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The jury sided with LoanCare's countersuit, which claims Freedom withdrew $22.6 million from certain custodial accounts for loans that LoanCare serviced without the subservicer's knowledge. Shortly prior, the working relationship between the two parties soured.
Dave Worral, president of LoanCare, issued a statement Tuesday noting his company is "pleased with the results of the trial" and that it sends a "message that Freedom's improper behavior will not be tolerated."
The original $39 million suit filed by Freedom Mortgage against the subservicer in 2016 was partially thrown out by a New Jersey federal judge last week. The lender's claim that LoanCare's negligent practices resulted in the lender losing over $30 million was dismissed by Chief Judge Renee Marie Bumb.
She ruled the lender failed to provide "legally sufficient evidence that the jury would need to resolve claims" that LoanCare did not carry out duties outlined in a contract it signed with the full-service residential mortgage lender, such as properly managing loss mitigation and the foreclosures of loans.
Specifically, the federal judge concluded the lender did not prove that LoanCare's services were any worse than the industry standard.
"The jury vindicated LoanCare's claim that Freedom fraudulently seized LoanCare's funds as the parties wound down their relationship in 2016," Worral said. "This was on the heels of Chief Judge Bumb recognizing that Freedom's main claim against LoanCare was meritless. Freedom had claimed that LoanCare improperly serviced its defaulted loans during the parties' relationship. Chief Judge Bumb rejected that claim without even sending it to the jury."
Freedom Mortgage did not respond to a request for comment. LoanCare's win was first reported by Law360.
The other outstanding accusation between the two parties was Freedom's allegation that LoanCare committed "fraud and unjustly enriched itself" by billing for loans that were no longer being serviced. The lender was awarded $247,000 in damages for this claim Monday.
The subservicer in previous filings argued the two parties resolved this issue when they allegedly agreed in 2014 that Freedom would receive a credit on its invoice and LoanCare would cease billing for loans that had gone more than 60 days post claim.
