On February 27, 2024, the CFPB published an article describing the recent increase in unlawful fees in the mortgage market resulting in increase of mortgage fees and other costs for consumers. It also announced that in recent court case against a mortgage servicer, the CFPB and the FTC jointly issued an Amicus Brief to reiterate that Fair Debt Collection Practices Act (FDCPA) Section 1692f(1) prohibits debt collectors from collecting “any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.”
In the case, Ocwen Loan Servicing charged two mortgage borrowers “convenience” fees ranging from $7.50 to $12 on dozens of occasions for payments made online or by phone. When the borrowers realized these fees were illegal, they each sued to hold Ocwen accountable for charging them. Both borrowers won in court, and now Ocwen is appealing those rulings. Among other things, Ocwen is arguing that the FDCPA’s protections don’t apply to this type of fee. Ocwen is also arguing that they should be able to charge these fees because people agree to pay them once it’s time to make their payment.
The CFPB and FTC’s brief argues that Section 1692f(1) applies to pay-to-pay fees because they are “amounts” covered by the provision and a debt collector “collects” them. Second, the brief argues that Section 1692f(1)’s permitted by law prong applies only when a law affirmatively authorizes the collection of an amount. Separate agreements to charge pay-to-pay fees do not satisfy Section 1692f(1)’s “permitted by law” prong because the FDCPA allows debt collectors to collect amounts pursuant to only one type of agreement—the agreement creating the debt.
As the primary enforcer of the Fair Debt Collection Practices Act (FDCPA), the CFPB reiterates its commitment to protect consumers from debt collectors that break the law, including mortgage servicers.
Read the CFPB’s blog post here..
The full amicus brief can be found here.