Expert Witness Profiler

Tag: Mortgage

  • Accounting Expert’s Lost-Opportunity Testimony Admitted

    Accounting Expert’s Lost-Opportunity Testimony Admitted

    Plaintiffs Joshua Cane Jellison and Jessica Marie Jellison (collectively “Plaintiffs”) alleged violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, against PHH Mortgage Corporation, the assignee and servicer of their mortgage loan.

    Plaintiffs claimed that they entered into a COVID-19 forbearance, which caused them to accrue past due payments. According to Plaintiffs, PHH offered to resolve the past due payments by way of a Federal Housing Administration (“FHA”) COVID-19 Recovery Standalone Partial Claim Mortgage (“PCM”), through which the FHA would have purchased Plaintiffs’ outstanding debt and secured it with a second position mortgage. Plaintiffs contended the PCM would have paused any monthly payments until the mortgaged property was sold or the mortgage serviced by PHH was paid in full or refinanced. They alleged that PHH did not timely approve Plaintiffs’ entry into the PCM and instead threatened foreclosure. PHH believed it properly rejected Plaintiffs’ applications for the PCM because Plaintiffs did not meet all of the requirements. Plaintiffs were eventually approved for the PCM and did not lose their home through foreclosure.

    Plaintiffs alleged generally that they incurred damages because their credit score was substantially reduced which severely affected their ability to run their business.

    When Plaintiffs produced the report of their economic expert, Key Coleman, Defendant PHH Mortgage Corp. filed a motion in limine to exclude the testimony of Coleman.

    Accounting Expert Witness

    Arthur Key Foster Coleman, CPA, CFA is Executive Director and Founder of Litigation Economic & Forensic Consulting Group LLC. Coleman has more than 30 years of experience providing business and financial analysis. His focus is on forensic accounting, commercial disputes, damages and expert testimony.

    Coleman serves full-time as Assistant Professor of Business at Rosemont College.

    Discover more cases with Key Coleman as an expert witness by ordering his comprehensive Expert Witness Profile report.

    Discussion by the Court

    Relying entirely on Jellison’s statements regarding his existing and future business ventures, Coleman concluded that Plaintiffs suffered economic damages in the amount of $322,608 from the alleged loss of the opportunity to expand Plaintiffs’ business by purchasing additional equipment.

    In its challenge to strike Coleman’s testimony at trial, PHH argued that his opinions are “inherently unreliable” because “his economic damages calculations are predicated entirely on speculative and unverified information provided to him by Mr. Jellison.”

    More specifically, PHH argued that Coleman’s opinions are based upon Joshua’s unsupported and unverified statements regarding (1) his future business plans; (2) the market conditions implicated by those plans; and (3) the viability and potential profits of those “purported plans.” PHH stressed that Coleman bases his opinion solely on what Jellison told him about demand for expanding his business.

    Analysis

    This Court and others, however, have noted that an owner of a business who participates in day-to-day operations is qualified to offer an opinion as to lost profits based on the company’s actual operating history.

    The historical business information supplied by Jellison and relied upon by Coleman is based upon Jellison’s personal knowledge acquired from the day-to-day operations of East Coast.

    As such, Coleman was justified in relying upon his discussions with Jellison, in conjunction with tax returns and other documents which corroborated Jellison’s representations concerning lost profits relating to expansion of his business.

    Moreover, because Coleman’s report relies upon data from tax returns for years 2021 through 2023, which reveals not only sales revenue but also depreciation and amortization of equipment needed for the addition of new crews in 2022 and 2023, the data is relevant to the facts of the case.

    Here, the information provided by Joshua Jellison is corroborated by East Coast’s tax returns.

    Other documents Coleman relied upon include those reflecting the dramatic drop in Jellison’s credit score; 2022 Depreciation and Amortization Report; Automobile Schedule for East Coast Equipment; Refusal for Small Business Line of Credit from PNC Bank; Delinquent Tax Reminder from Westmoreland County Tax Claim Bureau; 2019-2023 Tax Returns of Partnership Income with supporting documentation; and other documents.

    Tax records include information relating to equipment costs when adding the second and third crews in 2022 and 2023. Coleman outlined the methodology he used based on information he received from Jellison and supported by this documentation. Thus, there is an adequate factual foundation for Coleman’s opinions.

