Mr. Cooper Accused of Slapping Borrowers with Junk Fees in Loan Payoff Quotes

Borrowers are challenging mortgage servicer Mr. Cooper (formerly known as Nationstar) over a $25 fee charged for loan payoff quotes. The class action lawsuit alleges these fees are "junk fees" that violate federal consumer protection laws.

Borrowers take aim at $25 payoff quote fee

The lawsuit centers on a $25 charge Mr. Cooper adds to loan payoff quote statements. Borrowers argue this fee is excessive and unauthorized, considering the quotes can be generated electronically in seconds. 

The suit seeks to represent a class of borrowers who were at least 30 days delinquent on their loans when Mr. Cooper acquired servicing rights on their mortgages. These borrowers who brought the complaint represent potentially thousands of borrowers who may have been charged this fee.

Lawsuit claims FDCPA violations

According to the borrowers, the Mr. Cooper junk fees violate the Fair Debt Collection Practices Act (FDCPA) for several reasons. First, borrowers argue the $25 cost is unreasonable for a quick electronic process. 

Second, the fees allegedly lack authorization in borrowers' mortgage contracts and haven't been approved by the Department of Housing and Urban Development (HUD). 

Finally, the lawsuit suggests these fees give Mr. Cooper an unfair competitive advantage over servicers who don't charge for payoff quotes.

Mr. Cooper's legal troubles

“Junk fees” are the only legal issue Mr. Cooper's is facing. The company is facing several class action lawsuits over a data breach and has a settlement in the works for allegedly charging "exorbitant pay-to-pay fees."

While Mr. Cooper has yet to publicly comment on the case, their website acknowledges a potential "$25 preparation fee" for payoff quotes.

Uncertain damages and next steps

The total amount of fees collected and damages sought in the lawsuit remain unknown. Mr. Cooper has until May 9th, 2024 to respond to the lawsuit filed in a Washington state court, National Mortgage News reports.

If you believe you were charged surprise "junk fees" by Mr. Cooper in a loan payoff statement, be aware of this class action lawsuit. Review your loan documents and payoff statement carefully to see if any of these fees apply to you.

The plaintiffs are represented by Christina L. Henry of Seattle Consumer Justice P.S. and Phillip R. Robinson of Consumer Law Center LLC.

The Mr. Cooper junk fees class action lawsuit is Salom et al v. Nationstar Mortgage et al, Case No. 2:24-cv-00444 in the Superior Court of the State of Washington In and for the County of King.