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M&T Bank Pay-to-Pay Fees for Paying Mortgage by Telephone Class Action

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The complaint for this class action alleges that M&T Bank charges mortgage borrowers illegal Pay-to-Pay fees when they make payments over the telephone. The complaint claims that these fees are illegal, both under federal and state laws. At issue are the federal Fair Debt Collection Practices Act (FDCPA) and California’s Rosenthal Fair Debt Collection Practices Act (RFDCPA) and the terms of the mortgage contract.

Plaintiff Lisa Silveira bought her home in San Luis Obispo, California on December 29, 2008. The loan went into default, and M&T acquired the servicing of it in 2016. In 2017, Silveira was able to get a loan modification. Since then, she has been making her mortgage payments on time.

When Silveira makes the payments over the telephone, M&T charges her $15 as a pay-to-pay fee. The complaint alleges that these fees violate both the FDCPA and the RFDCPA and the terms of the mortgage contract.

If M&T claims that the $15 fee is a “default related fee,” the complaint says, the fee is “a direct breach of Paragraph 9 of the Mortgage Agreement…” The complaint quotes this section as saying that “amounts disbursedby the lender under this Section 9 will become the debt of the borrower.” The complaint says that “M&T collected more than the amount it disbursed to process the Pay-to-pay transaction.”

The complaint also claims that the M&T charge breaches Paragraph 14, “stating that lender may not charge fees prohibited by ‘Applicable Law.’” The complaint says the FDCPA is applicable and quotes it as saying that it is illegal to collect “any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” The Pay-to-Pay fees are not so authorized.

The complaint also quotes the California law as making it illegal to falsely represent that a consumer debt such as Silveira’s mortgage “may be increased by the addition of … charges if, in fact, such fees and charges may not be legally added to the existing obligation…”

The complaint proposes two classes:

  • The Nationwide FDCPA Class is all borrowers on residential mortgage loans that were not owned by M&T and to which M&T acquired servicing rights when such loans were thirty days or more delinquent, who paid a fee to M&T for making a loan payment by telephone, IVR, or the Internet, during the statute of limitations period through the date a class is certified in this case.
  • The California Class is all persons with a California address who were borrowers on a residential mortgage loan for which M&T acquired servicing rights, who paid a fee to M&T for making a loan payment by telephone, IVR, or the Internet, during the statute of limitations period for an Unfair Competition Law claim under California law through the date a class is certified in this case.

A California Subclass has also been proposed.

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