Mortgage Payment Fees Lead to Creditor Lawsuit

Lending money and collecting on debts are two key tenets of the American economy. While lending and collecting are necessary and helpful to those in need, lenders and debt collectors are, unfortunately, put in a position to take considerable advantage of debtors. One avenue by which debt collectors make profits off of those who owe them money is by the application of mortgage payment fees. These fees are often not included in mortgage agreements and are thus considered illegal under California law.

There are several laws in place in the state of California to ensure that debt collectors don’t over-charge debtors or use unfair or deceptive collection practices. Due to legal protections offered by these laws, many lawsuits have been filed against debt collectors by debtors who were allegedly charged unfairly. One such suit was filed against Lakeview Loan Servicing claiming that the company illegally charged pay-to-pay mortgage payment fees to borrowers.

Pay-to-Pay Mortgage Payment Fees

Pay-to-pay fees are among the most commonly cited on lawsuits filed against mortgage debt collectors. These mortgage payment fees are known by many names: speedpay fees, convenience fees, processing fees, and others. Pay-to-pay fees are not allowed under the majority of mortgage agreements. These fees can range from $5 to $20 per transaction and are commonly charged when a debtor interacts directly with a loan servicer or makes a payment online or over the phone.

This sort of additional fee for convenient payment options is not unheard of. For instance, many airlines charge a fee for purchasing tickets from a live salesperson. However, under the Rosenthal Fair Debt Collection Practices Act (FDCPA), they are restricted from using hidden fees and deceptive practices (such as charging mortgage payment fees other than those listed in the mortgage agreement) against debtors.

The Rosenthal Fair Debt Collection Practices Act

The Rosenthal Fair Debt Collection Practices Act (FDCPA) was passed in late 2019 in the state of California. This bill primarily lays out the definitions of several terms and restricts the ways in which lenders can collect on debts.

The law states that, among other things, creditors may not use a threat of force, profane language, or the false representation of communication as coming from an attorney to collect on debts. Specifically, the California statute lays out a broader definition of the term “debt collector” than federal law in order to offer greater protections to consumers, according to the State of California Department of Consumer Affairs (DCA).

Under the FDCPA, debtors have five days from their first contact with a creditor to dispute the debt. The debtor may also halt communications with a creditor or instruct all communications to go through the debtor’s attorney. The law restricts creditors from “falsely represent[ing] any services rendered.”

Given the fact that pay-to-pay mortgage payment fees are often charged due to “services” provided by the creditor, this provision is especially important to determine the legality of certain fees.

Mortgage Payment Fees Lawsuit

In his suit against Lakeview Loan Servicing LLC, plaintiff Paul Cheney alleges that the mortgage loan servicer improperly charged him pay-to-pay mortgage payment fees. The suit alleges that these fees were not included in his mortgage agreement and thus violate California law. According to Paul, Lakeview improperly charges debtors for the “service” of making a payment. The fee charged for such a service allegedly far exceeds the actual cost to Lakeview of offering that service.

“Lakeview collected the Pay-to-Pay Fees even though such fees are not authorized under the Mortgage Agreement,” the suit states. “Charging Pay-to-Pay Fees not authorized by the Mortgage Agreement violated the Rosenthal Act.”

Filing a Pay to Pay Fee Lawsuit

If you paid your mortgage over the phone or online and were charged pay to pay processing fees by your mortgage service company, you may be eligible to hire an attorney and join a class action investigation into these fees. Victims of pay to pay fees may be able to recover compensation and reimbursement.

Join a Free Mortgage Payment Fee Class Action Lawsuit Investigation

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

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