Ocwen prevails over most of CFPB's mortgage servicing lawsuit
3/5/21 REUTERS LEGAL 23:13:10
Copyright (c) 2021 Thomson Reuters
Jody Godoy
REUTERS LEGAL
March 5, 2021
FILE PHOTO: Signage is seen at the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, D.C., U.S., August 29, 2020. REUTERS/Andrew Kelly/File Photo
(Reuters) - A federal judge in Florida has handed a win to Ocwen Financial Corporation in the U.S. Consumer Financial Protection Bureau's lawsuit seeking to hold the company liable for an array of alleged mortgage servicing failures, saying most of the claims are precluded by an earlier nationwide settlement.
U.S. District Judge Kenneth Marra in West Palm Beach on Thursday granted partial summary judgment to the company, represented by Goodwin Procter. The CFPB had alleged that inaccurate recordkeeping and other servicing failures had caused borrowers nationwide to be overcharged by more than $100 million and led to some illegal foreclosures.
Ocwen, one of the largest mortgage servicers in the United States, said in a statement on Friday that it is pleased with the ruling and will continue to defend itself on any remaining claims. CFPB spokeswoman Tia Elbaum declined to comment.
In the wake of the subprime mortgage crisis, Ocwen had entered a nationwide settlement with the CFPB, 49 states and the District of Columbia in 2014 to resolve claims the company violated state law and the Consumer Financial Protection Act through shoddy mortgage servicing and illegal foreclosures. The company did not admit to wrongdoing in the settlement.
The settlement required Ocwen to provide more than $2 billion in borrower relief, adhere to specific standards and submit to an outside monitor for three years. The deal also included procedures for Ocwen to rectify any violations of the deal or be fined $1 million per violation.
After the monitorship ended in 2017, the CFPB filed its lawsuit alleging Ocwen's inaccurate data keeping since 2014 had led to violations of the Fair Debt Collection Practices Act, the Truth in Lending Act, the Real Estate Settlement Procedures Act and the Homeowners Protection Act.
Ocwen moved for summary judgment in June, arguing that nine out of ten counts were barred by the doctrine of res judicata because the consent judgment the CFPB agreed to before U.S. District Judge Rosemary Collyer in the District of Columbia had covered the claims.
The CFPB said in response that the settlement only resolved Ocwen's liability for violations through late 2013, that the new allegations about the company's recordkeeping were outside its scope and that the metrics used to monitor Ocwen did not catch the violations.
Marra agreed with Ocwen on Thursday, finding that the 2014 settlement was "designed to prevent the same genre of loan servicing misconduct" as alleged in the newer complaint, including by arranging for a third party audit of Ocwen's data. The judge added that if the CFPB had concerns about the metrics used to monitor Ocwen it should have asked Collyer to change them.
"That the Bureau now better understands the cause and ramifications of the servicing misconduct alleged in the D.C. action and wishes to cast a wider statutory net over it does not avoid a res judicata bar," the judge said.
The judge wrote that the CFPB can clarify whether any of its claims stem from Ocwen's conduct after the monitorship ended and move forward with those. The agency can also pursue a claim that Ocwen failed to cancel mortgage insurance when required to do so, which was not covered by the 2014 settlement.
The case is CFPB v. OCWEN Financial Corp. et al., No. 17-cv-80495, in U.S. District Court for the Southern District of Florida.
For Ocwen: Sabrina Rose-Smith, Thomas Hefferon, Laura Stoll and Catalina Azuero
For the CFPB: Jean Healey Dippold, Atur Desai, Michael Posner and Shirley Chiu
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