Nonbank mortgage servicer Ocwen agreed to pay $1.5 million to settle a class action lawsuit regarding alleged phone conversations recorded without clients’ consent.
Plaintiff Gregory Franklin filed the lawsuit in the United States District Court for the Northern District of California in 2018. He claimed that the company violated California’s Invasion of Privacy Act by recording outgoing calls to his cell phone without authorization.
The class action affects all customers in California whose cellular calls with Ocwen Loan Servicing, LLC were recorded in November 2015. The company will deposit the money in a settlement fund to pay for the settlement relief, attorneys’ fees, and other costs.
The class action lawsuit can reach 37,031 clients, represented by the law firm Kazerouni Law Group, APC. As the number of valid claims increases, each claimant’s payment will decrease accordingly.
The settlement included that Ocwen agreed to the terms of the agreement without admitting any liability or wrongdoing. HousingWire sent a message to the company seeking comment but did not immediately receive an answer.
Franklin said he fell behind on his mortgage payments and, between 2011 and 2015, received numerous phone calls from Ocwen, who was servicing his mortgage, to collect the payments.
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But he alleged that, on some occasions, the company did not tell him the phone call was being recorded. Also, the servicer informed him sometimes about the recording only after he provided personal and account information.
Under California law, clients consent to the audio recording if they receive advisement at the outset of the call that it may be recorded.
According to the lawsuit, Franklin reasonably expected that the telephone conversations would not be recorded due to the private subject matter discussed. In this case, his financial situation.
Franklin will receive up to $3,000 from the settlement fund for his efforts in bringing the lawsuit. On March 3, he will move the court for an order granting preliminary approval of the proposed class action settlement.
According to Inside Mortgage Finance, Ocwen had a $150 billion servicing portfolio in the fourth quarter of 2021, a year-over-year increase of 147%.
The company has been a target of the Consumer Financial Protection Bureau. Nearly a year after a federal judge dismissed the CFPB’s mortgage servicing misconduct suit against Ocwen Financial Corp., the watchdog agency moved in early February to overturn the decision.
In 2013, the CFPB accused Ocwen of “engaging in significant and systematic misconduct.” The accusations were resolved with a consent order issued December 17, 2013, shielding the servicer from future actions arising from the alleged practices up to that point. Ocwen also agreed to pay $2 billion in consumer relief as part of the settlement.
But in 2017 the CFPB announced that it was suing Ocwen for “failing borrowers at every stage of the mortgage servicing process.” The CFPB’s lawsuit alleged that Ocwen costs borrowers’ money, and in some cases, their homes, due to years of “widespread errors, shortcuts, and runarounds” dating back to January 2014.
Last March, U.S. District Judge Kenneth Marra, in Florida’s Southern District in West Palm Beach, ruled that most of the CFPB’s claims were blocked because of a 2013 settlement between Ocwen, the bureau, authorities in 49 states, and the District of Columbia.
During oral arguments in Miami before the U.S. Court of Appeals for the Eleventh Circuit, the CFPB argued that the consent agreement from 2013 did not excuse the mortgage servicer from future violations and that Ocwen is on the hook for alleged wrongdoings.
