MORTGAGE RIGHTS
Mortgage Loan Servicing Disputes Late Fees, Fee Pyramiding and Unreasonable Fees
LATE FEES There is one important fact that you need to know about late fees: the servicer keeps them. In fact, late fees and other fees can increase the profitability of the servicer's business. Consider this explanation from The Mortgage Professor: Lets say a firm pays $1 million for the right to service a loan portfolio of 1,000 loans with total balances of $100 million. The portfolio has an estimated average life of 7 years. The servicing fee on the $100 million is .25%, which generates income of $250,000 a year. It only costs the firm $50 a year to service each loan, or $50,000 in total. Net income is thus $200,000 a year for 7 years. The rate of return on investment is 9.20%. Now add late charges, which by industry practice are retained by the servicing agent. If a late charge of 5% of the payment is collected from just 1% of the borrowers, the rate of return on the investment in servicing jumps almost to 10%. If late charges can be collected from 5% of the borrowers, the rate of return exceeds 12%. Fees are cream and gravy for a mortgage company. Improperly charging fees puts more money in the pocket of the mortgage company One servicer trick is to hold payments until the are past due before processing them and charging a late fee. The sticky part, however, is proving that your payment arrived on time. Here is how one homeowner met that burden of proof: "On February 7, 2015, Mrs. Steinberg, who is also a signatory to the loan agreement, mailed the Steinberg's February mortgage payment check to Provident via first-class mail with the United Page 2 States Postal Service ("USPS"). Id. ¶ 18. On February 18, 2015, Mrs. Steinberg received a telephone call from Provident informing her that Provident had not received the mortgage payment for February. Id. ¶ 21. After speaking with a Provident representative that same day, Mrs. Steinberg completed the February mortgage payment online. Id. ¶ 22-23. On February 19, 2015, Provident sent a letter to Plaintiffs stating that Provident had received Plaintiffs' February mortgage check but it was "unable to apply the funds to [Plaintiffs'] account due to the following reason: Payment stop on check." Id. ¶ 24. Neither Mr. Steinberg nor Mrs. Steinberg ever placed a stop payment order on the February mortgage check. Id. ¶ 24. Provident subsequently assessed a late fee of approximately $200 on Plaintiffs' account. Id. ¶ 25. Plaintiffs allege that at no point did Provident present Plaintiffs with any documentation, or any evidence of any kind, supporting its claim that the payment was not timely received. Id. Plaintiffs also allege, "upon information and belief," that Provident shreds or otherwise disposes of the envelopes in which mortgage payments are mailed shortly after receipt. Id." "The FAC bolsters Plaintiffs' allegations regarding the allegedly fraudulent late fees in two ways. First, Plaintiffs quote numerous online consumer complaints. Id. ¶ 17. For instance, one of the online complaints claimed that Provident "sent me a late notice when they had check in hand." Id. Another complaint stated: "Provident has 'lost' my mailed payments and charged me late fees when the payment was mailed with a week to spare." Id. Still another complaint stated: "Late fee is incurred if received after the 16th of the month. I mailed payment on the 9th. Provident said they didn't receive it until the 17th which is BS because I mailed an insurance payment to a company in [California] the same day . . . and they received it on the 13th." Id. A fourth complaint "wonder[ed] if [Provident was] just holding onto the checks to purposely make them late so they can charge a late fee." Id. Second, Plaintiffs allege that according to the USPS website, domestic first-class mail is delivered in "1-3 business days," and that the USPS Service Standards Map confirms that a first-class letter sent from South Florida—the location from which Plaintiffs sent their February 2015 payment—to Provident's mailing address in Los Angeles, California is expected to arrive in three days. Id. ¶ 19. Plaintiffs also allege that, according to a 2015 report prepared for the USPS by thePage 3 International Business Machines Corporation, approximately 94% of first-class mail delivered within Los Angeles arrives on time or within one day of the Service Standard (in this case, within 2-4 business days), and approximately 98% of such mail arrives within two days of the Service Standard (in this case, within 3-5 business