Flagstar Interest-On-Escrow Class Action

Status Update: June 29, 2020

The Court granted summary judgment in favor of the Class as to liability on March 4, 2020. Another motion on behalf of the Class to set the amount of damages and enter a judgment in favor of the Class is currently awaiting a decision of the judge. The ruling will be posted to the Court Document section of this website when it issues. 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.

The Court has certified the Lawsuit as a class action addressing the alleged failure by Flagstar Bank, FSB (“Flagstar Bank”) to pay interest as required under California law on California mortgage escrow accounts. The Court defined the class of persons potentially entitled to relief under the Lawsuit as follows:

All persons who at any time on or after April 18, 2014 through September 30, 2019 had mortgage loans serviced by Flagstar Bank, FSB (“Flagstar”) on 1–4 unit residential properties in California and paid Flagstar money in advance to hold in escrow for the payment of taxes and assessments on the property, for insurance, or for other purposes relating to the property, but did not receive interest on the amounts held by Flagstar in their escrow accounts (excluding, however, any such persons (a) whose mortgage loans originated on or before July 21, 2010 or (b) who would be owed less than $1 in interest-on-escrow as of September 30, 2019 if plaintiffs’ allegations are proven) (the “Class”).

The Court then ordered notifications to all Class members by email and postcards directing them to this Notice of Class Action (“Notice”) website for further information.

The Lawsuit has not yet been decided. If you are a member of the Class, however, your legal rights are affected and you have a choice to make now:

YOUR LEGAL RIGHTS AND OPTIONS

DO NOTHING

Stay in the Lawsuit. Await the Outcome. Give up the right to sue Flagstar Bank separately for this claim.

If you wish to remain in the Lawsuit, you do not need to do anything. You will keep the possibility of getting money or benefits that may come from a trial or settlement of the Lawsuit. But you will give up any rights to sue Flagstar Bank separately for the same legal claim at issue in this Lawsuit.

ASK TO BE EXCLUDED

Get out of the Lawsuit. Get no benefits from it. Keep the right to sue Flagstar Bank separately for this claim.

If you do not wish to remain in the Lawsuit, you can ask to be excluded by March 2, 2020. If any money or benefits are later awarded, you will not share in them. But you will keep any rights to sue Flagstar Bank separately for the same legal claim at issue in this Lawsuit.

GET MORE INFORMATION

If you would like more information about the Lawsuit, please review the Notice available on this website. You may also direct questions to Class Counsel or the Notice Administrator, whose information can be found on the Contact page of this website.