Two Million Dollar Montana Verdict Against Ocwen and Deutsche for Wrongful Foreclosure

Recently, Ocwen and Deutsche were popped with a two-million-dollar jury verdict for a wrongful foreclosure in Montana.  A couple bought a farmhouse for cash, and were in the process of remodeling it, when they discovered that Ocwen had sold the property at foreclosure by mistake.  Ocwen refused to quitclaim the property back to the owners, claiming that they were prevented from doing so by a “scrivener’s error.”  The couple sued.

After a four-day-trial, a Montana jury unanimously awarded homeowners $350,000 in lost profitability, $100,000 for emotional distress and $1.6 million in punitive damages against Deutsche Bank National Trust Co. and Ocwen.

As reported by Ed Kemmick at Last Best News, full article here:

As part of their legal battle against Deutsche Bank, the Normans were granted a motion for summary judgment for quiet title, and the bank signed a “disclaimer of interest” in the property on May 8, 2014. The trouble was, Heenan said, the bank did not actually record the disclaimer with the Yellowstone County clerk and recorder until August of this year.

At trial, Heenan maintained that the defendants’ actions, far from being merely a series of mistakes, constituted an intentional disregard of facts that were likely to cause injury to the Normans, and that “disregard or indifference” amounted to malice.

The 12-person jury agreed, and last Thursday it unanimously awarded the compensatory damages totaling $450,000, then went into deliberations again on Friday and unanimously awarded the punitive damages of $1.6 million.

– See more at:

Congratulations to Montana attorney, John Sheenan, for the win!  Sheenan is a member of the National Association of Consumer Advocates (NACA).

Wells Fargo Settlement with Department of Justice Announced for Bankrupt Homeowners Who Did Not Receive Change of Payment Notices

On Thursday, the Department of Justice released a settlement with Wells Fargo concerning Wells Fargo’s failure to send payment change notices and updated escrow statements to homeowners in bankruptcy:

Settlement Terms

Wells Fargo agrees to pay a total of $81.6 million to homeowners who were in bankruptcy between Dec. 1, 2011, and March 31, 2015, and who were affected by Wells Fargo’s failure to timely file PCNs and escrow statements, including:

  • $53.6 million will be paid to more than 42,000 homeowners whose payments increased as to which Wells Fargo failed to timely file a PCN with the court. The payment will be in the form of a credit to the homeowner’s mortgage account in a lump sum amount, which averages $1,254 per homeowner and varies depending on the homeowner’s mortgage balance. More than 70 percent of the total payments will go to homeowners who have mortgage balances under $300,000. These payments will be made regardless of whether homeowners actually paid the increased amount.
  • An estimated $10 million will be paid by crediting homeowners’ accounts at the end of their bankruptcy cases if, upon a detailed review of the accounts, it is determined the homeowners were not fully compensated through the initial crediting process described above. Wells Fargo estimates that 15 to 20 percent of homeowners who receive the initial payments will be due additional amounts at case closing.
  • $1.5 million will be refunded in cash to about 3,000 homeowners where notices of decreases in monthly payments were not timely provided and the homeowners paid more than the actual amount due.
  • $1 million will be refunded in cash to about 2,400 homeowners who satisfied escrow shortages by making a lump sum payment, but whose monthly payments did not decrease to account for the lump sum payment.
  • $4.5 million will be paid by crediting the mortgage escrow accounts of about 6,000 homeowners who did not receive timely escrow statements. Wells Fargo will credit the amount of any increase in escrow shortage that was incurred between the time Wells Fargo should have performed the analysis and the time it actually did perform the analysis. As a result, homeowners will not be responsible for any increase in the escrow shortage stemming from Wells Fargo’s failure to timely perform the escrow analysis.
  • $4 million will be paid to about 12,000 homeowners by crediting mortgage accounts in the amount of $333, where Wells Fargo failed to timely perform an escrow analysis that would have resulted in a PCN being filed and the homeowner is not already receiving remediation for a missed or untimely PCN.
  • $4 million will be refunded in cash to about 6,000 homeowners who did not receive timely escrow statements and whose escrow accounts contained surpluses that Wells Fargo had not refunded or credited toward the next year’s escrow payment.
  • $3 million in remediation to about 8,000 homeowners has already been completed by Wells Fargo for certain violations.

