A New York federal jury returned a $54.8 million verdict against Wells Fargo & Co. in a class action accusing mortgage companies previously owned by Wells Fargo’s Wachovia Corp. of charging borrowers with unlawful fees. The plaintiffs had sought $629 million in the suit. The jury verdict favored plaintiff Joseph Mazzei’s request for overcharges allegedly assessed by the Money Store or HomEq Serving Corp. after borrowers’ loans were accelerated and paid off. However, the jury rejected Mr. Mazzei’s claim for amounts paid to non-party Fidelity National Default — which the Money Store and others allegedly employed to help with bankruptcies and foreclosures — from attorneys’ fees charged to borrowers.
In 1994, Mazzei took out a mortgage loan from the Money Store, issued pursuant to Fannie Mae form loan documents, on his home in Sacramento, California. After he fell behind on the loan five years later, he defaulted several times. In roughly March 2000, the Money Store and others accelerated Mazzei’s loan obligations and declared the full amount of the debt immediately due and payable, court filings said. He was then allegedly charged multiple late fees for his failure to make monthly payments. Mazzei later sold his home and made a payment of about $61,000 that allegedly included payment for all attorneys’ fees, late fees and other expenses that the defendants claimed they had incurred as a result of Mazzei’s defaults.
In his complaint, Mazzei alleged breach of contract — and violations of the Truth in Lending Act and California Business & Professional Code – in connection with the defendants’ allegedly improper debt collection practices. A judge had previously dismissed his claims under the Fair Debt Collection Practices Act and the Real Estate Settlement Procedures Act.
U.S. District Judge John G. Koeltl certified the classes in January 2013. They include borrowers who signed on loans owned or serviced by the defendants and who from March 1, 2000, to June 2, 2014, were charged unlawful fees. However, they don’t include borrowers who signed form loan mortgage agreements after Nov. 1, 2006.
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