Can You File a PHH Mortgage Lawsuit for Payment Processing Fees?

Although many mortgage lenders charge customers what’s known as a mortgage processing feefor making payments made over the phone or online, these fees may not always be legal. According to a lawsuit filed against PHH Mortgage Corporation, the lender may be engaging in deceptive fee practices.

What Is PHH?

PHH is a New Jersey-based mortgage lender. The company has been in business for more than 30 years and offers a variety of loan options. It is a subsidiary of Ocwen Financial Corporation.

What Are Mortgage Payment Processing Fees?

A mortgage payment processing fee is a charge assessed to consumers for making a mortgage payment. In some cases, these fees are meant to cover the cost of operating a credit card machine or otherwise processing the customer’s credit card. Many mortgage lenders charge these fees when borrowers pay their mortgage over the phone or online, rather than by mailing a check. However, it’s not always legal to charge a mortgage processing fee and some consumers have alleged that the practice is predatory.

Have You Been Charged Fees for Making a PHH Mortgage Payment?

A PHH customer has filed a class action lawsuit over the lender’s fee policies. In plaintiff Vincent M.’s March lawsuit, he claims he was charged deceptive fees multiple times in 2019 and 2020.

Vincent owns a home in Florida and the mortgage on the home is held by PHH. Vincent claims that PHH does not expressly disclose to customers that it charges processing fees for online and over-the-phone payments, and the fees are in violation of Florida law. According to the complaint, Vincent was assessed a $17.50 processing fee in April, May, and October 2019 when he made mortgage payments to the lender over the phone or online. He also claims that he was charged a $7.50 processing fee in June, July, August, September, October, November, and December 2019, as well as January and February 2020 for making payments the same way. The processing fees added up to more than $100. Vincent claims that since PHH’s contract does not disclose the fees, and no applicable Florida law allows them, the mortgage lender violated lending laws.

Are Mortgage Payment Processing Fees Legal?

In some cases, mortgage payment processing fees may be legal. If the fees are disclosed in the contract between the mortgage lender and the borrower, they may be acceptable. Additionally, many lenders are allowed to pass on to the customer the actual costs of processing transactions. However, the actual cost of processing an online or over-the-phone payment may be mere cents, yet in many instances, mortgage lenders charge between $5 and $15 for this service and pocket the profit.

In some cases, mortgage lenders have been accused of using deceptive methods to pressure consumers to pay mortgage processing fees. There have been reports of lenders telling consumers that the fee was required in order to pay the mortgage, when in fact the fee that was assessed was for posting the mortgage payment the same day, which some customers may not need. Mortgage lenders are not permitted to misrepresent to customers the nature of the fees in order to make a profit.

In 2017, the Consumer Financial Protection Bureau (CFPB) released a statement about these practices and warned consumers about the potential for being misled by mortgage lenders.

According to the CFPB, in an attempt to maximize profits, mortgage lenders across the country may purposefully not inform consumers about low-cost or no-cost mortgage payment options. Although the CFPB does not require mortgage lenders to inform customers of the options in any particular manner, the agency does require lenders to abide by consumer financial laws.

Can Payment Processing Fees Be Avoided?

Although some mortgage payment fees may be avoidable, the Federal Trade Commission (FTC) says that there are some steps that consumers can take to avoid unnecessary fees.

The FTC recommends checking with your mortgage servicer before having loan documents faxed or using other services. These options may be associated with unexpected fees. Knowing about these fees can help consumers avoid costly options. More details about authorized fees can likely be found in your loan documents and agreements.

This information can be important – especially when following the FTC’s next bit of advice: carefully review your billing statements. You will be able to find any fees you may have been charged listed on this statement. If you’re unsure about what a certain fee is, you can ask your mortgage servicer for an itemization and explanation. To get this information, send a written inquiry to your servicer.

If you have reviewed your mortgage billing statement and find unauthorized fees, you may be able to dispute these charges. Should your mortgage servicer be charging unauthorized fees, you could take action. You may be able to file a complaint with regulators like the FTC or take legal action through a class action lawsuit.

Can You File a PHH Mortgage Lawsuit for Payment Processing Fees?

Unfortunately, even if consumers are careful to protect themselves from unnecessary fees, they may still be charged unfair payment processing fees. In these cases, they may choose to take legal action in a payment processing fees class action lawsuit similar to Vincent’s lawsuit.

Legal action may be a great way to recover compensation for unfair fees and other damages. Vincent’s PHH Mortgage lawsuit is seeking compensation for himself and all other affected PHH customers, including reimbursement for actual monetary damages and additional relief. He is also seeking to prevent PHH from continuing to assess these inappropriate fees.

Other banks and lenders accused of engaging in similar practices are Citi Bank’s department store unit, Department Stores National Bank, and Green Tree Servicing.

If you are a PHH customer or another mortgage lender and have been charged a mortgage payment processing fee for paying your mortgage online or over the phone, you may be able to speak with an experienced attorney about your legal options. Some victims of deceptive fees may be able to recover reimbursement and additional compensation through a class action lawsuit.

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