Shellpoint force-placed flood insurance on a covered condo, foreclosure suit alleges

In October 2024 the servicer sent a flood insurance notice, but the borrower says the link she needed to upload her proof was buried in small print at the bottom of the page. On November 18, 2024, Shellpoint force-placed a flood policy and began drawing the premium from her escrow. She says she found the link that same month and uploaded the master policy declaration page, the document that shows the policy number and the insurer’s identity and contact details. The servicer received it, the filing states, and did not cancel the policy or refund the charges. 

From there the numbers climbed. A January 14, 2025 escrow analysis showed the account at negative $4,039.33 with a shortage of $5,741.54, which the suit ties to the force-placed charges. Shellpoint spread that shortage over sixty months and raised the monthly payment to $2,637.49, effective March 1, 2025. 

The borrower pushed back in writing, over and over. Court papers describe five notices of error between February 2025 and April 2026, each explaining that the building was already covered. RESPA and Regulation X give a servicer tight windows on those notices – roughly five business days to acknowledge and thirty to correct the error or explain why it thinks there isn’t one. The lawsuit says Shellpoint acknowledged the disputes but missed the deadlines, not substantively answering the first two until August 5, 2025, when it said no error had occurred. 

One day later, on August 6, the servicer reversed itself, cancelling the first policy back to its start date and confirming there had been no lapse in coverage, according to the filing. It refunded $3,125.77 on August 7. But the suit says the cleanup stopped there. The inflated payment stayed, an $89.20 late charge stayed, and the past-due credit reporting stayed. The servicer said it “will not remove the reported delinquencies,” the filing states, quoting the servicer’s own letter. 

The account, meanwhile, was heading toward foreclosure on the disputed numbers. An August 25, 2025 default notice said the loan’s owner – the filing identifies it as Fannie Mae – had instructed the servicer to begin foreclosure. The servicer assessed $2,315.00 in foreclosure-related costs, the suit says, made up of a $1,620.00 attorney charge, a $540.00 foreclosure charge, and a $155.00 title charge.