Lisa A. ABRAHAM, Lisa Cave, Scott Cave, Lee Ann Kaminski, and Mark E. Kaminski, on behalf of themselves and all others similarly situated, Plaintiffs, v. OCWEN LOAN SERVICING, LLC, Defendant, 321 F.R.D. 125

MEMORANDUM PADOVA, District Judge TABLE OF CONTENTS I. INTRODUCTION ...134 II. BACKGROUND ...134 III. THE CLASS CERTIFICATION RECORD .. .135 A. Background Regarding Ocwen’s In-House Balloon Loan Modifications and its Documentation Systems ... 135 B. The Class Representatives ... 136 1. Plaintiffs Lisa and Scott Cave ... 136 2. Plaintiff Lisa A. Abraham ... 138 3. Plaintiffs Lee Ann and Mark E. Ka-minski (the “Kaminskis”) ... 139 C. Expert Evidence ... 141 1. Plaintiffs’ Expert Dr. Brian C. Becker ...141 2. Defendant’s Expert Joseph J. Floyd ...144 3, Dr.

Becker’s Reply to the Floyd Report ...147 4, Floyd’s Supplemental Report ... 149 IV. OCWEN’S MOTION TO STRIKE ...150 V. THE CLASS CERTIFICATION MOTION ...152 A. Ocwen’s Preliminary Issues on Loss and Damages ... 153 1. Plaintiffs’ Theory of Loss ... 153 2. Becker’s Model Cannot Be Common Evidence ... 156 3. Becker’s Theory of Harm is not Supported by the Record ... 158 B. Ocwen’s Preliminary Issues on the Proposed Class

Definitions ... 162 1. The Pennsylvania and New Jersey Classes are Overbroad ... 162 2. Time-barred Claims ... 164 3. The FDCPA Class Definition is Both Flawed and Overbroad ... 165 4. Entitlement to Injunctive Relief ...168 C. Cohesiveness of the NJCFA Class ...172 1. Issues Involving Ascertainable Loss and Damages ... 174 2. Issues Involving the Crafting of In-junctive Relief ... 174 3. Rescission is an Inherently Individualized Form of Relief ... 175 4. Disparate Factual Circumstances ...176 D. Ascertainability of a Rule 23(b)

(3) Class ...177 E. Rule 23(

a) Requirements ... 181 1. Numerosity ... 181 2. Commonality ... 182 3. Typicality ... 183 4. Adequacy ... 186 F. Rule 23(b)

(3) Predominance and Superiority Requirements ... 186 1. Ascertainable loss ... 188 2. Causation ... 189 3. Reliance ... 192 VII. CONCLUSION ...193 I. INTRODUCTION Plaintiffs Lisa A. Abraham, Lisa and Scott Cave, and Lee Ann and Mark E. Kaminski filed this class action suit against Defendant Ocwen Loan Servicing, LLC (“Ocwen”) alleging Ocwen violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 Pa. Stat. § 201-3, the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq„ and the New Jersey Consumer Fraud Act (“NJCFA”), N.J.S.A. § 56.8-1, et seq.

They seek to represent classes of similarly situated Pennsylvania and New Jersey homeowners who have entered into a standard form in-house loan modification agreement with Ocwen that contained a “Balloon Disclosure” provision that allegedly did not disclose the amount of the balloon payment. Presently pending are Plaintiffs’ motion to certify three classes, one class for each statutory claim. Aso pending is a Motion by Ocwen to strike portions of Plaintiffs’ expert report. For the following reasons, the Motion to Strike is denied.

Additionally, after rigorous analysis of the expert submissions, the class certification record, and the arguments of the parties, the Motion for Class Certification is also denied. II.

BACKGROUND Plaintiffs allege that Ocwen violated the UTPCPL, FDCPA and NJCFA by entering into standard form-written in-house loan modification agreements with class members that contain a uniform Balloon Disclosure provision that is unfair, deceptive, and misleading because it does not disclose: (1) the amount of the balloon payment that the borrower will owe at the end of the term of the loan; (2) the method by which such a balloon payment is calculated; and (3) the amortization term of the loan and whether it had been changed by the modification.

Ocwen’s Balloon Disclosure states only: “The loan modification for which you have applied contains a balloon provision. This means that even if you make all payments full and on time, the loan will not be paid in full by the final payment date.” (See Sept. 2, 2016 Declaration of Eric Leehtzin (“Lechtzin Deck”) Ex. 4 at 0cwen001040). Plaintiffs assert that this language fails to disclose the information borrowers need to make informed financial decisions.

Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiffs move to certify a Pennsylvania Class represented by Plaintiffs Lisa Abraham, Lisa Cave and Scott Cave consisting of: Ml Pennsylvania homeowners whose mortgage loans have been serviced by Ocwen, and who have entered into a standard form template Loan Modification Agreement with Ocwen on or after February 14, 2007 that contains a “Balloon Disclosure” provision which does not disclose the amount of the balloon payment that the borrower will owe at the end of the term of the loan (the “Pennsylvania Class”). a New Jersey Class represented by Plaintiffs Lee Ann Kaminksi and Mark E.

Kaminski consisting of: All New Jersey homeowners whose mortgage loans have been serviced by Ocwen, and who have entered into a standard form template Loan Modification Agreement with Ocwen on or after February 25, 2009 that contains a “Balloon Disclosure” provision which does not disclose the amount of the balloon payment that the borrower will owe at the end of the term of the loan (the “New Jersey Class”). and a FDCPA Class represented by Plaintiffs Lisa Cave and Scott Cave consisting of: All Pennsylvania and New Jersey homeowners for whom servicing of their mortgage loans was transferred to Ocwen at a time when such homeowners were in default on their loans, and to whom Ocwen sent a standard form template Loan Modification Agreement with Ocwen on or after July 21, 2010 that contains a “Balloon Disclosure” provision which does not disclose the amount of the balloon payment that the borrower will owe at the end of the term of the loan (the “FDCPA Class”). (Br. in Support of Pis.’ Mot. for Class Cert. (“Pis.’ Mem”) (Docket Entry #56-1) at 2.) Plaintiffs seek certification of the Pennsylvania and New Jersey Classes under Rule 23(b)(2) in order to obtain injunctive relief pursuant to the UTPCPL and NJCFA.

Plaintiffs also seek certification of all three Classes under Rule 23(b)(3) for their actual and statutory damages as provided by the UTPCPL, NJCFA and FDCPA III. THE CLASS CERTIFICATION RECORD A. Background Regarding Ocwen’s In-House Balloon Loan Modifications and its Documentation Systems The balloon modification agreements at issue in this case originate from Oewen’s “Loan Resolution Module” or “LRM” computer system. (Lechtzin Decl.

Ex. 3, October 28, 2015 Deposition of Max Nieves (“Nieves Tr.”) at 31-32.) Ocwen inputs borrower data for its in-house loan modifications, including income data, into the LRM. (Nieves Tr. at 32; Lechtzin Decl.

Ex. 10, October 2, 2015 Deposition of Rashad Blanchard (“Blanchard Tr.”) at 26.) The data in the LRM also includes information about the original loan, such as the principal amount of the loan, the interest rate, and the term of the loan. (Blanchard Tr. at 27, 69-71, 121-24.) The LRM also contains data or rules (such as restrictions on loan modifications) culled from the pooling and servicing agreements between Ocwen and the owners or investors in the loans. (Nieves Tr. at 46-50.) Ocwen uses the borrower and loan data in LRM to generate in-house loan modification agreements based upon blank modification agreement templates, which are identifiable by unique version numbers or codes. (See id. at 30, 38, 140-44.) Ocwen runs the loan and borrower data through a “resolution waterfall,” which is an “algorithm within [the] LRM that tells [Ocwen] what the optimal resolution is ... versus taking it to foreclosure. ...” (Id. at 50-52.) In order to create a modification agreement that is sent to a borrower, Ocwen uses the LRM system which populates “merged fields” within the agreement template with data such as the borrower’s name, the property address, the principal balance of the modified loan, the modified interest rate, the modification effective date, the first payment date, and the loan maturity date. (Id. at 36-37; Lechtzin Deck, Exs. 4-6, 22-25 (exemplars of templates).) Ocwen stores copies of all modification agreements that have been accepted by borrowers on Ocweris Central Imaging System or “CIS.” (Nieves Tr. at 34.) Ocwen’s main loan servicing platform is called “RealServicing.” (Blanchard Tr. at 45.) Certain information in the LRM is automatically saved in RealServicing. (Nieves Tr. at 35.) RealServicing also contains a comment log and spreadsheet data that includes loan transaction or payment histories, amortization tables and loan terms (e.g., interest rate, first payment date, maturity date, and amortization term). (Blanchard Tr. at 69, 72, 106— 09.) Ocwen also records the identity of the investor in every loan serviced by Ocwen (i.e., the trusts that hold the loans) in Real-Servicing. (Id. at 96-98.) Prior to 2014, Ocwen’s standard template Balloon Disclosure did not disclose the dollar amount of any balloon payment due at the loan’s maturity date. (Nieves Tr. at 115-16, 147, 191-92.) Ocwen’s training manuals from this time period stated: “The agreements will never indicate the balloon amount.” (Id. at 191, 197); Lechtzin Decl.

