Page 16 - Ohio Vol 4 No 5

MARC DANN | OPINION
A First Step Toward Consumer
per, I learned that the company earns $20 million a quar- ter in late charges alone. I also discovered that because servicers make huge pro ts from the fees, they regularly impose them when they’re not owed and the refuse to remove or refund them when presented with proof that they’ve made a mistake.
THE BILL
HB 489 will protect Ohioans by giving servicers the op- portunity to correct mistakes or “bona de errors” as they are referred to in the legislation and by creating a way for state regulators and individual borrowers to hold compa- nies accountable for bad behavior if they refuse to do so.
e bill also provides relief to borrowers victimized by a particularly odious kind of mortgage servicer – companies that service underwater second mortgages. Many of these loans were rst made by predatory lenders like Washing- ton Mutual, Countrywide, Argent, and New Century and were used to provide the down payment for the rst mort- gage on a home that had been appraised at a price that far exceeded the property’s actual value. ese loans, as the collapse of the housing market here in Ohio and across the nation starkly demonstrated, were destined to fail.
Today, many of those second mortgages have fallen into the hands of unscrupulous debt buyers who use the threat of foreclosure to extort payments from Ohio borrowers. HB 489 will force these predators to register with the De- partment of Commerce, maintain a presence in Ohio, pro- vide borrowers with a warning notice that includes a rec- ommendation to consult a lawyer, provide proof of their right to collect the note.
Finally, we support HB 489 because the timing is right. Until Richard Cordray resigned as head of the Consumer Finance Protection Bureau nine months before his term ended that agency had done an outstanding job of regu- lating mortgage lending. e new head of the agency has, shall we say, shi ed focus, and has not authorized any en- forcement actions since November 2017 and has sought zero funding for the next scal year. is bill provides a sound and much-needed rst step toward the creation of a comprehensive framework that will protect consumers and borrowers, wring abuse from the mortgage servicing industry, and hold bad actors accountable.
at’s my testimony. If I’ve convinced you HB 489 should become law, give your state senator a shout. You can nd a directory and contact information online at http://www.ohiosenate.gov/senators. I and Ohio consum- ers will appreciate your support.
FORMER OHIO ATTORNEY GENERAL MARC DANN HAS BEEN FIGHTING FOR HOME- OWNERS, CONSUMERS AND SMALL BUSINESSES SINCE HE BEGAN HIS PRIVATE PRAC- TICE IN 1990. UPON LEAVING OFFICE IN MAY 2008, DANN VOLUNTEERED TO REPRE- SENT HOMEOWNERS FACING FORECLOSURE AND BECAME EVEN MORE CONCERNED ABOUT THE STANDING OF CERTAIN SERVICERS TO FORECLOSE ON HIS CLIENTS. RECOGNIZING THAT THE PROBLEM OF FRAUDULENT FORECLOSURE PRACTICES WAS EPIDEMIC IN OHIO, MARC DANN ESTABLISHED THE DANN LAW FIRM REPRESENTING MORE THAN 500 HOMEOWNERS IN FORECLOSURE IN MORE THAN 65 DIFFERENT COUNTIES IN OHIO.
Protection
Inthis month’s column I’m going to do a little lob- bying. I recently o ered the following proponent testi- mony on Ohio House Bill 489 to the Senate Insurance & Financial Institutions Committee. is leg- islation represents something of a phenomenon in the GOP-dominated General Assembly – it passed the Ohio House by a vote of 86-6 even though it actually protects consumers. I’m working hard with con- sumer groups to push the bill through the Senate. Read- ers of Attorney at Law Magazine can help by contacting their state senator and registering support for this much-
needed bill.
BACKGROUND
Anyone who has worked within, studied or observed the evolution of mortgage lending since the collapse of the housing market understands why Ohio must begin to regulate mortgage servicers in general and debt buy- ers who tra c in defaulted and o en underwater second mortgages in particular.
e problems that exist in the industry came to light when I and other attorneys general initiated a multistate investigation of loan servicers. What we found was hor- rifying. We learned servicers routinely fabricated docu- ments, forged mortgage notarizations, assignments, and a davits in support of foreclosure lawsuits, refused to allow borrowers to review escrow payment calculations or to verify that payments had been applied to principal interest and escrow before late fees or servicer gener- ated charges, and engaged in dual tracking – promising to modify a borrower’s home loan while simultaneously pursuing foreclosure.
e practices our investigation unearthed were so egre- gious they precipitated the National Mortgage Settlement that established standards for the loan servicing industry. Unfortunately, the settlement did not provide for long- term oversight or establish mechanisms borrowers could use to correct problems or hold bad actors accountable.
And as I and anyone who practices foreclosure defense or consumer protection law knows, plenty of bad actors are out there abusing borrowers.
ey’re out there because large banks like Chase, Fi h ird, PNC, US Bank, and Huntington that value their reputations abandoned mortgage servicing in the wake of the nancial crisis.
Now the industry is dominated by shadowy non-bank out-of-state loan servicers like Nationstar, Rushmore, Se- terus, SPS, SLS that could care less about their reputation and have little regard for ethics.
Here’s what they do care about – the millions of dollars in pro ts they generate by imposing fees on borrowers. For example, in the course of preparing for a trial against Nationstar, which recently changed its name to Mr. Coo-
ATTORNEY AT LAW MAGAZINE · CLEVELAND · VOL. 4 NO. 5 16