On July 30, 2024, Andrew Bigart, Mary Gardner, Liz Clark Rinehart, Michael Aphibal, and David McGee published “Consumer Financial Protection Bureau Homes in on Mortgage ‘Junk Fees’” in The Journal of Federal Agency Action. The following is an excerpt:
Recent releases from the Consumer Financial Protection Bureau (CFPB) show that the mortgage industry is in the crosshairs of the CFPB’s campaign against so-called junk fees.
Earlier this year, the CFPB indicated its interest in mortgage servicing fees when it, along with the Federal Trade Commission, filed an amicus brief in a case concerning whether payment convenience fees, what the Bureau calls “pay-to-pay” fees, are permissible when collecting mortgage loan payments. The CFPB argued that, unless the payment convenience fee was explicitly authorized by the mortgage agreements, payment convenience fees may not be charged by a mortgage servicer acting as a debt collector under the Fair Debt Collection Practices Act.
Now, the CFPB has released guidance, in the form of a Supervisory Highlights3 and a blog post,4 regarding the imposition of “junk fees” during the life cycle of a mortgage loan transaction. Each signals the CFPB’s further attention on junk fees and a return of focus on mortgage originators and servicers after the COVID-19 pandemic.