US Treasury attempts to Silence Consumer CFPB Complaints

Treasury Report Recommends Keeping Data From Consumers

Jun 14, 2017

An agency created to protect the interests of American consumers may be gutted by the Trump administration’s pursuits to cut back federal regulations.

The Consumer Financial Protection Bureau, which was created by the Dodd-Frank measures to hold financial institutions accountable for customer grievances about their products, is the latest reform to come under scrutiny.

Conservatives target the CFPB along with other Dodd-Frank regulations in the Financial CHOICE Act, which passed the House of Representatives on Thursday. The bill would prohibit the CFPB from publishing data — which can currently be found here — about the complaints it receives, meaning that consumers would have less information when making financial decisions.

The Treasury department released a report Monday that recommends keeping this data from the public, citing that only government authorities should have access to the information.

Companies have long claimed the bureau is overreaching. The Treasury backed up this viewpoint in the report, saying the CFPB “subjects companies to unwarranted reputational [sic] risks.”

Consumer advocates agree that the current database should delineate more clearly between complaints that have been investigated and false accusations, but also make the argument that the bureau should disclose even more data.

The bureau has processed nearly 800,000 complaints since its inception, according to CFPB records. As a result, the watchdog has been responsible for $11.8 billion dollars in returns to 29 million U.S. consumers, which breaks down to an average $407 returned to the 9% of the U.S. population affected. This back-of-the-napkin math assumes no customer was a victim in more than one case.

Complaints submitted to the CFPB played a role in resolving misconduct at Wells Fargo, Bank of America, and PayPal. The bureau has also targeted unfair student loan practices and predatory payday lending.

The agency gives consumers a cost-free avenue to hold large companies accountable, making it possible to correct issues that would have been ignored or addressed only by parties that could afford expensive court proceedings. The CFPB also provides data and research to help Americans make informed financial decisions.

“This report calls for radical changes that would make it easier for big banks to cheat their customers and spark another financial meltdown,” Sen. Elizabeth Warren, who worked to ensure the consumer protection measures were included in the 2010 Dodd-Frank reforms when she was a Harvard Law School Professor and congressional advisor.

The CHOICE act has virtually no chance to pass the Senate, but the debate about the CFPB will likely continue.

A court decision in October of last year declared the structure of the CFPB unconstitutional due to the unusual amount of power vested in a single director of the organization. Unlike other independent agencies, which typically report to a commission, the bureau was accountable only to the director. Rather than shutter the agency, the DC Court of Appeals ruled the president should have the power to dismiss the director at will.

The Department of Justice filed an amicus brief in March arguing that the president should have this authority ahead of the hearing to re-examine the October ruling. Oral arguments were held May 24th in front the Federal Court of Appeals for the D.C. Circuit, but a decision likely won’t be handed down until late summer or early fall 2017.

The DOJ brief and the recent Treasury report showed that the Trump administration is firmly siding with Republicans in Congress on this issue. And Treasury Secretary Steve Mnuchin has said the CFPB should be funded by Congress, rather than the Federal Reserve.

“It may not survive the way we know it through this administration,” consumer attorney Deepak Gupta, who worked at the CFPB in its early days, said of the agency in November.

CFPB to Assess RESPA Mortgage Servicing Rule Effectiveness

The Consumer Financial Protection Bureau (CFPB) is planning to assess the effectiveness of the Real Estate Settlement Procedures Act (RESPA) mortgage servicing rule. The rule, introduced in January 2013 and which took effect in January 2014, was designed to assist consumers who were behind on mortgage payments.

Among other things, the RESPA mortgage servicing rule requires servicers to follow certain procedures related to loss mitigation applications and communications with borrowers. Servicers must give, in writing, notices of error within five days, and investigate and respond to the borrowers within 30 days.

Additionally, the RESPA mortgage servicing rule called for greater transparency between the servicer and the borrower. It required clear monthly mortgage statements, early warning before adjusting interst rates, and gave options to avoid fore-placed insurance.

