Case 1:07-cv-11669-GAO Document 32 Filed 09/22/08 Page 1 of 1
UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS CIVIL ACTION NO. 07-11669-GAO
SUYAPA ALLEN and GLENDA MEDINA, on behalf of themselves and all other similarly situated, Plaintiffs v.
DECISION ONE MORTGAGE COMPANY, LLC, and HSBC FINANCE CORPORATION, Defendant.
ORDER September 22, 2008
O’TOOLE, D.J. On November 2, 2007, the defendants moved to dismiss the complaint. The plaintiffs have
since filed an amended complaint which they suggest renders the motion to dismiss moot.1 The defendants have not stated any disagreement with this view, and have been granted an extension to file an answer or otherwise respond to the amended complaint. That response may include a motion to dismiss directed at the recently amended complaint. The motion to dismiss (dkt. no. 14) addressing the now-superseded complaint is therefore deemed MOOT.
It is SO ORDERED. /s/ George A. O’Toole, Jr.
United States District Judge6
1 The Plaintiffs’ Unopposed Mot. to Substitute the Corrected First Am. Compl. for the First Am. Compl. Filed on July 31, 2008 (dkt. no. 30) is GRANTED.

 
 Case 1:07-cv-11669-GAO Document 58 Filed 11/27/09 Page 1 of 31

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

)

SUYAPA ALLEN, GLENDA MEDINA,

) C.A. NO. 1:07-cv-11669-GAO

FREDDIE RAMON CHAVEZ TORUNO,

)

DEMETRIE DOIRON and ROSALIND

)

CAVERO, on behalf of themselves and all

)

others similarly situated,

)

) JURY TRIAL DEMANDED

Plaintiffs,

)

)

vs.

)

)

DECISION ONE MORTGAGE

)

COMPANY, LLC, HSBC FINANCE

)

CORPORATION, HSBC NORTH

)

AMERICA HOLDINGS INC., HSBC

)

MORTGAGE CORPORATION (USA), and )

HSBC MORTGAGE SERVICES INC.

)

)

Defendants.

)

)

FIRST CONSOLIDATED CLASS ACTION COMPLAINT

Plaintiffs, Suyapa Allen, Glenda Medina, Freddie Ramon Chavez Toruno, Demetrie

Doiron and Rosalind Cavero ("Plaintiffs"), on behalf of themselves and all others similarly

situated, by their undersigned attorneys, allege as follows:

1. This is a class action brought by Plaintiffs, on behalf of themselves and other

similarly situated black and Hispanic homeowners, against Decision One Mortgage Company,

LLC ("Decision One"), HSBC Finance Corporation ("HSBC Finance"), HSBC Mortgage

Corporation (“HSBC Mortgage”), HSBC Mortgage Services Inc. (“HSBC Mortgage Services”)

and HSBC North America Holdings Inc. (“HNAH”) (collectively "HSBC" or "Defendants"),

under the Equal Credit Opportunity Act, 15 U.S.C. § 1691, et seq. (“ECOA”), the Fair Housing

Act, 42 U.S.C. § 3601, et seq. and the Civil Rights Act, 42 U.S.C. §§ 1981 and 1982 (“the Civil

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Rights Act”). Plaintiffs seek remedies for themselves and the Class (defined in ¶102, below) for the discriminatory effects of HSBC's home financing policies and practices.
2. As described below, HSBC has established a specific, identifiable and uniform credit pricing system, a component of which, referred to herein as the Discretionary Pricing Policy, authorizes unchecked, subjective surcharge of additional points and fees to an otherwise objective risk-based financing rate. In other words, after a finance rate acceptable to HSBC is determined by objective criteria (e.g., the individual’s credit history, credit score, debt-to-income ratio and loan-to-value ratios), HSBC's credit pricing policy authorizes additional discretionary financing charges and interest mark-ups. These subjective, additional finance charges have a widespread discriminatory impact on black and Hispanic applicants for home mortgage loans, in violation of ECOA, the FHA and the Civil Rights Act.
3. The mortgage lending industry has a long history of racial discrimination, offering minorities products and terms that are drastically worse than those given to their similarlysituated white counterparts. Recently, the Federal Reserve Board confirmed that blacks and other minorities are still more likely to pay higher prices for mortgages than whites.
4. In 2003, the National Community Reinvestment Coalition (“NCRC”) released a report on credit discrimination titled, “The Broken System: Discrimination and Unequal Access to Affordable Loans by Race and Age,”1 that indicated that consumers living in areas with more minority residents are more likely to have mortgages with interest rates higher than the “prevailing and competitive” rates, often because of discrimination in lending.
5. Loan data that mortgage lenders must now compile and disclose under the federal Home Mortgage Disclosure Act (“HMDA”) reveals profound loan pricing disparities between minority borrowers and similarly-situated white borrowers. HMDA data for 2006 showed that
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black and Hispanic borrowers are more likely to obtain higher-priced loans than are white borrowers. The data indicated that black homeowners who received subprime mortgage loans were much more likely to be issued a higher-rate loan than white borrowers with the same qualifications.
6. In a speech in 2006, Martin J. Gruenberg, Vice Chairman of the Federal Deposit Insurance Corporation observed that “previous studies have suggested higher-priced, subprime lenders are more active in lower income, urban areas and that minority access to credit is dominated by higher cost lenders.”2
7. In 2006, the Center for Responsible Lending, a non-profit research organization, uncovered “large and statistically significant” differences between the rates of subprime loans offered to blacks and whites, even when income and credit risk were taken into consideration. Compared to their otherwise similarly-situated white counterparts, blacks were 31-34% more likely to receive higher rate fixed-rate loans and 6-15% more likely to receive adjustable-rate loans.3
8. Subprime loans to blacks and other minorities not only impose higher interest rates, they are typically laden with excessive, unreasonable and often improperly disclosed fees as well. See supra, n.3.
9. These significant disparities are not mere coincidences. They are the result of a systematic and discriminatory policy of targeting minority borrowers for high-cost loans. Defendants’ business practices include implementing and maintaining policies that discriminate

1

This report is available at http://ncrc.org/policy/cra/documents/ncrcdiscrimstudy.pdf.

2

See Martin J. Gruenberg, FDIC Vice-Chairman, Address to the Conference on Hispanic

Immigration to the United States: Banking the Unbanked Initiatives in the U.S. (Oct. 18, 2006)

available at http://www.fdic.gov/news/news/speeches/archives/2006/chairman/spoct1806.html.

3

See “Unfair Lending: The Effect of Race and Ethnicity on the Price of Subprime

Mortgages,” available at http://www.responsiblelending.org.

3

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against minorities. Plaintiffs bring this lawsuit to seek relief from the harms suffered as a result of Defendants’ practices and to enjoin Defendants from continuing its discriminatory practices.
10. The Defendants have established policies for retail and wholesale access to their loan products that subject minority financing applicants to a significantly higher likelihood of exposure to discretionary points and fees. These costs drive up the average cost of a mortgage loan made by the Defendants to minority homeowners.
11. Plaintiffs seek damages, declaratory and injunctive relief, disgorgement and restitution of monies disparately obtained from minority borrowers.
JURISDICTION AND VENUE 12. Plaintiffs invoke the jurisdiction of this Court pursuant to 28 U.S.C. § 1331, which confers original jurisdiction upon this Court in a civil action arising under federal law. 13. Venue is proper in this Court pursuant to 28 U.S.C. 1391(b) inasmuch as the unlawful discriminatory practice is alleged to have been committed in this District, Defendants regularly conduct business in this District, and the named Plaintiffs reside in this District.
PARTIES 14. Plaintiff, Suyapa Allen, is a black homeowner who resides at 78 Blackstone Street, Unit 78, Stoughton, MA 02072. On September 8, 2006, Ms. Allen entered into a mortgage transaction, secured by her residence, with the lender identified as Decision One. 15. Plaintiff, Glenda Medina, is a Hispanic individual who resides at 28 Gilbert Street, Lawrence, MA 01843. On October 20, 2005, Ms. Medina entered into a mortgage transaction secured by her residence with the lender identified as Decision One. 16. Plaintiff, Demetrie Doiron, is a black homeowner who resides at 6541 Greenback Lane, Citrus Heights, California. On June 30, 2006, Mr. Doiron obtained a high cost adjustable
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rate mortgage loan (“ARM”) secured by his residence, with the lender identified as “HSBC Mortgage Services, Inc.”,
17. Plaintiff, Rosalind Cavero, is a Hispanic individual who resides at 1645 W. School St., Unit 218, Chicago, Illinois. On June 12, 2006, Ms. Cavero obtained a high cost ARM secured by her residence, with the lender identified as “HSBC Mortgage Corp. (USA)”.
18. Plaintiff, Freddie Ramon Chavez Toruno, is a Hispanic individual who resides at 809 West Madison Avenue, Montebello, CA 90640. On or about June 21, 2004, Mr. Toruno obtained a mortgage secured by his residence with the lender identified as Decision One.
19. Defendant, Decision One Mortgage Company, LLC ("Decision One"), is a mortgage lender with a principal place of business at 3023 HSBC Way, Fort Mill, South Carolina 29707. Decision One operates through more than 15 branches in cities nationwide, as well as through relationships with loan brokers. Decision One Mortgage is owned by British bank HSBC Holdings through that company's US-based HSBC Finance subsidiary. Decision One was purchased by Household International in 1999.
20. Defendants HSBC Finance (formerly Household International), HSBC Mortgage, and HSBC Mortgage Services are the consumer lending entities and subsidiaries of HNAH. HSBC conducts the lending activities at issue in this action throughout the United States, including in this judicial district and elsewhere.
21. As the parent of HSBC’s residential lending operations, HNAH directed, participated in and/or influenced the setting and establishing of credit-related policies and underwriting guidelines and practices used by each of the other Defendants. A. FACTS
22. Mortgage Lending in the United States Historically has Discriminated Against Minorities.
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23. Borrowers who obtain a home loan at an unnecessarily high interest rate will pay hundreds of dollars more each month in mortgage payments, making them more vulnerable to short term economic distress that may result from job loss or medical problems. In consequence, minority homeowners run higher risks of foreclosure, and will accumulate equity in their homes much more slowly than white borrowers. While for some minority borrowers with tarnished credit histories, higher-priced home loans provide the only access to the mortgage market and to homeownership, many other minorities will be paying far more for their mortgages than their credit histories justify.
24. The skyrocketing levels of foreclosures in urban areas, and minority communities in particular, have been tied to the growth of concentrated subprime lending in these areas.4 Concentrated foreclosures have a devastating impact on cities and neighborhoods. They affect local property values, serve as a magnet for crime, and hurt a city’s property tax base.5
25. While many institutions specialize in lending to either prime or subprime markets, there is an important set of large lenders that are active in both markets. These lenders utilize diverse lending channels such as branch and broker networks that allow them to reach a wide variety of geographic markets. Their size also gives them the capacity to offer an array of products that may be appropriate for customers with different levels of credit quality.

4

Immergluck, Dan and Geoff Smith. March 2004. “Risky Business: An Econometric

Analysis of the Relationship Between Subprime Lending and Foreclosures.” Woodstock

Institute: Chicago, IL.

5

For discussions of the external impacts of foreclosures, see Immergluck, Dan and Geoff

Smith. June 2005. There Goes the Neighborhood: The Effect of Single-Family Mortgage

Foreclosures on Property Values. Woodstock Institute: Chicago, IL; Immergluck, Dan and

Geoff Smith. November 2006. “The Impact of Single Family Foreclosures on Neighborhood

Crime.” Housing Studies (21:6); and Apgar, William, Mark Duda, and Rochelle Nawrocki

Gorey. February 2005. The Municipal Costs of Foreclosures: A Chicago Case Study.

Foreclosure Prevention Foundation: Minneapolis, MN.

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26. According to the Joint Center for Housing Studies at Harvard University’s 2005 study called “The Dual Mortgage Market: The Persistence of Discrimination in Mortgage Lending,” mortgage lending discrimination today is subtle but pervasive, with minority consumers continuing to have less-than-equal access to loans at the best price and on the best terms that their credit history, income, and other individual financial considerations merit more than three decades after the enactment of national fair lending legislation.
27. The passage of civil rights legislation and fair lending laws in the 1960s and 1970s brought an end to the most virulent forms of overt racial discrimination in the housing markets, but throughout the 1980s and 1990s, mortgage lenders found more subtle ways to discriminate, including maintaining offices only in white neighborhoods and engaging in practices such as redlining (refusing to lend on properties in predominantly minority neighborhoods).
28. After such redlining practices were challenged in the 1990s, mortgage lenders changed tactics once again, making loans to minorities, but charging higher interest rates and loan-related fees than they charged to similarly situated white borrowers. Loan data that mortgage lenders must now compile and disclose under the federal Home Mortgage Disclosure Act (“HMDA”) reveals profound loan pricing disparities between minority borrowers and similarly-situated white borrowers.
29. The HMDA requires mortgage lenders to report information about the home loans they process each year. In 2005, lenders reported information on more than 30 million home loan applications pursuant to HMDA. In 1989, Congress required lenders to begin disclosing information about mortgage borrowers’ race and ethnicity. In 2004, concerned with potential racial discrimination in loan pricing and recognizing that racial or other types of discrimination
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can occur when loan officers and mortgage brokers have latitude in setting interest rates, the Federal Reserve Board began requiring lenders to also report information concerning rates, points, and fees, charged to borrowers on high-cost loans.
30. According to a study published by the Federal Reserve, both 2004 and 2005 HMDA data revealed that “Blacks and minority borrowers were more likely . . . to have received higher-priced loans than non-Hispanic whites . . .. [which has] increased concern about the fairness of the lending process.”6
31. HMDA data for 2004 reveals profound loan pricing disparities between minority borrowers and non-Hispanic whites even after controlling for borrowers’ gender, income, property location, and loan amount. After accounting for those differences in the 2004 HMDA data, minority borrowers were still almost twice as likely to receive a higher-rate home loan as non-Hispanic whites.7 In a speech in 2006, the Vice-Chairman of the Federal Deposit Insurance Corporation, Martin Gruenberg, discussed the 2004 HMDA data and observed that that data “clearly indicated” that minority borrowers are more likely to receive high-cost home loans than are non-Hispanic whites.8
32. Likewise, HMDA data for 2005 shows that “for conventional home-purchase loans, the gross mean incidence of higher-priced lending was 54.7 percent for blacks and 17.2 percent for non-Hispanic whites, a difference of 37.5 percentage points.” Avery, supra, at A159. The situation is similar for refinancing, where there is a difference of 28.3 percentage points between blacks and non-Hispanic whites. Id. at A124, A159.

6

Robert B. Avery, Kenneth P. Brevoort and Glenn B. Canner, “Higher-Priced Home

Lending and the 2005 HMDA Data,” Federal Reserve Bulletin, A124, A159 (revised Sept. 18,

2006) (http://www.federalreserve.gov/pubs/bulletin/2006/hmda/bull06hmda.pdf).

7

This is available at http://www.responsiblelending.org/pdfs/Testimony-Ernst061306.pdf

8

This speech is available at

http://www.fdic.gov/news/news/speeches/archives/2006/chairman/spoct1806.html.

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33. The Association of Community Organizations for Reform Now (ACORN) released a report entitled “The High Cost of Credit: Disparities in High-priced Refinanced Loans to Minority Homeowners in 125 American Cities,” dated September 27, 2005, that found that “[i]n every metropolitan area where at least 50 refinances were made to African-American homeowners, African-Americans were more likely to receive a high-cost loan than White homeowners.”
34. The study found that, nationally, black home purchasers were 2.7 times more likely and Hispanics were 2.3 times more likely than white borrowers to be issued a problematic, subprime loan. Additionally, the ACORN study, available at www.acorn.org, found that nationally, for refinance loans, African Americans were 1.8 times more likely and Hispanics were 1.4 times more likely than white borrowers to be issued a problematic, subprime loan.
35. Differences in economic status are not to blame. These racial disparities were found to persist even among borrowers of the same income level. The ACORN study found that, among upper-income purchasers (defined as persons with incomes 120% or greater than the area median income for their metropolitan area), African Americans were 3.3 times more likely and Hispanics were 3 times more likely than similarly-situated whites to be issued a high-cost, subprime loan. Further, the ACORN study found that, with respect to refinance loans, among upper-income borrowers, African Americans and Hispanics were 1.7 times were likely than similarly-situated whites to be issued a high-cost, subprime loan.
36. While some borrowers in the subprime market are genuine credit risks, minority borrowers have been preyed upon by mortgage lenders and illegally steered into subprime loans. Defendants have engaged in this discriminatory lending by refusing to offer minority borrowers the prime loans offered to similarly-qualified white borrowers.
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37. Studies by Freddie Mac and Standard & Poor’s have found that 20% to 30% of borrowers who receive subprime mortgages could have qualified for traditional mortgages at the lower rates offered by banks to prime borrowers. This seriously disadvantages the borrower by effectively diluting the equity of the property, placing the borrower in jeopardy of default, and forcing the borrower to spend years paying off additional loan balances without developing any equity in their home.
38. Further, the U.S. Department of Housing and Urban Development found that in neighborhoods where at least 80 percent of the population is African American, borrowers were 2.2 times as likely as borrowers in the nation as a whole to refinance with a subprime lender. Higher-income borrowers living in predominately black neighborhoods are twice as likely as lower-income white borrowers to have subprime loans.9
39. The predatory lending practices of the Defendants and other mortgage lenders lead to dire financial consequences for borrowers. Earlier this year, over eighty consumer groups wrote to federal banking agencies about a particular type of subprime loan, 2/28 the adjustable rate mortgage (“2/28 ARM”). A 2/28 ARM typically contains an average built-in “shock payment” increase of 29%, even if interest rates remain unchanged. Fitch Ratings reports that the actual payment shock may be as high as 48%. The majority of subprime loans made to minorities had these adjustable rates. The Center for Responsible Lending estimates that 2.2 million such subprime loans have ended or will end in foreclosure, a rate of 19%.
40. Plaintiffs Allen and Medina each have a 2/28 ARM.

9

See “All Other Things Being Equal: A Paired Testing Study of Mortgage Lending

Institutions,” 2002, available at www.huduser.org.

