Plaintiffs in Lawsuit Against Ocwen Foreclosure Funding LLC
Beware: Ocwen is often accused of charging excessive fees for its services, even though it has been approved by the state to do just that. Beware also of lawsuits against Ocwen, which have been pending in Florida and in other states for quite some time now. Ocwen is sued (on again) by state regulators and is said to be overcharging its borrowers. Based out of West Palm Beach, Ocwen advertises itself as one of the nation’s leading sub-prime mortgage servicing firms.
But lawsuits are being filed against Ocwen, suggesting that it is engaged in unlawful activities.
Some of these lawsuits cite the fact that Ocwen has not complied with the Fair Debt Collection Practices Act (FDCPA) of long ago. According to the FDCPA, all mortgage companies have to take a certain measure of action when homeowners fall behind on their mortgages. One of those measures is to engage in good faith collections of delinquent payments-but how can a lender engage in that? They cannot simply take someone’s property and charge them all kinds of fees right away without any proof of inability to repay the mortgage. This is where lawsuits against Ocwen emerge.
There are two lawsuits against Ocwen pending in Florida right now that could have direct bearing on the company’s ability to process mortgage payments in the future.
In early December, the Florida attorney general’s office sent letters to several mortgage companies, warning that it would be “inappropriate” for brokers to pursue collection on a borrower’s delinquent mortgage without first having obtained court approval to do so. In early December, the mortgage servicer, Exeter Mortgage, did respond to the letters, but declined to pursue any claims against Ocwen. The two lawsuits filed in January against Ocwen contend that it did not comply with the law.
The lawsuits against Ocwen contend that the company engaged in a pattern or system of unlawful activity in violation of the FDCPA.
Primarily, the plaintiffs are asserting that Ocwen agents violated the FDCPA’s “adverse action” rule, which bars lenders from taking any action to encourage a borrower to abandon their property for lack of reasonable financial opportunity. Another rule violation cited in the lawsuits is the one that states that borrowers must receive notice before foreclosing on a home. This requirement was added to the FDCPA in 1996, as an attempt to prevent lenders from taking excessive shortcuts that could ultimately result in a denial of a claim for compensation.
The lawsuits further claim that Ocwen representatives encouraged borrowers to avoid paying their mortgages by increasing the interest rates on the loans.
They further charge that the mortgage servicicer and its attorneys tried to convince the federal judge that the bank did not commit fraud when it attempted to foreclose on Ocwen homeowners. Federal Judge William J. Taylor in Cincinnati has ordered the foreclosure auction process to be restarted on all 150 million mortgage notes. This means that borrowers in danger of losing their homes will have another chance to save them from foreclosure.
The actions of the services involved in the lawsuits against Ocwen represent the worst practices of the mortgage servicing industry.
Bank representatives and their attorneys know that the FDCPA does not apply to non-filing parties. In addition, these representatives are well aware that Congress has passed bills that allow the courts to dismiss actions by private services under the FDCPA’s “safe harbor” provision. These lawsuits against Ocwen represent the best opportunity to put a halt to the practice of mortgage servicing fraud. If the lawsuits are successful, the mortgage industry will no longer be able to benefit from the illegal conduct of its representatives.