Alena Hammer owned and resided in a house located in Villa Park, Ill. Her mortgage was serviced by AmTrust Bank until AmTrust failed and was taken over by the FDIC in November 2009. The mortgage did not include an escrow account, and Hammer paid her real estate taxes and property insurance separately.
Hammer, 65, entered into a loan modification agreement with the FDIC as receiver for AmTrust in June 2010. She had been laid off from her job the year before. Hammer’s mortgage loan was then transferred to the defendant Residential Credit Solutions (RCS) in August 2010. RCS began rejecting the plaintiff’s monthly mortgage payments in September 2010 and refused to acknowledge the existence of the loan modification agreement.
RCS then pursued two separate foreclosure actions against Hammer despite the fact that she was still up to date on her monthly payments as required under the loan modification agreement.
The first foreclosure case was dismissed in Hammer’s favor in March 2011 due to the RCS’s failure to honor the loan modification agreement. The judge ruled Hammer’s mortgage checks dated June 28 and July 28, 2010, which were cashed by the FDIC, established that the loan modification contract had in fact been ratified.
However, RCS continued to reject her payments and continued to deny the existence of her modification agreement. RCS filed a second foreclosure lawsuit in September 2011 and prosecuted that case until September 2013 when the foreclosure proceeding was stayed following the filing of this federal lawsuit.
Hammer contended that RCS improperly chose not to accept her timely mortgage payments, misapplied payments, charged numerous unexplained and unauthorized fees, failed to act in good faith, purchased force-placed insurance on multiple occasions despite the fact that Hammer had deducted amounts from the escrow account for the force-placed insurance, assessed increased monthly mortgage payment amounts without notification or authorization, sought to collect an escrow shortage/deficiency without documentation to substantiate the shortage as required under RESPA, failed to provide plaintiff any notice of the alleged escrow shortfall until after deducting the insurance payments from her escrow account, and assessed fees without conducting an annual escrow analysis or giving prior notice as required by RESPA.
Hammer argued that RCS’s actions were part of a pattern and practice of conduct in which RCS routinely engaged as part of its business model, it was RCS’s normal business practice to falsely characterize contractual arrangements and then misstate the nature of allegedly outstanding debts in amounts owed for its own pecuniary gain, and RCS’s conduct was willful and wanton with a reckless disregard for Hammer’s rights thereby warranting punitive damages.
Hammer sought to recover damages for the improper fees and costs assessed to her loan account, attorney’s fees and costs incurred to defend the two improper foreclosure proceedings, emotional distress from defendant’s perpetual harassment and litigation and mental anguish during the 3-year ordeal.
RCS maintained that the loan modification agreement was invalid. An additional claim that RCS violated the Fair Debt Collection Practices Act was dismissed with prejudice by the presiding judge prior to the beginning of the trial.
The jury’s verdict of $2 million was made up of the following damages;
$500,000 for compensatory damages; and
$1,500,000 for punitive damages.
The jury found in Hammer’s favor on all four counts: Breach of contract in violation of the Illinois Consumer Fraud Act (Unfairness), violation of the Illinois Consumer Fraud Act, (Deception) and violation of the Real Estate Settlement Procedures Act (RESPA).
The attorneys representing Alena Hammer were Nick Wooten, Ross Zambon and Marla Baltabols.
Alena Hammer v. Residential Credit Solutions, inc., No. 13-cv-6397 (U.S. District Court for the Northern District of Illinois, April 13, 2015).
Kreisman Law Offices has been handling commercial litigation, business disputes, real estate litigation and probate litigation for individual, families and business for more than 38 years in and around Chicago, Cook County and its surrounding areas, including Naperville, Wood Dale, Winfield, Winnetka, Wilmette, Niles, Morton Grove, Round Lake Beach, Grayslake, Gurnee, Lake Bluff, Waukegan, Joliet, Elgin, Aurora, Bensenville, Chicago (Jefferson Park, Hegewisch, Lincoln Square), Lincolnshire, Lincolnwood, Addison and Villa Park, Ill.
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