Ex. 9 (Ocwen Loss Mitigation Manual at Ocwen010223.) Similarly, scripting tools utilized by Ocwen representatives instructed them to answer the question, “What is my balloon at maturity?” by answering: “We cannot provide a balloon amount which will be due at maturity as the remaining balance becomes the balloon amount.” (Nieves Tr. at 189; Lechtzin Decl. Ex. 8 (Ocwen CCC Best Practices CCC Resolutions Manual) at Ocwen011487; id.

Ex. 9 (Ocwen Customer Care Center Loss Mitigation Manual) at Ocwen010223.) However, the same manuals also instruct representatives that, if an “estimated balloon payment” is reflected in the system for the borrower, the representative should “advise [the borrower] of the same, as long as you disclose it is only an estimate [and] [t]he balloon amount depends on how the customer makes the payments.” (Id.) Ocwen ceased using the balloon modification templates at issue in this case in late 2013 or early 2014. (Nieves Tr. at 40-42, 62-65.) Since that time, all Ocwen balloon disclosures state a minimum dollar amount for the balloon payment due at the maturity of the loan. (Id. at 42, 64-65, 66-72 (identifying blank balloon modification templates).) B.

The Class Representatives 1. Plaintiffs Lisa and Scott Cave Lisa and Scott Cave (“the Caves”), who seek to represent both the Pennsylvania and FDCPA Classes, are owners of a home located at 491 North Mill Road, Kennett Square, Pennsylvania, which they purchased in December 2003 for $175,000. (Lechtzin Decl. Ex. 26, June 24, 2014 Deposition of Scott Cave (“S. Cave Tr,”) at 49, 83.) On November 23, 2006, the Caves refinanced their home with a 30-year mortgage loan from Saxon Mortgage, Inc. in the amount of $236,300, which they were required to repay at an annual interest rate of 8.650 percent. (Lecht-zin Decl.

Ex. 28, November 23, 2005 Note; Ex. 29 November 23, 2005 Mortgage.) Under the terms of this loan, the Caves’ monthly payment of principal and interest was $1,842.12. (Id.) In August 2009, after falling behind on their mortgage payments, the Caves applied to Saxon for a loan modification under the Home Affordable Mortgage Program (“HAMP”). (S. Cave Tr. at 429-31.) By letter dated April 21, 2011, Saxon advised the Caves that the servicing of their mortgage was being transferred to Ocwen, effective May 16, 2011. (Lechtzin Decl.

Ex. 30.) At the time Ocwen assumed servicing of the Caves’ loan in May 2011, the Caves were in default on their loan. (Joint Submission of Material Facts (Docket Entry # 78) ¶ 15.) Specifically, the Caves’ loan was “due for November 2009,” according to an Ocwen Rule 30(b)(6) witness. (Lechtzin Decl. at Ex. 19, December 20, 2013 Deposition of Paul Myers (“Myers Tr.”) at 43; Ex. 21, Ocwen Letter of May 19, 2011.) In June 2011, Ocwen sent the Caves a HAMP solicitation letter, and on June 23, 2011, Ocwen received the Caves’ HAMP document package. (Myers Tr, at 53-55.) Ocwen reviewed the Caves for a HAMP modification and sent them a written notice of denial on June 25, 2011. (Id. at 56.) Also in June 2011, Ocwen sent the Caves an in-house loan modification agreement with the Balloon Disclosure provision at issue here. (Id. at 68.) Under the terms of the proposed Cave Modification Agreement, the principal balance increased from $236,300 to $278,203, the interest rate for the first 60 months was 2 percent, and the rate increased to 4.5 percent for the remaining term of the loan. (Id. at 72-73; Nieves Tr. at 123-24; Ex. 20, June 28, 2011 Loan Modification Agreement (“Cave Modification Agreement”).) Under the proposed Cave Modification Agreement, the monthly principal and interest payment for the first 60 months is $1,000.02. (Myers Tr. at 76.) The Cave Modification Agreement includes a “Balloon Disclosure” that is substantially similar to the modification agreements entered into by all other Pennsylvania Class members, which provides: The loan modification for which you have applied contains a balloon provision.

This means that even if you make all payments full and on time, the loan will not be paid in full by the final payment date. A single balloon payment will be due and payable in full on 12/1/35, provided that all payments are made in accordance with the loan terms, and the interest rate does not change for the entire loan term, (Lechtzin Decl.

Ex. 20.) Ocwen’s 30(b)(6) witness Paul Myers testified that all of Ocwen’s loan modification agreements had disclosures similar to those made in the Cave Modification Agreement, which did not state the amount of the balloon payment. (Myers Tr. at 100-04.) Before the Caves accepted the Cave Modification Agreement, Lisa Cave called Ocwen to inquire about the amount of the balloon, but, she testified, “[t]hey weren’t able to give me an amount.” (Lechtzin Decl. Ex. 32 June 23, 2014 Deposition of Lisa Cave (“L. Cave Tr.”) vol.

I at 302.) The Caves accepted Ocwen’s offer by executing the Cave Modification Agreement and returning the signed agreement to Ocwen along with the requested initial payment of $1,285.39, which Ocwen accepted and retained, (Id. at 302-03.) Under the Cave Modification Agreement, Ocwen extended the amortization term from 360 months to 374 months, commencing on September 1, 2011, the first payment date of the modification. (Myers Tr. at 86; Cave Modification Agreement; Nieves Tr. at 121-22.) Ocwen admits that the Cave Modification Agreement does not disclose this change in the amortization term from 360 months to 374 months. (Nieves Tr. at 124.) Ocwen did not provide the Caves with an amortization

schedule that would have revealed this change in the amortization term of the Caves’ loan. (Myers Tr, at 78.) The Cave Modification Agreement provides that “[a]ll covenants, agreements, stipulations, and conditions in your Note and Mortgage will remain in full force and effect, except as herein modified....” (Cave Modification Agreement ¶ 8(b).) Plaintiffs allege that this provision of the Cave Modification Agreement was misleading and deceptive in light of Ocwen’s failure to disclose the change to the amortization period of the Caves’ loan. (PI.

Mem. at 9.) Ocwen admits that the Cave Modification Agreement does not state the amount of the balloon payment due at the maturity of their loan. (Myers Tr. at 75; Nieves Tr. at 124.) However, at the time the Caves accepted the Cave Modification Agreement, Ocwen knew that the Caves would be required to make a balloon payment in the amount of $93,524.46 at the loan’s maturity date if they made all of their scheduled payments in full and on time. (Myers Tr. at 75, 80-81.) Ocwen admits that the Cave Modification Agreement does not include instructions as to how the Caves could have calculated the amount of the balloon they will owe at their loan’s maturity date, (Nieves Tr. at 127.) However, Ocwen 30(b)(6) witness Myers explained in general terms the steps that one would need to perform to calculate the amount of the balloon, stating; You determine the amortization portion.

I believe in this case we can certainly look at the comments. I can tell you what it was amortized over. It was amortized over 374 months. You take the principal balance, the 278,000 number, you amortize that, You initially do the amortization

schedule over 374 months. You take a look after month 60, what’s the principal balance. Then turn around and do a second one starting payment 61 through 374 and that would give you the amortization over the balance. (Myers Tr. at 86.) Ocwen 30(b)(6) witness Nieves provided a similar explanation about how to calculate the amount of the balloon. (Nieves Tr. at 124-127.) Scott Cave testified that “if I would have been told up front that it [the balloon] was $90,000 I would have walked away.” (S.

Cave Tr. at 70, 218-19.) Lisa Cave testified that because the balloon amount was not disclosed, “I wasn’t given the opportunity to plan properly financially. According to the information I have now, if I were to have paid the entire mortgage and then had to pay the balloon payment, I would have had to take out another loan somewhere in my 60s.” (L. Cave Tr. vol. II at 323.) 2. Plaintiff Lisa A.

Abraham Lisa Abraham, who seeks to represent the Pennsylvania and the FDCPA Classes, is the owner of a home located at 31 Clay Valley Road, Fleetwood, Pennsylvania, which has been her primary residence since 1992. (Lechtzin Decl. Ex. 14, June 18, 2007 Abraham Note; Lechtzin Decl. Ex. 34, August 28, 2015 Deposition of Lisa A.

Abraham (“Abraham Tr.”) at 43, 59-60.) On June 18, 2007, Abraham refinanced her home with a 30-year Fixed Rate Stepped Payment Note in the amount of $263,500, with a maturity date of July 1, 2037. (Abraham Tr. at 148-54; Ex. 14.) Under the terms of the loan, Abraham was to pay interest only at a rate of 8.590 percent for the first 120 months. (Blanchard Tr. at 182-84.) The initial monthly payment under this loan was $1,949.76, however after the first 120 months, the monthly payment would increase to $2,196.79. (Abraham Tr. at 154-55; Ex. 14.) There was no balloon payment provision under this loan. (Blanchard Tr. at 210.) In August 2010, Ms.

