A coalition of 33 state attorneys general filed a petition against PHH mortgage and its predecessor Ocwen loan service for allegedly charging illegal service fees to nearly a million borrowers.
Attorneys General, co-chaired by Letitia James of New York and Keith Ellison of Minnesota, oppose a proposed class-action settlement that would allow PHH to take advantage of processing fees for mortgage payments made over the phone or online and allow PHH to increase fees for the remaining life of the loan.
The motion says the proposed settlement was made too quickly, under the extenuating circumstances of the pandemic, and estimates that PHH billed the million homeowners somewhere between $ 7.50 and $ 17.50 in each monthly statement. If allowed, PHH could increase this fee to $ 19.50 per month.
In a Friday brief, the coalition alleged that the charges brought by PHH were “illegal” and “inappropriate” because authorization for such charges cannot be found in mortgage contracts. With this review, PHH would violate the Fair Debt Collection Practices Act (FDCPA) if the CFPB to conclude that PHH is essentially a “debt collector”.
“PHH’s sole purpose is to collect and process payments from homeowners, which already earn them millions of dollars each year. In the 21st century, when most Americans pay their bills online or over the phone, charging fees on top of what they’re already paid is not only unethical, but illegal, ”James said in a commentary. declaration.
Ocwen and PHH have both come under legal criticism in recent years, after a 2017 cease and desist order prohibited the acquisition of new mortgage management rights and the origination of mortgage loans by subsidiary Ocwen loan service until the company is “able to demonstrate that it can properly manage its consumer mortgage escrow accounts.”
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Next, the CFPB announced that it was suing Ocwen for “defaulting borrowers at every step of the mortgage management process.”
Ocwen then spent the following months regulation lawsuits with the 31 states that have taken action against him. The accumulation of legal actions between the States and the CFPB almost bankrupted Ocwen.
PHH denied the allegation made by the 33 PGs.
“We strongly disagree with the arguments raised by the attorneys general, and we look forward to filing our reactive brief to refute these arguments and affirm our belief that PHH has not violated any applicable law,” a spokesperson for ‘Ocwen at HousingWire.
“PHH’s actions are in accordance with a 2018 consent order (executed by 32 of 33 attorneys general joining the amicus brief), which sets out specific requirements that PHH was to follow to charge borrowers a convenience fee for l ‘use of optional expedited payment methods.
These one-time payment methods are optional, and before making a payment, PHH discloses the fee amount to the borrower as well as other available payment methods that do not require a fee or require a lower fee. We believe that the proposed settlement, which is substantially similar to an earlier class action settlement approved by a federal court less than two years ago, resolves the contested legal claims and is in the best interests of the borrower class, ”said declared the spokesperson.