A formal servicing dispute drew stall letters - then the loan changed hands, the borrower alleges
A Philadelphia homeowner says his mortgage servicers stalled on his questions, left him unclear about who owned his loan, and moved it along while his dispute stayed open - before he lost the home to foreclosure.
That is the case a borrower, acting without a lawyer, laid out in a lawsuit filed July 21 in federal court for the Eastern District of Pennsylvania. He is suing a chain of servicing-side companies: PHH Mortgage Corporation, Flagstar Bank, Freedom Mortgage Corporation, Pingora Loan Servicing, and Mortgage Electronic Registration Systems, Inc., the loan-registry entity known across the industry as MERS. The account he gives will read as familiar to anyone who runs a servicing operation - a borrower dispute that never gets closed out, and a loan that keeps moving while it stays open.
The timeline starts in 2016. On August 25 of that year, according to the filing, the homeowner signed a note for $140,500.00 at 3.750%, with monthly payments of $833.01, on a Philadelphia property. In June 2019 he sent a Qualified Written Request - a formal letter under federal servicing law that requires the servicer to investigate and respond - to both Flagstar and PHH. He says he disputed the debt and asked for the account history, the servicing records, and information on who owned the loan.
Those answers, the lawsuit claims, never fully arrived. He says Flagstar wrote back on July 1, 2019 confirming it had received his letter but not providing what he had requested, and that the paperwork it did send was incomplete, including a note missing its signature page. PHH acknowledged the request on July 20, 2019, he says. According to the filing, PHH then wrote in September 2019 to say it was sending the request for additional review, and again in October 2019 to say it needed more time and would respond by a set date. The complete response he was after, the filing states, did not come.
The loan, meanwhile, kept moving. The suit alleges MERS assigned the mortgage to Pingora Loan Servicing on July 16, 2019 - during the dispute - and that Pingora sued him on the same loan that October. In December 2022, according to the court papers, Pingora assigned the mortgage on to Freedom Mortgage. The borrower says he never received meaningful account or transfer information from Pingora "other than the later lawsuit filed against him."
He also raises an argument servicers have fielded before: he alleges that MERS was named only as nominee and never held the promissory note, which he contends separated the mortgage from the note in a way that, in his view, weakened the authority to enforce the debt.
The dispute reached its costliest point in state court. The filing says the foreclosure case in the Philadelphia Court of Common Pleas ended in a final judgment for Freedom Mortgage on or about July 7, 2025, fixing the amount owed at $195,039.42. The homeowner treats that sum as the heart of his claimed damages, along with lost equity, legal costs, credit harm, and emotional distress.
His federal case rests on six counts: alleged violations of the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), and state-law claims for fraud, fraudulent misrepresentation and concealment, unjust enrichment, and a request for declaratory judgment. He is asking for actual damages, statutory damages where the law allows, punitive damages, costs, and a court declaration that the companies fell short of their RESPA and TILA obligations.
For servicers, the point of interest sits in the pattern the borrower describes rather than in any result, because there is no result yet. He alleges a Qualified Written Request that produced acknowledgments and requests for more time instead of a complete answer, layered on top of a loan that changed hands while the dispute was still live. That sequence - whatever the facts turn out to be - is the kind compliance teams build their procedures to avoid.
None of these allegations has been tested in court, and no judge has ruled on the claims.