“For many borrowers, dealing with mortgage servicers has meant unwelcome surprises and constantly getting the runaround. In too many cases, it has led to unnecessary foreclosures,” said CFPB Director Richard Cordray of the rule in 2013. “Our rules ensure fair treatment for all borrowers and establish strong protections for those struggling to save their homes.”

Dodd-Frank requires the CFPB to review their rules five years after they take effect, and this includes RESPA. Currently, the Bureau is seeking comment from consumers, consumer advocates, housing counselors, mortgage loan servicers, industry representatives, and the general public regarding the rule, and will issue a report of their assessment by January 2019.

The assessment will give the CFPB better understanding of the costs and benefits of the RESPA mortgage servicing rule, and, according to the Bureau, will provide the public with a better understanding of the mortgage servicing market.

The CFPB’s Information Request can be found here.

CitiFinancial, CitiMortgage To Pay $28.8M Over Mortgage Servicing Issues

Millions of consumers lost their homes when the housing market bubble burst. But federal regulators say some of those people may have been able to stay in their homes had mortgage lenders fulfilled their requirements. To that end, the Consumer Financial Protection Bureau has ordered two Citigroup subsidiaries to pay $28.8 million to resolve allegations that some of its mortgage units harmed home borrowers. 

The CFPB announced Monday that CitiMortgage [PDF] and CitiFinancial Services [PDF] will pay fines and restitution to thousands of customers who were allegedly not made aware of their options to avoid foreclosure.

In all, CitiMortgage must pay $17 million to consumers and pay a civil penalty of $3 million, while CitiFinancial Services must refund approximately $4.4 million to consumers and pay a civil penalty of $4.4 million.

According to the CFPB complaint, the subsidiaries gave customers struggling to make mortgage payments the runaround when it came to trying to save their homes.

For example, CitiFinancial Servicing — which collects payments from borrowers for loans it originates and handles customer service, collections, loan modifications, and foreclosures — failed to consider a borrower’s application for deferred payment as a request for foreclosure relief options, the CFPB alleges.

Requests for foreclosure relief trigger protections required by CFPB mortgage servicing rules, that include helping borrowers complete their applications and considering them for all available foreclosure relief alternatives.

In the case that CitiFinancial did allow customers to defer payments, the CFPB claims, the subsidiary did not provide borrowers with information on how that would affect their future payment. Specifically, the company did not notify borrowers that the deferred amounts would become due when the deferment ended.

Additionally, the CFPB alleges that CitiFinancial charges customers for credit insurance — which cover a home loan if the borrower couldn’t make a payment — despite the fact that the insurance should have been canceled.

From July 2011 to April 30, 2015, the CFPB claims that 7,800 borrowers paid for credit insurance that CitiFinancial Servicing should have canceled based on the terms that insurance would not be applicable if the borrower had missed four or more monthly payments.

As for CitiMortgage, the CFPB complaint alleges that the subsidiary failed to help consumers looking for assistance in making their mortgage payments.

Instead, the Bureau alleges that when customers asked for help, CitiMortgage requested borrowers provide dozens of documents and forms that had no bearing on the application for foreclosure relief or that the consumer had already provided.

In 2014 alone, the CFPB claims that CitiMortgage sent 41,000 borrowers letters requesting unneeded documents with descriptions such as “teacher contract,” and “Social Security award letter.”

In addition to paying fines and refunds, CitiFinancial and CitiMortgage must clearly provide customers with information on what documents are needed for foreclosure relief, and provide terms for deferments upfront.

CFPB Lawsuit: Ocwen fails Borrowers at every state of Mortgage Servicing Process

By K.K. MacKinstry, LendingLies

CFPB claims “widespread errors, shortcuts, runarounds cost borrowers money, homes”

Ocwen is in its death throes. Not only did 20 state banking regulators issue cease-and-desist orders but the Consumer Financial Protection Bureau also took action citing Ocwen Financial for “failing borrowers at every stage of the mortgage servicing process.”

Ocwen Financial engages in predatory servicing.

