1024.41(h)(1), (4). 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." As for typicality, the named plaintiff must be "typical" of the class, such that that the class representative's claim and defenses are "typical of the claims or defenses of the class" in that prosecution of the claim will "simultaneously tend to advance the interests of the absent class members." Commonality requires that a class have "questions of law or fact common to the class" which are capable of classwide resolution, such that the determination of the truth or falsity of the common issue "will resolve an issue that is central to the validity of each one of the claims in one stroke." Since it is the plaintiff's burden to establish that the requirements of Rule 23 have been met and Mr. Robinson has failed to do so, the Motion for Class Certification will be denied as to any claims that Nationstar violated 12 C.F.R. For purposes of ascertainability, the requirements of 12 C.F.R. The plaintiff's claim "cannot be so different from the claims of absent class members that their claims will not be advanced by" proof of the plaintiff's own individual claim. Nelson, 2017 WL 1167230, at *3 (collecting cases). Accordingly, Nationstar's Motion for Summary Judgment will be granted as to the MCPA claims under sections 13-301 and 13-303. News Ask a Lawyer Since Mrs. Robinson may not bring a claim under Regulation X, she may not be a named class representative. 2003). 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. 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. Order, ECF No. Regulation X, which became effective on January 10, 2014, 78 Fed. 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. The Final Approval Order, approving the Class-wide Settlement, was entered December 11, 2020. 1024.41(c)(1)(ii), which requires a servicer to respond to a loan modification application within 30 days of receipt of a complete loss mitigation application and provide notice of appeal rights; 12 C.F.R. 89, 90, ECF No. Gunnells, 348 F.3d at 424 (quoting Amchem, 521 U.S. at 615). The relevant rule prohibits an attorney from "offer[ing] an inducement to a witness that is prohibited by law." "[N]amed class representatives [must] demonstrate standing through a 'requisite case or controversy between themselves personally and defendants,' not merely allege that 'injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent.'" See 12 C.F.R. 1024.41(f), (g), and (h), and Mr. Robinson's MCPA claim under sections 13-301 and 13-303. 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. 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. 1024.41(a). To the extent that, as Nationstar claims, such a determination could not be fully accomplished through computerized analysis alone, the resources needed to resolve this question would be even greater, such that the importance of having it resolved in a common fashion for all claims would be heightened. After an additional period of expert discovery relating to the class certification motion, discovery closed on December 30, 2018. 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. 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. Contact the Class Action Administrator at 1-855-917-3477 (Toll-Free). See Fed. 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. See Wirtz, 886 F.3d at 719-20. On July 17, 2014, Nationstar informed Mr. Robinson by letter that he did not qualify for a HAMP modification and that since the March 14 loan modification offer had not been accepted, it was withdrawn. At this stage of the proceedings, the Court must rely on facts in the record, and not assertions in the pleadings. 2018); Renfroe v. Nationstar Mortg., LLC, 822 F.3d 1241, 1247 n.4 (11th Cir. Joint Record ("MCC JR") 0907. v. Windsor, 521 U.S. 591, 623-24 (1997). Summ. Where a contingency fee arrangement for expert witnesses is not expressly prohibited by the Maryland Rules of Professional Conduct, the Court declines to find that the fee arrangement here constituted an ethical violation. JA 130. Although she has worked as a bookkeeper for various companies, she was not employed between March and September 2014. Before relating the facts relevant to the Motion for Class Certification, the Court will highlight the relevant procedural history affecting the record before the Court. Neither the rule nor the comment, however, state whether Maryland is one such jurisdiction. The Deed specifies that a person who signs it but "does not execute the note" is a co-signer of the Deed in order to mortgage and convey that person's interest in the Property under the terms of the Deed, but "is not personally obligated to pay the sums secured by this Security Instrument," and her consent is not required to alter the terms of the Deed or the Note. 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. Law 13-101 to 13-411 (West 2015). R. Civ. (2012), and the Maryland Consumer Protection Act ("MCPA"), Md. 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." "[A] trial court should consider the specific factors identified in Daubert where they are reasonable measures of the reliability of expert testimony." Class Cert. 2605(f). Because such information is stored electronically and based on objective criteria, the members of the class will be ascertainable without significant administrative burden. 