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Doucet Files Class Action Lawsuit Against Nationstar Mortgage

Doucet Files Class Action Lawsuit Against Nationstar Mortgage

Doucet & Associates filed a class action lawsuit against Nationstar Mortgage alleging a systematic practice of collecting and attempting to collect fees that were discharged following bankruptcy. Our client was forced to take money out of his wife’s 401k to prevent Nationstar from inexplicably foreclosing on his home. He alleges Nationstar made no effort to adequately explain or rectify the charges on his account, and damaged his credit by considering his account delinquent even after receiving a court discharge.

Terry Forson filed for Chapter 13 bankruptcy in 2008 and spent the next five years adhering to the repayment plan approved by the court. At the end of this period, the court issued an order deeming his mortgage current and requiring Nationstar to adjust his loan balances to reflect the amounts paid and discharged. In preparation for resuming responsibility for his mortgage, Mr. Forson sent a letter to Nationstar requesting information regarding his post-bankruptcy loan.

Forson claims Nationstar ignored his request for several months and never told him what his monthly payments would be. He contacted the trustee who managed his finances during bankruptcy and made several monthly payments for the amount he advised. According to the lawsuit, Nationstar accepted all of these payments.

After three months and two more written requests, Forson finally received some of the information he requested. However, the information he received made no mention of his total loan balance or any recent account activity. When Forson called to inquire about this, Nationstar responded by telling him to fax written his request. He obliged, but claims Nationstar never responded.

Forson eventually found a way to access his mortgage through Nationstar’s website. He was shocked to find the site allegedly stated he owed roughly $7,000 in delinquent payments and “Lender Paid Expenses.” Forson maintains Nationstar never adequately explained these charges to him, but spent the next eight months insisting his account was delinquent. Nationstar also allegedly refused to deem his mortgage current because it claimed he was delinquent on two payments. However, he made regular monthly payments every month both during and after bankruptcy, all of which were accepted.

Forson continued to make regular monthly payments until August 2014, when Nationstar rejected Forson’s payment. Forson called Nationstar about this, and it stated the amount was insufficient to cover the $8,100 he owed. Forson removed that money from his wife’s 401k in order to prevent what he felt was an imminent foreclosure. Despite their alleged claims that the $8,100 was required to bring his account current, Forson claims that Nationstar never updated his mortgage status. Forson made regular payments to Nationstar until the following March, when the company barred him access to the website.

Doucet & Associates believes that this is indicative of a broad pattern of incorrectly charging debtors for previously discharged debts, and has filed this class action lawsuit against Nationstar on behalf of Mr. Forson and those similarly situated. We estimate this case could be representative of at least thousands of individuals and encourage anyone who has gone through a similar experience with Nationstar or any other mortgage loan servicer to call us immediately at (614) 944-5219 if they live in Ohio or have been discharged from Chapter 13 bankruptcy.

 

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What is the difference between bankruptcy and a loan modification?

What is the difference between bankruptcy and a loan modification?

Bankruptcy is a section of federal law that enables people who owe money from having to pay it back. Bankruptcy is actually mentioned in the Constitution, and is recognized as a way for people to obtain fresh starts, usually after some catastrophic life event caused them to acquire significant amounts of debt. Studies have consistently shown the leading cause of bankruptcy is due to significant medical bills, job loss, business failure, or family turmoil.

Bankruptcy is the process of having your debts organized and either discharged (legally forgiven), or having them repaid in an organized way over time, or a mixture of both.

In the foreclosure context, Chapter 13 bankruptcy is the tool that enables homeowners to force their mortgage company to accept repayment and causes their loan to become current over time. You basically begin making your normal mortgage payment immediately, plus an extra amount to pay back the accumulated arrears. You will make these payments pursuant to a formal plan overseen by the bankruptcy court, over a period of several years. Once you complete all your payments, the plan is done and your loan is current. You then continue with just your normal mortgage payments.

On the flip side, a loan modification is where you and your mortgage company agree privately to terms that enable you to begin repaying the loan. The process is not part of any formal bankruptcy filing, nor is it overseen by a judge. Instead, a loan modification usually comes from your mortgage company realizing you are facing financial hardship and thus deciding to offer you (or is forced to offer you by the government) a lower interest rate or longer repayment period, which lowers your payment. Alternatively, a loan modification could mean you pay a higher payment for a period of time to repay any arrearages. It could be any combination of a series of terms and is only limited to everyone’s imagination and the existing consumer laws.

In any event, a loan modification is the result of an agreement reached directly between you and your mortgage company, rather than a bankruptcy filing, which is overseen by the bankruptcy court system.

 

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