April, 2017 | FORECLOSURE FRAUD | by DinSFLA

Archive | April, 2017

A Whistle Was Blown, but Who Was Listening?

A Whistle Was Blown, but Who Was Listening?

NEW YORK TIMES-

The Securities and Exchange Commission calls itself the whistle-blower’s advocate. But one participant in the agency’s lauded whistle-blower program isn’t so sure.

He is Michael J. Lutz, an accounting specialist who raised his hand in early 2013 when he was at Radian Group, the giant mortgage insurer. At the time, Radian was still weathering the subprime crisis; it had insured loads of soured mortgages, and Mr. Lutz believed the company was lowballing the amount it might have to pay in claims on the loans.

Mr. Lutz, 31, worked at Radian’s headquarters in Philadelphia verifying that the company’s internal accounting controls were effective. This task is also known as Sarbanes-Oxley testing, named for the Enron-era legislation that bolstered the penalties for accounting fraud.

Radian was required to set aside reserves against potential losses on bad loans, and Mr. Lutz reckoned that his employer was materially understating those amounts. The company was looking to raise capital through a stock offering, and the lower the reserves, the better the company’s earnings would appear.

Continue reading the main story

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TFH 4/30 | Where Has All the Money Gone? — Exposing the Hidden Secrets Behind the Biggest Financial Fraud in American History

TFH 4/30 | Where Has All the Money Gone? — Exposing the Hidden Secrets Behind the Biggest Financial Fraud in American History

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

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Sunday –  April 30

Where Has All the Money Gone? — Exposing the Hidden Secrets Behind the Biggest Financial Fraud in American History
———————

The worst financial crisis since the Great Depression hit the American Economy in the late summer of 2008.

Millions suddenly became unemployed, losing trillions of dollars in payroll funds.

More than 12 million families have since been foreclosed on, estimated to have lost homes collectively exceeding 6 trillion dollars in value.

Another 12 million families are predicted to lose their homes to foreclosure in the next ten years; another 6 trillion dollars or more gone.

And upwards of 10 trillion dollars in pension money appears also to have been lost.

In addition, the federal government has spent over 16 trillion dollars to financially bail out affected companies, mostly banks and affected insurance companies, and another nearly 200 billion dollars supposedly to protect the solvency of Fannie Mae and Freddie Mac.

What happened to these lost tens of trillions of dollars — equal in amount to the present entire United States national debt?

And the above figures are conservative at best.

Incredibly, no one so far has figured that out — or has wanted to.

On past shows we have identified the huge cast of characters who ran the securitized trust casinos, collecting bloated commissions and ill gotten gains, using foreclosure courts in effect as collection agencies for crooks.

Among them have been brokers of all kinds, appraisers, loan servicers, insurance companies, insurance agents, securitized trustees, title companies, title officers, loan underwriters, portfolio underwriters, attorneys, process servers, robo-signers, government insiders, auction companies, auctioneers, storage companies, court commissioners, and more.

But all of the above system personnel combined have taken only a small fraction of the tens of trillions of dollars that appear to have disappeared.

This Sunday’s show will trace the money and highlight where the money actually has gone and where it is likely to go. Our listeners will be very surprised.

And if you are a homeowner that has already been foreclosed on, you might want to strap yourself to a weighty chair while listening to the show in order to control your anger, and count from one to ten trillion.

We are very proud to have as our guest on today’s show researcher and investigator Virginia Parsons.

Ms. Parsons is one of the founders of the foreclosure defense movement nationally, and she is responsible for uncovering much of the information presented on today’s show.

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Host: Gary Dubin Co-Host: John Waihee

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CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
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AND ON
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The Foreclosure Hour 12

 

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OCWEN FILES MOTIONS FOR RESTRAINING ORDERS AND INJUNCTIONS AGAINST ILLINOIS AND MASSACHUSETTS MORTGAGE REGULATORS

OCWEN FILES MOTIONS FOR RESTRAINING ORDERS AND INJUNCTIONS AGAINST ILLINOIS AND MASSACHUSETTS MORTGAGE REGULATORS

via: http://shareholders.ocwen.com/releasedetail.cfm?ReleaseID=1022780

Plans to appeal or respond to each of the remaining state mortgage regulator actions in the coming days
Continues to seek an acceptable resolution to resolve all state concerns

WEST PALM BEACH, Fla., April 25, 2017 (GLOBE NEWSWIRE) — Ocwen Financial Corporation, (NYSE:OCN) (Ocwen or the Company), today announced the filing of two emergency motions requesting immediate court action restraining the cease and desist orders brought by the Illinois Department of Financial and Professional Regulation, Division of Banking and the Commissioner of Banks of the Massachusetts Division of Banks.

As discussed in today’s legal filings, Ocwen believes that the Illinois and Massachusetts orders will cause significant harm to the consumers in those states, including potentially those consumers with pending mortgage applications, and those seeking loan modifications. Under these circumstances, Ocwen has a responsibility to its customers, shareholders, and employees to vigorously defend the Company. The allegations at issue do not arise out of a recent assessment of Ocwen’s business activities. Instead, they come from a 2015 multi-state examination of the Company’s mortgage servicing business by the Multi-State Mortgage Committee (MMC), which covered Ocwen’s activities from January 2013 to February 2015. The MMC concluded its examination well over a year ago, in December 2015.

Over the course of almost two years, Ocwen and the Company’s Board of Directors have been in regular communication with its state mortgage regulators, including those in Illinois and Massachusetts. During those communications, Ocwen shared information regarding the significant operational and programmatic enhancements that the Company has made. For example, as it relates to borrower escrow accounts, one of the primary areas of concern in the orders at issue, independent reviews have consistently confirmed Ocwen’s escrow practices are in line with common industry standards for timeliness and accuracy.

Ocwen plans to appeal or respond to each of the remaining state mortgage regulators actions in the coming days. In the meantime, Ocwen remains committed to working with Illinois, Massachusetts, and the other state regulators to resolve any valid concerns, and has commenced those efforts. Ocwen’s ability to help homeowners at risk of foreclosure remain in their home through responsible loan modifications continues to positively impact communities across the country. From January 1, 2008 through March 31, 2017 Ocwen has:

  • Granted a total of more than 735,000 loan modifications throughout the U.S. and provided $12 billion in principal forgiveness.
  • In Illinois, provided more than 36,800 loan modifications. Approximately 35 percent of these modifications included principal forgiveness totaling more than $746 million, or on average $58,300 per loan.
  • In Massachusetts, provided more than 17,300 loan modifications. Approximately 29 percent of these modifications included principal forgiveness totaling more than $294 million or on average $57,600 per loan.

About Ocwen Financial Corporation

Ocwen Financial Corporation is a financial services holding company which, through its subsidiaries, originates and services loans. We are headquartered in West Palm Beach, Florida, with offices throughout the United States and in the U.S. Virgin Islands and operations in India and the Philippines. We have been serving our customers since 1988. We may post information that is important to investors on our website (www.Ocwen.com).

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by a reference to a future period or by the use of forward-looking terminology.

Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Our business has been undergoing substantial change which has magnified such uncertainties. Readers should bear these factors in mind when considering such statements and should not place undue reliance on such statements. Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. In the past, actual results have differed from those suggested by forward-looking statements and this may happen again. 

Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the following: our servicer and credit ratings as well as other actions from various rating agencies, including the impact of downgrades of our servicer and credit ratings; adverse effects on our business as a result of regulatory investigations or settlements; reactions to the announcement of such investigations or settlements by key counterparties; increased regulatory scrutiny and media attention; claims, litigation and investigations brought by government agencies and private parties regarding our servicing, foreclosure, modification and other practices, including uncertainty related to past, present or future investigations, litigations, and settlements with state regulators, the CFPB, State Attorneys General, the SEC, Department of Justice or HUD and actions brought under the False Claims Act by private parties on behalf of the United States of America regarding incentive and other payments made by government entities; any adverse developments in existing legal proceedings or the initiation of new legal proceedings; our ability to effectively manage our regulatory and contractual compliance obligations; our ability to contain and reduce our operating costs, including our ability to successfully execute on our cost improvement initiative; the adequacy of our financial resources, including our sources of liquidity and ability to sell, fund and recover advances, repay borrowings and comply with debt covenants, including the financial and other covenants contained in them; volatility in our stock price; the characteristics of our servicing portfolio, including prepayment speeds along with delinquency and advance rates; our ability to successfully modify delinquent loans, manage foreclosures and sell foreclosed properties; uncertainty related to legislation, regulations, regulatory agency actions, government programs and policies, industry initiatives and evolving best servicing practices; as well as other risks detailed in Ocwen’s reports and filings with the Securities and Exchange Commission (SEC), including its annual report on Form 10-K for the year ended December 31, 2016 and any current and quarterly reports since such date.  Anyone wishing to understand Ocwen’s business should review its SEC filings.  Ocwen’s forward-looking statements speak only as of the date they are made and, we disclaim any obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise.

FOR FURTHER INFORMATION CONTACT:

Investors:
Stephen Swett
T: (203) 614-0141
E: shareholderrelations@ocwen.com 

Media:
John Lovallo
T: (917) 612-8419
E: jlovallo@levick.com

Dan Rene
T: (202) 973-1325
E: drene@levick.com
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Suit: Wells Fargo targeted ‘undocumented immigrants’ for accounts

Suit: Wells Fargo targeted ‘undocumented immigrants’ for accounts

SF CHRONICLE-

Wells Fargo branches across the country deliberately targeted “undocumented immigrants” to open savings and checking accounts in order to meet aggressive sales goals, according to court documents.

In sworn declarations obtained by Burlingame plaintiff’s attorney Joseph Cotchett, former employees describe a scheme in which Spanish-speaking colleagues would visit places they knew were frequented by immigrants (including construction sites and a 7-Eleven), drive them to a branch and persuade them to open an account. Some employees would give the immigrants $10 apiece to start an account. The events described in the declaration go back a decade.

 “The conduct we have come up with is scandalous,” Cotchett said. “It’s outrageous to think that regulators let the bank get away with this.”

[SF CHRONICLE]

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Walsh v. BANK OF NEW YORK MELLON TRUST | FL 5DCA – Such proof was insufficient to demonstrate standing because “standing cannot be established by simply filing a note with an undated indorsement or allonge months after the original complaint was filed.”

Walsh v. BANK OF NEW YORK MELLON TRUST | FL 5DCA – Such proof was insufficient to demonstrate standing because “standing cannot be established by simply filing a note with an undated indorsement or allonge months after the original complaint was filed.”

 

PATRICK WALSH AND CATHERINE WALSH, Appellants,
v.
BANK OF NEW YORK MELLON TRUST, ETC., ET AL., Appellees.

Case No. 5D15-1898.
District Court of Appeal of Florida, Fifth District.
Opinion filed April 21, 2017.
Appeal from the Circuit Court for Lake County, Carven D. Angel, Judge.

Mark P. Stopa, of Stopa Law Firm, Tampa, for Appellants.

Matthew A. Ciccio, of Aldridge/Pite, LLP, Delray Beach, for Appellee, Bank of New York Mellon Trust.

No appearance for other appellees.

PALMER, J.

Patrick and Catherine Walsh (borrowers) appeal the trial court’s final judgment of foreclosure entered in favor of Bank of New York Trust (the bank). Determining that the bank failed to prove standing, we reverse and remand for the entry of an involuntary dismissal.

“A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012) (citations omitted). Additionally, a “party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing.” Venture Holdings & Acquisitions Grp., LLC v. A.I.M Funding Grp., LLC, 75 So. 3d 773, 776 (Fla. 4th DCA 2011). Thus, in order to prove standing, the bank was required to introduce admissible evidence that it (or its agent) possessed a properly-indorsed note at the inception of the case. Focht v. Wells Fargo Bank, N.A, 124 So. 3d 308, 310-11 (Fla. 2d DCA 2013).

Here, the copy of the note attached to the original complaint did not contain any indorsements, and the copy of the note attached to the amended complaint contained an undated blank indorsement. Such proof was insufficient to demonstrate standing because “standing cannot be established by simply filing a note with an undated indorsement or allonge months after the original complaint was filed.” Sorrell v. U.S. Bank Nat’l Ass’n, 198 So. 3d 845, 847 (Fla. 2d DCA 2016) (citing Focht, 124 So. 3d at 310; Cutler v. U.S. Bank Nat’l Ass’n, 109 So. 3d 224, 226 (Fla. 2d DCA 2012)). In addition to introducing the note, the bank presented a witness who testified that, based on his review of the business records, the bank had possession of the note at the time the bank filed its complaint. Yet, his testimony was not based on personal knowledge, but rather, on his review of a screenshot, which was not offered or admitted into evidence. Thus, that testimony was also insufficient to prove standing. Therefore, the trial court committed reversible error in entering final judgment of foreclosure in favor of the bank. See Gonzalez v. BAC Home Loans Servicing, L.P., 180 So. 3d 1106 (Fla. 5th DCA 2015) (holding that the testimony of a witness regarding business records that are not entered into evidence at trial is insufficient to prove standing in a foreclosure case).

Accordingly, we reverse and remand for the entry of an involuntary dismissal. REVERSED and REMANDED.

COHEN, C.J., and SAWAYA, J., concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED

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Ocwen Financial Faces Boatloads of Complaints, The Courthouse News database contains more than 1,000 lawsuits against Ocwen since 2016

Ocwen Financial Faces Boatloads of Complaints, The Courthouse News database contains more than 1,000 lawsuits against Ocwen since 2016

Courthouse News-

In a lawsuit brimming with claims of wrongful foreclosures, deceptive, unfair and incompetent debt collection, the Consumer Financial Protection Bureau says more than 300,000 homebuyers in the past two years have complained about Ocwen Financial, one of the largest nonbank mortgage servicers in the country.

The 14-count federal lawsuit says Ocwen’s widespread mishandling of borrowers’ mortgage accounts violated a bevy of consumer protection laws.

“Ocwen has improperly calculated loan balances, misapplied borrower payments, failed to correctly process escrow and insurance payments, and failed to properly investigate and make corrections in response to consumer complaints,” the CFPB says in the April 20 complaint. “Ocwen has compounded these failures by illegally foreclosing upon borrowers’ loans and selling loan servicing rights to servicers without fully disclosing or correcting errors in borrowers’ loan files.”

[THE COURTHOUSE NEWS]

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CARVELLI v OCWEN FINANCIAL CORPORATION |  FL CLASS ACTION – accusing the company of inflating its share price through false and misleading statements

CARVELLI v OCWEN FINANCIAL CORPORATION | FL CLASS ACTION – accusing the company of inflating its share price through false and misleading statements

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

KAREN A. CARVELLI, Individually and
On Behalf of All Others Similarly Situated,
Plaintiff,

v.

OCWEN FINANCIAL CORPORATION,
RONALD M. FARIS, and MICHAEL R.
BOURQUE JR.,
Defendants

CLASS ACTION COMPLAINT

Plaintiff Karen A. Carvelli (“Plaintiff”), individually and on behalf of all other persons
similarly situated, by her undersigned attorneys, for her complaint against Defendants, alleges the following based upon personal knowledge as to herself and her own acts, and information and
belief as to all other matters, based upon, inter alia, the investigation conducted by and through her attorneys, which included, among other things, a review of the Defendants’ public documents, conference calls and announcements made by Defendants, United States Securities and Exchange Commission (“SEC”) filings, wire and press releases published by and regarding Ocwen Financial Corporation (“Ocwen” or the “Company”), analysts’ reports and advisories about the Company, and information readily obtainable on the Internet. Plaintiff believes that substantial evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery.

