Woman Alleges Nationstar Violated Escrow Account Rules by Neglecting to Pay Interest

A woman has filed a lawsuit alleging her bank violated escrow account rules.

Plaintiff Yong Jun Choi alleges Nationstar Mortgage LLC, doing business as Mr. Cooper, violated the laws of New York and 13 other states by not paying interest on money held in escrow accounts. She cites escrow account rules in New York that mandate that homeowners be paid interest on fund placed into escrow accounts for property located in the state of New York at a minimum rate of two percent annually.

Choi claims she bought a single-family home in Glenn Cove, New York on May 12, 2016. At that time, her mortgage loan was with Nationstar’s predecessor-in-interest  Guaranteed Rate Inc. Nationstar allegedly purchased Choi’s mortgage in June 2016.

Alleged Violations of Escrow Account Rules

Choi alleges she did not receive any accrued interest on her escrow account either from Guaranteed Rate or from Nationstar from the time she purchased her home until she sold it on Aug. 30, 2017. During that time period, she alleges she made “substantial escrow payments totaling thousands of dollars in addition to her regular monthly principal and interest mortgage payments as a form of pre-payment of property tax and insurance.”

As a result of not paying Choi any interest on her escrow funds, Guaranteed Rate and Nationstar allegedly were in violation of escrow account rules.

According to Choi’s lawsuit, Nationstar is accused of profiting off the funds held in her escrow account, which generated float income for the mortgage company. The lawsuit indicates float income is defined as “revenue from the investment of funds held by Nationstar.”

Choi’s proposed Class would include fellow plaintiffs in 14 states who were victims of similar violations of escrow account rules by Nationstar doing business as Mr. Cooper. The affected states are New York, California, Connecticut, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, Oregon, Rhode Island, Utah, Vermont and Wisconsin.

As the third largest residential mortgage servicer in the U.S., Nationstar has more than three million customers. Choi says Class Members can be identified by Nationstar’s own records.

Choi also alleges that Nationstar knowingly and willfully violated the laws by refusing to pay interest on her escrow account and those of other homeowners. By allegedly breaking New York’s escrow account rules, Nationstar enriched its own financial position at the expense of homeowners, which Choi claims “constitutes unlawful, unfair, and deceptive business acts and practices.”

Choi’s mortgage escrow lawsuit alleges that in order to break escrow account rules and escape detection of such violations, Nationstar sent periodic “Escrow Account Disclosure” statements and mortgage statements to Choi and other Class Members. These statements allegedly did not accurately show the amount of money the homeowners were due in connection with their escrow accounts, because the statements did not indicate the interest Nationstar was required to pay on those escrow accounts.

Instead, the statements allegedly were knowingly and intentionally designed to falsely assure homeowners that Nationstar was properly managing the escrow accounts by making sure any excess funds in escrow were returned to the homeowners. Nationstar allegedly intentionally withheld interest from the homeowners in violation of escrow account rules, and never alluded to the interest in any statements received by the homeowners.

According to Choi’s lawsuit, “the form statements and accompanying literature that Nationstar sends or makes available to homeowners is replete with misleading information …”

The Escrow Account Rules Lawsuit is Yong Jun Choi v. Nationstar Mortgage LLC, d/b/a Mr. Cooper, in the U.S. District Court for the Eastern District of New York.

Join a Free Mortgage Escrow Account Class Action Lawsuit Investigation

Mortgage borrowers in certain states whose lenders required them to pre-pay their property taxes or property insurance through an escrow account and who did not receive interest on those escrowed funds may qualify to join this mortgage escrow account class action lawsuit investigation.

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