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Ocwen Financial Corporation is a national provider of loan servicing for lenders. It is headquartered in Florida and has offices in several states. In its Consent Agreement with Maine’s Bureau of Consumer Credit Protection and Attorney General, Ocwen admitted that after July 2014 it pursued foreclosures against Maine homeowners based on paperwork which the State found to be legally defective.

Specifically, Ocwen used “powers of attorney” granted by corporate originators of the mortgages, but those corporate originators of the mortgages had been legally dissolved – had ceased to exist – no later than March 2012. The State alleges that the powers of attorney terminated when the granting corporations dissolved.

Under the Consent Agreement, the State found that Ocwen’s use of the powers of attorneys from legally nonexistent entities violated a statute prohibiting “false, deceptive or misleading representation or means in the collection of any debt.”

Ocwen’s illegal filings continued into January of 2019, even after Ocwen’s lawyers had assured State regulators in November 2018 that the practice would stop. The company termed the additional filings as “inadvertent.”

Ocwen Financial Corporation will refund or credit 24 Maine residents more than $50,000 in attorney’s fees they were assessed when their homes were foreclosed upon, and the company will pay $24,000 in civil penalties and $10,000 in investigative costs to the State of Maine, as part of a Consent Agreement signed last week.

Maine’s Supreme Court has made clear that lenders must establish that they have the legal right to pursue foreclosures,” said Will Lund, Superintendent of the Maine Bureau of Consumer Credit Protection. “Those requirements were not followed in these cases.”

Attorney General Aaron M. Frey, whose office assisted state mortgage regulators in negotiating and resolving the matter, stated, “The Consent Agreement puts Ocwen – and other national mortgage lenders and servicers – on notice that they must follow the legal standards here in Maine if they pursue actions on defaulted mortgages.”

The Consent Agreement may have ramifications beyond Ocwen, noted Superintendent Lund, since other lenders may be filing foreclosures based on similar powers of attorney issued by the same nonexistent corporate loan originators used by Ocwen.

 

An action has been taken against Ditech Holding Corporation (Ditech) in the United States Bankruptcy Court for the Southern District of New York, opposing the mortgage servicer’s attempted end-run around statutory protections for homeowners.

Ditech currently has more than 880 active foreclosure actions pending across New York State. Homeowners organized the Consumer Creditors Committee to ensure that the courts do not permit the company to sweep their rights under the rug. Homeowners are demanding that their claims and defenses, which include significant money damages, not be extinguished in Bankruptcy Court.

Attorney General Letitia James made the announcement.

In addition to filing this motion, the Office of the New York State Attorney General currently has an open investigation into Reverse Mortgage Solutions (RMS), a reverse mortgage servicer that is owned by Ditech.

Bankruptcy Court should never be used as a tool to unjustly oust New Yorkers from their homes,” said Attorney General Letitia James. Ditech’s action is an illegal attempt to strip hundreds of homeowners of their legitimate claims and eviscerate New York’s carefully-created foreclosure process. Housing is a right, and we will continue to use every legal tool at our disposal to stand up for homeowners and to protect their rights.”

In addition to filing this motion, the Office of the New York State Attorney General currently has an open investigation into Reverse Mortgage Solutions (RMS), a reverse mortgage servicer that is owned by Ditech.

This past March, Attorney General James took a similar action when a building owner in Manhattan attempted to flout rent regulation laws and displace tenants.

Attorney General James — in support of the Consumer Creditors’ Committee — is filing the objection to ensure that vulnerable homeowners, who were victims of predatory lending and mortgage servicing abuses, including seniors with reverse mortgages, can assert their rights under the protections of New York’s robust judicial foreclosure process.

The objection is being handled by Assistant Attorneys General Elena González, Elizabeth M. Lynch, and Sarah Trombley of the Bureau of Consumer Frauds and Protection, under the supervision of Bureau Chief Jane M. Azia, as well as Enid Nagler Stuart, Special Bankruptcy Counsel for the Litigation Bureau. The Bureau of Consumer Frauds and Protection is overseen by Chief Deputy Attorney General for Economic Justice Christopher D’Angelo, and the Litigation Bureau is overseen by Chief Deputy Attorney for State Counsel Orelia Merchant.

 

A settlement agreement was reached today with 800 New Yorkers for a $45 million settlement with New Jersey-based mortgage lender and servicer PHH Mortgage Corporation.