[…]

Down Load PDF of This Case

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OCC Wrist Slaps U.S. Bank National Association $15 Million for Bankruptcy Filing Violations

OCC Wrist Slaps U.S. Bank National Association $15 Million for Bankruptcy Filing Violations

Contact: Bryan Hubbard
(202) 649-6870

OCC Fines U.S. Bank National Association $15 Million for Bankruptcy Filing Violations

WASHINGTON—The Office of the Comptroller of the Currency (OCC) today assessed a $15 million civil money penalty against U.S. Bank National Association for bankruptcy filing violations.

The OCC found that, between 2009 and 2014, the bank engaged in filing practices in bankruptcy courts with respect to proofs of claim, payment change notices, and post-petition fees among others that did not comply with bankruptcy rules and constituted unsafe or unsound banking practices. Such bankruptcy filing violations occurred during the period the bank was under an April 2011 mortgage servicing-related consent order, which was terminated in February 2016.

The bank will pay the assessed penalty to the U.S. Treasury.

Related Link

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Powell v. WELLS FARGO BANK, NA |  FL 4DCA – neither party disputes the validity of the special indorsement appearing on the allonge filed with the original complaint, the Bank was required to prove a chain of transfers starting with the indorsee, GreenPoint Mortgage.

Powell v. WELLS FARGO BANK, NA | FL 4DCA – neither party disputes the validity of the special indorsement appearing on the allonge filed with the original complaint, the Bank was required to prove a chain of transfers starting with the indorsee, GreenPoint Mortgage.

 

MARA POWELL and GLENN KENNETH POWELL, Appellants,
v.
WELLS FARGO BANK, N.A., as Trustee for Structured Asset Mortgage Investments II Inc., Greenpoint Mortgage Funding Trust 2006-AR2, Mortgage Pass-Through Certificates Series 2006-AR2, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., CITY OF FORT LAUDERDALE, FLORIDA, and CITY OF LAUDERHILL, Appellees.

No. 4D15-3013.
District Court of Appeal of Florida, Fourth District.
April 19, 2017.
Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Barry J. Stone, Senior Judge; L.T. Case No. CACE08052451.

Rachel M. Coe of Polaris Legal Group, Lighthouse Point, for appellants.

Elliot B. Kula, W. Aaron Daniel and William D. Mueller of Kula & Associates, P.A., Miami, for appellee Wells Fargo Bank, N.A.

DAMOORGIAN, J.

Mara and Glenn Powell (“Borrowers”) appeal the trial court’s entry of a final judgment of foreclosure in favor of Wells Fargo Bank, N.A. as Trustee for Structured Asset Mortgage Investments II, Inc., GreenPoint Mortgage Funding Trust 2006-AR2, Mortgage Pass-Through Certificates, Series 2006-AR2 (“the Bank”) following a bench trial. Because the Bank failed to establish standing, we reverse the final judgment and remand for entry of an order of involuntary dismissal.

In 2005, Borrowers executed and delivered a note and mortgage to Bankers Mortgage Trust, Inc. (“the original lender”). In 2008, the Bank, in its capacity as trustee, filed a two count complaint against Borrowers after they defaulted on the loan, alleging one count for mortgage foreclosure and one count for reestablishment of a lost note. Therein, the Bank alleged that it was the “legal and/or equitable owner and holder of the Note and Mortgage and ha[d] the right to enforce the loan documents.” The copy of the note attached to the complaint contained no indorsements, however an allonge affixed thereto contained one undated, special indorsement from the original lender to GreenPoint Mortgage Funding, Inc. (“GreenPoint Mortgage”). The Bank later amended the complaint and dropped the lost note count.

In October 2013, nearly five years after the filing of the original complaint, the Bank filed with the trial court the “true and correct” original note. That note reflected the same affixed allonge bearing a special indorsement from the original lender to GreenPoint Mortgage. The back-side of that allonge, however, also reflected an additional undated, special indorsement from GreenPoint Mortgage to the Bank. A second, separate allonge was also filed with the original note and bore an undated, blank indorsement from the Bank.

The matter ultimately proceeded to a bench trial. At trial, the Bank presented its case through the testimony of a single witness, Pamela Bingham (“the witness”). The witness worked as a home lending research officer for JP Morgan Chase Bank, N.A. (“JP Morgan”) which serviced Borrowers’ loan on behalf of the Bank. Through the witness, the Bank introduced the original note and two allonges, including the allonge bearing a special indorsement from GreenPoint Mortgage to the Bank. The witness, however, was unable to testify as to when the special indorsement to the Bank was placed on the back-side of the first allonge, when the blank indorsement from the Bank was placed on the second allonge, or why the back-side of the first allonge and the second allonge altogether were not attached to either the original or amended complaint.

As to how the Bank purportedly became the holder of the note, the witness explained the following series of transactions. On January 17, 2006, an entity named EMC Mortgage Corporation (“EMC Mortgage”) purchased and acquired Borrowers’ loan and began servicing the loan. The witness was unable to specify from whom EMC Mortgage purchased Borrowers’ loan. The witness then testified that on March 1, 2006, Borrowers’ loan was placed in the “Structured Asset Mortgage Investments II, Inc., GreenPoint Mortgage Funding Trust 2006-AR2, Mortgage Pass-Through Certificates, Series 2006-AR2” trust via a pooling and servicing agreement (“PSA”). The PSA, which was thereafter admitted into evidence, listed Structured Asset Mortgage Investments II, Inc. as the Depositor, EMC Mortgage as Servicer, and the Bank as trustee. The PSA did not reference GreenPoint Mortgage or the Borrowers’ loan, nor was a mortgage loan schedule attached thereto. The witness then testified that in May 2008, JP Morgan acquired EMC Mortgage and all of its assets, including Borrowers’ loan. According to the witness, the original note had been in the continuous physical possession of either EMC Mortgage or JP Morgan since January 25, 2007.

At the close of evidence, the Bank candidly acknowledged that it could not establish standing as holder of the note in light of the witness’s testimony. The Bank therefore moved to amend the complaint to conform to the evidence presented at trial and to change its theory of standing from holder in possession to nonholder in possession with the rights of the holder. The court granted the motion and ultimately entered final judgment of foreclosure in favor of the Bank.

On appeal, Borrowers argue that the court erred in finding that the Bank had standing as a nonholder in possession with the rights of the holder because the Bank failed to prove the series of transactions through which it acquired the note from the original lender. The Bank counters that the witness’s testimony that Borrowers’ loan was purchased and placed in the subject trust in 2006, coupled with the PSA which reflects an effective date of March 1, 2006, sufficiently established the Bank’s standing as nonholder in possession. We disagree with the Bank.

“A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose” when the complaint is filed. McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). “If the note does not name the plaintiff as the payee, the note must bear a special [i]ndorsement in favor of the plaintiff or a blank [i]ndorsement.” Id. “When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person.” § 673.2051(1), Fla. Stat. (2015) (emphasis added).

“Where a bank is seeking to enforce a note which is specially indorsed to another, the bank is a nonholder in possession.” Bank of N.Y. Mellon Tr. Co., N.A. v. Conley, 188 So. 3d 884, 885 (Fla. 4th DCA 2016). “A nonholder in possession may prove its right to enforce the note through: (1) evidence of an effective transfer; (2) proof of purchase of the debt; or (3) evidence of a valid assignment.” Id. As this Court has made clear, “[a] nonholder in possession must account for its possession of the instrument by proving the transaction (or series of transactions) through which it acquired the note,” starting with the first holder of the note. Id. (citing Murray v. HSBC Bank USA, 157 So. 3d 355, 358 (Fla. 4th DCA 2015)).

In the present case, and because neither party disputes the validity of the special indorsement appearing on the allonge filed with the original complaint, the Bank was required to prove a chain of transfers starting with the indorsee, GreenPoint Mortgage. Aside from the witness’s testimony that EMC Mortgage purchased and acquired Borrowers’ loan from “someone,” the only evidence admitted at trial purporting to transfer the note was the PSA. The PSA, in turn, did not reference GreenPoint Mortgage or Borrowers’ note. Moreover, absolutely no testimony was adduced at trial which explained how the Depositor, Structured Asset Mortgage Investments II, Inc., acquired mortgage loans to convey in the first place. At most, the evidence at trial established that EMC Mortgage acquired Borrowers’ loan in 2006 and placed the loan in the trust, and that the Bank became the trustee. There was nothing, however, connecting the indorsee of the note, GreenPoint Mortgage, to EMC Mortgage or the Bank. In other words, the Bank failed to prove the series of transactions through which it purportedly acquired the note from the indorsee.

Accordingly, we reverse the final judgment and remand for entry of an order of involuntary dismissal of the foreclosure action.

Reversed and remanded.

MAY and CONNER, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

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Held v. US Bank NA | FL 4DCA- court erred in granting the bank’s motion because no record activity occurred during the sixty days after the court issued the notice of lack of prosecution

Held v. US Bank NA | FL 4DCA- court erred in granting the bank’s motion because no record activity occurred during the sixty days after the court issued the notice of lack of prosecution

 

JUDY HELD, Appellant,
v.
U.S. BANK NATIONAL ASSOCIATION, as Trustee for C-BASS 2007-CB7 Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-CB7, UNKNOWN TENANT #1, n/k/a JEAN PIERRE LOUIS, and UNKNOWN TENANT #2, n/k/a ROSE SEIDE, Appellees.

No. 4D15-4499.
District Court of Appeal of Florida, Fourth District.
April 19, 2017.
Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Sandra Perlman, Patti Englander Henning, and Cynthia Imperato, Judges, and Barry Stone, Senior Judge; L.T. Case No. CACE09032763(11).

Cristina Duarte of Cristina Duarte, P.A., Miami, for appellant.

Diana B. Matson of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Fort Lauderdale, for appellee U.S. Bank National Association.

GERBER, J.

The borrower appeals from the circuit court’s final judgment of foreclosure, which was entered after the court granted the bank’s motion to vacate an earlier final order of dismissal for lack of prosecution. The borrower argues, among other things, that the court erred in granting the bank’s motion because no record activity occurred during the sixty days after the court issued the notice of lack of prosecution, and the bank did not show good cause at least five days before the good cause hearing.

We agree with the borrower’s argument and reverse for reinstatement of the final order of dismissal. This opinion will present the procedural history before the circuit court, and then will provide our analysis.

Procedural History

In 2009, the bank filed the foreclosure action. In 2010, the borrower filed an answer and affirmative defenses. In 2011, the borrower filed a motion for leave to amend the answer and affirmative defenses. For the next two years, no further record activity occurred.

On July 30, 2013, a judge issued a notice of lack of prosecution. The notice advised the bank that no activity had occurred for a ten month period, and if no record activity occurred within sixty days following the notice’s service, the case would be dismissed pursuant to Florida Rule of Civil Procedure 1.420(e), unless the bank showed good cause in writing at least five days before a hearing as to why the court should not dismiss the case for lack of prosecution. No record activity occurred within sixty days following the notice’s service.

On August 30, 2013, the judge issued an order for the bank to show good cause in writing, at least five days before a hearing set for October 15, 2013, as to why the court should not dismiss the case for lack of prosecution.

On October 11, 2013 (four days before the hearing), the bank filed a status report stating the bank had terminated its original counsel’s services on or about August 16, 2013, and had retained new counsel. The bank requested, “[i]n the light of the foregoing . . . the court find good cause to prevent the instant action from being dismissed.”

It is unclear from the record, but somehow two contradictory orders, signed by two different judges, were issued on October 15, 2013. One order, signed by the judge who set the show cause hearing, dismissed the case for lack of prosecution. Another order, signed by a different judge, declined to dismiss the case for lack of prosecution, finding “good cause shown.” No hearing transcript exists in the record to explain either of these two contradictory orders.

In August 2014 (ten months after the contradictory orders were issued), the bank filed a verified motion to vacate the order dismissing the case for lack of prosecution. The bank alleged it appeared at the October 15, 2013 hearing, the court found good cause for the case to remain open, and the court inadvertently issued an order dismissing the case for lack of prosecution. The bank argued that Florida Rule of Civil Procedure 1.540(b) authorized the court to relieve the bank from the inadvertent issuance of the order dismissing the case for lack of prosecution.

A third judge held a hearing on the bank’s motion. The following excerpt encompasses the hearing’s substance:

[BANK’S COUNSEL]: Judge, this is the [bank’s] verified motion to vacate the order of dismissal. Looks like there was a lack of prosecution hearing. [The bank] appeared at the hearing, and the Court found good cause to keep the case pending.

At the same day of the hearing, the Court also inadvertently issued a dismissal for lack of prosecution.

So, our motion is to have that dismissal set aside, due to the Court making that mistake.

We’re moving under Rule 1.540(b), on this matter, it’s a verified motion . . . . The docket in this matter reflects on the date of the hearing, good cause was shown, and, again, we’re just saying it was an inadvertent mistake, and also the attorney who drafted the motion, as an officer of the Court, states that good cause was shown at the hearing, and the Court stated the case would remain pending. It was just a mistake.

[BORROWER’S COUNSEL]: Your Honor, our position is that the dismissal should not be vacated.

The notice of lack of prosecution was executed July 30 of 2013. There was no record activity within 60 days after that, which is what’s required pursuant to Florida Rule of Civil Procedure 1.420. And there was also no motion . . . to show good cause issued. . . .

[BANK’S COUNSEL]: There was nothing 60 days after the lack of prosecution. That’s why the Court issued an order to show cause, and at the order to show hearing, they did find good cause, and the [borrower] is arguing for, basically, for rehearing of the order to show cause. . . .

What’s before the Court is our [1.540] motion in the case, [as to the order] which entered the dismissal, which was entered in error by the Court.

THE COURT: Okay. Got it. Granted.

The third judge, pursuant to its oral ruling, issued a written order granting the bank’s motion to vacate the dismissal.

The borrower then filed a motion to vacate the order vacating the dismissal. The borrower argued, among other things, that pursuant to Florida Rule of Civil Procedure 1.420(e), the court was required to dismiss the case because the bank failed to comply with the requirement to show good cause in writing at least five days before the good cause hearing.

The third judge entered an order denying the borrower’s motion to vacate. A fourth judge then held a non-jury trial on the foreclosure action, and entered a final judgment of foreclosure in the bank’s favor.

This appeal followed. The borrower argues the third judge erred in granting the bank’s motion to vacate dismissal because no record activity occurred during the sixty days after the first judge issued the notice of lack of prosecution, and the bank did not show good cause at least five days before the good cause hearing.

Analysis

Our review is de novo. See Chemrock Corp. v. Tampa Elec. Co., 71 So. 3d 786, 790 (Fla. 2011) (“[W]e apply a de novo standard of review when the construction of a procedural rule is at issue.”)

We agree with the borrower’s argument. Florida Rule of Civil Procedure 1.420(e) (2013) states, in pertinent part:

In all actions in which it appears on the face of the record that no activity by filing of pleadings, order of court, or otherwise has occurred for a period of 10 months, and no order staying the action has been issued nor stipulation for stay approved by the court . . . the court, or the clerk of the court may serve notice to all parties that no such activity has occurred. If no such record activity has occurred within the 10 months immediately preceding the service of such notice, and no record activity occurs within the 60 days immediately following the service of such notice, and if no stay was issued or approved prior to the expiration of such 60-day period, the action shall be dismissed by the court on its own motion or on the motion of any interested person . . . unless a party shows good cause in writing at least 5 days before the hearing on the motion why the action should remain pending.

Fla. R. Civ. P. 1.420(e) (2013) (emphasis added).

Since 2005, our supreme court has held that rule 1.420 should be interpreted according to its plain meaning. See Wilson v. Salamon, 923 So. 2d 363, 369 (Fla. 2005) (“[W]e return to the plain meaning of the rule as specifically set forth in the words of the rule as discussed above.”); Chemrock, 71 So. 3d at 792 (“Our plain meaning interpretation of the rule in Wilson remains applicable to the current rule [as amended in 2006]”).

In the instant case, no record activity occurred within the 10 months immediately preceding the service of such notice, no record activity occurred within the 60 days immediately following the service of such notice, and no stay was issued or approved prior to the expiration of such 60-day period. It was not until four days before the hearing that the bank sought to show good cause in writing why the action should remain pending. Under rule 1.420(e)’s plain meaning, the bank’s good cause showing was untimely. Therefore, the judge who issued the final order of dismissal for lack of prosecution did so properly.

Our reasoning is consistent with our sister court’s reasoning in Turner v. FIA Card Svcs., N.A., 51 So. 3d 1242 (Fla. 3d DCA 2011). Given the opinion’s similarity to this case, we cite the opinion virtually in its entirety:

It is undisputed that there was no record activity for a period of ten months immediately preceding the trial court’s issuance of a Notice of Lack of Prosecution on November 24, 2009. It is also undisputed that no record activity took place during the sixty-day period following the court’s Notice. The court refused to dismiss the action because [the plaintiff] filed on February 1, 2010, a showing of good cause. The hearing on the Notice was set for February 5, 2010. Rule 1.420(e) provides that this showing of good cause must be made “at least 5 days before the hearing.” The trial court stated that the timeliness was “close enough.” We conclude that “close enough” is not “good enough.”

The Florida Supreme Court in Wilson v. Salamon, 923 So. 2d 363, 368 (Fla. 2005), created a bright-line rule that any filing would prevent dismissal pursuant to this rule. Likewise, any filing in the 60-day period following the notice or motion for lack of prosecution would qualify as record activity and would keep the case from being dismissed. The rule likewise specifies a bright line for providing good cause — “at least five days before the hearing.” The rule does not read more or less five days, or around five days. By filing the showing of good cause on February 1, [the plaintiff] did so four days before the hearing. If this is close enough, what about February 2, three days before? We believe that, just as the Florida Supreme Court sought to impose a bright line for keeping a case from being dismissed for lack of prosecution, we should impose a bright line for showing good cause, and if the rule states “5 days,” we can require no less.

Id. at 1242-43 (emphasis added; footnote omitted).

Based on the foregoing, we reverse the final judgment of foreclosure and remand for reinstatement of the final order of dismissal.

Reversed and remanded for reinstatement of final order of dismissal.

TAYLOR and KLINGENSMITH, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

TFH 4/23 |  Foreclosure Workshop #31: Dowers v. Nationstar Mortgage, LLC — The FDCPA, a Newly Improved and Expanded Weapon in Foreclosure Offense

TFH 4/23 | Foreclosure Workshop #31: Dowers v. Nationstar Mortgage, LLC — The FDCPA, a Newly Improved and Expanded Weapon in Foreclosure Offense

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Sunday –  April 23

Foreclosure Workshop #31: Dowers v. Nationstar Mortgage, LLC — The FDCPA, a Newly Improved and Expanded Weapon in Foreclosure Offense
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The Foreclosure Hour has discussed in depth for years a broad range of lender, securitized trust, and loan servicer abuses which mostly heretofore have escaped effective judicial scrutiny.

This lack of oversight has been simply because in most instances traditional common law defenses have proven to be largely inadequate remedies as narrowly interpreted by judges acting as “word robots” performing what in past shows we have termed “The Rule Ritual” rather than their applying “The Rules.”

On today’s show we discuss what is becoming the principal weapon of homeowners against mortgage abuse: The Fair Debt Collection Practices Act,” which for many homeowners, their attorneys, and Judges alike, has for too long been neglected as a borrower’s remedy.

The federal FDCPA not only is becoming a powerful weapon against mortgage abuse in a growing number of cases, but gives homeowners the right to an independent action and the right to a jury trial, which the latter we know is the equivalent in the mortgage industry to waiving a Christian Cross at a Vampire.

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Submit questions to info@foreclosurehour.com

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The Foreclosure Hour 12

 

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Shaffer v DEUTSCHE BANK NATIONAL TRUST | FL 2DCA- no other document introduced at trial shows that the Shaffer note and mortgage are included in the Deutsche Bank trust.

Shaffer v DEUTSCHE BANK NATIONAL TRUST | FL 2DCA- no other document introduced at trial shows that the Shaffer note and mortgage are included in the Deutsche Bank trust.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED

IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT

LINDA L. SHAFFER,
Appellant,

v. …………… Case No. 2D14-4205

DEUTSCHE BANK NATIONAL TRUST,
AS INDENTURE TRUSTEE FOR
AMERICAN HOME MORTGAGE
INVESTMENT TRUST 2006-1,
MORTGAGE BACKED NOTES,
SERIES 2006-1,

Appellee.

Opinion filed April 19, 2017.
Appeal from the Circuit Court for Manatee
County; George K. Brown, Jr., Senior Judge.

Jacqulyn Mack of The Mack Law Firm,
Englewood, for Appellant.

Kimberly S. Mello and Jonathan S.
Tannen of Greenberg Traurig, P.A.,
Tampa, and Patrick G. Broderick of
Greenberg Traurig, P.A., West Palm
Beach, for Appellee.

ROTHSTEIN-YOUAKIM, Judge.

Linda L. Shaffer appeals from a final judgment of foreclosure, arguing,
among other things, that Deutsche Bank National Trust, as Indenture Trustee for
American Home Mortgage Investment Trust 2006-1, Mortgage Backed Notes, Series
2006-1 (the Bank), lacked standing to foreclose. Because we agree that the Bank failed
to prove that it had standing at the inception of the suit, we reverse.1

In September 2009, the Bank filed a complaint against Shaffer for
mortgage foreclosure and to reestablish a lost note. Along with the complaint, the Bank
filed a copy of the May 2009 assignment of the mortgage to the Bank from Mortgage
Electronic Registration Systems, Inc., as nominee for the original lender, American
Home Mortgage Acceptance Inc. (AHMAI). Before trial, however, the Bank filed with
the court the original note and voluntarily dismissed the lost-note count. The note,
which was dated September 21, 2005, identified AHMAI as the payee and bore an
undated indorsement in blank.

At trial, Shannon Fretwell, a loan analyst for Ocwen, the note servicer,
testified regarding Ocwen’s boarding process and the documents that Ocwen had
received from the previous servicer. One of those documents was a limited power of
attorney (LPOA), effective July 2009, between the Bank and prior servicer American
Home Mortgage Servicing, Inc. (AHMSI). The LPOA authorized AHMSI to act on behalf
of the Bank in connection with, among other things, American Home Mortgage
Investment Trust 2006-1, which, according to an exhibit attached to the LPOA, was
dated March 29, 2006.

Based on her review of the LPOA, Fretwell testified that the loan had been
transferred into the trust on March 29, 2006. She subsequently explained that, by
“loan,” she meant “note,” and by “transferred,” she meant that the note had been made
“a party of the trust,” i.e., the trust had “owned” it. We note, however, that nothing in the
LPOA—or in any other document admitted at trial—establishes what American Home
Mortgage Investment Trust 2006-1 comprised, and Fretwell did not indicate the basis for
her testimony that the note itself had been transferred into the trust.2 We also note,
however, that Shaffer did not cross-examine her on that point despite having the
opportunity to do so.

Regardless, even accepting Fretwell’s testimony that the note itself was
transferred into the trust on March 29, 2006, there is no evidence establishing what
interest in the note AHMAI transferred to the Bank as trustee. There is no evidence
establishing when the blank indorsement had been placed on the note, and the Bank
did not properly introduce a copy of the Pooling and Servicing Agreement (PSA)
establishing the duties, rights, and obligations of the parties to the trust.3

“[E]vidence that the note was transferred into the trust prior to the
foreclosure action is insufficient by itself to confer standing because there [is] no
evidence that the indorsee had the intent to transfer any interest to the trustee.” Balch
v. LaSalle Bank N.A., 171 So. 3d 207, 209 (Fla. 4th DCA 2015); see also Jarvis v.
Deutsche Bank Nat’l Tr. Co., 169 So. 3d 194, 196 (Fla. 4th DCA 2015) (“[E]vidence that
the note was physically transferred into a trust prior to Deutsche Bank filing its
foreclosure complaint does not, by itself, establish standing.”). Absent any evidence
establishing the interest that AHMAI conveyed to the Bank when transferring the note
into the trust, we conclude that the Bank failed to establish standing, and we reverse
and remand with instructions for the trial court to enter an involuntary dismissal.

Reversed and remanded.

SILBERMAN, J., Concurs.
VILLANTI, C.J., Concurs specially with opinion.

VILLANTI, Chief Judge, Concurring specially.

I concur in the majority’s decision to reverse the final judgment of
foreclosure. I write separately to note that while I agree that Deutsche Bank’s evidence
was legally insufficient to establish its standing to foreclose, I do not agree with all the
reasons identified by the majority. I also write to express my concerns with several
aspects of current foreclosure practice and to suggest ways to alleviate them.

The record in this case shows that Deutsche Bank filed its unverified
foreclosure complaint on September 29, 2009. Attached to the complaint were a copy
of the Shaffer mortgage in favor of American Home Mortgage Acceptance, Inc.
(AHMAI), and a copy of a May 1, 2009, assignment of the mortgage to Deutsche Bank
from MERS. No copy of the promissory note was attached to the complaint. Several
months later, on February 5, 2010, Deutsche Bank filed the original promissory note,
which was in favor of AHMAI and which was endorsed in blank. Importantly, the
endorsement in blank was undated.

Apparently recognizing that the undated blank endorsement on the note
was insufficient to establish its standing to foreclose, Deutsche Bank offered at trial the
testimony of Shannon Fretwell, a loan analyst for Ocwen Financial Corporation, which
was the current servicer of the Shaffer mortgage. Through Fretwell, Deutsche Bank
offered evidence that Ocwen was the successor by merger to the original loan servicer,
American Home Mortgage Servicing, Inc. (AHMSI). Also through Fretwell, Deutsche
Bank introduced a copy of a limited power of attorney (LPOA) that authorized AHMSI to
act on behalf of Deutsche Bank in, among other matters, foreclosure litigation relating to
notes and mortgages held by Deutsche Bank in its capacity as trustee of a number of
asset and investment trusts. Fretwell testified that the LPOA established that the
Shaffer loan became part of the American Home Mortgage Investment Trust 2006-1,
Mortgage Backed Notes, Series 2006-1 (the trust) on March 29, 2006; however, she
admitted that her testimony was based solely on her review of the LPOA and not any
independent knowledge that she had of the note or the transaction.

Unfortunately for Deutsche Bank, a review of the LPOA does not support
Fretwell’s testimony. The LPOA, which is dated July 21, 2009, includes the trust on
behalf of which Deutsche Bank purports to be acting as trustee in the foreclosure
proceeding against Shaffer. However, nothing in the LPOA identifies any of the notes
or mortgages that make up any of the trusts to which the LPOA applies. And while we
will generally defer to a witness’s trial testimony on factual matters, we need not do so
when that testimony is nothing more than the witness’s interpretation of a document that
is equally available to this court. Cf. Emergency Assocs. of Tampa, P.A. v. Sassano,
664 So. 2d 1000, 1002 (Fla. 2d DCA 1995) (noting that the appellate court is on equal
footing with a trial court when interpreting a written document); Fla. Power Corp. v.
Lynn, 594 So. 2d 789, 791 (Fla. 2d DCA 1992) (noting that the interpretation of a written
document is a question of law, on which an appellate court need not defer to the trial
court). Hence, neither the LPOA nor Fretwell’s testimony establish when or if Deutsche
Bank took ownership of the Shaffer note, and so neither can establish that Deutsche
Bank had standing when the foreclosure complaint was filed.

In addition, no other document introduced at trial shows that the Shaffer
note and mortgage are included in the Deutsche Bank trust. The record shows that
prior to trial, Deutsche Bank filed a request for judicial notice, attached to which was a
partial copy of a Pooling and Service Agreement (PSA) relating to the applicable trust.
However, this PSA—a document personal to one of the parties—was not subject to
judicial notice under any of the provisions of either section 90.201 or section 90.202,
Florida Statutes (2014). Moreover, the unauthenticated PSA was simply attached to a
notice of filing, making it inadmissible at trial without further testimony. See, e.g., BAC
Funding Consortium Inc. ISAOA/ATIMA v. Jean-Jacques, 28 So. 3d 936, 939 (Fla. 2d
DCA 2010) (noting that an unauthenticated document attached as an exhibit to a motion
did not constitute admissible evidence); Ciolli v. City of Palm Bay, 59 So. 3d 295, 297
(Fla. 5th DCA 2011) (noting that an unauthenticated document attached to a
memorandum of law does not constitute competent evidence); Tunnell v. Hicks, 574 So.
2d 264, 266 (Fla. 1st DCA 1991) (noting that an unauthenticated letter attached as an
exhibit to a motion was not admissible and not properly before the court). Because the
PSA was not subject to judicial notice and because Deutsche Bank took no steps to
authenticate it or introduce it into evidence at trial, the PSA was not properly before the
court and cannot constitute evidence of Deutsche Bank’s standing.

In sum, Deutsche Bank offered no evidence to establish that it owned the
note on the date it filed the foreclosure complaint in this case, and it therefore failed to
prove that it had standing. Shaffer’s motion for involuntary dismissal should have been
granted without further ado. For this reason, I agree with the majority’s decision to
reverse the final judgment in this case.4

1Because we conclude that reversal is warranted on this ground, we
decline to address Shaffer’s other challenges to the judgment.

2The LPOA indicated that the trusts covered by its terms could include
mortgages, deeds of trust, retail installment contracts, or promissory notes.
3Before trial, the Bank requested that the trial court take judicial notice of a
partial copy of a PSA relating to the applicable trust. However, this PSA—a document
personal to one of the parties—was not subject to judicial notice under either section
90.201 or section 90.202, Florida Statutes (2014). Moreover, the unauthenticated PSA
was simply attached to a notice of filing and was, therefore, inadmissible at trial without
further testimony. See, e.g., BAC Funding Consortium Inc. ISAOA/ATIMA v. JeanJacques,
28 So. 3d 936, 939 (Fla. 2d DCA 2010) (noting that an unauthenticated
document attached as an exhibit to a motion did not constitute admissible evidence);
Ciolli v. City of Palm Bay, 59 So. 3d 295, 297 (Fla. 5th DCA 2011) (noting that an
unauthenticated document attached to a memorandum of law does not constitute
competent evidence); Tunnell v. Hicks, 574 So. 2d 264, 266 (Fla. 1st DCA 1991) (noting
that an unauthenticated letter attached as an exhibit to a motion was not admissible and
not properly before the court). Because the PSA was not subject to judicial notice and
because the Bank took no steps to authenticate it or introduce it into evidence at trial,
the PSA was not properly before the court and cannot constitute evidence of the Bank’s
standing.

