LAS VEGAS (CN) - Nationstar Mortgage trampled on homeowners after buying from Bank of America servicing rights to 1.3 million home loans, for $7.1 billion, a class action claims in Federal Court.
Lead plaintiffs Brian and Lanilee Johnston sued Nationstar Mortgage LLC in Clark County Court, alleging breach of contract, breach of third party beneficiary contract, breach of faith and unjust enrichment.
It all started, the Johnstons say, when Bank of America put together a program to help people affected by the mortgage foreclosure crisis.
Bank of America is not a party to the lawsuit.
"As a servicer of residential mortgage loans, Bank of American ... entered into permanent loan modification agreements with distraught homeowners through the county whose residential mortgage loans it serviced prior to January 2013," the complaint states.
"On January 6, 2013, BOA entered into a Mortgage Servicing Rights Purchase and Sale Agreement (hereinafter 'MSRP') with Nationstar. Pursuant to the MSRP, Nationstar 2 assumed the servicing rights to approximately 1.3 million residential mortgage loans, with a total unpaid principal balance of approximately $215 billion, and servicing-related advanced receivables of approximately $5.8 billion. The aggregate purchase price was approximately $7.1 billion.
"Within the MSRP, Nationstar contractually obligated itself to honor all Modification Agreements that BOA previously entered with Homeowners. Despite its contractual obligation to do so, Nationstar has uniformly failed to honor the terms of the Modification Agreements to the detriment of Homeowners, thereby compelling the initiation of this action."
The Johnstons claim that "Nationstar has refused to honor the terms of the Modification Agreements. Rather than fulfill its contractual obligation, Nationstar has made numerous homeowners reapply for loan modifications featuring lesser terms than those within their valid Modification Agreements with BOA, held payments in suspension, improperly assessed unwarranted fees, and in some circumstances, initiated foreclosure proceedings.
"In those instances where homeowners refused to reapply for inferior loan modifications, or where Nationstar chose not to offer any loan modification whatsoever, Nationstar has deemed the original mortgage loans to be 'non-performing' or 'delinquent' and assessed unwarranted penalties and costs against homeowners."
The Johnstons claim they worked with Bank of America to reduce their monthly mortgage payment to $1,527.60. But after sending their first payment to Nationstar, "Nationstar sent a notice to plaintiffs stating that their December mortgage payment of $1,527.60 was insufficient and would be held in a suspense account. Nationstar also indicated that plaintiffs' principal balance was $212,433.27 (approximately $4,000 more than the principal balance with BOA) with monthly payments totaling $1,709.11 at an interest rate of 5.875 percent. Nationstar further stated that a total of $10,779 was currently due, including an unexplained property inspection fee of $315.00," according to the complaint.
The Johnstons say they asked Nationstar to honor their original loan modification agreement, but it refused.
The family seeks class certification, actual and compensatory damages, specific performance and attorneys' fees.
They are represented by George Haines, with Haines & Krieger, of Henderson.