Specialized Loan Servicing Charged Illegal ‘Pay-to-Pay’ Fees for Mortgage Payments Made By Phone, Class Action Claims

New to ClassAction.org? Read our Newswire Disclaimer

A proposed class action lawsuit claims Specialized Loan Servicing (SLS) unlawfully collected payment processing fees from borrowers who made mortgage payments by phone.

Get the latest open class action lawsuits sent to your inbox. Sign up for ClassAction.org’s free weekly newsletter.

The 28-page lawsuit alleges that SLS, which merged into Shellpoint Mortgage Servicing in May 2024, routinely violated state debt collection laws and its contractual agreements with borrowers by charging a “pay-to-pay” fee of up to $7.50 each time a homeowner made a monthly loan payment over the phone. The class action suit contends that because such fees were not authorized by borrowers’ mortgages or deeds of trust, the loan servicer had “no right to collect them.”

The plaintiff, a property owner residing in Texas, claims he was regularly charged a processing fee by SLS each time he made a mortgage payment over the phone prior to May 2024.

Although the loan servicer charged the man and other borrowers up to $7.50 per payment, the actual cost to process each transaction was $0.50 or less, allowing the company to “pocket” the approximately $7 “overcharge” as profit, the complaint alleges. Indeed, the filing asserts that the pay-to-pay fees could add up to hundreds of dollars over the life of a single loan and generated millions in “unlawful profits” for SLS.

The debt collection lawsuit relays that, at most, borrowers’ mortgage agreements and applicable debt collection laws allow the company to pass along to the customer only the actual costs it incurred to process the payments—in this case, less than a dollar per transaction, the suit says.

However, despite its legal and contractual obligations, the defendant “leveraged its position of power over homeowners and demanded exorbitant Pay-to-Pay Fees,” the complaint emphasizes.

As the filing tells it, SLS was part of the “dwindling minority” of loan servicers still charging pay-to-pay fees, which have been condemned in recent years by federal and state legislatures, regulators and numerous attorneys general.

The case names as defendant Newrez LLC, which does business as Shellpoint.

The Shellpoint lawsuit looks to represent anyone in the United States with residential property located in Maryland, California, Iowa, New Hampshire, Oregon, Texas or West Virginia secured by a loan that was serviced by SLS prior to May 1, 2024 who was charged one or more pay-to-pay fees, and whose mortgage or deed of trust did not expressly authorize the collection of such fees.

Check out ClassAction.org for a list of current class action lawsuits.