mortgage servicing

On September 8, 2017, the U.S. District Court for the Northern District of California entered an order granting a civil penalty and injunctive relief in a CFPB case against mortgage loan servicer Nationwide Biweekly Administration, Inc. (“Nationwide”), its wholly-owned subsidiary Loan Payment Administration, and the principal of Nationwide. In its suit, the CFPB alleged that the defendants engaged in abusive and deceptive practices and violated the Telephone Sales Rule (“TSR”) in the course of offering its mortgage payment program.

Among the notable aspects of this case was the court’s interpretation of the relevant statute of limitations period. The Dodd-Frank Act generally sets a statute of limitations for the Bureau of “3 years after the date of discovery of the violation to which an action relates.” 12 U.S.C. § 5564(g)(1). Prior to this decision, no court had ruled on how to interpret the Dodd-Frank “date of discovery” provision.

Here, the court found that “mere receipt of a consumer complaint” does not cause the statute to run, and moreover that such an interpretation would be “unworkable.” Instead, the court wrote that even a “credible and specific” consumer complaint would “at most” provide “inquiry notice” and that the statute begins running only after the CFPB “actually” discovers facts allegedly constituting a violation of law or until a “reasonably diligent plaintiff would have” discovered those facts. In other words, the clock does not begin to run until the Bureau has had enough time to conduct a preliminary investigation into the wrongdoing alleged in a consumer complaint.

Continue Reading Federal Court Takes Expansive View of CFPB Statute of Limitations, Limits Restitution

On June 7, 2017, the Consumer Financial Protection Bureau announced entry of a consent order against mortgage servicer Fay Servicing, LLC for alleged violations of the Bureau’s 2014 mortgage servicing rules.

The CFPB alleged that Fay Servicing failed to provide timely notices to delinquent borrowers acknowledging that their loss mitigation applications were complete or incomplete,

On April 20, 2017, the CFPB sued nonbank mortgage loan servicer Ocwen Financial Corporation and its subsidiaries (collectively, “Ocwen”) in the U.S. District Court for the Southern District of Florida. The Bureau’s complaint alleges violations of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Fair Debt Collection Practices Act, the Real Estate Settlement Procedures Act, the Truth in Lending Act, and the Homeowners Protection Act of 1998.

In a strongly worded press release, the CFPB alleged that Ocwen engaged in “significant and systemic misconduct at nearly every stage of the mortgage servicing process.”  CFPB Director Richard Cordray stated that “Ocwen has repeatedly made mistakes and taken shortcuts at every stage of the mortgage servicing process, costing some consumers money and others their homes.”  In its own statement, Ocwen vigorously denied any wrongdoing and accused the CFPB of bringing a “politically-motivated” lawsuit in an attempt to divert attention from mounting public criticism of the Bureau.

The CFPB’s new complaint was accompanied by a separate case brought by the State of Florida against Ocwen for similar allegations.  In addition, 20 states filed cease-and-desist orders alleging escrow management issues and seeking to prohibit Ocwen from originating or acquiring any new loans.

Notably, Ocwen is already subject to a $2.1 billion settlement approved in 2014 for similar allegations in a case brought by the CFPB, 49 states, and the District of Columbia.  The Bureau’s allegations largely relate to Ocwen’s conduct since January 2014 when the CFPB’s mortgage servicing and other mortgage rules became effective, although the Bureau’s allegations relating to Ocwen’s marketing and billing of add-on products date to July 2011.

The Bureau’s allegations, which Ocwen has vigorously denied, are summarized below.

Continue Reading CFPB Sues Ocwen for Alleged Violations of Consumer Financial Laws