Files lawsuit in coordinated federal/state effort to crack down on foreclosure relief schemes that target distressed homeowners

Wilmington – Today, Attorney General Beau Biden a filed a lawsuit against a California-based company alleging it operates a mortgage rescue and loan assistance scam that illegally collects large upfront fees from Delaware consumers facing financial distress with the promise to secure loan modification or other relief from their mortgage lenders.

“Mortgage rescue scammers target vulnerable homeowners, taking thousands of dollars from struggling families who ultimately receive no meaningful services, lose valuable time, and are instead left at greater risk of foreclosure,” Biden said. “We are protecting Delaware homeowners from these deceptive and harmful schemes.  Our Office of Foreclosure Prevention, Delaware’s certified housing counselors, and other agencies provide free foreclosure and mortgage modification help to homeowners – Delawareans should never pay a dime to anyone for assistance in seeking a loan modification or other services.”

Biden’s Consumer Protection Unit filed today’s lawsuit against Irvine, California-based Consumer Relief Program, Inc, which conducted business under the name Consumer Advocacy Assistance, and its owner Marinus Pieter Van Sweeden.  It alleges the company violated Delaware’s Mortgage Loan Modification Services Act, Consumer Fraud Act, and Deceptive Trade Practices Act by targeting struggling homeowners with a promise to save their homes by negotiating lower mortgage payments with the homeowners’ lenders for an upfront fee.  After five Delaware homeowners collectively paid the company more than $8,000, none of the homeowners received the promised services.

Under Delaware law, mortgage modification businesses are required to register with Biden’s Consumer Protection Unit and are prohibited from soliciting, collecting or attempting to collect any fees or other compensation from consumers before an offer for a modification of the loan terms is actually received from the lender/servicer.  Over the past year, Biden’s office has investigated multiple complaints about this company, which was not registered as a loan modification services provider as required.

Biden urged Delaware homeowners who are behind on their mortgage, are worried about making their mortgage payments, or who suspect a mortgage rescue fraud to contact the Delaware Homeowner Relief Hotline at 1-800-220-5424 or visit www.delawarehomeownerrelief.com.

Click here to read Biden’s Consumer Advisory on Mortgage Loan Modification Services.

Delaware’s lawsuit seeks restitution for the homeowners, the payment of civil penalties, and a Court order requiring the company to cease and desist its illegal activities.  It was filed in a coordinated nationwide effort among the federal Consumer Financial Protection Bureau, the Federal Trade Commission, and 17 states that together filed more than 30 lawsuits today targeting dozens of scam operations that prey on delinquent homeowners or those facing foreclosure.

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Latest enforcement action secures more than $17 million to Delaware from Citi;

Biden’s insistence on accountability for housing crisis has resulted in more than $130 million for Delaware in past three years;

Demands for accountability will continue   

WILMINGTON – Delaware Attorney General Beau Biden announced Monday that Citigroup Inc. will pay at least $17 million to Delaware to settle allegations stemming from the bank’s conduct that helped cause the housing crisis.

The settlement with Citi is part of a multi-billion dollar settlement announced Monday between the bank, the United States Department of Justice, four other states and Delaware. The settlement resolves allegations centering on the bundling and sale of mortgages to investors. The investments – bought by pension funds, mutual funds and other investors – were much riskier than advertised. The resulting losses were disastrous for the economy.

This settlement is the latest result of Biden’s work to ensure there is accountability for those responsible for causing the steepest economic downturn since the Great Depression. Over the past three years, Biden has secured more than $130 million for Delaware from financial institutions in housing-related settlements.

“Our financial system only works when everyone plays by the rules,” Biden said. “The housing crisis was a manmade disaster that did not have to happen. The funds we have secured have helped thousands of Delaware families avoid foreclosure, strengthen communities hit hard by the housing crisis and reimburse taxpayers. Our work seeking accountability and helping Delaware homeowners is not finished.”

Delaware’s recovery comes in two parts. Citi will make a minimum of $10 million in direct relief available to Delaware homeowners in the form of credits similar to the 2012 National Mortgage Settlement (such as mortgage modifications and forgiveness of second mortgages). Citi will also pay the State $7.35 million. As with the recent JPMorgan settlement, these funds will be used to remediate the harm caused by Citi’s misconduct, including reimbursing government entities that suffered losses.

“Many neighborhoods in Delaware continue to suffer from the effects of the housing crisis,” Biden said. “Financial recoveries such as this one will give communities opportunities to thrive.”

