UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

)

SHATONYA HARRIS, MATEO HUERTA, )

and KEVIN NICHOLSON, on behalf of

)

themselves and all others similarly situated,

)

)

Plaintiffs,

)

)

v.

)

)

CITIGROUP INC., and

)

CITIMORTGAGE, INC.,

)

)

Defendants.

)

)

Civil Action No. 08-10417-MLW

FINAL APPROVAL ORDER AND JUDGMENT
Plaintiffs, on their own behalf and on behalf of all similarly situated consumers, submitted to the Court a Motion for Final Approval of the Class Action Settlement and for Approval of Payment of Attorneys' Fees, Costs and Service Payments to Class Representatives ("Motion") seeking final approval of the Stipulation and Agreement of Settlement dated June 24, 2011 (the "Agreement"), and the exhibits attached thereto, entered into by and between Plaintiffs, Citigroup, Inc., and CitiMortgage, Inc. (collectively "the Defendants"). Defendants do not oppose Plaintiffs' Motion.
On March 6, 2012, this Court entered an Order that preliminarily approved the Agreement and conditionally certified the Settlement Class for settlement purposes only (the "Preliminary Approval Order"). (Doc. No. 105) 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 held 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 borrowers (including, without limitation, individual borrowers, joint-borrowers, and coborrowers) who obtained a Loan originated between January 1, 2004 and June 24, 2011. For purposes of this settlement only, the Settlement Class is certified pursuant to Federal Rules of Civil Procedure 23(b)(2) and 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. Excluded from the Settlement Class are those persons who validly and timely requested exclusion from the Settlement Class by way of the opt-out procedures set forth in the Preliminary Approval Order (identified in Exhibit 1 hereto) (the "Opt-Outs"). The Court further approves the agreement of the Parties that Defendants will honor the opt out of the class member (Hector
2

Pineda) whose notice of opt-out was received by the Settlement Administrator after the deadline previously set by the Court.
5. For purposes of this settlement only, this Court finds and concludes that: (a) the Settlement Class is so numerous that joinder of all Settlement Class Members in the Action is impracticable; (b) there are questions of law and fact common to the Settlement Class Members 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) Defendants have acted or refused to act 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.
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 considered and hereby overrules all objections to the settlement on their merits.
3

8. 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).
9. 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 spouses, heirs, executors, administrators, representatives, agents, attorneys, partners, successors, bankruptcy trustees, guardians, wards, joint tenants, tenants in common, tenants by the entirety, co-borrowers, joint-borrowers, guarantors, predecessors-in-interest, assigns and all persons acting for or on their behalf fully, finally and completely release and forever discharge, and shall be deemed to have fully, finally, completely released and forever discharged, the Released Parties, and each of them, from any and all actual or potential claim, right, demand, charge, complaint, action, cause of action, suit, counterclaim, cross-claim, third-party claim, contention, allegation, obligation, assertion of ~Tongdoing or liability of any and every kind whatsoever for lending discrimination associated with the origination of Loans or any activities attendant to the origination of Loans, including, without limitation, those based on contract, ECOA, and/or the FHA, or any other federal, state, local or other law, statute, regulation, or principle of common law or equity, including, without limitation, all claims for monetary, equitable, declaratory, injunctive, or any other form of relief, whether known or unknown, suspected or unsuspected, under the law of any jurisdiction, which Plaintiffs or any Settlement Class Member ever had, now has, or may have in the future, resulting from, arising out of, or in any way, directly or indirectly, connected with (a) the claims raised in the Action, or (b) any claims which could have been raised in the Action based on the same transactional nucleus of facts. Plaintiffs and each Settlement Class Member are not deemed to have released other claims
4

related to Loan origination and all claims related to the servicing of Plaintiffs or any Settlement Class Member's mortgage. Among the claims not released are claims that the Defendants or any other entity failed to properly evaluate Plaintiffs and any Settlement Class Member's Loan for a modification pursuant to the Home Affordable Modification Program ("HAMP"). The Court adopts and approves the Joint Stipulation Concerning the Release ("Joint Stipulation") filed by the Parties on August 9, 2012 (Document No. 126) (attached as Exhibit 2 hereto) and finds that the claims of the "non-HMDA borrowers" as defined in the Joint Stipulation are not released pursuant to the Settlement.
1O. 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
5

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.

11. This Court approves the Parties' agreement that Defendants will pay Class

Counsel $400,000 in attorneys' fees and costs, and will pay service awards of $5,000 for each of

Plaintiffs, for a total of $15,000 in service awards. The service awards shall be in addition to any

claims Plaintiffs may have to obtain any monetary benefits available under the Agreement. 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 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.

e. The Settlement was negotiated at arms' length and without collusion, with

the assistance of a highly qualified mediator.

f.

The fees will be paid in addition to and will not diminish any class

settlement.

6

12. The Court approves the Parties' agreement that Defendants will honor and pay all otherwise valid claims filed after the claims deadline up to and including the date of this Order and will not object to those claims solely on the grounds that they are untimely.
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 this matter been litigated rather than settled, or the validity of any claim that has been or could have been asserted in the Complaint, Amended Complaint, Second Amended Complaint, or in any other litigation, or the deficiency of any defense that has been or could have been asserted in the Complaint, Amended Complaint, Second 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 VvTongdoing, or in any way referred to for any other reason as against any of the parties to the Agreement, in any other civil, criminal or administrative action or proceeding, other than such proceedings as may be necessary to effectuate
7

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 Defendants that they are subject to the jurisdiction of any Massachusetts court; d. Will not be construed against any Defendant, Plaintiff, putative class member or other person 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. 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. 15. 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. 16. 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 will continue in their role to oversee all aspects of the Agreement and settlement. Upon notice to Class Counsel, Defendants may seek from this Court, pursuant to 28 U.S.C. § 1651 (a), such further orders or
8

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.
17. 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 ORDEREDA C\, ~ ~ c....
Dated: J3vq,. ~t \ "', 1.0\"
9

EXHIBIT 1

OptOut 70001 70002 70003 70004 70005 70006 70007 70008 70009 70010 70011 70012 70013 70014 70015 70016 70017 70018 70019 70020 70021 70022 70023 70024 70025 70026 70027 70028 70029 70030 70031 70032 70033 70034 70035 70036 70037 70038 70039 70040 70041 70042 70043 70044 70045 70046 70047 70048 70049 70050 70051

First

Middle

Last

VERONICA

PINA

CARRIE

T

SMITH

LUPE

SUAREZ

CIRA

F

PEREZ

IVAN

CAMACHO

ELIZABETH C

PALACIOS

ANGELA

MARTIN

MARIAN

K

ROLLINS

PHILLIP

H

HUTCHINSON

SANDY

L

ORTIZ

MARIA

L

MUSALEM

MARIA

MARTINEZ

RAY

F

GONZALES

RICKEY

W

JORDAN

BEATRIZ

ARREDONDO

PRISCILLA

MARCH

IRENE

S

HEGEDUS

SANDRA

CASTILLO-MORENO

BRENDA

STEWART

PAUL

ROACH

CAROL

A

DYETT

ANTONIO

RAMOS

ALVARO

ROJAS

VIRGINIA E

BROWN

MARIA

D

EVANOFF

SHARON W

MARTINEZ

J.

JOSE

ELiCERIO-DAVILA

CLARENCE

JOHNSON

LAURA

MUHAMMAD

LOUIS

J

FELLER

MARIA

N

GONZALEZ

TRUHAN

MCCRAY

ROBERTO RODRIGU' RIVERA

MARIO

SOTO

MICHELLE A

MCDONALD

IVAN

RAMIREZ RODRIGUEZ

ANA

PATRICIA GONZALEZ

SHERYL Y

WRIGHT

LEONOR M

DELGADO

0

L

BENDER

CAROL

C

THOMAS

BELENNA M

LAUTO

GLORIA

JEAN

EVERETT

JAMES

KELTY

OSVALDO

MENDEZ

SANDRA

HAWKINS

SANDRA JEFFREY HAWKINS

LENORA D

LEVINE

LEONARDO

CABRERA

DOROTHY

MILLER

BETSY

ALEXANDI GUTIERREZ GALAN

Co-First Co-Middle

Co-Last

OLGA

CAMACHO

AMERICA I KATHERINE T SANDRA M

MARTINEZ GONZALES JORDAN

MAVIS

V

MILDRED C

HINES ROJAS

DOUGLAS L

MARTINEZ

ROSE

E

JOHNSON

MARIA

A

FELLER

DIANE

MCCRAY

MARIANA HEREDIA BONILLA

VANESSA GONZALE BERRIOS

CLARA
WILLIAM JOHN ROSE

A

BENDER

J HENRY

LAUTO EVERETT KELTY

MARIA

ELENA REYES

Page 1 of 2

OptOut 70052 70053 70054 70055 70056 70057 70058 70059 70060 70061 70062 70063 70064 70065 70066 70067 70068 70069 70070 70071 70072 70073 70074 70075 70076 70077 70078 70079 70080 70081 70082 70083 70084 70085 70086 70087 70088 70089 70090 70091 70092 70093 70094 70096

First

Middle

Last

VICTOR

GASPAR

HERBERT W

KING

KIMBERLY D

DANIELS

OCTAVIO 0

MENDOZA

OCTAVIO 0

MENDOZA

HOWARD

SHEPHARD

KAYLEN

D

RANDLE

JUAN

JOSE

GARCIA

JUAN

MANUEL PEREZ-LUNA

RUPERT

HERON

DAVID

ALEJANDF CARREON

MARGIE

L

VAZQUEZ

CHARLES E

HARRIS

ANGEL

GUEVARA

SANTOS

PEREZ

DAVID

LONDONO

CHERYL D

LAWS

VERONICA

FINDLAY

MAMIE

TAYLOR

MERCEDES

CASTANEDA

TIMOTHY P

O'NEILL

MIGUEL

TARANGO

JUDGE

D

HARRIS

MARIE

ROSE ST JUSTE

THERESA MARIE SUCHEY

RICARDO

TAPIA

RACHELLE

SHROPSHIRE

JUVENAL

MARTIN

SALLY

RAMIREZ

KIRISTIN

BARBER

JOSE

SURINACH

ELISA

A

PENA

ROGELIO P

SILVA

ANDREA

SMALLS

RUBEN

MARTINEZ

SAMMIE

BELL

SUSAN

JAYNE CABALLERO

JOSE

LUIS DEL' CORONA

RAMONA

CALDERON

MARJORIE W

PEREZ

JUDITH

A

LEE

SUZANNE E

HORTON

ENOC

F

DASILVA

MALIKI

ALUKO

70095 Late HECTOR

PINEDA

Co-First GLORIA VIOLA

Co-Middle

Co-Last

M

SANCHEZ

W

KING

LORYLYN LORYLYN E CLAUDIA

MENDOZA MENDOZA SHEPHARD

JOSE

PEREZ-BAEZA

EUNICE MARICELA VICTORIA

GUEVARA SEGURA LONDONO

MONIQUE E GARZA O'NEILL

IMER

J

HARRIS

VANESSA R ELiUD

MARTIN RAMIREZ

ROSALIA

LEON-SILVA

HEITOR

CABALLERO

RUTH

F

EUGENIE A

HERDY-DASILVA ALUKO

Page 2 of 2

EXHIBIT 2

Case 1:08-cv-10417-MLW Document 126 Filed 08/09/12 Page 1 of 5

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

SHATONYA HARRIS, MATEO HUERTA and KEVIN NICHOLSON, on behalf of themselves and all others similarly situated,
Plaintiffs, vs.
CITIGROUP, INC., and CITIMORTGAGE, INC.,
Defendants.

C.A. NO. 08-10417-MLW

JOINT STIPULATION CO~C~RNING RELEASE Jn order to clarify the parties' agreement concerning the release in this matter in light of a discrepancy the parties have identified concerning the size of the class and the number of class notices that went out, Plaintiffs and Defendants Citigroup, Inc. and CitiMortgage, Inc. (collectively "Citi") (together, the Plaintiffs and Defendants are the "Parties") hereby stipulate as follows: 1. On April 15, 2011, in connection with settlement discussions during the mediation between the Parties, Citi generated data regarding the size of the settlement class. Per the agreement of the parties, this data included only loans contained in public reporting under the Home Mortgage Disclosure Act ("HMDA") of loans to minority borrowers. See Declaration of John March, Ex. A. 2. The data generated by Citi on April 15,2011, included settlement class members whose loans were originated between January 1, 2004, and December 31, 2010. This data reflected that the settlement class consisted of 103,338 individual and joint borrowers.

Case 1:08-cv-10417-MLW Document 126 Filed 08109/12 Page 2 of 5
3. On August 1, 20 II, the Parties filed a Settlement Agreement to fully and finally resolve this matter. Docket No. 89-1.
4. On March 6, 2012, the Court granted preliminary approval of the Settlement. Docket No. 105.
5. On March 9, 2012, Citi provided a class list for purposes of notifying class members of the settlement to both counsel for Plaintiffs and to the settlement administrator. That class list contained a total of 178,399 loan records.
6. Counsel for Plaintiffs first discovered the discrepancy between the number of class members set forth in the Settlement Agreement and the number of notices mailed out on or about July 19,2012, and subsequently notified counsel for Citi. 1 Citi's counsel thereafter determined that the discrepancy was due to the following factors:
(a) First, additional notices were necessitated by loans made after the date range set during Citi's initial investigation of the settlement class size (December 31, 20 10) and before the date of the settlement agreement (June 24, 2011). The definition set forth in the Settlement Agreement included residential mortgage loans originated up until June 24, 2011.
(b) Second, the class lists inadvertently included individuals (the "nonHMDA Borrowers") who had obtained loans, including Home Equity Lines of Credit ("HELOCs"), that were not contained in public reporting under HMDA. The Parties did not intend to include the non-HMDA borrowers within the definition of the class set forth in the Settlement Agreement. 7. All class members received notice of the settlement.
I The numbers for class notice would not have been expected to match up with the numbers previously given for class size for a number of reasons, including that the class notice data had some six months more of borrowers included within it.
2

Case 1:08-cv-10417-MLW Document 126 Filed 08/09112 Page 3 of 5

8. Additionally, and inadvertently, each non-HMDA Borrower (or joint borrowers) received a fonn of notice in this matter under the mailing procedures set out in the Settlement Agreement as described in the filing of the Settlement Administrator. Docket No. 123.
9. Citi has agreed and the parties stipulate that despite their not being members of the settlement class, the non-HMDA borrowers nevertheless will be entitled to the benefits of the Settlement specified in the notice they received pursuant to valid and timely elections they have or may make as if they were settlement class members.
10. Citi has agreed, and the parties further stipulate, that Citi will not enforce the release contained in the Settlement Agreement (Section IV) against any non-HMDA borrower except to the extent a non-HMDA borrower also was included in the class because they had a qualifying HMDA loan.
11. On July 26, 2012, the Parties filed their Motion for Final Approval of the Class Action Settlement. Docket No. 118. The Court will hold a hearing on this motion on August 9, 2012.
12. Counsel for the Parties has conferred regarding the inadvertent inclusion of nonclass members in the class notice list and have agreed that the response to the additional notices set forth above is appropriate.

Dated: August 9,2012

Respectfully submitted, SHATONYA HARRIS, MATEO HUERTA and KEVIN NICHOLSON By their attorneys, /s/ Gary Klein Gary Klein (BBO #560769) Shennan Kavanagh (BBO #655174)
3

Case 1:08-cv-10417-MLW Document 126 Filed 08/09/12 Page 4 of 5

Dated: August 9, 2012

Kevin Costello (BBO #669100) KLEIN KAVANAGH COSTELLO, LLP 85 Merrimac Street, 4th Floor Boston, MA 02114 Telephone: (617) 357-5500 Facsimile: (617) 357-5030 klein@kkcllp.com kavanagh@kkcllp.com costello@kkcllp.com
Respectfully submitted,
CITIGROUP, INC. AND CITIMORTGAGE, INC.
By their attorneys,
lsi Brenda R. Sharton Brenda R. Sharton (BBO #556909) Katherine Borden (BBO #670397) Goodwin Procter LLP 53 State Street Boston, MA 02109 Telephone: (617) 570-1000 Facsimile: 617) 523-1231 bsharton@goodwinprocter.com kborden@goodwinprocter.com

4

Case 1:08-cv-10417-MLW Document 126 Filed 08/09/12 Page 5 of 5 CERTIFICATE OF SERVICE
I, Gary Klein, hereby certify that on this 9th day of August, a true and correct copy of the foregoing document was filed electronically. Notice of this filing will be sent to all registered users through the Court's ECF system.
(s/ Gary Klein Gary Klein
5

 
 Case 1:08-cv-10417-MLW Document 33 Filed 08/11/08 Page 1 of 31

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

_____________________________________________________________________________

FELIX PUELLO, CESAR V. CANDELARIO, and VICTORIA E. CANDELARIO on behalf of themselves and all others similarly situated, all others similarly situated,

Plaintiffs,

vs.

Civil

Action No. 08-10417-MLW

CITIFINANCIAL SERVICES, INC., CITIGROUP INC., and CITIMORTGAGE, INC.,

Defendants. _____________________________________________________________________________

AMICUS CURIAE BRIEF OF THE LAWYERS’ COMMITTEE FOR CIVIL RIGHTS
UNDER LAW OF THE BOSTON BAR ASSOCIATION ______________________________________________________________________________

Michael E. Aleo LAWYERS’ COMMITTEE FOR CIVIL RIGHTS
UNDER LAW OF THE BOSTON BAR ASSOCIATION 294 Washington Street, Suite 443 Boston, MA 02108 Telephone: 617-988-0609

Dated: August 11, 2008

Case 1:08-cv-10417-MLW Document 33 Filed 08/11/08 Page 2 of 31
TABLE OF CONTENTS TABLE OF AUTHORITIES ......................................................................................................... iii STATEMENT OF INTEREST....................................................................................................... 1 ARGUMENT.................................................................................................................................. 2
I. CONTRARY TO DEFENDANTS’ CLAIMS, STATUTORY TEXT IS NOT THE SOLE CONSIDERATION WHEN DETERMINING WHETHER DISPARATE IMPACT CLAIMS MAY BE BROUGHT UNDER CIVIL RIGHTS STATUTES. ....... 3 A. The Supreme Court’s decision in Smith v. City of Jackson clearly confirms that when interpreting a statute, courts should consider a variety of relevant evidence, including statutory text, legislative history, administrative enforcement, and case law interpreting the statute. .............................................................................. 3 B. City of Jackson did not “hold” that the text of § 703(a)(1) of Title VII and § 4(a)(1) of the ADEA “focuses on ‘the employer’s actions with respect to the targeted individual.” ................................................................................................. 5
C. Defendants overstate the similarities between statutes and ignore key differences between Title VII, the ADEA, the FHA, and the ECOA. ........................................ 6
D. None of the other cases cited by Defendants supports the contention that statutory text is determinative. ................................................................................. 8
E. The Court is still bound by First Circuit precedent holding that disparate impact claims are available under the FHA. .......................................................... 11
II. BASED ON STATUTORY TEXT, ADMINISTRATIVE ENFORCEMENT, LEGISLATIVE HISTORY, AND DECADES OF CASE LAW, DISPARATE IMPACT CLAIMS ARE ALLOWED UNDER THE FHA AND ECOA. ..................... 12 A. The text of the FHA and ECOA supports the availability of disparate impact claims...................................................................................................................... 13 B. The legislative history underlying the FHA and ECOA supports allowing disparate impact claims under each statute. ........................................................... 13
1. The Fair Housing Act ................................................................................. 14
2. The Equal Credit Opportunity Act ............................................................. 17 C. The administrative agencies that enforce the FHA and ECOA have supported
the availability of disparate impact claims under each statute. .............................. 18
1. The Fair Housing Act ................................................................................. 18
2. The Equal Credit Opportunity Act ............................................................. 20 D. The Circuit Courts have endorsed the availability of disparate impact claims
under the FHA and ECOA. .................................................................................... 21 CONCLUSION............................................................................................................................. 24
ii

