BofA, Nationstar Class Action Says Mortgage Payments Inflated

Nationstar Mortgage Holdings and Bank of America have been slapped with a proposed class action seeking damages for borrowers nationwide who were allegedly charged “extortionate” amounts not listed on their mortgage payment schedules, putting them at risk of foreclosure.

Plaintiffs Jimmie and Gloria Hodge of Arkansas say they know firsthand that Nationstar and Bank of America’s practice of charging homeowners inflated amounts of principal on their mortgages results in homeowners being presented with unexpected “balloon payments” at the end of the life of their mortgage.

This figure can be “astronomic” and in the Hodges’ case, the amount Nationstar and Bank of America claimed due was 20 percent of the underlying loan.

Specifically, the Hodges state that in January 2001, they incurred a mortgage obligation to Bank of America for a residential property in California belonging to Gloria’s mother.

The promissory note securing the mortgage loan stated that the annual percentage rate of the loan was 7.862 percent, the principal was $50,479 and the finance charge was $35,892.74.

The total amount of all scheduled payments was $86,371.74. The terms of the Note further stated that the repayment would begin on Feb. 19, 2001 and would be spread across 180 monthly payments, the plaintiffs say.

For more than 12 years, the Hodges made all monthly payments within the 15-day grace period, with the exception of a five-month period in 2005 where Bank of America and the Hodges agreed on a modified schedule, the couple states.

In June 2013, the Hodges received a letter from Nationstar informing them that Nationstar had acquired and would now be servicing their mortgage. The letter further stated the “original loan terms will not change as a result of this transfer.”

However, three years later the Hodges claim they received a statement from Nationstar indicating a payoff balance of $11,469 and a notice stating if they continued to make their scheduled payments in accordance with the terms of the loan, this would result in a final payment of $9,234.14 in unpaid principal, as opposed to the expected final payment of $480.84 detailed in the original note.

Concerned by the drastic discrepancy, Gloria Hodge contacted Nationstar to inquire about the purported increase in the loan.

According to the lawsuit, the Nationstar employee told Gloria that this amount was reflective of the $50,000 borrowed from the note.

When Gloria referred to the final payment of $480.84 allegedly detailed in the note, she was told nonetheless she owed a final payment of $9,234.14.

“Plaintiffs have faithfully paid the entirety of the amounts articulated in the note,” the complaint says. “Despite this fact, they are now faced with the Hodges’ choice of paying an additional amount of almost $10,000 that is predicated on nothing more than defendants’ say so, or else risking foreclosure.”

They contend that when they asked for a full accounting, Nationstar and Bank of America refused to verify the legitimacy of the purported amount due.

“Because of the refusal of Bank of America and Nationstar to provide complete documentation, it is impossible for the [Hodges] to determine whether or not they actually are required to pay the ‘balloon payments’ which are separate and apart from the payments detailed in the amortization schedules of the underlying loans,” the lawsuit states.

The lawsuit further claims that by colluding with Nationstar in seeking to extract unsubstantiated, additional amounts of principal from its mortgages, Bank of America has breached its contract with the plaintiffs and proposed Class Members and has violated the covenant of good faith and fair dealing.

Jimmie and Gloria Hodge bring this action on behalf of a Class of all residential mortgagors in the United States whose loans were originated with or previously serviced by Bank of America and Nationstar, and whom the companies contend owe a balance on their mortgage that conflicts with the terms or the underlying mortgage notes.

The Hodges are represented by Hank Bates of Carney Bates & Pulliam PLLC, Brandon M. Haubert of Wilson & Haubert PLLC, and John B. Thomas and Eric Grant of Hicks Thomas LLP.

The Bank of America, Nationstar Inflated Mortgage Payment Class Action Lawsuit is Hodge, et al. v. Nationstar Mortgage Holdings Inc., et al., Case No. 1:16-cv-01516, in the U.S. District Court for the Eastern District of California.