Tag Archives: loan modification

Ocwen Caught Backdating Mortgage Letters

trap,  catchAccording to a recent review of Ocwen Financial Corporation, a major mortgage servicer, by the New York Department of Financial Services (DFS), Ocwen may have backdated thousands of letters it sent to borrowers who were trying to save their homes from foreclosure.

What Types of Letters Did Ocwen Backdate?

The DFS review into Ocwen’s servicing practices revealed that the company sent letters to borrowers denying their loan modification requests and giving them 30 days to appeal; however, in many cases, those letters were backdated by more than 30 days. This means the deadline to appeal had passed by the time the homeowners received the letters. (Learn more about government loan modification programs.)

In other cases, Ocwen sent letters to borrowers who were behind in payments giving them a deadline to cure the default and avoid foreclosure — but the deadline was months before the borrower actually received the letter.

How Many Borrowers Received Backdated Letters?

The DFS indicates that the backdating issue goes back to 2012, though the New York Post has reported that the problem may have started as early as 2010. As of now, there’s really no way to know how many backdated letters Ocwen has sent (or continues to send). Ocwen is the largest non-bank mortgage servicer in the country and currently services over two million mortgage loans, so it’s quite possible that thousands of improperly backdated letters have gone out. 

Ocwen’s Track Record of Servicing Errors and Abuses

This isn’t the first time that Ocwen’s mortgage servicing procedures have hurt borrowers. A previous investigation into Ocwen’s servicing activities revealed extensive misconduct, including robosigning and charging improper fees, among other errors and abuses in their mortgage servicing processes.

As a result, in December 2013, Ocwen reached a settlement with 49 state attorneys general, the District of Columbia, and the Consumer Financial Protection Bureau that, among other things, required Ocwen to comply with certain standards for servicing loans and to provide $125 million to eligible borrowers. (Learn more in Nolo’s article Foreclosure Relief for Homeowners With Ocwen Mortgages.)

What the Backdating Scandal Means for Harmed Borrowers

It looks very likely that Ocwen will subject to yet another settlement and have to pay millions of additional dollars in restitution payments to borrowers who were harmed by backdated letters.

Also, if you have a mortgage loan that Ocwen services and you applied for a loan modification, but were denied, review your denial letter closely. If the dates don’t make sense, you might want to consult with an attorney who can help you enforce your appeal rights.

You should also speak to an attorney if you’ve received a letter from Ocwen giving you a deadline to cure a mortgage default and avoid a foreclosure, but that deadline had already passed. If that letter (the “breach” letter) is invalid, any subsequent foreclosure steps may also be invalid.

Posted by guest blogger Amy Loftsgordon

New California Law Helps Homeowners in Foreclosure

On January 1, 2013 the new California Homeowner Bill of Rights went into effect. One part of this new law protects homeowners in foreclosure from dual-tracking. This means that if you request a loan modification within a certain period of time, your lender (or mortgage servicer) must stop temporarily stop foreclosure proceedings while it considers your application.

What Is Dual-Tracking?

In the past, a lender would sometimes continue to foreclose on a homeowner’s home, even while it was simultaneously considering the homeowner’s application for a loan modification. Because of this practice, called dual-tracking, many homeowners who were in the midst of loan modifications were shocked to lose their homes to foreclosure.

What Does the New California Foreclosure Law Do?

Under the new law, lenders and servicers that receive a complete loan modification application must temporarily stop foreclosure proceedings until it makes a decision on the application.

To learn details about the new prohibition on dual-tracking in California, as well as other provisions of the Homeowner Bill of Rights, see Nolo’s article California Foreclosure Protection: The Homeowner Bill of Rights.

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California Governor Signs Homeowners’ Foreclosure Rights Law

Last week, California Governor Jerry Brown signed into law historic homeowner-rights mortgage legislation that offers some of the country’s strongest borrower protections against bank foreclosure practices. The protections, part of a Homeowner Bill of Rights sponsored by California Attorney General Kamala Harris, include the following:

  • the prohibition of “dual tracking”—banks’ practice of negotiating loan modifications while simultaneously pursuing foreclosures
  • the banning of robo-signing (as well as the creation of a private right of action if banks violate the law under certain conditions; state agencies and private citizens may recover compensation, including damages of up to $50,000, if lenders willfully, intentionally, or recklessly violate the law); and
  • the requirement that lenders assign a single representative for borrowers to work with through the loan modification process.

This overhaul of foreclosure laws doesn’t apply to strategic defaulters (those who can afford to pay their underwater mortgages but choose to walk away) and only offers protection to borrowers who own and occupy their properties of four units or less.

To read the text of the new law, go to the California Legislative Information website and search for bill number SB-900 or AB-278.