Nationstar Mortgage Lawsuit Headed to Arbitration
The West Virginia Supreme Court of Appeals recently ruled the Nationstar Mortgage lawsuit would need to proceed to arbitration without any further action in the courtroom concerning the case. The petitioner in the suit, Nationstar Mortgage, wants to reverse the January order from the Putnam Circuit Court that denied its motion to compel arbitration. The underlying case related to allegations that Nationstar was using predatory lending techniques and acting abusively and unlawfully in debt collection related to its mortgages. In response, the circuit court determined that arbitration is procedurally and substantially unconscionable.
The Supreme Court found that the circuit court was in error when it decided that the arbitration agreement was unenforceable, so it reversed the decision and remanded the matter to arbitration. At least one member of the state supreme court took a dissenting opinion.
In July of 2003, a family entered into a loan agreement with Nationstar for $76,500. As part of their mortgage loan, the family signed a contractual rider that required them to use arbitration to settle disagreements that arose in the future related to the mortgage loan.
Nearly 10 years later, the family filed a complaint in Putnam Circuit Court against Nationstar that related to the origination and servicing of the mortgage loan. Nationstar had the complaint removed from federal court, and the family filed an amended complaint, which was granted and sent to state court. In August 2014, Nationstar filed a motion to compel arbitration. During a hearing, the family told the court it would submit to arbitration, as long as Nationstar agreed to use the AAA consumer rules of arbitration. Nationstar refused, which led to the current situation.