Attorney General Bonta Urges CFPB to Prohibit Mortgage Servicers From Charging "Pay to Pay" Fees

Monday, April 11, 2022
Contact: (916) 210-6000,

OAKLAND – California Attorney General Rob Bonta today, as part of a multistate coalition, urged the Consumer Financial Protection Bureau (CFPB) to prohibit mortgage servicers from charging excessive payment fees. Currently, many mortgage servicers charge “pay to pay” fees for payments made online, by phone, or through a third-party service, with fee amounts often exceeding the actual cost to the servicer to process the payments. In today’s letter, the coalition argues that these fees are excessive and exploitative because homeowners are unable to choose their servicer and thus are a captive market.

“For struggling homeowners trying to make their monthly mortgage payment, ‘pay to pay’ fees only rub salt in the wound,” said Attorney General Bonta. “The fact is: We are facing a housing affordability crisis of epic proportions here in California. And as costs of living continue to rise, the last thing Californians need is mortgage servicers taking advantage of this captive market in order to pad their bottom lines. I urge CFPB to put a stop to these abusive junk fees.”

When homeowners decide to take out a mortgage, many believe that they are entering into a long-term relationship with a specific financial institution. Unfortunately, after origination many mortgage loans and their servicing rights are sold in secondary markets, and may be sold many times over the course of the loan. This means that homeowners don’t and can’t know who will service their mortgage loan and are therefore unable to avoid “pay to pay” fees by taking their business elsewhere.

Homeowners are often forced to pay “pay to pay” fees to avoid late fees – but simply choosing the lesser of two evils doesn’t mean these homeowners really had a choice. “Pay to pay” fees generally range from a few dollars to over $10 per payment, generating significant income for some mortgage servicers. The most basic function of a mortgage servicer is to accept payments. The concept that a servicer ought to be able impose an additional charge to generate extra income for performing its core function is fundamentally flawed.

“Pay to pay” fees are just one example of exploitative junk fees charged to consumers in a multitude of financial products and services. In today’s letter, the coalition urges CFPB to prohibit mortgage servicers from charging these fees and to investigate fees in other captive markets. 

Attorney General Bonta joins the attorneys general of Illinois, 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, as well as the Hawaii Office of Consumer Protection in filing the comment letter.

A copy of the letter can be found here.

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