The federal investigation was led by the U.S. Department of Justice’s Residential Mortgage-Backed Securities Working Group, under the leadership of Associate U.S. Attorney General Tony West.

“Associate Attorney General West’s leadership makes possible the joint federal-state law enforcement actions that hold accountable the financial institutions that broke the rules and helped cause the housing crisis,” said Biden, who is also a working group member.

Previous financial settlements that Biden’s office has secured with banks relating to their conduct that contributed to the housing crisis include:

• In February 2012, Biden, 48 of his colleagues and the federal government signed a $25 billion settlement with the nation’s five largest mortgage-servicing banks. That settlement brought $11.7 million to the State and has, so far, meant $75 million in financial benefits to 3,000 Delawareans. It also included important new protections for America’s military personnel that Biden fought to include;

• In November 2013, Biden secured $19 million from JP Morgan Chase to settle allegations that the bank misled investors about the risk level of mortgage-backed securities; and

• In December 2013, Biden announced that Ocwen Financial Corporation and its subsidiary, Ocwen Loan Servicing, will provide $7 million to Delaware borrowers, holding Ocwen accountable for past mortgage servicing and foreclosure abuses, providing relief to homeowners and stopping future fraud and abuse.

The Citi matter was handled for Delaware by Victoria Counihan, David Casler, and Owen Lefkon of the Attorney General’s Investor Protection Unit, and Matthew Lintner, Fraud Division Director.

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SunTrust to provide borrowers with loan modifications; foreclosed loans may be eligible for payments for past abuse

Wilmington – Attorney General Beau Biden today secured nearly $2 million for Delaware homeowners as part of a state-federal settlement with mortgage lender and servicer SunTrust to address mortgage origination, servicing, and foreclosure abuses.  Under the national $1 billion settlement, $550 million is earmarked for borrowers to provide relief to those who either lost their home to foreclosure or who are currently in distress under a SunTrust mortgage; SunTrust will also pay $418 million to the federal government to resolve its potential liability under the federal False Claims Act.

“We’re holding another financial institution accountable for unacceptable mortgage practices which contributed to the nationwide economic crisis that brought our economy to its knees,” Biden said.  “This action provides financial benefits to Delaware borrowers who were harmed by this bank’s foreclosure abuses and establishes tough new mortgage servicing standards it must follow to better protect borrowers.”

The agreement requires SunTrust to provide approximately $1.8 million to certain Delaware borrowers in the form of loan modifications or other relief.  The modifications may include principal reductions and refinancing for underwater mortgages.  More information about these loan modifications will be released at a later date, although current borrowers with loans serviced by SunTrust can contact the company directly with questions.

In addition, approximately 50 eligible Delaware borrowers whose loans were serviced by SunTrust and who lost their home to foreclosure from January 1, 2008 through December 31, 2013 and encountered servicing abuse may be eligible for cash payments from a separate $40 million national fund that is being established through today’s agreement.  Eligible borrowers will be contacted about how to qualify for payments. The amount each borrower receives will depend on how many borrowers file claims.

Today’s settlement with Biden, 48 other states and the District of Columbia, the U.S. Department of Justice, the U.S. Department of Housing and Urban Development, and the federal Consumer Financial Protection Bureau also establishes tough new mortgage servicing standards for the bank and subjects it to oversight by an independent monitor to ensure its compliance with the settlement.  Its servicing standards largely mirror the February 2012 National Mortgage Settlement between the states, federal government, and the nation’s five largest national mortgage servicers which provided consumers with more than $50 billion in direct relief, created tough new servicing standards, and implemented independent oversight.

Under the terms of today’s settlement SunTrust must substantially change how it services mortgage loans, handles foreclosures, and ensures the accuracy of information provided in federal bankruptcy court.  Each are aimed at ending past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork.  Among the dozens of new consumer protections and standards are:

• Expanded protections for military servicemembers under the federal Servicemembers Civil Relief Act (SCRA) first championed by Biden in the February 2012 national mortgage settlement.  They include extending SCRA protections to all active servicemembers serving in a hostile fire zone and expanding mortgage assistance for servicemembers whose reassignments to new posts require them to relocate on short notice.
• Making foreclosure a last resort by first requiring SunTrust to evaluate homeowners for other loss mitigation options;
• Restricting foreclosure while the homeowner is being considered for a loan modification;
• New procedures and timelines for reviewing loan modification applications;
• Giving homeowners the right to appeal denials;
• Requiring a single point of contact for borrowers seeking information about their loans and maintaining adequate staff to handle calls.

