If you have ever paid a mortgage payment fee when paying for your mortgage over the phone or through an online website, then you should know that this may have been a violation on the part of your mortgage lender. Although these types of fees are common, they may be unlawful. The following guide will help you learn what you need to know about these potentially unlawful fees and what you should do if you have paid them.
What Is A Mortgage Payment Fee?
A mortgage payment fee, which is sometimes referred to as a convenience fee, processing fee or phone/online fee, is a fee tacked on by mortgage lenders when borrowers pay through certain platforms. The most common type of mortgage payment fee that borrowers encounter occurs when they pay via the phone or an online website.
A mortgage payment fee may range in price depending on the lender in question. Most lenders charge between $5 and $15 per transaction, though they may sometimes charge more or less depending on the amount being paid on the mortgage. Some lenders may also charge more or less for paying on the phone versus paying online.
Surcharge vs. Convenience Fee
Although some companies may use convenience fees and similar terms interchangeably with the term surcharge, there is actually a distinct and legal difference between the two terms. A surcharge is a charge added by merchants for customers who use credit cards, whereas a convenience fee may be added regardless of payment method or the platform being used. Many states have laws against surcharges, as well as certain types of convenience fees.
Why Do Mortgage Companies Charge Payment Fees?
The primary reason that companies charge these fees is to make up the cost they incur when allowing borrowers to pay via credit cards or other payment methods, since some types of transactions will charge the lender a fee. It should be noted, however, is that while companies may be charged a fee for processing transactions, the fee they are charged is far less than the mortgage payment fee they add for borrowers?
In one real life example, a defendant had to pay a $15 payment fee when sending mortgage loan payments over the phone. The explanation for the fee was to help the company recoup costs for processing payments, but it was discovered that the actual fee the company had to pay was only a few cents; the rest of the money, which amounted to over $14, was kept by the company .
Is a Mortgage Payment Fee Unlawful?
In most cases, yes, a mortgage payment fee is unlawful. This is because most mortgage contracts have a stipulation against charging fees based on the payment method and because these types of fees typically violate laws which forbid unethical and deceptive business practices. The primary agreements that most mortgage companies use will only allow lenders to add fees that cover the exact, actual cost of processing a payment–which, as it was mentioned above, is only a few cents at most.
Your Rights as a Mortgage Borrower
It is important that you understand your rights as a borrower making mortgage payments. Always check to see what, if any, fees are being added to your mortgage payments. If you are being charged unexplained fees or fees for paying online or through the phone, then you should first contact your mortgage company asking for clarification about the fees. This will help you obtain written evidence of the company acknowledging the fee, which can help you if you are entitled to compensation.
If you feel that you are unlawfully paying a mortgage payment fee, then you should contact a legal team to help you with a potential case. You may be eligible to join a class action lawsuit that will help you get compensation. For more information, please contact the attorneys at Shamis & Gentile, P.A.