A mortgage lender is being sued over allegations the company gouged consumers and illegally enhanced profits.
City of St. Clair Shores Police and Fire Retirement System filed the lawsuit June 2 in U.S. District Court in Florida against Nationstar Mortgage Holdings, claiming the company overstated its ability to profit from servicing loans.
The lawsuit claims the company is the second largest non-bank subprime mortgage servicer, and stated in its filings with the U.S. Securities and Exchange Commission that it was improving profitability.
However, the lawsuit claims management deficiencies prevented the company from complying with laws and regulations, and that it was gouging borrowers by charging for “repeated, unnecessary inspections.” The company is also accused of pressuring mortgagors to refinance their mortgages and complete expensive modifications.
The company was eventually named in a federal racketeering lawsuit, and its stock fell 13 percent. The lawsuit is seeking class status for all stockholders between Feb. 27, 2014, and May 4 of this year. The plaintiffs are also seeking an unspecified amount in damages plus court costs.
The plaintiffs are represented by Paul J. Geller, Jack Reise and Elizabeth A. Shonson of Robbins Geller Rudman & Dowd LLP in Boca Raton, Fla., and Samuel H. Rudman and Mary K. Blasy of the same law firm in Melville, N.Y.; and Thomas C. Michaud of Vanoverbeke Michaud & Timmony, P.C. of Detroit.
U.S. District Court Southern District of Florida case number 15-cv-61170.