Two years after a costly servicing snafu affected borrowers to the tune of $2.3 billion, Dallas-based servicer Mr. Cooper, formerly Nationstar Mortgage, is seeking additional compensation from ACI Payments. The lawsuit has been filed in a Texas federal court demanding unspecified damages.
In June, ACI Worldwide's subsidiary was slapped with a $25 million fine by the Consumer Financial Protection Bureau for unauthorized charges made to borrowers in April 2021. The blunder occurred when ACI contractors mistakenly used Nationstar's confidential client details during quality assurance tests. This resulted in inadvertent mortgage payment deductions from borrowers' bank accounts, leading banks to charge some customers overdraft or insufficient funds fees and even freezing others' accounts.
Mr. Cooper's legal team argued that ACI's misuse of confidential data went against the terms of their "Speedpay Agreement" with ACI's predecessor, Speedpay Inc.
In an attempt to placate affected customers, ACI had set up a $5 million fund to settle seven class-action lawsuits related to the 2021 mishap. As stated in a recent SEC 10-Q filing, insurance is expected to cover the majority of the settlement amounts and legal fees.
ACI has assured that the error did not lead to any compromise of customer funds or personal data.
In the lawsuit, Mr. Cooper highlighted the reputational damage and public outcry caused by the incident. The company has faced 10 federal class-action lawsuits and two individual state claims and has had to bear legal fees, compensations, and other related expenses.
"Although Nationstar and ACI both acted quickly to limit the impact of the [i]ncident on Nationstar’s customers, even with those efforts, the [i]ncident impacted many Nationstar customers, leading to widespread negative consequences for Nationstar," the complaint states.
Pointing fingers at Speedway, ACI attributed the mistake to the transitionary phase after the acquisition of Speedway's legacy data system in 2019.
Mr. Cooper initiated the legal action just before the deadline for filing claims against ACI. The charges against ACI encompass 11 counts, including breach of contract and trade secret violations. The U.S. District Court for the Northern District of Texas in Dallas has already issued a summons for ACI.
