Class Certification Denied in a HAMP Mortgage Litigation

The Situation

HAMP, a federal program implemented by the Treasury Department in 2009, was designed to assist qualifying homeowners to avoid foreclosure by modifying their first lien mortgages. The program required, among other things, that borrowers participate in a trial period plan, make timely TPP payments based on their stated or reported income, and provide all income and other documentation necessary to assess whether the mortgagor qualified for a permanent modification. The complaint alleged that the financial institution failed to modify mortgage loans in a timely manner after borrowers allegedly successfully completed the trial plan and sought to certify eight state classes of individuals who entered into a HAMP TPP and satisfied certain conditions.

NERA's Role

NERA Senior Vice President Dr. Faten Sabry was retained on behalf of the financial institution to provide economic analysis of class certification in this consumer finance class action and to assess the opposing expert's analysis and conclusions. Dr. Sabry filed expert reports on class certification and testified at deposition.

The Result

The Judge ruled that Plaintiffs failed to demonstrate that class certification was appropriate under Federal Rules of Procedure 23(b)(1), (2), or (3). The Court ruled that the Plaintiffs did not show that common questions of law predominated over the individual questions and had failed to propose a damage methodology that could be applied on a class-wide basis, citing the recent Supreme Court decision, Comcast Corp. v. Behrend. More specifically, the Judge found that an individualized review would be necessary to determine which fees, interest, and other charges were improper, and to determine which charges and/or payments were incorrectly reported to credit bureaus. In addition, the effective trial period end date may have been affected by the parties' course of conduct including, but not limited to, changes in income, inaccuracies of reported income, and representations regarding documentation.