Stephen and Cynthia Skertich reached an undisclosed settlement with Newrez last month after they were victimized by a HELOC fraud last summer. They sued Shellpoint Mortgage Servicing last December for counts including violating the Truth in Lending Act over the ordeal involving their $500,000 HELOC originated in 2021.

The July 22 settlement announcement, signed by a judge in a Pennsylvania federal court, only said the case was dismissed with prejudice, meaning it can't be refiled. Newrez in a June filing said it already "zeroed out" the fraudulent $425,650 wire transfer from the Skertichs' HELOC in December, giving the homeowners full access to their line of credit. 

The sides didn't return requests for comment Monday. 

The complaint revealed few details on how an unidentified person was able to scam the servicer into allowing the wire transfer. As homeowners sit on over $11 trillion of equity and rising, HELOC lending is becoming a more attractive space for cybercriminals. 

How the HELOC fraud unfolded

The Skertichs' secured a $500,000 HELOC for their Florida home from Spring EQ in 2021, according to a motion for partial summary judgment filed in June by Newrez. Specialized Loan Servicing acquired the loan in 2022, and today services the loan on behalf of Alliant Credit Union. SLS merged into Shellpoint as Rithm acquired SLS in 2024. 

Last June, someone submitted a fraudulent wire transfer request for the six-figure amount, including state and federal identification documents purporting to be Stephen Skertich, counsel for Newrez wrote. 

"The wire request was, unfortunately, approved, and the corresponding wire transfer was drawn upon a line of credit held by plaintiffs," the motion by the company read. 

In August, Shellpoint sent the couple a balance of $425,650, which was zero previously, the Sketrichs' said. Both sides admit the homeowners disputed the loan in August. But the couple said Shellpoint, in an attempt to harass the couple into paying, began foreclosure proceedings.

The servicer, emphasizing that the plaintiffs did nothing wrong, said it zeroed out the massive balance on Dec. 18. Plaintiffs filed their suit two days later. The mortgage company in its motion did not address the allegation that it began foreclosure proceedings, or that it lacked "commercially reasonable security systems" to prevent the fraud. 

Counsel for Newrez had suggested a judge toss several of the counts lobbied by the Skertichs, claiming Shellpoint was not liable under TILA because it is a servicer, not a creditor. The servicer also argued the HELOC bill did not count as a debt under a state consumer law. 

The massive servicer is still facing other complaints, including one accusing it of overcharging borrowers for phone payments. Another lawsuit from a Georgia borrower alleging Shellpoint inflated the balance on long-dormant second mortgages is scheduled for mediation in September.