Plaintiffs claim a $20 charge hit nearly 788,000 accounts across 36 jurisdictions
Rocket Mortgage is accused of charging nearly 788,000 borrowers improper fees at payoff, totaling more than $15.6 million.
A proposed class action filed on February 1 in federal court in Ohio puts Nationstar Mortgage LLC — doing business as Mr. Cooper and now Rocket Mortgage — squarely in the crosshairs over a $20 charge that plaintiffs say should never have appeared on their final loan statements.
The case centers on what the mortgage servicer labeled a "Third Party Reconveyance Preparation Fee" or "3rd Party Reconvey/Release Prep Fee." According to court filings, borrowers were hit with this charge when they paid off their mortgages in 36 jurisdictions that require lenders to release satisfied mortgages without tacking on fees beyond actual government recording costs.
The numbers are eye-catching. Court documents reference a related pending case in which the servicer's own filings indicated that 787,935 customer accounts were assessed this fee, collecting $15,642,786.
That earlier matter, Washington v. Nationstar, remains before the same court.
At the heart of the allegations is a simple question that mortgage servicers everywhere should be asking themselves: Are we charging fees that state law does not permit?
The plaintiffs contend that the servicer, in its role managing escrow accounts, inflated payoff statements by including the reconveyance fee. When borrowers sent their final payments, the fee allegedly came out of their escrow balances — money the servicer held in trust but, according to the filing, had no right to claim as its own.
The geographic reach of the case is notable. The affected jurisdictions span from New York to Hawaii, from Florida to Washington State, covering a patchwork of laws that all share one common thread: lenders must release mortgages upon satisfaction, and they cannot charge borrowers for the privilege beyond what it costs to record the release.
Named plaintiff Madeline McCabe received her right to pursue the claim through an estate that was charged the fee on an Ohio mortgage paid off in 2022. Fellow plaintiff John Blair faced the same $20 charge when he paid off his Ohio mortgage in 2024.
The plaintiffs are seeking class certification, damages, restitution, and an accounting of all fees collected. They also want the court to impose a constructive trust over the disputed funds.
No determination has been made on the merits. The case remains in its earliest stages, and the allegations have not been tested in court.
Still, for mortgage servicers operating across state lines, the lawsuit serves as a pointed reminder. Reconveyance and release procedures vary widely by jurisdiction, and what passes muster in one state may expose a company to liability in another. Compliance teams would do well to take a fresh look at their fee schedules — before plaintiffs' lawyers do it for them.
