Magazine article American Banker

Judge Throws out $16M Verdict against PHH for Servicing Errors

Magazine article American Banker

Judge Throws out $16M Verdict against PHH for Servicing Errors

Article excerpt

Byline: Kate Berry

In a surprise victory for mortgage servicer PHH Corp., a California judge overturned a $16.2 million jury verdict awarded to a California homeowner in July for a botched loan modification.

Yuba County Superior Court Judge Stephen Berrier issued a seven-page ruling late Monday, throwing out all claims for negligence, intentional misrepresentation, interference and infliction of emotional distress. A jury had awarded homeowner Phillip Linza $513,000 in compensatory damages and $15.7 million in punitive damages following a 17-day trial in July.

But Berrier wrote that "there is no substantial evidence," in support of $355,000 in compensatory damages or any punitive damages. He let stand breach of contract and good faith claims totaling $158,902.40.

A PHH statement said the Mount Laurel, N.J.-based company is "pleased" with the judge's ruling.

"The trial court has confirmed our belief that the previous verdict was not supported by the facts presented in this case or by applicable law," PHH spokesperson Dico Akseraylian said in a written statement. "We take our responsibilities to borrowers seriously and remain committed to meeting all of our obligations as a servicer."

Stephen Foondos, the managing partner at Roseville, Calif.-based United Law Center, which represented Linza, said the jury verdict was the first of its kind by a borrower who had sued for abuses of a loan modification.

"This is a very positive outcome for California homeowners," Foondos said in an interview with National Mortgage News. "The jury awarded $16 million but the judge still awarded $160,000 to someone who was not foreclosed on and that's significant."

Foondos said he plans to appeal Berrier's ruling. United Law Center is one of the largest foreclosure defense law firms in California, with 25 cases on appeal currently and 120 cases being litigated. …

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