    This factual foundation establishes a clear “fit” connecting Plaintiffs’ alleged damages with Coleman’s opinion. The cases relied upon by PHH simply do not carry the day.

    Held

    The Court denied PHH Mortgage Corp.’s motion in limine to exclude the testimony of expert witness Key Coleman.

    Key Takeaway

    In its discretion and considering all facts and circumstances, the Court found by preponderance of the evidence that Coleman’s report was supported by “good grounds,” and relevant such that it will assist the trier of fact. Coleman relied upon business tax returns, which were prepared by an outside accountant, and reviewed by the IRS. Coleman was able to corroborate Joshua Jellison’s representations from these documents. PHH, however, may conduct a thorough and vigorous cross examination of Coleman and Joshua Jellison at trial concerning future business plans and the market conditions supporting those plans.

    Case Details:

    Case Caption: Jellison V. PHH Mortgage Corporation
    Docket Number: 2:23cv739
    Court Name: United States District Court, Pennsylvania Western
    Order Date: January 20, 2026

  • Real Estate Expert’s Generalized Observations Excluded

    Real Estate Expert’s Generalized Observations Excluded

    Mohammed Zafaranchi is charged with conspiracy to commit wire fraud, wire fraud, money laundering, and destruction of records in a federal investigation.

    The indictment alleged that Zafaranchi operated a series of call centers that defrauded homeowners by charging them for mortgage modification services that were not as represented.

    Seeking a new trial, Defendant contended that the Court erroneously excluded testimony from his expert witness, Jack Cohen.

    Real Estate Expert Witness

    Jack G. Cohen is a private money real estate lender, real estate developer, investment property manager, and is well-experienced in real estate mortgages and finance, and purchase and sales transactions. He is also employed as a San Fernando Realty Real estate investment director (California Bureau of Real Estate).

    Want to know more about the challenges Jack Cohen has faced? Get the full details with our Challenge Study report.

    Discussion by the Court

    Defendant sought to have Cohen opine on the Everett call center’s compliance with mortgage modification and marketing industry norms and standards, in rebuttal to the Government’s anticipated expert regarding the same.

    Nevertheless, the Court barred Cohen’s testimony because he lacked the requisite specialized knowledge to opine on such issues.

    Specifically, according to Cohen’s curriculum vitae, he has no specialized mortgage modification training, experience, or knowledge. Furthermore, his report contained only generalized representations of industry norms supported solely by his personal observations. Thus, it lacked a discussion of or reference to objective sources, such as the regulatory authorities governing the Everett call center. 

    Moreover, Cohen’s CV and report also failed to demonstrate his specialized knowledge or experience in advertising and marketing techniques more generally.

    Defendant next suggested, irrespective of the exclusion of Cohen’s testimony, that in accordance with Federal Rules of Evidence 403 and 704 (the latter being implied), the Court should have excluded Randall Lowell‘s testimony.

    Lowell is a licensed real estate broker and mortgage broker, and has many years in the mortgage modification field. He has a mortgage loan underwriting certification and a U.S. Department Housing and Urban Development (“HUD”) housing counselor certification.

    Basically Lowell is an undisputed industry expert. And during trial, he testified at length regarding the industry standards, regulatory framework, and guidance governing and informing mortgage modifications and related services. The Court concluded that this was admissible because it would assist the jury in determining whether Defendant, vis à-vis the Everett call center, solicited modification services to the public with the intent to “devise a scheme or plan to defraud, or a scheme or plan for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.”

    Held

    The Court committed no error in barring Jack Cohen’s testimony.

    Key Takeaway:

    Cohen has no mortgage-specific educational certifications or mortgage modification knowledge or experience. In sum, Cohen’s knowledge, background, experience, and training fall well short of what Rule 702(a) requires.

    Case Details:

    Case Caption: USA V. Zafaranchi
    Docket Number: 2:22cr122
    Court Name: United States District Court, Washington Western
    Order Date: October 20, 2025
  • Court Accepts the Mortgage Expert’s Opinion on the OPERS’ Primary Fraud Theory

    Court Accepts the Mortgage Expert’s Opinion on the OPERS’ Primary Fraud Theory

    Defendant Federal Home Loan Mortgage Corporation (“Freddie Mac”) offered Dr. Chudozie Okongwu, a mortgage market expert, to discuss the mortgage and subprime markets and the credit crisis between August 1, 2006, and November 20, 2007 (the “Relevant Period”). The lawsuit concerns whether “Freddie Mac concealed its overextension in the nontraditional mortgage market—generally composed of instruments known as subprime mortgages or low credit and high risk instruments—and its materially deficient underwriting, risk management and fraud detection practices through misstatements and omissions to investors.”

