by William Hudson
Over 17,000 loans placed on foreclosure hold, that Ocwen likely has no right to foreclose upon in the first place.
Ocwen not only has been posting huge financial losses this year, but the non-bank servicer has finally been halted from foreclosing on more than 17,000 loans it services due to violations of the National Mortgage Settlement that it failed in the second half of 2014.
Joseph Smith, the monitor of the National Mortgage Settlement (NMS) announced back in October that Ocwen had failed metric 31. Metric 31 tested whether the mortgage servicer sent a loan modification denial notification to a borrower that included the reason for the denial, the factual information considered by the servicer in making its decision and a time-frame by which the borrower can provide evidence that the decision was made in error.
According to Smith, Ocwen failed to remedy the issues that led to the compliance failure.
Smith’s office stated that Ocwen “was delayed” in implementing its Corrective Action Plan for the failure because of “difficulties in resolving the technical issues that led to the original fail.” Therefore, Ocwen must place 17,496 loans that “could have been affected” by this issue on hold and cannot pursue foreclosure.
“While Ocwen has made progress toward correcting a number of past fails, it has not resolved its issues that led to its failure of Metric 31,” Smith stated. “Therefore, I will not allow Ocwen to move forward with foreclosures on any borrowers who could have been affected by this failure until each of these borrowers has correct information and a chance to appeal,” Smith said. The freeze will not be lifted until every borrower who was possibly been affected receives the correct information and is offered a chance to appeal.
However, this is a minor slap on the wrist for Ocwen who routinely violates the National Mortgage Settlement in ways much more egregious than this. In fact, all banks that agreed to the National Mortgage Settlement are in serious breach of their NMS agreements. There has literally been NO change in behavior except that the banks have become more sophisticated in their ability to create the illusion of compliance, while continuing to present fabricated documents to foreclose.
The fabrication of documents has now resulted in tens of thousands of foreclosures by entities that had NO standing to foreclose but were able to create the prima facie appearance of holder status by presenting fabricated endorsements, assignments, notarizations and false affidavits. The noncompliance of Ocwen and other big banks should be grounds for lawyers to challenge legal presumptions because we have, again, obvious proof in the public domain that Ocwen has not complied with the National settlement, has not performed any real audit as to pretender lender, ownership, authority and standing of the loans Ocwen services.
However, this a deliberate sleight of hand. Why are we focusing only on the servicer to the exclusion of the principal who is being named as Plaintiff in Judicial states or as beneficiaries in nonjudicial states? What the banks are doing here is a PR trick. The banks are getting everyone to focus on the bookkeeping for the payments instead of whether Ocwen had any right to be involved in the first place- because it was serving at the behest (allegedly) of a trust that does NOT and never did own the loan. The auditor is well aware that Ocwen has bigger issues than failing to correct metric 31- but the NMS monitors must maintain the appearance that they “mean business” and that has resulted on focusing on a relatively inconsequential detail.
The real question is why is anyone relying upon Ocwen? Best case scenario is they are a bookkeeper who keeps tracks and enforces payments and then forwards them to the alleged creditor. Ocwen doesn’t know or care if the purported creditor is the creditor. They just do their work and PRESUME (best case) that they have the name of the creditor. We all know now that any trust named as a creditor is NOT a creditor because if they were, there would be an assertion that the trust was a holder in due course which would eliminate all borrower defenses.
The worst case scenario is that they are not forwarding payment to any creditor and they have no idea who the trust is or if it still exists. We know the trusts are empty, we know most loans were not delivered to the trusts, we know there is no holder in due course- so why are we focused on the fact that Ocwen violated one metric when it has violated all settlement metrics and is engaging in massive fraud?
Not to be deterred by the NMS reprimand, Ocwen spun the issue into a positive stating, “Families across the country are still being impacted by the financial crisis,” the company stated. “Ocwen will continue to work with our customers, especially those facing foreclosure, to find loan modification programs, including principal reduction programs, to help them better afford and remain in their homes.”
What Ocwen really should have said is “Families across the country are still being impacted by the financial crisis because we have snowed Congress and the Courts.” Furthermore, “Ocwen will continue to confuse and deceive our unfortunate customers, especially those who are going to end up giving us their home, find ways to deny loan modification programs, and hope they find a place to rent.”
The National Mortgage Settlement was an insignificant slap on the wrist and was nothing more than a “cost of doing business” tax deduction that will do little to impact their bottom line. This strategy is similar to the pharmaceutical companies who create billion-dollar blockbuster drugs by “fudging” clinical safety trials, knowing that in 7 years when the drug goes off-patent they will likely be sued by approximately 5% of those treated by the drug who experienced medical complications (think Risperdal, Gardasil, etc). When you have a billion dollar a year drug, the $500 million dollars paid in damages is merely a cost of doing business and is built into the drug’s profit/loss structure. Apparently large banking institutions have the same profit strategy.
For instance, hypothetically, 90% of all homeowners will not fight foreclosure. Of the 10% who fight back, 5% of those homeowners will have their cases dismissed, another 2% will have incompetent counsel, and another 1% will have a biased judge. Therefore, the banks will face 2% of homeowners who persevere over great odds to simply enforce their right to due process. For the billions in profit they have made they will pay a paltry penalty. In order for the banks to change their wicked ways they must face heavy punitive costs, legal costs, fines and sanctions.
But even then, until bankers are prosecuted for criminal conduct- nothing is going to change because the banks will still be financially rewarded for their conduct. White collar banking fraud and forgery must be treated like any other type of fraud and forgery. The crimes are identical. The banks are confident (after 8 years of this behavior) they will not be heavily fined by government regulators or the courts; and no bank employee will be prosecuted. The banks have received a message to pillage with abandon and forge, fabricate, deceive, and conspire with impunity if you wear a tie or expensive shoes. The banks are modern day pirates but instead of a ship, hook and eye patch; they conduct their crime with Bugattis, Breitling watches, and Lasik surgery.
When the National Mortgage Settlement actually starts to penalize servicers for foreclosing on loans they don’t own- the NMS will have done their job. Stories like this are merely window dressing for an ineffective program that has no chance of deterring the behavior of the pretend lenders. Until bankers and their counsel are charged criminally for their conduct or huge punitive awards are given to homeowners who lose their homes- it is business as usual for the banker crime syndicate. Ocwen being forced to put 17k foreclosures on hold does one thing- it gives them more time to fabricate documents to ensure the “metrics” appear to be met.