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41. The Center for Responsible Lending published a study in December 2006 on the effects of foreclosure.10 The report states that the costs of subprime foreclosures fall heavily on African American and Hispanic homeowners, since subprime mortgages are disproportionately made in communities of color. HMDA data shows that over half of loans to black borrowers are higher-cost loans, which, by definition, are a proxy for subprime loans. For Hispanic homeowners, the portion of higher-cost loans is also very high, at four in ten. This data implies that subprime foreclosures will affect eight percent of recent Hispanic borrowers and 10 percent of recent black borrowers. By comparison, subprime foreclosures will likely occur among only about four percent of recent white borrowers.
42. The Center for Responsible Lending released an additional study in November, 200711 that explains how when a home goes into foreclosure, the negative effects extend beyond individual families losing their homes to surrounding neighbors and the wider community. The 2007 study further reports that a foreclosure on a home lowered the price of other nearby singlefamily homes, on average, by 0.9 percent. That impact was even higher in lower-income neighborhoods, where each foreclosure dropped home values by an average of 1.44 percent. The study notes that communities of color will be especially harmed, since these communities receive a disproportionate share of subprime home loans.
43. The 2007 study projects that, nationally, foreclosures on subprime home loans originated in 2005 and 2006 will have numerous impacts on the neighborhoods and communities in which they occur. For instance, the study predicts that 44.5 million neighboring homes will experience devaluation because of subprime foreclosures that take place nearby, and the total
10 See “Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners.” December 2006, available at www.responsiblelending.org.
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decline in house values and tax base from nearby foreclosure will be about $223 billion.
Homeowners living near foreclosed properties will see their property values decrease $5,000 on
average.
44. A growing number of research studies and investigations show that significant racial disparities still exist.12
45. Moreover, research studies have suggested that borrowers’ credit profiles cannot
fully explain why some borrowers, and not others, are saddled with higher cost loans.
Researchers have raised “doubts that risk can adequately explain racial differences” in high-cost loans.13 In other words, evidence “suggests that weak borrower credit profiles do not fully explain why some borrowers get stuck with higher-cost home loans.”14
46. In 2003, the California Reinvestment Coalition published a study, “Who Really
Gets Home Loans? Year Eleven: Mortgage Lending to African-American and Latino Borrowers in 5 California Communities,”15 that analyzed seven lenders, including HSBC. The study found
that HSBC, along with one other lender, had the worst records, “stand[ing] apart for making
significantly higher cost subprime loans to African Americans and Latinos in the five cities than
lower cost prime loans.”
11 See “Subprime Spillover: Foreclosures Cost Neighbors $223 Billion; 44.5 Million Homes Lost $5,000 on Average.” Center for Responsible Lending, available at www.responsiblelending.org. 12 California Reinvestment Coalition, et al., “Paying More for the American Dream: A Multi-State Analysis of Higher Cost Home Purchase Lending” (March 2007) (http://www.nedap.org/pressroom/documents/2007_Report-2005_HMDA.pdf); Ross, “The Continuing Practice and Impact of Discrimination” (Revised July 2006) (Univ. of Connecticut, Working Paper 2005-19R) (http://www.econ.uconn.edu/working/2005-19r.pdf). 13 Bradford, Center for Community Change, “Risk or Race? Racial Disparities and the Subprime Refinance Market” (May 2002) (http://www.knowledgeplex.org/kp/report/report/relfiles/ccc_0729_risk.pdf). 14 California Reinvestment Coalition, et al., “Paying More for the American Dream: A Multi-State Analysis of Higher Cost Home Purchase Lending.” (March 2007). 15 Available at, www.calreinvest.org/system/assets/24.pdf.
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47. A September 2005 Report by the Community Reinvestment Association of North Carolina, entitled, “Paying More and Getting Less: An Analysis of 2004 Mortgage Lending in North Carolina,”16 highlights HSBC’s channeling policy. “HSBC offers mortgages in North Carolina through HSBC Mortgage, Beneficial, and Decision One. While HSBC Mortgage issued only 0.3% of its mortgages at a high cost rate in 2004 in North Carolina, fully 68.5[] percent of Decision One’s originated mortgages in North Carolina were high cost loans. Beneficial originated 21.3 percent of its North Carolina mortgages at high cost rates. B. THE DEFENDANTS’ DISCRETIONARY PRICING POLICY CONTINUES THE
PERVASIVE DISCRIMINATION AGAINST MINORITIES IN MORTGAGE LENDING 48. Defendants originate and fund mortgage loans through loan officers, brokers and through a network of correspondent lenders. 49. On information and belief, the loan officers, mortgage brokers and correspondent lenders that work with Defendants broker and fund loans in collaboration with Defendants and in conformance with Defendants’ credit-pricing policies and procedures. 50. Defendants have followed -- and continue to follow -- discretionary loan pricing procedures that cause minority borrowers to pay subjective fees such as yield spread premiums and other mortgage related finance charges at higher rates than similarly situated non-minority borrowers. Defendants have intentionally discriminated against Plaintiffs and Class Members through these policies and procedures -- systematically giving them mortgage loans with less favorable conditions than were given to similarly situated non-minority borrowers. This pattern of discrimination is not the result of random or non-discriminatory factors. Rather, it is a direct result of Defendants’ mortgage lending policies and procedures.
16 Available at, www.federalreserve.gov/SECRS/2006/August/20060808/OP-1253/OP1253_7_1.pdf
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51. On information and belief, Defendants’ authorized loan officers, mortgage brokers and correspondent lenders receive part of all of their compensation from Defendants based on the interest rate charged to the borrower. Defendants’ in-house loan officers, authorized brokers and correspondent lenders receive more compensation from Defendants when they steer their clients into HSBC loans with higher interest rates, and less compensation when they place their clients into HSBC loans with lower interest rates.
52. Defendants’ conduct intentionally and actively implements this discriminatory credit-pricing policy in a number of ways, including actively educating its loan officers and brokers about Defendants’ credit policies and procedures, and directing its loan officers and brokers regarding the marketing of Defendants’ loan products.
53. Decision One made home-mortgage loans – the majority of which were subprime loans – that were arranged by its loan officers and/or its network of mortgage brokers. Those loans were made in reliance on Decision One’s credit-granting policies and with the participation of HSBC Finance.
54. Due to HSBC's policies as to where to place its offices and how to market its products, black and Hispanic borrowers are more likely than white borrowers to apply for credit from HSBC through its sub-prime subsidiary, Decision One, or from a Decision One authorized broker.
55. Even after controlling for differences in credit risk, because of the Discretionary Pricing Policy, loans obtained from Defendants’ network of brokers are more expensive to black and Hispanic homeowners, on average, than loans obtained directly from HSBC.
56. HSBC Finance, in the ordinary course of its business, regularly participates in credit decisions made by Decision One, including setting the terms of credit available in
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transactions originated by Decision One. HSBC Finance and Decision One jointly established the Discretionary Pricing Policy at issue in this case.
57. HSBC Finance participated in the decisions to grant credit to the Plaintiffs including, without limitation, by making the Discretionary Pricing Policy applicable to their loans.
58. A high-APR loan is a loan whose APR is at least three percentage points higher than the interest rate on U.S. Treasury securities of the same maturity, at the time the loan was made.
59. Based on the latest available Home Mortgage Disclosure Act (“HMDA”) data, available from the Department of Housing and Urban Development, whites who borrow from Decision One are over one and a half times more likely than blacks to have received a loan other than a high-APR loan to purchase or refinance their home.
60. While credit differences may explain some part of the disparities in rate and terms, the Defendants’ Discretionary Pricing Policy accounts for a significant portion of the disparity.
61. The Defendants’ Discretionary Pricing Policy is unrelated to a borrower’s objective credit characteristics such as credit history, credit score, debt-to-income ratio and loanto-value ratios and results in purely subjective charges that affect the rate otherwise available to borrowers.
62. Defendants provided their loan officers and authorized mortgage brokers with substantial information about its loan programs, rates and credit criteria, as well as its policies for compensating mortgage brokers who arrange business for it.
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63. Defendants authorized certain mortgage brokers to accept applications on its behalf, to quote financing rates and terms (within the limitations set by HSBC), to inform credit applicants of HSBC’s financing options and to originate finance transactions using HSBC’s forms, in accordance with its policies.
64. Defendants provided their loan officers and brokers with credit applications, loan contracts and other required financing forms, as well as instructions on filing out such documents necessary to complete home mortgage transactions.
65. In all of the home-mortgage-finance-transactions at issue, HSBC Finance advances the funds to make the loans and bears some or all of the risk of default.
66. After a customer provided credit information to one of Defendants’ loan officers or brokers, Defendants computed a financing rate through an objective credit analysis that, in general, discerns the creditworthiness of the customer.
67. These credit analyses consider numerous risk-related variables of creditworthiness, including credit bureau histories, payment amounts, debt ratio, bankruptcies, automobile repossessions, charge-offs, prior foreclosures, payment histories, credit score, debtto-income ratios, loan-to-value ratios and other risk-related attributes or variables. On information and belief, these variables are used by Defendants to determine a “mortgage score” for each credit applicant.
68. Based on these objective risk-related variables and the resulting mortgage score, Defendants derived a risk-based financing rate at which it would provide a home mortgage, often called the “Par Rate.” Alternatively, experienced Defendants loan officers and brokers estimated the risk-related Par Rate by referring to the applicant’s credit bureau determined credit score.
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69. Although Defendants’ initial analysis applied objective criteria to calculate this risk-related Par Rate, Defendants then authorized a subjective component in its credit pricing system —the Discretionary Pricing Policy — to impose additional non-risk charges. On information and belief, the applicable Par Rates and authorized discretionary charges were communicated by Defendants to their loan officers and brokers via regularly published “rate sheets.” Such rate sheets were published by Decision One via intranet and internet.
70. The discretionary charges are paid by the homeowner as a component of the total finance charge (the “Contract APR”), without the homeowner knowing that a portion of their Contract APR was a non-risk-related charge.
71. Loan officers and brokers had discretion, within the limits set by the Defendants, to impose discretionary mark-ups as additional points in interest – “a rate mark-up” or as points and fees on the loan. When there was a rate mark-up, the Defendants received additional income.
72. The Defendants’ Discretionary Pricing Policy, by design, caused persons with identical or similar credit scores to pay different amounts for the cost of credit. As a result of using a subjective pricing component that is designed to charge persons with the same credit profiles different amounts of finance charge, the objective qualities of the initial credit analysis used to calculate the Par Rate are undermined and the potential for race bias becomes inherent in the transaction.
73. The Discretionary Pricing Policy, although facially neutral (insofar as Defendants use the same or effectively the same policy for all credit applicants), has a disproportionately adverse effect on blacks and Hispanics compared to similarly situated whites in that blacks and Hispanics pay disparately more discretionary charges (both in frequency and amount) than
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similarly situated whites. Statistical analysis of discretionary charges imposed on black, Hispanic and white customers of other mortgage companies that use credit pricing systems structured like that of the Defendants have revealed that blacks and Hispanics, after controlling for credit risk, are substantially more likely than similarly situated whites to pay such charges.
74. Loan officers and brokers are agents of Defendants for the purpose of setting credit price, which is always set based on Defendants’ policy.
75. The disparate impact suffered by blacks and Hispanics is a direct result of Defendants’ Discretionary Pricing Policy in that Defendants designed, disseminated, controlled, implemented and profited from the Discretionary Pricing Policy creating the disparate impact.
76. The Defendants have a non-delegable duty to ensure that their mortgage financing structure and policies do not have a disparate impact on legally protected classes, such as blacks and Hispanics. Despite having such a non-delegable duty, the Defendants chose to use, a commission-driven, subjective pricing policy that they knew or should have known had a significant and pervasive adverse impact on black and Hispanic homeowners.
77. The disparities between the terms of Defendants’ transactions involving black and Hispanic homeowners and the terms involving whites homeowners cannot be a product of chance and cannot be explained by factors unrelated to race, but, instead, are the direct causal result of the use of the discriminatory Discretionary Pricing Policy.
78. There are no legitimate business reasons justifying the Defendants’ discriminatory Discretionary Pricing Policy that could not be achieved by a policy that has no discriminatory impact or a greatly reduced discriminatory impact.
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Case 1:07-cv-11669-GAO Document 58 Filed 11/27/09 Page 19 of 31
C. THE DEFENDANTS’ DISCRETIONARY PRICING POLICY DISCRIMINATED AGAINST PLAINTIFFS
Facts Relating To Plaintiff Suyapa Allen 79. Suyapa Allen resides at 78 Blackstone Street, Unit 78, Stoughton, MA 02072. 80. After attending a first-time homebuyer's class and finding a home she wanted to
buy, Ms. Allen's realtor, Prudential Scott Haynes Realtor, in Dorchester, Massachusetts, referred her to Zeus Funding to seek financing.
81. On September 8, 2006, Ms. Allen entered into a mortgage transaction with Decision One as lender and Zeus Funding as broker. The transaction was divided into two loans.
82. The larger loan (Loan No. 2090060823014) is a 30-year, adjustable rate loan with a balloon feature and a disclosed APR of 11.2141%. The loan amount was $243,200.00.
83. According to the HUD-One Settlement Statement, the following was paid from the seller’s funds at settlement: a $1,059.00 loan origination fee to Decision One, a $775.00 processing fee to Zeus Funding, a $275.00 application fee to Zeus Funding and a $260.00 administration fee to Zeus Funding.
84. Although the settlement sheet ostensibly reflects a credit from the seller to cover closing costs, all fees and charges were paid by Ms. Allen. Had the seller not provided a credit for settlement costs, the purchase price of the property would have been reduced by the amount of the credit. In effect, Ms. Allen ultimately bore the settlement costs in the transaction by paying a higher purchase price for the property.
85. The smaller loan (Loan No. 2090060823015), which had a loan amount of $60,800, is a 15-year fixed rate loan with a balloon feature, providing for a final payment of $53,390.01. The APR of the smaller loan is 12.7483%.
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Case 1:07-cv-11669-GAO Document 58 Filed 11/27/09 Page 20 of 31
86. At the time of the transaction, Ms. Allen had a credit score that would have qualified with many lenders for a mortgage in the prime-market. Instead, Ms. Allen received mortgages at sub-prime rates and on sub-prime terms.
87. On information and belief, unbeknownst to Ms. Allen, the contract APR on the mortgage loans was actually a combination of an objective, risk-based calculation and a totally subjective, discretionary component added pursuant to the HSBC's Discretionary Pricing Policy.
88. On information and belief, Ms. Allen was subject to HSBC's Discretionary Pricing Policy.
89. On information and belief, Ms. Allen was charged a disproportionately greater amount in non-risk-related credit charges than similarly situated white persons. Facts Relating To Plaintiff Glenda Medina
90. Glenda Medina resides at 28 Gilbert Street, Lawrence, Massachusetts 01843. She formerly owed and lived in a home located at 24 Kenwood Road, Methuen, Massachusetts 01844, but lost the home to foreclosure. Ms. Medina purchased the Methuen property in October, 2005 and received her purchase money loan from Decision One.
91. On October 20, 2005, Ms. Medina entered into a mortgage transaction with Decision One as the lender and Global Home Loans & Finance (“Global Home”) as the broker. The transaction was divided into two loans.
92. The larger loan (Loan No. 2090051075870) is a 30-year, adjustable rate loan with a disclosed APR of 9.9462%. The loan amount was $296,000.
93. According to the HUD-One Settlement Statement, Decision One paid Global Home a $4,810.00 yield spread premium (paid outside of closing) based on the discretionary marked up rate in the transaction.
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Case 1:07-cv-11669-GAO Document 58 Filed 11/27/09 Page 21 of 31
94. Ms. Medina paid $22,067.20 in settlement charges in connection with the loan, including, a $1,300 broker fee to Global Home, a $1,059.00 origination fee to Decision One, a $520.00 processing fee to Global Home, a $520.00 application fee to Global Home and a $500.00 administration fee to Global Home.
95. The smaller loan (Loan No. 2090051075880), which had a loan amount of $74,000.00, is a 15-year fixed rate loan with a balloon feature, providing for a final payment of $63,881.95. The APR of the smaller loan is 11.9%.
96. At the time of the transaction, Ms. Medina had a credit score that would have qualified with many lenders for a mortgage in the prime-market. Instead, Ms. Medina received mortgages at sub-prime rates and on sub-prime terms.
97. On information and belief, unbeknownst to Ms. Medina, the contract APR on the mortgage loans was actually a combination of an objective, risk-based calculation and a totally subjective, discretionary component added pursuant to the HSBC's Discretionary Pricing Policy.
98. On information and belief, Ms. Medina was subject to HSBC's Discretionary Pricing Policy.
99. On information and belief, Ms. Medina was charged a disproportionately greater amount in non-risk-related credit charges than similarly situated white persons. Facts Relating to Demetrie Doiron
100. Mr. Doiron, a resident of Citrus Heights, California, is a Minority homeowner. On June 30, 2006, Mr. Doiron obtained a mortgage loan from HSBC, secured by his residence located at 6541 Greenback Lane, Citrus Heights, California. His lender was listed as “HSBC Mortgage Services, Inc.,” with an address of 636 Grand Regency Blvd., Brandon, Florida.
101. At the time of his loan, Mr. Doiron was gainfully employed and had a good credit score. Mr. Doiron was placed into an adjustable rate mortgage with an initial rate of 8.11% and
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Case 1:07-cv-11669-GAO Document 58 Filed 11/27/09 Page 22 of 31
an APR of 11.32%. At closing, Mr. Doiron was surprised by the interest rate on his loan, as HSBC had promised a lower rate prior to closing.
102. Mr. Doiron is now trapped in a high cost loan. Mr. Doiron was instructed to sign a prepayment rider, which restricts his ability to refinance into a less expensive loan.
103. At the time of closing, HSBC was aware of Mr. Doiron’s Minority status. 104. Plaintiff Demetrie Doiron has been harmed by Defendants’ unlawful conduct. Facts Relating to Rosalind Cavero 105. Ms. Cavero is a resident of Chicago, Illinois. On June 12, 2006, Ms. Cavero obtained a mortgage loan from HSBC, secured by her residence located at 1645 W. School St., Unit 218, Chicago, Illinois. Her lender was listed as “HSBC Mortgage Corp. (USA),” with an address of 2929 Walden Ave., Depew, New York. 106. At the time of her loan, Ms. Cavero was gainfully employed, earned excellent income and a good credit score. Despite her employment history, income and credit score, Ms. Cavero was placed into an adjustable rate mortgage with an initial rate of 8.00%. 107. Upon information and belief, at the time of closing, HSBC was aware of Ms. Cavero’s Minority status. 108. Plaintiff Rosalind Cavero has been harmed by Defendants’ unlawful conduct. Facts Relating to Freddie Ramon Chavez Toruno 109. Freddie Ramon Chavez Toruno resides at 809 West Madison Avenue, Montobello, CA 90640 110. On or about June 21, 2004, Plaintiff refinanced his home. He engaged the services of mortgage broker 1st Realty Funding, Inc. (“1st Realty”), to assist him with his refinance transaction.
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Case 1:07-cv-11669-GAO Document 58 Filed 11/27/09 Page 23 of 31
111. Plaintiff refinanced his home with a $300,000 loan issued by Defendant Decision One. In connection with this transaction, Plaintiff was required to pay 1st Realty a “Brokerage Fee” of $3,900. At the same time, Plaintiff’s loan also was assessed a separate fee described as “Mortgage Broker Compensation,” which was paid outside of closing (“POC”) to 1st Realty in the amount of $3,000. On information and belief, these broker fees were assessed pursuant to Defendants standard credit pricing policies.
112. Plaintiff is primarily Spanish-speaking, and his mortgage broker and Defendants knew he was a minority borrower.
113. As a result of Defendants’ discriminatory conduct, Plaintiff received a loan on worse terms with higher costs than similarly situated non-minority borrowers.
TOLLING/CONTINUING VIOLATIONS 114. The Discretionary Pricing Policy is part of the Defendants’ regular course of business and standard operating procedure. 115. The Discretionary Pricing Policy has been in effect throughout the Class Period. 116. Because of its disparate effect, the Discretionary Pricing Policy constitutes an ongoing pattern or practice of discrimination. 117. Plaintiffs are challenging not just single, isolated incidents of conduct but a continuing policy and practice -- namely the Discretionary Pricing Policy which enables racial discriminatory practices, unrelated to creditworthiness. 118. The Discretionary Pricing Policy has affected, and continues to affect, Plaintiffs and members of the proposed class.
CLASS ALLEGATIONS 119. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full.
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120. This class action is brought pursuant to ECOA, the FHA and the Civil Rights Act by the individual named Plaintiffs on behalf of themselves and all African-American or Hispanic persons throughout the United States (“the Class”) who, between January 1, 2004 and the date of entry of the judgment in this action (the “Class Period”), obtained residential closed-end real estate secured loans from any of the following businesses: Decision One, HFC/Beneficial, HSBC Mortgage Corp. (USA) or HSBC Mortgage Services Telesales.
121. Plaintiffs sue on their own behalf and on behalf of a class of persons under Rules 23(a) and (b)(2) and (b)(3) of the Federal Rules of Civil Procedure.
122. "Discretionary Pricing Policy" means HSBC's policy of authorizing its loan officers and brokers to impose subjective, discretionary charges and interest mark-ups that are included in the finance charge loans they originate.
123. Plaintiffs do not know the exact size or identities of the proposed Class, since such information is in the exclusive control of HSBC. Plaintiffs believe that the Class encompasses many thousands or tens of thousands of individuals who are geographically dispersed throughout the United States. Therefore, the proposed class is so numerous that joinder of all members is impracticable.
124. All members of the Class have been subject to and affected by the same Discretionary Pricing Policy. There are questions of law and fact that are common to the Class, and predominate over any questions affecting only individual members of the Class. These questions include, but are not limited to the following:
(a) the nature, scope and operations of HSBC's Discretionary Pricing Policy;
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Case 1:07-cv-11669-GAO Document 58 Filed 11/27/09 Page 25 of 31
(b) whether HSBC Finance and Decision One are creditors under the ECOA because, for example, in the ordinary course of their business they participate in the decision of whether or not to extend credit to consumers;
(c) whether HSBC's Discretionary Pricing Policy is a facially neutral credit pricing system that has effected racial discrimination in violation of ECOA;
(d) whether there are statistically significant disparities between the amount of the discretionary charges imposed on black and Hispanic persons and the amount of the discretionary charges imposed on white persons that are unrelated to creditworthiness;
(e) whether any legitimate business reason for the Discretionary Pricing Policy can be achieved by a credit pricing system less discriminatory in its impact;
(f) whether Defendants have violated the Civil Rights Act; (g) whether the Court can enter declaratory and injunctive relief; and (h) the proper measure of disgorgement or damages. 125. The claims of the individual named Plaintiffs are typical of the claims of the Class and do not conflict with the interests of any other members of the Class in that both the Plaintiffs and the other members of the Class were subject to the same Discretionary Pricing Policy that has disproportionately affected black and Hispanic homeowners. 126. The individual named Plaintiffs will fairly and adequately represent the interests of the Class. They are committed to the vigorous prosecution of the Class’ claims and have retained attorneys who are qualified to pursue this litigation and have experience in class actions – in particular, consumer protection and discrimination actions.
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127. A class action is superior to other methods for the fast and efficient adjudication of this controversy. A class action regarding the issues in this case does not create any problems of manageability.
128. In the alternative, HSBC has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole.
COUNT I (DISCRIMINATION IN VIOLATION OF THE EQUAL CREDIT OPPORTUNITY ACT)
129. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full. 130. Defendants are creditors as defined in the ECOA, and in the ordinary course of its business, each participated in the decision of whether or not to extend credit to the Plaintiffs, the proposed Class representatives herein, and all prospective Class members. 131. HSBC designed, disseminated, controlled, implemented and profited from the discriminatory policy and practice alleged herein — the Discretionary Pricing Policy —which has had a disparate economic impact on blacks and Hispanics compared to similarly situated whites. 132. All actions taken by the HSBC loan officers and HSBC’s brokers were in accordance with the specific authority granted to them by HSBC and were in furtherance of HSBC's policies and practices. 133. As a result of HSBC's Discretionary Pricing Policy, HSBC has collected more in finance charges from blacks and Hispanics than from similarly situated white persons, for reasons totally unrelated to credit risk. 134. HSBC's Discretionary Pricing Policy violates the Equal Credit Opportunity Act.
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Case 1:07-cv-11669-GAO Document 58 Filed 11/27/09 Page 27 of 31
135. Plaintiffs and prospective class members are aggrieved persons as defined in ECOA by virtue of having been subject to the discriminatory, Discretionary Pricing Policy.
COUNT II (DISCRIMINATION IN VIOLATION OF THE FAIR HOUSING ACT) 136. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full. 137. HSBC engaged in residential real estate-related transactions with respect to the Plaintiffs, the proposed Class representative herein, and all prospective Class members. 138. HSBC's Discretionary Pricing Policy has resulted in discrimination with respect to the Plaintiffs, the proposed Class representative herein, and all prospective members of the Class. 139. As a result of HSBC's Discretionary Pricing Policy, HSBC has collected more in finance charges from blacks and Hispanics than from similarly situated white persons, for reasons totally unrelated to credit risk. 140. HSBC's Discretionary Pricing Policy violates the Fair Housing Act and constitutes actionable discrimination on the basis of race. 141. Plaintiffs and the Class are aggrieved persons as defined in FHA by virtue of having been subject to the discriminatory, HSBC's Discretionary Pricing Policy.
COUNT III: VIOLATIONS OF THE CIVIL RIGHTS ACT: RACIAL DISCRIMINATION
(42 U.S.C. §§ 1981, 1982 et seq.) 142. Plaintiffs hereby incorporate by reference the preceding paragraphs as if they were fully set forth herein. 143. The Civil Rights Act of 1866 and 1870, and later expanded in 1991, prohibits racial discrimination in the formation and issuance of contracts, and intentional interference to purchase and hold real property.
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Case 1:07-cv-11669-GAO Document 58 Filed 11/27/09 Page 28 of 31
144. Defendants intentionally discriminated against Plaintiffs and the Class Members by charging them higher interest rates than those charged to similarly-situated Caucasian mortgagees.
145. By charging higher rates to the Plaintiffs and Class Members, Defendants unlawfully discriminated against them in the (i) formation of contracts, (ii) making, performance, modification, and termination of contracts, and/or (iii) the enjoyment of all benefits, privileges, terms and conditions of the contractual relationship, and in their right to purchase and hold real property.
146. Defendants’ actions violate the Civil Rights Act. As a proximate result of Defendants’ systematic violation of this statute, Plaintiffs and the Class Members are entitled to the requested relief provided thereunder.
PRAYER FOR RELIEF WHEREFORE, the Plaintiffs respectfully request the following relief: A. Certify this case as a class action and certify the named Plaintiffs herein to be adequate class representative and her counsel to be class counsel; B. Enter a judgment, pursuant to 15 U.S.C. 1691e(c) and/or 42 U.S.C. § 3613, declaring the acts and practices of HSBC complained of herein to be in violation of ECOA and the FHA; C. Grant a permanent or final injunction, pursuant to 15 U.S.C. 1691e(c) and/or 42 U.S.C. § 3613(c), enjoining HSBC, and HSBC's agents and employees, affiliates and subsidiaries, from continuing to discriminate against Plaintiffs and the members of the Class because of their race through further use of the Discretionary Pricing Policy or any non-riskrelated Discretionary pricing policy employed by HSBC;
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Case 1:07-cv-11669-GAO Document 58 Filed 11/27/09 Page 29 of 31
D. Order HSBC, pursuant to 15 U.S.C. § 1691e(c) and/or 42 U.S.C. § 3613(c), to adopt and enforce a policy that requires appropriate training of HSBC's employees and its brokers to prevent discrimination;
E. Order HSBC, pursuant to 15 U.S.C. § 1691e(c) and/or 42 U.S.C. § 3613(c), to monitor and/or audit the racial pattern of its financings to ensure the cessation of discriminatory effects in its home mortgage transactions;
F. Order disgorgement, pursuant to 15 U.S.C. § 1691e (c), of all disproportionate non-risk charges imposed on blacks and Hispanics by HSBC's Discretionary Pricing Policy; and order the equitable distribution of such charges, as restitutionary relief, to all appropriate class members;
G. enjoin collection of all disproportionate non-risk charges in connection with future payments by class members;
H. Order actual and punitive damages to the Plaintiffs and the class pursuant to 42 U.S.C. § 3613(c);
I. Award Plaintiffs the costs of this action, including the fees and costs of experts, together with reasonable attorneys’ fees, pursuant to 15 U.S.C. § 1691e(d) and/or 42 U.S.C. § 3613(c); and
J. Grant Plaintiffs and the Class such other and further relief as this Court finds necessary and proper.
JURY TRIAL DEMANDED Plaintiffs demand a trial by jury on all issues so triable. Dated: November 27, 2009
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Case 1:07-cv-11669-GAO Document 58 Filed 11/27/09 Page 30 of 31
Respectfully submitted, On Behalf of the Plaintiffs,
/s/ Gary Klein Gary Klein (BBO # 560769) Shennan Kavanagh (BBO # 655174) Kevin Costello (BBO # 669100) RODDY KLEIN & RYAN 727 Atlantic Avenue Boston, MA 02111-2810 Telephone: (617) 357-5500 ext. 15 Facsimile: (617) 357-5030
Joseph H. Meltzer Edward W. Ciolko Donna Siegel Moffa Joseph A. Weeden BARROWAY TOPAZ KESSLER MELTZER & CHECK, LLP 280 King of Prussia Road Radnor, PA 19087 Telephone: (610) 667-7706 Facsimile: (610) 667-7056
Jeffrey L. Taren KINOY, TAREN & GERAGHTY, P.C. 224 S. Michigan Ave. Suite 300 Chicago, IL 60604 Telephone: (312) 663-5210 Facsimile: (312) 663-6663
Andrew S. Friedman Wendy J. Harrison BONNETT, FAIRBOURN, FRIEDMAN & BALINT, P.C. 2901 North Central Avenue, Suite 1000 Phoenix, Az 85012
Mark A. Chavez (pro hac vice admission pending) Jonathan Gertler Nance F. Becker CHAVEZ & GERTLER, L.L.P. 42 Miller Avenue Mill Valley, CA 94941
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Case 1:07-cv-11669-GAO Document 58 Filed 11/27/09 Page 31 of 31
John J. Stoia, Jr. Coty R. Miller COUGHLIN STOIA GELLER RUDMAN and ROBBINS LLP 655 West Broadway, Suite 1900 San Diego, CA 92101 Samuel H. Rudman Robert M. Rothman COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 58 South Service Road, Suite 200 Melville, NY 11747
31

 
 Case 1:07-cv-11669-GAO Document 71 Filed 12/09/09 Page 1 of 7

IN THE Ul'iITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

--,-,-,,-',-,,---
)

SUYAPA ALLEN, GLENDA MEDINA,

)

FREDDIE RAMON CHAVEZ TORUNO.