Beware of Institutional Vulture Debt Buyers and Default Judgments

Vulture debt buyers are buying up questionable debt (credit card, student loan, auto, you name it) for pennies on the dollar and filing lawsuits in volume, obtaining default judgments in bulk, on junk evidence.  The CFPB is going to step in with some new rules.

Full article in the American Bar Association journal here.

Here are three names to watch out for:


The debt-buying industry plays a legitimate role in righting the economy, providing some compensation (pennies on the dollar) to banks and other lenders that discharge unpaid debts and sell them. And it is huge, having become so in less than 15 years.

The biggest firm is Encore Capital Group, based in San Diego; it is the parent of Midland Funding, the company that pursues payment. Encore last year surpassed $1 billion in revenues, a 39 percent increase over 2013, spurred by major acquisitions, among them Asset Acceptance for $200 million and the United Kingdom debt buyer Cabot Credit Management for $177 million.

Next largest is Portfolio Recovery Associates, based in Norfolk, Virginia. In 2014, PRA reported revenue of $881 million and acquired Aktiv Kapital, a Norway-based debt buyer.

Encore, PRA and Asta Funding are the three biggest publicly traded debt buyers. The top five together purchase more than 80 percent of all credit card debt sold in this country, according to the worldwide trade association Debt Buyers Association International, which represents more than 575 companies and is based in Sacramento, California. (Because other firms are privately held, the other two top firms could not be determined.)

All have been tagged for widely publicized problems concerning abuses, including lawsuits filed with little or no documentation of the debt or its assignment to a buyer; mistaken identity in pursuing payment; suing for time-barred debts; and seeking high amounts in fees and interest for which there is no proof or accounting.

In July, the industry was stunned by a broad enforcement agreement JPMorgan Chase entered into with the Consumer Financial Protection Bureau and the attorneys general of 47 states. And in September, the agency hit at the industry’s heart, issuing a similarly sweeping order against the Encore Capital Group and Portfolio Recovery Associates.

JPMorgan Chase, a major seller of debt, admitted that a significant number of its own 538,000 collections suits filed between 2009 and 2013 were questionable or seriously flawed. Some of them had already been settled, paid in full or discharged in bankruptcy—based solely on robo-signed affidavits made with little or no review of pertinent documents (more than 150,000 times, the CFPB said)—or otherwise already found to be unenforceable.

“The evidence showed fundamental flaws in debt sales,” says Claudia Wilner, a staff attorney with the National Center for Law and Economic Justice in New York City. “These are not old cases. This is up to 2014, so it’s very recent. Debt buyers are trying to convince regulators that they’re legitimate and all is above board, but we know there still are many mistakes and inaccuracies.”

The CFPB’s subsequent order against the debt buyers says Encore must refund as much as $42 million to consumers for misrepresenting that it could sue on time-barred debt, or telling courts a debt was assumed because it hadn’t been disputed. PRA must refund $19 million for wrongly saying a lawyer had reviewed a debt, for collectors saying they were calling on behalf of lawyers and for improperly getting payments or judgments on time-barred debts.

Also, both companies must cease collection on similar judgments and drop pending lawsuits in such cases, as well as adhere to a laundry list of reforms concerning proof and verification of debts.

The two debt buyers admitted no wrongdoing, but they did not challenge the order.

What seems the harshest penalty in the CFPB agreement and orders is the prohibition on reselling debt, a common practice in an industry with big and small companies. Some debt buyers work portfolios to a certain extent and then sell the uncollected remains to others down the food chain. Debt buyers often resell accounts that don’t pan out, passing them along to others for even lesser amounts. Those collectors, in turn, might work longer or wring harder to get money from the portfolios.

