Nationstar Charges West Virginia Mortgage Borrowers Illegal ‘Pay-to-Pay’ Fees, Class Action Alleges

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Nationstar Mortgage, LLC, i.e, Mr. Cooper, routinely violates West Virginia law by charging processing fees when mortgage borrowers make payments by phone, a proposed class action claims. 

The 12-page complaint alleges Mr. Cooper has run afoul of the West Virginia Consumer Credit and Protection Act by impermissibly profiting from its “pay-to-pay” policy, whereby borrowers who pay over the phone are charged between $14 and $19 each time they make a payment. 

“As a servicer, Nationstar is supposed to be compensated out of the interest paid on each borrower’s monthly payment—not via additional ‘service’ fees that do not reflect the cost to Nationstar of providing such services,” the complaint contends. “Under West Virginia law, Nationstar cannot mark-up the amounts it pays third parties to provide borrowers’ services and impose unauthorized charges not explicitly included in the deed of trust to create a profit center for itself.” 

Even if the defendant’s apparent pay-to-pay fee was explicitly authorized in a borrower’s deed of trust, Nationstar nevertheless cannot charge it in West Virginia unless expressly authorized by statute, the breach-of-contract lawsuit says. The case attests that Nationstar “leverages its position over homeowners” by demanding “exorbitant” fees for payments made by phone despite the fact that the company’s costs for by-phone transactions is around 50 cents. 

“Nationstar pockets the difference as pure profit,” the suit claims. 

More specifically, the case says Nationstar charges borrowers a pay-to-pay fee of up to $19 when they make a payment over the phone by speaking with a customer service representative and up to $14 each time they make a payment through the company’s automated system. 

The suit looks to represent all persons with a residential mortgage loan securing a property in West Virginia serviced or sub-serviced by Nationstar, who paid a fee to Nationstar for making a loan payment by telephone or interactive voice recognition during the applicable statutes of limitations through the date a class is certified.

The case, initially filed in Ohio County Circuit Court on April 28, was removed to West Virginia’s Northern District Court on June 4. 

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