Attorneys general from 21 states and Washington, D.C., have sent a letter to Director Rohit Chopra of the Consumer Financial Protection Bureau (CFPB), calling for the agency to limit servicers from charging consumers convenience fees for using convenient payment methods to pay bills. This letter was sent in response to the CFPB’s
request for comment on “junk” fees.
These “pay-to-pay” fees, as the letter calls them, are applied when consumers use certain “convenient” payment methods, such as payment over telephone, through a website, or by third party service. The letter contends consumers are effectively put into a position where, to stay current with their mortgage payments, borrowers must pay a fee to make each month’s payment.
“Considering the length of mortgage loans, and their importance in the financial and emotional wellbeing of consumers’ lives, the lack of consumer choice warrants special attention to discretionary fees imposed by mortgage servicers, like convenience fees,” the letter read. “This is especially true given that some servicers have attempted to impose convenience fees even when the fees are not authorized by the original mortgage loan documents…”
This comes as lenders and regulators await a decision in the Ninth Circuit Court of Appeals decision in Thomas-Lawson v. Carrington Mortgage Services, which is hearing appeals on the application and restrictions of the Fair Debt Collections Practice Act.
Lenders contend servicers have willingly undertaken the burden of establishing these newer, more convenient technology-based payment methods, where borrowers previously had to use the mail to send payment to a specific, physical location. They contend that, because these new technological payment methods are not covered in the lending contract, each time a borrower uses these new payment methods, they enter a new payment contract which can apply its own fees.