    According to Ohio Public Employees Retirement System  (“OPERS”), the central issue is not the definition of subprime or the performance of Freddie Mac’s loans relative to others, but rather if Freddie Mac’s public disclosures about its portfolio, underwriting, credit risk, and capital position were misleading and fraudulent. OPERS alleged Freddie Mac was undertaking more risk than it revealed. Freddie Mac retained Okongwu to conduct economic and financial analysis regarding some of OPERS’ claims. His analysis aimed to refute OPERS’ primary-fraud theory, asserting that Freddie Mac’s Caution Loans did not carry “subprime risk” because “[t]he Caution Loans have different characteristics to the CoreLogic Subprime Loans and perform differently than the CoreLogic Subprime Loans. In particular, the serious delinquency rates of the Caution Loans were substantially lower than those of the CoreLogic Subprime Loans at both Q3 2007 and Q3 2008.”

    OPERS contended that Okongwu’s report, testimony, and purported opinions are inadmissible as expert evidence due to being irrelevant, unreliable, unhelpful, confusing, unfairly prejudicial, and failing to meet the necessary threshold.

    Mortgage Expert Witness

    Dr. Chudozie Okongwu is a Ph.D. economist and consultant with extensive experience in finance, economics, and valuation. He possesses expertise in the mortgage market, the evolution of the credit crisis during the Relevant Period, residential-mortgage products, and mortgage-backed securities (including their sensitivity to housing price and interest rate changes). He also has significant experience using econometric models for analyzing residential-mortgage products.

    Get the full story on challenges to Chudozie Okongwu’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    Okongwu’s Proposed Testimony on the First Two Topics in his Amended Expert Report about Background Facts of the Mortgage and Subprime Markets is Irrelevant and Unreliable

    OPERS contended that all of Okongwu’s planned testimony concerning the background of the mortgage and subprime markets in the initial two sections of his revised expert report was irrelevant and unreliable. However, the Court disagreed with OPERS’ central argument that Okongwu’s opinions on these first two topics were not suitable for expert testimony.

    The Court reasoned that this proposed testimony covers specialized areas related to events in the mortgage market during the financial crisis and OPERS’ claim that Freddie Mac did not disclose its involvement with subprime loans—details that are beyond the common understanding of an average juror. Furthermore, the Court found Okongwu’s testimony on these first two topics in his amended expert report to be reliable. His methodology was thoroughly explained, and he clearly stated the foundation for all his provided definitions. The Court also noted Okongwu’s expertise in residential-mortgage products and mortgage-backed securities (including their sensitivity to changes in housing prices and interest rates), along with his substantial experience in using econometric models to analyze residential-mortgage products.

    Okongwu’s Prepared-Solely-for-Litigation Proposed Testimony about what Freddie Mac Disclosed Between 2005 and 2008 is Irrelevant and Unreliable

    Okongwu’s analysis focuses on critical parts of Freddie Mac’s extensive disclosures to investors, which cautioned about credit risks leading up to the financial crisis. OPERS argued that Okongwu’s proposed testimony about Freddie Mac’s disclosures between 2005 and 2008—prepared solely for this litigation—is irrelevant, unreliable, and that he lacks the necessary qualifications to testify on this subject. However, the Court recognized that what OPERS described as a simple factual account is actually an independent analysis of substantial materials covering specialized topics. The Court noted that Okongwu has extensively published on the subjects relevant to his proposed testimony in this case. Consequently, the Court found Okongwu’s testimony on Freddie Mac’s extensive disclosures to be reliable, as he reviewed and analyzed these disclosures regarding credit risks within the context of the prevailing market conditions, drawing upon his expertise.

