A borrower filed a class action against a mortgage servicer, accusing it of failing to provide monthly statements and of providing false representations in negotiations for a modification agreement. The borrower alleged that the servicer violated consumer protection laws and the Truth in Lending Act (TILA). The servicer argued that it was not subject to TILA, so no violation occurred. The servicer moved for judgment on the pleadings.

This case is David Sellers v. NewRez LLC, d/b/a Shellpoint Mortgage Servicing, No. 25-CV-00035-LKG, 2026 WL 632357, at *1 (Mar. 6, 2026).

The facts

David Sellers purchased his Maryland home in 2005 using an 80/20 mortgage, comprised of a traditional first mortgage covering 80 percent of the home’s value and a home equity line of credit (HELOC) covering 20 percent. The HELOC loan was serviced by Specialized Loan Servicing, LLC (SLS).

In 2011, Sellers filed for Chapter 7 bankruptcy and filed a Statement of Intent, indicating that he would retain his interest in his home and continue to pay the first and second mortgages.

Sellers alleged that after the bankruptcy discharge in early 2012, he stopped receiving monthly statements on his second mortgage HELOC loan, which had the approximate principal balance of $70,000, and did not receive any correspondence regarding the loan for nearly a decade. Sellers also alleged that he assumed the HELOC loan was no longer an independent debt obligation.

In 2022, Sellers received a foreclosure notice from SLS, informing him that the HELOC loan was in default and that he owed over $87,000 in interest and fees that had accumulated since the bankruptcy discharge. Sellers alleged that SLS threatened to foreclose on his home if he did not pay the inflated amount, so he entered negotiations to modify the HELOC loan and avoid foreclosure. He further alleged that he relied on SLS’s false representations that he owed the inflated amounts in deciding to sign the modification agreement for the HELOC loan in October 2022.

In May 2024, Shellpoint took over the servicing of the HELOC loan after it merged with SLS.

In the complaint, Sellers alleged five claims, including violations of the Maryland Consumer Protection Act (MCPA), violations of the Maryland Consumer Debt Collection Act (MCDCA) and unjust enrichment. Sellers sought to recover the lost equity from the inflated balances on the secured second mortgage debts, the payments made on the modifications that SLS and Shellpoint deceptively induced, and emotional distress damages.

According to the complaint, Sellers alleged that Shellpoint violated the MCPA through engaging in an unfair, abusive or deceptive trade practice by deceiving him and the class members into entering loan modifications based on the false representation that they owed thousands of dollars in interest and fees, while threatening foreclosure.

Shellpoint also violated the MCDCA by collecting and attempting to collect retroactive interest and fees for periods in which no statements were sent to the class members, the complaint alleged.

Sellers filed the putative class action on Oct. 9, 2024. On June 16, 2025, Shellpoint filed a motion for judgment on the pleadings.

Shellpoint argued that the MCPA and MCDCA claims failed as a matter of law, “because these claims are predicated upon an alleged time-barred and non-existent TILA violation.” Shellpoint further argued that the unjust enrichment claim failed due to an express contract that governs the subject matter of the complaint.

In response to the opposition, Sellers argued that the complaint alleged independent violations of the MCPA and MCDCA that are not based on TILA and that even if there is a contract covering the subject matter, the complaint alleged facts to show fraud or bad faith by Shellpoint.

The ruling

U.S. District Court Judge Lydia Griggsby for Maryland found that the MCPA and MCDCA claims “must fail as a matter of law, because these claims are predicated up an alleged violation of [TILA] and Shellpoint cannot be held liable under TILA.”

Griggsby pointed to Section 1638(f) of TILA which provides that “[t]he creditor, assignee, or servicer with respect to any residential mortgage loan shall transmit to the obligor, for each billing cycle, a statement” containing information such as the remaining principal, the current interest rate, a description of late payment fees, and specific contact information through which the obligor can obtain more information about the mortgage.

According to the court, “TILA’s disclosure requirements apply only to creditors and their assignees. … And so, this court has held that a mortgage servicer cannot be held liable under the TILA, because it is not a creditor under the statute.”

In the present case, there was no dispute that Shellpoint was the servicer of the HELOC loan, rather than the owner of the loan.

The court also agreed with Shellpoint that Sellers’ MCPA and MCDCA claims were predicated upon violations of TILA as the claims rested on Shellpoint allegedly “deliberately withholding monthly statements” and “[knowing] from the plain language of the regulations that it did not have the right to collect interest and fees for periods in which it failed to send monthly statements to the plaintiff and the debt collection class.”

The court found that Sellers “cannot bring a claim under the TILA under the facade of challenging a violation of other consumer protection laws.”

As such, the court granted Shellpoint’s motion for judgment on the pleadings with regards to the MCPA and MCDA claims.

The court, however, said that Shellpoint’s argument regarding the unjust enrichment claim was “less convincing.”

The court found that the factual allegations in the complaint, such as the 80/20 mortgage structure agreement, demonstrated that there was an express agreement between Sellers and Shellpoint regarding the HELOC loan and the payment amounts and interest due under the loan.

According to the court, Sellers “correctly observe[d] that Maryland law permits a party to assert an unjust enrichment claim, under circumstances where there is an express contract.” However, Sellers failed to allege sufficient facts to support a fraud or bad faith exception in this case. The court noted that Sellers may be able to cure the deficiency by amending the complaint. As such, the court denied Shellpoint’s motion with respect to the unjust enrichment claim without prejudice.

Lastly, the court dismissed the class claims associated with the MCPA and MCDCA claims but declined to dismiss the class claim for the unjust enrichment claim.