A federal judge dismissed a lawsuit by a class of people victimized by the owner of a defunct mortgage company who allegedly operated a mortgage fraud scheme. In the ruling, U.S. District Judge James Giles said the banks that underwrote the mortgages had no obligation to monitor the Reading, Pennsylvania-based broker, Wesley Snyder, and that neither Synder or any of his companies were agents of the lenders.
Plaintiffs Douglas A. and Andrea M. Jones filed their initial class action complaint in the Berks County Court of Common Pleas on September 25, 2007, naming twenty-four companies plus “John Doe Mortgage Companies” as defendants. Defendant Countrywide Home 1 Loans, Inc. removed the lawsuit to federal court on October 16, 2007. Plaintiffs’ Second Amended Complaint named over two dozen plaintiffs and amended the list of defendants. In that Complaint, Plaintiffs alleged that several Pennsylvania companies, owned or controlled by Wesley Snyder, were the servicing agents and loan originators for each defendant. Plaintiffs allege that the Snyder Entities offered them “Equity Slide Down Mortgages” as part of what Plaintiffs allege was a mortgage servicing Ponzi scheme. Plaintiffs allege that Defendants failed to monitor and supervise the Snyder Entities, which did not credit Plaintiffs properly for payments and pre-payments of interest and principal on their mortgages. Plaintiffs further allege that, following the bankruptcy of the Snyder Entities, Defendants failed to notify Plaintiffs properly that they had taken over as servicing agents on the mortgage loans and demanded payments from Plaintiffs in amounts substantially higher than owed on the loans serviced by the Snyder Entities.
Synder allegedly defrauded 811 borrowers and 31 investors out of $29 million. The borrowers had sought to have their lost mortgage payments apply to their remaining loan balance, alleging that Snyder had acted as the banks’ agent. However, Judge Giles found that Snyder was not an agent of the lenders, and as such, dismissed the complaint.
Snyder pleaded guilty in November to a federal charge of mail fraud.