Case 1:08-cv-10417-MLW Document 33 Filed 08/11/08 Page 3 of 31
TABLE OF AUTHORITIES CASES AND COURT ORDERS AB & S Auto Service, Inc. v. South Shore Bank of Chicago, 962 F.Supp. 1056 (N.D.Ill.1997) 23 Agostini v. Felton, 521 U.S. 203 (1997)................................................................................ 11 - 12 Albemarle Paper Co. v. Moody, 422 U.S. 405 (1975)............................................................ 17, 21 Alexander v. Choate, 469 U.S. 287 (1985)............................................................................. 10, 12 Alexander v. Sandoval, 532 U.S. 275 (2001) .............................................................. 9 - 10, 11, 23 Arthur v. City of Toledo, 782 F.2d 565 (6th Cir. 1986) ............................................................... 22 Beaulialice v. Fed. Home Loan Mortg. Corp., 2007 WL 744646 (M.D.Fla. 2007) ..................... 24 Boykin v. KeyCorp, 2005 WL 711891 (W.D.N.Y. 2005)............................................................ 22 Casa Marie, Inc. v. Superior Court of Puerto Rico, 988 F.2d 252 (1st Cir. 1993) ....................... 22 CBOCS West, Inc. v. Humphries, 128 S.Ct. 1951 (2008)............................................................ 21 Cherry v. Amoco Oil Co., 490 F.Supp. 1026 (N.D.Ga. 1980) ..................................................... 17 Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)......... 4, 18 Coleman v. General Motors Acceptance Corp., 196 F.R.D. 315 (M.D.Tenn.2000) .................... 23 Dismuke v. Connor, 2007 WL 4463567 (W.D.Ark. 2007) .......................................................... 22 Faulkner v. Glickman, 172 F.Supp.2d 732 (D.Md. 2001) ............................................................ 23 Garcia v. Country Wide Financial Corp., No. 07-cv-01161, Am. Order Granting in Part
and Denying in Part Defs.’ Mot. To Dismiss (C.D.Cal. Jan. 17, 2008) ....................... 5, 24 General Bldg. Contractors Ass’n, Inc. v. Pennsylvania, 458 U.S. 375 (1982)............................. 13 Golden v. City of Columbus, 404 F.3d 950 (6th Cir. 2005) ......................................................... 22 Griggs v. Duke Power Co., 401 U.S. 424 (1971) ...................................... 5, 10 - 11, 12, 13, 17, 21 Guardians Assn. v. Civil Serv. Comm’n of New York City, 463 U.S. 582 (1983)...................... 10 Guisewhite v. Muncy Bank & Trust Co., 1996 WL 511525 (M.D.Pa. 1996) ........................ 17, 23 HUD v. Mountain Side Mobile Estates P’ship, 1993 WL 307069 (1993) ................................... 19 Jackson v. Birmingham Board of Educ., 544 U.S. 167 (2005)............................................ 8 - 9, 11 Jackson v. Okaloosa County, 21 F.3d 1531 (11th Cir. 1994)....................................................... 22 Keith v. Volpe, 858 F.2d 467 (9th Cir. 1988)............................................................................... 22 Langlois v. Abington Hous. Auth., 207 F.3d 43 (1st Cir. 2000) .................................................. 11
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Latimore v. Citibank, F.S.B., 979 F.Supp. 662 (N.D.Ill. 1997) ................................................... 23 Lorillard v. Pons, 434 U.S. 575 (1978)................................................................................... 16, 17 Macone v. Town of Wakefield, 277 F.3d 1 (1st Cir. 2002).......................................................... 11 Metro. Hous. Dev. Corp. v. Vill. of Arlington Heights, 558 F.2d 1283 (7th Cir. 1977) .............. 22 Miller v. Poretsky, 595 F.2d 780 (D.C. Cir. 1978) ....................................................................... 22 Mountain Side Mobile Estate P’ship v. Sec’y of Hous. and Urban Dev., 56 F.3d 1243
(10th Cir. 1995)........................................................................................................... 19, 22 Osborne v. Bank of America, Nat. Ass'n., 234 F.Supp.2d 804 (M.D.Tenn. 2002) .................. 9, 23 Payares v. JP Morgan Chase & Co, et al., No. 07-cv-05540, Mins. of In Chambers
Order Re: Mot. to Dismiss Cas (C.D.Cal. May 15, 2008).................................. 5, 9, 10, 23 Pfaff v. HUD, 88 F.3d 739 (9th Cir. 1996)................................................................................... 19 Powell v. American General Finance, Inc., 310 F.Supp.2d 481 (N.D.N.Y. 2004)....................... 22 Ramirez v. GreenPoint Mortgage Funding, Inc., 2008 WL 2051018 (N.D.Cal. 2008)................ 23 Raytheon Co. v. Hernandez, 540 U.S. 44 (2003) ......................................................................... 11 Regents of Univ. of Cal. v. Bakke, 438 U.S. 265 (1978) ............................................................. 10 Resident Advisory Bd. v. Rizzo, 425 F.Supp. 987 (D.C.Pa. 1976) .............................................. 15 Resident Advisory Bd. v. Rizzo, 564 F.2d 126 (3rd Cir. 1977) ............................................. 15, 22 Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989)......................... 12 Sayers v. General Motors Acceptance Corp., 522 F. Supp. 835 (D.C.Mo. 1981)........................ 17 Simms v. First Gibraltar Bank, 83 F.3d 1546 (5th Cir. 1996) ...................................................... 22 Smith v. Chrysler Financial, 2003 WL 328719 (D.N.J. 2003) ..................................................... 22 Smith v. City of Jackson, 544 U.S. 228 (2005) ................ 3 - 7, 11, 12, 13 - 14, 18, 19, 21, 23 - 24 Smith v. Town of Clarkton, 682 F.2d 1055 (4th Cir. 1982) ......................................................... 22 United States v. City of Black Jack, Missouri, 508 F.2d 1179 (8th Cir. 1974) ...................... 19, 22 United States v. Starrett City Assocs., 840 F.2d 1096 (2d Cir. 1988) .......................................... 22 Wide ex rel. Estate of Wilson v. Union Acceptance Corp., 2002 WL 31730920
(S.D.Ind. 2002) .......................................................................................................... 22 - 23 Zamudio v. HSBC North American Holdings Inc., 2008 WL 517138 (N.D.Ill. 2008)................ 24
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Case 1:08-cv-10417-MLW Document 33 Filed 08/11/08 Page 5 of 31 STATUTES AND REGULATIONS 12 CFR § 202.1 ...................................................................................................................... 20 - 21 15 U.S.C. § 1691 (Equal Credit Opportunity Act) ............................................................... 6, 7, 13 20 U.S.C. § 1681 (Title IX) ............................................................................................................ 8 24 CFR § 570.904 ......................................................................................................................... 19 29 U.S.C. § 623 (Age Discrimination in Employment Act)....................................................... 3, 7 42 U.S.C. § 1981..................................................................................................................... 13, 21 42 U.S.C. § 2000d (Title VI) .......................................................................................................... 9 42 U.S.C. § 2000e (Title VII) .................................................................................4 - 7, 10 - 11, 13 42 U.S.C. § 3601 (Fair Housing Act, Title VIII)................................................ 6, 7, 13, 14, 15, 19 Pub. L. No. 104-208...................................................................................................................... 17 Pub. L. No. 94-239........................................................................................................................ 17
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OTHER AUTHORITIES 114 Cong. Rec........................................................................................................................ 14 - 15 134 Cong. Rec............................................................................................................................... 16 59 Fed. Reg. 18266 ....................................................................................................................... 20 Bocian, Debbie Gruenstein, Keith S. Ernst and Wei Li, CENTER FOR RESPONSIBLE LENDING
Unfair Lending: The Effect of Race and Ethnicity on the Price of Subprime Mortgages (2006).................................................................................................................................. 2 Bradford, Calvin, Risk or Race? Racial Disparities and the Subprime Refinance Market: A Report of the Center for Community Change (2002) ...................................................... 2 Consolidated Audit Guide for Audits of HUD Programs, 2000.04 REV-2 CHG-1 ..................... 19 H.R. Rep. No. 100-711 ................................................................................................................. 16 Homeowners Ins. Discrimination: Hearing Before the Sen. Comm. On Banking, Housing, & Urban Affairs, 103d Cong. 793......................................................................................... 20 Kochhar, Rakesh, PEW HISPANIC CENTER, The Wealth of Hispanic Households: 1996 to 2002 (2004).................................................................................................................................. 2 Report on the Nat’l Advisory Comm’n on Civil Disorders........................................................... 14 S. Rep. No. 94-589........................................................................................................................ 17 Title VIII Complaint Intake, Investigation and Conciliation Handbook, 8024.01 CHG-1........... 19
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The Lawyers’ Committee for Civil Rights Under Law of the Boston Bar Association (“Lawyers’ Committee”) hereby submits this Amicus Curiae Brief in the above captioned matter to clarify points of law relating to the availability of disparate impact claims under the Fair Housing Act (“FHA”), 42 U.S.C. § 3601, and the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. §1691.
STATEMENT OF INTEREST The Lawyers’ Committee for Civil Rights Under Law of the Boston Bar Association is a non-profit organization located at 294 Washington Street, Suite 443, Boston, MA 02108. The Lawyers’ Committee was established in 1968 to provide pro bono legal representation to victims of race and national origin discrimination. Since its formation, the Lawyers’ Committee has brought dozens of actions to correct civil rights injustices in the Commonwealth of Massachusetts and has maintained a particular focus on fair housing practices. The recent increase in subprime lending in the mortgage industry has had a disproportionately detrimental effect on individuals and communities of color across the nation. Numerous studies have documented that African-Americans and Latinos are significantly more likely to receive subprime mortgages than similarly-situated white borrowers. This trend holds true even after factoring in credit history and other objective criteria that may influence the terms of a loan. For instance, a 2006 study by the Center for Responsible Lending found that African-American borrowers with prepaym ent penalties on their subprim e home loans were 6 to 34 percent m ore likely to rec eive a higher-rate loan than if they had been white borrowers with similar qualifications. Resu lts varied depending on the type of interest rate (i.e., fixed or adjustable) and the purpose (refinance o r purchase) of the loan. . . . Latino borro wers . . . were 29 to 142 percent m ore likely to receive a higher-rate loan than if they had been non-Latino and white.
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Debbie Gruenstein Bocian, Keith S. Ernst and Wei Li, CENTER FOR RESPONSIBLE LENDING Unfair Lending: The Effect of Race and Ethnicity on the Price of Subprime Mortgages 3-4 (2006). A report by the Center for Community Change revealed that
Lower-income African-Americans receive 2.4 times as m any subprime loans as lower-income whites, while upper-incom e African-Americans receive 3.0 tim es as many subprime loans as do whites wi th comparable incom es. . . . Lowerincome Hispanics receive 1.4 tim es as many subprime loans as do lower-incom e whites, while upper-income Hispanics receive 2.2 times as many of these loans. Calvin Bradford, Risk or Race? Racial Disparities and the Subprime Refinance Market: A Report of the Center for Community Change vii (2002). The importance of homeownership among African Americans and Latinos exacerbates the subprime crisis for these demographic groups. According to a study by the Pew Hispanic Center, in 2002, “61 percent of the average net worth of Latino households is derived from home equity,” and “home equity accounted for 63 percent of mean total net worth” for African American households. Rakesh Kochhar, PEW HISPANIC CENTER, The Wealth of Hispanic Households: 1996 to 2002 17, 20 (2004). In contrast, home equity accounted for only 38.5 percent of the mean net worth of white households the same year. Id. at 20. An increase in foreclosures due to subprime lending, therefore, has a particularly acute effect on minority communities and significantly decreases their overall wealth and opportunities. The Lawyers’ Committee, being dedicated to eradicating the causes and effects of race and national origin discrimination, therefore has a compelling interest in preserving the legal avenues allowing minority borrowers redress against lenders’ discriminatory practices.
ARGUMENT Plaintiffs brought this action under the FHA and the ECOA, alleging that Defendants have engaged in racially discriminatory mortgage lending practices. (First Am. Class Action Compl. at ¶¶ 1, 2.) Defendants have moved this Court to dismiss the Complaint pursuant to Fed.
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R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. (Mem. of Law in Supp. of Mot. to Dismiss the First Am. Compl. (“Mot. to Dismiss”) at 1.) This brief will address the issue, raised in Defendants’ Memorandum, of whether disparate impact claims are cognizable under the FHA and ECOA. I. CONTRARY TO DEFENDANTS’ CLAIMS, STATUTORY TEXT IS NOT THE
SOLE CONSIDERATION WHEN DETERMINING WHETHER DISPARATE IMPACT CLAIMS MAY BE BROUGHT UNDER CIVIL RIGHTS STATUTES. Defendants inaccurately argue that disparate impact claims are not allowed under either the ECOA or the FHA because those statutes do not include supposed “required language.” (Mot. to Dismiss at 12.) Contrary to Defendants’ arguments, no such “required language” is necessary to allow disparate impact claims under a civil rights statute, and, to the extent that statutory language is relevant, the language of the ECOA and FHA allows such claims. In support of Defendants’ “required language” argument, Defendants rely on the Supreme Court’s decision in Smith v. City of Jackson, 544 U.S. 228 (2005), for the inaccurate proposition that “textual analysis,” is “determinative of the question of whether a statute gives rise to disparate impact claims.” (Mot. to Dismiss at 13, 15.) Neither City of Jackson nor any of the other cases to which Defendants cite supports the contention that “Congress’ omission of the ‘adverse effects’ language dispositively signals its intent to bar disparate impact claims under the ECOA and the FHA.” (Id. at 15.) A. The Supreme Court’s decision in Smith v. City of Jackson clearly confirms
that when interpreting a statute, courts should consider a variety of relevant evidence, including statutory text, legislative history, administrative enforcement, and case law interpreting the statute. In Smith v. City of Jackson, the Supreme Court upheld the availability of disparate impact claims under the Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. § 623. In doing so, the Court, while admittedly analyzing the language of the statute, emphasized
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that statutory interpretation depends not only on the text, but also on the legislative history,
statutory purpose, administrative enforcement, and case law interpretation of a statute. City of
Jackson, 544 U.S. at 232-41. Defendants entirely ignore the Court’s explanation that statutory
text is not the only relevant factor when interpreting a statute. Defendants instead inaccurately
suggest that “‘adverse effects’ language” alone was the basis for the Court’s decision. (Mot. to
Dismiss at 14.)
The Supreme Court based its decision in City of Jackson on numerous factors and not, as
Defendants suggest, on a purely textual analysis. While the inclusion in the ADEA of the phrase
“otherwise adversely affects” certainly influenced the plurality’s holding, the Court also relied
upon the following: 1. the legislative history of the ADEA,1 2. the purpose of the ADEA, especially in comparison to that of Title VII, 42 U.S.C. § 2000e,2 3. deference to regulating authorities’ reasonable interpretation and enforcement of the statute,3 4. the Reasonable Factors Other Than Age (RFOA) provision, particularly as interpreted by the EEOC,4 5. the nature of the discrimination the ADEA regulates (age-based) as compared to the discrimination regulated by Title VII (race, national origin, etc.),5 6. unanimous Circuit Court treatment of the ADEA, supporting disparate impact claims.6
Thus, contrary to Defendants’ contention that the text of the statute alone “provides the answer”
(Mot. to Dismiss at 12), courts should look at a variety of factors, as the Supreme Court did in
1 See 544 U.S. at 232-33 (Majority); id. at 238 (Plurality Plus); id. at 248, 253-56 (O’Connor, J.). 2 See id. at 234, 235 n.5 (Plurality Plus); id. at 248, 256-58, 262 (O’Connor, J.). 3 See id. at 239-40 (Plurality Plus); id. at 243-47 (Scalia, J.); id. at 263-66 (O’Connor, J.). Notably, Justice Scalia’s concurrence emphasized that, in his opinion, disparate impact claims are available under the ADEA not because of the text of the ADEA, but because of the need to defer to the regulating authorities’ reasonable interpretation and enforcement of the statute. Id. at 243 (Scalia, J., concurring in part and concurring in the judgment) (citing Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)). 4 See id. at 240-41 (Majority); id. at 238-40 (Plurality Plus); id. at 245-46 (Scalia, J.); id. at 251-53, 263-67 (O’Connor, J.). 5 See id. at 240-41 (Majority); id. at 236 n.7 (Plurality Plus); id. at 254-55, 258-59, 261 (O’Connor, J ). 6 See id. at 236-238 (Plurality Plus).
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City of Jackson, to determine whether to allow disparate impact claims. See, e.g., Payares v. JP Morgan Chase & Co, et al., No. 07-cv-05540, Mins. of In Chambers Order Re: Mot. to Dismiss Case, at *4 (C.D.Cal. May 15, 2008); Garcia v. Country Wide Financial Corp., No. 07-cv-01161, Am. Order Granting in Part and Denying in Part Defs.’ Mot. To Dismiss, at *7-11 (C.D.Cal. Jan. 17, 2008) (explaining that City of Jackson “did not hold that a statute must contain this ‘effects’ language in order to authorize disparate impact claims.” (emphasis in original)).
Defendants’ inaccurately argue that, in City of Jackson, Justice Stevens noted that the Court’s decision in Griggs v. Duke Power Co., 401 U.S. 424 (1971), which was the landmark Supreme Court decision that allowed disparate impact claims under Title VII, “should more properly be understood as an interpretation of Title VII’s text.” (Mot. to Dismiss at 12.) Justice Stevens’ discussion of Griggs actually reinforced the importance of non-textual factors when interpreting statutory text, such as the purposes underlying and administrative enforcement of a statute. He stated:
While our opinion in Griggs relied primarily on the purposes of the Act, buttressed by the fact that the EEOC had endorsed the same view, we have subsequently noted that our holding represented the better reading of the statutory text as well. City of Jackson, 544 U.S. at 235 (emphasis added). This statement in no way indicates that the Court had abandoned considerations beyond statutory text. Rather, it confirmed that Griggs relied primarily on factors other than the text of Title VII, but that the text also supports the Court’s decision. B. City of Jackson did not “hold” that the text of § 703(a)(1) of Title VII and §
4(a)(1) of the ADEA “focuses on ‘the employer’s actions with respect to the targeted individual.” Much of Defendants’ mischaracterization of City of Jackson is based on the their wholly inaccurate reading of the Court’s treatment of § 703(a)(1) of Title VII and § 4(a)(1) of the
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ADEA. (See Mot. to Dismiss at 13-14.) In City of Jackson, the Supreme Court did not pass on the availability of any claim, disparate impact or otherwise, under either § 703(a)(1) of Title VII or § 4(a)(1) of the ADEA. Those sections of Title VII and the ADEA were not before the court. The Court discussed those issues, but such discussions were purely dicta. Defendants’ claim that the Court “held” that the text of those provisions of Title VII and the ADEA “focus[] on ‘the employer’s actions with respect to the targeted individual’” and therefore address only certain types of discrimination is plainly wrong.
C. Defendants overstate the similarities between statutes and ignore key differences between Title VII, the ADEA, the FHA, and the ECOA.
Even if Defendants were correct, which they are not, that City of Jackson articulated a rule that limits statutory interpretation to text alone, Defendants overstate the similarities between the statutes examined in prior cases and the statutes at issue here. Differences in the structure of the statutes undermine Defendants’ argument that § 3605(a) of the FHA and § 1691(a) of the ECOA “track the language of § 703(a)(1) of Title VII and § 4(a)(1) of the ADEA.” (Mot. to Dismiss at 14.)
In City of Jackson, the Court emphasized the “key textual differences” of two sections within Title VII: one section, § 4(a)(2), allowed disparate impact claims, and the other section, § 4(a)(1), did not. City of Jackson, 544 U.S. at 236 n. 6. The Supreme Court noted that the internal textual differences between the two sections supported the theory that Congress’s use of different language between subsections within the same statute demonstrated Congressional intent to have each subsection carry different meaning. Id. No such distinctions exist within either the FHA or ECOA. Instead, unlike Title VII and the ADEA, which each have two provisions barring discrimination in two distinct manners, in both the FHA and ECOA, the relevant sections banning discriminatory practices stand on their own and are not coupled with
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another provision. See 42 U.S.C. § 3605(a); 15 U.S.C. § 1691(a)(1). Thus, whereas those differences within the ADEA and Title VII served to bolster the Court’s decision in City of Jackson, the differences simply do not exist in either of the statutes at issue here.
The ECOA contains an additional major structural difference which Defendants overlook. The statute includes a section listing activities not constituting discrimination, which, notably, does not include disparate impact claims. 15 U.S.C. § 1691(b). In contrast, Title VII and the ADEA contain no such provision, complicating any comparison between the statutes. The fact that Congress would include this list of activities that do not fall within the scope of the Act but omit disparate impact claims from that list is instructive. See City of Jackson, 544 U.S. at 239 n.11 (“[I]f Congress intended to prohibit all disparate-impact claims, it certainly could have done so.”).
Defendants also overlook a key difference between the language of the ADEA, § 623(a)(1), and the FHA, 42 U.S.C. § 3605(a), which suggests that these clauses may have different meanings. Subsection 623(a)(1) of the ADEA “makes it unlawful for an employer ‘to fail or refuse to hire . . . any individual . . . because of such individual’s age.’” City of Jackson, 544 U.S. at 236 n.6 (quoting 29 U.S.C. § 623(a)(1)) (emphasis in original). The term “individual” appears to refer only to a single individual, particularly considering its placement next to the subsequent paragraph which addresses “employees” in the aggregate. In contrast, § 3605(a) of the FHA makes it “unlawful . . . to discriminate against any person.” 42 U.S.C. § 3605(a) (emphasis added). According to the definitions of the FHA, “‘Person’ includes one or more individuals,” not just a single individual. 42 U.S.C. § 3602(d) (emphasis added); see also 29 U.S.C. § 630 (applying the same definition to the ADEA); 42 U.S.C. § 2000e(a) (applying the same definition to Title VII). This raises the possibility that Congress intended the term
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“person,” as used in the FHA’s prohibition against discrimination, to refer to discrimination in an aggregate sense as well as discrimination against an individual.
These unique structural and textual characteristics in the FHA and ECOA support the availability of disparate impact claims under each statute. They certainly belie Defendants’ contention that the Court may not consider extrinsic evidence such as legislative history because there is no ambiguity in the plain meaning of the statutes. (Mot. to Dismiss at 16.)
D. None of the other cases cited by Defendants supports the contention that statutory text is determinative.
After mischaracterizing the holding in City of Jackson, Defendants attempt to bolster their flawed statutory interpretation argument by citing several cases in which, they contend, the Supreme Court “followed this same analysis in interpreting other anti-discrimination statutes.” (Mot. to Dismiss at 16.) None of these cases, however, supports such a claim.
Jackson v. Birmingham Board of Education Defendants entirely misread the Court’s decision in Jackson v. Birmingham Board of Educ., 544 U.S. 167 (2005). The Court in Jackson did not address whether disparate impact claims were available under Title IX, 20 U.S.C. § 1681, and it certainly did not hold that “only intentional discrimination claims are allowed under Title IX” based on the statute’s text, as Defendants claimed in their Motion to Dismiss. (Mot. to Dismiss at 16.) The issue presented in Jackson instead was “whether the private right of action implied by Title IX encompasses claims of retaliation.” Jackson, 544 U.S. at 171 (emphasis added). The Jackson Court held that a private right of action is available under Title IX “where the funding recipient retaliates against an individual because he has complained about sex discrimination.” Id. The phrase “disparate impact” (or variations thereof) appeared in the Jackson Court’s opinion a total of four times, all in the same paragraph, and all in describing Alexander v.
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Sandoval, 532 U.S. 275 (2001), which, as discussed infra, concerned the availability of a private right of action under a subsection of Title VI, not the availability of disparate impact claims. Jackson, 544 U.S. at 177-78. Nowhere in the opinion did the Court address the issue of whether disparate impact claims were available under Title IX, and thus this case is not relevant to Defendants’ argument here.
Alexander v. Sandoval The Supreme Court’s decision in Alexander v. Sandoval also has very little relevance with regard to the availability of disparate impact claims under the FHA or ECOA because the issue presented in Sandoval was not whether disparate impact claims were available under § 601 of Title VI, but whether a private right of action existed to enforce regulations under § 602 of Title VI. 532 U.S. at 278; see also Payares, at *3 (“Sandoval itself held only that no private right of action was available to enforce regulations enacted by federal agencies to prohibit disparate impact discrimination under a statute previously held to prohibit only intentional discrimination.” (emphasis added)); Osborne v. Bank of America, Nat. Ass'n., 234 F.Supp.2d 804, 809-12 (M.D.Tenn. 2002) (“Properly construed then, Sandoval holds only that regulations may not create private rights of action where no such right was intended by Congress.” (emphasis added)). In fact, the Court specifically assumed, for the sake of narrowing its discussion to the issue of whether a private right of action existed, that § 602 of Title VI could be used to proscribe activities that had a disparate impact on protected classes. Sandoval, 532 U.S. at 282. To the limited extent that Sandoval’s dicta on disparate impact claims (see Mot. to Dismiss at 16), is relevant here, the Court’s discussion actually undercuts Defendants’ argument that courts should focus exclusively on statutory text in determining the availability of disparate impact claims. The Sandoval Court’s recognition that § 601 of Title VI only prohibits
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intentional discrimination, and therefore not disparate impact claims, was based entirely on precedent, not textual analysis. See 532 U.S. at 280 (citing Regents of Univ. of Cal. v. Bakke, 438 U.S. 265 (1978); Guardians Assn. v. Civil Serv. Comm’n of New York City, 463 U.S. 582 (1983); Alexander v. Choate, 469 U.S. 287 (1985)); see also Payares, at *3 (“Sandoval merely acknowledged that disparate impact claims under Section 601 had been foreclosed in 1978, by the Court’s decision in Regents of Univ. of Cal. v. Bakke”). More importantly, the precedent cited in Sandoval, and the cases which Defendants erroneously imply hinged on the absence of “adverse effects” language, developed out of extensive examination of evidence beyond the statutory text, including legislative history, Congressional intent, agency interpretation, and other factors. See Bakke, 438 U.S. at 284-85 (“We must, therefore, seek whatever aid is available in determining the precise meaning of the statute before us” by examining the “voluminous legislative history,” “congressional intent,” “background of both the problem that Congress was addressing and the broader view of the statute that emerges from a full examination of the legislative debates.”); Guardians, 463 U.S. at 592, 599-601; id. at 609-11 (Powell, J., concurring in the judgment) (discussing the interpretation of “the federal agency given enforcement authority,” legislative history, structure of Title VI, and Congressional intent); see also Choate, 469 U.S. at 292-97, 299 (relying in large part on the Rehabilitation Act’s legislative history, statutory objectives, and interpretations by the Courts of Appeals).
Other Cases that Defendants Miscite In the seminal case Griggs v. Duke Power Co., 401 U.S. 424 (1971) (see Mot. to Dismiss at 16), the Court’s analysis was not, as Defendants suggested, limited to the “‘adverse effects’ language” found in Title VII. The Court instead considered a broad array of factors, including “the objective of Congress in the enactment of Title VII,” the legislative history of the statute,
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and “[t]he administrative interpretation of the Act by the enforcing agency.” 401 U.S. at 429, 433-35.
The Supreme Court’s decision in Raytheon Co. v. Hernandez, 540 U.S. 44 (2003) (see Mot. to Dismiss at 16), did not address the availability of disparate impact claims beyond acknowledging that such claims were available under Title VII. Id. at 52-55. The Court’s passing reference to discriminatory effects certainly does not stand for the broadly-applicable rule that Defendants would infer. Id. at 53.
E. The Court is still bound by First Circuit precedent holding that disparate impact claims are available under the FHA.
Even if Defendants were correct, which they are not, that cases such as City of Jackson articulated a rigid rule of decision regarding the “‘adverse’ effects language,” such a rule does not overturn controlling First Circuit precedent by implication. Defendants acknowledge that the First Circuit has clearly stated that disparate impact claims are available under the FHA in Langlois v. Abington Hous. Auth., 207 F.3d 43, 50 (1st Cir. 2000). (Mot. to Dismiss at 16 n.6.) See also Macone v. Town of Wakefield, 277 F.3d 1, 5 (1st Cir. 2002). Defendants urge, however, that Langlois is “no longer good law” based on the decisions in City of Jackson, Jackson, Sandoval, and Raytheon. This contention overreaches.
The Supreme Court laid out the proper course of analysis for lower courts charged with determining the effect of intervening case law in Agostini v. Felton, 521 U.S. 203, 237-38 (1997). In Agostini, the Court explained that lower courts should refrain from declaring controlling law overruled by analogy, stating, “[w]e do not acknowledge, and we do not hold, that other courts should conclude our more recent cases have, by implication, overruled an earlier precedent.” Id. at 237 (emphasis added). The Court reaffirmed the principle that “the Court of Appeals should follow the case which directly controls, leaving to this Court the prerogative of
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overruling its own decisions.” Id. (quoting Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 484 (1989)) (emphasis added). Likewise, a District Court should adhere to binding precedent unless and until the court that created the precedent reconsiders “its continued vitality.” Id. at 238.
However, as explained supra, nothing in City of Jackson or any other recent case indicates a new rule of statutory interpretation that forecloses inquiry into extrinsic evidence. In this case, examination of the legislative history, administrative enforcement, and precedent case law, along with the statutory text of the FHA and ECOA, is fully appropriate and consistent with recent Supreme Court jurisprudence. II. BASED ON STATUTORY TEXT, ADMINISTRATIVE ENFORCEMENT,
LEGISLATIVE HISTORY, AND DECADES OF CASE LAW, DISPARATE IMPACT CLAIMS ARE ALLOWED UNDER THE FHA AND ECOA. If and when the Supreme Court considers the issue of whether the FHA and ECOA allow disparate impact claims, the Court will consider, as it has done in the past, not only the statutory text, but also the legislative history underlying the acts, regulatory interpretation and enforcement by the relevant federal agencies, and the treatment of the statutes by the courts. See, e.g., Griggs, 401 U.S. at 429, 433-35 (focusing on Congressional objectives, legislative history, and administrative interpretation); Choate, 469 U.S. at 292-97, 299 (focusing on legislative history, interpretation by the Courts of Appeals, and statutory objectives). This analysis reveals that Congress intended to allow disparate impact claims under each of the statutes, that all of the relevant enforcement agencies have endorsed the availability of disparate impact claims, that all of the Circuit Courts to consider the issue have allowed disparate impact claims under the FHA, and that the courts that have considered the ECOA have held similarly.
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A. The text of the FHA and ECOA supports the availability of disparate impact claims.
Even disregarding the relevant legislative history, agency interpretation, and precedent regarding the FHA and ECOA, the text of the statutes themselves may be read as allowing disparate impact claims. The FHA states that
It shall be unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin. 42 U.S.C. § 3605(a). As explained supra, this language may reasonably be interpreted as encompassing disparate impact claims when it prohibits “discriminat[ion] against any person.” 42 U.S.C. § 3602(d) (defining “person” as “one or more individuals”) (emphasis added). The ECOA states that It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction . . . on the basis of race, color, religion, national origin, sex or marital status, or age . . . 15 U.S.C. § 1691(a)(1). Particularly when considered along with the list of activities which do not constitute discrimination, which does not include activities with a disparate impact on protected groups, this language may reasonably be understood as allowing for disparate impact claims. 15 U.S.C. §§ 1691(a), (b) (see supra at 7). B. The legislative history underlying the FHA and ECOA supports allowing
disparate impact claims under each statute. Since the early 1970s, the Supreme Court has placed a strong emphasis on the legislative history and purposes underlying civil rights statutes when determining the availability of disparate impact claims. See General Bldg. Contractors Ass’n, Inc. v. Pennsylvania, 458 U.S. 375, 386-391 (1982) (analyzing 42 U.S.C. § 1981); Griggs, 401 U.S. at 429-30 (analyzing Title VII). Not only does City of Jackson not abolish this analytical framework, it actually reaffirms
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the relevance of legislative history and Congressional purpose. City of Jackson, 544 U.S. at 23235.
1. The Fair Housing Act In 1967, Lyndon B. Johnson created the National Advisory Commission on Civil Disorders in order to identify the causes of recent race riots. The Commission’s Kerner Report warned that the “nation is moving toward two societies, one black, one white – separate and unequal.” See Report on the Nat’l Advisory Comm’n on Civil Disorders 1, 13 (1968). The report pointed to residential segregation and racism as primary causes of the riots and recommended, among other things, comprehensive legislative reform to eradicate housing discrimination. Within two months, Congress enacted the Fair Housing Act. 42 U.S.C. § 3601. Upon enacting the FHA, the primary sponsor of the Act, Senator Mondale, noted in the Congressional Record that the Act was necessary “to undo the effects” of discriminatory governmental action. 114 Cong. Rec. 2699 (emphasis added). He also stated that although the Supreme Court had outlawed explicit racial zoning laws, “ordinances with the same effect, although operating more deviously in an attempt to avoid the Court’s prohibition, were still being enacted.” Id. (emphasis added). Another key sponsor of the Act, Senator Brooke, stated that African Americans were “surrounded by a pattern of discrimination based on individual prejudice, often institutionalized by business and industry, and Government practices.” Id. at 2526. The purpose of the Act clearly included remedying the effects of discrimination, as well as prohibiting continued intentional discrimination.
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Throughout the lengthy floor debate concerning Title VIII in the Senate,7 a number of Congressmen spoke to the significance of the Act in eliminating the negative effects of discrimination in housing. See, e.g., id. at 2279-81 (1968) (remarks of Senator Brooke) and at 3421 (remarks of Senator Mondale). At one point, Senator Baker introduced an amendment that would have required evidence of discriminatory intent in order to prove a violation of Title VIII. Id. at 5214. Adopting this amendment would have shown conclusively that Congress wanted to limit the Act to claims of disparate treatment and not disparate impact. The Senate rejected the amendment, id. at 5221-22, with Senator Percy emphasizing that if “racial preference” were required to violate the FHA, “proof would be impossible to produce.” Id. at 5216 (quoted in Resident Advisory Bd. v. Rizzo, 425 F.Supp. 987, 1022 (D.C.Pa. 1976)). Several other senators argued against the amendment due to the difficulty of proving intent. 114 Cong. Rec. 5220 (Senator Dominick arguing that the amendment “increases the opportunity for discrimination”); see also id. at 5218, 5220-21 (Senators Mondale and Hart on the difficulty of showing discriminatory intent).
Congress has since ratified the use of disparate impact analysis under the FHA through its amendments to the Act. In 1988, Congress passed the Fair Housing Amendments Act (“FHAA”) in order to include new prohibitions against discrimination based on familial status or handicap. Pub. L. No. 100-430, 102 Stat. 1619 (1988), codified at 42 U.S.C. § 3601. In doing so, Congress used language similar to that which the FHA already employed with regard to race. Compare 42 U.S.C. § 3604(f)(1), (2) with 42 U.S.C. § 3604(a), (b). Prior to this point, all eight Circuit Courts that had confronted the issue had allowed disparate impact claims under the FHA. Since courts are to presume that Congress “adopt[s prior judicial] interpretation when it re-enacts a statute
7 The legislative history is somewhat incomplete because Title VIII was adopted from Senator Mondale’s floor amendment to the 1968 Civil Rights Act. See Resident Advisory Bd. v. Rizzo, 564 F.2d 126, 147 n. 29 (3rd Cir. 1977).
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without change,” Lorillard v. Pons, 434 U.S. 575, 580 (1978), this Court should presume that the FHAA adopted the practice of allowing disparate impact claims under the FHA.
The legislative history of the FHAA reinforces Congressional intent to allow disparate impact claims. According to a House Report, “The Committee understands that housing discrimination against [members of a protected class] is not limited to blatant, intentional acts of discrimination. Acts that have the effect of causing discrimination can be just as devastating as intentional discrimination.” H.R. Rep. No. 100-711, at 25 (1988) (emphasis added). The House Report cited a pair of FHA cases in the Fourth and Ninth Circuits that involved disparate impact: “[b]ecause minority households tend to be larger and exclusion of children often has a racially discriminatory effect, two federal courts of appeal have held that adults-only housing may state a claim of racial discrimination under Title VIII.” Id. at 21 (emphasis added).
Much like the original FHA, the House also rejected an amendment that would have limited the availability of disparate impact claims. The amendment would have included the provision: “a zoning decision is not a violation of the Fair Housing Act unless the decision was made with the intent to discriminate on the basis of race or other prohibited criteria under the Act.” Id. at 89 (emphasis added). Once again, the House rejected an amendment which had the express purpose of excluding disparate impact claims. Id.
Perhaps the clearest evidence of Congressional recognition that the FHA includes disparate impact claims comes from the principal sponsor of the FHAA, Senator Kennedy. The day after Congress signed the Act into law, Senator Kennedy said that “Congress accepted th[e] consistent judicial interpretation” of the Courts of Appeals, explaining that the FHA “prohibit[s] acts that have discriminatory effects, and that there is no need to prove discriminatory intent.” 134 Cong. Rec. 23711-12 (1988).
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2. The Equal Credit Opportunity Act The legislative history and Congressional purpose for the ECOA show an even stronger basis for allowing disparate impact claims. The Senate Report that addressed the ECOA amendments of 1976 specifically endorsed disparate impact claims: In determining the existence of discrim ination . . . courts o r agencies are free to look at the effects o f a creditor's pr actices as well as the creditor’s motives o r conduct in individual transa ctions. Thus judicial constructions of antidiscrimination legislation in the em ployment field, in cases such as Griggs v. Duke Power Company and Albemarle Paper Company v. Moody , are intended to serve as guides in the applic ation of this Act, especially with respect to the allocations of burdens of proof. S. Rep. No. 94-589 (1976) (emphasis added) (citations omitted). This Senate Report did not accompany the original enactment of the ECOA, but instead accompanied amendments which expanded the breadth of the statute to include racial discrimination, further underscoring Congressional intent to make disparate impact claims available under the ECOA in race discrimination lawsuits. Consumer Credit Protection Act, Pub. L. No. 94-239 (1976). Similar to the history of the FHA, Congress’s subsequent amendments to the ECOA confirmed the availability of disparate impact claims under the Act. Congress amended the Act in 1996 as part of the Omnibus Consolidated Appropriations Act of 1996. Pub. L. No. 104-208, 110 Stat. 3009. At this point, courts had already analyzed the ECOA and found that it included disparate impact claims. See, e.g., Guisewhite v. Muncy Bank & Trust Co., 1996 WL 511525, at *4 (M.D.Pa. 1996); Sayers v. General Motors Acceptance Corp., 522 F. Supp. 835, 839-40 (D.C.Mo. 1981); Cherry v. Amoco Oil Co., 490 F.Supp. 1026, 1029-30 (N.D.Ga. 1980). Silence from Congress thus ratified the widely held interpretation of the courts. See Lorillard, 434 U.S. at 580.
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C. The administrative agencies that enforce the FHA and ECOA have supported the availability of disparate impact claims under each statute.
Administrative treatment of the FHA and ECOA further supports the availability of disparate impact under each statute. As City of Jackson explained, 544 U.S. at 239, and as Justice Scalia’s concurring opinion wholly relied upon, 544 U.S. at 243 (Scalia, J., concurring), an administrative agency’s reasonable interpretation and enforcement of a statute warrants deferential treatment. Justice Scalia believed that the Court’s decision in City of Jackson should have been guided solely by deference to the Equal Employment Opportunity Commission (“EEOC”) under Chevron, 467 U.S. 837: “This is an absolutely classic case for deference to agency interpretation. The [ADEA] confers upon the EEOC authority to issue ‘such rules and regulations as it may consider necessary or appropriate for carrying out’ the [Act].” See City of Jackson, 544 U.S. at 243 (Scalia, J., concurring); see also Chevron, 467 U.S. at 844 (“We have long recognized that considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer, and the principle of deference to administrative interpretations.”). While the Lawyers’ Committee believes that all of the factors surrounding a statute should be considered, not solely the text or the administrative treatment, it is clear that an administrative agency’s regulations and enforcement of a statute bear consideration.
1. The Fair Housing Act Every agency in charge of implementing, enforcing and administering the FHA has unmistakably shown support for allowing disparate impact claims. The Department of Housing and Urban Development (“HUD”), which has the authority to issue federal regulations and bring claims under the FHA, has endorsed the availability of disparate impact claims. The Secretary of HUD, who has “[t]he authority and responsibility for administering th[e] Act,” 42 U.S.C.§
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3608(a), has determined and argued successfully through litigation that a disparate impact analysis is applicable to the FHA. See, e.g., Pfaff v. HUD, 88 F.3d 739, 745 (9th Cir. 1996); HUD v. Mountain Side Mobile Estates P’ship, 1993 WL 307069 (1993). Much like the EEOC’s position regarding the ADEA, HUD’s interpretation of the FHA is entitled to significant deference. See City of Jackson, 544 U.S. at 239-40; id. at 244-45 (Scalia, J., concurring).
The Department of Justice (“DOJ”) and the Attorney General also have enforcement responsibilities, see, e.g., 42 U.S.C. §§ 3610(g)(2)(C), 3614, and the DOJ has successfully argued that courts must allow disparate impact claims. See Pfaff, 88 F.3d at 745; Mountain Side Mobile Estate P’ship v. Sec’y of Hous. and Urban Dev., 56 F.3d 1243, 1250-51 (10th Cir. 1995); United States v. City of Black Jack, Missouri, 508 F.2d 1179, 1184-85 (8th Cir. 1974).
HUD has also described its position on the issue of disparate impact claims through enforcement handbooks, related regulations, and reports to Congress. An FHA enforcement handbook states that “even in cases where there is absolutely no evidence of discriminatory intent, a discriminatory impact claim may result in a finding of liability.” Title VIII Complaint Intake, Investigation and Conciliation Handbook, 8024.01 CHG-1 at 2-28 (1998). Another HUD handbook informs all HUD auditors that the FHA “prohibitions extend to actions, which have disparate impact because of any of the prohibited bases.” Consolidated Audit Guide for Audits of HUD Programs, 2000.04 REV-2 CHG-1 at 1-8 (2001).
A HUD regulation that invokes the FHA states that recipients of Community Development Block Grants are presumed to be “affirmatively furthering fair housing unless . . . [t]here is evidence that a policy, practice, standard or method of administration, although neutral on its face, operates to deny or affect adversely in a significantly disparate way . . . fair housing to [minorities].” 24 CFR § 570.904(a)(1)(ii).
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At a Senate hearing, the Assistant Secretary for Fair Housing and Equal Opportunity told Congress that the “standards to determine discrimination [in home insurance under the FHA, as in all other covered areas] will be based on the principles of overt discrimination, disparate treatment and disparate impact.” See Homeowners Ins. Discrimination: Hearing Before the Sen. Comm. On Banking, Housing, & Urban Affairs, 103d Cong. 793 at 20 (1994) (statement of Roberta Achtenberg).
HUD is not the only agency to interpret the FHA to allow disparate impact claims. In 1994, ten different agencies that regulate financial institutions – the Office of Federal Housing Enterprise Oversight, the Department of Justice, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Federal Housing Finance Board, the Federal Trade Commission, and the National Credit Union Administration, along with HUD – issued a joint “Policy Statement on Discrimination in Lending.” In the Policy Statement, the agencies confirmed that disparate impact claims were cognizable under the FHA, as well as the ECOA, and that “[e]vidence of discriminatory intent is not necessary.” See 59 Fed. Reg. 18266, 1826970 (Apr. 15, 1994).
2. The Equal Credit Opportunity Act Administrative interpretation of the ECOA also confirms the availability of disparate impact claims. Congress has delegated the duty of implementing the ECOA to the Federal Reserve Board (“the Board”), which it has done by issuing a group of regulations broadly known as Regulation B. See 12 CFR §§ 202.1-16. These regulations and their commentaries overtly allow for disparate impact claims:
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The legislative history of the Act indicates that the Congress intended an ‘effects test’ concept, as outlined in the em ployment field by the S upreme Court in the cases of Griggs v. Duke Power Co., 401 U.S. 424 (1971), and Albemarle Paper Co. v. Moody , 422 U.S. 405 ( 1975), to be a pplicable to a creditor's determination of creditworthiness. 12 C.F.R. § 202.6(a) n.2 (emphasis added). Thus, not only are federal regulations in place allowing disparate impact claims under the ECOA, but the agency in charge of implementing the Act is strongly in favor of the same. D. The Circuit Courts have endorsed the availability of disparate impact claims
under the FHA and ECOA. When interpreting civil rights statutes, in addition to the text of the statute, Courts must consider prior case law. See City of Jackson, 544 U.S. at 236-38. This principle was reiterated by the Supreme Court this year, in CBOCS West, Inc. v. Humphries, 128 S.Ct. 1951 (2008). In CBOCS, the Court reaffirmed that statutory text is not the only consideration when determining the availability of causes of action and held that retaliation claims are available under 42 U.S.C. § 1981, despite the absence of express statutory text allowing such claims. 128 S.Ct. at 1954. The Court placed a special emphasis on the importance of stare decisis, stating that “considerations of stare decisis strongly support our adherence to that view. And those considerations impose a considerable burden upon those who would seek a different interpretation that would necessarily unsettle many Court precedents.” Id. at 1958. More importantly, the Court even said that a change in judicial approaches to statutory interpretation, such as the approach that Defendants argue flows from City of Jackson, is not enough to overturn “well-established prior law. Principles of stare decisis, after all, demand respect for precedent whether judicial methods of interpretation change or stay the same.” Id. As explained below, the overwhelming case law interpreting the FHA and ECOA supports the availability of disparate impact claims under each statute.
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The eleven Circuit Courts that have considered the issue are unanimous in allowing disparate impact claims under the FHA, bolstering the Plaintiffs’ position. See, e.g., Casa Marie, Inc. v. Superior Court of Puerto Rico, 988 F.2d 252, 269 n.20 (1st Cir. 1993); United States v. Starrett City Assocs., 840 F.2d 1096, 1100 (2nd Cir. 1988); Resident Advisory Bd. v. Rizzo, 564 F.2d 126, 147-48 (3rd Cir. 1977); Smith v. Town of Clarkton, 682 F.2d 1055, 1065 (4th Cir. 1982); Simms v. First Gibraltar Bank, 83 F.3d 1546, 1555 (5th Cir. 1996); Arthur v. City of Toledo, 782 F.2d 565, 575 (6th Cir. 1986); Metro. Hous. Dev. Corp. v. Vill. of Arlington Heights, 558 F.2d 1283, 1290 (7th Cir. 1977); City of Black Jack, 508 F.2d at 1184 (8th Cir.); Keith v. Volpe, 858 F.2d 467, 482-84 (9th Cir. 1988); Mountain Side, 56 F.3d at 1250-51 (10th Cir.); Jackson v. Okaloosa County, 21 F.3d 1531, 1543 (11th Cir. 1994); see also Miller v. Poretsky, 595 F.2d 780, 790 n.10 (D.C. Cir. 1978) (declining to reach the issue but noting general consensus that such claims are cognizable).
Additionally, numerous courts have considered the availability of disparate impact claims under the ECOA and have all found that such claims may be brought. See, e.g., Golden v. City of Columbus, 404 F.3d 950, 963 n.11 (6th Cir. 2005) (“Neither the Supreme Court nor this Court have previously decided whether disparate impact claims are permissible under ECOA. However, it appears that they are.”); Dismuke v. Connor, 2007 WL 4463567, at *4 (W.D.Ark. 2007) (“A credit applicant may prove unlawful discrimination under ECOA using … [a] disparate impact analysis.”); Boykin v. KeyCorp, 2005 WL 711891, at *7 (W.D.N.Y. 2005) (vacated on other grounds in 521 F.3d 202 (2nd Cir. 2008)) (citing Powell v. American General Finance, Inc., 310 F.Supp.2d 481 (N.D.N.Y. 2004)); Smith v. Chrysler Financial, 2003 WL 328719 at *6 (D.N.J. 2003) ("the ECOA provides a private right of action for disparate impact liability claims.”); Wide ex rel. Estate of Wilson v. Union Acceptance Corp., 2002 WL
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31730920, at *2 (S.D.Ind. 2002) (“Disparate impact analysis clearly is available to demonstrate discrimination under the ECOA.”); Osborne, 234 F.Supp.2d at 809-12 n.4 (finding that disparate impact claims are available under the ECOA and that “one may conclude from the face of the statute that Congress intended the ECOA to extend beyond intentional discrimination”); Faulkner v. Glickman, 172 F.Supp.2d 732, 737 (D.Md. 2001) (a “credit applicant may prove discrimination in violation of the ECOA by relying on … [a] disparate impact analysis”); Coleman v. General Motors Acceptance Corp., 196 F.R.D. 315, 325-26 (M.D.Tenn. 2000), modified on other grounds, 296 F.3d 443 (6th Cir. 2002) (“there is abundant support indicating that a disparate impact theory can be used in ECOA cases.”); AB & S Auto Service, Inc. v. South Shore Bank of Chicago, 962 F.Supp. 1056, 1060 (N.D.Ill.1997) (confirming the availability of disparate impact claims based in part on legislative history); Latimore v. Citibank, F.S.B., 979 F.Supp. 662, 664 n.7 (N.D.Ill. 1997) (the “ECOA encompass[es] ‘disparate impact’/‘discriminatory effect’ claims, as well as ‘discriminatory intent’ claims.”); Guisewhite, 1996 WL 511525, at *4 (“As the legislative history of the Equal Credit Opportunity Act makes clear, [plaintiff] may ground his claim on either a disparate impact theory or a disparate treatment analysis.”).
The courts that have considered the issue since Sandoval and City of Jackson have confirmed that disparate impact claims remain available under the FHA and ECOA. See Payares, at *3-4 (“this Court must follow binding Ninth Circuit precedent allowing disparate impact claims of discrimination to be brought under both the FHA and the ECOA; precedent which, as it happens, appears to be well-reasoned, consistent with Congressional intent, in accord with the law in other circuits, and reflective of good public policy.”); Ramirez v. GreenPoint Mortgage Funding, Inc., 2008 WL 2051018, at *4 (N.D.Cal. 2008) (finding that defendant had
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not met the burden of showing that disparate impact claims are no longer available under the FHA or ECOA); Zamudio v. HSBC North American Holdings Inc., 2008 WL 517138, at *2 (N.D.Ill. 2008) (“it is well established that a disparate-impact claim is available under both the ECOA and FHA.”); Garcia at *7-11 (holding that City of Jackson did not require a statute to have “effects language” for disparate impact claims and that the City of Jackson Court relied on much more than textual analysis); Beaulialice v. Fed. Home Loan Mortg. Corp., 2007 WL 744646, at *4 (M.D.Fla. 2007) (“Neither [City of Jackson] nor Sandoval prohibit disparate impact claims under either statute [the FHA or ECOA].” (internal citations omitted)).
CONCLUSION This Court should deny Defendants’ Motion to Dismiss because Defendants cannot cite any authority for the proposition that disparate impact claims are no longer available under the FHA and ECOA.

Dated: August 11, 2008

Respectfully submitted,
____/s/ Michael E. Aleo_______ Michael E. Aleo, BBO # 672071 Lawyers’ Committee for Civil Rights
Under Law of the Boston Bar Association 294 Washington Street, Suite 443 Boston, MA 02108 Telephone: 617-988-0609 Facsimile: 617-482-4392 Email: maleo@lawyerscom.org

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CERTIFICATE OF SERVICE

I, Michael E. Aleo, hereby certify that this document, filed through the ECF system, will be sent electronically to the registered participants as identified on the Notice of Electronic Filing, and paper copies will be sent to those indicated as non registered participants on August 11, 2008.

____/s/ Michael E. Aleo__________

Michael E. Aleo

m

aleo@lawyerscom.org

 
 Case 1:08-cv-10417-MLW Document 64 Filed 05/12/10 Page 1 of 30

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

SHATONYA HARRIS, MATEO HUERTA and KEVIN NICHOLSON, on behalf of themselves and all others similarly situated,
Plaintiffs, vs.
CITIGROUP, INC., and CITIMORTGAGE, INC.
Defendants.

C.A. NO. 08-10417-MLW LEAVE TO FILE GRANTED MAY 3, 2010
JURY TRIAL DEMANDED

SECOND AMENDED CLASS ACTION COMPLAINT

Plaintiffs Shatonya Harris, Mateo Huerta and Kevin Nicholson, 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 minority homeowners, against Citigroup, Inc. ("Citigroup"), and Citimortgage,

Inc. (“Citimortgage,” and collectively "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. Plaintiffs

seek remedies for themselves and the Class (defined in ¶ 121, below) for the discriminatory

effects of the Defendants' home financing policies and practices.

2.

