Robinson v. Nationstar Mortg. LLC

DEMETRIUS ROBINSON and TAMARA ROBINSON, Plaintiffs, v. NATIONSTAR MORTGAGE LLC, Defendant.

Civil Action No. TDC-14-3667

UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND

September 9, 2019

MEMORANDUM OPINION

Plaintiffs Demetrius and Tamara Robinson (the "Robinsons") have resided in a home in Damascus, Maryland that has been subject to a mortgage loan. 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. §§ 2601-2617 (2012), specifically RESPA's implementing regulations known as "Regulation X," 12 C.F.R. § 1024.41 (2019), and the Maryland Consumer Protection Act ("MCPA"), Md. Code Ann., Com. Law §§ 13-101 to 13-411 (West 2015). Presently pending is Nationstar's Motion for Summary Judgment, Nationstar's Motion to Strike, and the Robinsons' Motion for Class Certification. The Motions are fully briefed, and no hearing is necessary to resolve the issues. See D. Md. Local R. 105.6. 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.

BACKGROUND

Relevant factual and procedural background is set forth in the Court's prior Memorandum Opinion granting in part and denying in part Nationstar's partial Motion to Dismiss. See Robinson v. Nationstar Mortg. LLC, No. 14-3667, 2015 WL 4994491, at *1-2 (D. Md. Aug. 19, 2015). Additional facts relevant to the pending motions are set forth below.

I. Motion for Summary Judgment

The Robinsons own a business called Green Earth Services, which provides waste and recycling services to clients. They have a home in Damascus, Maryland purchased by Demetrius Robinson ("Mr. Robinson"). In 2007, Mr. Robinson obtained a loan with the principal amount of $755,000 to refinance the property. While Mr. Robinson signed the promissory note ("the Note"), the deed of trust ("the Deed"), and the balloon payment rider for the 2007 loan, Tamara Robinson ("Mrs. Robinson") signed only the Deed and balloon payment rider and did not sign the Note. Nationstar ultimately became the servicer of the Robinsons' loan.

After several customers of Green Earth Services canceled its services, the Robinsons sought loss mitigation in the form of a loan modification from Nationstar. Between July 2010 and November 2013, the Robinsons submitted and Nationstar denied three applications for a loan modification under the Home Affordable Modification Program ("HAMP"). The denial letters stated that the loan's principal balance exceeded the limit under HAMP. 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.

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 withNationstar. In February 2014, after their income had further decreased, the Robinsons ceased making payments on the mortgage loan. After this missed payment, Nationstar assessed a late fee.

After they became delinquent on their loan, the Robinsons submitted another loan modification application to Nationstar on March 7, 2014. When Nationstar received the application, it prevented late fees from being assessed and put a hold on any foreclosure proceedings. However, Nationstar did not comply with all requirements of Regulation X, which became effective on January 10, 2014. At the time, Nationstar had not completed the process of updating its systems to conform to those requirements. Accordingly, Nationstar did not send the Robinsons an acknowledgment letter within five days stating that it had received the application, as required by Regulation X.

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. In approving such a modification, Nationstar made a mistake: the underwriter working on the Robinsons' loan had erroneously double-counted their income. Before the error was discovered, Mr. Robinson appealed this offer as insufficient on April 10, 2014.

The Robinsons and Nationstar then engaged in a series of tortured exchanges over the next several months. Mrs. Robinson was the primary point of contact for the Robinsons in interacting with Nationstar. Although she has worked as a bookkeeper for various companies, she was not employed between March and September 2014. On May 5, 2014, Nationstar asked the Robinsons for additional information to evaluate the appeal, including documents to verify their income. In response, on May 30, 2014, Mr. Robinson sent Nationstar the exact same application that he had submitted on March 7, 2014. On July 17, 2014, Nationstar informed Mr. Robinson by letter thathe did not qualify for a HAMP modification and that since the March 14 loan modification offer had not been accepted, it was withdrawn.

Mr. Robinson then submitted another loan modification application on August 25, 2014. The next day, Nationstar sent a letter noting that the August 25 application had been received and requesting additional information. 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. During this time and up until September 25, 2017, Nationstar had not begun any foreclosure proceedings on the Robinsons' home. The Robinsons have not made any mortgage payments since January 2014 and have not been assessed any late fees since February 2014. From January 2014 to the present, the Robinsons have not pursued other loss mitigation options, such as a short sale.

The Robinsons assert that they have paid a total of $6,147.12 in unspecified fees to Nationstar. 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. The Robinsons also claim as damages interest overcharges of approximately $141,000.

II. Motion for Class Certification

A. Procedural History

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. 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. On February 16, 2017, the Court referred the case toUnited States Magistrate Judge Charles B. Day to address discovery issues. 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. Class Certif. Joint Record ("MCC JR") 0907. After two more extensions were granted, based on a finding by the Magistrate Judge that "Defendant has failed to comply" with its discovery obligations and delayed the process, discovery closed on March 22, 2018. Order, ECF No. 125.

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. As a result, on January 29, 2018, the Magistrate Judge granted the Robinsons' Motion to Compel in which the Robinsons had sought to have the Court order Nationstar to accept and run scripts created by the Robinsons' expert to extract the relevant data from Nationstar's databases on the sample of loans from which they could test their methodology for identifying members of the proposed classes. The Robinsons' expert had written the scripts using data dictionaries and without accessing the databases. The Magistrate Judge ordered Nationstar to run those scripts and return the electronic data to the Robinsons. 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. Discovery Order, ECF No. 143. The Robinsons appealed the Magistrate Judge's ruling because it did not require Nationstar to run a structural script for a third database. On July 16, 2018, the Court affirmed the Magistrate Judge'sruling and required Nationstar to produce all outstanding "records subject to discovery orders." Order at 2, ECF No. 164. After an additional period of expert discovery relating to the class certification motion, discovery closed on December 30, 2018.

B. Nationstar Tracking Systems

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,...