Specialized Loan Servicing Accused of Charging Mortgage Payment Fees

Plaintiff Barack O. has filed a lawsuit against Specialized Loan Servicing (SLS), claiming that the company regularly violates the Texas financial code by charging illegal processing fees to borrowers who pay their monthly mortgage payments over the phone.

SLS Allegedly Charges Illegal Mortgage Payment Fees

According to Barack, he purchased a home and secured a mortgage in September 2001. At some point after this, SLS acquired servicing rights to his loan, and he began making mortgage payments to the company over the phone. Barack claims he was charged $7.50 for making a mortgage payment to SLS over the phone on October 17, 2019. He claims that this fee was excessive, and is illegal under Texas financial codes.

Specialized Loan Servicing services mortgages across the United States. Although loan servicing companies are allowed to pass on charges from third-parties to consumers when these third-parties provide services to borrowers, they are prohibited from inflating these costs in order to pocket a profit. However, according to Barack and other consumers, this may be exactly what Specialized Loan Servicing is doing.

According to Barack’s lawsuit, by industry standards it costs SLS approximately $0.50 to process a mortgage payment made over the phone. However, the company is allegedly charging between $7.50 and $12.50 to consumers for these payments. These fees are often referred to as pay-to-pay fees, and are not allowed under many financial laws. Additionally, these mortgage payment fees are not disclosed or included in Barack’s mortgage agreement.

Barack’s lawsuit seeks to recover damages on his own behalf, as well as on the behalf of other consumers who have also been charged illegal pay-to-pay fees by SLS.

About Pay-to-Pay Fees

SLS is not the only mortgage servicer to be accused of charging illegal mortgage payment fees when consumers make mortgage payments online or over the phone. Citibank and its store card unit have also been accused of charging pay-to-pay fees for consumers who made phone payments.

According to Citibank customers, the bank may be calling these charges “processing charges”, and assessing them for payments that are posted the same day. However, some consumers have claimed that they did not need their payments to be posted the same day, and free phone payments that would have posted later may have been available.

Consumers have accused Green Tree Servicing of similar incidents of pressure. While other forms of payment may have been free, customers of Green Tree claim that the company falsely represented a service with a $12 processing fee as the only way to make mortgage payments. Wells Fargo and HSBC Banks were also accused of charging excessive fees.

According to the Consumer Financial Protection Bureau, some companies may be misleading consumers about pay-to-pay fees, either by misrepresenting the purpose of the fee, or by pressuring consumers to pay additional fees to post their payments the same day, even when that is not necessary. Other companies may be representing paid options for making mortgage payments as the only options available to consumers, even when there are free options.

Consumers who have been pressured or misled into making mortgage payments with pay-to-pay fees may be eligible to hire an attorney to review their case and determine whether they qualify to file a lawsuit. Additionally, consumers who have been charged excessive pay-to-pay fees for paying their mortgage over the phone or online may be eligible to hire an attorney if these fees were hidden fees and not disclosed in their mortgage agreement. Victims who pursue litigation may be able to recover reimbursement for these fees, as well as additional compensation.

Barack’s SLS Pay-to-Pay Mortgage Lawsuit is Case No: 1:20-cv-00701, filed in the United States District Court for the District of Colorado.

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