Freedom Mortgage wants an appeals court to take another look at its suit against LoanCare. A spat between Freedom Mortgage and Loancare over alleged negligent servicing practices spanning from 2010 to 2016 came to a head last July when a New Jersey federal jury ruled in favor of Loancare awarding it over $22 million in compensatory damages.The jury sided with LoanCare’s countersuit, which claimed Freedom withdrew $22.6 million from certain custodial accounts for loans that LoanCare serviced without the subservicer’s knowledge. Meanwhile, Freedom, whose original complaint was seeking $39 million, was awarded $247,000 in damages based on accusations that LoanCare billed it for loans that were no longer being serviced.But both Freedom and LoanCare had outstanding questions regarding the final ruling.Specifically, the two companies wanted clarity regarding prejudgment and postjudgment interest and LoanCare was seeking judgment on its claim that Freedom breached the parties’ subservicing agreement.Ultimately, Chief Judge Renee Marie Bumb who was overseeing the case published an amended final judgment on June 27, concluding that LoanCare has the right to prejudgement interest. (This is despite the fact that Freedom has argued delays due to the COVID-19 pandemic constituted “exceptional circumstances” that warranted the suspension of prejudgement interest.)”Any suspension of prejudgment interest would unfairly reduce the true value of LoanCare’s recovery of the money that, a jury concluded, Freedom stole,” the judge wrote in an opinion and revised final judgment filing.Regarding postjudgment interest, Bumb wrote in a 54-page filing that interest on the parties’ respective damages awards will accrue at the rate of 5.33%. She also concluded that Freedom did in fact breach a section of its contract with LoanCare, when it “failed to return $22.7 million of LoanCare’s funds.” Freedom disagreed with the judge’s order, filing an appeal on July 22, which now paves the way for the U.S. Court of Appeals for the Third Circuit to have a second look at the case.In a filing, the mortgage lender and servicer wrote that it is appealing “the memorandum opinion and order entered June 27, 2024…the amended final judgment…and the order entered on July 21, 2023, granting the motion for judgment as a matter of law of LoanCare.” The mortgage lender and servicer declined to provide commentary. Loancare did not immediately respond to requests for comment.The original $39 million suit filed by Freedom Mortgage against the subservicer in 2016 claimed that negligent practices of LoanCare spanning from 2010 to 2016 resulted in the lender losing over $30 million. The complaint says the subservicer 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. This allegedly resulted in millions of dollars of financial losses for Freedom. The suit was partially thrown out by a New Jersey federal judge last July.Meanwhile, the subservicer challenged some of Freedom’s claims.LoanCare countersued Freedom for $22 million claiming that “when the parties relationship soured,” the lender withdrew money in certain custodial accounts for loans that LoanCare serviced without the subservicer’s knowledge.
