Thus, the Court concludes that, while Nationstar may have defenses as to some borrowers, the common proof that establishes the asserted violations, as well as the common question of whether the Robinsons can prove a pattern-or-practice violation by Nationstar, will predominate over the individual issues as to these claims. Id. After March 2014, Mrs. Robinson was primarily responsible for communicating with Nationstar and PaCE. Although the parties have not offered specific details on the nature and timing of those costs and fees, it is reasonable to infer that at least some portion of them were incurred after they submitted their March 7, 2014 loan modification application and after Nationstar had violated Regulation X. 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." 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. Individual damages would be below the cost of litigation even if each class member could establish that Nationstar's conduct consisted of a pattern or practice of violating Regulation X, because the statute limits such damages to $2,000 per borrower. (2000) (reflecting that the prior version of the rules of professional conduct prohibited an attorney from "acquiesc[ing] in the payment of compensation to a witness contingent on the content of his testimony or the outcome of the case"). Certification will also be denied as to the claim under 12 C.F.R. If the loan servicer denies a loan modification application where the complete application was received more than 90 days before a foreclosure sale, the servicer must allow the borrower to appeal and must respond to the appeal within 30 days of receiving it by stating in writing whether the appeal was granted and a loan modification will be offered. Nationstar further argues that summary judgment must be entered in its favor on the Robinsons' claims under 12 C.F.R. 1024.41(f), (g). Since Mrs. Robinson may not bring a claim under Regulation X, she may not be a named class representative. See Torres v. Mercer Canyons Inc., 835 F.3d 1125, 1137 (9th Cir. Mar. The language of the regulation states not that a loan servicer must comply with Regulation X's requirements only for a borrower's first loss mitigation application, but that a loan servicer must "comply with the requirements" only "for a single complete loss mitigation application." Accordingly, a loan servicer must comply with Regulation X as to the first loss mitigation application submitted after the effective date. SETTLEMENT CONFERENCE ORDER by District Judge Ronald A. 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. Code Ann., Com. Back To Top. Fed. 28, 2017). Every mortgage has a unique loan number that can be used to identify the borrower and the loan in each of the four databases. If the application is complete "more than 37 days before a foreclosure sale," the servicer may not move for a foreclosure judgment or conduct a foreclosure sale, but instead must first "[e]valuate the borrower for all loss mitigation options available to the borrower," send to the borrower "a notice in writing stating the servicer's determination of which loss mitigation options, if any, it will offer," and include a statement of applicable appeal rights. In analyzing this question, a court compares the class representative's claims and defenses to those of the absent class members, considers the facts needed to prove the class representative's claims, and assesses the extent to which those facts would also prove the claims of the absent class members. 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. 1024.41 (2019), and the Maryland Consumer Protection Act ("MCPA"), Md. Fed. Nationstar also asserts that the Robinsons have not identified evidence sufficient to support their MCPA claims. Co., 595 F.3d 164, 179-80 (4th Cir. Courts have wide discretion to certify a class based on their familiarity with the issues and potential difficulties arising in class action litigation. 1024.41. The Robinsons own a business called Green Earth Services, which provides waste and recycling services to clients. On March 8, 2014, Nationstar sent to Mr. Robinson a letter stating that he was ineligible for a HAMP modification, but on March 15, 2014, it sent a different letter offering a loan modification under which Mr. Robinson would receive a reduced interest rate for two years. Based on the language of Regulation X, the Court finds that a loss mitigation application submitted before the effective date does not count as the single application subject to the regulation. Code Ann., Com. Likewise, Oliver's expert report provides no analysis on how Nationstar's databases allow for a systematic determination whether Nationstar failed to inform borrowers of the specific reasons for the servicer's decision to deny each loan modification option, in violation of 12 C.F.R. 2014))). For the Regulation X provisions that require the servicer to communicate specific information to a borrower, Oliver's methodology involves reviewing a sample of loan files and identifying a specific communication to a borrower based on the file name. Moreover, because borrowers often submit multiple loan modification applications, and because Nationstar's data is stored at the loan level, not at the application level, Nationstar claims that it is not possible to tell from the data alone, without reviewing the files, whether a status or code change is in response to a specific loan modification