What is Fee Pyramiding?
Fee pyramiding is an illegal practice in which homeowners are charged late fees when they do not owe them. You should send a Notice of Error when your mortgage company engages in fee pyramiding. You should also report the mortgage company to the Consumer Financial Protection Bureau.
What Is Fee Pyramiding?Fee pyramiding happens when a homeowner (1) makes a late payment; (2) is charged a late fee; (3) makes all monthly payments on time after that one month of being late, but does not pay the late fee; and (4) the mortgage company charges a late fee on all the payments that were made on time.
How Does the Mortgage Company Justify Charging All of Those Late Fees?The way the mortgage company sees it, the first payment due after the late payment should have been for the regular monthly amount plus the late fee. Since the late fee was not paid, they argue, the payment was not a full, complete payment. They put the "incomplete payment" in a special account called a "suspense account," and charge another late fee because a complete payment was not made.
How Can Fee Pyramiding Land Me in Foreclosure?Mortgages give mortgage companies the right to return incomplete payments. That is, you can be locked out of your account. Interest continues to accumulate while you are prevented from making payments. Mortgage companies can begin charging you fees for such things as Broker Price Opinions and legal fees. If you save your payments, and have enough money to pay all of the fees, you can bring your account current. A lot of homeowners, however, cannot afford the fees and the mortgage company begins foreclosure proceedings. That is how you can lose your home to fee pyramiding.
What Should I Do?(1) Send a Notice of Error specifically pointing out the fee pyramiding. File new notices every month.(2) File a complaint with the Consumer Financial Protection Bureau. (3) If you can afford it, pay the fees and demand a refund. (4) If you are locked out of your account, continue sending payments every month. (5) If the mortgage company returns your payment, deposit the payment in your bank account and DO NOT SPEND IT. (6) Check your credit reports to see if the mortgage company is making negative comments about you, claiming that you are past due. (7) If the mortgage company is making negative comments, dispute the debt with the credit reporting agency. (8) Keep notes about how you are hurt by the mortgage company, including being turned down for loans. You can use this information to prove damages if you have to go to court. (9) Sue the bastards.