MortgageDepot, U.S. Bank Charge Illegal ‘Pay-to-Pay’ Fees for Payments Made Online, By Phone

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A proposed class action out of West Virginia alleges MortgageDepot and U.S. Bank have routinely charged and collected illegal payment processing fees from borrowers who make monthly mortgage payments online or by phone. 

According to the 14-page suit, MortgageDepot and U.S. Bank are contractually allowed to charge only fees that are explicitly outlined in a consumer’s mortgage deed of trust and permissible by law. The case claims the companies have “leverage[d] their position of power over homeowners” by demanding exorbitant “pay-to-pay” fees, in breach of the terms of borrowers’ mortgages and West Virginia Law. 

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“Even if the fees were explicitly included in the Deed of Trust, Defendants cannot charge fees in West Virginia unless the fees are authorized by statute,” the complaint says. “None of the Pay-to-Pay Fees charged by Defendants are permitted by statute.” 

As loan servicers, the complaint says, MortgageDepot and U.S. Bank are supposed to be compensated out of the interest assessed to borrowers on their monthly payments, not via additional “service” fees that do not reflect the cost to the companies to provide such services. The complaint alleges the actual cost to the defendants to process online mortgage payments is roughly $0.50 per transaction, much less than what homeowners incur in fees. 

For payments made by phone, the defendants charge borrowers a fee of up to $11, the case claims. 

“Defendants charge homeowners Pay-to-Pay Fees that can cost upwards of $10 per transaction and pocket the difference as pure profit,” the filing says. 

Typically, a mortgage servicer will use a vendor to process transactions, and the average market cost that servicers pay vendors to process payments is about $0.50 or less per transaction, the complaint says. 

The suit looks to cover all persons with a residential mortgage loan securing a property in West Virginia where the lender, broker, servicer or sub-servicer is MortgageDepot or U.S. Bank, and who paid a fee to either entity for making a payment by phone, interactive voice recognition, or any other electronic means during the applicable statute of limitations period. 

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