)

DEMETRIE DOIRON and ROSALIND

)

CAVERO, on behalf of themselves and all

J

others similarly situated,

)

)

PlaintitIs,

}

)

vs.

)

)

DECISION ONE MORTGAGE

)

COMPANY, LLC, HSBC FINANCE

}

CORPORATION, HSBC NORTH

)

AMERICA HOLDINGS INC., HSBC

)

MORTGAGE CORPORAnON (USA), and )

HSBC MORTGAGE SERVICES INC.

)

)

Defendants.

)

~.-~~~.~~.-~-~.---.~~-.-.~-- )

c'A, NO. I:07-cv-11669-GAO

:

Case 1:07-cv-11669-GAO Document 71 Filed 12/09/09 Page 2 of 7
WHEREAS, Plaintiffs have made a motion (the "Motion"), pursuant to Federal Rule of Civil Procedure 23, for an order preliminarily approving settlement ofthe abovecaptioned action (the "Action") in accordance with the Stipulation and Agreement ofSettiement dated November 27,2009 (the "Agreement") (Docket No, 59-2), which, together "vith the Exhibits attached thereto, sets forth the terms and conditions for a proposed settlement of the Action and its dismissal with prejudice; and
WHEREAS, as a condition of the Agreement, Plaintiffs. on behalf of themselves individually and on behalf of each of the Settlement Class Members, have agreed to release all claims arising under federal, state or common law as specified in Section 5.1 of the Agreement; and
WHEREAS, this Court having read and considered Plaintiffs' Motion, the Agreement and Exhibits attached thereto, as well as all arguments and submissions from the Parties and intervenors at the noticed hearings,
WHEREAS, all defined terms shall have the same meaning as set forth in the Agreement.
NOW, THEREFORE, IT IS HEREBY ORDERED: I. For purposes of this Action, this Court has subject matter jurisdiction and, for purposes of the settlement only, this Court has personal jurisdiction over the Parties, including all Settlement Class Members. 2. For purposes of this settlement only, this Court preliminarily certifies fbe following Settlement Class:
All African-American or Hispanic persons throughout the United States who, between January 1, 2004 and the date of the entry of the Preliminary Approval Order, obtained residential closed-end real estate secured loans from any of the following businesses: Decision One, HFC/Beneficial, HSBC Mortgage Corporation (USA) or HSBC Mortgage Services Telesales.
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a. As to damages claims, the Settlement Class preliminarily will be certified pursuant to Federal Rule of Civil Procedure 23(b)(3), and all Settlement Class Members shall have the right to exclude themselves by way of the opt-out procedure set forth below in Paragraph 12.
b. As to the Additional Consideration provided to all Settlement Class Members, the Settlement Class preliminarily will be certified as a mandatory, non-opt-out settlement class pursuant to Federal Rule of Civil Procedure 23(b)(2). If final approval is granted, Settlement Class Members will be deemed to release all daims for injunctive and non-monetary equitable relief and may not exclude themselves from this portion of the settlement.
3. This Court preliminarily finds, solely for purposes of the settlement, that the Action may be maintained as a class action on behalf of the Settlement Class because: (a) the Settlement Class is so numerous that joinder of all Settlement Class Members in the Action is impracticable; (b) there are questions oflaw and fact common to Settlement Class ;Vlembers that predominate over any individual questions; (c) Plaintiffs' claims are typical of the claims of the Settlement Class; (d) Plaintiffs and Class Counsel have fairly and adequately represented and protected the interests of the Settlement Class; (e) HSBC Defendants have acted or refused to on grounds that apply generally to the Settlement Class, so that final injunctive relief or corresponding declaratory relief is appropriate with respect to the Settlement Class as a whole; and (t) a class action is superior to other available methods for the fair and efficient adjudication of the controversy.
4. This Court preliminarily approves the Agreement as being fair, reasonable and adequate and within the range of possible approval, subject to further consideration at the Final Fairness Hearing as set forth below in Paragraph 7.
5. This Court preliminarily finds that Plaintiffs fairly and adequately represent the interests of the Settlement Class and therefore designate Plaintiffs as the representatives of the Settlement Class.
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Case 1:07-cv-11669-GAO Document 71 Filed 12/09/09 Page 4 of 7
6. Pursuant to Federal Rule of Civil Procedure 23(g), and after consideration of the factors described therein and oral and written arguments, this Court designates as Class Counsel the law linus of Roddy Klein & Ryan, Bonnett, Fairbourn, Friedman & Balint, P.C., Chavez & Gertler LLP, Coughlin Stoia Geller Rudman & Robbins LLP, and Barroway Topaz Kessler Meltzer & Check, LLP. This Court preliminarily finds that based on the work Class Counsel have done in identifying, investigating and prosecuting the claims in the action, Class Counsel's experience in handling class actions, other complex litigation and claims of the type asserted in this action, Class Counsel's knowledge of the applicable law and the resources Class Counsel have and wit! commit to representing the class, Class Counsel have and will fairly and adequately represent the interests of the Settlement Class. This Court authorizes PlaintitTs and Class Counsel to enter into the Agreement on behalf of the Settlement Class, subject to final approval by this Court of the settlement. Plaintiffs and Class Counsel, on behalfof the Settlement Class, are authorized to take all appropriate action required or penuitted to be taken by the Settieme;1t Class pursuant to the Agreement to effectuate its tenus.
7. The Final Fairness Hearing shall take place before the Honorable George A.
O'Toole Jr. on ~~. to ,2009 at ~/O .a.m.~ at the United States District Court, District of
Massachusetts, Courtroom #9, I Courthouse Way, Suite 2300, Boston, Massachusetts 02210, to detenuine: whef.her the proposed settlement of the Action on the tenus and conditions provided for in the Agreement is fair, adequate and reasonable as to the Settlement Class Members and should be approved; whether the Judgment, as provided for in the Agreement, should be entered; and the amount offees and costs that should be awarded to Class Counsel. and the amount of the service awards that should be awarded to Plaintifts, as provided for in the Agreement. The Court will also hear and consider any properly lodged objections at that time.
8. This Court approves Rust Consulting, Inc. as Settlement Administrator. 9. This Court linds that the notice provision as set forth in Section 6.2 of the Agreement is the only notice required, and that such notice satisfies the requirements ofDuc Process, the Federal Rules of Civil Procedure and any other applicable laws, and constitutes the
• 3 •

Case 1:07-cv-11669-GAO Document 71 Filed 12/09/09 Page 5 of 7
best notice practicable under the circumstances and shall constitute due and sufficient notice to all persons entitled thereto. This Court approves the form and content of the Direct Mail Notices and claim form attached as Exhibits D I, D2 and E to the Agreement.
10. The Court approves the claims procedurcs set forth in Section 6.5 of the Agreement. To be treated as valid, claim forms must be postmarked within one hundred five (J 05) days of entry of this Order.
11. All Settlement Class Members who do not request exclusion Copt-out") from the Settlement Class certified pursuant to Federal Rule of Civil Procedure 23(h)(3) as to damages claims, pursuar:t to the procedure set forth in Paragraph 12 below, shall be bound by all detelminations and judgments in this Action concerning the settlement, including, but not limited to, the validity, binding nature and effectiveness of the releases set forth in Section 5.1 of the Agreement.
12. Any Settlement Class Member who wishes to opt-out of the Settlement Class certitied pursuant tc Federal Rule of Civil Procedure 23(b)(3) as to damages claims shall submit to the Settlement Administrator, with a postmark no later than one hundred five (l 05) days after entry of this Order, an appropriate written request for exclusion by mail. personally signed by the Settlement Class Member, including: (i) the Settlement Class Member's name. address. telephone number; (ii) the account number of the Residential Loan(s}; (iii) a sentence confIrming. under penalty of perjury, that he or she is a Settlement Class Member; and (iv) the following statement: "I request to be excluded from the class settlement in Allen.~al. v.
Decision~Qne MOM~, LLC, et lIL Cnited States District Court, District of Massachusetts,
Case No. 07-1 1669-GAO." No Settlement Class Member, or any person acting on behalf of or in concert or participation with that Settlement Class Member, may exclude any other Settlement Class Member from the Settlement Class, except in the case of joint borrowers.
13. Any Settlement Class Member, who has not previously opted-out in accordance with the terms of Paragraph 12 above. may appear at the Final Fairness Hearing to argue that the proposed settlement should not be approved andlor to oppose the application of Class Counsel
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Case 1:07-cv-11669-GAO Document 71 Filed 12/09/09 Page 6 of 7
for an award of attorneys' fees and costs and the service awards to PlaintifTs; provided, however, that no Settlement Class Member shall be heard, and no objection may be considered, unless the Settlement Class Member files w'ith this Court a wTitten statement of the objection postmarked no later than one hundred five (105) days after entry of this Order. Copies of all objection papers must be served on: Class Counsel: Gary Klein, Roddy Klein & Ryan, 727 Atlantic Ave..
Boston. MA 0211 I; and counsel for HSBC Defendants: Julia B. Strickland, Esq.. Stroock &
Stroock & Lavan LLP, 2029 Century Park East, Los Angeles, Calitornia 90067. All objections must include: (i) the objector's name, address and telephone number; (ii) the account number of the Hesidential Loan(s); (iii) a sentence contirming, under penalty of perjury, that the objector is a Settlement Class Member; (iv) the factual basis and legal grounds for the objection to the settlement; (v) the identity of witnesses whom the objector may call to testifY at the Final Fairness Hearing; and (vi) copies of exhibits intended to be offered into evidence at the Final Fairness Hearing.
14. The costs of notice and settlement administration shall be paid from the Settlement Fund as described in Section3.4(a)(i) of the Agreement.
15. All proceedings in this Action are stayed pending final approval of the settlement, except as may b,: necessary to implement the settlement or comply with the terms of the Agreement.
16. P,:nding final determination of whether the settlement should be approved, Plaintifls. all Settlement Class Members and any person or entity allegedly acting on behalf of Settlement Class Members, either directly, representatively or in any other capacity, are preliminarily enjoined from commencing or prosecuting against the Released Parties any action or proceeding in any court or tribunal asserting any of the Released Claims, provided, however, that this injunction shall not apply to individual claims of any Settlement Class Members who timely exclude themselves in a manner that complies with Paragraph 12 above. This injunction is necessary to protect and effectuate the settlement, this Preliminary Approval Order, and the this Court's flexibility and authority to efTectuate this settlement and to enter judgment when

Case 1:07-cv-11669-GAO Document 71 Filed 12/09/09 Page 7 of 7 appropriate, and is ordered in aid of this Court's jurisdiction and to protect its judgments pursuant to 28 U's,C, section J65J(a).
17. This Court reserves the right to adjourn or continue the date of the Final Fairness Hearing without further notice to Settlement Class Members, and retains jurisdiction to consider all furthcr applications arising out of or connected with the settlement. This Court may approve or modifY the settlement without further notice to Settlement Class Members.
By:
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 UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 07-11669-GAO
SUYAPA ALLEN, GLENDA MEDINA, FREDDIE RAMON CHAVEZ TORUNO, DEMETRIE DOIRON and ROSALIND CAVERO, on behalf of themselves and all others
similarly situated, Plaintiffs,
v.
DECISION ONE MORTGAGE COMPANY, LLC, HSBC FINANCE CORPORATION, HSBC NORTH AMERICA HOLDINGS INC., HSBC MORTGAGE CORPORATION (USA), and HSBC MORTGAGE SERVICES, INC., Defendants.
FINAL APPROVAL ORDER AND JUDGMENT May 13, 2010
O’TOOLE, D.J.
The five named plaintiffs, on their own behalf and on behalf of all similarly situated
consumers, have submitted a Motion for Final Approval of the Class Action Settlement
(“Motion”) seeking final approval of the previously filed Stipulation and Agreement of
Settlement (the “Agreement”), and the exhibits attached thereto, that has been entered into by
and between Plaintiffs and the HSBC Defendants. The HSBC Defendants do not oppose
Plaintiffs’ Motion.
By order dated December 9, 2009 [Docket No. 71], I entered an Order that preliminarily
approved the Agreement and conditionally certified the Settlement Class for settlement purposes
only (the “Preliminary Approval Order”). Due and adequate notice having been given to the
Settlement Class in compliance with the procedures set forth in the Agreement and the
Preliminary Approval Order, this Court having considered all papers filed and proceedings had

herein, and otherwise being fully informed of the premises and good cause appearing therefore, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED:
1. This Final Approval Order and Judgment incorporates by reference the definitions in the Agreement, and all terms used herein shall have the same meanings as set forth in the Agreement.
2. This Court has jurisdiction over the subject matter and, for purposes of this settlement only, personal jurisdiction over all the Parties, including all Settlement Class Members.
3. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, and consistent with Due Process, this Court hereby approves the Agreement and finds that the settlement consideration is fair and that said settlement is, in all respects, fair, just, reasonable and adequate to the Settlement Class Members, and the Parties are hereby directed to perform its terms.
4. This Court hereby certifies, solely for purposes of effectuating this settlement, the “Settlement Class” defined as follows:
All African-American or Hispanic persons throughout the United States who, between January 1, 2004 and the date of the entry of the Preliminary Approval Order, obtained residential closed-end real estate secured loans from any of the following businesses: Decision One, HFC/Beneficial, HSBC Mortgage Corporation (USA) or HSBC Mortgage Services Telesales.
a. As to damages claims, the Settlement Class is certified pursuant to Federal Rule of Civil Procedure 23(b)(3). Settlement Class Members had the right to exclude themselves by way of the opt-out procedure set forth in the Preliminary Approval Order.
b. As to the Additional Consideration provided to all Settlement Class Members, the Settlement Class is certified as a mandatory, non-opt-out
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settlement class pursuant to Federal Rule of Civil Procedure 23(b)(2). Settlement Class Members are deemed to release all claims for injunctive and non-monetary equitable relief and may not exclude themselves from his portion of the settlement. Excluded from the Settlement Class are those persons who validly and timely requested exclusion from the Settlement Class certified pursuant to Federal Rule of Civil Procedure 23(b)(3) by way of the opt-out procedures set forth in the Preliminary Approval Order (identified in Exhibit A hereto) (the “Opt-Outs”). 5. For purposes of this settlement only, this Court finds and concludes that: (a) the Settlement Class Members are so numerous that joinder of all Settlement Class Members is impracticable; (b) there are questions of law and fact common to the Settlement Class which predominate over any individual questions; (c) Plaintiffs’ claims are typical of the claims of the Settlement Class; (d) Plaintiffs and Class Counsel have fairly and adequately represented and protected the interests of all of the Settlement Class Members; (e) HSBC Defendants have acted or refused to on grounds that apply generally to the Settlement Class, so that final injunctive relief or corresponding declaratory relief is appropriate with respect to the Settlement Class as a whole and (f) a class action is superior to other available methods for the fair and efficient adjudication of the controversy, considering: (i) the interests of the Settlement Class Members in individually controlling the prosecution of the separate actions; (ii) the extent and nature of any litigation concerning the controversy already commenced by Settlement Class Members; (iii) the desirability or undesirability of continuing the litigation of these claims in this particular forum; and (iv) the difficulties likely to be encountered in the management of the class action.
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6. This Court finds that the notice provided to Settlement Class Members was the best notice practicable and fully satisfied the requirements of the Federal Rules of Civil Procedure, Due Process, and any other applicable laws.
7. This Court has reviewed and considered all objections to the settlement that have been received.
a. In particular, I have reviewed correspondence submitted to the Court that reflects a possible intention to object to the Settlement including correspondence of Jerome and Judy Rowe, Jacqualine and David Ross, David Garrett (filed at [Docket No. 75]), Mary and Willie Barber, Maurice Hutt and Arnold Emmitt Quarles III.
b. I find that to the extent this correspondence was intended to object to the Settlement, such objections are unsupported and without merit and are overruled in their entirety.
8. None of the objections presents a substantial reason for rejecting the settlement. 9. This Court hereby dismisses with prejudice on the merits and without costs (except as otherwise provided in the Agreement) the above-captioned action (subject to retention of jurisdiction to enforce the settlement). 10. Plaintiffs and each Settlement Class Member (except Opt-Outs who nonetheless are deemed to release all claims for injunctive and non-monetary equitable relief), their respective heirs, executors, administrators, representatives, agents, attorneys, partners, successors, predecessors-in-interest, assigns and all persons acting for or on their behalf, are deemed to have fully, finally and forever released all discrimination-based or discriminationrelated claims, causes of action, or liabilities, whether arising under local, state, or federal law,
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whether by statute, contract, common law, or equity, whether known or unknown, suspected or unsuspected, asserted or unasserted, foreseen or unforeseen, actual or contingent, liquidated or unliquidated, as alleged or as could have been alleged based upon the facts asserted in the Consolidated Amended Complaint as to the defendants therein and the Released Parties, identified in Section 2.37 of the Agreement, except for claims against non-HSBC servicers based upon their post-origination activity. Without limiting the foregoing, the Released Claims specifically extend to claims that Settlement Class Members do not know or suspect to exist in their favor at the time that the settlement, and the releases contained therein, becomes effective.
11. As of the date of entry of the Preliminary Approval Order, Plaintiffs and Settlement Class Members are deemed to have waived Section 1542 of the California Civil Code and any similar, comparable, or similar provisions, rights and benefits conferred by the law of any state or territory of the United States or any jurisdiction, and any principle of common law, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. Plaintiffs and each Settlement Class Member understand and acknowledge the significance of these waivers of California Civil Code Section 1542 and/or of any other applicable law relating to limitations on releases. In connection with such waivers and relinquishment, Plaintiffs and each Settlement Class Member acknowledge that they are aware that they may hereafter discover facts in addition to, or different from, those facts which they now know or believe to be true with respect to the subject matter of the settlement, but that they release fully, finally and forever all
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Released Claims, and in furtherance of such intention, the release will remain in effect notwithstanding the discovery or existence of any such additional or different facts.
12. This Court approves an award to be paid from the Settlement Fund to Class Counsel of $1,800,000 in attorneys’ fees and costs (plus interest actually accrued thereon from the date of the Settlement Fund’s creation, less a proportionate share of any fees charged by the escrow holder for maintenance of the Settlement Fund), and service awards of $5,000 for each Plaintiff (plus interest actually accrued thereon from the date of the Settlement Fund’s creation, less a proportionate share of any fees charged by the escrow holder for maintenance of the Settlement Fund). The service awards shall be in addition to any claims Plaintiffs may have to share in the Fund. This Court, having presided over the above-captioned action and having considered the materials submitted by Class Counsel in support of final approval of the settlement as well as their request for attorneys’ fees and costs, finds the award appropriate based on the following factors:
a. The settlement provides substantial benefits for the class. b. The requested award of attorneys’ fees and expenses is within the range of
reasonable fees for similar class action settlements. c. The requested fee is consistent with the total lodestar fees and costs of
Class Counsel, based on declarations submitted to the Court. d. This litigation raised numerous questions of law and fact, Plaintiffs’
Counsel was opposed by highly skilled defense counsel, the litigation was intensely contested through the completion of the Settlement Agreement, and there was substantial risk that Plaintiffs would not prevail on some or all of their claims.
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e. The Settlement was negotiated at arms’ length and without collusion, with the assistance of a highly qualified mediator.
f. By receiving payment from a common fund, Class Counsel’s interests were fully aligned, during the settlement negotiation process, with those of members of the Settlement Class, such that Class Counsel had appropriate incentives to maximize the size of the common fund.
13. This Final Approval Order and Judgment, the Preliminary Approval Order, the Agreement, and any act performed or document executed pursuant to or in furtherance thereof:
a. Will not be offered or received against the Released Parties as evidence of, or be construed as or deemed to be evidence of, any admission or concession by the Released Parties as to the truth or relevance of any fact alleged by Plaintiffs, the existence of any class alleged by Plaintiffs, the propriety of class certification had the Allen, Toruno, and Doiron Actions been litigated rather than settled, or the validity of any claim that has been or could have been asserted in the Consolidated Amended Complaint or in any other litigation, or the deficiency of any defense that has been or could have been asserted in the Consolidated Amended Complaint or in any other litigation, or of any liability, negligence, fault, or wrongdoing of the Released Parties;
b. Will not be offered as or received against any of the Released Parties as evidence of, or construed as or deemed to be evidence of, any admission or concession of any liability, negligence, fault or wrongdoing, or in any way referred to for any other reason as against any of the parties to the
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Agreement, in any other civil, criminal or administrative action or proceeding, other than such proceedings as may be necessary to effectuate the provisions of the Agreement, except that the Released Parties may refer to it to effectuate the liability protection granted them thereunder; c. Will not be deemed an admission by HSBC North America Holdings Inc. or HSBC Finance Corporation that they are subject to the jurisdiction of any Massachusetts or California court; d. Will not be construed against the HSBC Defendants as an admission or concession that the consideration to be given under the Agreement represents the amount which could be or would have been recovered after trial. 14. All claims received by the Settlement Administrator through the date of this order are allowed and may be paid. 15. The Released Parties may file the Agreement and/or this Final Approval Order and Judgment in any action that may be brought against them in order to support a defense or counterclaim based on principles of res judicata, collateral estoppel, release, good faith settlement, judgment bar, reduction, set-off or any other theory of claim preclusion or issue preclusion or similar defense or counterclaim. 16. Settlement Class Members, and any person or entity allegedly acting on behalf of Settlement Class Members, either directly, representatively or in any other capacity, are enjoined from commencing or prosecuting against the Released Parties any action or proceeding in any court or tribunal asserting any of the Released Claims, provided, however, that this injunction shall not apply to non-released claims of Opt-Outs.
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17. Without affecting the finality of this Final Approval Order and Judgment in any way, this Court retains continuing jurisdiction to implement the Agreement and to construe, enforce and administer the Agreement and this settlement. Class Counsel are to continue in their role to oversee all aspects of the Agreement and settlement. Upon notice to Class Counsel, HSBC Defendants may seek from this Court, pursuant to 28 U.S.C. § 1651(a), such further orders or process as may be necessary to prevent or forestall the assertion of any of the Released Claims in any other forum, or as may be necessary to protect and effectuate the Settlement and this Final Approval Order and Judgment.
18. If an appeal, writ proceeding or other challenge is filed as to this Final Approval Order and Judgment, and if thereafter the Final Approval Order is not ultimately upheld, all orders entered, stipulations made and releases delivered in connection herewith, or in the Agreement or in connection therewith, shall be null and void to the extent provided by and in accordance with the Agreement.
It is SO ORDERED. /s/ George A. O’Toole, Jr. United States District Judge
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 Case 1:07-cv-11669-GAO Document 1 Filed 09/06/07 Page 1 of 18

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

SUYAPA ALLEN on behalf of herself and all others similarly situated,
Plaintiff,
vs.
DECISION ONE MORTGAGE COMPANY, LLC, HSBC FINANCE CORPORATION, and ZEUS FUNDING, LLC,
Defendants.