As described below, the Defendants have established a specific, identifiable and

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

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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 the Defendants is determined by objective criteria (e.g., the individual’s credit history, credit score, debt-to-income ratio and loan-to-value ratios), the Defendants' credit pricing policy authorizes additional discretionary finance charges. These subjective, additional finance charges have a widespread discriminatory impact on minority applicants for home mortgage loans, in violation of ECOA and the FHA.
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 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
1 This report is available at http://ncrc.org/policy/cra/documents/ncrcdiscrimstudy.pdf. 2

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were much more likely to be issued a higher-rate loan than white borrowers with the same qualifications.
6. In a speech last year, 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 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.
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.
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10. The Defendants’ Discretionary Pricing Policy constitutes a pattern and practice of discriminatory disparate impact by subjecting 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 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 Defendants regularly conduct business in this District.
PARTIES 14. Plaintiff Shatonya Harris is a minority homeowner who resides at 20231 St. Andrews Ct., Olympia Fields, IL 60641. 15. Plaintiff Mateo Huerta, is a minority homeowner who resides at 145 South 58th St., San Diego, CA 92114. 16. Plaintiff Kevin Nicholson is a minority homeowner who resides at 1218 Kasten Drive, Dolton, IL 60419. 17. Defendant Citigroup, Inc., is a Delaware corporation headquartered at 399 Park Avenue, New York, NY 10043. Citigroup offers a range of financial services through its subsidiary, defendant Citimortgage and through other subsidiaries that operate nationwide. 18. Defendant Citimortgage, Inc. is headquartered at 1000 Technology Drive, O’Fallon, MO 63368. Citimortgage is a subsidiary of Citigroup.
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19. Citimortgage and Citigroup transact business in this district.
FACTS A. MORTGAGE LENDING IN THE UNITED STATES HISTORICALLY HAS
DISCRIMINATED AGAINST MINORITIES 20. 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. 21. 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). 22. 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. 23. As noted above, 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
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potential racial discrimination in loan pricing and recognizing that racial or other types of discrimination 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.
24. According to 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.”4
25. 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.5
26. 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, et al., supra n.4, 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.
27. 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.
4 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) available at http://www.federalreserve.gov/pubs/bulletin/2006/hmda/bull06hmda.pdf. 5 This is available at http://www.responsiblelending.org/pdfs/Testimony-Ernst061306.pdf
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Defendants have engaged in this discriminatory lending by refusing to offer minority borrowers the prime loans offered to similarly-qualified white borrowers.
28. 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.
29. 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 blacks neighborhoods are twice as likely as lower-income white borrowers to have subprime loans.6
30. The Center for Responsible Lending (“CRL”) published a study in December 2006 on the effects of foreclosure.7 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
6 See U.S. Department of Housing and Urban Development, Office of Policy Development and Research, All Other Things Being Equal: A Paired Testing Study of Mortgage Lending Institutions, (2002) available at http://www.huduser.org/publications/hsgfin/aotbe.html.
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percent of recent blacks borrowers. By comparison, subprime foreclosures will likely occur
among only about four percent of recent white borrowers.
31. The CRL released an additional study in November, 2007 that explains the
negative effects of foreclosure extend beyond individual families losing their homes to surrounding neighbors and the wider community.8 The 2007 CRL study further reports that a
foreclosure on a home lowered the price of other nearby single-family 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.
32. The 2007 CRL study projects that, nationally, foreclosures on subprime home
loans originated in 2005 and 2006 will have devastating 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 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
7 See Ellen Schloemer, et al., Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners, (December 2006) available at http://www.responsiblelending.org/pdfs/FCPaper-12-19-new-cover-1.pdf. 8 See CRL Issue Paper, Subprime Spillover: Foreclosures Cost Neighbors $223 Billion; 44.5 Million Homes Lost $5,000 on Average, Center for Responsible Lending, available at http://www.responsiblelending.org/pdfs/subprime-spillover.pdf. For general discussion of the external impacts of foreclosures, see Dan Immergluck and Geoff Smith, There Goes the Neighborhood: The Effect of Single-Family Mortgage Foreclosures on Property Values (June 2005), Woodstock Institute, Chicago, IL; November 2006; Dan Immergluck and Geoff Smith, The Impact of Single Family Foreclosures on Neighborhood Crime, in Housing Studies, (November 2006); and William Apgar, Mark Duda, and Rochelle Nawrocki Gorey, The Municipal Costs of Foreclosures: A Chicago Case Study, (February 2005), Foreclosure Prevention Foundation, Minneapolis, MN.
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average. 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.9
33. A growing number of research studies and investigations show that significant
racial disparities in the terms of mortgage lending still exist.10
34. Moreover, and importantly, 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
9 Dan Immergluck and Geoff Smith, Risky Business: An Econometric Analysis of the Relationship Between Subprime Lending and Foreclosures, (March 2004), Woodstock Institute, Chicago, IL. 10 See, e.g., California Reinvestment Coalition, et al., Paying More for the American Dream: A Multi-State Analysis of Higher Cost Home Purchase Lending, (March 2007) (hereinafter “2007 CRC Report") available at http://www.nedap.org/pressroom/documents/2007_Report2005_HMDA.pdf; Stephen L. Ross, The Continuing Practice and Impact of Discrimination, (Revised July 2006) (Univ. of Connecticut, Working Paper 2005-19R), available at http://www.econ.uconn.edu/working/2005-19r.pdf. In addition to the 2007 report, the California Reinvestment Coalition, jointly with several other non-profit and housing advocacy groups, has also published a 2008 report examining the impact of lending by subprime lenders in 7 metropolitan areas – Boston, Charlotte, Chicago, Cleveland, Los Angeles, New York City and Rochester, NY. California Reinvestment Coalition, et al., Paying More for the American Dream: The Subprime Shakeout and Its Impact on Lower-Income and Minority Communities, (March 2008) (hereinafter "2008 CRC Report") available at http://www.nedap.org/resources/reports.html. Among other things, the study showed that subprime lenders are concentrated in minority neighborhoods. Data supporting this finding demonstrated that subprime lenders had 20% of the market share in predominantly minority neighborhoods in these metro areas, compared to a 4% market share in predominantly white neighborhoods. 2008 CRC Report at 5. In addition, over 40% of the loans made by subprime lenders were in neighborhoods where 80% or more of the residents were minorities. Id. In stark contrast, less than 10% of subprime lender loans were in areas where less than 10% of the residents were minorities. Id. In metro Boston, where one of the Plaintiffs resides, the same study shows that subprime, high-risk lenders had 22% of the home loan market in neighborhoods where more than 80% of the residents were minorities, while subprime lenders had only 5% of the market for home loans in neighborhoods where less than 10% of the residents were minorities. Id., at 8-10. Likewise, in metro Chicago, where the remaining Plaintiffs reside, the same study shows that subprime, lenders had 20.5% of the home loan market in neighborhoods where more than 80% of the residents were minorities, while subprime lenders had only 5.6% of the market for home loans in neighborhoods where less than 10% of the residents were minorities. Id., at 17. See also, 2008 CRC Report, Appendices & Dot Density Maps.
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high-cost loans.11 In other words, evidence “suggests that weak borrower credit profiles do not fully explain why some borrowers get stuck with higher-cost home loans.”12
35. 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.
36. 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, broker and correspondent 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.
37. Specifically, the Community Reinvestment Association of North Carolina ("CRANC") conducted a review of Citigroup's lending practices and determined that the company has developed separate lending channels for subprime and prime products.13 According to its review, a borrower engaging one of Citigroup's subprime subsidiaries to borrow will receive less
11 Calvin Bradford, Center for Community Change, Risk or Race? Racial Disparities and the Subprime Refinance Market, (May 2002), available at http://www.knowledgeplex.org/kp/report/report/relfiles/ccc_0729_risk.pdf. 12 2007 CRC Report, supra n.10 at 7.
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favorable terms than would be available at Citigroup's prime subsidiaries, (e.g., Citibank). Because minorities are disproportionately represented among subprime borrowers, CRA-NC concluded that Citigroup's channeling had a disparate impact on minorities. Id. Indeed, the CRA-NC review recounts a Department of Justice statistic that 98% of subprime borrowers who could qualify for prime loans are African-Americans. Id.
38. In addition, a public study of Citigroup's 2004 HMDA data concluded that African-Americans were more than seven times more likely, and Hispanics three times more likely, to receive a high-APR loan (defined as at least 3% higher than comparable treasuries on a first lien or at least 5% higher on a subordinated lien) than white Citigroup customers.14
39. In 2004, the Federal Reserve Board entered into a consent Order to Cease and Desist with Citigroup, stemming from its allegations that the company was routinely violating ECOA. See Federal Reserve Press Release, May 24, 2004.15 The Order required the company to pay a $70 million penalty, which was, in part, restitution to certain borrowers who received subprime mortgage and personal loans. Id. B. THE DEFENDANTS’ DISCRETIONARY PRICING POLICY CONTINUES THE
PERVASIVE DISCRIMINATION AGAINST MINORITIES IN MORTGAGE LENDING 40. According to Citigroup's website, "Citi is today's pre-eminent financial services company, with some 200 million customer accounts in 100 countries." Citigroup Website,
13 See Community Reinvestment Association of North Carolina, Separate and Unequal: The Effects of Overcharging by Citigroup, available at http://www.cranc.org/citigroup_effects_of_overcharging.htm#_ftnref5. 14 See Matthew Lee, Predatory Lending in the Big Apple: Citigroup Confines African Americans in New York to Higher Cost Loans Over Seven Times More Frequently Than Whites, Over Three Times for Latinos, (April 27, 2005) available at http://www.innercitypress.org/2004hmda4.html. 15 This press release is available at http://www.federalreserve.gov/boarddocs/press/enforcement/2004/20040527/default.htm.
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available at http://www.citigroup.com/citigroup/about/index.htm. Citimortgage is a subsidiary of Citigroup. Citimortgage is one of the nation’s largest mortgage originators and servicers. Citimortgage provides loans through a branch network, as well as through wholesale and correspondent channels.
41. Citigroup makes home-mortgage loans directly to consumers itself and through its subsidiaries, including Citimortgage, as well as through other mortgage lending subsidiaries in the Citigroup family of companies.
42. Due to the Defendants’ policies as to where to place their offices and how to market their products, minority borrowers were more likely than white borrowers to obtain subprime loans. The Defendants’ lending patterns indicate that higher-cost subprime loans are heavily targeted to minority borrowers.
43. In addition to its relationships with brokers and correspondent lenders, Defendants utilize loan officers, known as account executives, at their local branch locations to arrange mortgage loans.
44. The loans of Citimortgage are priced based on the Defendants’ policies. 45. Citigroup, in the ordinary course of its business, regularly participates in credit decisions made by Citimortgage, including setting the terms of credit available in transactions originated by Citimortgage. Among other things, the Defendants jointly established the Discretionary Pricing Policy at issue in this case. 46. Citigroup participated in determining the terms of credit available to the Plaintiffs including, without limitation, by making credit available in the Plaintiffs' communities with discretionary costs and fees.
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47. 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.
48. Citimortgage provided their account executives, brokers and/or correspondent lenders with substantial information about its loan programs, rates and credit criteria, as well as its policies for compensating its account executives.
49. Citimortgage account executives, brokers and/or correspondent lenders accepted applications, quoted financing rates and terms (within the limitations set by the Defendants), informed credit applicants of Defendants’ financing options and originated finance transactions using Defendants’ forms, in accordance with its policies.
50. Citimortgage provided their account executives, brokers and/or correspondent lenders with credit applications, loan contracts and other required financing forms, as well as instructions on filling out those documents necessary to complete home mortgage transactions.
51. After a customer provided credit information to one of Defendants’ account executives, brokers or correspondent lenders, Defendants computed a financing rate through an objective credit analysis that, in general, discerned the creditworthiness of the customer.
52. These credit analyses considered 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, Defendants used these variables to determine a “mortgage score” for each credit applicant.
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53. 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, Defendants’ experienced account executives, brokers and/or correspondent lenders estimated the risk-related Par Rate by referring to the applicant’s credit bureau determined credit score.
54. Although Defendants’ initial analysis applied objective criteria to calculate this risk-related Par Rate, the Defendants then authorized a subjective component in its credit pricing system —the Discretionary Pricing Policy — to impose additional non-risk charges. Defendants also allow account executives and mortgage brokers to apply for exceptions from their standard pricing on a discretionary basis and such discretion is applied to the disadvantage of minority borrowers. On information and belief, the applicable Par Rates and authorized discretionary charges were communicated by the Defendants to its account executives, brokers and/or correspondent lenders via regularly published “rate sheets.” On information and belief, such rate sheets were published by Defendants via intranet and other sources.
55. 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.
56. Account executives, brokers and/or correspondent lenders 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.
57. On information and belief, account executives, brokers and/or correspondent lenders received compensation based, in part, on the amount of discretionary charges added to
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each loan. This compensation scheme served as an incentive for account executives, brokers and/or correspondent lenders to mark-up loans, including the Plaintiffs’ loans.
58. The Defendants’ 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 calculate the Par Rate are undermined and the potential for race bias became inherent in the transaction.
59. The Discretionary Pricing Policy, although facially neutral (insofar as the Defendants use the same or effectively the same policy for all credit applicants), has a disproportionately adverse effect on minorities compared to similarly situated whites in that minorities pay disparately more discretionary charges (both in frequency and amount) than similarly situated whites. Statistical analysis of discretionary charges imposed on minority and white customers of other mortgage companies that use credit pricing systems structured like that of the Defendants has revealed that minorities, after controlling for credit risk, are substantially more likely than similarly situated whites to pay such charges.
60. The Discretionary Pricing Policy constitutes a pattern and practice that had an ongoing effect of discrimination against minority homeowners by way of disparate impact. The pattern and practice continued throughout the Class Period, defined below, and is ongoing. During this time period, the Discretionary Pricing Policy was the regular practice and standard operating procedure of the Defendants.
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61. Account executives, brokers and/or correspondent lenders are agents of the Defendants for the purpose of setting credit price, which always was set based on the Defendants’ policy.
62. The disparate impact suffered by minorities is a direct result of the Defendants’ Discretionary Pricing Policy in that the Defendants designed, disseminated, controlled, implemented and profited from the Discretionary Pricing Policy creating the disparate impact.
63. 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 minorities. 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 minority homeowners.
64. The disparities between the terms of the Defendants’ transactions involving minority 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.
65. 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. C. THE DEFENDANTS’ DISCRETIONARY PRICING POLICY DISCRIMINATED
AGAINST PLAINTIFFS Facts Relating to Shatonya Harris 66. Plaintiff Shatonya Harris is an African-American homeowner.
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67. On or about August 7, 2007, Ms. Harris refinanced her home with Mortgage Direct as the broker and Citimortgage as the lender. Ms. Harris wished to consolidate two loans she used to purchase the home into a single loan.
68. Ms. Harris was given a 30-year, adjustable rate loan for $445,000 with an initial two-year interest rate of 8.9%. After the initial two-year period, the interest rate was set to adjust to the rate published as “Six Month LIBOR” plus a margin of 4.21%.
69. At the time of closing, Citimortgage paid the broker a yield spread premium in the amount of $8900 representing additional commission to the broker based on a marked up rate.
70. Ms. Harris was informed that these were the best terms available to her. Nevertheless, Ms. Harris refinanced her Citimortgage loan approximately six month later and was provided with significantly better terms.
71. On information and belief, unbeknownst to Ms. Harris, the contract APR on their mortgage loan was actually a combination of an objective, risk-based calculation and a totally subjective, discretionary component added pursuant to the Defendants’ Discretionary Pricing Policy.
72. On information and belief, Ms. Harris was subject to the Defendants’ Discretionary Pricing Policy.
73. On information and belief, the Defendants charged Ms. Harris a disproportionately greater amount in non-risk-related credit charges than they charge similarly situated white persons.
Facts Relating to Plaintiff Mateo Huerta 74. Plaintiff Mateo Huerta is an Hispanic male. In March of 2007, Mr. Huerta purchased his home for approximately $385,000.
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75. Citimortgage provided the financing for this purchase, through a broker named TFM Mortgage. The financing consisted of two loans.
76. The first loan was a 30-year adjustable rate loan with a disclosed APR of 7.472%. The first three years of the loan payments were slated to be “interest-only,” meaning that none of Mr. Mateo’s payments during this time would be used to pay down the principal. Following this “interest-only” period, the loan was to adjust yearly, based on an index of 2.25% above the “average of interbank offered rates for one year U.S. dollar denominated deposits in the London Market. The loan amount was $308,000.00.
77. The second loan was a thirty year fixed rate loan with a disclosed APR of 8.65% in the amount of $77,000.
78. According to the HUD-One Settlement Statements, Mr. Huerta paid a "Loan Origination Fee" of $8470.00, as well as a $550.00 “Processing Fee,” a $950.00 “Admin Fee,” and a $1000.00 “broker fee.” In addition, Mr. Huerta paid a $780 commitent fee to Citimortgage. The Statements also reflect that Citimortgage paid $1995.84 to the broker in compensation for these loans.
79. On information and belief, Mr. Huerta had an average credit score in excess of 700 at the time of these loans.
80. On information and belief, unbeknownst to Mr. Huerta, the contract APR on the mortgage loan was actually a combination of an objective, risk-based calculation and a totally subjective, discretionary component added pursuant to the Defendants’ Discretionary Pricing Policy.
81. On information and belief, Mr. Huerta was subject to the Defendants’ Discretionary Pricing Policy.
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82. On information and belief, the Defendants charged Mr. Huerta a disproportionately greater amount in non-risk-related credit charges than it charges similarly situated white persons.
Facts Relating to Kevin Nicholson 83. Plaintiff Kevin Nicholson is an African-American homeowner. 84. In 2002, Mr. Nicholson purchased his home with a mortgage loan from Citimortgage. 85. Mr. Nicholson’s 2002 mortgage loan had a 30-year fixed rate at an interest rate of 6.625%. 86. In 2007, because Mr. Nicholson liked the option he was given at that time to pay his mortgage loan biweekly, he went to a Citibank branch to seek out refinancing in order to pay off some existing debt. 87. Mr. Nicholson’s interactions regarding the 2007 loan transaction were with employees of the Defendants. He met with a Citimortgage account executive named Marlon Sanders in July 2007. 88. After Mr. Nicholson requested a loan at an interest rate of approximately 7.125% in their initial meeting, Mr. Sanders provided Mr. Nicholson with a “counter-offer” document shortly thereafter. The document indicated that Mr. Nicholson was being offered a 7.625% fixed rate loan. Mr. Nicholson accepted this offer and agreed to proceed with refinancing from Citimortgage. 89. The closing of Mr. Nicholson’s refinance loan occurred on or about August 17, 2007.
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90. By contrast both with his existing loan and the “counter-offer,” Mr. Nicholson’s refinance loan was a 30-year, adjustable rate loan for $126,350 with an initial two-year interest rate of 8.875% and an APR over 10%. After the initial two-year period, the interest rate was set to adjust to the rate published as “Six Month LIBOR” plus a margin of 4.985%.
91. Mr. Nicholson did not learn of the final terms of the loan until shortly before closing. When Mr. Nicholson expressed surprise to Mr. Sanders, he was informed that these were the best terms available to him. Mr. Sanders also assured Mr. Nicholson that he could refinance the loan again in the future to get a lower interest rate.
92. At the time of closing, Citimortgage charged Mr. Nicholson a “Commitment Fee” of $565.00 and an “Application Fee” of $455.00.
93. On information and belief, unbeknownst to Mr. Nicholson, the contract APR on his mortgage loan was actually a combination of an objective, risk-based calculation and a totally subjective, discretionary component added pursuant to the Defendants’ Discretionary Pricing Policy.
94. On information and belief, Mr. Nicholson was subject to the Defendants’ Discretionary Pricing Policy.
95. On information and belief, the Defendants charged Mr. Nicholson a disproportionately greater amount in non-risk-related credit charges than they charge similarly situated white persons.
CONTINUING VIOLATION (TOLLING)
96. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full. 97. The Discretionary Pricing Policy described in this Amended and Consolidated Class Action Complaint constitutes a pattern or practice of discrimination because, as an integral
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part of the Defendants’ business plan, it was the standard operating procedure of Defendants that had a disparate impact on Minority borrowers.
98. Application of the Defendants’ Discretionary Pricing Policy, and the accompanying impact on minority borrowers, was not a sporadic, isolated practice, but rather occurred every day that loans were extended, renewed or continued during the Class Period.
99. Plaintiffs bring this lawsuit to challenge the overall adverse impact on minority borrowers wrought by Defendants’ Discretionary Pricing Policy, rather than merely the legality of their individual loans.
100. The claims of minority borrowers who obtained mortgage loans from Defendants more than two years prior to the initiation of this action are timely. Under the continuing violation doctrine, as set out by the Supreme Court in Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982) and later written into the FHA, a statute of limitations may not bar claims where the plaintiff challenges not just one incident, but an unlawful practice that continues into the limitations period.
101. Defendants’ use of their Discretionary Pricing Policy occurred both before the limitations period and during the limitations period.
102. Plaintiffs were exposed to discrimination as members of a group (i.e. minority borrowers of the Defendants) that suffered an adverse impact within the limitations period.
103. Additionally, applicable statutes of limitation may be tolled based upon principles of equitable tolling, fraudulent concealment and/or the discovery rule. In this case, it would be inequitable to permit the applicable statutes of limitation to bar the claims of any named plaintiff or absent Class Member.
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104. The subject matter of all of the alleged violations is identical. The violations constitute the same type of discrimination – minority borrowers subjected to the Discretionary Pricing Policy were disparately impacted as described in this Amended and Consolidated Class Action Complaint.
105. Further, despite the exercise of due diligence, a reasonably prudent person would not—and the absent Class Members did not—have knowledge of Defendants’ discriminatory practices more than two years prior to the initiation of this action.
106. The nature of Defendants’ violations is not such that they would trigger a reasonably prudent borrower’s awareness of a need to assert his rights. The nature of a disparate impact violation is such that it only manifests itself after a critical mass of similar borrowers have the same experience – information that a single borrower would not have access to.
107. The nature of the Defendants’ violations – and the nature of a disparate impact claim – is not such that the act of making a single loan to a borrower has such a degree of permanence as to trigger a reasonably prudent borrower’s awareness of a need to assert his rights. The nature of a disparate impact claim is such that it only manifests itself after a critical mass of similar borrowers have the same experience – information that a single borrower would not have access to.
108. Defendants’ employment of the Discretionary Pricing Policy means that minority borrowers are subjected to increased mortgage-related costs, in the form of higher interest rates and ongoing payments than would be the case in the absence of discrimination.
109. Home foreclosures disproportionately occur in predominantly minority neighborhoods. See, e.g., Juliana Barbassa, Report: Minorities Hit By Foreclosures, USA Today, March 6, 2008; National Training & Information Center, Preying on Neighborhoods,
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2007 Foreclosure Update, March 3, 2008 available at http://www.nticus.org/images/fullyear2007.pdf (last viewed April 28, 2010).
110. Plaintiffs in this action live in predominantly minority neighborhoods. 111. But for the effects of the Discretionary Pricing Policy, i.e., the ongoing higher interest rates and payments, the foreclosure rate among the Defendants’ minority borrowers would have been lower. 112. Minority neighborhoods suffer severe deleterious effects from increased foreclosures. A Woodstock Institute Study has demonstrated that “foreclosures, particularly in lower-income neighborhoods, can lead to vacant, boarded-up, or abandoned properties. These properties, in turn, contribute to the stock of ‘physical disorder’ in a community that can create a haven for criminal activity, discourage social capital formation, and lead to further disinvestment…and lower property values for existing residential homeowners.” Dan Immergluck & Geoff Smith, There Goes the Neighborhood: The Effect of Single-Family Mortgage Foreclosures on Property Values, Woodstock Institute Study (June 2005) available at http://www.nw.org/foreclosuresolutions/reports/documents/TGTN_Report.pdf 113. All residents of these neighborhoods suffer from these effects, including the Plaintiffs. As such, all Plaintiffs have suffered injury from the Defendants’ use of the Discretionary Pricing Policy within the limitations period. 114. Additionally, this discrimination has only recently been disclosed and quantified. It has only been in the last several years that mortgage lenders have been required to submit details of their sub-prime home loans under the Home Mortgage Disclosure Act and that such data has been disclosed and studied by experts in the field.
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115. On January 29, 2009, President Obama signed the “Lilly Ledbetter Fair Pay Act of 2009.” The legislation effectively overrules Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), a case upon which other defendants with similar ECOA and FHA claims against them rely to argue that the 2 year statutes of limitation in the ECOA and FHA are not tolled. The Act defines an unlawful employment practice as occurring, inter alia, “each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a [discriminatory] decision or other practice.”
CLASS ALLEGATIONS 116. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full. 117. 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. 118. This class action is brought pursuant to ECOA and the FHA by the individual named plaintiffs on behalf of themselves and all minority consumers (the “Class”) who obtained a home mortgage loan from Defendants in the United States between January 1, 2001 and the date of judgment in this action (the “Class Period”) and who were subject to the Defendants’ Discretionary Pricing Policy pursuant to which they paid discretionary points, fees or interest mark-ups in connection with their loan. The term “minority” refers to blacks and Hispanics as defined by federal law. 119. The phrase "Discretionary Pricing Policy" refers to the Defendants’ 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. 120. Plaintiffs do not know the exact size or identities of the proposed Class, since such information is in the exclusive control of the Defendants. Plaintiffs believe that the Class
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encompasses many thousands or tens of thousands of individuals who are dispersed geographically throughout the United States. Therefore, the proposed class is so numerous that joinder of all members is impracticable.
121. 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 Defendants’ Discretionary Pricing Policy; b. whether Citimortgage and Citigroup are creditors under the ECOA because, for
example, in the ordinary course of its business they participate in the decision as to whether or not to extend credit to consumers; c. whether the Defendants’ 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 minority 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 the Court can enter declaratory and injunctive relief; and g. the proper measure of disgorgement or damages. 122. 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
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and the other members of the Class were subject to the same Discretionary Pricing Policy that disproportionately has affected minority homeowners.
123. The individual named plaintiffs will fairly and adequately represent the interests of the Class. They are committed to the vigorous prosecution of the Class’s 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.
124. 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.
125. In the alternative, Defendants have acted or refused to act on grounds generally applicable to the case, 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
126. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full. 127. The Defendants are creditors 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 Plaintiffs, the proposed Class representatives herein, and all prospective Class members. 128. The Defendants 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 minorities compared to similarly situated whites. 129. All actions taken by Defendants' account executives, brokers and/or correspondent lenders were in accordance with the specific authority granted to them by Defendants and were in furtherance of the Defendants’ policies and practices.
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130. As a result of the Defendants’ Discretionary Pricing Policy, the Defendants have collected more in finance charges from minority borrowers than from similarly situated white persons, for reasons unrelated to credit risk.
131. The Defendants’ Discretionary Pricing Policy violates the Equal Credit Opportunity Act.
132. Plaintiffs and prospective class members are aggrieved persons as defined in ECOA by virtue of having been subject to the Defendants’ discriminatory Discretionary Pricing Policy.
COUNT II DISCRIMINATION IN VIOLATION OF THE FAIR HOUSING ACT 133. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full. 134. The Defendants engaged in residential real estate-related transactions with respect to the Plaintiffs, the proposed Class representatives herein, and all prospective Class members. 135. The Defendants’ Discretionary Pricing Policy has resulted in discrimination with respect to the Plaintiffs, the proposed Class representatives herein, and all prospective members of the Class. 136. As a result of the Defendants’ Discretionary Pricing Policy, the Defendants have collected more in finance charges from minorities than from similarly situated white persons, for reasons unrelated to credit risk. 137. The Defendants’ Discretionary Pricing Policy violates the Fair Housing Act and constitutes actionable discrimination on the basis of race. 138. Plaintiffs and the Class are aggrieved persons as defined in FHA by virtue of having been subject to the Defendants’ discriminatory, Discretionary Pricing Policy.
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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 representatives and their 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 Defendants 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 the Defendants, and the Defendants' agents and employees, affiliates and subsidiaries, from collection of any amounts, including interest, resulting from actionable discrimination and/or from continuing to discriminate against Plaintiffs and the members of the Class because of their race or ethnicity; d. Order the Defendants, 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 the Defendants' employees and its brokers and correspondent lenders to prevent discrimination; e. Order the Defendants, 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 nonrisk charges imposed on minorities by the Defendants' Discretionary Pricing Policy; and order the equitable distribution of such charges to all appropriate class members; together with other relief for unjust enrichment;
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g. Order actual damages and/or restitution to the Plaintiffs and the Class pursuant to
42 U.S.C. § 3613(c);
h. 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
i. 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.
Respectfully submitted, On behalf of the Plaintiffs,
/s/ Gary Klein Gary Klein
Gary Klein (BBO # 560769) Shennan Kavanagh (BBO # 655174) Kevin Costello (BBO # 669100) RODDY KLEIN & RYAN 727 Atlantic Avenue, 2nd Flr. Boston, MA 02111-2810 Telephone: (617) 357-5500 ext. 15 Facsimile: (617) 357-5030
Stuart Rossman (BBO # 430640) Charles Delbaum (BBO # 543225) NATIONAL CONSUMER LAW CENTER 7 Winthrop Square, 4th Flr. Boston, MA 021110 Telephone: (617) 542-8010 Facsimile: (617) 542-8028
Al Hofeld Law Offices of Al Hofeld, Jr., LLC 1525 East 53rd Street, Suite 903 Chicago, IL 60615 Telephone: (773) 241-5844 29

Case 1:08-cv-10417-MLW Document 64 Filed 05/12/10 Page 30 of 30
Marvin A. Miller Matthew E. Van Tine Lori A. Fanning MILLER LAW LLC 115 South LaSalle Street, Suite 2910 Chicago, IL 60603 Telephone: (312) 332-3400 Robert M. Rothman ROBBINS GELLER RUDMAN & DOWD LLP 58 South Service Road, Suite 200 Melville, NY 11747 Telephone: (631) 367-7100 Facsimile: (631) 367-1173
Dated: May 12, 2010
CERTIFICATE OF SERVICE I hereby certify that this document filed through the ECF system will be sent electronically to the registered participants as identified on the Notice of Electronic File (NEF) and paper copies will be sent to those indicated as non-registered participants on May 12, 2010.
/s/Gary Klein Gary Klein
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 Case 1:08-cv-10417-MLW Document 80 Filed 12/07/10 Page 1 of 13

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

SHATONYA HARRIS, MATEO HUERTA and KEVIN NICHOLSON, on behalf of themselves and all others similarly situated,

C.A. No. 08-10417-MWL

Plaintiffs, vs.

Leave to file granted December 7, 2010

CITIGROUP, INC., and CITIMORTGAGE, INC.

Defendants.

REPLY IN SUPPORT OF PLAINTIFFS’ MOTION TO COMPEL DEFENDANTS TO PRODUCE DOCUMENTS

Plaintiffs Shatonya Harris, Mateo Huerta and Kevin Nicholson, on behalf of themselves

and all others similarly situated (“Plaintiffs”), through counsel, hereby submit this Reply in

support of their Motion to Compel [Docket No. 72] and in response to the Opposition of

Defendants CitiGroup, Inc. and CitiMortgage, Inc. (collectively “Defendant” or “Citi”) [Docket

No. 75].

I. PLAINTIFFS HAVE NOT RENEGED ON AN AGREEMENT BETWEEN COUNSEL

Defendant’s Opposition to Plaintiffs’ Motion to Compel suggests that Plaintiffs’ request

for additional data was in violation of an agreement between the parties. See Defendant’s

Opposition [Docket 75] at 2, 7 (stating “Plaintiffs effectively reneged on part of this agreement”

and characterizing Plaintiffs’ counsel as “backtracking on their original agreement.”) This is

plainly wrong and appears designed to mislead the Court. See Declaration of Gary Klein in

Support of Plaintiffs’ Motion to Compel (“Klein Decl.”) at ¶ 2.

Case 1:08-cv-10417-MLW Document 80 Filed 12/07/10 Page 2 of 13
It is true that Plaintiffs agreed to an initial round of document production that encompassed only the years 2006 through 2008. Klein Decl. at ¶¶ 5-7. Plaintiffs took this step for the sake of expediency and in the interests of advancing the litigation. Id. at ¶ 4. However, as a condition of acceptance to this agreement, Plaintiffs reserved their right to ask for a broader swath of documents and data. Id. ¶¶ 5-7. This was not merely a general reservation of rights; Plaintiffs required and received an explicit confirmation that their agreement to the initial production would not prejudice their right to obtain documents from an earlier timeframe. Id.
Specifically, in a July 9, 2010 email, counsel for Plaintiffs stated, inter alia: “These agreements are acceptable providing you confirm our understanding that Plaintiffs are not waiving any right to data and documents for earlier time periods.” Id. at ¶ 6 & Ex. B. Defendant’s counsel confirmed that understanding in a July 14, 2010 email, stating, inter alia: “Per your email of July 9, 2010, we confirm that our understanding of this agreement is that Plaintiffs have reserved the [sic] rights as to whether they can seek documents or data prior January 1, 2006 in future proceedings . . . .” Id. at ¶ 7 & Ex. C.
Citi thus had a full understanding not just that Plaintiffs reserved their rights generally, but that they specifically reserved the right to seek data from an earlier time period.1 That data is precisely what Plaintiffs now seek. For Defendant to characterize this effort as being in derogation of an agreement between counsel is thus contradicted by the litigation history of this case. This characterization is wrong and should be rejected outright by the Court. II. THE DISPUTED DISCOVERY REQUEST IS SPECIFICALLY RELEVANT TO
CLASS CERTIFICATION Defendant suggests that Plaintiffs have not met their burden of explaining how data from the 2004-2005 timeframe is relevant to class certification. As explained in their initial
1 Defendant acknowledges as much in its Opposition. See Opp. at 7 n.3.
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memorandum, Plaintiffs’ class certification motion will rely on a statistical analysis to show a class-wide disparate impact caused by Citi’s Discretionary Pricing Policy. Mem. at 7-8. Where, as here, the alleged discrimination involves subjective decision-making, statistical analysis showing a discriminatory disparity provides the nexus between the subjective decision-making and the pattern of discrimination sufficient to satisfy commonality. Id. at 8 & n.3.2 As the amount of discretionary deviation from the par rate is the gravamen of the complaint, Plaintiffs need to show, by statistical evidence, that those discretionary deviations affect the putative class in a uniform and consistent way. Fed. R. Civ. P. 23(a)(2). This is just as much true for 2004 and 2005 as it is for 2006. In addition, the Plaintiffs from the 2004-2005 timeframe must show that the level of discrimination against them is typical of discrimination against the Class. Fed. R. Civ. P. 23(a)(3). They cannot do so without statistical evidence from those years.
Professor Ian Ayers, who has previously acted as an expert in support of motions for class certification in similar cases, attests to the need to analyze loan-level data from each of the relevant years within the class period in order to maintain the integrity of the statistical analysis. See Declaration of Ian Ayers (attached as Exhibit A) at ¶¶ 5-6. This justification of relevance is true for each and every one of the years included in the class period. Id. Indeed, in order for
2 See, e.g., Barefield v. Chevron U.S.A. Inc., No. C86-2427, 1987 WL 65054, at *3 (N.D. Cal. Sept. 9, 1987) (finding classwide impact in a Title VII employment discrimination case on the basis of plaintiffs’ statistical analysis that showed a disparate impact by revealing “a disproportionately low representation of blacks and Hispanics in upper-level jobs . . .”); Ellis v. Costco Wholesale Corp., 240 F.R.D. 627, 638-40 (N.D. Cal. 2007); McReynolds v. Sodexho Marriott Servs., Inc., 208 F.R.D. 428, 441 (D.D.C. 2002) (plaintiffs’ statistical analysis supported a finding of commonality because they showed a pattern of discrimination across the defendants’ operating divisions); Hnot v. Willis Grp. Holdings LTD, 228 F.R.D. 476, 483 (S.D.N.Y. 2005) (finding commonality based on statistical showing of significant disparity in promotion and compensation between women and men working in defendant’s northeast region).
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Plaintiffs to offer a comprehensive and robust statistical analysis, they must have a complete dataset from the entirety of the time period at issue. Id.3
III. THE DISPUTED DISCOVERY REQUEST IS RELEVANT TO PLAINTIFFS EFFORTS TO CERTIFY A CLASS REACHING BACK TO 2004
Plaintiffs have pled a class that reaches back to 2001. See Second Am. Compl. at ¶ 118.
In addition, Plaintiffs’ pleading puts the Defendant on notice that its Discretionary Pricing Policy
constitutes a pattern or practice that falls within the “continuing violation” doctrine, as codified in the Fair Housing Act itself, 42 U.S.C. § 3613(a)(1)(A).4 See SAC at ¶¶ 96-115.5 Based on a
statute of limitations defense that Citi failed to raise in either its unsuccessful motion to dismiss
[Docket No. 41], or in a motion to strike portions of the complaint, Citi now contends that
documents from the 2004-2005 timeframe are irrelevant. Plaintiffs intend to move to certify a
class that includes Citi borrowers from the 2004-2005 timeframe. Unless Citi is willing to
consent that these borrowers are properly included within the class, the disputed discovery
requests will be necessary to show commonality and typicality under Rule 23.
3 As the Defendant is likely to assert that its pricing policies changed over time, even absent the continuing violations doctrine, data from 2004 and 2005 is relevant to the question of the whether disparities identified for 2006 are causally connected to the challenged pricing policies. 4 “An aggrieved person may commence a civil action in an appropriate United States district court or State court not later than 2 years after the occurrence or the termination of an alleged discriminatory housing practice....” 42 U.S.C. § 3613(a)(1)(A) (emphasis added). 5 These paragraphs of the Second Amended Complaint undermine Citi’s reliance on Steele v. GE Money Bank, No. 08-1880, 2009 WL 393860 (N.D. Ill. Feb. 17, 2009). Here, Plaintiffs have pled a class of borrowers that reaches back beyond the limitations period. Whether the named plaintiffs are typical and adequate class representatives is an issue to be decided in the context of class certification. Having defeated a motion to dismiss, and pursuant to this Court’s scheduling orders, Plaintiffs are entitled to discovery that will support their motion for class certification on the allegations as pled, which include claims for borrowers in the 2004-2005 timeframe. Had Citi wished to limit its exposure in discovery to claims extending only back to 2006, it was incumbent upon it to move to dismiss or strike that portion of the Second Amended Complaint.
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Citi’s new argument that such borrowers may not be included in the class ignores authority that is directly on point, misreads Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982) (“Havens Realty”) and fails to account for recent developments in the law.
A. Plaintiffs’ Inclusion of 2004-2005 Borrowers in the Class Comports with Authority that is Directly On Point
When Plaintiffs move to certify the class, the Court likely will apply the continuing violation doctrine, as pled in the Second Amended Complaint, and consider 2004-2005 borrowers for certification. In a case with nearly identical claims, a class stretching back two years prior to the statute of limitations has recently been certified. Ramirez v. GreenPoint Mortgage Funding, Inc., No. C08-0369, 2010 WL 2867068 (N.D. Cal. July 20, 2010) (“Ramirez”). The Ramirez Court expressly accepted application of continuing violation doctrine in a prior ruling. Ramirez v. GreenPoint Mortgage Funding, Inc., No. C08-0369-TEH, 2008 WL 2051018 at *5-7 (N.D. Cal. May 13, 2008).
Moreover, this Court has expressly accepted Plaintiffs’ application of the continuing violation doctrine at the motion to dismiss stage in another nearly identical case. See Miller v. Countrywide Bank, N.A., No. 07-cv-11275, 2008 WL 3522374, at *7-9 (D. Mass. July 30, 2008) (“Miller”). In Miller, the Court found that continuing violation theory applied in these circumstances because the plaintiff challenged an ongoing policy that stretched into the limitations period. Id., 2008 WL 3522374 at *8 (noting that the plaintiff “makes a Havens Realty type claim, challenging a policy that continues into the limitations period” and that “this is a disparate impact case, where both the challenged policy and its disparate effects continue in the relevant period”) (emphasis in original). On the basis of Ramirez and Miller alone, the Plaintiffs stand on firm footing in moving to certify a class including borrowers from the 2004-2005 timeframe.
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B. Citi’s Argument to the Contrary Misreads Havens Realty Ignoring this directly relevant authority, and citing Kimbrew v. Fremont Reorganization Corp., No. 08-3277-AG, 2008 WL 5975083 (C.D. Cal. Nov. 17, 2008), Citi’s opposition now, for the first time, raises an argument that borrowers from 2004 and 2005 may not be included in the class. Citi’s position is that the class here at issue may not encompass borrowers from any time prior to 2006 because continuing violation doctrine does not apply. Both Kimbrew and Citi’s recitation of that court’s opinion misjudge the import of the Supreme Court’s decision in Havens Realty. Havens Realty was a class action brought by three individuals (one “renter” and two “testers”) and one fair housing organization for violations of § 804 of the FHA, its anti-steering provision.6 Paul Coles, the renter plaintiff, was a black man who intended to rent from the defendant, but was falsely told that no apartments were available. The two tester plaintiffs, Sylvia Coleman and R. Kent Willis (black and white, respectively), were employed by the fair housing organization to make near-simultaneous and repeated inquiries of the defendants – in each instance receiving contrary information about the availability of apartments. Of the three individual plaintiffs, only Coles’ (the “renter” plaintiff) incident was within the then-relevant 180-day statute of limitations. The Supreme Court ruled “that for the purposes of [the statute of limitations], a ‘continuing violation’ of the FHA should be treated differently from one discrete act of discrimination.” Justice Brennan, writing for the Court-- only Justice Powell saw fit to file a
6 Although the Supreme Court’s opinion identifies the complaint in Havens Realty as a class action, the appropriateness of the claims for class treatment is not addressed. The Court was reviewing the complaint at the motion to dismiss stage, with the exception of the steering claim of the renter plaintiff, which, unfettered by tolling issues, had previously resulted in a trial after class certification.
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separate opinion, in concurrence-- justified the use of continuing violation theory by noting that such conduct by the defendant removes it from the staleness concerns that statutes of limitations are designed to address. To view the statute of limitations differently would “undermine[] the broad remedial intent of Congress embodied in the Act.” Havens Realty, 455 U.S. at 380. The Court described a proper continuing violation claim as such: “[W]here a plaintiff, pursuant to the FHA, challenges not just one incident of conduct violative of the Act, but an unlawful practice that continues into the limitations period, the complaint is timely when it is filed within 180 days of the last asserted occurrence of that practice.” Id. 455 U.S. at 381. Here, as in the Ramirez and Miller cases, Plaintiffs challenge a Discretionary Pricing Policy that continued into the limitations period.
In applying the continuing violation doctrine, the Havens Realty Court found that the otherwise untimely “neighborhood integration” allegations of Coleman and Willis were rendered timely by the inclusion of Coles’ identical and timely claim – all three claims stemmed from a common discriminatory policy. The Supreme Court, however, rejected Coleman’s “specific injury” claim arising from the false information given to her. In making this distinction, the Court emphasized that the “neighborhood integration” claims were “based not solely on isolated incidents involving the two respondents, but a continuing violation manifested in a number of incidents -- including at least one (involving Coles) that is asserted to have occurred within the 180-day period.” Havens Realty, 455 U.S. at 381. By contrast, the Court characterized Coleman’s “specific injury” claim as occurring on “four isolated occasions.” Id.
Similarly, Plaintiffs here do not challenge isolated instances of discrimination, but rather an ongoing policy – the Discretionary Pricing Policy – that continued into the limitations period. Disparate impact claims, by their very nature, allege injury occasioned by the cumulative effect
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of an ongoing policy – and are not challenges to individual transactions, in and of themselves. See Watson v. Fort Worth Bank and Trust, 487 U.S. 977, 990-91 (1988).
This interpretation of continuing violation doctrine is consistent with First Circuit jurisprudence. The First Circuit has made clear that the doctrine applies to toll the applicable statute of limitations in the context of civil rights cases, so long as the discriminatory policy remains in place. See, e.g., Jensen v. Frank, 912 F.2d 517, 523 (1st Cir. 1990) (A systemic violation usually “has its roots in a discriminatory policy or practice; so long as the policy or practice itself continues into the limitation period, a challenger may be deemed to have filed a timely complaint,” even if he fails to show “an identifiable discrete act of discrimination transpiring within the period.”) The Kimbrew court, of course, was not bound by Jensen as this Court is. Thus, Havens Realty, as interpreted by the First Circuit, and as interpreted by the Courts in Ramirez and Miller, ensures that the Court will likely agree to consider a class encompassing borrowers from 2004 forward on class certification.
C. Even if the Kimbrew Court’s Interpretation of Havens Realty were Correct, the Opposition Ignores Important Developments in the Law that Have Occurred Since that Ruling
Even putting aside whether Kimbrew represents a correct interpretation of Havens Realty, Citi’s argument fails in the face of two important developments in the law since Kimbrew was decided. First, on January 29, 2009, the Lily Ledbetter Fair Pay Act, Pub. L. 111-2, became law, amending the definition of an “employment practice” in Title VII. This new law expressly abrogates the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), finding that the decision was “at odds with the robust application of the civil rights laws that Congress intended.” See Pub. L. 111-2, § 2, (Jan. 29, 2009). Congress specifically rejected the Court’s enunciation of an unlawful employment practice as occurring only at the
8

