See id. Furthermore, to the extent that the Robinsons' claim is that Nationstar falsely stated that it would evaluate the Robinsons for all available loss mitigation plans, the Robinsons point only to statements in letters that the Robinsons "may" be eligible for certain non-HAMP loan modification programs. "); cf. Id 1024.41(c)(1). Johnson, 374 F. App'x at 873; Keen v. Ocwen Loan Servicing, LLC, No. 1024.41(h)(1), (4). 13-316(e)(1). For the foregoing reasons, Nationstar's Motion for Summary Judgment will be GRANTED IN PART and DENIED IN PART. 3d 254, 274-75 (S.D.N.Y. R. Civ. The Robinsons' Motion for Class Certification will be GRANTED IN PART and DENIED IN PART. Corp., 546 F.2d 530, 538-39 (3d Cir. 1024.41(c)(1)(i) and (d), because the Robinsons made no showing that the Rule 23 requirements were met. Compl. However, if the costs are shown to have been incurred in response to the RESPA violation, the Court finds that they would be actual damages within the meaning of 12 U.S.C. If you are a member of the Settlement Class, you must submit a completed Claim Form to receive a payment. Id. 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. Nationstar broke that trust by engaging in unfair and deceptive practices," Kraninger added. (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"). See Robinson v. Nationstar Mortg. Presently pending is Nationstar's Motion for Summary Judgment, Nationstar's Motion to Strike, and the Robinsons' Motion for Class Certification. P. 23(b)(3). 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 In its complaint, filed in federal district court in the District of Columbia, the Bureau alleges that Nationstar engaged in unfair and deceptive acts and practices in violation of the Consumer Financial Protection Act of 2010, violated the Real Estate Settlement Procedures Act (RESPA), and violated the Homeowner's Protection Act of 1998 (HPA). For example, it was undisputed that on May 30, 2014, Mr. Robinson, in response to Nationstar's requests for additional information, resubmitted the same information sent with his March 2014 loan modification application. 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. The regulation is silent on whether a loss mitigation application submitted before January 10, 2014 could qualify as the "single complete loss mitigation application." Anderson, 477 U.S. at 248. 1024.41(a). 702, 703. Nationstar argues that summary judgment should be entered on the Robinsons' MCPA claim under section 13-316 because the Robinsons have not shown that they submitted a complaint or inquiry that triggers a duty to respond. 2605(f)(1)(A); see 12 C.F.R. Order at 2, ECF No. 28, 2017). 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. Finally, Nationstar argues that summary judgment should be entered on the RESPA claims because the Robinsons cannot establish that they have suffered actual damages as a result of Nationstar's violations of Regulation X. Id. . Because Oliver's methodology is reliable within the meaning of Federal Rule of Civil Procedure 702 and Daubert, Nationstar's Motion to Strike will be denied. In their Motion for Class Certification, the Robinsons seek certification of two classes. 1024.41(c)(1)(i)-(ii), (g). Whether an application is complete depends on the requirements of the investor who holds the loan. On July 16, 2018, the Court affirmed the Magistrate Judge's ruling and required Nationstar to produce all outstanding "records subject to discovery orders." 10696, 10836. As the Supreme Court noted in Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999), Daubert "made clear that its list of factors was meant to be helpful, not definitive," and it is not always the case that an expert witness's claim will have been subjected to peer review. Nationstar Call Settlement Administrator. Law 13-316(e)(1), and "actual damages," 12 U.S.C. The Nationwide Class and the Maryland Subclass are ascertainable and satisfy the Rule 23(a) factors. 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. Gunnells, 348 F.3d at 427-28. Nationstar correctly notes that the Robinsons have not identified a false or misleading statement or representation by Nationstar in the record. Ballard v. Blue Shield of S.W. Id. Mot. This abandoned high school was converted into a 31-unit apartment building, number of unlawful practices in handling mortgages following the Great Recession. Auto. . An 85-year Harvard study found the No. 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. Subsequent Loss Mitigation Application. 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. 15-3960, 2017 WL 623465, at *8 (D. Md. Thus, based on his report and experience, Oliver concludes that Nationstar "failed to comply" with Regulation X and that it is possible to "identify violations" of Regulation X "using the methodologies" he described, without the necessity of a file-by-file review. Nationstar's Motion for Summary Judgment will be granted as to Tamara Robinson. 