A recent case and a Consumer Finance Protection Bureau (CFPB) announcement demonstrate that we are still not that far removed from the lender problems experienced in the mortgage meltdown. In Berman v HSBC Bank (2017), the lender misstated the length of time for the borrower, who had a notice of default recorded on his property, to appeal the denial of a loan modification. The Civil Code requirements in question, enacted after the meltdown in 2008 (some of which expire January 1, 2018), provide for injunctive relief against a lender for any material breach of notice provisions. The purpose of the injunction was to require the lender to correct the notice and provide the borrower with accurate information regarding the borrower’s rights.
Although the pro per plaintiff was not precise in his pleadings, the appellate court reversed the lower court’s decision and allowed an injunction against HSBC, preventing the lender from continuing with foreclosure on its trust deed, at least temporarily. The court also noted that HSBC could have issued a new notice complying with the statutory requirements anytime during the two and one-half years since the original incorrect notice, which would have ended the need for the present action.
The recent CFPB announcement of its suit against Ocwen Financial Corporation further highlights the lingering effects still felt in the mortgage business. Ocwen is one of the largest mortgage loan servicers in the country. The original lender generally sells residential loans shortly after the loan is made, and the loan servicing may be transferred to another entity (not the loan holder). This is the service that Ocwen provides, specializing in servicing subprime or delinquent loans. It handles customer service, collections, loan modifications, and foreclosures.
In its announcement, CFPB alleges that Ocwen has repeatedly make mistakes and taken shortcuts at every stage of the mortgage servicing process, costing some consumers money and others their homes. “Borrowers have no say over who services their mortgage, so the Bureau will remain vigilant to ensure they get fair treatment.”
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