On Monday, March 21st, a federal jury in Columbus, Georgia returned a $21 million verdict against PHH Mortgage Company (operating as Coldwell Banker) in favor of 29-year old U.S. Army Sergeant David Brash.
In his suit, Brash claimed that the mortgage company had falsely reported his account to credit bureaus as seriously delinquent, and then refused to correct the mistake or even answer his questions, putting him on hold in foreign call centers for thirty minutes to nearly an hour at a time.
Brash purchased a home in Columbus, Georgia in 2007 using PHH as his mortgage company. The soldier set up automatic payments while he was on active duty and for eighteen months no problems occurred. In the spring of 2009, however, PHH began to send him notices of delinquent payments. Though reassured repeatedly that the errors would be corrected, no action was taken by PHH; the notices continued and Brash’s credit rating was severely damaged. In late 2009, Brash filed suit against the mortgage company.
The jury deliberated for six hours before returning its verdict and awarding Brash $575 for expenses, $1 million in compensatory damages, and $20 million in punitive damages. The jury’s award of punitive damages was intended to punish PHH’s behavior and prevent future customer abuse by the lender. Given PHH’s large size—it closed $38 billion in mortgage financing in 2009 alone—the jury likely felt that a large punitive award was necessary to ensure the company changes its practices.