By July 13, 2017 Read More →

Federal judge levies $11 million judgment against Quicken Loans

By LINDA HARRIS

The State Journal

WHEELING, W.Va. — Quicken Loans says it will appeal the damages a federal judge in Wheeling awarded a class of West Virginia homebuyers for what he characterized as deceitful lending practices “condoned by the highest levels of management and motivated by greed.”

U.S. District Judge John Preston Bailey awarded each of the 2,770 class members $3,500 — totaling more than $9.65 million — for violations of the West Virginia Consumer Credit & Protection Act, plus another $986,703 in damages for breach of contract as well as interest going back to June 2012. Bailey said the “substantial penalty” would serve to protect consumers from Quicken’s “unfair, illegal and deceptive” lending practices.

“This case does not involve mere phone calls or technical violations of statute,” Bailey wrote in his 74-page opinion in Alig v Quicken Loans. “Quicken’s conduct jeopardizes the American dream of home ownership. This conduct was frequent — it occurred on nearly every refinancing loan and was repeated as necessary with value appeals.

In June 2016 Bailey found that Quicken’s practice of providing estimated home values to appraisers could be construed as “unconscionable conduct” under West Virginia’s Consumer Credit & Protection Act.

“Quicken was also persistent in that it continued with this practice amongst every growing industry scrutiny by regulators, appraisers, investors, consumer advocates and lawmakers … . This practice was fostered and condoned by the highest levels of management and motivated by greed.”

Bailey said providing appraisers with a target figure ahead of time “is a universally condemned process that serves no legitimate purpose and cannot conceivably be an ‘acceptable’ one.”

“Quicken deprived borrowers of fair and trustworthy appraisals during their loan application process via a mechanism universally condemned,” Bailey wrote. “It did so repeatedly and without remorse, despite all indications that it would improperly influence appraisers’ judgment. ”

A Quicken spokesperson said in an emailed statement there’s “no evidence to suggest that homeowner’s estimates impacted the opinion of local independent, licensed, professional home appraisers in West Virginia.”

“In fact, multiple state-licensed home appraisers testified that such estimates had zero influence on the home valuations they issued,” the spokesperson said. “There is also no evidence that the valuations the appraisers issued at the time were inflated in any way or caused any damages whatsoever to a single plaintiff in the class. The facts of this case are clear and we are confident that both the judge’s ruling and the damages assessed will be overturned on appeal.”

Quicken questions how “the customary practice” for homeowners in that time frame — 2004-09 — to provide the appraiser with an estimate of their homes’ values could result in a damage judgment against lenders, suggesting the only entities hurt by appraisers ascribing a higher-than-market value to a property would be the lenders themselves.

“Professional appraisers, who are subject to their own licensing and ethical standards, deliver independent valuations,” Quicken’s spokesperson said. “The court labeled the borrower’s self-estimates of their homes value as a ‘target value.’

“There is no evidence to suggest that homeowner’s estimates impacted the opinion of local independent, licensed, professional home appraisers in West Virginia,” the spokesperson continued. “In fact, multiple state-licensed home appraisers testified that such estimates had zero influence on the home valuations they issued.”

Representing the homeowners were Jonathan Marshall and Patricia Kipnis of Bailey Glasser, based in Charleston, and Jim Bordas and Jason Causey of Wheeling-based Bordas & Bordas,

Bordas said the “extensive and detailed order” Bailey issued makes it clear that “conduct of the nature exhibited by Quicken Loans is unconscionable and needs to be deterred.”

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