Mortgage Fees Litigated, Legislated & Regulated

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MORTGAGE EXPERT
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Several lawsuits in various states have been filed by counties that seek to recover lost fees on documents that were never recorded, and some have been certified as class actions. One state and a federal regulator have banned private transfer fees. Borrowers, meanwhile, have been suing lenders over allegedly charging illegal fees.

Quicken Loans Inc. issued a statement indicating that it has never charged unearned fees and never will. The statement was issued in response to a federal lawsuit, Freeman v. Quicken Loans, that the lender says it won. The decision was upheld by the U.S. Court of Appeals for the Fifth Circuit, and the Detroit-based firm says that it is confident the U.S. Supreme Court will agree that the claims are meritless.

The case, according to Quicken, centers on the Real Estate Settlement Procedures Act, Section 2607(b), which prohibits the sharing of loan closing fees when the recipient didn’t earn the fees, or “kickbacks.”

“Quicken Loans, like all lenders, has and continues to offer clients the option of ‘buying down’ their interest rate by paying loan discount points,” the statement said. “This practice is a universal standard across the lending industry and is in accordance with state and federal laws. It was proven the loan discount points collected were earned and resulted in a lower interest rate for the borrowers.”

A class action filed on Feb. 10 against Wells Fargo & Co. and JPMorgan Chase & Co. alleges that the two lenders illegally levied excessive and deceptive default service fees against hundreds of thousands delinquent borrowers, Baron & Budd P.C. announced. The law firm, which touts its success on mesothelioma cases, claims that borrowers were cheated out of a billion dollars or more in fees — including fees for broker price opinions — that ranged from $20 to $135.

The Mortgage Electronic Registration Systems Inc. said that the U.S. Court for the Western District of Kentucky dismissed with prejudice a lawsuit filed by county clerks seeking to collect fees. The court reportedly determined that county clerks lack standing to sue or collect damages from MERS.

A motion to dismiss was filed on March 9 by MERSCORP Inc. in a federal lawsuit filed by Dallas County, Texas. The county claims it lost fee revenue as a result of the MERS system. An amended complaint filed on Oct. 31 sought to expand the case to a class action that includes all other Texas counties that also lost fees, and Harris and Brazoria Counties have since joined as plaintiffs. An amended scheduling order granted on Wednesday by the judge indicates that a trial date is expected on Feb. 11, 2013.

MERS is also fighting a class action lawsuit filed in the Geauga County Court of Common Pleas during October on behalf of Geauga County, Ohio. Violations of Ohio state law are alleged because assignments weren’t recorded and public records were damaged.

A class action complaint filed in U.S. District Court for the Eastern District of Michigan against the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. on Nov. 10, 2011, by Michigan counties seeks to collect transfer taxes on deeds. There are 83 counties in Michigan. The case was certified as a class action on Jan. 3.

Another case filed in Ingham County Circuit Court on behalf of Michigan counties against MERS was certified as a class action, according to a Nov. 26 story from The Daily Reporter. The case, originally filed in August 2011, alleges that the defendants owe millions of dollars in property title transfer taxes.

South Carolina Gov. Nikki Haley signed into law HB 1594 to restrict Wall Street Home Resale Fees, the American Land Title Association announced last month. The law prohibits private transfer fees, which typically earn private third parties a percentage of the sale price each time a property is sold. They can last for up to 99 years.

South Carolina is the 38th state to ban such fees.

FHFA on March 15 said that it published a final rule that limits Fannie Mae, Freddie Mac and the Federal Home Loan Banks on purchases or guarantees of loans with private transfer fees. The rule applies to covenants created on or after Feb. 8 but doesn’t apply in certain situations like fees for homeowners associations.

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Mortgage Daily Staff

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