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Yuba jury awards $16 million in mortgage case

Friday, July 18, 2014

by Dale Kasler, SacBee.com

A jury has awarded $16.2 million in damages to a Yuba County homeowner who nearly lost his home to foreclosure after his loan servicer botched his mortgage modification, his lawyers said today.

Phillip Linza, a homeowner in Plumas Lake, was awarded the damages after a three-year battle against PHH Mortgage Services, a loan servicer based in Mount Laurel, N.J. A Yuba County Superior Court jury decided on the award earlier this week.

Linza’s attorneys Andre Chernay and Jon Oldenburg of the United Law Center in Roseville, said the award included $514,000 in compensatory damages and $15.7 million in punitive damages. They said it ranked among the biggest jury awards they’ve encountered in years of representing homeowners in foreclosure and other mortgage-related cases.

“This is really the highest we’ve seen,” Oldenburg said. “It’s a huge figure.”

Officials with PHH couldn’t be reached for comment. The company’s lawyers Edward Treder and Darlene Hernandez declined comment.

Chernay said the case began when Linza, who works in sales, fell on hard financial times after buying a home in 2006 for approximately $280,000. Court records show Linza filed for personal bankruptcy in October 2009.

According to his lawsuit, PHH agreed in late 2010 to a loan modification that was supposed to reduce Linza’s monthly payments to $1,543 from $2,100. The new loan was supposed to take effect in January 2011.

After Linza made three monthly payments under the new terms, PHH began sending him letters demanding different amounts. First it said his new payment was $2,350 a month – slightly higher than before the modification. Later it sent him a notice saying he owed PHH some $7.056. The company also told him it wasn’t applying his monthly payments to his loan balance because he wasn’t paying the proper amount, according to Chernay.

“It was their mistake as of January 1st (2011) that created this whole scenario,” Chernay said.

Despite numerous phone calls and letters, Chernay said Linza wasn’t able to resolve the problem. After learning that his payments weren’t being used to reduce his balance, he stopped sending money to PHH, the lawyer said.

In 2012, the loan-servicing company initiated foreclosure proceedings. The proceedings halted when the Roseville law firm stepped in and filed suit on Linza’s behalf, Chernay said.

Even with the foreclosure stopped, Linza’s credit rating suffered and he endured emotional stress, Chernay said.

“If the Yuba County jury hadn’t saved him, the house would have been gone and he would have had to move in with his daughter in Colorado,” Chernay said.

NBC News Reports On ULC’s $16M Victory:

Jury awards Yuba Co. homeowner $16M in mortgage suit

YUBA COUNTY, Calif. (KCRA) —A Northern California jury awarded a homeowner $16 million in a lawsuit claiming a mortgage service company backtracked on his loan modification.

Watch report: Yuba Co. homeowner wins lawsuit against mortgage company

Phill Linza ruffled through a stack of records and letters from his mortgage servicing company that he has been collecting for the past several years.

“This is about a third of all the paperwork that I have,” Linza said.

He applied for a home loan modification when he hit hard times during the recession and was granted one by PHH Mortgage Corp.

Linza said he signed an agreement that reduced his monthly payments from about $2,100 to $1,500.

But within a couple months, the payments ballooned to $2,300 — which was higher than his original mortgage payments.

Linza said he repeatedly tried to get customer service representatives to straighten out the payments to no avail.

“They flat out told me, when I told them I’m going to sue if they don’t get this corrected, ‘Go ahead (and) stand in line. We’re a multi-billion dollar company. Go ahead and take your shot,'” Linza said.

Linza did sue, and throughout a three-year court battle, he feared he was still going to lose his four-bedroom home in Plumas Lake.

“The belittlement that they did to me — it was beyond comprehension,” Linza said. “People were coming to my front door, knocking on my front door, asking to take pictures of my backyard because they understood my house was under foreclosure.”

This week, Linza got vindication. A jury not only awarded him $500,000 in damages, the jury also returned with more than $15.5 million in punitive damages to punish PHH.

“Homeowners are still fighting the mortgage meltdown,” said attorney Jon Oldenburg.

Oldenburg and Andre Chernay, with the United Law Center in Roseville, said the victory could send a message to mortgage companies using similar tactics with other homeowners.

“You know our overall mission for the last six years, led by Stephen Foondos, has been to try to fight for the little guy,” Oldenburg said.

“They just need to understand is there is help out there,” Chernay said. “There is assistance out there.  You don’t have to be the victim.”

Linza’s attorneys said they are already anticipating an appeal, but believe Linza will get to keep his home and receive compensation for what he went through.

KCRA 3 tried to contact the attorneys for PHH Mortgage Corp., but none of the messages were returned.

ABC News Covers Linza trial victory:

Yuba Co. man awarded millions in modification fraud case

PLUMAS LAKES – A Plumas Lakes man has won a major judgement in a mortgage modification fraud case dating back to 2010.

A Superior Court jury in Yuba County awarded Phillip Linza $513,902 in damages and $15.7 million in punitive damages against PHH Mortgage Corporation.

It began when Linza was struggling to pay his mortgage in 2010 in the middle of the mortgage crisis. He thought he was on the road to saving his home when his loan provider PHH Mortgage agreed to a loan modification, taking his payment from $2,100 a month to just over $1,500 a month.

“I made the payments for months,” Linza said. “Then I get a letter in the mail that says, ‘oops, we made a mistake, your payments aren’t $1,530, they’re $2,300.'”

A few weeks later, the company sent Linza another letter.

“They jacked it up, never explained why. They sent another letter demanding $7,000, never explained why,” said United Law Center attorney Andre Chernay, who helped represent Linza.

Linza testified he tried repeatedly to reach someone with the company who would help him straighten things out, but got nowhere. When, in desperation, Linza threatened to sue PHH Mortgage, the company did respond.

Linza said he was told, “‘We’re a multi-billion dollar company. Stand in line because we’ve got a busload of attorneys that are on retainers.'”

The ruling Thursday is being called one of the largest of it’s kind in California and a message to the banking industry.

“It’s a classic case of David v. Goliath,” according to Jon Oldenburg, Managing Attorney and partner at United Law Center. “No one thought the banks could be beaten. This award is a huge step in the right direction to help us continue to punish the banks for violations against millions of California homeowners.”

Linza said the entire issue could have been avoided if PHH Mortgage had simply owned up to their mistake and honored their agreement. He said the verdict sends a broad message.

“You people have been taking advantage of enough people and the country’s tired of it. I mean, society’s tired of it,” Linza said.

The case is expected to be appealed.

No one from PHH Mortgage was available for comment late Friday.