What is this lawsuit about?
Plaintiffs claim that Nationstar did not report some borrowers’ negative amortization payments to the IRS on tax Form 1098 for tax years between 2010 and 2018. They further claim that by not reporting these payments, and by relying on the Form 1098 that Nationstar sent to them, they overpaid their taxes because they were not able to claim the full amount of their mortgage interest deduction. More specifically, the Plaintiffs sued Nationstar for: (1) breach of contract; (2) breach of covenant of good faith and fair dealing; (3) violation of the unfair competition law; (4) fraud; (5) negligence; (6) negligent misrepresentation; and (7) violation of IRS codes. In 2016, after the case was filed, Nationstar began attempting to identify loans on which Class Members’ payments of negative amortization were not captured by its automated system. As a result of that process, in 2016 Nationstar began crediting and reporting additional payments of negative amortization to the IRS on the Forms 1098 that it issued to many Class Members. Thus, if you had negative amortization as part of your loan balance and were making fully amortized monthly payments in 2016 and years thereafter, you may have noticed a substantial increase in the amount of interest that Nationstar reported to you in Box 1 on your Form 1098 for years 2016-2018 compared to the amount it had been reporting in 2015 and years prior. As a result of this change in Nationstar’s process, you may by now have already had reported to you the full amount of mortgage interest that Plaintiffs’ original complaint sought to have Nationstar report to you. Therefore, Nationstar may have corrected the problem for you that Plaintiffs sought to correct, and you may have already deducted the full amount of interest that Plaintiffs’ original complaint sought to allow you to deduct. The purpose of this Settlement is to provide relief to those persons who did not get full relief from Nationstar’s 2016 change in Form 1098 reporting.
The Court has not decided who is right or whether Nationstar did anything wrong. Instead, by agreeing to a Settlement, both Plaintiffs and Nationstar avoid the cost and risk of further litigation and a trial, and the people affected will get benefits.
Additional information about the lawsuit and important court documents may be found on the Important Documents and FAQs pages of this website.
Who is Included?
The Settlement includes: "All persons who, according to Nationstar’s reasonably available computerized records, had or have Option ARM Loans serviced by Nationstar and made payments to Nationstar in any tax year from 2010 to 2018."