Nationstar employees use four software applications and databases to store and track electronic information relating to loans: (1) Loan Services and Accounting Management System ("LSAMS"), Nationstar's primary loan servicing software, which contains data for loans, including the permanent records of the accounting history, communication logs, and letters documented with codes that were sent to the borrower; (2) Remedy Star, Nationstar's proprietary loss mitigation and loan modification management system, which, among other tasks, tracks the status and timeline of a loan modification and links to documents stored in FileNet; (3) LPS Desktop ("LPS"), an application which Nationstar uses to track and manage foreclosure processes and communicate with outside attorneys; and (4) FileNet, a platform that houses PDF images of documents, including letters sent to borrowers by Nationstar. Summ. Id. First, as a threshold matter, the Court notes that in ruling on Nationstar's Motion for Summary Judgment, it will grant judgment in favor of Nationstar as to Mrs. Robinson's claims, Mr. Robinson's RESPA claims under 12 C.F.R. 1024.41, a regulation of RESPA that outlines loss mitigation procedures. A class action is a superior means for "fairly and efficiently adjudicating" whether Nationstar has violated Regulation X and section 3-316(c) of the MCPA. First, Nationstar correctly notes that Mr. Robinson, in his Motion, and Oliver, in his expert report, do not put forward any evidence establishing that the necessary prerequisites for a class action have been met with respect to the claim that Nationstar did not evaluate borrowers "for all loss mitigation options available to the borrower," in violation of 12 C.F.R. Co, 445 F.3d 311, 318 (4th Cir. Proof of these claims requires a showing of the dates that an application was received, an acknowledgment letter was sent, an application became complete, Nationstar sent a decision letter to the borrower, and a foreclosure sale is scheduled. The Robinsons, however, have not identified any evidence that Nationstar did not intend to, and did not, conduct such evaluations. Amchem Prods. Joint Record ("MCC JR") 0907. 1024.41(i). at 359-60. The lawsuit alleges, however, that Nationstar has not made interest payments to the plaintiffs, nor provided any record that interest was accruing and due to the homeowners, at any time during or after December 1, 2018 to March 22, 2019 or May 1, 2020 through the present. 2018). Wright et al. Additional facts relevant to the pending motions are set forth below. If the settlements are approved by the D.C. district court, Nationstar will be required to immediately set aside about $15.6 million to pay borrowers it has not yet remediated. Some courts have held that administrative costs that predate the alleged RESPA violation cannot constitute "actual damages." 2015) Court Description: MEMORANDUM OPINION. . Since the parties do not argue that the Nationwide Class and the Maryland Subclass differ for the purposes of the class certification analysis, the Court will analyze them together. The fee arrangement will be considered as an issue potentially affecting the credibility, rather than the admissibility, of the expert testimony. May 31, 2016), the plaintiff had signed the deed of trust but not the promissory note but was nevertheless deemed to have standing because she had owned the home with a right of survivorship with her deceased husband, who had signed the note. Law 13 . Fed. Lembach v. Bierman, 528 F. App'x 297 (4th Cir. UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND. He was retained by the Robinsons under an arrangement through which he is to be paid a flat fee of $125,000: $62,500 up front, with an additional $62,500 to be paid if a class is certified in this case. Plaintiffs "must present specific evidence to establish a causal link between the [servicer's] violation and their injuries." The company has already paid about $57.5 million in restitution to affected consumers, according to the CFPB. application to Nationstar after January 10, 2014, and through the date of the Court's . Code Ann., Com. Summary judgment will therefore be entered for Nationstar on the claims that Nationstar violated subsections (f) and (g). A code is also added to LSAMS to put a hold on foreclosure proceedings. . Bouchat, 346 F.3d at 522. uniformity of decision as to persons similarly situated, without sacrificing procedural fairness or bringing about other undesirable results." The Robinsons have not made any mortgage payments since January 2014 and have not been assessed any late fees since February 2014. See 12 C.F.R. Portland, OR 97208-3560. 164. 