But JPMorgan already has virtually ended debt sales, PRA has never resold debt and Encore stopped doing so about 10 years ago, says Jan Stieger, executive director of DBA International, the trade association of companies involved in debt buying.

“The effect on the small and medium-size companies is devastating,” Stieger says. “They can’t buy [volume] from the big banks, and the industry could become less competitive because only the big five or 10 buyers might survive.”

Travis County Recorder Speaks Out Against MERS and the Fifth Circuit Ruling

In Travis County,  a large Texas county with Austin (my alma mater) serving as the county seat, the County Clerk derided a recent MERS-related decision of the notoriously “conservative” (really meaning bank-oligarchy-friendly rather than some more benign definition of fiscal conservatism) U.S. Court of Appeals for the Fifth Circuit in Harris County v. MERSCorp Incorporated.   The Clerk was quoted as concluding:

For years, MERS violated existing practices in the State of Texas. It breaks my heart that we are unable to stop MERS, stop the damage to the records, and stop the mistreatment of human beings and their assets. Because of the ruling of the Fifth Circuit, we must surrender to what big corporations prefer, not what’s dependable for our citizens and their ownership rights now and into the future.

Travis County Clerk’s Statement also stated:

Most people will never notice that the public paperwork you typically expect to be recorded with the County Clerk whenever you buy a house, get a new lender, or refinance your mortgage isn’t being filed at all. A group of residential lenders created MERSCorp (Mortgage Electronic Recording System) several years ago for its own purposes and for bypassing the public record. This group has succeeded in creating its own private registry. The Travis County Commissioners Court, supported by the Travis County Clerk, joined a federal lawsuit in Nueces County to put a stop to this secret, substitute recording system.

Unfortunately, on June 26th of this year, in a different case, Harris County v. MERSCorp Incorporated, the U.S. Court of Appeals for the Fifth Circuit issued an opinion that allows MERS to continue its private document registry and dodge the public record. Further, the Court found that MERS is not responsible for major gaps in the chain of title and public deed records that misrepresent ownership records in every county in Texas. By the manner in which the opinion was written, the Fifth Circuit made this ruling apply to the Nueces case without ever hearing one word in court from Travis County.

If you are one of the owners of property financed by a MERS member, and you want to know who owns your deed of trust—the lien on your house—you can’t find it in the Clerk’s record because every time they resold your mortgage to another lender, MERS kept the records secret. MERS never filed the documents in the county deed records. Now, the Court has ruled the County Clerk, who is the keeper of real property records, is not required to be informed about the subsequent sales of the lien on your house. MERS tried to claim they were the owners of the deed of trust because they named themselves a beneficiary in the document. MERS also asserted, at the same time, that they had none of the rights or responsibilities of a beneficiary. The Fifth Circuit agreed and declared that this tortured logic did not constitute fraudulent behavior. Further, the Court ruled that the County Clerk, has no right to compel MERS to file future ownership documents as expected nor bring the public record up to date. Unbelievably, the Court ruled that the County Clerk had no right to even file the lawsuit to preserve the integrity of the important real estate records that the Clerk is sworn to protect.

Travis County does not have a ruling in the Nueces County case, and we have not been allowed our day in court. However, to continue the Nueces case would be viewed legally as frivolous because the Fifth Circuit has ruled in a similar case and set new law. The rulings in the Harris County v. MERS case mean that Travis County must stop our legal efforts to protect the permanent library of deed records from the damages inflicted by the members of MERSCorp. The Travis County Commissioners Court has instructed the County Attorney to stop pursuing the MERS case.

We understand that this action is necessary to protect Travis County taxpayers from the liability of various attorneys’ fees and/or possible sanctions. Travis County Clerk DeBeauvoir and the Commissioners’ Court commend the Travis County Attorney for their thorough analysis of the documents that prove MERS direct assault on transparent business dealings.

