Loan processor's suit accuses Ryland Mortgage She says she was fired for refusing to falsify

Mortgages

February 29, 1996|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

A former loan processor for Ryland Mortgage Co. who says the lender fired her for refusing to falsify and alter documents to approve mortgages is seeking more than $5 million in damages.

Kellie D. Nau, who worked in the Lutherville branch for two years through last April, filed suit Monday in Baltimore County Circuit Court against the lender and its branch manager, Deborah L. Brothers.

Ms. Nau contends that the branch manager and other employees altered, falsified and completely fabricated documents, such as explanations of credit histories, employment verification and tax returns, to push through potentially troubled loans -- usually without the applicants' knowledge.

As one of three people in the 20-person branch who gathered documentation to show applicants qualified for loans, Ms. Nau objected. But she was told on several occasions that she would lose her job if she refused to cooperate, the suit says.

Ms. Nau, 35, who now works for a savings bank on Long Island, N.Y., could not be reached yesterday.

However, her attorneys said the practice of doctoring information was fairly widespread at the Lutherville branch.

"This was not an isolated event," said Avalon Brandt Williams, an attorney for Ms. Nau.

Anne Madison, spokesman for Columbia-based Ryland Group Inc. -- the nation's third-largest homebuilder -- said yesterday that the mortgage subsidiary could not comment until after being legally served with the complaint.

Ms. Brothers left the company voluntarily in early February, Ms. Madison said. Reached at her Lutherville home last night, Ms. Brothers declined to discuss the lawsuit.

In the spring of 1994, about a year after she began working for Ryland -- first in a temporary job -- Ms. Nau discovered that the branch manager and other employees were altering mortgage-related documents -- a practice that continued through early 1995, the complaint says.

For instance, according to the suit, when one applicant had poor credit, Ms. Brothers wrote a letter fabricating a story that the applicant couldn't pay her bills because of her mother's long and fatal struggle with lymphoma. Ms. Brothers then forged the borrower's signature and approved the application, the suit says.

At other times, Ms. Brothers wrote false credit letters, without the prospective borrowers' knowledge, explaining poor credit with invented stories about the applicants or their relatives having been the victims of crimes such as rape or murder, the suit says. The manager also made up false documents containing statements from applicants, employers or relatives, forging signatures or copying them from other documents, Ms. Nau says in the complaint.

On more than one occasion, Ms. Brothers altered or told other employees to alter employment or tax information, such as employment dates or entries on income tax returns, according to the complaint.

A top producing office

The branch most likely used the methods to generate more loans, Ms. Nau's attorneys said. The Lutherville branch was one of Ryland's top producing offices, Ms. Williams said.

Ms. Nau complained to Ms. Brothers and to other supervisors, the lawsuit says. Finally, in mid-March, she learned that a job-verification form had been changed to show a more favorable period of employment, according to the suit. Ms. Nau confronted supervisors, telling them she knew that the document had been altered and that Ms. Brothers and others had worked on the file, the suit says.

In April, Ms. Brothers fired Ms. Nau, telling her it had to do with offices merging, said Lawrence E. Dube Jr., an attorney for Ms. Nau.

"She was told that she was being let go because of staffing levels and because somebody needed to be terminated," Mr. Dube said. "She was not told she was being terminated for misconduct or poor performance."

Ms. Nau is seeking punitive damages of $2.5 million from Ryland and $2.5 million from Ms. Brothers.

She is also seeking compensatory damages of $350,000 for mental anguish, pain and suffering and lost wages starting from last April.

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