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In a Victory for Borrowers, Fourth Circuit Affirms $3 Million Settlement in Class Action against Nationstar Mortgage

Date Published

Feb 14, 2022

Publication

Law360

RICHMOND, VA – In a victory for borrowers, the Fourth Circuit issued an opinion in Robinson v. Nationstar Mortgage LLC, affirming approval of a settlement between mortgage servicer Nationstar and a class of borrowers. The Fourth Circuit affirmed the district court’s approval of the settlement as fair, reasonable, and adequate.

The 2008 financial crisis revealed that many mortgage servicers did not have the infrastructure to manage an influx of loss mitigation applications–the process by which a homeowner who has fallen behind on a mortgage seeks relief from the servicer–which prompted the Consumer Financial Protection Bureau (CFPB) to amend the Real Estate Settlement Procedures Act (RESPA) in 2013. The amendments, which became effective in 2014, require servicers to follow strict procedures for processing loss mitigation applications and to disclose certain information to borrowers about the status of their application. Plaintiffs Demetrius and Tamara Robinson, on behalf of themselves and a class of similarly situated borrowers alleged that Nationstar had failed to comply with these CFPB regulations.

After years of contentious litigation and court-supervised negotiations, the district court certified two classes in 2019 and approved a settlement in 2020, which provided for a $3 million recovery for the class. One individual class member then objected to the settlement, arguing that the magistrate judge did not have jurisdiction to grant final approval, that the Settlement Agreement was overbroad, that the settlement was inadequate, that attorneys’ fees were excessive, that Nationstar’s agreement not to oppose the motion for fees was inappropriate, and the notice did not sufficiently inform class members of the settlement distribution plan. The magistrate judge overruled the objections, and the Fourth Circuit has now also rejected all these arguments against the settlement.

As a result of the Fourth Circuit’s decision, the benefits of the settlement will soon be distributed to members of the class, after what has been an 8-year-long litigation.

Partner Jon Tycko, class counsel, said about the settlement,

“We’re hopeful that, as a result of the Fourth Circuit’s decision, the benefits of the settlement will soon be distributed to members of the class. That will wrap up what has been an 8-year-long litigation.”

The case is Robinson v. Nationstar Mortgage, LLC, Case No. 8:14−cv−03667−TJS in the United States District Court for the District of Maryland, Greenbelt Division. The Plaintiffs are represented by Tycko & Zavareei LLP.

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