12 U.S.C. Broussard v. Meineke Discount Muffler Shops, Inc., 155 F.3d 331, 344 (4th Cir. Mrs. Robinson was the primary point of contact for the Robinsons in interacting with Nationstar. THEODORE D. CHUANG United States District Judge. A letter noting receipt of the application is automatically generated and sent to the borrower, and a Nationstar employee checks the application's documentation to determine if it is complete based on a checklist. For example, in EQT, the court concluded that a proposed class of all individuals who owned an interest in a gas estate was not ascertainable because the actual owners could be determined only through an individualized review of land records. Because such information is stored electronically and based on objective criteria, the members of the class will be ascertainable without significant administrative burden. If the named plaintiff satisfies each of these requirements under Rule 23(a), the Court must still find that the proposed class action fits into one of the categories of class action under Rule 23(b) in order to certify the class. 3d at 1014. Class Certif. See Wirtz, 886 F.3d at 719-20. Id. Accordingly, the Motion is denied as to such claims. Under a provision of Regulation X entitled "Loss mitigation procedures," mortgage servicers must take certain steps when a borrower applies for loss mitigation measures, such as the loan modifications sought in this case. 15-05811, 2016 WL 3055901 (N.D. Cal. R. Civ. Nationstar's Motion for Summary Judgment will be granted as to Tamara Robinson. 09-08213, 2011 WL 11651320 (C.D. Likewise, the articulated concern that Nationstar would not be required to respond to loss mitigation applications filed within a certain number of days of a foreclosure sale, can be addressed through the provision of data relating to the dates of scheduled foreclosure sales. In their Motion for Class Certification, the Robinsons seek certification of two classes. 2605(f), caused by the violation, which likely consist of administrative fees and costs, the individual recovery available for each class member would likely be low, far below the cost of litigating the claims themselves. These claims do not have to be factually or legally identical, but the class claims should be fairly encompassed by those of the named plaintiffs. Nationstar will need to enhance its policies and processes around how it handles consumer complaints, performs escrow analyses and conducts audits, for example. 12 C.F.R. at 983. 1987) (holding, in the context of an informant who is paid a contingent fee, that the fee should be treated "as a credibility factor"). 2605(f), is common question of law and fact that Mr. Robinson and the class members would all be required prove in their individual cases in order to qualify for statutory damages. 1024.41(b)(1), which requires reasonable diligence in obtaining documents and information to complete a loss mitigation application; and Md. See id. If you are a member of the Settlement Class, you must submit a completed Claim Form to receive a payment. Regulation X's effective date reflected "an intent not to apply it to conduct occurring prior to that date." State attorneys general are here for homeowners, Raoul adds. 1024.41(c)(1)(ii), 1024.41(b)(1), the Court concludes that common computerized analysis will substantially advance the resolution of such claims, even if not entirely eliminating the need for reviewing certain specific file documents. Because all of the Rule 23(a) and (b)(3) requirements are met as to a class asserting violations of 12 C.F.R. cause[d] damages retroactively" and "transmogrifie[d]" the costs that predate the RESPA violation into damages. Between July 2010 and November 2013, the Robinsons submitted and Nationstar denied three applications for a loan modification under the Home Affordable Modification Program ("HAMP"). The economic challenges and burdens that homeowners currently face are similar to the ones experienced following the Great Recession. Class certification will be granted, with Demetrius Robinson as the named plaintiff, as to both the Nationwide Class and the Maryland Class for the claims under 12 C.F.R. Code Ann., Com. Nationstar also asserts that the Robinsons have not identified evidence sufficient to support their MCPA claims. 120. See 12 C.F.R. Nationstar has no process for standardizing file names. McLean II, 398 F. App'x at 471. In Baez v. Specialized Loan Servicing, LLC, 709 F. App'x 979 (11th Cir. Id. 2d 452, 468 (D. Md. 1024.41(f), (g). 12 U.S.C. In February 2014, after their income had further decreased, the Robinsons ceased making payments on the mortgage loan. After an additional period of expert discovery relating to the class certification motion, discovery closed on December 30, 2018. For the foregoing reasons, Nationstar's Motion for Summary Judgment will be GRANTED IN PART and DENIED IN PART. If the Court approves the Settlement and it becomes final and effective, and you remain in the Settlement Class, you will receive a payment. at 151. 