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time the original discriminatory decision is executed. In place of that interpretation, Congress defined an unlawful practice as also occurring “when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.” 42 U.S.C. § 2000e-5(3)(a) (emphasis added).
The clear import of the statutory amendment and the congressional findings that heralded its adoption is that federal courts take too narrow a view of civil rights laws if they parse the facts of civil rights claimants who suffer from ongoing discrimination to dismiss claims as untimely. Just as Ms. Ledbetter complained that she continued to be discriminated against long after the original decisions to pay her less money were made, so too can the Plaintiffs in this case illustrate discrimination for as long as they continue to make the more onerous loan payments occasioned by impermissible disparate impact. See, e.g., Bazemore v. Friday, 478 U.S. 385, 395 (“[e]ach...paycheck that delivers less to a black than to a similarly situated white is a wrong actionable under Title VII, regardless of the fact that this pattern was begun prior to the to the effective date”); Second Am. Compl. at ¶ 108. The codification of continuing violation doctrine in the FHA, see 42 U.S.C. § 3613(a)(1)(A), is consistent with the basic premise for which the Lily Ledbetter Fair Pay Act was passed.7
Second, the Supreme Court’s recent decision in Lewis v. City of Chicago, 130 S. Ct. 2191 (2010) (“Lewis”) reversed the Seventh Circuit opinion that Citi relies on and clearly supports
7 There is a long and well-established history of reading the Fair Housing Act and Title VII in concert with each other because they were both drafted with broad remedial goals in mind. See, e.g., Gamble v. City of Escondido, 104F.3d 300, 304 (9th Cir.1997) (“Title VII discrimination analysis” applies to FHA discrimination claims); Pfaff v. U.S. Dep’t of Housing & Urban Dev., 88 F.3d 739, 745 n. 1 (9th Cir. 1996) (same); Mille v. American Express Co., 688 F.2d 1235, 1239-40 (9th Cir. 1982) (Title VII disparate impact analysis applies to ECOA); Pina v. Town of Plympton, 529 F.Supp. 2d 151, (D. Mass. 2007) (applying Title VII standard in FHA case).
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application of continuing violation doctrine here. In Lewis, the Court considered disparate impact racial discrimination claims of minority firefighter applicants, similar to those here at issue. The city’s method of hiring firefighters involved administering an exam once every several years and then using the results from that exam to make hiring decisions into the future. Lewis, 130 S. Ct. at 2195-96. The Lewis plaintiffs alleged that the 1995 exam produced results that had an impermissible disparate impact on minorities. Id. However, the Lewis plaintiffs waited two years after the exam to bring their suit – after the first two rounds of hiring based on the 1995 exam had occurred. Id. The relevant statute of limitations required any claim of an impermissible employment practice to be brought within 300 days of that practice. Id., 130 S. Ct. 2197-98. Presented to the Court, then, was the question whether the employment practice on which the disparate impact claim was based should be considered to be only the 1995 exam itself, or whether it should also include the subsequent “clerical” act of hiring.
Writing for a unanimous Court, Justice Scalia focused on the fact that Plaintiffs were challenging a discriminatory practice, the use of which continued into the limitations period. The Lewis Court thus held that an employer “uses” a particular employment practice not just at the time when it is first adopted and applied, but each subsequent time that it is used to the plaintiffs’ detriment. Id., 130 S. Ct. at 2198. Further, the Lewis opinion makes clear that the Supreme Court’s prior decisions distinguishing between “present effects” and “past discrimination” do not apply in the context of disparate impact cases, where there is no requirement that Plaintiffs illustrate intent. Id., 130 S. Ct. at 2199. Just as in Bazemore, supra, and Lewis, the Citi’s 2004 and 2005 borrowers became subject to the Discretionary Pricing Policy at the time their loan closed, but the continuation of that policy into the limitations period is illustrated by their monthly payment on terms that were discriminatorily marked up.
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Taken together, the Lily Ledbetter Fair Pay Act and Lewis establish that the Court will be applying the continuing violation doctrine against a legal landscape that is vastly different than was before the Kimbrew court. Adding these developments to the already overwhelming balance of authority in support of its application, the Court is likely to apply continuing violation doctrine and consider certification of a class extending beyond the strict limitations period. For this reason, the data sought now sought by Plaintiffs is clearly relevant. IV. THE ADDITIONAL DATA ELEMENTS SOUGHT BY PLAINTIFFS ARE
NECESSARY FOR STATISTICAL ANALYSIS AND ARE LIKEWISE RELEVANT Defendant’s Opposition offers no meaningful rebuttal to Plaintiffs’ argument that the additional data elements they seek are relevant. Instead, Citi resorts to the same position that was disproved above – that since Plaintiffs initially accepted a narrower range of data than was originally requested, they therefore somehow waived their right to seek additional data elements. This position is supported neither by the litigation history of this case, see supra Section I, nor by law. There can be no doubt that the requested data constitutes “nonprivileged matter that is relevant to any party's claim or defense.” Fed. R. Civ. P. 26(b)(1). Because this data is directly relevant to Plaintiffs’ claims, they need not even meet the “good cause” standard in Rule 26(b)(1) for discovery of materials that is only generally relevant to the subject matter of the litigation. In any event, the additional data elements are relevant. Plaintiffs anticipate that Citi will assert that some or all of any disparity is related to differences in minority and non-minority credit characteristics as a group. In order to evaluate this question statistically, Plaintiffs’ must have access to all information on which Citi might base a business necessity defense. Of course, if Citi is willing to stipulate that it will not raise a business necessity defense nor otherwise
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object to the reliability of Plaintiffs’ expert’s analysis on the basis of these additional data elements, Plaintiffs will drop this request. As it stands however, it is clear that the additional data elements are relevant to Plaintiffs’ expert’s statistical analysis. See Ayers Decl. at ¶¶ 7-14.
It is particularly bold of Citi to disclaim the relevance of data elements identified by Plaintiffs as necessary for their expert to execute statistical analysis. The effect of this argument is to place Citi in a position where it can micromanage Plaintiffs’ expert’s analysis and methodology. On the question of what is relevant to their own expert’s statistical analysis, Plaintiffs, not Citi, have the prerogative. V. CONCLUSION
For the reasons stated herein, as well as in the motion and memorandum of points and authorities in support of Plaintiffs’ Motion to Compel and the supporting Declarations of Gary Klein and Ian Ayers, the Court should grant Plaintiffs’ motion and order production of the requested materials.
Respectfully Submitted, On behalf of Plaintiffs

Dated: December 7, 2010

/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 klein@roddykleinryan.com
Andrew S. Friedman Wendy J. Harrison BONNETT, FAIRBOURN, FRIEDMAN & BALINT, P.C.
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2901 N. Central Avenue, Suite 1000 Phoenix, AZ 85012 Telephone: (602_274-1100 Facsimile: (602) 274-1199 afriedman@bffb.com wharrison@bffb.com
Stuart Rossman (BBO # 4306640) Charles Delbaum (BBO # 543225) NATIONAL CONSUMER LAW CENTER 7 Winthrop Square, 4th Floor Boston, MA 02110 Telephone: (617) 542-8010 Facsimile: (617) 542-8028
Al Hofeld LAW OFFICES OF AL HOFELD, JR., LLC 1525 East 53rd Street, Suite 903 Chicago, IL 60615 Telephone: (773) 241-5844
Marvin A. Miller Matthew E. Van Tine (BBO 541943) Lori A. Fanning MILLER LAW LLC 115 South LaSalle Street, Suite 2910 Chicago, IL 60603 Telephone: (312) 332-3400
Robert M. Rothman ROBBINS GELLER RUDMAN & DOWD LLP 58 South Service Road, Suite 200 Melville, NY 11747 Telephone: (631) 367-7100 Facsimile: (631) 367-1173
CERTIFICATE OF SERVICE
I, Gary Klein, hereby certify that on December 7, 2010, a true and correct copy of the foregoing document was filed electronically. Notice of this filing will be sent to all registered users through the Court’s ECF system.
/s/ Gary Klein Gary Klein
13

 
 Case 1:08-cv-10417-MLW Document 127 Filed 08/09/12 Page 1 of 4

Case 1:08-cv-10417-MLW Document 127 Filed 08/09/12 Page 2 of 4

UNITIW S'I'ATES DISTRICT COURT FOR THE DISTRICT OF I\1ASSACHliSETTS

)

SHATONYA HARRIS, MATEO IIUFRTA, )

and KEVIN NICHOLSON, on behalfoC

)

themselves and all others similarly situated,

)

)

Plaintiffs,

)

)

\'"

)

)

CITIGROIJP INC" and

)

CITIMORTGA.GE, INC"

)

)

Defendants,

)

)

Civil Action No, 08-]0417-MLW

DECLARATION OF ,JOliN MARCH

I, John March, hereby depose and state the following, under the pains and penalties of

perjury:

I, [ am a Director of CitiMortgage, fnc ("CitiMortgage"), 'This declaration is bascd

on my personal knowledge and inl,)rmation available to me ii'om eertain records and personnel

f'rom CitiMortgage and Citigroup, Ine, ("(,itigroup"),

2, I rnake this declaration in connection with eertain settlement discussions

regarding the claims made hy Shatonya IIarris, Mateo Hnerta and Kevin Nicholson against

C'itity!ortgage and Citigron[J in the above-rcJereneed litigation between eounscl I'Jr Mr. Pnello

and counsel!,))' Citi!'immcial.

3, The innJrmation contained in tbis declaration is intended f(rr settlement purposes

only, and is inadmissible in the above-referenced litigation Imfsuant to Fecleral RuJe of E'~vidence

408.

Case 1:08-cv-10417-MLW Document 127 Filed 08/09/12 Page 3 of 4
4. On April 15,2011, I caused to be collected certain inrimnation regarding the volume of loans originated by CitiMortgage and its opemting subsidiaries in the retail and wholesale division from January J, 2004 through December 31, 20J 0,
5. In order to obtain this infcmnation, CitiMortgage employees, at Iny direction, wok the h1!lowing steps:
a. Accessed a secure drive .in St. Louis that only the Data Program Manager hII Fair Lending has access to, whieb contains infcm.11.ationdelivered each year fi'om tbe HMIJA and CRA Unit via the Hi\1DA Unit Share Point site; and
b. Ran a query was in Microsoft Access against the final reportable HMDA data [or each year. IiJtcring for Legal Vehicle, Channel, Race and Ethnicity, to determine the number of African-American and Hispanic borrowers who obtained mortgagc loans !i'om CililVlortgage. either through the retail or wholesale lending divisions. from January I, 2004 through .Deecrnber 3],2010. based on upon CitiJ'v1ortgage's HMDA data.
6. Based on the procedure described in Paragraph 5 above, CitiMortgage and its operating subsidiaries originated 54,294 loans through its retail lending div.ision from January I. 20()4 through December 31 20 I0,
7. Based on the procedure described in Paragraph 5 above, CitiMortgage and ils operating subsidiaries originated 49,t)44 loans through its wholesale lending division limn January 1.2004 through December 3 I, 20 IO.
8. Based on the procedure described in Paragraph 5 above, CitiIv!ortgage and its operating subsidiaries originated 103,338 loans through its retail and wbolesale lending divisions combined from January I 2004 through December 3 I, 201 0.
2

Case 1:08-cv-10417-MLW Document 127 Filed 08/09/12 Page 4 of 4 9. Based on the proccdure described in Paragraph 5 above, Citiivlortgage and its operating subsidiaries originated 19,528 loans through its wholesale lending division from January], 2004 through Deeember 31, 2006.
I declare under penally of perjury that the foregoing islrue and correct This the 23rd day of June, 2011.

 
 Case 1:08-cv-10417-MLW Document 126 Filed 08/09/12 Page 1 of 5

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

SHATONYA HARRIS, MATEO HUERTA and KEVIN NICHOLSON, on behalf of themselves and all others similarly situated,
Plaintiffs, vs.
CITIGROUP, INC., and CITIMORTGAGE, INC.,
Defendants.

C.A. NO. 08-10417-MLW

JOINT STIPULATION CONCERNING RELEASE In order to clarify the parties’ agreement concerning the release in this matter in light of a discrepancy the parties have identified concerning the size of the class and the number of class notices that went out, Plaintiffs and Defendants Citigroup, Inc. and CitiMortgage, Inc. (collectively “Citi”) (together, the Plaintiffs and Defendants are the “Parties”) hereby stipulate as follows: 1. On April 15, 2011, in connection with settlement discussions during the mediation between the Parties, Citi generated data regarding the size of the settlement class. Per the agreement of the parties, this data included only loans contained in public reporting under the Home Mortgage Disclosure Act (“HMDA”) of loans to minority borrowers. See Declaration of John March, Ex. A. 2. The data generated by Citi on April 15, 2011, included settlement class members whose loans were originated between January 1, 2004, and December 31, 2010. This data reflected that the settlement class consisted of 103,338 individual and joint borrowers.

Case 1:08-cv-10417-MLW Document 126 Filed 08/09/12 Page 2 of 5
3. On August 1, 2011, the Parties filed a Settlement Agreement to fully and finally resolve this matter. Docket No. 89-1.
4. On March 6, 2012, the Court granted preliminary approval of the Settlement. Docket No. 105.
5. On March 9, 2012, Citi provided a class list for purposes of notifying class members of the settlement to both counsel for Plaintiffs and to the settlement administrator. That class list contained a total of 178,399 loan records.
6. Counsel for Plaintiffs first discovered the discrepancy between the number of class members set forth in the Settlement Agreement and the number of notices mailed out on or about July 19, 2012, and subsequently notified counsel for Citi.1 Citi’s counsel thereafter determined that the discrepancy was due to the following factors:
(a) First, additional notices were necessitated by loans made after the date range set during Citi’s initial investigation of the settlement class size (December 31, 2010) and before the date of the settlement agreement (June 24, 2011). The definition set forth in the Settlement Agreement included residential mortgage loans originated up until June 24, 2011.
(b) Second, the class lists inadvertently included individuals (the “nonHMDA Borrowers”) who had obtained loans, including Home Equity Lines of Credit (“HELOCs”), that were not contained in public reporting under HMDA. The Parties did not intend to include the non-HMDA borrowers within the definition of the class set forth in the Settlement Agreement. 7. All class members received notice of the settlement.
1 The numbers for class notice would not have been expected to match up with the numbers previously given for class size for a number of reasons, including that the class notice data had some six months more of borrowers included within it.
2

Case 1:08-cv-10417-MLW Document 126 Filed 08/09/12 Page 3 of 5

8. Additionally, and inadvertently, each non-HMDA Borrower (or joint borrowers) received a form of notice in this matter under the mailing procedures set out in the Settlement Agreement as described in the filing of the Settlement Administrator. Docket No. 123.
9. Citi has agreed and the parties stipulate that despite their not being members of the settlement class, the non-HMDA borrowers nevertheless will be entitled to the benefits of the Settlement specified in the notice they received pursuant to valid and timely elections they have or may make as if they were settlement class members.
10. Citi has agreed, and the parties further stipulate, that Citi will not enforce the release contained in the Settlement Agreement (Section IV) against any non-HMDA borrower except to the extent a non-HMDA borrower also was included in the class because they had a qualifying HMDA loan.
11. On July 26, 2012, the Parties filed their Motion for Final Approval of the Class Action Settlement. Docket No. 118. The Court will hold a hearing on this motion on August 9, 2012.
12. Counsel for the Parties has conferred regarding the inadvertent inclusion of nonclass members in the class notice list and have agreed that the response to the additional notices set forth above is appropriate.

Dated: August 9, 2012

Respectfully submitted, SHATONYA HARRIS, MATEO HUERTA and KEVIN NICHOLSON By their attorneys, /s/ Gary Klein Gary Klein (BBO #560769) Shennan Kavanagh (BBO #655174)
3

Case 1:08-cv-10417-MLW Document 126 Filed 08/09/12 Page 4 of 5

Dated: August 9, 2012

Kevin Costello (BBO #669100) KLEIN KAVANAGH COSTELLO, LLP 85 Merrimac Street, 4th Floor Boston, MA 02114 Telephone: (617) 357-5500 Facsimile: (617) 357-5030 klein@kkcllp.com kavanagh@kkcllp.com costello@kkcllp.com
Respectfully submitted,
CITIGROUP, INC. AND CITIMORTGAGE, INC.
By their attorneys,
/s/ Brenda R. Sharton Brenda R. Sharton (BBO #556909) Katherine Borden (BBO #670397) Goodwin Procter LLP 53 State Street Boston, MA 02109 Telephone: (617) 570-1000 Facsimile: 617) 523-1231 bsharton@goodwinprocter.com kborden@goodwinprocter.com

4

Case 1:08-cv-10417-MLW Document 126 Filed 08/09/12 Page 5 of 5 CERTIFICATE OF SERVICE
I, Gary Klein, hereby certify that on this 9th day of August, a true and correct copy of the foregoing document was filed electronically. Notice of this filing will be sent to all registered users through the Court’s ECF system.
/s/ Gary Klein Gary Klein
5

 
 Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 1 of 24

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

FELIX PUELLO, on behalf of himself and all others similarly situated,
Plaintiff, vs.
CITIFINANCIAL SERVICES, INC., CITIGROUP, INC.
Defendants.

C.A. NO. 08--10417

JURY TRIAL DEMANDED

CLASS ACTION COMPLAINT Plaintiff Felix Puello on behalf of himself and all others similarly situated, by his undersigned attorneys, alleges as follows: 1. This is a class action brought by Plaintiff, on behalf of himself and other similarly situated minority homeowners, against Citifinancial Services, Inc. ("Citifinancial") and Citigroup, Inc. ("Citigroup") (collectively "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 himself and the Class (defined in ¶ 74, below) for the discriminatory effects of the Defendants' home financing policies and practices. 2. As described below, the Defendants have established a specific, identifiable and uniform credit pricing system, a component of which, referred to herein as the Discretionary
1

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 2 of 24
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 the Defendants is determined by objective criteria (e.g., the individual’s credit history, credit score, debt-to-income ratio and loan-to-value ratios), the Defendants' credit pricing policy authorizes additional discretionary finance charges. These subjective, additional finance charges have a widespread discriminatory impact on minority applicants for home mortgage loans, in violation of ECOA and the FHA.
3. The Defendants have established policies for 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 Defendants to minority homeowners.
4. Plaintiff seeks damages, declaratory and injunctive relief, disgorgement and restitution of monies disparately obtained from minority 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.
PARTIES 7. Plaintiff, Felix Puello, is a minority homeowner who resides at 175 Clare Avenue, Apartment A2, Hyde Park, Massachusetts 02136, a condominium unit.
2

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 3 of 24
8. Defendant, Citigroup, Inc., is a Delaware corporation headquartered at 399 Park Avenue, New York, NY 10043. Citigroup offers a range of financial services through its subsidiary, defendant Citifinancial Services, Inc., and through other subsidiaries that operate nationwide.
9. Defendant, Citifinancial Services, Inc., is headquartered at 300 Saint Paul Place, Baltimore, MD 21202. Citifinancial is a subsidiary of Citigroup.
10. Both Citifinancial and Citigroup transact business in this district.
FACTS A. MORTGAGE LENDING IN THE UNITED STATES HISTORICALLY HAS
DISCRIMINATED AGAINST MINORITIES 11. 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. 12. 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).
3

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 4 of 24
13. 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.
14. 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 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.
15. According to 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-minority whites. . . . [which has] increased concern about the fairness of the lending process.” 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) (available at http://www.federalreserve.gov/pubs/bulletin/2006/hmda/bull06hmda.pdf) (last viewed March 10, 2008).
16. HMDA data for 2004 reveals profound loan pricing disparities between minority borrowers and non-minority whites even after controlling for borrowers’ gender, income,
4

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 5 of 24
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-minority whites. Testimony of Keith Ernst before the Subcommittee on Financial Institutions and Consumer Credit, June 13, 2006 at 3 (available at http://www.responsiblelending.org/pdfs/Testimony-Ernst061306.pdf) (last viewed March 10, 2008). In an October 2006 speech, 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-minority whites. (available at http://www.fdic.gov/news/news/speeches/archives/2006/chairman/spoct1806.html) (last viewed March 10, 2008).
17. 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-minority whites, a difference of 37.5 percentage points.” Avery et al., supra, at A159. The situation is similar for refinancing, where there is a difference of 28.3 percentage points between blacks and non-minority whites. Id. at A124, A159.
18. A growing number of research studies and investigations show that significant racial disparities still exist in lending practices. California Reinvestment Coalition, et al., “Paying More for the American Dream: A Multi-State Analysis of Higher Cost Home Purchase Lending” (March 2007) (available at http://www.nedap.org/pressroom/documents/2007_Report2005_HMDA.pdf) (last viewed March 10, 2008); Ross, “The Continuing Practice and Impact of Discrimination” (Revised July 2006) (Univ. of Connecticut, Working Paper 2005-19R) (available at http://www.econ.uconn.edu/working/2005-19r.pdf) (last viewed March 10, 2008).
5

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 6 of 24
19. Just this month, the California Reinvestment Coalition, jointly with several other non-profit and housing advocacy groups, published another report. The organizations examined the impact of lending by subprime, high-risk lenders in 7 metropolitan areas – Boston, Charlotte, Chicago, Cleveland, Los Angeles, New York City and Rochester, NY. California Reinvestment Coalition, et al., “Paying More for the American Dream: A Multi-State Analysis of Higher Cost Home Purchase Lending” (March 2008) ("CRC Report") (available at http://www.nedap.org/resources/reports.html) (last viewed March 12, 2008).
20. Among other things, the study showed that subprime high –risk lenders are concentrated in minority neighborhoods. Data supporting this finding demonstrated that subprime high-risk lenders had 20% of the market share in predominantly minority neighborhoods in these metro areas, compared to a 4% market share in predominantly white neighborhoods. CRC Report at 5. In addition, over 40% of the loans made by subprime highrisk lenders were in neighborhoods where 80% or more of the residents were minorities. Id. In stark contrast, less than 10% of subprime high-risk lender loans were in areas where less than 10% of the residents were minorities. Id.
21. In metro Boston, where the plaintiff resides, the same study shows that subprime, high-risk lenders had 22% of the home loan market in neighborhoods where more than 80% of the residents were minorities, while subprime high-risk lenders had only 5% of the market for home loans in neighborhoods where less than 10% of the residents were minorities. CRC Report at 8-10. In 6 of the 7 metro areas analyzed by the California Reinvestment Coalition group report, the subprime high-risk lender market share in predominantly minority neighborhoods was at least 3 times the subprime high-risk lender market share in predominantly white neighborhoods. Id. See also, CRC Report, Appendices & Dot Density Maps.
6

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 7 of 24
22. The Association of Community Organizations for Reform Now (ACORN) released a report entitled,” dated September 27, 2005, that found that “[i]n every metropolitan area where at least 50 refinances were made to African-American homeowners, AfricanAmericans were more likely to receive a high-cost loan than White homeowners.” “The High Cost of Credit: Disparities in High-priced Refinanced Loans to Minority Homeowners in 125 American Cities" at 11 (available at http://www.acorn.org/fileadmin/Afforable_Housing/hmda/High_Cost_of_Credit_Report.doc) (last viewed March 10, 2008).
23. Moreover, and importantly, 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. Bradford, Center for Community Change, “Risk or Race? Racial Disparities and the Subprime Refinance Market” (May 2002) (available at http://www.knowledgeplex.org/kp/report/report/relfiles/ccc_0729_risk.pdf) (last viewed March 10, 2008). In other words, evidence “suggests that weak borrower credit profiles do not fully explain why some borrowers get stuck with higher-cost home loans.” California Reinvestment Coalition, et al., “Paying More for the American Dream: A Multi-State Analysis of Higher Cost Home Purchase Lending” at 7 (March 2007).
24. Massachusetts borrowers like the plaintiff are not immune from these realities. In February 2008, the Massachusetts Community and Banking Council ("MCBC") released a report examining the 2006 HMDA data for lending in Massachusetts. Massachusetts Community & Banking Council, "Changing Patterns XIV: Mortgage Lending to Traditionally Underserved Borrowers and Neighborhoods in Boston, Greater Boston and Massachusetts, 2006," (available
7

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 8 of 24
at http://www.masscommunityandbanking.org/PDFs/CP14-Feb08 Report.pdf) (last viewed March 11, 2008). After reviewing 2006 HMDA data, MCBC concluded that Black and Hispanic borrower homebuyers in Greater Boston were 4.5 times more likely to receive a High-APR loan than their white counterparts. Id. at 6. Black and Hispanic borrowers in Greater Boston who were refinancing their homes were at least 2.2 times more likely to receive high cost loans than their white counterparts. Id. Looked at more broadly, the data revealed that Black and Hispanic borrowers were represented among the ranks of sub-prime borrowers at a rate of more than five times their representation among borrowers on prime terms. Id. at 7. Such disparities did not subside at higher income levels -- to the contrary, the racial disparity among high-income borrowers was higher than among their low-income counterparts. Id. at 8-9.
25. Specifically, the Community Reinvestment Association of North Carolina ("CRANC") conducted a review of Citigroup's lending practices and determined that the company has developed separate lending channels for subprime and prime products. Community Reinvestment Association of North Carolina, "Separate and Unequal: The Effects of Overcharging by Citigroup (available at http://www.cranc.org/citigroup_effects_of_overcharging.htm#_ftnref5) (last visited March 10, 2008). According to its review, a borrower engaging one of Citigroup's subprime subsidiaries (i.e. Citifinancial Services, Inc., inter alia) to borrow will receive less favorable terms than would be available at Citigroup's prime subsidiaries, (i.e. Citibank). Because minorities are disproportionately represented among subprime borrowers, CRA-NC concluded that Citigroup's channeling had a disparate impact on minorities. Id. Indeed, the CRA-NC review recounts a Department of Justice statistic that 98% of subprime borrowers who could qualify for prime loans are African-Americans. Id.
8

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 9 of 24
26. In addition, a public study of Citigroup's 2004 HMDA data concluded that African-Americans were more than seven times more likely, and Hispanics three times more likely, to receive a high APR loan (defined as at least 3% higher than comparable treasuries on a first lien or at least 5% higher on a subordinated lien) than white Citigroup customers. Matthew Lee, "Predatory Lending in the Big Apple: Citigroup Confines African Americans in New York to Higher Cost Loans Over Seven Times More Frequently Than Whites, Over Three Times for Latinos," April 27, 2005 (available at http://www.innercitypress.org/2004hmda4.html) (last visited March 10, 2008).
27. In 2004, the Federal Reserve Board entered into a consent Order to Cease and Desist with Citigroup and its subsidiary Citifinancial Credit Company, stemming from its allegations that the company was routinely violating ECOA. Federal Reserve Press Release, May 24, 2004 (available at http://www.federalreserve.gov/boarddocs/press/enforcement/2004/20040527/default.htm) (last visited March 10, 2008). The Order required the company to pay a $70 million penalty, which was, in part, restitution to certain borrowers who received sub-prime mortgage and personal loans. Id. B. THE DEFENDANTS’ DISCRETIONARY PRICING POLICY CONTINUES THE
PERVASIVE DISCRIMINATION AGAINST MINORITIES IN MORTGAGE LENDING 28. According to Citigroup's website, "Citi is today's pre-eminent financial services company, with some 200 million customer accounts in 100 countries." Citigroup Website, http://www.citigroup.com/citigroup/about/index.htm (last visited March 10, 2008). Citifinancial is a subprime subsidiary of Citigroup. Citifinancial provides consumer loan services, including
9

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 10 of 24
secured unsecured and partially secured personal loans. Citigroup Website, http://www.citigroup.com/citigroup/business/index.htm (last visited March 10, 2008).
29. Citigroup makes home-mortgage loans directly to consumers itself and through its subsidiary, Citifinancial, as well as through other mortgage lending subsidiaries in the Citigroup family of companies.
30. Due to the Defendants’ policies as to where to place their offices and how to market their products, minority borrowers were more likely than white borrowers to obtain subprime loans. The Defendants’ lending patterns indicate that higher-cost subprime Citifinancial loans are heavily targeted to minority borrowers.
31. Citifinancial's mortgage loans are arranged by its loan officers, known as account executives, at its local branch locations, including the plaintiff's loan at the Citifinancial branch in Norwood, Massachusetts.
32. Citifinacial's loans are priced based on the Defendants’ policies. 33. Citigroup, in the ordinary course of its business, regularly participates in credit decisions made by Citifinancial, including setting the terms of credit available in transactions originated by Citifinancial. Among other things, Citigroup and Citifinancial jointly established the Discretionary Pricing Policy at issue in this case. 34. Citigroup participated in determining the terms of credit available to the Plaintiff including, without limitation, by making credit more widely available in the Plaintiff’s community through Citifinancial rather than lower cost banking outlets and by making the Discretionary Pricing Policy applicable to Citifinancial loans. 35. Based on the latest available Home Mortgage Disclosure Act (“HMDA”) data
10

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 11 of 24
from the Department of Housing and Urban Development, minority homeowners who borrowed from the Defendants were more likely than whites to have received a high-APR loan.
36. 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.
37. 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.
38. Citifinancial provided its account executives with substantial information about its loan programs, rates and credit criteria, as well as its policies for compensating its account executives.
39. Citifinancial account executives accepted applications, quoted financing rates and terms (within the limitations set by the Defendants), informed credit applicants of Citifinancial’s financing options and originated finance transactions using Citifinancial’s forms, in accordance with its policies.
40. Citifinancial provided its account executives with credit applications, loan contracts and other required financing forms, as well as instructions on filling out those documents necessary to complete home mortgage transactions.
41. After a customer provided credit information to one of Citifinancial's account executives, Citifinancial computed a financing rate through an objective credit analysis that, in general, discerned the creditworthiness of the customer.
11

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 12 of 24
42. These credit analyses considered 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, Citifinancial used these variables to determine a “mortgage score” for each credit applicant.
43. Based on these objective risk-related variables and the resulting mortgage score, Citifinancial derived a risk-based financing rate at which it would provide a home mortgage, often called the “Par Rate.” Alternatively, experienced Citifinancial account executives estimated the risk-related Par Rate by referring to the applicant’s credit bureau determined credit score.
44. Although Citifinancial’s initial analysis applied objective criteria to calculate this risk-related Par Rate, the 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 the Defendants to its account executives via regularly published “rate sheets.” On information and belief, such rate sheets were published by Defendants via intranet and other sources.
45. 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.
46. Account executives 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
12

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 13 of 24

and fees on the loan. When there was a rate mark-up, the Defendants received additional

income.

47. On information and belief, account executives received compensation based, in

part, on the amount of discretionary charges added to each loan. This compensation scheme

served as an incentive for account executives to mark-up loans, including the Plaintiff’s loan.

48. The Defendants’ 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 calculate the Par Rate are undermined and the potential for race bias became inherent in

the transaction.

49. The Discretionary Pricing Policy, although facially neutral (insofar as the

Defendants use the same or effectively the same policy for all credit applicants), has a

disproportionately adverse effect on minorities compared to similarly situated whites in that

minorities pay disparately more discretionary charges (both in frequency and amount) than

similarly situated whites. Statistical analysis of discretionary charges imposed on minority and

white customers of other mortgage companies that use credit pricing systems structured like that

of the Defendants has revealed that minorities, after controlling for credit risk, are substantially

more likely than similarly situated whites to pay such charges.

50.

Account executives are agents of the Defendants for the purpose of setting credit

price, which always was set based on the Defendants’ policy.