4The majority cites to several cases that pertain to whether there was
evidence that “the indorsee had the intent to transfer any interest to the trustee.” Given
that Deutsche Bank offered no admissible evidence that the Shaffer note and mortgage
were ever transferred into the trust, I find these cases irrelevant to the issue of standing
before this court.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

OCWEN | COMMONWEALTH OF MASSACHUSETTS DIVISION OF BANKS — Temporary Order to Cease and Desist and Order

OCWEN | COMMONWEALTH OF MASSACHUSETTS DIVISION OF BANKS — Temporary Order to Cease and Desist and Order

COMMONWEALTH OF MASSACHUSETTS
DIVISION OF BANKS

IN THE MATTER OF:

OCWEN LOAN SERVICING, LLC
Debt Collector License No: DC0861
Mortgage Lender License No: ML1852
NMLS No. 1852
1661 Worthington Rd., Suite 100
West Palm Beach, FL 33409

Docket No. 2017-001


FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST AND
ORDER TO SHOW CAUSE AND NOTICE OF RIGHT TO A HEARING

 

The Division of Banks (“Division”) has determined that Ocwen Loan Servicing, LLC (“Ocwen” or “Company”), with its headquarter office located at 1661 Worthington Rd., Suite 100, West Palm Beach, Florida 33409, has engaged in, or is engaging in, residential mortgage loan servicing practices which violate State and Federal laws and fails to meet the requirements for a Massachusetts residential mortgage lender and debt collector.  Therefore, the Division hereby issues these FINDING OF FACTS AND TEMPORARY ORDER TO CEASE AND DESIST AND ORDER TO SHOW CAUSE AND NOTICE OF RIGHT TO A HEARING (“Order”) pursuant to General Laws chapter 255E section 6, and General Laws chapter 93, sections 24J and 24I.

JURISDICTION

WHEREFORE, the Division has jurisdiction over the licensing and regulation of persons and entities engaged in the business of debt collection and servicing residential mortgage loans in Massachusetts pursuant to General Laws chapter 93, sections 24-28 and implementing regulation 209 CMR 18 et seq.

WHEREFORE, the Division has jurisdiction over the licensing and regulation of persons and entities engaged in the business of residential mortgage lending pursuant to General Laws chapter 255E and implementing regulation 209 CMR 42 et seq.

WHEREFORE, Ocwen, at all relevant times herein was a wholly-owned subsidiary of Ocwen Mortgage Servicing, Inc., which was a wholly-owned subsidiary of Ocwen Financial Corporation, has engaged in the business of servicing residential mortgage loans in Massachusetts. These activities generally include collecting or remitting for any lender, noteowner, noteholder, or itself, payments, interest, principal, and trust items on a residential mortgage loan in accordance with the terms of the residential mortgage loan, as well as the additional servicing activities further described below.  Ocwen has also engaged in the business of residential mortgage lending.

WHEREFORE, the Division has issued to Ocwen a debt collector license, License Number DC0861, for the servicing of loans and collection of debts relating to residential mortgage loans in Massachusetts and a mortgage lender license ML1852.

MMC EXAMINATION AND SUPPLEMENTAL COLLECTION OF INFORMATION

The state mortgage regulators, as coordinated by the Multi-State Mortgage Committee (“MMC”), conducted a limited-scope multi-state examination (“MMC Examination”) of Ocwen in order to determine Ocwen’s compliance with applicable State and Federal laws and regulations. The MMC Examination covered the period of January 1, 2013, to February 28, 2015. The participating States in the MMC Examination consisted of Florida, Maryland, Massachusetts, Mississippi, Montana, and Washington. Florida served as the lead State.

The MMC Examination was conducted pursuant to the participating States’ respective statutory authorities, and in accordance with the protocols established by the Conference of State Bank Supervisors (CSBS)/American Association of Residential Mortgage Regulators (AARMR) Nationwide Cooperative Protocol for Mortgage Supervision as well as the Nationwide Cooperative Agreement for Mortgage Supervision.

Pursuant to the MMC Examination, the participating States identified compliance violations of both State and Federal laws, a deteriorating financial condition, and systemic operational limitations under present management, all of which resulted in substantial harm to consumers and presented grave risk regarding the overall viability of Ocwen as a going concern.

In December 2015, the MMC issued to Ocwen the written Report of Examination.

In January 2016, Ocwen submitted a written Response to the Report of Examination (Examination Response).

Subsequently, the MMC has engaged in the collection of additional information from Ocwen, the status of which is ongoing.  The Division is issuing this Order due to the deficient nature of the Examination Response and level of corrective action.

The following sets forth specific facts as determined by the MMC Examination and supplemental collection of information.

STATEMENT OF FACTS

OVERALL CONDITION:

1.  The MMC Examination found that Ocwen’s overall condition is deficient due to the failure to identify, measure, monitor, and control risk associated with rapid growth. Beginning in late 2012, Ocwen began making large acquisitions of mortgage servicing rights (MSRs).  Over a nine-month period from December 2012 through August 2013, Ocwen acquired the MSRs to over 2.6 million consumer mortgage loans with over $347 billion in unpaid principal balance (UPB). MSR purchases from 2012 through year-end 2014 more than doubled the size of Ocwen’s servicing portfolio from $204 billion to $465 billion. The rapid growth beginning in 2012 doubled Ocwen’s net income from $181 million for 2012 to $282 million for 2013. However, through September 30, 2016, Ocwen lost $819 million as operational deficiencies due to rapid growth and increased operational complexity resulted in increased operating costs.  The MMC Examination found that the effectiveness of Ocwen’s Management Control Systems (MCSs)  failed to keep pace with growth leading to a material increase in operational deficiencies including the failure to timely date borrower correspondence, the failure to timely pay borrower escrow items, the failure to ensure the accuracy of escrow statements, the failure to timely reconcile consumer custodial accounts and the failure to ensure licensure of an affiliate that provides servicing related activities. The MMC Examination review of these operational deficiencies revealed that as Ocwen attempted to assimilate MSR purchases, deficient MCSs caused consumer harm, led to violations of federal and state regulations and resulted in non-compliance with servicing standards required by the 2012 National Mortgage Settlement (NMS).

FINANCIAL CONDITION:

2.  Earnings: Ocwen lost $472 million in 2014, $247 million in 2015 and $200 million in 2016.  Ocwen’s losses stem from declines in loan servicing income as a result of Ocwen’s sale in 2015 of $88 billion of its servicing portfolio and continued high operating costs including the costs of regulatory fines, industry litigation and ongoing monitoring required by regulatory settlements.

3.  Capital: Ocwen has lost $919 million since the beginning of 2014, that when combined with $320 million in stock repurchases during that same period, have reduced capital by $1.2 billion, or 63 percent. Additionally, Ocwen’s stock value has declined from a high of $59.97 on October 25, 2013 to a range of $1.50 to $7 dollars per share in 2016, which impedes Ocwen’s ability to raise additional capital.  Ocwen has failed to put forth realistic plans to address its declining level of capital.

4.  Liquidity: Ocwen’s liquidity is less than satisfactory due to uncertainty surrounding Ocwen’s ability to maintain and refinance borrowing facilities at competitive rates in light of Ocwen’s deteriorated condition. The MMC Examination revealed that Ocwen did not have the current liquidity to fund required servicing advances should it be unsuccessful in renewing borrowing facilities in the future. Although Ocwen did subsequently renew its borrowing facilities, there is no guaranty that the facilities will continue to be renewed in light of Ocwen’s overall deficient financial condition.

5.  Budget: The MMC Examination found that Ocwen’s 2014 budget did not account for increasing levels of uncollectable servicing advances which resulted in an increase of $50 million in reserves for bad debt to a total of $127 million, an increase of nearly 65 percent over 2013’s reserve for bad debt. The increase in uncollectible servicing advances was the result of operating deficiencies related to servicing acquisition integrations.

6.   Sensitivity to Market Risk: The MMC Examination found that Ocwen had not adopted limits on exposure to Interest Rate Risk (IRR). Ocwen reserved $1.6 million during the MMC Examination period against declines in the value of its MSRs due to changes in interest rates. Additional declines in the value of MSRs from exposure to IRR occurred after the MMC Examination and negatively affected earnings.

7. Sale of GSE MSRs: Ocwen sold the MSRs to loans totaling approximately $92 billion in 2015. Although the MSR sales provided significant liquidity that Ocwen primarily used to reduce debt, the MSR sales significantly reduced income and contribute to ongoing losses that have eroded capital.

SYSTEM OF RECORD DEFICIENCIES

8.  REALServicing: The problems with Ocwen’s system of record REALServicing have been extensive.  By way of example, the 2014 Consent Order that Ocwen entered with the New York State Department of Financial Services (NYSDFS) provided the following: “Ocwen’s core servicing functions rely on its inadequate systems. Specifically, Ocwen uses comment codes entered either manually or automatically to service its portfolio; each code initiates a process, such as sending a delinquency letter to a borrower, or referring a loan to foreclosure counsel. With Ocwen’s rapid growth and acquisitions of other servicers, the number of Ocwen’s comment codes has ballooned to more than 8,400 such codes. Often, due to insufficient integration following acquisitions of other servicers, there are duplicate codes that perform the same function. The result is an unnecessarily complex system of comment codes, including, for example, 50 different codes for the single function of assigning a struggling borrower a designated customer care representative.”

9.  Letter dating deficiencies: The dates on Ocwen’s letters to borrowers are automatically inserted onto the letterhead based on events in the system of record REALServicing. Ocwen relies on third party vendors to actually print and mail the letters. Going as far back as 2012, large scale delays occurred between the time of the event that triggered the need for a letter versus the time the letters were actually mailed by the vendors. The dates on many letters were often several days or even weeks before the letters were actually mailed. For example, borrowers received letters providing for 30 days to appeal the denial of a loan modification, but the 30-day appeal period had already lapsed. Disturbingly, when an Ocwen employee first brought the problem to the attention of Ocwen management, Ocwen ignored the problem for another 5 months before even starting corrective measures. In April 2015, Ocwen submitted a Global Corrective Action Plan (CAP) to the Monitor for the NMS to address letter dating deficiencies. The Global CAP encompassed 7 different types of letters that were part of the letter dating problem.  The Monitor has required that the metric testing under the Global CAP be extended for a year beyond the termination date of the NMS to February 2018. An external review of Ocwen’s letter dating deficiencies concluded that Ocwen was aware of the deficiencies from at least 2012. The external review also concluded that, the problems were prevalent in all correspondence platforms, the deficiencies were technology related and Ocwen’s systems and processes did not evolve with growth and Ocwen’s regulatory responsibilities. Ocwen has reserved $15 million for the cost of remediating letter dating deficiencies.

LENDER PLACED INSURANCE

10.  Lender Placed Insurance: The MMC Examination found that Ocwen has engaged in a pattern and practice of unsafe and unsound loan servicing by manipulating the lender-placed force-placed insurance market and artificially inflating the premiums and then passing the improperly inflated amounts onto consumers. Generally, the terms and conditions of the mortgage loan documents require consumers to maintain insurance coverage on the properties securing their loans. If a consumer does not maintain the required insurance, the loan documents permit a lender to obtain insurance to cover its interest in the property and the loan. Permitting a lender to forcibly place insurance on a mortgaged property and charge the borrower for the cost of the premium is commonly referred to as forced-place insurance or lender-placed insurance. Lender-placed insurance (LPI) is a well-established practice in the mortgage industry and is uniformly disclosed in loan documents; however, the MMC Examination revealed that Ocwen has exclusive arrangements with one of the major participants in the LPI market that allowed Ocwen and its affiliates to collect unearned commissions and other benefits that artificially inflate LPI premium rates.

11.  In 2009, Ocwen entered into a five-year agreement with Assurant that required Assurant to pay Ocwen $16.8 million per year for Ocwen supplying 611 Full Time Equivalent resources to perform various services for Assurant including image verification, outbound telemarketing, insurance customer service, and exception processing. A review of LPI practices showed that Ocwen and other third-parties involved in administering LPI for Ocwen had little, if any, financial incentive to explore options that would have resulted in lower LPI premiums for borrowers.

12.  To manipulate the LPI market and reap the benefits of artificially inflated LPI premium rates, Ocwen purchases master or “umbrella” insurance policies that cover its entire portfolio of mortgage loans. In exchange, the insurer is given the exclusive right to force insurance on property securing a loan within the portfolio when the borrower’s insurance lapses or the lender determines the borrower’s existing insurance is inadequate. Once it is determined that the insurance covering the mortgage property has lapsed, the borrower receives a notice that insurance will be “purchased” and force-placed if the voluntary coverage is not continued. If a lapse continues, the insurer notifies the borrower that insurance is being force-placed at the borrower’s expense. When the forced-place coverage is imposed, Ocwen pays the insurer for the premium and then charges the borrower for the payment, which is either deducted from the borrower’s mortgage escrow account or added to the balance of the borrower’s loan.

13.  LPI litigation: Several lawsuits have been filed around the country against Ocwen regarding LPI programs, and Ocwen has set aside $16.7 million in a reserve through June 30, 2015 to pay for claims related to the lawsuit. These suits principally allege that Ocwen and insurers colluded to create a scheme of “kickbacks” in the form of unearned commissions and other benefits that artificially inflate LPI premium rates.  Ocwen settled a Federal, class-action law suit (0:14-cv-60649-JAL) in the Southern District of Florida on December 18, 2014 that alleged Ocwen derived improper financial benefits through LPI policies imposed on borrower properties. The settlement included provisions prohibiting Ocwen, or any Ocwen affiliated vendor, from charging and collecting LPI premiums. These facts illustrate how Ocwen’s policies and practices undermine requirements that loan servicers act in a safe and sound manner.

LOAN TRANSFERS AND BOARDING

14. Transfer Notices: Federal law requires that Ocwen send a Notice to borrowers at least 15 days prior to any transfer. Ocwen transferred a bulk of loans on April 15, 2015.  Ocwen used a third party vendor to process the Notices. However, Ocwen failed to provide the vendor usable data to process the Notices until April 1, 2015, and the vendor took two or more days to complete the generation of the Notices. As a result, the Notices were not actually sent to the borrowers until April 2, 2015, or later. These Notices were sent in less than 15 days before the bulk transfer and were therefore in violation of the federal law.  Moreover, the examiners determined that the face of the Notices were deceptively back-dated to reflect a date of March 27, 2015. This violation occurred on a substantial scale. For example, the Washington Department of Financial Institutions (WA DFI) found the violation in 31% of the loans reviewed.

15.  Boarding loans: Under both state and federal law, Ocwen is required to board new loans into its system of record with accurate servicing data on the loans.  However, the MMC Examination loan review found that for 2 of the 29 loans reviewed by the WA DFI, Ocwen boarded the loans to incorrectly require an escrow account.

BORROWER ESCROW ACCOUNTS

16.  Untimely escrow payments: Federal law requires that Ocwen make disbursements from escrow accounts to the taxing authorities and insurance companies in a timely manner (within 30 days) to avoid the borrowers incurring penalties. The MMC Examination showed that Ocwen failed to make timely disbursements from escrow accounts on at least 56 loans. This violation occurred on a substantial scale, as it was found by 5 out of the 6 participating exam States. Moreover, the borrowers on these loans filed consumer complaints to the respective participating exam States.

17. Inaccurate Escrow Statements: The MMC Examination revealed that Ocwen routinely sent borrowers inaccurate escrow statements as a result of entries made to Ocwen’s escrow accounting system to effectuate an Ocwen proprietary Shared Appreciation Modification (SAM). One escrow statement reviewed listed approximately 60 actual escrow payments when in fact they were non-cash items used to account for the SAM.  Ocwen later identified over 7,200 borrowers who received escrow statements containing SAM accounting entries listed as actual escrow payments. The MMC Examination found that Ocwen’s inability to accurately monitor the Ocwen SAM program caused Ocwen to send confusing and misleading escrow statements to consumers. The MMC Examination findings support the conclusion that Ocwen did not have any procedures in place to detect escrow statements that contained SAM accounting entries.

DEFAULT SERVICING

18.  Loss Mitigation: As prior referenced, the MMC Examination revealed that Ocwen was unaware that it had routinely mailed inaccurate escrow statements to borrowers who had obtained an Ocwen SAM that contained numerous SAM accounting entries that appeared as actual escrow payments, when in fact they were not.

