NewRez LLC, doing business as Shellpoint Mortgage Servicing, is facing a wave of lawsuits and one recently announced state settlement over how it services home loans. In December 2025, Massachusetts Attorney General Andrea Joy Campbell secured a $4.65 million settlement resolving allegations that NewRez’s predecessor, Specialized Loan Servicing, unlawfully foreclosed on Massachusetts homeowners.1Mass.gov. AG Campbell Reaches $4.65 Million Settlement With Mortgage Loan Servicer for Unlawful Foreclosures and Deceptive Business Practices Beyond that resolved matter, active NewRez lawsuits cover zombie second mortgages resurrected years after bankruptcy discharge, manufactured escrow defaults, botched servicing transfers, dual tracking, loss mitigation failures, junk phone-payment fees, forced-placed insurance, and refusals to honor mortgage deferments for deployed servicemembers.
The Massachusetts $4.65 Million Settlement
The Assurance of Discontinuance announced on December 17, 2025 resolved claims that Specialized Loan Servicing (SLS) violated the Massachusetts Consumer Protection Act in its handling of roughly 24,000 Massachusetts properties.1Mass.gov. AG Campbell Reaches $4.65 Million Settlement With Mortgage Loan Servicer for Unlawful Foreclosures and Deceptive Business Practices2RESPA News. Servicer Enters $4.65M Agreement With Massachusetts
According to the Attorney General, SLS sent right-to-cure letters that gave borrowers only 33 days to cure a default when Massachusetts law requires 90. It also allegedly failed to notify borrowers of their right to seek loan modifications, failed to lawfully process modification requests, and violated the state’s COVID-19 foreclosure and eviction moratoriums by withholding required relief from homeowners in pandemic-related hardship.1Mass.gov. AG Campbell Reaches $4.65 Million Settlement With Mortgage Loan Servicer for Unlawful Foreclosures and Deceptive Business Practices
The $4.65 million includes restitution for hundreds of consumers who faced foreclosure. NewRez must also adopt new procedures to protect borrowers and file regular compliance reports with the Attorney General’s office.1Mass.gov. AG Campbell Reaches $4.65 Million Settlement With Mortgage Loan Servicer for Unlawful Foreclosures and Deceptive Business Practices The conduct at issue predates NewRez’s May 2024 absorption of the SLS portfolio, but NewRez inherited the liability.
The Zombie Second Mortgage Class Action
Filed in January 2025 in the U.S. District Court for the District of Massachusetts, Hodges v. NewRez, LLC (Case No. 1:25-cv-10147) accuses NewRez and co-defendant The Bank of New York Mellon of a “systematic internal policy” of not sending statements to borrowers whose second mortgages were discharged in bankruptcy, then reviving those dormant debts years later with demands for tens of thousands of dollars.3National Consumer Law Center. Hodges v. NewRez, LLC d/b/a Shellpoint Mortgage Servicing and The Bank of New York Mellon
Eva Hodges, the named plaintiff, took out a $100,000 home equity line of credit in 2005 and received a bankruptcy discharge of the loan in 2008. Statements stopped. In early 2024, after more than a decade of silence, Shellpoint allegedly demanded $152,820 to cure the arrearage, claimed a total balance of $200,000, and threatened foreclosure.4National Mortgage News. NewRez Asks Judges to Dismiss Zombie Mortgage Lawsuits
The complaint asserts violations of the Fair Debt Collection Practices Act and state consumer protection laws. Judge Allison D. Burroughs granted an earlier motion to dismiss without prejudice in January 2026, and the plaintiff filed a second amended complaint. As of June 2026, another motion to dismiss was pending with replies due June 22, 2026.5PACER Monitor. Hodges v. Newrez, LLC et al The case seeks classwide relief for all homeowners affected by the alleged conduct.3National Consumer Law Center. Hodges v. NewRez, LLC d/b/a Shellpoint Mortgage Servicing and The Bank of New York Mellon
Servicing Errors That Push Borrowers Into Foreclosure
A cluster of recent individual suits alleges that Shellpoint’s servicing errors created defaults where none should have existed, then drove those manufactured defaults toward foreclosure.
