PHH Ordered to Pay Nearly $2 Million for Refusing a Divorcing Spouse Loss Mitigation

Trial Team Including Adam J. Feuer Secures Arbitration Award Against One of The Nation’s Largest Mortgage Loan Servicers For Compensatory, Punitive Damages and Attorney’s Fees


October 21, 2022 – The trial team of Adam J. Feuer, Rusty A. Payton and Nick Wooten have secured a nearly $2 million arbitration award against PHH Mortgage Services, a wholly owned subsidiary of Ocwen Financial Corporation, according to legal filings and media reports. The team brought a federal court action under the Illinois Consumer Fraud Act and other statutes on behalf of their client, a divorced homeowner who had applied to Ocwen for a loan modification to save her home after the divorce.

Their client’s loan was serviced by Ocwen / PHH and owned by Freddie Mac, whose clear guidelines mandate that divorced borrowers who retain the home in the divorce be allowed to receive a loan modification without the signature of their ex-spouse. Despite Freddie Mac guidelines, which are in clear accord with federal law, Ocwen maintained that its own policy of requiring the ex-spouse’s signature on the loan modification agreement was legally permissible.

In fact, Ocwen maintained throughout the six-day arbitration hearing that its interpretation of the guidelines and the law was the correct one, and that Ocwen would not change the policy for any reason.

This unwavering position coupled with Ocwen’s deceptive trial strategy of withholding documents and evidence, despite the arbitration panel ordering them produced, is believed to have significantly informed the panel’s decision to include $500,000 of punitive damages in the award. The award also consisted of over $750,000 in damages intended to compensate the consumer for the out of pocket losses and emotional distress Ocwen caused her to suffer over the nearly six year ordeal, as well as ordering Ocwen to pay over $500,000 in the consumer’s attorneys fees.

In her award, the Arbitrator noted: “Corporate actions and indifference, when practiced to the harm of a targeted group, can easily be described as malicious. For Claimant, the actions of the loan modification process in December 2018 through June 2019 may not have begun as intentionally malevolent, but clearly evolved into deceit. Claimant's request for punitive damages is supported by the record.”

The consumer’s trial team notes that family law attorneys, divorcing spouses, and consumer lawyers should all be on the lookout for mortgage servicers denying divorced or divorcing couples loss mitigation, because the conduct exhibited by Ocwen in this case appears to be rampant with other loan servicers across the country. Homeowners who are experiencing similar deceptive or abusive conduct from their mortgage servicer should know that there are powerful tools available to hold these companies to account, and that we are here to help.

The case is Albeck v. PHH Mortgage Corp., No. 20-cv-07727, United States District Court, Northern District of Illinois. Ocwen was represented at the hearing by attorneys Simon Fleischmann and Ryan Sawyer of Locke Lord LLP.