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). which has the capacity, tendency, or effect of deceiving or misleading consumers." During this time and up until September 25, 2017, Nationstar had not begun any foreclosure proceedings on the Robinsons' home. P. 23(a)(1). 222. 1024.41. Code Ann., Com. Wirtz v. Specialized Loan Servicing, LLC, 886 F.3d 713, 719-20 (8th Cir. 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. Nelson, 2017 WL 1167230, at *3 (collecting cases). In Washington v. Am. Md. See id. 2010) (considering consistency of results that provide finality to the defendant as favoring a finding of superiority). 1024.41(b)(2)(B), which requires that an acknowledgment letter be sent within five days of receipt of a loan modification application; or 12 C.F.R. 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] . It follows that only borrowers may bring a claim that a loan servicer has violated Regulation X. 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. Nationstar filed a notice of settlement and a joint motion to proceed before a magistrate . Code Ann., Com. After an additional period of expert discovery relating to the class certification motion, discovery closed on December 30, 2018. 2605(f). 2012) (citing Lloyd v. Gen. Motors Corp., 916 A.2d 257, 277 (Md. According to Oliver, if he used incorrect data, that was a result of the limited data fields and definitions provided to him. These letters are based on standard Nationstar templates, and the code reflects the type of letter sent. 2006). Furthermore, according to Nationstar, to identify the content of a letter sent to a borrower, the letter itself must be viewed. Law 13-316(c), the Court will grant class certification as to those class members and claims. (quoting 7AA Charles Allan Wright et al., Federal Practice and Procedure 1778 (3d ed. The Federal Rules of Evidence do not prohibit these kinds of arrangements. 1967). Although she has worked as a bookkeeper for various companies, she was not employed between March and September 2014. Gunnells, 348 F.3d at 429 ("[T]he need for individualized proof of damages alone will not defeat class certification."). See Wirtz, 886 F.3d at 719-20. Finally, the named plaintiff must "fairly and adequately protect the interests of class" without a conflict of interest with the absent class members. Code Ann., Com. That's one reason why the settlement, particularly the provisions requiring Nationstar to adhere to enhanced standards, is crucial. 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. In assessing this element, "numbers alone are not controlling" and a district court should consider "all of the circumstances of the case." The distinction is crucial. 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."). The Final Approval Order, approving the Class-wide Settlement, was entered December 11, 2020. In its Motion to Strike, Nationstar argues that Oliver's methodology has not been peer reviewed, has a high error rate because he used the wrong data fields to identify the dates of events, failed to consider the timing of foreclosure sales relative to the dates of the submission of loan modification applications, and did not propose a specific methodology for calculating damages. at 151. See 12 C.F.R. Filed by Janie Robinson. Day to address discovery issues. Rather than rendering the testimony inadmissible, the fee arrangement is relevant to the expert's credibility. 2601(a). . Moreover, Nationstar cites no authority for the proposition that a loss mitigation application would not be deemed "complete" for purposes of RESPA upon such a formal designation, and any rule that would deem such an application incomplete in the event that an underwriter subsequently decided to ask for additional material would be entirely unworkable. Nationstar admits that in March 2014, two months after the implementation date of Regulation X, it had not yet updated its systems to comply with the regulation. Many impacted consumers have already received refunds and more will be contacted by the settlement administrator in the coming weeks. 16-0307, 2017 WL 1167230, at *3 (E.D.N.C. The Court agrees that costs, including administrative costs, "incurred whether or not the servicer complied with its obligations" are not actual damages "caused by, or 'a result of,'" the RESPA violation, whether or not they occurred before or after the violation. Id. 2013); Poindexter v. Teubert, 462 F.2d 1096, 1097 (4th Cir. Where the results of such an analysis would apply to any individual claim, it would be highly inefficient and wasteful to require duplicative analysis in each such case. 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." . v. Nationstar Mortgage LLC. Thus, the nature of the proof of whether there has been a pattern or practice of RESPA violations provides substantial support for a finding of predominance. Mortgage servicers seek government aid as forebearance requests soar, How this 39-year-old earns $26,000 a year in California. Law 13-301 and 303. 