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. 1024.41(a). In support of these claims, Mr. Robinson testified in his deposition that the $141,000 in interest represents the amount that the Robinsons have been overcharged over the life of the loan. Some courts have held that administrative costs that predate the alleged RESPA violation cannot constitute "actual damages." Marchese v. JPMorgan Chase Bank, N.A., 917 F. Supp. 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." However, the burden is on the plaintiffs to show that other class members exist and that their joinder is impracticable; a court may not rely on mere speculation that numerosity has been satisfied. 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. Id. See Johnson v. Ocwen Loan Servicing, 374 F. App'x 868, 873 (11th Cir. They have a home in Damascus, Maryland purchased by Demetrius Robinson ("Mr. Robinson"). Baez, 709 F. App'x at 983. USCA4 Appeal: 21-1087 Doc: 38 Filed: 06/15/2021 Pg: 9 of 33 Additional facts relevant to the pending motions are set forth below. That provision provides, in parallel, that a loan servicer which does not comply with Regulation X is liable "to the borrower." Rather than striking the testimony, the Court may need to consider permitting supplemental discovery to correct for the lack of relevant data not previously made available to Oliver. For the claims that rely on the timing of a response, Oliver and the Robinsons propose using changes in the Remedy Star substatus or LSAMS codes and documents stored in FileNet to identify the date a loan modification application was received or marked as complete, to identify the date a response was sent, and to count the number of days between events. The Robinsons do not address this argument in their Opposition. Nationstar correctly notes that the Robinsons have not identified a false or misleading statement or representation by Nationstar in the record. Subsequent to the Court's approval, one of the objectors to the settlement filed an appeal. The Court will therefore deny the Motion for Summary Judgment as to this argument. When each event occurseither the mailing of a letter or the changing of a code or substatusthe date is recorded in the databases. 2601-2617 (2012), specifically RESPA's implementing regulations known as "Regulation X," 12 C.F.R. During discovery, Oliver revealed that his fee arrangement with the Robinsons includes a flat fee for his expert services, but that a portion of the fee is contingent on the certification of a class in this case. 702, 703. Stewart v. Bierman, 859 F. Supp. 1024.41, a regulation of RESPA that outlines loss mitigation procedures. While class members would not be eligible for statutory damages unless actual damages are shown, see 12 U.S.C. Presently pending is Nationstar's Motion for Summary Judgment, Nationstar's Motion to Strike, and the Robinsons' Motion for Class Certification. But see Sutton v. CitiMortgage, Inc., 228 F. Supp. . "There are going to be a lot of homeowners who need a home loan modification or other assistance," Raoul says. Rules 19-303.4(b) (2018). Thus, the Court concludes that common computerized analysis can largely answer the question of whether Nationstar violated these RESPA provisions with respect to individual borrowers. Sept. 2, 2015). Deiter, 436 F.3d at 466-67. Compl. 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. MCC JR 0003. Nationstar argues that summary judgment should be granted against Mrs. Robinson because she is not a "borrower" within the meaning of RESPA. 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. . "If a borrower's complete loss mitigation application is denied for any trial or permanent loan modification option available to the borrower," the servicer must state in the required notice to the borrower "the specific reason or reasons for the servicer's determination for each such trial or permanent loan modification and, if applicable, that the borrower was not evaluated on other criteria." Filed by Janie Robinson. Mr. Robinson then submitted another loan modification application on August 25, 2014. In response, on May 30, 2014, Mr. Robinson sent Nationstar the exact same application that he had submitted on March 7, 2014. . 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. See id. . This assertion mischaracterizes the burden of proof in a civil case. . R. Civ. Code Ann., Com. 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."). Specifically, the application itself would have to be reviewed to determine when it was stamped as received by Nationstar. Before the error was discovered, Mr. Robinson appealed this offer as insufficient on April 10, 2014. 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. Actual damages may also include "non-pecuniary damages, such as emotional distress and pain and suffering." 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. 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. 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. 