It is obvious by the allegations set forth by the CFPB lawsuit that Ocwen’s business model is not to service mortgage loans but instead to implement predatory practices that ensure defaults occur.  If Ocwen can successfully steer a homeowner into foreclosure, they receive an absolute financial windfall.  Ocwen’s reign of terror may finally be coming to an end.

According to the CFPB lawsuit, they allege that Ocwen cost borrower’s money and some of them their homes, with its history of “widespread errors, shortcuts, and runarounds.”

The CFPB states in the suit that Ocwen “botched basic functions like sending accurate monthly statements, properly crediting payments, and handling taxes and insurance.”

The CFPB says Ocwen, “illegally foreclosed on struggling borrowers, ignored customer complaints, and sold off the servicing rights to loans without fully disclosing the mistakes it made in borrowers’ records.”

What the CFPB failed to investigate is that Ocwen routinely robosigns notes and assignments and is unable to provide evidence of a creditor.  The CFPB is looking at the surface issues but unfortunately is not concerned about Ocwen’s deeper fraudulent practices

The CFPB uncovered “substantial evidence that Ocwen has engaged in significant and systemic misconduct at nearly every stage of the mortgage servicing process.”   Ocwen was aware that a CFPB investigation into its servicing practices was likely and set aside $12.5 million to settle with the bureau. Considering they are making huge profits from wrongful servicing and foreclosing on homes it doesn’t own- a mere $12.5 million is a pathetic penalty by any standard.

In October of 2016 Ocwen revealed that they were under investigation and it appears that Ocwen’s negotiations with the bureau were unsuccessful.

The CFPB release states that Ocwen serviced almost 1.4 million loans with an aggregate unpaid principal balance of $209 billion, at the end of 2016.  Servicing violations, include (from the CFPB report):

  • Servicing loans using inaccurate information: Ocwen uses a proprietary loan management system called REALServicing to process and apply borrower payments, communicate payment information to borrowers, and maintain loan balance information.  Ocwen is accused of loading inaccurate and incomplete information into its REALServicing system. Even when data was deemed accurate (yeah- right), REALServicing generated errors because of system failures and deficient programming. To manage this issue, Ocwen attempted to implement manual workarounds, but they often failed to correct inaccuracies and produced additional errors. Ocwen then used this faulty information to service borrowers’ loans. In 2014, Ocwen’s head of servicing described its system as “ridiculous” and a “train wreck.”
  • Illegally Home Foreclosures: Ocwen brags about its superior ability to service and modify loans for customers. The investigation found that Ocwen has failed to implement mandated foreclosure protections. The Bureau alleges that Ocwen has wrongfully initiated foreclosure proceedings on at least 1,000 people, and has wrongfully held foreclosure sales (Livinglies readers know the numbers are likely triple this number or more). Ocwen dual-tracked customers and initiated foreclosure proceedings before completing a review of borrowers’ loan modification applications. Ocwen also repeatedly asked borrowers to submit additional information with a 30-day deadline, but would then foreclose on the borrowers before the deadline. Ocwen has also foreclosed on borrowers who were compliant with their obligations under a loan modification agreement.
  • Failure to post borrowers’ payments: Ocwen reportedly failed to appropriately credit payments made by some borrowers resulting in inaccurate account information. Ocwen also failed to send borrowers accurate periodic statements detailing the amount due, how payments were applied, total payments received, and other information.  Ocwen also failed to correct billing and payment errors.  It is well known that Ocwen does not respond to Qualified Written Requests or provide the information requested as a routine policy.
  • Botched escrow accounts: Ocwen manages escrow accounts to pay insurance and taxes for over 75% of the loans it services. Ocwen has allegedly botched basic tasks in managing these borrower accounts causing huge headaches for customers.  Ocwen has allegedly failed to conduct escrow analyses and sent some borrowers’ escrow statements late or not at all and blames it on computer issues.  Ocwen failed to properly account for and apply payments by borrowers to address escrow shortages, such as changes in the account when property taxes go up. This resulted in tax and insurance issues.