10696, 10708, provides that "[a] servicer is only required to comply with the requirements of this section for a single complete loss mitigation application for a borrower's mortgage loan account." In addition to the fee paid to PaCE, the Robinsons also assert as damages $50.58 in administrative costs, specifically postage fees for sending information relating to their loan modification application to Nationstar, and 120 hours of time expended on the loan modification process. WASHINGTON, D.C. 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. 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. 2605(f)(2), "Rule 23 contains no suggestion that the necessity for individual damage determinations destroys commonality, typicality, or predominance, or otherwise forecloses class certification." Sept. 2, 2015). As for the claims of errors in Oliver's analysis, although this criticism is couched as his "misunderstanding the nature of Nationstar's various databases," Nationstar largely challenges Oliver's failure to use particular data fields, some which were never made available to him. See, e.g., Ward v. Dixie Nat. The Fourth Circuit has stated that 74 members is "well within the range appropriate for class certification," Brady v. Thurston Motor Lines, 726 F.2d 136, 145 (4th Cir. After attempts to modify the 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. 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. MCC JR 318, 530-531. Fed. Nationstar's claim that the above-described coding is not dispositive, because an underwriter could subsequently determine that more information was needed after all, is not persuasive. . Law 13-316(c), which requires a response to a mortgage servicing complaint or inquiry within 15 days. 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. 1 . Nationstar also seeks summary judgment on the Robinsons' claims under the MCPA, which include claims of misleading statements in connection with the collection of consumer debts, in violation of section 13-301(1), (3) and section 13-303(4)-(5) of the MCPA, and claims that Nationstar did not respond to consumer inquiries within 15 days, in violation of section 13-316(c) of the MCPA. Co., 595 F.3d 164, 179-80 (4th Cir. Ins. Id. 218. On February 10, 2022, the Court of Appeals issued a decision affirming the Final Approval Order. Id. 12 U.S.C. From this approach, Oliver concluded that for approximately 60 percent of the sampled loans, Nationstar failed to comply with the requirement that it inform the borrower of loss mitigation application determination within 30 days of receiving a complete application. 1024.41(h)(1). News Ask a Lawyer 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. 2601-2617 (2012), specifically RESPA's implementing regulations known as "Regulation X," 12 C.F.R. They have claimed $141,000 in interest; $6,147.12 in fees assessed by Nationstar; $2,275 in consulting fees; $50.58 in administrative costs; and lost time and labor of approximately 120 hours; as well as punitive and statutory damages. Certification will not be granted as to the claims under 12 C.F.R. During this period, in August 2013, the Robinsons retained a forensic loan auditor, Professional Compliance Examiners ("PaCE"), and paid it $2,275 to help them communicate with Nationstar. Nationstar's reliance on Accrued Financial Services v. Prime Retail, Inc., 298 F.3d 291 (4th Cir. Law 13-316(c). Cent. Am. P. 23(a)(2); Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). Where the Robinsons may be able to show that they have suffered actual damages, their claim for statutory damages, upon a showing that Nationstar has engaged in a pattern or practice of violating Regulation X, remains viable. 1987) (holding, in the context of an informant who is paid a contingent fee, that the fee should be treated "as a credibility factor"). Accordingly, a loan servicer must comply with Regulation X as to the first loss mitigation application submitted after the effective date. cause[d] damages retroactively" and "transmogrifie[d]" the costs that predate the RESPA violation into damages. Md. Mr. Robinson then submitted another loan modification application on August 25, 2014. A class action may be maintained under Rule 23(b)(3) if common questions of law or fact "predominate over any questions affecting only individual members" and a "class action is superior to other available methods for fairly and efficiently adjudicating the controversy." 2018). Rules Prof'l Conduct 3.4 cmt. Co v. Adair, 764 F.3d 347, 359-60 (4th Cir. The record is undisputed that as of September 25, 2017, Nationstar had neither started foreclosure proceedings nor moved for foreclosure judgment on the Robinsons' home. Bouchat, 346 F.3d at 522. Although based on imperfect data, Oliver's expert report reveals that such analysis can substantially address whether Nationstar violated 12 C.F.R. Robinson, 2015 WL 4994491, at *4 (citing Marchese v. JPMorgan Chase Bank, N.A., 917 F. Supp. 