FNMA Inaccurate Mortgage Payoff Statements Reg Z Class Action

What happens if you don’t make your mortgage payments? The mortgage loan becomes accelerated, or due in full. The complaint for this class action alleges that the Federal National Mortgage Association (FNMA) improperly imposes late charges when mortgage payments are not made after acceleration, even when the mortgage agreements don’t allow for that.

Plaintiff Patrick D. Trivison had a mortgage loan on his home with Citizens Bank. The loan’s assignee was FNMA and Citizens Bank became the servicer, acting on behalf of FNMA.

On September 5, 2018, after Trivison failed to make payments, he was sent a notice of default, which stated that if he did not pay all the overdue amounts by October 10, the loan would be accelerated. Trivison did not make any further payments, and the loan was accelerated.

According to the complaint, under Trivison’s mortgage agreement, once the loan is accelerated, he no longer must make monthly payments. The only payment required is the full amount owed on the loan. The complaint refers to Paragraph 6 of Trivison’s mortgage note to support this statement.

Since no mortgage payments were any longer due, the complaint says, no late charges were incurred. However, Citizens or FNMA continued to impose late fees.

In September 2019, Trivison submitted a written request to Citizens Bank asking for a payoff balance. The October 7 payoff balance statement he received included the improper late fees, the complaint says, and was therefore inaccurate.

What law is at issue here? The complaint refers to the Truth in Lending Act (TILA) and something called Regulation Z.

Regulation Z is TILA Mortgage Servicing Final Rules which were issued in January 2013 by the Consumer Finance Protection Bureau (CFPB) under authority given it by the Dodd-Frank Wall Street Reform and the Consumer Protection Act, which amended TILA.

Among Reg Z’s rules and clarification is guidance for the interpretation of certain parts of TILA, such as the duties mortgage servicers have in responding to requests for a payoff balance from mortgage holders. Upon the mortgage holder’s request, a statement of the payoff balance amount must be provided “within a reasonable time, but in no case more than seven business days” after receipt of the request.

According to the complaint, the inaccurate payoff balance statement violated Reg Z. Since Citizens was acting on behalf of FNMA, it says, FNMA is ultimately responsible for that.

The class for this action is all borrowers in the US who

  • Between April 2, 2019 and April 2, 2020,
  • Had mortgages for which FNMA was the creditor or assignee
  • Where the loan agreements did not provide for late fees after acceleration
  • Against whom late fees or charges were imposed after acceleration,
  • Who submitted a written request to FNMA or its servicers a written request for a payoff balance, and
  • Who received in response a statement that included the late fees that were imposed after the acceleration of their mortgages.
Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

FNMA Inaccurate Mortgage Payoff Statements Reg Z Complaint

April 2, 2020

What happens if you don’t make your mortgage payments? The mortgage loan becomes accelerated, or due in full. The complaint for this class action alleges that the Federal National Mortgage Association (FNMA) improperly imposes late charges when mortgage payments are not made after acceleration, even when the mortgage agreements don’t allow for that.

FNMA Inaccurate Mortgage Payoff Statements Reg Z Complaint

Case Event History

FNMA Inaccurate Mortgage Payoff Statements Reg Z Complaint

April 2, 2020

What happens if you don’t make your mortgage payments? The mortgage loan becomes accelerated, or due in full. The complaint for this class action alleges that the Federal National Mortgage Association (FNMA) improperly imposes late charges when mortgage payments are not made after acceleration, even when the mortgage agreements don’t allow for that.

FNMA Inaccurate Mortgage Payoff Statements Reg Z Complaint
Tags: Late Payment Fees, Mortgage-Related Unfair Practices, Servicing Your Mortgage, Unlawful Fees