19.  Failure to provide accurate loss mitigation option information to borrowers: During the MMC Examination, examiners evaluated the nature of Ocwen’s operations; the adequacy of its internal controls, and its compliance with laws and regulations to determine whether Ocwen was operating in a safe and sound manner with respect to its third-party loss mitigation policies and procedures.[1] The MMC Examination findings support the conclusion that Ocwen lacked the internal controls necessary to ensure that consumers received accurate loss mitigation information.

20.  Property Inspections: Borrowers were overcharged $6.2 million in 2014 for property inspections carried out by vendor Altisource Portfolio Solutions, S.A. (Altisource) when it mistakenly increased inspection fees to the maximum GSE allowable amount, which in some cases exceeded the amounts that were contractually agreed upon in the statement of work. Ocwen has agreed to refund borrowers the overcharges. Ocwen agreed to pay 30 percent ($1.9 million) of the $6.2 million refund and Altisource will pay the remaining 70 percent ($4.3 million).

LOAN PAY OFFS

21.  The MMC loan review revealed an instance where Ocwen failed to issue a satisfaction of a mortgage loan. As of the MMC Examination date of February 28, 2015, Ocwen had not issued a satisfaction of mortgage on a loan that was paid off on August 25, 2014, or 187 days prior. Ocwen management responded to the MMC Examination finding stating that the vendor that processes mortgage satisfactions could not find a recorded mortgage in the county of record. Ocwen further responded that if the borrower provided a copy of the recorded mortgage, Ocwen would promptly issue a release noting that no further actions were possible or required.  Further review by MMC examiners revealed that the county of record does not provide online information and that formal requests for recording information are required. Ocwen was made aware of this requirement by MMC examiners, after which, Ocwen formally requested and received the required information and issued a satisfaction of mortgage. The MMC Examination revealed that Ocwen’s procedures for issuing satisfactions of mortgage, including vendor oversight, were deficient.

22.  Failure to communicate with successor in interest: Section 1024.38(b)(1)(vi) of the Real Estate Settlement Procedures Act (12 CFR 1024) requires the servicer upon death of a borrower to promptly identify and facilitate communication with the successor in interest of the deceased borrower with respect to the property secured by the deceased borrower’s mortgage loan. The MMC loan review revealed an instance where Ocwen failed to promptly identify and facilitate communication with the successor interest of a deceased borrower after Ocwen obtained credit reports indicating that the borrower was deceased.

NEGATIVE EFFECTS OF RELATED PARTY TRANSACTIONS

23.  Switch to Southwest Business Corporation (SWBC) for LPI policies:  Beginning in 2009, Ocwen entered into a series of vendor agreements with Assurant that provided Ocwen significant income related to LPI. Later in 2009, Ocwen spun off one of its business units, Altisource, in a manner which provided Altisource, not Ocwen, entitlement to the income related to LPI. In 2014, Ocwen switched vendors from Assurant to SWBC. This switch allowed Altisource to receive income related to LPI in amounts beyond the limits set by Fannie Mae December 2013 and effective in June 2014. The matters involving Altisource and SWBC were approved by William Erbey, the former Ocwen Chairman and Altisource’s single largest shareholder. The Altisource-SWBC arrangement was essentially a captive pool of LPI which gave Ocwen little incentive to explore other potentially less costly options for borrowers.  In December 2014, Ocwen settled a federal class action law suit involving allegations that Ocwen derived improper financial benefits through LPI policies. One month later, Altisource announced that it was exiting the LPI business. The MMC Examination found that the 2014 switch from Assurant to SWBC was a root cause of Ocwen’s failure to timely pay escrow amounts for borrower insurance.

24. Hubzu: Ocwen requires certain borrowers[2] that are interested in a short sale to list their property at the Hubzu.com website, an online marketing, sales and auction site for real-estate owned properties and short sales. Hubzu is the registered name of Altisource Online Auction, Inc., a Delaware corporation owned by Altisource, which is a publicly traded company based in Luxembourg. In 2012, Altisource and Ocwen amended their 2009 servicing agreement to include a section covering “Assisted Short Sale Services.”  Under the 2012 amended agreement, Ocwen agreed to retain Altisource to oversee pending borrower requests for short sale approvals. Ocwen maintains that the Hubzu requirement is designed to meet the following objectives:

  1. Increase the pool of interested and relevant buyers of a short sale property,
  2. Increase the likelihood that the borrower and investor receive a market price for the short sale,
  3. Increase the speed at which a successful short sale can be completed, and
  4. Decrease the likelihood of fraud against any stakeholder in the transaction.

25.  As part of the MMC Examination an in-depth investigation of Hubzu was conducted.  Analysis of data for loans that have been listed on Hubzu website supports the conclusion that the Hubzu short sale program increases fees for a once-affiliated company with common ownership ties to the Ocwen parent company and has resulted in diminished benefits for the borrowers or increased the likelihood of harm to borrowers seeking short sale approval from Ocwen.

26.  The service agreement provides that Ocwen agrees to pay Altisource on a fee-for-service basis as set forth on a fee schedule. The buyer’s premium is 3.5% of the purchase price, and the technology fee is $299. The buyer’s premium and technology fee are not charged to the buyer if the offer accepted by Ocwen is the same offer amount by the same buyer as originally brought to Ocwen by the listing agent. If the offer accepted by Ocwen is lower than the original offer, but is made by the original buyer, then the buyer’s premium and technology fee are charged to the original buyer. The buyer’s premium and technology fee are paid to Altisource in all other circumstances, including where the winning offer is from someone other than the original bidder and the sales prices is the same as or lower than the original offer. The buyer’s premium for short sale properties has been increased to 4.5% in an amendment to the service agreement dated June 2015 (amended service agreement).

27.  Review of the Hubzu data showed that listing property on the Hubzu website did not increase the pool of interested buyers (e.g., 33 out of 71 loan files or 47 percent showed that borrowers received zero bids when they listed their properties on Hubzu). The data also showed that properties listed on Hubzu did not increase the amount of the purchase price of the home (e.g. only 5 out of 71 loan files resulted in a consummated short sale with a higher purchase price than the original, pre-Hubzu, offer). Additionally, examiners found that listing property on the Hubzu website did not increase the speed for short sale approvals (e.g. prior to June 2015, Altisource retained the discretion to list the property for an unlimited number of auction cycles up to 30 calendar days prior to a scheduled foreclosure). While the file remained with Altisource, the borrower was precluded from pursuing other loss mitigation options such as a Home Affordable Foreclosure Alternatives short sale or deed in lieu of foreclosure.

28.  The MMC Examination also revealed that there was a lack of transparency regarding program requirements for Ocwen borrowers who were required to utilize Hubzu. For example, the Ocwen website does not inform borrowers that before they will be approved for a short sale, they will be required to list their property at Hubzu., the types of loans that are required to be listed at Hubzu, or the maximum number of auction cycles.

29.  The MMC Examination further revealed that Ocwen’s requirement that borrowers list their short-sale properties on the Hubzu website left consumers at risk for higher deficiency debts after the sale of the property because the Hubzu listing requirement reduced the amount of money paid to mortgage holders and investors. Of the consummated short sales through Hubzu, almost twice as many loans closed with the same or a lower purchase price than the original offer. The deficiency amount was also greater for borrowers that fell out of the Hubzu program and were subsequently offered a traditional short sale.

30.  Thus, one can conclude from the MMC Examination findings that Ocwen’s short sale program using the Hubzu website has contributed to the organizational deficiencies that prevent Ocwen from operating in a safe and sound manner. Like the policies and practices that allowed Ocwen and its affiliates to manipulate the LPI market and reap the benefits of artificially inflated LPI premium rates, the harm to borrowers described above is the by-product of an affiliate relationship between Ocwen and Altisource.

CONSUMER CUSTODIAL ACCOUNTS

31.  Failure to timely reconcile consumer custodial accounts:  Ocwen internal audits identified several high priority findings that revealed significant deficiencies related to the failure to timely reconcile consumer custodial accounts. Similarly, a Fannie Mae review in late 2014 resulted in a CAP to address concerns over Ocwen’s failure to timely reconcile consumer custodial accounts. The MMC Examination identified further instances of Ocwen’s failure to timely reconcile consumer custodial accounts of which management was unaware in spite of Ocwen’s own internal audits and the Fannie Mae review. Ocwen engaged in a pattern and practice of failing to timely reconcile aged consumer custodial account items. The MMC Examination revealed that four of the seven consumer custodial accounts reviewed had not been timely reconciled.  Unreconciled aged items from around the country were 64,139, totaling $83 million at the end of 2014. Further, the MMC Examination revealed that Ocwen was forced to create a special team to handle the high number of unreconciled items, and that it was subject to the mandates of a Fannie Mae action plan to increase reconciliation timeliness. The MMC examiners’ review of consumer custodial account reconciliations showed that an error in REALServicing’s custodial account software had caused the untimely reconciliation of consumer custodial account items. In this instance, Ocwen did not realize that accounts were not being reconciled in a timely manner, and that the accounting software system was not functioning properly until MMC examiners brought the matter to Ocwen’s attention. Thus, the MMC Examination findings support the conclusion that Ocwen’s internal controls are insufficient to meet its loan servicing duties under state and Federal laws; enforcement orders; and consent decrees. Ocwen’s response to these deficiencies is that they are not a material violation of the American Bankers Association Uniform Standard Attestation Program concerning timely reconciliations of consumer custodial accounts because the unreconciled items were less than five percent of all reconciled items; however, the failure to timely reconcile consumer custodial accounts  demonstrates that Ocwen does not have effective policies and procedures in place to ensure that it operates in a safe and sound manner. The MMC Examination findings concerning the failure to timely reconcile consumer custodial accounts and Ocwen’s lack of awareness about the untimeliness of account reconciliations support the conclusion that Ocwen’s practices undermine the safety and soundness of its internal operations.

BOARD OVERSIGHT

32.  Failure to ensure an effective Risk Management Program: The MMC Examination found that Ocwen’s Board of Directors failed in its responsibility to oversee and ensure that Ocwen had an effective Risk Management Program (RMP) with MCSs that kept pace with increased operational complexity that arose from rapid growth. Ocwen was cited for failure to have a comprehensive RMP in place with MCSs capable of effectively identifying, measuring, monitoring, and controlling its growth-related risks. The MMC Examination provided specific examples showing that Ocwen’s lack of an effective RMP resulted in operational deficiencies, including untimely borrower letter dating, untimely payment of escrow items, inaccurate escrow statements, the use of an unlicensed affiliate for servicing related activities, and untimely reconciliation of consumer custodial accounts.

33.  Failure to review and approve key strategic initiatives: The MMC Examination confirmed that it was not Ocwen’s Board of Directors, but former Chairman Erbey and two members of Ocwen’s Credit Committee, who approved a key strategic initiative to switch Ocwen’s LPI vendors. The switch in LPI vendors allowed Altisource, an Ocwen related entity in which Chairman Erbey has a financial interest, to continue to earn LPI premiums beyond the June 2014 general prohibition imposed by Fannie Mae on loan servicers earning LPI related income. Former Chairman Erbey resigned his position at Ocwen and four other Ocwen related entities as part of a settlement with the NYDFS, in part, over allegations of conflicts of interest regarding Ocwen related entities. Former Chairman Erbey’s financial interest in Altisource is a conflict of interest that should have precluded him from voting on the switch in LPI vendors. Additionally, the MMC Examination found that the switch in LPI vendors was a root cause of Ocwen’s failure to timely pay borrower escrow insurance items leading to instances of consumer harm through increased borrower premiums and heightened borrower confusion.

34.  Similarly, the MMC Examination found no evidence that the Board of Directors reviewed and approved Ocwen management’s actions surrounding the lack of state licensure of Ocwen affiliate Ocwen Business Solutions, Inc. (OBS). OBS performs servicing related activities for Ocwen and is located in the Philippines as part of Ocwen’s strategy to reduce servicing costs and minimize taxes. Information was requested during the MMC Examination about Ocwen’s internal deliberations over the need for state licensure of OBS.  Ocwen management indicated that no such information existed. However, the MMC obtained information after the MMC Examination that contradicted management’s assertion that no such information existed. Internal e-mails obtained by the MMC revealed management was fully aware that OBS lacked proper licensure when it began operations, but felt that the risk was “minimal” according to one internal e-mail. The MMC met with the Board of Directors again and presented the e-mails as evidence that management knew that OBS was not properly licensed and that it continued to be non-responsive to requests for information made during the MMC Examination. After the Board of Directors meeting with the MMC, Ocwen produced a large amount of internal deliberations regarding OBS licensure that had not been produced when originally requested. The use of unlicensed affiliate OBS for servicing related activities was cited as a violation of Washington State law in the MMC Examination and resulted in a fine of $900,000.  To date, Ocwen has not confirmed if Massachusetts consumers were serviced by OBS or affected by its operations.

35.  Over-reliance on senior management for Board responsibilities: The failure to review and approve key strategic initiatives suggests that the Board became over-reliant on members of senior management to carry out traditional Board functions such as corporate planning, personnel administration, and the oversight of compliance with applicable laws and regulations.  Senior management did not include the Board in deliberations over the initiative to use OBS for servicing-related activities and did not present the Board important information, such as the need for licensure of OBS.

36.  Turnover and vacancies in senior management: The MMC Examination set forth the Board of Directors’ responsibility to have regulatory compliance personnel with adequate access to information necessary to properly respond to regulator requests for information, including during the MMC Examination, and an effective understanding of the information being supplied. However, the MMC Examination found high levels of turnover and vacancies in Ocwen’s regulatory compliance department. Ocwen’s Chief Compliance Officer, Vice President of Compliance and Senior Manager of Examinations all resigned during the MMC Examination.  Moreover, the positions of Director of Examinations, Licensing and Analytics, Senior Manager of Licensing and Senior Manager of Analytics were all vacant at the outset of the MMC Examination.  Since then, positions have been filled in some areas, but turnover and consistency continue to be issues for the licensee.

MANAGEMENT

37.  Approval of actions with conflict of interest: As prior-referenced, the MMC Examination confirmed instances of senior management, and not the Board, approving key strategic initiatives where potential conflicts of interest should have precluded management from participating in the approval process. The MMC Examination confirmed that it was former Chairman Erbey and two other members of Ocwen’s Credit Committee, and not the Board, who approved Ocwen’s switch in LPI vendors, a transaction in which Mr. Erbey held a financial interest.

38.  Failure to implement an effective RMP: As prior-referenced, the MMC Examination found that Ocwen failed in its responsibility to have an effective RMP with adequate MCSs, which resulted in operational deficiencies. The MMC Examination traced Ocwen’s lack of an effective RMP to instances of consumer harm, violations of federal and state regulations, non-compliance with servicing standards required by the  NMS, and Ocwen’s overall deficient condition.

39.  Deficient internal audit structure: The MMC Examination found that Ocwen’s Internal Audit Department (IAD) had been realigned to report operationally to its Chief Risk Officer, and functionally to its Vice President and General Auditor. The MMC Examination cited concerns that such a reporting structure might hamper the IAD’s ability to provide Ocwen’s Board of Directors with independent and objective assurances that major business risks are being managed appropriately and that Ocwen’s risk management and internal control framework is operating effectively.

40.  Deficient reporting channels: Senior management failed to provide adequate information to the Board regarding the need for licensure of affiliate OBS. Additionally, Ocwen’s IAD revealed Ocwen had inadequate procedures for escalation and tracking of deficiencies to ultimate resolution.

41.  Failure to notify State Regulators of significant events: The MMC Examination revealed that Ocwen failed to report as required by Massachusetts regulation several regulatory actions against Ocwen involving significant events and proposed changes in ownership or personnel, including the 2014 settlement with the NYSDFS.