CFPB Hated By Bankers and Beloved by Consumers

The Consumer Financial Protection Bureau (CFPB) is definitely the new kid on the  block, as far as regulators go.  It has some pretty powerful enemies, including the predictable Goldman-Sachs-JPMorganChase-Citibank-BankofAmerica-Wells-Fargo of the too-big-to-fail/too-big-to-jail swagger.

When the foreclosure crisis was starting, circa 2008 and 2009, causing apocalyptic shock waves in my state, Arizona, among many others, I started to seeing a tidal wave of potential clients seeking help with their rapidly dying mortgages, home values, and incomes.  In our initial naiveté, we wrote to the appropriate regulators for the designated bank.  For example we wrote to the OTC or the OCC, depending upon whether it was a federal savings bank or a “national association” we were grappling with.  The letters and responses from these revolving door regulators (as in revolving door between high-paying jobs at the banks being regulated and the government jobs as regulators, with all yellow brick roads seemingly leading to Covington & Burling and their ilk) were lacking.  The responses were anemic, one-pagers, of the learned helplessness variety.

Snap to the creation of the CFPB, born of Sen. Elizabeth Warren’s (then Law School Dean Warren) pragmatic idea to have a regulator focused toward helping the consumer, rather than the bank.  She posited an agency with a direct line to the consumers it purported to help, with a user-friendly web site, with non-legalese communication, with an easy way to file on-line complaints that were actually addressed, and with actual Rule-Making Authority to effect regulations and guidelines for the heavies of the consumer protection statutes, such as the Real Estate Settlement Procedures Act (RESPA), the Truth in Lending Act (TILA), the Fair Debt Collection Practices Act (FDCPA) and the Dodd-Frank Amendments to parts of these federal consumer-protective statutes.

The CFPB actually became involved in writing amicus curiae (friend of court) briefs for various issues wending their way through the state and federal courts of appeal.

Former Attorney General of Illinois, Richard Cordray took over this agency.

Since inception, the CFPB has issued plain guides, and has pretty much done what is said it would do, which is advocate as the regulator for the actual group of people these consumer-protective laws are supposed to protect, the consumer.

What a subversive idea in the post-2000 world where up became down, and down was up, and the regulators were captured by their subjects who they deemed “clients,”  right?  To have a regulator actually regulating the banks?  The horror.

And the CFPB has been under attack ever since by its well-heeled critics.  The audacity of this strapping young upstart, to upend the billionaire boys’ clubs “ways of doing things.”  Who did this Eliot Ness kid think he was?

And the fear-mongering continues to ratchet up, with the CFPB getting lip service at the Republican debates.

From the LA Times article here:

Despite the ominous, fearful and largely bogus criticism by its Republican critics, the bureau has been steadily doing what it was created to do: safeguarding consumers from the greedy practices of businesses that think they can act without regard for the law.

Last week, the bureau announced a crackdown on the nation’s two largest debt buyers — companies that purchase uncollected debt for pennies on the dollar and then try to squeeze payments from consumers by threatening lawsuits and damage to credit ratings.

One of the companies, Encore Capital Group, is based in San Diego. The other, Portfolio Recovery Associates, has its headquarters in Norfolk, Va.

Richard Cordray, the bureau’s director, said the two companies bought thousands of consumer-debt accounts “that they knew or should have known were inaccurate or could not legally be enforced” because the files lacked required documentation.

Nevertheless, he said, the companies filed lawsuits against people “knowing that they would win the vast majority of the lawsuits by default when consumers failed to defend themselves.”

Thanks to the bureau’s investigation, Encore now will refund consumers up to $42 million, stop its collection of $125 million in questionable debts and pay a $10-million penalty.

Portfolio Recovery Associates will refund about $19 million, halt collections on $3 million in dubious obligations and pay an $8-million penalty.

Both companies also are prohibited from collecting any debt they can’t verify and from suing anyone without full documentation related to money owed.

“Consumers have the right to expect that they will be told the truth and treated fairly,” Cordray said.