  • Hazard insurance issues: Ocwen failed to administer escrow account for customers. A servicer is obligated to make timely insurance and/or tax payments on behalf of the borrower if contracted to do so. Ocwen failed to make timely insurance payments to pay for borrowers’ home insurance premiums. Ocwen’s failures led to the lapse of homeowners’ insurance coverage for more than 10,000 borrowers. Some borrowers were pushed into force-placed insurance.
  • Private mortgage insurance failures: Ocwen failed to cancel borrowers’ private mortgage insurance, or PMI, in a timely way, causing consumers to overpay.  Borrowers must purchase PMI when they obtain a mortgage with less than 20% down, or when they refinance their mortgage with less than 20% equity in their property. Servicers must end a borrower’s requirement to pay PMI when the principal balance of the mortgage reaches 78% of the property’s original value. Since 2014, Ocwen has failed to end borrowers’ PMI on time after learning information in its REALServicing system was unreliable or missing altogether. Ocwen ultimately overcharged borrowers about $1.2 million for PMI premiums, and refunded this money only after the fact.
  • Deceptively charged homeowners for add-on products:  Ocwen pulled a Wells Fargo and enrolled some customers in add-on products through deceptive solicitations and without their consent. Ocwen then billed and collected payments from these consumers without their consent.
  • Heirs seeking foreclosure alternatives were denied assistance: Ocwen mishandled accounts for heirs or successors to deceased borrowers. These people included widows, children, and other relatives. Ocwen failed to properly recognize individuals as heirs, and thereby denied assistance to help these individuals avoid foreclosure. In some cases, Ocwen foreclosed on individuals who may have been eligible to save these homes through loan modifications or other loss mitigation options. This is the epitome of engineering a default so Ocwen could illegally steal a home.
  • Failed to adequately investigate and respond to borrower complaints: Servicer are required to investigate errors and correct the error identified by the borrower, called a notice of error. Since 2014, Ocwen has allegedly routinely failed to properly acknowledge and investigate complaints, or make necessary corrections.  In April 2015 Ocwen failed to address the difficulty its call center had in recognizing and escalating complaints. Under its new policy, borrowers must complain at least five times in nine days before Ocwen automatically escalates their complaint to be resolved. Since April 2015, Ocwen has received more than 580,000 notices of error and complaints from more than 300,000 different borrowers.
  • Provided incomplete and inaccurate information to new servicers: Ocwen failed to include complete and accurate borrower information when it sold servicing rights for thousands of loans to new mortgage servicers. This resulted the new servicers’ efforts to comply with laws and investor guidelines. It is likely that not only does Ocwen have incomplete payment histories but cannot produce the original notes or assignments without resorting to fraudulent means to recreate them.

The CFPB accuses Ocwen of failing to “remediate borrowers for the harm it has caused, including the problems it has created for struggling borrowers who were in default on their loans or who had filed for bankruptcy.”  The CFPB need only contact Livinglies and we will be happy to provide information about the challenges our clients have faced while trying to obtain basic information about their loans including who the real creditor is.  In some cases it appears that Ocwen had no idea who they were servicing the loan for.

CFPB Director Richard Cordray summarized Ocwen’s alleged failings.  He wrote, “Ocwen has repeatedly made mistakes and taken shortcuts at every stage of the mortgage servicing process, costing some consumers money and others their homes,” Cordray continued, “Borrowers have no say over who services their mortgage, so the Bureau will remain vigilant to ensure they get fair treatment.”

Ocwen denying any liability and released a lengthy statement in response to the CFPB’s allegations. To read the statement click here.  The market responded with a drastic loss of over 50% per share.


The Consumerist: Complaints About Student Loan Servicing Increased 429% In Past Year

Complaints About Student Loan Servicing Increased 429% In Past Year

In the past year, federal regulators and consumer advocates have highlighted issues with student loans and the servicing of these often crippling debts: from finding that educational loans continue to haunt older borrowers, to suing Navient, the largest student loan servicing company. Because of this, it might not come as much of a surprise that the number of complaints the Consumer Financial Protection Bureau received related to student loans has skyrocketed. 

Today, the Bureau released its monthly complaint snapshot [PDF], which shows a 429% increase in student loan complaints received in a year-to-year comparison of just three months.

