Carrington Mortgage Services Hit with Class Action Over Allegedly Unlawful ‘Pay-to-Pay’ Fees

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A Florida consumer claims in a proposed class action lawsuit that Carrington Mortgage Services, LLC charges unlawful fees for mortgage payments made online or over the phone.

The lawsuit alleges that Carrington, one of the largest residential mortgage servicers in the U.S., charges homeowners $5.00 for each online mortgage payment and $10.00 to $20.00 for payments made by phone. According to the case, these “pay-to-pay” fees violate both consumers’ mortgage agreements and Florida debt collection law.

Per the lawsuit, Carrington is permitted under homeowners’ mortgage agreements to pass on to borrowers only the exact amounts it incurs for certain servicing activities. According to the case, Carrington pays non-party Western Union to operate Quick Pay, an automated online and telephone payment processing system for which the financial firm charges the defendant about $0.50 or less per transaction. Despite incurring out-of-pocket expenses amounting to “only a few cents per transaction,” Carrington marks up the processing fees charged to borrowers for online and phone payments in direct violation of their mortgage agreements, the lawsuit alleges.

The case goes on to claim that as a Federal Housing Association-approved mortgage servicer, Carrington agreed to charge borrowers only fees permitted by the Secretary of Housing and Urban Development. Per the lawsuit, pay-to-pay fees are not included in HUD’s “exhaustive list” of authorized servicing fees and charges. Moreover, HUD specifically prohibits mortgage servicers from charging borrowers for “costs of telephone calls, telegrams, personal visits with the Borrower, certified mail, or other activities that are normally considered a part of a prudent Mortgagee’s servicing activity,” the suit continues.

The lawsuit alleges violations of Florida’s Consumer Collection Practices Act and Deceptive and Unfair Trade Practices Act, as well as breach of contract and unjust enrichment.

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