Couple sues Rocket Mortgage and Flagstar over bungled HELOC transfer
The servicer’s June 3, 2026 response to the third notice did concede one thing, according to the filing: “our responses dated July 29, 2025, and October 31, 2025, did not fully address the concerns raised in your correspondence.” But the suit alleges this response still fell short, speculating that the payment-system failures were consistent with “standard new-account setup requirements” without reviewing the borrowers’ actual payment attempts, and concluding “no system error occurred.”
The credit reporting mess
The credit reporting problems ran on a parallel track, according to the lawsuit. After the transfer, the original HELOC tradeline was reported as closed and “Transferred to another lender,” with the credit limit listed as “N/A.” A new tradeline appeared, but the suit says it classified the open-end revolving credit line as a “Mortgage Account” and “Home Equity Loan,” reported the $64,000 credit limit only as a “High Balance” rather than an actual credit limit, and showed stale balance information and “$0” payments received despite payments having been made.
When Stephanie Princip disputed the tradeline with TransUnion, the filing says, the servicer “verified as accurate” the disputed information while simultaneously changing the account type, credit limit, and rating – which the suit characterizes as proof the original reporting was inaccurate and that the investigation was a rubber stamp.
The Princips allege their credit scores dropped by more than 130 points. They say the damage blocked them from getting pre-approved for a new purchase loan at a time when their primary adjustable-rate mortgage on the property was set to reset. The filing also says Defendants sent them a “North Carolina Forty-Five (45) Day Pre-Foreclosure Notice” around July 10, 2025, and registered their home with the State Home Foreclosure Prevention Project.
What they’re asking for
The Princips are seeking actual damages, statutory damages of $2,000 per RESPA violation per plaintiff – which they calculate at $12,000 against each defendant on the error-notice claims, plus $4,000 against Rocket for the missing transfer notice – punitive damages under the Fair Credit Reporting Act, and attorneys’ fees. They have demanded a jury trial.
