Reply Brief by the Anti-Consumer Watchdog (CFPB)
AUG 26, 2021 | REPUBLISHED BY LIT: AUG 26, 2021
The issue in this case is the res judicata effect of the Consent Judgment that the Bureau and Ocwen entered into in December 2013. The Consent Judgment stated that, going forward, Ocwen was required to comply with state and federal law. It also included a Release, through which the Bureau and Ocwen agreed that the only claims that were released as a result of the Consent Judgment were those that arose from conduct that had “taken place as of 11:59 p.m., Eastern Standard Time, on December 18, 2013.”
In addition, the Consent Judgment included new obligations for Ocwen: For three years – while the Consent Judgment was in effect – Ocwen was required to comply with fencing-in injunctive provisions designed to add an additional layer of consumer protection. The Consent Judgment also included an enforcement mechanism that applied if Ocwen failed to comply with the fencing-in provisions.
As a result, Ocwen had two sets of obligations while the Consent Judgment was in effect: complying with federal and state law, and complying with the fencing-in provisions.
The Bureau’s authority to enforce these two sets of obligations was distinct.
In Norfolk Southern Corp. v. Chevron, U.S.A., Inc., 371 F.3d 1285 (11th Cir. 2004), this Court explained how to assess the res judicata effect of a consent judgment: Look to the intent of the parties as expressed in the judgment itself. But that is not what the district court did in this case.
Instead of evaluating the parties’ intent as expressed in the Release, it applied the traditional four-part res judicata test, a test that is appropriate for a litigated judgment, but inappropriate for a judgment that is entered with the consent of the parties.
And when it applied the four-part test, the district court got it wrong. Instead of assessing whether this case and the Consent Judgment stem from the same nucleus of facts, the court compared the allegations in this case to the injunctive fencing-in relief included in the Consent Judgment.
There is no support for that approach.
In its brief, Ocwen purports to base its arguments on Norfolk Southern. But when it describes the parties’ intent, it pays little more than lip service to the Release, the section of the Consent Judgment that specifically addresses res judicata. The Release describes, down to the minute, the claims that are released and those that are not.
Instead, Ocwen focuses on the Consent Judgment’s fencing-in provisions.
Those provisions do not address the res judicata effect of the Consent Judgment, and most certainly do not countermand the express provisions of the Release.
I. THE CONSENT JUDGMENT REFLECTS THE PARTIES’ INTENT THAT THE CLAIMS IN THIS CASE ARE NOT PRECLUDED
A. Norfolk Southern dictates that the parties’ intent establishes the res judicata effect of the Consent Judgment
Norfolk Southern controls this case. In that case, this Court explained that it is the “expressed intent of the parties” that is “the determining factor in whether a consent-based judgment is given collateral estoppel effect.”
371 F.3d at 1288.
And “[t]he best evidence of that intent is, of course, the settlement agreement itself.”
Id. at 1289.
Id. at 1290.
Finally, this Court explained that there are two ways parties can express their intent. They can “list the types of suits that may be brought in the future,” or they can “agree to an exclusive list of the suits that are subject to preclusion.”
Id. at 1289.
When they specify which suits are subject to preclusion, they “thereby implicitly allow all other claims to be brought in the future.” Id. Whichever approach they take, courts must “enforce the parties’ intent.”
Ocwen agrees that the intent of the Bureau and Ocwen – the parties to the 2013 Consent Judgment – controls the Consent Judgment’s res judicata effect.1
See Br. of Defendants-Appellees (Ocwen Br.) at 25, 26, 29, 32, 39, 40, 50.
But when it comes to assessing that intent, Ocwen goes astray.
B. The Consent Judgment preserves the Bureau’s authority to bring this law enforcement action
1. When the Bureau entered into the Consent Judgment,2 it did not thereby abdicate its statutory obligation going forward to enforce the law with respect to Ocwen’s conduct.
See 12 U.S.C. § 5511(a) (“The Bureau shall seek to … enforce Federal consumer financial law consistently ….”).