The settlement agreement reached by 49 states, the District of Columbia and 45 state mortgage regulators resolves allegations that PHH, the nation’s ninth largest non-bank residential mortgage servicer, improperly serviced mortgage loans from January 1, 2009 through December 31, 2012. The $45 million settlement includes $30.4 million in payments to borrowers, and additional payments to states and mortgage regulators for costs and fees related to the investigation.

Over 800 New York borrowers applied for payments. Rust Consulting, the settlement administrator, issued checks to claimants on Friday, May 31, 2019. Borrowers who lost their homes to foreclosure during the eligible period will receive approximately $1,500, and borrowers referred (but did not ultimately lose their home) to foreclosure will receive approximately $540. Total payments to New York State borrowers exceeds $666,000.

The settlement agreement also requires PHH to adhere to comprehensive mortgage servicing standards, conduct audits, and provide audit results to a committee of states. The settlement does not release PHH from liability for conduct that occurred beginning in 2013.

Attorney General Letitia James made the announcement.

Today, homeowners who were unfairly and unwittingly victimized receive a piece of justice that they deserve,” said Attorney General Letitia James. “It is unfortunate that New York homeowners were victimized by improper mortgage servicing in the first place, but are at least now receiving the financial compensation owed to them. We will continue to use every resource at our disposal to reverse the damaging practices that helped to create the foreclosure crisis, and hold bad-acting mortgage companies accountable.

Empire Justice Center applauds Attorney General Letitia James for representing New York homeowners in the recent multi-state settlement with PHH Mortgage Corporation,” said Kirsten Keefe, Senior Attorney and Program Director for HOPP Anchor Partner Program at the Empire Justice Center.The settlement requires PHH to clean-up its mortgage servicing practices so that they help, rather than harm homeowners. In addition, over 800 New Yorkers will share in a total of cash payments of more than $660,000. Fortunately in New York State, many homeowners who might have otherwise lost their homes because of the misconduct of PHH, received assistance from housing counseling and legal service providers funded through the Attorney General’s Homeowner Protection Program (HOPP) and so remain in their homes. We are very fortunate to have an Attorney General who is continuing to press for the rights of New York’s homeowners and communities.”

We commend the Attorney General’s office for holding mortgage servicer’s accountable for their actions to protect New Yorker’s homes, which is their largest and most important asset,” said Susan Boss, Executive Director of The Housing Council at PathStone. “Along with the A.G’s office, we will continue to advocate for all New York homeowners.

We are thankful to Attorney General James for her dedicated support of New York homeowners,” said Christie Peale, CEO and Executive Director of the Center for NYC Neighborhoods. “This settlement provides direct compensation to hundreds of families, some of whom lost their homes to foreclosure during the financial crisis. Just as importantly, it shows that New York State will hold other mortgage lenders and servicers accountable for fully complying with all servicing regulations, and treating homeowners equitably.

The case was handled Deputy Bureau Chief Laura J. Levine under the supervision of Bureau Chief Jane M. Azia in the Consumer Frauds and Protection Bureau, and Executive Deputy Attorney General of Economic Justice Christopher D’Angelo.

Ocwen Loan Servicing LLC, one of the nation’s largest mortgage servicers will pay $2 million in restitution to resolve allegations that it violated state law and committed unfair and deceptive practices by charging Massachusetts homeowners for unnecessary fees and overpriced force-placed insurance policies.

The AG’s complaint alleged that Ocwen committed widespread mortgage servicing violations that increased Massachusetts borrowers’ mortgage and insurance expenses, exposed borrowers to serious risk through insurance lapses, and contributed to loan delinquencies and foreclosures. When borrowers requested information about or disputed errors on their loan accounts, Ocwen failed to respond to the requests as required by law. According to the complaint, Ocwen’s violations include:

  • Unnecessary flood insurance: Ocwen force-placed borrowers in expensive flood insurance policies for time periods when properties were not in special hazard flood area and did not require flood insurance. The force-placed policies carried high deductibles and did not provide critical liability and personal property coverage to borrowers.
  • Improperly administering insurance premiums: Ocwen forced borrowers to pay their insurance premiums into an escrow account and then failed to disburse these escrowed insurance premiums to insurers, causing borrowers’ insurance policies to lapse and leaving them exposed to serious gaps in insurance coverage.
  • Charging inflated and duplicative fees: Ocwen took advantage of struggling borrowers by charging duplicative and unnecessary pre-foreclosure property inspection and preservation fees for grass cuts, landscaping, and title review. In some cases, Ocwen conducted three property inspections in the same month and ordered several grass cuts within the same week, then passed the costs on to the borrower.
  • Failing to respond to borrower disputes and requests for information: Ocwen failed to provide timely and adequate responses to borrowers’ requests for information, complaints, and notices of error, causing problems to go unaddressed.