According to the report, the CFPB received 2,913 complaints from Dec. 2016 to Feb. 2017, a significant increase from the 551 complaints written between Dec. 2015 to Feb. 2016.

The CFPB notes that the surge in complaints is likely tied not only to an increased awareness of student loan servicing issues, but the fact that the Bureau updated its intake form on accepting complaints in Feb. 2016.

Additionally, the Bureau believes that taking “major enforcement action” against a student loan servicer contributed to a student loan complaint volume spike in Jan. 2017.

The CFPB doesn’t explicitly name the company, but the Bureau — along with two states — sued Navient, alleging the company cheated borrowers out of repayment rights.

While the CFPB didn’t provide specific complaint volume for that time, the snapshot shows that Navient was the tenth most complained about company from Oct. 2016 to Dec. 2016, receiving an average of 236 complaints each month.

When the complaints are compared to the same three-month period in Oct. 2015 to Dec. 2015, the CFPB found a 52% increase. In all, the Bureau says it received 10,637 student loans-related complaints for all of 2016.

Rohit Chopra, senior fellow at the Consumer Federation of America, is a former assistant director and student loan ombudsman for the CFPB. He tell Consumerist that Bureau’s snapshot is just the latest finding in a loan line of data point that show signs of big trouble in the broken student loan market.

“The agency’s lawsuit against Navient was a wake-up call to many borrowers that they too may have been preyed upon by the company’s illegal conduct,” he says of the increases, adding that borrowers may also be filing more complaints with the CFPB because companies are more likely to provide an in-writing response through this portal.

Suzanne Martindale, staff attorney for Consumer Union, tells Consumerist that the CPFB’s report provides just another reason why a strong consumer watchdog is needed.

“If anything, this increase shows that there’s a real problem out there – and that consumers increasingly rely on the CFPB to stand up for them,” she said, noting that CFPB provides an outlet for people who would otherwise suffer in silence when financial companies mistreat them.

Other Highlights

The CFPB’s monthly snapshot of complaints also highlighted issues with credit card companies and a national complaint overview.

As of March 1, 2017, the Bureau says it has handled approximately 116,200 credit card complaints, many involving issues related to being billed for fraudulent charges, confusion over reward programs, and being the victims of identity theft.

Of the complaints the CFPB received, the most involved Citibank, Capital One, and JPMorgan Chase. These companies received about 90% of all credit card complaints received by the Bureau from Oct. 2016 to Dec. 2016.

Wells Fargo received the greatest increase credit card complaints — about 99% — when comparing consumer gripes between Oct. 2015 and Dec. 2015 to those received between Oct. 2016 to Dec. 2016.

While the CFPB doesn’t mention it, the increased complaints came immediately after Wells Fargo’s fake account fiasco was uncovered.

In Sept. 2016, the CFPB — along with the Office of the Comptroller of the Currency and the Los Angeles city attorney — ordered the bank to pay $185 million in refunds and penalties after finding that employees opened nearly two million unauthorized consumers accounts in order meet high-pressure sales quotas.

While student loans and credit card companies accounted for many complaints received by the CFPB, it was actually debt collection that was the most-complained about financial product or service.

Of the approximately 26,000 complaints handled in February, there were 7,755 complaints about debt collection.

The second most-complained-about consumer product was credit reporting — accounting for 4,902 complaints — followed by mortgages, which accounted for 3,718 complaints.

NewYorkTimes: How ‘Consumer Relief’ after Mortgage Crisis can Enrich Big Banks


the basic thrust of the defense is to point out what is absent rather than attack what is not absent.