This is because the Consent Judgment includes a Release that specifically preserves the Bureau’s authority to enforce the law with respect to violations committed by Ocwen after December 18, 2013 – the day the Bureau and Ocwen entered into the Consent Judgment.
The Release was attached to the Consent Judgment as Consent Exhibit E. Doc. 32-1 at 160-63. It sets forth the Bureau’s and Ocwen’s intent with respect to the res judicata effect of the Consent Judgment. The Release shows that it was not the parties’ intent to preclude this law enforcement action.
The Consent Judgment settled charges that, in connection with Ocwen’s mortgage servicing business, it had engaged in a variety of unfair and deceptive practices relating to foreclosures stemming from the 2008 mortgage crisis.
These practices included assessing unauthorized fees, charging consumers for insurance that they did not need, and engaging in illegal practices such as robo-signing foreclosure documents and filing unverified affidavits.
The Consent Judgment required Ocwen to pay $127 million for the benefit of consumers whose homes were sold in foreclosure sales between 2009 and 2012.
Id. at 10.
It also required Ocwen to provide $2 billion in loan modification relief to consumers who, the Bureau alleged, had been harmed by Ocwen’s practices.
Id. at 11.
(Ocwen did not have to pay the $2 billion as cash out of pocket because that relief took the form of modifications to mortgage loans. Id. at 118.)
The Consent Judgment also included fencing-in injunctive relief in the form of “Servicing Standards” – detailed procedures for Ocwen to follow in connection with certain aspects of its mortgage servicing business.
Id. at 67-113 (Consent Exhibit A).
To make sure that Ocwen complied with these injunctive provisions, the Consent Judgment provided for appointment of a Monitor.
Id. at 122.
The Monitor’s job was to measure Ocwen’s compliance with some, but not all, of the more than 300 Servicing Standards. The Monitor measured Ocwen’s compliance using specified Metrics, which were set forth in Consent Exhibit D.
Particularly important for this case, Section VI of the Consent Judgment provided that [t]he CFPB and [Ocwen] have agreed, in consideration for the terms provided herein, for the release of certain claims and remedies as provided in the CFPB Release, attached hereto as Exhibit E. CFPB and [Ocwen] have also agreed that certain claims and remedies are not released, as provided in Paragraph C of Exhibit E.
Id. at 11-12. (Consent Exhibit E was the Release.)
Paragraph B of the Release provided that the CFPB fully and finally releases [Ocwen] from all potential liability that has been or might have been asserted by the CFPB relating to mortgage servicing practices described in the complaint (the “Mortgage Servicing Practices”) that have taken place as of 11:59 p.m., Eastern Standard Time, on December 18, 2013.
Id. at 162.
This alone was enough to make clear that entry of the Consent Judgment did not release claims based on practices that had occurred after 11:59 p.m. on December 18, 2013.
See Norfolk S., 371 F.3d at 1289 (if parties “agree to an exclusive list of the suits that are subject to preclusion,” this “implicitly allow[s] all other claims to be brought in the future”).
But even beyond that, Paragraph C of the Release expressly confirms that claims post-dating December 18, 2013, are not released:
Notwithstanding any other term of this Release, the CFPB specifically reserves and does not release any liability for conduct other than conduct related to the Mortgage Servicing Practices asserted or that might have been asserted in the complaint.
The Bureau could not have “asserted in the complaint” the conduct challenged in this case, all of which occurred after the D.C. Complaint had been filed. Moreover, there is nothing in the Consent Judgment or in the Release itself that releases any claims that arose after December 18, 2013, even if those claims overlap with the Servicing Standards.
Nor is there anything in the Servicing Standards overriding the limitations on the res judicata effect of the Consent Judgment as set forth in the Release.
2. When Ocwen attempts to assess the parties’ intent with respect to the res judicata effect of the Consent Judgment as to claims that arose after December 18, 2013, it effectively ignores the Release. Instead, it attempts to find the parties’ intent with respect to those claims in the Servicing Standards.
See Ocwen Br. at 7-11, 12-16, 32-37.