143. On July 16, 2018, the Court affirmed the Magistrate Judge's ruling and required Nationstar to produce all outstanding "records subject to discovery orders." The denial letters stated that the loan's principal balance exceeded the limit under HAMP. 3d 712, 728 (S.D. 2013). v. W.R. Grace & Co., 6 F.3d 177, 188 (4th Cir. 877-683-9363. MSJ JR 0284. at 983 (quoting 12 U.S.C. Although Monday's case specifically addresses Nationstar's actions following the Great Recession, the outcome can affect today's homeowners, says Kwame Raoul, attorney general of Illinois. Many impacted consumers have already received refunds and more will be contacted by the settlement administrator in the coming weeks. Fed. An "unfair or deceptive" trade practice includes a "false . Fla. 2009), aff'd, 398 F. App'x 467, 471 (11th Cir. Nov. 12, 2011), the court held that a plaintiff who signed a deed of trust on a property and was a joint tenant with her son, but did not sign the promissory note, had constitutional standing to bring a RESPA claim because she stood to be injured if a default on her son's loan led to the loss of her equitable interest in the property. Portland, OR 97208-3560. Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. The Robinsons' designated expert, Geoffrey Oliver, has offered a methodology for identifying class members and when their rights under RESPA and the MCPA have been violated. While the date that Nationstar's systems came into compliance, is unknown, Nationstar's systematic noncompliance presents common questions of law and fact for all class members. 2d 452, 468 (D. Md. 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." 2006). Once an underwriter is assigned, that employee double-checks whether the application contains all required documentation and is complete. 1024.41(b)(1), (b)(2)(i)(B), and (c)(1)(ii) and Md. Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act ("Regulation X"), 78 Fed. at 151. 1024.41 In February 2014, after their income had further decreased, the Robinsons ceased making payments on the mortgage loan. ORDER Scheduling Settlement Conference for Wednesday, October 26, 2016 at 10:30 a.m. 1967). A dispute of material fact is only "genuine" if sufficient evidence favoring the nonmoving party exists for the trier of fact to return a verdict for that party. UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND. 1024.41(b)(1). J. 2605(f)(1)(A)). 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. Auto. Co, 445 F.3d 311, 318 (4th Cir. 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. See Tagatz, 861 F.2d at 1042. 1994) (noting that a single common issue is sufficient to meet the commonality requirement). Feb. 14, 2017) (holding that the plaintiff sufficiently pleaded damages under the MCPA where she alleged that the defendant's failures to respond "resulted in the continual assessment of accruing interest, fees and costs on the mortgage account," as well as "stress, physical sickness, headaches, sleep deprivation, worry, and pecuniary expenses"). The Magistrate Judge ordered Nationstar to run those scripts and return the electronic data to the Robinsons. Under Count I, the Robinsons allege a violation of 12 C.F.R. 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. Part 1024). 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." 2010). As to the third denial on November 7, 2013, Nationstar informed the Robinsons that the loan modification application was denied because the mortgage loan was not in default. 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. Since Mr. Robinson has the same goal as the other class members of establishing that Nationstar violated Regulation X with respect to his loan, he will adequately protect their interests. Fed. 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). That is not so here. Furthermore, according to Nationstar, to identify the content of a letter sent to a borrower, the letter itself must be viewed. Id. Regulation X's effective date reflected "an intent not to apply it to conduct occurring prior to that date." Moreover, the conflict must not be "merely speculative or hypothetical." That notice must be provided within 30 days of receiving the complete loss mitigation application. Campbell v. Nationstar Mortg., 611 F. App'x 288, 297-98 (6th Cir. When considering whether expert testimony is reliable or should be excluded, the court considers the following factors: "When an expert's report or testimony is 'critical to class certification,'" the district court "must make a conclusive ruling on any challenge to that expert's qualifications or submissions before it may rule on a motion for class certification." 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). Northern District of Ohio, ohnd-1:2021-cv-00452 of 0 An error occurred while loading the PDF. Nationstar argues that it should be granted summary judgment on all of the RESPA claims because Nationstar was required to comply with Regulation X only as to a borrower's first loss mitigation application, and the Robinsons' March 7, 2014 application was not their first loan modification application. Robinson, 2015 WL 4994491, at *4 (citing Marchese v. JPMorgan Chase Bank, N.A., 917 F. Supp. Although similar to Rule 23(a)'s commonality requirement, the test for predominance under Rule 23(b)(3) is "far more demanding" and "tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." However, Nationstar did not comply with all requirements of Regulation X, which became effective on January 10, 2014. 