More and more borrowers report being charged unfair mortgage processing fees for making mortgage payments online or over the phone. Certain mortgage agreements do not allow these types of fees.
If you were charged a mortgage processing fee for making a mortgage payment online or over the phone, you may be able to file a lawsuit and pursue compensation.
Corporate advance fees are assessed if you paid less than what you owe on a monthly payment and your lender covers the difference. This fee is charged on top of what you now owe the lender. Loan recast fees are charged in exchange for recalculating your monthly payment after you make a large payment toward your loan’s balance. Late payment fees are self-explanatory and generally a certain percentage of the late payment.
Other mortgage-related fees include appraisal fees, credit report fees, flood certification fees, tax service fees, processing fees, among others.
Some lenders have also been charging a mortgage processing fee (sometimes referred to as a mortgage payment fee) simply for the borrower making the mortgage payment, even when it’s on time and the full amount owed. In some cases, lenders may actually charge a different processing fee for a payment made by phone than a payment made online.
These kinds of fees are also known as convenience fees, pay to pay fees, processing fees, and Speedpay fees, the latter named after a specific payment system called Speedpay.
Using different names may be misleading for consumers. For instance, referring to a charge as a “processing fee” may indicate that the fee is unavoidable if the payment is to be made at all. The Consumer Financial Protection Bureau (CFPB) notes that misleading information of this nature can “result in consumers incurring charges for services they don’t need,” like expedited processing.
“The Bureau is warning companies about tricking consumers into more expensive fees when they pay bills by phone,” CFPB Director Richard Cordray said in a 2017 statement. “We are concerned that companies are misleading consumers about pay-by-phone fees or keeping them in the dark about much cheaper or no-cost payment options.”
According to reports from some consumers, this misleading name may not be the only deception taking place. Some bank customers have reported being pressured into choosing a fee-based payment option. Others have reported that they were never informed about free ways to pay their mortgage, and were only told about the paid options. In some cases, customers claim to have been pressured into paying for fee-based mortgage payment options they didn’t even need, such as same-day payment posting.
Although it may not be illegal for mortgage lenders to assess fees to borrowers, the fees must be disclosed, Lying to customers or misleading them about fees is prohibited. In some cases, these fees may be in violations of the bank’s own customer agreements. If you have been charged mortgage processing fees, you may want to review your bank agreement to determine whether these fees are allowed.
Even banks whose contracts include fees for making mortgage payments over the phone or online may be assessing these charges in a predatory manner. In many cases, banks are allowed to pass on to the consumer the costs of processing mortgage payments. However, mortgage payment processing fees are often much higher than the actual cost to process the payment. In some cases, these payments may cost only cents to process, but the bank is charging the customer between $5 and $15.
If mortgage servicers have charged these fees on a loan that’s in default, the legality of the fee is even more questionable, as the lender would be considered a debt collector in these circumstances and therefore required to abide by the standards of the Fair Debt Collection Practices Act (FDCPA). This federal law prohibits abusive debt collection practices which may include unfair or deceptive fee policies. Other state laws, such as California’s Rosenthal Fair Debt Collection Practices Act, provide more specific protections against unfair fees.
New Fee Added to Mortgage Refinancing
As if homeowners weren’t subjected to enough fees, a new one called the Adverse Market Refinance Fee for mortgage refinancing applications took effect Dec. 1.
According to federal lenders, the fee is meant to recapture some of the expenses incurred by Freddie Mac and Fannie Mae under the CARES Act during the COVID-19 outbreak.
“In light of market and economic uncertainty resulting in higher risk and costs incurred by Fannie Mae, we are implementing a new loan-level price adjustment,” said the federal lender in a letter.
Though the fee is technically assessed on lenders, Forbes reports that it will likely be passed to borrowers in the form of closing costs or an interest rate hike. The fee amounts to 0.5% and will have an impact on what homeowners pay.
“The dollar impact could make a big difference for some people who want to refinance,” an expert told Forbes, noting that the fee could amount to a one-eighth increase in interest rates, for example bringing a 2.875% rate to 3%.
While certain mortgage processing fees are unavoidable, such as the new fee for certain mortgage refinances, Investopedia warns consumers to watch out for excessive feesthat dupe borrowers out of hard-earned cash.
How Much Are Mortgage Processing Fees?
Depending on the lender, mortgage processing fees charged for online or telephone payments typically range between $5 and $15 per transaction. Sometimes, the fee for an online transaction may be different than the fee for a phone transaction.
Processing fees meant to cover the cost of a mortgage application ranges between $300 and $1,500.
Can You Avoid Mortgage Payment Processing Fees?
There may be steps that you can take to avoid or minimize mortgage processing fees in connection to making monthly payments.
Although mortgage documents can be long and, in some cases, confusing, reviewing these agreements can help you understand which fees your mortgage servicer is contractually allowed to charge. If you are charged fees that are not detailed in your mortgage agreement, the fees may be invalid or illegal.
The Federal Trade Commission (FTC) also recommends reviewing your billing statements for any fees you may have been charged. This can help you ensure that the fees charged are legitimate and authorized. If you’re unsure about a fee on your statement, you can contact your mortgage servicer with a written inquiry.
Unfortunately, even if consumers are careful to review their account terms and billing statements, they may still get charged unexpected fees. In these cases, you may want to try to negotiate fees, seek a refund, or even take legal action.
Can You Negotiate Paying the Processing Fees?
Certain types of mortgage processing fees may be negotiable, such as origination, underwriting, or processing fees, commitment fees, and survey fees. Fees that are non-negotiable include appraisal fees, credit report fees, taxes, flood certification, and recording fees.
For certain mortgage-related fees, you may be able to ask for a refund. Others may be non-negotiable.
Are Mortgage Processing Fees Tax Deductible?
While certain closing costs may be tax deductible if structured so that the lender pays these costs and the borrower is charged a higher interest rate to compensate, the mortgage processing fees themselves cannot be added to your costs, and therefore are not tax-deductible.
Can You Get a Mortgage Fee Refund?
Some borrowers have filed lawsuits against their lenders, claiming they were charged illegal and unfair mortgage processing fees. Several groups of homeowners have begun pursuing class action litigation over these kinds of fees.
At least one class action lawsuit filed by mortgage holders claiming they were charged illegal processing fees has resulted in a settlement for the class members. Although the amount you may be eligible to receive through a class action settlement may be fairly low, this type of litigation is often the only way to persuade banks or other large companies to change their policies and cease taking advantage of consumers.
If you were charged a mortgage processing fee after making a payment on your mortgage over the phone or online, you may be able to join a class action lawsuitinvestigation and pursue compensation. These fees, sometimes referred to as speed pay fees, convenience fees, processing fees, or pay to pay fees, usually run between $5 and $15. If your mortgage agreements do not permit these fees to be charged, you may be able to file a lawsuit against your mortgage servicer. Filing a lawsuit can help you recover money lost to these fees, as well as hold financial institutions accountable for their practices.
Filing a lawsuit can be a daunting prospect, so Top Class Actions has laid the groundwork by connecting you with an experienced attorney. Consulting an attorney can help determine if you have a claim, navigate the complexities of litigation, and maximize your potential compensation.
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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3 thoughts onWhat Are Mortgage Processing Fees?
yes i too had to pay a mortgage company a service charge to make my payments when they were on time.
Add me.
Add me.