WHEELING - While browsing the Internet in 2006, pop-up ads forhome refinancing appeared on Lourie Brown Jefferson's screen.
Her interest piqued, she entered her information on a fewdifferent sites, each promising to refinance her current mortgagefor less interest.
Not long after, Detroit-based Quicken Loans responded and aftercompleting the loan application process and having her property at118 12th St. in Wheeling appraised, Jefferson received a loan formore than $144,000.
Now, nearly five years later, Jefferson and her daughter, MoniqueBrown, will receive $2.1 million in punitive damages and more than$3 million overall for what Ohio County Circuit Court Judge ArthurRecht deemed to be a textbook example of predatory lending practicesin one of the largest such verdicts in the country.
Attorney Jim Bordas of Bordas and Bordas PLLC of Wheeling, whorepresented Jefferson and Brown, filed the lawsuit due to what hecalled inflated interest that was hidden from his clients.Additionally, the property was appraised at more than $100,000higher than it was worth, he said.
Bordas said after applying for the loan, Jefferson decided shedid not want to continue and notified Quicken of this. Within twoweeks, Quicken contacted Jefferson and offered more money andpromised to refinance the loan in four months at a lower interestrate. According to Bordas, that did not happen.
"The promise of refinancing was essential to Lourie's decision toaccept the loan," he said. "Quicken reneged on its promise ofrefinancing."
According to court documents, Jefferson also was told that if shepaid more money on the closing costs, her interest rate would bereduced. She later found out those extra payments had no effect onher interest rate.
The property, located in what Bordas termed "the most depressedarea of Wheeling," was evaluated by an appraiser designated byQuicken, whom Bordas alleged was working with a pre-appraisal figureof more than $200,000, provided by Quicken.
Bordas said no home in the East Wheeling area where Jefferson'shome is located had sold for more then $67,000 in at least fiveyears before the appraisal was completed. Instead, the appraisertook figures from homes in other areas of Wheeling, including ForestHills, which routinely has homes sell for more than $200,000.
The appraiser valued the property at $181,700. Bordas said theactual value at the time was $46,000. Bordas said Quicken's computersystem attempted to reject the appraisal, showing more than 20 redflags. Quicken ignored those red flags, Bordas said, as the inflatedappraisal allowed them to offer a larger loan.
"A company has to justify making a loan," Bordas said. "Withthese practices, they get people in, charge them up-front fees, thenpackage the loan together with other loans to sell off to WallStreet. The larger the loan, the more money Quicken makes."
According to a statement provided by Paula Silver, vice presidentof communications for Quicken Loans, prior to closing the loan,Quicken found that Jefferson had failed to make her mortgagepayments on the existing loan that was to be paid off usingQuicken's new mortgage. Because of her delinquency on that mortgage,she was no longer qualified for the product for which she wasoriginally approved.
"The new mortgage approval was conditional upon continued timelymortgage payments and her maintaining other standards of creditquality," the statement reads. "At the same time, Ms. (Jefferson)requested that the loan amount be increased to its maximum so thatshe could receive more cash at closing. The new terms and interestrate of the more flexible product were disclosed in writing to Ms.(Jefferson) and she accepted and chose to move ahead and close."
Jefferson received a loan of $144,800. However, Bordas estimatesthat because of the terms associated with the loan, which hemaintains were never explained to Jefferson, and ballooning interestpayments, she would have needed to make monthly payments rangingfrom $1,144 to $1,582. After 30 years of those payments, the totalamount paid on the loan would have been $550,084. However, Jeffersonwould still owe $107,015 in interest on the loan due to the balloonpayment, a stipulation introduced late in the loan process of whichJefferson was unaware, he said.
"Ms. Jefferson would have been in her mid-70s facing a payment of$107,000 with no promise or ability to refinance," Bordas said,adding the increased payments put Jefferson at risk of losing thehome.
Jefferson and Brown filed a 12-count complaint in Ohio CountyCircuit Court, requesting punitive damages, compensation foremotional distress and payment for attorney fees and court costs.They also filed suit against the appraiser, which Bordas said wassettled out of court. According to Quicken's statement, the out-of-court settlement resulted in Jefferson receiving more than $700,000from the appraisal firm.
Seventeen months after the suit was filed, Recht presided over aneight-day trial. He awarded punitive damages and ordered Quicken topay for all attorney and court fees, with a grand total of more than$3.69 million.
Recht, in his ruling, found that Quicken was fraudulent in thatit reneged on its promise to allow Jefferson to refinance the loanafter four months; misrepresented to Jefferson that she would be"buying down" her loan by making increased payments, which was"nothing more than pure profit;" and not disclosing to Jeffersonprior to closing that her loan contained a large balloon payment.The court also found there was sufficient evidence to show theappraisal was not bona fide and that it was "grossly inflated."
"For the judge to make such a strong order shows that this is apretty horrific case," Bordas said.
According to the statement from Quicken, the company plans toappeal the decision, citing numerous contradictions to theinformation provided by Bordas and in the court's ruling. The firmmaintains Jefferson defaulted on her mortgage, neglecting to makepayments on her loan after a few months. It also charges thatJefferson used a large amount of cash from the refinance to purchaseluxury items, including a new vehicle.
Most notably, however, Quicken maintains the appraisal processwas skewed by figures provided by Jefferson during the applicationprocess. During that time, Quicken states, Jefferson estimated theproperty to be valued at $250,000, which Quicken deemed reasonablebased on the fact that her home, a 4,200-square-foot colonial, wasinsured for $374,000.
Quicken's statement claims the awarded total to be paid is"preposterous."
That amount "in total damages to a single plaintiff in relationto a $144,800 mortgage amount in which she defaulted and stoppedmaking her payments, 60 days from closing the loan; needless to say,Quicken will be appealing this wanton injustice," the statementreads.
Bordas maintains the ruling is fair and sets an example forothers in a similar situation.
"The federal government has recognized the issues covered in thiscase, and people all across the county are losing their homes insimilar cases," he said. "People need to know that there is hope outthere for them."
J.W. Johnson Jr./WHEELING NEWS-REGISTER A verdict in Ohio CountyCircuit Court against Detroit-based Quicken Loans awarded LourieBrown Jefferson and her daughter, Monique Brown, more than $3million in punitive damages and legal fees for what the court deemedto be fraud and predatory lending. The home, at 118 12th Street, wasappraised at $181,700 by an outside appraisal company hired byQuicken. The actual value of the home at the time was $46,000, ajury ruled.
No comments:
Post a Comment