New filing claims servicers mishandled HAF funds and FHA loss mitigation
An FHA borrower’s wrongful-foreclosure fight is putting Servbank and Mr. Cooper’s COVID-era loss mitigation and Georgia notice practices under a sharp industry spotlight.
Filed on December 9, 2025 in the U.S. District Court for the Northern District of Georgia, the lawsuit comes from Jamaree James, a Fairburn, Georgia homeowner who lost his property at a January 2, 2024 foreclosure sale. The filing names Servbank, SB, Inc. (formerly known as Allied First Bank, SB) and Nationstar Mortgage, LLC dba Mr. Cooper as defendants.
James bought the home at 6470 St. Mark Way on July 25, 2019, using a $183,612 FHA-insured mortgage from Everett Financial. The loan and security deed were assigned to Nationstar/Mr. Cooper on March 10, 2022, and then to Servbank in a transfer recorded on October 25, 2023.
The lawsuit traces the trouble back to the pandemic. In 2020, James entered a 16‑month COVID-19 forbearance, which he says was granted because of financial hardship and his need to support family members. As that relief period ended, he turned to the state’s homeowner assistance program.
According to the filing, in March 2022 James received a $32,000 grant from the Georgia Department of Community Affairs: about $27,000 to pay off his then‑past‑due balance and the rest to cover three months of upcoming payments. The grant was paid to Nationstar/Mr. Cooper. A later section of the lawsuit cites Georgia Department of Community Affairs records reflecting a payment of $32,321.41 made on March 8, 2023 to Nationstar Mortgage that does business as Mr. Cooper.
Despite that support, James says he was surprised to get a letter from Servbank dated May 2, 2023, stating his loan was delinquent. He points out that county records referenced in the lawsuit show the loan was not assigned to Allied First Bank dba Servbank until October 2023, and he believed the state grant money should have covered his mortgage through July 2023. He alleges that Servbank continued to send delinquency notices from July through September 2023.
Trying to avoid foreclosure, James says he submitted a mortgage assistance application to Servbank in September 2023 to begin the FHA loss mitigation process. Servbank allegedly responded that it had not received the application. After the loan was formally assigned toward the end of October 2023, he claims he sent a fresh application in December 2023.
On December 14, 2023, Servbank wrote to James saying it could not consider that application because it had arrived less than 30 days before the scheduled foreclosure date, according to the lawsuit. The foreclosure went ahead on January 2, 2024.
James argues the sale was wrongful on two main fronts. First, he cites FHA-insured servicing requirements described in the lawsuit, which state that as of April 30, 2023, servicers must evaluate eligible borrowers under HUD’s COVID‑19 loss mitigation “waterfall” in a specific order of options and that lenders and servicers are required to take FHA borrowers through this mitigation process before initiating foreclosure. He claims the period between the October 25, 2023 assignment and the January 2, 2024 sale was not enough time for Servbank to evaluate and implement those options.
Second, he alleges violations of Georgia’s foreclosure statutes, O.C.G.A. 44-14-162 and 44-14-162.2. He says he never received the required certified mail notice of foreclosure at least 30 days before the sale and that the foreclosure was not advertised in Fulton County’s legal organ as the law requires.
A separate claim targets Nationstar/Mr. Cooper, alleging that the company either failed to apply the Georgia assistance correctly or did not ensure that the funds were reflected when the loan moved to Servbank. As support, James points to Servbank’s delinquency notices beginning in 2023.
James is asking for $290,000 in damages, which he says reflects the property’s value, along with $3,156 in attorney’s fees incurred so far and any additional fees and litigation costs the court may award.
For now, these are allegations drawn from the lawsuit. The court has not made any findings about whether Servbank or Mr. Cooper complied with FHA’s COVID-19 loss mitigation requirements, handled the Georgia assistance funds correctly, or met Georgia’s foreclosure notice and advertising rules.
