A former executive at a California credit union has filed suit, alleging that he was wrongfully terminated for revealing a flaw in the credit union’s mortgage payment system. This flaw, he claims, has affected thousands of borrowers.
On Oct. 24, a one-time senior vice president of the San Diego County Credit Union filed a lawsuit in San Diego County Superior Court against his former employer. The wrongful termination lawsuit alleges that the credit union mismanaged mortgage servicing responsibilities. Specifically, the former executive claims that he warned the credit union that payments were not being applied correctly to loan principal and interest. Sometimes these were misapplied, other times they were not applied at all, according to the complaint. These warnings, he says, were ignored by SDCCU.
Specifically, the complaint alleges that when late payments that did not include a late fee were received by the credit union, they were not returned as insufficient. Instead, the payments were first applied to the late fee. This resulted in a lower payment on the principal balance and a higher interest charge due to the higher balance. He alleges that these errors may have affected up to 2,000 credit union members, and issuing refunds could cost the credit union up to half a million dollars. The complaint claims that the credit union knew about these issues in 2005, but did not correct them until 2011.
In retaliation for exposing this problem, the former vice president claims that he was wrongfully terminated. If true, the credit union could be liable for damages resulting from the firing. An attorney who has experience working with wrongfully discharged employees may be able to help investigate the termination and bring a lawsuit in civil court.
Source: U-T San Diego, “FORMER EXEC SUES SDCCU,” Jeff McDonald, Oct. 30, 2013.
Source: Credit Union Times, “