Illegal Mortgage Closing & Settlement Fees
I recently received a letter from the law offices of Peter G. Angelos (the owner of the Baltimore Orioles) that they, after they reviewed the business practices of mortgage lenders in Maryland, discovered that some mortgage lenders charged mortgage closing/settlement fees that were illegal under Maryland law. Most of these illegal fees were connected to second mortgages, which I had. And of course, the firm was available to examine the closing documents to see if I was illegal charged and paid any of the illegal fees. If it happens that I was, I might be entitled to a refund of all the interest I had paid since getting the loan and additional damages.
The letter was dated January 13th, 2006 and did contain references to how it was illegal for lenders to charge excessive prepayment or refinancing penalties but neither of those cases applied to me. I also found an article dated Sept. 2004 from the Realty Times where “the U.S. 2nd Court of Appeals in New York ruled that markups of loan origination and closing fees violate federal law if they are not accompanied by additional services to justify the extra costs.”
Basically, a lot of mortgage companies hire other companies to do the title work, home inspection, and other services. Those companies bill the mortgage company who then in turn bills you. In some cases, the mortgage company was billed $10 and then charged the budding homeowner more, without adding any services. This was ruled to be illegal. Perhaps this is what they are referring to?
I don’t know but they left a number and offered to review my closing documents. I figured I’ll give them a call, ask them about what the obligations would be, and probably fax over my closing documents for them to review. If they find any money for me and their fee is less than that, I win. If not, it’s only a few minutes of my time.
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9 Comments - Share Your Thoughts
Jim,
If I can be of any help with this, I would be honored.
I was basically lied to when closing on my refinance a few years back. However, due to the rise in interest rates, the extra $3k in closing costs was small compared to the additional interest I would have to pay if I backed out of the loan. I never did anything about it but know it had to do with some of these empty fees. I wonder if there’s a similar ruling out here in CA.
Let us know how it turns out. Hope it’s not some ID theft scheme in disguise.
Jim,
I am reading your blog for some time. But first time Iam posting a reply.
i wonder did u try contacting the law firm and able to find any unlawful fees on ur closing docs?
Do you know where i can find the list of fees and their fee range for all mortgage closing (like title, credit enquiry, underwriting ..etc)?
I will look through my home purchase which i did in july 2004. if i find any is it possible to file the compliant now? (after 1.5 years)
Sasi.
Sasi,
I was going to fax my documents to Dave at Pacesettermortgage but he had something he had to take care of and asked that I wait on sending it. When I do I’ll post it on my blog.
You should have your closing documents (HUD) from your closing, that should list the fees you paid. Good luck,
jim
I am going to be closing on a condo in May and after reviewing all of the charges on my good faith estimate I am outraged. The first time I bought a condo I was charged 3K in closing costs. This time I am being charged almost 10K. The title comapny is trying to charge me $800 in attorney fees, $1,000 for title insurance, $500 for both underwriting and doc. review fees, and $2500 in city/state/and county tax (which half is to be paid by the seller, but is in my estimate to be paid by me). All of these charges are 75% higher than they should be. I guess because I am a woman they think I am not going to challenge this.
Where can I find a list of what I should be charged for attorney fees, title insurance, underwriting fees and doc. review fees?
Jackie - The only tip I have is to shop around with other lenders and see what their good faith estimates are. A lot of those fees are negotiable (and dependent on where you are) and so you can always go back to your current lender and ask for them to lower it.
What I like to know is why does this manager of this mobile home park get a finders fee of $2000 from me(buyer of a mobile home by owner)and a $2,500 fee from the seller? I was never told upfront and nothing in writing. He also told my husband he was going to a realtors school.He said it was customary and it was a low price.I believe he has a conflict of interest and illegal.Can help advise?
I just closed on a condo in the Seattle area and signed my closing documents a month ago. Escrow had advised me that they were going to refund me a check for my property tax that I had intially paid at closing. Instead of receiving a check for the full 7 months that I had paid upfront, I came to realize that I was given a check for 6 months. One month short of what I should have received. To make a long story short, I contacted the Escrow company and they had notified me that the appraisal fee at Countrywide had increased recently so they deducted the fee out of my refund check. Mind you, no one had the decency to contact me about this and I had to find out on my own. Can someone please tell me if this is illegal? Shouldn’t this amount be established prior to signing? This is another form of theft since I was not advised of this nor agreed to the charges.
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