    Okongwu’s Proposed Testimony about Freddie Mac’s Caution Loans being Different from the CoreLogic Subprime Loans is Irrelevant and Unreliable

    Okongwu performed an empirical study employing specific analytical methods to compare millions of these two loan categories, ultimately concluding that OPERS’ “primary fraud” theory is flawed. His analysis indicated that Caution Loans and subprime loans were not the same, with Freddie Mac’s Caution Loans demonstrating significantly better performance. The Court ruled that Okongwu’s analysis comparing caution loans and subprime loans is admissible, relevant, and will aid the fact-finder in comprehending and deciding on OPERS’ primary-fraud theory.

    The Court also found Okongwu’s testimony analyzing Freddie Mac Caution Loans and comparing them to the CoreLogic Subprime Loans to be reliable. However, OPERS argues that Okongwu’s comparison was incomplete, as he did not examine “the totality of Freddie Mac’s subprime-like loans” because the Caution Loans he analyzed originated from the “Loan Prospector automated underwriting system . . ., which applied higher underwriting standards than other channels from which Freddie Mac purchased loans. . . .” The Court determined that Okongwu’s proposed testimony regarding the difference between Freddie Mac’s Caution Loans and the CoreLogic Subprime Loans is a suitable topic for examination through direct and cross-examination, but does not warrant excluding the proposed testimony.

    Held

    The Court denied OPERS’ motion to strike and exclude the testimony of Dr. Chudozie Okongwu.

    Key Takeaway:

    The Court operates with wide latitude in deciding how to test an expert’s reliability, and thus has considerable leeway in deciding how to go about determining whether particular expert testimony is reliable.

    Case Details:

    Case Caption: Ohio Public Employees Retirement System V. Federal Home Loan Mortgage Corp., Et Al.
    Docket Number: 4:08cv160
    Court Name: United States District Court for the Northern District of Ohio, Eastern Division
    Order Date: March 21, 2025
  • Mortgage Lending Expert Witness’ Testimony Regarding Deviation from HUD Standards Limited

    Mortgage Lending Expert Witness’ Testimony Regarding Deviation from HUD Standards Limited

    On November 22, 2019, Plaintiffs Alfredo and Chelsie Dominguez (“collectively “Plaintiffs” or “Dominguez”) refinanced their manufactured home with Wallick & Volk, working with loan originator and W&V employee, Christina Bingham. In February 2020, W&V sold the loan and transferred servicing to The Money Source, Inc. (“TMS”). Nine months later in November 2020, Plaintiffs’ hazard insurance policy premium became due but was not paid by TMS from the loan servicer’s escrow account, resulting in cancellation of the policy on February 6, 2021, for non-payment of premium. On March 22, 2021, more than a year after W&V transferred the loan to TMS, the home suffered severe fire damage.

    Plaintiffs sought to recover approximately $300,000 for the loss of real and personal property, as well as emotional distress damages and attorney fees, resulting from the fire that destroyed their home on March 22, 2021.

    Defendant The Money Source, Inc. (“TMS”) filed a motion to exclude Plaintiffs Alfredo Dominguez and Chelsie Dominguez’s (“Plaintiffs”) expert Curtis Novy’s expert reports and testimony.

    Mortgage Lending Expert Witness

    Curtis L. Novy is a licensed financial crimes investigator and seasoned mortgage & real estate expert witness with many years of experience. His work focuses on complex investigations, corporate risk management, elder financial abuse, private equity & family office investigations, and providing court certified expert witness testimony. 

    Get the full story on challenges to Curtis Novy’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    Qualifications

    TMS first argued that Novy is unqualified to offer mortgage servicing opinions because his expertise is in mortgage fraud investigations and underwriting.

    Novy, however, has over 30 years of experience in commercial and residential lending, which includes “loan servicing compliance.” Since 1997, Novy has served in various capacities in the mortgage industry—his expertise includes lending operations, mortgage banking standards and practices, and ensuring loans meet industry standards. Furthermore, since 1997, Novy has been retained as a subject matter expert and consultant, where his areas of testimony included mortgage lending for both commercial and residential mortgages. Novy also testified that he received Housing and Urban Development (“HUD”) training as to loan servicing matters and he has reviewed loan servicing records as part of his role in compliance and auditing. The Court therefore found Novy’s qualifications met the knowledge and experience of an expert to discuss the mortgage servicing industry.

    In their response, Plaintiffs attached a declaration from Novy expounding upon his expertise and expert conclusions. The Court held that this declaration amounts to an untimely supplemental expert report because it was produced after the deadline to disclose supplement expert witness opinions.