1976). Although section 13-316 provides a remedy only for economic damages arising from a mortgage servicer's failure to respond to an inquiry, see Md. at 248-49. Messner v. Northshore Univ. or misleading oral or written statement . Oliver is the Chief Executive Officer of Hilltop Advisors LLC, a financial services consulting, compliance audit, and accounting advisory firm, and has extensive experience conducting compliance reviews for mortgage servicers, including for compliance with loss mitigation procedures. Johnson, 374 F. App'x at 873; Keen v. Ocwen Loan Servicing, LLC, No. Am. After they became delinquent on their loan, the Robinsons submitted another loan modification application to Nationstar on March 7, 2014. 1024.41(c)(1)(i). In its Motion to Strike, Nationstar moves to strike the report of the Robinsons' expert witness, Geoffrey Oliver, on the grounds that (1) Oliver was hired pursuant to an ethically improper contingency fee agreement; and (2) his testimony does not meet the requirements of Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Fed. In Robinson v., Under the RESPA, civil liability is limited to "borrowers": "[w]hoever fails to comply with any provision of, Full title:DEMETRIUS ROBINSON and TAMARA ROBINSON, Plaintiffs, v. NATIONSTAR MORTGAGE, Court:UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND. 2003) ("[I]f Lierboe has no stacking claim, she cannot represent others who may have such a claim, and her bid to serve as a class representative must fail. Likewise, although Mrs. Robinson expended time corresponding with Nationstar, she was not working for pay at the same time, and the Robinsons have not provided evidence to quantify the loss to Mr. Robinson, the only viable plaintiff here. Code Ann., Com. Fed. Although Nationstar argues that Mr. Robinson has a conflict of interest because he wishes to avoid foreclosure and to delay payments on his mortgage, the record does not reflect that proposition. 1024.41(f), (g), and (h), and Md. 89, 90, ECF No. 2013); Poindexter v. Teubert, 462 F.2d 1096, 1097 (4th Cir. 2605(f)(2) is not fatal to the predominance inquiry. "); see also 1 William Rubenstein et al., Newberg on Class Actions 2:3 (5th ed. 1024.41(h)(1), (4). Co., 595 F.3d 164, 179-80 (4th Cir. Courts have held that a person who did not sign the promissory note is not a "borrower" for the purposes of RESPA because that individual has not "assumed the loan." There is no reason to conclude that individual class members have any particular interest in individually controlling the litigation through separate actions, or that this Court is an undesirable forum to host this litigation, since Nationstar services loans in this district, is subject to jurisdiction here, and has presented no argument that Maryland is an inconvenient forum. A settlement has been reached in a class action lawsuit alleging Nationstar Mortgage LLC (Nationstar or Defendant) violated the Real Estate Settlement Procedures Act (RESPA) by failing to adhere to its requirements with respect to its customers loss mitigation applications and that Nationstar violated Maryland law by not timely responding to its customers mortgage servicing complaints. 2605(f)(2); Wirtz, 886 F.3d at 719-20, that the individualized damages inquiry would need to precede the award of statutory damages based on a finding of a pattern-or-practice of RESPA violations is a distinction without a difference: whether individual damages are shown before or after the pattern-or-practice liability, the common issues of liability predominate over the individualized questions of damages. This argument runs contrary to the plain language of Nationstar's own procedures, which describe the application as "complete" based on the processor's determination, leading to the referral of the complete package to an underwriter. If a class is ascertainable, it must then satisfy all four elements of Rule 23(a): numerosity, commonality, typicality, and adequacy. P. 23(a)(1). MCC JR 0003. To prepare his expert report, Oliver reviewed a randomly selected sample of 400 loans serviced by Nationstar in which a loan modification application was submitted. Indeed, since previous versions of the Maryland rule expressly stated that contingency fee arrangements for experts were forbidden, but that explicit language was removed, it is reasonable to conclude that the amendment changed the rule in Maryland to no longer bar contingency fee arrangements. Tagatz, 861 F.2d at 1042; cf. Any additional updates will be posted here. She alleges Nationstar was sent multiple disputes by both Experian and Equifax with documentation showing the debt was forgiven, yet Nationstar persisted in reporting the debt as valid. But see Ayres v. Ocwen Loan Servicing, LLC, 129 F. Supp. He is joined by 49 