Facts

Ocwen Loan Servicing and PHH Mortgage Corporation (PHH) service mortgages on behalf of mortgage loan investors and other servicers throughout the United States, with a total of 1,419,943 loans nationwide. Servicing primarily involved the collection of principal and interest payments from borrowers, as well as management of loans that are delinquent or in foreclosure. Lawrence Torliatt had his mortgage loan serviced by Ocwen on his home located in California. On July 26, 2019, Torliatt, on behalf of himself and all others similarly situated, brought a class action against Ocwen and PHH, alleging violations of Fair Debt Collection Practices Act, California's Rosenthal Fair Debt Collection Practices Act, and California's Unfair Competition Law (UCL), as well as for beach of contract. The class included all borrowers on residential mortgage loans involving mortgaged property located in California who, between July 26, 2015, and June 24, 2022, paid a convenience fee to Ocwen and/or, between July 30, 2015, and June 24, 2022 paid a convenience fee to PHH to make a due and owing monthly payment over the telephone, or via Interactive Voice Response (IVR), or online. The court dismissed the breach of contract and Fair Debt Collection Practices Act claims. On November 17, 2021, the parties participated in a court-ordered mediation session before Chief Magistrate Judge Joseph C. Spero. The parties participated in a second mediation session with Judge Spero on April 27, 2022.

PLAINTIFF'S CONTENTIONS: Plaintiff alleged that defendants violated the Rosenthal Act and UCL by charging convenience fees for borrowers for making loan payments by telephone, through IVR, or through the internet on property located in California. In particular, plaintiff maintained that defendants charged homeowners a $5 to $20 pay-to-pay fee for each online or phone mortgage payment transactions even though defendants would only pay Western Union $.40 for each pay-to-pay transaction. Plaintiff contended that these fees were unlawful and that defendants knew they were unlawful because they were not expressly authorized by the settlement class members' underlying loan documents. Finally, plaintiff argued that as a result of these acts and practices, defendants were unlawfully enriched at the expense of plaintiff and the class members.

DEFENDANTS' CONTENTIONS: Defendants denied all contentions.

Result

Defendants agreed to pay $7 million to settle all claims.

Other Information

Consolidated with: Lawrence Torliatt v. PHH Mortgage Corp., Case No. 3:19-cv-04356-WHO