Under the terms of the consent judgment, Ocwen will pay $2 million in restitution including direct cash refunds and account credits. Ocwen will send notifications to 4,000 borrowers who may be eligible to receive a loan modification and has also agreed to halt foreclosure proceedings for certain homeowners to allow them time to apply for the loan modification. Ocwen will also pay three times the damages for borrowers for whom the company wrongfully failed to disburse escrowed insurance premiums and reimburse borrowers who were unnecessarily charged for flood insurance policies. Finally, Ocwen will implement new policies relating to the handling of customer complaints.

Attorney General Maura Healey made the announcement today.

The consent judgment, entered in Suffolk Superior Court, settles a lawsuit filed by the AG’s Office in April 2017 against Ocwen Loan Servicing LLC, which services tens of thousands of mortgages for Massachusetts homeowners.

Keeping families in their homes remains a top priority for my office,” said AG Healey. “This settlement will provide relief to thousands of Massachusetts homeowners harmed by abusive and unfair mortgage servicing practices.”

The AG’s Office has been a national leader in securing restitution and other relief for borrowers from banks and servicers. The office has obtained recoveries and other relief from Morgan StanleyGoldman SachsRoyal Bank of ScotlandCitigroupJPMorgan ChaseCountrywideFremont Investment & LoanOption OneDitechHSBC, PHH, Nationstar, Shellpoint and others on behalf of Massachusetts homeowners.

The AG’s Office has also brought a string of force-placed insurance cases and obtained over $12 million in related recoveries under settlements with HSBC, American Security Insurance Company (Assurant), and QBE Insurance.

This matter was handled by Assistant Attorneys General Michael Lecaroz and Sarah Petrie, and Deputy Division Chief Shennan Kavanagh, all of the AG’s Consumer Protection Division; and Assistant Attorney General Tim Hoitink and Deputy Director Arwen Thoman of the AG’s Insurance and Financial Services Division.

 

Mark Goldstein and Drew Alia, Pennsylvania, and their five Pennsylvania mortgage foreclosure companies were sued today for deceiving consumers into signing contracts to have their mortgage loans modified and never delivering the services paid for.

Goldstein and Alia’s companies included GMK Solutions, the Foreclosure Law Center; Century Legal Group; Alia Law Group; and the Law Offices of Drew Alia.  Pennsylvania homeowners and other consumers wound up agreeing to pay the defendants more than $280,000 through their scam conducted between 2008 and 2015.

Here’s how the scam worked:

The defendants signed contracts with homeowners, promising to do a home loan audit and a mortgage modification – with the goal of lowering the consumer’s monthly mortgage payments or interest rate, or saving their home from foreclosure.

The defendants took cash deposits, often thousands of dollars, and then failed to produce the audits or mortgage modifications. To hide their scam, they told homeowners not to contact their mortgage lenders or make any payments because they were “handling” negotiations on the homeowners’ behalf.  When anxious consumers began to demand updates on the status of their loans, the defendants dodged their calls and offered no refunds.

During the scam, many homeowners received notices from their lenders stating that if they did not respond, their homes would be foreclosed upon or sold at sheriff’s sale.  In one instance, a consumer paid $3,500 up front for mortgage foreclosure services, and after the defendants assured the homeowner they had stopped the Sheriff’s sale, the home was lost anyway.

Another consumer from Delaware County called the Foreclosure Law Center for a loan modification to keep her home out of foreclosure, and paid a $700 deposit. The night before a sheriff’s sale, the defendants contacted the consumer and told her to file for bankruptcy to delay the sale. The bankruptcy filing was dismissed by the court. Ultimately, the defendants never delivered services or helped her and wouldn’t refund her deposit.