But there is nothing in the Servicing Standards reflecting any agreement by the parties that those standards would be the exclusive requirements for Ocwen’s mortgage servicing business over the three- year term of the Consent Judgment.
What Ocwen’s analysis misses is that the Servicing Standards represent the injunctive relief that Ocwen accepted as one of the costs of settling the claims in the D.C. action, not an expression of the parties’ intent with respect to res judicata.
To the contrary, the Consent Judgment specifically provided that “[n]othing in this Consent Judgment shall relieve [Ocwen] of its obligation to comply with applicable state and federal law.”
Doc. 32-1 at 13.
Rather than reflecting the intent of the parties with respect to res judicata, the Servicing Standards were fencing-in provisions, provisions that went above and beyond the requirements of the law, but did not replace the laws that govern Ocwen’s mortgage servicing practices.
Indeed, the Servicing Standards did not encompass every aspect of Ocwen’s loan servicing business. And when it comes to the res judicata effect of the Consent Judgment, there is nothing in the Servicing Standards suggesting that those standards were intended to countermand the specific res judicata provisions of the Release.
Ocwen’s theory is that the Release was solely backward-looking, expressing the parties’ intent with respect to the release of claims that might have arisen on or before December 18, 2013.
Ocwen Br. at 46 (“the Release exclusively applies to conduct before the filing [of the D.C. Complaint].”)
As to claims that arose after that date, including all the claims in this case, Ocwen repeatedly contends that the Bureau was limited to pursuing those claims as violations of the Servicing Standards.
See Ocwen Br. at 1, 3, 4, 10, 24, 26, 31-33, 38-39, 40, 42, 43, 46.
But this argument is inconsistent with the Release. Paragraph B of the Release limits the extent of the claims released to those that occurred no later than 11:59 p.m. on December 18, 2013. And Paragraph C confirms that the only claims released are those that were, or might have been, asserted in the D.C. Complaint, which was filed on December 19, 2013. Indeed, Paragraph C is separately mentioned in the Consent Judgment itself:
“CFPB and [Ocwen] have also agreed that certain claims and remedies are not released, as provided in Paragraph C of Exhibit E.” Doc. 32-1 at 11-12. Violations that Ocwen committed after the filing of the D.C. Complaint on December 19, 2013, could not possibly “have been asserted in the complaint.”
The district court purported to consider Paragraph C of the Release, but concluded that “this contractual reservation does not operate as an exception to the principle of res judicata.”
Doc. 764 at 23.
Indeed, the district court believed that Norfolk Southern was “inapposite.” Id. at 25. Instead, the court applied the traditional four-part test for res judicata.
Doc. 764 at 13-22.
And in applying the test, the district court held that the Bureau was precluded from bringing claims that could have been pursued as violations of the Servicing Standards using the Consent Judgment’s enforcement mechanism.
Doc. 764 at 22.
But again, this ignores – indeed, goes contrary to – the Release, which ties the res judicata effect of the Consent Judgment not to its enforcement mechanism for its injunctive provisions, but to claims that had been asserted or might have been asserted in the D.C. Complaint.
Ocwen’s discussion of Paragraph C of the Release is even more meager. Ocwen refers to Paragraph C only once in its argument, and then ignores it altogether.
See Ocwen Br. at 46; see also id. at 20 (claims arising after the filing of the D.C. Complaint are “outside the scope of the Release”).
Instead, Ocwen focuses on the Servicing Standards and, just like the district court, contends that, because the Consent Judgment included a mechanism for enforcing those Standards, that mechanism provided the only option for challenging Ocwen’s conduct during the three-year period that the Consent Judgment was in effect.3
As Ocwen notes, see Ocwen Br. at 6, 9, 17, 23, 26, 32, 38, 55, the exclusive mechanism for enforcing the Servicing Standards was set forth in Consent Exhibit D. Doc. 32-1 at 122-58. But Consent Exhibit D imposed a limit only on the authority of the Bureau (and the other plaintiffs) to enforce the Servicing Standards.
