A non-partisan group of 33 attorneys general led by Letitia James from New York and Keith Ellison from Minnesota filed a complaint against PHH Mortgage and its predecessor, Ocwen Loan Servicing, for allegedly unlawful service charges.
The group opposes the company's proposed class action lawsuit that would allow PHH to continue charging payment processing fees to borrowers when making mortgage payments over the phone or online, and allows the company to increase the fee in the future. The motion calls for the settlement to be broken and calls the fees PHH charges borrowers "excessive, unnecessary and likely illegal". The motion calls on the U.S. District Court to reject the PHH proposed deal, arguing that the fees violate some state and fraud laws.
The motion states that in the extenuating circumstances of the pandemic, the proposed settlement was carried out too quickly and that the fees are not included in the mortgage agreements. According to the statement, PHH charged 1 million homeowners a fee – between $ 7.50 and $ 17.50 – for each monthly payment.
"When Americans use online or phone payments to repay their monthly mortgages, PHH benefits, but instead of passing those savings on to homeowners, PHH charged illegal fees and increased costs for nearly a million Americans," James said in a press release. "In the 21st century, when most Americans pay their bills online or over the phone, it is not only unethical but also illegal to charge fees in addition to what they have already paid."
Ocwen Financial Corp. acquired PHH in October 2018 for $ 360 million. This is not the first time either company has been involved in litigation over its practices. In January, Ocwen's mediation with the CFPB regarding a re-examined mortgage service ended without a resolution. As of October 2020, Ocwen had resolved 30 cases related to Florida trust business worth $ 11 million. According to allegations by the Ministry of Justice, PHH paid the unlawfully expelled military personnel in February 2019 an agreement. In June 2018, CFPB dismissed its lawsuit against PHH for violating the Real Estate Settlement Procedures Act.
PHH dismissed the coalition's claims when reaching for comment.
"We disagree with the attorneys-general's arguments at all and look forward to submitting our reply letter to refute those arguments and reiterate our belief that PHH has not violated any applicable law," PHH said in a statement to NMN. "PHH's actions are in line with a 2018 consent resolution (executed by every AG that joins the Amicus-Brief), which sets out the specific requirements PHH had to meet in order to provide borrowers with convenience fees for the Use optional expedited payment methods to be billed. "