried to coerce a local appraiser into using a pre-determined fair market value because it listed a pre-printed appraisal value on the order, a March 2 news release said. Frontier — which was accused of violating the state’s Consumer Sales Practices Act — admitted no wrongdoing, agreed to pay a $5,000 civil penalty and was prohibited from indicating estimated values on future orders.

In another lawsuit by Ohio’s attorney general against Phoenix-based All Line Appraisals, the judge issued a default judgment. Four other similar lawsuits are still pending against Apex Mortgage, CFIC Direct, First Ohio Bank & Lending and Nations Lending Corp.

A federal court awarded a former vice president of Primary Residential Mortgage Inc. $354,704 for back pay and retaliation, according to court documents. The judge in the case also awarded $367,689 in attorneys’ fees.

Yvonne Flitton claims in her lawsuit, originally filed in U.S. District Court for the District of Utah in 2003, that she had been an exceptional employee since starting with the Salt Lake City-based net branch operation in August 2000. But she allegedly was subject to unwanted sexual comments by PRMI senior executive Steve Chapman, laughed at by the company’s president when she reported the behavior and treated differently than her male counterparts.

Flitton alleged that married men at PRMI “have pursued single women to attempt to encourage them to join their polygamist practices.” She claims that one day after she complained on another occasion to the president and chief executive officer, she was terminated. She alleges PRMI violated the Equal Employment Opportunity Act of 1972.

Around 1,650 former Mortgage Lenders Network employees who were not given 60 days notice as required by the Worker Adjustment and Retraining Notification Act will share a $2.7 million settlement, the Philadelphia Inquirer reported yesterday. MLN halted wholesale originations in January 2007. An arrest warrant was filed against former MLN president and chief executive officer Mitchell L. Heffernan in March 2007 by Connecticut’s Department of Labor over the firm’s alleged failure to pay $3 million in wages.

A settlement between Chase Manhattan Mortgage Corp. and borrowers who were allegedly defrauded by Poconos home builder Gene P. Percudani has apparently hit a roadblock. An April 13 letter from attorney Mark R. Cuker to the judge indicated Percudani has failed to come up with his portion of the settlement by the deadline. Cuker asked the judge to reopen the case.

Steven Gordon, a former secondary marketing executive at Bayview Financial LP, was sentenced to 36 months in prison for altering the credit information on over 2,800 securitized loans from 1995 to 2006 so that he would earn $2.8 million in inflated bonuses, the U.S. Attorney for the Southern District of Florida said Monday.

Bayview first discovered the alterations in March 2006. Bayview securitized around $2.0 billion in residential mortgage-backed securities during 2006, while another $0.9 billion was securitized in 2005 and $1.2 billion in 2004. Around 3 percent of its RMBS were impacted by the fraud.

The Supreme Court of South Carolina last week granted a request by Fannie Mae for a restraining order stopping the foreclosure process on conforming agency loans in the state. The order will prevent the dismissal — and costly re-filing — of foreclosures on loans that do not qualify for the Home Affordable Modification Program.

In Shelby County, Tenn., the board of commissioners is considering filing a lawsuit against mortgage lenders because of higher rates of foreclosure for minorities in the Memphis area. The lenders are accused of “unlawful, irresponsible, unfair, deceptive and discriminatory lending practices.” A lawsuit would enable a moratorium on foreclosures and cash for alleged damages to the city and county. The board hopes the state will join the lawsuit.

Lawsuits have been filed in Arizona and Nevada against AIG United Guaranty Corp., Bank of America, CitiMortgage Inc., Countrywide Home Loans Inc., Fannie Mae, Freddie Mac, GE Money Bank, GMAC Mortgage, HSBC Mortgage Corp., JPMorgan Chase & Co., Merrill Lynch, the Mortgage Electronic Registration System, National City Bank, PNC Financial Services Group Inc. and Wells Fargo Bank, the Orlando Sentinel reported last month. Another case is pending in Florida. The actions, which seek class action certification, allege the lenders defrauded Hispanics who had limited abilities to read and speak English.

MGIC Investment Corp. disclosed several lawsuits in its first-quarter earnings report and warned it could face liability in pending lawsuits against lenders over violations of the Real Estate Settlement Procedures Act tied to mortgage reinsurance.

The bankruptcy trustee in a $1 billion lawsuit against former executives of First Magnus Financial Corp. has been ordered by the judge to rewrite an excessively long 200-page complaint, the Arizona Daily Star reported.

The Federal Deposit Insurance Corporation said in a May 4 statement that Michael Bradfield has been appointed general counsel of the agency. Among Bradfield’s new responsibilities will be FDIC litigation.

Second mortgage servicers that sue Arizona borrowers for deficiency balances may have to contend with attorney Kevin Harper — who said in an announcement last week that lenders have no legal right to do so. Harper claims a recent $40,000 lawsuit by one second mortgage lender was quickly dismissed following a letter from the Phoenix lawyer. Harper acknowledged, however, that there are some specific situations when lenders are entitled to a deficiency balance.

Ohio v. First Ohio Banc & Lending.
Case Number 07-CV-259 (Belmont County).

State v. Nations Lending Corp.
Case Number CV-07-644350 (Cuyahoga County).

YVONNE FLITTON, Plaintiff, vs. PRIMARY RESIDENTIAL MORTGAGE, INC. Defendant.