Today’s settlement is the latest enforcement action taken by Biden in response to the mortgage foreclosure crisis.  Recent actions by Biden and his office include:

• In February 2012, Biden, 48 of his colleagues and the federal government signed a $25 billion settlement with the nation’s five largest mortgage-servicing banks (including JPMorgan). That settlement brought $11.7 million to the State and has, so far, meant $75 million in financial benefits to 3,000 Delawareans. It also included important new protections for America’s military personnel that Biden fought to include in the settlement.
• In July 2012, Biden secured important operational reforms from MERS – a national shadow mortgage registry at the heart of the mortgage crisis – in a settlement of a lawsuit he filed the year before. MERS’ inaccurate and unreliable records made it difficult if not impossible for homeowners to determine which financial institution owned their mortgage.
• In October 2012, Biden announced that an investigation by his office into allegations of “robo-signing” and other improper mortgage services provided by subsidiaries of Lender Processing Services, Inc. (LPS) led to the Florida-based company paying $250,000 to the State of Delaware.
• In January 2013, Biden, 12 of his colleagues and the federal government filed separate suits against Standard & Poor’s, charging the rating agency with violating state law by misrepresenting that its evaluations of structured finance securities were independent and objective when actually S&P’s analysis was influenced by its own financial interests. That suit is still pending.
• In November 2013, Biden announced that JPMorgan Chase will compensate Delaware nearly $20 million for selling mortgage-backed securities that were central to economic crisis.  The payment resolves allegations concerning the bundling and sale of mortgages to investors. The investments – bought by pension funds, mutual funds and other investors – were much riskier than advertised. The resulting losses were catastrophic for the economy.
• In December 2013, Biden secured nearly $7 million for Delaware from Ocwen Financial Corporation and its subsidiary, Ocwen Loan Servicing in a settlement following the states’  ongoing investigation into mortgage servicing and foreclosure abuse.  The agreement requires Ocwen to pay more than $6 million in direct financial relief for Delaware borrowers who have been harmed by the mortgage crisis

Today’s agreement, which will be filed as a consent judgment in the U.S. District Court for the District of Columbia, does not prevent state or federal authorities from pursuing criminal enforcement actions related to this or other conduct by SunTrust and does not prevent any action by individual borrowers who wish to bring their own lawsuits.

This matter was handled for Delaware by Deputy Attorney General Gillian Andrews in Biden’s Fraud and Consumer Protection Division.

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WILMINGTON – Delaware homeowners who are behind on mortgage payments, face foreclosure, or have questions about their mortgage can meet face-to-face with mortgage lenders at free housing workshops next week in Dover and Newark, Attorney General Beau Biden announced today.

Homeowners can attend the events on March 22 to discuss their loans with their banks, connect with a non-profit housing counselor, get information from the Attorney General’s Office and Delaware State Housing Authority about government programs, and learn how to prevent foreclosure-related frauds and scams.

“Attending one of these workshops is the first step a homeowner can take to avoid foreclosure,” Biden said. “These events will help homeowners learn about the resources and programs available to help them keep their homes and receive immediate on-site assistance from a variety of housing professionals that we have brought together.”

At each workshop, mortgage servicers, state employees, and HUD-certified housing counselors will discuss mortgage modifications, government homeowner programs, and foreclosure scams. No reservations are needed. Workshops will take place as follows:

Saturday, March 22, 2014

9 a.m. – 1 p.m.

Delaware Technical and Community College – Terry Campus Training Center, 100 Campus Dr., Dover.

3 p.m. – 7 p.m.

University of Delaware’s John M. Clayton Hall, 100 Hollowell Dr., Newark

Homeowners who wish to meet on-site with their mortgage servicer should bring information about current income and details about their current mortgage, including loan number, monthly payment, interest rate, and loan balance.

Delawareans who have questions about next week’s workshops should call the Delaware Homeowner Relief Hotline at 1-800-220-5424 or Attorney General Biden’s Office of Foreclosure Office at 302-577-8393, e-mail mortgage@delaware.gov, or visithttp://www.delawarehomeownerrelief.com.

