The lender allegedly agreed to pay. Months later, the servicer is still waiting
A mortgage lender allegedly agreed to cover a Fannie Mae loan repurchase — then never sent the money, according to a newly filed federal lawsuit.
Seneca Mortgage Servicing LLC filed the action on March 20, 2026, in the U.S. District Court for the Southern District of New York, accusing Homespire Mortgage Corporation of walking away from a clear contractual obligation. Seneca is seeking $376,147.06 in damages, along with interest, attorneys' fees, and costs.
The dispute grows out of a Bulk Servicing Rights Purchase and Sale Agreement the two companies signed on November 30, 2022. Under that deal, Seneca purchased mortgage servicing rights from Homespire for residential loans owned by Fannie Mae or Freddie Mac. Seneca says it held up its end of the bargain, paying all required amounts, advances, and holdbacks.
Things went sideways in July 2025, when Fannie Mae issued a putback notice directing Seneca to repurchase a loan because of a defect or excluded obligation attributable to Homespire. The price tag: $376,147.06.
According to the filing, Seneca notified Homespire promptly. Homespire acknowledged the notice on July 10, 2025, and by August 26, 2025, agreed it was on the hook to fund the repurchase. The contract was clear on this point — Homespire was required to either pay the agency directly or wire the funds to Seneca. The agreement also explicitly stated that Seneca was not required to advance any of its own money to satisfy a repurchase demand.
But the money never came. Seneca alleges that Homespire failed to send the funds to either Fannie Mae or Seneca. With its agency standing on the line, Seneca paid Fannie Mae the full amount on November 26, 2025. A formal demand for reimbursement followed on December 16, 2025. According to the lawsuit, Homespire has failed and refused to pay.
The agreement also provides that unpaid amounts carry interest at the Prime Rate plus five percent annually, and that the prevailing party in any legal action is entitled to recover attorneys' fees and costs. Notably, the repurchase obligations under the contract survive for the life of the related mortgage loans — meaning there is no expiration date on the seller's responsibility.
For MSR buyers, the case is a real-world stress test of the contractual protections that are supposed to backstop these transactions. Repurchase provisions, indemnification clauses, and interest penalties are only as good as the counterparty's willingness and ability to honor them. When a seller agrees in writing that it owes the money and then fails to pay, the buyer's options narrow quickly.
The case remains in its early stages, and no court has made any determination on the merits. Homespire has not yet responded to the allegations. The lawsuit is docketed as Case No. 1:26-cv-02300.