days). Id. "Therefore, on information and belief," Plaintiffs allege that "Provident received Plaintiffs' payment prior to the expiration of the applicable 15-day grace period." Id. ¶ 20. Finally, Plaintiffs note that further evidence regarding the date and time of receipt of Plaintiffs' February 2015 payment is "within the exclusive possession, custody, and control of Provident." Id. Steinberg v. Provident Funding Assocs., L.P. (N.D. Cal., 2016)" Unreasonable Fees The Consumer Financial Protection Bureau gives these examples of a servicer lacking a reasonable basis to impose fees: a late fee for a payment that was not late; A charge imposed by a service provider for a service that was not actually rendered; a default property management fee for borrowers that are not in a delinquency status that would justify the charge; or a charge for force-placed insurance in a circumstance not permitted by the statute and regs governing force-placed insurance. Another area in which you will find problems is unexplained charges, like miscellaneous advances of corporate funds, miscellaneous other fee disbursement, and other fee adjustment. If you fall behind on your payments, you will see charges for property preservation, attorney advances and brokers price opinions. Fee Pyramiding Fee pyramiding is the practice of charging more than one late fee when only one payment was late. For example, a homeowner is late with a payment and the servicer charges a late fee. That means that the next payment is the sum of the regular payment plus the late fee. In our example, however, the homeowner just sends in a normal monthly payment. The unscrupulous servicer deducts the previous month's late fee from the payment and puts the remainder in a suspense account (because it no longer is a full payment). The unscrupulous servicer then charges another late fee. Late fees will continue to stack up until the homeowner realizes what is going on. This is why reading your statement every month is one of the useful things you can do to protect yourself. Fee pyramiding is illegal and must be challenged.
NEXT: Force Placed Insurance
 MORTGAGE RIGHTS
The site does not provide legal advice. Neither Susan LaCava nor her law firm, LaCava Law, S.C., represent you until there is a signed retainer agreement.
Mortgage Loan Servicing Disputes Late Fees, Fee Pyramiding and Unreasonable Fees LATE FEES There is one important fact that you need to know about late fees: the servicer keeps them. In fact, late fees and other fees can increase the profitability of the servicer's business. Consider this explanation from The Mortgage Professor: Lets say a firm pays $1 million for the right to service a loan portfolio of 1,000 loans with total balances of $100 million. The portfolio has an estimated average life of 7 years. The servicing fee on the $100 million is .25%, which generates income of $250,000 a year. It only costs the firm $50 a year to service each loan, or $50,000 in total. Net income is thus $200,000 a year for 7 years. The rate of return on investment is 9.20%. Now add late charges, which by industry practice are retained by the servicing agent. If a late charge of 5% of the payment is collected from just 1% of the borrowers, the rate of return on the investment in servicing jumps almost to 10%. If late charges can be collected from 5% of the borrowers, the rate of return exceeds 12%. Fees are cream and gravy for a mortgage company. Improperly charging fees puts more money in the pocket of the mortgage company One servicer trick is to hold payments until the are past due before processing them and charging a late fee. The sticky part, however, is proving that your payment arrived on time. Here is how one homeowner met that burden of proof: "On February 7, 2015, Mrs. Steinberg, who is also a signatory to the loan agreement, mailed the Steinberg's February mortgage payment check to Provident via first-class mail with the United Page 2 States Postal Service ("USPS"). Id. ¶ 18. On February 18, 2015, Mrs. Steinberg received a telephone call from Provident informing her that Provident had not received the mortgage payment for February. Id. ¶ 21. After speaking with a Provident representative that same day, Mrs. Steinberg completed the February mortgage payment online. Id. ¶ 22-23. On February 19, 2015, Provident sent a letter to Plaintiffs stating that Provident had received Plaintiffs' February mortgage check but it was "unable to apply the funds to [Plaintiffs'] account due to the following reason: Payment stop on check." Id. ¶ 24. Neither