A federal judge in the Eastern District of Pennsylvania dismissed in its entirety a putative class action brought against Countrywide Home Loans and several other lenders involving a rogue mortgage broker who defrauded more than 800 borrowers in a complicated Ponzi scheme. When the Ponzi scheme collapsed, the broker filed bankruptcy, and the borrowers sued their mortgage lenders, claiming that the broker was the servicing agent of the lenders, and the lenders should be held liable for the broker’s actions. In granting a motion to dismiss in Jones v. ABN Amro Mortgage Group, Inc., the court ruled that (1) the plaintiffs could not sue in tort for claims arising from mortgage contracts; (2) the terms of the mortgages negated any claim that the broker was the lenders’ servicing agent; and (3) no common law agency relationship existed between the lenders and the broker. Goodwin Procter partner Tom Hefferon represented Countrywide in this matter. Click here for a copy of Jones v. ABN Amro Mortgage Group, Inc., Civ. Action No. 07-4328 (E.D. Pa. Apr. 10, 2008).
Alert April 22, 2008