Connecticut Attorney General William Tong is among 23 state AGs calling on the Consumer Financial Protection Bureau (CFPB) to stop mortgage servicers from charging convenience fees. The group calls the fees exploitive due in part to the fact that, unlike other forms of debt, mortgage borrowers cannot choose their loan servicer.
“These convenience fees are just another burden on Connecticut families who are already squeezed by the rising cost of living,” Attorney General Tong said in a statement. “The last thing consumers need is another fee on top of their monthly mortgage payments. Our coalition is calling on the CFPB to prohibit mortgage servicers from charging these fees, which add up over time and are often many times the cost of actually processing the mortgage.”
Convenience fees are a type of charge paid by consumers when they pay by a means other than cash, check, or over the phone. In Connecticut, it is illegal for credit card companies to charge convenience fees, but that doesn’t extend to mortgages.
In their letter to the CFPB, the AGs also claim that these fees can be inconsistent across servicers and can sometimes exceed the cost of processing the payments themselves. In their argument, they site one servicer, PHH Mortgage, “which charges individuals $7.50 to make payments online or via the telephone through an automated service. Those who opt to speak to a live operator will be charged $17.50.”
The group is calling on the CFPB to prohibit convenience fees or, short of that, to limit those fees to the amount it costs to process the payments.