Does that sound like an agency run amok? Or does it sound like a much-needed overseer for financial firms that, all too often, demonstrate their unworthiness of public trust?

. . .

In the four years since its founding, the Consumer Financial Protection Bureau has, among other actions:

•Forced credit card companies to return nearly $2 billion to consumers who were duped into signing up for costly add-on programs such as unneeded identity theft or disability coverage.

•Required that mortgage lenders verify in advance that a borrower can repay a loan. The subprime mortgage crisis during the Great Recession was precipitated in part by lenders irresponsibly handing out cash to almost anyone who applied.

•Helped secure $480 million in debt forgiveness for students saddled with high-priced loans from Corinthian Colleges Inc. For-profit Corinthian filled for Chapter 11 bankruptcy protection in May and closed dozens of schools.

•Created a database of consumer complaints intended to highlight and resolve ongoing problems. Debt collection, credit reporting and mortgages have drawn the most complaints and, as of last month, the most-complained-about companies were Equifax, Experian and Bank of America.

The Consumer Financial Protection Bureau is the little agency Wall Street banks and debt collectors love to hate because it works for consumers, not them,” said Emily Rusch, executive director of the California Public Interest Research Group.

“For the first time, we have an agency that’s looking out for our interests instead of the banks’ interests,” she said.

A key focus for the bureau these days is payday lending. It has proposed federal rules that would limit the interest rates payday lenders can charge, prohibit borrowers from taking out more than one loan at a time and require lenders to assess borrowers’ ability to pay.

Oh, the nerve of that CFPB.  How dare it just saunter into the country club, clearly not belonging, clearly an outsider, coolly order an Arnold Palmer, and proceed to do its job?

If you don’t believe me, go check out this rogue agency’s completely transparent web site, at and check out its nefarious doings.  If you still don’t believe me, check out the Reports of the Special Inspector General for the TARP’s web site, another agency that actually tells it like it sees it, even if Treasury doesn’t like it, and Treasury refuses to follow its guidelines.

See if you can suss out the real threat to consumers.  Hint: it ain’t transparency.  Also, perhaps the consumers themselves are not so mentally impaired that they cannot accurately report their experiences in programs such as HAMP, and HARP, and HAMP SQUARED, and HARP DEUCED, and other risky games of chance dreamed up by the Treasury to “foam the runway” for the Goldman-Sachs-JPMorganChase-Citibank-BankofAmerica-Wells-Fargo Goliath.  Just so there’s something to balance against the “self-reporting” of the loan servicers that are often either subsidiaries or just loyal minions and courtiers of the GSJMChase-CIT-BANA-WF beast.

You figure it out.

And remember, if a politician starts spouting about getting rid of the CFPB while shoring up the NSA and other agencies that are quite expensively spying on and collecting data non-voluntarily on innocent American citizens, some little alarm might bleep in your brain.  Go look up that politician’s principal donors.  Don’t be deterred by the vague, patriotic-y, maverick-y sounding names either.  Don’t let yourself be totally “Citzens-United”-ed.  A Potemkin village does not stand up against a little scratching of the surface.  It will fall down like a cheap Our Town dinner theatre set.


MERS Lacks Legal Authority and Public Accountability

Originally posted on Findsen Law:

Harvard Amicus Brief on MERS

Some of the best quotes,

  • Mortgage servicing companies, banks, courts and government agencies have all expressed astonishment at the extent to which MERS database is inaccurate. (p. 24)
  • “Simply put, ‘MERS is the Wikipedia of land registration systems.’ Culhane v. Aurora Loan Services, 826 F. Supp. 2d 352 (D. Mass. 2011) aff’d, 708 F.3d 282 (1st Cir. 2013).” (p. 12)
  • Janis Smith, a spokeswoman for Fannie Mae, admitted Fannie Mae kept its own records and that “We would never rely on it [MERS] to find ownership.” Powell and Morgenson,
    supra p. 32. (p. 25)
  • Judge Jennifer Bailey, a circuit court judge in Miami stated of 60,000 foreclosures filed in 2009 in her court, “[A]lmost every single one of them… represents a situation where the bank’s position is constantly shifting and changing because they don’t know what the Sam Hill is going on in their files.” Transcript of Hearing on…

