Following a proposed $3.6 million settlement with Mr. Cooper Group over extra fees charged to mortgage borrowers when paying their monthly mortgage, loanDepot now faces a similar class action in West Virginia.
The class action filed by David and Patricia Warren of Seth, West Virgina, alleges that each time a mortgage borrower whose loan is serviced by loanDepot makes a payment over the phone the company charges them $2 when the actual cost to service that payment is $0.30.
"Defendant’s customers’ mortgage agreements do not authorize Defendant to collect Pay-to-Pay Fees," the complaint states.
While the lawsuit does not specify monetary damages, it requests the court to provide appropriate and necessary equitable relief for both the plaintiffs and class members. Additionally, it seeks a civil penalty for each violation. The lawsuit was filed in the U.S. Southern District Court of West Virginia, with legal representation provided by attorneys from Bailey & Glasser and Bordas & Bordas.
A loanDepot spokesperson said it does not comment on pending litigation.
The lawsuit arrives amidst heightened public discussions concerning the oversight of extraneous fees often referred to as “junk fees.” Over the past year, the Biden Administration, the Consumer Financial Protection Bureau (CFPB), and multiple state governments have joined the conversation. The financial services sector has frequently faced criticism from the CFPB for its reliance on these types of “junk fees” as a revenue source. Additionally, in the previous year, numerous state regulators advocated discontinuing pay-to-pay practices in mortgage and other loan servicing, which the CFPB classifies as a form of extraneous fee.
Earlier this fall, a Texas court upheld a previous decision, ruling that Lakeview Loan Servicing, previously sued for massive data breaches, had unlawfully charged borrower fees in the state of Texas. That lawsuit alleged the company charged FHA mortgage borrowers illegal "Pay-to-Pay" fees, extra charges of up to $12 for processing monthly payments by phone. The ruling in September required the company to stop charging the fees but did not end up with any big settlement. The same law firm that filed the lawsuit for the Warrens in West Virginia earlier this month was the one who won the settlement in the Texas case.
Then, there was the proposed $3.6 million settlement with Mr. Cooper Group earlier this month. That case involved 780 borrower accounts where, in 5,767 instances, they paid convenience fees to make payments by telephone.