Abraham was going through a divorce and fell behind on her loan payments. (Abraham Tr. at 170-73.) In order to bring her loan current and resolve pending litigation, she entered into a Settlement and Release Agreement with Ocwen, which modified the terms of her loan. (Id. at ISO-88; Lechtzin Deck Ex. 18, June 2, 2010 Ocwen/Abraham Settlement and Release Agreement (“Release”).) Under the terms of this agreement, Ocwen increased the principal amount of her loan to $322,838.81, the interest rate was fixed at 6.4 percent, and her new monthly principal and interest payment increased to $1,867.13. (Release ¶¶ lb-d.) Unlike the modification agreements at issue in this case, Abraham’s Release expressly stated the amortization term applicable to her modified loan: “this balloon modification is amortized as if the repayment period was 480 months....” (Id. ¶ le; Abraham Tr. at 205.) In February 2011, Ms.

Abraham suffered a stroke and again fell behind on her monthly loan payments. (Abraham Tr. at 210-12.) By letter dated November 23, 2012, Ocwen offered Abraham a new Loan Modification Agreement that: (1) reduced the principal balance of her loan to $236,040.80; (2) forgave approximately $91,000.00 of her total outstanding debt; (3) reduced her monthly principal and interest from $1,867.13 to $714.79; (4) lowered her total monthly payment, including escrow items, from $2,535.16 to $1,319.75; and (5) lowered the interest rate from 6.4% to 2.0%. (Lechtzin Deel.

Ex. 15, November 23, 2012 Proposed Modification Agreement (“Proposed Modification Agreement”); Blanchard Tr. at 184-85, 196— 99.) The Agreement changed the amortization period of the loan to 480 months from 360 months. (Blanchard Tr. 229-31.) The Proposed Modification Agreement is based upon a standard template document, which can be identified by its version number, and which Ocwen has used to modify mortgages on properties located in Pennsylvania. (Nieves Tr. at 60-61.) The “Balloon Disclosure” provision in the Abraham Modification Agreement provides: The loan modification for which you have applied contains a balloon provision.

This means that even if you make all payments full and on time, the loan will not be paid in full by the final payment date. A single balloon payment will be due and payable in full on 7/1/37, provided that all payments are made in accordance with the loan terms, and the interest rate does not change for the entire loan term. (Proposed Modification Agreement.) Ms. Abraham accepted Ocwen’s offer by executing the Proposed Modification Agreement and returning it to Ocwen. (Blanchard Tr. at 186-87; Lechtzin Deel.

Ex. 16, executed Abraham Modification Agreement.) At the time Abraham signed the Modification Agreement, she did not know the amount of the balloon payment she would owe at the loan’s maturity. (Abraham Tr. at 248-49.) Ocwen admits that the Abraham Modification Agreement does not state the amount of the balloon payment due at the maturity of her loan. (Blanchard Tr. at 210-11; Lechtzin Decl.

Ex. 17, Ocwen Response to Request for Admission (“Ocwen Abraham Admission”) No. 12.) Ocwen also admits that it had determined that the estimated balloon payment amount was projected to be $114,236.82 at the time of the loan’s maturity date, provided Abraham made all scheduled monthly payments due under the Abraham Modification Agreement. (Blanchard Tr. at 212; Ocwen Abraham Admission No. 14.) According to Ocwen’s records of a phone call with Ms.

Abraham on February 11, 2014, an Ocwen representative informed her orally that her balloon amount is at least $114,236.82. (Blanchard Tr. at 190-92, 212.) Abraham recalls that when she asked the representative about the amount of the balloon, he said: “I’m not real sure.

This is not set in stone.” (Abraham Tr. at 248-49, 298-99.) Ocwen admits that that the Abraham Modification Agreement did not include an amortization schedule. (Ocwen Abraham Admission No. 7.) Ocwen further admits that “neither the ‘Balloon Disclosure’ term set forth at Paragraph 5 on Page 2 of the Abraham Modification Agreement, nor the Balloon Disclosure set forth at Page 4 of the Abraham Modification Agreement, states the method by which the balloon payment that would be due at the loan’s maturity date of July 1, 2037 will be calculated.” (Ocwen Abraham Admission No. 13; Nieves Tr. at 88.) Moreover, “Ocwen admits that neither the Abraham Modification Agreement ... nor the cover letter, dated November 23, 2012, enclosing the Abraham Modification Agreement, provided express instructions as to how Abraham could calculate the amount of the estimated minimum balloon payment due and payable on July 1, 2037.” (Ocwen Abraham Admission No. 16.) Abraham admits that the loan modification lowered her monthly payments and made her life “more comfortable,” but believes she would not have lost her home if she did not enter into this agreement “[bjecause I had been paying my loan prior to the 2012 modification.” (Abraham Tr. at 322.) She testified that if the amount of the balloon payment had been disclosed in the modification agreement, she would not have agreed to it, because she will be age 77 when the balloon comes due and she would need to take out a new mortgage to pay that amount. (Id. at 350-51 (“That wouldn’t work.

It’s not going to work. No one is going to give a 77-year-old woman, with rheumatoid arthritis, on disability, even a $100,000 mortgage at that age. It’s impossibility.”).) After Ms. Abraham filed the instant lawsuit, Ocwen stopped sending her monthly mortgage statements and it no longer allows her to view her loan information on its website. (Blanchard Tr. at 176-77; Abraham Tr. at 301.) 3. Plaintiffs Lee Ann and Mark E. Kaminski (the “Kaminskis”) The Kaminskis, who seek to represent the New Jersey Class, are owners of a home located at 10 E.

Maple Tree Drive, Westamp-ton, New Jersey, which has been their family’s primary residence since May 2000. (Lechtzin Deck Ex. 36, September 10, 2015 Deposition of Lee Ann Kaminski (“L. Kamin-ski Tr.”) at 15, 28-29.) The Kaminskis purchased their home for $267,000, of which $135,000 was financed with a mortgage. (Id at 31-32.) In order to consolidate various debts, on February 24, 2006, the Kaminskis refinanced their home with a 30-year, fixed rate mortgage in the amount of $344,250, and a maturity date of March 1, 2036. (Id. at 44-46; Lechtzin Decl.

Ex. 11, February 24, 2006 Kaminski Mortgage at 0cwen005086-5102.) This loan was amortized over a term of 360 months. (Nieves Tr. at 56-57.) Under the terms of this loan, the monthly payment was $2,772.58 for the first 120 months, and thereafter the amount would increase to $3,076.64. (L. Kaminski Tr. at 51.) The Kaminskis fell behind on their loan in 2007, when Mrs. Kaminski’s job as a long-term substitute teacher came to an end, and Mr.

Kaminski lost his job. (Id at 56-57.) In May 2007, the Kaminskis entered into a forbearance agreement with Ocwen, which called for them to make increased monthly payments of $3,456 for twelve months so they could cure their delinquency. (Id. at 60-63.) Although Mr.

Kaminski found new employment, the Kaminskis were unable to make all of the forbearance payments. (Id at 64-65.) They entered into a second forbearance agreement in January 2008, which contained a “Modification Contingency” that increased the principal balance of their loan to $367,716.11, and had a fixed interest rate of 8.63 percent. (Id. at 66-70.) To receive this modification, Ocwen required the Kaminskis to pay a reinstatement amount of $27,666.33, and to make a down payment of $6,902.24. (Id. at 71-72.) In June 2009, the Kaminskis entered into a new loan modification agreement that increased their principal balance to $387,168.50, and provided an initial monthly payment of $2,237.12. (Lechtzin Deck Ex. 37, June 2009 Home Affordable Modification Agreement effective July 1,2009.) By letter dated March 9, 2011, Ocwen offered the Kaminskis a “STREAMLINED LOAN MODIFICATION,” which provided a monthly payment of $1,979.96, including escrow items such as property taxes. (Lechtzin Deck Ex. 12, March 9, 2011 Letter enclosing draft Loan Modification Agreement (“Kamin-ski Loan Modification Agreement”) at Ocwen006480-6483.) The Loan Modification Agreement enclosed with this letter stated that, if the Kaminskis accepted Ocwen’s offer, the interest rate of their loan would be modified to 2 percent, the new principal balance would be $377,566.06 (as compared to the original principal amount of $344,250), and their new monthly principal and interest payment would be $1,143.32. (Id.; Blanchard Tr. at 66-67,101.) The Kaminski Loan Modification Agreement did not provide any principal forgiveness. (Blanchard Tr. at 92.) Ocwen 30(b)(6) witness Nieves testified that the Kaminski Loan Modification Agreement is based on a standard template document that Ocwen has used to modify mortgages on properties located in New Jersey. (Nieves Tr. at 25-29, 59-60; Lechtzin Deck Ex. 1, December 21, 2015 Class Certification Report of Brian C.

