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Freedom Mortgage Automatic Inspection Fees Class Action

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The complaint for this class action alleges that Freedom Mortgage Corporation charges borrowers who default for unnecessary property inspections. The complaint alleges that this violates the mortgage agreements, which only allow for fees for services that are “reasonable and appropriate.”

Three classes have been proposed for this action. The Nationwide Class is all mortgagors in the US of a mortgage owned or serviced by Freedom Mortgage who were charged a fee for a property inspection. There is also a Pennsylvania Class for borrowers in Pennsylvania and a Multi-State Class for borrowers in California, Florida, Illinois, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania, or Washington. 

Plaintiffs Michael J. and Brandy L. Gress bought their home in Mercersburg, Pennsylvania in May 2017. Their original lender eventually assigned the mortgage to Freedom, which services the mortgage. 

The Gresses later had financial difficulties which caused them to miss a payment. However, they continued to make payments after that, on October 31 and November 30, 2017 and January 6 and February 21, 2018. During this time, they claim they were in communication with Freedom and made clear that they intended to become current again and were not going to abandon the property.

Even so, the complaint says that around February 21, 2018, Freedom ordered that an inspection be done on the property. The purpose of this kind of inspection is to determine whether the property has been abandoned. For this, it charged the Gresses $15. 

According to the complaint, Freedom’s computer looks for accounts that have been in default for a certain amount of time and automatically calls for inspections of them. However, the computer assigns inspections even when Freedom has reason to know that properties are not abandoned, because the computer does not check any other factors.

The Gresses continued to make payments for the next four months. Unfortunately, they suffered further financial problems, missed their August payment, and made the September payment late.

Again, they remained in communication with Freedom, asking about options in their circumstances. 

Freedom sent them a loan modification application. Yet it also charged them for three more inspections, although the complaint says the company clearly knew that the property was not abandoned and the inspections did nothing to protect the company’s rights under the mortgage.

The complaint quotes the Gresses’ mortgage document as saying that, in the event of a default, abandonment, or a legal proceeding, “then Lender may do and pay for whatever is reasonable or appropriate to protect Lender’s interest in the Property and rights under this Security Agreement…” 

The complaint alleges that a property inspection is not reasonable or appropriate when the borrowers have been in communication with the lender and the lender knows that the property is still occupied. The complaint claims breach of contract, among other things.

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