LoanDepot Charges West Virginia Mortgage Borrowers Illegal ‘Pay-to-Pay’ Fees, Class Action Says

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A proposed class action lawsuit claims LoanDepot has collected unlawful payment processing fees from borrowers who make monthly mortgage payments online or by phone.

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The nine-page lawsuit alleges that the mortgage lender has “routinely” violated West Virginia law and wrongfully profited from borrowers by charging them an illegal $2 “pay-to-pay” fee each time they make a monthly mortgage payment over the phone or online.

According to the suit, state law prohibits loan servicers like LoanDepot from charging any additional fees for services rendered to customers, including the collection of monthly payments. Likewise, borrowers’ mortgage agreements with the company do not authorize the defendant to collect such fees, the case adds.

Nevertheless, despite its legal and contractual obligations, the lender “leverages its position of power over homeowners and demands unlawful, tacked-on pay-to-pay fees,” the complaint contends.

Although LoanDepot charges borrowers a $2 fee when they make a payment online or by phone, the actual cost to the company to process each transaction is approximately $.30 or less, allowing the lender to “pocket[] the difference as profit,” the filing relays.

“[LoanDepot] created an unlawful profit center through charging pay-to-pay fees for every monthly mortgage payment made by phone or internet,” the lawsuit claims. “In doing so, [the defendant] nickels-and-dimes borrowers who struggle enough without having to unlawfully ‘tip’ the debt collector for taking borrowers’ payments.”

The plaintiffs, two West Virginia residents who entered into a $161,500 mortgage loan agreement with LoanDepot, claim they have been charged an additional $2 fee each time they made a monthly payment over the phone. Per the case, neither the borrowers’ mortgage agreement nor any state statute authorizes the company to assess such fees.

The lawsuit looks to represent anyone with a residential mortgage loan securing a property in West Virginia whose servicer is LoanDepot and who paid a fee for making a payment by phone or electronic means during the applicable statute of limitations period.

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