The Consumer Financial Protection Bureau (CFPB) has just finalized a rule which will further protect consumers from serial violators like the infamous subprime mortgage servicing giant OCWEN. Under the new rule, banks and financial companies will no longer be allowed to use agreements that prevent consumers from joining group lawsuits against them over wrongdoing. After the rule goes into effect, in eight month’s time, companies will also be required to report to the CFPB regarding arbitration outcomes in consumer complaints, which will help the agency further protect consumers.
In a press interview, CFPB director Richard Cordray explained, "In practice, companies use these clauses to bar groups of consumers from joining together to seek justice by vindicating their legal right."
In our experience, individual homeowners simply can't afford to fight a company worth billions. (Remember, homeowners fighting their mortgage servicer or lender are often already in tough financial straits.) For many consumers, the only way to win the David vs. Goliath battle with companies like OCWEN is to join up with many other borrowers. (Keep reading for more on our class action investigations of OCWEN.)
Lawsuit waivers, class action bans and mandatory arbitration clauses are usually hidden in the small print of agreements, and consumers often pay little heed to them. When potential plaintiffs are forced to sue on their own over relatively insignificant amounts, they often decide that the cost-benefit equation does not add up. Thus, companies are free from the legal and financial burdens associated with lawsuits, and they often continue their unlawful practices, basically cheating a lot of people out of a little bit of money.
Here is an example of an arbitration clause from a contract with OCWEN:
“Neither Borrower nor Lender may commence, join, or be joined to any judicial action (as either an individual litigant or the member of a class) that arises from the other party’s actions pursuant to this Security Instrument or that alleges that the other party has breached any provision of, or any duty owed by reason of, this Security Instrument, until such Borrower or Lender has notified the other party (with such notice given in compliance with the requirements of Section 15) of such alleged breach and afforded the other party hereto a reasonable period after the giving of such notice to take corrective action.”
With the new rule, all consumers will get a chance to join forces with others who have been defrauded in similar ways. "Arbitration clauses in contracts for products like bank accounts and credit cards make it nearly impossible for people to take companies to court when things go wrong," Cordray said in a statement, "These clauses allow companies to avoid accountability by blocking group lawsuits and forcing people to go it alone or give up. Our new rule will stop companies from sidestepping the courts and ensure that people who are harmed together can take action together."
Up until now, hundreds of millions of contracts in the financial industry have featured some form of mandatory arbitration clauses. Though the clauses can potentially block any lawsuit, wrongdoers like OCWEN typically use them to block class actions. They essentially lock consumers out if the courthouse!
According to Cordray, the rule banning these arbitration clauses will face decisive opposition from some Republican sectors, which will seek to nullify it. This would be in line with the Trump administration´s clear intent to relax regulations in many industries, including finance. In fact, some Republican representatives are currently lobbying for Cordray to be fired.
Cordray also believes that by requiring companies to report on arbitration outcomes, the new rule will help expose harmful business practices which would, otherwise, seldom come into public attention.
Is my OCWEN agreement covered by the new CFPB Arbitration Rule?
If you are a customer of OCWEN or another financial institution, you may be wondering whether your agreement is covered. If there is an arbitration clause in your agreement, it is important that you understand how CFPB rules work.
As per the Dodd Frank Act, CFPB rules of this type do not apply to existing contracts. Thus, the new rule would only ban class action waivers in the case of agreements that have been entered into after the rule comes into effect, so, not before eight months from now.
However, if there is any kind of change in an existing contract, which includes offering a new product or service, then the new product/service will be subject to the new rule. Thus, in the case of a violation of the particular terms of the agreement regarding that product/service, customers will have the ability to enter into a class action lawsuit, regardless of the waivers included in the original agreement.
The CFPB´s definition of what constitutes a new product or service is to a certain degree open to interpretation, and it is best to consult a legal professional to establish whether your agreement with OCWEN or another bank or nonbank mortgage servicer will bar you from participating in a class action. (Please note that we are investigating class action claims and racketeering charges against OCWEN. We are not a foreclosure defense firm and cannot provide advice on individual cases.)
