PHH Mortgage of Pay-to-Pay Fees West Virginia Class Action

This class action bring suit against PHH Mortgage Corporation from improperly profiting from homeowners whose mortgages it services by charging illegal processing fees, or “pay-to-pay” fees, for mortgage payments made by telephone or online. The complaint alleges this violates the West Virginia Consumer Credit and Protection Act (CCPA), the state’s debt collection law, and the uniform terms of the company’s mortgages.

The class for this action is all persons (1) who have a residential mortgage loan securing a property in West Virginia, (2) that is serviced or sub-serviced by PHH Mortgage, (3) who paid a fee to PHH for making a loan payment by telephone or Internet, from the beginning of the applicable statutes of limitations to the date the class is certified in this case.

According to the complaint, PHH charges customers a pay-to-pay fee of up to $17.50 when they pay their mortgages online or over the telephone.

The complaint alleges, “As a servicer, PHH Mortgage is supposed to be compensated out of the interest paid on each borrower’s monthly payment—not via additional ‘service’ fees that do not reflect the cost to PHH Mortgage of providing such services.”

West Virginia law, says the complaint, “cannot mark-up the amounts it pays third parties to provide borrowers’ services and impose unauthorized charges not explicitly included in the deed of trust to create a profit center for itself.” The complaint estimates that “PHH Mortgage pays Western Union to process these Pay-to-Pay transactions at a cost of about $0.40 each. PHH Mortgage pockets the difference as pure profit.”

Even if this fee were authorized in the deed of trust, the complaint alleges, it could not be charged in West Virginia unless it was authorized by law. Since the pay-to-pay charge is not authorized in either place, the complaint alleges, PHH is not permitted to charge these fees.

The plaintiff in this case, Elbert J. Thacker, bought a home in Moundsville, West Virginia, for which he had a mortgage loan of $172,488. While he had the mortgage, PHH acquired its servicing rights. This gave PHH the right to collect payments and provide other services on the lender’s behalf.

The complaint details a series of Thacker’s payments to PHH between November 2016 and February 2018 to PHH, for each of which he was charged $7.50.

Under Thacker’s Deed of Trust, the complaint claims, “fees may only be charged in connection with” default, and then they may only be for ‘any amounts disburse[d]’ in connection with the default. Also, the complaint alleges, “PHH Mortgage did not disburse the entire $7.50 collected in each Pay-to-Pay Transaction to any third party.”

Article Type: Lawsuit
Topic: Loans
Tags: Mortgage-Related Unfair Practices, Processing or Pay-to-Pay Fees, Servicing Your Mortgage