UPDATE 6/4/2018: This case has been resolved and is no longer proceeding. If you have faced a similar situation (bankruptcy Chapter 13 discharge violations) with your mortgage servicer anywhere in the country, please contact us here. We are interested in pursuing other similar cases nationwide.
The law firm of Doucet & Associates Co., L.P.A. filed a class action against Nationstar Mortgage, LLC that alleged the mortgage servicer overcharged its Chapter 13 bankruptcy customers thousands of dollars. The overcharges resulted from the mortgage company charging disallowed fees after those customers received a Chapter 13 bankruptcy discharge. Today, the Court ruled against Nationstar, finding multiple violations of the bankruptcy discharge. In a procedurally unusual move, the case will now proceed to class-wide discovery to determine how many people in the Southern District of Ohio faced similar problems.
The lawsuit was filed on behalf of Terry Forson, a man who paid back every penny of his obligation to Nationstar as part of his Chapter 13 bankruptcy plan. However, rather than recognizing Mr. Forson’s payments and his completed plan, Mr. Forson alleges that Nationstar demanded thousands of dollars in extra fees and interest after his bankruptcy was completed that it was not entitled to recover. The court found today that letters sent to Mr. Forson illegally demanded money he was not obligated to repay.
Chapter 13 bankruptcy allows people to reorganize their personal debts and “get back on track” after missing some payments. The bankruptcy reorganization plans last three to five years and allow consumers to make up their past due payments over time without losing their property. During that process, mortgage companies recover missed payments from behind homeowners, but are not allowed to charge certain fees as part of the plan. Those fees, like late fees, are not allowed.
Mr. Forson wrote several letters to Nationstar and explained their bankruptcy discharge multiple times over the phone to Nationstar. He even had the bankruptcy trustee send a letter indicating they were deemed current on their mortgage. However, despite these numerous requests, Nationstar continued to fail to correct their account.
After a year of on-time payments by the Forsons and hours of haggling over the issue, Nationstar threatened to foreclose on the Forson’s home unless it received over $8,000 in disallowed fees. The Forsons paid the amount in protest and then retained counsel to find justice and ensure this does not happen to anyone else. The court found many of those letters were illegal. It will decide damages soon, and the entire case will proceed to class discovery.
The class action was filed as part of adversarial proceeding number 2:15-ap-02137 in Bankruptcy Case Number 08-61001 before the United States Bankruptcy Court for the Southern District of Ohio, Eastern Division. If this has happened to you anywhere else in the country, please call our firm at 614-944-5219 or fill out this contact form.
Contact: Troy Doucet