If you are currently paying on a mortgage, then you may have encountered a mortgage payment fee. A mortgage payment fee is an additional fee that mortgage lenders sometimes add to payments when those payments are made with an online or phone based payment system. But these fees are not always lawful. The following is a closer look at why your mortgage lender may not be allowed to charge a mortgage payment fee, and what you should do if you have encountered these fees.
Pay to Pay Fees
First, it’s important to understand what a mortgage payment fee is–and isn’t. Mortgage payment fees may be called other names by the lender, including convenience fees, processing fees, online payment fees, phone payment fees, and so on. These fees are referred to as “pay to pay” fees, since people are effectively being made to pay money in order to pay on their loan.
When Banks Charge Mortgage Payment Fees
Banks or lenders may charge a mortgage payment fee when someone pays via a certain method, such as through the phone or an online website. The lenders may claim that these fees are required in order for borrowers to pay with certain platforms; sense lenders themselves may be charged transaction fees to use certain types of payment processors.
The amount charged by a bank or lender for a mortgage payment fee will vary from case to case. In most cases, borrowers are charged anywhere between $5 and $15 per transaction to make their payments, with phone payments typically being more expensive than online payments.
Rosenthal Fair Debt Collection Practices Act
If you live in California, then the regulations regarding debt collection, including mortgage payments, are governed under the Rosenthal Fair Debt Collection Practices Act. This act is intended to make sure that debt collectors do not collect any additional charges, fees or expenses that are related to collecting debt. It is this act which prohibits mortgage lenders from adding charges for borrowers who pay via the phone or online. The only exception to this act is if the original mortgage contract specifically allows for payment processing fees, but this is very uncommon as most standard mortgage contracts do not allow them.
Although the Rosenthal Fair Debt Collection Practices Act is only valid in California, there are other state and federal laws which may prohibit certain types of mortgage payment fees as well.
Mortgage Payment Fee Lawsuits
There have been several notable lawsuits regarding the inclusion of mortgage payment fees. In one case, a Californian class action lawsuit was filed against Freedom Mortgage, which claimed that the service lender had “unreasonable mortgage payment fees’ for borrowers who paid via the online or phone system.
What to Do If You Were Charged Mortgage Payment Fees
If you are a California resident who has been charged a mortgage payment fee by your bank or mortgage lender, then you are possibly eligible to receive compensation due to the unlawful practice from your lender. You should contact our legal team to find out if and how you can attempt to receive compensation. To learn more information, contact the attorneys at Shamis & Gentile P.A. today.