Banking and Finance Law Daily Wrap Up, MORTGAGES—Bloomberg sues CFPB and Fed over “zombie mortgage” FOIA requests, (Mar 13, 2026)

By Shashi Kant, BALLB, LLM.

The complaint alleges agencies failed to produce records concerning investigations into mortgage servicers’ attempts to collect long-dormant second-lien debt.

Bloomberg L.P. filed a complaint under the Freedom of Information Act seeking records from the Consumer Financial Protection Bureau and the Federal Reserve Board concerning federal investigations into “zombie” second mortgages, alleging that the agencies failed to comply with statutory obligations to search for and produce responsive documents. The complaint, filed in the U.S. District Court for the District of Columbia, alleges that the CFPB and the Fed did not conduct adequate searches or produce records responsive to requests for information related to enforcement investigations involving mortgage servicing companies and the collection of dormant second-lien mortgage debt (Bloomberg L.P. v. Consumer Financial Protection Bureau, No. 1:26-cv-00866 (D.D.C. filed Mar. 12, 2026)).

FOIA requests. According to the complaint, Bloomberg News investigative reporter Noah Buhayar submitted a FOIA request to the CFPB’s Office of Enforcement on Oct. 9, 2025, seeking records relating to investigations into certain mortgage servicing entities connected to so-called “zombie” second mortgages. The request sought closing letters, memoranda, and other records reflecting decisions by the CFPB to end or decline enforcement actions involving Veripro Solutions, a subsidiary of Mr. Cooper Group; Specialized Loan Servicing, which is part of Newrez; and FCI Lender Services. The request sought records dated from Jan. 20, 2025, through the date the agency conducted its search.

The complaint describes “zombie” second mortgages as dormant second-lien loans that homeowners believed had been extinguished or discharged but that later reappear when lenders or servicers attempt to collect the outstanding debt. According to the FOIA request, thousands of borrowers have faced attempts to collect on such second mortgages after years of inactivity, often after borrowers stopped receiving monthly statements or believed the loans had been written off. Bloomberg stated in its request that litigation involving these loans has alleged that certain servicers and investors attempted to collect time-barred debt and accrued interest after years without communication with borrowers. The request also sought records reflecting communications between the CFPB and the companies regarding the investigations, as well as documents explaining the agency’s decision-making regarding whether enforcement action would be pursued. Bloomberg requested expedited processing of the FOIA request, stating that there was an urgent need to inform the public about government enforcement decisions affecting mortgage markets and large numbers of consumers.

Agency responses and alleged noncompliance. According to the complaint, the agency denied Bloomberg’s request for expedited processing and informed the requester that it faced a backlog of FOIA requests. Bloomberg alleges that the CFPB subsequently failed to provide a determination within the timeframe required by FOIA and did not produce responsive records. The complaint also names the Board of Governors of the Federal Reserve System as a defendant, alleging that the Fed similarly failed to comply with its obligations under FOIA with respect to related records requests concerning second-lien mortgage enforcement activity. Bloomberg alleges that the agencies’ failures to produce records, conduct adequate searches, or issue timely determinations violated the Freedom of Information Act and deprived the news organization of access to information about government regulatory and enforcement activity.

Claims under the Freedom of Information Act. The complaint asserts that the CFPB and the Fed violated FOIA by failing to conduct reasonable searches for records responsive to the requests and by failing to produce non-exempt records. Bloomberg also alleges that the agencies failed to make required determinations within the statutory deadlines set forth in FOIA and improperly withheld records. Under the statute, federal agencies must determine within a specified period whether they will comply with a request and must promptly produce responsive records unless they fall within one of the statute’s exemptions. The complaint states that Bloomberg has exhausted its administrative remedies because the agencies failed to provide the requested records or timely determinations.

Relief requested. Bloomberg asks the court to declare that the CFPB and the Fed violated the Freedom of Information Act and to order the agencies to conduct adequate searches for records responsive to the requests. The complaint seeks an order requiring the agencies to produce any non-exempt documents and to justify any withheld records through the submission of detailed indices explaining the basis for withholding under FOIA exemptions. Bloomberg also asks the court to retain jurisdiction to ensure compliance with its orders and to award the company reasonable attorneys’ fees and litigation costs.

Attorneys: Merrick Jason Wayne (Loevy & Loevy) for Bloomberg L.P.

Companies: Bloomberg L.P.

LitigationEnforcement: CFPB GCNNews Loans Mortgages