Borrowers Catherine Palazzo and Peter Hackinen elevated their failed class action case to the 9th U.S. Circuit Court of Appeals last week, according to federal court records. The plaintiffs sued the megaservicer over its fee for expedited payoff-quote statements, which they alleged violated the Fair Debt Collection Practices Act. 

A Seattle-based federal judge in August ruled the fee doesn't break debt collection laws because the charge "is not a communication related to collecting a debt." The initial complaint filed last April described the charges to thousands of borrowers as "junk fees," referencing a term the Consumer Financial Protection Bureau introduced last spring.

Plaintiffs have to share their opening argument by Oct. 28, and Mr. Cooper must reply by Nov. 28, according to the case docket. Counsel for plaintiffs and a representative for Mr. Cooper didn't immediately return requests for comment Monday morning. 

How the Mr. Cooper "junk fee" case unfolded

The lawsuit suggested the expedited payoff-quote statements are processed in seconds and cost the company "pennies" compared to the $25 fee it charges. Mr. Cooper today on its website describes a "preparation fee of up to $25" for the quote, and tells borrowers to contact the company for questions about the fees. 

Mr. Cooper argued that the expedited delivery of a payoff statement was an additional service contracted outside the mortgage loan. It also assured the court it provides the statements for free within the statutorily allowed time frame. 

During the litigation, the Consumer Financial Protection Bureau filed a short amicus brief agreeing with consumers that Mr. Cooper was violating the FDCPA by charging a fee customers weren't previously aware of. The Trump administration withdrew that guidance earlier this year. 

Last month's granting of summary judgment also denied as moot expert testimony from subjects, including a Mr. Cooper executive. 

Plaintiffs last year also failed to add Freddie Mac as a defendant, which they accused of turning a blind eye to the supposedly illicit fee. Attorneys for Freddie Mac told the court it requires servicers to comply with applicable laws. 

Other "pay-to-pay" lawsuits between consumers and servicers over issues that include charges for remittance by phone and certain late fees, remain pending in federal courts.