Loandepot, Cardinal sued over alleged deceptive practices

A pair of lawsuits have been filed in a Dallas County, Texas court separately alleging that Loandepot and Cardinal Financial violated the state's deceptive practices law when advising borrowers to miss payments on recently refinanced or modified mortgages.

These were filed by attorney Rogge Dunn, and each are seeking certification as class action suits. 

"The false and misleading advice given by Defendant to Plaintiffs induced Plaintiffs to enter or modify transactions with Defendant," both filings claimed.

The primary count in both filings involves allegations of violating the Deceptive Trade Practices Act. 

"By failing to disclose to consumers…the consequences of delaying, deferring and/or skipping mortgage payments in connection with the Transactions, You engaged in unconscionable actions and/or a course of action" that violated the DTPA, both legal filings read.

If anything, at one point in 2020, Cardinal did send a warning to borrowers about the consequences of missing payments through the forbearance process, Dunn said. But in the mortgages involving the plaintiffs in this case, Bernard Guinard and Joel Luna, as well as the potential members of the class, Cardinal did not provide this information.

"If Cardinal thought it was important to be transparent and upfront with consumers, back in April of 2020, why don't they send this article to every consumer every time somebody wants to skip a couple payments?" Dunn asked rhetorically during an interview. "Cardinal can't say it's no longer important to warn consumers that are thinking about skipping payments."

Loandepot never provided this warning to borrowers, he added. The plaintiffs in this action are Angela Colonna, Stephen Colonna and Avinash Daga

"The other issue is failure to disclose, 'hey, even though you're skipping payments, you're going to have to pay interest and that interest accrues, so it may not be in your economic interest to skip payments,'" Dunn said, creating the impression for some of the consumers that this course of action was a "no brainer."

Both Loandepot and Cardinal do not comment on ongoing litigation, both companies said in an emailed reply.

In May, Cardinal settled a lawsuit alleging it violated the Telephone Consumer Protection Act for $7.2 million.

Meanwhile, Loandepot was sued in November by West Virginia consumers who alleged it violated the state's consumer protection laws regarding fees charged when a borrower paid by telephone. That suit is also seeking class action status.

Loandepot's former chief operating officer Tammy Richards also filed a suit against the company over its underwriting and marketing practices, and has filed a counterclaim against her.