application. See Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974) ("In determining the propriety of a class action, the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 are met."). Nationstar ultimately became the servicer of the Robinsons' loan. The fee arrangement will be considered as an issue potentially affecting the credibility, rather than the admissibility, of the expert testimony. "There are going to be a lot of homeowners who need a home loan modification or other assistance," Raoul says. The fact that Oliver's methodology has not been subjected to peer review and that he has not published any articles about it does not invalidate it. In contrast, Nationstar maintains that there is no way to reliably identify when a loss mitigation application is submitted or complete using codes and status change entries in its existing software, and that the only way to make those determinations is through a file-by-file review. 26-1. A borrower may enforce violations of these provisions through a private cause of action pursuant to 12 U.S.C. A magistrate granted preliminary approval. J. In December 2020, Nationstar (d/b/a Mr. Cooper) reached a settlement with the CFPB, the State Attorneys General, and certain state mortgage regulators to resolve old regulatory matters. hbbd```b``63@$urD29 NIL5 "#>9$ 0 3 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. Gariety v. Grant Thornton, LLP, 368 F.3d 356, 366 (4th Cir. For the foregoing reasons, Nationstar's Motion for Summary Judgment will be GRANTED IN PART and DENIED IN PART. At this stage of the proceedings, the Court must rely on facts in the record, and not assertions in the pleadings. Thus, a loan servicer could not have complied with Regulation X for a loss mitigation application submitted before January 10, 2014 because there was no regulation in effect with which to comply. TDC-14-3667 (D. Md. "When these issues were identified several years ago, we immediately made restitution to our impacted customers and invested in process improvements to prevent reoccurrence," Jay Bray, CEO and chairman of Mr. Cooper said in a statement Monday. On July 16, 2018, the Court affirmed the Magistrate Judge's ruling and required Nationstar to produce all outstanding "records subject to discovery orders." R. Evid. at *5. Current Outline Item. 2003). The Robinsons appealed the Magistrate Judge's ruling because it did not require Nationstar to run a structural script for a third database. Nationstar. P. 23(a)(4); Ward v. Dixie Nat'l Life Ins. Factors "pertinent" to the predominance and superiority requirements include the "class members' interests in individually controlling" the litigation, whether litigation on the matter has already been begun by other class members, whether concentrating the litigation in one forum is desirable or undesirable, and the potential difficulties managing the class action presents. Contact Fraudfighters.net Current Class Settlements Search Our Successes Practice Areas Class Actions Financial Services & Economic Justice TDC-14-3667, 2019 WL 4261696 (D. Md. 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. 2605(f). A conflict of interest will not defeat the adequacy requirement when "all class members share common objectives[,] the same factual and legal positions, and . 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. 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 Consumer Financial Protection Bureau (CFPB) today ordered Nationstar Mortgage LLC to pay a $1.75 million civil penalty for violating the Home Mortgage Disclosure Act (HMDA) by consistently failing to report accurate data about mortgage transactions for 2012 through 2014. . It follows that only borrowers may bring a claim that a loan servicer has violated Regulation X. 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. When combined with the state settlements, Nationstar is on the hook to pay a total of $91 million overall: $85 million to harmed consumers and $6 million in civil penalties. 12 U.S.C. 2605(f)(1)(A)). Co, 445 F.3d 311, 318 (4th Cir. But where the broad methodology is sound, the lack of consideration of unproduced data cannot provide a basis to strike the expert witness's testimony. 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. Id. In their Motion for Class Certification, the Robinsons seek certification of two classes. 2011) ("[T]he possibility that a well-defined class will nonetheless encompass some class members who have suffered no injury . Nationstar's reliance on Accrued Financial Services v. Prime Retail, Inc., 298 F.3d 291 (4th Cir. It will be otherwise denied. The predominance and superiority requirements under Rule 23(b)(3) are designed to ensure that the class action "achieve[s] economies of time, effort, and expense, and promote[s] . that it is improper to pay an expert witness a contingent fee." 143. Marchese v. JPMorgan Chase Bank, N.A., 917 F. Supp. Code Ann., Com. JA 130. Tenn. Aug. 28, 2018) (holding that a spouse who signed a deed of trust stating that a person who did not sign the promissory note was not obligated on the security instrument, but did not sign the promissory note, was not a borrower under RESPA). Here, even though the Robinsons' March 7, 2014 loss mitigation application was not the Robinsons' first such application, it was their first submitted after the effective date of Regulation X. Id. Furthermore, Oliver states that since Nationstar employees used templates to communicate with borrowers, he could determine whether there were violations of certain RESPA provisions based on entries showing that Nationstar employees used templates that did not comply with RESPA. The commonality requirement is also met. Law 13-101 to 13-411 (West 2015). Cf. MCC JR 318, 530-531. 