Tuesday, May 31, 2016

West Virginia Jury Hammers Notoriously Sleazy Loan Servicer With $2.5 Million In Punitive Damages For Failure To Reasonably Investigate Homeowner's Credit Report Dispute That He Was Being Falsely Reported To Be In Foreclosure

In Beckley, West Virginia, the West Virginia Record reports:
  • A Wood County man will receive more than $2.5 million after a federal jury said a mortgage service company didn’t investigate his repeated disputes of his credit report.

    A federal jury on May 23 awarded $6,128.39 in compensatory damages and $2.5 million in punitive damages to David M. Daugherty of Vienna. He had sued Ocwen Loan Servicing LLC and Equifax Information Services LLC in Raleigh County in 2014. The defendants had the case removed to federal court.

    After a six-day trial before Judge Irene Berger, the jury ruled in favor of Daugherty, saying Ocwen willfully violated the Fair Credit and Reporting Act. One component of that act requires that a company investigate all disputes. Daugherty had filed several disputes with Ocwen after receiving Equifax credit reports showing him behind on his mortgage payment.

    Ocwen, however, said Daugherty had other negative accounts and wouldn’t have been given the loan. Ocwen also said its investigation of Daugherty’s dispute was sufficient.

    Jed Nolan, one of Daugherty’s attorneys, said Ocwen’s investigation was nothing more than checking basic information such as Daugherty’s Social Security number and his loan account numbers.

    “Mr. Daugherty had a balloon note mortgage, and he had to pay an $80,000 balloon payment,” said Nolan, with the law firm of Hamilton Burgess Young and Pollard. “He wasn’t behind on his mortgage payments, yet the credit report showed he was five months behind. It said he was in foreclosure, and he wasn’t. Ocwen even acknowledged he wasn’t in foreclosure.”

    Daugherty and Equifax settled before the case when to trial.

    “The thing is, the company doesn’t even have to get the investigation right,” Nolan said. “They just have to do a thorough job of investigating a dispute. Ocwen wasn’t doing that. It wasn’t doing a reasonable investigation. Ocwen wouldn’t look at the rest of the information.”

    Nolan said he thinks the jury came up with the $2.5 million figure for punitive damages when Ocwen testified that it was the company’s policy to not look past that basic information when investigating a dispute.

    “I can’t say what the jury thought, but it seems to me that it wasn’t just a matter of Ocwen made a mistake looking at the report,” Nolan said. “I think the jury got frustrated Ocwen wasn’t looking beyond these basic information points and not verifying what they were told was accurate.

    “I don’t think the jury was swayed by sympathy. They sent a strong message that you have to follow the law. You have to investigate these disputes. They said Ocwen didn’t do enough to investigate his complaint. It wasn’t just a negligent mistake. It was willful.

    Daugherty was represented by Nolan as well as Steven Broadwater, Ralph Young and Christopher Frost at Fayetteville-based Hamilton Burgess as well as Sarah Brown with Mountain State Justice in Charleston. Ocwen was represented by Jason Manning, John Lynch and Jonathan Kenney of Troutman Sanders in Virginia Beach, Va.