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| A Baltimore, Md.-based company has been accused in a class-action lawsuit of charging excessive and illegal fees in connection with second-mortgage loans.Under Maryland’s Secondary Mortgage Loan Law — perhaps one of the nation’s most consumer-oriented laws aimed at such loans — companies are limited to collecting an origination fee that cannot exceed 10 percent of the net proceeds on second mortgages.
Admiral Mortgage charged two Maryland couples an origination fee of eight percent of the principal loan amount and then charged the homeowners credit report fees, document preparation fees and underwriting fees in violation of the statute, the lawsuit says. Admiral’s attorney, Andrew J. Graham, could not be reached for comment. But the borrowers alleged in court documents that Admiral collected excess recording fees and charged borrowers finder’s fees that it paid to brokers in connection with the loans. The law restricts lenders to charging the actual cost of the recording fees and does not allow lenders to pass on to consumers the cost of finder’s fees made in connection with the loans. The homeowners say the illegal and excessive fees were added to the monthly mortgage payment “thereby wrongly increasing” the monthly payments required from the homeowners. Admiral has made numerous secondary mortgage loans in the state, according to the complaint. Plaintiff’s attorney John A. Pica, Jr. said as many as 500 people may have been affected by the company’s practices. Explaining that there is a substantial amount of predatory lending in the state, Pica also said his firm, the Law Offices of Peter G. Angelos, will be filing many similar complaints in the next several weeks. |
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Lisa D. Burden is a legal analyst for MortgageDaily.com and holds a law degree from the University of Maryland. She is currently a freelance journalist who previously wrote for Institutional Investor publications and the Baltimore Daily Record. e-mail Lisa at: burdenlisa@yahoo.com |
