Although many mortgage lenders charge their customers what is known as a mortgage origination fee for making payments over the phone or over the Internet, these fees are not always legal. According to a lawsuit filed against PHH Mortgage Corporation, the lender may be engaging in deceptive commission practices.
What is PHH?
PHH is a New Jersey-based mortgage lender. The company has been in the market for more than 30 years and offers a wide variety of loan options. It is a subsidiary of Ocwen Financial Corporation.
What are mortgage payment processing fees?
A mortgage payment processing fee is a fee charged to consumers for making a mortgage payment. In some cases, these fees are used to cover the cost of running a credit card machine or otherwise processing a customer’s credit card. Many mortgage lenders charge these fees when borrowers pay their mortgage over the phone or online, rather than by mailing a check. However, it is not always legal to charge a mortgage processing fee and some consumers have claimed that this is an abusive practice.
Have you been charged fees to pay a PHH mortgage?
A PHH client has filed a class action lawsuit over the lender’s fee policies. In plaintiff Vincent M.’s March lawsuit, he claims he was charged deceptive commissions multiple times in 2019 and 2020.
Vincent owns a home in Florida and the mortgage on the home is owned by PHH. Vincent claims that PHH does not expressly disclose to customers that it charges processing fees for online and phone payments, and the fees violate Florida law. According to the lawsuit, Vincent was charged a $17.50 processing fee in April, May and October 2019 when he made mortgage payments to the lender over the phone or online. He also claims that he was charged a $7.50 processing fee in June, July, August, September, October, November, and December 2019, as well as January and February 2020 for making payments in the same way. The processing fees totaled more than $100. Vincent claims that since PHH’s contract does not disclose fees, and no applicable Florida law allows them, the mortgage lender violated lending laws.
The consumer pays the mortgage over the phone. Are the mortgage processing fees legal?
In some cases, mortgage payment processing fees may be legal. If the fees are stated in the contract between the mortgage lender and the borrower, they may be acceptable. In addition, many lenders may pass on the actual costs of processing transactions to the customer. However, the actual cost of processing an Internet or phone payment can be as little as a few cents, but in many cases mortgage lenders charge between $5 and $15 for this service and pocket the profit.
In some cases, mortgage lenders have been accused of using deceptive methods to pressure consumers to pay mortgage origination fees. There have been reports of lenders telling consumers the fee was necessary to pay the mortgage, when in fact the fee being charged was for posting the same-day mortgage payment, something some customers may not need. Mortgage lenders may not misrepresent the nature of fees to customers in order to make a profit.
In 2017, the Consumer Financial Protection Bureau (CFPB) released a statement about these practices and warned consumers about the potential for being misled by mortgage lenders.
According to the CFPB, in an attempt to maximize profits, mortgage lenders across the country may deliberately fail to inform consumers about free or low-cost mortgage payment options. Although the CFPB does not require mortgage lenders to inform customers of options in any particular way, the agency does require lenders to follow consumer finance laws.
Can payment processing fees be avoided?
Although some mortgage payment fees can be avoided, the Federal Trade Commission (FTC) says there are some steps consumers can take to avoid unnecessary fees.
The FTC recommends checking with your mortgage servicer before faxing loan documents or using other services. These options may entail unexpected expenses. Knowing these fees can help consumers avoid expensive options. See your loan documents and agreements for more details on authorized rates.
This information can be important, especially if you follow the FTC’s advice: Review your billing statements carefully. You will be able to find commissions that you may have been charged. If you’re not sure what a certain fee is, you can ask your mortgage servicer for a breakdown and explanation. To obtain this information, submit a written request to your administrator.
If you have reviewed your mortgage billing statement and find unauthorized fees, you may be able to dispute these charges. Should your mortgage servicer be charging unauthorized fees, you could take action. You may be able to file a complaint with regulators like the FTC or take legal action through a class action lawsuit.
Can You File a Lawsuit Against PHH Mortgage for Payment Processing Fees?
Unfortunately, while consumers are careful to guard against unnecessary fees, they may be charged unfair payment processing fees. In these cases, they may choose to pursue legal action in a class action lawsuit for payment processing fees similar to Vincent’s lawsuit.
Legal action can be a great way to recover compensation for unfair fees and other damages. Vincent’s lawsuit against PHH Mortgage seeks compensation for him and all other affected PHH clients, including reimbursement for actual money damages and additional relief. It also seeks to prevent PHH from continuing to charge these inappropriate fees.
Other banks and lenders accused of similar practices include Citi Bank’s department store unit, Department Stores National Bank, and Green Tree Servicing.
If you are a customer of PHH or another mortgage lender and have been charged a mortgage payment processing fee for your mortgage payment online or over the phone, you may be able to speak with an experienced attorney about of your legal options. Some victims of deceptive charges may be able to recover reimbursement and additional compensation through a class action lawsuit.