May 12, 2008

Mortgage Lenders Hit with $99 Million in Punitive Damages has a post entitled "Mortgage lenders ordered to pay $99,000,000.00 in punitive damages." In a class action against three mortgage lenders, a Missouri jury ordered defendants Residential Funding Company LLC, Household Finance Corporation III and Wachovia Equity Servicing LLC to pay $5.1 million in compensatory damages and $99,000,000.00 in punitive damages. According to Injury Board, "The actual damages suffered by the plaintiffs as a result of the illegal conduct of the three mortgage companies occurred because the original lender had charged the victims excessive interest and illegal charges for origination fees, loan discount fees, underwriting fees, processing fees, document preparation fees, and legal fees."

It seems doubtful that this punitive damage award (at nearly a 20 to 1 ratio) can survive constitutional scrutiny.