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Homeowners who filed a class action lawsuit against a Florida mortgage service provider over pay-to-pay fees have agreed to settle the case for $12.6 million.
The plaintiffs suing PHH Mortgage Corp., and its parent company Ocwen Loan Servicing, submitted a request for preliminary approval of a proposed settlement agreement in U.S. District Court in Florida on August 25. They are asking the judge overseeing their case to endorse the deal hammered out earlier this year. The agreement includes financial compensation and changes to the way the company deals with alternative payment methods.
Central to the case was PHH Mortgage’s practice of charging what it referred to as “processing fees” when customers made their home loan payments online or over the telephone – fees ranging from $17.50 to $7.50 – the plaintiffs said. Those charges violated the Federal Fair Debt Collection Practices Act and were in breach of their mortgage contracts, according to the class action lawsuit.
Details of the Pay-to-Pay Fees Settlement
The proposed settlement sets up eligible Class Members to get refunds of 18% to 28% of the pay-to-pay fees they paid PHH Mortgage Corp. between March 25, 2016 and Aug. 21, 2020, according to the request for approval.
About 80% of the Class Members still have mortgages that are being serviced by PHH and they will have their applied directly to their accounts, according to the settlement proposal. The remaining plaintiffs will receive direct payments after filing claims for their refunds.
Along with the financial portion of the settlement, PHH Mortgage Corp. has agreed to reduce its online payment fees by 13% and to freeze that amount for three years. Similarly, the company said it would freeze the amount it charges in pay-to-paw fees for telephone transactions.
PHH Mortgage also agreed to improve the way it discloses the fees to customers so there can be no mistaking when and what its borrowers will be charged.
Pay-to-Pay Fees Increasingly Common, Sometimes Hidden
Pay-to-pay fees – sometimes referred to as processing or convenience fees – are charged when customers use alternative methods to pay their bills.
Businesses say the fees help offset the costs associated with processing payments electronically.
Convenience fees are typically a set dollar amount assigned to the specific type of payment, Investopedia says. The amounts vary by company, and sometimes transaction. It might cost $5 to make an online payment, $7 to make a payment over the telephone, and $10 to make a payment by telephone with a live customer service representative, for example.
In theory, pay-to-pay fees are legal if they are disclosed in advance and allowed for in the terms of the customer’s contract or service agreement.
Many consumers are caught unaware by the charges, so much so that the federal Consumer Financial Protection Bureau issued a warning in 2017 about companies “tricking” customers into expensive pay-by-phone fees by misleading them or “keeping them in the dark about much cheaper or no-cost payment options.
Similar Class Action Lawsuits
The PHH Mortgage pay-to-pay case is just the latest in a string of class action lawsuits filed by consumers who are contesting the convenience charges.
A Florida woman brought a similar class action lawsuit against AmeriHome Mortgage Company at around the same time the PHH Mortgage case was filed. In that matter, homeowner Sandra E. Lish says AmeriHome violated state laws and breached their contract when it charged her to $2 each time she paid her home loan over the telephone.
In Texas earlier this year, a homeowner filed a lawsuit against Lakeview Loan Servicing and its sub servicer Loancare, which took over the administration of her Federal Housing Authority mortgage and began charging her pay-to-pay fees. Before she filed suit, the companies had charged her $444 for making mortgage payments over the phone and online.
The PHH Mortgage Pay-to-Pay Fees Class Action Lawsuit is Vincent J. Morris, et al. v. PHH Mortgage Corp., Case No. 0:20-cv-60633 in the U.S. District Court for the Southern District of Florida, Fort Lauderdale 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.
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for informational purposes only.
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26 thoughts onPHH Mortgage Corp. Agrees to Settle Pay-to-Pay Class Action for $12.6M
PHH prepaid my non arrears quarterly taxes one week before the due date and used that excuse to initiate an accelerated foreclosure. PHH later acknowledged I paid my taxes, but that they paid them first. I received Certified Mailing for an accelerated foreclosure from their attorneys and they built up several thousand dollars of legal fees against the mortgage principle balance, which still remain. It is a Reverse Mortgage that is probably equal to its value, that PHH wants off it’s books. PHH ordered a Drive by Appraisal and I have the billing showing that the $550.00 Bill returned $250.00 to PHH as a Administrative Fee and I imagine all the legal fees are also compromised.