That is, in response to a violation of the Servicing Standards, the plaintiffs could not have pursued a motion for contempt, but were limited to the procedures set forth in Consent Exhibit D.
However, there is nothing in Consent Exhibit D that imposes any restriction on the Bureau’s authority going forward to enforce any of the federal consumer financial laws that the Bureau is charged with enforcing.4
Indeed, the only mention of federal law in the Consent Judgment is in Paragraph 17, which provides that “[n]othing in this Consent Judgment shall relieve [Ocwen] of its obligation to comply with applicable state and federal law.”
Doc. 32-1 at 13.
Although Ocwen concedes that this provision confirmed its obligation to comply with the law, it contends that the Bureau “conflates Ocwen’s obligation to comply with the law with the scope of the CFPB’s ability to enforce the law.”
Ocwen Br. at 27.
But the conflating is on Ocwen’s side. It conflates its obligation under the Consent Judgment to comply with the additional protections of the Servicing Standards with its obligation to comply with the law.
The two are separate – the Consent Judgment’s enforcement mechanism applied only to the Servicing Standards, not to the Bureau’s authority to enforce the consumer financial laws that Ocwen remained obligated to follow.5
Ocwen’s analysis is completely at odds with this Court’s decision in Norfolk Southern. Norfolk Southern explains that parties may express their intent with respect to the res judicata effect of a consent judgment by including an “express description of claims subject to res judicata” or an “express description of claims excepted from res judicata.”
371 F.3d at 1289.
The Consent Judgment here does both and does so explicitly. Paragraph B of the Release describes those claims that the Bureau released and that are therefore “subject to res judicata” – claims based on conduct that had occurred as of 11:59 p.m. on December 18, 2013. Under Norfolk Southern, that alone “implicitly allow[s] all other claims to be brought in the future.”
371 F.3d at 1289.
And the forward-looking provision of the Release, Paragraph C, describes those claims that are “specifically reserve[d]” and “not release[d]” – claims that could not have been asserted in the D.C. Complaint, including any claims based on conduct that post-dates the filing of the Consent Judgment.
It is hard to imagine how the parties’ intent with respect to future claims could have been more explicitly expressed. This intent is “the determining factor” in assessing the res judicata effect of the Consent Judgment.6
See Norfolk S., 371 F.3d at 1288.
II. TRADITIONAL PRINCIPLES OF RES JUDICATA DO NOT DICTATE DISMISSAL
Traditional principles of res judicata do not apply here because the res judicata effect of the Consent Judgment is controlled by the intent of the parties.
See Norfolk S., 371 F.3d at 1288-89.
But it is those traditional principles that form the basis of the district court’s decision.
See Doc. 764 at 14 (“[i]n the Eleventh Circuit, a defendant asserting res judicata must establish four elements …”).
And although the district court should not have applied those traditional principles, when it did so, it did so incorrectly.
In applying the traditional test, the district court focused on the final element of res judicata: whether the claims arise out of the “same operative nucleus of fact.”
See Pleming v. Universal-Rundle Corp., 142 F.3d 1354, 1356-57 (11th Cir. 1998).
In evaluating that element, “[a] court … must examine the factual issues that must be resolved in the second suit and compare them with the issues explored in the first case.” Id. Thus, the district court should have assessed whether the issues in the present case arise from the same facts that would have been relevant had the D.C. Complaint been litigated. That is not what the district court did. Had it done so, it would have realized that the bases of the two cases are completely different. The D.C. Complaint was based on Ocwen’s “premature and unauthorized foreclosures, violation of homeowners’ rights and protections, and the use of false and deceptive affidavits and other documents.”
Doc. 731-2 at 9.
The basis of this case is quite different. This case is based on the consequences of Ocwen’s maintenance of a system of record described as a “train wreck.” See Doc. 481 at 14. Instead of making that comparison, the district court derived the Consent Judgment’s res judicata effect from the Servicing Standards, from what the Monitor oversaw, and also from what the Monitor would have overseen had the Bureau sought modifications to both the Servicing Standards and the Monitor’s authority to enforce the Servicing Standards.