other Attorneys General, the District of Columbia, and other state and federal agencies. Law 13-301 and 13-303, because the Robinsons do not have standing to bring those claims. As of November 22, about 2.8 million homeowners were in a forbearance plan, according to the latest research from the Mortgage Bankers Association. R. Civ. Tagatz v. Marquette Univ., 861 F.2d 1040, 1042 (7th Cir. Id. Id. For example, Nationstar's own internal procedures reveal that when a loss mitigation application is received, a processor reviews it to determine if all required information and documents have been received, and enters one code, specifically "code HMPC" in LSAMS signifying "Financial Application Complete," and a different code, specifically "code HMPA," signifying "Financial Application Incomplete." Signed by Magistrate Judge Jillyn K Schulze on 9/9/2016 . Nationstar's reliance on Accrued Financial Services v. Prime Retail, Inc., 298 F.3d 291 (4th Cir. The Robinsons assert that they have suffered damages in the lost opportunity to have their mortgage loan modified and to pursue other loss mitigation options; in the fees, late fees, and interest that Nationstar has assessed since they became delinquent on their loan; in the lost "time and effort" which they expended in "pursuing the loss mitigation process with Nationstar" rather than trying to improve their business; and in administrative costs, including "postage, travel expenses, photocopying, scanning, and facsimile expenses." Eligible consumers will be contacted by Nationstar or the settlement administrator about refunds under the settlement. An 85-year Harvard study found the No. Code Ann., Com. United States v. Valona, 834 F.2d 1334, 1344 (7th Cir. And given that the class includes all borrowers who have submitted an application since January 10, 2014, joinder of all members is eminently impractical. . Where it is now apparent, in hindsight, that Nationstar was permitted to withhold relevant and necessary data in the discovery process, it is unsurprising that Nationstar employees would then review loan files, with their complete data, and identify problems. Law 13-316(c). This Court previously held that a loan modification application can be an inquiry under the MCPA that triggers a duty to respond, and that in the case of the Robinsons, the loan modification application that was "submitted at the request of Nationstar[] necessarily seeks a response." See, e.g., Linderman v. U.S. Bank Nat'l Ass'n, 887 F.3d 319, 321 (7th Cir. From January 2012 to December 2016, the CFPB and 50 state attorneys general claim Nationstar, which is now doing business asMr. Cooper, engaged in a number of unlawful practices in handling mortgages following the Great Recession. Summ. Thorn v. Jefferson-Pilot Life Ins. Mr. Robinson's counsel is experienced in complex civil litigation and class action litigation. Md. Since the Court already considered and ruled on these issues, see supra part I.B, it will not revisit those arguments here. 1024.41(b)(2)(B), (c)(1)(ii); Md. 1024.41(b)(1). . While the Nationstar employee who conducts the initial processing of an application may refer it to an underwriter based on its facial completeness, the underwriter makes the final determination of whether the application is complete and is responsible for obtaining any additional required documentation. The Nationstar Mortgage Unwanted Phone Calls Class Action Lawsuit is Wright, et al. Nationstar Mortgage agreed to settle an action commenced by the Consumer Financial Protection Bureau for $91 million to resolve allegations surrounding mortgage servicing misconduct and deceptive practices that resulted in financial harm to borrowers. CFPB Director Kathleen Kraninger said in a statement. Id. A class action allows representative parties to prosecute not only their own claims, but also the claims of other individuals which present similar issues. Code Ann., Com. Id 1024.41(c)(1). Id. Law 13-301 and 13-303, and that Mr. Robinson therefore may not assert such claims on behalf of the class, Mr. Robinson's remaining claims and defenses are typical of the class members. Although each class member must individually show that they suffered "actual damages" under 12 U.S.C. 1024.41(f), (g), and (h), and Mr. Robinson's MCPA claim under sections 13-301 and 13-303. Code Ann., Com. . 2012). See supra parts I.B.1, I.B.3, I.C.1. Code Ann., Com. A Scheduling Order was first entered on November 24, 2015, and the period for discovery was extended four times between November 2015 and January 2017. The CFPB estimates about 40,000 borrowers were harmed by Nationstar's allegedly unfair and deceptive practices, according to a statement released Monday. 