Mortgage Class Action Lawsuit

Class Action Lawsuit After Bankruptcy

A recent $9.5 million mortgage class action lawsuit results in claims that Freedom mortgage Corp. put unwanted calls on consumers in violation of state law. According to the Freedom Mortgage classaction lawsuit, many consumers were troubled by unsolicited telephone calls from the mortgage business, which included calls placed using automated message systems and recorded voice messages.

The recorded voice messages often told the caller that they were a representative of Freedom mortgage and encouraging the consumer to apply for a mortgage loan. Many of the recorded calls involved the same sales pitches used by many mortgage brokers and direct lenders. The recorded voice messages conveyed the lending institution’s commitment to fair housing and their desire to assist financially troubled borrowers with affordable mortgage loans.

Mortgage Class Action Lawsuit

As in any other federal law suit, plaintiffs must prove “a likelihood of confusion.” To do so, plaintiffs must show, “An ordinary consumer would be confused” if engaging in similar conduct by the defendants. In this case, plaintiffs argue that because the defendants placed automated telemarketing calls and recorded voice messages, the claims of both parties are likely to result in a “likeliness of confusion” for the plaintiffs. Accordingly, they ask the court to dismiss the complaint as a matter of law.

On appeal, the district court granted summary judgment to the defendants, holding that there was no likelihood of confusion.

However, the three-judge panel of the U.S. Court of Appeals for the Sixth Circuit reversed that decision, writing that the district court abused its discretion in allowing the defendants to go through the motions in formal plat form without approval. Accordingly, the appeals court ordered a reconsideration of the complaint and a hearing on the merits.

The three-judge panel noted, “Class action lawsuits are rarely litigated on summary judgment,” but was unable to find a distinction between this case and that of Johnson v. Deaver. Accordingly, the court entered a final approval order granting final approval to the complaint as a class action.

The plaintiffs in both cases are seeking final approval of the class action lawsuit as a basis for entering a structured settlement as part of the negotiations.

A defendant’s motion to dismiss is not enough to prevent the plaintiffs from ultimately obtaining a settlement; absent an express statutory declaration that the defendant is not required to respond to a complaint, a plaintiff is not barred from recovering damages on a basis that does not include the “class action” element of the complaint. Therefore, the final approval of the complaint is tantamount to the issuance of final approval of the settlement transaction.

Plaintiffs argue that the district court abused its discretion in permitting defendants to enter into the plea bargain without approval of the complaint and without granting class certification.

They further contend that the lack of a certificate of class provides no remedy to class members who were improperly denied the opportunity to a binding judgment regarding the merits of their claim. Such arguments are addressed to the three-judgment limit set forth in the FDCPA. But the District Court ignored the state exception and ruled that defendants had adequate notice of their potential liability from the date of the filing of the complaint.

We affirm the decisions below and reach the following conclusion.

Plaintiffs may assert that defendants improperly waived their rights to bring the complaint on a class action basis by permitting them to enter into a “modification” program after they had been awarded a final judgment against them. The fact that a district court allows a class to pursue a modus operandi at the expense of the class members does not alter the reality of the situation.

If the complaint did not seek class protection, a lender could engage in a program and accept the payment from a class member, subject to the bank’s contractual obligations not to discriminate based on race, gender, or religion. Modification programs like those authorized by the Bankruptcy Law can be used to repay loan modifications under the loan modification program and thus are not void.

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