A Shelby County Circuit Court lawsuit and government records revealed a pattern of fraud allegations against mortgage-servicing company Nationstar Mortgage.
The WMC Action News 5 Investigators launched an investigation of the Dallas-based mortgage-servicer after it foreclosed on the Cordova, Tennessee, home of Linda Howard. Howard and her husband had owned the home since 1998. Her attorney Kevin Snider produced records that proved Howard never missed a payment since Nationstar Mortgage started servicing her mortgage in 2011.
Also according to the records, Nationstar Mortgage suddenly started refusing her monthly payments in February of this year. From February to May, the company sent her payments back with statements posting thousands of dollars in unexplained fees like "property inspections" and "disbursement insurance."
"I wrote them. I called them. And I got no response," Howard said.
Snider said Nationstar Mortgage kept returning Howard's payments and kept ignoring her requests for explanation of the fees until it foreclosed on her house in May, then sold it at auction. "Nationstar improperly foreclosed on the property," Snider said.
Snider filed a lawsuit on Howard's behalf in Shelby County Circuit Court. The suit alleges Nationstar Mortgage committed negligence, fraud, breach of contract, breach of the implied consent of good faith and fair dealing, violations of the Tennessee Consumer Protection Act and unjust enrichment based on "...improper, inaccurate and fraudulent representations" of "...improper or excessive late fees" designed to force the Howards into foreclosure "...so that (Nationstar Mortgage) could acquire the property with its large equity at a bargain basement price."
"I don't understand it. I never missed a payment," Howard said. "I don't have a house anymore."
"The Howards made their payment every month. How are these payments being applied? What are the extra charges for?" asked Snider. "They have never been given an explanation. This is a way to garner, if you will, extra fees, extra charges, extra expenses to essentially force them into foreclosure so that Nationstar Mortgage can sell their home."
According to the federal Consumer Financial Protection Bureau, Nationstar Mortgage has registered 14,013 mortgage servicing-related complaints, the fifth most behind Bank of America, Wells Fargo, Ocwen and JPMorgan Chase. Spokesperson Sam Gilford said the bureau neither comments on nor confirms federal investigations of mortgage-servicing companies.
Tennessee Department of Commerce & Insurance spokesperson Kevin Walters said the agency has logged 24 mortgage-servicing complaints against Nationstar Mortgage since 2014. Narratives from the complaints include the following allegations:
"...consumer claims (Nationstar Mortgage) will not give an explanation of refused payment, nor do they show the money they are holding in suspension..."
"...consumer claims (Nationstar Mortgage) used deceptive tactics to steer consumer into foreclosure..."
"...consumer claims (Nationstar Mortgage) never released the lien when consumer purchased the home four years ago and said it would respond within 6 days (and did not respond)"
Kevin Solodar of Dallas, Texas, unsuccessfully filed a petition on Change.org in an attempt to encourage the Federal Trade Commission to "investigate Nationstar Mortgage for abusive servicing practices." He produced financial documents that indicated Nationstar Mortgage may have misapplied his mortgage escrow refund to his mortgage interest during a bankruptcy. "They are a foreclosure mill," Solodar said. "They buy risky mortgages -- people who are unemployed, people who are in bankruptcy -- and do what they can to get the house and sell it."
Kelly Ann Doherty, senior vice president of corporate communications for Nationstar Mortgage, issued this statement:
"We work hard to impress our customers through caring service. We are not perfect, but we have made tremendous progress on our journey to deliver radical service for our nearly 2.5 million customers. For example, customer complaints are down over 50% over the last two years, our current Better Business Bureau rating is an A+ and we have earned Fannie Mae's highest servicing rating for the second year in a row. We also have a legacy of assisting homeowners in the midst of the financial crisis. Since 2010, we have helped more than 600,000 customers stay in their homes through workout solutions. While it is our policy not to comment on pending litigation, I can share that integrity is core to our business and essential to every service we perform. When we collect a payment on behalf of the owner of the loan, our team follows a comprehensive compliance and risk management system, which includes adhering to state and federal regulations."
In 2014, Nationstar Mortgage settled a New York lawsuit, alleging the company illegally sold mortgage loans without notifying investors.The settlement's terms were kept secret.
Howard and her husband must vacate their home by September 30. She said she realizes there's no way to get her home of 18 years back, but she wants Nationstar Mortgage held accountable. "I'm not going to sit back and watch them do this because there's other people out there who are probably going through the same thing," she said.
Complaints concerning Nationstar Mortgage can be forwarded to Andy Wise at awise@wmctv.com. They should also be filed with your state consumer affairs office:
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