A 2022 settlement was supposed to end it. Three years later, the same error allegedly resurfaced
Shellpoint Mortgage Servicing is back in federal court — sued again by the same Ohio couple over the same alleged escrow mistake.
Abraham and Mildred Washington filed their case on February 24, 2026, in the Southern District of Ohio, accusing Shellpoint of wrongfully creating an escrow account on their mortgage loan for the second time — in direct violation of a settlement agreement from a prior lawsuit over the identical issue. U.S. Bank, N.A., as trustee on behalf of Home Improvement and Home Equity Loan Trust 1997-D, is also named as a defendant.
The Washingtons have owned their Cincinnati home since 1991 and refinanced in 1997. They have made consistent payments for nearly 30 years, according to court filings. In 2000, they went through Chapter 7 bankruptcy and received a discharge that included the mortgage loan. Despite the discharge, they kept paying.
The trouble started in 2020, when Shellpoint took over servicing. The Washingtons say the servicer created an escrow account on their loan without justification and misapplied their payments. They sent two qualified written requests seeking corrections. Shellpoint, they allege, never responded. That led to a federal lawsuit in 2021.
The two sides settled in mid-2022. The deal was straightforward: restore the loan to current status, and keep it non-escrowed. The Washingtons would continue paying their own taxes and insurance, as they had done since the loan's origination.
For three years, things went smoothly. Then, according to the filings, Shellpoint started demanding escrow payments again in June 2025 — with no notice to the borrowers and no apparent reason. The loan's maturity date is February 1, 2027, making the timing all the more puzzling.
The Washingtons say they tried to resolve the issue directly with Shellpoint before turning to legal counsel. Their attorney sent a qualified written request flagging the error and asking for an accounting. Shellpoint, they allege, never acknowledged or responded to that request either.
The Washingtons also allege that Shellpoint reported overdue payment information to at least one credit bureau after receiving an earlier qualified written request in November 2020. Now, they say the servicer is threatening foreclosure — on a loan tied to a debt discharged in bankruptcy. The filings describe this as an attempt to collect on obligations the borrowers no longer legally owe, inflated by escrow charges that should not exist.
The case raises claims under the Real Estate Settlement Procedures Act, the Truth in Lending Act, and a breach of contract count tied to the 2022 settlement agreement. The Washingtons are seeking actual and statutory damages, attorney fees, and costs. They have also requested a jury trial.
No determination has been made on the merits, and the case remains in its earliest stage.
For mortgage professionals, the case is a pointed reminder that settlement agreements carry real, enforceable obligations — and that repeating the same servicing error can land a company right back where it started, this time facing compounded claims. It also underscores the operational risks of escrow account management, particularly on legacy loans nearing payoff, and the nonnegotiable nature of RESPA's qualified written request requirements.