Becker (“Becker Report”) ¶¶36, 38.) The Kaminski Loan Modification Agreement contains a “Balloon Disclosure” provision that provides: The loan modification for which you have applied contains a balloon provision. This means that even if you make all payments full and on time, the loan will not be paid in full by the final payment date.

A single balloon payment will be due and payable in full on 9/1/2036, provided that all payments are made in accordance with the loan terms, and the interest rate does not change for the entire loan term. (Kaminski Loan Modification Agreement at Ocwen006483.) Athough the Kaminskis’ loan was originally amortized over a period of 360 months, under the Kaminski Loan Modification Agreement the loan is amortized as though it is payable over a period of 480 months. (Blanchard Tr. at 104-06.) This change in the amortization term is not disclosed in the Kaminski Loan Modification Agreement. (Id. at 116-17.) The Kaminski Loan Modification Agreement provides that “[a]ll covenants, agreements, stipulations, and conditions in your Note and Mortgage will remain in full force and effect, except as herein modified..,.” (Loan Modification Agreement at OcwenOQ6481.) Ocwen’s March 9, 2011 letter to the Kam-inskis was a “blind modification offer,” meaning that Ocwen solicited the Kaminskis for a modification rather than the Kaminskis applying to Ocwen for a modification. (Blanchard Tr. at 43-44, 46; Nieves Tr. at 31.) According to Ocwen’s records of a phone call with Mrs.

Kaminski, as of March 21, 2011, the Kaminskis had not received the modification offer, even though the March 9 letter stated that they needed to respond to the offer by March 23. (Blanchard Tr. at 168-60.) Ocwen then sent the offer via email, Although the Kaminskis had only two days to consider the offer, if they had stated that they needed more time, Ocwen representatives had the authority to extend the offer. (Id.) The Kaminskis accepted Ocwen’s offer by signing the Kaminski Modification Agreement on March 24, 2011, and returning it to Ocwen. (Blanchard Tr. at 48; Lechtzin Deck Ex. 13, executed Kaminski Loan Modification Agreement Ocwen006127-5129.) Under the terms of the Kaminski Loan Modification Agreement, if they made all of their scheduled payments in full and on time, they would owe a balloon payment of $173,421.59 at the loan’s maturity date of September 1, 2036. (Blanchard Tr. 129-31.) Mrs.

Kaminski testified that she did not know the amount of the balloon payment before she signed the Kaminski Loan Modification Agreement and that, if she had known the amount of the balloon payment, she would not have signed it, (L. Kaminski Tr. at 117-20; 149.) Mr. Kaminski testified that he did not ask Ocwen about the balloon disclosure before signing the Agreement, and that he “would not know how — what formula to use, how to amortize, I’m not the financial expert. I would not know how to arrive at a dollar value based on my situation.” (Lecht-zin Decl, Ex. 38, September 10, 2015 Deposition of Mark E.

Kaminski (“M, Kaminski Tr.”) at 80-81.) He also testified, I realize that a balloon payment, the amount could be less or more depending on us making our payments on time through the course of the loan. It was tacked on, it’s tacked on to the back end of the loan which is due [and] payable in 2036. And I don’t know how they derive the number based on our situation, so I have no other recourse. (Id. at 81.) Both Plaintiffs expressed concerned that they will be unable to make the balloon payment when it comes due. (L, Ka-minski Tr. at 150; M.

Kaminski Tr. at 94.) Ocwen admits that the Kaminski Loan Modification Agreement “did not include an amortization schedule.” (Lechtzin Decl. Ex, 39, Ocwen Response to Request for Admission (“Ocwen Kaminski Admission”) No. 7.) Ocwen also admits that the Balloon Disclosure “does not state the dollar amount of any balloon payment that would be due on September 1, 2036, under the terms of the Ka-minski Modification Agreement,” (Id.

No, 11; Blanchard Tr. at 119; Nieves Tr. at 86.) Ocwen further admits that the Balloon Disclosure “does not state the method by which the balloon payment that would be due at the loan’s maturity date of September 1,2036 will be calculated.” (Ocwen Kaminski Admission No. 12; Blanchard Tr. at 155.) Moreover, Ocwen’s “cover letter dated March 9, 2011, enclosing the Kaminski Modification Agreement, did not provide express instructions as to how the Kaminskis could calculate the amount of the estimated minimum balloon payment due and payable on September 1, 2036.” (Ocwen Kaminski Admission No. 16.) Nor did the Modification Agreement itself “provide express instructions as to how the Kaminskis could calculate the amount of the estimated minimum balloon payment due and payable on September 1, 2036.” (Id.

No, 16.) Ocwen admits “that on or around the time the Kaminski Modification Agreement .,. was sent to the Kaminskis, Ocwen was able to calculate the estimated minimum balloon payment amount at the time of the loan’s maturity date, if the Kaminskis made all scheduled monthly payments due under the Kaminski Modification Agreement in full and on time.” (Id. No. 13.) After the Kaminskis filed the instant lawsuit, Ocwen stopped sending them monthly statements for their mortgage and no longer allows them to view information concerning their loan on Ocwen’s website. (Blanchard Tr. at 174-76.) Mrs.

Kaminski testified that she cannot access her account online or make payments online, but must send her payments to Ocwen via certified mail. (L, Kamin-ski Tr. at 143.) C. Expert Evidence 1. Plaintiffs’ Expert Dr, Brian O, Becker Plaintiffs have retained Dr. Brian C, Becker to “evaluate whether (

a) members of the proposed class shared common experiences as a result of policies and practices that [Ocwen] applied uniformly, which caused the same types of damage to all members of the proposed class, and whether (

b) such putative members of the proposed class can be readily identified using data maintained by Ocwen.” (Becker Report ¶ l.) He concludes that that putative Class members can be identified using common methods applied to Ocwen’s electronic records, that Ocwen’s electronic records can be queried to extract the borrowers whose loan modification processes meet the Class definition, and that damages can be calculated for each Class member using common methods applied to Ocwen’s electronic records. (Id. ¶¶ 4,10-12.) Dr.

Becker’s method for identifying class members relies upon searchable electronic data maintained by Ocwen that can be exported, sorted, and analyzed. (Id. ¶ 18.) Specifically, he relies on

(1) Ocwen’s RealServic-ing system, which includes borrower and loan information, payment history, comments and the amount and due date of each borrower’s balloon payment;

(2) Ocwen’s LRM, which is Ocwen’s decision engine used to determine a loan’s eligibility for a modification or alternative loan resolutions such as a short sale or deed in lieu of foreclosure; and

(3) Ocwen’s CIS, which is another database maintained by Ocwen that stores images of certain letters and documents sent to and received back from borrowers, and retains information on prior servicers, payment history, customer communications, the mortgage document, the note document, and modification documents (including actual copies of the modification agreements sent to and received from borrowers). (Id. ¶¶ 21-23.) Finally, Dr. Becker asserts that RealDoc, another database maintained by Ocwen, stores the templates of modification agreements sent to and received back from borrowers. (Id. ¶ 24.) Dr.

Becker opines that Ocwen’s own analysis of its loan-level data on its loan modifications provides evidence that methods exist which can be commonly applied on a class-wide basis to identify Class members. (Id. ¶ 26.) He notes that Oewen’s data analyst, Paul Britton, produced a table in which he presented the results of queries of Ocwen’s internal loan-level data, including data contained within RealServicing, to identify modified loans that met each of the following aspects of the Class definition: (1) borrowers in Pennsylvania or New Jersey, and (2) borrowers Ocwen placed into non-HAMP modification agreements with balloon payment features between January 1, 2009 and September 30, 2015. (Id.) Britton’s query identified 11,157 non-HAMP modifications in Pennsylvania between January 2009 and September 2015 that had a balloon payment feature, and identified 8,454 non-HAMP modifications in New Jersey between January 2009 and September 2015 that had a balloon payment feature. (Id.) Becker opines that he can identify class members by further refining Britton’s query by: (1) identifying those borrowers located in a state included in the Class definition with a modification featuring a balloon payment, and (2) then identifying those borrowers who did not receive a disclosure of the amount of the balloon payment in their modification agreement. (Id. ¶¶ 28-30.) He asserts that, based on the documents produced and deposition testimony in the case, “it is likely that all of Ocwen’s standard in-house modification agreements with balloon payments made until late 2013 in Pennsylvania and New Jersey would meet the Class definition.” (Id. ¶ 31.) Becker states that this same data can be used on a class-wide basis to establish whether or not there is a violation of state and federal consumer protection laws under Plaintiffs’ theories, and that the named Plaintiffs are members of the class. (Id. ¶¶ 34-35.) On the issue of damages, Dr.

