An arbitrator has ruled that PHH Mortgage Services and parent company Ocwen Financial Corp. must pay $2 million to a plaintiff in a consumer fraud case.
According to the plaintiff’s attorneys, PHH and Ocwen denied their client consumer loss mitigation and refused to follow Freddie Mac guidelines to assist homeowners going through a divorce.
The plaintiffs attorneys said in a release this week that the award is significant because it demonstrates that Ocwen and PHH have harmed thousands of divorcing homeowners by refusing them loss mitigation during a divorce as a matter of corporate policy, which directly conflicts with their obligations under federal law and Freddie Mac guidelines.
“Our client was abused for nearly five years because Ocwen simply refuses to follow the law,” said attorney Rusty A. Payton. "Ocwen’s conduct maintains a long-time trend of abusing homeowners and ignoring legal obligations. Ocwen engaged in tactics that made it impossible for our client to get the relief she was entitled to, eventually suing her for foreclosure in early 2018."
Payton continued, "Ocwen then dangled an offer of help, received payments intended for loss mitigation, only to later snatch the offer away. Ocwen mistreats divorcing borrowers in need of a loan modification. Our client is relieved that this long nightmare appears to be drawing to an end.”
The arbitrator’s award, which is subject to appeal on a limited basis, includes $750,000 in compensatory damages, more than $580,000 in attorneys fees, and $500,000 in punitive damages, according to court records.
In her award, arbitrator Susan Zwick a retired Cook County, Ill., circuit judge, noted that corporate actions and indifference, when practiced to the harm of a targeted group, can easily be described as malicious.
“For claimant, the actions of the loan modification process in December 2018 through June 2019 may not have begun as intentionally malevolent, but clearly evolved into deceit,” Zwick said. “Claimant’s request for punitive damages is supported by the record.”
The arbitration final award was issued Sept. 29, and the plaintiff has moved the U.S. District Court to confirm the award and enter an enforceable money judgment, her attorneys said.
“Ocwen’s counsel has represented that they will contest entry of judgment, at least in part, on the grounds that the arbitrator was guilty of misconduct or misbehavior, an allegation that is both baseless and repugnant to her reputation and the professional manner in which she conducted the hearing,” Payton said.
Attorney Adam J. Feuer added that matrimonial attorneys, divorcing spouses, and consumer lawyers should be on the lookout for mortgage servicers denying divorcing couples loss mitigation.
“This misconduct seems rampant today,” Feuer said. “Homeowners who are experiencing similar deceptive or abusive conduct from their mortgage servicer should know that there are powerful tools available to hold these companies to account, and we are here to help.”
Payton added in an email Friday that the award should resonate with Ocwen/PHH and its investors "because it represents almost 20% of the company's second-quarter net income and, given that this is an ongoing policy failure, we believe there are hundreds of other borrowers who have similar cases."
Ocwen officials did not immediately respond to a request for comment.