2601-2617 (2012), specifically RESPA's implementing regulations known as "Regulation X," 12 C.F.R. The "Maryland Subclass" consists of "[a]ll persons in the State of Maryland that submitted a loss mitigation application to Nationstar after January 10, 2014, and through the date of the Court's certification order." More importantly, while a determination of an individual violation would not require extensive analysis, specific proof of a pattern or practice of RESPA violations in any individual case would be a substantial undertaking, likely requiring the same type of complex analysis proposed here: a sampling of Nationstar files, compilation of all relevant data for such files, expert analysis to identify violations, and an assessment whether the identified violations are sufficient to establish a pattern or practice of violations. The economic challenges and burdens that homeowners currently face are similar to the ones experienced following the Great Recession. Nationstar argues that summary judgment should be granted against Mrs. Robinson because she is not a "borrower" within the meaning of RESPA. They do not seek damages in the Amended Complaint for emotional distress or include such a claim in their itemized list of damages submitted in discovery. 12 U.S.C. Oliver's expert report focuses on the use of Nationstar's internal databases to determine whether Nationstar has systematically failed to comply with various requirements of Regulation X. The CFPB estimates about 40,000 borrowers were harmed by Nationstar's allegedly unfair and deceptive practices, according to a statement released Monday. In contrast, the Court finds that there is a genuine issue of material fact whether the administrative costs and fees incurred by the Robinsons resulted from Nationstar's RESPA violations. A servicer that fails to comply with Regulation X is liable for "any actual damages to the borrower as a result of the failure" to comply. 218. See Tyson Foods v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016) ("When 'one or more of the central issues in the action are common to the class and can be said to predominate, the action may be considered proper under Rule 23(b)(3) even though other important matters will have to be tried separately, such as damages or some affirmative defense peculiar to some individual class members.'" See, e.g. ("MCC") 2, ECF No. On August 26, 2014, Nationstar mailed another letter acknowledging (kw2s, Deputy Clerk) Download PDF Jennings' office said that these new standards are more robust than existing law and will be in place for three years starting in January 2021. In Washington v. Am. Nationstar asserts that Oliver's testimony should be stricken because this fee arrangement includes an unethical contingency fee. Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act ("Regulation X"), 78 Fed. Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. Make your practice more effective and efficient with Casetexts legal research suite. P. 23(a)(1). If a class is ascertainable, it must then satisfy all four elements of Rule 23(a): numerosity, commonality, typicality, and adequacy. "We want to hear from you," Raoul says. 1024.41(c)(1)(ii), which requires a servicer to respond to a completed loan modification application; or Md. The Federal Rules of Evidence do not prohibit these kinds of arrangements. Id. RECITALS In assessing the Motion, the Court views the facts in the light most favorable to the nonmoving party, with all justifiable inferences drawn in its favor. A complete loss mitigation application is "an application in connection with which a servicer has received all the information that the servicer requires from a borrower in evaluating applications for the loss mitigation options available to the borrower." Cal. Wirtz v. Specialized Loan Servicing, LLC, 886 F.3d 713, 719-20 (8th Cir. 12 U.S.C. A class action claimed Nationstar violated consumer protection laws in servicing class members' mortgage loans. application to Nationstar after January 10, 2014, and through the date of the Court's . 1967). Stewart v. Bierman, 859 F. Supp. See Krakauer v. Dish Network, L.L.C., 925 F.3d 643, 658 (4th Cir. In Frank, due to the state's community property laws, the mortgage was "a community debt," and after her husband died, the plaintiff "was therefore obligated to make the loan payments" because of her interest in the home. 1024.41(a). The Court will address the varying claims in turn. But see Ayres v. Ocwen Loan Servicing, LLC, 129 F. Supp. loan" did not have standing to bring a RESPA claim); Nelson v. Nationstar Mortg. P. 23(b)(3). . These letters are based on standard Nationstar templates, and the code reflects the type of letter sent. Tagatz v. Marquette Univ., 861 F.2d 1040, 1042 (7th Cir. In order of priority, the parties proposed that the $3,000,000 settlement fund pay for administrative expenses up to $300,000, attorneys' fees, a class representative award, and . 1024.41(c) and (d) impose obligations on a loan servicer once it receives a "complete loss mitigation application" and once the completed application is denied.
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