The couple alleges Carrington ignored four requests — then issued a $30K+ foreclosure demand
Carrington Mortgage Services is facing a federal lawsuit over allegations it ignored repeated borrower requests and moved toward foreclosure while a dispute remained unresolved.
Barry Schneider and Allison M. Schneider filed the case on March 15, 2026, in the United States District Court for the District of New Jersey. The couple holds an FHA-insured mortgage on their home in East Windsor, serviced by Carrington, with JP Morgan as the investor.
The trouble, according to the court filing, started in January 2026 when the Schneiders noticed a string of irregularities on Carrington's servicing portal. The system displayed a next payment due date of July 1, 2025 — months in the past — and showed no escrow summary, no mortgage insurance information, no payment history, and no monthly statements. On January 21, Carrington made an escrow disbursement without providing any analysis or notice, the filing states.
Over the next several days, the Schneiders sent four written requests to Carrington asking for straightforward answers: the current loan status, past-due amount, escrow and mortgage insurance information, and a proper contact person. One of those requests was copied to HUD FHA oversight. According to the filing, Carrington did not respond to any of them.
On January 29, Carrington sent the couple a Notice of Default and Intention to Foreclose, demanding a cure amount exceeding $30,000. The same day, the Schneiders submitted a formal Notice of Error and Request for Information under RESPA, identifying issues including bankruptcy misclassification, missing escrow analysis, an incorrect due date, and system irregularities.
On February 2, the Schneiders responded to the foreclosure notice in writing, asking Carrington to pause foreclosure activity while the dispute was resolved. The filing states Carrington did not pause the process and did not provide written confirmation that it would.
Carrington acknowledged receiving the Notice of Error on February 4 but, according to the filing, never delivered a substantive written response. A February 10 letter stated that Carrington had "attempted to call" the couple — despite their repeated insistence on written communication only.
Perhaps the most notable allegation involves bankruptcy reporting. Allison Schneider's Chapter 13 bankruptcy case was closed or dismissed on February 11, 2026. After that date, HUD informed the Schneiders that Carrington continued reporting the loan as "active bankruptcy." The filing alleges this misclassification suppressed FHA-required disclosures and servicing functions on the loan.
The couple opened cases with HUD and the Consumer Financial Protection Bureau. The lawsuit brings claims under RESPA and seeks actual and statutory damages along with corrective servicing actions.
No determination has been made on the merits of the case.
For mortgage professionals, the allegations outlined here read like a compliance cautionary tale: unanswered borrower correspondence, missed statutory deadlines, inaccurate bankruptcy coding, and foreclosure proceedings moving forward while a dispute sat unresolved. Whether or not the claims ultimately hold up, the case is a pointed reminder that these routine servicing obligations carry real legal consequences when they go unmet.
