Freddie Mac dismissed from Mr. Cooper 'pay-to-pay' suit

Consumers suing Mr. Cooper for "pay-to-pay" fees have failed so far to prove Freddie Mac authorized the alleged junk fees, a federal judge has ruled. 

Plaintiffs have 15 days to amend their claim against the government-sponsored enterprise, U.S. District Judge Barbara Jacobs Rothstein wrote in an order Thursday. The case in a Washington federal court accuses Mr. Cooper of levying illegal $25 fees for expedited payoff quote statements.

The ruling did not dismiss Mr. Cooper from the civil counts. The sides must also file a joint status report within 15 days.

The lawsuit is one of several similar "pay-to-pay" cases against mortgage companies. The Consumer Financial Protection Bureau has also weighed in on behalf of plaintiffs against Mr. Cooper. The complaint uses the servicer's former Nationstar Mortgage name. 

A Mr. Cooper representative declined to comment Friday, citing a company policy not to comment on pending litigation. Neither representatives for Freddie Mac nor attorneys for the parties responded to requests for comment Friday. 

Three borrowers who incurred charges in 2022 and 2023 accuse Mr. Cooper of unjust enrichment and violation of state consumer laws. Attorneys for Mr. Cooper have defended the fees, and the company to this day describes the payoff quote charge on its website. 

After the complaint was filed in April, plaintiffs named Freddie Mac as a defendant, as owner of one of the loans in question. Plaintiffs suggested the GSE had the ability to supervise the servicer's conduct and that it turned a blind eye to the fees. 

Freddie Mac in September argued it requires servicers to only charge lawful fees and comply with all applicable laws. Its attorneys also cited the Merrill doctrine, a legal principle protecting the government from liability when it does not authorize such challenged actions. 

"Plaintiffs fail to allege any affirmative act committed by Freddie Mac nor that Freddie Mac provided any express authorization for the charged fee," wrote Rothstein. 

The Coppell, Texas-based lender and servicer has been busy in federal court, last month watching a federal judge dismiss a pending class action case over COVID-19 loss mitigation relief denials. It also sued its insurers for $30 million in losses they allegedly hadn't covered in the aftermath of the company's massive data breach last December.