42.  Timely Filing of Financial Reports: The MMC Examination found that Ocwen failed to file its 2015 annual financial audit within the required timeframes for the States of Florida and Massachusetts. Ocwen delayed filing its 2015 annual financial audit until May 11, 2015 in order to resolve questions surrounding its ability to remain a going concern, which allowed Ocwen to receive an unqualified audit opinion. Concerns remain about Ocwen’s overall deficient financial condition and Ocwen’s ability to continue as a going concern and there is no assurance that Ocwen will receive an unqualified audit opinion in the future.

FAILURE TO COOPERATE WITH EXAMINATION ACTIVITIES

43.  Delay in producing information during the MMC Examination and multiple other State specific examinations: During the MMC Examination, Ocwen management consistently failed to provide MMC examiners with access to books and records requested. Ocwen failed to timely provide MMC examiners with access to books and records and/or failed to provide comprehensive records of all documents requested.

44.  Ocwen’s responses during the MMC Examination to information requests were often slow, and or, non-responsive requiring numerous follow-up requests for additional information. Ocwen paid a fine of $2.5 million as part of a settlement with the CA DBO during the MMC Examination review period that was based, in part, on concerns over responsiveness to regulatory information requests.

45.  Ocwen’s failure to provide the books and records requested severely limited the MMC Examination team from conducting a comprehensive evaluation of the Company’s operations.

46.  On or about February 28, 2015, the MMC Examination team notified Ocwen that it would be conducting a review of the Company’s books and records to ensure compliance with each participating state’s statutes and regulations.

47.  Ocwen was notified that the MMC Examination would commence on or around April 6, 2015. Ocwen was notified through an Initial Information Request sent to Ocwen’s management team on or about March 27, 2015 that the MMC Examination would include at a minimum; a review of Ocwen’s failure to timely pay escrow items.

48.  Although, Ocwen was made aware of the MMC Examination team’s concerns, during the onsite portion of the MMC Examination, Ocwen’s management failed to prepare any responses about the scope and root causes of the Company’s failure to timely pay consumer escrow funds and furthermore, management failed to notify the MMC Examination team what remedial action had been taken to ensure that consumers escrow funds were safeguarded.

49.  During the MMC Examination, several requests for information were made regarding the status of the failure to timely pay escrow items and meetings were held with Ocwen’s management to underscore to the Company’s representatives that a thorough response about Ocwen’s failure to appropriately manage consumer escrow funds would be required.

50.  On August 19, 2015, as a result of Ocwen’s pattern of failure to produce requested books and records, the MMC held a meeting with Ocwen Financial Corporation’s Board of Directors.  During the August 19, 2015 meeting, the Board of Directors committed to resolve deficiencies surrounding MMC Examination requests for information that had been outstanding since the commencement of the MMC Examination. The Board of Directors was receptive to concerns about untimely and inadequate responses to requests for information and made a commitment to the MMC to resolve the identified concerns. However, although Ocwen management appeared to have improved its responsiveness to requests for information after the meeting with the Board of Directors, The MMC Examination team later learned that Ocwen management continued its pattern of withholding requested information as evidenced by its failure to produce information concerning internal deliberations over the need for licensure of Ocwen affiliate OBS when originally requested.

51.  Ocwen’s lack of responsiveness to regulatory requests during the MMC Examination raises significant concerns about the Company’s receptiveness to regulatory oversight.

UNLICENSED SERVICING ACTIVITY

52.  During the MMC Examination, the MMC examiners became aware that Ocwen utilized its affiliate OBS for services related to debt collection, loan modifications, and its servicing related business.

53.  The MMC Examination revealed that OBS was not properly licensed in all jurisdictions in which it has been operating. In addition, the MMC Examination found that Ocwen’s Board of Directors was not involved in approving the use OBS for servicing related activities and that Ocwen’s management team had failed to discuss the need for licensure with the Board of Directors even though Ocwen management knew OBS was not properly licensed.

54.  From discussions with Ocwen management, the MMC Examination team learned that the Philippine location for OBS was originally intended to be a branch location of Ocwen.  However, OBS’s parent company was ultimately formed as an independent, wholly-owned subsidiary of Ocwen’s parent, Ocwen Financial Corporation for tax purposes.

55.  Information received during the MMC Examination indicates that OBS began servicing consumer accounts in late 2012. The MMC Examination team’s review of the Master Agreement for Services (Master Agreement) between Ocwen and OBS revealed that, although the Master Agreement was signed in December of 2014, the effective date is as of January 1, 2014.

56.  A further review of the Company’s books and records revealed that OBS billed Ocwen over $10 million for servicing related activities in 2014 in the absence of both a written agreement and a statement of work.

57.  The MMC Examination revealed that OBS has processed consumer loan payments in excess of $445 million since 2013. Ocwen’s Management also notified the MMC Examination team that there are no written policies and procedures for reviewing any charges imposed by OBS bills for reasonableness.

58.  Additionally, the MMC Examination team was unable to gather comprehensive information regarding OBS’s business activities as Ocwen’s management failed to respond to requests for information in a timely manner.

59.  As of the date of this Order, Ocwen is in the process of applying for the requisite licenses for OBS, but has not applied in Massachusetts.

60.  Unlicensed affiliate Ocwen Financial Solutions Private Limited: During the MMC Examination, the MMC examiners became aware that Ocwen utilized its affiliate Ocwen Financial Solutions Private Limited in Washington State to service consumer loan accounts without obtaining the required license.

61.  During the MMC Examination, the MMC Examination team also became aware that Ocwen had outsourced a large portion of its servicing related business by hiring employees located in both the Philippine’s and India. The MMC Examination revealed that approximately seventy (70) percent of Ocwen’s employees are located offshore.

OTHER REGULATORY ENFORCEMENT ACTIONS (DISCIPLINE)

62. National Mortgage Settlement: On February 9, 2012, the attorneys general of 49 states and the District of Columbia the federal government and five banks and mortgage servicers reached agreement on the NMS that created new servicing standards, provided for relief to distressed homeowners and provided funding for state and federal governments. The NMS was formalized on April 5, 2012, when the United States District Court of the District of Columbia (Court) entered the consent judgments containing the Settlement terms.

63.  The NMS established nationwide reforms to mortgage servicing. These standards required at a minimum: better communication with borrowers; a single point of contact; adequate staffing levels and training; and appropriate standards for executing documents in foreclosure cases.

64.  The servicers’ performance in meeting the standards was required to be tested by a designated Monitor through a series of metrics. The NMS created 29 original metrics, and the designated Monitor established four more in 2013 for a total of 33 metrics.

65.  On February 24, 2014, Ocwen entered into a new consent judgment (Agreement) with the Consumer Financial Protection Bureau (CFPB) and 49 states which required the Company to comply with the NMS servicing standards for its entire loan portfolio. The provisions of Ocwen’s Agreement required the designated Monitor to conduct a quarterly testing of the metrics and issue reports outlining the results of the testing.

66.  The MMC Examination team reviewed the reports filed by the Monitor and Ocwen’s overall compliance with the metrics which revealed that in 2014 Ocwen failed four metrics and seven additional metrics were also deemed failures.

67.  The MMC Examination revealed that Ocwen in addition to entering into the NMS whereby the Company was required to provide approximately 2.1 billion in consumer relief also entered into several subsequent settlement agreements with State Mortgage Regulators which required Ocwen to pay either monetary penalties and/or provide consumer restitution.

68.  New York: The MMC Examination revealed that on December 22, 2014, Ocwen entered into a $150 million settlement with the NYSDFS. The settlement included allegations of: Inadequate and Ineffective Information Technology Systems and Personnel; and Widespread Conflicts of Interest with Related Parties regarding Chairman William Erbey, (and other members of Ocwen Management) arising from their ownership interests in, and positions held at related companies.)

69.  The NYSDFS settlement also placed restrictions on MSR growth in New York and required the election of two additional independent directors to the Board of Ocwen’s parent OFC.

70.  The terms of the NYSDFS settlement required OFC to pay $100 million as a civil monetary penalty and $50 million as borrower restitution.

71.  California: The MMC Examination revealed that on January 23, 2015, Ocwen entered into a settlement with the California Department of Business Oversight (CA DBO). The settlement included allegations that Ocwen repeatedly failed to timely and fully comply with the CA DBO’s requests for information and documentation.

72.  The terms of the settlement prohibited Ocwen from acquiring additional California MSRs until the CA DBO was satisfied that Ocwen could satisfactorily respond to requests for information and documentation made in the course of a regulatory examination.

73.  The CA DBO settlement also required Ocwen to engage a third-party auditor who was required to report directly to the CA DBO for 24 months to assess Ocwen’s compliance with state and federal laws and regulations. The CA DBO settlement required Ocwen to pay a monetary penalty of $2.5 million.

74.  WA DFI: On August 24, 2016, Ocwen entered into a settlement with the WA DFI. The settlement included allegations that Ocwen engaged the services of two unlicensed companies, Ocwen Financial Solutions Private Limited, operating out of a location in India, and Ocwen Business Solutions, operating out of a location in the Philippines, to engage in the servicing business in Washington State.

75.  The WA DFI alleged that Ocwen Financial Solutions Private Limited engaged in unlicensed servicing activities dating back to August 1, 2010 and Ocwen Business Solutions’ unlicensed activity took place between June 2013 and August 2015.

76.  The terms of the settlement prohibited Ocwen from engaging in the servicing business in Washington State from any location and/or by any person that was not appropriately licensed by the State.

77.  The WA DFI settlement further noted that Ocwen would be subject to an examination to evaluate the Company’s compliance with the provisions of the settlement agreement between 12-18 months.

78.  The WA DFI settlement required Ocwen to pay a monetary penalty of $900,000.

79.  It is the Division’s understanding that there are other pending regulatory enforcement and legal matters that are likely to negatively impact Ocwen’s financial condition.

FAILURE TO COMPLY WITH THE MEMORANDUM OF UNDERSTANDING

80.  Based on the findings of the examination and subsequent communications, the state regulators, Ocwen Financial Corporation, Ocwen Mortgage Servicing, and Ocwen entered into a Memorandum of Understanding (MOU) on December 7, 2016.  The MOU outlined various steps that Ocwen and its parent companies would take to help alleviate certain regulatory concerns. As outlined below, Ocwen materially failed to comply with the terms of the MOU.

81.  The MOU required Ocwen to retain an independent auditing firm (Auditor) to perform a comprehensive audit and reconciliation of all consumer escrow accounts, with a report to be furnished by the Auditor to Ocwen and the MMC within five business days thereafter. The audit plan was to be submitted to, and approved by, the MMC no later than January 13, 2017.

82.  Ocwen’s response to the state regulators on January 13, 2017, was that the reconciliation of escrow accounts, which is paramount in ensuring the appropriate management of consumer funds, would cost $1.5 billion and well beyond Ocwen’s financial capacity. Ocwen has suggested instead that a sample of 457 escrow accounts nationwide be reconciled out of 2.5 million active first lien escrow accounts that Ocwen has serviced since January 2013. This proposal is entirely deficient as the sample size is such a small percentage of Ocwen’s total portfolio.

83.  The MOU required Ocwen to provide, among other things, a viable going forward business plan that encompassed an analysis of its financial condition going forward. The purpose of the   plan was to analyze Ocwen’s future financial condition incorporating and encompassing all known or reasonably certain liabilities.  Ocwen’s going forward plan submitted in response to the MOU was deficient because it did not provide a complete assessment of its financial condition because it excluded significant liabilities. The Division has reason to believe that if the going forward plan had accurately accounted for known or anticipated regulatory penalties and other operational costs, including, but not limited to, the expenses of moving to a new servicing platform and complete reconciliation of consumer escrow accounts with restitution to impacted borrowers, it would indicate the company would not continue as a going concern.

CONCLUSIONS OF LAW

 Based upon the aforementioned Statement of Facts, Ocwen has failed to demonstrate the financial responsibility, character, reputation, integrity, and general fitness that would warrant the belief that the business will be operated honestly, fairly, and soundly in the public interest in violation of General Laws chapter 93, sections 24G, 24I, General Laws chapter 255E, section 4, 209 CRM 42.03, and 209 CMR 18.03.

ORDER TO CEASE AND DESIST

After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:

ORDERED that Ocwen and any and all officers, directors, managers, employees, independent contractors or agents operating on behalf of Ocwen, and their successors or assigns, shall initiate a process as set forth below to transfer the entire portfolio of Massachusetts residential mortgage loans for which it provides mortgage servicing and debt collection services as defined under Massachusetts General Laws chapter 93, sections 24-28 to one or more appropriately licensed loan servicer(s) as approved by the Division.

  1. )           Within 30 days of this order, Ocwen shall seek the Division’s approval by submitting in writing the licensed loan servicer(s) to which Ocwen intends to transfer all of its mortgage servicing and debt collection activities.  Ocwen may transfer its mortgage servicing rights or may engage sub-servicer(s).
  2. )           Within 120 days after the Division’s approval of transferee loan servicer(s), Ocwen will effectuate the transfer all of its mortgage servicing and debt collection activities.
  3. )           Until the mortgage servicing and debt collection activities for each loan is transferred, Ocwen will continue to act as servicer.  This includes, but is not limited to accepting, processing and applying payments, as well as making appropriate escrow disbursements.
  4. )           Ocwen will transfer all of its mortgage servicing and debt collection activities in a manner compliant with all federal and state regulations, including but not limited to the Real Estate Settlement Procedures Act (RESPA).
  5. )           Ocwen shall ensure the transfer is made with no harm to any Massachusetts consumers.

As soon as possible, but not later than 48 hours after the effective date of this ORDER, Ocwen shall submit to the Commissioner a list identifying all of the Massachusetts residential mortgage loans which are to be transferred on or after the effective date of this ORDER.  The list shall contain all identifying information for the loan, including but not limited to the following: the property address, the borrower’s name, addresses and telephone numbers; the loan number; and the name of the new loan servicer.  The record should include telephone numbers of contact persons at each new loan servicer who is familiar with the Company’s transferred loans;

IT IS FURTHER ORDERED that Ocwen shall immediately cease soliciting or accepting, either directly or indirectly, any new residential mortgage loan applications from consumers for residential property located in Massachusetts.

IT IS FURTHER ORDERED that Ocwen shall place with one or more qualified or lender(s), with no loss to applicants, the following: (a) Ocwen’s entire portfolio of Massachusetts residential mortgage loans which were closed by Ocwen, and remain unfunded within 15 days after the issuance of this Order; and (b) Ocwen’s entire pending application list of Massachusetts residential mortgage loans.  It being understood that “no loss to the applicant” shall mean that any loan which was closed by Ocwen, as well as any application which was approved by Ocwen, shall be placed to a lender willing to fund, or close, the mortgage loan under the same terms and conditions extended by Ocwen.  In the event that no such placement can be made, Ocwen shall either independently fund the mortgage loan under such terms and conditions or buy down the mortgage loan offered by the lender so that the applicant does not incur a loss as a result of such placement.  Ocwen shall obtain the prior approval of the Commissioner before placing such applications to the qualified lender(s).  Ocwen shall continue to maintain its present pipeline of loan applications until the transfer for each application has been completed.

IT IS FURTHER ORDERED that Ocwen shall immediately place any fees previously collected from Massachusetts consumers relative to any pending mortgage loan applications in a separate escrow account maintained at a federally insured bank.

