Antonio Ray Harvey | California Black Media
(CBM) – Last week, California Attorney General Rob Bonta called on the federal government to ban extra fees that businesses charge homeowners to pay their mortgages.
California joins 20 other states and the District of Columbia in this effort.
“Some financial service providers charge a fee if a consumer chooses to use a certain type of payment method, such as making payment over the phone, through a website, or through a third-party service,” Bonta and other prosecutors wrote. generals in a press release. letter they co-signed addressed to Rohit Chopra, Director, Consumer Financial Protection Bureau (CFPB). The Hawaii Consumer Protection Bureau also signed the letter.
“While these types of ‘pay to pay’ fees are charged by service providers in several different markets, the issues raised by these fees are particularly insidious in the mortgage industry because, unlike in most markets, homeowners don’t have no choice in their mortgage agent,” the letter continued.
When homeowners decide to take out a mortgage, many believe they are entering into a long-term relationship with a particular financial institution. That’s not always the case, according to the California Department of Justice (DOJ).
After origination, “many mortgages and their servicing rights are sold in secondary markets” and could be “sold several times over the course of the loan,” the DOJ says.
“This means homeowners don’t and can’t know who will be servicing their mortgage and are therefore unable to avoid ‘pay to pay’ fees by taking their business elsewhere,” the DOJ explained.
Bonta said the problem is critical in California because the state already faces a housing affordability problem.
“As the cost of living continues to rise, the last thing Californians need is for mortgage agents to take advantage of this captive market to inflate their bottom line,” Bonta said. “I urge the CFPB to put an end to these abusive junk fees.”
Landlords and renters in California struggle with housing costs and taxes. The extra fees companies add to payments increase those charges for consumers in the Golden State, where only about 31% of households can afford to buy a median-priced home, according to the Public Policy Institute of California.
African American homeowners in California also potentially face increased costs due to documented discriminatory practices common in the home buying and selling process.
Last year, Governor Newsom signed Assembly Bill (AB) 948 into law after multiple reports revealed home appraisers
valued homes owned by blacks and other minorities at much lower prices than those owned by whites.
Wells Fargo has been criticized more than once for its discriminatory banking and lending services. According to the findings of a Bloomberg News analysis published last month, the San Francisco-based global financial services firm rejected 53% of black homeowners who applied for refinance loans during the pandemic in 2020. It only rejected than 28% of white applicants.
The board of directors of the California-Hawaii State Conference of the NAACP met this weekend to discuss Wells Fargo’s track record in providing its services to African-American customers.
Among the nation’s major lenders, Wells Fargo’s gap between whites and blacks the company approved for loans was the widest.
According to Zillow’s Consumer Housing Trends Report released last year, black and other minority renters pay more in application fees and security deposits when renting apartments. They also fill
more rental inquiries, on average, before finding a home than white renters.
The letter from the multi-state coalition says, “There is no uniformity in convenience fees among mortgage servicers. Some charge for it and some don’t.
And the fees can add up.
For example, the letter highlights a service that currently charges its borrowers $7.50 to make an online payment or pay over the phone through an automated service. If consumers want to speak to a live operator to make their payment, they will be charged $17.50.
The New Jersey-based mortgage company that provides the service calls the process “SpeedPay,” which is one of the “one-time payment options” a borrower can use to make their monthly mortgage payment, as shown on the company’s website.
The states joining the initiative are Illinois, California, Colorado, Connecticut, Delaware, the District of
Columbia, Hawaii, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island and Washington.
Bonta agrees, adding that the payments are “an example of unwanted fees being charged to consumers across a host of financial products and services” offered by some banks, credit card companies, prepaid debit card providers and others.
“For struggling homeowners trying to make their monthly mortgage payment, the ‘pay to pay’ fee is just rubbing a knife in the wound,” the California attorney general said.
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