Mortgage Servicing Failure – HOs Paying the Price

Homeowners in Northern California have filed a lawsuit against Nationstar Mortgage LLC for demanding erroneous monthly payment amounts, misapplying payments, wrongful collections, and false credit reporting. These homeowners had an adjustable rate mortgage (“ARM”), and Nationstar sent these homeowners notice that their interest rate was going to change and that they would have a new monthly payment. This notice was correct on both the interest rate and the payment amount. The homeowners sent Nationstar more than their monthly payment amount so that they would pay off the loan quicker. Instead of applying this payment properly, Nationstar claimed the payment due was actually nearly $1000 more, with an interest rate nearly double what they had been told, and held the funds in a suspense account.
When the homeowners refused to pay the higher amount, Nationstar began a campaign of constant and repeated collection calls, began reporting the loan as past due to the credit bureaus, and, once again, refused to pay attention when the homeowners told them they were wrong. Nationstar ignored both qualified written requests (“QWR”) and Notices of Error (“NOE”) sent by the homeowners asking for documents and information about the higher payment. Instead of investigating and providing any proof that the higher payment was correct, Nationstar simply continued its collection calls.
When the homeowners disputed the false credit reporting with the credit reporting agencies (Equifax, TransUnion and Experian) Nationstar again failed to correct its error and continued to collect and report the loan as past due.
Nationstar has refused to correct the payment amount and continued to charge more interest than it should. This means that Nationstar is not reducing the principal balance correctly when the homeowners make their monthly payments.
All of this conduct is typical of Nationstar who operate on a corporate mantra that the consumer cannot be trusted. All attempts to document and communicate the error to Nationstar have met with the same result. Their policies and procedures blindly rely on a system that can be found at fault, without any avenue for actually processing a complaint when a problem arises.
Time and time again, mortgage servicers have consistently failed to devote adequate resources to train their frontline employees to investigate and understand borrowers who report errors on their loan account. Mortgage servicers don’t seem interested in borrower concerns, being solely dedicated to obtaining payment for whatever amount is shown on their operators’ screens. Instead of asking questions or escalating complaints, employees are trained that their internal computer records are correct no matter what errors the servicer made and in disregard of all proof provided by the borrower.
Homeowners should not be subject to these anti-consumer policies, and larger companies dig in their heels and prey on the inclination to not press the issue.
The lawsuit alleges Nationstar violated the federal and California Fair Credit Reporting Act [15 U.S.C. 1681 et.seq., Cal. Civ. Code 1785.25(a)], the California Fair Debt Collection Practices Act [Cal. Civ. Code 1788 et.seq.,], and the Real Estate Settlement Procedures Act [12 U.S.C. 2605 et.seq.]. The case is Ritsema v. Nationstar Mortgage LLC., Case No. 16-cv-01335, filed in the Superior Court of California, County of Santa Cruz.

The homeowners are represented by David Humphreys and Luke Wallace of the Consumer Protection law firm of Humphreys Wallace Humphreys P.C. in Tulsa, Oklahoma.

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