) ) ) ) ) C.A. NO. 07-11669 ) ) ) ) ) ) ) ) ) ) JURY TRIAL DEMANDED ) ) ) ) )

CLASS ACTION COMPLAINT

Plaintiff, Suyapa Allen ("Plaintiff"), on behalf of herself and all others similarly situated,

by her undersigned attorneys, alleges as follows:

1.

This is a class action brought by Plaintiff, on behalf of herself and other similarly

situated black homeowners, against Decision One Mortgage Company, LLC ("Decision One"),

and HSBC Finance Corporation ("HSBC Finance") (collectively "HSBC" or "Defendants"),

under the Equal Credit Opportunity Act, 15 U.S.C. § 1691, et seq. (“ECOA”) and the Fair

Housing Act, 42 U.S.C. § 3601, et seq. Plaintiff seeks remedies for herself and the Class (defined

in ¶ 18, below) for the discriminatory effects of HSBC's home financing policies and practices.

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2.

As described below, HSBC has established a specific, identifiable and uniform

credit pricing system, a component of which, referred to herein as the Discretionary Pricing

Policy, authorizes unchecked, subjective surcharge of additional points and fees to an otherwise

objective risk-based financing rate. In other words, after a finance rate acceptable to HSBC is

determined by objective criteria (e.g., the individual’s credit history, credit score, debt-to-income

ratio and loan-to-value ratios), HSBC's credit pricing policy authorizes additional discretionary

financing charges and interest mark-ups. These subjective, additional finance charges have a

widespread discriminatory impact on black applicants for home mortgage loans, in violation of

ECOA and the FHA.

3.

HSBC has established policies for retail and wholesale access to its loan products

that subject black financing applicants to a significantly higher likelihood of exposure to

discretionary points, fees and interest mark-ups. These costs drive up the average cost of a

mortgage loan made by Decision One to black applicants.

4.

Plaintiff seeks declaratory and injunctive relief, disgorgement and restitution of

monies disparately obtained from black borrowers.

JURISDICTION AND VENUE

5.

Plaintiffs invoke the jurisdiction of this Court pursuant to 28 U.S.C. § 1331,

which confers original jurisdiction upon this Court in a civil action arising under federal law.

6.

Venue is proper in this Court pursuant to 28 U.S.C. 1391(b) inasmuch as the

unlawful discriminatory practice is alleged to have been committed in this District, Defendants

regularly conduct business in this District, and the named Plaintiff resides in this District.

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PARTIES

7.

Plaintiff, Suyapa Allen, is a black homeowner who resides at 78 Blackstone

Street, Unit 78, Stoughton, MA 02072.

8.

Defendant, Decision One Mortgage Company, LLC ("Decision One"), is a

mortgage lender with a principal place of business at 3023 HSBC Way, Fort Mill, South

Carolina 29707. Decision One operates through more than 15 branches in cities nationwide, as

well as through relationships with loan brokers and correspondents. Decision One Mortgage is

owned by British bank HSBC Holdings through that company's US-based HSBC Finance

subsidiary. Decision One was purchased by Household International in 1999.

9.

Defendant, HSBC Finance (formerly Household International) is the consumer

lending arm of HSBC Holdings. HSBC Finance has a place of business at 2700 Sanders Road,

Prospect Heights, Illinois 60070.

10. Defendant, Zeus Funding, LLC is a mortgage broker with a principal place of

business at 850 SW Lighthouse Drive, Palm City, Florida 34990.

CLASS ALLEGATIONS

11. Plaintiff repeats and re-alleges every allegation above as if set forth herein in full.

12. This class action is brought pursuant to ECOA and the FHA by the individual

named Plaintiff on behalf of herself and all black consumers (the “Class”) who obtained a

Decision One home mortgage loan in the United States between January 1, 2001 and the date of

judgment in this action (the “Class Period”) and who were subject to HSBC's Discretionary

Pricing Policy pursuant to which they paid discretionary points, fees or interest mark-ups in

connection with their loan.

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13. Plaintiff sues on her own behalf and on behalf of a class of persons under Rules 23(a) and (b)(2) and (b)(3) of the Federal Rules of Civil Procedure.
14. "Discretionary Pricing Policy" means HSBC's policy of authorizing its loan officers, brokers and correspondent lenders to impose subjective, discretionary charges and interest mark-ups, that are included in the finance charge loans they originate.
15. Plaintiff does not know the exact size or identities of the proposed Class, since such information is in the exclusive control of HSBC. Plaintiff believes that the Class encompasses many thousands or tens of thousands of individuals who are geographically dispersed throughout the United States. Therefore, the proposed class is so numerous that joinder of all members is impracticable.
16. All members of the Class have been subject to and affected by the same Discretionary Pricing Policy. There are questions of law and fact that are common to the Class, and predominate over any questions affecting only individual members of the Class. These questions include, but are not limited to the following:
a. the nature, scope and operations of HSBC's Discretionary Pricing Policy; b. whether HSBC Finance and Decision One are creditors under the ECOA because,
for example, in the ordinary course of their business they participate in the decision of whether or not to extend credit to consumers; c. whether HSBC's Discretionary Pricing Policy is a facially neutral credit pricing system that has effected racial discrimination in violation of ECOA; d. whether there are statistically significant disparities between the amount of the discretionary charges imposed on black persons and the amount of the
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discretionary charges imposed on white persons that are unrelated to creditworthiness; e. whether any legitimate business reason for the Discretionary Pricing Policy can be achieved by a credit pricing system less discriminatory in its impact; f. whether the Court can enter declaratory and injunctive relief; and g. the proper measure of disgorgement or damages. 17. The claims of the individual named Plaintiff are typical of the claims of the Class and do not conflict with the interests of any other members of the Class in that both the Plaintiff and the other members of the Class were subject to the same Discretionary Pricing Policy that has disproportionately affected black homeowners. 18. The individual named Plaintiff will fairly and adequately represent the interests of the Class. She is committed to the vigorous prosecution of the Class’ claims and has retained attorneys who are qualified to pursue this litigation and have experience in class actions – in particular, consumer protection and discrimination actions. 19. A class action is superior to other methods for the fast and efficient adjudication of this controversy. A class action regarding the issues in this case does not create any problems of manageability. 20. In the alternative, HSBC has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole.
ALLEGATIONS OF CLASS-WIDE DISCRIMINATION 21. HSBC publicly promotes its home financing expertise by means of nationwide advertising campaigns. In its advertisements, HSBC solicits persons to apply for financing with
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Case 1:07-cv-11669-GAO Document 1 Filed 09/06/07 Page 6 of 18
HSBC either in one of its offices or through one of the mortgage brokers whom HSBC has authorized to accept applications on its behalf.
22. HSBC makes home-mortgage loans directly to consumers through its branches in several markets.
23. HSBC also makes home-mortgage loans that are arranged by its network of mortgage brokers. Those loans are made in reliance on HSBC’s credit-granting policies and with the participation of Decision One.
24. Due to HSBC's policies as to where to place its offices and how to market its products, black borrowers are more likely than white borrowers to apply for credit from HSBC through Decision One, by an application made to an authorized broker.
25. Because of the Discretionary Pricing Policy, loans obtained from HSBC through Decision One or HSBC's network of brokers are more expensive to black homeowners, on average, than loans obtained directly from HSBC.
26. A high-APR loan is a loan whose APR is at least three percentage points higher than the interest rate on U.S. Treasury securities of the same maturity, at the time the loan was made.
27. Based on the latest available Home Mortgage Disclosure Act (“HMDA”) data, available from the Department of Housing and Urban Development, whites who borrow from Decision One are over one and a half times more likely than blacks to have received a loan other than a high-APR loan to purchase or refinance their home.
28. While credit differences may explain some part of the disparities in rate and terms, HSBC's Discretionary Pricing Policy accounts for a significant portion of the disparity.
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29. HSBC's Discretionary Pricing Policy is unrelated to a borrower’s objective credit characteristics such as credit history, credit score, debt-to-income ratio and loan-to-value ratios and results in purely subjective charges that affect the rate otherwise available to borrowers.
30. HSBC provides authorized mortgage brokers with substantial information about its loan programs, rates and credit criteria, as well as its policies for compensating mortgage brokers and correspondent lenders who arrange business for it.
31. HSBC authorizes mortgage brokers who have signed a contract with it to accept applications on its behalf, quote financing rates and terms on it (within the limitations set by Decision One), inform credit applicants of HSBC's financing options and to originate finance transactions using HSBC’s forms, in accordance with its policies.
32. In all of the home-mortgage-finance-transactions at issue, HSBC advances the funds to make the loans and bears some or all of the risk of default. HSBC provides its loan officers, brokers and correspondent lenders with credit applications, loan contracts and other required financing forms, as well as instructions on filling out such documents necessary to complete home mortgage transactions.
33. After a customer provides credit information to one of HSBC's loan officers or brokers, HSBC computes a financing rate through an objective credit analysis that, in general, discerns the creditworthiness of the customer.
34. These credit analyses consider numerous risk-related variables of creditworthiness, including credit bureau histories, payment amounts, debt ratio, bankruptcies, automobile repossessions, charge-offs, prior foreclosures, payment histories, credit score, debtto-income ratios, loan-to-value ratios and other risk-related attributes or variables. On
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information and belief, HSBC uses these variables to determine a “mortgage score” for each credit applicant.
35. Based on these objective risk-related variables and the resulting mortgage score, HSBC derives a risk-based financing rate at which it would provide a home mortgage, often called the “Par Rate.” Alternatively, experienced HSBC loan officers, brokers and correspondent lenders can estimate the risk-related Par Rate by referring to the applicant’s credit bureau determined credit score.
36. Although HSBC's initial analysis applies objective criteria to calculate this riskrelated Par Rate, HSBC then authorizes a subjective component in its credit pricing system —the Discretionary Pricing Policy — to impose additional non-risk charges. On information and belief, the applicable Par Rates and authorized discretionary charges are communicated by HSBC to its loan officers and brokers via regularly published “rate sheets.” Such rate sheets are published by HSBC via intranet and internet.
37. The discretionary charges are paid by the customer as a component of the total finance charge (the “Contract APR”), without the homeowner knowing that a portion of their Contract APR was a non-risk-related charge.
38. Loan officers and brokers have discretion, within the limits set by HSBC, to impose discretionary mark-ups as additional points in interest – “a rate mark-up”. When there is a rate mark-up, HSBC shares the additional income, even if the loan is originated by a broker.
39. HSBC's Discretionary Pricing Policy, by design, causes persons with identical or similar credit scores to pay different amounts for the cost of credit. As a result of using a subjective pricing component that is designed to charge persons with the same credit profiles different amounts of finance charge, the objective qualities of the initial credit analysis used to
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calculate the Par Rate are undermined and the potential for race bias becomes inherent in the

transaction.

40. The Discretionary Pricing Policy, although facially neutral (insofar as HSBC uses

the same or effectively the same policy for all credit applicants), has a disproportionately adverse

effect on blacks compared to similarly situated whites in that blacks pay disparately more

discretionary charges (both in frequency and amount) than similarly situated whites. Statistical

analysis of discretionary charges imposed on black and white customers of other mortgage

companies that use credit pricing systems structured like that of HSBC has revealed that blacks,

after controlling for credit risk, are substantially more likely than similarly situated whites to pay

such charges.

41.

Loan officers and brokers are agents of HSBC for the purpose of setting credit

price, which is always set based on HSBC's policy.

42. The disparate impact suffered by blacks is a direct result of HSBC's Discretionary

Pricing Policy in that HSBC designed, disseminated, controlled, implemented and profited from

the Discretionary Pricing Policy creating the disparate impact.

43. HSBC has a non-delegable duty to ensure that its mortgage financing structure

and policies do not have a disparate impact on legally protected classes, such as blacks. Despite

having such a non-delegable duty, HSBC has chosen to use, and on information and belief,

continues to use, a commission-driven, subjective pricing policy that it knows or should have

known has a significant and pervasive adverse impact on black homeowners.

44. The disparities between the terms of HSBC's transactions involving black

homeowners and the terms involving whites homeowners cannot be a product of chance and

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Case 1:07-cv-11669-GAO Document 1 Filed 09/06/07 Page 10 of 18
cannot be explained by factors unrelated to race, but, instead, are the direct causal result of the use of the discriminatory Discretionary Pricing Policy.
45. There are no legitimate business reasons justifying HSBC's discriminatory Discretionary Pricing Policy that could not be achieved by a policy that has no discriminatory impact or a greatly reduced discriminatory impact.
ALLEGATIONS OF NON-DISCLOSURE – FRAUDULENT CONCEALMENT (TOLLING)
46. Commission-driven, discretionary pricing systems – such as those in the real estate mortgage industry that are structurally similar to the system utilized by HSBC – have been found to produce significant discriminatory effects. Knowledge concerning the significant and pervasive discriminatory impact of such commission-driven, discretionary credit pricing systems has been widely circulated throughout the financing industry for several years, particularly since 1994, as a result of numerous high profile actions by the United States Department of Justice and federal regulatory agencies. HSBC has known or should have known that its credit pricing system causes blacks to pay the Defendant more for mortgage financing than the amounts paid by white customers with identical or effectively identical credit scores. The following various regulatory settlements involved discriminatory pricing policies structurally similar to HSBC's pricing policy and were widely reported through the financing industry:
United States v. Blackpipe State Bank, Civ. Act. No. 93-5115 (D. S.D. filed November 16, 1993)(charging American Indians higher interest rates) United States v. First National Bank of Vicksburg, No. 5:94 CV 6(B)(N) (S.D. Miss. filed Jan. 21, 1994) (charging African-Americans higher interest rates) United States v. Huntington Mortgage Co., No. 1; 95 CV 2211 (N.D. Ohio filed October 18, 1995)(charging African-Americans higher fees)
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United States v. Security State Bank of Pecos, No. SA 95 CA 0996 (W.D.Tex. filed October 15, 1995)(charging Hispanics higher interest rates) United States v. First National Bank of Gordon, No. CIV-96-5035 (W.D.S.D. filed April 15, 1996)(charging American Indians higher interest rates) United States v. Fleet Mortgage Corp., No. 96-2279 (E.D.N.Y. filed May 7, 1996)(charging African-Americans and Hispanics higher interest rates) United States v. Long Beach Mortgage Co., No. CV-96-6159 (C.D. Cal. filed Sept. 5, 1996)(charging African-Americans, Latinos, women and persons over age 55 higher interest rates) 47. Despite the fact that HSBC has known or should have known of the discriminatory effect of its credit pricing policy, none of the loan documents inform the customer that its finance rates are subjective and not based solely on risk-related characteristics. 48. Although, pursuant to HSBC's Discretionary Pricing Policy, the final credit rate that a customer pays for credit is subjective, HSBC's advertisements, marketing materials and financing documents universally create and foster the image that HSBC offers non-negotiable, competitive finance rates that are objectively set by HSBC based on credit-risk factors. 49. Despite spending millions of dollars annually on advertising, marketing materials, and the creation and distribution of HSBC financing documents that falsely create and foster the image that HSBC offers competitive rates that are objectively set, HSBC never discloses the truth to its credit applicants concerning the fact that: (a) its credit rates are subjective and can vary significantly among persons with identical credit profiles, and (b) that it has authorized and provided a financial incentive to its loan officers, authorized brokers and correspondent lenders to subjectively increase the credit rate above the rate otherwise available to homeowners. 50. HSBC's black customers, due to the inherent nature of the HSBC's undisclosed pricing system and due to HSBC's deception and concealment, have no way of knowing or suspecting (a) the existence of HSBC's subjective credit pricing policy; (b) that they were
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charged additional subjective credit charges; and (c) that they were charged a disproportionately greater amount for their cost of credit than similarly situated white persons.
FACTUAL ALLEGATIONS Facts Relating To Plaintiff Suyapa Allen
51. Suyapa Allen resides at 78 Blackstone Street, Unit 78, Stoughton, MA 02072. 52. After attending a first-time homebuyer's class and finding a home she wanted to buy, Ms. Allen's realtor, Prudential Scott Haynes Realtor, in Dorchester, Massachusetts, referred her to Zeus Funding to seek financing. 53. On September 8, 2006, Ms. Allen entered into a mortgage transaction with Decision One as lender and Zeus Funding as broker. The transaction was divided into two loans. 54. The larger loan (Loan No. 2090060823014) is a 30-year, adjustable rate loan with a balloon feature and a disclosed APR of 11.2141%. The loan amount was $243,200.00. 55. According to the HUD-One Settlement Statement, Decision One paid Zeus Funding a yield spread premium of an undisclosed amount in connection with the loan. 56. The smaller loan (Loan No. 2090060823015), which had a loan amount of $60,800, is a 15-year fixed rate loan with a balloon feature, providing for a final payment of $53,390.01. The APR of the smaller loan is 12.7483%. 57. A true and correct copy of the Truth-in-Lending disclosure provided in connection with Loan No. 2090060823014 is attached hereto and labeled Exhibit 1. 58. True and correct copies of Truth-in-Lending disclosure and HUD-One Settlement Statement provided in connection with Loan No. 2090060823015are attached hereto and labeled Exhibit 2 and Exhibit 3, respectively.
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59. At the time of the transaction, Ms. Allen had a credit score that would have qualified with many lenders for a mortgage in the prime-market. Instead, Ms. Allen received mortgages at sub-prime rates and on sub-prime terms.
60. On information and belief, unbeknownst to Ms. Allen, the contract APR on the mortgage loans was actually a combination of an objective, risk-based calculation and a totally subjective, discretionary component added pursuant to the HSBC's Discretionary Pricing Policy.
61. On information and belief, Ms. Allen was subject to HSBC's Discretionary Pricing Policy.
62. On information and belief, Ms. Allen was charged a disproportionately greater amount in non-risk-related credit charges than similarly situated white persons.
COUNT I (DISCRIMINATION IN VIOLATION OF THE EQUAL CREDIT OPPORTUNITY ACT
AGAINST HSBC BY PLAINTIFF ON BEHALF OF THE CLASS) 63. Plaintiff repeats and re-alleges every allegation above as if set forth herein in full. 64. Decision One and HSBC Finance are creditors as defined in the ECOA, and in the ordinary course of its business, each participated in the decision of whether or not to extend credit to the Plaintiff, the proposed Class representative herein, and all prospective Class members. 65. HSBC designed, disseminated, controlled, implemented and profited from the discriminatory policy and practice alleged herein — the Discretionary Pricing Policy —which has had a disparate economic impact on blacks compared to similarly situated whites. 66. All actions taken by the HSBC loan officers and HSBC’s brokers were in accordance with the specific authority granted to them by HSBC and were in furtherance of HSBC's policies and practices.
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67. As a result of HSBC's Discretionary Pricing Policy, HSBC has collected more in finance charges from blacks than from similarly situated white persons, for reasons totally unrelated to credit risk.
68. HSBC's Discretionary Pricing Policy violates the Equal Credit Opportunity Act. 69. Plaintiff and prospective class members are aggrieved persons as defined in ECOA by virtue of having been subject to the discriminatory, Discretionary Pricing Policy.
COUNT II (DISCRIMINATION IN VIOLATION OF THE FAIR HOUSING ACT AGAINST HSBC BY PLAINTIFF
ON BEHALF OF THE CLASS) 70. Plaintiff repeats and re-alleges every allegation above as if set forth herein in full. 71. HSBC engaged in residential real estate-related transactions with respect to the Plaintiff, the proposed Class representative herein, and all prospective Class members. 72. HSBC's Discretionary Pricing Policy has resulted in discrimination with respect to the Plaintiff, the proposed Class representative herein, and all prospective members of the Class. 73. As a result of HSBC's Discretionary Pricing Policy, HSBC has collected more in finance charges from blacks than from similarly situated white persons, for reasons totally unrelated to credit risk. 74. HSBC's Discretionary Pricing Policy violates the Fair Housing Act and constitutes actionable discrimination on the basis of race. 75. Plaintiff and the Class are aggrieved persons as defined in FHA by virtue of having been subject to the discriminatory, HSBC's Discretionary Pricing Policy.
COUNT III (DISCRIMINATION IN VIOLATION OF THE
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EQUAL CREDIT OPPORTUNITY ACT AGAINST ZEUS FUNDING BY PLAINTIFF ON BEHALF OF HERSELF, INDIVIDUALLY)
76. Plaintiff repeats and re-alleges every allegation above as if set forth herein in full. 77. Zeus Funding is a creditor as defined in ECOA, and in the ordinary course of its business, participated in the decision of whether or not to extend credit to the Plaintiff. 78. The Plaintiff, Ms. Allen, is a member of a protected class. 79. Following her credit application, Zeus Funding extended credit to Ms. Allen on sub-prime rather than prime terms because of her race. 80. During the same period, Zeus Funding extended credit to similarly situated white borrowers on prime terms. 81. Zeus Funding's conduct violates the Equal Credit Opportunity Act. 82. Ms. Allen is an aggrieved person as defined in ECOA by virtue of having been subject to this disparate treatment.
COUNT IV (DISCRIMINATION IN VIOLATION OF THE FAIR HOUSING ACT AGAINST ZEUS FUNDING BY PLAINTIFF ON BEHALF OF
HERSELF, INDIVIDUALLY) 83. Plaintiff repeats and re-alleges every allegation above as if set forth herein in full. 84. Zeus Funding engaged in residential real estate-related transactions with respect to Ms. Allen. 85. The Plaintiff, Ms. Allen, is a member of a protected class. 86. Following her credit application, Zeus Funding extended credit to Ms. Allen on sub-prime rather than prime terms because of her race. 87. During the same period, Zeus Funding extended credit to similarly situated white borrowers on prime terms.
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88. Zeus Funding's conduct violates the FHA. 89. Ms. Allen is an aggrieved person as defined in FHA by virtue of having been subject to this disparate treatment.
PRAYER FOR RELIEF WHEREFORE, the Plaintiffs respectfully request the following relief: On behalf of the Class: a. Certify this case as a class action and certify the named Plaintiff herein to be adequate class representative and her counsel to be class counsel; b. Enter a judgment, pursuant to 15 U.S.C. 1691e(c) and/or 42 U.S.C. § 3613, declaring the acts and practices of HSBC complained of herein to be in violation of ECOA and the FHA; c. Grant a permanent or final injunction, pursuant to 15 U.S.C. 1691e(c) and/or 42 U.S.C. § 3613(c), enjoining HSBC, and HSBC's agents and employees, affiliates and subsidiaries, from continuing to discriminate against plaintiffs and the members of the Class because of their race through further use of the Discretionary Pricing Policy or any non-riskrelated Discretionary pricing policy employed by HSBC; d. Order HSBC, pursuant to 15 U.S.C. § 1691e(c) and/or 42 U.S.C. § 3613(c), to adopt and enforce a policy that requires appropriate training of HSBC's employees and its brokers to prevent discrimination; e. Order HSBC, pursuant to 15 U.S.C. § 1691e(c) and/or 42 U.S.C. § 3613(c), to monitor and/or audit the racial pattern of its financings to ensure the cessation of discriminatory effects in its home mortgage transactions;
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f. Order disgorgement, pursuant to 15 U.S.C. § 1691e (c), of all disproportionate non-risk charges imposed on blacks by HSBC's Discretionary Pricing Policy; and order the equitable distribution of such charges, as restitutionary relief, to all appropriate class members;
g. Order actual and punitive damages to the Plaintiff and the class pursuant to 42 U.S.C. § 3613(c);
h. Award Plaintiff the costs of this action, including the fees and costs of experts, together with reasonable attorneys’ fees, pursuant to 15 U.S.C. § 1691e(d) and/or 42 U.S.C. § 3613(c); and
i. Grant Plaintiff and the Class such other and further relief as this Court finds necessary and proper. On behalf of Ms. Allen:
j. Order actual and punitive damages to the Plaintiff pursuant to 42 U.S.C. § 3613(c);
k. Award Ms. Allen the costs of this action, including the fees and costs of experts, together with reasonable attorneys’ fees, pursuant to 15 U.S.C. § 1691e(d) and/or 42 U.S.C. § 3613(c); and
l. Grant Ms. Allen such other and further relief as this Court finds necessary and proper.
JURY TRIAL DEMANDED Plaintiff demands a trial by jury on all issues so triable.
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Respectfully submitted, On Behalf of the Plaintiff,

