As originally reported:
Pamela Williamson started paying off the mortgage on her house on Crossbrook Drive in Nashville after buying it in 2005. But payments soon started getting out of hand.
From the next year until recently, she began receiving mailings and phone calls from her loan servicer, Delaware-based Ocwen Loan Servicing, several times a month. She says the notifications from Ocwen included demands for the payment of various fees and late charges.
When she requested an accounting of her payments, she received incomplete statements of the money she paid on her house. Early this year, Williamson received a surprise foreclosure notice from a Memphis-based law firm acting on behalf of Ocwen.
This week, Williamson and her attorney, Kline Preston, sued Ocwen under the Racketeer Influenced Corrupt Organizations Act, accusing the company of fraud using U.S. mail and wire services. The defendants include Ocwen Loan Servicing, its Florida-based parent Ocwen Financial Corp. and various unnamed employees, officers and directors of the Ocwen group of companies. Other charges in the suit – which is available here – include "violation of contract", "false and deceptive means of collecting debt" and "harassment."
Williamson is seeking statutory and punitive damages to be settled by a jury in addition to at least $150,000 in compensation plus court and attorney fees. Plaintiffs in a RICO lawsuit can request three-fold compensation for damages suffered.
Ocwen made every effort to assist the homeowner on the various occasions when she fell behind in her payments, said Paul Koches, executive vice president and general counsel at Ocwen Financial, via e-mail.
"We worked out a special payment plan and later actually modified the terms of her loan to accommodate her," Koches wrote. "Throughout this time, the homeowner repeatedly apologized for late payments and expressed gratitude for our patience and assistance, saying at one point we 'have been an OUTSTANDING company to work with' (emphasis in original)."
Koches said Williamson did not contact the company's Ombudsman Department, which handles homeowners' problems with their mortgages.
"The assertions of wrongdoing are without any factual or legal merit and that we will defend the case vigorously in court," Koches said.
Ocwen is no stranger to the courts or to controversy. In its most recent quarterly report with the Securities and Exchange Commission, the company details the progress of a series of legal actions accusing it of charging improper fees or misapplying loan payments. (Search for 'state courts.') Many of those suits have been consolidated since 2004, but little progress has been made toward any resolution.
In 2002, Kweku Hanson, a Connecticut resident, brought a class action against Ocwen Federal Bank, a now-defunct subsidiary, and Ocwen Financial in federal court on charges of racketeering, breach of contract, unfair debt collection practices, harassment, mail fraud and others. The lawsuit seeks punitive damages in the amount of $1.5 billion.
A Huffington Post story from earlier this year also outlined other recent regulatory issues. The Department of Veterans Affairs hired Ocwen in 2003 to manage and sell thousands of foreclosed properties owned by the department. A 2007 report from the Government Accountability Office said the VA "has not been satisfied with Ocwen's performance" and had levied $1.3 million in penalties in 2005 – when housing market was at its peak – after Ocwen did not meet sales targets.
The GAO report also said Ocwen charged the VA for home-upkeep repairs that were never made and let numerous houses fall into disrepair, which the GAO says might have lowered property values.
And in 2000, Ocwen Federal Bank paid $50,000 to settle charges from HUD after violating loan-servicing rules. Four years later, the Office of Thrift Supervision forced Ocwen Federal to sign an agreement promising to improve its compliance with fair-lending laws.
Commenting on the various run-ins Ocwen had with law, Koches said that in April, the Board of Contracts Appeals decided the VA issue in Ocwen's favor, reversing all penalties. The VA has not challenged that decision, he said.
In the Hanson case, the federal judge granted summary judgment in Ocwen's favor, Koches said. In 2005, the court ruled that the servicing fees and charges challenged in the Hanson and all other consolidated lawsuits are proper under the controlling mortgage documents. Some nine years ago, Ocwen "had a disagreement with HUD's interpretation of certain loan servicing guidelines concerning a small number of loans we acquired in the mid-1990s", Koches said. "To avoid costly and protracted proceedings, we agreed make an administrative payment of $50,000. There was no fine, penalty or finding of liability."