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UPDATE:
- As of April 22, 2021, the Court has entered judgment of $9,262,769.24.
- Entry of the judgment also triggered an injunctive order requiring Flagstar to pay interest-on-escrow to Subclass Members (current customers) on an ongoing basis.
- However, Flagstar has appealed the judgment to the 9th Circuit Court of Appeals; resolution of the appeal will likely take at least 18 to 24 months.
A website has been established that informs Class Members of their rights under a Flagstar Bank escrow class action, in which customers claim the bank fails to pay interest on funds held in escrow for mortgage agreements.
While the website is live, it is not accepting claims yet. Top Class Actions will provide claim filing instructions as soon as they become available.
Meanwhile, viewers will receive an email notice when this article is updated with more information by using a free Top Class Actions account and clicking the “Follow Article” button at the top of the post.
According to the website, Flagstar customers William Kivett and Bernard and Lisa Bravo filed the escrow class action lawsuit against Flagstar. The three customers claimed that Flagstar violated California law by failing to pay interest on funds held in escrow to pay for property taxes, property insurance, and other costs as part of a mortgage agreement.
The Flagstar class action lawsuit says that California law requires mortgage lenders to pay mortgage borrowers a two percent interest on funds held in escrow, for the time period that the funds are held.
Flagstar has fought back against these allegations, saying that the bank does not have to comply with the state law, because the requirements are preempted by federal law, so the federal law should be followed instead.
The bank also argued that following the state law and providing a two percent interest payment would “significantly interfere with its banking powers.”
Class Members include all people who meet the following requirements:
- Those individuals who had mortgage loans on up to four California residential properties through Flagstar Bank between April 18, 2014 and Sept. 30, 2019
- Those who paid Flagstar money to be held in escrow for the purpose of paying property taxes and fees
- Those who not receive interest on the money held in escrow
The Class excludes those who meet any of the following criteria:
- Those who took out their mortgage loans on or before July 21, 2010
- Those who, as of Sept. 30, 2019, would be owed less than $1 on the funds held in escrow, if the Flagstar escrow class action lawsuit is successful
The website explains that, though there are no benefits available at this time, the rights of all Class Members are affected by the Flagstar class action lawsuit.
At this point, if Class Members wish to remain in the Class, they can do nothing and retain the right to collect benefits from the escrow interest class action lawsuit if benefits become available from a settlement or judgement. Class Members who remain part of the class, even if they do not collect benefits, waive their right to pursue independent litigation over the escrow interest issue.
Class Members can ask to be excluded from the Flagstar class action lawsuit by March 2, 2020. Those who exclude themselves will not receive any available benefits, but will retain their right to pursue independent litigation.
Class Members who wish to get more information about the Flagstar class action lawsuit are welcome to review the website or direct questions to the Class Counsel Notice Administrator.
Have you received interest for funds held in escrow? If not, do you believe you should have?
Class Members are represented by Thomas E. Loeser of Hagens Berman Sobol Shapiro and by Peter Fredman of the Law Office of Peter Fredman PC.
The Flagstar Escrow Interest Payment Class Action Lawsuit is William Kivett, et al. v. Flagstar Bank FSB, Case No. 3:18-cv-05131-WHA, in the U.S. District Court for the Northern District of California.
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2 thoughts onFlagstar Escrow Interest Class Action Website Is Live
We purchased a new built home in California and the loan was through Flagstar. The home when finished was purchased for 726k. The escrow account was set up based on that purchase amount. The county then sent an assessment to Flagstar for the value of $302k which was before the home was completed but Flagstar was impounding based on the $726k. We thought that was good. That meant Flagstar was accumulating a lot more escrow then was needed for the payment of the then property assesment. The county then sent a supplemental assessment for the $726k which was another large amount. When we contacted Flagstar they informed us that they would not pay the supplemental assessment as they did not have to even though they had collected and impounded enough money to make the additional assessment amount. We asked why they did not pay that if that was our money and they controlled it and they stated the Federal law didnt allow it. I asked what they did with the excess money we impounded and they said it would be evaluated at the following year to see if they wanted to return it.
I challenged them on the legality of that policy and I was just sent around and around with out any meaningful explanation how they could keep my extra money and my supplemental tax bill would not be paid out of my escrow account. I contacted several of my neighbors as this is a new community and we have all purchased homes in this development at same time. They told me when they received their supplementals the forwarded them to their lenders and they were paid as expected they would be given the new home completion reassessment.
To date nobody has sent info on class action law suit