Ocwen Class Action Says Mortgage Accounts Improperly Foreclosed

A homeowner has filed a class action lawsuit against Ocwen Loan Servicing, arguing that his home was foreclosed on before unapplied funds were applied to his Ocwen mortgage or refunded to him.

Plaintiff Jose Parra recently claims the mortgage company failed to apply funds before foreclosing.

Parra entered into a mortgage in November 2006. In August 2014, the mortgage was transferred from the previous bank to Deutsche Bank, for which Ocwen was the loan servicer.

The plaintiff claims that when Ocwen started foreclosure procedures, they failed to apply $773 in unapplied funds to this Ocwen mortgage account or refund that money to him.

“Ocwen knew that it had not applied the unapplied funds to the outstanding principal balances of plaintiff and the class, but nevertheless intended to induce payment from plaintiff and the class,” the Ocwen mortgage class action alleges.

By failing to inform consumers of their unapplied funds and failing to apply those funds to Ocwen mortgage accounts, the servicer has allegedly forced consumer to pay “excessive payments of interest and principal balances.”

The Ocwen mortgage class action argues that the loan servicer has been engaging in this behavior and breaching contracts since 2008.

Ocwen mortgage contracts allegedly require that “unapplied funds be applied to the outstanding principal balance under the Mortgage immediately prior to foreclosure, or that the unapplied funds be returned to the borrower.”

By failing to comply with this subsection of Ocwen mortgage agreements, Ocwen has allegedly breached its contract and the covenant of good faith and fair dealing.

Parra argues that this behavior is in violation of the Illinois Mortgage Foreclosure Act. This law requires that foreclosure complaints include the “current unpaid principal balance […] and any further information concerning the default.” The Ocwen class action argues that by failing to include unapplied funds in the remaining Ocwen mortgage balance, the loan servicer violates this law.

“Ocwen did not apply the unapplied funds to the outstanding principal balance under the Mortgage immediately prior to foreclosure. As a direct result, the complaint to foreclose listed an incorrect current unpaid principal balance which violated the Act’s requirement that a complaint for foreclosure include the current unpaid principal balance,” the Ocwen mortgage class action claims.

Parra seeks to represent a nationwide Class of consumers who had an Ocwen mortgage since 2008 and (1) were foreclosed on without Ocwen applying unapplied funds or (2) were foreclosed on and not refunded unapplied funds. He also seeks to represent an Illinois Class of the same individuals protected under state laws.

The Ocwen class action seeks actual damages, compensatory damages, punitive damages, court costs, and attorneys’ fees. The Ocwen class action also seeks the establishment of a trust or escrow consisting of the unapplied funds associated with Ocwen mortgage accounts.

Parra is represented by Larry Drury and Thomas Rebholz of Larry D. Drury LTD; and Marshal Morris of Marshal P. Morris LLC.

The Ocwen Mortgage Class Action Lawsuit is Parra v. Ocwen Loan Servicing LLC, Case No. 2018-­CH­09242, in the Circuit Court of Cook County, Illinois.