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Wood v. Nationstar Mortgage, LLC

United States District Court, D. Oregon

July 13, 2018

MICHAEL WOOD and SUMMER WOOD, Plaintiffs,
v.
NATIONSTAR MORTGAGE, LLC., and OCWEN LOAN SERVICING, LLC., Defendants.

          ORDER

          JOLIE A. RUSSO, UNITED STATES MAGISTRATE JUDGE.

         On May 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.

         The 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 inadequate.

         In 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 following interrogatory:

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.

         Plaintiffs responded:

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 state:
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 WOOD000307.
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 Ocwen.
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 ...

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