Flagstar Interest-On-Escrow Class Action

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Flagstar Interest-On-Escrow Class Action
Court Documents
Court Documents

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.
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:



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.


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.


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.

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