They paid the trial plan. The servicer sent the checks back. Now a foreclosure suit follows
Three large mortgage servicers are being sued in Philadelphia over claims that an internal "stop file" sank a borrower's trial modification and triggered foreclosure.
The lawsuit, filed on May 5, 2026 in the United States District Court for the Eastern District of Pennsylvania, takes aim at Rushmore Loan Management Services LLC, Specialized Loan Servicing, and NewRez LLC d/b/a Shellpoint Mortgage Servicing. The borrowers, Xong V. Dinh and Suong Thi Huynh, say the servicers turned a routine loss-mitigation workout into a foreclosure scare - and they point to the servicers' own letters to make the case.
The story laid out in the filing is one many in the industry will recognize. According to the filing, Specialized Loan Servicing offered the couple a Trial Period Plan on or about March 25, 2024, with a start date of May 1, 2024 and three trial payments to clear the way for a permanent modification slated to begin August 1, 2024. The terms attached to the filing show a post-modification total monthly payment of $283.35, a new principal balance of $20,889.63 at 6.750 percent, and an amortization stretched from 360 months to 480, pushing the maturity date out to April 1, 2064.
The borrowers say they accepted the offer and made the payments. Then, the filing alleges, Shellpoint started sending the checks back. A June 24, 2024 letter is cited as one example. A second letter, dated July 31, 2024, is alleged to have accused the couple of failing to maintain communication and cooperation - without mentioning the trial plan they say they were dutifully paying on.
The piece of paper the case may turn on is a September 30, 2024 letter from Shellpoint, sent in response to an inquiry from the borrowers' counsel. According to the filing, the servicer wrote that its payment processing department had determined "the loan is currently on a stop file and that the stop file would need to be removed so that the payments are no longer returned," and added, "Please accept our sincere apology for any inconvenience caused by this error."
By then, the filing says, a foreclosure action was already pending in the Philadelphia Court of Common Pleas under the caption Rushmore Loan Management v Xong V Dinh et al. A replacement modification did not arrive until September 26, 2025, the borrowers say, and it came with a higher total monthly payment of $493.45.
The case lays out two theories. The first claims a "pattern or practice" of non-compliance with RESPA's Regulation X and TILA's Regulation Z, pointing to rules that govern how servicers handle early outreach, loss-mitigation reviews, and periodic statements. The second is a more familiar one to anyone who has worked a file through a workout - breach of contract, plus breach of the duty of good faith and fair dealing tied to the trial plan itself. The borrowers are seeking damages, counsel fees, and other relief the court considers appropriate.
The allegations have not been tested in court. The servicers have not yet filed a response, and no judge has ruled on the claims.
