MReport September 2018

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60 | TH E M R EP O RT SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T LOCAL EDITION Judge Upholds $96.2M Jury Verdict Against BBVA Compass THE JUDGEMENT ALSO UPHELD THE DEMAND FOR A $40 MILLION REPAYMENT FOR PUNITIVE DAMAGES. TEXAS // A Dallas judge has entered a $96.2 million judgment supporting the fraud findings and the bulk of a December 2017 jury verdict against BBVA Compass. The bank and one of its executives were found guilty of fraud during loan-renewal and modification negotiations with David Bagwell, a Tarrant County, Texas developer. The recent judgment by Dallas County State District Court Judge Staci Williams preserves all but one portion of the original $98 million jury verdict and adds pre- and post-verdict interest. The judgment also preserves the jury's demand that BBVA make a $40 million payment to Bagwell for punitive damages, in addition to the amount slotted for the actual damages. The 2017 verdict had included payments of around $38 million to Bagwell and $20 million to his related business entities. BBVA Compass disagreed with the 2017 verdict. A bank spokes - person told Dallas News BBVA strongly disagreed with the jury's findings and "will pursue all ac- tions to remedy what it feels is an unfair verdict, including an appeal upon the judgment." The lawsuit filed by Bagwell stemmed from his efforts to modify loan terms for his projects during the 2008–09 financial crisis. According to a statement by Boyd Powers Williamson, the legal firm that represented the de - veloper, the trial jurors had agreed that BBVA Compass had commit- ted fraud during a renegotiation of terms and conditions of the devel- oper David Bagwell's financing for three high-end housing projects in Colleyville, Texas. The evidence presented during the trial showed that during the 2008–09 housing crisis, BBVA Compass had "deceived Bagwell about the status of efforts to refinance his loans," the statement by Boyd Powers Williamson said. Additionally, it said that the bank had assured Bagwell that "his loans were being renewed while the bank was simultane - ously working in secret to sell the loans at a steep discount to a competing developer. Once the new developer acquired the debt, partnerships associated with the developments were forced into bankruptcy and lost control of the properties." Webinar Addressed Zombie Homes THE EVENT REVOLVED AROUND THE CHALLENGES OF AND SOLUTIONS FOR ZOMBIE HOUSES. MReport's sister publication DS News and sponsor Altisource Field Services presented an exclusive, complimentary webinar re - cently entitled "Zombie Homes— Challenges and Guidance." This event united subject matter experts in a discussion of the unique challenges zombie homes pose. Those challenges range from servicer responsibilities, legal chal - lenges, and property-preservation demands involved with maintain- ing due diligence for these proper- ties often caught in a legal limbo. Zombie homes are vacant properties generated in the midst of the foreclosure process that are not yet under the control of the servicer or noteholder. Often, they are created as a result of well- meaning legislators and regulators attempting to help borrowers by extending foreclosure processes. In judicial foreclosure states, the foreclosure process can drag on for more than 1,000 days, during which these properties may be uninhabited and falling into disrepair, thereby posing safety risks, as well as driving down local property values. Unfortunately, the process of dealing with zombie properties is complicated by statutes and regulations that vary wildly, starting with variations on the basic definition of what constitutes a vacant or abandoned property in the first place. DS News' "Zombie Homes— Challenges and Guidance" webinar featured presentations and insights from moderator Rick Sharga, EVP, Carrington Mortgage Holdings; Dawn Adams, SVP, Default Servicing, RoundPoint Mortgage Servicing; Stephen Hladik, Partner, Hladik, Onorato & Federman; and Timothy Meyer, SVP of Field Services, Altisource. After a quick rundown of the current state of zombie properties, most prevalent in states such as New York, New Jersey, Florida, Illinois, and Ohio, moderator Rick Sharga handed the discussion off to Dawn Adams. She delved into the challenges presented by the lack of standardized definitions as to what constitutes a zombie property, and how expedited foreclosures can help combat the zombie properties problem. Stephen Hladik then walked attendees through the complex web of legal challenges zombie homes present, and how some states such as Pennsylvania are passing new legislation to aid in the fight against these abandoned properties. Finally, Altisource's Timothy Meyer covered the property- preservation angle, discussing inspections, repairs, compliance, and complaint resolution, plus highlighting how field servicers should partner with local govern - ments to combat urban blight. LOCAL EDITION SERVICING

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