While mortgage servicers are getting their hats handed to them on a collective basis, a federal judge is taking issue with Wells Fargo over their dealings with a single homeowner, to the tune of $3.1 million in punitive damages. The bankruptcy judge called Wells Fargo’s behavior “highly reprehensible” in the recent decision.

The Huffington Post reports on Judge Elizabeth Magner’s ruling in the Eastern District of Louisiana, where she ordered the bank to fork over the cash to a New Orleans homeowner after five years of litigation. It’s one of the biggest fines ever for mortgage-servicing misconduct.

“Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed,” Magner writes in the decision. “But perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods.”

In this case, Magner ruled in 2007 that Wells Fargo had improperly charged the homeowner more than $24,000 in fees, due to a problem in the automated system the bank used to account for his loan payments. He fell into default, and Magner said the bank shouldn’t have applied his mortgage payments to interest and fees, and instead of to his principal. That caused a whole slew of fees and interest, she ruled, that were improperly applied even after he declared bankruptcy.

Magner’s been on the case in previous mortgage disputes — including an earlier case that was overturned in appeals court that would’ve forced Wells Fargo to audit and provide a full accounting for more than 400 home loans in her jurisdiction.

Of course, Wells Fargo isn’t taking this turn of events lying down, and say they’re considering an appeal.

“The ruling handed down by the court in an individual bankruptcy case covers allegations going back more than six years and ignores significant changes in servicing practices that have occurred since that time,” said a spokesman in a statement. “We believe that there are numerous factual and legal problems with the opinion and are reviewing our options regarding an appropriate legal response.”

Wells Fargo is one of the five big banks that recently agreed to a $25 billion settlement with the government over mortgage-servicing issues, so this separate fine has got to smart just that little extra bit.

*Thanks for the tip, Brian!

Wells Fargo Slapped With $3.1 Million Fine For ‘Reprehensible’ Handling Of One Mortgage [Huffington Post]

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