DATE: September 6, 2007

/s/ Gary Klein Gary Klein
Gary Klein (BBO # 560769) Shennan Kavanagh (BBO # 655174) Gillian Feiner (BBO # 664152) RODDY KLEIN & RYAN 727 Atlantic Avenue Boston, MA 02111-2810 Telephone: (617) 357-5500 ext. 15 Facsimile: (617) 357-5030
Marvin A. Miller Matthew E. VanTine Lori A. Fanning MILLER LAW LLC 115 South LaSalle Street, Suite 2910 Chicago, IL 60603 Telephone: (312) 332-3400
Thomas M. Sobol (BBO # 471770) Gregory Matthews (BBO # 653316) HAGENS BERMAN SOBOL SHAPIRO LLP One Main Street, 4th Floor Boston, MA 02142 Telephone: (617) 475-1950 Facsimile: (617) 482-3003

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C.A. No. 07-11669

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 Case 1:07-cv-11669-GAO Document 59-2 Filed 11/27/09 Page 1 of 46
STIPULATION AND AGREEMENT OF SETTLEMENT This Stipulation and Agreement of Settlement is entered into by and between plaintiffs SUYAPA ALLEN, GLENDA MEDINA, FREDDIE RAMON CHAVEZ TORUNO, DEMETRIE DOIRON and ROSALIND CAVERO, individually and as putative representatives of the Settlement Class (defined in Section 3.2 below), on the one hand, and HSBC Defendants, on the other hand, subject to preliminary and final approval by the District Court.1
I. RECITALS This Agreement is made with reference to and in contemplation of the following facts and circumstances. A. The Pending Actions In the Allen, Toruno and Doiron Actions, Plaintiffs allege that, in making mortgage loans, HSBC Defendants discriminated against minority borrowers through a pricing system in which loan officers and/or mortgage brokers had discretion to increase interest rates and/or charge additional fees to particular borrowers. Plaintiffs allege that these policies led minority borrowers to obtain higher-cost loans than similarly situated non-minority borrowers. Based on these allegations, Plaintiffs allege causes of action for violations of: (1) the Civil Rights Act; (2) the Fair Housing Act; and (3) the Equal Credit Opportunity Act. Plaintiffs seek, among other things, compensatory and punitive damages, declaratory and injunctive relief, disgorgement and reasonable attorneys’ fees and costs on behalf of themselves and on behalf of a putative nationwide class of AfricanAmerican and Hispanic persons who obtained residential closed-end real estate secured loans from HSBC Defendants.
1 Section II below contains the definitions of capitalized terms utilized herein unless otherwise noted.
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B. Settlement Through Mediation On or about May 2008, following substantial exchange of discovery by agreement between
the parties, Plaintiffs’ Counsel and counsel for HSBC Defendants began an extensive, good faith arm’s-length negotiation concerning the possible settlement of the Allen, Toruno and Doiron Actions, including without limitation by participating in mediation sessions with the Honorable Edward A. Infante (Ret.) of JAMS. The Parties’ negotiations and the mediation sessions resulted in an MOU executed on or about August 19, 2009, which MOU is superseded and replaced by this Agreement. It is the Parties’ desire and intention to effect a full, complete and final settlement and resolution of all existing disputes and claims that relate to or arise out of the Allen, Toruno and Doiron Actions. C. Plaintiffs’ Counsel’s Investigation
Plaintiffs’ Counsel have concluded that a settlement with HSBC on the terms set forth herein is fair, reasonable, adequate and in the best interests of the Settlement Class based upon their investigation and continuing discovery, and taking into account the sharply contested issues involved, HSBC Defendants’ arguments that problems of proof and legal defenses may be an impediment to the claims asserted by Plaintiffs, the risks, uncertainty and cost of further prosecution of the Allen, Toruno and Doiron Actions, and the substantial benefits to be received pursuant to this Agreement. D. HSBC Defendants’ Denial Of Liability
HSBC Defendants vigorously deny all claims asserted in the Allen, Toruno and Doiron Actions, deny all allegations of wrongdoing and liability, and have denied the material allegations and asserted numerous defenses. HSBC Defendants nevertheless desire to settle all claims that are asserted, or which could have been asserted, in the Allen, Toruno and Doiron Actions, on the terms and conditions set forth herein, solely for the purpose of avoiding the burden, expense and uncertainty of continuing litigation and for the purpose of putting to rest the controversies
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Case 1:07-cv-11669-GAO Document 59-2 Filed 11/27/09 Page 3 of 46
engendered by these actions. Nothing in this Agreement or any document shall be construed as an admission or concession by HSBC Defendants of the allegations raised in the Allen, Toruno and Doiron Actions, or any other action, of any fault, wrongdoing or liability of any kind, nor are HSBC Defendants estopped from challenging those allegations in further proceedings in these or in any other action, if the settlement is not finally approved. Moreover, nothing in this Agreement shall be construed as an admission that the District Court has personal jurisdiction over Finance or HNAH, nor are Finance and HNAH estopped from challenging personal jurisdiction in further proceedings in the Allen, Toruno and Doiron Actions, or in any other action, if the settlement is not finally approved.
NOW, THEREFORE, in consideration of the promises and agreements set forth herein, it is hereby STIPULATED AND AGREED, subject to the District Court’s approval, that each and every claim that has been alleged, or could have been alleged, in the Allen, Toruno and Doiron Actions, including any other currently pending or later filed actions making these same claims, shall be fully and finally settled and compromised and dismissed with prejudice, and shall be fully discharged and released, upon and subject to the following terms and conditions:
II. DEFINITIONS 2.1 “Agreement” means this Stipulation and Agreement of Settlement. 2.2 “Allen Action” means the putative class action entitled Allen, et al. v. Decision One Mortgage, LLC, et al., United States District Court, District of Massachusetts, Case No. 07-11669GAO. 2.3 “Civil Rights Act” means 42 U.S.C. §§ 1981, 1982. 2.4 “Confidential Letter Agreement” means the document described in Section 7.5(d) below related to the Opt-Out Limit. 2.5 “Consolidated Amended Complaint” means the complaint to be filed in the District Court as set forth in Section 7.1 below.
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2.6 “Decision One” means Decision One Mortgage Company, LLC. 2.7 “Decision One Borrower” means a Settlement Class Member who qualifies for membership in the Settlement Class by reason of obtaining a loan from Decision One. 2.8 “Direct Mail Notice” means the method of notice set forth in Section 6.2 below. 2.9 “District Court” means the United States District Court for the District of Massachusetts, Boston Division. 2.10 “Doiron Action” means the putative class action entitled Doiron, et al. v. HSBC North America Holdings, et al., United States District Court, Eastern District of California, Case No. 08-00605-FCD. 2.11 “Equal Credit Opportunity Act” means 15 U.S.C. §§ 1691 et seq. 2.12 “Effective Date” means ten (10) business days after the Judgment has become Final. 2.13 “FAP” means a foreclosure avoidance/foreclosure mitigation program or programs. 2.14 “Fair Housing Act” means 42 U.S.C. §§ 3601 et seq. 2.15 “Final” means the date the Judgment becomes final for all purposes because either (i) no appeal has been filed and the time within which an appeal may be filed has lapsed, or (ii) if a timely appeal has been filed, the appeal is finally resolved, with no possibility of further appellate or other review, resulting in final judicial approval of the settlement. 2.16 “Final Approval Order” means the order to be entered by the District Court in the Allen Action finally approving this settlement and resolving all issues between the Parties, as provided for in Section 8.1 below, substantially in the form attached hereto as Exhibit C. 2.17 “Final Fairness Hearing” means the hearing at which the District Court will consider and finally decide whether to approve the settlement provided for in this Agreement, enter Judgment and make such rulings as are contemplated by this Agreement. 2.18 “Finance” means HSBC Finance Corporation.
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2.19 “HFC/Beneficial” means Household Finance Company LLC and Beneficial Company LLC, and any and all current or former licensed affiliates or subsidiaries (direct or indirect) thereof engaged in retail branch-based residential lending operations.
2.20 “HMDA” means the Home Mortgage Disclosure Act, 12 U.S.C. §§ 2801 et seq. 2.21 “HNAH” means HSBC North America Holdings Inc. 2.22 “HSBC” means the entities identified in the attached Exhibit A. 2.23 “HSBC Defendants” means Decision One, Finance, Mortgage Corp., Mortgage Services and HNAH. 2.24 “Judgment” means a final judgment and order of dismissal with prejudice to be entered by the District Court concurrently with the Final Approval Order. 2.25 “LRP” means an adjustable rate mortgage loan reset program or programs. 2.26 “Mediator” means the Honorable Edward A. Infante (Ret.), or if he becomes unable or unwilling to serve, such other person as may be mutually acceptable to Plaintiffs’ Counsel and counsel for HSBC Defendants, but in the absence of mutual agreement as to a substitute mediator, such United States Magistrate Judge as may be appointed by the District Court shall serve as “Mediator” for purposes of this Agreement. 2.27 “MOU” means the Memorandum of Understanding executed by Plaintiffs’ Counsel and counsel for HSBC Defendants on or about August 19, 2009. 2.28 “Mortgage Corp.” means HSBC Mortgage Corporation (USA). 2.29 “Mortgage Services” means HSBC Mortgage Services Inc. 2.30 “NCOA” means the National Change of Address system to provide updated address information that works directly with the United States Postal Service. 2.31 “Opt-Out Limit” means the maximum number of opt-outs agreed to by counsel for the Parties in a concurrently executed Confidential Letter Agreement as set forth in Section 7.5(d) below.
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Case 1:07-cv-11669-GAO Document 59-2 Filed 11/27/09 Page 6 of 46
2.32 “Parties” means HSBC Defendants, Plaintiffs and, upon class certification for settlement purposes only as set forth herein, the Settlement Class.
2.33 “Plaintiffs” means named plaintiffs Suyapa Allen, Glenda Medina, Freddy Ramon Chavez Toruno, Demetrie Doiron and Rosalind Cavero, individually and as putative representatives of the Settlement Class.
2.34 “Plaintiffs’ Counsel” and “Class Counsel” mean Chavez & Gertler LLP, Roddy Klein & Ryan, Bonnett, Fairbourn, Friedman & Balint, P.C., Coughlin Stoia Geller Rudman & Robbins LLP and Barroway Topaz Kessler Meltzer & Check, LLP.
2.35 “Preliminary Approval Order” means an order to be entered by the District Court in the Allen Action, as provided for in Section 7.2 below, substantially in the form attached hereto as Exhibit B.
2.36 “Released Claims” means the claims released by this Agreement as set forth in Section 5.1 below.
2.37 “Released Parties” means HSBC and the HSBC Defendants, as well as their current, former and future direct and indirect parent companies, affiliates, subsidiaries, agents, representatives, successors, predecessors-in-interest, related entities and each of their respective officers, directors, employees, attorneys, insurers, vendors (including processing facilities) and assigns.
2.38 “Residential Loan” means any residential closed-end real estate secured loan to any Settlement Class Member originated by any of the Released Parties.
2.39 “Settlement Administrator” means such administrator as may be agreed to by the Parties and approved by the District Court. HSBC Defendants may, at their discretion, elect to selfadminister the settlement as set forth in this Agreement and designate one or more of their employees or agents to fulfill the duties of Settlement Administrator.
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2.40 “Settlement Class” and “Settlement Class Member” mean, include and refer to Plaintiffs and any other person and/or entity that falls within the definition of the Settlement Class, certified solely for purposes of this settlement, as provided for in Section 3.2 below.
2.41 “Settlement Fund” means the amounts paid as described in Section 3.4 below. 2.42 “Telesales” means the Telesales unit of Mortgage Services. 2.43 “Toruno Action” means the putative class action entitled Toruno v. HSBC Finance Corporation, et al., United States District Court, Central District of California, Case No. 07-05998AG.
III. TERMS OF THE SETTLEMENT 3.1 Certification Of Settlement Class For Settlement Purposes Only. HSBC Defendants dispute that a class would be manageable and further deny that a class properly may be certified in the Allen Action or any other action. However, solely for purposes of avoiding the expense and inconvenience of further litigation, HSBC Defendants do not oppose the certification for settlement purposes only of the Settlement Class. No agreements made by HSBC Defendants in connection with the settlement may be used by Plaintiffs, any Settlement Class Member, or any other person, to establish any of the elements of class certification, other than for settlement purposes. Preliminary certification of a Settlement Class shall not be deemed a concession that certification of a litigation class is appropriate, nor are HSBC Defendants estopped from challenging class certification in further proceedings in the Allen Action or in any other action, if the settlement is not finally approved. Nor shall this agreement be deemed to limit the Plaintiffs, in the event that the Settlement Class is not certified, from later seeking certification of a different class in any litigation pursuant to Federal Rule of Civil Procedure 23. 3.2 Definition Of The Settlement Class. Solely for purposes of this Settlement, the Parties agree to preliminary certification of the following Settlement Class:
All African-American or Hispanic persons throughout the United States who, between January 1, 2004 and the date of entry of the
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Case 1:07-cv-11669-GAO Document 59-2 Filed 11/27/09 Page 8 of 46
Preliminary Approval Order, obtained residential closed-end real estate secured loans from any of the following businesses: Decision One, HFC/Beneficial, HSBC Mortgage Corp. (USA) or HSBC Mortgage Services Telesales. As to damages claims set forth in Section 3.4 below, the Settlement Class will be certified pursuant to Federal Rule of Civil Procedure 23(b)(3), and all Settlement Class Members shall have the right to exclude themselves by way of the opt-out procedure set forth in the Preliminary Approval Order. As to the Additional Consideration provided to all Settlement Class Members, as set forth in Section 3.5 below, the Settlement Class will be certified as a mandatory, non-opt-out settlement class pursuant to Federal Rule of Civil Procedure 23(b)(2). Settlement Class Members will be deemed to have released all claims for injunctive and non-monetary equitable relief and may not exclude themselves from this portion of the settlement. 3.3 Identification Of The Settlement Class. Settlement Class Members will be identified by HSBC Defendants based on their HDMA reporting data. If HSBC Defendants choose to use a third-party Settlement Administrator, HSBC Defendants will make a list of Settlement Class Members available to the Settlement Administrator, solely for purposes of this settlement, with sufficient time for the Settlement Administrator to prepare and mail the Direct Mail Notice described in Section 6.2 below. HSBC Defendants also will make a list of Settlement Class Members available to Class Counsel, solely for purposes of this settlement, concurrently with the mailing of the Direct Mail Notice. The list of Settlement Class Members made available to Class Counsel will contain the name, city and state of each member of the Settlement Class, together with an indication of whether that Settlement Class Member is a Decision One Borrower and, if so, whether such Decision One Borrower’s loan(s) is owned and actively serviced by Mortgage Services.
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3.4 Settlement Fund. a. Distribution Of The Settlement Fund. HSBC Defendants will pay six million, fifty thousand dollars ($6,050,000) for the benefit of the Settlement Class, which amount will be deposited with the Settlement Administrator within ten (10) business days following the Effective Date. The Settlement Administrator will establish the Settlement Fund with a jointly approved escrow holder as a Qualified Settlement Fund consistent with Treasury Regulation §1.468B-1. The Settlement Fund, together with any interest accrued thereon subsequent to deposit (less any fees charged by the escrow holder for maintenance of the Settlement Fund), is to be distributed as follows: i. First, to pay the costs of class notice and, if a Settlement Administrator is used, the costs of settlement administration; ii. Second, pursuant to Section 4.1 below, to pay Class Counsel’s attorneys’ fees and costs and service awards to Plaintiffs in the amounts approved by the Court; iii. Third, to pay $125,000 to the National Council of La Raza and $125,000 to the National Urban League for the purposes described in Section 3.4(c) below; iv. Fourth, to pay claims as set forth in Section 3.4(b) below; v. Fifth, if any residual remains after payment of Sections 3.4(a)(i)-(iv) above, to pay additional amounts to the National Council of La Raza and the National Urban League for the purposes described in Section 3.4(c) below, but in no event shall an aggregate total of more than $750,000 (including amounts set forth in Section 3.4(a)(iii) above) be
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paid to the National Council of La Raza and the National Urban League; vi. Sixth, if any residual remains after payment of Sections 3.4(a)(i)-(v) above, to contribute to a charitable organization or organizations engaged in providing housing assistance or consumer credit education. In the event such amounts remain, the Parties agree to meet and confer in good faith to jointly propose a charity or charities to the District Court for approval, and if no agreement can be reached as to a joint proposal, then the Parties agree to submit their choices to the Mediator for a recommendation, and thereafter to jointly submit the Mediator’s recommendation to the District Court for approval. b. Payment To Settlement Class Members. Decision One Borrowers will be entitled to claim $200 per loan against the Settlement Fund as set forth in Section 3.4(a)(iv) above. In the event that the amounts contained in the Settlement Fund are insufficient to pay $200 per loan per each valid claim, the Decision One Borrower’s claims are subject to proration as set forth in Section 3.4(d) below. If Mortgage Services owns and is actively servicing a Decision One Borrower’s loan(s) at the time claims are to be paid pursuant to the settlement, the Decision One Borrower shall be deemed to have presented a valid claim, and the Decision One Borrower’s share of the Settlement Fund shall be credited against the outstanding principal balance on his loan(s) within sixty (60) days after the Effective Date. Such Decision One Borrower credits will be applied whether or not the Decision One Borrower has submitted a claim form. If Mortgage Services does not own and actively service the loan(s) at the time claims are to be paid pursuant to the settlement,
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Case 1:07-cv-11669-GAO Document 59-2 Filed 11/27/09 Page 11 of 46
the Decision One Borrower will not be paid unless he or she has timely submitted a valid claim form. Such Decision One Borrower shall be paid within sixty (60) days after the Effective Date by check mailed to the address provided by the Decision One Borrower on the returned claim form (or to any later forwarding address provided by the Decision One Borrower to the Settlement Administrator). If checks distributed to Decision One Borrowers are not cashed within six months of the check issue date, such checks will not be re-issued and the money in question will be distributed instead pursuant to Sections 3.4(a)(v) and (vi) above. c. Organization Funding. All payments made to the National Council of La Raza or the National Urban League under the Agreement will be used to support financial education, homeownership education and/or foreclosure counseling activities. The first payment to each organization pursuant to Section 3.4(a)(iii) above shall be $125,000, and thereafter, payments shall be made during succeeding years to each organization pursuant to Section 3.4(a)(v) above and shall not exceed $83,000 annually. Prior to receiving money pursuant to Sections 3.4(a)(iii) or (v) above, the National Council of La Raza and the National Urban League must provide HSBC Defendants with a business plan describing proposed uses of the funding, and must agree that no funds so provided will be used for any advocacy, litigation, lobbying or legislative efforts. Additionally, each organization must provide quarterly reports to HSBC Defendants and Class Counsel regarding the actual use of money received. The names of the Released Parties, as well as logos, trademarks or service marks, may not be used in connection with or in association with any of the funded programs in the absence of the Released
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Parties’ advance express written consent. The National Council of La Raza and the National Urban League may not issue a press release or otherwise disclose the source of this funding. d. Proration Of Claims. If amounts remaining in the Settlement Fund after payments made pursuant to Sections 3.4(a)(i) through (iii) above are insufficient to pay all valid claims pursuant to Section 3.4(a)(iv) above, the $200 claim amount shall be reduced pro rata based on the number of loans for which valid claims are submitted (or deemed submitted) so that the Settlement Fund will be depleted but that no payments from the Settlement Fund will be made pursuant to Sections 3.4(a)(v) or (vi) above. e. Quarterly Reports Regarding Distribution Of Settlement Fund. The Settlement Administrator will provide quarterly reports to Class Counsel, counsel for HSBC Defendants and the District Court on the distribution of the Settlement Fund until such time as the Settlement Fund is fully paid to eligible recipients and depleted. f. Credit For Advances On Behalf Of The Settlement Fund. The HSBC Defendants shall be responsible for advancing any notice and administration costs that become due and payable prior to creation of the Settlement Fund. Advances by HSBC Defendants of any notice and administration costs or expenses directly to the Settlement Administrator are to be treated as contributions to the Settlement Fund as set forth above in Section 3.4(a) and shall be credited in their entirety (100%) towards HSBC Defendants’ obligation thereunder. In lieu of depositing money into the Settlement Fund as set forth in Section 3.4(a) above, HSBC Defendants may at their sole discretion apply the principal balance credits described in Section 3.4(b)
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Case 1:07-cv-11669-GAO Document 59-2 Filed 11/27/09 Page 13 of 46
above on or before the Effective Date. HSBC Defendants shall advise the Settlement Administrator and Plaintiffs’ Counsel by letter about any such principal balance credits, and one hundred percent (100%) of the principal balance credits applied shall be credited towards HSBC Defendants’ obligation to the Settlement Fund. HSBC Defendants shall be entitled to prompt reimbursement from the Settlement Fund for all principal balance credits applied after deposit of the Settlement Fund. g. No Reversion. No portion of the Settlement Fund will revert to HSBC Defendants. 3.5 Additional Consideration To The Settlement Class. The following Additional Consideration will be provided to the Settlement Class: a. On behalf of HSBC, HSBC Defendants agree, as a matter of contract, to the terms described in this Section 3.5 but will not be subject to an injunction. b. HSBC will have an LRP until June 30, 2010, to the extent that HSBC continues to own a sufficient number of adjustable rate loans with borrowers that are current and anticipate difficulty making their new monthly mortgage payment after the first interest rate adjustment date. The purpose of the LRP is to assist these borrowers in avoiding default if HSBC determines that avoidance of default is reasonably possible. HSBC will provide notice of the LRP to eligible borrowers a reasonable time prior to the first interest rate adjustment date. HSBC will not assess a fee for discussing the LRP with borrowers unless permitted or required under a government-sponsored or government-recommended program, or by a government sponsored enterprise such as Fannie Mae or Freddie Mac. Nothing contained herein shall preclude HSBC from charging borrowers for actual costs incurred in
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connection with the LRP. Borrowers eligible for the LRP will be advised of the opportunity to speak with a Spanish-speaking representative of HSBC. c. HSBC will have a FAP until June 30, 2011. The purpose of the FAP is to help borrowers experiencing serious financial hardship avoid foreclosure when HSBC determines that avoidance of foreclosure is reasonably possible. HSBC will provide notice of the FAP to each eligible borrower a reasonable time after the borrower becomes seriously delinquent. HSBC will not assess a fee for discussing the program with its borrowers unless permitted or required under a government-sponsored or government-recommended program, or by a government sponsored enterprise such as Fannie Mae or Freddie Mac. Nothing contained herein shall preclude HSBC from charging borrowers for actual costs incurred in connection with the FAP. Borrowers eligible for FAP will be advised of the opportunity to speak with a Spanishspeaking representative of HSBC. 3.6 Representations And Warranties By HSBC. a. On behalf of HSBC, HSBC Defendants represent and warrant that, as of January 19, 2009, HSBC has not originated any new wholesale (unaffiliated third-party broker or unaffiliated third-party correspondent) residential real estate secured loans to consumers. If, within one year of entry of the Preliminary Approval Order, HSBC re-enters the business of originating new wholesale (unaffiliated third-party broker or unaffiliated third-party correspondent) residential real estate secured loans to consumers, HSBC Defendants will so notify Class Counsel. Notwithstanding the foregoing, HSBC Defendants have no duty to notify Class Counsel of bulk purchases of seasoned loans on any secondary market.
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b. On behalf of Mortgage Corp., HSBC Defendants represent and warrant that, as to retail residential real estate secured loans to consumers, Mortgage Corp.’s policies and procedures are, and have been at least since January 1, 2004, designed to ensure that loan originators cannot exercise discretion in pricing in a manner unfavorable to the borrower.
c. On behalf of HFC/Beneficial and Telesales, HSBC Defendants represent and warrant that, as to retail residential real estate secured loans to consumers, HFC/Beneficial and Telesales’ policies and procedures are, and have been at least since January 1, 2004, designed to ensure that loan originators cannot exercise discretion in pricing.
IV. ATTORNEYS’ FEES AND COSTS AND SERVICE AWARDS TO PLAINTIFFS
4.1 Subject to court approval, Class Counsel intend to seek $1,800,000 in attorneys’ fees and costs, and service awards of $5,000 for each of Plaintiffs (plus interest actually accrued thereon from the date of the Settlement Fund’s creation as described in Section 3.4(a) above, less a proportionate share of any fees charged by the escrow holder for maintenance of the Settlement Fund). Class Counsel will not request attorneys’ fees and costs in excess of the foregoing amounts, and HSBC Defendants will not oppose Class Counsel’s petition for fees, costs and service awards in the foregoing amounts. The service awards shall be in addition to any claims Plaintiffs may have to share in the Settlement Fund.