See Doc. 764 at 21-22, 26 n.14.
This approach, which in no way focuses on issues underlying the two cases, has no limit and goes far beyond traditional principles of res judicata.
See June 1, 2021, Br. of Plaintiff-Appellant CFPB at 39.
In defense of the district court, Ocwen relies on TVPX ARS, Inc. v. Genworth Life & Annuity Ins. Co., 959 F.3d 1318 (11th Cir. 2020); see Ocwen Br. at 52.
In fact, that case emphasizes why the district court’s analysis was wrong.
TVPX ARS alleged that Genworth’s calculation of applicable rates violated the terms of a universal life insurance policy it sold.
The district court enjoined TVPX ARS’s suit based on the res judicata effect of a class action settlement that had been entered14 years earlier and that also involved the calculation of rates for Genworth’s universal life insurance policies. That class action settlement, unlike the Consent Judgment that Ocwen and the Bureau entered into, included a broad release that released, among other things, “past, present, and future causes of action,” including causes of action that were directly or indirectly related to “the allegations, facts, subjects or issues” raised in the class action case.
TVPX ARS, 959 F.3d at 1322.
Despite the broad release, this Court vacated the district court’s decision.
Id. at 1329.
It held that “a class release may not preclude a subsequent action unless the released conduct arises out of the identical factual predicate as the claims at issue in the case.”
Id. at 1326 (internal quotation marks omitted).
Moreover, “[t]he plaintiff must have also been capable of bringing the same claims in the first action.” Id.
Here, the Consent Judgment and the Bureau’s current law enforcement action arise from different factual predicates – the Consent Judgment settled charges based on Ocwen’s practices in connection with foreclosure, whereas this case focuses on Ocwen’s use of inaccurate information in its day-to-day operations, and how, as a result of using that information, Ocwen made misrepresentations regarding loan terms, borrowers’ payments, payoff amounts, escrow analysis and payments, and insurance coverage.
Compare D.C. Compl. (Doc. 731-2) at 11-13, with the Bureau’s First Am. Compl. (Doc. 481) at 7-63.7
Further, the Bureau was not capable of bringing all of its claims in the D.C. Complaint because four of the counts of the FAC allege violations of regulations that had not taken effect at the time the D.C. Complaint was filed.8
Ocwen notes that in TVPX ARS, this Court “looked to both the factual allegations in the complaint and the terms of the settlement agreement as part of the traditional res judicata analysis.”
Ocwen Br. at 52 (emphasis in original) (citing TVPX ARS, 959 F.3d at 1326).
But what this Court considered in TVPX ARS were the allegations in the class action complaint, the description of those allegations in the class
action notice, and the release in the settlement agreement.9
Here, the district court ignored the D.C. Complaint, ignored the Release, and focused instead on the fencing-in relief. Ocwen has not identified any case in which the res judicata effect of a prior settlement was based on the scope of fencing-in relief included in a consent.10 Accordingly, even if it were appropriate for the district court to apply traditional res judicata principles, it misapplied those principles.
III. COMPLIANCE WITH THE SERVICING STANDARDS, AS ENFORCED IN ACCORDANCE WITH THE METRICS, DID NOT SATISFY OCWEN’S OBLIGATION TO COMPLY WITH THE LAW
As explained, the Release unambiguously preserves the Bureau’s authority to enforce the federal consumer financial laws with respect to Ocwen’s conduct occurring after December 18, 2013. The res judicata analysis in this case should end there.
But even if a court were to apply traditional principles of res judicata, the court’s assessment of whether the same operative nucleus of fact is involved should be based on the factual issues underlying the cases, not on an examination of the fencing-in relief the party has agreed to. And in any event, Ocwen’s obligation to comply with the Servicing Standards, as enforced in accordance with the Metrics, did not satisfy its obligation to comply with law.
