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Mr. Cooper Interest on California Mortgage Impound Accounts Class Action

Man with Money Bad Leaning on House

The complaint for this class action alleges that Nationstar Mortgage, which does business under the name Mr. Cooper, does not pay mortgage holders interest on the amounts held in escrow, or in impound accounts, despite laws requiring this.

The class for this action is

  • All owners of one- to four-family residences in California,
  • Secured by a mortgage loan serviced by Mr. Cooper or Nationstar,
  • Who maintained an impound account through the company
  • At any time between May 23, 2014 and the date of the class notice,
  • Who did not received 2% simple interest on the balances of their impound accounts during that period.

The complaint quotes the federal Dodd-Frank Act and the regulations of the Department of Housing and Urban Development requiring that mortgage lenders observe state laws reguarding interest on amounts held in escrow or impound accounts. It also quotes the California Civil Code, which says that mortgage lenders who receive “money in advance for payment of taxes and assessments on the property, for insurance, or for other purposes relating to the property, shall pay interest on the amount so held to the borrower.”

Plaintiff Robert Wilde lives in California, and when he entered into mortgage contracts with Mr. Cooper, he was required to deposit funds into an escrow account for property taxes and insurance. The standard terms of the Deed of Trust require him to do so, and add, “Unless an agreement is made in writing or Applicable Law requires interest to be paid on the Funs, lender shall not be required to pay Borrower any interest or earnings on the Funds.”

Wilde paid $994.04 per month for the escrow account for the first six months of 2017 and $975.24 per month for the second six months of 2017. The complaint estimates that the average amount in the account was therefore $4,680 during 2017 and that the company should have paid him $94 in interest.

When Wilde went to figure his 2017 taxes, he discovered he had not received a Form 1099-INT from Mr. Cooper stating the amount of interest paid to him. When he contacted the company, the complaint says, it told him that the form had not been issued because he had accrued less than $10.

Although he requested that the company look into the matter on February 22 and followed up on March 11, and although he received assurances that the company would respond after various short periods, as of the filing of the complaint for this action (May 25) he has still not received either an answer or the interest he is due.

Among other things, the complaint cites California’s Unfair Competition Law and breach of contract. 

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