Planet Home Lending Hit with Class Action Over Alleged Inspection Practices

New to ClassAction.org? Read our Newswire Disclaimer

A proposed class action aims to challenge the allegedly unlawful manner in which Planet Home Lending, LLC assesses and collects home inspection fees for “unauthorized and unnecessary” property inspections.

The 16-page lawsuit claims the way in which Planet Home Lending imposes inspection fees violates U.S. Department of Housing and Urban Development (HUD) regulations and the contractual language of the company’s assigned mortgage agreements, as well as those the defendant services for other lenders. 

The plaintiff, a Diamond Bar, California resident, claims Planet Home Lending initiates inspections on Federal Housing Administration-insured properties upon evidence of an alleged default without making any attempt to contact the mortgagor by phone prior to the inspection to determine whether the property is occupied. Per the suit, the defendant is in the practice of continuing and charging fees for inspections throughout the alleged mortgage default regardless of whether it discovered that the property is currently occupied. 

The case explains that under HUD regulations, it is the mortgagee’s responsibility to conduct monthly inspections of FHA-insured properties only when the mortgage is in default and the property is determined to be vacant or abandoned. Once it has been found to be occupied, “no further inspections are required by HUD or authorized for reimbursement,” the suit relays. 

“In other words, once a property subject to an FHA loan is found to be occupied, charges for inspection fees are not allowed,” the complaint states. 

According to the lawsuit, Planet Home Lending uses the foreclosure process to recoup charges for the apparently unauthorized inspection fees by either requiring mortgagors to pay the fees so as to make their loan current or through final sale of the property at the conclusion of the foreclosure proceeding. 

The case emphasizes that because the power to conduct property inspections and assess related fees for FHA-insured properties lies solely with Planet Home Lending, it is “incumbent upon Defendant to not wield that power in an immoral, unethical, oppressive, or unscrupulous way,” or such that it can be significantly harmful to consumers. 

“[The plaintiff] is informed and believes, and upon such information and belief avers, that this action is based upon a common nucleus of operative facts because Defendant violated the regulations of HUD and the FHA mortgages it services in the same or similar manner,” the lawsuit reads.

According to the suit, Planet Home Lending “knew, or should have known,” that the plaintiff, who reached out to HUD for assistance on her mortgage in late 2013 and filed for Chapter 13 bankruptcy in September 2015, still occupied the property prior to initiating inspections, in part because the company was in contact with the individual throughout the life of her mortgage. Planet Home Lending, who the lawsuit says assessed the plaintiff more than $900 in inspection fees between 2012 and late 2019, made no attempt to contact the plaintiff prior to any inspections, the case claims. 

The suit relays a notice of default for the plaintiff’s property was filed with Los Angeles County in September 2018.

The plaintiff claims she was never provided with an opportunity to object to the assessment of inspection fees on her mortgage. Per the suit, the fees were deducted from the equity the plaintiff had in the property at its closing. 

The lawsuit looks to represent all persons nationwide who owned residential property subject to a Federal Housing Administration mortgage, occupied the subject property and were charged inspection fees by Planet Home Lending while they still occupied the property. Further sought for coverage is a California-only subclass of individuals who, within the last four years, occupied residential property subject to an FHA mortgage and were charged inspection fees by the defendant while they still occupied the property. 

Get class action lawsuit news sent to your inbox – sign up for ClassAction.org’s free weekly newsletter here.