Bank Charges Investigation 2020
Several of the Bank charges or convenience fees you have been made to pay by your Bank might be illegal. Find out what you can do about it here.
Banks, mortgage companies, and mortgage servicing companies all have one thing in common: they charge convenience fees or surcharges when borrowers pay their mortgages through phone or through credit cards.
Banks and other mortgage lending companies usually solicit mortgage business by convincing potential borrowers that they can pay in cash over the counter, by sending a check through the mail, or using online payment services at their convenience. These same banks do not ever tell potential borrowers that they have to pay dearly for that convenience.
Convenience fees, surcharges and processing fees – what’s the difference?
While banks and mortgage lenders usually give borrowers several options to pay their monthly mortgage payments, they charge borrowers convenience fees for paying over the phone. If borrowers pay using their credit cards, banks and mortgage lenders charge borrowers surcharges.
Studies have shown that banks and mortgage lenders usually charge a flat convenience fee which is, on average $15 per payment. When borrowers pay by credit card, the surcharge that borrowers pay can be 1.5% up to 3.5% of the mortgage payment they made. Both of these are paid on top of the monthly mortgage payment.
Think about this: a borrower makes 360 monthly mortgage payments for a 30-year mortgage. If the borrower pays every single month by phone and the lender charges $15 in convenience fee for every monthly mortgage payment, the borrower will have had to pay an additional $5400 on top of the mortgage.
Why are convenience fees improper?
First, banks and lenders are required by law to disclose to the borrower the cost of the entire loan prior to making the loan. This means that banks must disclose to the borrowers that they will pay an extra $5400 in convenience fees if they pay their mortgage by phone every month. Banks rarely disclose this before borrowers sign the loan agreement.
Second, banks and lenders use so many terms for these “pay-to-pay” fees that borrowers often are unsure why they are being charged these convenience fees. Some banks call them convenience fees and sometimes, they call them processing fees. Some call them “telepay” charges.
Third, some states already prohibit creditors from charging convenience fees. These states are: California, Florida. Massachusetts, Michigan, North Carolina, Texas, Washington and West Virginia.
Fourth, banks are probably overcharging borrowers. Banks often say that the convenience fees are meant to pay the cost of processing the mortgage payment. Some banks will say that the convenience fee does not go to them but to the mortgage servicing company that processes the mortgage payments. Under the SAFE Act, banks and mortgage companies cannot charge borrowers more than the cost that they paid for the services offered by third parties such as the mortgage services. In truth, studies by the Consumer Financial Protection Bureau show that it only costs about $0.50 to process a mortgage payment by phone. Thus, banks and lending companies charge $14.50 more than the actual cost of the payment processing.
Fifth, banks and mortgage lenders have probably not included or disclosed the “convenience” fees as part of the loan agreement. Thus, the borrowers may not have agreed to pay the convenience fees when they signed the loan agreement.
Sixth, banks and mortgage servicers often fail to disclose the amount of “convenience” fees they the borrowers make the payment. Borrowers often discover that they have been charged a “convenience” fee only after they have already paid. This makes the convenience fee improper.
What has the government done?
July 2017, Consumer Financial Protection Bureau warned banks about “pay-to-pay” charges and surcharges. The Consumer Financial Protection Bureau issued a bulletin forbidding unfair, deceptive or abusive acts or practice such as convenience fees. More importantly, the Federal Trade Commission takes action against banks for making confusing, misleading or unfair fee structures.
What can you do?
You can report the bank or lender to a state agency that supervises the mortgage industry. State agencies such as the Banking Commissioner often have the power to examine and investigate deceptive and fraudulent practices by lenders. Lenders may be required to reimburse the convenience fees they have already charged the borrowers and may be required to pay damages besides.
You can report the bank or lender to the FTC, the CFPB. These agencies not only conduct studies but they also investigate and prosecute complaints of unfair practices.
You can talk to a lawyer. Lawyers such as ours at https://classactionnews.com/ conduct their own investigations and represent borrowers who may have been prejudiced by these bank practices. Individually, borrowers may not have the power to hold banks and mortgage companies accountable. But collectively you can bring a class action suit and make banks and mortgage companies pay back the fees you have been overcharged. Speak to our class action lawyer right now to determine if you can become part of a class action suit.
