Missouri Mortgage Holders Win Suit Against Countrywide
More than 23,000 Missouri customers of Countrywide Financial could each get repaid $125 or more because of a $6 million court ruling over document preparation fees, the St. Louis Post-Dispatch reports.
Last week, St. Louis County Circuit Judge Gary M. Gaertner Jr. decided that because the appropriate mortgage documents were not actually reviewed by lawyers, the fees amounted to an unauthorized practice of law.
The company said that it had done nothing wrong.
One of the plaintiffs’ lawyers in the class-action suit, David Butsch, said Gaertner’s ruling applies to people who received home mortgages from March 2002 through August 2005, when a new state law took effect.
The new law specifically permits home mortgage companies to charge up to $200 for document preparation without a legal review.
Gaertner heard testimony in a non-jury trial in May, ruling against Countrywide, the largest home loan provider in the U.S., on December 6, and awarding $6,150,966, including back interest and triple damages for some plaintiffs.
Gaertner told Countrywide Mortgage to employ a claims administrator and ordered the lender to repay each customer no less than what was charged. Any money left over is to go to a charity selected by the court.
The suit claimed the fees for documents such as deeds of trust or promissory notes were deceptive and violated the Merchandising Practices Act.
In a prepared statement, the California-based lender said:
“Although we are pleased by the court’s finding that Countrywide did not violate the Missouri Merchandising Practices Act, we are very disappointed with the court’s ruling on the issue of unauthorized practice of law.”
Gaertner also ruled for Countrywide in finding that the statute of limitation for claims in the case is two years, not five.
The company noted that mortgage lenders won similar cases in Illinois, Michigan, Washington and California, where the fees were regarded as administrative rather than legal work.
Gaertner’s ruling follows a Missouri Court of Appeals decision last month in a case by the same plaintiff law firm against Midwest Bankcentre. In 2005, St. Louis County Circuit Judge Mark D. Seigel found against Midwest and in favor of 2,852 borrowers to the tune of $1.2 million.
Butsch said his firm has reached out-of-court settlements over such fees with other big Missouri mortgage lenders, including U.S. Bank, Chase Manhattan Mortgage Corp. and American Equity Mortgage.