For Immediate Release:
Tuesday, April 12, 2022
Nazneen Ahmed (919) 716-0060
(RALEIGH) Attorney General Josh Stein urged the Consumer Financial Protection Bureau (CFPB) to prohibit mortgage servicers from charging convenience fees, a payment on top of a payment that can exploit homeowners. They are particularly unfair because homeowners have no choice in their mortgage services, unlike other industries.
“Mortgage servicers set convenience fees at will to excessively profit off homeowners, and homeowners are stuck with them,” said Attorney General Josh Stein. “I’m pleased that the CFPB is seeking to learn more about how excess fees harm North Carolinians, and I hope it will take action to put an end to these exploitative costs.”
In a letter to the CFPB, Attorney General Stein and 21 other attorneys general responded to the CFPB’s request for information about various fees imposed upon consumers in the financial marketplace. In their comments, the attorneys general point out that when taking out a mortgage, many people believe they are entering into a long-term relationship with a specific financial institution. But mortgage loans and their servicing rights may be sold many times over and as a result, people don’t know which company will service their mortgage loan and have no ability to change servicers. Additionally, servicers charge convenience fees that exceed their actual cost to accept payments online or over the phone. By charging convenience fees, mortgage servicers are essentially being compensated twice when accepting a payment.
There is also no uniformity in convenience fees. Some servicers charge them, others don’t, and some servicers attempt to charge them even when the original loan documents do not authorize the fees. For example, PHH Mortgage charges people $7.50 to make payments online or via the telephone through an automated service. Those who opt to speak to a live operator will be charged $17.50. Other servicers charge more, less, or nothing at all. In addition, borrowers do not have the option of switching to another servicer to avoid the fees.
The coalition of attorneys general is urging the CFPB to consider prohibiting mortgage servicers from imposing convenience fees on consumers or prohibiting servicers from charging convenience fees that exceed the actual cost of processing a borrower’s payment. The coalition further asks that the CFPB require servicers to fully document their costs supporting the imposition of convenience fees.
Attorney General Stein is joined in sending this letter by the Attorneys General of California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island and Washington, as well as the Hawaii Office of Consumer Protection.
A copy of the letter is available here.