FDCPA Strikes Again: West Virginia Slams Wells Fargo

YARNEY v. OCWEN LOAN SERVICING, LLC, Dist. Court, WD Virginia 2013

SARAH C. YARNEY, Plaintiff,



No. 3:12-cv-00014. United States District Court, W.D. Virginia, Charlottesville Division.

March 8, 2013


NORMAN K. MOON, District Judge.

The Plaintiff Sarah C. Yarney (“Plaintiff”), pursuant to Fed. R. Civ. P. 56, seeks summary judgment as to liability on all claims asserted in her complaint. Plaintiff alleges that Defendants Wells Fargo Bank N.A., as Trustee for SABR 2008-1 Trust (“Wells Fargo”), and its loan servicer, Ocwen Loan Servicing, LCC (“Ocwen”), attempted to collect on her home mortgage loan after she had settled the debt with Wells Fargo.


A. Plaintiff’s FDCPA Claims as a Matter of Law

In summary, mortgage servicers are considered debt collectors under the FDCPA if they became servicers after the debt they service fell into default. At the time Ocwen became the servicer on Plaintiff’s home loan, the loan was already in default. Therefore, Ocwen is a debt collector seeking to collect an alleged debt for the purposes of FDCPA liability in this case.[4]

1. Defendants’ Liability under 15 U.S.C. § 1692e(2)(A)

Given the contents of the monthly bills and notices sent to Plaintiff directly, along with the continued calls she received from collection agents, I find that the least sophisticated consumer in Plaintiff’s position could believe that she still owed a debt. Thus, Plaintiff is entitled to summary judgment on her count that Ocwen violated § 1692e(2)(A) of the FDCPA.
2. Defendants’ Liability under 15 U.S.C. § 1692c(a)(2)

Because Plaintiff continued to directly receive bills, statements and phone calls from Ocwen representatives seeking to collect on an alleged debt obligation, despite notice that she was represented by counsel, Plaintiff is entitled to summary judgment that Ocwen violated section 1692c(a)(2).

B. Plaintiff’s Breach of Contract Claim as a Matter of Law

Plaintiff contends that Wells Fargo breached its agreement with Plaintiff, through the action of its agent, Ocwen ….
plaintiff contends, Wells Fargo failed to comply with its obligations, due to the actions of Ocwen, its servicer.
By attempting to collect payments from Plaintiff on behalf of Wells Fargo, Ocwen acted as Wells Fargo’s agent with respect to the original mortgage loan.[10] Further, the undisputed facts in this case demonstrate that Ocwen continued to behave in all respects towards Plaintiff as Wells Fargo’s agent after the March 18, 2011 settlement agreement.[11] While a party may delegate the performance of its duties under a contract, it retains the ultimate obligation to perform….
[11] While Defendants argued during the February 25, 2013 motion hearing that Wells Fargo shouldn’t be held liable for Ocwen’s conduct from now until eternity, Ocwen’s actions at the center of this case constituted collection efforts in connection with the same mortgage loan debt for which Ocwen had been assigned to service, and that Plaintiff and Wells Fargo had attempted to resolve under the March 18, 2011 settlement agreement. Thus, given the facts of this case, Ocwen continued to act as Wells Fargo’s agent with respect to Plaintiff following the settlement agreement.
Due to Ocwen’s subsequent attempts to collect mortgage loan payments from Plaintiff, Wells Fargo neither absolved Plaintiff of her possible deficiency nor properly accepted the deed in lieu of foreclosure.
. . .
“… and thus, due to the actions of its servicer, Plaintiff is entitled to summary judgment that Wells Fargo breached the March 18, 2011 contract agreement.

For the foregoing reasons, Plaintiff’s motion for partial summary judgment is granted. This case is scheduled for a jury trial on April 9, 2013, at 9:30 a.m. in Charlottesville, VA, at which time Plaintiff will have the opportunity to testify in regards to any damages she may be entitled to in this matter.[12] An appropriate order accompanies this memorandum opinion


