These options are only currently available to consumers at financial institutions and often incur a pay-to-pay fee assessed by the payment processor to complete the transactions . Field examiners found over half of the amount of the total pay-to-pay fees were continuously provided back to loan servicers as incentive payments by third-party payment processors . This means millions of dollars in payments could be made off members locked into contracts requiring regular payments . More importantly , because dealers , not consumers , are responsible for selecting which servicers are used , this would often prevents consumers from researching servicers ’ payment processing fees and practices , negotiating the assessed charges , or searching for alternative lower-cost or free payment methods to avoid reoccurring fees .
Mortgage Servicing
Continued from page 3
However , this was not before potentially causing significant monetary harm to consumers , especially those who paid the demanded amounts , but could not afford to be deprived of the funds due to be refunded even for a short period . Consumers may have also experienced monetary harms if they ultimately chose not to , or were dissuaded from , recovering their vehicles and potentially risk losing permanent access because they were unable to afford to pay the $ 1,000 fee .
In the case of unlawful kickback incentives , they spoke broadly of situations where they had identified servicers engaging in unfair and abusive practices by charging and continuously profiting from payment processing fees on settled loans . They specifically found servicers were only offering two types of traditionally “ free ” payment options , preauthorized recurring ACH or mailed checks .
In reviewing mortgage servicing practices at various institutions , the CFPB noted examiners have seen UDAAP violations in the fees charged to consumers , similar to the ones we have already discussed . Although UDAAP is the most common violation cited , they did express concerns that risk extended beyond UDAAP and into other consumer protection laws , like Regulation Z . Regulations Z protects consumers against inaccurate and unfair credit billing and credit card practices . Overcharging late fees , repeated charges for unnecessary property inspections , misrepresenting owed private mortgage insurance ( PMI ) premiums , charging presumably waived and / or removed fees , and charging late fees after representing no fees would be assessed in formal documents were among the most egregious violations found . Below is a quick summary of the most notable observations .
• Overcharging Late Fees – Where loan agreements include a maximum permitted late fee , servicers were found to have failed to input these late fee caps into their systems and instead charged the member the maximum allowable late fee amount permitted under relevant state laws . These amounts frequently exceed the specific caps in loan agreements , consequently resulting in unfair and unlawful fees assessed which were not originally contracted . Servicers were also found to be in direct violation of Regulation Z if they issued periodic statements that included inaccurate late payment fee amounts exceeding amounts allowable in loan agreements .
4