Federal Court Upholds Jury Verdict in Predatory Lending Case
- At August 30, 2018
- By fhfla
- In News
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On August 30, 2018, Judge Sterling Johnson of the U.S. District Court for the Eastern District of New York upheld a June 2016 jury verdict finding that Emigrant’s predatory loans violated the Fair Housing Act and other civil rights laws. Concluding that a waiver provision signed by two of the plaintiffs was void, and that the jury’s award was insufficient to make the plaintiffs whole, the Court ruled that they are entitled to a new trial on damages.
Each of the Firm’s clients was issued a predatory home refinance loan through Emigrant’s STAR NINA program, which was designed solely for low credit borrowers, had default interest rates as high as 18%, and was aggressively marketed in Black and Latino neighborhoods. Predictably, these loans–which required no verification of income or assets–went into default, allowing Emigrant to strip equity from its borrowers. During a five-week trial, plaintiffs presented strong evidence that such practices harmed plaintiffs and the predominantly African-American and Hispanic communities that Emigrant targeted. The Brooklyn jury found Emigrant liable for discrimination under all counts of federal and state anti-discrimination laws.
The jury awarded $950,000 in compensatory damages to six of the plaintiffs. The two remaining plaintiffs, however, were unable to recover the losses sustained from their Emigrant loan because they had signed a waiver of claims as part of Emigrant’s loan modification process. In its August 2018 decision, the Court held that Emigrant’s waiver provision violated public policy and was unenforceable.
The Court also held that the remaining plaintiffs were entitled to a new trial on damages, finding that the jury’s compensatory damages verdict was insufficient to “restor[e] Plaintiffs to their pre-STAR NINA loan positions.” In light of the significant testimony introduced at trial, the Court found that the jury’s award was grossly inadequate, and that plaintiffs were entitled to another opportunity to present their case on damages to a new jury.
The Relman, Dane & Colfax team is led by Reed Colfax, Tara Ramchandani, and Yiyang Wu, who are joined by Rachel Geballe from Brooklyn Legal Services with additional support from the Center for Responsible Lending. The Court’s decision can be found here.
