Second Circuit ruling in Ocwen / PHH is a victory for owners, landmark ruling will strengthen RESPA, Reg. X


An influential court rules that Ocwen / PHH violated the Real Estate Practices Act, orders the lower court to hold a jury trial to determine damages.

I find it both incredibly satisfying and ironic that the company’s persistent and willful violations of the law strengthen and extend the protections offered by RESPA.

– Marc Dann

CLEVELAND, OH, UNITED STATES, Jan. 10, 2022 / – In 2010 Kim Naimoli of Geneva, New York, who was struggling to make her mortgage payments following the collapse of the housing market in 2007-2008, applied for a loan modification under the provisions of the federal Home Affordable Modification Program (HAMP). Over the next six years, Ms Naimoli did everything right: she completed and returned forms, complied with requests for documents, made payments for her house on time, and, as required by law, filed a “Error notice” (NOE) when Ocwen, the company that handled his loan, made mistakes.

During that same period, Ocwen, now known as PHH, got it all wrong. The company did not register mortgage documents, refused to comply with the terms of the loan modification agreement it had approved, did not recognize or respond to correspondence from Ms. Naimoli or her advisor legal, began to refuse to accept his mortgage payments, revoked the mod loan, and rejected an NOE asking the company to correct its glaring mistakes.

In 2017, DannLaw, one of the nation’s leading consumer protection law firms, sued Ocwen / PHH on behalf of Ms Naimoli in Federal District Court for the Western District of New York, alleging that the company had committed multiple violations of federal real estate sales practices law. (RESPA). In April 2020, Justice Elizabeth A. Wolford allowed the company’s summary judgment motion and dismissed the case.

DannLaw immediately appealed and, in what DannLaw founder and former Ohio Attorney General Marc Dann hailed as a major victory for the owners, the United States Court of Appeals for the Second Circuit has overturned Judge Wolford and found that Ocwen / PHH had indeed broken the law. According to Dann, the ruling, released on Jan. 7, 2022, will have a huge impact on the mortgage services industry, as the New York-based Second Circuit is one of the most influential courts in the federal court system.

The importance of the case is underscored by the fact that the judges asked the Consumer Financial Protection Bureau to file a brief after the oral argument. In the brief, the CFPB essentially supported DannLaw’s position.

Javier Merino, leader of the DannLaw team that argued the case, said Ocwen / PHH has never denied engaging in the conduct which nearly cost Ms Naimoli her home. “The bottom line is clear: the company made a lot of mistakes, didn’t correct them, and then used their mistakes as a rationale to stray from the lending mod it previously approved,” he said. “Once we took them to court, they argued that because their acknowledged wrongdoing was related to the denial of the loan mod and not the mortgage service, they were not covered by RESPA. Fortunately, the Second Circuit understood this specious argument and ruled in our favor. The decision can be viewed here.

“Ocwen / PHH is still ranked among the worst mortgage services in the United States, so I’m certainly not surprised that their bad actions were the catalyst for this landmark decision,” noted Marc Dann. “I find it both incredibly satisfying and ironic that the company’s persistent and willful violations of the law strengthen and extend the protections offered by RESPA and benefit homeowners too often abused by the mortgage services industry.”

Dann said the case, which has taken years to go to court, demonstrates the importance of RESPA’s fee transfer provisions that balance the legal playing field. “The contingency fee provisions ensure that owners like Ms. Naimoli have the opportunity to seek and obtain justice and receive the financial compensation they need and deserve,” he said. “They allow plaintiff law firms like ours to confront and defeat white-shoe law firms that represent the financial services industry, case after case, year after year. ”

Dann also said the case illustrates why borrowers must document in writing and preserve all communications and interactions they have with lenders. “The records that Ms. Naimoli kept, including delivery receipts, originals and copies of all correspondence, allowed us to present clear and compelling evidence to the court of Ocwen / PHH’s conduct. The value of these records and the role they played in our victory cannot be understated. “

Marc Dann
+1 216-373-0539
[email protected]
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