20 Responses

  1. In order for anyone to receive a 1099, there has to be a corresponding loss to the party issuing the 1099 (for debt forgiveness). No loss should mean no 1099. JVE said the notes have been paid by cds’s. Seems to me that’s only true if the party who rec’d the ben of the cds were the party who owned the obligation -or – it might be possible that even when not, if that party had its own obligation to the investors (as I believe), the cds payout should be in play. The question is, I guess, is can one note/obligation provide two parties with recovery, or one recovery and a windfall (speaking of windfalls, your honor)? I don’t know the legal answer and can’t because without discovery to determine whom if anyone received such a payout, the question not being asked will remain unanswered. We have to keep asking about those payouts and hopefully courts will find their relevant if not dispositive. If the banksters have no obligation, no indenture to the investors imo created by non-delivery, maybe their wager is in fact a side-bet with no impact on the borrower’s obligation (assuming there is no conversion to securities undermining the note in the first place) to the trust/investors. But if the banksters non-delivery did in fact create an indenture to the investors, as a matter of equity, it’s the investors who should benefit from the cds’s and not be stuck with whatever is garnered by a post-foreclosure sale, which as far as I can tell is what’s going on. I think the normal private mtg insurance taken on some loans only pays out after the loss is known (post foreclosure sale), but the cds bet may pay upon the borrower’s alleged default before that event. If so and the banksters are indentured to the investors, those monies have to have an impact on the notes because the banksters are the primary obligors to the investors, and even in the absence of a contractual agreement, no court should if not could ignore the cds payment to an indentured party and allow that party to skate with the proceeds.when it has an obligation to someone else on the deal. The only reason I can think of for pension funds, say, to continue to ignore this issue and not demand those funds is the tax consequences of monies already received when those monies are not in fact tax sheltered. That or a misunderstanding about the indenture created by non-delivery which is admittedly hard to believe given that they must have some attorneys on board who understand the UCC. Plus they would have to prove the non-delivery and we know how much fun that is. .

  2. a Wells Fargo Dinner:

  3. pat1
    dig your heels in , the irs needs to do their job too, talk to a fraud agent at the irs. raise your concerns.

  4. Always love your comment Jan spot on!

  5. Go West Virginia!

    Beware folks it’s ever over as far as I can see…

    In the last two weeks I have received three 1099 -C forms from the same servicer on a property that was foreclosed over 2 years ago and Chapter 7 discharge which named the property in 2008. This servicer came into the picture almost two years after discharge and 18 months after my 2nd servicer refused payments and put my last payment in suspense fund.

    I settled out of court on FDCPA with servicer for the 2nd time for same servicer because mediating judge indicated he doubt the court would grant summary judgement. BK Judge was much tougher on them and ordered sanctions.

    Here is the weird thing house sold for mid 500,000 to buyer of the foreclosed home. Home loan was under 900 but one 1099 C says debt was forgiven on wait for it……

    The first one is for 1.2million the 2nd one is for 580,000 both were generated on same day with same loan number from the same servicer who already was slapped with sanctions in Adversary proceeding and now today I get another one from the same servicer for O dollar amount with no date filed in but the same loan number and property address.

    So now I have to explain all this to the IRS!!

    Three different 1099-C’s for one loan from a servicer that was never my servicer!!

    Who runs a business like this??

    The nightmare continues…

  6. My formula ………. unearned intrest due + all payments + legal fees = a buttwipe in the negitive. 🙂

  7. Jan van Eck- thanks for all your posts, Jan- we have exchanged posts over lo, these many years here on LL, and if it weren’t for stripes, we might see a few more of your posts. Was it you who defined ‘unearned interest’, what it was, what it look like? Man, we be hoodin’ rastan ‘bov thery. Could you please explain it again for me? Or maybe it was iwantmynpv. Not sure. No one in the US has ever made a claim for unearned interest due the borrower. I want to be the first.

  8. […] FDCPA Strikes Again: West Virginia Slams Wells Fargo […]

  9. “One of the biggest benefits of having homeowners file lawsuits in larger numbers is that the Courts start to recognize a pattern of deceit by these “servicers” and the “opaque posture of innocence” by the supposed bankers.”

    Bingo! I have been advocating suing lenders for over 2 years. Especially because judges tend to have that knee-jerk reaction of: “Nobody files suit without having a good reason.” That’s been one of the reasons judges have, thus far, favored the banks: they sue first. If homeowners started inundating courts with lawsuits, judges would pay a little more attention to what’s been going on… even in federal court!

  10. in the meantime…..

    “If violating the Fifth Amendment to the United States Constitution by denying the Debtors the hearing to which they are entitled as both procedural and substantive due process does not constitute exceptional circumstances, no order of a court would ever meet the criteria applied by Judge XXXX”
    ” An evidentiary hearing in which Debtors intended to prove that the first recorded assignment of mortgage was a forgery, the unrecorded mortgage assignment was a forgery, and the second recorded mortgage assignment (created and recorded AFTER the filing of their
    bankruptcy petition by Wells Fargo Bank, N.A. employees pretending to be officers of that entity) is also a forgery, but is additionally an illegal attempt by Wells Fargo Bank, N.A. to create a preferential transfer to HSBC Bank USA, N.A. to the detriment of other unsecured creditors.”

