Suit alleges system processed payment from deleted account, then reported delinquency during dispute period
Nationstar Mortgage faces allegations it debited a closed bank account and reported a borrower late, despite receiving multiple notices of the error.
A Florida borrower has sued the mortgage giant in federal court, claiming the servicer's payment processing failure damaged her credit and violated federal consumer protection laws. The November filing in the Middle District of Florida comes months after Nationstar reached a $5.8 million multistate settlement and paid over $73 million in Consumer Financial Protection Bureau penalties for similar servicing failures.
Dominique Davis, who had never missed a mortgage payment, says she deleted her Bank of America account from Nationstar's online portal in May 2025 and replaced it with a Navy Federal Credit Union account. She successfully made payments in May and June from the new account, according to the filing.
But in July, the servicer's system attempted to process her payment from the closed Bank of America account, causing it to be rejected. The bank account had been permanently shut down in May and was no longer visible in the servicer's app, the suit says. The system requires borrowers to delete existing accounts before adding new ones, making it impossible for the old account to remain active.
Davis says she never re-authorized the defunct account. When the payment failed, she immediately contacted Nationstar and filed formal notices under the Real Estate Settlement Procedures Act detailing what had gone wrong.
The servicer acknowledged her correspondence but refused to fix the error, instead asserting without evidence that Davis had selected the closed account herself, the suit alleges. Internal logs contradicted the company's position, as Nationstar had previously confirmed the Bank of America account was deleted in May, then later reversed course.
Within 60 days of receiving Davis's dispute, Nationstar reported the July payment as 30 days late to credit bureaus, violating federal law that prohibits furnishing adverse information about disputed payments during the investigation window. Davis says her credit score dropped significantly, making it harder to obtain credit while causing emotional distress and reputational harm.
The case highlights persistent vulnerabilities in automated payment systems and raises questions about servicer compliance with RESPA's error resolution requirements. Courts have held that servicers can be liable even when technical problems rather than intentional misconduct cause the failures, and that consumer protection laws should be interpreted broadly in borrowers' favor.
The suit also references regulatory scrutiny that has intensified around Nationstar. The CFPB has cited mortgage servicers for systemic failures in payment processing, including attempts to debit closed accounts, continuing unauthorized automatic payments, and misreporting late payments. The bureau has demanded remediation where technical errors in account management resulted in misapplied payments or false credit reporting.
Davis is representing herself and seeks actual damages for economic and reputational harm, statutory damages under RESPA, the Fair Credit Reporting Act, and Florida consumer protection statutes, punitive damages for willful noncompliance, and court orders compelling Nationstar to correct her credit report and implement measures to prevent similar errors. No determination has been made on the merits of her claims.