This consumer, Kathleen Zang, said: “The Foreclosure Law Center told me not to contact my mortgage company and they were handling everything on my behalf. I had to file for bankruptcy after I learned that communication was never made to keep my house — where my children and family lived. I was outraged after learning from my mortgage company that no one from the Foreclosure Law Center had been in touch with them. Other people lost their homes because of this company. I lost $700 — and I’m grateful to Attorney General Shapiro and his Bureau of Consumer Protection for stepping up for consumers like myself.”

The Office of Attorney General received 21 complaints from Pennsylvania consumers, and nearly 50 more from consumers across the country, who entered into mortgage modification contracts. In some cases, homeowners instructed by the scammers to not pay their mortgages ultimately lost their homes in sheriff’s sales.

Attorney General Josh Shapiro made the announcement.

Defendants Mark Goldstein, Drew Alia and their companies preyed upon dozens of Pennsylvanians and other consumers who thought they were making a smart decision for their home and family,” Attorney General Shapiro said. “They wanted to lower their interest rates, modify their mortgages, and save their homes. Instead, all they received from these defendants were false promises and no services. Some even lost their homes.  This misleading scam was outrageous and I’m suing to get restitution for every person and hold these companies accountable.

In addition to claims filed under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, the Attorney General’s lawsuit bases other claims against the defendants under the Pennsylvania Mortgage Licensing Act.

“If you believe you were victimized by defendants Goldstein, Alia or any of their companies, or any other false mortgage modification deal, call my office today or email us at scams@attorneygeneral.gov,” Attorney General Josh Shapiro said. “I want to hear from you, and we’ll seek justice and restitution for you.”

The lawsuit in the Philadelphia County Common Pleas Court seeks injunctive relief and restitution in excess of $280,000 total for all consumers who are currently or have ever been in a transaction with any of these companies or their affiliates.

Nationstar Mortgage LLC has entered into settlement agreements with the Consumer Protection Division and the Commissioner of Financial Regulation to resolve allegations that it charged homeowners illegal inspection fees.

Nationstar, the nation’s largest non-bank servicer of home mortgages, arranges for property inspections in order to protect the interests of mortgage lenders when homeowners are in default on their payments. Although Maryland law prohibits passing the cost of these inspections onto homeowners, Nationstar allegedly charged the inspection costs to homeowners until January 1, 2014 for forward loans and February 2016 for reverse mortgages. Nationstar assessed Maryland homeowners over $1 million in inspection fees.

Maryland Attorney General Brian E. Frosh made the announcement today.

These inspection charges violate state law,” said Attorney General Frosh. “They were performed for the benefit of the lenders, not the benefit of the homeowners. We are pleased that the victims of the illegal charges will be made whole.”

Under the terms of the settlement, Nationstar agrees to:

  • not collect inspection fees in the future,
  • return over $260,000 in fees in addition to $827,759 that it returned during the Division’s investigation, and
  • pay the Division close to $490,000 in penalties and $10,000 in costs.

The Commissioner of Financial Regulation, who licenses Nationstar, has entered into a Memorandum of Understanding contemporaneously with the Consumer Protection Division’s settlement.

Avi Stern, Christopher Graeve, and Stuart Hankin, Florida, three high-volume Florida real estate investors were indicted yesterday with conspiring to rig bids during online auctions in Palm Beach County, Florida in order to obtain foreclosed properties at suppressed prices.  The indictment alleges that the conduct took place from at least January 2012 until June 2015.

The Department of Justice made the announcement.

These are the first indictments related to bid rigging in foreclosure auctions filed in Florida by the Justice Department’s Antitrust Division.  The Antitrust Division previously has prosecuted similar bid rigging conduct in Alabama, California, Georgia and North Carolina, resulting in more than 100 guilty pleas and convictions in those states.

These charges demonstrate that the Antitrust Division will uncover and prosecute collusion by real estate investors, regardless of whether their conduct is carried out in person, or in texts, online chats or through other electronic means,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division.  “The Division will continue to work closely with our law enforcement colleagues to prosecute those responsible for taking money that would otherwise have gone to mortgage holders, Palm Beach County, and in some cases, to the owners of foreclosed homes.

Real estate investors who think they can swindle the system to line their pockets with ill-gotten gains beware,” said Assistant Special Agent in Charge Paul Keenan of the FBI Miami’s Field Office. “The FBI and our law enforcement partners will vigorously investigate such schemes.”