Get a consult! 202-838-6345 to schedule CONSULT, leave message or make payments.
As predicted on my blog back in 2008, we are seeing new names of Trusts emerge in foreclosure cases — involving old loans that were declared in default years ago by parties asserting they represent the alleged servicer of either a named bank or servicer or an old trust. What happened? As our sources had revealed, the alleged trusts had nothing in them and were the source of extreme liability of the Master Servicer acting as underwriter to the investors and third parties who traded in securities based upon the representation that the Trust actually owned the debts of millions of homeowners.
We have not seen the agreements, but we are told, and our analysis confirms, that the old trusts were “retired” and that new trusts, also empty, are now being used wherein the paperwork for the new “Trusts” is far more complete than what we have previously seen.
As far as we have determined thus far the mechanics of the change of trust name are along the following lines:
  1. There is probably a purchase and sale agreement between the old trust and the new trust. Like previous documentation there are no warranties of ownership but ownership of the debts is implied.
  2. Like the old Trusts, foreclosures are brought in the name of the new trusts, using US Bank or other major institution as the “Trustee.”
  3. Investors in the old trusts are given certificates in the new trust as settlement of claims brought by investors for malfeasance in the handling of their money — namely the origination of loans instead of the acquisition of loans and the granting of loans that were far lower in quality than agreed and far higher risks than allowed for stable managed funds.
  4. This “resecuritization” process is a sham just like the original old trust. But it follows the playbook the banks have been using for over a decade. By adding another level of paper to fabricated documents based upon nonexistent transactions, it promotes the illusion of valid transactions and valid documents.
  5. Like all other trusts and hybrid situations in which trusts were involved but not named, the entire scheme is based upon a simple premise. The banks have managed information and data such that there remains a false sense of security that they are still credible sources of information — despite all evidence to the contrary. The additional layer of documents then adds to the illusion because it is counterintuitive to believe that these high level complex documents represent transactions in the real world that don’t exist.
Defense strategies remain the same, however. The issues in evidence laws and rules are foundation, and hearsay.The basic defects in the bank’s credibility must be revealed even if it does not get to the point where everything is revealed. The rent-a-name practice for appointment of trustees that have no obligations or duties continues. The “apparent authority” of the servicers is based upon a trust document of an entity in which there is no asset. But the website of US Bank and others suggest that they have business records — which in actuality do not exist. Hence, the basic thrust of the defense is to point out what is absent rather than attack what is not absent.
This takes strict logical analysis by the attorney representing the homeowner — an exercise that in most cases cannot be accomplished by a pro se litigant. It may be beyond the confidence of the lawyer too, but there are many people in the country who provide services that assist with the logical analysis and factual analysis — including but not limited to the team at LivingLies and LendingLies. The analyst should be well-steeped in the three classes of securitization — concept, written documents and actual practice in order to come to conclusions that are not only correct but are likely to give traction in court.
While tempting, attacking the existing documentation on the basis of authenticity or validity is a rabbit hole. The only parties that actually have the proof as to the fabrication of any one particular transaction are the parties with whom you are in litigation and the parties who created them and use them as sham conduits. They resist by all means available any attempt to provide access tot he real information and the real monetary transactions which look very different from the ones portrayed in court.
By making an allegation you are now required to prove what you have said by evidence that the other side simply will not give up. This is not to say that there is no value in sending a QWR (Qualified Written Request), (DVL) Debt Validation Letter, or a complaint to the state AG or the CFPB. Much of the inconsistent statements come from those responses and can be used in court. And there is also considerable value in seeking discovery even if we know that in most cases, while it should be allowed, the judge will issue protective orders or sustain objections to requests seeking the identity of the owner of the debt.
The value of those apparently futile endeavors can be that at trial the foreclosing party will almost certainly rely on legal presumptions that depend upon information contained in your discovery request.
OBJECTIONS AT TRIAL: This requires research and analysis of potential objections and how they should be used. While a motion in limine before trial would seem to be the better practice, the real traction seems to come at trial when the homeowner raises objections and moves to exclude evidence that relies upon data contained in discovery they refused to answer and which the court ruled was irrelevant. It is of utmost importance, however, that in order to use the discovery exchanges, you must file a motion to compel and set it for hearing and get it heard. The risk of a motion in limine is that the court is more likely to deny it and then when raised at trial in an objection will regard your objection as a second bite an apple that has already been the subject of a dispositive ruling.
Cross examination of the robo-witness should be aggressive and relentless pointing to the actual lack of knowledge of the witness about anything other than the script from which he was trained to testify.
%d bloggers like this: