Industry NewsMortgage

Libel suit against Mortgage ‘Implode-O-Meter’ to proceed

Judge rules lender may have been damaged by site's postings

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A judge in California has ruled that a popular Web site that maintains a list of "imploded" mortgage lenders must defend itself against a libel suit by a lender that was placed on the list and described as "gone" in a blog post heading. The Loan Center of California Inc. sued Aaron Krowne, a computer scientist and digital librarian who operates "The Mortgage Lender Implode-O-Meter" Web site in his spare time, after Krowne published an anonymous e-mail in April from a person claiming to be a laid-off credit officer. The e-mail alleged that the company had engaged in risky and fraudulent lending practices, that its owner was seeking bankruptcy protection, and that "only a skeleton crew remains to sweep up the mess." After the e-mail was published, attorneys for LCC Inc. allege, the company's warehouse lenders withdrew $3.8 million in funding -- or 75 percent of the company's cash on hand -- and took over ownership and servicing rights to many of LCC's loans. "These actions occurred as a...