Becker opines that Ocwen’s records contain information on each putative Class member’s payment terms, including unpaid principal balance, monthly payment amount, interest rate, and the remaining term of the loan that would be sufficient to generate an appropriate formula to measure the damages applicable to Plaintiffs’ claims. (Id. ¶ 39.) To calculate damages, he first assumes “that Class members’ expectation of the balloon payment and monthly payments would have been the balloon payment and monthly payments that would have occurred had the modified loan been amortized over the previously disclosed amortization term.” (Id. ¶40.) He asserts that damages through the earlier of (1) the date on which the last payment on the loan was made, or (2) the date when damages are awarded, can be defined as “the present value difference to each Class member from his position with the modification in its actual state and the but-for modification with the same terms except with an amortization

schedule corresponding to the last disclosed amortization term prior to the modification with the undisclosed balloon amount.” (Id ¶41 (emphasis in original).) He calculates that, while Lisa Abraham suffered no damages — because the amortization term in her modification agreement did not change from the last disclosed amortization term — the Caves suffered damages of $6,173.15 and the Kaminskis suffered damages of $30,240.12. (Id ¶¶ 44-45.) Dr. Becker opines that, all things being equal, a loan amortized over a longer term will have a lower monthly payment than a loan amortized over a shorter term.

That lower monthly payment, however, results in the loan principal being paid off at a slower rate than would occur if a larger monthly payment were made.

Because the principal balance is paid off more slowly over the longer amortization term, the interest being charged each month is larger than what would be charged if the principal balance were paid off faster, as would occur if the loan payments were calculated over a shorter amortization term, Therefore, more interest will be paid over the life of a loan if payments are made according to a longer amortization term than would be paid if payments are made according to a shorter amortization term. (Id. ¶ 46.) Further, because the principal is paid off more slowly when payments are made according to an amortization

schedule with a longer term, “a larger balloon payment is required at the loan maturity than would be required if payments were made according to an amortization

schedule with a shorter term,” (Id. ¶47.) Becker calculates that the Caves’ balloon payment under the but-for amortization

schedule would be $13,658.37 less than the balloon payment recorded in Ocwen’s RealServicing system; for the Kaminskis, the balloon payment under the but-for amortization

schedule would be $130,390.67 less than the balloon payment recorded in Ocwen’s RealServicing system; Abraham’s balloon payment would be the same since her amortization term did not change. (Id. ¶ 48.) Dr.

Becker recognizes, however, that “for many Class members, damages will be awarded before loan maturity, For those Class members, neither the difference between actual and but-for balloon payments nor the difference between actual and but-for principal and interest payments through maturity would be the measure of damages.” (Id, ¶ 60.) He has developed an equation to capture the measure of damages that can be used for borrowers who paid either the exact amount of their required monthly modified payments, who paid more than their required monthly modified payments, or who paid fewer required monthly modified payments.

He opines that, for each scenario, his equation represents the amount that would place the borrower in the financial position the borrower would have been in at the date on which damages are awarded if a modification had occurred using the previously disclosed amortization term by compensating the borrower for differences between the values of the actual balances and what the balances would have been if a modification had been implemented with regard to the outstanding principle balance and any accrued interest.

To this difference in principal balance in Equation [1], one adds the difference between the actual principal and interest payments and what the principal and interest payments would have been if a modification had been implemented using the previously disclosed amortization term.

Thus, Equation [1] compensates Class members by calculating the but-for impact of Ocwen’s failure to implement modifications using the previously disclosed amortization term on both the Class members’ financial “stocks” and “flows” — the stocks being the principle balance and the flows being the Class members’ monthly payments. (Id. ¶ 62.) Under this equation, as of October 2015, he calculates damages for Abraham to be $0.00, for the Caves to be $50.36, and for the Kaminskis to be $3.58. (Id. ¶¶ 52-55.) 2. Defendant’s Expert Joseph J, Floyd Ocwen has retained Joseph J.

Floyd to evaluate the proper method of identifying whether the named Plaintiffs and putative class members suffered ascertainable financial losses, as well as to review and comment on the Becker Report. (Forbes Decl. Ex. A, January 27, 2016 Expert Report of Joseph J. Floyd (“Floyd Report”) at 3.) Like Dr.

Becker, Floyd opines that the most appropriate method to evaluate whether a borrower incurred financial damages due to the receipt of a loan modification agreement is a “but-for” analysis. (Id. at 4, 16.) In applying his approach, Floyd assumes that borrowers could not remain current on their pre-modifi-cation loan terms and, therefore, would face imminent foreclosure without the loan modification since, if the borrower was not having problems, it is unlikely that a modification would have been offered. (Id.) Accordingly to Floyd, following their receipt and acceptance of loan modification agreements, Plaintiffs benefited from comparatively lower monthly payments and lower interest rates; continued to benefit from the home’s appreciation; avoided the adverse consequences of foreclosure and loss of their home; and avoided the adverse consequences of potential bankruptcy filings. (Id. at 5.) He asserts that “[e]ach of these factors is financially favorable to the Plaintiffs and appears contrary to the existence of any possible financial harm or damage that may have arisen from the provision of the loan modification agreements by Ocwen.” (Id.) On the issue of damages, Floyd posits that Dr.

Becker’s analyses and calculations are based on a flawed premise that the alleged failure to disclose the estimated amount of the loan modification balloon payment due at the loan maturity date and the loan amortization term caused the Plaintiffs to suffer financial damages. In my opinion,

A) the loan amortization term only impacted the calculation of the monthly payment; an amount agreed to by the Plaintiffs and

B) the Plaintiffs had access to all of the information needed to determine their balloon payment at any point in time. Therefore, the alleged failure to disclose the amount of the loan modification balloon payment and the loan amortization term would not cause the Plaintiffs to suffer ascertainable loss or financial damages. (Id.) He adds that Dr.

Becker’s analyses and conclusions regarding the Plaintiffs’ alleged damages are based on a flawed and incomplete comparison because Becker invents a new loan product — one with no apparent basis in the evidence — and calculates damages based solely on that hypothetical loan.

Therefore, Dr, Becker’s report not only ignores the benefits of the loan modifications actually received by the Plaintiffs, it also attempts to calculate damages based on fictional loan terms, (Id.) Floyd, on the contrary, attempts to compare what he opines is “the relevant data — the Plaintiffs financial events and consequences without the modification (such as foreclosure or becoming current with the pre-modification loan terms) as compared with the modification terms” which, he concludes, “indicates that none of the Plaintiffs suffered any ascertainable loss, actual harm, or financial damages.” (Id.) Finally, Floyd asserts that because each Plaintiffs’ financial and economic situations are unique and would require individual considerations to properly evaluate the existence of each member’s possible financial damages, if any, the inquiry necessary to determine the existence of financial damages and then perform the calculation of such damages, if any, are individualized and not capable of proof through evidence that is common to the class. (Id.) According to Floyd, “the most appropriate method to evaluate whether a borrower incurred financial damages due to the receipt of a balloon loan modification is the ‘but-for’ analysis which considers the borrower’s financial events and consequences without the modification (such as foreclosure or becoming current with the pre-modification loan terms) as compared with the modification terms.” (Id. at 16.) He identifies several financial events and consequences to a borrower who was provided a loan modification, which, he asserts, would be relevant to whether the borrower incurred damages as a result of the modification, (Id.) First, Floyd notes that the borrower’s modified monthly payments were reduced after the modification and that the reduction “was in part due to lowered interest rates being provided to the Plaintiffs pursuant to their loan modification agreements.” (Id. (citing Blanchard Tr. at 166).) He opines that “interest rates represent the ‘cost’ of funds, and by lowering the interest rate, the borrower is paying less monthly for the use of the monies.” (Id. at 17.) Second, Plaintiffs received the economic value for the use of their homes — rather than renting other lodging if the mortgage was foreclosed— which is a significant consideration of the existence and calculation of damages arising from receipt and acceptance of modification agreements since this factor plays a significant role in any individual borrower’s decision to enter into the modification agreement. (Id.) Third, the lower payment option afforded Plaintiffs the ability to pay additional principal if they chose to do so. (Id.) Fourth, for many borrowers the amount due under the Plaintiffs’ pre-modification mortgage loan terms was not increased, but some borrowers, like the Caves and Kaminskis, owed delinquencies and other fees that were added to the principal balance upon modification, while other borrowers, like Abraham, had a portion of their principal forgiven in the modification.

Fifth, whether a borrower had equity in their home is relevant since, if they did, a traditional sale would have been possible, while the lack of equity and past payment defaults are generally triggers to ftmeclosure.

Finally, by lowering the monthly payments, the mortgage loans became more affordable thus enabling borrowers to hold and sell them homes at a later date when the market rebounded. (Id. at 16-18.) Floyd opines that each of these factors is financially favorable to the Plaintiffs and appears contrary to the existence of any possible financial harm or damage that may have arisen from the loan modification agreements by Ocwen.

Additionally, Abraham, and presumably other putative class members, benefited from the reduction of the principal balance and total outstanding debt of her loan. (Id. at 18.) Floyd criticizes Becker’s damages model on several grounds. Using the reduced loan modification interest rate and the previously-applicable loan amortization term, Dr. Becker calculates a new monthly payment and balloon payment amount for a hypothetical loan product.

Floyd notes that Becker then compares these amounts to the payments due under the actual loan modification agreement to present his purported measure of financial damages. (Id. at 19.) Floyd faults Dr. Becker for assuming that all Plaintiffs, and presumably all putative class members, had an expectation that the amortization term, and the balloon payment, if any, did not change as a result of the modification. As such, Dr.

