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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 [3] 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.