Couple says they paid the required amount on time, every month
A California couple is suing Mr. Cooper and Rocket Mortgage, alleging the servicer launched foreclosure on their home despite never missing a payment.
The lawsuit, filed February 20 in the Northern District of California, paints a troubling picture of what can go wrong when a mortgage servicing transfer goes sideways — and what it could mean for an industry now dominated by a single, newly merged entity.
The couple say they obtained a home loan in January 2025 for their residence in Napa, California. The loan was initially serviced by Fifth Third Bank, to which they made all payments on time. In March 2025, the couple wired $174,750.00 to Fifth Third Bank to recast the loan and lower their monthly payments.
When servicing shifted to Mr. Cooper on April 1, 2025, the couple resubmitted their recast request at the servicer's direction. Mr. Cooper approved it in writing on April 29, confirmed it was completed on May 20, and on June 4 notified the couple that their private mortgage insurance had been dropped, setting their new monthly payment at $3,852.76 effective July 1.
The couple says they paid that amount, on time, every month.
Then things took a turn. On October 2, Mr. Cooper's own monthly statement confirmed the next payment was due November 1, with $0.00 past due. Eight days later, on October 10, the servicer sent a letter claiming the loan was delinquent and demanding $12,265.02. After that, according to the filing, Mr. Cooper stopped accepting the couple's payments altogether.
By November 18, the alleged past due balance had ballooned to $30,122.01. The couple sent a Notice of Error on December 2, flagging what they described as misapplied payments and false delinquency reporting to credit bureaus. The servicer, they say, did not correct course.
On January 16, 2026, Mr. Cooper recorded a Notice of Default on the home, claiming $37,861.49 was past due. By January 21, the servicer's statement listed a reinstatement amount of $43,661.98. The couple alleges the servicer never contacted them to discuss their financial situation or explore alternatives to foreclosure — despite filing a declaration stating it had tried with due diligence to do so.
The case raises eight causes of action spanning wrongful foreclosure, fair credit reporting violations, debt collection abuses, and noncompliance with federal servicing transfer rules under RESPA. Among the more pointed allegations: Mr. Cooper did not notify the borrowers of the servicing transfer within the 15-day window required by federal law, and recorded a Notice of Default on a loan that, according to the filing, was not more than 120 days delinquent.
What gives the case added weight is who is on the other side of it. Rocket Companies closed its $14.2 billion acquisition of Mr. Cooper Group in October 2025, merging the country's largest mortgage lender with its largest servicer. Together, they now manage loans for nearly 10 million homeowners.
The couple are seeking damages, an order to rescind the Notice of Default and halt the foreclosure, and correction of their credit reports. They have requested a jury trial. The case remains in its early stages, and no determination on the merits has been made.