IT IS FURTHER ORDERED that Ocwen shall submit to the Commissioner a detailed record, prepared as of the date of submission, of all of the Company’s pending residential mortgage loan applications on property located in Massachusetts.  The records to be produced shall include all information on file regarding the Company’s Massachusetts mortgage loan portfolio, including but not necessarily limited to, the following:

  1. )           Within sixteen (16) days of the effective date of this Order, Ocwen shall submit to the Commissioner all information on file as of the date of submission regarding the Company’s portfolio of mortgage loans that were closed by Ocwen prior to the effective date of this Order, but remain as yet unfunded.  Such information shall include, but is not limited to, the following: The names of all individuals from whom Ocwen processed an application and closed the residential mortgage loan, but failed to fund; the applicants’ addresses and telephone numbers; the loan number; the amount of all prepaid loan fees submitted by the customer; the amount of each loan; the loan terms; the current funding status; the actual closing dates; the loan purpose (i.e. purchase or refinance); and identification of the applicable lender with whom each application will be placed.  The record should include telephone numbers of contact persons at each lender who is familiar with the Company’s submitted loans;
  2. )           As soon as possible, but not later than  forty eight hours after the effective date of this Order, Ocwen shall submit to the Commissioner all information on file as of the date of submission regarding the Company’s pipeline of pending mortgage loan applications including but not limited to, the following: The names of all individuals from whom Ocwen has accepted an application for a residential mortgage loan; the applicants’ addresses and telephone numbers; the loan number; the amount of all prepaid loan fees submitted by the customer; rate lock status; the amount of each loan; application status (i.e. filed, submitted to lenders, cleared to close, etc.); loan terms, if approved; scheduled closing dates; the loan purpose (i.e. purchase or refinance); and identification of the applicable lender with whom each application will be placed.  The record should include telephone numbers of contact persons at each lender who is familiar with the Company’s submitted loans;

IT IS FURTHER ORDERED that Ocwen shall immediately secure all pending mortgage loan application files and, to the extent that any original documents must be forwarded to the relevant mortgage lender(s) pursuant to this Order, a copy of such document, correspondence, or paper relating to the mortgage loan shall be retained in Ocwen’s books and records and shall be available to the Commissioner, in their entirety, upon request.

IT IS FURTHER ORDERED that within five (5) days of the effective date of this Order, Ocwen shall submit to the Commissioner Ocwen’s balance sheet and year-to-date income statement, prepared as of the date of submission, and attested by a duly authorized officer of the Company.  The balance sheet shall indicate Ocwen’s cash position at each of its depository banks as well as Ocwen’s bank account numbers.

IT IS FURTHER ORDERED that this Order shall become effective immediately and shall remain in effect unless set aside, limited or suspended by the Commissioner or upon court order after review under Massachusetts General Laws chapter 30A.

ORDER TO SHOW CAUSE 

The Division hereby re-alleges and incorporates by reference FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein as though fully set forth.  WHEREAS, finding it necessary and appropriate and in the public interest, and consistent with the purposes of the laws governing mortgage brokers and loan originators in the Commonwealth;

IT IS HEREBY ORDERED that Ocwen shall show cause why its mortgage lender license, ML1852 should not be revoked pursuant to General Laws chapter 255E, section 6.

IT IS FURTHER ORDERED that Ocwen shall show cause why its debt collector license, DC0861 should not be revoked pursuant to General Laws chapter 93, section 24I.

PRAYER FOR RELIEF

WHEREFORE, the Division, by and through the Commissioner, prays for a final decision as follows:

  1. For a final Agency decision in favor of the Division and against Ocwen for each Charge set forth in this Order;
  2. For a final Agency decision revoking Ocwen’s mortgage lender license, numbers ML1852 to conduct business as a mortgage lender in Massachusetts;
  3. For a final Agency decision revoking Ocwen’s mortgage lender license, numbers DC0861 to conduct business as a debt collector and residential mortgage loan servicer in Massachusetts;
  4. For a final Agency decision ordering Ocwen to cease and desist from transacting business in Massachusetts as a mortgage lender;
  5. For a final Agency decision ordering Ocwen to cease and desist from transacting business in Massachusetts as a debt collector or loan servicer;
  6. For a final Agency decision ordering Ocwen to immediately place any pending residential mortgage loan applications and related files, if it has not already done so in accordance with the provisions of this Order, with qualified mortgage lender(s), with no costs to the applicant;
  7. For a final Agency decision ordering Ocwen to immediately place any residential mortgage loans, if it has not already done so in accordance with the provisions of this Order, with qualified mortgage servicer(s), with no costs to the consumer;
  8. For costs and fees of the Division’s investigation of this matter; and
  9. For such additional equitable relief as the Presiding Officer may deem just and proper.

NOTICE OF RIGHT TO A HEARING

Ocwen is required to file an Answer or otherwise respond to the Charges contained in this Order within twenty-one (21) days of its effective date, pursuant to the Standard Adjudicatory Rules of Practices and Procedures, 801 CMR 1.01(6)(d).  Ocwen may request that a hearing be held within 20 days of the Division’s receiving of Ocwen’s request for a hearing.  If Ocwen fails to respond to this Order within the twenty-one (21) day period, the FINDING OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST AND ORDER TO SHOW CAUSE AND NOTICE OF RIGHT TO A HEARING shall become permanent and final until it is modified or vacated by the Commissioner. Failure to file an Answer may also result in a default judgment against Ocwen in the matter of the revocation of the Company’s mortgage lender and debt collector licenses. The Answer, and any subsequent filings that are made in conjunction with this proceeding, shall be directed to the Division, with a copy to Prosecuting Counsel. All papers filed with the Division shall be addressed to the attention of:
Administrative Hearings Officer
Massachusetts Division of Banks
1000 Washington Street, 10th Floor
Boston, Massachusetts 02118

Prosecuting Counsel for this matter is:

Amanda B. Loring, Esq.
Massachusetts Division of Banks
1000 Washington Street, 10th Floor
Boston, Massachusetts 02118

You are further advised that Ocwen has the right to be represented by counsel or other representative, to call and examine witnesses, to introduce exhibits, to cross-examine witnesses who testify against Ocwen and to present oral arguments. The hearing will be held at a date and time to be determined and will be conducted according to Massachusetts General Laws, chapter 30A, sections 10 and 11, and the Standard Adjudicatory Rules of Practice and Procedure, 801 C.M.R. 1.01 and 1.03.

Ocwen may examine any and all discoverable Division records relative to this case prior to the date of the hearing, during normal business hours, at the office of the Prosecuting Counsel. If you elect to undertake such an examination, please contact the Prosecuting Counsel, Amanda B. Loring, Esq. at 617-956-1500 in advance to schedule a time that is mutually convenient.



[1] The MMC Examination findings also showed that Ocwen violated Federal and various state laws governing loss mitigation procedures by failing to process and address the application as required under 12 CFR 1024.41(b). As a loan servicer of federally related mortgage loans are governed under Federal Regulation X, Ocwen is required to review the loss mitigation application and to notify the borrower within 5 days of the outcome, 12 CFR 1024.41(b); is required to evaluate the plaintiff for all loss mitigation options, 12 CFR 1024.41(c); is prohibited from engaging in “dual tracking” after having received the application for loss mitigation and responding by scheduling the foreclosure sale, 12 CFR 1024.41(g); and is required to comply with various state laws that make it a violation to act contrary to Regulation X requirements.

 

[2] According to Ocwen, loans owned by the following investors are excluded from the requirement to list the property at Hubzu: the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and FHA or VA insured loans.  In addition, E*TRADE has stated to Ocwen that they do not wish to participate in the Hubzu program.

 

 

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 20th day of April, 2017

Cynthia A. Begin
Chief Risk Officer
Commonwealth of Massachusetts

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North Carolina Slaps Ocwen with a Cease-and-Desist Letter

North Carolina Slaps Ocwen with a Cease-and-Desist Letter

?In completely separate moves, Ocwen came under fire from multiple states across the country. For instance, the state of North Carolina today slapped Ocwen with a cease-and-desist letter that will indefinitely prevent it from acquiring new mortgage servicing rights in the state, as well as originating mortgages that it plans to service.

OcwenOrder17_025 by DinSFLA on Scribd

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REBOOT |  CFPB Sues Ocwen for Failing Borrowers Throughout Mortgage Servicing Process

REBOOT | CFPB Sues Ocwen for Failing Borrowers Throughout Mortgage Servicing Process

Mortgage Servicer’s Widespread Errors, Shortcuts, and Runarounds Cost Borrowers Money, Homes

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) today sued one of the country’s largest nonbank mortgage loan servicers, Ocwen Financial Corporation, and its subsidiaries for failing borrowers at every stage of the mortgage servicing process. The Bureau alleges that Ocwen’s years of widespread errors, shortcuts, and runarounds cost some borrowers money and others their homes. Ocwen allegedly botched basic functions like sending accurate monthly statements, properly crediting payments, and handling taxes and insurance. Allegedly, Ocwen also illegally foreclosed on struggling borrowers, ignored customer complaints, and sold off the servicing rights to loans without fully disclosing the mistakes it made in borrowers’ records. The Florida Attorney General took a similar action against Ocwen today in a separate lawsuit. Many state financial regulators are also independently issuing cease-and-desist and license revocation orders against Ocwen for escrow management and licensing issues today.

“Ocwen has repeatedly made mistakes and taken shortcuts at every stage of the mortgage servicing process, costing some consumers money and others their homes,” said CFPB Director Richard Cordray. “Borrowers have no say over who services their mortgage, so the Bureau will remain vigilant to ensure they get fair treatment.”

Ocwen, headquartered in West Palm Beach, Fla., is one of the nation’s largest nonbank mortgage servicers. As of Dec. 31, 2016, Ocwen serviced almost 1.4 million loans with an aggregate unpaid principal balance of $209 billion. It services loans for borrowers in all 50 states and the District of Columbia. A mortgage servicer collects payments from the mortgage borrower and forwards those payments to the owner of the loan. It handles customer service, collections, loan modifications, and foreclosures. Ocwen specializes in servicing subprime or delinquent loans.

The CFPB uncovered substantial evidence that Ocwen has engaged in significant and systemic misconduct at nearly every stage of the mortgage servicing process. The CFPB is charged with enforcing the Dodd-Frank Wall Street Reform and Consumer Protection Act, which protects consumers from unfair, deceptive, or abusive acts or practices, and other federal consumer financial laws. In addition, the Bureau adopted common-sense rules for the mortgage servicing market that first took effect in January 2014. The CFPB’s mortgage servicing rules require that servicers promptly credit payments and correct errors on request. The rules also include strong protections for struggling homeowners, including those facing foreclosure. In its lawsuit, the CFPB alleges that Ocwen:

  • Serviced loans using error-riddled information: Ocwen uses a proprietary system called REALServicing to process and apply borrower payments, communicate payment information to borrowers, and maintain loan balance information. Ocwen allegedly loaded inaccurate and incomplete information into its REALServicing system. And even when data was accurate, REALServicing generated errors because of system failures and deficient programming. To manage this risk, Ocwen tried manual workarounds, but they often failed to correct inaccuracies and produced still more errors. Ocwen then used this faulty information to service borrowers’ loans. In 2014, Ocwen’s head of servicing described its system as “ridiculous” and a “train wreck.”
  •  Illegally foreclosed on homeowners: Ocwen has long touted its ability to service and modify loans for troubled borrowers. But allegedly, Ocwen has failed to deliver required foreclosure protections. As a result, the Bureau alleges that Ocwen has wrongfully initiated foreclosure proceedings on at least 1,000 people, and has wrongfully held foreclosure sales. Among other illegal practices, Ocwen has initiated the foreclosure process before completing a review of borrowers’ loss mitigation applications. In other instances, Ocwen has asked borrowers to submit additional information within 30 days, but foreclosed on the borrowers before the deadline. Ocwen has also foreclosed on borrowers who were fulfilling their obligations under a loss mitigation agreement.
  • Failed to credit borrowers’ payments: Ocwen has allegedly failed to appropriately credit payments made by numerous borrowers. Ocwen has also failed to send borrowers accurate periodic statements detailing the amount due, how payments were applied, total payments received, and other information. Ocwen has also failed to correct billing and payment errors.
  • Botched escrow accounts: Ocwen manages escrow accounts for over 75 percent of the loans it services. Ocwen has allegedly botched basic tasks in managing these borrower accounts. Because of system breakdowns and an over-reliance on manually entering information, Ocwen has allegedly failed to conduct escrow analyses and sent some borrowers’ escrow statements late or not at all. Ocwen also allegedly failed to properly account for and apply payments by borrowers to address escrow shortages, such as changes in the account when property taxes go up. One result of this failure has been that some borrowers have paid inaccurate amounts.
  • Mishandled hazard insurance: If a servicer administers an escrow account for a borrower, a servicer must make timely insurance and/or tax payments on behalf of the borrower. Ocwen, however, has allegedly failed to make timely insurance payments to pay for borrowers’ home insurance premiums. Ocwen’s failures led to the lapse of homeowners’ insurance coverage for more than 10,000 borrowers. Some borrowers were pushed into force-placed insurance.
  • Bungled borrowers’ private mortgage insurance: Ocwen allegedly failed to cancel borrowers’ private mortgage insurance, or PMI, in a timely way, causing consumers to overpay. Generally, borrowers must purchase PMI when they obtain a mortgage with a down payment of less than 20 percent, or when they refinance their mortgage with less than 20 percent equity in their property. Servicers must end a borrower’s requirement to pay PMI when the principal balance of the mortgage reaches 78 percent of the property’s original value. Since 2014, Ocwen has failed to end borrowers’ PMI on time after learning information in its REALServicing system was unreliable or missing altogether. Ocwen ultimately overcharged borrowers about $1.2 million for PMI premiums, and refunded this money only after the fact.
  • Deceptively signed up and charged borrowers for add-on products: When servicing borrowers’ mortgage loans, Ocwen allegedly enrolled some consumers in add-on products through deceptive solicitations and without their consent. Ocwen then billed and collected payments from these consumers.
  • Failed to assist heirs seeking foreclosure alternatives: Ocwen allegedly mishandled accounts for successors-in-interest, or heirs, to a deceased borrower. These consumers included widows, children, and other relatives. As a result, Ocwen failed to properly recognize individuals as heirs, and thereby denied assistance to help avoid foreclosure. In some instances, Ocwen foreclosed on individuals who may have been eligible to save these homes through a loan modification or other loss mitigation option.
  •  Failed to adequately investigate and respond to borrower complaints: If an error is made in the servicing of a mortgage loan, a servicer must generally either correct the error identified by the borrower, called a notice of error, or investigate the alleged error. Since 2014, Ocwen has allegedly routinely failed to properly acknowledge and investigate complaints, or make necessary corrections. Ocwen changed its policy in April 2015 to address the difficulty its call center had in recognizing and escalating complaints, but these changes fell short. Under its new policy, borrowers still have to complain at least five times in nine days before Ocwen automatically escalates their complaint to be resolved. Since April 2015, Ocwen has received more than 580,000 notices of error and complaints from more than 300,000 different borrowers.
  •  Failed to provide complete and accurate loan information to new servicers: Ocwen has allegedly failed to include complete and accurate borrower information when it sold its rights to service thousands of loans to new mortgage servicers. This has hampered the new servicers’ efforts to comply with laws and investor guidelines.

The Bureau also alleges that Ocwen has failed to remediate borrowers for the harm it has caused, including the problems it has created for struggling borrowers who were in default on their loans or who had filed for bankruptcy. For these groups of borrowers, Ocwen’s servicing errors have been particularly costly.

Through its complaint, filed in federal district court for the Southern District of Florida, the CFPB seeks a court order requiring Ocwen to follow mortgage servicing law, provide relief for consumers, and pay penalties. The complaint is not a finding or ruling that the defendants have actually violated the law.