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.

These charges have been filed as a result of the ongoing investigation being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Miami Division – West Palm Beach Resident Agency.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Washington Criminal I Section of the Antitrust Division at 202-307-6694 or www.justice.gov/atr/contact/newcase.html.

MichaelMickey” Henschel, 68, Van Nuys, California was indicted on an 11-counts for his alleged role as the mastermind of a foreclosure-avoidance scam that targeted distressed homeowner.  He was arrested on federal charges that he orchestrated a bankruptcy fraud scheme that brought in more than $7 million from victims. Henschel was ordered detained pending trial.

According to the indictment unsealed after his arrest, Henschel owned a Van Nuys-based company he operated under several names, including Valueline. Henschel and several co-conspirators marketed illegal foreclosure- and eviction-delay services to homeowners who had defaulted on their mortgages and renters who were facing eviction. As part of the scheme, Henschel and the others allegedly convinced homeowners to sign fake grant deeds that purported to show the homeowners had conveyed an interest in their properties to fictional third parties.

Henschel and his co-conspirators allegedly filed bankruptcies in the names of fictional persons and entities to trigger the automatic stay provision of the Bankruptcy Code, which meant that foreclosure sales were stalled.

Henschel allegedly delayed evictions in a similar way, filing fraudulent documents in state eviction actions and sending similar documents to sheriff’s offices.

Henschel allegedly charged some homeowners large fees before agreeing to clear title to their properties, in addition to the monthly fees paid for the illegal services. During the course of the scheme, from October 2010 through July 2013, Henschel and his co-conspirators collected more than $7 million, according to the indictment.

The indictment charges Henschel with one count of conspiracy, eight counts of bankruptcy fraud and two counts of wire fraud.

Following his arrest, Henschel was arraigned on the indictment. He entered a not guilty plea, and a trial was scheduled for August 8, 2017.

If he is convicted of the charges in the indictment, Henschel would face a statutory maximum sentence of five years in federal prison for each of the conspiracy bankruptcy fraud counts. The two wire fraud counts carry a statutory maximum sentence of 20 years.

The case against Henschel is the result of an investigation by the FBI and FHFA-OIG, which received assistance from the Alameda County District Attorney’s Office and the United States Trustee’s Office for the Central District of California.

This case is being prosecuted by Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.

Drew Alia, 40, Philadelphia, Pennsylvania, pled guilty to an Information which charged him with willfully failing to file federal income tax returns for tax years 2010 through 2013 before United States District Court Judge Paul Diamond.

Alia, an attorney, according to the Information, operated a home mortgage rescue service which was designed to assist home owners who were facing foreclosure to secure financing in order to prevent a home mortgage foreclosure. The Information alleged that Alia realized gross income of $28,000 in 2010; $107,000 in 2011, $144,000 in 2012, and $71,000 in 2013 all of which he failed to report on federal income tax returns that he was required to file in each of the aforementioned years.

As we begin the 2017 filing season, American taxpayers are reminded that the term voluntary compliance means that each of us is responsible for filing a tax return when required and for paying the correct amount of tax,” said Internal Revenue Service Criminal Investigation Acting SAC Gregory Floyd. “That responsibility should not be taken lightly. Mr. Alia chose to ignore his duty to file and pay taxes; thus he must be held accountable for his actions.”

Alia faces a maximum of 4 years of imprisonment, a fine of up to $400,000 and 1 year of supervised release when he sentenced.

The plea was announced by acting United States Attorney Louis D. Lappen.The case was investigated by Internal Revenue Service’s Criminal Investigation Division Philadelphia Field Office and is being prosecuted by Assistant United States Attorney Floyd J. Miller.

Trent Gaines, a Georgia real estate investor, pleaded guilty for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia.  Gaines admitted that he and others conspired not to bid against one another at public real estate foreclosure auctions from October 2008 to November 2010 in Fulton County, Georgia, and from September 2006 to February 2011 in DeKalb County, Georgia. Gaines also admitted to conspiring with others to use the mail to carry out a scheme to fraudulently acquire title to selected Fulton and DeKalb properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that should have gone to mortgage holders and others. The selected properties were then awarded to the conspirators who submitted the highest bids in private side auctions open only to Gaines and his co-conspirators. Continue Reading…