A federal judge just gave the green light to a class action challenging Select Portfolio Servicing’s “pay-to-pay” fees. Could your servicing practices be next?
federal judge just put Select Portfolio Servicing’s “pay-to-pay” mortgage fees on trial, signaling new legal risks for servicers nationwide.
On September 10, 2025, the United States District Court for the District of Columbia ruled that borrowers can keep pressing their claims against Select Portfolio Servicing, Inc. (SPS) over extra fees charged for making mortgage payments online or by phone. The case started when two D.C. homeowners, C. Sukari Hardnett and Lisa Dennis, said they were hit with fees of up to $15 every time they used these payment methods. According to their lawsuit, SPS’s actual cost to process those payments was less than fifty cents—a gap that, if true, could mean big profits for the servicer.
The homeowners argue that these “pay-to-pay” fees aren’t just unfair—they’re illegal under D.C. consumer protection laws and the D.C. Mortgage Lender and Broker Act. They say their mortgage agreements never spelled out these charges, and that SPS never made it clear what borrowers were really paying for. The case is a class action, so it could affect a lot more people than just the two named plaintiffs.
SPS, for its part, tried to get the case thrown out early. The company argued that the claims were too old, that the homeowners hadn’t followed the right steps before suing, and that the fees were allowed under the mortgage contracts. SPS also pointed to a previous federal consent order, saying it gave them the green light for these kinds of charges.
Judge Amir H. Ali wasn’t buying it. In his decision, he said it was too soon to decide if the claims were out of time, especially since the complaint described ongoing fees. He also found that the homeowners had given SPS enough notice before filing the lawsuit, so that argument didn’t hold up either.
But here’s where things get especially interesting for mortgage professionals: the judge said that mortgage servicers like SPS can be held to account under D.C. consumer protection laws. The court found that the homeowners had made a plausible case that charging “pay-to-pay” fees—especially when they’re much higher than the actual cost—could be considered deceptive or unfair. The judge also shot down the idea that the mortgage agreements or the old consent order gave SPS a free pass to charge whatever fees it wanted.
On top of that, the court said the D.C. Mortgage Lender and Broker Act does let borrowers sue over these kinds of fees. Judge Ali pointed out that the law was meant to protect people with mortgages from unfair practices, and that the homeowners fit squarely into that group.
With SPS’s attempt to shut down the lawsuit denied, the case is moving forward. Both sides have been told to meet and propose what happens next.
So, what does this mean for you and your business? If you’re in mortgage servicing, this case is a wake-up call. Fee practices—especially those that aren’t clearly spelled out or justified—are getting more attention from the courts. The outcome here could set the tone for how servicers nationwide handle payment options, fee disclosures, and compliance with consumer protection rules. As this case unfolds, it’s a good time to take a hard look at your own fee structures and make sure you’re not leaving yourself open to the same kind of challenge.
