Wells Fargo Can’t Pause Mortgage Class Action

A judge has rejected Wells Fargo’s effort to stay a class action lawsuit, saying the bank did not notify some borrowers about mortgage modification options.

The bank attempted to pause the claims while a court of appeals heard the bank’s plea that the Class of mortgage borrowers be reconsidered.

The decision to keep the mortgage modification class action lawsuit was made by U.S. District Judge William Alsup in the Northern District of California. The judge decided to deny Wells Fargo’s request for a stay, believing that the bank did not meet its burden to show that a stay was warranted.

The judge based his decision on four essential factors — the likelihood that the appeal would succeed based on merit, harm that would be done to the defendant if a stay were not granted, harm that would be done to plaintiffs if a stay were granted, and general public interest.

Judge Alsup starts his denial decision by noting that Wells Fargo’s premise for why the mortgage class action lawsuit should be paused is based on the same faulty argument that the bank presented during the Class certification period. In both instances, the bank argued that customers had not stated how causation and damages would be proven.

However, the judge determined that this was not enough to pause the claims because this takes issue not with the matters that affect all of the consumers, but with how the Class was defined. 

The denial decision goes on to note that Wells Fargo had not sufficiently addressed the issue of the harm or benefits that could result from pausing the mortgage modification notification class action lawsuit. The bank had said that the costs of preparing for trial would cause Wells Fargo significant injury. Judge Alsup rejected this argument because the trial scheduled for May 11 had already been canceled. 

The Wells Fargo mortgage denial decision noted that the trial will not be held until Class Members have had the opportunity to opt out of the Class, and until the request for summary judgment has been reviewed.

According to Judge Alsup, there is enough time between then and now for the court of appeals to decide if Wells Fargo’s appeal of the Class certification will be accepted. In sum, the judge determined that Wells Fargo would not be irreparably harmed if the mortgage borrowers’ claims proceed.

Judge Alsup then rejected another one of Wells Fargo’s arguments on a similar basis.

The bank had argued that public interest would indeed be harmed if the mortgage modifications class action lawsuit were denied.

According to the bank, the Class would be confused if they were to receive multiple notices about the litigation.

This argument is moot, says Judge Alsup, because the court already approved the distribution of notices to the Class — if an appeal is granted and the Class is changed or decertified, the Class would receive multiple notices whether or not the stay was granted.

The Wells Fargo mortgage notice class action lawsuit was filed by Alicia Hernandez in 2018 over claims that the bank wrongly denies mortgage borrowers modifications to their loans.

Allegedly, Wells Fargo’s denial of these mortgage modifications violated the Home Affordable Modification Program.

According to Hernandez, the bank took up to $6.4 billion in HAMP funding after the Great Recession of 2008, but did not fulfill its obligation to borrowers under the program.

Hernandez says that she and other customers lost their homes due to foreclosure as the result of this practice. She argues that Wells Fargo incorrectly calculated her mortgage, and initiated foreclosure proceedings. Allegedly, the plaintiff fought the foreclosure for years, but was ultimately unsuccessful. 

The Wells Fargo HAMP class action lawsuit notes that Wells Fargo does admit it committed “systematic miscalculations” that led to many customers being denied loan modifications for which they should have been eligible under HAMP. Allegedly, the bank admitted that it had foreclosed on 545 borrowers that should have been eligible for a loan modification.

Are you familiar with the benefits of a HAMP loan modification? Tell us in the comments section below.

The borrowers are represented by Michael L. Schrag, Joshua J. Bloomfield, and Linda P. Lam of Gibbs Law Group LLP and Richard M. Paul III, Ashlea G. Schwartz and Laura C. Fellows of Paul LLP.

The Wells Fargo Mortgage Modifications Notification Class Action Lawsuit is Hernandez, et al. v. Wells Fargo Bank NA, et al., Case No. 3:18-cv-07354, in the U.S. District Court for the Northern District of California.

UPDATE: May 2020, the Wells Fargo mortgage class action settlement is now open. Click here to file a claim.

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