The dispute boils down to two words: “anniversary date.”
In April 2024, Michael E Kasaba LLC took out a $399,000 mortgage from Investor Mortgage Finance LLC on a home at 810 Joyce Drive in Port Hueneme, California, with monthly payments of $2,661.26 starting that June. The loan’s Fixed Rate Note laid out a sliding prepayment penalty – 5% if the loan was paid off on or before the first anniversary of the loan, 4% by the second, and so on down to zero after the fifth year. What the note did not do, according to the filing, was define what “anniversary date” actually meant.
That ambiguity, the borrower says, is where the trouble started. After the loan was transferred to Mr. Cooper, the borrower paid it off in full on May 27, 2025. Mr. Cooper, then operating under the Rushmore Servicing brand, charged a prepayment penalty of $19,748.32 – 5% of the $394,966.38 balance. The borrower argues the penalty should have been 4%, or $15,798.66, because the payoff came more than a year after the loan funded on April 4, 2024. That is a difference of $3,949.66. When the borrower called Mr. Cooper on June 5, 2025, to dispute the charge, the filing says the company refused to refund it.
The borrower’s position, backed by a citation to a Seventh Circuit case, is that “anniversary date” in the mortgage world commonly refers to the date the loan was issued – not the date the first payment came due. Mr. Cooper, according to the filing, read it the other way, using the later first-payment date and applying the higher 5% penalty.
The lawsuit brings four claims: breach of contract and the implied covenant of good faith and fair dealing, unjust enrichment, violations of California’s Unfair Competition Law, and violations of the Texas Deceptive Trade Practices Act. Invoking the Class Action Fairness Act, the filing pegs the aggregate amount in controversy at more than $5 million and says the class could include thousands of borrowers.