V. RELEASE AND DISMISSAL 5.1 Release. As of the Effective Date of the Agreement, Plaintiffs and each Settlement Class Member, their respective heirs, executors, administrators, representatives, agents, attorneys, partners, successors, predecessors-in-interest, assigns and all persons acting for or on their behalf, shall be deemed to have fully, finally and forever released all discrimination-based or
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discrimination-related claims, causes of action, or liabilities, whether arising under local, state, or federal law, whether by statute, contract, common law, or equity, whether known or unknown, suspected or unsuspected, asserted or unasserted, foreseen or unforeseen, actual or contingent, liquidated or unliquidated, as alleged or as could have been alleged based upon the facts asserted in the Consolidated Amended Complaint as to the Released Parties, except for claims against nonHSBC servicers based upon their post-origination activity. Without limiting the foregoing, the Released Claims specifically extend to claims that Settlement Class Members do not know or suspect to exist in their favor at the time that the settlement, and the releases contained therein, becomes effective.
This paragraph constitutes a waiver of Section 1542 of the California Civil Code and any similar or comparable provisions, rights and benefits conferred by the law of any state or territory of the United States or any jurisdiction, and any principle of common law, which provide:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. Plaintiffs and each Settlement Class Member understand and acknowledge the significance of these waivers of California Civil Code Section 1542 and/or of any other applicable law relating to limitations on releases. In connection with such waivers and relinquishment, Plaintiffs and each Settlement Class Member acknowledge that they are aware that they may hereafter discover facts in addition to, or different from, those facts which they now know or believe to be true with respect to the subject matter of the settlement, but that they release fully, finally and forever all Released Claims, and in furtherance of such intention, the release will remain in effect notwithstanding the discovery or existence of any such additional or different facts.
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5.2 Dismissal. Upon entry of the Final Approval Order, Plaintiffs shall take all actions necessary to dismiss with prejudice all litigation by Plaintiffs against HSBC Defendants in any court, including without limitation, the Allen, Toruno and Doiron Actions.
5.3 Obligations Of Settlement Class Members. All Settlement Class Members will remain fully obligated on any and all debts owed to the Released Parties, and the Released Parties’ security interests and lien positions shall remain fully enforceable and unaffected by this Agreement and the settlement.
VI. NOTICE, SETTLEMENT ADMINISTRATION AND CONFIRMATORY DISCOVERY
6.1 Costs Of Notice And Administration. The costs of notice and administration shall be paid from the Settlement Fund as described in Section 3.4(a)(i) above.
6.2 Class Notice. Direct Mail Notice shall be provided as soon as practicable after entry of the Preliminary Approval Order, but in no event later than sixty (60) days following entry of such Order, as follows:
a. Direct Mail Notice, substantially in the forms attached hereto as Exhibit D1 and D2 that is approved by the District Court, will be mailed, via first class mail, to Settlement Class Members at the most recent address shown in HSBC’s electronic records, as maintained in the ordinary course of business, for the loan at issue. The D1 form of Direct Mail Notice will be sent to those Settlement Class Members who, based on the HSBC Defendants’ records, appear to be eligible to make claims. The D2 form of Direct Mail Notice will be sent to those Settlement Class Members who, based on the HSBC Defendants’ records, appear eligible for other forms of relief under the Settlement. A Spanish translation of the class notice will be printed on the reverse side or at the end of the notice. Addresses will be run once through
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the NCOA system and returned notices will be remailed if they are returned with a postmark date within twenty-five (25) days of the postmark date of the Direct Mail Notice and contain a forwarding address. HSBC Defendants shall have no responsibility with respect to Direct Mail Notices that are returned undeliverable. b. The D1 form of Direct Mail Notice shall include a claim form substantially in the form attached hereto as Exhibit E that is approved by the District Court. If Mortgage Services does not own and actively service the Decision One Borrower’s loan(s) at the time of settlement administration, the Decision One Borrower must fully complete the claim form and return it in order for the claim form to be deemed submitted. The deadline for the submission of the claim form shall be a postmark date that is no later than one hundred and five (105) days after entry of the Preliminary Approval Order, and the Settlement Administrator will have no obligation to honor any claim form returned after that date. Although there is no obligation to accept any late claim forms, late claim forms may be accepted with the consent of HSBC Defendants and Class Counsel, if received before the settlement becomes Final and only if acceptance of the claim form would not trigger proration pursuant to Section 3.4(d) above, taking into consideration anticipated further costs and expenses of settlement administration. c. The notice and claims process shall be administered, in whole or in part, either by HSBC Defendants or by a mutually agreed-upon Settlement Administrator, and all valid claims will be paid. Twenty (20) days after the filing the Agreement in the District Court, the Parties will advise the District
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Court of the agreed-upon Settlement Administrator or that HSBC Defendants will administer the notice and claims process. d. HSBC Defendants will be responsible, at their own expense, for compliance with the notice provisions of the Class Action Fairness Act (“CAFA”) and approval dates will be set in accord with CAFA. Plaintiffs will cooperate reasonably with HSBC Defendants to ensure CAFA compliance so that the releases described in Section 5.1 above are fully enforceable. 6.3 Certification To The District Court. No later than five (5) days before the Final Fairness Hearing, the Settlement Administrator and/or its designees shall file a declaration with the District Court verifying that Direct Mail Notice has been provided to the Settlement Class. 6.4 Confirmatory Discovery. HSBC Defendants agree to permit reasonable confirmatory discovery in regard to the representations and warranties above and in regard to other matters relevant to evaluating the fairness, reasonableness and adequacy of this settlement. HSBC Defendants have provided confirmatory discovery prior to execution of this Agreement. All additional confirmatory discovery must be completed by no later than thirty (30) days before the Final Fairness Hearing. If approval of the settlement is denied, all confirmatory discovery and additional confirmatory discovery previously provided or to be provided, will be subject to Rule 408 of the Federal Rules of Evidence and will not be admissible for any litigation purpose. 6.5 Processing of Claim Forms. a. Untimely Claims. To be treated as valid, claim forms must be postmarked within one hundred and five (105) days of the date of entry of Preliminary Approval Order. Because the settlement involves a pro rata distribution of a fixed fund as set forth in Section 3.4(a) above, claims forms that are not timely will not be allowed absent relief from the District Court specifically granting allowance prior to entry of the Final Approval Order.
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b. Claims of Deceased Persons. Claims of deceased persons will not be allowed unless a claim form is submitted by a person authorized to act on behalf of the deceased person’s estate together with proof of such authorization.
c. Claims of Joint Borrowers. For purposes of this settlement, joint borrowers on the same loan from Decision One are deemed to be a single Settlement Class Member and will be treated for the purposes of distribution as if they have a single claim. If only one claim form is timely submitted on a loan with joint borrowers, however, the entire amount of the joint borrowers’ claim will be paid to the joint borrower who timely submitted the claim form. If more than one claim form is timely submitted on a loan with joint borrowers, the claim will be paid by check to the joint borrowers.
d. Incomplete or Improper Claims. The Settlement Administrator will have final authority, in consultation with Class Counsel, to disallow any incomplete or improperly filed claim forms and will send notice of and the reasons for such disallowance, if any, with the reasons therefor, no later than twenty (20) days prior to the hearing set for the Final Fairness Hearing. To the extent that deficiencies in filed claim forms are not resolved prior to entry of the Final Approval Order, and if no relief from the District Court is obtained by the claimant at the claimant’s sole cost and expense, said claim will be permanently and finally disallowed.
6.6 Dispute Resolution. The Parties agree to meet and confer in good faith in regard to any dispute relating to the settlement or to administration of the settlement, including, without limitation, the scope of confirmatory discovery and the approval or denial of claims. Any dispute that cannot be resolved by the Parties shall be submitted, not earlier than thirty (30) days after notice of the dispute was first given, to the Mediator for his recommendation as to a resolution.
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Each of the Parties may seek de novo review of the Mediator’s recommendation by way of a motion filed before the District Court in the Allen Action.
VII. PRELIMINARY APPROVAL ORDER AND FINAL FAIRNESS HEARING 7.1 Filing Of Consolidated Amended Complaint. In connection with this settlement,
Plaintiffs shall promptly file the Consolidated Amended Complaint, encompassing all claims in the Allen, Toruno and Doiron Actions, in the District Court to effectuate the objectives of this Agreement and the settlement approval proceedings. All allegations of the Consolidated Amended Complaint shall be deemed denied and disputed by HSBC Defendants without the necessity of filing an answer.
7.2 Preliminary Approval Order. Plaintiffs will seek the District Court’s approval of this Agreement by filing an appropriate Motion for Preliminary Approval and seeking entry of a Preliminary Approval Order, substantially in the form attached hereto as Exhibit B. The Parties shall cooperate in presenting such papers to the District Court as may be necessary to effectuate the intent and purposes of this Agreement. Among other things, the Preliminary Approval Order shall specifically include the following:
a. A determination that, for settlement purposes only, the Allen Action may be maintained as a class action on behalf of the Settlement Class;
b. A finding that Direct Mail Notice is the only notice required, and that such Direct Mail Notice satisfies the requirements of due process, the Federal Rules of Civil Procedure and any other applicable laws;
c. A preliminary finding that this Agreement is fair, reasonable, adequate and within the range of possible approval;
d. A preliminary finding that Plaintiffs fairly and adequately represent the interests of the Settlement Class;
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e. A preliminary appointment of Plaintiffs’ Class Counsel finding that Class Counsel are adequate to act as counsel for the Settlement Class;
f. A scheduled date for the Final Fairness Hearing, which the Parties shall request be approximately one hundred fifty (150) days after entry of the Preliminary Approval Order, to determine whether there exists any reasonable basis why the settlement should not be approved as being fair, reasonable and adequate, and in the best interests of the Settlement Class and why Judgment should not be entered thereon;
g. Establishment of a procedure for filing claims and setting a deadline to file claims that is no later than one hundred and five (105) days after entry of the Preliminary Approval Order;
h. Establishment of a procedure for Settlement Class Members to opt-out of the proposed settlement and setting a postmark deadline of one hundred and five (105) days after entry of the Preliminary Approval Order, after which no Settlement Class Member shall be allowed to opt-out of the Settlement Class;
i. Establishment of a procedure for Settlement Class Members to object to the proposed settlement and setting a postmark deadline of one hundred and five (105) days after entry of the Preliminary Approval Order, after which no Settlement Class Member shall be allowed to object to the proposed settlement;
j. Entry of a preliminary injunction as to Plaintiffs, all Settlement Class Members and any person or entity allegedly acting on behalf of Settlement Class Members, either directly, representatively or in any other capacity, enjoining them from commencing or prosecuting against the Released
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Parties, any action or proceeding in any court or tribunal asserting any of the Released Claims; and k. Entry of a stay of all proceedings in the Allen Action except as may be necessary to implement the settlement or comply with the terms of the Agreement. 7.3 Grant Of Preliminary Approval Order. Upon entry of the Preliminary Approval Order, the Parties shall promptly cooperate in filing such papers as may be necessary to obtain a stay of the proceedings in the Toruno and Doiron Actions, except as may be necessary to implement the settlement or comply with the terms of the Agreement. 7.4 Denial Of Preliminary Approval Order. If the District Court fails for any reason to enter the Preliminary Approval Order substantially in the form attached hereto as Exhibit B or to certify the Settlement Class for settlement purposes consistent with the provisions hereof, and if all Parties do not agree jointly to appeal such ruling, this Agreement shall terminate and be of no further force or effect without any further action by the Parties. In such an event, nothing in this Agreement or filed in connection with seeking entry of the Preliminary Approval Order shall be construed as an admission or concession by HSBC Defendants of the allegations raised in the Allen, Toruno and Doiron Actions, or any other action, of any fault, wrongdoing or liability of any kind, nor are HSBC Defendants estopped from challenging those allegations in further proceedings in the in the Allen Action or in any other action. 7.5 Opt-Out/Requests For Exclusion From Settlement Of Damages Claims. a. Requests For Exclusion. Prospective Settlement Class Members shall be given the opportunity to opt-out of the Settlement Class as to the damages claims certified pursuant to Federal Rule of Civil Procedure 23(b)(3). All requests by Settlement Class Members to be excluded must be in writing and mailed to the Settlement Administrator, postmarked no later than one
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hundred and five (105) days after entry of the Preliminary Approval Order. An appropriate written request for exclusion must be personally signed by the Settlement Class Member and must include: (i) the Settlement Class Member’s name, address, telephone number; (ii) the account number(s) of the Residential Loan(s); (iii) a sentence confirming, under penalty of perjury, that he or she is a Settlement Class Member; and (iv) the following statement: “I request to be excluded from the class settlement of damages claims in Allen, et al. v. Decision One Mortgage, LLC, et al., United States District Court, District of Massachusetts, Case No. 07-11669-GAO.” No Settlement Class Member, or any person acting on behalf of or in concert or participation with that Settlement Class Member, may exclude any other Settlement Class Member from the Settlement Class, except in the case of joint borrowers. b. Delivery To Parties/Filing With Court. The Settlement Administrator shall provide copies of the original requests for exclusion to the Parties by no later than fifteen (15) days after the opt-out deadline. Not later than ten (10) days before the Final Fairness Hearing, the Settlement Administrator shall file with the District Court a declaration that lists all of the opt-outs received. c. Effect. All prospective Settlement Class Members who timely exclude themselves from the Settlement Class certified pursuant to Federal Rule of Civil Procedure 23(b)(3) as to damages will not be eligible to receive any payment pursuant to settlement of the damages claims or be bound by any further orders or judgments in the Allen Action with respect to damages, and will preserve their ability to independently pursue any individual claims for damages they may have against HSBC Defendants by filing their own lawsuit
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or arbitration at their own expense. In the event of ambiguity as to whether a Settlement Class Member has requested to be excluded (such as through a submission of both a request for exclusion and a claim form), the Settlement Class Member shall be deemed not to have requested exclusion. Settlement Class Members may not opt-out of the Additional Consideration provided pursuant to Section 3.5 above, for which the Settlement Class is to be certified pursuant to Federal Rule of Civil Procedure 23(b)(2). d. Right To Withdraw For Excessive Opt-Outs. If the number of Settlement Class Members who request exclusion exceeds the Opt-Out Limit contained in the Confidential Letter Agreement, HSBC Defendants may terminate the Agreement in their sole discretion and the Parties shall be returned to the status quo ante as of October 6, 2008, for all litigation purposes, as if no settlement had been negotiated or entered into. If HSBC Defendants exercise this right to declare the Agreement void, they shall provide Plaintiffs’ Counsel with written notice of this election no later than twenty (20) days after the opt-out deadline. If HSBC Defendants declare this Agreement void, then the terms of the Agreement and the fact that the Agreement was reached shall not be referred to by the Parties in connection with any further proceedings. The Parties agree to maintain the Opt-Out Limit and the Confidential Letter Agreement concerning it in strict confidence, except as necessary for in camera review by the District Court and/or as otherwise agreed by the Parties. 7.6 Objections To Settlement. a. Right To Object. Any Settlement Class Member, who has not previously opted-out in accordance with the terms of this Agreement, may appear at the
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Final Fairness Hearing to argue that the proposed settlement should not be approved and/or to oppose the application of Class Counsel for an award of attorneys’ fees and costs and the service awards to Plaintiffs. b. Deadline. Any such objection must be filed with the Clerk of the United States District Court for the District of Massachusetts, 1 Courthouse Way, Suite 2300, Boston, Massachusetts 02210, postmarked no later than one hundred and five (105) days after entry of the Preliminary Approval Order. Copies of all objections also must be mailed to each of the following, postmarked by the last day to file the objection: Class Counsel: Gary Klein, Roddy Klein & Ryan, 727 Atlantic Ave., Boston, MA 02111; and counsel for HSBC Defendants: Julia B. Strickland, Esq., Stroock & Stroock & Lavan LLP, 2029 Century Park East, 16th Floor, Los Angeles, California 90067. c. Content Of Objections. All objections must include: (i) the objector’s name, address and telephone number; (ii) the account number of the Residential Loan(s); (iii) a sentence confirming, under penalty of perjury, that he or she is a Settlement Class Member; (iv) the factual basis and legal grounds for the objection to the settlement; (v) the identity of witnesses whom they may call to testify at the Final Fairness Hearing; and (vi) copies of exhibits they intend to offer into evidence at the Final Fairness Hearing. VIII. FINAL APPROVAL OF SETTLEMENT AND OTHER CONDITIONS 8.1 Final Approval Order. On a date to be set by the District Court, Plaintiffs will petition the District Court for an order granting final approval of this settlement and entering Judgment in the Allen Action, substantially in the form attached hereto as Exhibit C. The Final Approval Order will provide:
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a. That the Allen Action, for purposes of this settlement, may be maintained as a class action on behalf of the Settlement Class;
b. That Plaintiffs fairly and adequately represent the interests of the Settlement Class;
c. That Class Counsel adequately represent Plaintiffs and the Settlement Class; d. That Direct Mail Notice satisfied the requirements of due process, the Federal
Rules of Civil Procedure and any other applicable laws; e. That the settlement is fair, reasonable and adequate to the Settlement Class
and that each Settlement Class Member shall be bound by the settlement, including the releases contained in Section 5.1 above; f. That the settlement represents a fair resolution of all claims asserted on behalf of the Settlement Class and should fully and finally resolve all such claims; g. Conclude that this Agreement should be, and is, approved; h. The amount of attorneys’ fees and costs, and service awards that may be paid from the Settlement Fund; i. Confirm the opt-outs from the settlement; j. Overrule any objections; k. Dismiss, on the merits and with prejudice, all claims in the Allen Action, and permanently enjoin each and every Settlement Class Member (except those who have obtained proper and timely exclusion from the Settlement Class of the damages claims pursuant to Federal Rule of Civil Procedure 23(b)(3)) from bringing, joining or continuing to prosecute against the Released Parties any Released Claims and enter Judgment thereon; and
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l. Retain jurisdiction of all matters relating to the modification, interpretation, administration, implementation, effectuation and enforcement of this Agreement and the settlement.
8.2 Dismissal of Toruno and Doiron Actions. Once the judgment becomes Final, the Parties shall promptly cooperate in filing such papers as may be necessary to obtain dismissal, on the merits and with prejudice, of the proceedings in the Toruno and Doiron Actions.
IX. TERMINATION OF AGREEMENT 9.1 Non-Approval Of Agreement. This Agreement is conditioned upon final approval without material modification by the District Court in the Allen Action. In the event that the Agreement is not so approved, the Parties shall return to the status quo ante as of October 6, 2008 as if no Agreement had been negotiated or entered into. Moreover, the Parties shall be deemed to have preserved all of their rights or defenses as of October 6, 2008, and shall not be deemed to have waived any substantive or procedural rights of any kind that they may have as to each other or any member of the proposed Settlement Class, including without limitation the right to move to compel arbitration as to any claims that might be asserted by any of the Plaintiffs or by any member of the proposed Settlement Class. Likewise, in the event that the Agreement is approved without material modification by the District Court, but is later reversed or vacated on appeal, each of the Parties shall have the right to withdraw from the Agreement and return to the status quo ante as of October 6, 2008, for all litigation purposes, as if no Agreement had been negotiated or entered into, and shall not be deemed to have waived any substantive or procedural rights of any kind that they may have as to each other or any member of the proposed Settlement Class, including without limitation the right to move to compel arbitration as to any claims that might be asserted by any of the Plaintiffs or by any member of the proposed Settlement Class.
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X. MISCELLANEOUS PROVISIONS 10.1 Further Assurance. Each of the Parties shall execute all documents and perform all acts necessary and proper to effectuate the terms of this Agreement. 10.2 Publicity And Non-Disparagement. Plaintiffs and Plaintiffs’ Counsel shall refrain from disparaging HSBC, any related entity or the HSBC brand publicly or taking any action designed to harm the public perception of HSBC regarding any issue related to the settlement or the Allen, Toruno and Doiron Actions. None of the Parties or their counsel shall issue press releases or otherwise communicate with the media regarding this Agreement or the settlement except as set forth herein. Prior to submission of the settlement to the District Court for preliminary approval, the Parties shall work in good faith to develop a joint agreed statement regarding the settlement which may be made publicly available (following mailing to the Settlement Class of the Direct Mail Notice) and develop joint agreed responses to likely questions from Settlement Class Members, as well as to provide informational materials to be used by the Settlement Administrator. Class Counsel may respond to direct communications from Settlement Class Members regarding the settlement. Inquiries other than those from Settlement Class Members seeking legal advice may be responded to only by reference to information contained in the public record and/or agreed upon by the Parties. 10.3 Entire Agreement. This Agreement constitutes the entire agreement between and among the Parties with respect to the settlement of the Allen, Toruno and Doiron Actions. This Agreement supersedes all prior negotiations and agreements, including, without limitation, the MOU. The Parties, and each of them, represent and warrant that no other party or any agent or attorney of any of the Parties has made any promise, representation or warranty whatsoever not contained in this Agreement and the other documents referred to in this Agreement to induce them to execute the same. The Parties, and each of them, represent and warrant that they have not executed this Agreement or the other documents referred to in this Agreement in reliance on any
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Case 1:07-cv-11669-GAO Document 59-2 Filed 11/27/09 Page 30 of 46
promise, representation or warranty not contained in this Agreement and the other documents referred to in this Agreement.
10.4 Confidentiality. Any and all drafts of this Agreement and other settlement documents relating to the negotiations between the Parties will remain confidential and will not be disclosed or duplicated except as necessary to obtain preliminary and/or final court approval. This provision will not prohibit the Parties from submitting this Agreement to the District Court in order to obtain preliminary and/or final approval of the settlement. It is agreed that, within thirty (30) days after the Effective Date, the originals and all copies of all confidential or highly confidential documents and/or information subject to all confidentiality agreements and any protective order in the Allen, Toruno and Doiron Actions shall be destroyed or returned to the designating Parties.
10.5 Successors And Assigns. The Agreement shall be binding upon, and inure to the benefit of, the heirs, successors and assigns of the Parties.
10.6 Competency Of Parties. The Parties, and each of them, acknowledge, warrant, represent and agree that in executing and delivering this Agreement, they do so freely, knowingly and voluntarily, that they had an opportunity to and did discuss its terms and their implications with legal counsel, that they are fully aware of the contents and effect of the Agreement and that such execution and delivery is not the result of any fraud, duress, mistake or undue influence whatsoever.
10.7 Authority. The person signing this Agreement on behalf of HSBC Defendants warrants and represents that he or she is authorized to sign on HSBC Defendants’ behalf. Each of the Plaintiffs has personally signed this Agreement.
10.8 Modification. No modification of or amendment to this Agreement shall be valid unless it is in writing and signed by all Parties hereto or agreed to on the record in the District Court.
10.9 Construction. Each of the Parties has cooperated in the drafting and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be
Page 30 of 37