13

Case 1:08-cv-10417-MLW Document 1 Filed 03/13/08 Page 14 of 24
51. The disparate impact suffered by minorities is a direct result of the Defendants’ Discretionary Pricing Policy in that the Defendants designed, disseminated, controlled, implemented and profited from the Discretionary Pricing Policy creating the disparate impact.
52. 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 minorities. 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 minority homeowners.
53. The disparities between the terms of the Defendants’ transactions involving minority 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.
54. 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. C. THE DEFENDANTS’ DISCRETIONARY PRICING POLICY DISCRIMATED
AGAINST PLAINTIFF 55. Plaintiff Felix Puello is an Hispanic male who resides at 175 Clare Avenue, Apartment A2, Hyde Park, Massachusetts 02136. 56. In October of 2006, the plaintiff purchased his Hyde Park condominum for approximately $134,000. 57. On October 18, 2007, the plaintiff closed a mortgage loan with Citifinancial.
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58. The loan, (Loan No. 141630) was a 15-year, fixed rate loan with a disclosed APR of 13.74%. The loan amount was $15,913.64.
59. According to the HUD-One Settlement Statement, the plaintiff paid three points for a "Loan Origination Fee." This amounted to $463.51. In addition, the plaintiff an $80 appraisal fee to Realtor Success, a $195 fee for Title Examination to National Real Estate and a $176 Recording Fee.
60. True and correct copies of Truth-in-Lending disclosure and HUD-One Settlement Statement provided in connection with Loan No. 141630 are attached hereto and labeled Exhibit 1 and Exhibit 2, respectively.
61. According to credit reports available to the defendants, the plaintiff had an average credit score in excess of 700.
62. At the time of the transaction, the plaintiff had credit scores that would have qualified with many lenders, including Citigroup and other Citigroup subsidiaries, for a loan in the prime-market. Instead, the plaintiff received a loan at a sub-prime rate and on sub-prime terms from Citifinancial.
63. On information and belief, unbeknownst to the plaintiff, the contract APR on the mortgage loan was actually a combination of an objective, risk-based calculation and a totally subjective, discretionary component added pursuant to the Defendants’ Discretionary Pricing Policy.
64. On information and belief, the plaintiff was subject to the Defendants’ Discretionary Pricing Policy.
65. On information and belief, the Defendants charged Plaintiff a disproportionately greater amount in non-risk-related credit charges than it charges similarly situated white persons.
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ALLEGATIONS OF NON-DISCLOSURE – FRAUDULENT CONCEALMENT (TOLLING)
66. The causes of action alleged herein accrued upon discovery of the discriminatory impact of the Defendants’ Discretionary Pricing Policy. Plaintiff and members of the Class did not discover and could not have discovered through the exercise of reasonable diligence the factual bases of those claims. Indeed, the data forming the basis of plaintiff’s claims only recently was released and analyzed in a comprehensive manner. Moreover, because the Defendants knowingly and actively concealed the facts alleged herein, plaintiff and the Class have been kept ignorant of vital information essential to the pursuit of these claims, without any fault or lack of diligence on their part.
67. Commission-driven, discretionary pricing systems, such as those used in the mortgage industry and structurally similar to the system utilized by the Defendants, 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 within the financing industry for several years, as a result of numerous actions by the United States Department of Justice and federal regulatory agencies. See, Facts, Section A supra. Thus, the Defendants knew or should have known that their credit pricing system causes minority homeowners to pay more for mortgage financing than the amounts paid by white customers with identical or effectively identical credit scores.
68. Despite the fact that the Defendants knew or should have known of the discriminatory effect of their Discretionary Pricing Policy, none of the loan documents inform the customer that its finance rates ultimately are subjective and not based solely on risk-related characteristics.
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69. The Defendants were and are under a continuous non-delegable duty to disclose to the plaintiff and Class material information regarding their loans. The fact that certain loan terms are subjective and discretionary is information a reasonable borrower would consider important when deciding whether to accept the loan and on what terms. The fact that the subjective and discretionary components result in a disparate impact on minority is also information a reasonable minority borrower would consider important.
70. The Defendants failed to disclose this information, however, and plaintiff and Class Members reasonably relied upon the Defendants’ representation that terms of their loans would be based on their creditworthiness. The Defendants’ financing documents falsely fostered the image that the Defendants offer competitive rates that objectively are set. However, the Defendants never disclosed to its credit applicants the fact that: (a) its credit rates are subjective and can vary significantly among persons with identical credit profiles; and (b) it had authorized and provided a financial incentive to mortgage brokers to subjectively increase the credit rate above the rate otherwise available to the homeowner.
71. Due to the inherent nature of the Defendants’ undisclosed Discretionary Pricing Policy and due to the Defendants’ deception and concealment, the Defendants’ minority customers had no way of knowing or suspecting: (a) the existence of the Defendants’ subjective credit pricing policy; (b) that they were charged additional subjective credit charges; (c) that they were charged a disproportionately greater amount for their cost of credit than similarly situated white persons, and or (d) that any part of the loan price was negotiable. Thus, the Defendants are estopped from relying on any statutes of limitation in their defenses of this action.
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CLASS ALLEGATIONS 72. Plaintiff repeats and re-alleges every allegation above as if set forth herein in full. 73. Plaintiff sues on his 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. 74. This class action is brought pursuant to ECOA and the FHA by the individual named plaintiff on behalf of himself and all minority consumers (the “Class”) who obtained a home mortgage loan from Citifinancial in the United States between January 1, 2001 and the date of judgment in this action (the “Class Period”) and who were subject to the Defendants’ Discretionary Pricing Policy pursuant to which they paid discretionary points, fees or interest mark-ups in connection with their loan. The term “minority” refers to blacks and Hispanics as defined by federal law. 75. The phrase "Discretionary Pricing Policy" refers to the Defendants’ 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. 76. Plaintiff does not know the exact size or identities of the proposed Class, since such information is in the exclusive control of the Defendants. Plaintiff believes that the Class encompasses many thousands or tens of thousands of individuals who are dispersed geographically throughout the United States. Therefore, the proposed class is so numerous that joinder of all members is impracticable. 77. 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,
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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 Defendants’ Discretionary Pricing Policy; b. whether Citifinancial and Citigroup are creditors under the ECOA because, for
example, in the ordinary course of its business they participate in the decision as to whether or not to extend credit to consumers; c. whether the Defendants’ 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 minority 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 the Court can enter declaratory and injunctive relief; and g. the proper measure of disgorgement or damages. 78. 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 disproportionately has affected minority homeowners. 79. The individual named plaintiff will fairly and adequately represent the interests of the Class. He is committed to the vigorous prosecution of the Class’ claims and has retained
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attorneys who are qualified to pursue this litigation and have experience in class actions – in particular, consumer protection and discrimination actions.
80. 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.
81. In the alternative, Defendants have acted or refused to act on grounds generally applicable to the case, 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
82. Plaintiff repeats and re-alleges every allegation above as if set forth herein in full. 83. The Defendants are creditors 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, the proposed Class representatives herein, and all prospective Class members. 84. The Defendants 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 minorities compared to similarly situated whites. 85. All actions taken by Defendants' account executives were in accordance with the specific authority granted to them by Defendants and were in furtherance of the Defendants’ policies and practices. 86. As a result of the Defendants’ Discretionary Pricing Policy, the Defendants have collected more in finance charges from minority borrowers than from similarly situated white persons, for reasons unrelated to credit risk.
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87. The Defendants’ Discretionary Pricing Policy violates the Equal Credit Opportunity Act.
88. Plaintiff and prospective class members are aggrieved persons as defined in ECOA by virtue of having been subject to the Defendants’ discriminatory, Discretionary Pricing Policy.
COUNT II DISCRIMINATION IN VIOLATION OF THE FAIR HOUSING ACT 89. Plaintiff repeats and re-alleges every allegation above as if set forth herein in full. 90. The Defendants engaged in residential real estate-related transactions with respect to the Plaintiff, the proposed Class representatives herein, and all prospective Class members. 91. The Defendants’ Discretionary Pricing Policy has resulted in discrimination with respect to the Plaintiff, the proposed Class representatives herein, and all prospective members of the Class. 92. As a result of the Defendants’ Discretionary Pricing Policy, the Defendants have collected more in finance charges from minorities than from similarly situated white persons, for reasons unrelated to credit risk. 93. The Defendants’ Discretionary Pricing Policy violates the Fair Housing Act and constitutes actionable discrimination on the basis of race. 94. Plaintiff and the Class are aggrieved persons as defined in FHA by virtue of having been subject to the Defendants’ discriminatory, Discretionary Pricing Policy.
PRAYER FOR RELIEF WHEREFORE, the Plaintiff respectfully requests the following relief: a. Certify this case as a class action and certify the named Plaintiff herein to be an adequate class representative and their counsel to be class counsel;
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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 Defendants 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 the Defendants, and the Defendants' agents and employees, affiliates and subsidiaries, from continuing to discriminate against plaintiff and the members of the Class because of their race through further use of the Discretionary Pricing Policy or any other nonrisk-related discretionary pricing policy employed by the Defendants;
d. Order the Defendants, 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 the Defendants' employees and its brokers and correspondent lenders to prevent discrimination;
e. Order the Defendants, 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 nonrisk charges imposed on minorities by the Defendants' Discretionary Pricing Policy; and order the equitable distribution of such charges to all appropriate class members; together with other relief for unjust enrichment;
g. Order actual and punitive damages and/or restitution 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
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i. Grant plaintiff and the Class 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.
Respectfully submitted, On behalf of the plaintiff,
/s/ Gary Klein 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
Stuart Rossman (BBO # 430640) Charles Delbaum (BBO # 543225) NATIONAL CONSUMER LAW CENTER 77 Summer Street, 10th Flr. Boston, MA 02141 Telephone: (617) 542-8010 Facsimile: (617) 542-8028
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
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Dated: March 13, 2008

Samuel H. Rudman Robert M. Rothman Mark S. Reich COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 58 South Service Road, Suite 200 Melville, NY 11747 Telephone: (631) 367-7100 Facsimile: (631) 367-1173

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SETTLEMENT AGREEMENT
This Settlement Agreement is made and entered into as of June 24, 2011 between (a) plaintiffs Shatonya Johnson (formerly Shatonya Harris), Mateo Huerta, and Kevin Nicholson (collectively, “Plaintiffs”) on behalf of themselves and the Class Members (as defined herein), and (b) defendants Citigroup, Inc. (“Citigroup”) and CitiMortgage, Inc. (“CitiMortgage”) (collectively, Citigroup and CitiMortgage are “Defendants”).
RECITALS1
WHEREAS, Plaintiffs are the current named plaintiffs in a putative class action litigation captioned as Shatonya Harris, Mateo Huerta, and Kevin Nicholson, on behalf of themselves and all others similarly situated v. CitiGroup, Inc. and CitiMortgage, Inc., currently pending in the United States District Court for the District of Massachusetts, Docket No. 08-10417;
WHEREAS, the Action asserts that Defendants violated the Fair Housing Act, 42 U.S.C. § 3601 et seq. (“FHA”) and the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq. (“ECOA”) in connection with the pricing of mortgage loans;
WHEREAS, Plaintiffs allege that, while race-neutral and ethnicity-neutral, Defendants’ pricing policies resulted in a disparate impact on African-American and Hispanic borrowers in that they allegedly received higher-priced loans than those loans made to similarly situated nonminority borrowers;
WHEREAS, Defendants have denied and continue to deny the material allegations in the Action, have denied and continue to deny any wrongdoing and any liability to Plaintiffs or any Class Member, in any amount, in connection with the claims asserted in the Action, have denied that class certification is required or appropriate, and contend that they would prevail in the Action;
WHEREAS, Plaintiffs maintain that they would prevail in the Action, on behalf of themselves and the Settlement Class;
WHEREAS, Plaintiffs and Class Counsel have conducted extensive formal and informal examinations and evaluations of the relevant law and facts to assess the merits of the pending and potential claims in the Action, and have conducted a further investigation to determine how to best serve the interests of the putative class in the Action, both before commencing the Action, as well as during the litigation of the Action and the negotiation of the Settlement provided for in this Agreement;
WHEREAS, Plaintiffs, for themselves and on behalf of the Settlement Class Members, desire to settle the Action and all matters within the scope of the Release set forth herein, having taken into account the risks, delay, and difficulties involved in establishing liability, the
1 Capitalized terms used in these Recitals shall, unless otherwise defined in the Recitals, have the meanings set forth in Section I of the Settlement Agreement.
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likelihood of recovery in excess of that offered by this Settlement Agreement, the desirability of payment now, and the likelihood that the Action could be protracted and expensive;
WHEREAS, Defendants vigorously and expressly deny any wrongdoing and any liability to Plaintiffs and the Class Members, but nevertheless believe that it is desirable and in their best interests to settle the Action and all matters within the scope of the Release in the manner and upon the terms and conditions provided for in this Settlement Agreement in order to avoid the further expense, inconvenience, and distraction of litigation, and in order to put to rest the claims that have been asserted in the Action and/or are within the scope of the Release;
WHEREAS, the issues before the Court are complex and, if fully litigated, would likely result in protracted litigation, appeals, and continued uncertainty as to any outcome;
WHEREAS, the Parties have had the opportunity to evaluate their respective positions on the merits of the Action; and
WHEREAS, the Parties have agreed on all of the terms and conditions of this Settlement Agreement through extensive arms length negotiations between their respective counsel, and the assistance of the Honorable Edward A. Infante (ret.), serving as mediator, at JAMS.
NOW THEREFORE, in consideration of the foregoing and the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged herein, Plaintiffs, for themselves and as representatives of the Settlement Class, and Defendants agree, subject to the approval by the Court of the Settlement, as follows:
I. DEFINITIONS
In addition to the terms defined above, the following terms are used in this Settlement Agreement:
1.1 “Action” means the action captioned as Shatonya Harris, Mateo Huerta, and Kevin Nicholson, on behalf of themselves and all others similarly situated v. CitiGroup, Inc. and CitiMortgage, Inc., and currently pending in the United States District Court for the District of Massachusetts, Docket No. 08-10417.
1.2 “Agreement” means this Stipulation and Agreement of Settlement, including its exhibits.
1.3 “Authorized Claimant” means a Wholesale Settlement Subclass Member who is Eligible and who properly submits a timely and valid Claim Form.
1.4 “Benefit Payments” means the negotiable check or voucher form to be sent to Authorized Claimants pursuant to Section 2.4 below.
1.5 “Claim Form” means the claim form contemplated by this Agreement.

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1.6 “Defendants” means:
(a) Citigroup, Inc.; and
(b) CitiMortgage, Inc.
1.7 “Defendants’ Counsel” means Goodwin Procter LLP.
1.8 “Direct Mail Notices” means the method of notice set forth in Section 5.3 below.
1.9 “District Court” means the United States District Court for the District of Massachusetts.
1.10 “Effective Date” means ten (10) business days after Final Settlement Approval.
1.11 “Eligible” means a Wholesale Settlement Subclass Member who meets the requirements set forth in Section 5.6 below for submitting a valid claim.
1.12 “Final Approval Order” means an order entered by the District Court in the Action finally approving this settlement and resolving all issues between the Parties, as provided for in Section 7.1 below, substantially in the form attached hereto as Exhibit D.
1.13 “Final Fairness Hearing” means the hearing(s) at which the District Court will address whether to approve the settlement provided for in this Agreement, enter the Judgment and make such rulings as are contemplated by this Agreement.
1.14 “Final Settlement Approval” means the last date on which all of the following have occurred:
(a) The Court has issued all necessary orders under Fed. R. Civ. P. 23 approving of the Settlement in a manner substantially consistent with the terms and intent of this Settlement Agreement, including the Final Approval Order;
(b) The Court enters Judgment;
(c) Either: (i) thirty-five (35) days have passed after entry of the Court’s judgment finally approving the Settlement in a manner substantially consistent with the terms and intent of this Settlement Agreement and within such time no appeal is taken after the Judgment and no motion or other pleading has been filed with the Court to set aside or in any way alter the Judgment and/or orders of the Court finally approving of the Settlement, or (ii) all appellate, reconsideration, or other forms of review and potential review of the Court’s orders and Judgment finally approving the Settlement are exhausted or become unavailable by virtue of the passage of time, and the Court’s orders and Judgment are upheld, or not altered in a manner that is substantially inconsistent with the judgment

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contemplated by subparagraph (b) provided that, and without limitation, any change or modification that may increase Defendants’ liability, or not approve the use of a Claim Form, or reduce the scope of the Release, or reduce the scope of the Settlement Class shall prevent the occurrence of Final Approval at the sole option of Defendants; and
(d) no Party with a right to do so has terminated the Agreement.
1.15 “Judgment” means a final judgment and order of dismissal with prejudice entered by the District Court, substantially in the form attached hereto as Exhibit E.
1.16 “Loan” means a residential mortgage loan of a Settlement Class Member originated by CitiMortgage, Inc. or any of its subsidiaries upon which the Settlement Class Member is or was an obligor.
1.17 “Mediator” means Judge Edward A. Infante, (Ret.), or if he becomes unable or unwilling to serve, such other person as may be mutually acceptable to the Parties, 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.
1.18 “NCOA” means the National Change of Address system to provide updated address information.
1.19 “Parties” means Defendants, Plaintiffs and, upon class certification for settlement purposes only as set forth herein, each Settlement Class Member.
1.20 “Plaintiffs” means representative named plaintiffs Shatonya Johnson (formerly Shatonya Harris), Mateo Huerta and Kevin Nicholson, individually and as putative representatives of the Settlement Class.
1.21 “Plaintiffs’ Counsel” and “Settlement Class Counsel” means Bonnett, Fairbourn, Friedman & Balint, P.C.; Roddy Klein & Ryan; the Law Offices of Al Hofeld Jr., LLC; Miller Law, LLC, Robbins, Geller, Rudman & Dowd, LLP, and the National Consumer Law Center, Inc.
1.22 “Preliminary Approval Order” means an order entered by the District Court in the Action, as provided for in Section 6.1 below, substantially in the form attached hereto as Exhibit C.
1.23 “Released Claims” means the claims released by this Agreement as set forth in Section 4.1 below.
1.24 “Released Parties” means each entity defined hereunder as Defendants and entity’s predecessors, successors (including, without limitation, acquirers of all or substantially all of the assets, stock, or other ownership interests of any of the Released Parties) and assigns, the past, present and future, direct and indirect, parents (including, without limitation, holding companies), subsidiaries, affiliates and associates of any of the above; and the past, present and future principals, trustees, partners, officers, directors, employees, agents, attorneys, insurers,

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vendors, shareholders, advisors, predecessors, successors (including, without limitation, acquirers of all or substantially all of the assets, stock, or other ownership interests of any of the above), assignors, assignees, assigns, representatives, heirs, executors and administrators of any of the above.
1.25 “Settlement Administrator” means Tilghman & Co., P.C. subject to the approval of the Court.
1.26 “Settlement Class” means Plaintiffs and any other person and/or entity who or which falls within the definition of the class provided for in Section 2.2 below, certified solely for purposes of this settlement.
1.27 “Settlement Class Member” means all members of the Settlement Class who have not timely and properly opted out of the Settlement Class as provided for in Section 6.4 below.
1.28 “Settlement Website” means a website designed and maintained by the Settlement Administrator with input from the Parties, which will provide information to the Settlement Class as described in Section 5.5 below.
1.29 “Wholesale Settlement Subclass” means any person and/or entity who or which falls within the definition of the subclass provided for in Section 2.2(b) below, certified solely for purposes of this settlement,.
1.30 “Wholesale Settlement Subclass Member” means all members of the Wholesale Settlement Subclass who have not timely and properly opted out of the Wholesale Settlement Subclass as provided for in Section 6.4 below.
1.31 As used herein, the plural of any defined term includes the singular thereof and vice versa, except where the context requires otherwise. All references to days shall be interpreted to mean calendar days, unless otherwise noted. When a deadline or date falls on a weekend or a legal Court holiday, the deadline or date shall be extended to the next business day that is not a weekend or legal Court holiday.
1.32 Other terms are defined in the text of this Agreement, and shall have the meaning given those terms in the text. It shall be the intent of the Parties in connection with all documents related to the Settlement that defined terms as used in other documents shall have the meaning given to them in this Agreement.
II. SETTLEMENT CLASS, WHOLESALE SETTLEMENT SUBCLASS, AND CONSIDERATION.
2.1 Certification of Settlement Class and Wholesale Settlement Subclass for Settlement Purposes Only.
Defendants dispute that a class would be manageable in the Action, and further denies that a class properly may be certified in the Action. However, solely for purposes of avoiding the expense and inconvenience of further litigation, Defendants do not oppose the certification for settlement purposes only of the Settlement Class as set out in Section 2.2(a) below or of the

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Wholesale Settlement Subclass as set out in Section 2.2(b) below, provided that neither such certifications for settlement purposes only, nor any other act relating to the negotiation, execution or implementation of this Agreement, shall be considered as a factor in connection with any class certification issue(s) if the Agreement terminates, or there is no Judgment or Final Settlement Approval, or with respect to any Settlement Class member who timely and properly opts out of the Settlement Class. No agreements made by Defendants, or any order of a court, in connection with this 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. Nor shall this Agreement be deemed to limit the Plaintiffs, in the event that the Settlement Class or the Wholesale Settlement Subclass are not certified, or if the Agreement terminates, from later seeking certification of a different class in this or any other litigation pursuant to Fed. R. Civ. P. 23.
2.2 Definition of Settlement Class and Wholesale Settlement Subclass.
(a) Solely for purposes of this Settlement, the Parties agree to seek certification of the following Settlement Class pursuant to Fed. R. Civ. P. 23(a), 23(b)(2) and 23(b)(3):
All African-American or Hispanic borrowers (including, without limitation, individual borrowers, joint-borrowers, and coborrowers) who obtained a Loan (as defined herein) originated between January 1, 2004 and the date of this Agreement.
Based on a review of its records, Defendants represents that under this definition, the Settlement Class includes 103,338 members.
(b) Solely for purposes of this Settlement, the Parties agree to seek certification of the following Wholesale Settlement Subclass:
All African-American or Hispanic borrowers (including, without limitation, individual borrowers, joint-borrowers, and coborrowers) who obtained a Loan (as defined herein) through a third-party mortgage broker originated between January 1, 2004 and December 31, 2006.
Based on a review of its records, Defendant represents that under this definition, the Wholesale Settlement Subclass includes 19,528 members.
2.3 Consideration to Settlement Class.
(a) Settlement Class Members shall be eligible to receive telephonic housing counseling services (“Counseling Services”) through a date that is one year following that date of Final Settlement Approval. Such Counseling Services shall be accessed by a toll free number through a reputable non-profit outside provider selected by Settlement Class Counsel. Settlement Class Counsel shall notify Defendants’ counsel of the cost of the Counseling Services by the Effective Date, with such costs not to exceed one hundred thousand dollars ($100,000.00). Defendants shall pay the cost of the Counseling Services to Settlement Class Counsel, up to one hundred thousand dollars ($100,000.00), within ten (10) business days of receiving notice of the

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cost of such services. Defendants shall have no involvement with the selection or retention of the provider of the Counseling Services. Further, 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 the Counseling Services other than to identify the Counseling Services as a benefit available under this Agreement, except as otherwise authorized in writing by the Released Parties.
(b) Defendants further represent and agree as follows:
(i) Defendants represent that CitiMortgage has a policy of not allowing discretionary pricing and agrees to continue that policy;
(ii) Defendants represent that CitiMortgage has developed an enhanced Fair Lending Policy that addresses the claims raised by Plaintiffs in this litigation and has distributed and published this policy to all employees and affiliates working through all lending channels, and agrees to continue that policy;
(iii) Defendants represent that CitiMortgage has retained an expert in fair lending practices to develop a fair lending training program that covers all aspects of fair lending discrimination, including discriminatory pricing, and agrees to continue to retain that expert or an expert of similar quality and experience;
(iv) Defendants represent that CitiMortgage has trained all employees with respect to fair lending issues who are in any way involved with mortgage loan origination, and agrees to retrain such employees as necessary; and
(v) Defendants represent that CitiMortgage has developed an enhanced fair lending monitoring program with regard to residential mortgage loans, and agrees to continue that program.
(c) Defendants will provide Settlement Class Counsel with a declaration attesting to the implementation of the terms set forth in Section 2.3(b) no later than sixty (60) days from Final Settlement Approval.
2.4 Consideration to Wholesale Settlement Subclass.
(a) In addition to the consideration set forth in Section 2.3, each Authorized Claimant within the Wholesale Settlement Subclass will receive, in a manner compliant with Section 5.6 below, either (1) a check for ninety dollars ($90.00) (“Settlement Checks”) or (2) a credit in the amount of two hundred dollars ($200.00) against the closing costs incurred by the Wholesale Settlement Subclass Member for their next Loan from CitiMortgage or any CitiMortgage subsidiary (“Closing Credit”), provided that the Wholesale Settlement Subclass Member is otherwise eligible to obtain the Loan under CitiMortgage’s then-existing lending and underwriting policies.
(b) To the extent an Authorized Claimant elects to receive the Closing Credit, Defendants shall prepare a voucher outlining the details of such Closing Credit (“Closing Credit Voucher”) for distribution to the Authorized Claimant.

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(c) The Settlement Administrator, under the supervision of Settlement Class Counsel, and subject to the supervision, direction, and express prior approval of the District Court, shall administer, determine which claim forms are timely and proper, calculate the amount to be paid for Settlement Checks and the number of Closing Credit Vouchers to be issued to the Authorized Claimants, and oversee distribution to the Authorized Claimants.
(d) In no event shall Defendants or any other Released Party have any liability or responsibility with respect to the administration or distribution of the Benefit Payments, or any dispute by any member of the Settlement Class concerning the handling or resolution of his, her or its claim with respect to the Benefit Payments, except as expressly set forth in Section 5.1.
(e) Those Authorized Claimants electing to receive a Settlement Check shall be paid within sixty (60) days after the Effective Date by check mailed to the address provided by the Authorized Claimant on the returned claim form (or to any later forwarding address timely provided by the Authorized Claimant to the Settlement Administrator). Settlement Checks will bear a legend that they must be cashed within 120 days. If checks distributed to the Authorized Claimant are not cashed within 120 days of the check issue date, such checks will not be reissued absent proof of exigent circumstances satisfactory to Settlement Class Counsel. To the extent Settlement Checks are not cashed, the money in question will be paid as a grant for general housing counseling services to the non-profit organization selected to provide Counseling Services pursuant to Section 2.3(a) on a date no earlier than 180 days after the check issue date.
(f) Those Authorized Claimants electing to receive a Closing Credit Voucher shall be distributed by mail to the address provided by the Authorized Claimant on the returned claim form (or to any later forwarding address timely provided by the Authorized Claimant to the Settlement Administrator). The Closing Credit Voucher shall be valid for a period of two (2) years following the date of issuance of the Closing Credit Voucher.
2.5 Other Relief
Nothing in this Settlement Agreement shall be construed to constitute a waiver of any rights that Settlement Class members may otherwise have to participate in any otherwise-existing loan modification or foreclosure prevention programs. Nothing in this Section shall be read as limiting the scope of the Settlement Class members’ release, contained in Section 4.1 below.
Nothing in this Settlement Agreement shall be construed to require Defendants or any affiliated company to alter, in any way, their loan modification standards. Nor shall anything in this Settlement Agreement be construed as preventing Defendants or any affiliate entity from altering, in any way, their loan modification standards. Nor shall this Settlement Agreement prevent Defendants or any affiliated entity from releasing the servicing rights associated with the loan of any member of the Settlement Class in the normal course of business to a non-affiliated entity.

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III. ATTORNEYS’ FEES AND COSTS AND SERVICE AWARDS TO PLAINTIFFS
3.1 Subject to court approval, Settlement Class Counsel intend to seek no more than $400,000 for their attorneys’ fees and costs, and service awards of no more than $5,000 for each of Plaintiffs. These payments will be in addition to, and will in no way reduce, the amounts Defendants are obligated to pay to Authorized Claimants. Settlement Class Counsel will not request attorneys’ fees and costs in excess of the foregoing amounts, and Defendants will not oppose Settlement 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 obtain to the extent Plaintiffs qualify as Authorized Claimants.
3.2 Defendants will pay such attorneys’ fees and costs and service awards as are awarded by the Court within 10 (ten) business days of the Effective Date.
IV. RELEASE AND DISMISSAL WITH PREJUDICE
4.1 Release. As of the Effective Date, Plaintiffs and each Settlement Class Member, and each of their respective spouses, heirs, executors, administrators, representatives, agents, attorneys, partners, successors, bankruptcy trustees, guardians, wards, joint tenants, tenants in common, tenants by the entirety, co-borrowers, joint-borrowers, guarantors, predecessors-ininterest, assigns and all persons acting for or on their behalf fully, finally and completely release and forever discharge, and shall be deemed to have fully, finally, completely released and forever discharged, the Released Parties, and each of them, from any and all actual or potential claim, right, demand, charge, complaint, action, cause of action, suit, counterclaim, cross-claim, third-party claim, contention, allegation, obligation, assertion of wrongdoing or liability of any and every kind whatsoever for lending discrimination associated with the origination of Loans or any activities attendant to the origination of Loans, including, without limitation, those based on contract, ECOA, and/or the FHA, or any other federal, state, local or other law, statute, regulation, or principle of common law or equity, including, without limitation, all claims for monetary, equitable, declaratory, injunctive, or any other form of relief, whether known or unknown, suspected or unsuspected, under the law of any jurisdiction, which Plaintiffs or any Settlement Class Member ever had, now has, or may have in the future, resulting from, arising out of, or in any way, directly or indirectly, connected with (a) the claims raised in the Action, or (b) any claims which could have been raised in the Action based on the same transactional nucleus of facts.
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 or equity), 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.

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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 other than, 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, and that they fully, finally and forever release and discharge all Released Claims, and in furtherance of such intention, the release will remain in effect notwithstanding the discovery or existence of any such other, additional or different facts.
4.2 Obligations of Each Settlement Class Member. Nothing in this Agreement will alter the Settlement Class Member’s obligation, if any, on a promissory note, deed of trust, mortgage and/or security interest associated with a Loan.
4.3 Plaintiffs, Settlement Class Counsel and the Settlement Class Members acknowledge that he or she may hereafter discover facts other than or different from those that he or she knows or believes to be true with respect to the subject matter of the claims released pursuant to the terms of Paragraph 4.1, but each of those individuals expressly agree that, upon entry of the final judgment contemplated by this Settlement Agreement, he and she shall have waived and fully, finally, and forever settled and released any known or unknown, suspected or unsuspected, asserted or unasserted, contingent or non-contingent claim with respect to the claims released pursuant to Paragraph 4.1, whether or not concealed or hidden, without regard to subsequent discovery or existence of such different or additional facts.
V. NOTICE AND SETTLEMENT ADMINISTRATION
5.1 Costs of Notice and Administration. The reasonable costs of notice and administration shall be borne and promptly paid by Defendants. Defendants’ payment of notice and administration costs will be in addition to, and will in no way reduce, the amounts Defendants are obligated to pay to Authorized Claimants.
5.2 Class List. In the event of Preliminary Approval, Defendants shall prepare a list identifying the members of the Settlement Class and the Wholesale Settlement Subclass by name and last known address shown in Defendants’ electronic records, as maintained in the ordinary course of business, no later than three (3) weeks after entry of the Preliminary Approval Order and will provide the class list to the Settlement Administrator and to Settlement Class Counsel. Defendants shall have no obligation to look beyond information obtainable from Defendants’ readily searchable computer media to prepare the class list. Provision of the class list to the Settlement Administrator and to Settlement Class Counsel shall be done pursuant to the Stipulated Protective Order (“Protective Order”) filed with the District Court on June 25, 2010 in order to provide reasonable safeguards for all non-public personal information obtained in the course of administering this Agreement, and the contents of the Class List are hereby designated “Confidential Information” as defined by the Protective Order. The Settlement Administrator and any Class Counsel that has not already done so must execute and deliver to Defendants prior to delivery of the Class List a written acknowledgement and agreement to comply with the Protective Order.

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5.3 Class Notice. Direct Mail Notices 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 Notices, substantially in the form attached hereto as Exhibits A-1 and A-2 and that are approved by the District Court, will be mailed, via first class mail, to members of the Settlement Class..Members of the Wholesale Settlement Subclass will receive a Direct Mail Notice substantially in the Form of Exhibit A-2 at the address provided to the Settlement Administrator pursuant to Section 5.2 above. All other members of the Settlement Class will receive a Direct Mail Notice substantially in the Form of Exhibit A-1 at the address provided to the Settlement Administrator pursuant to Section 5.2 above. The Direct Mail Notices shall be in English, but will contain a bold font statement in Spanish that copies of the Direct Mail Notices is available in Spanish on the Settlement Website or in writing by contacting the Settlement Administrator by telephone. Addresses will be run once through the NCOA system and returned notices will be re-mailed if they are returned with a postmark date within thirty (30) days of the postmark date of the Direct Mail Notices and contain a forwarding address. If the returned mail does not reflect a forwarding address, then the Settlement Administrator shall have no additional obligation to locate the Settlement Class Member or Wholesale Settlement Subclass Member or re-mail the Direct Mail Notices. Without limiting the generality of this Section, Defendants shall have no responsibility with respect to Direct Mail Notices that are returned undeliverable.
(b) The form of Direct Mail Notice to Wholesale Settlement Subclass Members attached hereto as Exhibit A-2 shall include a claim form substantially in the form attached hereto as Exhibit B and that is approved by the District Court (“Claim Form”).
5.4 Certification to the District Court. No later than ten (10) 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 Notices have been provided to the Settlement Class and the Wholesale Settlement Subclass.
5.5 Settlement Website. The Settlement Administrator shall set up a website to provide certain information to the Settlement Class and the Wholesale Settlement Subclass, including the Second Amended and Consolidated Class Action Complaint, the Direct Mail Notices, the Claim Form, this Agreement, information relevant to claiming benefits under this Agreement, and such other information as may be agreed to by the Parties.
5.6 Claims.
(a) Timeliness of Claims. In order for a claim form to be deemed timely and properly submitted, a Wholesale Settlement Subclass Member must fully complete the Claim Form and return it such that it is either actually received by the Settlement Administrator by a date that is no later than one hundred and five (105) days after entry of the Preliminary Approval Order, or in the event of a claim form returned by mail, such that it bears a postmark that is no later than one hundred and five (105) days after entry of the Preliminary Approval Order. The Settlement Administrator will have no obligation to honor any claim form that is not fully completed or is returned after that date. Claim 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 or Incapacitated Persons. Claims of deceased or incapacitated persons will not be allowed unless a Claim Form is submitted by a person authorized to act on behalf of the deceased or incapacitated 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 CitiMortgage and its subsidiaries are deemed to be a single member of the Settlement Class 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, 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 a single check made payable jointly to the joint borrowers.
(d) Incomplete or Improper Claims. The Settlement Administrator will have final authority, in consultation with Settlement Class Counsel and Defendants’ Counsel, to allow or disallow any incomplete or improperly filed claim forms and will send notice of and the reasons for such disallowance, if any, to the Settlement Class Member, with copies to Settlement Class Counsel and Defendants’ Counsel, no later than twenty (20) days prior to 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.
(e) Members of the Settlement Class with Multiple Loans during the Class Period. Class members who have multiple Loans with CitiMortgage or its subsidiaries during the class period will be entitled to make claims for each such Loan.
5.7 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, disputes concerning confirmatory discovery and the approval or denial of claims. Any dispute that cannot be resolved by the Parties shall be submitted to the Mediator for resolution, provided that at least thirty (30) days has elapsed since notice of the dispute was first given absent a compelling reason for a shorter time period.
VI. PRELIMINARY APPROVAL ORDER AND FINAL FAIRNESS HEARING
6.1 Preliminary Approval Order. As soon as reasonably possible after the execution of this Agreement, or in accordance with any Order of the District Court, Plaintiffs will seek the District Court’s approval of this Agreement, and the settlement contemplated hereby, by filing an appropriate Motion for Preliminary Approval and seeking entry of a Preliminary Approval Order, substantially in the form attached hereto as Exhibit C. 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 without limitation, by assenting to any motion for Preliminary Approval that is consistent with this Agreement. Among other things, the Preliminary Approval Order shall specifically include the following:

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(a) A preliminary determination that, for settlement purposes only, the Action may be maintained as a class action pursuant to Rule 23(a), Rule 23(b)(2) and Rule 23(b)(3) of the Federal Rule of Civil Procedure;
(b) A finding that the Direct Mail Notices are the only notice required, and that such Direct Mail Notices satisfy the requirements of due process, the Federal Rules of Civil Procedure and any other applicable laws and that the Parties’ notice and plan for providing notice to Settlement Class Members is approved as sufficient and valid;
(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;
(e) A preliminary finding that Settlement Class Counsel are adequate to act as counsel for the Settlement Class and appointing Settlement Class Counsel as counsel to 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 members of the Settlement Class 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 any Settlement Class Member 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) Establishment of a procedure for any person or government entity noticed pursuant to 28 U.S.C. § 1715, or that claims an entitlement to have been noticed pursuant to 28 U.S.C. § 1715, 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 person or government entity shall be allowed to object to the proposed settlement; and
(k) Entry of a stay of all proceedings in the Action except as may be necessary to implement the settlement or comply with the terms of the Agreement.

