Ocwen Loan Servicing Settlement Leaves Class ‘In the Dark,’ Say Objectors

A Florida federal judge reportedly ruled that Class Members who object to the terms of the Ocwen Loan Servicing settlement regarding mortgage processing fees will be able to proceed.

The judge also ruled that several non-Class Members who had objected to the class action settlement did not have grounds to stand on, according to Law360.

Class Action Alleges Improper Fees

Mortgage holders lodged a class action lawsuit against Ocwen Loan Servicing, LLC, alleging that the company assessed convenience fees in violation of state and federal laws. According to the lead plaintiffs, the company charged fees for mortgage payments made online or by phone.

Ocwen Loan Servicing is based in West Palm Beach, Fla., with a subsidiary also named in the lawsuit that is based in New Jersey. The plaintiffs claimed that Ocwen’s convenience fees on their mortgage payments violated the Fair Debt Collection Practices Act, a federal law also called the FDCPA.

The class action lawsuit alleged that the mortgage contracts they had with Ocwen did not allow for processing fees and that such fees also violated state consumer protection laws. However, Ocwen allegedly charged them and other Class Members between $7.50 and $17.50 for making payments online or by phone. These fees were deemed “processing fees” or “SpeedPay” fees.

The plaintiffs accused Ocwen of collecting “a massive profit” from the illegal mortgage processing fees. Allegedly, Ocwen did not pass the money from these processing fees off to a servicer. Additionally, the class action lawsuit alleged that the mortgage company misrepresented the fees to consumers, implying that the fees were “mandatory.”

Indeed, Investopedia warns that consumers should be on the lookout for “junk” mortgage fees, including fees for loan processing, mortgage rate locks, and broker rebates, as well as excessively high application or underwriting fees.

Mortgage Co. to Pay $12M in Ocwen Loan Servicing Settlement

In August of 2020, Ocwen reportedly agreed to pay $12.6 million to end the class action lawsuit, including refunds to Class Members, reduced processing fees going forward, and an improved disclosure process. In exchange, the plaintiffs agreed to drop allegations the company violated the FDCPA.

Law360 reports that, under the term of the class action settlement, the mortgage company would still be able to assess processing fees, just at a reduced rate. Specifically, online payment fees would be permitted, as long as they were reduced by 13%. Ocwen also agreed to put a moratorium on phone and online payment charges for three years.

Class Action Settlement Leaves Consumers Worse Off

From the start, Class Members and those outside of the lawsuit objected to the terms of the Ocwen Loan Servicing settlement.

Consumer advocacy groups and plaintiffs from a separate class action lawsuit lodged against the home loan servicer complained that the terms of the settlement agreement allowed Ocwen to continue to charge mortgage processing fees.

“The settlement’s amendment of mortgages en masse will subject class members in perpetuity to the exact unfair fees the plaintiffs alleged were illegal in the first place,” the lawyer representing the parties objecting to the class action settlement told Law360.

In addition, four Class Members argued that the terms of the agreement do not adequately disclose how much each Class Member will get from the settlement. Additionally, three of the objecting Class Members own property in Texas and say that state law would protect them from fees, rather than the reduced fees proposed in the settlement.

Ocwen Faces Other Legal Actions

According to Law360, Ocwen currently faces three other class action lawsuits. Yahoo!News reports this class action lawsuit was not the first time Ocwen had been accused of assessing improper mortgage processing fees. Reportedly, several years before the class action lawsuit was filed in 2018, Ocwen had agreed to change its processing fee practices in 2013.

In addition, the company faced a lawsuit filed by the Consumer Financial Protection Bureau over an alleged 300,000 consumer complaints. In 2017, according to Courthouse News, Ocwen was hit with the 14-cournt CFPB complaint over allegations it “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.”

The federal agency also accused Ocwen of failing to fix errors in loan files it then sold to other servicers. Further, the company allegedly foreclosed on customers’ homes illegally.

The Ocwen Loan Servicing Class Action Lawsuit is Vincent J. Morris et al. v. PHH Mortgage Corp., Case No. 0:20-cv-60633, in the U.S. District Court for the Southern District of Florida.

Other similar lawsuits have been filed in New York, North Carolina, Maryland, and California.

This article is not legal advice. It is presented
for informational purposes only.