As the CFPB aggressively seeks to hold OCWEN accountable for its systematic misconduct, the scenario for the interpretation of such clauses has shifted and, again, only an experienced attorney can shed light on each customer´s situation.
Suing OCWEN
Between early 2016 and late April 2017, OCWEN was hit with over 1,000 lawsuits. According to the CFPB, over 300,000 homebuyers have complained about OCWEN´s mortgage servicing over the course of two years.
According to the CFPB´s lawsuit against the company, “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... 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.”
There are countless complaints and legal cases against OCWEN over this type of practices. If you have been harmed by any of them or possess insider information about OCWEN´s mortgage servicing, you may be eligible to sue OCWEN or join our firm´s class action against OCWEN.
At this time, we are focusing on the following practices:
● Use of a proprietary software known to trigger unsupported fees and speed foreclosures (REAL Servicing);
● Knowing use of infirm loan data,
● Illegal foreclosures,
● Failure to credit borrowers’ payments,
● Mismanagement of escrow accounts,
● Manufactured force-placed insurance,
● Delayed termination of private mortgage insurance,
● Charges for additional products without consent,
● Mishandling accounts for deceased borrowers, and
● Failure to correct errors identified by the borrower.
A typical OCWEN violation
When we discuss violations by OCWEN everything may seem very abstract. To exemplify with an actual case, here is information from a complaint submitted to the CFPB:
“The Ocwen Company acquired my mortgage loan from X bank on X [date] with a balance of {$210000.00}. Over a two-year period Ocwen has charged me bogus fees and extraneous charges to try and force me to foreclose on my home. Ocwen expects me to believe that my {$210000.00} debt has climbed to {$390000.00} in 2 years. They have charged me foreclosure and property maintenance and other fees for a property that was never foreclosed on and I still own... I have complained to the Missouri Attorneys general office and CFPB in the past. Ocwen should not be allowed to lie, bully and ruin homeowners’ futures in this way. I suffered a significant financial hardship after the real estate recession and Ocwen is determined to bury me financially. Ocwen agreed to use X dollars to work with homeowners and during that time they proceeded to offer me an underwater loan modification. Ocwen told me that the investor of my loan did not participate in principal reductions. They told me that X owns the loan. When I contacted the investor they said they have nothing to do with the day to day mortgage servicing and they do not prevent principal reduction modifications. I cannot trust Ocwen as my mortgage servicer.”
RICO Racketeering Investigation Against OCWEN
The bank fraud lawyers at MahanyLaw have teamed up with consumer class action powerhouse Carella, Byrne, Cecchi, Olstein, Brody & Agnello to protect homeowners from the predatory practice of OCWEN. We are currently investigating methods of bringing a civil RICO (racketeering) claims against Ocwen.
We are interested in speaking to as many homeowners as possible. Please note that if you are facing foreclosure or the loss of your home, you should seek a local foreclosure defense lawyer immediately. We seek to force OCWEN to pay damages for the crimes and misdeeds we believe they have committed. Our action will not be able to keep you from losing your home, however.
To share your story, please contact attorney Anthony Dietz at [hidden email]. Do you need to speak to someone right away? Email Anthony and we will quickly schedule a return call. Never have our phones rang so much as they have since we have announced our OCWEN investigation. Unfortunately, we cannot keep up with the call volume! Emailing or emailing an asking for a return call is the best way of reaching us.
More OCWEN Fraud Information
Our sister site has much more information about our OCWEN RICO lawsuit investigation. Between this site and the MahanyLaw law firm website, we have over a dozen current articles on OCWEN. Much of that content is news that often doesn't make the paper. Both blogs are text searchable. We invite you to spend time on both sites and learn more.
Are You a Potential OCWEN Whistleblower or Wish to Become a Behind-the-Scenes Consulting Expert?
If you work or worked at Ocwen and have information to share, contact MahanyLaw principal Brian Mahany at [hidden email] or by phone at (414) 704-6731 (direct).
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