Michigan Attorney General Dana Nessel joined two multistate actions aimed at eliminating unnecessary fees from banks.
“We know the costs of goods and services are at an all-time high,” Nessel said. “That’s why it’s more important than ever to fight against companies that charge fees that ultimately do more to hurt the customer than offset their own operating costs.”
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The first was a call for consumer banks to eliminate overdraft fees. The coalition of attorneys general are calling on the CEOs of JPMorgan Chase, Bank of America, U.S. Bank, and Wells Fargo to eliminate all overdraft fees on consumer bank accounts.
Nessel is asking each bank to eliminate overdraft fees by this summer. She said overdraft fees have disproportionately affected vulnerable families and communities of color by sending them deeper into debt.
“Charging overdraft fees that can sometimes be more than five times the amount of the original purchase is abhorrent,” Nessel said. “By eliminating these fees altogether, banks will show that they care as much for their customers’ financial well-being as they do their own.”
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Calls to prohibit mortgage servicers from charging convenience fees
Nessel also joined a coalition of 22 attorneys general urging the Consumer Financial Protection Bureau to prohibit mortgage servicers from charging convenience fees.
The coalition urges the CFPB to evaluate convenience fees in the mortgage industry. They argue that the fees are unfair and abusive because homeowners have no choice in their mortgage servicers.
“Convenience fees are exploitative and ultimately allow mortgage servicers to be paid twice. It is unfair that consumers face additional charges depending on how they decide to pay their bills,” Nessel said.
The attorneys general point out that many consumers believe they are entering into a long-term relationship with a specific financial institution. However, many mortgage loans and their servicing rights are sold in the secondary markets and may be sold many times over the course of the loan.
Consumers do not know which company will service their mortgage loan and have no ability to change servicers. The letter says the CFPB’s further evaluation of discretionary fees charged by servicers is warranted due to the duration of mortgage loans coupled with consumers’ lack of servicer choice and the fact that some servicers have attempted to impose convenience fees even when they are not authorized by the original loan documents.
The coalition is also concerned that the convenience fees exceed their actual cost to accept payments online or over the phone.
The attorneys general argue that a servicer being able to impose an additional fee for performing its core function is fundamentally flawed. Mortgage servicers have already been compensated for the costs of accepting payments when they either enter into the original loan or choose to acquire servicing rights for the loan. By charging convenience fees, mortgage servicers are essentially being compensated twice when accepting a payment.
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