Class Action Lawsuit Accuses Nationstar of Racketeering

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Last week, Nationstar Mortgage LLC was hit with a class action lawsuit accusing the loan company of violating federal Racketeer Influenced Corrupt Organizations (RICO) and Florida law over claims that the company automatically charged homeowners through a subsidiary for home inspections that were excessive and unreasonable and then received kickbacks.

Lead plaintiffs, four Florida homeowners, alleged in their RICO class action lawsuit that Nationstar and its subsidiary, Solutionstar, unfairly required multiple home and property inspections after they became delinquent on their mortgage payments that were serviced by Nationstar. The plaintiffs allege that the inspections were conducted by Solutionstar and they were charged additional late payment fees and required to refinance and make expensive modifications.

“Because Nationstar’s parent companies profit from property inspections through their ownership of Solutionstar, Nationstar is incentivized to order property inspections even where they are excessive in frequency and price, unnecessary, inappropriate or otherwise unlawful,” the plaintiffs argue in their RICO class action lawsuit.

The plaintiffs further allege that Nationstar has an unfair interest in hitting delinquent mortgage holders with excessive fees because they generate revenue from those fees. According to the class action lawsuit, Nationstar has an unfair incentive to keep mortgage holders in default because it collects more in profit if it does so.

“Instead of being based on reasonable parameters — such as whether borrowers’ mortgage contracts or applicable law permitted and/or the lender’s guidelines required the inspections — Nationstar’s computer servicing system was programmed to order the inspections and impose as many charges and fees as possible,” claim the plaintiffs in the class action lawsuit. “Nationstar routinely engaged in this abusive conduct even after it had been notified by the borrowers’ attorney that the property was inhabited and in good condition.”

The plaintiffs further allege that when Solutionstar became the service company for delinquent property inspections, Nationstar increased the fees it charged delinquent borrowers for property inspections around 2012 from $9.15 to $15. Additionally, according to the class action lawsuit, Solutionstar began to assess multiple fees within a single month and even within the same day.

The plaintiffs argue these charges amount to violations of federal and state RICO laws engaging in a racketeering scheme to increase its own profits at the expense of delinquent borrowers and also by using mail fraud and wire fraud to conduct its communications with customers. The class action lawsuit alleges that in March, the New York Department of Financial Services sent the CEO of Nationstar a letter notifying the company of an excessive number of complaints failed against it for these practices.

The plaintiffs contend that a class action lawsuit is appropriate because of a number of other lawsuits filed against the companies in Florida with similar accusations.

Lead plaintiffs, Trevor Hill, Staci Hill, Qamarun M. Shaikh and Mujahiddin Shaikh, are represented by Yechezkel Rodal of Loan Lawyers LLC in Florida and Patrick F. Madden of Berger & Montague PC.

The Nationstar RICO Class Action Lawsuit is Hill, et al v. Nationstar Mortgage LLC, et al., Case No. 0:15-cv-60106, in the U.S. District Court for the Southern District of Florida.