Becker asserts that the Plaintiffs are entitled to recover damages for any excess payments the Plaintiffs will allegedly have to make as a result of the extended amortization term and the resulting balloon payments. (Id. at 20.) Floyd calls this approach a mechanistic damage model to hypothesize the impact of maintaining the loan amortization term in place before any modification. ... The result of Dr. Becker’s calculation assumptions is a proposed monthly loan payment that is higher than the modification monthly payment for two of the three named Plaintiffs and the same for one of the Plaintiffs.

This phenomenon is caused by his calculation of a revised monthly payment based on the original, pre-modification amortization period, which is shorter than the loan modification amortization period for those two Plaintiffs. (Id. at 20.) Next, Floyd faults Dr. Becker’s analysis because Becker also assumes that the loan principal payments must still be sufficient to achieve the loan payoff amount before the end of the amortization term, thereby causing an increase in the required monthly principal payment amounts over those reflected in the actual loan modification. A consequence of Dr.

Becker’s calculated higher monthly principal payments, and the assumption of timely payments for the life of the loan, is a lower hypothetical balloon payment at the end of the contractual mortgage period. Importantly, “under Dr. Becker’s assumptions, the Plaintiffs’ monthly payments are higher than they actually have made or were required to make under their actual loan modifications, creating an unusual finan-eial presentation of damages.” (Id at 21.) Dr. Becker also assumes that, for his hypothetical loan product,

(1) Ocwen and Plaintiffs would have each agreed to these alternate terms; (2) each Plaintiff would have been eligible for a modification based on Dr. Becker’s terms; and (3) each Plaintiff would have been able to pay the higher monthly payments on the same dates that the actual loan modification payments occurred or were due. Floyd criticizes Dr. Becker’s hypothetical loan because neither he nor Plaintiffs offer any evidence that any one of the Plaintiffs was eligible for or could have satisfied those higher monthly payment amounts. (Id.) Floyd notes that, under Dr.

Becker’s hypothetical loan, while Abraham’s monthly payment would remain unchanged, the Cave’s monthly payment would increase $325.29 and the Kaminski’s monthly payment would increase $328.28. (Id. at 22.) To calculate damages, Becker first assumes “that Class members’ expectation of the balloon payment and monthly payments would have been the balloon payment and monthly payments that would have occurred had the modified loan been amortized over the previously disclosed amortization term.” (Becker Report ¶40.) Floyd criticizes this assumption asserting that the alleged failure to disclose the loan amortization term “would only be relevant to the determination of the minimum monthly payment; an amount the Plaintiffs agreed to and accepted in their loan modification agreements.” (Floyd Report at 23.) Floyd further opines that, once the monthly payment is established, the determination of the outstanding principal balance is an easy exercise based on the other terms fully disclosed in the loan modification agreement.

Since the Plaintiffs’ modification agreements told them the new principal balance due, the interest rate, the loan maturity date, and the minimum monthly payment due, Floyd asserts that this information is sufficient to calculate an expected principal balance outstanding amount after each payment, including the estimated balloon payment. (Id. at 23.) Floyd has prepared an amortization

schedule solely based on information from a modification agreement. (Floyd Report Ex. B.) Because borrowers had this information, Floyd asserts that Dr. Becker’s analyses and calculations are based on a flawed premise that the alleged failure to disclose the amount of the loan modification balloon payment and the loan amortization term caused the Plaintiffs to suffer financial damages. (Id. at 24.) Next, Floyd faults Dr.

Becker for failing to address the fact that the Plaintiffs benefited and agreed to the monthly payments under the actual loan modification agreements, which were less than previously owed by the Plaintiffs and lower than the revised amounts calculated by Dr. Becker under his damages approach. (Id.) Floyd calculates that as a result of the loan modification, the net present value benefit realized by the Kaminski Plaintiffs was approximately $96,000.00. (Floyd Report Ex. C.) 3. Dr. Becker’s Reply to the Floyd Report Dr.

Becker asserts that Floyd’s but-for alternative to the Ocwen balloon modification — no modification at all and continuation of the prior loan terms — is an inappropriate model. (Lechtzin Deck Ex. 2, February 12, 2016 Reply Class Certification Report of Brian C. Becker (“Becker Reply”) ¶ 6.) Becker asserts that Plaintiffs did not sue because they were “tricked” into a modification; rather they were aware they were entering into a new loan with new terms.

He faults Floyd for failing to consider a but-for world where Ocwen maintained the pre-modification amortization term or offered borrowers a modification with a disclosed balloon payment. (Id.) Dr.

Becker rejects the importance of the factors Floyd listed as allegedly benefiting boirowers entering into a modification because those factors also compare the Ocwen modification only to a but-for world continuing the original loan terms. (Id. ¶ 7.) Specific to Floyd’s assertions that under the Ocwen modification borrowers enjoyed the offsetting benefits of lowering their monthly payments, avoiding foreclosure and receiving the economic value for the use of them homes, being able to pay additional principal if they chose to do so, lowering — or at least not increasing — the principal balance, and permitting them breathing room until the market stabilized so they could sell the home, Becker opines that that the correct counterfactual is not the pre-modi-fication payment; it is the post-modification payment had the modification been implemented with the previously disclosed amortization term.

Further, the appropriate comparison is not the overall monthly payment, but the cost of the loan in terms of interest paid [ ]. Under that comparison, as shown in the Becker Report, the borrower does not ‘benefit’ from Oewen’s failure to disclose because the Kaminskis would have paid less in interest under the previously disclosed amortization term. (Id. ¶7 (internal citation omitted).) Regarding Floyd’s assumption that, without the Ocwen modification a borrower would have faced foreclosure and thus benefited from being able to stay in their home, Dr.

Becker responds that the question as to whether a borrower would face imminent foreclosure is only relevant to the Floyd Report’s assumed but-for world in which Ocwen does not modify the borrower’s loan. (Id. ¶ 8.) Becker asserts that this factor is flawed since it assumes the borrower would have received no modification, and without a proper balloon disclosure a borrower could not make an informed decision whether to accept the modification, seek alternate lodging, or try to cure their default through other means such as bankruptcy proceedings. (Id. ¶ 14.) Dr, Becker contends that a but-for comparison using a “loan modification with alternative terms world” is reasonable and a but-for comparison using a “no modification world” is not reasonable. (Id ¶ 9.) He asserts that a but-for analysis “requires the construction of what would have happened, not what actually happened, but-for the conduct.

An assumed but-for loan modification with alternative loan terms is no more ‘hypothetical’ or ‘fictional’, as labeled in the Floyd Report, as the Floyd Report’s assumption of no loan modification whatsoever.” (Id. ¶ 10.) While Becker concedes that, in the actual world, neither of those “hypothetical” events occurred, both he and Floyd agree that loan servicers offer loan modifications because they expect to benefit from the modification. (Id. ¶ 10 (citing Becker Report ¶ 6; Floyd Report at 5 n.2, 16 n.9),) He asserts that borrowers as well expect to benefit when entering the modification, relative to making no modification.

Hence, Becker concludes that an assumption that a loan modification with alternative terms would have been offered by the servicer but-for the alleged conduct is a reasonable assumption. (Id.) Dr. Becker reiterates his assertion that a but-for model should incorporate the amortization term of the original loan since modification agreement did not disclose new amortization terms.

He contends that this assumption is “consistent with the premise that the loan terms remained unchanged unless otherwise disclosed in the loan modification agreement.” He adds that each of the named Plaintiffs’ modification agreements at issue in this case includes the following language: All covenants, agreements, stipulations, and conditions in your Note and Mortgage will remain in full force and affect, except as herein modified, and none of the your [sic] obligations or liabilities under your Note and Mortgage will be diminished or released by any provisions hereof, nor will this Agreement in any way impair, diminish, or affect any of Oewen’s rights under or remedies on your Note and Mortgage, whether such rights or remedies arise there under or by operation of law. (Id. ¶ 12 (citations omitted).) Next, Dr.

Becker takes issue with Floyd’s assertion that borrowers had access to the data needed to calculate their prospective balloon payment and could easily have done so. He accuses Floyd of attempting to shift the blame for Oewen’s failure to disclose onto the putative class members.

Becker contends that calculating a balloon payment is an “easy” exercise only to someone with a high level of financial sophistication and/or experience in the mortgage industry. (Id. ¶16.) Becker argues also that “[b]orrowers who become delinquent on their loans, such as Class members, are likely to exhibit even lower degrees of financial literacy, given that studies show that a borrower’s numerical ability and financial literacy are negatively associated with the likelihood of becoming delinquent on a mortgage.” (Id. (citing Kirs-topher Gerardi, Lorenz Goette, & Stephan Meier, Numerical ability predicts mortgage default, 110 Proc.