    Reliability

    TMS argued that Novy’s opinion lacks reliability, calling it speculative and full of legal conclusions.

    Preliminary Report Opinion No. 4

    TMS argued that opinion number 4 in Novy’s preliminary report improperly opined that “TMS failed to properly audit the loan file from Wallick & Volk and therefore accepted all liability and risks.” Novy relied on HUD regulations to reach this conclusion. TMS also argued that Novy did not identify the correct HUD regulations in his deposition testimony.

    The Court found that this statement is an improper legal conclusion because Novy concluded that TMS violated HUD standards and accepted liability. As an expert, Novy may address the factual question of whether TMS deviated from the customs, practices, and standards of the mortgage industry, but not the ultimate legal issue of whether TMS is liable. 

    TMS also argued that Novy improperly testified that Chelsie Dominguez “had no obligation to provide TMS with the Perkin Insurance Policy” because he “had not reviewed the Deed of Trust” to verify who was required to provide proof of insurance. In fact, Novy’s report explained that he did review the Deed of Trust. He testified at this deposition that he did so but could not “recollect the exact wording in there.” Therefore, the Court found this testimony reliable.

    Supplemental Report Opinion No. 5

    TMS argued that Novy’s opinion number 5, concluding that TMS failed to service the loan to HUD standards, was unreliable. TMS failed to develop this argument. The Court found that Novy’s conclusion was reliable because he had “a sufficient basis to support an opinion.”

    Novy relied on TMS procedures, loan servicing records, deposition testimony, HUD QC Audit Checklist, and his knowledge of industry standards and practices.

    The Court reserved the question of whether Novy’s opinion that TMS did not service the loan to HUD standards as an improper legal conclusion for trial.

    Supplemental Report Opinion No. 6

    TMS argued that Novy’s opinion number 6, which concluded that TMS failed to properly monitor its subcontractor work, was unreliable because he never managed or oversaw an insurance vendor.

    The Court found that Novy’s opinion is reliable. Novy testified that he relied on the deposition testimony of Linda Case, who was responsible for managing Assurant, TMS’s servicing vendor. Novy also relied on HUD regulations and “QC plan standards.” 

    Supplemental Report Opinion No. 7

    TMS argued that Novy’s opinion number 7, which concluded that it was improper of TMS to place Plaintiffs’ loan in default status, was unreliable because Novy testified that he did not know the reason the loan was put in default status.

    The Court found Novy’s opinion reliable because he had “a sufficient basis to support the opinion.” Novy reviewed TMS procedures, loan servicing records, deposition testimony, and HUD QC Audit Checklist, which includes property insurance verification. Using these materials and his expertise, Novy concluded that it was improper to put the loan in default status. 

    Supplemental Report Opinion No. 8

    TMS argued that Novy’s opinion number 8, concluding that TMS did not follow FHA (“Federal Housing Administration”) Guidelines to ensure that hazard insurance is filed and settled “expeditiously,” was unreliable because Novy testified that he had no opinion as to the industry standard timing. 

    The Court found Novy’s opinion reliable because his conclusion was based on his knowledge and experience from the industry. Novy testified that HUD does not set a timeline but that “based on [his] 30-plus years of experience” the timing should be between 30 days to 90 days.

    Held

    The Court granted in part and denied in part the Defendant The Money Source, Inc.’s motion to exclude expert Curtis Novy’s reports and testimony. It also struck Curtis Novy’s declaration.

    Key Takeaway:

    Novy reviewed TMS procedures, loan servicing records, deposition testimony, and HUD QC Audit Checklist and used his extensive knowledge of industry standards and practices to arrive at his conclusions. However, Novy may address the factual question of whether TMS deviated from the customs, practices, and standards of the mortgage industry, but not the ultimate legal issue of whether TMS is liable. 