Mr. Steinberg nor Mrs. Steinberg ever placed a stop payment order on the February mortgage check. Id. ¶ 24. Provident subsequently assessed a late fee of approximately $200 on Plaintiffs' account. Id. ¶ 25. Plaintiffs allege that at no point did Provident present Plaintiffs with any documentation, or any evidence of any kind, supporting its claim that the payment was not timely received. Id. Plaintiffs also allege, "upon information and belief," that Provident shreds or otherwise disposes of the envelopes in which mortgage payments are mailed shortly after receipt. Id." "The FAC bolsters Plaintiffs' allegations regarding the allegedly fraudulent late fees in two ways. First, Plaintiffs quote numerous online consumer complaints. Id. ¶ 17. For instance, one of the online complaints claimed that Provident "sent me a late notice when they had check in hand." Id. Another complaint stated: "Provident has 'lost' my mailed payments and charged me late fees when the payment was mailed with a week to spare." Id. Still another complaint stated: "Late fee is incurred if received after the 16th of the month. I mailed payment on the 9th. Provident said they didn't receive it until the 17th which is BS because I mailed an insurance payment to a company in [California] the same day . . . and they received it on the 13th." Id. A fourth complaint "wonder[ed] if [Provident was] just holding onto the checks to purposely make them late so they can charge a late fee." Id. Second, Plaintiffs allege that according to the USPS website, domestic first-class mail is delivered in "1-3 business days," and that the USPS Service Standards Map confirms that a first-class letter sent from South Florida—the location from which Plaintiffs sent their February 2015 payment—to Provident's mailing address in Los Angeles, California is expected to arrive in three days. Id. ¶ 19. Plaintiffs also allege that, according to a 2015 report prepared for the USPS by thePage 3 International Business Machines Corporation, approximately 94% of first-class mail delivered within Los Angeles arrives on time or within one day of the Service Standard (in this case, within 2-4 business days), and approximately 98% of such mail arrives within two days of the Service Standard (in this case, within 3-5 business days). Id. "Therefore, on information and belief," Plaintiffs allege that "Provident received Plaintiffs' payment prior to the expiration of the applicable 15-day grace period." Id. ¶ 20. Finally, Plaintiffs note that further evidence regarding the date and time of receipt of Plaintiffs' February 2015 payment is "within the exclusive possession, custody, and control of Provident." Id. Steinberg v. Provident Funding Assocs., L.P. (N.D. Cal., 2016)" Unreasonable Fees The Consumer Financial Protection Bureau gives these examples of a servicer lacking a reasonable basis to impose fees: a late fee for a payment that was not late; A charge imposed by a service provider for a service that was not actually rendered; a default property management fee for borrowers that are not in a delinquency status that would justify the charge; or a charge for force-placed insurance in a circumstance not permitted by the statute and regs governing force-placed insurance. Another area in which you will find problems is unexplained charges, like miscellaneous advances of corporate funds, miscellaneous other fee disbursement, and other fee adjustment. If you fall behind on your payments, you will see charges for property preservation, attorney advances and brokers price opinions. Fee Pyramiding Fee pyramiding is the practice of charging more than one late fee when only one payment was late. For example, a homeowner is late with a payment and the servicer charges a late fee. That means that the next payment is the sum of the regular payment plus the late fee. In our example, however, the homeowner just sends in a normal monthly payment. The unscrupulous servicer deducts the previous month's late fee from the payment and puts the remainder in a suspense account (because it no longer is a full payment). The unscrupulous servicer then charges another late fee. Late fees will continue to stack up until the homeowner realizes what is going on. This is why reading your statement every month is one of the useful things you can do to protect yourself. Fee pyramiding is illegal and must be challenged.
 MORTGAGE RIGHTS
 MORTGAGE RIGHTS
The site does not provide legal advice. Neither Susan LaCava nor her law firm, LaCava Law, S.C., represent you until there is a signed retainer agreement.
