The U.S. Department of Housing and Urban Development (HUD) and PHH Mortgage Corp. have reached a $3.5 million settlement to resolve allegations that the Mount Laurel, New Jersey-based mortgage company unlawfully charged fees to borrowers during mortgage payments.
The practice is a violation of HUD’s Federal Housing Administration requirements. The settlement is the largest reimbursement amount to the most FHA borrowers in the history of HUD.
The settlement, which did not constitute an admission of fault or liability for either party, includes PHH paying nearly $3.5 million to be reimbursed to 51,500 Federal Housing Administration borrowers that HUD alleges were illegally charged certain fees during 490,000 transactions. The fees were charged between May 2021 and February 2023.
In addition, PHH will make an administrative payment of $245,000 to HUD. Eligible borrowers who were charged improper fees will automatically receive either credit to their mortgage accounts or checks if they no longer have mortgages serviced by PHH.
“One of the most sacred responsibilities we have at HUD is to ensure inclusive and fair access to housing for all, which includes protecting families with FHA mortgage payments from junk fees” said HUD Agency Head Adrianne Todman. “This settlement serves as a reminder that HUD will always hold FHA mortgage companies accountable to ensure the people we serve are treated fairly.”
The settlement with PHH is occurring at a time when HUD is attempting to crack down on junk fees being charged to borrowers. HUD is investigating other mortgage servicers that may have charged borrowers the same types of fees as those charged by PHH.