    Case Details:

    Case Caption: Dominguez Et Al V. Wallick And Volk Incorporated Et Al
    Docket Number: 2:22cv768
    Court: United States District Court for the District of Arizona
    Order Date: August 23, 2024
  • Mortgage Expert Witness’ Statements regarding TILA Rescission Held to Amount to a Legal Conclusion

    Mortgage Expert Witness’ Statements regarding TILA Rescission Held to Amount to a Legal Conclusion

    This case involved claims under the federal Truth in Lending Act (“TILA”) regarding alleged errors in a loan arranged between Plaintiff and Defendant, as well as claims of slander of title, quiet title, and wrongful foreclosure. Beginning in 2006, Plaintiff owned residential property in Sandy, Utah (the “Property”). Defendant Veritas Funding, LLC is a mortgage lending company based in Midvale, Utah. On June 11, 2018, Plaintiff obtained a Fannie Mae Homestyle Renovation Loan for $370,500.00 from Defendant to remodel the Property, funding the loan by executing a deed of trust.

    Plaintiff had stopped making loan payments to Veritas in February 2020, claiming that Defendant’s lending process “was fraught with continual material disclosure errors.” Plaintiff sent a Notice of Rescission to Defendant on May 13, 2020, recorded with the Salt Lake County Recorder’s Office on June 18, 2020. On April 16, 2021, Defendant entered a Notice of Default and Election to Sell the Property (“Default”) and served the notice to Plaintiff. Plaintiff had until July 16, 2021, to cure the Default.

    Plaintiff brought this action on May 31, 2021, in the Third Judicial District Court, Salt Lake County, Utah, subsequently removed to Utah District Court on July 13, 2021. Plaintiff recorded a Lis Pendens on the Property with the County Recorder on October 4, 2021, also filed with the Court.

    On September 22, 2023, Plaintiff filed a motion for partial summary judgment on the grounds that her Notice of Rescission was valid and proper due to Defendant’s material disclosure errors in violation of the TILA, and Defendant’s subsequent foreclosure of Plaintiff’s home was therefore unlawful. The Defendants filed a motion for summary judgment on the exact same date alleging that (1) Plaintiff’s TILA rescission claim failed as a matter of law because she did not and could not tender the loan principal; (2) Plaintiff’s damages claims related to TILA violations, including actual damages, statutory damages, attorney fees, and finance charges were time-barred; and (3) Plaintiff’s claim for wrongful foreclosure was not supported by evidence of fraud in the foreclosure proceedings.

    Plaintiff had served Defendant with the expert report of Nelson Locke, whose testimony the Defendant sought to exclude in its entirety.

    Mortgage Expert Witness

    Nelson A. Locke has been an active Mortgage Loan Originator and Mortgage Banker from 1991 to 2013. While an active Mortgage Loan Originator and Mortgage Banker, he originated, underwrote, or approved approximately $450,000,000 of residential forward and reverse mortgage loans. From 2003 to 2013, he was the Legal and Compliance Manager for Value Financial, a Florida based HUD approved Direct Endorsement Lender. From 1991 to 2003, he was the CEO and Chairman of Amstar Financial Services, a publicly traded national HUD FHA Mortgage Banker headquartered in Florida. Since 1996, he has been a member in good standing of the Florida Association of Mortgage Professionals (“FAMP”), the largest state Mortgage Originator Association in the country, and a former President of that Association. While he was President, he wrote, produced, and hosted a public television series entitled “Ask Mr. Mortgage.”

    Discussion by the Court

    Federal Rule of Evidence 702 allows an expert to testify if the proponent has demonstrated by a preponderance of the evidence that:

    (a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; 

    (b) the testimony is based on sufficient facts or data;

    (c) the testimony is the product of reliable principles and methods; and

    (d) the expert’s opinion reflects a reliable application of the principles and methods to the facts of the case.

    The Defendant’s motion against Locke did not challenge his qualifications per se but was concerned with part (a) of Rule 702. Defendants objected to Locke’s expert opinions by arguing that “they were the type of impermissible legal analysis that attempt to usurp the role of the judge and jury and also because they exceeded their scope by improperly attempting to instruct the Court that Plaintiff had suffered various damages.”

    Plaintiff responded by asserting that Locke had the requisite qualifications and that his testimony was relevant and reliable.

    The Court observed that Locke, one of America’s foremost mortgage compliance experts, reviewed the Plaintiff’s Complaint, Defendant’s Answer, documents produced by the parties, and the origination and processing of Plaintiff’s Homestyle residential mortgage loan by Defendants in preparation to give his testimony.

    Locke’s assignment scope involved assessing Defendant’s handling of Plaintiff’s Homestyle Loan, examining the impact of rescission on foreclosure, and considering potential violations of Truth in Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), and Unfair, Deceptive, or Abusive Acts or Practices (UDAAP). Locke also aimed to consider any other civil torts present in the case file.

