PHH Mortgage Corporation will refund more than 50,000 mortgage borrowers a total of nearly $3.5 million to settle allegations by the U.S. Department of Housing and Urban Development (HUD) that the lender and servicer charged junk fees.
HUD alleges PHH charged borrowers “convenience” fees when they made payments over the phone through a representative; by telephone through an interactive voice response telephone system; or online if the borrower was not enrolled in PHH’s paperless statement program, which is a violation of HUD’s Federal Housing Administration (FHA) requirements.
The settlement provides the largest reimbursement amount to the most FHA borrowers in HUD’s history.
“One of the most sacred responsibilities we have at HUD is to ensure inclusive and fair access to housing for all, which includes protecting families with FHA mortgage payments from junk fees,” says Adrianne Todman, agency head for HUD in a statement. “This settlement serves as a reminder that HUD will always hold FHA mortgage companies accountable to ensure the people we serve are treated fairly.”
HUD says charging “convenience fees” violates FHA requirements because accepting and processing mortgage payments is considered part of a mortgagee’s ordinary servicing activities for which it is already paid.
Therefore, charging a borrower such additional fees is prohibited absent explicit HUD approval – which PHH never sought or obtained.
The affected transactions occurred between May 2021 and February 2023.
PHH ceased charging the fees in February 2023.
Photo: Eskay Lim