Mortgage Loan Servicing Disputes Late Fees, Fee Pyramiding and Unreasonable Fees LATE FEES There is one important fact that you need to know about late fees: the servicer keeps them. In fact, late fees and other fees can increase the profitability of the servicer's business. Consider this explanation from The Mortgage Professor: Lets say a firm pays $1 million for the right to service a loan portfolio of 1,000 loans with total balances of $100 million. The portfolio has an estimated average life of 7 years. The servicing fee on the $100 million is .25%, which generates income of $250,000 a year. It only costs the firm $50 a year to service each loan, or $50,000 in total. Net income is thus $200,000 a year for 7 years. The rate of return on investment is 9.20%. Now add late charges, which by industry practice are retained by the servicing agent. If a late charge of 5% of the payment is collected from just 1% of the borrowers, the rate of return on the investment in servicing jumps almost to 10%. If late charges can be collected from 5% of the borrowers, the rate of return exceeds 12%. Fees are cream and gravy for a mortgage company. Improperly charging fees puts more money in the pocket of the mortgage company One servicer trick is to hold payments until the are past due before processing them and charging a late fee. The sticky part, however, is proving that your payment arrived on time. Here is how one homeowner met that burden of proof: "On February 7, 2015, Mrs. Steinberg, who is also a signatory to the loan agreement, mailed the Steinberg's February mortgage payment check to Provident via first-class mail with the United Page 2 States Postal Service ("USPS"). Id. ¶ 18. On February 18, 2015, Mrs. Steinberg received a telephone call from Provident informing her that Provident had not received the mortgage payment for February. Id. ¶ 21. After speaking with a Provident representative that same day, Mrs. Steinberg completed the February mortgage payment online. Id. ¶ 22-23. On February 19, 2015, Provident sent a letter to Plaintiffs stating that Provident had received Plaintiffs' February mortgage check but it was "unable to apply the funds to [Plaintiffs'] account due to the following reason: Payment stop on check." Id. ¶ 24. Neither Mr. Steinberg nor Mrs. Steinberg ever placed a stop payment order on the February mortgage check. Id. ¶ 24. Provident subsequently assessed a late fee of approximately $200 on Plaintiffs' account. Id. ¶ 25. Plaintiffs allege that at no point did Provident present Plaintiffs with any documentation, or any evidence of any kind, supporting its claim that the payment was not timely received. Id. Plaintiffs also allege, "upon information and belief," that Provident shreds or otherwise disposes of the envelopes in which mortgage payments are mailed shortly after receipt. Id." "The FAC bolsters Plaintiffs' allegations regarding the allegedly fraudulent late fees in two ways. First, Plaintiffs quote numerous online consumer complaints. Id. ¶ 17. For instance, one of the online complaints claimed that Provident "sent me a late notice when they had check in hand." Id. Another complaint stated: "Provident has 'lost' my mailed payments and charged me late fees when the payment was mailed with a week to spare." Id. Still another complaint stated: "Late fee is incurred if received after the 16th of the month. I mailed payment on the 9th. Provident said they didn't receive it until the 17th which is BS because I mailed an insurance payment to a company in [California] the same day . . . and they received it on the 13th." Id. A fourth complaint "wonder[ed] if [Provident was] just holding onto the checks to purposely make them late so they can charge a late fee." Id. Second, Plaintiffs allege that according to the USPS website, domestic first-class mail is delivered in "1-3 business days," and that the USPS Service Standards Map confirms that a first-class letter sent from South Florida—the location from which Plaintiffs sent their February 2015 payment—to Provident's mailing address in Los Angeles, California is expected to arrive in three days. Id. ¶ 19. Plaintiffs also allege that, according to a 2015 report prepared for the USPS by thePage 3 International Business Machines Corporation, approximately 94% of first-class mail delivered within Los Angeles arrives on time or within one day of the Service Standard (in this case, within 2-4 business days), and approximately 98% of such mail arrives within two days of the Service Standard (in this case, within 3-5 business