If you have been charged a mortgage payment fee, you are not alone; it is increasingly common for lenders to charge borrowers an additional fee when they pay their mortgage via the phone or through an online system. But are these mortgage payment fees legal? The following is a closer look at what mortgage payment fees are and whether or not they are actually legal.
Mortgage Payment Fee Definition
A mortgage payment fee is an additional fee set up by the lender that is charged to borrowers when they make a payment on their mortgage. Mortgage payment fees are almost exclusively associated with paying via certain methods, such as through a phone system or paying via an online website.
In some cases, these payment fees are called something else such as “Speedpay fees,” “convenience fees,” “processing fees,” or “payment processing fees.” You may have encountered similar processing fees when paying for theater or movie tickets, although an increasing amount of states are passing laws against these types of fees associated with payment methods.
How Much Are Mortgage Payment Fees?
The exact price of a mortgage payment fee will vary depending on the lender. Most lenders will charge anywhere between $5 and $15 per transaction as a processing fee; lenders may also charge a different fee for paying through the phone than paying via an online payment system. Some lenders may also charge a fee that is related to the amount being paid on the mortgage.
Are Mortgage Payment Fees Legal?
In most cases, mortgage payment fees are actually unlawful for several reasons. For one, most mortgage agreements stipulate that charging fees based on payment type is not allowed. Therefore, a mortgage lender who charges borrowers a fee for paying online or through the phone is actually violating their own agreement. Another element to consider when determining the legal status of a processing fee is existing federal laws against UDAAPs–or Unfair, Deceptive, Abusive Acts or Practices. UDAAPs are regulated under the Consumer Protection and Fair Debt Collection Practices Act, which is monitored by the CFPB (Consumer Financial Protection Bureau). According to the laws under this act, all service providers must not commit anything considered an UDAAP. This includes undisclosed transaction fees, such as charging a fee for paying through the phone but not charging a fee for paying via a slower method such as mailing a check.
It should also be noted that mortgage lenders who charge payment fees for mortgage loans that are in default may be subject to additional regulations, as charging fees for defaulted loans may place them in the category of a debt collector as per the Fair Debt Collection Practices Act.
Should I Seek Legal Recourse with Shamis & Gentile, P.A.?
If you believe that you have paid unlawful mortgage payment fees, then you may be entitled to compensation. There are several instances where borrowers have pursued and won legal cases against mortgage lenders for paying unlawful payment fees. You may also be eligible to join a class action lawsuit regarding mortgage payment fees.
To learn more information, contact the attorneys at Shamis & Gentile P.A. today. Our professional legal team will help you find out more about your potential case and determine whether or not you may be eligible to join a class action lawsuit. Submit your mortgage payment fee claim here.