Nat’l Acad. Sci. 11267 (July 9, 2013)).) He adds that Floyd’s allegation that Plaintiffs had the necessary information to determine their balloon payment at any time is inconsistent with the evidence that they in fact did not, and were unable to perform that calculation, as none of the five named Plaintiffs, including Lee Ann Kaminski, a former math teacher, testified that he or she knew how to calculate a balloon payment. (Id.) Dr. Becker also criticizes Floyd for failing to address the increased interest payments resulting from the undisclosed change in loan terms.

In critiquing Becker, Floyd focuses on the fact that the Becker model’s but-for monthly payments are greater when the but-for amortization term is shorter, relative to the actual monthly payments and amortization term. Becker responds that Floyd ignores the fact that less total interest over the course of the loan is paid by a borrower when the amortization term is shorter. (Id. ¶ 21.) 4. Floyd’s Supplemental Report Finally, Floyd has supplemented his original report by including responses to Dr. Becker’s deposition, which was held after Floyd submitted his original report.

Floyd notes errors in the Becker Report damages calculations related to: “(

i) the comparison of accrued interest as of the damages date in the actual loan modification terms (‘Actual’) versus the alternate hypothetical modification scenario in the Becker Report (‘Becker But-For’); and (ii) the calculation of the present value of principal and interest (‘P & I’) differences between the Actual and Becker But-For scenarios,” (Forbes Deck Ex. B, July 29, 2016 Supplement to the Expert Report of Joseph J. Floyd (“Floyd Supp.

Report”) at 1.) Floyd also observes that the Becker Report damages calculation “arbitrarily assumes an investment return equal to the interest rate on the named Plaintiffs’ modified loans despite more favorable investment opportunities that were available to Plaintiffs at the time they obtained their loan modifications and thereafter.” (Id.) In light of these three observations, Floyd has performed corrected calculations using Becker’s own damages model for the named Plaintiffs.

The first error Floyd identifies relates to the consideration of accrued interest owed by the Cave Plaintiffs through the damages date, which is assumed to be October 2016 in the Becker Report. (Floyd Supp. Report at 2.) This portion of the Becker Report damages calculation captures the difference in accrued interest owed by the named Plaintiffs from the date they ceased paying P & I through the damages date in the Actual scenario as compared to the Becker But-For scenario. However, notes Floyd, the Becker Report incorrectly relies on the aggregate interest due based on a loan amortization

schedule that assumes that the Cave Plaintiffs have continued to make P & I payments, which never actually occurred. (Id.) The impact of correcting the Becker Report damages calculation for the Cave Plaintiffs to account for this accrued interest error reduces the Cave Plaintiffs’ alleged financial losses or damages, as calculated in the Becker Report as of October 2016, from $60.38 to $0.02. (Id.) The second error Floyd identifies “relates to the Becker Report determination of the present value of P & I differences between the Actual and Becker But-For scenarios for the named Plaintiffs.

The Becker Report calculates the present value assuming the named Plaintiffs made their payments on the first day of the month following the payment, without regard for the actual day the payment occurred.” (Id.) Correcting the calculation to reflect the dates that actual payments were made by each of the named Plaintiffs, “properly reflects the days that the named Plaintiffs would benefit from the opportunity to invest the differential between the lower Actual monthly payments and the higher But-For monthly payments set forth in the Becker Report.” (Id. at 3.) Floyd calculates that after correcting for the accrued interest error discussed above for the Cave Plaintiffs and after correcting for the days omitted from the actual payment date through the end of the month for the Cave Plaintiffs and the Kaminski Plaintiffs, “the Cave Plaintiffs’ alleged ‘damages’ amount changes from an alleged financial loss of $0.02 (after accounting for the accrued interest error) to a financial benefit of $0.05.... [T]he Kaminski Plaintiffs’ alleged ‘damages’ amount changes from a financial loss of $3.58, as posited in the Becker Report, to a financial benefit of $11.92.” (Id.) Accordingly, Floyd concludes that, correcting for just these two errors, none of these named Plaintiffs suffered damages.

The third error relates to the Becker Report’s assumption of the named Plaintiffs’ modified loan interest rate (2%) “as the investment rate of return the named Plaintiffs could realize had they invested the difference between the monthly payment amounts in the Actual and Becker But-For scenarios.” (Id.) Floyd notes that Becker conceded in his deposition that if the named Plaintiffs could have invested the savings generated from their lowered monthly payments at a rate higher than his 2% assumption, “that would make the actual world relatively better than the but-for world and would lower or potentially erase the damages here.” (Id. (quoting Forbes Deel.

Ex. EE, July 20, 2016 Deposition of Dr. Brian C.

Becker (“Becker Tr.”) at 232).) Floyd opines that “investment rates of return higher than the 2-percent assumed in the Becker Report were available based on conservative and widely-accepted investment vehicles.” (Id. at 4.) For example, had the named Plaintiffs invested the incremental funds each month in the Vanguard VGLT exchange-traded fund, Floyd calculates that the Cave Plaintiffs would have received an aggregate financial benefit of $1.13, and the Kaminski Plaintiffs would have received an aggregate financial benefit of $1,350.41, when comparing their Actual modification terms (and the lower monthly payments provided thereby) to the Becker But-For terms (with its higher monthly payments). (Id.) IV.

OCWEN’S MOTION TO STRIKE Ocwen has moved to strike portions of the Becker Report as well as references to those portions in Plaintiffs’ class certification papers. Ocwen argues that Becker purports to provide legal opinions regarding the ascer-tainability, commonality, and typicality class certification requirements. The Motion is denied.

The United States Court of Appeals for the Third Circuit has joined other Courts of Appeals holding that a plaintiff “cannot rely on challenged expert testimony, when critical to class certification, to demonstrate conformity with [Federal Rule of Civil Procedure] 23 unless the plaintiff also demonstrates, and the trial court finds, that the expert testimony satisfies the standard set out in Daubert [v. Merrell Dow Pharm., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) ].” In re Blood Reagents Antitrust Litig., 783 F.3d 183, 187 (3d Cir. 2015).

The Court held that expert testimony “that is insufficiently reliable to satisfy the Daubert standard cannot ‘prove’ that the Rule 23(

a) prerequisites have been met ‘in fact,’ nor can it establish ‘through evidentiary proof that Rule 23(

b) is satisfied,” Id. The Daubert analysis governing the admissibility of expert testimony has been codified in Federal Rule of Evidence 702, which provides as follows: A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (

a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (

b) the testimony is based on sufficient facts or data; (

c) the testimony is the product of reliable principles and methods; and (

d) the expert has reliably applied the principles and methods to the facts of the case. Fed. R. Evid. 702. The proponent of the expert testimony has the burden of establishing its admissibility by a preponderance of the evidence. Padillas v. Stork-Gamco, Inc., 186 F.3d 412, 418 (3d Cir. 1999) (citing Daubert, 509 U.S. at 592 n.10, 113 S.Ct. 2786); see also Mahmood v. Narciso, 549 Fed.Appx. 99, 102 (3d Cir. 2013) (citing In re TMI Litig., 193 F.3d 613, 663 (3d Cir. 1999)). There are three requirements for the admissibility of expert testimony pursuant to Rule 702, ‘“qualification, reliability and fit.’” Calhoun v.

Yamaha Motor Corp., U.S.A., 350 F.3d 316, 321 (3d Cir. 2003) (quoting Schneider v. Fried, 320 F.3d 396, 405 (3d Cir. 2003)). “Qualification requires ‘that the witness possess specialized expertise.’ ” Id. (quoting Schneider, 320 F.3d at 405). The Third Circuit has “ ‘interpreted this requirement liberally,’ holding that ‘a broad range of knowledge, skills, and training qualify an expert as such.’ ” Id. (quoting In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 741 (3d Cir. 1994) (“Paoli II”)).

The “reliability” prong requires that “the expert’s opinion must be based on the ‘methods and procedures of science’ rather than on ‘subjective belief or unsupported speculation’; the expert must have ‘good grounds’ for his or her belief.” Id. (quoting Paoli II at 742 (quoting Daubert, 509 U.S. at 590, 113 S.Ct. 2786)). An assessment of “ ‘the reliability of scientific evidence under Rule 702 requires a determination as to its scientific validity.’ ” Id. (quoting Paoli II at 742).

In determining whether the reliability requirement is met, courts may examine the following factors where appropriate: (1) whether a method consists of a testable hypothesis; (2) whether the method has been subject to peer review; (3) the known or potential rate of error; (4) the existence and maintenance of standards controlling the technique’s operation; (5) whether the method is generally accepted; (6) the relationship of the technique to methods which have been established to be reliable; (7) the qualifications of the expert witness testifying based on the methodology; and (8) the non-judicial uses to which the method has been put.

See In re Blood Reagents Antitrust Litig., Civ. A. No. 09-2081, 2015 WL 6123211, at *8 (E.D. Pa. Oct. 19, 2015) (citing United States v. Mitchell, 365 F.3d 215, 235 (3d Cir. 2004)). The reliability prong “applies to all aspects of an expert’s testimony: the methodology, the facts underlying the expert’s opinion, [and] the link between the facts and the conclusion.” ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254, 291 (3d Cir. 2012) (alteration in original; quotations omitted).

