Freedom Mortgage and Loancare say they’ve settled a long-running fight over servicing practices, two years after a jury awarded a $22 million verdict in the case.
The agreement disclosed in federal court this week will end both district court and federal appeals court cases. Freedom took the fight to the Third U.S. Circuit Court of Appeals last summer, after a New Jersey federal jury in 2023 ruled in Loancare’s favor and awarded it $22.6 million in damages.
The notice was filed by a special counsel for the case, and follows the sides’ agreement in principle reached last month, according to court filings. It was dismissed with prejudice, meaning the case can’t be relitigated. The terms are confidential, and it’s unclear what the sides will receive in the deal.
“I can tell you that the parties have entered into a satisfactory settlement,” wrote Stuart Singer, managing partner at Boies Schiller Flexner LLP on behalf of Loancare, in an email Thursday.
The attorney declined to comment on what would happen to the earlier multimillion dollar settlement. A representative for Freedom didn’t return a request for comment Thursday.
Freedom and Loancare’s servicing fight goes back to 2010
The case focuses on Freedom’s claims that the subservicer cost the lender tens of millions of dollars via negligent practices between 2010 to 2016. Freedom focused on over 1,000 defaulted Federal Housing Administration loans, which Loancare allegedly submitted incomplete or incorrect information.
The supposed pattern resulted in smaller reimbursements to Freedom from the Department of Housing and Urban Development, which amounted to over $15 million.
Loancare responded with its own countersuit for $22 million, claiming Freedom withdrew funds from certain of its custodial accounts without Loancare’s knowledge. Freedom allegedly received $111 million through multiple transactions but failed to return a remaining $22 million.
The jury in 2023 agreed with Loancare’s case, but additionally awarded Freedom $247,000 in damages for accusations that Loancare billed the lender for loans that were no longer serviced. Both companies had outstanding questions after that result regarding prejudgment and postjudgment interest.
The sides were scheduled for an oral argument June 12 before a New Jersey appeals court, but asked for a delay given the agreement in principle.
Freedom Mortgage is one of the industry’s largest independent mortgage banks, originating and purchasing a combined $72 billion in loans last year according to a Richey May analysis of Home Mortgage Disclosure Act data.
Loancare, a subsidiary of title insurance player Fidelity National Financial, as of last year had a $327 billion portfolio of around 1.27 million loans, according to Fitch Ratings.
