Wachovia in 2006 sold HomEq to Barclays, which in turn in 2010 sold the mortgage servicing business to Ocwen Financial.
Wells Fargo bought Wachovia at the end of 2008 and thus never owned HomEq, but a spokesman confirmed it remained liable for some claims raised in the lawsuit. Ocwen in a statement said it did not have similar liability. Barclays declined to comment.
The lawsuit filed by Joseph Mazzei, a California resident, contends that HomEq kept charging borrowers monthly late fees even after their mortgages went into default, making the full amounts owed immediately due.
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It also said HomEq violated its contracts by charging attorneys' fees in foreclosure and bankruptcy and splitting them with a nonlawyer, specifically a unit of Fidelity National Information Services. Sharing fees in this manner is illegal throughout the country, the lawsuit said.
In an October court filing, a damages expert for the plaintiffs estimated damages at $59.3 million for late fees and $282.7 million for attorneys' fees, plus pre-judgment interest of $287.4 million.
"We strongly disagree with and dispute the plaintiff's claims and legal arguments, which relate to acts that occurred at a legacy company more than a decade ago, and are prepared to present our case in court." Wells Fargo spokesman Tom Goyda said.
Moshe Horn, a lawyer for the plaintiffs at Seeger Weiss, declined to comment.
The case is Mazzei v. The Money Store, U.S. District Court, Southern District of New York, No. 01-5694.