PRMI Ordered To Pay $20M For Defaults

Primary Residential Mortgage Inc. has a legal bill of more than $20 million after losing its fight over defaulted mortgages.

The lawsuit stems from mortgages PRMI sold to Residential Funding Co. (RFC) ahead of the 2008 financial crash.

RFC then securitized the loans, but when they defaulted, the trusts that bought the securities sued.

RFC went bankrupt, filing a Chapter 11 petition to reorganize its finances in 2012, and as part of the reorganization plan, RESCAP liquidating trust was created to go after lenders like PRMI for damages.

In 2020, a judge sided with RESCAP and ruled that PRMI was responsible for $5.4 million for defaulted loans, and another $16.6 million in various legal costs. An appellate judge in Minnesota has now upheld that decision.

PRMI says it did not breach the terms of the sale, but the judge ruled that the contract clearly gave RFC sole power to make that determination. That power then transferred to RESCAP.

PRMI also raised several claims that the court would  “[i]nvite unfairness, speculation, and false precision" by accepting RESCAP’s calculation of damages.

The appellate judge disagreed, saying RESCAP followed both Minnesota law and past court rulings in coming up with the number.