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Illegal Mortgage Closing & Settlement Fees

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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.

{ 18 comments, please add your thoughts now! }

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18 Responses to “Illegal Mortgage Closing & Settlement Fees”

  1. David Porter says:


    If I can be of any help with this, I would be honored.

  2. John Koontz says:

    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.

  3. FMF says:

    Let us know how it turns out. Hope it’s not some ID theft scheme in disguise. 😉

  4. sasi says:


    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)


  5. jim says:

    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,

  6. Jackie says:

    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?

  7. jim says:

    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.

  8. peggy says:

    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?

  9. Janet says:

    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.

  10. Antoinette Iannacco says:

    How about almost $28,000 for a closing on an illegal mortgage. My in-laws got a mortgage(as a refinancing instead of a buyout that it was suppose to be). No one will help me. We have a lawyer that finally got the house sold. But I would like to know how my in-laws got the loan without my husbands knowledge?(one of three owners)the agent Hawthorne Abstract Corp,now changed it’s name to Hawthorne Capital Corp (same office) for the title compamy did all the damage. The NYC banking said they could not help,they have no control over the company. Even the FBI won’t help.My husbands name was forged to get the loan then crossed out to record the mortgage. They even lied on the homeowner’s insurance,to get a cheaper policy. Who to contact? I just want to know how? and why $28,000 for a closing.

    • Antoinette Iannacco says:

      Just something to add the appraiser was fined $2,00 for his part in putting the value on the house down $75,000 so Hawthorne Abstract Corp. could get the illegal mortgage for my in-laws. Lina Desimone & Ettore Iannacco of Brooklyn NY.The value of the house was closer to the $885,00 that was first given by another appraiser. The state appraiser found the $810,000 as stated by the appraiser Mr. Albert Perez to be to low. My in-laws also gave false addresses. Used these false addresses to give their lawyer power of attorney too. Why didn’t the lawyer ask for ID?

      • Antoinette Iannacco says:

        Actually it was $2,000 dollars,the appraiser was fined. The house is sold now, but I know this is not the end of the story yet!!! There is still more to come. I have all the documents,so if anyone wants them to get answers for their clients. If Hawthorne tried to scam them too,just e-mail me. Maybe I can help others,because we did not want to continue,and lose more money. We wanted to have a little something after the house was sold.Hawthorne moved around a lot and changed their name too. I have followed their trail for more than four years now.I don’t want what happened to us,happen to anyone else.

        • Chris says:


          I am concerned that a relative of mine was also pulled into something with Hawthorne. They helped her refinance a mortgage, but they never paid the taxes on the house and now the town is saying they are starting proceedings for foreclosure. After looking up information regarding Hawthorne and seeing your post, I am also concerned that they are scamming a lot of people. The bank to which they sold the mortgage to are is also attempting to get loan papers because Hawhtorne has not given them anything!

          • Antoinette Iannacco says:

            No one will help you, I tried. The NY Banking won’t help at all. They will only deal with a lawyer!!! Get a lawyer and see what he can do!! Hawthorne has gotten away with too much. There are some companies that are investigating them, but no one will tell us anything. Good Luck, it took us more than five years to get the house sold, because my in-law’s lawyer worked very hard not to sell it. But we had a better lawyer and got it sold. We had to change three lawyers before we got the best one. He got the job done.

          • Antoinette Iannacco says:

            Also check out the illegal mortgage for the house we sold, at Iannacco, 5805 18th ave,Brooklyn,NY 11204. You will see all the errors and blank spaces. Even where they crossed out my husband’s name. There are at least 30 mistakes and lies. My in-laws even lied as to where they lived. We live in Delaware not Brooklyn,They had my husband,Stefano living in Brooklyn, but no one chcked the address on the paper, was in Delaware!!! I was told the records dept only checks the cover letter. So no one looked to see all the blank spaces. Hawthorne knew this. That is why they didn’t use a lawyer!!

        • Antoinette Iannacco says:

          Well we sold the house!! Only almost two years later one lawyer we got rid because he never helped us. Had his firm send a notice, making it sound importand and as a final notice. Which we never got even one. Because we closed with him before we got our last and best lawyer that really helped to sell it. They were asking for more money,when acually we could asked for a refund, because he caused more problems and keep us from selling the house. We found out the lawyer himself was being sued by a big company, while we were his clients. Nice story. But we noticed his name was no longer on the letter head. We found out he can no longer practice. Well we are glad we got a real lawyer in the end. I will never go to lawyers com for a lawyer again. Glad we don’t live in NY anymore either, what a mess. We never got any answers to how my in-laws got their illegal mortgage. Just glad it’s over!!! Hawthorne just keeps changing it’s name & address but not it’s phone number??? and still is doing damage to so many others.In the end my in-laws are still trying to get away with lies, like giving false info as to where they really live. They are just as bad as their lawyer is too. Glad we don’t have to see their lawyer ever again either. He was horrible and we think he knew about our other lawyer’s problem. That is why he always tried to postpone selling the house. But when we finally got a real good lawyer, he put him in his place. Telling him,we must sell it or do you want to go to court with a tainted mortgage?? We got the house sold within weeks after that.What a nightmare!!!Even if you keep your nose clean all your life, someone else can try and destroy you.

  11. David Shannon says:

    I have been told that “pick a payment plan” is illigal. I have an ARM mortgage and has increased the cost of of my mortgage over the years. I can select from 4 different payments. Does anyone know about this type of mortgage?

  12. Ray says:

    Closing costs may range on a average..

    For example my closing costs will be 4900 for bolingbrook, il

    and my settlement fees will add another 4600..

    also my home inspection will be another 300

    plus my great attorny will be another 500

    im looking at 10300 + ???? plus minimum down payment of 4K through fha

    Why so much you question!? well no one told me this but when you buy through hud you pay all their stupid fees for them like theyr title search plus policy…

    my escrow account which i wont get back, pnc is asking for 4K alone…

    so dont be fooled by someone from your lender or realtor telling you closing costs + down payment theres alot more fees involved…get ready to be rap*d

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