Alabama Residents Allege Mr. Cooper Failed to Pay Property Taxes, Insurance With Portions of Monthly Mortgage Payments

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Mr. Cooper Group Inc. faces a proposed class action over its alleged failure to pay property taxes and insurance with money the residential loan servicer receives from borrowers as part of their monthly mortgage payment. 

The plaintiffs, a Jefferson County, Alabama couple, allege in the 13-page negligence complaint that Mr. Cooper’s “wrongful actions” caused their property taxes to fall into delinquency before their home was sold and bought at a tax sale auction.

“Because of Mr. Cooper’s actions, many of its customers and/or mortgagees have paid money to Mr. Cooper in trust that Mr. Cooper would uphold their end of the bargain, have had their property rights and interests put at risk of forfeiture, and have otherwise suffered damages,” the lawsuit alleges. 

As part of its financing, Mr. Cooper estimated each year’s taxes and required the plaintiffs, as mortgagees, to make an additional monthly payment for taxes and insurance on top of their mortgage, the lawsuit begins. As a condition of the plaintiffs’ additional payment, Mr. Cooper agreed to remit the residents’ property taxes to the Jefferson County tax collector, the suit says. 

In March 2020, however, the plaintiffs were notified by the Jefferson County tax collector’s office that their property taxes for 2019 had not been paid and thus were delinquent, the lawsuit states. Upon contacting Mr. Cooper and immediately asking that the company pay the delinquent taxes, the plaintiffs were told by the defendant that the issue was “under investigation,” the case claims.

In June, the plaintiffs were once again informed that their 2019 taxes had not been paid and that their property was at risk of being sold at a tax sale auction, according to the complaint. After again contacting Mr. Cooper, the plaintiffs were again told by the company that the matter was still under investigation—and they were not at risk of losing their property, the suit says.

“As a result of the [plaintiffs’] 2019 property taxes never being paid, their property was purchased by a third party in July 2020 at a tax sale auction,” the lawsuit says.

Per the complaint, Mr. Cooper breached the duty of care contractually owed to the plaintiffs by failing to ensure set-aside funds were used to timely pay property taxes and insurance. While the plaintiffs upheld their end of the deal by making monthly mortgage payments, Mr. Cooper, the case claims, fell short of its side of the bargain.

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