Rhodes Litigation:
On January 9, 2006, a class action lawsuit was filed naming Fieldstone Mortgage in the Northern District of Illinois (Eastern Division) alleging violations of the Fair Credit Reporting Act (”FCRA”). The class action is entitled Rhodes v. Fieldstone Mortgage Company. Plaintiff alleges that Fieldstone Mortgage violated the firm offer of credit guidelines encapsulated in 15 U.S.C. §1681 et seq. during its mail marketing campaign in or around April 2005. Specifically, Plaintiff alleges that Fieldstone Mortgage did not comply with the statutory guidelines for providing a firm offer of credit to the potential consumer. Pursuant to 15 U.S.C. §1681 et seq., statutory damages can range from $100 to $1,000 per mailing in the event that the violation is deemed willful. In July 2006, Plaintiff filed a motion for class certification. This action is currently in the discovery stage.
Due to the uncertain nature of the litigation at this time, we are unable to estimate the probable outcome of this matter. While we intend to continue to vigorously defend this claim and believe we have meritorious defenses available, there can be no assurance the Company will prevail and that an adverse outcome would not have a material effect on the Company’s results of operations.
Arredondo Litigation:
Arredondo, et al. v. Fieldstone Investment, et al., is an action filed on August 3, 2004 in the United States District Court for the District of Arizona by nine former employees of Fieldstone Mortgage Company alleging that their supervisors and co-workers created a hostile work environment resulting from gender discrimination, racial discrimination and retaliation in the workplace pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e, and the Civil Rights Act of 1866, 42 U.S.C. §1981, as amended by the Civil Rights Act of 1991, 42 U.S.C. §1981(a). Plaintiffs claim that they are entitled to money damages in the form of back pay and front pay and nominal, compensatory and punitive damages, costs and attorney fees and equitable relief. We filed our answer denying all relevant claims on August 25, 2004. In addition, we filed a variety of motions seeking to have some of the plaintiffs dismissed from the lawsuit for failure to exhaust their administrative remedies, to dismiss other claims as not being permitted under the statute, and finally to sever the plaintiffs for trial purposes. Plaintiffs filed a response to our motion to dismiss, sever or in the alternative, bifurcate, and on April 18, 2005, our motion to dismiss was denied. On December 27, 2005, one of the named Plaintiffs, Berinda Arredondo, requested and was dismissed from the litigation. The discovery cutoff date was May 31, 2006.
Due to the uncertain nature of this litigation at this time, we are unable to estimate the probable outcome of this matter. The plaintiffs in this matter have not specified damages sought and therefore we are unable to estimate potential exposure.
Fieldstone Mortgage Company, one of the nation’s leading non-conforming lenders, originates loans through wholesale and retail channels through its network of thousands of independent mortgage brokers and its branch offices in twenty-seven (27) states throughout the country.
Fieldstone employs a full staff of highly qualified individuals and has as its senior officers a number of seasoned mortgage banking and capital markets professionals who average more than twenty (20) years’ experience each in the mortgage industry. Since its founding, Fieldstone has been one of the fastest growing mortgage lenders, offering a broad range of flexible mortgage solutions to serve almost any borrower.
At Fieldstone, we take great pride in our strong relationships and ensure that our customers receive the highest level of service from our Team. As an Equal Opportunity Lender, Fieldstone strives to make mortgage lending easier and more affordable for borrowers that do not meet the requirements of traditional lenders.