Opinion ID: 2751916
Heading Depth: 3
Heading Rank: 2

Heading: Pick-a-Payment Settlement

Text: In the meantime, Wells Fargo settled a California class action lawsuit in May 2011. The plaintiffs in that suit had alleged that Pick-a-Payment loans violated the Truth-in-Lending Act because the loan documents failed to adequately disclose to borrowers certain loan conditions, including interest rates and payment schedules. The class action settlement agreement specified three categories of Pick-a-Payment borrowers, and the parties agree that Foley is a member of Settlement Class B. -4- A few of the settlement agreement's terms, as they apply to Settlement Class B members, are relevant to Foley's case. The agreement provides: Settlement Class B Members . . . first shall be considered for a HAMP modification. . . . [Those] who do not qualify for or elect not to accept a HAMP modification shall be considered for a MAP2R modification. MAP2R was a new proprietary modification program Wells Fargo created specifically for the settlement, and the step-by-step eligibility determination process for MAP2R (called the waterfall process) was spelled out in the agreement. The bank was required to apply seven specific (and rather complicated) sequential steps until a debt-to-income ratio of 31 percent was reached for the borrower. But if the bank followed the waterfall and could not reach 31 percent, it was not required to offer a MAP2R modification. The settlement agreement also imposed certain servicing commitments, created, according to the agreement, [i]n order to ensure that Borrowers are appropriately considered for a MAP2R Modification in a timely manner. The agreement required, for instance, that Wells Fargo provide class members with clear, written explanations of modification denials, and in any foreclosure-related communications, a notification that the borrower was still being considered for a modification. -5-