Mortgage lenders sued over handling of late payments
Tuesday, July 20, 2010
The folks over at Courthouse News report this morning that four federal class action lawsuits have been filed in California against mortgage companies in a dispute over how customers’ mortgage payments are credited to delinquent accounts.
The complaints allege that California law mandates a new payment to be applied to the current payment cycle, but that miortgage companies were toutinely applying the payments to past-due bills. That means the penalties for late or missed payment continue to accrue for each cycle.
“The purpose of this requirement,” the complaint says, “is to insure that, if one payment is missed, but subsequent payments are made on time, the borrower is only charged a late charge for the single missed payment.”
There can be some significant money involved, with fees ranging up to $250 or so a month, depending on the lender and the policy. In an environeent in which tens of thousands of Californians are late in their payments, this could add up to some serious cash for the lenders. Not to mention that additional anchor around the borrowers’ necks.
The lawsuits target Saxon Mortgage Services, GMAC Mortgage, Litton Loan Servicing and Aurora Loan Services. The plaintiffs are represented by Richard Kellner.
And note that the complaint comes from the legal field, not from regulators. Yet another area in which plaintiffs’ access to the courts might prove key to forcing corporations to obey the law.