Bailey Glasser Secures $3.6 Million Settlement in "Pay-to-Pay" Class Action Against Mr. Cooper

Bailey & Glasser, LLP secured a groundbreaking $3.6 million settlement in a class action before a federal district court in Washington, D.C on behalf of consumers who were charged illegal fees just for paying their mortgages over the phone.

The lawsuit against Mr. Cooper – formerly known as Nationstar Mortgage LLC – and one of the country’s largest home loan servicers, alleges that the servicer charged mortgage borrowers in D.C. and nationwide illegal “Pay-to-Pay” fees, or extra charges up to $14 to process each monthly payment by phone in violation of several federal and state consumer protection laws. Bailey Glasser partner James Kauffman, along with attorneys from the law firm Tycko & Zavareei LLP, are class counsel in this case.

On Thursday, May 2, 2024, U.S. District Court Magistrate Judge Zia M. Faruqui gave final approval on the settlement, which included the nearly $3.6 million payment to 72,555 class members and was based on a novel legal argument under the D.C. “Protecting Consumers from Unjust Debt Collections Practices Act,” which provides additional statutory damages to consumers for each illegal transaction. The settlement includes a D.C. borrower portion that provides that even though a D.C. borrower may have paid a $14 or lower pay-to-pay fee, they will receive $250 per transaction, less attorney’s fees, expenses, service awards and administrative costs.

"The settlement obtained is an excellent result for the class, and we are pleased that the court agreed," James Kauffman said. “While our work has caused many servicers to stop charging these fees, others persist in this abuse, and we will continue to fight to protect hardworking consumers from junk fees.”

The case is McFadden et al. v. Nationstar Mortgage LLC, case number 1:20-cv-00166, in the U.S. District Court for the District of Columbia. You can learn more about this settlement by reading this Law360 article here: https://www.law360.com/pulse/daily-litigation/articles/1829094