On July 25, 2025, the U.S. District Court for the District of New Jersey denied a motion for a Temporary Restraining Order (TRO) sought by homeowners challenging their loan servicing and pending foreclosure. The plaintiffs alleged serious violations of RESPA, FDCPA, and TILA against loan servicers and investors.
The homeowners requested emergency injunctive relief based on the allegation that the servicers violated the anti-dual tracking provisions of RESPA. The Court denied the TRO due to several factors. First, no irreparable harm was shown, there was no active foreclosure or imminent loss of property was demonstrated. Next, the statutes cited in support of their application (RESPA, FDCPA, TILA) did not clearly support the kind of emergency injunction sought. Lastly, the extraordinary relief standard was not met, specifically, Plaintiffs did not establish a likelihood of success or sufficient urgency under Rule 65.
The facts of the case are as follows. In 2023, homeowners took out a mortgage, serviced by the initial servicer, Servicer A. Later, Servicer B (“outgoing servicer”) assumed servicing. In January 2024, the outgoing servicer initiated a refinance transaction and advised the homeowners not to make the January mortgage payment because of the pending refinance. After refinancing documents were signed, the outgoing servicer allegedly stopped communicating with the Plaintiffs. The homeowners claim attempts to resume payments resulted in penalties and threats of foreclosure.
In December 2024, the homeowners asked Servicer B for documentation about who owns and services the loan. The outgoing servicer allegedly refused to provide a complete response and just advised that Servicer C (“incoming servicer”) was the new owner. In March 2025, Plaintiffs got a “Welcome Letter” from the incoming servicer as the new servicer, but the letter did not give a proper address for Qualified Written Requests (“QWR”) nor identify the current note holder. Thereafter, the homeowners received another letter from the incoming servicer’s parent claiming ownership of the loan as of March 3, 2025, but still told the homeowners to make payments to Servicer B, the outgoing servicer.
On April 8, 2025, the homeowners submitted a QWR to the incoming servicer seeking verification of the debt and identification of the note’s owner. Plaintiffs allege Servicer C failed to acknowledge the QWR within five business days, which is required by federal law. Further, the homeowners contend that the incoming servicer issued multiple foreclosure notices during April and May of 2025.
Even though the Court denied the TRO, it is still crucial that loan servicers / investors respond timely to QWRs and validate debt transitions carefully. Further, welcome letters and ownership notices need to comply with Regulation X and TILA and contain all relevant and required information.
If you have questions about this decision or any other New Jersey matter, contact Padgett to connect with our New Jersey team.