December 19, 2014 / 8:04 PM / 3 years ago

UPDATE 2-Wells Fargo faces payout after $54.8 mln loan fee verdict

(Adds comment from homeowners’ lawyer, 4th paragraph)

By Nate Raymond

NEW YORK, Dec 19 (Reuters) - U.S. homeowners suing mortgage companies once owned by a bank Wells Fargo & Co later acquired won a $54.8 million verdict on Friday in a class action over excessive fees.

The verdict, by a federal jury in Manhattan, came in a long-running lawsuit by borrowers whose mortgages were owned or serviced by HomEq Serving or the lender whose loans it was established to manage, the now-defunct The Money Store.

Wells Fargo said afterward that it disagreed with the jury’s decision and would likely seek further court review.

A lawyer for the homeowners, Moshe Horn, said in a statement that he was “thrilled our clients finally had our day in court.”

Homeowners, who sued in 2001, had sought to recoup about $629 million for alleged overcharges and interest, according to an October court filing by a damages expert for the plaintiffs.

The lawsuit was filed by homeowner Joseph Mazzei, who contends that The Money Store and HomEq kept charging borrowers monthly late fees even after their mortgages went into default.

According to court records, the jury found the mortgage companies liable for the late fees but not liable on a separate question of whether the companies mishandled attorney fees.

Wells Fargo spokesman Tom Goyda said in a statement that while the bank would likely seek a review of the part of the case it lost, “We are pleased that the jury rejected a significant portion of the plaintiff’s claims.”

Mazzei was awarded $133.80 plus interest, records showed. If the verdict stands, the $54.8 million will be split up among the class at a later date.

Wells Fargo, the largest U.S. mortgage lender, never owned either defendant.

Wells Fargo in 2008 acquired Wachovia, which had owned HomEq. The Money Store was owned by First Union, which later became part of Wachovia.

First Union shut down The Money Store in 2000 because of losses. A New Jersey mortgage lender bought The Money Store’s name in 2006 and has continued using it.

The case is Mazzei v. The Money Store, U.S. District Court for the Southern District of New York, No. 01-5694. (Reporting by Nate Raymond in New York; Editing by David Ingram, Richard Chang and Tom Brown)

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