One loan, four different balances, and a $258K discrepancy nobody has explained
A federal lawsuit alleges BNY Mellon and PHH Mortgage retained RMBS settlement proceeds tied to a $6.75 billion claim without adjusting a borrower's account.
The case, filed April 16, 2026, in the U.S. District Court for the Northern District of Alabama, was brought by Birmingham homeowner Gideon J. Sipin, who holds a mortgage within the RAMP Series 2006-RZ3 securitization trust. BNY Mellon serves as the trust's master trustee, and PHH Mortgage Corporation, now operating as Onity Mortgage Corporation, serves as the loan servicer.
At the center of the dispute is what happened after the Residential Capital bankruptcy produced a court-approved net allowed RMBS trust claim of approximately $6.75 billion, distributed across 392 trusts covering an estimated 463,000 mortgage loans. According to court documents, those proceeds were allocated using the Duff and Phelps methodology, which relied on loan-level data and breaching-loss modeling to calculate each trust's share.
Sipin alleges that despite settlement proceeds flowing to the trust holding his loan, neither the trustee nor the servicer adjusted his balance to reflect those recoveries. The filing points to a December 2023 response from PHH Mortgage to the Consumer Financial Protection Bureau, in which the servicer confirmed an unpaid principal balance of $330,651.59 on the loan. Sipin treats that figure as the defendants' own admission of the trust's economic exposure on his account.
The problem, as the filing frames it, is that the numbers don't line up. The filing identifies four different balances asserted on the same loan across separate proceedings: $472,176.37 recorded in trust pool records as of September 2018; the $330,651.59 confirmed to the CFPB; approximately $589,000 asserted under penalty of perjury in a bankruptcy proof of claim; and an estimated $625,000 that Sipin says the payoff figure has since reached. That $258,348.41 gap between the CFPB figure and the bankruptcy claim remains unexplained, according to the filing.
The case also raises servicing practice concerns. Sipin alleges his access to the online mortgage portal was cut off and monthly statements stopped arriving. He further cites sworn testimony from a related proceeding in which PHH's designated corporate representative reportedly could not confirm whether the account was in default, whether statements were being sent, or basic details of the servicing history.
The lawsuit does not seek to enforce the trust's pooling and servicing agreement. Instead, it invokes equitable principles, essentially arguing that a trustee and servicer should not be permitted to retain settlement compensation while simultaneously demanding full payment from the borrower. Sipin is seeking a court-ordered accounting of all settlement proceeds allocated to the trust, a recalculation of his loan balance, and restitution of any amounts retained beyond the trust's actual loss.
No ruling has been issued and the defendants have not yet responded. The allegations remain unproven at this stage. But for mortgage servicers and RMBS trustees managing legacy portfolios, the case floats a pointed question: when a trust receives institutional settlement proceeds calculated from specific loan-level losses, what obligation exists to reflect that at the borrower level? How that question is answered could matter well beyond a single loan in Birmingham.
