Pay by Phone Fees Aren’t Part of Mortgage Agreement, Says Texas Borrower

A woman in Texas has filed a class action lawsuit against two companies servicing her mortgage over fees she says they charged her for paying her home loan over the phone and online.

The fees, sometimes called convenience charges, violate provisions of the Texas Debt Collection Act, the lawsuit claims, and breach uniform terms for mortgages guaranteed by the Federal Housing Administration, or FHA. The plaintiff purchased her home using an FHA mortgage.

Texas Case Background

The lawsuit filed in Texas involves plaintiff Ursula Nichole Williams, who purchased her home with help from the Federal Housing Authority. At some point over the life of the mortgage, Lakeview Loan Servicing, LLC and its “subservicer” Loancare, LLC became the service providers for the home loan, according to court papers.

Williams is suing Lakeview and Loancare for charging her no less than $444 in pay-to-pay fees as of the date she filed the complaint, May 20. The mortgage companies charge borrowers as much as $15 for making mortgage payments by telephone via an operator, $12 for payments using an interactive voice response system or IVR and up to $10 for making payments online, according to the lawsuit.

Those fees violate Texas’ Debt Collection Act and are not authorized by the terms for the mortgage set by the Federal Housing Administration, Williams claims. Even if they were allowable, the lawsuit says, the actual cost to process IVR and online mortgage payments is much lower than what Lakeview and Loancare charge. “Defendants pocket the difference as pure profit,” the lawsuit claims.

Williams is seeking to have her case certified as a class action, arguing thousands of other homeowners are being charged the same fees. She filed suit in the U.S. District Court for the Southern District of Texas, Houston Division.

Lakeview Loan Servicing, according to its website, is the nation’s fourth largest mortgage service provider and has 1.4 million customers.

Mortgage Payment Fees Overview

Service providers and sellers often charge convenience fees or pay-to-pay fees (sometimes labeled processing or speedpay fees) when a consumer pays their bills with an electronic payment online or over the telephone. The rationale behind it is that the consumer is paying for the convenience of not having to write out a check, or money order, and mail in a payment or send cash.

Businesses also say the fees help offset the costs associated with processing payments electronically.

Convenience fees can either be a set dollar amount or a percentage of the transaction, according to Investopedia. They are usually applied to mortgage payments, property and other tax payments and college tuition payments, the consumer finance service says.

Even though pay-to-pay fees are commonly charged for mortgage payments made online or by phone, many mortgage agreements do not authorize lenders to charge such fees.

Similar Lawsuits Filed Over Online and Pay by Phone Fees

The Texas case is not the only class action lawsuit to be filed over the convenience and pay by phone fees charged by mortgage companies.

A group of homeowners in Florida filed against the company Seterus Inc. over convenience payment fees they claim are excessive and in violation of the terms of their mortgages. And in California, a woman filed a class action lawsuit against M&T Bank over the $15 fees it charged her to pay her mortgage.

The Lakeview Loan Servicing and Loancare Class Action Lawsuit is Ursula Nichole Williams, on behalf of herself and all others similarly situated, v. Lakeview Loan Servicing LLC and Loancare LLC. Case No. 4:20-cv-01900 in the U.S. District Court for the Southern District of Texas Houston Division.

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.

Get a Free Case Evaluation

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