Homeowners in St. Petersburg trying to rebuild after Hurricane Helene are now grappling with a new crisis: foreclosure threats from a mortgage company that recently acquired their loan.

Woody Faircloth and his family, who live in the Riviera Bay neighborhood, say their mortgage was sold while they were still recovering from storm damage. Despite following instructions from their original lender to pause payments temporarily, they were stunned to learn their new mortgage servicer had initiated foreclosure.

“It’s mentally exhausting, emotionally draining, and just devastating,” Faircloth told WTVT. “As a husband and a father, it’s terrifying because my family depends on me.”

According to Faircloth, his previous lender told him not to make payments for four months so he could focus on repairing his home. They assured him he could catch up using his insurance payout once it arrived. But when that forbearance period ended, his loan was transferred to Mr. Cooper, a mortgage servicer owned by Nationstar Mortgage.

Faircloth says Mr. Cooper immediately flagged him as delinquent and began foreclosure proceedings.

“When I called and told them we were under a forbearance agreement, they responded, ‘Not with us, you weren’t,’” Faircloth explained. “Now they’re threatening to sell our home if we don’t pay up.”

Real estate attorney Charles Gallagher says these situations are becoming more common, especially when forbearance agreements were made verbally rather than in writing.

“This is similar to what we saw after the COVID crisis,” Gallagher explained. “If there’s a written agreement, the new servicer must honor it. If they don’t, that’s a legal violation.”

Nationstar, operating as Mr. Cooper, has a history of legal trouble over similar issues. All 50 state attorneys general have sued the company twice, resulting in nationwide settlements. The Consumer Financial Protection Bureau also secured a $91 million settlement for mishandling transferred mortgages.

Gallagher warns homeowners not to panic if threatened verbally with foreclosure. “Lenders must go through the courts. A lawsuit must be filed, and the homeowner has a right to respond,” he said.

He added that some servicers mislead homeowners by falsely claiming a sale date has been set — a tactic that could constitute fraud or deceptive trade practices.

“To say there’s a foreclosure and a sale date when there’s been no legal filing is not just dishonest — it may be actionable in court,” Gallagher said.

Faircloth has reported the issue to St. Petersburg Police, where a detective is now reviewing the case. He’s also filed a formal complaint with the Florida Attorney General.

“Surviving the hurricane was hard enough,” Faircloth said. “I never imagined the real disaster would come from the mortgage company trying to take our home.”

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