TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 48 of 67

Th e M Rep o RT | 47 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SERVICING Department LocaL eDition SERVICING cFPB Files suit against lenders for False advertising The governmenT waTchdog asserTs defendanTs duped unwiTTing consumers wiTh a so-called "inTeresT minimizing" program. OHIO // Nationwide Biweekly Administration, Inc., Loan Payment Administration, LLC, and the company's owner, Daniel Lipsky, are being sued by the Consumer Financial Protection Bureau (CFPB) in federal district court. The CFPB claims that Nationwide falsely advertises the interest savings consumers will achieve through a biweekly mortgage payment program called the "Interest Minimizer" and deceives consumers about the price of the program. The Bureau's complaint is not a find- ing or ruling that the defendants have broken the law. Program participants paid $49 million in fees for the misleading mortgage program between 2009 and 2014. The CFPB hopes to gain compensation for harmed participants, a civil penalty, and an injunction against the compa- nies and their owner. "These companies and their owner, Daniel Lipsky, took advantage of consumers with false promises of savings on their mortgage," said Richard Cordray, CFPB director. "Homeowners deserve accurate information in the financial marketplace. Today we are taking action to end these illegal and deceptive practices and to hold these companies account- able for their actions." Daniel Lipsky serves as the founder, president, and sole owner of Ohio-based Nationwide Biweekly Administration, a liaison company that transfers funds from consumers to their mortgage servicers. Loan Payment Administration, LLC, is a wholly owned subsidiary of Nationwide. Lipsky assumes all managerial responsibility for both companies. The "Interest Minimizer" program that's currently under fire works as follows: when a consumer enrolls, they are expected to send Nationwide half of their monthly mortgage payment every two weeks. This will allow them to make one extra mortgage payment every year. The company charges participants an initial setup fee of $995 and charges participants between $84 and $101 in payment processing fees for each year they stay enrolled. Nationwide promised consumers that the "Interest Minimizer" would save money with language such as, "Am I guaranteed to save money? Yes!" Other documents contained statements like "soon you will be … saving thousands of dollars in unnecessary payments." Through this program, the CFPB alleges that the defendants collected $49 million in setup fees between 2011 and 2014. In its suit, the CFPB claims that the defendants are aware that consumers will pay more in fees than they save in inter- est for the first several years in the program. The CFPB alleges that these practices violate the Telemarketing Sales Rule and the Consumer Financial Protection Act's prohibition against unfair, deceptive, or abusive acts or practices. Ocwen Fails Part of compliance test; improvements for internal review group The company fell shorT on an nms meTric dealing wiTh borrower noTificaTion buT sailed Through The oTher eighT. GEORGIA // Retesting of Ocwen Financial's compliance with the terms of the 2012 National Mortgage Settlement (NMS) for the first quarter of 2014 revealed that the Atlanta-based servicer failed one metric originally re- ported as a pass but passed the other eight metrics, according to a release from the Office of Mortgage Settlement Oversight. In a report filed with the U.S. District Court for the District of Columbia in May, NMS Monitor Joseph A. Smith, Jr., reported the results of the retesting for Q1 2014 and also outlined several actions Ocwen has taken to im- prove its internal review group (IRG), which Smith has been investigating since May 2014. "Since my last report, my team and I have been working to assess Ocwen's compliance with the NMS," Smith said. "Our retesting for the first quarter of 2014 of nine metrics that our investigation determined to be 'at risk' showed that the servicer failed one metric (Metric 19) that it had previously reported as a pass. Metric 19 tests whether the servicer is complying with the requirement to notify borrow- ers of any missing or incomplete documents in a loan modification application. Ocwen has proposed a corrective action plan to address the reasons for its failure, and I am reviewing it." Smith said his team launched an investigation of Ocwen's IRG in May 2014 after hearing from an employee about "serious deficien- cies in Ocwen's internal review group process" and issues relating to backdated foreclosure notices sent to about 7,000 borrowers, which Ocwen attributed to com- puter errors. The erroneously dated notices resulted in Ocwen reaching a $150 million settlement with the New York Department of Financial Services in December. "While our testing continues, Ocwen has taken a number of actions to address previ- ous problems with its internal review group. Specifically, Ocwen replaced the executive who leads the IRG and otherwise reorga- nized employees, adopted corpo- rate governance principles, and enhanced my access to informa- tion," Smith said. "I also created a hotline to allow any concerned employees to contact me directly and anonymously if they see problems. As a result of these actions, I report to the court that Ocwen internal review group's independence, competency, and capacity have shown measurable improvement." "These companies and their owner, Daniel Lipsky, took advantage of consumers with false promises of savings on their mortgage." —Richard Cordray, CFPB Director

Articles in this issue

Archives of this issue

view archives of TheMReport - MReport_July2015