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. The Complaint asserts two claims. Motor Freight System, Inc. v. Rodriguez, 431 U.S. 395, 403 (1977))). See Krakauer v. Dish Network, L.L.C., 925 F.3d 643, 658 (4th Cir. "[A]n evaluation of the merits to determine the strength of plaintiffs' case is not part of a Rule 23 analysis." When each event occurseither the mailing of a letter or the changing of a code or substatusthe date is recorded in the databases. 1990) (citing Universal Athletic favorably for this proposition). The economic challenges and burdens that homeowners currently face are similar to the ones experienced following the Great Recession. 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. v. DEMETRIUS ROBINSON; TAMARA ROBINSON, Plaintiffs - Appellees, v. . A code is entered in Remedy Star when the letter is sent. Moreover, the possibility that some members of the class as defined by the Robinsons have not suffered any injury cognizable under RESPA or MCPA does not preclude certifying the class. In the case of Tony Robinson and Debra Robinson vs Nationstar Mortgage, LLC, the appeals court ruled that the lender did not actually have the right to foreclose on the property. Under subsection (h), if a loan servicer receives a complete loss mitigation application more than 90 days before a foreclosure sale but then denies the application, the servicer must allow the borrower to appeal and must respond to the appeal within 30 days of receiving it. 1024.41(b)(1). Id. UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND. Marchese v. JPMorgan Chase Bank, N.A., 917 F. Supp. 89, 90, ECF No. 1993) (quoting Blum v. Yaretsky, 457 U.S. 991, 1001 n.13 (1982)). Thus, Mrs. Robinson is not "obligated" to pay the amount due on the Note and therefore is not a "borrower" for purposes of RESPA. 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. Reg. At this stage of the proceedings, the Court must rely on facts in the record, and not assertions in the pleadings. 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. In Baez v. Specialized Loan Servicing, LLC, 709 F. App'x 979 (11th Cir. Co, 445 F.3d 311, 318 (4th Cir. 2001) (striking expert testimony because of a contingent fee arrangement), aff'd, 43 F. App'x 547 (4th Cir. The company has already paid about $57.5 million in restitution to affected consumers, according to the CFPB. 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. Local R. 105.6. The first of these prerequisites is that the class must exist and be "readily identifiable" or "ascertainable" by the court through "objective criteria." Gym, Recreational & Athletic Equip. On September 9, 2014, Nationstar sent Mr. Robinson a letter denying the loan modification application and stating that it could not offer him any modification because his income was not high enough to cover the mortgage payments under any modification option. At different stages in the processing of a loan modification application, Nationstar employees enter certain codes into certain databases, and certain information can be stored and accessed through those applications. 2013) (holding that the plaintiff sufficiently pleaded actual injury or loss under the MCPA where he alleged that he suffered "bogus late fees," damage to his credit, and attorney's fees); see also Cole v. Fed'l Nat'l Mortg. Since the MCPA and Regulation X allow recovery only of "economic damages," Md. Subsequent to the Court's approval, one of the objectors to the settlement filed an appeal. The Robinsons do not address this argument in their Opposition. For the following reasons, the Motion for Summary Judgment will be GRANTED IN PART and DENIED IN PART; the Motion to Strike will be DENIED; and the Motion for Class Certification will be GRANTED IN PART and DENIED IN PART. 2014). In addition to the fines and restitution, Delaware Attorney General Kathleen Jennings said the settlements require Nationstar to adhere to increased "servicing standards." Nationstar will need to enhance its policies and processes around how it handles consumer complaints, performs escrow analyses and conducts audits, for example. 2d 873, 883 (D. Md. 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. Id. 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. at 359-60. To calculate damages, Oliver stated that he would look to data from the LSAMS application, including data tables that contain fee information, to identify fees that would not have been charged but for Nationstar's various RESPA violations, but that he was not able to evaluate this data in his report because it had not been provided to him. "We want to hear from you," Raoul says. Cal. at *5. 2605(f)(1)(A)). Nationstar said in a statement that its settlements were based on "loan-servicing practices" that the company used between 2010 and 2015 and has since discontinued. A "borrower" may enforce the provisions of Regulation X pursuant to 12 U.S.C. 2605(f).
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