Case 1:07-cv-11669-GAO Document 59-2 Filed 11/27/09 Page 31 of 46
construed against any of the Parties. Before declaring any provision of this Agreement invalid, the District Court shall first attempt to construe the provision valid to the fullest extent possible consistent with applicable precedent so as to find all provisions of this Agreement valid and enforceable. After applying this rule of construction and still finding a provision invalid, the District Court shall thereupon interpret the invalid provision to the fullest extent possible to otherwise enforce the invalid provision. The invalidity of any one provision shall not render this Agreement otherwise invalid and unenforceable unless the provision found to be invalid materially affects the terms of this Agreement after application of the rules of construction set forth in this paragraph.
10.10 No Waiver. The failure of any of the Parties to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, or any other provision, nor in any way to affect the validity of this Agreement or any part hereof, or the right of any of the Parties thereafter to enforce that provision or each and every other provision. No waiver of any breach of this Agreement shall constitute or be deemed a waiver of any other breach.
10.11 Governing Law. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Massachusetts.
10.12 Notices/Communications. All requests, demands, claims and other communications hereunder shall: (a) be in writing; (b) be delivered by U.S. Mail and facsimile; (c) be deemed to have been duly given on the date received; and (d) be addressed to the intended recipient as set forth below:
If to Plaintiffs or the Settlement Class: Gary Klein, Esq. Roddy Klein & Ryan 727 Atlantic Ave. Boston, MA 02111 If to HSBC Defendants: Julia B. Strickland, Esq. Stroock & Stroock & Lavan LLP
Page 31 of 37

Case 1:07-cv-11669-GAO Document 59-2 Filed 11/27/09 Page 32 of 46 2029 Century Park East Los Angeles, California 90067 Each of the Parties may change the address to which requests, demands, claims or other communications hereunder are to be delivered by giving the other Parties notice in the manner set forth herein. 10.13 Counterparts. This Agreement may be executed in one or more counterparts and, if so executed, the various counterparts shall be and constitute one instrument for all purposes and shall be binding on each of the Parties that executed it, provided, however, that none of the Parties shall be bound unless and until all Parties have executed this Agreement. For convenience, the several signature pages may be collected and annexed to one or more documents to form a complete counterpart. Photocopies of executed copies of this Agreement may be treated as originals.
Page 32 of 37

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 Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 1 of 14
United States District Court District of Massachusetts (Boston) CIVIL DOCKET FOR CASE #: 1:07−cv−11669−GAO

CLOSED

Allen v. Decision One Mortgage Company, LLC et al Assigned to: Judge George A. OToole, Jr Demand: $9,999,000 Cause: 42:405 Fair Housing Act
Plaintiff

Date Filed: 09/06/2007 Date Terminated: 05/13/2010 Jury Demand: Plaintiff Nature of Suit: 890 Other Statutory Actions Jurisdiction: Federal Question

Suyapa Allen

represented by Mark A. Chavez Chavez &Gertler 42 Miller Avenue Mill Valley, CA 94941−5572 415−381−5599 Email: mark@chavezgertler.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Gary E. Klein Klein Kavanagh Costello, LLP 85 Merrimac Street, 4th Floor Boston, MA 02114 617−357−5500 ext. 15 Fax: 617−357−5030 Email: klein@kkcllp.com ATTORNEY TO BE NOTICED

Gillian R. Feiner Office of the Attorney General (MA) Suite 301 10 Mechanic Street Worcester, MA 01608 617−963−2571 Fax: 617−727−5765 Email: gillian.feiner@state.ma.us TERMINATED: 12/11/2007 ATTORNEY TO BE NOTICED

Kevin Costello Klein Kavanagh Costello, LLP 85 Merrimac Street, 4th Flr. Boston, MA 02114 617−357−5500 Fax: 617−357−5030 Email: costello@kkcllp.com ATTORNEY TO BE NOTICED

Matthew E. Van Tine Miller Law LLC 115 S. LaSalle Street Suite 2910 Chicago, IL 60603 312−332−3400 Fax: 312−676−2676 Email: mvantine@millerlawllc.com ATTORNEY TO BE NOTICED

Shennan Alexandra Kavanagh

Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 2 of 14

Klein Kavanagh Costello, LLP 85 Merrimac Street, 4th Flr. Boston, MA 02114 617 357 5500 Fax: 617 357 5030 Email: kavanagh@kkcllp.com ATTORNEY TO BE NOTICED

Plaintiff Glenda Medina

represented by Gary E. Klein (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Mark A. Chavez (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Shennan Alexandra Kavanagh (See above for address) ATTORNEY TO BE NOTICED

Plaintiff Freddie Ramon Chavez Toruno

represented by Gary E. Klein (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff Demetrie Doiron

represented by Gary E. Klein (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff Rosalind Cavero

represented by Gary E. Klein (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

V.
Defendant
Decision One Mortgage Company, LLC

represented by Andrew C. Glass KLGates LLP State Street Financial Center One Lincoln Street Boston, MA 02111−2950 617−261−3107 Fax: 617−261−3175 Email: andrew.glass@klgates.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Gregory N. Blase K &L Gates LLP − MA One Lincoln Street State Street Financial Center Boston, MA 02111

Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 3 of 14
617−951−9059 Fax: 617−261−3175 Email: gregory.blase@klgates.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Irene C. Freidel Kirkpatrick &Lockhart Preston Gates Ellis LLP State Street Financial Center One Lincoln Street Boston, MA 02111−2950 617−951−9154 Fax: 617−261−3175 Email: irene.freidel@klgates.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Julia B. Strickland Stroock, Stroock &Lavan 2029 Century Park East Los Angeles, CA 16599 310−556−5800 Email: jstrickland@stroock.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lucas A. Messenger Stroock &Stroock &Lavan LLP 2029 Century Park East Los Angeles, CA 90067−3086 (310) 556−5800 Fax: (310) 556−5959 Email: lmessenger@stroock.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Melissa D. Sanchez Kirkpatrick &Lockhart Preston Gates Ellis LLP Wachovia Financial Center 200 South Biscayne Blvd Miami, FL 33131 LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Paul F. Hancock Kirkpatrick &Lockhart Preston Gates Ellis LLP Wachovia Financial Center 200 South Biscayne Blvd. Miami, FL 33131 LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
R. Bruce Allensworth K &L Gates LLP − MA One Lincoln Street State Street Financial Center Boston, MA 02111−2950 617−261−3119 Fax: 617−261−3175

Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 4 of 14

Email: bruce.allensworth@klgates.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

Stephen J. Newman Stroock &Stroock &Lavan LLP 2029 Century Park East Los Angeles, CA 90067−3086 (310) 556−5800 Fax: (310) 556−5959 Email: snewman@stroock.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Defendant
HSBC Finance Corporation formerly known as Household International, Inc.

represented by Gregory N. Blase (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Irene C. Freidel (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Melissa D. Sanchez (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Paul F. Hancock (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

R. Bruce Allensworth (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Julia B. Strickland (See above for address) ATTORNEY TO BE NOTICED

Lucas A. Messenger (See above for address) ATTORNEY TO BE NOTICED

Stephen J. Newman (See above for address) ATTORNEY TO BE NOTICED

Defendant Zeus Funding, LLC

Defendant
HSBC Finance Corporation TERMINATED: 05/05/2009

Defendant

Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 5 of 14

HSBC North America Holdings, Inc.

represented by Andrew C. Glass (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Gregory N. Blase (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

R. Bruce Allensworth (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Julia B. Strickland (See above for address) ATTORNEY TO BE NOTICED

Lucas A. Messenger (See above for address) ATTORNEY TO BE NOTICED

Stephen J. Newman (See above for address) ATTORNEY TO BE NOTICED

Defendant HSBC Mortgage Services, Inc.

represented by Andrew C. Glass (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Gregory N. Blase (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

R. Bruce Allensworth (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Julia B. Strickland (See above for address) ATTORNEY TO BE NOTICED

Lucas A. Messenger (See above for address) ATTORNEY TO BE NOTICED

Stephen J. Newman (See above for address) ATTORNEY TO BE NOTICED

Defendant HSBC Mortgage Corporation (USA)

represented by Andrew C. Glass (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Gregory N. Blase (See above for address) LEAD ATTORNEY

Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 6 of 14
ATTORNEY TO BE NOTICED
R. Bruce Allensworth (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Julia B. Strickland (See above for address) ATTORNEY TO BE NOTICED
Lucas A. Messenger (See above for address) ATTORNEY TO BE NOTICED
Stephen J. Newman (See above for address) ATTORNEY TO BE NOTICED

Date Filed 09/06/2007
09/06/2007
09/06/2007 09/10/2007 09/10/2007 09/21/2007 10/01/2007 10/03/2007 10/03/2007 10/03/2007 10/03/2007
10/04/2007

# Docket Text
1 COMPLAINT against Decision One Mortgage Company, LLC, HSBC Finance Corporation, Zeus Funding, LLC Filing fee: $ 350, receipt number 1655946, filed by Suyapa Allen. (Attachments: # 1 Exhibits 1−3# 2 Civil Cover Sheet and Category Form)(Klein, Gary) (Additional attachment(s) added on 9/14/2011: # 3 Appendix, # 4 Exhibit Addendums) (Cataldo, Michael). (Entered: 09/06/2007)
ELECTRONIC NOTICE of Case Assignment. Judge George A. O'Toole, Jr assigned to case. If the trial Judge issues an Order of Reference of any matter in this case to a Magistrate Judge, the matter will be transmitted to Magistrate Judge Collings (York, Steve) (Entered: 09/07/2007)
Summons Issued as to Decision One Mortgage Company, LLC, HSBC Finance Corporation, Zeus Funding, LLC. (Flaherty, Elaine) (Entered: 09/07/2007)
2 NOTICE of Appearance by Gillian R. Feiner on behalf of Suyapa Allen (Feiner, Gillian) Additional attachment(s) added on 10/9/2007 (Edge, Eugenia). (Entered: 09/10/2007)
3 NOTICE of Appearance by Shennan Alexandra Kavanagh on behalf of Suyapa Allen (Kavanagh, Shennan) Additional attachment(s) added on 10/9/2007 (Edge, Eugenia). (Entered: 09/10/2007)
4 NOTICE of Appearance by Matthew E. Van Tine on behalf of Suyapa Allen (Van Tine, Matthew) (Entered: 09/21/2007)
5 SUMMONS Returned Executed Decision One Mortgage Company, LLC served on 9/13/2007, answer due 10/3/2007. (Feiner, Gillian) (Entered: 10/01/2007)
6 NOTICE of Appearance by R. Bruce Allensworth on behalf of Decision One Mortgage Company, LLC, HSBC Finance Corporation (Allensworth, R.) (Entered: 10/03/2007)
7 NOTICE of Appearance by Irene C. Freidel on behalf of Decision One Mortgage Company, LLC, HSBC Finance Corporation (Freidel, Irene) (Entered: 10/03/2007)
8 NOTICE of Appearance by Gregory N. Blase on behalf of Decision One Mortgage Company, LLC, HSBC Finance Corporation (Blase, Gregory) (Entered: 10/03/2007)
9 Assented to MOTION for Extension of Time to November 2, 2007 to File Answer re 1 Complaint, or to otherwise respond to Complaint by Decision One Mortgage Company, LLC, HSBC Finance Corporation.(Blase, Gregory) (Entered: 10/03/2007)
Judge George A. O'Toole Jr.: Electronic ORDER entered granting 9 Motion for Extension of Time to Answer Decision One Mortgage Company, LLC answer due

Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 7 of 14

10/04/2007 10/04/2007 10/09/2007 11/01/2007 11/02/2007 11/02/2007
11/02/2007 11/02/2007 11/02/2007 11/05/2007 11/15/2007
11/20/2007
12/07/2007 12/14/2007 12/14/2007
12/14/2007
12/17/2007

11/2/2007; HSBC Finance Corporation answer due 11/2/2007. (Lyness, Paul) (Entered: 10/04/2007)
10 CORPORATE DISCLOSURE STATEMENT by Decision One Mortgage Company, LLC. (Allensworth, R.) (Entered: 10/04/2007)
11 CORPORATE DISCLOSURE STATEMENT by HSBC Finance Corporation. (Allensworth, R.) (Entered: 10/04/2007)
12 SUMMONS Returned Executed Zeus Funding, LLC served on 9/20/2007, answer due 10/10/2007. (Feiner, Gillian) (Entered: 10/09/2007)
13 SUMMONS Returned Executed HSBC Finance Corporation served on 10/24/2007, answer due 11/13/2007. (Klein, Gary) (Entered: 11/01/2007)
14 MOTION to Dismiss Complaint by Decision One Mortgage Company, LLC, HSBC Finance Corporation. (Attachments: # 1 Exhibit A# 2 Exhibit B# 3 Exhibit C)(Allensworth, R.) (Entered: 11/02/2007)
15 MOTION for Leave to File Excess Pages for Memorandum of Law in Support of Motion to Dismiss Complaint Dismiss Complaint (Unopposed) by Decision One Mortgage Company, LLC, HSBC Finance Corporation.(Allensworth, R.) (Entered: 11/02/2007)
16 MEMORANDUM in Support re 14 MOTION to Dismiss Complaint Pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) filed by Decision One Mortgage Company, LLC, HSBC Finance Corporation. (Allensworth, R.) (Entered: 11/02/2007)
17 MEMORANDUM in Support re 14 MOTION to Dismiss Complaint Pursuant to Fed. R. Civ. P. 12(b)(2) filed by HSBC Finance Corporation. (Allensworth, R.) (Entered: 11/02/2007)
18 DECLARATION by Margo J. Hickman re 14 MOTION to Dismiss Complaint by HSBC Finance Corporation. (Allensworth, R.) Modified on 11/5/2007 (Edge, Eugenia). (Entered: 11/02/2007)
Judge George A. O'Toole Jr.: Electronic ORDER entered granting 15 Motion for Leave to File Excess Pages. Memorandum in Support filed and assigned docket entry #16. (Edge, Eugenia) (Entered: 11/05/2007)
19 Joint MOTION TO SET BRIEFING SCHEDULE and for Leave to File REPLY IN SUPPORT OF DEFENDANTS' MOTION TO DISMISS AND by Suyapa Allen.(Klein, Gary) Modified on 11/16/2007 (Edge, Eugenia). (Entered: 11/15/2007)
Judge George A. O'Toole Jr.: Electronic ORDER entered granting 19 Motion to set briefing schedule AND for Leave to File Reply in Support of Defendants' Motion to Dismiss; Plaintiffs' opposition due on or before 12/14/07. Defendants' response due on or before 1/18/08. (Edge, Eugenia) (Entered: 11/20/2007)
20 NOTICE of Withdrawal of Appearance by Gillian R. Feiner (Feiner, Gillian) (Entered: 12/07/2007)
21 Assented to MOTION to Continue Briefing Schedule to February 7, 2008 on Defendants' Motion to Dismiss by Suyapa Allen.(Klein, Gary) (Entered: 12/14/2007)
22 MOTION for Leave to Appear Pro Hac Vice for admission of Paul F. Hancock Filing fee $ 50, receipt number 1780406. by Decision One Mortgage Company, LLC, HSBC Finance Corporation. (Attachments: # 1 Exhibit A# 2 Text of Proposed Order)(Blase, Gregory) (Entered: 12/14/2007)
23 MOTION for Leave to Appear Pro Hac Vice for admission of Melissa D. Sanchez Filing fee $ 50, receipt number 1780413. by Decision One Mortgage Company, LLC, HSBC Finance Corporation. (Attachments: # 1 Exhibit A# 2 Text of Proposed Order)(Blase, Gregory) (Entered: 12/14/2007)
Judge George A. OToole, Jr: Electronic ORDER entered granting 21 Motion to Continue (Lyness, Paul) Modified on 12/20/2007 (Edge, Eugenia). (Entered:

Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 8 of 14

12/17/2007 12/17/2007 02/06/2008 02/11/2008 03/07/2008 03/10/2008 03/11/2008 05/20/2008 05/22/2008 06/11/2008
07/31/2008 07/31/2008 08/05/2008 08/15/2008 08/18/2008

12/17/2007)
Judge George A. OToole, Jr: Electronic ORDER entered granting 22 Motion for Leave to Appear Pro Hac Vice Added Paul F. Hancock for Decision One Mortgage Company, LLC and HSBC Finance Corporation (Edge, Eugenia) (Entered: 12/17/2007)
Judge George A. OToole, Jr: Electronic ORDER entered granting 23 Motion for Leave to Appear Pro Hac Vice Added Melissa D. Sanchez for Decision One Mortgage Company, LLC and HSBC Finance Corporation (Edge, Eugenia) (Entered: 12/17/2007)
24 Assented to MOTION to Amend Briefing Schedule On Defendants' Motion To Dismiss by Suyapa Allen.(Klein, Gary) (Entered: 02/06/2008)
Judge George A. OToole, Jr: Electronic ORDER entered granting 24 Motion to Amend. Plaintiff shall file her Opposition to the Motion to Dismiss on or before 3/7/08; Decision One and HSBC Finance shall file their Reply in support of the Motion to Dismiss on or before 4/7/08. (Lyness, Paul) (Entered: 02/11/2008)
25 Unopposed MOTION for Extension of Time to 06/02/2008 to File Opposition to Motion to Dismiss by Suyapa Allen.(Klein, Gary) Modified on 3/7/2008 (Edge, Eugenia). (Entered: 03/07/2008)
Judge George A. OToole, Jr: Electronic ORDER entered granting 25 Motion for Extension of Time. Plaintiff shall file her Opposition to the Motion to Dismiss on or before 6/2/08; Decision One and HSBC Finance shall file their Reply in Support of the Motion to Dismiss on or before 7/7/08. (Lyness, Paul) (Entered: 03/10/2008)
26 NOTICE of Appearance by Kevin Costello on behalf of Suyapa Allen (Costello, Kevin) (Entered: 03/11/2008)
27 MOTION for Extension of Time to July 31, 2008 to File Opposition to Motion to Dismiss by Suyapa Allen.(Klein, Gary) (Entered: 05/20/2008)
ELECTRONIC NOTICE of Hearing on Motion 27 MOTION for Extension of Time to July 31, 2008 to File Opposition to Motion to Dismiss : Motion Hearing set for 6/11/2008 02:00 PM in Courtroom 9 before Judge George A. OToole Jr.. Please mark your calendars accordingly. (Lyness, Paul) (Entered: 05/22/2008)
Electronic Clerk's Notes for proceedings held before Judge George A. OToole, Jr: Motion Hearing held on 6/11/2008 re 27 MOTION for Extension of Time to July 31, 2008 to File Opposition to Motion to Dismiss filed by Suyapa Allen, The court GRANTS the motion(27). Motions terminated: 27 MOTION for Extension of Time to July 31, 2008 to File Opposition to Motion to Dismiss filed by Suyapa Allen. (Court Reporter: Debra Joyce.)(Attorneys present: For Plaintiff; Gary Klein; For Defendant: R. Bruce Allensworth) (Lyness, Paul) (Entered: 06/12/2008)
28 NOTICE by Suyapa Allen of Filing First Amended Class Action Complaint (Klein, Gary) (Entered: 07/31/2008)
29 First AMENDED COMPLAINT against Decision One Mortgage Company, LLC, HSBC Finance Corporation, filed by Suyapa Allen. (Attachments: # 1 Exhibit 1−8)(Klein, Gary) (Entered: 07/31/2008)
30 MOTION To Substitute The Corrected First Amended Complaint For the First Amended Complaint Filed On July 31, 2008 re 29 Amended Complaint by Glenda Medina, Suyapa Allen. (Attachments: # 1 Exhibit A)(Klein, Gary) (Entered: 08/05/2008)
31 Assented to MOTION for Extension of Time to October 31, 2008 to File Answer re 29 Amended Complaint or to otherwise respond to same by Decision One Mortgage Company, LLC, HSBC Finance Corporation.(Allensworth, R.) (Entered: 08/15/2008)
Judge George A. OToole, Jr: Electronic ORDER entered granting 31 Motion for Extension of Time to Answer re 29 Amended Complaint Decision One Mortgage Company, LLC answer due 10/31/2008; HSBC Finance Corporation answer due 10/31/2008. (Lyness, Paul) (Entered: 08/18/2008)

Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 9 of 14

09/22/2008 10/27/2008 10/31/2008 12/22/2008 12/23/2008 01/26/2009 02/02/2009 03/30/2009 03/31/2009 04/13/2009 04/13/2009 04/13/2009 04/13/2009 04/24/2009 04/27/2009
05/04/2009

