Mortgage Payment Fees Violate California Law, Class Action Claims

A recent class action lawsuit claims that Freedom Mortgage charges unfair mortgage payment fees for over the phone or online transactions.

According to plaintiffs Neri and Leonila Urbina, California borrowers are routinely charged between $10 and $15 by Freedom Mortgage when they make mortgage payments either online or over the phone. Most of these fees reportedly contribute to “pure profit” for Freedom Mortgage.

The Urbinas reportedly took out their mortgage with Freedom Mortgage in August 2016. During 2017, the couple allegedly made several monthly payments on their mortgage online or over the phone. During this time, they were allegedly charged an additional fee of $15 for every transaction.

The couple claims that these “pay to pay” fees are unlawful. These fees allegedly violate the mortgage lender’s loan agreements because the contracts reportedly do not allow a pay to pay fee to be charged as a service fee.

“[Freedom Mortgage] services mortgages across the country and must know the terms of the standard loan agreements it services, none of which expressly allow Pay-to-Pay fees as a type of service fee that [Freedom Mortgage] can charge,” the mortgage fee class action lawsuit claims.

Furthermore, the Urbina couple claims that their mortgage is also insured by the Federal Housing Authority (FHA), meaning that they are covered by rules and regulations from the government agency. These regulations reportedly prohibit FHA loan servicers from charging “any fee to the borrowers that is not expressly allowed.” Even if the fees are expressly allowed, the FHA reportedly only allows lenders to charge its out-of-pocket costs associated with a service.

FHA loans are mortgages that are insured by the federal agency. This allows banks to offer home loans to low-to-moderate income borrowers without as much risk. The loans are also associated with lower down payments and credit score requirements.

Freedom Mortgage Payment Fees Allegedly Unlawful

The Urbinas argue that Freedom Mortgage’s mortgage payment fees violate both FHA rules and California laws such as the Rosenthal Fair Debt Collection Practices Act. This state law prohibits unfair or deceptive debt collection practices and any violation of the law reportedly constitutes a violation of the California Unfair Competition Law.

“[Freedom Mortgage] must be held accountable for assessing these excessive fees to its borrowers,” the couple argues in their mortgage fee class action lawsuit.

Freedom Mortgage is reportedly one of the largest mortgage lenders in America and provides a large number of FHA insured mortgages. The plaintiffs argue that “hundreds of thousands” of other consumers could be affected by the alleged mortgage fee law violations. The Urbinas seek to represent a class of California citizens who paid a fee to Freedom Mortgage for making a loan payment by telephone, interactive voice response, or the internet.

The mortgage fee class action seeks actual damages, injunctive relief, court costs, and attorneys’ fees.

The Mortgage Payment Fees Class Action Lawsuit is Urbina, et al. v. Freedom Mortgage Corporation, Case No. 1:19-at-00745, in the U.S. District Court for the Eastern 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.

Learn More

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