A blog covering legal topics and whatever I feel like posting. Some posts on this page could be considered to be attorney advertisements.
About The Consumer Law Office of Steve Hofer
Steve Hofer has been practicing consumer law in Indiana for more than 20 years. He is a former Indiana State Chairperson of the National Association of Consumer Advocates, a national organization of attorneys striving for fairness in the consumer marketplace. Contact me by phone at 317-662-4529 or via email at hoferlawindyATgmail.com. You can also leave a message through my website at www.hoferlawindy.com.
I have no respect for schools that pressure their students to get their grandparents to cosign student loans. If a school has no confidence that the student or even the student's parents can pay for the school, then the educational program likely isn't worth what it costs in the first place. That goes double when the grandparent's income is basically just social security. What grandparents should know is that no federal loan program (that I know of, anyway) takes grandparent cosigners. The private loans that grandparents cosign for may survive bankruptcy, BUT the private lenders can't garnish social security.
If you have cosigned a loan for a grandchild, you should know that after 12 months of on-time payments, students can apply to have the grandparent removed. This benefits not just the grandparent cosigner, but also the student. For most private student loans, if the cosigner dies or goes bankruptcy, the lender has the right to declare the entire balance of the loan due. If the cosigner has been removed from the loan, the death or bankruptcy of the cosigner has no effect on the loan. For loans issued prior to 2009, the death of the borrowing student could mean tragedy to the cosigner. The lender could declare the entire balance of the loan due. This has devastating effects on a family who just lost a child to an untimely death.
I think the Consumer Financial Protection Bureau is going to issue new regulations that give student loan cosigners more rights, but until they do, I urge parents, and especially grandparents not to cosign on student loans for any more money than they can afford to lose. And if you can live without the money, it might just make more sense to give the money to the student outright and save the hassles down the road. For more on this topic from the CFPB, click on the link here.
I was a latecomer to the story of the problems of Ocwen Financial. As it so happens, I don't have any current cases relating to Ocwen, so keeping track of the company isn't a high priority. The saga of Ocwen though, is an allegory to problems that are rampant in the mortgage servicing industry. Just as systematic loan origination problems helped cause the Great Recession, systematic loan servicing problems are contributing to the slowness of recovery.
Ocwen Financial, is not a lender, it's a mortgage servicer. Ocwen Financial grew quickly during the Great Recession, gaining a reputation for servicing troubled loans for a bargain basement price. That's the reputation Ocwen had with the financial pools holding mortgages, but with homeowners, Ocwen has a different reputation, a reputation of being unresponsive and sometimes untrustworthy. (The video below from Youtube seems to be typical of a typical interaction between borrowers and Ocwen "customer service" staff. Warning, it's 43 minutes long.)
It appears that the chickens have come home to roost at Ocwen as more and more evidence is coming to light about shady dealings. In 2013, Ocwen reached a $2 billion settlement with state and federal authorities, apparently relating to failure to credit payments properly and other problems. In 2014, According to the New York Post, the New York Department of Financial Services is on the verge of settling with Ocwen concerning allegations that Ocwen backdated communications with borrowers another scandal surfaced: The New York Department of Financial Institutions alleged that Ocwen backdated thousands of letters to borrowers regarding mortgage modifications, both requests for information and notices of denial/appeal rights. According to the New York Post's article:
Ocwen sent thousands of letters to clients denying them a loan modification and giving them 30 days to appeal, Lawsky’s office said. Those letters were backdated more than 30 days, making it impossible for homeowners to modify their mortgages and increasing the likelihood of default.
Think of the inherent dishonesty in this practice. I don't know if someone blew the whistle, but if so, it was only after thousands of letters went out giving thirty days to appeal, backdated more than thirty days. Why didn't someone have the moral courage to call out this practice before thousands of people were at risk of losing their homes?
The New York settlement ultimately cost Ocwen $150 million in fines to the New York Department of Financial Institutions, and as part of the deal Bill Erbey, the company's chairman and controlling shareholder, was forced to resign from his positions at Ocwen and related company. According to a Bloomberg article from December 22, 2014, the scandal cost Erbey his billionaire status as the value of his shares went down more than 60% to $16.01/share. That was less than a month ago, hopefully, Erbey will be digging ditches pretty soon, because as I write this (1/13/15) OCN shares have dropped by more than half again to $7.78/share. (The high point was an obscene $59.97/share on Oct. 25, 2013. For a laugh, read Forbes.com's asskissing article from November 2013 praising Bill Erbey.)
The bottom line is it seems clear to me that Ocwen is in a death spiral. I would be surprised if the company remains in business as an independent entity at the end of 2015. That may be sweet justice for homeowners that went through Ocwen hell and came out the other side, but for those who are still stuck with Ocwen as a servicer, it means your trouble may just be starting. Ocwen was never particularly good at keeping track of things, and as employees start spending more time on their resumes than their jobs, things aren't going to get better. When the Ocwen loans are handed off to another company there will be even more chances for errors. If you have an Ocwen loan, you need to keep very good records of when you sent your payments, and you need to observe when the payments are credited. If there is a small problem, you need to be on it like a hawk before it turns into a big problem. Anything an Ocwen employee tells you on the phone, you need to confirm in writing. If Ocwen doesn't resolve a problem on the first attempt, you should complain immediately to the Consumer Financial Protection Bureau and your state department of financial insitutions or similar entity.
I have handled one significant case involving Ocwen. It was a nightmare for the clients while it was going on but we finally got a decent result. It would have been extremely hard for the clients to get any result without an attorney. If you are having trouble with Ocwen, go talk to a NACA lawyer in your area. If you think you were cheated out of the time necessary to complete a modification application, make sure you tell the attorney that. In most cases, when Ocwen has taken over your loan when in default, Ocwen is a statutory debt collector under the Fair Debt Collection Practices Act. This gives you extra rights and remedies that you might not have with servicers that aren't debt collectors. I have a hunch there will be some pretty significant class actions filed against Ocwen. Ocwen has set aside $100 million dollars just towards the civil settlement with the New York Department of Financial Institutions. That's just one state, albeit a large one. Where are all the other states on this? The world wonders. Right now I have my doubts if Ocwen will even be around for the other states to get their licks in.
New York Attorney General Eric Schneiderman, announced a settlement with one of the largest bad debt buyers in the country, Encore Capital Group. Encore agreed to set aside 4,500 judgments that were procured with faulty dcoumentation. Apparently there were even falsified credit card statements presented to get some of these judgments. In Indiana Encore's main subsidiary is Midland Credit Management. Encore acquired and absorbed another large debt buyer, Asset Acceptance Capital Corp. in 2013. More states should follow New York's lead, but in the meantime, most debt defendants are left to fend for themselves. If Midland Credit Management is calling you, call me or a consumer attorney near you. You can find a quality consumer attorney through the National Association of Consumer Advocates (NACA) at www.consumeradvocates.org.
If you are being sued or otherwise being hounded by JH Portfolio Debt Equities, LLC, please call my office at 317-662-4529. We are investigating some of their collection practices.
