The excerpts from Ron Davis' testimony in Sealy Davis vs Ocwen FSB, Deutsche Bank et. al. (2005) provided the court a glimpse of how business processes were set up to push borrowers into foreclosure and to sell more foreclosed homes at Ocwen.
The motive behind designing those processes was the management's greed. Business processes are corporate habits. Since the motivation remains the same, the processes have only changed slightly.
The REO department has been spun off into Altisource, while LRCs remain at Ocwen (now Ocwen Loan Servicing in India). The last I knew collectors were being paid up to INR 100,000 a month as a part of the ICP. REO staff at Altisource were also being rewarded substantially through ICPs. On the other hand when I was involved with foreclosure prevention activities (short sales, deed-in-lieu, refinance) Altisource refused to pay my team and me any incentives. Most Collections/Foreclosure Consultants/REO Asset Management employees would get very low salaries but very high incentives to motivate them to foreclose and sell more foreclosed homes. Transaction Coordinators were also paid substantial incentives so they would get deeds with forged signatures and errors recorded through Premium Title (a subsidiary of Altisource), let RHSS agents like David Judd make important decisions on transactions and allow payment of real estate commissions to Ocwen subsidiaries - RESS and REO Management, LLC.
Here are the key parts of Ron Davis' testimony:
Q.(Mr. Hilliard) Mr. Davis, while you were at Ocwen, would you explain to the jury the type of training that you received in regards to dealing with customers.
A. (Ron Davis) When I first hired into Ocwen, we just hired off the street. We didn't have a training class up yet. The time line I remember,training class was 1998, '99. When we went to Orlando, Florida,from West Palm Beach,their operation there and they had a training class then. That was for collectors.
Q. And while at Ocwen, would you from time to time be given bonuses or extra money that had a particular name?
A. We got ICP programs and then extra money called bumps.
Q. Would you tell the jury what you think a bump is?
A. What I think a bump is?
Q. What you think a bump is.
A. I know what a bump is.
A. A bump is like if you lost your home to foreclosure and we had a broker list to call brokers to buy the home, we would get a bump for that extra money because they bought it. And it's called third party take out. And Ocwen paid us extra for that.
Q. Do you have any information about whether Ocwen would send payments back to customers, reject payments after they requested the payments be sent to them?
A. Yes,we did. Sometimes--
Q. Could you explain that to the jury?
A. Well, the foreclosure department needed a minimum of three payments. If they wanted to send one to us, it was our discretion to take it or send it back. We could put them on foreclosure hold for that one payment and they would send us two more later on or whatever. But we would send it back to them. We looked in the system and seen there was equity in the home,we would reject the payment and it was in foreclosure anyway and there was not time to put them on a forbearance plan,and we sent it back. Or if we didn't receive the payment, got lost or sent back,that's what we did.
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Q. (MR. HILLIARD) Can you explain to the folks what you meant when you explained to Mr. Madole if there was equity in the house,you would choose not to modify a customer's loan?
A. That's correct. Because if there was equity,and this is based upon all the LRCs, and there's 30 of us,and we would get a bump if it went to foreclosure. We didn't have to do modification. If they didn't come up with payments to put them on forbearance, we would not do that either. We would let it go to foreclosure, get a buyer for the home.
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Q. Could you explain to the jury what the policy was in regards to representing forbearance as a possibility and foreclosure?
A. Again, our system allowed us to go in there and plug in the numbers for percentages of the house, what the loan to value was,what Ocwen got for the home, or if it was even being serviced by another lender. It was up to us. And we did it to let it go to foreclosure or come up with the money we were asking for, including attorneys' fees and costs for our bumps,extra money in our pocket.
Q. Are you familiar with whether or not there was a policy at Ocwen to make representations that forbearance was a possibility while unbeknownst to the customer proceeding to foreclosure?
A. Yes.
Q. There was a policy?
A. Yes. We had control over the portfolio. We had 250 to 300 customers in our portfolio. We could go in, check everyone out,see which ones had equity, which ones we would put on forbearance or modify. We only had to get an X amount of deals to get our money, big money,up to 10,000 a month for bonus money. And many did.
Q. How much?
A. It's 10,000 a month.
Q. What's the most you made in a month?
A. It was $7600. One month. I was overwhelmed myself.
Q. What was your salary?
A. It was 30,000 in '96.
Q. Go ahead. Finish.
A. So, by not knowing anything,I was off the street and took the position because they offered it to me. I was a collector two years. Before I got that offer, I learned from the rest of them how to do it and what to say. And we didn't treat the people very well but the money was pretty good.
