A class action filed against M&T Bank alleges the company violated the Fair Debt Collection Practices Act (FDCPA) and California’s Rosenthal Act by charging customers a fee to process mortgage payments made over the phone or online.
The lead plaintiff in the case says that M&T acquired the mortgage on her California residence through default in 2016. After obtaining a loan modification in 2017, the woman has reportedly made payments over the phone on at least five separate occasions and has been charged a $15 “pay-to-pay” processing fee each time.
While M&T claims that the charges are default-related fees, the complaint points out that M&T is only allowed to collect on money it actually disbursed to the borrower.
“If M&T is allowed to collect a fee under the auspice that it is a ‘default related fee,’ M&T’s demand for payment of pay-to-pay fees were a direct breach of Paragraph 9 of the Mortgage Agreement … stating that only ‘amounts disbursed by the lender…will become debt of the borrower,’” the lawsuit states. “M&T collected more than the amount it disbursed to process the Pay-to-pay transactions.”
Under the Rosenthal Act, California’s state law designed to help enforce the FDCPA, it is illegal for a lender to add extra charges to a borrower’s debt unless those charges are specifically allowed by law, the complaint says. Similarly, the FDCPA, the suit states, forbids “the collection of any amount unless such amount is expressly authorized by the agreement creating the debt or permitted by law.”
The suit seeks to represent both a nationwide class and a class of borrowers in California whose mortgage M&T acquired the rights to, and who were charged a fee for IVR, telephone or internet payments.