The lawsuit is available at:http://files.consumerfinance.gov/f/documents/20170420_cfpb_Ocwen-Complaint.pdf

###

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Acting Manhattan U.S. Attorney Settles Civil Lawsuit Against HSBC Bank USA, N.A., Regarding Failure To Disclose Fraud Or Potential Fraud In Guaranteed Loans

Acting Manhattan U.S. Attorney Settles Civil Lawsuit Against HSBC Bank USA, N.A., Regarding Failure To Disclose Fraud Or Potential Fraud In Guaranteed Loans

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Friday, April 14, 2017

Acting Manhattan U.S. Attorney Settles Civil Lawsuit Against HSBC Bank USA, N.A., Regarding Failure To Disclose Fraud Or Potential Fraud In Guaranteed Loans

Defendant HSBC Bank USA, N.A., Admits Submitting Dozens of Loans for Payment on SBA Guarantees Without Disclosing that Loans Had Been Identified as Fraudulent or Potentially Fraudulent

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Eric S. Benderson, the Acting General Counsel of the U.S. Small Business Administration (“SBA”), announced today that the United States has settled a civil fraud lawsuit against HSBC BANK USA, N.A. (“HSBC”). The Government’s complaint, filed on April 10, 2017 (the “Complaint”), sought damages and civil penalties under the False Claims Act for misconduct in connection with HSBC’s participation in the SBAExpress loan program, which was designed to help start-ups and existing small businesses. The Complaint alleged that, as part of an internal review designed to identify reasons for defaults on loans to small and medium-size enterprises, HSBC identified dozens of SBAExpress loans as fraudulent or potentially fraudulent, since borrowers appeared to have submitted false information to HSBC to obtain the loans. The Complaint further alleged that after 42 of these loans defaulted, HSBC sought reimbursement from the SBA without revealing the facts suggesting that borrowers submitted false information to HSBC to obtain many of the loans, or the fact that HSBC had included the loans on an internal list of fraudulent or potentially fraudulent loans. In the settlement approved today by U.S. District Judge Lorna G. Schofield, HSBC agreed to pay $2,118,861.36 to resolve the Government’s claims, and admitted, acknowledged, and accepted responsibility for conduct alleged in the Complaint.

 

Manhattan Acting U.S. Attorney Joon H. Kim said: “Lenders must disclose material information for our agency partners like the SBA, who administer federal loan programs. When they fail to do so – as HSBC did here, by submitting loans for repayment on SBA guarantees without disclosing that the loans had been identified as potentially fraudulent – they need to be held to account. This settlement reflects the Office’s continuing commitment to keep lenders who participate in federal lending programs honest.”

 

SBA Acting General Counsel Eric S. Benderson said: “This case is yet another example of the tremendous results achieved through the joint efforts of the SBA and the Department of Justice to uncover and forcefully respond to civil fraud committed by those who participate in SBA’s lending programs. Identifying and aggressively pursuing instances of civil fraud by participants in the Agency’s lending programs is one of SBA’s top priorities.”

 

The Government’s lawsuit alleged as follows:

 

In or around 2006, HSBC conducted an internal review to identify reasons for the default rates on loans it had made to small and medium-size enterprises, including but not limited to loans issued pursuant to SBAExpress. HSBC created a list of known fraud accounts as part of the review. HSBC identified many SBAExpress loans as fraudulent or potentially fraudulent in which borrowers may have submitted false information to HSBC in obtaining their loans, including 42 loans (the “Loans”) referenced in an exhibit attached to the Complaint.

 

After the Loans defaulted, HSBC sought reimbursement from SBA for the guaranteed amount on each of these Loans (up to 50 percent of the principal of the Loans) without telling SBA that many of the Loans were fraudulent or potentially fraudulent. Specifically, HSBC did not inform SBA of all of the facts indicating that borrowers may have submitted false information to HSBC in connection with the origination of many of the Loans, or that HSBC had included these Loans on an internal list of fraudulent or potentially fraudulent loans. HSBC’s failure to disclose that it had determined that many of the Loans were fraudulent or potentially fraudulent rendered HSBC’s reimbursement requests for losses incurred in connection with the Loans false, misleading, and/or fraudulent. The submissions made to SBA in connection with seeking reimbursement on many of these Loans contained half-truths and material omissions by failing to disclose facts about fraud or potential fraud by borrowers when the Loans were originated.

 

The case was initially brought by a whistleblower under the False Claims Act, and the Government intervened in the case.

 

Pursuant to the settlement, HSBC will pay the United States $2,118,861.36. As part of the settlement, the bank admitted, acknowledged, and accepted responsibility for the following conduct:

 

  • In or around 2006, HSBC voluntarily commenced an internal effort to gain an understanding of the reasons for the default rates on loans that it had made to small and medium-size enterprises, including but not limited to loans issued pursuant to the SBAExpress program. HSBC’s efforts included an attempt to identify whether any of the loans involved fraud or potential fraud by borrowers;

     

  • As part of this effort, HSBC identified a number of loans as fraudulent or potentially fraudulent in which borrowers may have submitted false information to HSBC in obtaining their loans, including the Loans;

     

  • HSBC subsequently sought from SBA the guaranteed amounts on each of these Loans (i.e., up to fifty percent of the principal of the Loans) after the loans defaulted;

     

  • In submitting the requests for payment to SBA of the guaranteed amounts of certain Loans, HSBC did not inform SBA of all of the facts indicating that borrowers may have submitted false information to HSBC in connection with the origination of these loans, or that as a result HSBC had identified these loans as fraudulent or potentially fraudulent.

 

* * *

Mr. Kim thanked SBA for its investigative efforts and assistance with the case.

 

This case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Lawrence H. Fogelman is in charge of the case.

17-108
Topic:
Financial Fraud
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Feds knew of 700 Wells Fargo whistleblower cases in 2010

Feds knew of 700 Wells Fargo whistleblower cases in 2010

CNN-

America’s chief federal banking regulator admits it failed to act on numerous “red flags” at Wells Fargo that could have stopped the fake account scandal years earlier.

One particularly alarming red flag that went unheeded: In January 2010, the regulator was aware of “700 cases of whistleblower complaints” about Wells Fargo’s sales tactics.

 An internal review published on Wednesday by the Office of the Comptroller of the Currency found that the regulator didn’t live up to its responsibilities. The report found that oversight of Wells Fargo (WFC) was “untimely and ineffective” and federal examiners overseeing the bank “missed” several opportunities to uncover the problems that led to the creation of millions of fake accounts.
[CNN]
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HSBC Challenges Foreclosure Dismissal Amid Claims of ‘Unclean Hands’

HSBC Challenges Foreclosure Dismissal Amid Claims of ‘Unclean Hands’

Daily Business Review-

Things looked grim for HSBC Bank USA N.A. last year when it faced involuntary dismissal of its case after a bench trial and sanctions for prosecuting a foreclosure suit with “unclean hands.”

Back then, the trial judge sided with borrowers accusing the bank of building its case on a forged mortgage assignment and granted their request to force the financial institution to show why it shouldn’t be punished for committing a fraud on the court.

But HSBC seems off to a strong start on appeal—at least in its challenge of one aspect of the lower court’s order—having survived a motion to dismiss its case as premature before a state appellate panel.

[DAILY BUSINESS REVIEW]

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Costa v. Deutsche Bank |  NYSD – granted summary judgment (i) in favor of their RPAPL Article 15 claim seeking the cancellation and discharge of record of the Mortgage, a declaration adjudging the Property to be free from an encumbrance arising from the Mortgage, and a declaration discharging Plaintiffs’ obligations under the Note

Costa v. Deutsche Bank | NYSD – granted summary judgment (i) in favor of their RPAPL Article 15 claim seeking the cancellation and discharge of record of the Mortgage, a declaration adjudging the Property to be free from an encumbrance arising from the Mortgage, and a declaration discharging Plaintiffs’ obligations under the Note

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

VITO V. COSTA and MARION P. COSTA,
Plaintiffs,

v.

DEUTSCHE BANK NATIONAL TRUST
COMPANY AS TRUSTEE FOR GSR
MORTGAGE LOAN TRUST 2006-OAI,
MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 2006-OA1, and
SPECIALIZED LOAN SERVICING LLC,
Defendants.

KATHERINE POLK FAILLA, District Judge:

Stripped of its technical jargon, this case is about whether a nearly
decade-old defaulted mortgage loan remains enforceable. Plaintiffs Vito and
Marion Costa argue that the applicable six-year statute of limitations has
expired and that they are therefore entitled to the cancellation and discharge of
their mortgage loan. Defendants, the loan trustee and the servicer, maintain
that the limitations period has not expired because it had not started prior to
this action or, if it had, it was tolled or renewed; thus, foreclosure is warranted.
Even if their foreclosure claim is time-barred, however, Defendants still seek to
recoup their expenses in maintaining the property over the past decade. The
parties filed cross-motions for summary judgment pursuant to Federal Rule of
Civil Procedure 56 following the close of discovery. For the reasons that follow,
Plaintiffs’ motion is granted and Defendants’ motion is denied.

[…]

Down Load PDF of This Case

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CFPB Files Suit Against Law Firm for Misrepresenting Attorney Involvement in Collection of Millions of Debts

CFPB Files Suit Against Law Firm for Misrepresenting Attorney Involvement in Collection of Millions of Debts

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit in a federal district court against the debt collection law firm Weltman, Weinberg & Reis for falsely representing in millions of collection letters sent to consumers that attorneys were involved in collecting the debt. The law firm made statements on collection calls and sent collection letters creating the false impression that attorneys had meaningfully reviewed the consumer’s file, when no such review has occurred. The CFPB is seeking to stop the unlawful practices and recoup compensation for consumers who have been harmed.

“Debt collectors who misrepresent that a lawyer was involved in reviewing a consumer’s account are implying a level of authority and professional judgement that is just not true,” said CFPB Director Richard Cordray. “Weltman, Weinberg & Reis masked millions of debt collection letters and phone calls with the professional standards associated with attorneys when attorneys were, in fact, not involved. Such illegal behavior will not be allowed in the debt collection market.”

Weltman, Weinberg & Reis, based in Cleveland, Ohio, regularly collects debt related to credit cards, installment loan contracts, mortgage loans, and student loans. It collects on debts nationwide but only files collection lawsuits in seven states: Illinois, Indiana, Kentucky, Michigan, New Jersey, Ohio, and Pennsylvania.

The CFPB alleges that the firm engaged in illegal debt collection practices. In form demand letters and during collection calls to consumers, the firm implied that lawyers had reviewed the veracity of a consumer’s debt. But typically, no attorney had reviewed any aspect of a consumer’s individual debt or accounts. No attorney had assessed any consumer-specific information. And no attorney had made any individual determination that the consumer owed the debt, that a specific letter should be sent to the consumer, that a consumer should receive a call, or that the account was a candidate for litigation.

The CFPB alleges that the company is violating the Fair Debt Collection Practices Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Since at least July 21, 2011, the law firm has sent millions of demand letters to consumers. Specifically, the CFPB alleges that the law firm:

  • Sent collection letters falsely implying they were from a lawyer: Weltman, Weinberg & Reis sent letters on formal law firm letterhead with the phrase “Attorneys at Law” at the top of the letter and stated the law firm’s name in the signature line. The letters also included a payment coupon indicating that payment should be sent to the firm. Some demand letters referred to possible “legal action” against consumers who did not make payments. Despite these representations, the vast majority of the time, no attorneys had reviewed consumer accounts or made any determination that the consumer owed the debt, that a specific letter should be sent to the consumer, or that the account was a candidate for litigation before these letters were sent.
  • Called consumers and falsely implied a lawyer was involved: Weltman, Weinberg & Reis’s debt collectors told consumers during collection calls that they were calling from a law firm. Specifically, sometimes they told consumers that it was the “largest collection law firm in the United States,” or that the debt had been placed with “the collections branch of our law firm.” This implied that attorneys participated in the decision to make collection calls, but no attorney had reviewed consumer accounts before debt collectors called consumers.

The Bureau is seeking to stop the alleged unlawful practices of Weltman, Weinberg & Reis. The Bureau has also requested that the court impose penalties on the company for its conduct and require that compensation be paid to consumers who have been harmed.

The Bureau’s complaint is not a finding or ruling that the defendant has actually violated the law.

The full text of the complaint can be found at:http://files.consumerfinance.gov/f/documents/201704_cfpb_Weltman-Weinberg-Reis_Complaint.pdf

###
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

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Buyers Beware! Florida’s District Courts of Appeal Confirm that Third Party Purchasers Have Little to No Right to Participate in Foreclosure Proceedings

Buyers Beware! Florida’s District Courts of Appeal Confirm that Third Party Purchasers Have Little to No Right to Participate in Foreclosure Proceedings

Lexology-

Third party purchaser lacks standing to participate in foreclosure proceeding, absent assertion of intention to redeem the property. After the Second District Court of Appeal issued a per curiam affirmance of the entry of final judgment of foreclosure in favor of the bank, Judge Sleet issued a specially concurring opinion in which he concluded that because the appellant was a third party purchaser of the property who was not obligated on the note and mortgage, it was “questionable” whether she had standing to challenge the bank’s foreclosure proceeding in the first place. Pealer v. Wilmington Trust, N.A., as Trustee for the MFRA Trust, 2D15-2822, 2017 WL 104075, at *1 (Fla. 2d DCA March 171, 2017).

In 2011, the appellant (“the Purchaser”) acquired the property at a homeowner’s association foreclosure sale with actual knowledge of the bank’s mortgage on the property, but did not assume the mortgage. Id. In 2013, the bank began its foreclosure proceeding, naming the mortgagors, who did not participate in the foreclosure, and the Purchaser, who participated fully at trial and disputed the admissibility of the bank’s business records and challenged its standing to foreclose. Id. The bank did not object to the Purchaser’s participation at trial, thereby waiving any argument that the Purchaser lacked standing to participate. Id.

However, in his specially concurring opinion, Judge Sleet concluded that, had the bank objected to the Purchaser’s right to participate at trial, that argument would have been meritorious in this case. Id. The concurrence explained that the Purchaser was an indispensable party to the foreclosure proceeding and was properly named as a defendant because she acquired the property before the bank filed a foreclosure complaint or recorded a lis pendens. Id. However, the concurrence explained that the Purchaser’s interest in the foreclosure proceeding was “not a legally cognizable interest” because the Purchaser took title to the property subject to the bank’s superior interest in the property. Id. at *2. Because the Purchaser had only a possessory interest in the property and was never obligated on the note and mortgage, the Purchaser could only participate in the foreclosure proceeding to exercise her statutory right of redemption and prevent the forced sale of the property. Id. In this case, though, the concurrence found that there was no evidence in the record that the Purchaser ever asserted her right to redeem the property, and as a result, the Purchaser’s interest in the foreclosure action was “speculative” and “insufficient to support [her] standing to challenge the bank’s standing or admission of evidence at trial.”

continue reading LEXOLOGY

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Bank of America Protests Judge’s $45 Million Fine In Homeowner Case

Bank of America Protests Judge’s $45 Million Fine In Homeowner Case

Fox News-

Bank of America Corp. asked a bankruptcy judge to reconsider his $45 million fine over its treatment of a California couple who requested lower mortgage payments, calling the amount “unprecedented in its magnitude.”

In court papers, bank officials asked Judge Christopher Klein to amend his 107-page ruling against the bank, arguing that his “excessive” fine amount violates guidance from Supreme Court justices in 2008 meant to prevent outsized awards. The fine, the bank said, stands as the largest punitive damages award for violations of bankruptcy law’s automatic stay rules, which ban lenders from advancing foreclosures and taking other actions.

The ruling, issued March 23, said that bank officials mistreated California couple Renee and Erik Sundquist as they fought to save their home outside Sacramento from foreclosure. The decision, which renewed attention to the mortgage industry’s loan-servicing business, called for the Sundquists to donate most of the $45 million award to five law schools and two legal-aid nonprofits.

[FOX NEWS]

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