Are One-Time Mortgage Payment Fees Legal?

A growing number of borrowers are reporting being charged extra payment fees when they make payments on their mortgage online or over the phone. But is this practice legal?

What are Mortgage Payment Fees?

When people make mortgage payments by phone or online, they are sometimes charged extra payment fees.

These fees are also referred to by other names, including “convenience fees” or “processing fees,” or sometimes “Speedpay fees,” after a particular payment system called Speedpay.

Convenience fees, according to Investopedia, are an extremely common practice for online payments, such as for concert or movie tickets. These and other hidden fees are an annoyance and may be illegal in some cases.

However, under the terms of most mortgage agreements, these fees are not allowed. Indeed, mortgage lenders may be violating their own agreements with borrowers by charging these fees for online or phone transactions.

This is especially true if any mortgage servicers have charged fees on a loan that is currently in default. The servicer could in this instance be considered a debt collector subject to the standards set forth in the Fair Debt Collection Practices Act.

How Much Are These Fees?

Typically, mortgage payment fees are reportedly somewhere around $5, $10, or $15 per transaction, depending on the lender in question. In some cases, the fee charged for an online transaction may be different than the fee charged for making a mortgage payment over the phone.

Is Anything Being Done About It?

There are federal laws against what is known as Unfair, Deceptive, Abusive Acts or Practices (UDAAPs) under the Dodd-Frank Wall Street Reform, Consumer Protection and Fair Debt Collection Practices Acts. Enforcement of these laws is the responsibility of the Consumer Financial Protection Bureau (CFPB). Under these laws, entities and service providers – including mortgage companies – are prohibited from committing UDAPPs that are likely to cause harm to, or mislead consumers.

What Are Some Examples?

A prime example of a UDAAP is the failure to disclose “transaction fees”; a billing statement may state that such a fee may apply, but does not state how much a consumer might pay. In a number of cases, consumers may not even be aware that they have lower or no-cost alternatives. For example, a mortgage company may charge a fee for expedited phone payments, but a no-fee option may be available that involves a processing delay.

In one enforcement action, the CFPB found reason to believe that a mortgage company was deceiving consumers by telling them that a certain pay-by-phone method was their only option, and by not using it, risked incurring late fees or even foreclosure. However, this particular mortgage company did in fact offer other options that did not involve a “pay-to-pay” fee, which consumers could have used had they known.

Another abuse is the failure to tell consumers when a payment fee is added to a regular payment, causing them to believe there were no mortgage payment fees.  

Have Any Lawsuits Been Filed?

If these payment fees break the lender or servicer’s agreement with the borrower, the borrower may have grounds to sue. So far, several groups of homeowners have begun pursuing lawsuits against mortgage servicers for tacking these convenience fees onto their mortgage payments.

Recent Lawsuits

A California woman recently filed a class action lawsuit against M&T Bank, alleging that the bank, her mortgage servicer, charged her and many other California homeowners excessive “pay-to-pay” convenience fees for phone and online mortgage payment transactions.

The plaintiff, Lisa S., claims that the actual processing cost per transaction for M&T is much lower than their $15 fee, and the rest of the money is meant to pad their own pockets.

Indeed, Lisa claims in her lawsuit that under both federal and California laws, M&T is not allowed to charge convenience fees in excess of the actual cost the transaction incurs, which Lisa’s lawsuit states should only be a few cents.

Lisa filed her lawsuit on Aug. 9, 2019, in the U.S. District Court for the Central District of California.

Filing a Lawsuit Over Mortgage Payment Fees

If you have been charged extra payment fees after making a mortgage payment online or by phone, you may be able to join this class action lawsuit investigation.

Filing a lawsuit can be a daunting prospect, so Top Class Actions has laid the groundwork for you by connecting you with an experienced attorney. Consulting an attorney can help you determine if you have a claim, navigate the complexities of litigation, and maximize your potential compensation.

The Payment Fees Lawsuit is Case No. 2:19-cv-06958, in the U.S. District Court for the Central District of California.

Join a Free Mortgage Payment Fee Class Action Lawsuit Investigation

If you were charged a payment fee for paying your mortgage online or over the phone, you may qualify to join a FREE online payment mortgage fee class action lawsuit investigation.

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This article is not legal advice. It is presented
for informational purposes only.