days). Id. "Therefore, on information and belief," Plaintiffs allege that "Provident received Plaintiffs' payment prior to the expiration of the applicable 15-day grace period." Id. ¶ 20. Finally, Plaintiffs note that further evidence regarding the date and time of receipt of Plaintiffs' February 2015 payment is "within the exclusive possession, custody, and control of Provident." Id. Steinberg v. Provident Funding Assocs., L.P. (N.D. Cal., 2016)" Unreasonable Fees The Consumer Financial Protection Bureau gives these examples of a servicer lacking a reasonable basis to impose fees: a late fee for a payment that was not late; A charge imposed by a service provider for a service that was not actually rendered; a default property management fee for borrowers that are not in a delinquency status that would justify the charge; or a charge for force-placed insurance in a circumstance not permitted by the statute and regs governing force-placed insurance. Another area in which you will find problems is unexplained charges, like miscellaneous advances of corporate funds, miscellaneous other fee disbursement, and other fee adjustment. If you fall behind on your payments, you will see charges for property preservation, attorney advances and brokers price opinions. Fee Pyramiding Fee pyramiding is the practice of charging more than one late fee when only one payment was late. For example, a homeowner is late with a payment and the servicer charges a late fee. That means that the next payment is the sum of the regular payment plus the late fee. In our example, however, the homeowner just sends in a normal monthly payment. The unscrupulous servicer deducts the previous month's late fee from the payment and puts the remainder in a suspense account (because it no longer is a full payment). The unscrupulous servicer then charges another late fee. Late fees will continue to stack up until the homeowner realizes what is going on. This is why reading your statement every month is one of the useful things you can do to protect yourself. Fee pyramiding is illegal and must be challenged.
 MORTGAGE RIGHTS
 MORTGAGE RIGHTS
The site does not provide legal advice. Neither Susan LaCava nor her law firm, LaCava Law, S.C., represent you until there is a signed retainer agreement.
Mortgage Loan Servicing Disputes Late Fees, Fee Pyramiding and Unreasonable Fees LATE FEES There is one important fact that you need to know about late fees: the servicer keeps them. In fact, late fees and other fees can increase the profitability of the servicer's business. Consider this explanation from The Mortgage Professor: Lets say a firm pays $1 million for the right to service a loan portfolio of 1,000 loans with total balances of $100 million. The portfolio has an estimated average life of 7 years. The servicing fee on the $100 million is .25%, which generates income of $250,000 a year. It only costs the firm $50 a year to service each loan, or $50,000 in total. Net income is thus $200,000 a year for 7 years. The rate of return on investment is 9.20%. Now add late charges, which by industry practice are retained by the servicing agent. If a late charge of 5% of the payment is collected from just 1% of the borrowers, the rate of return on the investment in servicing jumps almost to 10%. If late charges can be collected from 5% of the borrowers, the rate of return exceeds 12%. Fees are cream and gravy for a mortgage company. Improperly charging fees puts more money in the pocket of the mortgage company One servicer trick is to hold payments until the are past due before processing them and charging a late fee. The sticky part, however, is proving that your payment arrived on time. Here is how one homeowner met that burden of proof: "On February 7, 2015, Mrs. Steinberg, who is also a signatory to the loan agreement, mailed the Steinberg's February mortgage payment check to Provident via first-class mail with the United Page 2 States Postal Service ("USPS"). Id. ¶ 18. On February 18, 2015, Mrs. Steinberg received a telephone call from Provident informing her that Provident had not received the mortgage payment for February. Id. ¶ 21. After speaking with a Provident representative that same day, Mrs. Steinberg completed the February mortgage payment online. Id. ¶ 22-23. On February 19, 2015, Provident sent a letter to Plaintiffs stating that Provident had received Plaintiffs' February mortgage check but it was "unable to apply the funds to [Plaintiffs'] account due to the following reason: Payment stop on check." Id. ¶ 24. Neither Mr. Steinberg