Where the expert’s “factual basis, data, principles, methods, or their application are called sufficiently into question, ... the trial judge must determine whether the testimony has ‘a reliable basis in the knowledge and experience of the relevant discipline.’ ” Id. at 294 (alteration in original) (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999)). “Fit” means that “ ‘the expert’s testimony must be relevant for the purposes of the case and must assist the trier of fact.’ ” Calhoun, 350 F.3d at 321 (quoting Schneider, 320 F.3d at 405).

Fit pertains “ ‘primarily to relevance.’ ” Meadows v. Anchor Longwall & Rebuild, Inc., 306 Fed.Appx. 781, 790 (3d Cir. 2009) (quoting Lauria v. Nat’l R.R. Passenger Corp., 145 F.3d 593, 599 (3d Cir. 1998)). “The expert’s testimony must ‘fit’ under the facts of the ease so that ‘it will aid the [fact finder] in resolving a factual dispute.’” Id. (quoting Lauria, 145 F.3d at 599).

This element “ ‘requires a valid scientific connection to the pertinent inquiry as a precondition to admissibility.’ ” Id. (quoting Lauria, 145 F.3d at 600). “In other words, expert testimony based on assumptions lacking factual foundation in the record is properly excluded.” Id. (citing Stecyk v. Bell Helicopter Textron, Inc., 295 F.3d 408, 414 (3d Cir. 2002)). We reject Ocwen’s arguments seeking to strike Dr. Becker’s discussion of the ascertainability, commonality and typicality class action requirements. The argument that Dr.

Becker lacks specialized knowledge, expertise, or academic training to provide opinions on the search capabilities of Ocwen’s proprietary systems or databases is inappo-site. Ocwen’s own Rule 30(b)(6) witness offered fact testimony on the search capabilities. Becker’s opinions relate to how, as an economist, he uses those capabilities to identify members of a class.

Becker specifically states that his method for identifying class members relies upon the searchable electronic data maintained by Ocwen that can be exported, sorted, and analyzed. (Becker Report ¶ 18.) He further asserts that Ocwen’s own analysis of its loan-level data on its loan modifications provides evidence that methods exist which can be commonly applied on a class-wide basis to identify Class members. (Id. ¶ 26.) As such, his opinions are based on the methods and procedures of an economist, rather than on his own subjective belief or unsupported speculation, and there is nothing in Ocwen’s Motion to suggest that Becker’s method of relying on Ocwen’s own data is improper or that his conclusions are unreliable.

Ocwen’s argument that Dr. Becker’s discussion of ascertainability, commonality, and typicality constitute legal conclusions on these class certification issues is also rejected. Expert witnesses are prohibited from rendering a legal opinion because “it would usurp the District Court’s pivotal role in explaining the law to the jury.” Berckeley Inv. Grp., Ltd. v. Colkitt, 455 F.3d 195, 217 (3d Cir. 2006) (citing First Nat’l State Bank v. Reliance Elec. Co., 668 F.2d 726, 731 (3d Cir. 1981)).

While an expert is prohibited from rendering a legal opinion, his opinion is not impermissible because it “embraces an ultimate issue to be decided by the trier of fact.” United States v. Fulton, 837 F.3d 281, 291 (3d Cir. 2016). The Third Circuit has stated that the key to whether an expert improperly delves into improper legal opinion is whether or not the expert “give[s] his opinion as to what was required under the law, or whether the defendant complied with the [law].” Berckeley Inv. Grp., Ltd., 455 F.3d at 218. Ocwen’s argument lacks merit for several reasons.

First, Ocwen concedes that Becker has expressly disclaimed any intention or ability to provide legal opinions. (Ocwen’s Mem, in Support of Mot. to Strike (Docket Entry 63) at 8.) Second, Becker is not a lawyer and does not rely on case law, legal treatises, or other legal sources in reaching his opinions. Third, he has not given an opinion as to what is required by Rule 23. His opinions are confined to an analysis of the factual record to determine whether it demonstrates that class members meeting the class

definitions could be identified, and whether they share common features with named Plaintiffs. As such, they are not legal opinions; they are opinions on which a court may rely to reach its own legal conclusions about the class certification requirements. Cf. Romero v. Allstate Ins. Co., 52 F.Supp.3d 715, 723 (E.D.

Pa. 2014) (striking expert report of law professor offered for purposes of defeating class certification where the expert offered no particularized knowledge of any of the factual issues relevant to a class certification analysis, but rather put forth his own legal analysis based on his experience as a legal scholar of the class certification factors); Witt v. Chesapeake Exploration, L.L.C., Civ. A. No. 10-22, 2011 WL 2790174, at *2 (E.D. Tex, July 14, 2011) (striking law professor’s report providing a

summary of various legal authorities on class certification issues and using his

interpretation of these authorities to argue that the requirements for class certification had been met in this case); Woodard v. Andrus, Civ. A. No. 03-2098, 2009 WL 140527, at *2 (W.D. La. Jan. 20, 2009) (rejecting expert report where proffered testimony from law professor was focused exclusively on whether the legal standard for class certification has been satisfied, rather than bearing on some factual inquiry). Accordingly, the Motion to Strike is denied and the Becker Report is admitted into the class certification record.

We examine the merits of Dr, Becker’s opinions, including the weight to which his conclusions are entitled, when we discuss the individual Rule 23 issues for which they are offered. Y.

THE CLASS CERTIFICATION MOTION The United States Court of Appeals for the Third Circuit requires us to “rigorously assess” the available evidence to assure the prerequisites of Rule 23 are met and to “resolve factual disputes by a preponderance of the evidence and make findings that each Rule 23 requirement is met or is not met, having considered all relevant evidence and arguments presented by the parties.” In re Hydrogen Peroxide Antitrust Litig., 562 F.3d 305, 320-21 (3d Cir. 2008).

A plaintiff “must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011) (emphasis omitted). Failure to meet any of Rule 23(

a) or 23(b)’s requirements precludes certification. Danvers Motor Co., Inc. v. Ford Motor Co., 543 F.3d 141, 147 (3d Cir. 2008). It is the plaintiffs burden to prove each of the prerequisites under Rule 23(

a) and that the class fits within the desired categories of class actions set forth in Rule 23(

b) by a preponderance of the evidence. In re Hydrogen Peroxide, 552 F.3d at 307, 316 n. 14, 320 (citation omitted); see Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349, 354 (3d Cir. 2013) (“It is plaintiffs burden to show that a class action is a proper vehicle for this lawsuit”). Rigorous analysis will frequently “entail some overlap with the merits of the plaintiffs underlying claim.

That cannot be helped. ‘[T]he class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiffs cause of action.’ ” Dukes, 564 U.S. at 351, 131 S.Ct. 2541 (alteration in original) (quoting Gen. Tel. Co. of SW v. Falcon, 457 U.S. 147, 160, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982)). The Third Circuit has also held that issue certification under Rule 23(c)(4), like any other certification decision under Rule 23, “must be supported by rigorous analysis.” Hohider v. United Parcel Serv., Inc., 574 F.3d 169, 200-02 (3d Cir. 2009). A.

Ocwen’s Preliminary Issues on Loss and Damages 1. Plaintiffs’ Theory of Loss Preliminary to its arguments on the Rule 23 requirements, Oewen raises predicate issues, the first of which is that Plaintiffs have proposed fundamentally flawed theories of causation and ascertainable loss. It asserts that we have already rejected the central theory of Dr. Becker’s model and should reject any attempt by Plaintiffs to resurrect it to demonstrate economic loss. This argument has no merit.

Oewen argues that Plaintiffs’ theory of economic loss assumes that Plaintiffs had to pay a greater amount of interest over the life of a loan caused by the “undisclosed extension of the amortization terms under [plaintiffs’ and putative class members’] modified loans.” (Def. Mem. in Opp. to Mot. to Certify Class (Docket Entry #60) (“Def. Mem.”) at 17 (quoting Pis.’ Mem. at 51).) According to Oewen, “[t]he central premise of [Dr.

Becker’s] theory is the proposition that whether a putative class member suffered ascertainable loss or harm can be determined by a comparison of the terms of the actual loan modification provided to each borrower with the hypothetical terms of what Dr.

Becker calls a ‘but-for’ modification that differs from borrower to borrower.” (Id. (quoting Becker Report at 22, Pis.’ Mem. at 51).) Oewen notes that Becker creates a “but-for” loan modification model that retains the reduced interest rate, the loan term, and the new unpaid principal balance (including any principal forgiveness) of the actual modification received by each plaintiff, but then shortens the amortization period.

Oewen contends that, although the obvious goal of Becker’s model is to manufacture some form of assumed causation and measurable damages for each borrower, plaintiffs’ hypothetical modification results in increased higher monthly payments and presumes without analysis (or facts), a borrower’s actual ability or willingness to pay those higher amounts — neither of which could be established other than by case-by-case examination of each borrower’s ability and desire to pay....

Plaintiffs and the Becker Report base these “but-for” modification terms on the unsupported assumption that, in entering their actual loan modifications, putative class m

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