15-0925, 2015 WL 5165415, at *4 (D. Md. The loan is then evaluated for loan modification options. 2010). The Robinsons also claim as damages interest overcharges of approximately $141,000. which has the capacity, tendency, or effect of deceiving or misleading consumers." Indeed, Nationstar does not seriously contest the commonality prong. Compl. In support of this argument, Nationstar contends that the ethical rules for attorneys prohibit contingency fee arrangements with expert witnesses. Corp., 546 F.2d 530, 538-39 (3d Cir. Nationstar further argues that summary judgment must be entered in its favor on the Robinsons' claims under 12 C.F.R. 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. Sep. 9, 2019). Make your practice more effective and efficient with Casetexts legal research suite. In Frank v. J.P. Morgan Chase Bank, N.A., No. Those claims arose from Nationstar's alleged 2010). Nationstar's Motion to Strike will be DENIED. 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. McLean v. GMAC Mortg. 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. The Court does not find such a prohibition in the Maryland Attorneys' Rules of Professional Conduct. In their Motion for Class Certification, the Robinsons seek certification of two classes. An 85-year Harvard study found the No. Id. While the particulars of Mr. Robinson's application process will not necessarily prove that Nationstar mishandled the applications of other individual class members, these facts fairly encompass the types of claims that would be brought by the members of the class. 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. 1024.41(b)(2)(B). Your Email Please enter your email. Every mortgage has a unique loan number that can be used to identify the borrower and the loan in each of the four databases. 28, 2017). On February 10, 2022, the Court of Appeals issued a decision affirming the Final Approval Order. Fed. 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. If the Court approves the Settlement and it becomes final and effective, and you remain in the Settlement Class, you will receive a payment. Actual damages may include late fees; denial of credit or access to the full amount of a credit line; out-of-pocket expenses incurred in dealing with a RESPA violation, such as expenses for preparing and copying correspondence; and lost time and inconvenience, including time spent away from employment while preparing correspondence "to the extent it resulted in actual pecuniary loss." 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. Co v. Adair, 764 F.3d 347, 359-60 (4th Cir. 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." 1024.41(c)(1)(i) and (d), because the Robinsons made no showing that the Rule 23 requirements were met. Corp. ("McLean II"), 398 F. App'x 467, 471 (11th Cir. 12 C.F.R. Law 13-316(c), which requires a response to a mortgage servicing complaint or inquiry within 15 days. Sept. 29, 2021). 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. 2014))). After March 2014, Mrs. Robinson was primarily responsible for communicating with Nationstar and PaCE. 3d 249, 266 (D. Md. Ass'n, 375 F.2d 648, 653 (4th Cir. 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. Filing fee paid $ 402, Receipt number AOHNDC-10680087. After several customers of Green Earth Services canceled its services, the Robinsons sought loss mitigation in the form of a loan modification from Nationstar. 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. Id. 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. But, Nationstar is correct that Owens-Benniefield may United States v. Valona, 834 F.2d 1334, 1344 (7th Cir. 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. See D. Md. 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. Nationstar has no process for standardizing file names. See Stillmock, 385 F. App'x at 274 ("[T]here is no reasoned basis to conclude that the fact that an individual plaintiff can recover attorney's fees in addition to statutory damages of up to $1,000 will result in enforcement of [the Fair Credit Reporting Act] by individual actions of a scale comparable to the potential enforcement by way of class action."). Like the class members, to prove his case, Mr. Robinson will have to show that Nationstar failed to timely and appropriately respond to his loan modification applications by pointing to the dates of his submissions and the dates and contents of Nationstar's responses. On June 16, 2017, the Magistrate Judge bifurcated discovery to focus initially on the merits of the Robinsons' individual claim and the question of class certification, ordered Nationstar to disclose electronic records so that the Robinsons could sample Nationstar's data for purposes of a motion for class certification, and limited the discovery of such records to a sample of 400 loans from the period from January 10, 2014 to June 30, 2014 and "to areas which inform" the Court's decision on class certification, namely whether Nationstar was in compliance with Regulation X. Mot.
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