Q. So,during the time that you were there --and were you a manager at some point?
A. Supervisor.
Q. Were you familiar with the prevailing attitude that exited while you were there in regards to misleading customers?
A. Yes. I was trained.
Q. What?
A. I was, like trained by the other managers and employees how to treat the people that's -- the loans we had.
Q. Tell the jury about what you know in that regard.
A. We would call the customers and ask them what bridge they were going to live under or the next cardboard box they would have to cut out,what curb they would be kicked to,because all the belongings in Georgia went to the curb. Hey, I wasn't like that, but I learned to take the money. That was our key,the money. We had never seen the people..
Q. Once you learned how to do it,would you tell these folks how you felt about doing that?
A. I came here for that reason,
kind of like to put myself at ease. I got away from Ocwen, resigned and went to another firm, an attorney firm three hours away to get away from being like I was.
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Q. Do you have familiarity with that situation, sending checks--telling the customer to start sending a check to a different location.
A. Yes, lockboxes.
Q. What familiarity do you have in that regard?
A. They started out with four different lock boxes in different places. The payments were getting lost. So,they changed the lockbox but the customer wouldn't get the notice before the late charges were assessed. And some went to foreclosure.
.......
Q. Let me ask you that. Were you familiar while you were there with regard to the policy of Ocwen intentionally posting payments late?
A. We posted numerous payments late.
Q. Why?
A. One,the system wouldn't accept them. We had a new program put in and it was rejecting the payments and late charges were added. And then before foreclosure, more fees were added. And that caused a lot of problems.
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Q. Did folks in your position -- were you called an LRC?
A. Yeah, a loan resolution consultant.
Q. LRC. Did LRCs, while you were there, also get money,kickbacks from brokers?
A. Yes, they did,as well as the REO department.
Q. Would you tell the jury about that?
A. The note that -- the customer would go into foreclosure would come to our department first. We would hear -- if we couldn't put them on a plan or we refused to put them on a plan and refused their monies,and again, if there was equity, it would benefit us. If they went to foreclosure, they would go to other department we knew. And most of those were ex-LRCs. It's called real estate owned, REO. They are the ones who got the extra cash and trips and shared it with us. They were managers as well as -- well, managers, I guess.
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Q. Let me ask you again. in regard to the question I just asked, was it a policy of Ocwen's to sometimes represent to customers that they could get a forbearance agreement while at the same time secretly move that customer towards foreclosure?
A. Yes.
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Q. You and your colleagues, things you saw and were permanently aware of, how were your customers viewed?
A. As D&E people. Poor. Not affordable homes.
Q. Why is that significant?
A. There is a portfolio full of equity homes to benefit us for extra money, the bumps and bonuses.
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Q. And if Sealy Davis -- one of her issues in this case is that she was promised by Ocwen that they could lower her payments,is that a type of promise you have personally made in the past to customers like her?
A. Yes, I did. I would on some of the loans that had no equity --
Q. No. After you said "yes," I have to ask you another question. So, you did that?
A. Yes.
Q. From time to time, did you do it with no intention of fulfilling that promise?
A. Yes, I did. I couldn't find the payments, yes. So they went foreclosure.
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Q. (Mr. Madole) You said that you personally, Ron Davis, would pick up a phone,call a borrower and say, "I will give you a forbearance plan." And in your secret heart, you would say, "Ha, ha, no." That's the way you were?
A. That's the way we were.
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Q. (Mr. Hilliard) Let me ask you, who is Bill Erbey?
A. He is the owner of Ocwen Federal Bank.
Q. Did you ever attend any meetings with Bill Erbey?
A. Yes. Luncheons we would call it.
Q. During those luncheons did Mr. Erbey ever set out for you his view of how Ocwen should conduct business?
A. Yes. Due to the type of paper, again we're back to the D&E paper that he bought from HUD and other Loan Servicing accounts that these are people that have no money, probably won't have no money to get their houses back out of foreclosure. There are some that have equity which would help build your bonus structure,and that was at the Palm Beach Lake address.
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Q. While you were there, did Ocwen from time to time or folks who worked with customers from time to time doctor the comment history log?
A. Yes, we did. We changed the financials a lot.
Q. Explain it to these folks.
A. If the loan had, based on no equity, a lifeless loan, we would call it,we would change it to add more food, more electricity,any expense that would be for the home. If they put down cable,we would tell them we would erase it. That didn't count towards the affordability of their payment. So,we helped them with their financials based on the equity in the home, the amount of equity. That's what we did.
Q. You mentioned some times you would call a customer how many times a day?
A. The dialer would call the customer. Automated dialer. Put headsets on, it would ring the phone six, seven times a day, because the program wasn't working correctly. And got OTS complaints from the banking commission and the Attorney General and the consumer people because we harassed them too many times.
