The Ninth Circuit affirmed an order denying class certification in a case involving allegations that a mortgage servicer wronged borrowers through its implementation of the federal Home Affordable Modification Program (HAMP). The Ninth Circuit held that the district court did not abuse its discretion in denying certification on the basis that individual issues predominated over common ones.
Plaintiffs sought certification of eight statewide classes of individual borrowers who entered into trial period plan (TPP) agreements with the defendant and made all payments required by the TPP agreements, but were neither granted permanent HAMP modifications nor timely notified that their applications had been denied. Plaintiffs alleged that defendant told them they were qualified for HAMP modification, encouraged them to enter into TPP agreements, and then unjustifiably failed to modify their loans and/or inform them that their applications had been denied. Plaintiffs claimed that they were harmed by being denied the ability to participate in HAMP, had their credit damaged by defendant’s practice of treating their loans as being in default despite their having made reduced payments as required by the TPP agreements, and by being charged increased fees and interest as a result of entering into the TPP agreements without being granted permanent HAMP modifications.
The Ninth Circuit agreed with the district court’s determination that individual issues predominated over common ones, because the determination of liability and damages would depend on highly individualized inquiries regarding each class member’s “course of conduct,” including “changes in income, inaccurately or incompletely reported income, oral and written representations [by defendant] regarding documentation still needed and other modification options, applicable Treasury Directives, and other considerations.” The Ninth Circuit also affirmed the district court’s denial of class certification under 23(b)(1) and 23(b)(2), finding that plaintiff’s argument in favor of the former was merely “cursory” while their argument in favor of the latter was not raised before the district court and was thus waived.