32 Judge George A. OToole, Jr: ORDER entered granting 30 Plaintiff's Unopposed Motion to Substitute the Corrected First Amended Complaint for the First Amended Complaint Filed on July 31, 2008 ; finding as moot 14 Motion to Dismiss (Lyness, Paul) (Entered: 09/22/2008)
33 Assented to MOTION for Extension of Time to December 29, 2008 to File Answer re 29 Amended Complaint by Decision One Mortgage Company, LLC, HSBC Finance Corporation.(Allensworth, R.) (Entered: 10/27/2008)
Judge George A. OToole, Jr: Electronic ORDER entered granting 33 Motion for Extension of Time to Answer re 29 Amended Complaint Decision One Mortgage Company, LLC answer due 12/29/2008; HSBC Finance Corporation answer due 12/29/2008. (Lyness, Paul) (Entered: 10/31/2008)
34 Assented to MOTION for Extension of Time to January 30, 2008 to Respond to Plaintiffs' Corrected First Amended Complaint by Decision One Mortgage Company, LLC, HSBC Finance Corporation.(Allensworth, R.) (Entered: 12/22/2008)
Judge George A. OToole, Jr: Electronic ORDER entered granting 34 Motion for Extension of Time (Lyness, Paul) (Entered: 12/23/2008)
35 Assented to MOTION for Extension of Time to March 31, 2009 to File Answer or to Respond to Plaintiffs' Corrected First Amended Complaint by Decision One Mortgage Company, LLC, HSBC Finance Corporation.(Allensworth, R.) (Entered: 01/26/2009)
Judge George A. OToole, Jr: Electronic ORDER entered granting 35 Motion for Extension of Time to Answer re 29 Amended Complaint Decision One Mortgage Company, LLC answer due 3/31/2009; HSBC Finance Corporation answer due 3/31/2009. (Lyness, Paul) (Entered: 02/02/2009)
36 Assented to MOTION for Extension of Time to File Answer re 29 Amended Complaint by Decision One Mortgage Company, LLC, HSBC Finance Corporation.(Freidel, Irene) (Entered: 03/30/2009)
Judge George A. OToole, Jr: Electronic ORDER entered granting 36 Motion for Extension of Time to Answer re 29 Amended Complaint Decision One Mortgage Company, LLC answer due 4/13/2009; HSBC Finance Corporation answer due 4/13/2009. (Lyness, Paul) (Entered: 03/31/2009)
37 MOTION to Dismiss for Lack of Jurisdiction Pursuant to Fed. R. Civ. P. 12(b)(2) by HSBC Finance Corporation.(Allensworth, R.) (Entered: 04/13/2009)
38 MEMORANDUM in Support re 37 MOTION to Dismiss for Lack of Jurisdiction Pursuant to Fed. R. Civ. P. 12(b)(2) filed by HSBC Finance Corporation. (Allensworth, R.) (Entered: 04/13/2009)
39 DECLARATION re 37 MOTION to Dismiss for Lack of Jurisdiction Pursuant to Fed. R. Civ. P. 12(b)(2) (Supplemental Declaration of Margo Hickman) by HSBC Finance Corporation. (Attachments: # 1 Exhibit A)(Allensworth, R.) (Entered: 04/13/2009)
40 ANSWER to 29 Amended Complaint with Affirmative Defenses by Decision One Mortgage Company, LLC.(Allensworth, R.) (Entered: 04/13/2009)
41 MOTION for Extension of Time to May 4, 2009 to File Response/Reply as to 37 MOTION to Dismiss for Lack of Jurisdiction Pursuant to Fed. R. Civ. P. 12(b)(2) (Unopposed) by Glenda Medina, Suyapa Allen.(Kavanagh, Shennan) (Entered: 04/24/2009)
Judge George A. OToole, Jr: Electronic ORDER entered granting 41 Motion for Extension of Time to File Response/Reply re 41 MOTION for Extension of Time to May 4, 2009 to File Response/Reply as to 37 MOTION to Dismiss for Lack of Jurisdiction Pursuant to Fed. R. Civ. P. 12(b)(2) (Unopposed) Responses due by 5/4/2009 (Lyness, Paul) (Entered: 04/27/2009)
42 NOTICE of Voluntary Dismissal by Glenda Medina, Suyapa Allen (Klein, Gary) (Entered: 05/04/2009)

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05/04/2009 05/05/2009 05/12/2009 05/12/2009 05/12/2009 06/01/2009 06/01/2009 06/08/2009
06/09/2009 06/09/2009 06/11/2009
09/16/2009 09/25/2009 09/25/2009 11/24/2009
11/24/2009
11/24/2009

43 NOTICE by Glenda Medina, Suyapa Allen Suggestion of Mootness of Defendant, HSBC Finance Corporation's Motion to Dismiss for Lack of Personal Jurisdiction (Klein, Gary) (Entered: 05/04/2009)
Motions terminated: 37 MOTION to Dismiss for Lack of Jurisdiction Pursuant to Fed. R. Civ. P. 12(b)(2) filed by HSBC Finance Corporation. See (#43) Suggestion of Mootness. (Edge, Eugenia) (Entered: 05/05/2009)
44 NOTICE of Scheduling Conference Scheduling Conference set for 6/8/2009 02:00 PM in Courtroom 9 before Judge George A. OToole Jr.. Please mark your calendars accordingly. (Lyness, Paul) (Entered: 05/12/2009)
45 General Order 09−1, dated January 6, 2009 regarding the E−Government Act and Personal Identifiers entered. (Lyness, Paul) (Entered: 05/12/2009)
46 NOTICE of Appearance by Andrew C. Glass on behalf of Decision One Mortgage Company, LLC (Glass, Andrew) (Entered: 05/12/2009)
47 JOINT SUBMISSION pursuant to Local Rule 16.1 by Glenda Medina, Suyapa Allen.(Klein, Gary) (Entered: 06/01/2009)
48 CERTIFICATION pursuant to Local Rule 16.1 (D)(3) by Decision One Mortgage Company, LLC.(Glass, Andrew) (Entered: 06/01/2009)
Electronic Clerk's Notes for proceedings held before Judge George A. OToole, Jr: Scheduling Conference held on 6/8/2009. Plaintiff's Initial Expert Witness Disclosure on Class Certification Issues by 10/19/09; Defendant's Rebuttal Expert Witness Disclosure on Class Certification Issues by 12/19/09; Plaintiff's Rebuttal Expert Witness Disclosure on Class Certification Issues by 1/19/10; Expert Discovery on Class Certification Issues Cut−Off Date by 3/31/10; Filing deadline for Motion for Class Certification by 5/15/10 and response due by 6/15/10. (Court Reporter: Marcia Patrisso.)(Attorneys present: For Plaintiff: Gary Klein and Shennan Alexandra Kavanagh; For Defendants: Andrew Glass and R. Bruce Allensworth) (Lyness, Paul) (Entered: 06/09/2009)
49 CERTIFICATION pursuant to Local Rule 16.1 by Glenda Medina.(Klein, Gary) Modified on 6/10/2009 to remove filer (Patch, Christine). (Entered: 06/09/2009)
50 CERTIFICATION pursuant to Local Rule 16.1 by Suyapa Allen.(Klein, Gary) Modified on 6/10/2009 to remove filer (Patch, Christine). (Entered: 06/09/2009)
Set Scheduling Order Deadlines: Expert Discovery on Class Certification Issues to be completed by 3/31/2010. Motions for Class Certification due by 5/15/2010. Response due by 6/15/10; Plaintiff's Initial Expert Witness Disclosure on Class Certification Issues by 10/19/09; Defendant's Rebuttal Expert Witness Disclosure on Class Certification Issues by 12/19/09; Plaintiff's Rebuttal Expert Witness Disclosure on Class Certification Issues by 1/19/10. (Edge, Eugenia) (Entered: 06/11/2009)
51 STIPULATION to Abate Deadlines by Glenda Medina, Suyapa Allen. (Kavanagh, Shennan) (Entered: 09/16/2009)
52 Judge George A. OToole, Jr: ORDER entered. 60 DAY SETTLEMENT ORDER OF DISMISSAL (Lyness, Paul) (Entered: 09/25/2009)
Civil Case Terminated. (Lyness, Paul) (Entered: 09/25/2009)
53 MOTION for Leave to Appear Pro Hac Vice for admission of Julia B. Strickland Filing fee $ 50, receipt number 01010000000002678890. by Decision One Mortgage Company, LLC. (Attachments: # 1 Exhibit A Certificate of Julia B. Strickland, # 2 Text of Proposed Order)(Blase, Gregory) (Entered: 11/24/2009)
54 MOTION for Leave to Appear Pro Hac Vice for admission of Stephen J. Newman Filing fee $ 50, receipt number 01010000000002678921. by Decision One Mortgage Company, LLC. (Attachments: # 1 Exhibit A (Certificate of Stephen Newman), # 2 Text of Proposed Order)(Blase, Gregory) (Entered: 11/24/2009)
55 MOTION for Leave to Appear Pro Hac Vice for admission of Lucas A. Messenger Filing fee $ 50, receipt number 01010000000002679054. by Decision One

Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 11 of 14

11/24/2009 11/24/2009 11/24/2009 11/24/2009 11/27/2009 11/27/2009 11/27/2009
11/27/2009 11/27/2009 11/27/2009 12/03/2009

Mortgage Company, LLC. (Attachments: # 1 Exhibit A (Certificate of Lucas Messenger), # 2 Text of Proposed Order)(Blase, Gregory) (Entered: 11/24/2009)
Judge George A. OToole, Jr: Electronic ORDER entered granting 53 Motion for Leave to Appear Pro Hac Vice; Added Julia B. Strickland for Decision One Mortgage Company, LLC. Attorneys admitted Pro Hac Vice must register for electronic filing. To register go to the Court website at www.mad.uscourts.gov. Select Case Information, then Electronic Filing (CM/ECF) and go to the CM/ECF Registration Form. (Lyness, Paul) (Entered: 11/24/2009)
Judge George A. OToole, Jr: Electronic ORDER entered granting 54 Motion for Leave to Appear Pro Hac Vice; Added Stephen J. Newman for Decision One Mortgage Company, LLC. Attorneys admitted Pro Hac Vice must register for electronic filing. To register go to the Court website at www.mad.uscourts.gov. Select Case Information, then Electronic Filing (CM/ECF) and go to the CM/ECF Registration Form. (Lyness, Paul) (Entered: 11/24/2009)
Judge George A. OToole, Jr: Electronic ORDER entered granting 55 Motion for Leave to Appear Pro Hac Vice; Added Lucas A. Messenger for Decision One Mortgage Company, LLC. Attorneys admitted Pro Hac Vice must register for electronic filing. To register go to the Court website at www.mad.uscourts.gov. Select Case Information, then Electronic Filing (CM/ECF) and go to the CM/ECF Registration Form. (Lyness, Paul) (Entered: 11/24/2009)
56 MOTION for Leave to Appear Pro Hac Vice for admission of Mark A. Chavez Filing fee $ 50, receipt number 01010000000002680049. by Glenda Medina, Suyapa Allen. (Attachments: # 1 Exhibit A)(Klein, Gary) (Entered: 11/24/2009)
57 STIPULATION to the Filing of a Consolidated Amended Class Action Complaint for Settlement Purposes by Glenda Medina, Suyapa Allen. (Klein, Gary) (Entered: 11/27/2009)
58 AMENDED COMPLAINT against HSBC Finance Corporation, HSBC North America Holdings, Inc., HSBC Mortgage Services, Inc., HSBC Mortgage Corporation (USA), Decision One Mortgage Company, LLC (First Consolidated), filed by Freddie Ramon Chavez Toruno, Demetrie Doiron, Rosalind Cavero, Glenda Medina, Suyapa Allen.(Klein, Gary) Modified docket text on 11/27/2009 (Burgos, Sandra). (Entered: 11/27/2009)
59 NOTICE of Settlement (Class Action) by Glenda Medina, Freddie Ramon Chavez Toruno, Demetrie Doiron, Rosalind Cavero, Suyapa Allen (Attachments: # 1 Stipulation and Agreement of Settlement, # 2 Exhibit A − List of HSBC Entities, # 3 Exhibit B − [Proposed] Preliminary Approval Order, # 4 Exhibit C − [Proposed] Final Approval Order, # 5 Exhibit D1 − [Proposed] Class Notice − Decision One, # 6 Exhibit D2 − [Proposed] Class Notice − General, # 7 Exhibit E − [Proposed] Claim Form)(Klein, Gary) (Entered: 11/27/2009)
60 MOTION for Settlement (Preliminary Approval of Class Action Settlement) (Unopposed) by Glenda Medina, Freddie Ramon Chavez Toruno, Demetrie Doiron, Rosalind Cavero, Suyapa Allen. (Attachments: # 1 Exhibit A)(Klein, Gary) (Entered: 11/27/2009)
61 MEMORANDUM in Support re 60 MOTION for Settlement (Preliminary Approval of Class Action Settlement) (Unopposed) filed by Glenda Medina, Freddie Ramon Chavez Toruno, Demetrie Doiron, Rosalind Cavero, Suyapa Allen. (Attachments: # 1 Exhibit 1 − Declaration of Gary Klein, # 2 Exhibit 2 − Declaration of Mark A. Chavez, # 3 Exhibit 3 − Declaration of Donna Siegel Moffa)(Klein, Gary) (Entered: 11/27/2009)
62 CERTIFICATE OF SERVICE by Glenda Medina, Freddie Ramon Chavez Toruno, Demetrie Doiron, Rosalind Cavero, Suyapa Allen re 57 Stipulation, 58 Amended Complaint, 60 MOTION for Settlement (Preliminary Approval of Class Action Settlement) (Unopposed), 61 Memorandum in Support of Motion, 59 Notice of Settlement,,. (Klein, Gary) (Entered: 11/27/2009)
ELECTRONIC NOTICE of Hearing on Motion 60 MOTION for Settlement (Preliminary Approval of Class Action Settlement) (Unopposed) : Motion Hearing

Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 12 of 14

12/04/2009 12/04/2009 12/04/2009 12/07/2009 12/07/2009 12/07/2009 12/07/2009 12/08/2009 12/09/2009
12/09/2009 12/09/2009 12/09/2009 12/09/2009

set for 12/9/2009 11:00 AM in Courtroom 9 before Judge George A. OToole Jr.. Please mark your calendars accordingly. (Lyness, Paul) (Entered: 12/03/2009)
63 NOTICE of Appearance by R. Bruce Allensworth on behalf of HSBC North America Holdings, Inc., HSBC Mortgage Services, Inc., HSBC Mortgage Corporation (USA), Decision One Mortgage Company, LLC (Allensworth, R.) (Entered: 12/04/2009)
64 NOTICE of Appearance by Andrew C. Glass on behalf of HSBC North America Holdings, Inc., HSBC Mortgage Services, Inc., HSBC Mortgage Corporation (USA), Decision One Mortgage Company, LLC (Glass, Andrew) (Entered: 12/04/2009)
65 NOTICE of Appearance by Gregory N. Blase on behalf of HSBC North America Holdings, Inc., HSBC Mortgage Services, Inc., HSBC Mortgage Corporation (USA), Decision One Mortgage Company, LLC (Blase, Gregory) (Entered: 12/04/2009)
66 NOTICE of Appearance by Julia B. Strickland on behalf of HSBC North America Holdings, Inc., HSBC Mortgage Services, Inc., HSBC Mortgage Corporation (USA), Decision One Mortgage Company, LLC, HSBC Finance Corporation (Strickland, Julia) (Entered: 12/07/2009)
67 NOTICE of Appearance by Stephen J. Newman on behalf of HSBC North America Holdings, Inc., HSBC Mortgage Services, Inc., HSBC Mortgage Corporation (USA), Decision One Mortgage Company, LLC, HSBC Finance Corporation (Newman, Stephen) (Entered: 12/07/2009)
68 NOTICE of Appearance by Lucas A. Messenger on behalf of HSBC North America Holdings, Inc., HSBC Mortgage Services, Inc., HSBC Mortgage Corporation (USA), Decision One Mortgage Company, LLC, HSBC Finance Corporation (Messenger, Lucas) (Entered: 12/07/2009)
69 CERTIFICATE OF SERVICE by HSBC Finance Corporation, HSBC Mortgage Services, Inc., HSBC Mortgage Corporation (USA), Decision One Mortgage Company, LLC for the CAFA Notice for the Proposed Settlement. (Messenger, Lucas) (Entered: 12/07/2009)
70 NOTICE by Glenda Medina, Freddie Ramon Chavez Toruno, Demetrie Doiron, Rosalind Cavero, Suyapa Allen re 59 Notice of Settlement,, (Notice of Joint Filing Pursuant to Fed. R. Civ. P. 23(e)(3)) (Attachments: # 1 Attachment)(Klein, Gary) (Entered: 12/08/2009)
Electronic Clerk's Notes for proceedings held before Judge George A. OToole, Jr: Motion Hearing held on 12/9/2009 re 60 MOTION for Settlement (Preliminary Approval of Class Action Settlement) (Unopposed) filed by Demetrie Doiron, Rosalind Cavero, Freddie Ramon Chavez Toruno, Suyapa Allen, Glenda Medina. This case was closed by a 60 day settlement order. That order is now VACATED and this case is reopened for consideration of the settlement approval. (Court Reporter: Marcia Patrisso.)(Attorneys present: For Plaintiffs: Gary Klein and Kevin Costello; For Defendant: Julia Strickland ( by telephone)) (Lyness, Paul) (Entered: 12/09/2009)
Case Reopened (Lyness, Paul) (Entered: 12/09/2009)
Judge George A. OToole, Jr: Electronic ORDER entered granting in 60 Motion for Settlement (Lyness, Paul) (Entered: 12/09/2009)
71 Judge George A. OToole, Jr: ORDER entered. re 60 MOTION for Settlement (Preliminary Approval of Class Action Settlement) (Unopposed) filed by Demetrie Doiron, Rosalind Cavero, Freddie Ramon Chavez Toruno, Suyapa Allen, Glenda Medina (Lyness, Paul) (Entered: 12/09/2009)
ELECTRONIC NOTICE of Hearing :Final Fairness Hearing set for 5/10/2010 10:00 AM in Courtroom 9 before Judge George A. OToole Jr.. (Lyness, Paul) (Entered: 12/09/2009)

Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 13 of 14

12/14/2009
12/17/2009
12/17/2009 02/22/2010 05/03/2010 05/03/2010 05/03/2010 05/03/2010
05/03/2010 05/03/2010 05/03/2010 05/03/2010 05/03/2010

Judge George A. OToole, Jr: Electronic ORDER entered granting 56 Motion for Leave to Appear Pro Hac Vice; Added Mark A. Chavez for Glenda Medina and Suyapa Allen. Attorneys admitted Pro Hac Vice must register for electronic filing. To register go to the Court website at www.mad.uscourts.gov. Select Case Information, then Electronic Filing (CM/ECF) and go to the CM/ECF Registration Form. (Danieli, Chris) (Entered: 12/14/2009)
72 Transcript of Motion Hearing held on December 9, 2009, before Judge O'Toole. Court Reporter: Marcia G. Patrisso at 617/737−8728. The Transcript may be purchased through the Court Reporter, viewed at the public terminal, or viewed through PACER after it is released. Redaction Request due 1/7/2010. Redacted Transcript Deadline set for 1/19/2010. Release of Transcript Restriction set for 3/17/2010. (Scalfani, Deborah) (Entered: 12/17/2009)
73 NOTICE is hereby given that an official transcript of a proceeding has been filed by the court reporter in the above−captioned matter. Counsel are referred to the Court's Transcript Redaction Policy, a copy of which is attached to this entry.. (Scalfani, Deborah) (Entered: 12/17/2009)
75 Letter/request (non−motion)regarding loans from Eric D. Garrett, Sr. (Danieli, Chris) Modified on 2/23/2010 (Danieli, Chris). (Entered: 02/23/2010)
76 DECLARATION of Hon. Edward A. Infante (Ret.) in Support of Plaintiffs' Motion for Approval of Class Action Settlement by Suyapa Allen, Rosalind Cavero, Demetrie Doiron, Glenda Medina, Freddie Ramon Chavez Toruno. (Klein, Gary) (Entered: 05/03/2010)
77 AFFIDAVIT of Amy Lake, Settlement Administrator, Concerning Notification by Suyapa Allen, Rosalind Cavero, Demetrie Doiron, Glenda Medina, Freddie Ramon Chavez Toruno. (Attachments: # 1 Exhibit A − Exclusion Requests, # 2 Exhibit B − Potential Objections)(Klein, Gary) (Entered: 05/03/2010)
78 DECLARATION of Shennan Kavanagh Regarding Class Member Correspondence by Suyapa Allen, Rosalind Cavero, Demetrie Doiron, Glenda Medina, Freddie Ramon Chavez Toruno. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6)(Kavanagh, Shennan) (Entered: 05/03/2010)
79 DECLARATION (Joint) of Counsel in Support of Plaintiffs' Motion for Final Approval of Settlement and for Approval of Payment of Attorneys Fees, Costs and Class Representative Service Payments by Suyapa Allen, Rosalind Cavero, Demetrie Doiron, Glenda Medina, Freddie Ramon Chavez Toruno. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5)(Klein, Gary) (Entered: 05/03/2010)
80 MOTION for Final Approval of Class Action Settlement and for Approval of Payment of Attorney's Fees, Costs and Service Payments to Class Representatives by Suyapa Allen, Rosalind Cavero, Demetrie Doiron, Glenda Medina, Freddie Ramon Chavez Toruno. (Attachments: # 1 Text of Proposed Order)(Klein, Gary) (Entered: 05/03/2010)
81 MOTION for Leave to File Excess Pages (Unopposed) by Suyapa Allen, Rosalind Cavero, Demetrie Doiron, Glenda Medina, Freddie Ramon Chavez Toruno. (Attachments: # 1 Plaintiffs' Memorandum in Support of Motion for Final Approval of Settlement)(Klein, Gary) (Entered: 05/03/2010)
82 MEMORANDUM in Support re 80 MOTION for Final Approval of Class Action Settlement and for Approval of Payment of Attorney's Fees, Costs and Service Payments to Class Representatives filed by Suyapa Allen, Rosalind Cavero, Demetrie Doiron, Glenda Medina, Freddie Ramon Chavez Toruno. (Klein, Gary) (Entered: 05/03/2010)
83 MOTION to Allow Late Filed Claims by Suyapa Allen, Rosalind Cavero, Demetrie Doiron, Glenda Medina, Freddie Ramon Chavez Toruno.(Klein, Gary) (Entered: 05/03/2010)
84 CERTIFICATE OF SERVICE pursuant to LR 5.2 by Suyapa Allen, Rosalind Cavero, Demetrie Doiron, Glenda Medina, Freddie Ramon Chavez Toruno re 82

Case: 1:07-cv-11669 As of: 10/25/2012 10:45 PM EDT 14 of 14

05/04/2010 05/04/2010
05/06/2010 05/10/2010
05/13/2010 05/13/2010 06/28/2010 01/13/2011 04/08/2011

Memorandum in Support of Motion, 78 Declaration, 77 Affidavit, 79 Declaration, 80 MOTION for Final Approval of Class Action Settlement and for Approval of Payment of Attorney's Fees, Costs and Service Payments to Class Representatives, 81 MOTION for Leave to File Excess Pages (Unopposed) MOTION for Leave to File Excess Pages (Unopposed), 83 MOTION to Allow Late Filed Claims, 76 Declaration. (Klein, Gary) (Entered: 05/03/2010)
85 CERTIFICATE OF SERVICE pursuant to LR 5.2 by Suyapa Allen, Rosalind Cavero, Demetrie Doiron, Glenda Medina, Freddie Ramon Chavez Toruno on Objectors. (Klein, Gary) (Entered: 05/04/2010)
86 NOTICE by Decision One Mortgage Company, LLC, HSBC Finance Corporation, HSBC Mortgage Corporation (USA), HSBC Mortgage Services, Inc., HSBC North America Holdings, Inc. re 83 MOTION to Allow Late Filed Claims Of Non−Opposition (Messenger, Lucas) (Entered: 05/04/2010)
Judge George A. OToole, Jr: ELECTRONIC ORDER entered granting 83 Motion (Lyness, Paul) (Entered: 05/06/2010)
ELECTRONIC Clerk's Notes for proceedings held before Judge George A. OToole, Jr: Hearing re Final Fairness Hearing held on 5/10/2010. The court adopts the proposed settlement agreement. An order from the court will be forthcoming. (Court Reporter: Marcia Patrisso at 617−737−8728.)(Attorneys present: For Plaintiffs: Gary Klein, Shennan Kavanagh, Wendy Harrison and Stuart Rossman; For Defendants: Julia Strickland and Kristin Cantu) (Lyness, Paul) (Entered: 05/10/2010)
87 Judge George A. OToole, Jr: ORDER entered. FINAL APPROVAL ORDER AND JUDGMENT (Lyness, Paul) (Entered: 05/13/2010)
Civil Case Terminated. (Lyness, Paul) (Entered: 05/13/2010)
88 Letter (non−motion) from George Houser. (Danieli, Chris) (Entered: 06/28/2010)
90 Letter/request (non−motion) from Richard K. Bryant. Letter has been forwarded to Allen Settlement Administrator, P.O. Box 2280, Faribault, MN, 55021−2415. (Danieli, Chris) (Entered: 01/13/2011)
91 Letter/request (non−motion) from Jean and Sylvia Mellon. Letter has been forwarded to Allen Settlement Administrator, P.O. Box 2280, Faribault, MN, 55021−2415 (Danieli, Chris) (Entered: 04/08/2011)