Lawsuit Alleges Mortgage Payment Processing Fees are Illegal

According to a recent class action lawsuit filed by several plaintiffs against Carrington Mortgage Services, the company may have illegally charged processing fees to customers who paid their monthly mortgage online or over the phone.

Carrington Lawsuit Filed Over Mortgage Payment Processing Fees

Carrington Mortgage Services is one of the largest servicers of residential mortgages in the United States. However, according to plaintiffs in a recent lawsuit, the mortgage company may be violating the Fair Debt Collection Practices Act (FDCPA), as well as state debt collection laws, and the terms of their own mortgages.

According to consumers, Carrington may be charging borrowers $5.00 each time they pay their mortgage online, and between $10.00 and $20.00 for each payment made over the phone. These mortgage payment processing fees may also be referred to as “Pay-to-Pay” fees.

Plaintiffs Amy T., Brenda B., Miguel P., and William G. filed their lawsuit against Carrington Mortgage Services on Dec. 16, 2019. Plaintiff Amy T. claims that she made several online mortgage payments in September and October 2017, as well as February 2019. Each time that she paid her mortgage online, Amy claims she was assessed a $5.00 fee. William G. claims that in addition to the $5.00 fees he was assessed for payments he made online, he was also charged $10.00 and $20.00 fees for payments he made over the phone. Brenda B. and Miguel P. have similar claims regarding illegal pay-to-pay fees.

Unlike hidden fees, these fees are known, but not legal.  Although Carrington is permitted by law to pass on fees paid to third party servicers to borrowers, mortgage companies are not permitted to mark-up these fees in order to pocket a profit. Although the system that Carrington uses to process online fees charges about $0.50 for each transaction, Carrington charges consumers $5.00 in order to pay their mortgage online. The $4.50 difference is allegedly pocketed by the company as profit.

Several other financial institutions have been found to have charged consumers illegal mortgage payment processing fees, including Citibank and Green Tree Servicing. Payment processors at these companies may be pressuring customers into agreeing to pay these deceptive fees by calling them “processing charges,” or saying that the fee was necessary in order for the payment to be processed immediately.

About the Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act governs the ways that debt collectors are allowed to attempt to collect a debt on behalf of another entity. Under the FDCPA terms, debt collectors are prohibited from using false, deceptive, or misleading means in order to collect a debt. This may include misrepresenting the character, amount, or legal status of the debt.

If Carrington is misrepresenting the fees associated with online and over the phone payments, the mortgage company may have violated the FDCPA. Companies who violate the FDCPA may be sued within one year of the violation and may be subject to fines or legal action.

Consumers who believe they have been harmed by FDCPA violations committed by Carrington or another mortgage lender may be able to file a class action lawsuit against the offending company.

The Carrington Illegal Mortgage Fees lawsuit is Case No: 1:19-cv-03567-DLB, filed in the United States District Court for the District of Maryland, Northern Division.

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.