  11. to Deborah Wynn:
    “Finger-pointing” by defendants is the one thing that will seriously irritate judges in the bankruptcy courts, if you are in that venue then harp on that theme and take the posture that you as the debtor are being abused. Judges have been known to whack creditors with serious sanctions “sua sponte” when they see evasion by creditors, coupled with finger-pointing.

    In the civil courts, finger-pointing becomes an art form, when defendants file “cross-complaints” against yet further defendants. Don’t get buffaloed by that; not your problem how the damages monies are going to be apportioned.

    What is interesting about this case is that the Order flows from the Federal Bench, which typically has more conservative Judges. It becomes apparent that this Judge was not sympathetic to Wells’ argument that it was not responsible for the misconduct of Ocwen. I rather suspect the Judge has seen this type of misconduct before in his court, and decided to put his foot down. One of the biggest benefits of having homeowners file lawsuits in larger numbers is that the Courts start to recognize a pattern of deceit by these “servicers” and the “opaque posture of innocence” by the supposed bankers. The part that remains hidden from view is that this Note is assuredly already long paid, long before the “deed in lieu” that was done, by some credit-default insurer. The Note gets paid by an insurer and the Note itself is never stamped “Paid” and handed back to the Obligor. Just lovely.

  12. Ian, you’re killing me…….

  13. jan van Eck
    same principle re originator, appraiser, servicer, fdic, et al we may see some ankle biting as the scales start to tip, as we are starting to see, like its not me its him, and he made me do it.

  14. I like her. By the time she’s done, she’ll have shed the proper light on pretty much everything wrong in our society. Who knows… she might even succeed in taking back some of those banker’s obscene bonuses. Unless, of course, she manages to simply tear down the whole edifice…

    Elizabeth Warren: Minimum Wage Would Be $22 An Hour If It Had Kept Up With Productivity

    The Huffington Post | By Nick Wing Posted: 03/18/2013 12:34 pm EDT | Updated: 03/19/2013 3:07 pm EDT

    Sen. Elizabeth Warren (D-Mass.) made a case for increasing the minimum wage last week during a Senate Committee on Health, Education, Labor and Pensions hearing, in which she cited a study that suggested the federal minimum wage would have stood at nearly $22 an hour today if it had kept up with increased rates in worker productivity.

    “If we started in 1960 and we said that as productivity goes up, that is as workers are producing more, then the minimum wage is going to go up the same. And if that were the case then the minimum wage today would be about $22 an hour,” she said, speaking to Dr. Arindrajit Dube, a University of Massachusetts Amherst professor who has studied the economic impacts of minimum wage. “So my question is Mr. Dube, with a minimum wage of $7.25 an hour, what happened to the other $14.75? It sure didn’t go to the worker.”

    Dube went on to note that if minimum wage incomes had grown over that period at the same pace as it had for the top 1 percent of income earners, the minimum wage would actually be closer to $33 an hour than the current $7.25.

    It didn’t appear that Warren was actually trying to make the case for a $22 an hour minimum wage, but rather highlighting the results of a recent study that showed flat minimum wage growth over the past 40-plus years coinciding with surging inequality across a number of economic indicators.

  15. Interesting that W.V. (one of the most bank-friendly states) has suddenly found religion in two cases back to back. Might we be seeing a slow but sure reversal of a nationwide trend?

  16. Jan van Eck- re; ‘a pervasive posture of innocent opacity’ is good, but how about ‘ I know you believe you understand what you think I said, but I am not sure that what you heard is what I actually meant’. Huh?

  17. Agreed Jan!

  18. What is intriguing about this case is the tidbit discussing Motions arguments by Wells Fargo “that it should not be held liable for Ocwen’s misconduct from now until eternity.” This is the “What? Who? Me? What did I do?” defense, which in your Pleading as an aggrieved plaintiff can be recited as adopting “a pervasive posture of innocent opacity.”

    Be sure to remember that phrase, it is a real dragon-slayer in Court! I have used it with great success. Makes the Court sit up and take notice.

  19. […] FDCPA Strikes Again: West Virginia Slams Wells Fargo […]

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