Borrower claims servicer ghosted him for five years. Then came the foreclosure
A federal lawsuit filed last week alleges Shellpoint Mortgage Servicing ignored a borrower's requests for five years while pushing ahead with foreclosure.
The case, filed January 30 in the Northern District of Ohio, paints a troubling picture of what one homeowner describes as a years-long struggle to get the servicer to honor a loan modification agreement. The allegations, which have not yet been tested in court, touch on compliance issues that should give pause to any mortgage professional following Regulation X developments.
The borrower claims he was approved for a permanent loan modification in November 2019. He signed the paperwork, returned it on time, and made every payment as agreed. But according to the lawsuit, Shellpoint never actually implemented the modification and refused to update his account balance.
What happened next reads like a compliance cautionary tale.
The borrower sent a Qualified Written Request and a Request for Information in July 2020, asking for payoff history, escrow records, and original loan documents. The servicer's response, the lawsuit claims, addressed only the unpaid principal balance and ignored everything else.
Over the next 15 months, the borrower filed five separate Notices of Error, starting in September 2020 and ending in December 2021. The lawsuit alleges that Shellpoint failed to acknowledge any of them within the required five-day window and never provided the substantive responses that Regulation X demands within 30 days.
The fifth notice raised pointed concerns: that the servicer had failed to send periodic statements, misapplied payments from a prior servicer, credited payments on the wrong dates, and never finalized a modification the borrower believed he had already secured.
Two more loan modification applications followed in October 2023 and January 2024. Both were denied for allegedly missing documents, though the lawsuit insists the borrower submitted everything that was requested.
Then came the foreclosure.
According to the filing, Shellpoint moved for summary judgment in state court while the loan was still under review for loss mitigation. A foreclosure decree followed on March 15, 2024, and the home sold at auction for $161,626. The property later hit the market at $279,000 and sold in April 2025 for $269,000.
The borrower is now seeking statutory damages, actual damages, punitive damages, and attorneys' fees. The lawsuit characterizes the servicer's conduct as a pattern of noncompliance with federal mortgage servicing rules.
Shellpoint, which operates out of South Carolina, has not yet responded to the allegations. No determination on the merits has been made.
For servicers, the case is a stark reminder that Regulation X timelines are not suggestions. Notices of Error require acknowledgment within five days and a substantive response within 30. Ignoring them, as this lawsuit illustrates, can turn a routine modification dispute into a federal case with significant exposure.
The borrower has demanded a jury trial.