Escrow Charges on a Non-Escrowed Loan
In Smith v. BSI Financial Services and NewRez LLC, filed March 25, 2026 in the Middle District of Florida, Michael and Kimberly Smith allege prior servicer BSI Financial posted an $8,388 corporate advance for an escrow deficit in January 2024 on a loan that did not require escrow. When servicing transferred to Shellpoint in May 2024, the negative balance transferred with it. Both servicers acknowledged the loan was current at transfer, according to the complaint, but Shellpoint allegedly refused to remove the inherited deficit, coded the account as 90-plus days delinquent, referred it to foreclosure in November 2024, and filed a foreclosure action in September 2025. The suit brings claims under RESPA, the FDCPA, and the Florida Consumer Collection Practices Act.6Mortgage Professional America. Lawsuit Accuses Shellpoint, BSI of Pushing Current Loan Into Foreclosure
Botched Servicing Transfer and Dual Tracking
Murray v. NewRez LLC (Case No. 5:26-cv-00142), filed February 2026 in the Middle District of Florida, alleges Shellpoint failed to carry over the borrower’s “successor in interest” status when it took the loan from Wells Fargo in March 2022, locking her out of the account and producing an artificial default. Shellpoint allegedly admitted in writing that the borrower was “removed in error” and the loan was “improperly boarded,” but declined to reverse the resulting fees. The complaint also alleges Shellpoint approved a loan modification in November 2024 while simultaneously pursuing foreclosure in Lake County, Florida — dual tracking. The borrower paid $43,546.14 under protest to halt the foreclosure.7Mortgage Professional America. Shellpoint Hit With RESPA Suit After Servicing Transfer Sparks Foreclosure
Loss Mitigation Failures
In Maletick et al v. NewRez LLC (Case No. 2:26-cv-00389-NR), filed March 10, 2026 in the Western District of Pennsylvania, the plaintiffs allege Shellpoint repeatedly failed to process their loss mitigation applications, claimed documents were missing without specifying which ones, and missed the 30-day evaluation deadline required by Regulation X. The loan trust allegedly moved for a default judgment in foreclosure on February 24, 2025 while a January 2025 loss mitigation application was still unevaluated. The seven-count complaint seeks actual damages, $2,000 in statutory damages per RESPA violation, treble damages under Pennsylvania consumer protection law, and attorneys’ fees. Shellpoint had not yet responded to the suit as of March 2026.8Mortgage Professional America. Homeowners Sue Shellpoint in Seven-Count Suit Over Loss Mitigation Failures
Fee and Forced-Placed Insurance Suits
Cardin v. NewRez LLC (Case No. 1:21-cv-03350, N.D. Ill.), filed June 2021, alleges Shellpoint unilaterally bought property insurance despite knowing the borrower already had a policy, then profited from “kickbacks” from the insurer. The same complaint accuses Shellpoint of fabricating escrow shortages, treating current loans as though in default, demanding inflated payoff figures, holding payments in suspense rather than applying them, and falsely reporting borrowers as delinquent to credit bureaus. The plaintiff alleged at least $5,078 in economic damages and brought claims for breach of contract, FDCPA violations, Illinois consumer fraud, and unjust enrichment.9ClassAction.org. Cardin v. NewRez LLC Complaint
A separate class action, Alvarez v. NewRez LLC (Case No. 4:24-cv-3597, S.D. Tex.), filed September 2024, alleges SLS charged borrowers up to $7.50 per phone payment as “Pay-to-Pay” fees when the actual processing cost was $0.50 or less, and that the fees were not authorized by borrowers’ mortgage contracts. The complaint asserts violations of the Texas Debt Collection Act, the FDCPA, and similar statutes in six other states, with an amount in controversy exceeding $5 million.10ClassAction.org. Alvarez v. NewRez LLC Complaint
Refusals to Honor Military Deferments
A California consumer law firm has filed several suits accusing Shellpoint of violating California Military and Veterans Code § 800, which requires mortgage deferments for deployed servicemembers. Beginning in 2022, the firm alleged Shellpoint issued written refusals to comply with the deferment, attempted to collect full principal and interest, claimed thousands more owed than was actually due, reported the servicemember as being in default, and threatened foreclosure.11Temecula Consumer Attorneys. Deployed Military Protections Refused by Shellpoint Mortgage NewRez LLC
A February 4, 2025 lawsuit alleges that even after the client obtained a court-ordered deferment in December 2024 with the help of a JAG attorney, and even after NewRez was served with the order, the company continued to label the client as in default and threaten foreclosure. That case remains pending.12Temecula Consumer Attorneys. Lawsuit Alleges NewRez, LLC (dba Shellpoint Mortgage) Violates Court Ordered Deferment
Inherited Bankruptcy Exposure
In Bivens v. NewRez LLC, 625 B.R. 843 (Bankr. M.D.N.C. 2021), a borrower alleged that her prior servicer, CitiMortgage, misapplied Chapter 13 plan payments, assessed undisclosed fees, and passed inflated principal balances to successor servicers, ultimately including Shellpoint. The day after the borrower received her bankruptcy discharge, Shellpoint issued a Notice of Default.13Bankruptcy Mastery. Prior Servicer Liability
The bankruptcy court denied CitiMortgage’s motion to dismiss and found that transferring a loan with erroneous payment records to a successor servicer could violate both the automatic stay and the bankruptcy discharge. The court also held that CitiMortgage’s failure to disclose assessed fees violated Rule 3002.1(c).14NC Bankruptcy Expert. Bankr. M.D.N.C. Bivens v. NewRez The ruling matters beyond its own facts because it confirmed that a current servicer like Shellpoint can inherit legal exposure from a predecessor’s bankruptcy-era errors.
