Last week, regulators from 49 states and the District of Columbia announced a $45 million settlement with PHH Mortgage Corporation. Left unsaid was how that settlement would become legally enforceable and whether it would fully exonerate PHH. The answers to those questions are: the settlement will become enforceable through the Dodd-Frank Act and, no, PHH could face further liability.
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Yesterday, the Florida Attorney General and the Consumer Financial Protection Bureau hit Ocwen Financial Corporation with twin lawsuits for the company’s allegedly improper mortgage-servicing practices. Regulators from nearly two dozen states are either issuing cease-and-desist orders against Ocwen or yanking its licensing. At the heart of the company’s problems lies a vexing issue: its software platform, which it developed itself, is supposedly junk.
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In recent years, the economic downturn and the practice of mortgage securitization converged, spawning all sorts of novel legal questions. Among those is whether a homeowner can sue an entity that foreclosed on her home but did not have proper legal title to the underlying mortgage. Last month, in a closely-watched decision, the California Supreme Court said “yes.” Lower courts will spend years, if not decades, deciphering the ruling’s implications.
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Wells Fargo Bank, N.A.’s former practice of charging more for broker price opinions (BPOs) than it paid for them could lead to class liability, a federal court in California ruled last month. The lone claim approved for class certification is a doozy: one count under the federal Racketeering Influenced and Corrupt Organizations Act (RICO). That disco-era statute, seldom invoked nowadays, is being dusted off and used by plaintiffs’ lawyers as a last-ditch effort to rescue seemingly doomed class actions.
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Earlier this month, Bank of America, N.A., convinced a California court to reject certification of a proposed class of homeowners who experienced long delays when modifying their mortgages under a federal housing program. The plaintiffs’ novel theory, while inappropriate on a class basis, still might result in lenders being liable to individual consumers.
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In the latest chapter in an extended legal battle over robosigning, Mortgage Electronic Registration Systems, Inc. (MERS), and other industry participants convinced an Arizona federal court last month to deny several homeowners’ demand for class certification. The ruling leaves the plaintiffs’ case in disarray and is well-reasoned enough to deter future copy-cat lawsuits.

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Systemic failures to serve notices of mortgage payment changes resulted in Wells Fargo Bank, N.A., having to pay $81.6 million in restitution earlier this month. Payment change notices (PCNs) are required for borrowers who file Chapter 13 bankruptcy and try to cure their existing mortgage delinquencies. Other mortgage servicers with lax PCN procedures should take heed of Wells Fargo’s costly lesson.


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The financial woes of mortgage-industry titan, Ocwen Loan Servicing, Inc., continue. After reporting a loss of over $500 million in 2014, Ocwen announced last week that it had agreed to settle a pending class-action lawsuit for $140 million. The lawsuit, which includes co-defendant Assurant, Inc., accuses Ocwen of receiving hefty, unlawful kickbacks from Assurant for

The on-going battle over property inspections for defaulted mortgages recently took an interesting turn. This latest skirmish pitted mortgage servicing giant Ocwen Loan Servicing against the famed plaintiffs’ law firm of Baron & Budd, P.C., which according to a federal court in Los Angeles, “specializes in suing large banking institutions for imposing unnecessary property inspection