Ocwen Financial will provide direct financial benefits to borrowers in settlement following continued investigations into mortgage servicing and foreclosure abuses

Wilmington – Delaware Attorney General Beau Biden today announced that Ocwen Financial Corporation and its subsidiary, Ocwen Loan Servicing, will provide $7 million to Delaware borrowers in the latest effort by his office to hold accountable those responsible for the mortgage foreclosure crisis.  Today’s announcement with the nation’s fourth largest mortgage servicer is part of a national $2.1 billion national settlement with 49 states and the federal Consumer Financial Protection Bureau (CFPB) which holds Ocwen accountable for past mortgage servicing and foreclosure abuses, provides relief to homeowners, and stops future fraud and abuse.

“Our financial system only works when everyone follows the rules, and this settlement holds a financial institution accountable for breaking the rules and inflicting harm on homeowners and the economy,” Biden said. “The financial relief that my office has secured for Delawareans is a direct result of our ongoing investigations into the conduct that led to the economic crisis and our continued commitment to hold those responsible accountable for their actions.”

Today’s settlement with Ocwen, which specialized in servicing high-risk mortgage loans, and two companies later acquired by Ocwen – Homeward Residential Inc. and Litton Home Servicing LP – was filed as a consent agreement in the U.S. District Court for the District of Columbia.  It follows an ongoing joint state/federal investigation into mortgage servicing misconduct that began more than four years ago during the mortgage foreclosure crisis.  According to the states and federal government in today’s court filing, the misconduct resulted in premature and unauthorized foreclosures, violations of homeowners’ rights and protections, and the use of false and deceptive documents and affidavits, including “robo-signing.”

In Delaware, under the terms of the settlement $6.7 million will be provided to borrowers through mortgage principal reductions to current homeowners and approximately $350,000 will be paid to borrowers who lost their home to foreclosure between January 1, 2009 and December 31, 2013.  Individual payments to foreclosed homeowners are projected to exceed $1,000.  Nationally, Ocwen will provide $2 billion in mortgage principal reduction to current borrowers and $125 million for cash payments to borrowers on nearly 185,000 foreclosed loans.

Ocwen borrowers who seek a principal reduction through today’s settlement are urged to submit a completed loan modification application with Ocwen as soon as possible.  Consumers can contact Ocwen at 1-800-337-6695 or ConsumerRelief@Ocwen.com.  Borrowers having difficulty contacting Ocwen or who have questions should contact Biden’s office by calling the Delaware Homeowner Relief Hotline at 1-800-220-5424, and can also contact a Delaware HUD-approved housing counseling agency for assistance with the application process.  Foreclosed borrowers who are eligible for the cash payment will be contacted directly by the settlement administrator.  Joseph A. Smith, Jr., Monitor of the 2012 National Mortgage Settlement, will oversee the Ocwen agreement’s implementation and compliance.

Today’s announcement is the latest in a series of enforcement actions Biden’s office has taken in response to the foreclosure crisis, including:

·         In February 2012, Biden, 48 of his colleagues and the federal government signed a $25 billion settlement with five national mortgage-servicing banks (including Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo), that has provided $75 million in direct financial benefit to more than 3,000 Delawareans and $11.7 million to the State.  That settlement included important new financial protections Biden fought to secure for America’s military servicemembers.

·         In July 2012, Biden secured important operational reforms from MERS – a national shadow mortgage registry at the heart of the mortgage crisis – in a settlement of a lawsuit he filed the year before. MERS’ inaccurate and unreliable records made it difficult if not impossible for homeowners to determine which financial institution owned their mortgage.

·         In October 2012, Biden announced that an investigation by his office into allegations of “robo-signing” and other improper mortgage services provided by subsidiaries of Lender Processing Services, Inc. (LPS) led to the Florida-based company paying $250,000 to the State of Delaware.

·         In January 2013, Biden, 12 of his colleagues and the federal government filed separate suits against Standard & Poor’s, charging the rating agency with violating state law by misrepresenting that its evaluations of mortgage-backed securities were fair and impartial when actually S&P made decisions based on its own financial interests. That suit is still pending.

·         In November, 2013 Biden secured $19.7 million for Delaware from JP Morgan Chase to resolve allegations concerning the company’s bundling and sale of mortgages to investors. The investments – bought by pension funds, mutual funds and other investors – were much riskier than advertised and the resulting losses were catastrophic for the economy.  Delaware’s payment, part of a national agreement with the federal government and four other states, will be used to compensate a variety of state entities for their losses on these investments and to fund further efforts to help Delawareans emerge from the financial crisis, strengthen Delaware’s communities and alleviate other harm caused by the financial crisis.

Today’s settlement with Ocwen does not grant the company immunity from criminal offenses and it does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases.  It also preserves the authority of state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.

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