This should give those facing a Miami foreclosure something to smile about: A federal judge has ordered Wells Fargo to pay a whopping $3.1 million for what she termed the “reprehensible” mismanagement of a single mortgage.
Our Miami foreclosure attorneys think it will be interesting to see whether the decision, made in a U.S. Eastern District of Louisiana court, will be upheld, and if so, what the implications could be for future cases.
It’s no secret that large banks have exploited their customers, as well as homeowners’ inability to mount a massive foreclosure defense to match the bank’s titan legal teams. They have stretched legal loopholes and in many cases broken the law.
The problem for many judges, particularly in district or state courts, is they haven’t had the time or financial expertise to dissect each case for each accounting error – intentional or otherwise – made by the banks in foreclosure cases. Combing through a single home loan history can be a huge headache for a judge who has hundreds of foreclosure cases on his or her docket.
But here, in a Louisiana federal bankruptcy court, one judge was simply fed up.
The case involved a New Orleans homeowner who has been ensnared in a six-year battle over his foreclosure case. Way back in 2007, U.S. Judge Elizabeth Manger ordered Wells Fargo to pay nearly $25,000 in fees because of a systematic accounting error that was used to figure out the homeowner’s monthly mortgage payments.
What happened was that when the homeowner went into default, the bank improperly applied the mortgage payments he was making to his interest and accrued fees, rather than to his principal. In turn, this resulted in a flood of additional interest and fees piling up – something that’s known as “rolling default.” And when the homeowner was forced to file for bankruptcy, the bank continued to misapply payments.
What made this even more egregious was that the bank refused to communicate with the homeowner, even as it was improperly charging him. They filed motion after motion with the court to slow the process down to an inchworm’s pace. And what’s more, Magner says, the bank still refuses to own up to its mistake – one that it continues to make with homeowners. She said when she conducted a close review of 20 loan files in her district, every single one contained accounting mistakes that were the fault of the bank.
She cited all of this as reason for her $3.1 million punitive damages order against the bank – solely for this one case. It’s considered one of the largest fines ever handed down for misconduct involving mortgage servicing.
She wrote that rather than admit its mistakes and return the money it gained through unfair methods, the bank continues to fight.
The bank has said it will likely appeal.
Magner had previously ordered the bank to conduct a complete audit and provide a full accounting of some 400 mortgages in her jurisdiction, but an appeals court has overruled that decision.
If you’re battling foreclosure in Miami or the surrounding areas, contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.