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U.S. Bank Direct Loans Settlement

WBSV is pleased to announce that the Court has preliminarily approved a $92,000,000.00 class action settlement in Thomas v. U.S. Bank National Association, Case No. 1216-CV20561. U.S. Bank National Association and U.S. Bank National Association ND (collectively “U.S. Bank”) have agreed to pay $92,000,000.00 to settle the claims of over 2,400 class members who obtained aproximately 1,500 second mortgage loans that were purchased by, assigned to, or serviced by U.S. Bank. Class Members who do not exclude themselves from the settlement will receive a substantial payment ranging from an estimated $250.00 to $142,257.20 ($33,499.25 on average).

The claims asserted against U.S. Bank in the Thomas case were originally asserted in five separate class action lawsuits, and this settlement will resolve the “Released Claims” against U.S. Bank in each of those cases. Because the Missouri law claims filed against the other defendants in those five class action lawsuits have yet to be resolved, those five lawsuits will remain pending. For more information about those underlying lawsuits, you can click on the case names below:

Class Members can see what we currently estimate the amount of their settlement payment to be by accessing the Proposed Distribution Schedule. To access the Proposed Distribution Schedule for your settlement benefit, click here.

The Circuit Court of Jackson County has entered its order giving final approval to the Settlement Agreement reached with U.S. Bank in DeAnthony Thomas and Susan Jelinek-Thomas, et al. v. U.S. Bank National Association ND and U.S. Bank National Association. The order will become final on December 26, and we anticipate sending distribution checks to Settlement Class Members beginning sometime in late January or early February, 2013.

On November 13, 2013, our firm filed a Motion to Enforce Settlement Agreement ( Motion to Enforce ) with the Circuit Court of Jackson County, Missouri, at Independence. The Motion to Enforce was filed in connection with 140 U.S. Bank Direct Loans that the Defendants are seeking to mischaracterize as being Active Loans for purposes of the Settlement and Release Agreement that the Circuit Court approved on November 16, 2012.

The Defendants are withholding full payment on the settled claims arising from these 140 loans. The Defendants contend that principal balances are still owed on each of the loans even though the Defendants had previously written off those balances and/or had otherwise ceased to actively collect the same. By mischaracterizing these 140 loans as “Active Loans,” the Defendants are attempting to reduce and in many instances eliminate entirely the monetary payment to the Class Members on the 140 loans by deducting the principal balances that Defendants say were never paid. Our firm believes that the Defendants’ mischaracterization of the loans and THEIR decision to withhold what we calculate to be the full payment DUE on the loans constitute violations of the Settlement Agreement and the Court’s November 16, 2012 Judgment.

Attempts to resolve the dispute over the 140 U.S. Bank Direct Loans have not been successful. Accordingly, we have initiated further litigation against the Defendants to resolve the “Active Loans” dispute by filing the Motion to Enforce. In doing so, we have requested the Court to enforce the Settlement Agreement and its Judgment to require the Defendants to make full payment on the affected U.S. Bank Direct Loans without any deduction for allegedly unpaid principal. The Defendants will have an opportunity to file their response to the Motion to Enforce, and we will have the ability to respond to what the Defendants say by filing a separate reply. After the issue has been fully briefed, the Court will make a ruling and decide whether any or all of the 140 loans are “Active Loans” or whether the Judgment must be vacated as to some or all of those 140 loans. If the latter occurs, we will seek to reform the Settlement Agreement to provide that none of the 140 loans is an “Active Loan” and/or sue the Defendants for fraud.

At this time, there is no timetable for the completion of the briefing, nor for the Court to rule on the Motion to Enforce. A copy of the Motion to Enforce can be viewed here.

On April 17, 2014 and April 18, 2014, we appeared before Judge Charles H. McKenzie and presented oral arguments in support of Plaintiffs’ Motions to Enforce Settlement Agreement and Judgment on the Active loans issue. Defendants U.S. Bank NA and U.S. Bank NA ND offered arguments in opposition. Judge McKenzie stated that he was taking the matter under advisement and asked for hard copies of all of the exhibits. In addition, both sides must draft proposed Orders and submit them to the Court for review.

On November 4, 2015, the Court of Appeals for the Western District of Missouri issued its Mandate affirming the Judgment of the Circuit Court of Jackson County, Missouri, relating to Plaintiffs’ Motion to Enforce Settlement Agreement and Judgment on the Active Loans issue. The underlying Judgment entered by the Circuit Court rejected our argument that the term “Active Loan” as used in the Settlement Agreement was ambiguous and should be read to exclude those loans that had ceased to be paid and were no longer “active.”

Under the Circuit Court’s decision, as affirmed by the Court of Appeals, U.S. Bank is entitled to offset and reduce the amount of any Valid Claim by the “principal indebtedness outstanding,” which refers to the principal amount of the loan that was never repaid. While the outcome of the Motion to Enforce and the subsequent appeal are disappointing, the decision is consistent with Missouri law that a violation of the MSMLA does not relieve the borrower from the obligation to repay the loan principal. However, under the terms of the Settlement, the Settling Defendants must acknowledge that the unpaid loan principal for each Active Loan has been paid in full and file a release of any mortgage lien associated with each Active Loan.

A detailed letter is being sent to all affected class members to provide more information regarding the Circuit Court’s Judgment and the Mandate of the Court of Appeals.

Affected class members can see the amount that the Settling Defendants assert to be still owed and outstanding on their respective loans by clicking click here and typing in their social security number. Affected class members will also be able to see the net amount, if any, that they will receive if the amount of the offset that U.S. Bank is claiming for the unpaid principal debt does not change.

Links to Settlement Documents:


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