View original 809 more words

TARP Watchdog Report Calls Out Loan Servicers and Treasury for Massive HAMP Failures

The SIGTARP’s latest report to Congress issued July 29, 2015 chastises Treasury for its failure to question and punish loan servicers for their dismal HAMP numbers.  Servicers who participate in HAMP are paid incentives, and are “required to offer HAMP modifications to all eligible homeowners.” Servicers “must follow the HAMP rules” and “Treasury has an oversight responsibility to ensure that servicers follow Treasury’s HAMP Rules.”  But they do not.

A staggering 7 out of 10 homeowners have been rejected for HAMP modifications.  Mortgage servicers have denied four million homeowner applications for HAMP assistance.  “JP Morgan Chase and Bank of America, historically the two largest HAMP servicers, and Citi each turned down 80% or more of homeowners who applied for HAMP; Ocwen, the current largest HAMP servicer, turned down more than 70% of  homeowners who applied for HAMP.”  See SIGTARP Report, Section 3. And this is only after Treasury began requiring servicers to report some of their metrics post-2009.

“In Treasury’s first [second look] June 2011 servicer assessment, 5 of the top 10 servicers (Bank of America, Cit, JPMorgan Chase, Ocwen and OneWest Bank) ranked poorly in Treasury’s second look.” Id.

Treasury continues to find servicers wrongfully denying homeowners.  “In two quarters in 2014 Treasury found second look problems at Ocwen, Wells Fargo, and Citi.”  In addition, Treasury “found problems recently in the fourth quarter of 2014 at Select Portfolio Servicing, and at Nationstar Mortgage, LLC in the first quarter of 2015.” Treasury’s findings “make clear that even after more than five years of HAMP, top HAMP servicers are still mistreating homeowners by not following HAMP Rules designed to protect homeowners.” Id. (emphasis added)

Predictably, the self-reporting loan servicers lay the blame on homeowners but SIGTARP easily dispels the pretext.

The main three reasons self-reported to Treasury by the loan servicers are (1) failure to send documentation; (2) failure to accept trial payment plans or loan modifications; or (3) eligibility failure based on income.  But all three of these reasons can also be caused by servicer misconduct, as has been widely reported.

As noted by SIGTARP, the Consumer Financial Protection Bureau, and Treasury’s own limited investigations, as well as homeowner-filed complaints, “Persistent problems and errors in the application and income calculation process have hisorically plagued homeowners seeking HAMP assistance, and continue to do so.  As a result, eligible homeowners may have been, and may continue to be, denied a chance to get into HAMP through no fault of their own.”

As for the “failure of documentation,” SIGTARP reports that the “incomplete documentation” is often attritubutable to loan servicers losing paperwork and requiring resubmission, servicer delays, and servicers ignoring requests for clarification or assistance.  SIGTARP cites the “egregious examples” of the SunTrust Mortgage prosecution by the Department of Justice in July 2014 and of the CFPB findings that “Ocwen, the largest HAMP servicer, provided false and misleading information to homeowners about the status of their loss modification review, failed to respond to homeowner requests for loan modification information and assistance, and failed to honor modifications in process of loans obtained from other servicers.”

SIGTARP also questions the servicer claims of homeowner failures to accept modified loans, pointing out the role of significant servicer backlogs such as Citibank’s 14-month backlog, and Bank of America and Select Portfolio Services, LLC’s signficant application backlogs of 5 months each.

SIGTARP urges Treasury to see the HAMP denials through the “known history of servicer misconduct,” to look beyond the servicer reporting, and “hold servicers accountable for extensive delays, lost paperwork, and errors in calculating key eligibility factors such as income, rather than let those and other servicer problems seep into the servicers’ decisions on homeowners’ HAMP applications.”