Key facts
- Onity is suing the New York State Department of Financial Services.
- The lawsuit concerns optional expedited mortgage payment fees.
- Onity argues the 'reasonably related to the cost' standard is undefined.
- The company claims this lack of definition exposes servicers to regulatory and litigation risk.
Onity Group Inc. has filed a lawsuit in the U.S. District Court for the Northern District of New York, seeking judicial clarification on a regulation governing optional expedited mortgage payment fees. The company contends that the phrase 'reasonably related to the cost of rendering that service' within the regulation lacks clear definition and objective standards, potentially exposing servicers to significant regulatory and litigation risk.
Onity stated that these fees are entirely optional for customers, who have free payment alternatives. The company also noted that it has voluntarily reduced these fees and eliminated them for online and automated phone payments. Despite cooperating with the state, Onity believes a court is the appropriate venue to resolve the ambiguity surrounding the cost-related standard.