1. The Servicing Standards – As a general matter, the Servicing Standards, which were fencing-in requirements, were not congruent with Ocwen’s obligations under the law. Indeed, many of the Servicing Standards were merely general requirements addressing procedures that Ocwen had to implement so that the sorts of violations alleged in the D.C. Complaint would be less likely.11
Others were more specific.12 But it would have been impossible for the Servicing Standards to address every potential violation of law that Ocwen might commit in connection with its mortgage servicing business. And indeed, they did not.
Ocwen argues that each of the nine counts of the FAC challenges conduct that was “addressed” by the Servicing Standards.
Ocwen Br. at 12; see also id. at 13-16, 33-37.
In fact, the Servicing Standards did not require compliance with the statutes and regulations the Bureau is seeking to enforce.
As one example, Count VII of the FAC alleges that Ocwen violated 12 C.F.R. § 1024.17, a provision of Regulation X, which is the regulation that implements the Real Estate Settlement Procedures Act (RESPA).
That provision requires Ocwen to conduct annual escrow analyses for borrowers that have escrow accounts, and provide those borrowers with an annual escrow statement disclosing amounts paid for taxes, insurance, and other charges; the total paid into the escrow account during the previous year; and an explanation of how any surplus in the account is handled.
Ocwen contends that Count VII was “addressed” by Servicing Standards I.B.1, I.B.5, and VII.A.1. Ocwen Br. at 13, 35-36.
Ocwen is wrong.
Servicing Standard I.B.1 merely required Ocwen to maintain procedures to ensure accurate account information for borrowers, Doc. 32-1 at 71;
Servicing Standard I.B.5 required Ocwen to provide borrowers with monthly billing statements that showed the balance of the borrower’s escrow account, id. at 73; and Servicing Standard VII.A.1 addressed Ocwen’s obligation to make hazard insurance payments.
None of these Servicing Standards came anywhere close to requiring Ocwen to conduct annual escrow analyses or to satisfy the other requirements of § 1024.17.13
Moreover, it is Ocwen’s failure to conduct these annual analyses that led to the overcharges it imposed on borrowers. It is not surprising that the Servicing Standards did not specifically address the conduct challenged by Count VII of the FAC because the Consent Judgment settled charges stemming from Ocwen’s foreclosure practices resulting from the 2008 mortgage crisis, not the sorts of practices challenged in this case.
Another example: Four counts of the FAC – Counts I, II, V, and VI – allege that Ocwen used inaccurate or incomplete information derived from its system of record in connection with various aspects of servicing borrowers’ loans. As the Bureau alleged in the FAC, Ocwen’s head of servicing referred to its system of record as “[a]n absolute train wreck.”
Doc. 481 at 14. Ocwen (and the district court) contend that this problem was addressed by Servicing Standard I.B.9.
See Ocwen Br. at 13, 33-34; Doc. 764 at 18.
But Servicing Standard I.B.9 merely required Ocwen to have its system of record periodically reviewed for accuracy and completeness by an independent reviewer, not by the Monitor.
Doc. 32-1 at 74.
Although the independent reviewer did report to the Monitor, the Monitor had no responsibility to assess whether those reviews were adequate, or whether Ocwen implemented any changes that the independent reviewer might have suggested.
Doc. 764 at 17-18.
Further, when assessing Ocwen’s performance under the Servicing Standards, the Monitor stated that he assumed the accuracy of Ocwen’s system of record.
Doc. 731-24 at 7 & n.4.
That is, the Monitor assumed away the very violations alleged by the Bureau. Thus, the Servicing Standards did not address a central flaw in Ocwen’s loan servicing, a flaw that is a central basis of this case.14
2. The Metrics – Ocwen also focuses on the Metrics set forth in Consent Exhibit D. See Ocwen
Br. at 16 (allegations in the Complaint were regulated by Servicing Standards, and compliance with the Servicing Standards was “governed by the Metrics”).
