Outcome: $3.6 Million Settlement
McFadden et al. v. Nationstar Mortgage LLC, Case No.: 1:20-cv-00166, in the U.S. District Court for the District of Columbia
In a victory for homeowners, a $3.6 million class action settlement has been given final approval by a D.C. federal judge, resolving claims against Mr. Cooper, one of the country’s largest home loan servicers. The lawsuit alleged that Mr. Cooper unlawfully charged processing fees, known as “pay to pay fees,” to borrowers who made mortgage payments over the phone or via IVR. These fees, which allegedly violated several federal and state consumer protection laws, were as high as $19 per transaction. The settlement provided relief to affected mortgage borrowers in Washington, D.C., and nationwide.
The settlement marked the end of a four-year legal battle that began in January 2020. As part of the agreement, Mr. Cooper has stopped charging the convenience fees as of 2022 and has committed to refraining from collecting or charging such fees for an additional six months following the final approval of the settlement. This outcome not only benefited the class members involved in the lawsuit but also set an example for other home loan servicers, discouraging them from imposing similar unlawful fees on borrowers in the future.