Mortgage Rebates Were a ‘Trojan Horse,’ Class Says

     BROOKLYN, N.Y. (CN) – Ocwen, the nation’s largest subprime loan servicer, uses a check for $2.50 to automatically enroll unsuspecting customers in bogus home-warranty and service plans, a class claims in Federal Court.
     Margarita Delgado and William Sheppard, a married couple from Brooklyn, filed the suit in Eastern District New York against Ocwen Loan Servicing; Ocwen Mortgage Servicing; Ocwen Financial Corp.; Ronald Faris; Scott W. Anderson; Cross Country Home Services Inc.; Homesure of America Inc.; Homesure Services Inc.; Homesure Protection of California Inc.; Homesure of Virginia Inc.; Joseph Incandela; and Sandra Finn.
     The couple says the scheme starts by sending Ocwen customers checks for $2.50 “that a reasonable consumer thinks is a refund or rebate on their mortgage.”
     Enclosed in the letters is a pitch inviting customers to cash the checks “so they can start saving money right away!” the lawsuit states.
     The solicitations highlight the “savings” and so-called “benefits” in large print, but hide the “costs” and “exclusions” with small print and confusing descriptions, “and omit other downsides entirely,” according to the complaint.
     “Defendants’ check solicitation scheme fails to make clear that by cashing the check customers will be enrolled in home warranty and service plan[s] that substantially increase their monthly mortgage payments,” the lawsuit states.
     Ocwen did not immediately return an email Wednesday seeking comment. A spokeswoman for Cross Country on Wednesday said she was unaware of the lawsuit but said she would get back to Courthouse News later to comment.
     Delgao and Sheppard’s complaint says that once customers cash the check, they are then locked into $500-a-year home-warranty and service plans that offer “services customers never use because they don’t know they are buying them.”
     “Defendants also don’t provide customers with an agreement or contract to review before ‘enrolling’ them in a plan,” the lawsuit states.
     Cross Country – which the plaintiffs describe as a self-styled consumer-oriented financial company and “architect” of the “scheme,” allegedly approaches companies like Ocwen “with the promise of a new joint enterprise that can enhance the bottom line.”
     “Ocwen was a perfect candidate, as it has more than 600,000 customers in its high-risk loan portfolio worth more than $125 million,” the lawsuit states. “Having found a willing partner, Cross Country engineered a Trojan Horse stratagem for Ocwen to mail out the solicitation checks to homeowners.”
     Once a customer cashes the $2.50 check, Cross Country tacks on an additional line item to a homeowner’s mortgage that the Cross Country and Ocwen split, according to the complaint.
     Delgado and Sheppard say Ocwen does not disclose to customers how it is sharing the new “plan” fees with an outside company, and that the company banks “on the fact that most of Ocwen’s customers – comprised of homeowners who may already be teetering on the edge of financial disaster from their subprime loans – don’t realize what’s happening.”
     Because the plan charges are relatively small compared to the higher cost a single customer would incur in trying to challenge defendants’ alleged conduct, “it makes no financial sense for an individual customer to bring legal action,” the complaint states. “With this class action, Ocwen’s customers seek to level the playing field and make sure the companies like Cross Country and Ocwen engage in fair and upright business practices.”
     The class seeks at least $100 million in damages for violating federal anti-racketeering law and the Fair Debt Collection Practices Act, as well as other claims. They also want their money back.

%d bloggers like this: