Mortgages

Coldwell Banker Ordered to Pay $21 Million for Mortgage Mistakes

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An active-duty soldier whose mortgage servicing company reported him as “seriously delinquent”—even though he never missed a payment—recently won $21 million from the company in federal court.

U.S. Army Sergeant David Brash bought his house in Columbus, GA for $160,000 in 2007. He set the monthly $1,200 payment to be withdrawn automatically from his paycheck every month, according to court documents.

But Coldwell Banker Mortgage, the nation’s 8th-biggest mortgage servicing company, made mistakes on the original loan paperwork. These caused Brash’s payments to come in late or go missing.

The nightmare started six months after Brash signed his mortgage, when Coldwell Banker called Brash and sent him letters saying he had missed several payments, according to the lawsuit. Brash responded with letters and phone calls of his own, explaining how that was impossible, since he had bank statements proving that all the payments had been automatically withdrawn.

[Article: One Family’s 9-Month Trip Through the Loan Mod Twilight Zone]

Coldwell Banker employees investigated, and found Brash was right. But the no-payment letters kept coming. Other employees promised to conduct an internal investigation, and inform Brash in writing of what they found. Brash later discovered that no investigation was ever begun, and he received nothing in writing.

Eventually, Coldwell Banker reported to the three major credit bureaus that Brash was $2,418 past due on his mortgage, erroneously trashing his credit score.

After nearly two years of repeated mistakes by Coldwell Banker, Brash sued the company in December 2009 for breach of contract, negligence and punitive damages.

“Coldwell Banker Mortgage has acted in bad faith, has been stubbornly litigious, and has caused Plaintiff unnecessary trouble and expense,” according to the lawsuit.

The jury agreed. Georgia’s middle district federal court awarded Brash $21 million, mostly in punitive damages. Coldwell Banker says it plans to appeal.

“(W)e believe this verdict is not supported by the facts of the case or by applicable law, and that the award is grossly disproportionate to any damages Sgt. Brash may have sustained,” Jonathan McGrain, a spokesman for Coldwell Banker, told Georgia news station WTVN.

[Related: Why the Home Loan Mod Program is Failing]

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