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6.2 Notifications to Governmental Entities. Within the time period provided under 28 U.S.C. § 1715, Defendants shall cause the requisite notifications of the Agreement and the terms thereof to be made to the persons and/or governmental entities or officials identified in the statute.
6.3 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 C 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 (as well as the negotiation, execution or implementation of this Agreement) or filed in connection with seeking entry of the Preliminary Approval Order shall be construed as an admission or concession by Defendants of the allegations raised in the Action, or any other action, of any fault, wrongdoing or liability of any kind, or of the propriety of certification of a litigation class, nor are Defendants estopped from (i) challenging those allegations in further proceedings in the Action or in any other action, and (ii) opposing any subsequent class certification issue(s).
6.4 Opt-Out/Requests for Exclusion.
(a) Requests for Exclusion. Members of the Settlement Class shall be given the opportunity to opt-out of the Settlement Class certified pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(3). All requests by members of the Settlement Class to be excluded from the Settlement Class must be in writing and mailed to the Settlement Administrator, postmarked no later than one hundred and five (105) days after entry of the Preliminary Approval Order. To be effective, a written request for exclusion also must be personally signed by the member of the Settlement Class and must include: (i) the Settlement Class member’s name, address, telephone number; (ii) the address of the property securing the mortgage loan(s); (iii) the account number of the mortgage loan(s); (iv) a sentence confirming, under penalty of perjury, that he or she is a member of the Settlement Class; and (v) the following statement: “I request to be excluded from the Settlement Class in Harris v. Citigroup, Inc., United States District Court, District of Massachusetts, 08-10417.” No member of the Settlement Class, or any person acting on behalf of or in concert or participation with that member of the Settlement Class, may exclude any other member of the Settlement Class from the Settlement Class, except in the case of joint borrowers or persons authorized to act on behalf of another, such as the administrator of an estate.
(b) Delivery to Parties/Filing with District 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. Unless otherwise ordered by the District Court, the Settlement Administrator shall file with the District Court a declaration that lists all of the opt-outs received no later than ten (10) days before the Final Fairness Hearing.
(c) Effect. All members of the Settlement Class who timely and properly exclude themselves from the Settlement Class will not be eligible to receive any payment or other relief pursuant to this Agreement or be bound by any further orders or judgments in the Action, and will preserve their ability independently to pursue any individual claims for damages they may

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have against Defendants by filing their own lawsuit or arbitration at their own expense subject to all of Defendants’ defenses. In the event of ambiguity as to whether a member of the Settlement Class has requested to be excluded (such as through a submission of both a request for exclusion and a claim form or through unclear potential request for exclusion), the member of the Settlement Class shall be deemed not to have requested exclusion.
(d) Right to Withdraw for Excessive Opt-Outs. If more than two (2.0%) percent of Settlement Class Members successfully request exclusion, Defendants may terminate the Agreement in their sole discretion and the Parties shall be returned to the status quo ante as of the date of this Agreement, for all litigation purposes, as if no settlement had been negotiated or entered into. If 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 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.
6.5 Objections to Settlement.
(a) Right to Object. Any Settlement Class Member who has filed timely and properly filed an objection may appear at the Final Fairness Hearing to argue that the proposed settlement should not be approved and/or to oppose the application of Settlement 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, Eastern Division, United States Courthouse, 1 Courthouse Way, 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:
(1) Settlement Class Counsel
Gary Klein, Esq. Roddy Klein & Ryan 727 Atlantic Avenue Boston, MA 02111
(2) Defendants’ Counsel
Brenda R. Sharton, Esq. Goodwin Procter LLP 53 State Street Boston, MA 02109
(c) Content of Objections. All objections must include: (i) the objector’s name, address and telephone number; (ii) the property address securing the mortgage loan; (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

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witnesses (if any) whom the objector may call to testify at the Final Fairness Hearing; and (vi) copies of exhibits (if any) they intend to offer into evidence at the Final Fairness Hearing.
6.6 The Parties will recommend that any filings, objections, statements, or other submissions by any person or government entity noticed pursuant to 28 U.S.C. § 1715, or that claims an entitlement to have been noticed pursuant to 28 U.S.C. § 1715, shall be filed with the Court and served upon Settlement Class Counsel and Defendants’ Counsel no later than one hundred and five (105) days after entry of the Preliminary Approval Order. The Parties also will recommend that any objection by such person or government entity be made by the same method and subject to the same restrictions as set forth in Section 6.5 above.
VII. FINAL APPROVAL OF SETTLEMENT AND OTHER CONDITIONS
7.1 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 Action, substantially in the form attached hereto as Exhibits D and E respectively. Defendants will assent to any such motion that is consistent with the Agreement. The Final Approval Order will provide:
(a) That the Action, for purposes of this settlement only, 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 Settlement Class Counsel adequately represent Plaintiffs and the Settlement Class;
(d) That the Direct Mail Notices 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, without limitation, the releases contained in Section 4.1 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) 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 to the settlement;

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(k) Dismiss, on the merits and with prejudice, all claims in the Action, including without limitation the Second Amended Complaint, with prejudice, and permanently enjoin each and every Settlement Class Member from commencing, instituting, continuing, pursuing, maintaining, prosecuting, bringing, joining or enforcing, directly or indirectly, in any judicial, administrative, arbitral, or other forum, any Released Claims against any of the Released Parties, and enter Judgment thereon; and
(l) Retain jurisdiction of all matters relating to the modification, interpretation, administration, implementation, effectuation and enforcement of this Agreement and the settlement.
VIII. TERMINATION OF AGREEMENT
8.1 Non-Approval of Agreement. This Agreement is conditioned upon Final Settlement Approval without material modification by the District Court in the Action. In the event that the Agreement is not so approved or otherwise terminates, the Parties shall return to the status quo ante with respect to the Action as if no settlement had been negotiated or entered into. Moreover, the Parties shall be deemed to have preserved all of their rights or defenses, 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 oppose any class certification motion(s) on any ground. Likewise, in the event that the Agreement is approved without material modification by the District Court, but is later reversed or vacated on appeal, the Parties shall return to the status quo ante, 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 oppose any class certification motion(s) on any ground.
IX. MISCELLANEOUS PROVISIONS
9.1 Further Assurance. Each of the Parties shall execute all documents and perform all acts necessary and proper to effectuate the terms of this Agreement.
9.2 Publicity and Non-Disparagement. Plaintiffs and Plaintiffs’ Counsel shall refrain from disparaging Defendants, or taking any action designed to harm the public perception of Defendants regarding any issue related to the settlement or the Action. None of the Parties or their counsel shall issue press releases or otherwise communicate with the media regarding this Agreement or the settlement contemplated hereby except as set forth herein or as may be required by law. Prior to submission of the settlement to the District Court for preliminary approval, the Parties may work in good faith to develop a joint agreed statement regarding the settlement which may be made publicly available (following the beginning of mailing to the Settlement Class of the Direct Mail Notices) 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, although the Parties are under no obligation to create any such statement or joint agreed responses to likely questions. Nothing in this section is intended to prevent Settlement Class Counsel from responding to communications from Settlement Class Members regarding the settlement.

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9.3 Entire Agreement. This Agreement constitutes the entire agreement between and among the Parties with respect to the settlement of the Action. This Agreement supersedes all prior negotiations and agreements, including, without limitation, the “Terms of Agreement in Principle” executed at the April 15, 2011 mediation. 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 promise, representation or warranty not contained in this Agreement and the other documents referred to in this Agreement.
9.4 Confidentiality. Any and all drafts of this Agreement and other documents relating to the negotiations between the Parties will remain confidential and will not be disclosed except as necessary to obtain preliminary and/or final court approval or otherwise to implement and enforce the terms of this Agreement. This provision will not prohibit the Parties from submitting this Agreement to any court of competent jurisdiction in order to obtain preliminary and/or final approval of the settlement or otherwise to implement and enforce the terms of this Agreement. Pursuant to the terms of the Protective Order in the Action, all materials produced or provided by a Party that contain Confidential Information or Attorneys’ Eyes Only Information shall be returned or disposed of in accordance with the terms of the Protective Order. For the avoidance of doubt, nothing in this Agreement or in the Protective Order shall prevent any Party from implementing and enforcing the terms of this Agreement.
9.5 This Agreement is not an Admission. The Parties hereto agree that this Agreement (including, without limitation, its exhibits), and any and all negotiations, documents and discussions associated with it, shall be without prejudice to the rights, positions or privileges of any Party (except as expressly provided for in this Agreement, including, without limitation, its exhibits), and shall not be deemed or construed to be an admission or evidence of any violation of any statute, law, rule, regulation or principle of common law or equity, or of any liability or wrongdoing by Defendants, or of the truth of any of the claims alleged in the Action, and evidence thereof shall not be discoverable or used, directly or indirectly, in any way, whether in the Action or in any other action or proceeding, except for purposes of demonstrating, describing, implementing or enforcing the terms and conditions of this Agreement, the Preliminary Approval Order, the Final Approval Order and/or the Judgment.
9.6 Representations and Warranties.
(a) Plaintiffs, Settlement Class Counsel, and Defendants represent and warrant that they have not, nor will they (i) attempt to void this Agreement in any way (unless provided for under the terms of this Agreement); (ii) opt-out of the Settlement under this Agreement; (iii) solicit or encourage in any fashion Settlement Class Members to opt-out; or (iv) solicit or encourage in any fashion any effort by any person (natural or legal) to object to the Settlement under this Agreement.
(b) Plaintiffs and Settlement Class Counsel represent and warrant that they will not use or seek to use the discovery obtained in the Action in any other claim, proceeding, action or litigation against Defendants or any Released Person. Plaintiffs and Settlement Class Counsel

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further represent and warrant that they will not seek to use the fact or content of the Settlement in any other claim, proceeding, action or litigation, other than any claim, proceeding, action or litigation arising out of the enforcement of this Agreement itself, against Defendant or any Released Person to establish or attempt to establish (i) Defendants’ or any Released Person’s liability, and/or (ii) that class treatment or certification is required or appropriate.
9.7 Successors and Assigns. The Agreement shall be binding upon, and inure to the benefit of, the heirs, successors and assigns of the Parties.
9.8 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, 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.
9.9 Authority. The person signing this Agreement on behalf of each of the Defendants warrants and represents that he or she is authorized to sign on each of the Defendants’ behalf. Each of the Plaintiffs has personally signed this Agreement.
9.10 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.
9.11 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 construed against any of the Parties on the basis that such Party was deemed to be the drafter. Before declaring any provision of this Agreement invalid, the 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 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.
9.12 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.
9.13 Governing Law. This Agreement shall be governed by, construed and enforced in accordance with the laws of the Commonwealth of Massachusetts.
9.14 Notices/Communications. All requests, demands, claims and other communications hereunder shall: (a) be in writing; (b) be delivered by U.S. Mail and facsimile;

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(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 Avenue Boston, MA 02111
If to Defendants:
Brenda R. Sharton, Esq. Goodwin Procter LLP 53 State Street Boston, MA 02109
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.
9.15 Headings. The headings used in this Agreement are for the convenience of the reader only and shall not affect the meaning or interpretation of this Agreement.
9.16 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.
9.17 Sealed Instrument. It is understood that agreed by the Parties that the terms of this Agreement are contractual, not a mere recital, and that this Agreement shall take effect as a sealed instrument.

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EXHIBIT A - 1

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NOTICE OF PROPOSED SETTLEMENT OF CLASS ACTION LAWSUIT TO CITIMORTGAGE, INC. BORROWERS
You have received this Notice because you were identified as someone who may be eligible to receive valuable benefits provided under the proposed settlement of a class action lawsuit as described below. You are eligible for benefits if you are African-American or Hispanic and obtained a residential mortgage loan from CitiMortgage, Inc. between January 1, 2004 and June 24, 2011.
THIS NOTICE COULD AFFECT YOUR RIGHTS – PLEASE READ IT CAREFULLY
PARA UNA TRADUCCIÓN AL ESPAÑOL DE ESTE AVISO, POR FAVOR CONSULTE WWW.SETTLEMENTWEBSITE.COM.
This Notice and attached Claim Form are sent to you by order of the United States District Court for the District of Massachusetts. It summarizes a proposed settlement of a class action lawsuit titled Harris et al. v. Citigroup, Inc. et al., Case No. 08-10417 (“Harris Lawsuit”). In that case, several individuals (the “Plaintiffs”) sued Citigroup, Inc. (“Citigroup”) and CitiMortgage, Inc. (“CitiMortgage”) (together, Citigroup and CitiMortgage are the “Defendants”), claiming that CitiMortgage had a policy and practice of affording employees and the mortgage brokers with whom it dealt discretion in setting the pricing terms of loans. Plaintiffs further alleged that the availability of this discretion resulted in higher-cost loans to African-American and Hispanic borrowers than to white borrowers with the same credit characteristics. Plaintiffs specifically identified yield spread premiums as an example of the pricing discretion that is afforded to mortgage brokers. Based on these allegations, Plaintiffs claimed that Defendants are liable for disparate impact discrimination 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. (“FHA”). Plaintiffs sought both actual and punitive damages, in addition to injunctive and declaratory relief.
Defendants deny all allegations of wrongdoing and contend that they fully complied with the law. More specifically, Defendants contend that there were no facts indicating that CitiMortgage’s loan origination practices at issue resulted in higher-cost loans being made to minority borrowers, or resulted in any discriminatory or other adverse impacts on minority borrowers.
Who is a Settlement Class Member?
If you are African-American or Hispanic and you obtained a residential real estate loan between January 1, 2004 and June 24, 2011 from CitiMortgage, you are a “Settlement Class Member.” According to Defendants’ records, each person to whom this Notice is being sent is likely to be a Settlement Class Member.
What are the terms of the proposed Settlement?
The complete terms of the proposed settlement are set forth in a formal Settlement Agreement (the “Agreement”) which is on file with the Court. This Notice is only a summary of the Settlement, and in case of any conflict between this Notice and the Agreement, the terms of the Agreement will control. The Settlement, if approved, would resolve all of the claims alleged in
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the Harris lawsuit and all other pending cases involving similar issues, regardless of whether the litigation is specifically identified in this Notice or in the Agreement.
In the proposed Settlement, Defendants have agreed to: • Fund telephonic housing counseling services offered by a third-party non-profit organization; • Maintain fair lending compliance policies and programs; • Provide either a payment or a closing cost credit to only those Settlement Class Members who obtained a residential real estate loan through a third party broker; and • Pay certain attorneys’ fees and representative plaintiffs awards to Settlement Class Counsel and Plaintiffs, respectively.
The settlement benefits are summarized below.
Borrower Assistance Programs. Defendants have agreed to fund, up to one hundred thousand dollars ($100,000), telephonic housing counseling services (“Counseling Services”) to Settlement Class Members for a period of one year following the date when the Court gives final approval to the Settlement. Such Counseling Services shall be accessed by a toll free number through a reputable non-profit outside provider selected by Settlement Class Counsel. Defendants shall have no involvement with the selection or retention of the provider of the Counseling Services. If the settlement is approved, information about how to receive Counseling Services will be available on the Settlement Website: www.settlementwebsite.com
Fair Lending Compliance Policies and Programs. Defendants represent that CitiMortgage has a policy of not allowing discretionary pricing and have agreed to continue that policy. Defendants further agree to continue CitiMortgage’s enhanced Fair Lending Policy that addresses the claims raised by Plaintiffs in this litigation, and that CitiMortgage has trained, and will re-train as necessary, all employees who are in any way involved with mortgage loan origination with respect to fair lending issues.
Payments or Closing Cost Credits. If the Settlement is approved by the Court, Settlement Class Members who received a residential loan through a third party broker and have filed a claim form will be eligible to receive either a one-time payment of ninety dollars ($90.00) (“Payment”) or a voucher for a credit in the amount of two hundred dollars ($200.00) (“Voucher”) against the closing costs incurred in your next residential mortgage loan obtained from CitiMortgage or any CitiMortgage subsidiary. Claim forms have only been provided to those individuals identified through CitiMortgage’s records as Settlement Class Members who received a residential loan through a third party broker.
Attorneys’ Fees and Representative Plaintiffs’ Awards. Plaintiffs’ counsel will ask the Court to award them up to $400,000, and to award each of the Plaintiffs $5,000 (for a total of $415,000 in fees, costs and service awards). The Court will determine the appropriate amount of the awards to be paid separately and in addition to any benefits for which you are eligible. The Settlement is not conditioned upon approval of any of the attorneys’ fees, costs or service award amounts.
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What Happens Next?
The Court will hold a “Final Fairness Hearing” on ___________, 2011, at _______ A.M./P.M. at the United States District Court for the District of Massachusetts, 1 Courthouse Way, Courtroom #10, Boston, MA 02210, to hear any objections and to consider whether to give final approval to the Settlement. The Court will only hear objections at the hearing from those who timely object to the Settlement (see below). You may participate in the Final Fairness Hearing with or without an attorney, but if you choose to be represented by an attorney you must do so at your own expense. YOU DO NOT HAVE TO APPEAR AT THE HEARING TO RECEIVE THE BENEFITS OF THE SETTLEMENT.
What Are Your Options?
Participate in the Settlement. If you wish to remain a part of the Settlement in order to be eligible for the Housing Counseling Services, you do not have to do anything now. You automatically will be eligible for the Housing Counseling Services if the Settlement receives final approval from the Court.
Opt Out of the Settlement. If you choose to exclude yourself, or “opt out,” of the Settlement, you must send a written statement to the Settlement Administrator that includes: (1) your name, address, telephone number; (2) the address of the property securing your mortgage loan(s); (3) the account number of your mortgage loan(s); (iv) a sentence confirming, under penalty of perjury, that you are a Settlement Class Member; and (v) the following statement: “I request to be excluded from the Settlement in Harris v. Citigroup, Inc., United States District Court, District of Massachusetts, 08-10417.” You must personally sign your written “opt-out” statement and mail it postmarked by ____________, 2011 to the following address:
[Settlement Administrator name] [address] [city, state, zip]
If you do not opt out, you will be bound by this Settlement.
Object to the Settlement. You may remain a member of the Settlement Class, but object to the terms of the Settlement. You may object to all or any portion of the Settlement at the Final Fairness Hearing, but you must first explain your objections in writing. All objections must include: (1) your name, address and telephone number; (2) the account number(s) of your loan(s); (3) a sentence confirming, under penalty of perjury, that you are a Settlement Class Member; (4) the factual basis and legal grounds for your objection; (5) the identity of any witnesses whom you may call to testify at the Final Fairness Hearing; and (6) copies of any exhibits you intend to offer into evidence at the Final Fairness Hearing. To be considered, objections must: (1) be mailed to the lawyers handling the case for each side postmarked by ____________, 2011; and (2) filed with the court no later than __________, 2011.
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The three addresses are:
Counsel for Plaintiffs Gary E. Klein, Esq. Roddy Klein & Ryan 727 Atlantic Ave. Boston, MA 02111
Counsel for Defendants Brenda R. Sharton, Esq. Goodwin Procter LLP 53 State Street Boston, MA 02109
The Court Clerk, United States District Court for the District of Massachusetts 1 Courthouse Way, Suite 2300 Boston, Massachusetts 02210
You have the right to consult with your own attorney, at your own expense, before deciding how best to proceed.
What claims will be released by this Settlement?
If the Settlement receives final approval from the Court, the Settlement will be legally binding on all Settlement Class Members, including Settlement Class Members who object. If you, or someone acting on your behalf, are currently litigating claims against Defendants or other released parties, you will be barred from pursuing the claims released by the Settlement unless you validly “opt out” as described above. The full terms of the release, which will bind all Settlement Class Members as to certain claims against the Defendants and certain affiliates and related entities (“Released Parties”), are set forth in the Agreement which is on file with the Court. In summary, you will release all race discrimination claims relating to the origination of your mortgage loan(s), including any claim that race discrimination caused you to pay more for your mortgage than you should have paid, or caused you to be placed in a loan that was not suitable for you (“Released Claims”). The release provides:
As of the Effective Date, Plaintiffs and each Settlement Class Member, and each of their respective spouses, heirs, executors, administrators, representatives, agents, attorneys, partners, successors, bankruptcy trustees, guardians, wards, joint tenants, tenants in common, tenants by the entirety, co-borrowers, joint-borrowers, guarantors, predecessors-in-interest, assigns and all persons acting for or on their behalf fully, finally and completely release and forever discharge, and shall be deemed to have fully, finally, completely released and forever discharged, the Released Parties, and each of them, from any and all actual or potential claim, right, demand, charge, complaint, action, cause of action, suit, counterclaim, cross-claim, third-party claim, contention, allegation, obligation, assertion of wrongdoing or liability of any and every kind whatsoever for lending discrimination associated with the origination of Loans or any activities attendant to the origination of Loans, including, without limitation, those based on contract, ECOA,
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and/or the FHA, or any other federal, state, local or other law, statute, regulation, or principle of common law or equity, including, without limitation, all claims for monetary, equitable, declaratory, injunctive, or any other form of relief, whether known or unknown, suspected or unsuspected, under the law of any jurisdiction, which Plaintiffs or any Settlement Class Member ever had, now has, or may have in the future, resulting from, arising out of, or in any way, directly or indirectly, connected with (a) the claims raised in the Action, or (b) any claims which could have been raised in the Action based on the same transactional nucleus of facts.
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 or equity), 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 other than, 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, and that they fully, finally and forever release and discharge all Released Claims, and in furtherance of such intention, the release will remain in effect notwithstanding the discovery or existence of any such other, additional or different facts.
More Information Is Available
This Notice is only a summary of the Settlement and the Agreement. If you have questions regarding the Settlement, or would like to review a copy of the Agreement, please contact the Settlement Administrator:
[Settlement Administrator name] [address] [city, state, zip]
You may also review the Court’s file during regular court hours at:
U.S. District Court for the District of Massachusetts 1 Courthouse Way, Suite 2300 Boston, Massachusetts 02210
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Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 37 of 67 You may also find additional information at the settlement website at www.settlementwebsite.com. PLEASE DO NOT TELEPHONE THE COURT, THE JUDGE, OR THE CLERK OF THE COURT. Dated: ______________, 2011 By Order of the United States District Court for the District of Massachusetts.
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EXHIBIT A - 2

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NOTICE OF PROPOSED SETTLEMENT OF CLASS ACTION LAWSUIT TO CITIMORTGAGE, INC. BORROWERS
You have received this Notice because you were identified as someone who may be eligible to receive valuable benefits provided under the proposed settlement of a class action lawsuit as described below. You are eligible for benefits if you are African-American or Hispanic and obtained a residential mortgage loan between January 1, 2004 and December 31, 2006 from CitiMortgage, Inc. through a third-party mortgage broker.
THIS NOTICE COULD AFFECT YOUR RIGHTS – PLEASE READ IT CAREFULLY
PARA UNA TRADUCCIÓN AL ESPAÑOL DE ESTE AVISO, POR FAVOR CONSULTE WWW.SETTLEMENTWEBSITE.COM.
This Notice and attached Claim Form are sent to you by order of the United States District Court for the District of Massachusetts. It summarizes a proposed settlement of a class action lawsuit titled Harris et al. v. Citigroup, Inc. et al., Case No. 08-10417 (“Harris Lawsuit”). In that case, several individuals (the “Plaintiffs”) sued Citigroup, Inc. (“Citigroup”) and CitiMortgage, Inc. (“CitiMortgage”) (together, Citigroup and CitiMortgage are the “Defendants”), claiming that CitiMortgage had a policy and practice of affording employees and the mortgage brokers with whom it dealt discretion in setting the pricing terms of loans. Plaintiffs further alleged that the availability of this discretion resulted in higher-cost loans to African-American and Hispanic borrowers than to white borrowers with the same credit characteristics. Plaintiffs specifically identified yield spread premiums as an example of the pricing discretion that is afforded to mortgage brokers. Based on these allegations, Plaintiffs claimed that Defendants are liable for disparate impact discrimination 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. (“FHA”). Plaintiffs sought both actual and punitive damages, in addition to injunctive and declaratory relief.
Defendants deny all allegations of wrongdoing and contend that they fully complied with the law. More specifically, Defendants contend that there were no facts indicating that CitiMortgage’s loan origination practices at issue resulted in higher-cost loans being made to minority borrowers, or resulted in any discriminatory or other adverse impacts on minority borrowers.
Who is a Settlement Class Member?
If you are African-American or Hispanic and you obtained a residential real estate loan between January 1, 2004 and December 31, 2006 from CitiMortgage, Inc. through a third-party mortgage broker, you are a “Settlement Class Member.”
What are the terms of the proposed Settlement?
The complete terms of the proposed settlement are set forth in a formal Settlement Agreement (the “Agreement”) which is on file with the Court. This Notice is only a summary of the Settlement, and in case of any conflict between this Notice and the Agreement, the terms of the
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Agreement will control. The Settlement, if approved, would resolve all of the claims alleged in the Harris lawsuit and all other pending cases involving similar issues, regardless of whether the litigation is specifically identified in this Notice or in the Agreement.
In the proposed Settlement, Defendants have agreed to: • Fund telephonic housing counseling services offered by a third-party non-profit organization; • Maintain fair lending compliance policies and programs; • Provide either a payment or a closing cost credit to only those Settlement Class Members who make timely claims; and • Pay certain attorneys’ fees and representative plaintiffs awards to Settlement Class Counsel and Plaintiffs, respectively.
The settlement benefits are summarized below.
Borrower Assistance Programs. Defendants have agreed to fund, up to one hundred thousand dollars ($100,000), telephonic housing counseling services (“Counseling Services”) to Settlement Class Members for a period of one year following the date when the Court gives final approval to the Settlement. Such Counseling Services shall be accessed by a toll free number through a reputable non-profit outside provider selected by Settlement Class Counsel. Defendants shall have no involvement with the selection or retention of the provider of the Counseling Services. If the settlement is approved, information about how to receive Counseling Services will be available on the Settlement Website: www.settlementwebsite.com
Fair Lending Compliance Policies and Programs. Defendants represent that CitiMortgage has a policy of not allowing discretionary pricing and have agreed to continue that policy. Defendants further agree to continue CitiMortgage’s enhanced Fair Lending Policy that addresses the claims raised by Plaintiffs in this litigation, and that CitiMortgage has trained, and will re-train as necessary, all employees who are in any way involved with mortgage loan origination with respect to fair lending issues,
Payments or Closing Cost Credits. If the Settlement is approved by the Court, some Settlement Class Members will be eligible to receive either a one-time payment of ninety dollars ($90.00) (“Payment”) or a voucher for a credit in the amount of two hundred dollars ($200.00) (“Voucher”) (valid for two years from date of issuance) against the closing costs incurred in your next residential mortgage loan obtained from CitiMortgage or any CitiMortgage subsidiary, provided that you are otherwise eligible to obtain the mortgage loan under CitiMortgage’s thenexisting lending and underwriting policies. Because you received this form of notice, you are eligible for this benefit. If you wish to receive a payment or closing cost credit, please fill out, sign, and return the enclosed claim form to the Settlement Administrator. THE CLAIM FORM MUST BE POSTMARKED ON OR BEFORE _____________, 2011 OR IT WILL NOT BE ACCEPTED.
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Attorneys’ Fees and Representative Plaintiffs’ Awards. Plaintiffs’ counsel will ask the Court to award them up to $400,000, and to award each of the Plaintiffs $5,000 (for a total of $415,000 in fees, costs and service awards). The Court will determine the appropriate amount of the awards to be paid separately and in addition to any benefits for which you are eligible. The Settlement is not conditioned upon approval of any of the attorneys’ fees, costs or service award amounts.
What Happens Next?
The Court will hold a “Final Fairness Hearing” on ___________, 2011, at _______ A.M./P.M. at the United States District Court for the District of Massachusetts, 1 Courthouse Way, Courtroom #10, Boston, MA 02210, to hear any objections and to consider whether to give final approval to the Settlement. The Court will only hear objections at the hearing from those who timely object to the Settlement (see below). You may participate in the Final Fairness Hearing with or without an attorney, but if you choose to be represented by an attorney you must do so at your own expense. YOU DO NOT HAVE TO APPEAR AT THE HEARING TO RECEIVE THE BENEFITS OF THE SETTLEMENT.
What Are Your Options?
Participate in the Settlement. If you wish to remain a part of the Settlement in order to be eligible for the Housing Counseling Services, you do not have to do anything now. If you wish to receive either the Payment or the Voucher for your valid claim(s), you must mail a completed claim form postmarked on or before _____________, 2011. The Claim Form is enclosed with this Notice. You will also automatically be eligible for the Housing Counseling Services if the Settlement receives final approval from the Court.
Opt Out of the Settlement. If you choose to exclude yourself, or “opt out,” of the Settlement, you must send a written statement to the Settlement Administrator that includes: (1) your name, address, telephone number; (2) the address of the property securing your mortgage loan(s); (3) the account number of your mortgage loan(s); (iv) a sentence confirming, under penalty of perjury, that you are a Settlement Class Member; and (v) the following statement: “I request to be excluded from the Settlement in Harris v. Citigroup, Inc., United States District Court, District of Massachusetts, 08-10417.” You must personally sign your written “opt-out” statement and mail it postmarked by ____________, 2011 to the following address:
[Settlement Administrator name] [address] [city, state, zip]
If you do not opt out, you will be bound by this Settlement.
Object to the Settlement. You may remain a member of the Settlement Class, but object to the terms of the Settlement. You may object to all or any portion of the Settlement at the Final Fairness Hearing, but you must first explain your objections in writing. All objections must include: (1) your name, address and telephone number; (2) the account number(s) of your
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loan(s); (3) a sentence confirming, under penalty of perjury, that you are a Settlement Class Member; (4) the factual basis and legal grounds for your objection; (5) the identity of any witnesses whom you may call to testify at the Final Fairness Hearing; and (6) copies of any exhibits you intend to offer into evidence at the Final Fairness Hearing. To be considered, objections must: (1) be mailed to the lawyers handling the case for each side postmarked by ____________, 2011; and (2) filed with the court no later than __________, 2011.
The three addresses are:
Counsel for Plaintiffs Gary E. Klein, Esq. Roddy Klein & Ryan 727 Atlantic Ave. Boston, MA 02111
Counsel for Defendants Brenda R. Sharton, Esq. Goodwin Procter LLP 53 State Street Boston, MA 02109
The Court Clerk, United States District Court for the District of Massachusetts 1 Courthouse Way, Suite 2300 Boston, Massachusetts 02210
You have the right to consult with your own attorney, at your own expense, before deciding how best to proceed.
What claims will be released by this Settlement?
If the Settlement receives final approval from the Court, the Settlement will be legally binding on all Settlement Class Members, including Settlement Class Members who object. If you, or someone acting on your behalf, are currently litigating claims against Defendants or other released parties, you will be barred from pursuing the claims released by the Settlement unless you validly “opt out” as described above. The full terms of the release, which will bind all Settlement Class Members as to certain claims against the Defendants and certain affiliates and related entities (“Released Parties”), are set forth in the Agreement which is on file with the Court. In summary, you will release all race discrimination claims relating to the origination of your mortgage loan(s), including any claim that race discrimination caused you to pay more for your mortgage than you should have paid, or caused you to be placed in a loan that was not suitable for you (“Released Claims”). The release provides:
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As of the Effective Date, Plaintiffs and each Settlement Class Member, and each of their respective spouses, heirs, executors, administrators, representatives, agents, attorneys, partners, successors, bankruptcy trustees, guardians, wards, joint tenants, tenants in common, tenants by the entirety, co-borrowers, joint-borrowers, guarantors, predecessors-in-interest, assigns and all persons acting for or on their behalf fully, finally and completely release and forever discharge, and shall be deemed to have fully, finally, completely released and forever discharged, the Released Parties, and each of them, from any and all actual or potential claim, right, demand, charge, complaint, action, cause of action, suit, counterclaim, cross-claim, third-party claim, contention, allegation, obligation, assertion of wrongdoing or liability of any and every kind whatsoever for lending discrimination associated with the origination of Loans or any activities attendant to the origination of Loans, including, without limitation, those based on contract, ECOA, and/or the FHA, or any other federal, state, local or other law, statute, regulation, or principle of common law or equity, including, without limitation, all claims for monetary, equitable, declaratory, injunctive, or any other form of relief, whether known or unknown, suspected or unsuspected, under the law of any jurisdiction, which Plaintiffs or any Settlement Class Member ever had, now has, or may have in the future, resulting from, arising out of, or in any way, directly or indirectly, connected with (a) the claims raised in the Action, or (b) any claims which could have been raised in the Action based on the same transactional nucleus of facts.
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 or equity), 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 other than, 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, and that they fully, finally and forever release and discharge all Released Claims, and in furtherance of such intention, the release will remain in effect notwithstanding the discovery or existence of any such other, additional or different facts.
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More Information Is Available This Notice is only a summary of the Settlement and the Agreement. If you have questions regarding the Settlement, or would like to review a copy of the Agreement, please contact the Settlement Administrator: [Settlement Administrator name] [address] [city, state, zip] You may also review the Court’s file during regular court hours at: U.S. District Court for the District of Massachusetts 1 Courthouse Way, Suite 2300 Boston, Massachusetts 02210 You may also find additional information at the settlement website at www.settlementwebsite.com. PLEASE DO NOT TELEPHONE THE COURT, THE JUDGE, OR THE CLERK OF THE COURT. Dated: ______________, 2011 By Order of the United States District Court for the District of Massachusetts.
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Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 46 of 67
CLAIM INFORMATION AND FORM
This Claim Form accompanies the Notice of Proposed Settlement of Class Action in Harris et al. v. Citigroup, Inc. et al., United States District Court, District of Massachusetts, Case No. 08-10417.
PLEASE READ THE NOTICE BEFORE READING OR FILLING OUT THIS FORM!
You have received this claim form because you have been identified as a CitiMortgage, Inc. borrower who may be eligible to receive valuable benefits under the terms of the proposed Settlement of this case. The following persons are eligible to submit a claim:
All African-American or Hispanic persons throughout the United States who, between January 1, 2004 and December 31, 2006, obtained residential closed-end real estate secured mortgage loans from CitiMortgage, Inc. through a third-party mortgage broker.
ONLY CLAIMS POSTMARKED BEFORE THE DEADLINE OF _____________, 2011 WILL BE CONSIDERED.
INSTRUCTIONS
The benefits provided by the proposed Settlement of this action are described in the accompanying Notice and are on file with the Court. Some additional instructions which may or may not apply to you are as follows.
Multiple Borrowers: Settlement Fund payments will be based on the number of loans, not the number of borrowers. If more than one person is or was liable under the loan (“joint borrowers”), they will be treated for these purposes as if they have a single claim. If only one claim form is timely submitted, the entire amount of the joint borrowers’ claim will be paid to that person. If more than one claim form is timely submitted, the claim will be paid by check to the joint borrowers.
Deceased Persons: If the borrower is deceased, the representatives of his/her estate may make a claim for the estate. Claims on behalf of deceased persons should be submitted by a person authorized to act on behalf of the deceased person’s estate together with proof of such authorization.
CLAIM FORMS MUST BE POSTMARKED ON OR BEFORE _________, 2011. ALL CLAIMS SUBMITTED BEARING A POSTMARK AFTER THAT DATE WILL BE DENIED. CLAIMS WILL NOT BE PAID UNTIL THE SETTLEMENT IS FINAL. PLEASE DO NOT CONTACT THE COURT, THE DEFENDANTS, OR DEFENDANTS’ COUNSEL. THE DEFENDANTS’ REPRESENTATIVES ARE NOT AUTHORIZED TO CHANGE THE TERMS OF THE AGREEMENT. UPDATED INFORMATION ABOUT THE STATUS OF THE SETTLEMENT WILL BE AVAILABLE ON THE SETTLEMENT ADMINISTRATOR’S WEBSITE: www.settlementwebsite.com. ACCURATE CLAIMS PROCESSING TAKES TIME; IT WILL LIKELY BE ABOUT FOUR TO SIX MONTHS BEFORE YOU RECEIVE ANY CHECK OR VOUCHER. THANK YOU FOR YOUR PATIENCE.
LIBA/2191583.2

Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 47 of 67

CLAIM FORM

Harris et al. v. Citigroup, Inc. et al. United States District Court, District of Massachusetts, Case No. 08-10417

BORROWER INFORMATION

First Name:

_____________________________________

Middle Name:

_____________________________________

Last Name:

_____________________________________

Current Street Address:

_____________________________________

City, State and Zip:

_____________________________________

Daytime Telephone Number: _____________________________________

Email (optional):

_____________________________________

CO-BORROWER INFORMATION (if any)

First Name:

_____________________________________

Middle Name:

_____________________________________

Last Name:

_____________________________________

Current Street Address:

_____________________________________

City, State and Zip:

_____________________________________

Daytime Telephone Number: _____________________________________

Email (optional):

_____________________________________

2
LIBA/2191583.2

Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 48 of 67

LOAN AND PROPERTY INFORMATION

Account Number of Residential Loan (if known): _____________________________

Property Address (if different than your current address):

Street Address: _____________________________________ City, State and Zip: _____________________________________

If you have or had more than one mortgage loan from Citimortgage, Inc., as obtained through a third-party mortgage broker during the period January 1, 2004 through December 31, 2006, provide the same information for each qualifying loan. (You may copy the form if necessary.)

Account Number of Residential Loan (if known): _____________________________

Property Address (if different than your current address):

Street Address: _____________________________________ City, State and Zip: _____________________________________

Account Number of Residential Loan (if known): _____________________________

Property Address (if different than your current address):

Street Address: _____________________________________ City, State and Zip: _____________________________________

ELECTION OF SETTLEMENT BENEFITS

Please select the settlement benefit option you would like to proceed. If you have only one residential mortgage loan that qualifies for these benefits, please select only one settlement benefit option. If you have multiple residential mortgage loans that qualify for these benefits, please provide the number of either settlement benefit options you wish to receive – do not select more benefit options than the number of qualifying mortgages.

____ Settlement Check of Ninety Dollars ($90.00)

____ Closing Cost Voucher of Two Hundred Dollars ($200.00)

I/we affirm that the information provided in this form is true.

________________________ Signature

____________________________ Signature

Mail this form to the Settlement Administrator by _______, 2011: [Name] [Address] [City, State, Zip]
3
LIBA/2191583.2

Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 49 of 67

Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 50 of 67

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

)

SHATONYA HARRIS, MATEO HUERTA, )

and KEVIN NICHOLSON, on behalf of

)

themselves and all others similarly situated, )

)

Plaintiffs,

)

)

v.

)

)

CITIGROUP INC., and

)

CITIMORTGAGE, INC.,

)

)

Defendants.