Although the Metrics governed compliance with some of the Servicing Standards, they did not govern compliance with the law. Again, consider Count VII, which alleges that Ocwen violated RESPA and Regulation X by failing to conduct annual escrow analyses. Ocwen claims that there were two relevant Metrics:
Metrics 4.B and 33. Metric 4.B addressed Ocwen’s payment processing, see Doc. 32-1 at 143, and Metric 33 addressed whether Ocwen’s billing statements reflected information in its system of record, id. at 157.
Neither of those Metrics had anything to do with assessing whether Ocwen was conducting the annual escrow analyses mandated by RESPA.
See Doc. 32-1 at 143, 157.15
There is another reason why the Metrics could not measure
Ocwen’s compliance with RESPA, Regulation X, or any of the other legal requirements that the Bureau alleges that Ocwen violated.
Every Metric had both a Loan Level Tolerance for Error, as well as a Threshold Error Rate. See Doc. 32-1 at 137-51.
The Loan Level Tolerance for Error “represents a threshold beyond which the variance between the actual outcome and the expected outcome on a single test case is deemed reportable.”
Id. at 157.
For example, Metric 33 assessed, inter alia, whether Ocwen’s monthly billing statements accurately stated the borrower’s principal balance, as that amount was reflected in Ocwen’s system of record.
Id. at 157.
The Tolerance for Error for that Metric was the greater of $99 or 1% of the correct unpaid principal balance. That means that if Ocwen’s system of record reflected that the balance of a borrower’s mortgage was $100,000, Ocwen could have overstated the amount in the borrower’s monthly billing statement by $1000 without violating the Servicing Standard.
The Threshold Error Rate meant that “[f]or each metric or outcome tested[,] if the total number of reportable errors as a percentage of the total number of cases tested exceeds this limit[,] then [Ocwen] will be determined to have failed that metric for the reported period.”
Doc. 32-1 at 158.
For Metric 33, the threshold error rate was 5%.
Id. at 157.
This meant that, in testing a representative sample of loans serviced by Ocwen to assess compliance with Metric 33, Ocwen could have failed (i.e., it could exceed the Loan Level Tolerance for Error) on 5% of the loans being tested without violating the Metric.
None of the laws at issue in this case includes this sort of tolerance for error. According to the district court, this is nothing more than “a limitation in the negotiated settlement between the parties.”
Doc. 764 at 20-21.
To the contrary, the error tolerance was merely a limitation on the ability of the Bureau and the other plaintiffs in the D.C. action to enforce the injunctive relief embodied in the Servicing Standards – not on the Bureau’s ability to enforce the law.
The Consent Judgment, which expressly provided that nothing in it “relieve[d] [Ocwen] of its obligation to comply with applicable state and federal law,” released only claims based on certain conduct occurring before December 19, 2013.
It also expressly reserved the Bureau’s right to enforce the law with respect to later conduct.
This ensured that the Bureau retained its full authority to enforce the consumer financial laws going forward independent of its contractual rights to pursue Ocwen’s violations of the Servicing Standards.
For the reasons set forth above, and in the Bureau’s June 1, 2021, Brief, the judgment of the district court should be reversed.16
Stephen Van Meter
Acting General Counsel
Steven Y. Bressler
Acting Deputy General Counsel
Acting Assistant General Counsel
Senior Litigation Counsel
Consumer Financial Protection Bureau
1700 G Street NW
Washington, DC 20552
CERTIFICATE OF COMPLIANCE
This brief complies with the length limits permitted by Fed. R. App. P. 32(a)(7)(B).
The brief is 6113 words, excluding the portions exempted by 11th Circuit Rule 32-4.
The brief’s typeface and type style comply with Fed. R. App. P. 32(a)(5) and (6).
August 26, 2021 /s/ Lawrence DeMille-Wagman
Senior Litigation Counsel
Consumer Financial Protection Bureau
1700 G Street NW
Washington, DC 20552
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United States Court of Appeals for the Eleventh Circuit
United States Court of Appeals for the Eleventh Circuit
|CONSUMER FINANCIAL PROTECTION BUREAU,
Plaintiff – Appellant,
OCWEN FINANCIAL CORPORATION,
Defendants – Appellees.