Ocwen Class Action Alleges Illegal Post-Payment Interest Charges

Ocwen has been hit with a proposed class action lawsuit alleging the mortgage servicing company illegally charges “prepayment penalties in the form of “post-payment” interest on loans insured by the Federal Housing Administration.”

Plaintiffs Leo and Jessica Ramirez say that as a result of Ocwen’s actions, the company has “collected hundreds of millions of dollars in post-payment interest unlawfully” the lawsuit says, and the pair is seeking to recover damages on behalf of themselves and a nationwide class.

Post-payment interest refers to the “interest that a lender collects after the borrower has paid the full unpaid principal of the loan.”

“For example, if a borrower pays off the loan in full on August 5, and the lender continues collecting interest for the remainder of August, the lender has collected post-payment interest from the borrower. Any interest collected after the borrower makes payment of the full unpaid principal is post-payment interest,” the Ocwen class action says.

According to the complaint, on August 2010 the Ramirez’s secured a FHA-insured loan from Fairway Independent Mtg. Corp. to purchase a home. Ocwen later acquired the loan. Since the loan was insured by the FHA, “Ocwen is required to comply with FHS regulations with respect to [their] loan,” the class action lawsuit states.

In 2013, the couple refinanced the loan and requested that Ocwen provides them with a payoff statement so they could pay off the loan. Ocwen provided a payoff statement dated March 29, 2013, which reportedly represented that the Ramirez’s owed $911.57 in interest. Essentially, Ocwen charged and sought to collect interest for the entire month of April, even though the payoff occurred before May 1, 2013.

On April 4, 2013, the Ramirez’s paid Ocwen $258,540.11, which included $911.57 in interest.

However, because Ocwen required the couple to pay interest for the entire month of March and April – even though the Ramirez’s paid the full unpaid principal on April 4, 2013, Ocwen collected post-payment interest.

Additionally, the class action lawsuit claims Ocwen did not provide the Ramirez’s with an FHA-approved payoff form. Specifically, the form used by Ocwen was both misleading and contains language that does not comply with the mandatory language of the FHA approved form, according to the complaint. As such, any post-payment interest collected by Ocwen violates the uniform provisions of the note and FHA regulations, the lawsuit contends.

“All of the relevant government agencies now agree that collecting postpayment interest is an unfair prepayment penalty and is against public policy,” the Ocwen class action lawsuit states.

The plaintiffs are seeking to represent a class of past Owcen borrowers comprised of “any person who has a loan (i) insured by the FHA at any time during the period beginning August 2, 1985 and ending on January 20, 2015, (ii) that held by Ocwen as of the day payment of the full unpaid principal was made, and (iii) for which Ocwen collected interest for any period after payment of the full unpaid principal was made.”

Along with claims against Ocwen for breach of contract, proposed class action lawsuit request declaratory and injunctive relief as well as compensatory and statutory damages.

The plaintiffs are represented by Archie I. Grubb II, W. Daniel “Dee” Miles III, Andrew E. Brashier, and Rachel E. Boyd of Beasley Allen Crow Methvin Portis & Miles PC; and Michael L. Werner and Matthew Q. Wetherington of the The Werner Law Firm.

The Ocwen Interest Charges Class Action Lawsuit is Ramirez, et al. v. Ocwen Loan Servicing LLC, Case No. 1:17-mi-99999-UNA in the U.S. District Court for the Northern District of Georgia, Atlanta Division.