A servicing transfer, a $4,376 advance and a $203,343 foreclosure - the filing pulls familiar threads
A federal lawsuit out of South Carolina is taking aim at post-settlement servicing, servicing transfers, and credit reporting practices involving several mortgage servicers and trustees.
The case landed in the District of South Carolina on May 5, 2026, and it touches several pressure points mortgage professionals know well - what happens to old fees after a loan modification, how account balances travel during a servicing transfer, and how credit furnishing decisions can quietly close the door on a refinance.
According to the filing, Jamal A. Middleton and Sylvia N. Middleton, a North Charleston couple representing themselves, sued Rushmore Loan Management Services LLC, Nationstar Mortgage LLC d/b/a Rushmore Servicing, Wilmington Savings Fund Society, FSB as Owner Trustee for CSMC 2022-RPL2 Trust, DLJ Mortgage Capital, Inc., and US Bank National Association as Trustee for RMAC Trust, Series 2016-CTT, along with unnamed servicing, property preservation, and credit reporting vendors. The filing brings twenty counts under federal statutes including RESPA, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, and the Truth in Lending Act, plus the South Carolina Unfair Trade Practices Act and state common law.
The plaintiffs say the dispute begins with a Confidential Settlement and Release Agreement signed on March 1, 2021 with US Bank as trustee, Rushmore, and related entities. They allege they completed a Trial Payment Plan, received a permanent loan modification, and saw the earlier foreclosure dismissed - with the defendants, they say, retaining the right to foreclose only for future defaults.
What followed, the filing claims, was the opposite of a clean slate. The Middletons allege that pre-2021 corporate advances were re-added, extinguished fees reappeared, escrow was miscalculated, and payments were not credited properly. They point to a payment history showing at least 95 separate "Lender Paid Expense Adjustments." They also reference a December 4, 2023 written response to the Consumer Financial Protection Bureau, which the filing quotes as stating, "The above referenced fees were not incorporated into the 2021 loan modification agreement."
When servicing moved from Rushmore to Nationstar d/b/a Rushmore Servicing in October 2023, the filing alleges, a $4,376 "corporate advance balance" dated December 27, 2019 was added, along with other unexplained fees and higher monthly payments. The plaintiffs also say their on-time payments from 2021 through 2023 were not reported to the credit bureaus, costing them refinance opportunities.
On March 10, 2025, Wilmington Savings Fund Society filed a foreclosure action in Charleston County asserting $203,343.36 owed, including corporate advances, legal fees, and inspection fees. The plaintiffs say that figure is built on misapplied payments and fees the 2021 settlement was supposed to resolve.
They are asking a federal judge to halt the foreclosure, order a full accounting going back to 2017, void the disputed fees, correct the credit reporting, and award damages and attorneys' fees. A jury trial has been demanded.
The allegations have not been tested in court. The defendants have not yet filed a response, and no court has ruled.