1 Nationstar later conceded that at the time the Robinsons submitted their application, it had not yet updated its systems to comply with Section 1024.41. Code Ann., Com. Id. Sept. 29, 2017); Billings v. Seterus, Inc., 170 F. Supp. The comments to that rule state that the "common law rule in most jurisdictions is . In 2007, Mr. Robinson obtained a loan with the principal amount of $755,000 to refinance the property. 1988) (distinguishing between a rule of professional conduct and admissibility of evidence); cf. See Johnson v. Ocwen Loan Servicing, 374 F. App'x 868, 873 (11th Cir. Reg. Under Count I, the Robinsons allege a violation of 12 C.F.R. The MCPA prohibits the use of an "unfair or deceptive trade practice" in the "[t]he extension of consumer credit" or "[t]he collection of consumer debts" and provides for a private right of action. 2d 873, 883 (D. Md. Order at 2, ECF No. More Information You will receive no benefits from the Settlement, but will retain any rights you currently have to sue Nationstar about the same claims in this case. Law 13-316(c), the Court will grant class certification as to those class members and claims. Since the Rule 23(a) factors are satisfied, the Court will now consider whether the Rule 23(b)(3) predominance and superiority considerations are met. It will be otherwise denied. Instead, the Robinsons assert that Nationstar has not affirmatively proven that it conducted such reviews. 2003). Similarly, though the precise nature of the fees imposed was not specified, it is reasonable to infer that some were attributable to delays linked to RESPA violations. Aug. 19, 2015). 16-0307, 2017 WL 1167230, at *3 (E.D.N.C. Nationstar ultimately became the servicer of the Robinsons' loan. Id. 2d 1360, 1366 (S.D. When those scripts did not produce data that allowed the Robinsons to conduct the sampling, the Magistrate Judge ordered Nationstar on April 3, 2018 to run certain "structural scripts" on two of its four databases. 2010). 2015) (holding that Regulation X did not apply to loss mitigation applications submitted before the effective date). See 12 C.F.R. For a class action brought for violations of Regulation X, a servicer is liable for "actual damages to each of the borrowers in the class" and, upon a finding of a "pattern or practice" of noncompliance, statutory damages amounting to a maximum of $2,000 per class member up to a total of the lesser of $1 million or one percent of the servicer's net worth. Although the Robinsons contend that they would have pursued other loss mitigation options in the absence of the RESPA violations, they have not identified any such options in a way that would permit a calculation of damages associated with any lost opportunity. In Accrued Financial, the United States Court of Appeals for the Fourth Circuit held that where commercial real estate tenants assigned their potential claims against their landlords to a commercial real estate auditor under an arrangement through which the auditor would receive a percentage of any recovery in litigation, the assignments violated public policy because where the auditor's employees could testify in such litigation, the assignments "provide for supplying expert testimony for a contingent fee." Northern District of Ohio, ohnd-1:2021-cv-00452 of 0 An error occurred while loading the PDF. Nationstar's Motion to Strike will be DENIED. In response, on May 30, 2014, Mr. Robinson sent Nationstar the exact same application that he had submitted on March 7, 2014. Neither the rule nor the comment, however, state whether Maryland is one such jurisdiction. That provision provides, in parallel, that a loan servicer which does not comply with Regulation X is liable "to the borrower." Mar. Code Ann., Com. ("MCC") 2, ECF No. J. Universal Athletic Sales Co. v. Am. As a result, the Robinsons' claim that Nationstar violated certain Regulation X procedures with respect to their loan modification application and those of the class members. . 125. Nationstar broke that trust by engaging in unfair and deceptive practices," Kraninger added. Where Accrued Financial addresses a different scenario with a different remedy, the Court does not find that it requires that the testimony of an expert witness paid on contingency fee basis must be excluded. Throughout discovery, Nationstar repeatedly stated that it could not produce the data on loss mitigation or loan modification applications from its databases in the form requested by the Robinsons. The fact that each borrower must individually show damages under 12 U.S.C. Because of the need to protect the rights of absent plaintiffs to assert different claims and of defendants to assert facts and defenses specific to individual class members, courts must conduct a "rigorous analysis" of whether a proposed class action meets the requirements of Federal Rule of Civil Procedure 23 before certifying a class. In Washington v. Am. 1024.41(c)(1)(i) and (d), because the Robinsons made