Earlier Class Actions, One Settlement, and a Consent Order
Class action filings against NewRez and Shellpoint go back years. Proposed class actions in 2017 alleged FDCPA violations tied to collection of discharged debts. Suits in 2019 challenged debt collection during active bankruptcy proceedings. Actions in 2018 and 2019 targeted inaccurate credit reporting. A 2021 class action against NewRez, Shellpoint, and Freddie Mac alleged misleading default and right-to-cure notices to Massachusetts borrowers.15ClassAction.org. Shellpoint Mortgage Servicing Class Action Lawsuits
One earlier case settled. Rudin v. MTGLQ Investors L.P., et al. (Case No. 19-2-17081-6 SEA, King County, Washington) resolved claims that Shellpoint and MTGLQ charged Washington borrowers for property preservation fees on non-vacant properties and for property inspections at rates exceeding $50 per inspection. The settlement fund totaled $152,000. Borrowers who had paid the fees could file claims for a share of the fund; borrowers with open accounts who had been charged but not paid would have the fees reversed or reduced automatically. The claim deadline was November 28, 2022, and final approval was set for December 2, 2022.16BJT Lawyers. Rudin Class Action Settlement
On the regulatory side, the Washington State Department of Financial Institutions entered a consent order against NewRez on May 14, 2019 under the state Consumer Loan Act (Order File No. C-18-2429-19-CO01).17Washington DFI. Consent Orders
How NewRez Has Defended Itself
In the Hodges zombie mortgage case, NewRez argued the plaintiff’s FDCPA claims were disguised Truth in Lending Act claims and that, as a servicer rather than a loan owner, it could not be held liable as a “creditor” under TILA. The plaintiff amended the complaint in April 2025 to remove the TILA claim and proceed on FDCPA and state-law theories.4National Mortgage News. NewRez Asks Judges to Dismiss Zombie Mortgage Lawsuits
NewRez has also won at least one appellate ruling. In The Falls Properties, LLC v. NewRez LLC (No. 88660-COA), the Nevada Court of Appeals affirmed dismissal of a wrongful foreclosure claim in July 2025, holding that a loan default alone does not trigger the state’s ten-year statute of limitations for discharging a lien if the borrower has a contractual right to cure. The court also found the plaintiff failed to follow proper procedures for requesting payoff information.18FindLaw. The Falls Properties, LLC v. Newrez LLC
The 2025 and 2026 lawsuits described above have not reached a determination on the merits. The allegations remain unproven.
Why Specialized Loan Servicing Keeps Coming Up
NewRez’s parent, Rithm Capital, announced in October 2023 that it would acquire Computershare Mortgage Services and Specialized Loan Servicing for roughly $720 million, bringing in about $136 billion in unpaid principal balance of mortgage servicing rights.19Rithm Capital. Rithm Capital to Acquire Specialized Loan Servicing LLC The SLS portfolio transitioned to Shellpoint’s systems on May 1, 2024.20Shellpoint Mortgage Servicing. SLS Loan Transition Information The Massachusetts Attorney General settlement flows from SLS’s pre-merger conduct, and the Alvarez pay-to-pay class action targets fees SLS charged before the transition. If you had a loan with SLS that moved to Shellpoint in 2024, both matters may apply to you.