    Defendant argued that Locke’s expert report contained numerous instances where he offered legal conclusions regarding the alleged facts of the case. For instance, Defendant pointed out that Locke’s statements regarding TILA rescission appeared to resemble legal opinions. Locke referenced relevant statutes and Supreme Court caselaw before concluding with his opinion that Plaintiff complied with both the timing and form of notice requirements, and that all of Plaintiff’s funds should have been immediately returned. Defendant asserted that admitting Locke’s “array of legal conclusions” concerning nearly every element of Plaintiff’s burden of proof could have undermined the Court’s duty to establish the law and the jury’s ability to apply it to the evidence.

    The Court granted in part Defendant’s motion to exclude Locke’s testimony. Testimony offering legal conclusions about the elements of the case Plaintiff was required to prove at trial was excluded. However, to the extent that Locke’s expert testimony provided helpful information to the jury regarding the process of obtaining a Homestyle Loan, or otherwise provided context for the mortgage process and other fact issues based on his expertise, it was not excluded.

    As for Plaintiff’s motion for partial summary judgment, the Court observed that Plaintiff sent a notice of rescission outside the three-day period, and none of the other required steps in 15 U.S.C. § 1635(b) were completed. The Court denied Plaintiff’s motion because Plaintiff’s Notice of Rescission was not enough alone to make the rescission complete.

    Coming to the Defendant’s motion for summary judgment, the Court held that Defendant cannot require Plaintiff to prove her ability to tender the loan proceeds without first petitioning the Court for an equitable reordering of the TILA rescission process. It was noted that Defendant had made no motion requesting that the Court alter the TILA rescission procedure. Therefore, summary judgment in favor of Defendant due to Plaintiff’s alleged inability to tender the loan proceeds was inappropriate and was denied.

    However, because the statute of limitations contained in 15 U.S.C. §1640(e) applied to Plaintiff’s damages claim and Plaintiff filed her damages claim three years after the alleged violations and consummation of the sale, the Court granted summary judgment for Defendant on Plaintiff’s damages claim.

    Defendant’s knowledge of the initiation of the timely rescission process and its failure to comply with the requirements of TILA after receiving notice of rescission indicated a genuine dispute of material fact as to the existence of unfair dealing in the foreclosure sale process. If the Plaintiff timely rescinded the loan from Defendant, the trust deed executed through the foreclosure sale became void. The Plaintiff had plausibly alleged that her interests were sacrificed based on Defendant’s improper foreclosure of the Property. Defendant was not entitled to summary judgment on the wrongful foreclosure claim based on the Court’s earlier order denying a continued stay of foreclosure. While the Court denied the Plaintiff’s request for continued injunctive relief, the merits of her claim remained to be determined. Therefore, the Court denied summary judgment for Defendant on the wrongful foreclosure claim.

    As of February 26, 2024, the Defendant filed a motion requesting the Court to reconsider the the Memorandum Decision denying Veritas’s Motion for Summary Judgment on Plaintiff’s TILA Rescission Claim.

    Held

    Plaintiff’s motion for partial summary judgment was denied by the Court while the Defendant’s Motion for Summary Judgment was granted in part and denied in part. The Court also granted in part Defendant’s motion to exclude Plaintiff’s Proposed expert Nelson Locke.

    The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.

    Key Takeaways:

    Locke, recognized as a leading mortgage compliance expert in the United States, was evaluated based on his qualifications and the relevance of his testimony within the scope of Rule 702. His analysis focused on assessing the Defendant’s handling of the Plaintiff’s mortgage loan and potential violations of various acts, demonstrating the importance of expert testimony directly addressing the case’s issues. However, the Court differentiated between permissible expert opinions providing helpful information to the jury regarding the mortgage process and impermissible legal conclusions, excluding the latter to avoid usurping the judge and jury’s role in interpreting the law. This decision highlights the necessity of expert testimony adhering to Rule 702’s criteria, including relevance, reliability, and staying within the expert’s scope of expertise.

    Case Details:

    Case Caption: Drummond V. Veritas Funding
    Docket Number: 2:21cv423
    Court: United States District Court, Utah
    Citation: 2024 U.S. Dist. LEXIS 22232
    Order Date: February 7, 2024