Pemberton

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA 10 MICHAEL PEMBERTON and Case No. 14-cv-01024-BAS (MSB) SANDRA COLLINS PEMBERTON, individually and on behalf of others ORDER GRANTING FINAL similarly situated, APPROVAL OF CLASS ACTION

SETTLEMENT

Plaintiffs, [ECF No. 132] v. NATIONSTAR MORTGAGE, LLC, a Federal Savings Bank, 16 Defendant. 17 Plaintiffs obtained an adjustable rate mortgage (“ARM”) loan that permitted them to defer payment of accrued interest. The loan provided that unpaid accrued interest would be added back to their unpaid principal balance. How that unpaid accrued interest added back to the principal balance (“negative amortization”) should be treated for purposes of IRS deductions is the subject of this lawsuit. Plaintiffs argue that, even though the accrued interest is added back to principal, the negative amortization is still interest that should have been reported on IRS Form 1098. Nationstar claims it failed to report negative amortization only when it took 26 …