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Payoff Statement Fee at Issue in Class Action Lawsuit Against Countrywide

New Jersey case could cost firm up to $1.8 million

June 7, 2004


One of the nation's largest residential lenders was named in a New Jersey class action lawsuit for allegedly illegally charging consumers fees required for closing. This marks the third lawsuit related to such practices and could end up costing the company over $1.8 million.

Levy, Angstreich, Finney, Baldante, Rubenstein and Coren, P.C. announced a consumer fraud lawsuit against Countrywide Home Loans Inc. has been certified class action in Middlesex County Superior Court. Over 10,000 New Jersey residents could be affected by the class action, which claims that the mortgage lender charged individual consumers a $60 statement when requesting a written payoff calculation required for closing.

The large fee is allegedly a violation of the New Jersey Consumer Fraud Act -- one of the most protective consumer laws in the nation that prohibits businesses from engaging in unconscionable commercial practices, deception and fraud aimed at consumers, the law firm reported.

Michael Cohen, one of the three senior partners at the law firm appointed to the case, told MortgageDaily.com that Countrywide charges the inflated fee when consumers ask that a payoff statement be faxed to them. The mortgage company's position is reportedly that they have a right to charge the fee because consumers can simply ask for a payoff amount over the phone or via the Internet. While Countrywide does not charge for phone or online statements, Cohen said title companies do not accept verbal or unofficial numbers when they are conducting a closing on a home or a mortgage payoff, they require a traditional faxed or written payoff statement.

"It's an abusive practice," Cohen said, adding that this lawsuit is the third against Countrywide for charging this fee and that he and his partners will additionally ask for an injunction to stop the mortgage lender from continuing to charge it.

In this case, Cohen said the suit emerged after a lawyer who represented a person closing found the fee improper. The Calabasas, Calif.-headquartered residential lender has charged over 900,000 consumers the fee nationwide and while attorneys tried for this suit to be national class action, it was certified at the state level only, he added.

Violation of the state's consumer fraud act automatically triples fines involved in a lawsuit, according to Cohen. If it is determined that Countrywide violated the act, assuming an estimated 10,000 New Jersey residents are eligible, the mortgage lender could end up paying over $1.8 million in attorney and court fees, and restitution to consumers, who would receive triple the amount of what they paid out of their pocket.

New Jersey consumers will receive notification of the class action in the mail in about two to three months, according to the law firm -- which advised that those interested in assuring they recover any unfair statement fee paid to Countrywide, should contact them to request that their name and address be added to the notification list.

Countrywide did not return a phone call for comment upon MortgageDaily.com's request.

Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.

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