United States District Court, D. Oregon
A. RUSSO, UNITED STATES MAGISTRATE JUDGE.
22, 2018, the court ordered plaintiffs, due to repeated case
delays and discovery failures, to show cause why a sanction
of dismissal or a sanction prohibiting introduction of
certain evidence should not be entered (doc. 54). The court
also requested the parties submit all discovery provided by
plaintiffs to date for in camera review.
court has reviewed the in camera documents and
plaintiffs' response to the order to show case as well as
defendant Ocwen's response to the assertions raised by
plaintiffs. Defendant Ocwen demonstrates that plaintiffs'
responses to the interrogatories at issue are still
essence, plaintiffs rely on their assertion that their
mortgage loan is current and thus argue any information
defendants seek regarding alleged misapplied payments,
attempts to collect improper payments, late fees, etc. is
"self-evident." Plaintiffs fail to provide
sufficient records showing they made all payments on time.
For example, such documents as canceled checks or statements
from their own financial institution demonstrating payments
made on the loan and when those payments were made along with
the corresponding monthly mortgage statements validating the
receipt of the payments. For instance, in response to the
Interrogatory No. 3 to Mr. Woods: If YOU contend that any of
the payments made by YOU or on YOUR behalf on the LOAN were
misapplied in any way by DEFENDANT or any other PERSON,
IDENTIFY each misapplied payment by specifying the date and
the amount of the misapplied payment and state all facts ...
on which YOU rely to support YOUR contention that the payment
was misapplied and IDENTIFY all witnesses or PERSONS with
knowledge of facts supporting YOUR contention.
Notwithstanding plaintiffs' objections, plaintiffs and
defendants have knowledge of the facts in this case.
Plaintiffs further refer defendant to plaintiffs'
response to defendants Request for Production of Documents,
specifically Folders A, C, E, F, and G.
In their response to the order to show cause, plaintiffs
Ocwen acknowledges that it received the loan history created
by plaintiffs showing that plaintiffs are current and loan
history provided by Ocwen showing how Ocwen attempted to
apply the payments. However, it is dissatisfied with the fact
that plaintiffs are not pointing to a specific misapplied
payment or a specific sum.
This amount is unknowable given that Ocwen has failed to
account for the plaintiffs' payments properly. Plaintiffs
cannot tell from the date that Ocwen began reversing payments
what Ocwen did with the money that it received while it
serviced the loan.
This is not peculiar to the plaintiffs' loan. Indeed,
according to the Consumer Financial Protection Bureau
Ocwen's own head of servicing indicated “the BK
escrow balance bucket is wrong and requires every BK loan to
be manually reviewed and we can still have errors.” See
The head of servicing has also stated “I've
stressed importance of getting the BK escrow balance issues
fixed, but no confirmation of root cause or target correction
date . . . . It's a system issue because a bucket that
determines the amount of money that a customer sends for
their monthly payment can change with no record of why on the
system . . . . Please help get the importance across on this
issue. If this is not fixed, I cannot recommend that we move
to analyze BK for the portfolio. Even with a control report
to catch them, there is still risk the balance will be wrong
when you actually analyze the account.” Id.
Indeed, what is clear is that Ocwen's own management
acknowledge that it is not accounting for payments correctly,
particularly when the borrower is in bankruptcy, as the
plaintiffs were. Therefore, Ocwen's counsel claim that
plaintiffs have not provided interrogatory responses to
specific payment application is due solely and entirely to
While the plaintiffs cannot know for certain how Ocwen made
these errors, Nationstar reports that the loan information
from Ocwen indicates that the plaintiffs were at least $8332
delinquent when it began servicing the loan. Compare
WOOD000246 with plaintiffs' accounting. See also e.g.
WOOD000150. Therefore, plaintiffs can only assume that since
they are current, that ...