San Diego, CA: A $4.5 million settlement has been reached in a consumer banking deceptive practices class action lawsuit against a unit of Morgan Stanley. The lawsuit was filed by homeowners who allege the finance company denied thousands of California homeowners new terms through the federal Home Affordable Modification Plan (HAMP), which they claim resulted in some people losing their homes.
The settlement is preliminary and requires final approval, which, if granted, would pay the approximate 2,705 class members an average of $1,663 each. According to court documents, the settlement represented about 15 percent of the roughly $30 million in total trial payments made by the class.
According to the lawsuit, plaintiff Marie Gaudin alleged Saxon delayed processing her loan while urging her to make trial payments as part of its Home Affordable Modification Program, meant for homeowners who were behind on loan payments. Saxon later pulled the offer of permanent loan modification without cause, according to the lawsuit.
If approved, 1,365 class members who lost their homes after Saxon denied them permanent loan modifications would be paid back. All class members would receive a base award of approximately $184, with tiered payments being made to those who lost their homes in foreclosures or short sales without being offered loan modifications, and to those who entered into alternative modifications elsewhere.
The class is defined as California borrowers who entered into HAMP TPPs with Saxon through October 1, 2009, and made at least three trial period payments but did not receive HAMP loan modifications.