nor Mrs. Steinberg ever placed a stop payment order on the February mortgage check. Id. ¶ 24. Provident subsequently assessed a late fee of approximately $200 on Plaintiffs' account. Id. ¶ 25. Plaintiffs allege that at no point did Provident present Plaintiffs with any documentation, or any evidence of any kind, supporting its claim that the payment was not timely received. Id. Plaintiffs also allege, "upon information and belief," that Provident shreds or otherwise disposes of the envelopes in which mortgage payments are mailed shortly after receipt. Id." "The FAC bolsters Plaintiffs' allegations regarding the allegedly fraudulent late fees in two ways. First, Plaintiffs quote numerous online consumer complaints. Id. ¶ 17. For instance, one of the online complaints claimed that Provident "sent me a late notice when they had check in hand." Id. Another complaint stated: "Provident has 'lost' my mailed payments and charged me late fees when the payment was mailed with a week to spare." Id. Still another complaint stated: "Late fee is incurred if received after the 16th of the month. I mailed payment on the 9th. Provident said they didn't receive it until the 17th which is BS because I mailed an insurance payment to a company in [California] the same day . . . and they received it on the 13th." Id. A fourth complaint "wonder[ed] if [Provident was] just holding onto the checks to purposely make them late so they can charge a late fee." Id. Second, Plaintiffs allege that according to the USPS website, domestic first-class mail is delivered in "1-3 business days," and that the USPS Service Standards Map confirms that a first-class letter sent from South Florida—the location from which Plaintiffs sent their February 2015 payment—to Provident's mailing address in Los Angeles, California is expected to arrive in three days. Id. ¶ 19. Plaintiffs also allege that, according to a 2015 report prepared for the USPS by thePage 3 International Business Machines Corporation, approximately 94% of first-class mail delivered within Los Angeles arrives on time or within one day of the Service Standard (in this case, within 2-4 business days), and approximately 98% of such mail arrives within two days of the Service Standard (in this case, within 3-5 business days). Id. "Therefore, on information and belief," Plaintiffs allege that "Provident received Plaintiffs' payment prior to the expiration of the applicable 15-day grace period." Id. ¶ 20. Finally, Plaintiffs note that further evidence regarding the date and time of receipt of Plaintiffs' February 2015 payment is "within the exclusive possession, custody, and control of Provident." Id. Steinberg v. Provident Funding Assocs., L.P. (N.D. Cal., 2016)" Unreasonable Fees The Consumer Financial Protection Bureau gives these examples of a servicer lacking a reasonable basis to impose fees: a late fee for a payment that was not late; A charge imposed by a service provider for a service that was not actually rendered; a default property management fee for borrowers that are not in a delinquency status that would justify the charge; or a charge for force-placed insurance in a circumstance not permitted by the statute and regs governing force-placed insurance. Another area in which you will find problems is unexplained charges, like miscellaneous advances of corporate funds, miscellaneous other fee disbursement, and other fee adjustment. If you fall behind on your payments, you will see charges for property preservation, attorney advances and brokers price opinions. Fee Pyramiding Fee pyramiding is the practice of charging more than one late fee when only one payment was late. For example, a homeowner is late with a payment and the servicer charges a late fee. That means that the next payment is the sum of the regular payment plus the late fee. In our example, however, the homeowner just sends in a normal monthly payment. The unscrupulous servicer deducts the previous month's late fee from the payment and puts the remainder in a suspense account (because it no longer is a full payment). The unscrupulous servicer then charges another late fee. Late fees will continue to stack up until the homeowner realizes what is going on. This is why reading your statement every month is one of the useful things you can do to protect yourself. Fee pyramiding is illegal and must be challenged.
 MORTGAGE RIGHTS
The site does not provide legal advice. Neither Susan LaCava nor her law firm, LaCava Law, S.C., represent you until there is a signed retainer agreement.  MORTGAGE RIGHTS