)

)

Civil Action No. 08-10417-MLW

[PROPOSED] PRELIMINARY APPROVAL ORDER WHEREAS, Plaintiffs have made a motion (the “Motion”), pursuant to Federal Rule of Civil Procedure 23, for an order preliminarily approving settlement of the above-captioned action (the “Action”) in accordance with the Settlement Agreement dated June 24, 2011 (the “Agreement”), which, together with the Exhibits attached thereto, sets forth the terms and conditions for a proposed settlement of this matter 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 certain claims arising under federal, state or common law as specified in Section 4.1 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 WHEREAS, all defined terms shall have the same meaning as set forth in the Agreement.

Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 51 of 67
NOW, THEREFORE, IT IS HEREBY ORDERED: 1. 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 the following Settlement Class:
All African-American or Hispanic borrowers (including, without limitation, individual borrowers, joint-borrowers, and coborrowers) who obtained a Loan (as defined herein) originated between January 1, 2004 and June 24, 2011. For purposes of this settlement only, the Settlement Class preliminarily will be certified pursuant to Federal Rules of Civil Procedure 23(b)(2) and 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. 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 of law and fact common to Settlement Class Members 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) Defendants have acted or refused to act 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;
2

Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 52 of 67
and (f) 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.
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 firms of Bonnett, Fairbourn, Friedman & Balint, P.C., Roddy Klein & Ryan, the Law Offices of Al Hofeld Jr., LLC, Miller Law, LLC, Robbins, Geller, Rudman & Dowd, LLP, and the National Consumer Law Center, Inc. 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 will commit to representing the class, Class Counsel have and will fairly and adequately represent the interests of the Settlement Class. This Court authorizes Plaintiffs 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 behalf of the Settlement Class, are authorized to take all appropriate action required or permitted to be taken by the Settlement Class pursuant to the Agreement to effectuate its terms.
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7. The Final Fairness Hearing shall take place before the Honorable Mark L. Wolf on _________, 2011 at ____ a.m./p.m. at the United States District Court, District of Massachusetts, Courtroom #10, 1 Courthouse Way, Suite 2300, Boston, Massachusetts 02210, to determine: whether the proposed settlement of the Action on the terms 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; the amount of fees and costs that should be awarded to Class Counsel; and the amount of the service awards that should be awarded to Plaintiffs, as provided for in the Agreement. The Court will also hear and consider any properly lodged objections at that time.
8. This Court approves Tilghman & Co., P.C. as Settlement Administrator. 9. This Court finds 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 of Due Process, the Federal Rules of Civil Procedure and any other applicable laws, and constitutes the 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 A-1, A-2 and B, respectively, to the Agreement. 10. The Court approves the claims procedures set forth in Section 5.6 of the Agreement. To be treated as valid, claim forms must be postmarked within one hundred five (105) days of entry of this Order. 11. All Settlement Class Members who do not request exclusion (“opt-out”) from the Settlement Class, pursuant to the procedure set forth in Paragraph 12 below, shall be bound by all determinations and judgments in this Action concerning the settlement, including, but not
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Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 54 of 67
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 as to damages claims shall submit to the Settlement Administrator, with a postmark no later than one hundred five (105) 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 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 Harris et al. v. Citigroup, Inc. et al., United States District Court, District of Massachusetts, Case No. 0810417.” 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 and/or to oppose the application of Class Counsel for an award of attorneys’ fees and costs and the service awards to Plaintiffs; provided, however, that no Settlement Class Member shall be heard, and no objection may be considered, unless the Settlement Class Member files with this Court a written 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, Esq. Roddy Klein & Ryan 727 Atlantic Ave.
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Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 55 of 67
Boston, MA 02111 Counsel for Defendants Brenda R. Sharton, Esq. Goodwin Procter LLP 53 State Street Boston, MA 02109 All objections must include: (i) the objector’s name, address and telephone number; (ii) the account number of the Loan(s); (iii) a sentence confirming, 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 Section 3.4(a)(i) of the Agreement. 15. All proceedings in this Action are stayed pending final approval of the settlement, except as may be necessary to implement the settlement or comply with the terms of the Agreement. 16. Pending final determination of whether the settlement should be approved, 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, 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 this
6

Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 56 of 67

Court’s flexibility and authority to effectuate this settlement and to enter judgment when

appropriate, and is ordered in aid of this Court’s jurisdiction and to protect its judgments

pursuant to 28 U.S.C. section 1651(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 further applications arising out of or connected with the settlement. This Court may approve

or modify the settlement without further notice to Settlement Class Members.

IT IS SO ORDERED.

Dated:

Honorable Mark L. Wolf United States District Judge

7

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Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 58 of 67

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

)

SHATONYA HARRIS, MATEO HUERTA, )

and KEVIN NICHOLSON, on behalf of

)

themselves and all others similarly situated, )

)

Plaintiffs,

)

)

Civil Action No. 08-10417-MLW

v.

)

)

CITIGROUP INC., and

)

CITIMORTGAGE, INC.,

)

)

Defendants.

)

)

[PROPOSED] FINAL APPROVAL ORDER AND JUDGMENT

Plaintiffs, on their own behalf and on behalf of all similarly situated consumers,

submitted to the Court a Motion for Final Approval of the Class Action Settlement (“Motion”)

seeking final approval of the Stipulation and Agreement of Settlement (the “Agreement”), and

the exhibits attached thereto, entered into by and between Plaintiffs, Citigroup, Inc., and

CitiMortgage, Inc. (together, Citigroup, Inc. and CitiMortgage, Inc. are the “Defendants”).

Defendants do not oppose Plaintiffs’ Motion.

By Order dated ________, 2011, this Court 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,

Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 59 of 67
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 borrowers (including, without limitation, individual borrowers, joint-borrowers, and coborrowers) who obtained a Loan (as defined herein) originated between January 1, 2004 and June 24, 2011. For purposes of this settlement only, the Settlement Class is certified pursuant to Federal Rules of Civil Procedure 23(b)(2) and 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. Excluded from the Settlement Class are those persons who validly and timely requested exclusion from the Settlement Class by way of the opt-out procedures set forth in the Preliminary Approval Order (identified in Exhibit 1 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
2

Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 60 of 67
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) Defendants have acted or refused to act 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.
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 considered and hereby overrules all objections to the settlement on their merits.
8. 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).
9. 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 spouses, heirs, executors, administrators, representatives, agents, attorneys, partners,
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successors, bankruptcy trustees, guardians, wards, joint tenants, tenants in common, tenants by the entirety, co-borrowers, joint-borrowers, guarantors, predecessors-in-interest, assigns and all persons acting for or on their behalf fully, finally and completely release and forever discharge, and shall be deemed to have fully, finally, completely released and forever discharged, the Released Parties, and each of them, from any and all actual or potential claim, right, demand, charge, complaint, action, cause of action, suit, counterclaim, cross-claim, third-party claim, contention, allegation, obligation, assertion of wrongdoing or liability of any and every kind whatsoever for lending discrimination associated with the Origination of Loans or any activities attendant to Origination of Loans, including, without limitation, those based on contract, ECOA, and/or the FHA, or any other federal, state, local or other law, statute, regulation, or principle of common law or equity, including, without limitation, all claims for monetary, equitable, declaratory, injunctive, or any other form of relief, whether known or unknown, suspected or unsuspected, under the law of any jurisdiction, which Plaintiffs or any Settlement Class Member ever had, now has, or may have in the future, resulting from, arising out of, or in any way, directly or indirectly, connected with (a) the claims raised in the Action, or (b) any claims which could have been raised in the Action based on the same transactional nucleus of facts.
10. 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:
4

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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. 11. This Court approves an award to be paid from the Settlement Fund to Class Counsel of $400,000 in attorneys’ fees and costs, and service awards of $5,000 for each of Plaintiffs, for a total of $15,000 in service awards. The service awards shall be in addition to any claims Plaintiffs may have to obtain any monetary benefits available under the Agreement. 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 of Class
Counsel, based on declarations submitted to the Court.
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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.
e. The Settlement was negotiated at arms' length and without collusion, with the assistance of a highly qualified mediator.
f. The fees will be paid in addition to and will not diminish any class settlement.
12. 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 this matter been litigated rather than settled, or the validity of any claim that has been or could have been asserted in the Complaint, Amended Complaint, Second Amended Complaint, or in any other litigation, or the deficiency of any defense that has been or could have been asserted in the Complaint, Amended Complaint, Second Amended Complaint, or in any other litigation, or of any liability, negligence, fault, or wrongdoing of the Released Parties;
6

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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 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 Defendants that they are subject to the jurisdiction of any Massachusetts court;
d. Will not be construed against any Defendant, Plaintiff, putative class member or other person 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.
13. 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.
14. 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
7

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court or tribunal asserting any of the Released Claims, provided, however, that this injunction

shall not apply to non-released claims of Opt-Outs.

15. 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 will continue in their

role to oversee all aspects of the Agreement and settlement. Upon notice to Class Counsel,

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.

16. 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.

Dated:

Honorable Mark L. Wolf United States District Judge

8

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Case 1:08-cv-10417-MLW Document 89-1 Filed 08/01/11 Page 67 of 67

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

)

SHATONYA HARRIS, MATEO HUERTA, )

and KEVIN NICHOLSON, on behalf of

)

themselves and all others similarly situated, )

)

Plaintiffs,

)

)

Civil Action No. 08-10417-MLW

v.

)

)

CITIGROUP INC., and

)

CITIMORTGAGE, INC.,

)

)

Defendants.

)

)

[PROPOSED] FINAL JUDGMENT AND ORDER OF DISMISSAL

On this ____ day of __________, 2011, the Court, having approved the Settlement

Agreement and having entered a final order in this matter, hereby dismisses with prejudice the

above-captioned action, subject to retention of jurisdiction to enforce the settlement.

IT IS SO ORDERED.

Dated:

Honorable Mark L. Wolf United States District Judge

 
 Case 1:08-cv-10417-MLW Document 90 Filed 12/22/11 Page 1 of 3

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

FELIX PUELLO, et al., Plaintiffs,
v.
CITIFINANCIAL SERVICES, INC., et al., Defendants.

) ) ) ) C.A. No. 08-10417-MLW ) ) ) )

ORDER

WOLF, D.J.

December 22, 2011

As stated in court on December 21, 2011, it is hereby ORDERED

that:

1. The Plaintiffs' Motion for Preliminary Approval of Class

Action Settlement (Docket No. 87) is DENIED without prejudice.

2. By January 20, 2012:

(a) Plaintiffs shall file any renewed Motion for

Preliminary Approval of Class Action Settlement and a supplemental

memorandum in support of that Motion. The memorandum shall, among

other things, provide the relevant current law concerning the

standards the court must apply when deciding whether to

preliminarily certify a class for settlement purposes in light of

Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997); address the

issues concerning class certification arising from the Supreme

Court's decision in Wal-Mart Stores, Inc. v. Duke,s 131 S. Ct. 2541

(2011), see Rodriguez v. National City Bank, No. 08-2059, 2011 WL

5041355, at *4-7 (E.D. Pa. Oct. 24, 2011); provide by affidavit a

factual basis for the claim that class certification is

Case 1:08-cv-10417-MLW Document 90 Filed 12/22/11 Page 2 of 3

appropriate; address the estimated number of class members for whom

the plaintiffs' counsel believes it has a current address; state

whether and why $1 00,000 in credit counseling is sufficient for

this class.

(b) Plaintiffs shall also address whether the court

should appoint an expert or special master, at the parties'

expense, to gather information and provide the court with advice

concerning the plaintiffs' request for conditional certification of

a class for set tlement purposes and preliminary approval of the

proposed class action settlement. See

Manual for Complex

Litigation, Fourth, §21.632, at 321.

(c) Plaintiffs shall submit revised proposed Class

Notices for the Non-Wholesale and Wholesale subclasses. The

revised proposed Notices shall describe to the class members the

nature of claims which would not be released pursuant to the

Settlement Agreement, including claims under the Home Affordable

Modification Program ("HAMP"). Such Notices shall also include the

name and contact information of the plaintiffs' counsel.

(d) Defendants shall file an affidavit describing the

actions they have taken pursuant to Section 2.3(b) of the

Settlement Agreement, which is described on page 2 of the proposed

Class Notice, to develop and continue an "enhanced Fair Lending

Policy" that addresses the claims raised by the Plaintiffs in this

litigation, to retain and continue to retain an expert in fair

2

Case 1:08-cv-10417-MLW Document 90 Filed 12/22/11 Page 3 of 3 lending practices to develop a fair lending training program, and to train and retrain as necessary all employees involved in mortgage loan origination with respect to fair lending practices.
3. A hearing to address any renewed Motion for Preliminary Approval of a Class Action Settlement shall be held on February 15, 2012, at 3:30 p.m.
/s/ Mark L. Wolf UNITED STATES DISTRICT JUDGE
3

 
 Case 1:08-cv-10417-MLW Document 105 Filed 03/06/12 Page 1 of 9

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

)

SHATONYA HARRIS, MATEO HUERTA, )

and KEVIN NICHOLSON, on behalf )

of themselves and all others

)

similarly situated,

)

)

Plaintiffs, )

)

v.

)

)

CITIGROUP INC., and

)

CITIMORTGAGE, INC.,

)

)

Defendants.

Civil Action No. 08-10417MLW

PRELIMINARY APPROVAL ORDER Plaintiffs have made a motion (the "Motion"), pursuant to Federal Rule of Civil Procedure 23, for an order preliminarily approving settlement of the above-captioned action (the "Action") in accordance with the settlement Agreement dated June 24, 2011 (the II Agreement II), which, together with the Exhibits attached thereto, sets forth the terms and conditions for a proposed settlement of this matter and its dismissal with prejudice. 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 certain claims arising under federal, state or common law as specified in Section 4.1 of the Agreement; and This Court conducted two hearings on the Motion and required additional briefing on certain issues.

Case 1:08-cv-10417-MLW Document 105 Filed 03/06/12 Page 2 of 9
For the reasons stated in court on February 15, 2012, it is hereby ORDERED that:
1. 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, the following Settlement Class is preliminarily certified:
All African-American or Hispanic borrowers (including, without limitation, individual borrowers, joint-borrowers, and co-borrowers) who obtained a Loan originated between January 1, 2004 and June 24, 2011. For purposes of this settlement only, the Settlement Class is preliminarily certified pursuant to Federal Rules of Civil Procedure 23(b) (2) and 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. 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 of law and fact common to Settlement Class Members that
tAll terms in this Order have the definitions given to them in the Agreement.
2

Case 1:08-cv-10417-MLW Document 105 Filed 03/06/12 Page 3 of 9
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) Defendants have acted or refused to act 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.
4. This Court finds that the Agreement is 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.
6. Pursuant to Federal Rule of Civil Procedure 23(g), this Court deSignates as Class Counsel the law firms of Bonnett, Fairbourn, Friedman & Balint, P.C., Roddy Klein & Ryan, the Law Offices of Al Hofeld Jr., LLC, Miller Law, LLC, Robbins, Geller, Rudman & Dowd, LLP, and the National Consumer Law Center, Inc. This Court preliminarily finds that based on the work Class
3

Case 1:08-cv-10417-MLW Document 105 Filed 03/06/12 Page 4 of 9
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 will commit to representing the class, Class Counsel have and will fairly and adequately represent the interests of the Settlement Class. This Court authorizes Plaintiffs and Class Counsel to enter into the Agreement on behalf of the Settlement Class, subj ect to final approval by this Court of the settlement. Plaintiffs and Class Counsel, on behalf of the Settlement Class, are authorized to take all appropriate action required or permitted to be taken by the Settlement Class pursuant to the Agreement to effectuate its terms.
7. The Final Fairness Hearing shall take place before the Honorable Mark L. Wolf on August 9, 2012 at 3: 00 p. m. at the United States District Court, District of Massachusetts, Courtroom #10, 1 Courthouse Way, Boston, Massachusetts 02210, to determine: whether the proposed settlement of the Action on the terms 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; the amount of fees and costs that should be awarded to Class Counsel; and the amount of the service
4

Case 1:08-cv-10417-MLW Document 105 Filed 03/06/12 Page 5 of 9
awards that should be awarded to Plaintiffs, as provided for in the Agreement. The Court will also hear and consider any properly lodged objections at that time.
8. The parties shall file a memorandum in support of final approval and a proposed order by July 26, 2012.
9. This Court approves Tilghman & Co., P.C. as Settlement Administrator.
10. This Court finds that the notice provision as set forth in Section 6.2 of the Agreement satisfies the requirements of 28 U.S.C. §1715, and that the attached notice satisfies the requirements of Due Process, the Federal Rules of Civil Procedure and any other appl icable laws, and constitutes the 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 Notices and Claim Form which are attached hereto.'
11. The Court approves the claims procedures set forth in Section 5.6 of the Agreement. To be treated as valid, claim forms must be postmarked within one hundred five (105) days of entry of this Order.
12. All Settlement Class Members who do not request exclusion ("opt-out") from the Settlement Class, pursuant to the
2The name and contact information for the Settlement Administrator shall be added to the Notices.
5

Case 1:08-cv-10417-MLW Document 105 Filed 03/06/12 Page 6 of 9
procedure set forth in Paragraph 12 below, shall be bound by all determinations 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.
13. Any Settlement Class Member who wishes to opt-out of the Settlement Class as to damages claims shall submit to the Settlement Administrator, with a postmark no later than one hundred five (105) 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 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 Harris et al. v. Citigroup, Inc. et al., United States District Court, District of Massachusetts, Case No. 0810417." No Set tlement 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.
14. 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
6

Case 1:08-cv-10417-MLW Document 105 Filed 03/06/12 Page 7 of 9
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; provided, however, that no Settlement Class Member shall be heard, and no objection may be considered, unless the Settlement Class Member files with this Court a written statement of the obj ection 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, Esq. Klein Kavanagh Costello, LLP 85 Merrimac St., 4th Floor Boston, MA 02114 Counsel for Defendants Brenda R. Sharton, Esq. Goodwin Procter LLP 53 State Street Boston, MA 02109 All objections must include: (i) the objector's name, address and telephone number; (ii) the account number of the Loan(s); (iii) a sentence confirming, 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.
7

Case 1:08-cv-10417-MLW Document 105 Filed 03/06/12 Page 8 of 9
15. The costs of notice and settlement administration shall be paid from the Settlement Fund as described in Section 3.4(a) (i) of the Agreement.
16. All proceedings in this Action are stayed pending final approval of the settlement, except as may be necessary to implement the settlement or comply with the terms of the Agreement.
17. Pending final determination of whether the settlement should be approved, 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, 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 this Court's flexibility and authority to effectuate this settlement and to enter judgment when appropriate, and is ordered in aid of this Court's jurisdiction and to protect its judgments pursuant to 28 U.S.C. section 1651(a).
&

Case 1:08-cv-10417-MLW Document 105 Filed 03/06/12 Page 9 of 9
18. This Court reserves the right to alter any of the deadlines established by this Order for good cause shown, and to adjourn or continue the date of the Final Fairness Hearing without further notice to Settlement Class Members, and retains jurisdiction to consider all further applications arising out of or connected with the settlement. This Court may approve or modify the settlement without further notice to Settlement Class Members.

Date: ~ utA '. "

,--_,\C' .e ...... •. .....p ~
Honorable Mark L. Wolf United States District Ju

9

 
 Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 1 of 17
CLOSED,STAYED
United States District Court District of Massachusetts (Boston) CIVIL DOCKET FOR CASE #: 1:08−cv−10417−MLW

Puello v. Citifinancial Services Inc. et al Assigned to: Judge Mark L. Wolf Demand: $9,999,000 Cause: 42:405 Fair Housing Act
Plaintiff
Felix Puello on behalf of himself and all others similarly situated

Date Filed: 03/13/2008 Date Terminated: 08/10/2012 Jury Demand: Both Nature of Suit: 440 Civil Rights: Other Jurisdiction: Federal Question
represented by Andrew S. Friedman Bonnett Fairbourn Friedman &Balint, P.C. 2901 North Central Avenue Suite 100 Phoenix, AZ 85012 602−274−1100 Fax: 602−274−1199 Email: afriedman@bffb.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Charles M. Delbaum National Consumer Law Center 7 Winthrop Square 4th Floor Boston, MA 02110 617−542−8010 Fax: 617−542−8033 Email: cdelbaum@nclc.org LEAD ATTORNEY 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 LEAD ATTORNEY 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 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Shennan Alexandra Kavanagh Klein Kavanagh Costello, LLP 85 Merrimac Street, 4th Flr. Boston, MA 02114 617 357 5500 Fax: 617 357 5030 Email: kavanagh@kkcllp.com LEAD ATTORNEY

Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 2 of 17

ATTORNEY TO BE NOTICED

Stuart T. Rossman National Consumer Law Center 7 Winthrop Square 4th Floor Boston, MA 02110 617−542−8010 Fax: 617−542−8028 Email: srossman@nclc.org LEAD ATTORNEY ATTORNEY TO BE NOTICED

Wendy J. Harrison Bonnett Fairbourn, Friedman &Balint, P.C. 2325 East Camelback Road Suite 300 Phoenix, AZ 85016 602−274−1100 Fax: 602−274−1199 Email: wharrison@bffb.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Plaintiff
Cesar V. Candelario TERMINATED: 04/16/2010

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

Plaintiff
Victoria E. Candelario TERMINATED: 04/16/2010

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

Plaintiff Trustee Joseph A. Baldi

represented by Kevin C. Cain Zizik Powers O'Connell Spaulding and LaMontagne 690 Canton Street Suite 306 Westwood, MA 02090 781−320−5441 Email: Kcain@zizikpowers.com ATTORNEY TO BE NOTICED

Plaintiff Shatonya Harris

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

Plaintiff Mateo Huerta

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

Plaintiff

Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 3 of 17

Kevin Nicholson

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

V. Defendant Citifinancial Services Inc.
Defendant

represented by Joyce S. Huang Paul Weiss Rifkind Wharton &Garrison LLP 1285 Avenue of the Americas New York, NY 10019−6064 212−373−3000 Fax: 212−373−3990 Email: jhuang@paulweiss.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Theodore Von Wells , Jr. Paul Weiss Rifkind Wharton &Garrison LLP 1285 Avenue of the Americas New York, NY 10019−6064 212−373−3000 Fax: 212−373−3990 Email: twells@paulweiss.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Brenda R. Sharton Goodwin Procter LLP Exchange Place 53 State Street Boston, MA 02109 617−570−1000 Fax: 617−523−1231 Email: bsharton@goodwinprocter.com ATTORNEY TO BE NOTICED
Brook L. Ames Goodwin Procter LLP Exchange Place 53 State Street Boston, MA 02109 617−570−1000 Fax: 617−523−1231 Email: bames@goodwinprocter.com TERMINATED: 01/26/2012 ATTORNEY TO BE NOTICED
Katherine A. Borden Goodwin Procter LLP Exchange Place 53 State Street Boston, MA 02109 617−570−1000 Email: kborden@goodwinprocter.com ATTORNEY TO BE NOTICED

Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 4 of 17

Citigroup, Inc.

represented by Joyce S. Huang (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Theodore Von Wells , Jr. (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Brenda R. Sharton (See above for address) ATTORNEY TO BE NOTICED

Brook L. Ames (See above for address) TERMINATED: 01/26/2012 ATTORNEY TO BE NOTICED

Katherine A. Borden (See above for address) ATTORNEY TO BE NOTICED

Defendant CitiMortgage, Inc.

represented by Brenda R. Sharton (See above for address) ATTORNEY TO BE NOTICED

Brook L. Ames (See above for address) TERMINATED: 01/26/2012 ATTORNEY TO BE NOTICED

Joyce S. Huang (See above for address) ATTORNEY TO BE NOTICED

Katherine A. Borden (See above for address) ATTORNEY TO BE NOTICED

Theodore Von Wells , Jr. (See above for address) ATTORNEY TO BE NOTICED

Interested Party
Lawyers' Commitee for Civil Rights Under Law of the Boston Bar Association

represented by Michael E. Aleo Lesser, Newman &Nasser, LLP 39 Main Street Northampton, MA 01060 413−584−7331 Fax: 617−482−4392 Email: aleo@lnn−law.com ATTORNEY TO BE NOTICED

Date Filed 03/13/2008

# Docket Text
1 COMPLAINT against all defendants Filing fee: $ 350, receipt number 01010000000001885891, filed by Felix Puello. (Attachments: # 1 Civil Cover Sheet, # 2 Exhibit 1 and 2)(Klein, Gary) (Entered: 03/13/2008)

Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 5 of 17

03/14/2008 03/14/2008
04/03/2008 04/07/2008 04/11/2008 04/14/2008 04/14/2008 04/14/2008 04/14/2008 04/15/2008 04/15/2008
04/22/2008 04/30/2008
05/09/2008 05/09/2008 05/09/2008

ELECTRONIC NOTICE of Case Assignment. Chief Judge Mark L. Wolf 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 (Patch, Christine) (Entered: 03/14/2008)
2 Summons Issued as to Citifinancial Services Inc., Citigroup, Inc.. Counsel receiving this notice electronically should download this summons, complete one for each defendant and serve it in accordance with Fed.R.Civ.P. 4 and LR 4.1. Summons will be mailed to plaintiff(s) not receiving notice electronically for completion of service. (Patch, Christine) (Entered: 03/14/2008)
3 SUMMONS Returned Executed Citifinancial Services Inc. served on 3/25/2008, answer due 4/14/2008. (Klein, Gary) (Entered: 04/03/2008)
4 SUMMONS Returned Executed Citigroup, Inc. served on 3/27/2008, answer due 4/16/2008. (Klein, Gary) (Entered: 04/07/2008)
5 MOTION for Leave to Appear Pro Hac Vice for admission of Andrew S. Friedman and Wendy J. Harrison Filing fee $ 100, receipt number 01010000000001924362. by Felix Puello. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Klein, Gary) (Entered: 04/11/2008)
6 NOTICE of Appearance by Brenda R. Sharton on behalf of Citifinancial Services Inc., Citigroup, Inc. (Sharton, Brenda) (Entered: 04/14/2008)
7 STIPULATION re 1 Complaint (Joint Stipulation And Order To Extend Time To Answer, Move Or Otherwise Respond To The Complaint) by Felix Puello, Citifinancial Services Inc., Citigroup, Inc.. (Sharton, Brenda) (Entered: 04/14/2008)
8 CORPORATE DISCLOSURE STATEMENT by Citifinancial Services Inc., Citigroup, Inc.. (Sharton, Brenda) (Entered: 04/14/2008)
9 NOTICE of Appearance by Brook L. Ames on behalf of Citifinancial Services Inc., Citigroup, Inc. (Ames, Brook) (Entered: 04/14/2008)
10 Chief Judge Mark L. Wolf: ORDER entered. re 7 Stipulation filed by Citifinancial Services Inc., Felix Puello, Citigroup, Inc. (O'Leary, Dennis) (Entered: 04/15/2008)
Chief Judge Mark L. Wolf: Electronic ORDER entered granting 5 Motion for Leave to Appear Pro Hac Vice; Added Andrew S. Friedman for Felix Puello, Wendy J. Harrison for Felix Puello. Attorneys admitted Pro Hac Vice must register for electronic filing. To register go to the Court website at www.mad.uscourts.gov. Select Forms and then scroll down to CM/ECF Forms. (O'Leary, Dennis) (Entered: 04/15/2008)
11 MOTION for Leave to Appear Pro Hac Vice for admission of Thedore V. Wells, Jr. and Joyce S. Haung Filing fee $ 100, receipt number 01010000000001934480. by Citifinancial Services Inc., Citigroup, Inc.. (Attachments: # 1 Exhibit Exhibit A, # 2 Exhibit Exhibit B)(Ames, Brook) (Entered: 04/22/2008)
Chief Judge Mark L. Wolf: Electronic ORDER entered granting 11 Motion for Leave to Appear Pro Hac Vice; Added Theodore V Wells for Citifinancial Services Inc. and Citigroup, Inc., Joyce S Huang for Citifinancial Services Inc. and Citigroup, Inc.. Attorneys admitted Pro Hac Vice must register for electronic filing. To register go to the Court website at www.mad.uscourts.gov. Select Forms and then scroll down to CM/ECF Forms. (O'Leary, Dennis) (Entered: 04/30/2008)
12 MOTION to Dismiss by Citifinancial Services Inc., Citigroup, Inc..(Sharton, Brenda) (Entered: 05/09/2008)
13 MEMORANDUM in Support re 12 MOTION to Dismiss (Memorandum of Law in Support of Defendants' Motion to Dismiss) filed by Citifinancial Services Inc., Citigroup, Inc.. (Sharton, Brenda) (Entered: 05/09/2008)
14 DECLARATION re 13 Memorandum in Support of Motion (Declaration of Joyce S. Huang) by Citifinancial Services Inc., Citigroup, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7

Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 6 of 17

05/12/2008
05/19/2008 05/20/2008 05/21/2008 05/21/2008
05/29/2008 05/29/2008 05/30/2008 07/21/2008 07/21/2008 07/21/2008 07/21/2008 07/21/2008
07/22/2008
07/24/2008 07/24/2008 07/31/2008

Exhibit G, # 8 Exhibit H)(Sharton, Brenda) (Entered: 05/09/2008)
ELECTRONIC NOTICE issued requesting courtesy copy for 14 Declaration,. Counsel who filed this document are requested to submit a courtesy copy of this document (or documents) to the Clerk's Office by 5/16/2008. These documents must be clearly marked as a Courtesy Copy and reflect the document number assigned by CM/ECF. (O'Leary, Dennis) (Entered: 05/12/2008)
15 Assented to MOTION for Extension of Time to 5/30/08 to File Response/Reply to Defendant's Motion to Dismiss by Felix Puello.(Klein, Gary) (Entered: 05/19/2008)
Chief Judge Mark L. Wolf: Electronic ORDER entered granting 15 Motion for Extension of Time to File Response/Reply re 12 MOTION to Dismiss Responses due by 5/30/2008 (O'Leary, Dennis) (Entered: 05/20/2008)
16 NOTICE by Felix Puello Of Filing First Amended Class Action Complaint (Klein, Gary) (Entered: 05/21/2008)
17 First AMENDED COMPLAINT against all defendants, filed by Cesar V. Candelario, Victoria E. Candelario, Felix Puello. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5)(Klein, Gary) (Entered: 05/21/2008)
18 CORPORATE DISCLOSURE STATEMENT by Citimortgage, Inc.. (Sharton, Brenda) (Entered: 05/29/2008)
19 STIPULATION −Joint Stipulation and Order To Extend Time To Answer, Move or Otherwise Respond to the First Amended Complaint by Citifinancial Services Inc., Citigroup, Inc., Citimortgage, Inc.. (Sharton, Brenda) (Entered: 05/29/2008)
20 Judge Chief Judge Mark L. Wolf: ELECTRONIC ENDORSEMENT re 19 Stipulation filed by Citifinancial Services Inc., Citimortgage, Inc., Citigroup, Inc. (O'Leary, Dennis) (Entered: 05/30/2008)
21 NOTICE of Appearance by Brenda R. Sharton on behalf of CitiMortgage, Inc. (Sharton, Brenda) (Entered: 07/21/2008)
22 NOTICE of Appearance by Brook L. Ames on behalf of CitiMortgage, Inc. (Ames, Brook) (Entered: 07/21/2008)
23 MOTION to Dismiss the First Amended Complaint by Citifinancial Services Inc., Citigroup, Inc., CitiMortgage, Inc..(Sharton, Brenda) (Entered: 07/21/2008)
24 MEMORANDUM in Support re 23 MOTION to Dismiss the First Amended Complaint filed by Citifinancial Services Inc., Citigroup, Inc., CitiMortgage, Inc.. (Sharton, Brenda) (Entered: 07/21/2008)
25 DECLARATION re 24 Memorandum in Support of Motion (Declaration of Joyce S. Huang) by Citifinancial Services Inc., Citigroup, Inc., CitiMortgage, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H)(Sharton, Brenda) (Entered: 07/21/2008)
ELECTRONIC NOTICE issued requesting courtesy copy for 25 Declaration,. Counsel who filed this document are requested to submit a courtesy copy of this document (or documents) to the Clerk's Office by 7/28/2008. These documents must be clearly marked as a Courtesy Copy and reflect the document number assigned by CM/ECF. (O'Leary, Dennis) (Entered: 07/22/2008)
26 NOTICE of Appearance by Joyce S. Huang on behalf of CitiMortgage, Inc. (Huang, Joyce) (Entered: 07/24/2008)
27 NOTICE of Appearance by Theodore Von Wells, Jr on behalf of CitiMortgage, Inc. (Von Wells, Theodore) (Entered: 07/24/2008)
28 MOTION for Extension of Time to 8/8/2008 to File Response/Reply as to 23 MOTION to Dismiss the First Amended Complaint by Cesar V. Candelario, Victoria E. Candelario.(Klein, Gary) (Entered: 07/31/2008)

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08/01/2008 08/07/2008 08/08/2008
08/11/2008 08/11/2008 08/11/2008 08/14/2008 08/19/2008 08/26/2008 08/27/2008 08/27/2008
08/27/2008 09/08/2008 10/03/2008

Chief Judge Mark L. Wolf: Electronic ORDER entered granting 28 Motion for Extension of Time to File Response/Reply re 23 MOTION to Dismiss the First Amended Complaint, 12 MOTION to Dismiss Responses due by 8/8/2008 (O'Leary, Dennis) (Entered: 08/01/2008)
29 Opposition re 23 MOTION to Dismiss the First Amended Complaint filed by Felix Puello, Cesar V. Candelario, Victoria E. Candelario. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3)(Klein, Gary) (Entered: 08/07/2008)
ELECTRONIC NOTICE issued requesting courtesy copy for 29 Opposition to Motion. Counsel who filed this document are requested to submit a courtesy copy of this document (or documents) to the Clerk's Office by 8/14/2008. These documents must be clearly marked as a Courtesy Copy and reflect the document number assigned by CM/ECF. (O'Leary, Dennis) (Entered: 08/08/2008)
30 Cover letter dated 8/11/08 from Michael E. Aleo to Chief Judge Wolf enclosing a Motion for Leave to File an Amicus Curiae Brief, Memorandum in Support of Motion for Leave to File and Amicus Curiae Brief, FILED. (Boyce, Kathy) (Entered: 08/14/2008)
32 MEMORANDUM in Support re 31 MOTION for Leave to File filed by Lawyers' Commitee for Civil Rights Under Law of the Boston Bar Association, FILED, c/s. (Boyce, Kathy) (Entered: 08/14/2008)
33 AMICUS BRIEF filed by Lawyers' Commitee for Civil Rights Under Law of the Boston Bar Association, FILED, c/s. (Boyce, Kathy) (Entered: 08/14/2008)
31 MOTION for Leave to File Amicus Brief by Lawyers' Commitee for Civil Rights Under Law of the Boston Bar Association, FILED, c/s.(Boyce, Kathy) (Entered: 08/14/2008)
34 NOTICE of Hearing on Motion 23 MOTION to Dismiss the First Amended Complaint, 12 MOTION to Dismiss : Motion Hearing set for 10/14/2008 02:30 PM in Courtroom 10 before Chief Judge Mark L. Wolf. (O'Leary, Dennis) (Entered: 08/19/2008)
35 Assented to MOTION for Leave to File Reply Brief in Support of Motion to Dismiss by Citifinancial Services Inc., Citigroup, Inc., CitiMortgage, Inc.. (Attachments: # 1 Defendants' Reply Memorandum of Law in Support of Defendants' Motion to Dismiss the First Amended Complaint)(Sharton, Brenda) (Entered: 08/26/2008)
Chief Judge Mark L. Wolf: Electronic ORDER entered granting 35 Motion for Leave to File; Counsel using the Electronic Case Filing System should now file the document for which leave to file has been granted in accordance with the CM/ECF Administrative Procedures. Counsel must include − Leave to file granted on (date of order)− in the caption of the document. (O'Leary, Dennis) (Entered: 08/27/2008)
36 MEMORANDUM in Support re 23 MOTION to Dismiss the First Amended Complaint Leave to file granted on August 27, 2008 (Defendants' Reply Memorandum of Law in Support of Defendants' Motion to Dismiss the First Amended Complaint Leave to file granted on August 27, 2008) filed by Citifinancial Services Inc., Citigroup, Inc., CitiMortgage, Inc.. (Sharton, Brenda) (Entered: 08/27/2008)
37 First ADDENDUM re 35 Assented to MOTION for Leave to File Reply Brief in Support of Motion to Dismiss Amicus Curiae Brief filed by Lawyers' Commitee for Civil Rights Under Law of the Boston Bar Association. (Aleo, Michael) (Entered: 08/27/2008)
38 DECLARATION Of Gary Klein For The Purpose Of Submitting Supplemental Authority Relevant To Defendants' Motion To Dismiss by Felix Puello, Cesar V. Candelario, Victoria E. Candelario. (Attachments: # 1 Exhibit 1)(Klein, Gary) (Entered: 09/08/2008)
ELECTRONIC NOTICE Canceling Hearing. The Motion Hearing/Scheduling Conference previously set for 10/14/2008 at 3:00 pm has been canceled. (O'Leary,

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02/11/2009 03/03/2009 03/16/2009 03/17/2009 03/17/2009 03/30/2009
03/31/2009
03/31/2009 04/15/2009 04/15/2009 04/20/2009 04/20/2009

