California Federal District Court Grants Class Certification in HAMP Litigation

Foreclosure Mortgage Servicing Class Action HAMP

On August 5, the U.S. District Court for the Northern District of California certified a class of borrowers who allege that a mortgage servicer wrongly rejected mortgage modification applications and improperly initiated foreclosure proceedings. Gaudin v. Saxon Mortg. Svcs., Inc., No. 11-1663, 2013 WL 4029043 (N.D. Cal. Aug. 5, 2013). The named plaintiff contends that a trial modification plan provided by her servicer constituted a binding contract that required the servicer to evaluate the borrower under the Home Affordable Modification Program and, if all conditions of the trial plan were satisfied, offer the borrower a permanent modification. According to the borrower, the servicer later, without cause, refused to offer a permanent modification and breached the contract, thereby violating California’s Rosenthal Act and Unfair Competition Law. On the borrower’s motion for class certification, the court held that the case presents significant common questions of law and fact concerning the nature and scope of the trial plan, and that the borrower’s alleged injury is similar to, if not precisely the same as, the potential class because the servicer’s issuance and countersigning of the trial plans constitute a single course of conduct. The court rejected the servicer’s argument that the borrower’s claims are subject to unique defenses because the servicer will argue that the borrower misrepresented her income, explaining that a defendant cannot defeat typicality if it intends to raise similar arguments in response to all class members.