The U.S. Department of Housing and Urban Development (HUD) has announced a significant settlement with PHH Mortgage Corporation regarding allegations of improper fees charged to borrowers. This settlement addresses claims that PHH imposed fees on borrowers for making mortgage payments, which violates Federal Housing Administration (FHA) requirements.

HUD Agency Head Adrianne Todman stated, "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. 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 resolves accusations against PHH without any admission of fault or liability. It concerns fees allegedly charged when borrowers made mortgage payments over the phone, via an interactive voice response system, or online if not enrolled in a paperless statement program. These so-called "pay-to-pay" or "convenience" fees contravene FHA rules since processing mortgage payments is considered part of regular servicing activities already compensated.

Under this agreement, approximately 51,500 borrowers will receive restitution for around 490,000 transactions that occurred between May 2021 and February 2023, when PHH stopped charging these fees. The total restitution is estimated at $3,465,000. Additionally, PHH will pay $245,000 administratively to HUD. Borrowers affected by these charges will either receive credit to their accounts or checks if they no longer have mortgages serviced by PHH.

This action against PHH aligns with a wider HUD initiative targeting junk fees across the industry. HUD is investigating other mortgage servicers that may have similarly charged improper fees and is seeking reimbursements for those affected borrowers.