Newrez settles pay-to-pay case amid class certification push

Newrez has agreed to settle a pay-to-pay case with a consumer who was moving to certify a proposed class of at least thousands of aggrieved individuals. 

Borrower Eugenio Alvarez sued the company in 2024, accusing its servicing subsidiary Specialized Loan Servicing of up-charging borrowers with $7.50 fees to process mortgage payments via telephone. Newrez today doesn't charge the so-called pay-to-pay fee, but the company was still fighting the suit. 

The plaintiff was in the midst of asking a federal judge for class certification. White the total number of potentially affected borrowers was redacted in a January motion, a March filing by Alvarez revealed at least 7,827 Texas-based class members. 

The sides had also argued in recent months over Newrez's motion for summary judgment, before disclosing their settlement June 3. A federal judge dismissed the case then, and terms of the deal were undisclosed. 

The large servicer has dealt with wider scrutiny in recent years, including litigation over its alleged attempted collection of debt on "zombie" second mortgages. It's also starting at a potential $4.2 million penalty by a Washington state regulator for various alleged violations of consumer laws. 

In a statement to National Mortgage News Friday, a spokesperson for Newrez noted that the claims related to historical practices at SLS before it was acquired by Newrez in 2024, and that borrowers have since not been charged such pay-to-pay fees. 

"We remain focused on providing a clear, transparent experience for all the homeowners we have the privilege to serve every day," the statement read. 

Attorneys for Alvarez didn't return requests for comment. 

The accusations

Alvarez, whose loan was serviced by SLS from 2017 to 2024, claims he was charged the fees to pay his mortgage via telephone in violation of the Federal Debt Collection Practices Act. The borrower cited other servicers who didn't charge the fees, and claimed the fees cost SLS less than $0.50 per transaction. 

While Alvarez said the charge wasn't authorized in his loan agreement, Newrez suggested that other borrowers may have had different provisions regarding the fee in their respective agreements. Attorneys for Alvarez in a March filing argued to the court that Shellpoint failed to identify a single prospective class member with an agreement different than Alvarez's. 

According to the class certification motion, the plaintiff sought to include borrowers with loans serviced by SLS who paid telephone fees between September 2022 and the time the class was approved. 

Pay-to-pay fights

Both consumers and regulators have scrutinized the various pay-to-pay fees servicers have attached to mortgage payments. The Consumer Financial Protection Bureau issued guidance around "junk fees" in 2024, but the Trump administration withdrew its scrutiny in 2025. 

Mr. Cooper last year successfully batted away a pay-to-pay complaint over its $25 expedited payoff quote statement fees. PennyMac suffered a setback in December as a federal judge ruled that a consumer's complaint over the servicer's fees for debit card mortgage payments could move forward.