no showing that the Rule 23 requirements were met. USCA4 Appeal: 21-1087 Doc: 38 Filed: 06/15/2021 Pg: 9 of 33 1024.41(f), (g), and (h); and (4) there is no evidence of actual damages from any RESPA violation. To establish an MCPA violation under this provision, a plaintiff must establish that (1) the defendant engaged in an unfair or deceptive practice or misrepresentation; (2) the plaintiff relied upon the representation; and (3) doing so caused the plaintiff actual injury. Nationstar's failings resulted in "substantial consumer harm," CFPB Director Kathleen Kraninger said in a statement. Id. Nationstar asserts that Oliver's testimony should be stricken because this fee arrangement includes an unethical contingency fee. "[A]n evaluation of the merits to determine the strength of plaintiffs' case is not part of a Rule 23 analysis." Nationstar, the fourth-largest mortgage servicer in the U.S., is set to pay $91 million to settle claims brought by the Consumer Financial Protection Bureau and state attorneys general alleging that the company failed to honor mortgage forbearance agreements and unfairly foreclosed on homeowners. 2017), the United States Court of Appeals for the Eleventh Circuit held that postage costs incurred by the plaintiff to send the "initial request for information is not a cost to the borrower 'as a result of the failure' to comply with a RESPA obligation," because a violation has not occurred and will not "necessarily occur" at the time the plaintiff paid the postage. The distinction is crucial. Gunnells, 348 F.3d at 424 (quoting Amchem, 521 U.S. at 615). Thus, Mrs. Robinson is not "obligated" to pay the amount due on the Note and therefore is not a "borrower" for purposes of RESPA. is generally unproblematic as the non-injured parties can just be sorted out at the remedies phase of the suit."). 28, 2017). at *2. As a result, on January 29, 2018, the Magistrate Judge granted the Robinsons' Motion to Compel in which the Robinsons had sought to have the Court order Nationstar to accept and run scripts created by the Robinsons' expert to extract the relevant data from Nationstar's databases on the sample of loans from which they could test their methodology for identifying members of the proposed classes. First, to the extent that there was a period of time during which Nationstar failed to implement procedures to comply with RESPA, the facts establishing such a gap would be highly relevant to a pattern or practice determination and would be common in every case. 2010). Mortgage servicers seek government aid as forebearance requests soar, How this 39-year-old earns $26,000 a year in California. Under subsections (f) and (g), a loan servicer is not permitted to begin foreclosure proceedings or move for foreclosure judgment if "a borrower submits a complete loss mitigation application" except in certain circumstances. Nationstar also does not argue that the class is not numerous, as there approximately 33,855 members who submitted loss mitigation applications from January 10, 2014 to March 30, 2014. 1994) (noting that a single common issue is sufficient to meet the commonality requirement). Moreover, whether Nationstar engaged in a "pattern or practice" of Regulation X violations, within the meaning of 12 U.S.C. After attempts to modify their loan failed, the Robinsons filed a Class Action Complaint against Defendant Nationstar Mortgage, LLC ("Nationstar") for alleged violations of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. R. Civ. If a borrower is experiencing issues or not getting the help needed, contact your state attorneys general. Because Nationstar employees used standard templates to communicate with borrowers, Oliver concluded that Regulation X violations can be identified through the existence of noncompliant templates and the dates that those templates were in use. Id. Stewart v. Bierman, 859 F. Supp. 2605(f). The servicer "is liable for any economic damages caused by the violation." LLCNo. P. 23(a)(2); Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). Home Loans, No. Particularly where a class may be certified even if individualized damages calculations would be necessary, the incomplete nature of the damages analysis does not provide a basis for striking Oliver's expert testimony. "Mortgage servicers are entrusted with handling significant financial transactions for millions of Americans, including struggling homeowners. Whether an application is complete depends on the requirements of the investor who holds the loan. Nationstar further argues that the Robinsons cannot show that they suffered economic damages as a result of the violation of section 13-316. 2001) (striking expert testimony because of a contingent fee arrangement), aff'd, 43 F. App'x 547 (4th Cir.
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