Status Update: July 25, 2022
Flagstar's petition for rehearing has been denied by
the 9th Circuit. But Flagstar indicates that it will seek review from the US
Supreme Court. This will further delay the final disposition of the case and
distribution of the Class judgment funds to Class members. Assuming the US
Supreme Court denies review, Class Counsel hopes to complete the case before
the end of this year.
Status Update: May 17, 2022
The Ninth Circuit Court of Appeals denied most
of Flagstar's appeal on May 17, 2022. The Memorandum of
disposition is posted to the Court Documents section of this website.
However, Flagstar has announced that it plans to ask for
a rehearing, which will further delay the final resolution of this case,
including the disbursement of the judgment to the Class.
Class Counsel now estimates that the final
disposition of the court of appeals will occur approximately July 2022, that
they will file their motion for attorney fees approximately August 2022 (to be
posted in the Court Document section of this website when it is filed), and
that the final distribution of the Class judgment should occur approximately
October 2022. These estimates could change based on unexpected activity by the
appellate courts.
Also please note that, per the Memorandum, the Court of
Appeals changed the dates of the class period to make the Class slightly
smaller. Whereas the class period reached back to April 18, 2014, previously, it
now reaches back to August 22, 2014. This results in a reduction of the
Class judgment from $9,262,769.24 to $9,180,580.15 (less than 1%).
Status Update: April 22, 2021
The Court has entered judgment in the amount of $9,262,769.24. A copy of the judgment is posted to the Document section of this website. The entry of the judgment also triggers an injunctive order requiring Flagstar to pay interest-on-escrow to sub-class members (current customers) on an ongoing basis.
However, Flagstar has appealed the judgment to the Ninth Circuit Court of Appeals (where it is case number 21-15667). Resolution of the appeal will likely take 18-24 months or longer.
Status Update: December 18, 2020
The Court's order of December 10, 2020 has been amended by stipulation so that the judgment shall be entered on or about March 1, 2021. The stipulated order is posted to the Court Documents section of this website.
As amended, the money judgment in favor of the Class against Flagstar shall cover the period through December 31, 2020 and interest-on-escrow shall accrue to sub-class members January 1, 2021 and be payable directly to sub-class members effective January 1, 2022, or when a sub-class member's relationship with Flagstar terminates, whichever is sooner. It remains the case that, if Flagstar appeals the judgment, it could take years for this case to resolve. In the event of a proposed settlement, class members will be sent a notice, Plaintiffs will post a motion for attorney fees to this website within 35 days of entry of the judgment.
Status Update: December 10, 2020
The Court granted summary
judgment in favor of the Class on December 10, 2020. The ruling is posted to the
Court Document section of this website. The order provides for a money
judgment in favor of the Class against Flagstar covering the period through
December 31, 2019, and requires Flagstar to begin paying interest-on-escrow to
all sub-class members effective January 1, 2020. If Flagstar appeals the
judgment, it could take years for this case to resolve. In the event of a proposed
settlement, class members will be sent a notice.
The information contained on this website is
only a summary. You may download a copy
of the full Notice in English by clicking here and in Spanish by clicking here.
Please read this carefully, as it explains a
lawsuit that affects your legal rights.
If you were directed to this website by
an email or postcard, this notifies you that you may be a member of a class
(the “Class”) in the case William Kivett,
et al. v. Flagstar Bank, FSB (the “Lawsuit”), which is now pending in the
United States District Court for the Northern District of California (the
“Court”).
This Lawsuit involves the portion of
mortgage payments that Flagstar Bank collects for some borrowers in advance and
holds in escrow to pay for property taxes, property insurance, and other charges
related to the property. The Lawsuit alleges that a California law, known as
section 2954.8(a) of the Civil Code (“section 2954.8”), requires Flagstar Bank
to pay interest on these funds at the rate of two percent during the period
that it holds the funds in escrow on the borrowers’ behalves. Flagstar Bank
asserts that it does not have to comply because section 2954.8 is preempted by
federal law and complying with section 2954.8 would significantly interfere
with its banking powers.
Judge William Alsup, of the United
States District Court for the Northern District of California, presides over
this Lawsuit, entitled William Kivett and Bernard and Lisa Bravo v. Flagstar
Bank, FSB, Case No. 3:18-cv-05131-WHA. The named persons who brought this
Lawsuit are known as the “Lead Plaintiffs.” Judge Alsup has certified them to
represent the “Class.” Flagstar Bank is also known as the “Defendant.”
The Court has not
decided whether the Lead Plaintiffs or Defendant are correct; this is the
subject of a trial which will be set for March, April, or May of 2020. By certifying the Class
and authorizing this Notice, the Court is not suggesting that the Class will
prevail at trial on this case. The Class must prove its claims at trial.