Dennis) (Entered: 10/03/2008)
39 DECLARATION of Gary Klein for the Purpose of Submitting Supplemental Authority Directly Relevant to Defendants' Motion to Dismiss by Felix Puello, Cesar V. Candelario, Victoria E. Candelario. (Attachments: # 1 Exhibit 1)(Klein, Gary) (Entered: 02/11/2009)
ELECTRONIC NOTICE of Hearing on Motion 31 MOTION for Leave to File, 23 MOTION to Dismiss the First Amended Complaint, 12 MOTION to Dismiss : Motion Hearing set for 3/20/2009 03:00 PM in Courtroom 10 before Chief Judge Mark L. Wolf. (O'Leary, Dennis) (Entered: 03/03/2009)
40 Assented to MOTION to Continue Hearing On Pending Motions to March 27, 2009 by Citifinancial Services Inc., Citigroup, Inc., CitiMortgage, Inc..(Sharton, Brenda) (Entered: 03/16/2009)
Chief Judge Mark L. Wolf: Electronic ORDER entered granting 40 Motion to Continue. The motion hearing will now be held on 3/30/2009 at 3:00 PM. Please mark your calendars accordingly. (O'Leary, Dennis) (Entered: 03/17/2009)
ELECTRONIC NOTICE of Hearing on Motion 31 MOTION for Leave to File, 23 MOTION to Dismiss the First Amended Complaint : Motion Hearing set for 3/30/2009 03:00 PM in Courtroom 10 before Chief Judge Mark L. Wolf. (O'Leary, Dennis) (Entered: 03/17/2009)
Electronic Clerk's Notes for proceedings held before Chief Judge Mark L. Wolf: Motion Hearing held on 3/30/2009 re 12 MOTION to Dismiss filed by Citifinancial Services Inc., Citigroup, Inc., 23 MOTION to Dismiss the First Amended Complaint filed by CitiMortgage, Inc., Citifinancial Services Inc., Citigroup, Inc., 31 MOTION for Leave to File filed by Lawyers' Commitee for Civil Rights Under Law of the Boston Bar Association. Court listens to oral arguments on the pending motions. Court grants motion to file amicus brief. finds moot motion to dismiss original complaint and denies motion to dismiss amended complaint. Court gives its reasoning from the bench. Court orders the parties to propose a schedule for the remainder of the case by 4/20/09. If necessary a scheduling conference will be held on 4/30/99 at 4:00 pm. Written order to issue. (Court Reporter: Romanow.)(Attorneys present: Counsel of Record) (O'Leary, Dennis) (Entered: 03/31/2009)
41 Chief Judge Mark L. Wolf: ORDER entered. For the reasons stated in court on March 30, 2009, it ishereby ORDERED that: 1. The Motion for Leave to File Amicus Curiae Brief by theLawyers' Committee for Civil Rights Under Law of the Boston Bar Association (Docket No. 31) is ALLOWED. 2. Defendants' Motion to Dismiss (Docket No. 12) is MOOT. 3. Defendants' Motion to Dismiss the First Amended Complaint (Docket No. 23) is DENIED. 4. The parties shall, by April 20, 2009, respond to the attached Notice of Scheduling Conference. 5. Unless otherwise ordered, a scheduling conference will be held on April 30, 2009, at 4:00 p.m. (Attachments: # 1 16b Notice) (O'Leary, Dennis) (Entered: 03/31/2009)
42 NOTICE of Hearing : Scheduling Conference set for 4/30/2009 04:00 PM in Courtroom 10 before Chief Judge Mark L. Wolf. (O'Leary, Dennis) (Entered: 03/31/2009)
43 General Order 09−1, dated January 6, 2009 regarding the E−Government Act and Personal Identifiers entered. (O'Leary, Dennis) (Entered: 04/15/2009)
44 ANSWER to 17 Amended Complaint by Citifinancial Services Inc., Citigroup, Inc., CitiMortgage, Inc..(Sharton, Brenda) (Entered: 04/15/2009)
45 JOINT SUBMISSION pursuant to Local Rule 16.1 / Joint Statement Pursuant to Fed. R. Civ. P. 26(f) and Local Rule 16.1 by Felix Puello, Citifinancial Services Inc., Citigroup, Inc., CitiMortgage, Inc., Cesar V. Candelario, Victoria E. Candelario.(Sharton, Brenda) (Entered: 04/20/2009)
46 CERTIFICATION pursuant to Local Rule 16.1 (d)(3) by Citifinancial Services Inc..(Sharton, Brenda) (Entered: 04/20/2009)

Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 9 of 17

04/20/2009 04/20/2009 04/30/2009 05/01/2009
06/16/2009 06/16/2009 10/22/2009 10/22/2009
11/03/2009 11/12/2009 11/13/2009
11/13/2009 11/13/2009
11/24/2009
11/24/2009
12/15/2009 03/17/2010

47 CERTIFICATION pursuant to Local Rule 16.1 (d)(3) by CitiMortgage, Inc..(Sharton, Brenda) (Entered: 04/20/2009)
48 CERTIFICATION pursuant to Local Rule 16.1 (d)(3) by Citigroup, Inc..(Sharton, Brenda) (Entered: 04/20/2009)
49 Clerk's Notes for proceedings held before Chief Judge Mark L. Wolf: Scheduling Conference held on 4/30/2009. (Court Reporter: Romanow.) (O'Leary, Dennis) (Entered: 05/01/2009)
50 Chief Judge Mark L. Wolf: ORDER entered. SCHEDULING ORDER: Status Conference set for 4/29/2010 03:00 PM in Courtroom 10 before Chief Judge Mark L. Wolf. Amended Pleadings due by 7/31/2009. Discovery to be completed by 3/31/2010. (O'Leary, Dennis) (Entered: 05/01/2009)
52 CERTIFICATION pursuant to Local Rule 16.1 by Felix Puello, Cesar V. Candelario, Victoria E. Candelario.(Klein, Gary) (Entered: 06/16/2009)
53 CERTIFICATION pursuant to Local Rule 16.1 by Felix Puello, Cesar V. Candelario, Victoria E. Candelario.(Klein, Gary) (Entered: 06/16/2009)
54 MOTION to Substitute Party and Motion for Voluntary Dismissal by Joseph A. Baldi.(Cain, Kevin) (Entered: 10/22/2009)
55 MEMORANDUM in Support re 54 MOTION to Substitute Party and Motion for Voluntary Dismissal filed by Joseph A. Baldi. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F)(Cain, Kevin) (Entered: 10/22/2009)
56 Opposition re 54 MOTION to Substitute Party and Motion for Voluntary Dismissal filed by Felix Puello, Cesar V. Candelario, Victoria E. Candelario. (Klein, Gary) (Entered: 11/03/2009)
57 MOTION for Leave to File Reply in Support of Motion to Substitute and Motion for Voluntary Dismissal by Joseph A. Baldi. (Attachments: # 1 Exhibit A)(Cain, Kevin) (Entered: 11/12/2009)
Chief Judge Mark L. Wolf: Electronic ORDER entered granting 57 Motion for Leave to File; Counsel using the Electronic Case Filing System should now file the document for which leave to file has been granted in accordance with the CM/ECF Administrative Procedures. Counsel must include − Leave to file granted on (date of order)− in the caption of the document. (O'Leary, Dennis) (Entered: 11/13/2009)
58 REPLY to Response to 54 MOTION to Substitute Party and Motion for Voluntary Dismissal filed by Joseph A. Baldi. (Cain, Kevin) (Entered: 11/13/2009)
59 MOTION for Leave to File a Memorandum in Response to Plaintiffs' Opposition to Bankruptcy Trustee's Motion to Substitute and Motion for Voluntary Dismissal. by Citifinancial Services Inc., Citigroup, Inc., CitiMortgage, Inc.. (Attachments: # 1 Exhibit A)(Ames, Brook) (Entered: 11/13/2009)
Chief Judge Mark L. Wolf: Electronic ORDER entered granting 59 Motion for Leave to File; Counsel using the Electronic Case Filing System should now file the document for which leave to file has been granted in accordance with the CM/ECF Administrative Procedures. Counsel must include − Leave to file granted on (date of order)− in the caption of the document. (O'Leary, Dennis) (Entered: 11/24/2009)
60 REPLY to Response to 54 MOTION to Substitute Party and Motion for Voluntary Dismissal (DEFENDANTS MEMORANDUM IN RESPONSE TO PLAINTIFFS OPPOSITION TO BANKRUPTCY TRUSTEES MOTION TO SUBSTITUTE AND MOTION FOR VOLUNTARY DISMISSAL) filed by Citifinancial Services Inc., Citigroup, Inc., CitiMortgage, Inc.. (Sharton, Brenda) (Entered: 11/24/2009)
61 STIPULATION re 50 Scheduling Order, by Felix Puello, Cesar V. Candelario, Victoria E. Candelario. (Costello, Kevin) (Entered: 12/15/2009)
Chief Judge Mark L. Wolf: Electronic ORDER entered. re 61 Joint Stipulation to extend scheduling order filed by Victoria E. Candelario, Felix Puello, Cesar V. Candelario. "Allowed."(Boyce, Kathy) (Entered: 03/18/2010)

Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 10 of 17

03/18/2010 04/01/2010 04/16/2010
04/30/2010 05/03/2010
05/12/2010 05/13/2010 05/27/2010 05/28/2010
06/01/2010 06/02/2010 06/04/2010
06/04/2010

Reset Deadlines: Discovery to be completed by 6/25/2010. Status Report due by 7/16/2010. (Boyce, Kathy) (Entered: 03/18/2010)
ELECTRONIC NOTICE OF RESCHEDULING Status Conference set for 8/12/2010 03:00 PM in Courtroom 10 before Chief Judge Mark L. Wolf. (O'Leary, Dennis) (Entered: 04/01/2010)
62 Chief Judge Mark L. Wolf: MEMORANDUM AND ORDER entered. Accordingly, it is hereby ORDERED that:1. The Trustee's Motion to Substitute and Motion for Voluntary Dismissal (Docket No. 54) is ALLOWED. The Trustee is SUBSTITUTED for the Candelarios, and the Candelarios' individual claims against defendants are DISMISSED with prejudice. 2. If the remaining plaintiff wishes to move for leave to amend the complaint to add or substitute one or more new named plaintiffs, he shall do so by May 14, 2010. If defendants oppose any such motion and the court has not denied the motion, they shall complete discovery concerning any proposed new plaintiff by the previously established June 26, 2010 deadline. All other deadlines remain in tact. (O'Leary, Dennis) (Entered: 04/16/2010)
63 MOTION for Leave to File Second Amended Class Action Complaint, Substitute Plaintiffs and Drop Parties (Unopposed) by Felix Puello. (Attachments: # 1 Exhibit 1)(Klein, Gary) (Entered: 04/30/2010)
Chief Judge Mark L. Wolf: ELECTRONIC ORDER entered granting 63 Motion for Leave to File Second Amended Class Action Complaint, Substitute Plaintiffs and Drop Parties; Counsel using the Electronic Case Filing System should now file the document for which leave to file has been granted in accordance with the CM/ECF Administrative Procedures. Counsel must include − Leave to file granted on (date of order)− in the caption of the document. (O'Leary, Dennis) (Entered: 05/03/2010)
64 AMENDED COMPLAINT against CitiMortgage, Inc., Citigroup, Inc., filed by Shatonya Harris, Mateo Huerta, Kevin Nicholson.(Klein, Gary) (Entered: 05/12/2010)
65 MOTION for Extension of Time to Extend Scheduling Order by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 Attachment − Gary Klein Declaration, # 2 Text of Proposed Order)(Klein, Gary) (Entered: 05/13/2010)
66 Opposition re 65 MOTION for Extension of Time to Extend Scheduling Order filed by CitiMortgage, Inc., Citigroup, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D)(Sharton, Brenda) (Entered: 05/27/2010)
ELECTRONIC NOTICE issued requesting courtesy copy for 66 Opposition to Motion. Counsel who filed this document are requested to submit a courtesy copy of this document (or documents) to the Clerk's Office by 6/1/2010. These documents must be clearly marked as a Courtesy Copy and reflect the document number assigned by CM/ECF. (O'Leary, Dennis) (Entered: 05/28/2010)
67 ANSWER to 64 Amended Complaint (Defendants' Answer and Affirmative Defenses to Plaintiffs' Second Amended Class Action Complaint) by CitiMortgage, Inc., Citigroup, Inc..(Sharton, Brenda) (Entered: 06/01/2010)
68 MOTION for Leave to File Reply to Defendants' Opposition to Motion to Extend Scheduling Order (Unopposed) by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 [Proposed] Reply)(Klein, Gary) (Entered: 06/02/2010)
Chief Judge Mark L. Wolf: ELECTRONIC ORDER entered granting 68 Motion for Leave to File Document ; Counsel using the Electronic Case Filing System should now file the document for which leave to file has been granted in accordance with the CM/ECF Administrative Procedures. Counsel must include − Leave to file granted on (date of order)− in the caption of the document. (O'Leary, Dennis) (Entered: 06/04/2010)
69 REPLY to Response to 65 MOTION for Extension of Time to Extend Scheduling Order filed by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1

Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 11 of 17

06/25/2010 06/25/2010 06/25/2010 10/06/2010 10/08/2010 10/15/2010 10/18/2010 10/27/2010 10/27/2010 11/02/2010
11/12/2010 11/12/2010

Exhibit 1, # 2 Exhibit 2)(Klein, Gary) (Entered: 06/04/2010)
70 Proposed Stipulation Protective Order, FILED, C/S. (Attachments: # 1 Exhibit A)(Sharton, Brenda) Docket entry text Modified on 6/25/2010 to correctly name the document (Boyce, Kathy). (Entered: 06/25/2010)
Chief Judge Mark L. Wolf: ELECTRONIC ORDER entered granting 65 Motion for Extension of Time to Extend Scheduling Order (O'Leary, Dennis) (Entered: 06/25/2010)
71 Chief Judge Mark L. Wolf: ORDER entered. SCHEDULING ORDER: Status Conference set for 2/10/2011 04:00 PM in Courtroom 10 before Chief Judge Mark L. Wolf. Discovery to be completed by 1/14/2011. Status Report due by 2/4/2011.(O'Leary, Dennis) (Entered: 06/25/2010)
72 MOTION to Compel Defendants to Produce Documents and Memorandum of Points and Authorities in Support Thereof by Shatonya Harris, Mateo Huerta, Kevin Nicholson.(Klein, Gary) (Entered: 10/06/2010)
73 Chief Judge Mark L. Wolf: ORDER entered. REFERRING CASE to Magistrate Judge Robert B. Collings Referred for: MOTION TO COMPEL Motions referred: 72 MOTION to Compel Defendants to Produce Documents and Memorandum of Points and Authorities in Support Thereof (O'Leary, Dennis) Motions referred to Robert B. Collings. (Entered: 10/08/2010)
74 Assented to MOTION for Extension of Time to October 28, 2010 to File Response/Reply as to 72 MOTION to Compel Defendants to Produce Documents and Memorandum of Points and Authorities in Support Thereof by CitiMortgage, Inc., Citigroup, Inc..(Sharton, Brenda) (Entered: 10/15/2010)
Magistrate Judge Robert B. Collings: ELECTRONIC ORDER entered granting 74 Motion for Extension of Time to File Response/Reply; Responses due by 10/28/2010. (Dolan, Kathleen) (Entered: 10/18/2010)
75 Opposition re 72 MOTION to Compel Defendants to Produce Documents and Memorandum of Points and Authorities in Support Thereof filed by CitiMortgage, Inc., Citigroup, Inc.. (Sharton, Brenda) (Entered: 10/27/2010)
76 DECLARATION re 75 Opposition to Motion (Declaration of Brenda R. Sharton in Support of Defendants' Opposition to Plaintiffs' Motion to Compel Defendants to Produce Documents) by CitiMortgage, Inc., Citigroup, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G)(Sharton, Brenda) (Entered: 10/27/2010)
Magistrate Judge Robert B. Collings: ELECTRONIC PROCEDURAL ORDER entered re 72 MOTION to Compel Defendants to Produce Documents and Memorandum of Points and Authorities in Support Thereof filed by Kevin Nicholson, Mateo Huerta, Shatonya Harris. The defendants have produced a sworn affidavit by their counsel asserting that there was an agreement as to the scope of documentary evidence which the defendants were to produce, that defendants produced the agreed−upon discovery and now the plaintiffs, in derogation of the agreement, are seeking more documents. No sworn affidavit has been submitted by plaintiffs' counsel controverting these assertions. If the assertions are controverted, plaintiffs' counsel shall file a sworn affidavit or affidavits setting forth the facts which form the basis of their position. The affidavit(s) shall be filed on or before the close of business on November 12, 2010. (Entered: 11/02/2010)
77 DECLARATION re 72 MOTION to Compel Defendants to Produce Documents and Memorandum of Points and Authorities in Support Thereof by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C)(Klein, Gary) (Entered: 11/12/2010)
78 MOTION for Leave to File Reply in Support of Plaintiffs' Motion to Compel Defendants to Produce Documents by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 [Proposed] Reply)(Klein, Gary) (Entered: 11/12/2010)

Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 12 of 17

11/19/2010 12/07/2010
12/07/2010 12/15/2010 12/16/2010
12/19/2010 12/20/2010 12/20/2010 12/21/2010 12/21/2010
01/10/2011 01/10/2011 01/13/2011
01/13/2011 02/11/2011

79 STIPULATION re 71 Scheduling Order by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 Text of Proposed Order)(Klein, Gary) (Entered: 11/19/2010)
Magistrate Judge Robert B. Collings: ELECTRONIC ORDER entered granting 78 Motion for Leave to File Document, no opposition having been filed. Counsel using the Electronic Case Filing System should now file the document for which leave to file has been granted in accordance with the CM/ECF Administrative Procedures. Counsel must include − Leave to file granted on (date of order)− in the caption of the document. (Irwin, Nancy) (Entered: 12/07/2010)
80 REPLY to Response to 72 MOTION to Compel Defendants to Produce Documents and Memorandum of Points and Authorities in Support Thereof filed by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 Exhibit A)(Klein, Gary) (Entered: 12/07/2010)
ELECTRONIC NOTICE OF RESCHEDULINGThe Status Conference previously set for 2/10/2011 at 3:00 PM is now set for 2/15/2011 03:00 PM in Courtroom 10 before Chief Judge Mark L. Wolf. (O'Leary, Dennis) (Entered: 12/15/2010)
ELECTRONIC NOTICE Setting Hearing on Motion 72 MOTION to Compel Defendants to Produce Documents and Memorandum of Points and Authorities in Support Thereof : Motion Hearing set for 12/30/2010 at 11:00 AM in Courtroom 23 before Magistrate Judge Robert B. Collings. (Dolan, Kathleen) (Entered: 12/16/2010)
ELECTRONIC ENDORSEMENT re 79 Stipulation filed by Kevin Nicholson, Mateo Huerta, Shatonya Harris. ALLOWED. (O'Leary, Dennis) (Entered: 12/20/2010)
81 Chief Judge Mark L. Wolf: ORDER entered. SCHEDULING ORDER: Case Management Conference set for 6/23/2011 04:00 PM in Courtroom 10 before Chief Judge Mark L. Wolf. Discovery to be completed by 5/23/2011. Status Report due by 6/9/2011.(O'Leary, Dennis) (Entered: 12/20/2010)
82 MOTION To Reschedule Hearing on Plaintiffs' Motion to Compel (Unopposed) by CitiMortgage, Inc., Citigroup, Inc..(Sharton, Brenda) (Entered: 12/20/2010)
Magistrate Judge Robert B. Collings: ELECTRONIC ORDER entered granting 82 Motion to Reschedule hearing on Motion to Compel. Hearing re−scheduled to 1/11/11 at 2:00 P.M. (Dolan, Kathleen) (Entered: 12/21/2010)
ELECTRONIC NOTICE Setting Hearing on Motion 72 MOTION to Compel Defendants to Produce Documents and Memorandum of Points and Authorities in Support Thereof : Motion Hearing set for 1/11/2011 at 02:00 PM in Courtroom 23 before Magistrate Judge Robert B. Collings. (Dolan, Kathleen) (Entered: 12/21/2010)
83 STIPULATION Joint Stipulation to Suspend Deadlines and Abate Discovery Hearing Scheduled for January 11, 2011 to Allow for Mediation by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Klein, Gary) (Entered: 01/10/2011)
Magistrate Judge Robert B. Collings: ELECTRONIC ORDER entered approving in part 83 Stipulation filed by Kevin Nicholson, Mateo Huerta, Shatonya Harris. As to the 1/11/11 @ 2:00 PM Hearing; the hearing is continued generally. (Russo, Noreen) (Entered: 01/10/2011)
ELECTRONIC ENDORSEMENT re 83 Stipulation filed by Kevin Nicholson, Mateo Huerta, Shatonya Harris Allowed as to the request to abate discovery. The parties shall report the results of the mediation within 30 days. If the case is not settled, the parties shall also prepare a new proposed schedule for the remainder of the case. This case is otherwise stayed.(Hohler, Daniel) (Entered: 01/13/2011)
Chief Judge Mark L. Wolf: ELECTRONIC ORDER entered. Case stayed.(Hohler, Daniel) (Entered: 01/13/2011)
84 STATUS REPORT (Joint) by CitiMortgage, Inc., Citigroup, Inc., Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Ames, Brook) (Entered: 02/11/2011)

Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 13 of 17

04/19/2011 04/19/2011 06/03/2011 06/06/2011 07/11/2011 08/01/2011 08/01/2011 08/01/2011 12/02/2011 12/21/2011 12/21/2011
12/22/2011

Remark: It appearing that this case has been settled, the file is returned to the Clerk's Office and is no longer referred to Magistrate Judge Robert B. Collings. (Dolan, Kathleen) (Entered: 04/19/2011)
Case no longer referred to Magistrate Judge Robert B. Collings. (Dolan, Kathleen) (Entered: 04/19/2011)
85 STATUS REPORT (Joint) by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Klein, Gary) (Entered: 06/03/2011)
Chief Judge Mark L. Wolf: ELECTRONIC ORDER entered. Stay extended until 7/11/2011. The hearing scheduled for 6/23/2011 is canceled. No new date has been set. re 85 Status Report filed by Kevin Nicholson, Mateo Huerta, Shatonya Harris (Hohler, Daniel) (Entered: 06/06/2011)
86 Joint MOTION for Extension of Time to August 1, 2011 to Continue Stay of Litigation by CitiMortgage, Inc., Citigroup, Inc., Shatonya Harris, Mateo Huerta, Kevin Nicholson.(Ames, Brook) (Entered: 07/11/2011)
87 MOTION For Preliminary Approval of Class Action Settlement (Unopposed) by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 Exhibit A − [Proposed] Preliminary Approval Order)(Klein, Gary) (Entered: 08/01/2011)
88 MEMORANDUM in Support re 87 MOTION For Preliminary Approval of Class Action Settlement (Unopposed) filed by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 Exhibit 1 − Declaration of Gary Klein, # 2 Exhibit 2 − Declaration of Wendy J. Harrison)(Klein, Gary) (Entered: 08/01/2011)
89 NOTICE of Settlement by Shatonya Harris, Mateo Huerta, Kevin Nicholson (Attachments: # 1 Attachment − Settlement Agreement)(Klein, Gary) (Entered: 08/01/2011)
ELECTRONIC NOTICE Setting Hearing on Motion 87 MOTION For Preliminary Approval of Class Action Settlement (Unopposed) : Motion Hearing set for 12/21/2011 03:00 PM in Courtroom 10 before Chief Judge Mark L. Wolf. (Hohler, Daniel) (Entered: 12/02/2011)
ELECTRONIC NOTICE of Hearing.Hearing set for 2/15/2012 03:30 PM in Courtroom 10 before Chief Judge Mark L. Wolf. (Hohler, Daniel) (Entered: 12/21/2011)
ELECTRONIC Clerk's Notes for proceedings held before Chief Judge Mark L. Wolf: Hearing re Preliminary Settlement Hearing held on 12/21/2011.Court is in session. Parties identify themselves. Court hears the parties on motion for preliminary approval of settlement. Court denies the motion without prejudice. Court is in recess. Defendants to provide affidavit. Proposed notice revised to describe claims not released and names of firms and contact information. Filings due 1/20/2012. Further hearing is scheduled for 2/15/2012 at 3:30 pm. (Court Reporter: Richard Romanow at bulldog@richromanow.com.)(Attorneys present: Klein, Sharton, Ames) (Hohler, Daniel) (Entered: 12/21/2011)
90 Chief Judge Mark L. Wolf: ORDER entered denying 87 Motion As stated in court on December 21, 2011, it is hereby ORDERED that: 1. The Plaintiffs' Motion for Preliminary Approval of Class Action Settlement (Docket No. 87) is DENIED without prejudice. 2. By January 20, 2012: (a) Plaintiffs shall file any renewed Motion for Preliminary Approval of Class Action Settlement and a supplemental memorandum in support of that Motion. The memorandum shall, among other things, provide the relevant current law concerning the standards the court must apply when deciding whether to preliminarily certify a class for settlement purposes in light of Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997); address the issues concerning class certification arising from the Supreme Court's decision in Wal−Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), see Rodriguez v. National City Bank, No. 08−2059, 2011 WL 5041355, at *4−7 (E.D. Pa. Oct. 24, 2011); provide by affidavit a factual basis for the claim that class certification is appropriate; address the estimated number of class members for whom the plaintiffs' counsel believes it has a current address; state whether and why $100,000 in credit counseling is sufficient for this class. (b) Plaintiffs shall also address whether the court should appoint an expert or special master, at the parties'

Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 14 of 17

01/04/2012 01/18/2012 01/18/2012 01/19/2012 01/25/2012 01/26/2012 01/30/2012 01/30/2012
01/30/2012
01/30/2012

expense, to gather information and provide the court with advice concerning the plaintiffs' request for conditional certification of a class for settlement purposes and preliminary approval of the proposed class action settlement. See Manual for Complex Litigation, Fourth, §21.632, at 321. (c) Plaintiffs shall submit revised proposed Class Notices for the Non−Wholesale and Wholesale subclasses. The revised proposed Notices shall describe to the class members the nature of claims which would not be released pursuant to the Settlement Agreement, including claims under the Home Affordable Modification Program ("HAMP"). Such Notices shall also include the name and contact information of the plaintiffs' counsel. (d) Defendants shall file an affidavit describing the actions they have taken pursuant to Section 2.3(b) of the Settlement Agreement, which is described on page 2 of the proposed Class Notice, to develop and continue an "enhanced Fair Lending Policy" that addresses the claims raised by the Plaintiffs in this litigation, to retain and continue to retain an expert in fair lending practices to develop a fair lending training program, and to train and retrain as necessary all employees involved in mortgage loan origination with respect to fair lending practices. 3. A hearing to address any renewed Motion for Preliminary Approval of a Class Action Settlement shall be held on February 15, 2012, at 3:30 p.m. (Hohler, Daniel) (Entered: 12/22/2011)
ELECTRONIC NOTICE of Hearing.Hearing set for 2/15/2012 03:30 PM in Courtroom 10 before Chief Judge Mark L. Wolf. (Hohler, Daniel) (Entered: 01/04/2012)
91 Joint MOTION for Extension of Time to January 30, 2012 to file supplemental papers in support of the Motion for Preliminary Approval of Class Action Settlement by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 [Proposed] Order)(Klein, Gary) (Entered: 01/18/2012)
Chief Judge Mark L. Wolf: ELECTRONIC ORDER entered granting 91 Motion for Extension of Time (Hohler, Daniel) (Entered: 01/18/2012)
92 NOTICE of Appearance by Katherine A. Borden on behalf of CitiMortgage, Inc., Citifinancial Services Inc., Citigroup, Inc. (Borden, Katherine) (Entered: 01/19/2012)
93 NOTICE of Change of Address or Firm Name by Gary E. Klein (Klein, Gary) (Entered: 01/25/2012)
94 NOTICE of Withdrawal of Appearance by Brook L. Ames (Ames, Brook) (Entered: 01/26/2012)
95 MOTION for Preliminary Approval of Class Action Settlement (Renewed and Unopposed) re 90 Order on Motion for Miscellaneous Relief,,,,,,,,,,, by Shatonya Harris, Mateo Huerta, Kevin Nicholson.(Klein, Gary) (Entered: 01/30/2012)
96 DECLARATION re 95 MOTION for Preliminary Approval of Class Action Settlement (Renewed and Unopposed) re 90 Order on Motion for Miscellaneous Relief,,,,,,,,,,, of Gary Klein Regarding Foreclosure Counseling Programs Included in Settlement by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Klein, Gary) (Entered: 01/30/2012)
97 NOTICE by Shatonya Harris, Mateo Huerta, Kevin Nicholson re 95 MOTION for Preliminary Approval of Class Action Settlement (Renewed and Unopposed) re 90 Order on Motion for Miscellaneous Relief,,,,,,,,,,, of Filing of Revised Proposed Class Notices (Attachments: # 1 Redlined Proposed Class Notice for the Non−Wholesale Subclass, # 2 Redlined Proposed Class Notice for the Wholesale Subclass, # 3 Final Proposed Class Notice for the Non−Wholesale Subclass, # 4 Final Proposed Class Notice for the Wholesale Subclass)(Klein, Gary) (Entered: 01/30/2012)
98 DECLARATION re 95 MOTION for Preliminary Approval of Class Action Settlement (Renewed and Unopposed) re 90 Order on Motion for Miscellaneous Relief,,,,,,,,,,, of William Dyson by CitiMortgage, Inc., Citifinancial Services Inc., Citigroup, Inc.. (Sharton, Brenda) (Entered: 01/30/2012)

Case: 1:08-cv-10417 As of: 08/04/2014 09:35 AM EDT 15 of 17

01/30/2012 01/30/2012 02/15/2012
02/15/2012 02/16/2012 02/16/2012 02/24/2012 03/06/2012 03/06/2012 04/06/2012
04/06/2012
04/06/2012 04/26/2012

99 Joint AFFIDAVIT in Support re 95 MOTION for Preliminary Approval of Class Action Settlement (Renewed and Unopposed) re 90 Order on Motion for Miscellaneous Relief,,,,,,,,,,, filed by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Klein, Gary) (Entered: 01/30/2012)
100 MOTION for Leave to File Excess Pages in Support of Preliminary Approval Settlement by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 Revised and Supplemented Memorandum in Support of Unopposed Motion for Preliminary Approval of Class Action Settlement)(Klein, Gary) (Entered: 01/30/2012)
Clerk's Notes for proceedings held before Chief Judge Mark L. Wolf: Hearing re Preliminary Settlement Hearing held on 2/15/2012. Court is in session. Parties identify themselves. Court hears from the parties on issues relating to the preliminary settlement. Court preliminarily approves settlement. Final Settlement Hearing 8/9/2012, 3:00 p.m. Separate order to issue. Court is in recess. (Court Reporter: Richard Romanow at bulldog@richromanow.com.)(Attorneys present: Rossman, Klein, Sharton, Borden) (Hohler, Daniel) (Entered: 02/15/2012)
ELECTRONIC NOTICE of Hearing.Hearing set for 8/9/2012 03:00 PM in Courtroom 10 before Chief Judge Mark L. Wolf. (Hohler, Daniel) (Entered: 02/15/2012)
101 Chief Judge Mark L. Wolf: PRELIMINARY APPROVAL ORDER entered. Counsel are advised that the court has modified p.4 of the document identified in the footer as LIBA/2195311.2 and p. 5 of the document identified in the footer as LIBA/2195312.2. Both of these documents are attachments to this Preliminary Approval Order (Hohler, Daniel) (Entered: 02/16/2012)
102 TRANSCRIPT ORDER FORM by Shatonya Harris, Mateo Huerta, Kevin Nicholson for proceedings held on 12/21/2011 and 02/15/2012 Judge Chief Judge Mark L. Wolf.. (Klein, Gary) (Entered: 02/16/2012)
103 Joint MOTION to Amend 101 Order, by Shatonya Harris, Mateo Huerta, Kevin Nicholson.(Klein, Gary) (Entered: 02/24/2012)
104 Chief Judge Mark L. Wolf: ORDER entered granting 103 Motion to Amend. See attached order. (Hohler, Daniel) (Entered: 03/06/2012)
105 Chief Judge Mark L. Wolf: PRELIMINARY APPROVAL ORDER entered. (Hohler, Daniel) (Entered: 03/06/2012)
106 Transcript of Preliminary Approval of Settlement Hearing held on December 12, 2011, before Chief Judge Mark L. Wolf. The Transcript may be purchased through the Court Reporter, viewed at the public terminal, or viewed through PACER after it is released. Court Reporter Name and Contact Information: Richard Romanow at bulldog@richromanow.com Redaction Request due 4/27/2012. Redacted Transcript Deadline set for 5/7/2012. Release of Transcript Restriction set for 7/5/2012. (Scalfani, Deborah) (Entered: 04/06/2012)
107 Transcript of Preliminary Approval of Settlement Hearing (Continued) held on February 12, 2012, before Chief Judge Mark L. Wolf. The Transcript may be purchased through the Court Reporter, viewed at the public terminal, or viewed through PACER after it is released. Court Reporter Name and Contact Information: Richard Romanow at bulldog@richromanow.com Redaction Request due 4/27/2012. Redacted Transcript Deadline set for 5/7/2012. Release of Transcript Restriction set for 7/5/2012. (Scalfani, Deborah) (Entered: 04/06/2012)
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, available on the court website at http://www.mad.uscourts.gov/attorneys/general−info.htm (Scalfani, Deborah) (Entered: 04/06/2012)
108 Letter/request (non−motion) from Brenda Stewart Opting Out of Settlement outlined in Preliminary Approval Order 105 . (MacDonald, Gail) (Entered: 04/30/2012)

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111 NOTICE of Objection to Settlement from Fannie LeFlore of Milwaukee, Wisconsin. (MacDonald, Gail) (Entered: 05/23/2012)
113 Objection to 105 Proposed Settlement. (Attachments: # 1 Affidavit)(MacDonald, Gail) (Entered: 06/04/2012)
114 Letter/request (non−motion) from Carrie M. Riley. (MacDonald, Gail) (Entered: 06/07/2012)
116 MOTION for Leave to File Excess Pages Plaintiffs' Unopposed Motion for Leave to File Excess Pages by Shatonya Harris, Mateo Huerta, Kevin Nicholson.(Klein, Gary) (Entered: 07/25/2012)
117 Chief Judge Mark L. Wolf: ELECTRONIC ORDER entered granting 116 Motion for Leave to File Excess Pages ; Counsel using the Electronic Case Filing System should now file the document for which leave to file has been granted in accordance with the CM/ECF Administrative Procedures. Counsel must include − Leave to file granted on (date of order)− in the caption of the document. (Hohler, Daniel) (Entered: 07/25/2012)
118 Assented to MOTION for Settlement Approval (Final) of Class Action Settlement and for Approval of Payment of Attorneys' Fees, Costs and Service Payments to Class Representatives by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 Exhibit 1 − Proposed Order with Exhibit)(Klein, Gary) (Entered: 07/26/2012)
119 MEMORANDUM in Support re 118 Assented to MOTION for Settlement Approval (Final) of Class Action Settlement and for Approval of Payment of Attorneys' Fees, Costs and Service Payments to Class Representatives filed by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Klein, Gary) (Entered: 07/26/2012)
120 MEMORANDUM in Support re 118 Assented to MOTION for Settlement Approval (Final) of Class Action Settlement and for Approval of Payment of Attorneys' Fees, Costs and Service Payments to Class Representatives specific to Approval of Payment of Attorneys' Fees, Costs and Service Payments to Class Representatives filed by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Klein, Gary) (Entered: 07/26/2012)
121 AFFIDAVIT in Support re 118 Assented to MOTION for Settlement Approval (Final) of Class Action Settlement and for Approval of Payment of Attorneys' Fees, Costs and Service Payments to Class Representatives (Joint Declaration of Class Counsel) filed by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8)(Klein, Gary) (Entered: 07/26/2012)
122 AFFIDAVIT of Kevin Costello Regarding Class Member Correspondence in Support re 118 Assented to MOTION for Settlement Approval (Final) of Class Action Settlement and for Approval of Payment of Attorneys' Fees, Costs and Service Payments to Class Representatives filed by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15)(Klein, Gary) (Entered: 07/26/2012)
123 AFFIDAVIT of L. Stephens Tilghman, Settlement Administrator, Concerning Notification in Support re 118 Assented to MOTION for Settlement Approval (Final) of Class Action Settlement and for Approval of Payment of Attorneys' Fees, Costs and Service Payments to Class Representatives filed by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Klein, Gary) (Entered: 07/26/2012)
124 AFFIDAVIT of Hon. Edward A. Infante (Ret.) in Support re 118 Assented to MOTION for Settlement Approval (Final) of Class Action Settlement and for Approval of Payment of Attorneys' Fees, Costs and Service Payments to Class Representatives filed by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Klein, Gary) (Entered: 07/26/2012)

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125 CERTIFICATE OF SERVICE pursuant to LR 5.2 by Shatonya Harris, Mateo Huerta, Kevin Nicholson re 120 Memorandum in Support of Motion, 123 Affidavit in Support of Motion, 124 Affidavit in Support of Motion, 121 Affidavit in Support of Motion, 119 Memorandum in Support of Motion, 118 Assented to MOTION for Settlement Approval (Final) of Class Action Settlement and for Approval of Payment of Attorneys' Fees, Costs and Service Payments to Class Representatives, 122 Affidavit in Support of Motion,, . (Harrison, Wendy) (Entered: 07/26/2012)
126 STIPULATION Joint Stipulation Concerning Release by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Klein, Gary) (Entered: 08/09/2012)
127 EXHIBIT re 126 Stipulation Exhibit A by Shatonya Harris, Mateo Huerta, Kevin Nicholson. (Klein, Gary) (Entered: 08/09/2012)
128 Chief Judge Mark L. Wolf: ORDER entered. FINAL APPROVAL ORDER AND JUDGMENT (Hohler, Daniel) (Entered: 08/10/2012)
Civil Case Terminated. (Hohler, Daniel) (Entered: 08/10/2012)