A recent class action lawsuit has been filed by a group of plaintiffs against PHH Corporation d/b/a PHH Mortgage Services (PHH). The plaintiffs allege that PHH Mortgage Services has breached their contract, violated the covenant of good faith and fair dealing, violated both the New York General Business Law and the Illinois Consumer Fraud and Deceptive Business Practices Act, and acted in a way which was unjustly enriching them. They are seeking to recover the unfair fees that PHH charged them and keep PHH from charging future customers these fees.
For years, PHH has been unjustly amassing substantial profits by exploiting homeowners who rely on them for their mortgage servicing needs. Taking advantage of the fact that borrowers have no say in choosing their mortgage servicer, PHH leverages their captive audience to maximize revenue. While the company saves money when borrowers utilize electronic funds transfers (EFT) as their payment method, they have chosen to impose exorbitant “convenience fees” or “processing fees” (or “Pay-to-Pay” fees) for customers who prefer to make their payments on a monthly basis. Although PHH currently permits borrowers to use a pre-authorized, reoccurring EFT transaction over the Automated Clearing House (ACH) network without charge, they still tack on disproportionate fees of up to $19.50 for those who choose to make the same transaction manually each month.
This class action lawsuit seeks to hold PHH accountable for making their customers “Pay-to-Pay” their mortgages. PHH services mortgages for many lower income borrowers who obtained loans through the Federal Housing Administration (FHA). Under the FHA guidelines, mortgage servicers cannot charge borrowers additional fees. According to the complaint, PHH “has aggressively sought out ways to force these fees on borrowers,” by attempting to make borrowers amend their mortgage agreements in such a way as to enshrine the Pay-to-Pay fees “each time the borrower elects to pay in a method not specifically provided for in the borrower’s original note agreement for the duration of the mortgage agreement.”
The case is Anntwanette Jones and Lucinda Allard v. PHH Mortgage Corporation d/b/a PHH Mortgage Services, case no.: 1:23-cv-1040 in the United States District Court for the District of New Jersey.